Herbalife Comments on ABC News Report Exposing More of Bill Ackman’s Undisclosed Financial Arrangements
April 24 2014 - 6:30AM
Business Wire
Herbalife (NYSE:HLF), a leading global nutrition company, today
issued the following statement regarding a recent report from ABC
News:
ABC News has revealed new information
regarding Bill Ackman’s, Founder and CEO of Pershing Square
Capital, unprecedented $1 billion campaign to manipulate
Herbalife’s stock to the detriment of Herbalife’s shareholders,
customers and employees. Mr. Ackman’s campaign, part of which was
uncovered by ABC News, is losing its credibility with each passing
day.
The previously unreported information includes confirmation
that Mr. Ackman has spent more than $20 million to date on his
campaign. This includes a contractual arrangement to pay an
individual up to $3.6 million over 10 years to make accusations
against Herbalife, in addition to Mr. Ackman’s agreement to pay the
individual’s legal fees and arrange his public relations efforts.
Importantly, when the individual was on ABC News – an interview
that Mr. Ackman’s PR team helped to arrange – he failed to disclose
the existence of his contract with Ackman and, in fact, the
contract itself contains a confidentiality clause. The
payments are only one part of a calculated, coordinated and
well-funded effort by Mr. Ackman and his agents to offer secret,
undisclosed payments to individuals and organizations to bring
false and misleading charges against Herbalife.
The ABC News story raises a number of
important questions that Mr. Ackman should answer fully and
honestly:
- How has Mr. Ackman spent the $20
million?
- Who else has Mr. Ackman or his team of
agents and consultants made payments to, directly or indirectly, or
made future contingency payment offers to?
- Did Mr. Ackman disclose his financial
inducement with these individuals when lobbying state and federal
regulators and lawmakers?
Herbalife also commented:
Herbalife’s ‘Gold Standard’ consumer-protection rules not only
meet, but in most cases exceed the standards prescribed by the
Direct Selling Association (DSA), of which the Company is a
long-time member in good standing.
We provide clear, accurate and timely disclosures to prospective
members regarding potential income in our Statement of Average
Gross Compensation. Studies have revealed that the vast majority of
Herbalife members have realistic expectations of the business
opportunity and the effort required to succeed at all levels.
Additionally, as noted in the ABC News report, Herbalife is
explicit with its members that “products are not intended to
diagnose, treat, prevent or cure any disease or medical condition,
and under no circumstances should there be any statements,
advertising or implications to the contrary.”
Enforcement of the rules of conduct is a top priority at
Herbalife, and we investigate and take all claims seriously. The
Company has a compliance team of more than 300 people worldwide
that monitors members’ activity and enforce Herbalife’s rules. Our
compliance operation includes secret shoppers who investigate
compliance on the ground, web-monitoring companies to track
internet-based compliance and several customer feedback
channels.
Herbalife remains focused on operating its business, producing
the finest nutrition products, and generating strong financial
results. The Company’s ongoing ability to do so is further
testament to the integrity of the Company’s business model and the
value of its product.
A link to the ABC News story can be found at abcnews.go.com or
http://abcnews.go.com/Blotter/bill-ackmans-secret-deal-herbalife-whistleblower/story?id=23415501
A copy of Mr. Ackman’s agreement can be found via ABC News at:
http://abcnews.go.com/images/Blotter/agreement_redacted2.pdf
About Herbalife Ltd.
Herbalife Ltd. (NYSE:HLF) is a global nutrition company that
sells weight-management, nutrition and personal care products
intended to support a healthy lifestyle. Herbalife products are
sold in more than 90 countries to and through a network of
independent members. The Company supports the Herbalife Family
Foundation and its Casa Herbalife program to help bring good
nutrition to children. Herbalife's website contains a significant
amount of financial and other information about the company at
http://ir.Herbalife.com. The company encourages investors to visit
its website from time to time, as information is updated and new
information is posted.
FORWARD-LOOKING STATEMENTS
Although we believe that the expectations reflected in any of
our forward-looking statements are reasonable, actual results could
differ materially from those projected or assumed in any of our
forward-looking statements. Our future financial condition and
results of operations, as well as any forward-looking statements,
are subject to change and to inherent risks and uncertainties, such
as those disclosed or incorporated by reference in our filings with
the Securities and Exchange Commission. Important factors that
could cause our actual results, performance and achievements, or
industry results to differ materially from estimates or projections
contained in our forward-looking statements include, among others,
the following:
- any collateral impact resulting from
the ongoing worldwide financial environment, including the
availability of liquidity to us, our customers and our suppliers or
the willingness of our customers to purchase products in a
difficult economic environment;
- our relationship with, and our ability
to influence the actions of, our Members;
- improper action by our employees or
Members in violation of applicable law;
- adverse publicity associated with our
products or network marketing organization, including our ability
to comfort the marketplace and regulators regarding our compliance
with applicable laws;
- the outcome of inquiries from
regulatory authorities;
- changing consumer preferences and
demands;
- our reliance upon, or the loss or
departure of any member of, our senior management team which could
negatively impact our Member relations and operating results;
- the competitive nature of our
business;
- regulatory matters governing our
products, including potential governmental or regulatory actions
concerning the safety or efficacy of our products and network
marketing program, including the direct selling market in which we
operate;
- legal challenges to our network
marketing program;
- risks associated with operating
internationally and the effect of economic factors, including
foreign exchange, inflation, disruptions or conflicts with our
third party importers, pricing and currency devaluation risks,
especially in countries such as Venezuela;
- uncertainties relating to the
application of transfer pricing, duties, value added taxes, and
other tax regulations, and changes thereto;
- uncertainties relating to
interpretation and enforcement of legislation in China governing
direct selling;
- uncertainties relating to the
interpretation, enforcement or amendment of legislation in India
governing direct selling;
- our inability to obtain the necessary
licenses to expand our direct selling business in China;
- adverse changes in the Chinese economy,
Chinese legal system or Chinese governmental policies;
- our dependence on increased penetration
of existing markets;
- contractual limitations on our ability
to expand our business;
- our reliance on our information
technology infrastructure and outside manufacturers;
- the sufficiency of trademarks and other
intellectual property rights;
- product concentration;
- changes in tax laws, treaties or
regulations, or their interpretation;
- taxation relating to our Members;
- product liability claims;
- whether we will purchase any of our
shares in the open markets or otherwise; and
- share price volatility related to,
among other things, speculative trading and certain traders
shorting our common shares.
We do not undertake any obligation to update or release any
revisions to any forward-looking statement or to report any events
or circumstances after the date hereof or to reflect the occurrence
of unanticipated events, except as required by law.
Herbalife Ltd.Barbara Henderson, 213-745-0517SVP, Worldwide
Corp. CommunicationsorAmy Greene, 213-745-0474VP, Investor
Relations
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