Herbalife says Icahn will nominate to new directors to company board, option to increase stake

LOS ANGELES, Calif. – Dietary supplements company Herbalife says 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 another hedge fund manager.

Herbalife says its board will nominate two new directors chosen by Icahn Enterprises Holdings. As part of the agreement, Icahn will have the option to increase his stake in the company from about 13 per cent to as much as 25 per cent.

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

Hedge fund manager Bill Ackman argues that the company makes most of its money by recruiting new salespeople, rather than on the products they sell.

Herbalife Ltd. shares rose 6 per cent in afternoon trading.