Business

Icahn to add three of his own picks to Herbalife board

Billionaire investor Carl Icahn has put up three directors to replace those who are leaving the board of embattled Herbalife, the multilevel marketing company under investigation by the Federal Trade Commission.

Herbalife asked Icahn, who has a 17 percent stake in the company, to add his people to the board, as others were expected to leave after the FTC announced a formal probe of the company, sources told The Post.

Some departing board members, sources said, were worried about warnings from activist Bill Ackman, who has bet $1 billion that Herbalife is a pyramid scheme. Ackman wrote two letters to the board—published by The Post on March 21— detailing directors’ potential liability should Herbalife be found to be a pyramid scheme.

Bill Stiritz, another large shareholder, was also approached to join the board but declined, according to sources.

Herbalife shares, down 23 percent since the March 12 news of the probe, jumped 6.7 percent Monday on the news and closed at $52.86.

“I believe it’s a great business model, and a lot of people depend on the money they earn from Herbalife,” Icahn told The Post. “It would hurt a lot of poor people if Herbalife went out of business.”

Ackman and Hispanic activists disagree, saying the company preys on the poor, mostly undocumented Hispanics.

The new nominees, all from Icahn Enterprises, are: Hunter C. Gary, a senior vice president; Jesse A. Lynn, assistant general counsel; and James L. Nelson, an independent director.

Icahn will have five people on Herbalife’s 13-member board.

The three Icahn nominees replace three independent directors who are stepping down.

Most prominent among the departures is Michael Levitt, vice chairman of Apollo Credit Management, a unit of Apollo Global Management, who joined the board in 2012. He was the lead director. Levitt, whose term was up, was widely expected to step down.

“He doesn’t need this headache,” said one source.

Levitt did not return calls.

On March 20, Herbalife told The Post that Levitt was staying, repeating earlier assertions by the company that no one was leaving the board.

Herbalife declined to comment on Monday.

Also stepping down are Carole Black, the former CEO of Lifetime Entertainment who previously worked at Disney (as did Herbalife CEO Michael Johnson), and Colombe Nicholas, a consultant of Financo Global Consulting, who is leaving in the midst of her term.

One person staying on the board is John Tartol, a 30-year Herbalife veteran, who was recently cast in a harsh light by Ackman.

Tartol, who earned about $3 million from Herbalife in 2012, according to regulatory filings, was an owner of a now-banned lead generation business.

“Tartol tells recruits that he is making millions and they can make it even faster than he did,” Ackman said in a recent presentation. “In reality, the odds of a new distributor qualifying for the Herbalife Chairman’s Club are virtually nil.”

Tartol, whose term expires this year, was not stepping down because his departure would be an “admission” Ackman was right, sources close to Herbalife said.