Herbalife Names New CEO to Lead L.A. Nutrition Company Amidst Controversies

Herbalife Ltd. (NYSE: HLF), the Los Angeles-based nutrition company, has appointed Stephan Gratziani as its new CEO, effective May 1, 2025. Gratziani, a former Herbalife independent distributor, will succeed Michael Johnson, who will transition to the role of Executive Chairman. This leadership change comes as Herbalife works to move past a series of controversies and regulatory issues that have tarnished its reputation and eroded investor confidence.

Gratziani's appointment signals a commitment to rebuilding Herbalife's reputation and restoring investor confidence. With nearly three decades of experience as a distributor and three years at Herbalife as Chief Strategy Officer and President, Gratziani brings a unique perspective and deep understanding of the company's distributor network. His vision for the company's future involves merging Herbalife's strong distributor network with cutting-edge health and wellness technology, modernizing the business, and redefining direct selling.

To address the concerns raised by the Federal Trade Commission (FTC) and other regulators, Herbalife has taken several steps:

1. Settlement with the FTC: In 2016, Herbalife agreed to pay a $200 million settlement and change its business practices to address the FTC's allegations that it deceived consumers into believing they could get rich quickly by selling its products. The company admitted no wrongdoing but agreed to restructure its business model to better align with regulatory requirements.
2. Admission of criminal conduct in China: In 2020, Herbalife admitted to criminal conduct and agreed to pay combined penalties of more than $123 million for bribing Chinese officials. This admission demonstrates the company's willingness to acknowledge and address past misconduct.
3. Restructuring and transformation: Herbalife has initiated a restructuring program to improve operational efficiency and deliver annual savings of $80 million beginning in 2025. This program is part of the company's broader transformation efforts to address past concerns and create a new, compliant business model.
4. Investment in distributor development programs: Herbalife has invested in new programs like the Diamond Development Mastermind Program to support and educate its distributors, fostering a more informed and compliant sales force.
5. Appointment of a former distributor as CEO: Stephan Gratziani's appointment signals a commitment to addressing the concerns of distributors and ensuring they operate within the bounds of relevant laws and regulations.

Herbalife's new leadership faces several challenges in rebuilding the company's reputation and restoring investor confidence. These include addressing past controversies, implementing changes to the business model, proving the long-term viability of the direct selling model, communicating effectively with investors and stakeholders, and maintaining a strong financial performance.

Despite these challenges, Herbalife's new leadership is committed to addressing past concerns and ensuring compliance with relevant laws and regulations. By merging the distributor network with technology, modernizing the business, and redefining direct selling, Gratziani aims to position Herbalife as a leader in the health and wellness industry and create a new Herbalife for the future.