Herbalife's Probert Steps Down After Faking Degree

Bloomberg News/May 1, 2008

Herbalife Ltd., the maker of nutritional supplements accused of fraud by researchers last month, said Chief Operating Officer Gregory Probert resigned after faking an academic qualification on his resume.

Other employees have taken over Probert's duties, the company said today in a statement. Cayman Islands-based Herbalife also reported a higher-than-estimated 69 percent gain in first-quarter profit and raised its annual earnings forecast.

Herbalife joins a list of companies from RadioShack Corp. to InterContinental Hotels Group Plc that have severed ties with managers who lied about their resumes. Probert, who resigned yesterday, enrolled in the Masters of Business Administration program at California State University, Los Angeles, though he never obtained a degree, the company said last week.

"Greg made substantial contributions to Herbalife," Chief Executive Officer Michael Johnson said in the statement. "The circumstances surrounding his resignation are disappointing."

Probert, a former Walt Disney Co. executive, was appointed to his position at Herbalife in 2003. A telephone call to Probert's office seeking comment was not immediately returned.

Net income rose to $62.4 million, or 93 cents a share, from $41.2 million, or 55 cents, a year earlier, Herbalife said. It was expected to earn 73 cents a share, according to four analyst estimates compiled by Bloomberg. Sales climbed 19 percent to $604.4 million as all five of the company's regions reported positive growth.

Earnings Forecast

Annual per-share profit will be between $3.52 and $3.57, according to Herbalife, which forecast second-quarter earnings of 89 cents to 92 cents on the same basis. The forecasts for diluted earnings reflect currency movements and taxes.

Herbalife rose $1.36, or 3.2 percent, to $43.78 in New York Stock Exchange composite trading yesterday. The stock's gain extended this year's advance to 8.7 percent.

David Edmondson stepped down as CEO of RadioShack, the third-largest U.S. retailer of electronics, in February 2006. InterContinental, the owner of the Holiday Inn lodging brand, said in June of last year Patrick Imbardelli had resigned as head of its Asia-Pacific division.

Herbalife has denied a report issued last month by the San Diego-based Fraud Discovery Institute stating that actions at the company raised suspicion about financial crimes.

The supplements maker sponsors Los Angeles Galaxy, the soccer team whose roster includes star midfielder David Beckham, to help keep its brand in the public eye.

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