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Monday, May 29, 2023

Ethical Flap Forces Exit Of President

The Herbalife Ltd. president and chief operating officer who resigned last week following charges that he had hyped his academic credentials was a longtime colleague and personal friend of Chief Executive Michael Johnson.

Wall Street even credited Gregory Probert with a key role in the torrid growth of the Los Angeles nutritional supplement maker over the last five years.

But once it became public April 25 that that the 51-year-old Probert hadn’t completed all the requirements for an MBA he had claimed to finish, it was only a matter of time before he joined the ranks of U.S. corporate leaders forced from office for resume inflation or other ethical infractions.

“To lie about this type of information makes you wonder what other things he could have been hiding,” said Alexandra Higgins, a consultant with Corporate Library, a respected corporate governance research firm in Portland, Maine.

Also working against Probert: He joined the firm shortly after Johnson came on board in 2003 to clean house and turn things around following the overdose death of founder Mark Hughes, a charismatic leader who was not a trained executive.

“Given the company’s unwavering commitment to the highest standards in business ethics, the company had no other choice but to accept the resignation,” Herbalife said in a statement, declining any further comment.

While the company said Probert’s decision followed a nearly weeklong internal investigation, the May 1 announcement itself was strategically timed to coincide with news that the company’s first-quarter profits had jumped 51 percent on strong overseas sales in South America and China.

The strong earnings report, released five days earlier than planned, blunted the news of Probert’s departure. Shares had fallen 9 percent to $40.08 the day the story broke, but closed at $42.97 on May 1.

In the 1990s, Probert was a key lieutenant in Johnson’s successful campaign to build Walt Disney Co.’s then miniscule international home video business into a global powerhouse. When Johnson left his job as president of Walt Disney International in 2003 to take the helm at Herbalife, Probert was one of the first former colleagues he recruited.

The discrepancy in Probert’s resume ironically came to light when longtime Herbalife critic Barry Minkow hired an investigator to do a background check on the company’s executives. Minkow now runs a fraud watchdog group, but is notorious for his conviction in the late 1980s for running a Ponzi scheme through his publicly held ZZZZ Best carpet cleaning company. Minkow has admitted shorting Herbalife’s stock.

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