Herbalife Is Not A Pyramid Scheme: Company Executives

The Herbalife CEO and other executives today rejected the allegation by hedge fund manager Bill Ackman that the company is a pyramid scheme. They spoke at an investor’s meeting this morning in New York City.

Herbalife is a billion dollar multilevel marketing company that sells nutritional supplements and weight loss products.

According to CNN, Herbalife’s top echelon defended the company against Ackman’s criticism:

” ‘We are confident that you will see that we’re a legitimate company with legitimate customers,’ Herbalife CEO Michael Johnson told investors and analysts gathered at the Four Seasons in midtown Manhattan Thursday. Johnson call the opportunity to address the crowd ‘unusual but incredible.’

” … At the conference, Herbalife trotted out its executives, including its president and chief operating officer, who all explained that the company sells real products to real consumers.

” ‘If we were not a legitimate company why on earth would we invest and commit to hundreds of millions of dollars to products and distribution facilities?’ noted Herbalife’s president, Des Walsh.”

Herbalife’s stock tanked after Ackman went public with his allegations on December 20 but the stock price has now rebounded. Ackman has a huge short position in the company.

Johnson characterized Ackman’s claims as a “gross distortion of reality,” according to the Wall Street Journal.

Walsh insisted that “our business is a meritocracy” rather than a pyramid scheme. Herbalife’s CFO John DeSimone advised that information on the company’s fourth-quarter financial performance will be released next week.

Johnson ended this morning’s presentation with the caution: “Don’t believe everything you hear. We’ve got a great company and we’re moving forward with it.”

Do you think that Herbalife is a legitimate company?