Herbalife International is an American multinational multi-level marketing corporation that develops, markets and sells nutrition supplements, weight management, sports nutrition and personal-care products. The company was founded by entrepreneur Mark Hughes in 1980, and it employs around 7,800 people worldwide. Herbalife reported net sales of US$3.825 billion in 2014, a 21% decrease over 2013, and net income of $308.7 million. It incorporated in the Cayman Islands, and its corporate headquarters are there.
The company operates internationally and distributes its products in 95 countries (as of July 2015) through a network of approximately 3.2 million independent distributors, some of whom earn profit on product sales and additional commission from a multi-level marketing (MLM) compensation structure. The MLM compensation structure consists of commissions, royalties and bonuses on sales done by a distributor's downline (the people they have sponsored as new recruits). Out of about 526,000 total members in the US at the beginning of 2014, about 62,000 received bonuses of some kind from Herbalife: 7,385 (1.4%) received over $5,000 in bonuses per year (this translates to an average of $417 per month) and 1,304 (0.25%) received over $50,000 ($4,167 per month average). These figures do not include income from product sales nor do they include any costs incurred by distributors.
The company has been criticized by, among others, hedge fund manager Bill Ackman of Pershing Square Capital, who claimed that Herbalife operates a "sophisticated pyramid scheme" after taking a $1-billion short position in Herbalife stock. The company denies the allegations. However, in March 2014, Herbalife came under investigation by the U.S. Federal Trade Commission.