Herbalife, strengthening ties with the company's biggest investor amid a federal probe into its business practices, forged an agreement with billionaire Carl Icahn that will add three directors to the board.
Herbalife will nominate Hunter Gary, Jesse Lynn and James Nelson to the board at its annual general meeting scheduled for April 29, the company said Monday. Icahn and related companies own about 16.8 percent of Herbalife's stock and will control five of 13 board members if the nominees are approved.
"This is a very positive agreement, and we appreciate the Icahn parties' shared confidence in Herbalife's continued success," Michael Johnson, chairman and chief executive, said in a statement.
Herbalife shares have fallen 18 percent since the company disclosed March 12 that the Federal Trade Commission had started a civil probe into its practices.
Hedge-fund manager Bill Ackman has pressed federal regulators to shut down the maker of weight-loss shakes and skin creams, saying it misleads distributors, misrepresents sales figures and sells a commodity product at inflated prices.
Icahn said on Twitter Monday he expected the new directors to "enhance value and contribute to the long-term success" of Herbalife.
The billionaire disclosed early last year that he had taken a stake in the company, saying he would discuss strategic alternatives with management. He is now the largest shareholder.
The move escalates Icahn's rivalry with fellow billionaire Ackman, who made a $1 billion bet against Herbalife's stock in 2012 and set out to prove that the company is a pyramid scheme and should be shut down.
Herbalife, which sells products in more than 90 countries through a network of independent distributors, has repeatedly denied Ackman's allegations.
Herbalife shares closed up 6.70 percent, to $52.86.