Herbalife Ltd. said Thursday that it had agreed to increase its board by two seats, to 11 members, and will fill those positions with people chosen by activist investor Carl Icahn, whose investment company now controls more than 13 percent of the company.
The Los Angeles nutritional-supplements maker so far has found Icahn, head of Icahn Enterprises Holdings L.P. in New York, a friendlier shareholder than New York hedge fund manager William Ackman of Pershing Square Capital Management. Ackman sparked a roller-coaster ride for Herbalife shares in December when he announced he had taken a significant short position on the company and accused it of running a “pyramid scheme.”
Herbalife said the agreement with Icahn Enterprises, whose entities control about 14 million Herbalife shares, includes certain standstill provisions, such as an agreement by Icahn Enterprises not to acquire more than 25 percent of the company.
Chief Executive Michael Johnson said the company was looking forward to working with the Icahn-backed directors. “We appreciate the Icahn parties’ shared views on the inherent value of Herbalife’s operations, products and future prospects,” he said in a statement.
“Over its long history, Herbalife has proven its ability to increase revenues and returns, and we will work with the company to build on its results,” Icahn said in a statement. “We expect our shareholder representatives to provide positive input into board decisions affecting the future of the company.”
Herbalife shares closed at $40.29 Thursday, up $2.85, or 7.6 percent.