LOS ANGELES - Dietary supplements company Herbalife 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 Bill Ackman.
Herbalife said in a statement Thursday that its board will nominate two new directors chosen by Icahn. As part of the agreement, Icahn can increase an existing stake of 13.6 percent to as much as 25 percent.
"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.
In this Friday, Sept. 8, 2006 file photo, provided by Herbalife, a worker cleans the logo on the Herbalife sign as finishing touches are put on the company's new building in Torrance, Calif., Herbalife, the company caught in the middle of a hedge fund dogfight, says revenue and profit grew at the end of 2012.
Herbalife Ltd. shares jumped 6 percent to $39.77 on the news.
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.
Ackman argues that the company makes most of its money by recruiting new salespeople, rather than on the products they sell. Salespeople must pay fees and purchase 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.
On 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."
Herbalife has also said that it will begin disclosing more information about its customers and product sales - but Ackman countered that the change wasn't enough for him.