Herbalife names new CEO to lead the L.A. nutrition company as it works to move past controversies

Herbalife has named a new chief executive, marking a new chapter for the Los Angeles nutrition products company as it continues to rebuild after a string of controversies over the last decade.

Stephan Gratziani, who started as an independent distributor at Herbalife nearly 34 years ago, will take over the top job May 1. He has been the direct-selling company’s president since January 2024, and its chief strategy officer for five months before that.

Michael O. Johnson, the company’s current CEO and board chairman since 2022, will become executive chairman.

“We’re making progress in delivering on what we said we would do,” Gratziani said in an earnings call shortly after the leadership changes were announced Wednesday. “But we’re not stopping here. We understand there’s a broader question about the relevance of our business model and its future.”

Johnson, a former Walt Disney Co. executive, has served as CEO of Herbalife on three occasions, the first stint from 2003 to 2017. That period included an investigation by federal regulators into Herbalife’s business practices and structure, culminating with the Federal Trade Commission suing the company in 2016.

The FTC alleged Herbalife and its affiliates deceived consumers into believing they could get rich quickly by selling the brand’s diet, nutritional supplement and personal care products. The agency issued a stinging rebuke of the company’s business model, saying in its complaint that Herbalife had misled people into becoming its distributors or its members with videos and brochures showing mansions, fancy cars and boats, and telling them they could quit their jobs.

Herbalife settled that year, agreeing to pay $200 million and fundamentally restructure its business. It admitted no wrongdoing.

Four years later, federal prosecutors in New York charged the company with bribing Chinese officials. In that case, Herbalife admitted to criminal conduct and agreed to pay combined penalties of more than $123 million.

“We’ve been portrayed and mis-portrayed over time. We’ve fought some battles,” Johnson said during Wednesday’s call. “We’ve got a company poised for the future with a vision from Stephan and the team here that’s going to be unleashed on our distributors over the next year, that’s going to create a new Herbalife.”

Founded in 1980, Herbalife today has more than 2 million distributors in more than 90 countries. Its products include meal replacement shakes, protein bars, vitamins and skin care.

Herbalife reported its fourth-quarter and full-year earnings and leadership changes after the markets closed.

For 2024, the company said revenue declined 1.4% to just under $5 billion. Year-over-year profit rose to $254.3 million, or $2.53 a share, from $142.2 million, or $1.44 a share.

“This year, we will be committed to helping investors understand and appreciate the power of our business and how it is different than it is perceived,” Chief Financial Officer John DeSimone said.

In after-hours trading, shares were up about 18%. Year to date, its stock is down nearly 16%, closing Wednesday at $5.62 a share.