Sunday, 3 May 2015
Last updated 2 days ago
Feb 7 2013 | 10:21am ET
Herbalife said yesterday it would offer more details about how much it pays its distributors in an effort to fend off Pershing Square Capital Management's allegation that the nutritional supplements company is a pyramid scheme.
Pershing Square chief William Ackman in December launched a broadside against the direct-selling company, criticizing it for, among other things, its opacity: Herbalife in 2011 disclosed only payments to its supervisor-level distributors or higher, a group accounting for just 17% of its U.S. distributors. As of yesterday, however, the company is offering ranges of gross compensation for each distributor level, the number of distributors at each level and their average gross payments.
That's not, of course, to say that the somewhat vague information will satisfy Ackman, a fact that Herbalife chief Des Walsh acknowledged.
"We believe many of those critics are guided by a profit motive and to that extent it is likely that any information we provide will continue to be criticized, not because of its insufficiency or its inadequacy, but simply because it is not in the interest of these people to accept anything that we say," Walsh told Reuters.
Herbalife itself admitted that the figures it disclosed—showing that 88% of its distributors received no payment at all last year, with average payments running from $104 at the lowest level to $724,030 at the highest—were not accurate representations of distributor compensation, since they do not take into account expenses on the part of the distributor.
Herbalife this week also had to deny a New York Post report that it was the subject of a law-enforcement investigation. The tabloid cited the Federal Trade Commission's response to a Freedom of Information Act request, noting that it was withholding some information under a statute that covers law-enforcement probes.
Reuters reports that the FTC's letter actually referred to potential law enforcement actions, and that it was changing the boilerplate to avoid such confusion. Herbalife demanded a correction from the Post.
"Other than the voluntary dialogue with regulators, which we communicated on our January investor day, we are unaware of any other regulatory interest and/or investigation," Herbalife said.
Mar 20 2015 | 12:45pm ET
StreetWise Partners, a non-profit organization that works with low-income individuals to help them overcome employment barriers, raised over $275,000 at the 2015 Raising the Ante Charity Poker Tournament and Casino Event last Wednesday evening at Capitale. Here are some photos from the event. Read more…