Herbalife to add 2 Icahn reps to its board

Dietary supplements company Herbalife said Thursday it will add two new members to its board of directors at the request of billionaire investor Carl Icahn, who has backed the company in a public spat with hedge fund manager William Ackman.

Herbalife, based in the Cayman Islands, said it will nominate two new directors chosen by Icahn, increasing its board from nine to 11 members. As part of the agreement, Icahn can increase an existing stake of 13.6 percent to as much as 25 percent. Icahn had previously suggested he might push the company to go private, though the 25 percent ownership cap makes that option less likely.

"We appreciate the Icahn Parties' shared views on the inherent value of Herbalife's operations, products and future prospects," said Herbalife chairman and CEO Michael Johnson.

Herbalife Ltd. shares rose $2.85, or 7.61 percent to close at $40.29.

Herbalife, which uses a network of distributors to sell its nutrition and weight-loss products, has been fighting off claims made by Ackman that its business amounts to a "pyramid scheme."

Ackman argues that the company makes most of its money by recruiting new salespeople, rather than on the products they sell. Salespeople buy marketing materials and products directly from Herbalife.

Icahn has publicly upbraided Ackman, and the two got into a televised shouting match over Herbalife and their past business dealings on CNBC in late January.

Thursday, Icahn said in a statement that "Herbalife has proven its ability to increase revenues and returns, and we will work with the company to build on its results."