UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material |
HERBALIFE NUTRITION LTD.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)all boxes that apply):
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☐ | Fee paid previously with preliminary materials. | |||
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Herbalife Nutrition Ltd.
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Annual General Meeting of Shareholders
Our 2018 Annual General Meeting of Shareholders
will be held on Tuesday, April 24, 2018 at 8:30 a.m., Pacific Daylight Time, at:
800 W. Olympic Blvd., Suite 406
Los Angeles, CA 90015
Admission requirements
See Part 1 – “Information concerning solicitation and voting” for details on admission requirements to attend the Annual Meeting.
Proxy voting options
Your vote is important!
All shareholders are cordially invited to attend the Annual General Meeting in person. However, in order to assure your representation at the Annual General Meeting, you are urged to vote promptly. You may vote your shares via a toll-free telephone number, over the Internet or by completing, signing and mailing a proxy card or voting instruction form. Please follow the instructions on the proxy card or voting instruction form.
Proxies submitted by mail, the Internet or telephone must be received by 11:59 p.m., Eastern Time, on April 23, 2018.
Vote by Internet
www.envisionreports.com/HLF
24 hours a day / 7 days a week
Instructions:
Vote by telephone
1.800.652.VOTE (8683) via touch tone phone
toll-free within the USA, US territories & Canada 24 hours a day / 7 days a week
Outside the USA, US territories & Canada, call 1.781.575.2300 via a touch tone phone. Standard rates will apply
Instructions:
Herbalife Ltd.
Notice of Annual General Meeting of Shareholders
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NOTICE IS HEREBY GIVEN that the 2018 Annual General Meeting of Shareholders, or the Meeting, of Herbalife Ltd., a Cayman Islands exempted company incorporated with limited liability, or the Company, will be held on Tuesday, April 24, 2018 at 8:30 a.m., Pacific Daylight Time, at 800 W. Olympic Blvd., Suite 406, Los Angeles, CA 90015.
Sincerely,
RICHARD WERBER
Acting General Counsel and Corporate Secretary
Los Angeles, California
March 13, 2018
Proxy summary
This summary highlights information contained elsewhere in this Proxy Statement. You should carefully read this Proxy Statement in its entirety prior to voting on the proposals listed below and outlined herein. This Proxy Statement is dated March 13, 2018, and is first being made available to shareholders of the Company on or about March 14, 2018. A Notice Regarding Internet Availability of Proxy Materials for the Annual General Meeting was mailed to shareholders of the Company on or about March 14, 2018.
Annual General Meeting of Shareholders
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Admission to meeting: Proof of share ownership will be required to enter the Meeting. held on Wednesday, April 27, 2022 at 8:30 a.m., Pacific Daylight Time, at
800 W. Olympic Blvd., Suite 406
Los Angeles, CA 90015
Admission requirements
See Part 1 – “Information concerning solicitation and voting” for details.
Meeting agenda
Shareholders will also act upon such other matters as may properly come beforedetails on admission requirements to attend the Annual General Meeting.
Proxy voting options
Voting matters andYour vote recommendationis important!
Our Board of Directors unanimously recommends that you vote on the proposals to be considered at the Meeting as follows:
Matter | Board vote recommendation | Page Reference (for more detail) | ||||
1. | Election of 14 directors
| For each director nominee | 11 | |||
2. | Advisory vote to approve the Company’s executive compensation
| For | 22 | |||
3. | Approve, as a special resolution, the name change of the Company from “Herbalife Ltd.” to “Herbalife Nutrition Ltd.”
| For | 24 | |||
4. | Approve, as a special resolution, the amendment and restatement of the Company’s Amended and Restated Memorandum and Articles of Association in the form attached as Annex A
| For | 25 | |||
5. | Effect atwo-for-one stock split of the Company’s Common Shares
| For | 26 | |||
6. | Ratification of the Company’s independent registered
| For | 28 |
YOUR VOTE IS VERY IMPORTANT.Whether or not you planAll shareholders are cordially invited to attend the Annual General Meeting. However, in order to assure your representation at the Annual General Meeting, please take the timeyou are urged to vote.vote promptly. You may vote your shares via a toll-free telephone number, over the Internet or by completing, signing and mailing the proxy card or voting instruction form provided to you. Please follow the instructions on the proxy card or voting instruction form.
Proxies submitted by mail, the Internet or telephone must be received by 11:59 p.m., Eastern Time, on April 26, 2022.
Vote by internet
www.envisionreports.com/HLF
24 hours a day / 7 days a week
Instructions:
1. | Go to: www.envisionreports.com/HLF. |
2. | Follow the steps outlined on the secure website. |
Vote by telephone
1.800.652.VOTE (8683) via touch tone phone
toll-free within the USA, US territories & Canada 24 hours a day / 7 days a week
Outside the USA, US territories & Canada, call 1.781.575.2300 via a touch tone phone. Standard rates will apply.
Instructions:
1. | Call toll-free 1.800.652.VOTE (8683) within the USA, US territories & Canada. Outside the USA, US territories & Canada, call 1.781.575.2300. |
2. | Follow the instructions provided by the recorded message. |
Herbalife Nutrition Ltd.
Notice of Annual General Meeting of Shareholders
Date: | Wednesday, April 27, 2022 | |
Time: | 8:30 a.m., Pacific Daylight Time | |
Place: | 800 W. Olympic Blvd., Suite 406 Los Angeles, CA 90015 | |
Record date: | March 1, 2022 | |
Proxy voting: | All shareholders are cordially invited to attend the Annual General Meeting. See Part 1 — “Information concerning solicitation and voting” for details on admission requirements to attend the Annual General Meeting. However, to assure your representation at the Annual General Meeting, you are urged to vote promptly. You may vote your shares via a toll-free telephone number, over the Internet or by completing, signing and mailing the proxy card or voting instruction form provided to you. Please follow the instructions on the proxy card or voting instruction form provided to you. | |
Items of business: | 1. Elect each of the 10 directors named in the Proxy Statement to the Board of Directors to serve until the 2023 annual general meeting of shareholders of the Company or until their successors are duly elected and qualified; 2. Approve, on an advisory basis, the compensation of the Company’s named executive officers; and 3. Ratify the appointment of the Company’s independent registered public accounting firm for fiscal year 2022. Shareholders will also transact such other business as may properly come before the Annual General Meeting and at any adjournments or postponements of the Annual General Meeting. | |
The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Only shareholders of record at the close of business on March 1, 2022 are entitled to notice of, and to vote at, the Annual General Meeting and any subsequent adjournment(s) or postponement(s) thereof. | ||
Availability of materials: | On or about March 16, 2022, we began mailing a Notice of Internet Availability of Proxy Materials to our shareholders. The Proxy Statement and Annual Report to Shareholders are available at http://www.edocumentview.com/HLF. |
NOTICE IS HEREBY GIVEN that the 2022 Annual General Meeting of Shareholders of Herbalife Nutrition Ltd., a Cayman Islands exempted company incorporated with limited liability, will be held on Wednesday, April 27, 2022 at 8:30 a.m., Pacific Daylight Time, at 800 W. Olympic Blvd., Suite 406, Los Angeles, CA 90015.
Sincerely,
HENRY C. WANG
General Counsel and Corporate Secretary
Los Angeles, California
March 15, 2022
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Proxy summary
The following is a summary of certain key disclosures in our proxy statement. This is only a summary, and it may not contain all the information that is important to you. For more complete information, please review the proxy statement as well as our 2021 Annual Report, which includes our Annual Report on Form 10-K. References to “Herbalife,” “Herbalife Nutrition”, “the Company,” “we,” “us” or “our” refer to Herbalife Nutrition Ltd.
Proposals to be Voted on and Board Voting Recommendations | ||||||
Proposals | More Information | Board’s Voting Recommendation | ||||
Proposal 1 | Election of Directors | Page 16 | FOR EACH NOMINEE | |||
Proposal 2 | Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers | Page 23 | FOR | |||
Proposal 3 | Ratification of the Company’s Independent Registered Public Accounting Firm | Page 24 | FOR |
2022 Director nominees
Committees | ||||||||||
Name | Independent | Audit | Compensation | Nominating and Corporate Governance | ESG | |||||
John O. Agwunobi (Chairman and CEO) | ● | |||||||||
Richard H. Carmona | ![]() | Chair | ||||||||
Michael O. Johnson | ||||||||||
Kevin M. Jones | ![]() | ● | ||||||||
Sophie L’Hélias | ![]() | ● | Chair | |||||||
Alan W. LeFevre (Lead Director) | ![]() | ● | ● | |||||||
Juan Miguel Mendoza | ||||||||||
Don Mulligan | ![]() | Chair | ● | |||||||
Maria Otero | ![]() | Chair | ● | ● | ||||||
John Tartol |
Proxy summary |
Corporate Governance Highlights
![]() | All directors stand for election annually |
![]() | Independent lead director with clearly defined duties and responsibilities |
![]() | One vote per share |
![]() | Majority voting standard for uncontested director elections |
![]() | All members of the audit, compensation and nominating and corporate governance committees are independent |
![]() | ESG Committee provides direct board oversight of environmental and social sustainability |
![]() | Robust share ownership guidelines for directors and named executive officers |
![]() | Annual board and committee assessments |
Executive Compensation Highlights
![]() | Incentive design links pay outcomes to company performance against preset goals |
![]() | Balanced mix between fixed and variable compensation and short- and long-term incentives. For 2021, 85% of CEO targeted direct compensation was at risk, and at least 75% of 2021 equity grants to named executive officers were in the form of performance share units. |
![]() | Annual say-on-pay advisory vote |
![]() | Compensation risk assessment |
![]() | Robust share ownership guidelines for named executive officers |
![]() | “Double trigger” change in control |
![]() | Clawback policy applicable to Section 16 officers applicable to cash and equity incentives |
![]() | Anti-hedging and anti-pledging policies applicable to all employees |
This proxy statement includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current facts, including statements regarding our environmental and other sustainability plans and goals, made in this document are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results or outcomes could differ materially for a variety of reasons. Risks and uncertainties that could cause our actual results to differ significantly from management’s expectations are described in our 2021 Annual Report on Form 10-K. In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this document.
Proxy summary |
Proxy Statement table of contents
Part 1. Our annual general meeting of shareholders | ||||
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Part 2. | ||||
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Part 3. Proposals to be voted on at the meeting | ||||
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Part 4. Executive compensation | ||||
Role of executive officers in executive compensation decisions | ||||
Annual incentive awards & | ||||
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Narrative disclosure to summary compensation table and grants of plan-based awards | ||||
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Table of Contents | i |
Part 5. Security ownership of certain beneficial owners and management | ||||
Part 6. Certain relationships and related transactions | ||||
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Table of |
| Our annual general meeting of |
Information concerning solicitation and voting
Place, time and date of meeting. This Proxy Statement is being furnished to the Company’s shareholders in connection with the solicitation of proxies on behalf of our Board of Directors, or the Board, for use at the 2022 Annual General Meeting of Shareholders, or the Meeting, to be held on Tuesday,Wednesday, April 24, 201827, 2022 at 8:30 a.m., Pacific Daylight Time, and at any subsequent adjournment(s) or postponement(s) thereof, for the purposes set forth herein and in the accompanying Notice of Annual General Meeting of Shareholders. The Meeting will be held at 800 W. Olympic Blvd., Suite 406, Los Angeles, CA 90015. Our telephone number is(213) 745-0500.
Record date and voting securities. Only shareholders of record at the close of business on February 26, 2018,March 1, 2022, or the Record Date, or duly authorized proxy holders of such shareholders of record, are entitled to notice of, and to vote at, the Meeting. The Company has one series of common shares, or Common Shares, outstanding. AsEach owner of record on the Record Date 87,432,346is entitled to one vote for each Common Share held by such shareholder. On March 1, 2022, there were 109,866,338 Common Shares were issued and outstanding and held of record by 570 registered holders.outstanding.
Voting. Each shareholder is entitled to one vote for each Common Share held on the Record Date on all matters submitted for consideration at the Meeting. A quorum, representing the holders of not less than a majority of the issued and outstanding Common Shares entitled to vote at the Meeting, must be present in person or by proxy at the Meeting for the transaction of business. Common Shares that reflect abstentions are treated as Common Shares that are present and entitled to vote for the purposes of establishing a quorum and for purposes of determining the outcome of any matter submitted to the shareholders for
a vote that requires the approval of a specified percentage of shares present and entitled to vote. However, abstentions do not constitute a vote “for” or “against” any matter and thus will have no effect in determining whether a required affirmative majority of votes cast has been obtained.
“Brokernon-votes” are Common Shares held in “street name” through a broker or other nominee over which the broker or nominee lacks discretionary power to vote and for which the broker or nominee has not received specific voting instructions. Thus, if you do not give your broker or nominee specific instructions, your Common Shares may not be voted on certain matters. Common Shares that
reflect “brokernon-votes” are treated as Common Shares that are present and entitled to vote for the purposes of establishing a quorum. However, for the purposes of determining the outcome of any matter as to which the broker or nominee has indicated on the proxy that it does not have discretionary authority to vote, which is the case with all proposals to be considered at the Meeting other than proposal 3, those Common Shares will be treated as not present and not entitled to vote with respect to that matter, even though those Common Shares are considered present and entitled to vote for the purposes of establishing a quorum and may be entitled to vote on other matters.
IfSee “Meaning of shareholder of record” below for additional information regarding the different ways you are a beneficial shareholder and your broker or nominee holdsmay hold your Common Shares in its name,Shares.
Votes required for proposals and board recommendations. The following table details information regarding the broker or nominee is permitted to vote your Common Shares with respect to proposals 3, 5 and 6, which involve the name change of the Company, a two-for-one stock split of the Company’s Common Shares and the ratification of the appointment of independent registered public accountants, respectively, even if the broker or nominee does not receive voting instructions from you.
Directors are elected under a majority voting standard in uncontested director elections (i.e., an election where the number of persons nominated for election does not exceed the number of Directors to be elected). The election of directorsvoted on at the Meeting, constitutes an uncontested director election. Under a majority voting standard in uncontested director elections, each vote is required to be counted “for” or “against” a director nominee’s election. In order to be elected, the votes cast “for” such nominee’s election must exceed the number of votes cast “against” such nominee’s election. Abstentions and “brokernon-votes” will not affect the outcome of the election of directors.
In respect of proposals 2, 5 and 6, which involve an advisory voteBoard’s recommendation on the Company’s executive compensation, a two-for-one stock split of the Company’s Common Shares and ratification of accountants, respectively, each proposal must receive the affirmative vote of a majority of the Common Shares present or represented by proxy and entitledhow to vote on such matter. In respecteach proposal, the votes required to approve each proposal and the effect of proposal 3abstentions and 4, which involve changes to the Company’s name and Amended and Restated Memorandum and Articles of Association, or “Articles,” the Companies Law (2016 Revision) of the Cayman Islands, or Cayman Islands Law,broker non-votes.
Our annual general meeting of shareholders | 1 |
Proposal | Voting Options | Board | Vote Required | Effect of | Effect of | |||||
Item 1: Elect each of the 10 directors named in the Proxy Statement to the Board of Directors to serve until the 2023 annual general meeting of shareholders of the Company or until their successors are duly elected and qualified | For, Against or Abstain on each nominee | FOR each nominee | Majority of votes cast with respect to each nominee | No effect | No effect | |||||
Item 2: Approve, on an advisory basis, the compensation of the Company’s named executive officers | For, Against or Abstain | FOR | Majority of shares represented in person or by proxy and entitled to vote | Treated as votes Against | No effect | |||||
Item 3: Ratify the appointment of the Company’s independent registered public accounting firm for fiscal year 2022 | For, Against or Abstain | FOR | Majority of shares represented in person or by proxy and entitled to vote | Treated as votes Against | Brokers have discretion to vote |
requires each such proposalYOUR VOTE IS VERY IMPORTANT. Whether or not you plan to be passed asattend the Meeting, please take the time to vote. You may vote your shares via a special resolution. Accordingly, each such proposal must receivetoll-free telephone number, over the affirmative vote of not less than 66.67% ofInternet or by completing, signing and mailing the Common Shares presentproxy card or represented by proxy and entitledvoting instruction form provided to vote in order to be approved. In respect of determiningyou. Please follow the outcome of proposals 2, 3, 4, 5 and 6, abstentions have the effect of a negative vote. “Brokernon-votes” will not affect the outcome of any such proposals.
The results of the advisory voteinstructions on the Company’s executive compensation are not binding on the Board of Directors.proxy card or voting instruction form.
Revocability of proxies. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by eithereither: (a) delivering to the Corporate Secretary of the Company a written notice of revocation or a duly executed proxy bearing a later date,date; (b) granting a subsequent proxy through the Internet or telephonetelephone; or (c) by attending the Meeting and voting in person. However, please note that if you would like to vote at the Meeting and you are not the shareholder of record, you must request, complete and deliver a proxy from your broker or other nominee.
Proxy solicitation. The Company bears the expense of printing and mailing proxy materials. Proxies may be solicited by certain of our directors, officers and employees, without additional compensation, in person, by telephone, facsimile or electronic mail. We will, upon request, reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation material to the beneficial owners of Common Shares.
Meeting attendance. Only shareholders of record and beneficial owners as of February 26, 2018,the Record Date, their authorized proxy holders, and invited guests of the Board of Directors may attend the Meeting.
If you are a shareholder of record, in order to be admitted to the Meeting, you will need to produce picture identification (such as a valid driver’s license or passport) as well asand either a copy of a form of proxy card or a Notice showing your name and address. If you are a beneficial owner and you wish to vote in person at the Meeting, you will need to obtain a proxy from the shareholder orof record. If you are a beneficial owner or other authorized proxy holder, in order to attend the Meeting, you will needboth an admission ticket and picture identification (such as a valid driver’s license or passport). To obtain an
admission ticket to the Meeting, please send your written request to our Corporate Secretary at c/o Herbalife International of America, Inc., 800 W. Olympic Boulevard,Blvd., Suite 406, Los Angeles, California 90015 or electronically by emailingcorpsec@herbalife.com.
Your request must be received on or before April 14, 201817, 2022 and include a copy of a form of proxy card or voting instruction form confirming your appointment as a proxy holder of a shareholder of record. In your request, please include the address where your admission ticket should be mailed to, and any special assistance needs. The Board requests that persons attending the Meeting observe a
2 | Our annual general meeting of shareholders |
professional business dress code.Thecode.The Company also does not permit the use of cameras or other recording devices at the Meeting.
We continue to actively monitor the continued public health and travel safety concerns relating to the COVID-19 pandemic and the advisories or mandates that federal, state, and local governments, and related agencies, may issue. In response, and in continued support for the health and safety of all, the Company will hold a live listen-only audio webcast of the Meeting. Shareholders may listen to the Meeting via live audio webcast by logging on to www.meetnow.global/MNQRLZZ using your control number. Please see below:
By email: Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com
By mail: Computershare, Herbalife Nutrition Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001.
Pursuant to the Company’s Amended and Restated Memorandum of Articles of Association, or the Articles, please be advised that shareholders will not be deemed to be “present” for quorum purposes and will not be able to vote their shares, or revoke or change a previously submitted vote, by logging onto the webcast of the Meeting. As a result, the Company strongly urges shareholders to submit their proxies or votes in advance of the Meeting.
In the event it is not possible or advisable to hold our Meeting in person as currently planned, we will announce the decision to do so via a press release and posting details on our website that will also be filed with the Securities and Exchange Commission, or the SEC, as proxy material. If you are planning to attend our Meeting, please check our Investor Relations website the week of the Meeting. As always, we encourage you to vote your shares prior to the Meeting.
Meaning of shareholder of record. You are a shareholder of record only if your name is recorded on the Company’s register of members. If your name is not recorded on the Company’s register of members, any shares you hold in the Company are held beneficially. In this case you may still be entitled to direct the holder of your shares as to who should be appointed as proxy in respect of those shares and/or as to how to vote those shares on your behalf.
Shareholders who have purchased their shares on an exchange may hold those shares through a depository, in which case they will beare beneficial shareholders and will not be shareholders of record. If you hold your shares in “street name,” you willare not be a shareholder of record.
If you wish to enquireinquire as to whether or not you are a shareholder of record, please contact our Corporate Secretary at c/o Herbalife International of America, Inc., 800 W. Olympic Boulevard,Blvd., Suite 406, Los Angeles, California 90015.90015 or electronically by emailing corpsec@herbalife.com.
Additional information. This Proxy Statement contains summaries of certain documents, but you are urged to read the documents themselvesyourself for complete information. The summaries are qualified in their entirety by reference to the complete text of the document. In the event that any of the terms, conditions or other provisions of any such document is inconsistent with or contrary to the description or terms in this Proxy Statement, such document will control. Each of these documents, as well as those documents referenced in this Proxy Statement as being available in print upon request, are available upon request to the Company by following the procedures described under Part 7 — “Annual report, financial and additional information.”information”.
Important Notice Regarding the Availability of Proxy Materials for the Annual General Meeting of Shareholders to beBe Held on April 24, 2018.27, 2022. The Proxy Statement and Annual Report to Shareholders are available athttp://www.envisionreports.com/www.edocumentview.com/HLF.
Our annual general meeting of shareholders | 3 |
| Corporate governance |
Our Board of Directors has affirmatively determined that each of Messrs. Bermingham, Carmona, Christodoro, Cozza, Dunn, Gary, Lynn, Montelongo and Nelson and Mme. Otero is independent under section 303A.02Under the listing standards of the New York Stock Exchange, or the NYSE, Listeda majority of the members of the Board must satisfy the NYSE criteria for “independence”. No director qualifies as independent under the NYSE listing standards unless the Board affirmatively determines that the director has no material relationship with the Company Manual and(either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company’s Categorical Standards of Independence, which are included as partCompany).
The Board evaluates the independence of our Principlesdirectors annually and will review independence of Corporate Governance.individual directors on an interim basis as needed to consider changes in employment, relationships and other factors. Our PrinciplesBoard has affirmatively determined that all of Corporate Governancethe directors and director nominees, as well as each individual who served as a director at any time during 2021, other than Dr. Agwunobi and Messrs. Johnson, Mendoza and Tartol, are available on our website atwww.herbalife.com byindependent in accordance with Section 303A.02 of the NYSE listing standards, or the NYSE Independence Standards. Under the NYSE Independence Standards, a director will not be considered independent in the following circumstances:
In July 2021, the Board approved enhancements to the Company’s Principles of Corporate Governance. Under the Company’s Principles of Corporate Governance, an independent director. director must, in addition to satisfying the NYSE Independence Standards, be free of any existing or potential professional or personal interest, business, or relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the Company and all its shareholders.
The Board of Directors has affirmatively determined that noneconsidered Dr. Carmona’s independence in view of the foregoing directors had any relationship with the Company that would compromise his or her independence. Additionally, the Board has determined that, if elected, Mme.Paláu-Hernández, and Messrs. LeFevre and Graziano will be independent under
section 303A.02 of the NYSE’s Listed Company Manual and the Company’s Categorical Standards of Independence.
Messrs. Cardoso and Tartol are not, and Mr. Mendoza will not be, independent due to their status as independent Herbalife distributors.
Dr. Carmona received $100,000$25,000 in speaking fees he received from the Company in 20172021, as disclosed in the “Director Compensation Table” below. We leveragesubsection “Compensation to directors”. The Company leverages Dr. Carmona’s professional experience — as the 17th Surgeon General of the United States — to provide training and education to our independent membersHerbalife Nutrition Members at various Company-sponsored sales events, such as Extravaganzas. Additionally, Extravaganzas, which are training and promotional events for our independent distributors. After consideration of the foregoing and other relevant factors, the Board determined that the Company’s engagement of Dr. Carmona for these limited services did not present a conflict of interest nor compromise Dr. Carmona’s independence from the Company.
Messrs. Jonathan Christodoro, Cozza,Hunter C. Gary, Nicholas Graziano, (if elected),Jesse A. Lynn and James L. Nelson areserved on the Board until January 3, 2021. Each had been re-nominated to the Board in connection with the Company’s 2020 Annual General Meeting of Shareholders in accordance
4 | Corporate governance |
with the now terminated Second Amended and Restated Support Agreement, dated as of July 15, 2016, or the Support Agreement, among the Company, Carl C. Icahn and certain affiliated entities of Mr. Icahn, or the Icahn Parties. The Board determined that the Support Agreement while in effect and the relationships each director nominated pursuant to the Support Agreement had with the Icahn Parties (as defined in Part 3 — “Proposal 1: the election of directors”), which beneficially own approximately 22,872,324 Common Shares. However, the Board of Directors affirmatively determined that such relationships did not compromise their independence. The Support Agreement was terminated in its entirety on January 7, 2021, and Messrs. Christodoro, Gary, Graziano, Lynn and Nelson resigned from the Board effective January 3, 2021.
Dr. Agwunobi is not determined independent judgment or their ability to actbecause he is the Company’s Chief Executive Officer. Mr. Johnson has
previously served as the Company’s Chief Executive Officer within the last three years and is accordingly not determined independent.
Messrs. Mendoza and Tartol are not determined independent because the income received by each of them as top distributors of Herbalife Nutrition products precludes them from being determined independent. Neither are employees of the Company’s management.Company. For additional details surrounding their compensation as Herbalife Nutrition Members, which they receive irrespective of any service on the Board, please see “Compensation to directors”.
During the fiscal year ended December 31, 2017, theThe Board of Directors held nine meetings. Eleven Board members attended 100%eight meetings during fiscal year 2021. The independent directors generally meet in executive session at each regularly scheduled meeting, without the presence of these meetings,management and non-independent directors, to discuss various matters relating to the other two attended eight out of nine of these meetings. Board members who serve onBoard’s function and Company oversight, including the Compensation Committee,Company’s management. The independent lead director, or the Nominating and Corporate Governance Committee, the Audit Committee and the implementation oversight committee attended at least 75% of the committee meetings on which they served. Lead Director, presides over such executive sessions.
Each director is expected to dedicate sufficient time, energy and attention to ensureallow for the diligent performance of his or her duties, including attending meetingsthe Company’s annual general meeting of the shareholders and meetings of the Company, the Board of Directors and committees of which he or she is a member. All membersincumbent directors attended at least 75% of the aggregate of all Board of Directors
attendedand applicable committee meetings held during the 2017period that he or she served as a director, as well as the Company’s 2021 annual general meeting of shareholders.
It is the policy of the Board of Directors to hold four regularly scheduled meetings, each of which includes an executive session ofnon-management directors, led by the Lead Director of the Board of Directors, without the presence of management as well as a session of only the independent directors. Additional meetings of the Board of Directors, executive sessions ofnon-management directors and sessions of independent directors may be held from time to time as required or determined to be necessary.
Currently, Mr. Johnson serves as our Executive Chairman. Mr. Richard Goudis succeeded Mr. Johnson as CEO effective June 1, 2017, thereby separatingThe Company’s governance framework provides the rolesBoard with the flexibility to select the appropriate leadership structure for the Company. The current leadership structure is comprised of Chairmana combined Chair of the Board and CEO. AsChief Executive Chairman, Mr. Johnson supports Mr. Goudis as Mr. Goudis continues to transition intoOfficer, an independent Lead Director, Board committees led by independent directors and establish himself in his role as CEO. Mr. Johnson continues to take part in the management of the Company’s business, including working with independent members. In this way, Mr. Johnson can serve as a key link between the Board and other members of management.active engagement by all directors. The Board determined that although the roles of Chairman and CEO have been separated, having a board leadershipbelieves this structure featuring an executive as Executive Chairman with a Lead Director best serves the interests of the Company and its shareholders becauseshareholders. The Board believes the combined Chair and CEO role supports the Board’s effective oversight of the Company’s business and strategy, with the CEO serving as a key link between the Board also believes thatand management, providing a deep understanding of the Company’s business and operations, bringing key business considerations to the Board’s attention and leading implementation of the Company’s strategic plans as approved by the Board. The Lead Director in turn allows for strong, independent Board leadership, iswith authority to set the meeting agendas and to lead sessions outside the Chair’s presence. We believe this to be a critical aspect of effective corporate governance.
The Lead Director is an independent director elected for a two yeartwo-year term by the independent directors. The
appointment is evaluated biannually. The Lead Director chairs the Board meetings during all executive sessions and when the Executive ChairmanChair is unable to participate in Board meetings, and is a contact point for major shareholders and third parties who may desirewish to contact the Board independentlyindependent of the Executive Chairman and/orChair and CEO. Mr. Dunn has served as Lead Director since April 24, 2014, and wasre-elected as Lead Director by the independent directors effective April 28, 2016. The responsibilities of the Lead Director include:
|
Corporate governance | 5 |
With Mr. Dunn’stwo-year termLeFevre was elected to serve as Lead Director coming to an end,by the independent directors will elect effective July 1, 2021, to serve until
the nextCompany’s 2023 Annual General Meeting of Shareholders. Prior to such date, Ms. Otero served as the Lead Director, immediately aftercommencing January 3, 2021, when Mr. Nelson, the Meeting.
then-current Lead Director, resigned from the Board. The Board periodically reviews the structure of the Board and Company leadership as part of the succession planning process.
Annual Board and committee assessment process
The Board and each committee annually conduct self-evaluations, a process that is overseen by the nominating and corporate governance committee. Additionally, as part of our annual evaluation process, each director evaluates the Board and the committees on which he or she serves. The assessments provide directors and applicable committee members the opportunity to provide feedback on a number of issues, including:
![]() | Board and committee structure, composition, roles and leadership; |
![]() | Board and committee function and effectiveness, including quality of meetings and flow of information; and |
![]() | Access to management, advisors and internal and external resources. |
The board’sBoard’s role in risk oversight
The full Board of Directors hasoversees the ultimate responsibility for risk oversight regarding the Company. The Board oversees a Company-wideCompany’s enterprise-wide approach to risk management, designedand as part of executing its risk oversight responsibility, delegates specific risk oversight duties to enhance shareholder value and to support the achievement of strategic objectives and to improve long-term organizational performance. The first aspecteach Board committee, as set forth below.
Audit committee
Compensation committee
Nominating and corporate governance committee
ESG committee
The Board also provides oversight of management regarding key enterprise risks as well as the Company’s risk management policies and procedures to ensure they are designed and implemented in a strategic planway that reflects the Board’s and management’s consensus as to appropriate levels of risk as tofor specific aspects of the Company’s business and the appropriate measuresbusiness. The Company’s Management Risk Committee is comprised of members of senior management who meet on a regular basis to manage those risks. Additionally, the full Board of Directors participates inserve as a periodic enterpriseforum for risk
management assessment during its quarterly meetings. In this process, risk is assessed throughout the business, focusing on risks arising out of various aspects of the Company’s strategic plan and its implementation, including financial, legal/compliance, operational/strategic and compensation risks. The Board also assesses its role in risk oversight throughout our business. In addition to the discussion of risk with the full Board at least once a year, the independent directors discuss information sharing, risk management during executive sessions without management present with the Lead Director presiding. While the full Board of Directors has the ultimate oversight responsibility for thecoordination, and risk management process, various Board committees also have responsibility fordecisioning and response. The enterprise risk management in certain areas. In particular, the audit committee focuses on financial risk, including internal controls,program promotes informed and assesses the Company’s risk profile with the Company’s internal auditors. The internal controls risk profile drives the internal audit plandata-driven decisions and integrated processes to identify, monitor and mitigate key enterprise risks.
forThe compensation committee, with the coming year. The audit committee also reviews the Company’s cyber security matters and handles violationsassistance of Meridian, its compensation advisor, regularly conducts a review of the Company’s Code of Ethicsmaterial compensation policies and related corporate policies. Finally,practices applicable to its employees, including its executive officers. Based on this review, the compensation committee periodically reviews compensationconcluded that these policies and practices and policies to confirm that they do not encourage excessive risk taking.create risks that are reasonably likely to have a material adverse effect on the Company. Key features of the executive compensation program that support this
Management regularly reports on each such risk toconclusion include: the relevant committee orbalanced mix between fixed and variable compensation and short- and long-term incentives; the full Board, as appropriate, and additional review or reporting on enterprise risks is conducted as needed or as requested by the Board or the relevant committee.
The table below summarizes the compensation paid by the Company tonon-management directors for the fiscal year ended December 31, 2017.
Name | Fees earned or paid in cash ($)
| Equity awards ($)(1) | All other compensation
| Total ($) | ||||||||||||
Richard P. Bermingham
| 157,500 | 119,930 | — | 277,430 | ||||||||||||
Pedro Cardoso
| 95,000 | 119,930 | 1,403,497 | (2) | 1,618,427 | |||||||||||
Dr. Richard Carmona
| 119,000 | 119,930 | 100,000 | (3) | 338,930 | |||||||||||
Jonathan Christodoro
| 130,000 | 119,930 | — | 249,930 | ||||||||||||
Keith Cozza
| 101,000 | 119,930 | — | 220,930 | ||||||||||||
Jeffrey T. Dunn
| 132,000 | 119,930 | — | 251,930 | ||||||||||||
Hunter C. Gary
| 117,000 | 119,930 | 236,930 | |||||||||||||
Jesse A. Lynn
| 114,000 | 119,930 | — | 233,930 | ||||||||||||
Michael Montelongo
| 119,000 | 119,930 | — | 238,930 | ||||||||||||
James L. Nelson
| 144,000 | 119,930 | — | 263,930 | ||||||||||||
Maria Otero
| 136,000 | 119,930 | — | 255,930 | ||||||||||||
John Tartol
| 96,000 | 119,930 | 1,709,979 | (4) | 1,925,909 |
Effective April 24, 2014, eachnon-management director receives (i) $85,000 per year for services asuse of multiple performance measures within incentive plans; strong internal controls, including a director and $5,000 for each Board committee on which the director served, an additional $20,000 per year for the Lead Director, an additional $15,000 per year for the chaircode of the audit committee, an additional $10,000 per year for the chair of theconduct; compensation committee discretion over all final annual incentive awards and an additional $10,000 per year foractive involvement in setting performance targets; the chairuse of the nominating and corporate governance committee, (ii) $1,500 for each Board meeting attended by the director in person or $1,000 per Board meeting attended telephonically, (iii) $3,000 for each audit committee meeting attended either in person or telephonically, and
(iv) $2,000 for each compensation committee and for each nominating and corporate governance committee meeting attended either in person or telephonically. In addition, on July 18, 2016, the Board of Directors established the implementation oversight committee to oversee the implementation of the Federal Trade Commission’s Consent Order, as discussed in greater detail below under “Committees of the board.” Each member of the independent oversight committee receives $1,000 for each such committee meeting attended either in person or telephonically,share ownership guidelines; and the chair such committee receives additional $15,000 per year.existence of an anti-hedging policy.
One of our top priorities is the health and safety of our employees, distributors and customers. With respect to our employees, in response to, and during various phases of, the COVID-19 pandemic, we have taken several actions, including supporting our employees to work from home when possible, offering mental wellness programs, and implementing the following safety measures at our U.S. facilities: required temperature screening, required face coverings, instituted social distancing protocols, enhanced robust cleaning and sanitation measures, and increased the filtration efficiency of existing ventilation systems. Earlier during the COVID-19 pandemic, we also offered incremental compensation to certain of our employees. Over the course of the pandemic, our senior management team has relied on cross-functional teams to monitor, review, and assess the evolving situation, and to recommend risk mitigation actions for the health and safety of our employees and, in the U.S., protocols to align
with all federal, state, and local public health guidelines. We believe our proactive efforts have been successful in supporting our business growth despite the obstacles and challenges presented by the COVID-19 pandemic.
With respect to our distributors, our distributor training and promotion events, such as our Success Training Seminars and our Leadership Development Weekends, have shifted to include “virtual” online approaches, with in-person events reinstituted during the fourth quarter of 2021 and continuing on a case-by-case basis as conditions allow. Promotional activities aimed at our distributors continue, though prizes that have involved travel to events have shifted in some cases to cash and other awards. Certain modified practices by us and our distributors may prove to be lasting improvements, such as events and trainings that are offered virtually as well as in-person, and expanded use of social media channels.
We are a health and nutrition company, and our success has been premised on improving communities. From helping people improve their nutrition with our science-backed products to increasing access to economic opportunities, including through our direct selling business model, we’ve helped people around the world lead healthier lives, become entrepreneurs and have a positive impact in their communities.
Our current Global Responsibility strategy has been informed by multiple inputs including a benchmarking exercise, materiality assessment, multiple rounds of internal stakeholder engagement and Board oversight. Our strategy is part of our business practices and long-term growth plans. Our three core pillars of our Global Responsibility strategy are:
• | Environmental stewardship. We focus on promoting a sustainable future, including our focus on environmental impact and product stewardship. |
To ensure regular review of our strategy, we are conducting a second global materiality assessment across various stakeholder groups. The results of our materiality analysis will help with continuous development of our Global Responsibility strategy.
We are dedicated to improving communities by aligning our Global Responsibility strategy with the United Nations Sustainable Development Goals (UNSDGs), specifically Goal 1 (No Poverty), Goal 2 (Zero Hunger), Goal 3 (Good
Effective April 24, 2018, eachHealth and Wellbeing), Goal 12 (Responsible Consumption and Production) and Goal 13 (Climate Action).
Herbalife Nutrition joined the UN Global Compact as a signatory member in 2020 and continues to remain in good standing.
50 Million Positive Impacts
In 2020, we began working towards our goal to achieve 50 million positive impacts across our Global Responsibility focus areas by 2030, the 50th anniversary of Herbalife Nutrition, to help drive our commitment to nourish people, communities, and the planet.
Nourishing Healthy Communities
As a business that has been focused on helping people improve their nutritional habits for more than 40 years, access to food and nutrition is paramount to our stakeholders. We are committed to the goal of ending hunger and supporting opportunities to improve nutrition worldwide. Among the core aims of nourishing healthy communities include working towards hunger eradication, fostering accessible nutrition, nutrition education and supporting health and wellness for communities.
Through various partnerships and programs, Herbalife Nutrition continues with its efforts to help eradicate hunger and reduce food insecurity and malnutrition for communities around the world. To support this critical ambition, Herbalife Nutrition announced a global initiative in 2019, the Nutrition for Zero Hunger (NFZH). Supported by the Company and the Herbalife Nutrition Foundation1, NFZH is a program aimed at eradicating hunger by partnering with leading global, regional, and local nonprofit and strategic organizations. Current partners include the World Food Program USA, Feed the Children, Asociación Mexicana de Bancos de Alimentos (BAMX), who have received grants from the Herbalife Nutrition Foundation, as well as partners like SOS Children’s Villages of Europe, Africa and India, supported by charitable contributions from Herbalife Nutrition, along with other partners who are working to achieve the end of global hunger.
Nourishing Economic Opportunity
As a core part of our support for communities, we commit to working to create sustainable changes to promote economic empowerment. This includes working with nonprofit partners to provide resources to vulnerable communities including tools, education, and mentorship. Our key focus areas are supporting development of
inclusive economies, gender equity, women financial empowerment and supporting entrepreneurship.
Herbalife Nutrition proudly supports organizations that provide opportunities for underserved, vulnerable and minority communities. In 2021, the Company, along with the Herbalife Nutrition Foundation, supported more than a dozen of these organizations, reflecting the needs of diverse global, regional, and local communities.
These partners include Unidos US, League of United Latin American Citizens (LULAC), Los Angeles Urban League, and Chrysalis. In addition we support various programs including nutrition and health resources, mentoring, human rights, gender equity and advocacy as well as provide in-kind donations of nutrient-dense products.
Nourishing a Thriving Planet
Herbalife Nutrition is committed to helping protect the future of our planet in an environment where natural resources are constrained. Our integration of environmental stewardship aligns with the values of our Herbalife Nutrition Members and consumers, who care about how our products are sourced, manufactured, and produced. As with our product quality philosophy, we view our environmental footprint through a product lifecycle lens that extends from seed to feed, striving to meet the needs of our planet and our global community.
Our current sustainability initiatives focus on issues including climate and emissions, packaging, and operational waste.
Commitment to Diversity, Equity and Inclusion (DEI)
Herbalife Nutrition is focused on fostering an inclusive and representative workforce. Our DEI strategy embraces a core vision that our commitment to these principles is imperative to enabling us to better serve our Herbalife Nutrition members, stakeholders, and communities. This requires creating a work environment where people of all genders, ethnicities, abilities, cultures, races, religions, and sexual orientations can thrive.
To support our DEI efforts, we have established a Global DEI Council and supporting Regional Councils to oversee
1 Herbalife Nutrition Foundation is a public charity. Herbalife Nutrition Foundation chooses to join Herbalife Nutrition in some charitable initiatives where mission and goals are aligned.
8 | Corporate governance |
the implementation of our core DEI principles. In addition, we have launched eight global employee-led Employee Networks, which are identity- or experience-based groups that help employees build community and share a common purpose. They focus on strengthening belonging, providing support, and contributing to personal and professional development in the workplace.
In 2021, we set diversity goals and targets for women in leadership roles globally and for racial and ethnic minorities in leadership roles in the U.S.
ESG Governance Structure
To ensure that our Global Responsibility strategy is embedded into the Company’s overall long-term sustainable business strategy and managed throughout the global organization, we have established the following governance structures regarding ESG and Global Responsibility:
* | The ESG Committee of the Board of Directors assists the Board in overseeing Global Responsibility strategy. It also works with other Committees, depending on relevance, scope and other factors. |
Board of Directors: Our Global Responsibility strategy is subject to Board oversight. For additional details regarding our Board’s ESG Committee, please see page 15.
Executive Committee: Provides executive direction and ensures integration of Global Responsibility goals across functional and regional strategies.
Global Responsibility Steering Committees and Working Groups: Leaders representing business functions, regions and markets meet regularly to form cross-functional and project-specific groups to drive accountability, ownership, and integration of Global Responsibility initiatives.
Global Responsibility Report and ESG Index
Herbalife Nutrition is committed to continue to report on our Global Responsibility programs, progress, metrics, and policies. In addition to our first Global Responsibility Report, which was issued in 2021, we also make metrics available through our ESG Index, updated annually.
Our ESG Index and Global Responsibility Report are prepared in accordance with the Global Reporting Initiative and the Sustainability Accounting Standards Board, and can be found on our corporate website at www.IAmHerbalifeNutrition.com. The content on this website, including the ESG Index and Global Responsibility Report, is not incorporated by reference into this Proxy Statement.
Herbalife Nutrition Foundation
Established in 1994, the Herbalife Nutrition Foundation (HNF) is a public charity. Its mission is to improve the lives of children and communities around the globe. In 2021, HNF funded 167 community-based Casa Herbalife Nutrition partners in 59 countries, reaching more than 200,000 people in need. HNF may choose to join Herbalife Nutrition in some charitable initiatives where mission and goals are aligned.
Corporate governance | 9 |
Each non-management director will receive (i) $100,000 per yearreceives annual cash fees for servicesservice on the Board and committees* as a director and $10,000 for each Board committee on which the director served,follows:
Board service | $100,000 per year | |
Audit committee service | Member - $10,000 per year Chair - $20,000 per year | |
Compensation committee service | Member - $10,000 per year Chair - $15,000 per year | |
Nominating and corporate governance committee service | Member - $10,000 per year Chair - $15,000 per year | |
ESG committee service | Member - $10,000 per year Chair - $15,000 per year |
* | Chairs receive chair fees in addition to member fees. For example, the chair of the audit committee receives an aggregate fee of $30,000 for his or her services on the committee. |
The Lead Director also receives an additionalannual fee of $25,000 per year for the Lead Director, an additional $20,000 per year for the chair of the audit committee, an additional $20,000 per year for the chair of the implementation oversight committee, an additional $15,000 per year for the chair of the compensation committee and an additional $15,000 per year for the chair of the nominating and corporate governance committee. Directors will no longer receive meeting attendance compensation.services provided in that capacity.
Cash fees with respect to Board or committee membership or service as the Lead Director or a committee chair are paid ratably assuming 12 consecutive months of service from the date the particular membership or service commences. Cash fees for attending Board or committee meetings were paid in the month following the meeting date.Non-management directors also receive an annual equity grant pursuant to the Company’s Amended and Restated Independent Deferred Compensation and Stock Unit Plan, which is part of the Herbalife Ltd. 2014 Stock Incentive Plan, as it may be amended from time to time, or the 2014 Plan, in the form of restricted
stock units, or RSUs, with a grant date fair value (as determined for financial reporting purposes) of $120,000 (rounded down to the nearest whole unit that vest on April 15, 2018). Effective April 24, 2018, RSUs granted tonon-management directors will have a grant date fair value of $135,000 (rounded down to the nearest whole unitunit) that vest annually. The board equity grants made in May 2021, or the 2021 Board RSU Grants, are scheduled to vest on April 15, 2019). 2022.
The Lead Director also receives an equity grant upon appointment in the form of RSUs with a grant date fair value (as determined for financial reporting purposes) of $250,000 (rounded down to the nearest whole unit) in respect of his or hertwo-year term as Lead Director. It is anticipated that, effective April 24, 2018, the Lead Director’s equity grant upon appointment will continue to be in the form of RSUs but with a grant date fair value of $25,000 (rounded down to the nearest whole unit) per each year of his or hertwo-year term. Currently,term, which vests annually the RSU award grantedfollowing year. The current Lead Director, Mr. LeFevre, who was appointed Lead Director effective July 1, 2021, received a 75% pro-rated Lead Director equity grant, totaling a grant date fair value of $18,750 (rounded down to the nearest whole unit), in August 2021. Mr. LeFevre’s lead director equity grant is scheduled to vest on April 15, 2022.
Ms. Otero, who served as Lead Director vestsfrom January 3, 2021 until July 1, 2021, received a Lead Director equity grant in May 2021 at the time of the 2021 Board RSU Grants. In July 2021, when Mr. LeFevre became Lead Director, half of Ms. Otero’s Lead Director equity grant was forfeited, while the remainder is scheduled to vest on continuationApril 15, 2022 in recognition of her approximately six-month service as Lead Director.
The compensation disclosed in the 2021 Director Compensation table below for Mr. Tartol and Mr. Mendoza includes other compensation, unrelated to their services as directors. Specifically, in ratable amounts overaddition to their director compensation, the table below includes each quarter, overof Mr. Tartol’s and Mr. Mendoza’s respective earnings as top distributors of Herbalife Nutrition products under thetwo-year life of Company’s Marketing Plan.
The Company may also reimburse our directors for their respective travel, lodging and related expenses associated with travel to and attendance at Board or Board committee meetings, as well as reasonable costs in connection with attending director continuing education programs in accordance with the award. However, effective April 24, 2018, such RSU award will vest annually on the grant date the following year. Our Lead Director typically serves for atwo-year termCompany’s applicable orientation and the appointment is reconsidered biannually concurrently with our annual general meeting of shareholders.continuing education policy.
The following table summarizes the compensation paid by the Company to non-management directors for the fiscal year ended December 31, 2021, which includes: (1) compensation paid to directors for their services on the Board and the Board’s committees, (2) payments made to directors for any services provided at Company events, such as Extravaganzas, and (3) payments made to independent distributors of Herbalife Nutrition products in accordance with the Company’s Marketing Plan.
2021 Director compensation table
Name | Fees earned or paid in cash ($) | Equity awards ($)(1) | All other compensation | Total ($) | ||||||||||||
Richard H. Carmona |
| 128,116 |
|
| 134,994 |
|
| 25,000 | (2) |
| 288,110 |
| ||||
Jonathan Christodoro(3) |
| — |
|
| — |
| — |
| — |
| ||||||
Hunter C. Gary(3) |
| — |
|
| — |
| — |
| — |
| ||||||
Nicholas Graziano(3) |
| — |
|
| — |
|
| — |
|
| — |
| ||||
Kevin M. Jones(4) |
| 90,976 |
|
| 157,476 |
|
| — |
|
| 248,452 |
| ||||
Sophie L’Hélias(4) |
| 107,851 |
|
| 157,476 |
|
| — |
|
| 265,327 |
| ||||
Alan W. LeFevre |
| 142,446 |
|
| 153,740 | (5) |
| — |
|
| 296,186 |
| ||||
Jesse A. Lynn(3) |
| — |
|
| — |
|
| — |
|
| — |
| ||||
Juan Miguel Mendoza(6) |
| 100,000 |
|
| 134,994 |
|
| 1,758,274 | (6)(7) |
| 1,993,268 |
| ||||
Michael Montelongo(8) |
| 45,262 |
|
| — |
|
| — |
|
| 45,262 |
| ||||
Don Mulligan(4) |
| 107,726 |
|
| 157,476 |
|
| — |
|
| 265,202 |
| ||||
James L. Nelson(3) |
| — |
|
| — |
|
| — |
|
| — |
| ||||
Maria Otero |
| 153,981 |
|
| 159,957 | (9) |
| — |
|
| 313,938 |
| ||||
Margarita Paláu-Hernández(8) |
| 43,280 |
|
| — |
|
| — |
|
| 43,280 |
| ||||
John Tartol(6) |
| 100,000 |
|
| 134,994 |
| 1,693,315 | (6)(10) |
| 1,928,309 |
|
(1) | Amounts represent the aggregate grant date fair value of the relevant award(s) presented in accordance with FASB ASC Topic 718, “Compensation—Stock Compensation”. See Note 9 to the to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for a discussion of the relevant assumptions used in calculating these amounts pursuant to FASB ASC Topic 718. |
(2) | Amount represents fees for speaking at Herbalife Nutrition events. |
(3) | Messrs. Christodoro, Gary, Graziano, Lynn and Nelson resigned from the Board effective January 3, 2021. |
(4) | Messrs. Jones and Mulligan and Ms. L’Hélias were appointed to the Board on February 26, 2021. Equity award amount includes the 2021 annual director equity grant and a prorated portion of annual director equity grant based on service from such appointment date through May 2021. |
(5) | Mr. LeFevre was appointed Lead Director on July 1, 2021. Amount includes the 2021 annual director equity grant and a prorated 2021 Lead Director equity grant. |
(6) | All independent distributors of Herbalife Nutrition products, including Messrs. Mendoza and Tartol, are eligible to receive income under the Company’s Marketing Plan as a result of their activities as distributors. Under the Company’s Marketing Plan, Herbalife Nutrition Members may earn profits by purchasing products at wholesale prices, discounted depending on the Member’s level within our Marketing Plan, and reselling those products at prices they establish for themselves to generate retail profit. Second, Herbalife Nutrition Members who sponsor other Members and establish, maintain, coach, and train their own sales organizations may earn commissions on the sales of their organization. Both Mr. Mendoza and Mr. Tartol would have received this income irrespective of their services on the Board. Neither Mr. Mendoza nor Mr. Tartol receive any preferential treatment or payments under the Company’s Marketing Plan. |
(7) | Amount includes $30,000 in fees for speaking at Herbalife Nutrition events for Herbalife Nutrition Members. Additionally, unrelated to his service as a Board member, amount also includes $1,728,274 in income earned as a top distributor of Herbalife Nutrition products. See note 6 above. |
(8) | Mr. Montelongo and Ms. Paláu-Hernández did not stand for re-election to the Company’s Board of Directors at the Company’s 2021 Annual General Meeting of Shareholders. |
Corporate governance | 11 |
(9) | Ms. Otero served as the Board’s Lead Director from January 3, 2021 through July 1, 2021. Amount reflects the 2021 annual director equity grant and Lead Director equity grant. Upon the transition from Lead Director in July 2021, half of such Lead Director equity grant was forfeited. |
(10) | Amount includes $20,000 in fees for speaking at Herbalife Nutrition events for Herbalife Nutrition Members. Additionally, unrelated to his service as a Board member, amount also includes $1,673,315 in income earned as a top distributor of Herbalife Nutrition products. See note 6 above. |
The table below summarizes the equity-based awards held by the Company’snon-management directors who served on the Company’s Board of Directors in 2021, as of December 31, 2017.2021.
Name | Options/Stock Appreciation Rights
| Stock Unit Awards
| ||||||||||||||||||||||
Number of securities underlying unexercised options/SARs (#) exercisable | Number of securities underlying unexercised options/SARs (#) un-exercisable | Exercise price ($) | Expiration date | Number of Shares or units of stock that have not vested (#) | Market value of Shares or units of stock that have not vested(1) ($) | |||||||||||||||||||
Richard P. Bermingham
| 7,503 |
| —
|
|
| 44.79
|
|
| 05/31/2019
|
| ||||||||||||||
Richard P. Bermingham
|
| 4,526
|
|
| —
|
|
| 79.58
|
|
| 12/19/2020
|
| ||||||||||||
Richard P. Bermingham
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
| |||||||||
Pedro Cardoso
|
| 5,452
|
|
| —
|
|
| 53.29
|
|
| 05/18/2018
|
| ||||||||||||
Pedro Cardoso
|
| 7,503
|
|
| —
|
|
| 44.79
|
|
| 05/31/2019
|
| ||||||||||||
Pedro Cardoso
|
| 4,526
|
|
| —
|
|
| 79.58
|
|
| 12/19/2020
|
| ||||||||||||
Pedro Cardoso
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
| |||||||||
Richard Carmona
|
| 4,526
|
|
| —
|
|
| 79.58
|
|
| 12/19/2020
|
| ||||||||||||
Richard Carmona
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
| |||||||||
Jonathan Christodoro
|
| 4,526
|
|
| —
|
|
| 79.58
|
|
| 12/19/2020
|
| ||||||||||||
Jonathan Christodoro
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
| |||||||||
Keith Cozza
|
| 4,526
|
|
| —
|
|
| 79.58
|
|
| 12/19/2020
|
| ||||||||||||
Keith Cozza
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
| |||||||||
Jeffrey T. Dunn
|
| 5,452
|
|
| —
|
|
| 53.29
|
|
| 05/18/2018
|
| ||||||||||||
Jeffrey T. Dunn
|
| 7,503
|
|
| —
|
|
| 44.79
|
|
| 05/31/2019
|
| ||||||||||||
Jeffrey T. Dunn
|
| 4,526
|
|
| —
|
|
| 79.58
|
|
| 12/19/2020
|
| ||||||||||||
Jeffrey T. Dunn
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
| |||||||||
Jeffrey T. Dunn
|
| —
|
|
| —
|
|
| —
|
|
| 1,022
|
|
| 69,210
|
| |||||||||
Hunter C. Gary
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
| |||||||||
Jesse Lynn
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
| |||||||||
Michael Montelongo
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
| |||||||||
James Nelson
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
| |||||||||
Maria Otero
|
| 4,526
|
|
| —
|
|
| 79.58
|
|
| 12/19/2020
|
| ||||||||||||
Maria Otero
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
| |||||||||
John Tartol
|
| 5,452
|
|
| —
|
|
| 53.29
|
|
| 05/18/2018
|
| ||||||||||||
John Tartol
|
| 7,503
|
|
| —
|
|
| 44.79
|
|
| 05/31/2019
|
| ||||||||||||
John Tartol
|
| 4,526
|
|
| —
|
|
| 79.58
|
|
| 12/19/2020
|
| ||||||||||||
John Tartol
|
| —
|
|
| —
|
|
| —
|
|
| 1,665
|
|
| 112,754
|
|
Name | Stock Unit Awards | |||||||
Number of Shares or units of stock that have not vested (#) | Market value of Shares or units of stock that have not vested(1) ($) | |||||||
Richard H. Carmona |
| 2,720 |
|
| 111,330 |
| ||
Jonathan Christodoro(2) |
| — |
|
| — |
| ||
Hunter C. Gary(2) |
| — |
|
| — |
| ||
Nicholas Graziano(2) |
| — |
|
| — |
| ||
Kevin M. Jones |
| 3,173 |
|
| 129,871 |
| ||
Sophie L’Hélias |
| 3,173 |
|
| 129,871 |
| ||
Alan W. LeFevre |
| 3,114 | (3) |
| 127,456 |
| ||
Jesse Lynn(2) |
| — |
|
| — |
| ||
Juan Miguel Mendoza |
| 2,720 |
|
| 111,330 |
| ||
Michael Montelongo(2) |
| — |
|
| — |
| ||
Don Mulligan |
| 3,173 |
|
| 129,871 |
| ||
James L. Nelson(2) |
| — |
|
| — |
| ||
Maria Otero |
| 2,971 | (4) |
| 121,603 |
| ||
Margarita Paláu-Hernández(2) |
| — |
|
| — |
| ||
John Tartol |
| 2,720 |
|
| 111,330 |
|
(1) | Market value based on the closing price of a Common Share on the NYSE on December |
(2) | Former member of the Board. |
(3) | Following Mr. LeFevre’s appointment as Lead Director in July 2021, Mr. Lefevre received a pro-rated Lead Director equity grant granted in August 2021 in the amount of 394 RSUs. |
(4) | Ms. Otero served as Lead Director from January 3, 2021 through July 1, 2021. Ms. Otero received a Lead Director equity grant in May 2021 of 503 RSUs. Upon the Lead Director transition in July 2021, half of such Lead Director equity grant, equaling 252 RSUs, was forfeited while the remaining 251 RSUs are subject to vest April 15, 2022. |
StockShare ownership guidelines
The Company has adopted stockshare ownership guidelines applicable to each of our named executive officersofficer andnon-management directors.director to encourage each person to acquire a meaningful ownership stake in the Company over time by retaining financial interest in our common shares. Our CEO is encouraged to acquire and hold Common Shares and/or vested equity awards with an aggregate value equal to five times his base salary.salary within five years of his CEO appointment. Our other named executive officers are
encouraged to acquire and hold Common Shares and/or vested equity awards with an aggregate value equal to two times their respective base salaries. salaries within five years following their respective designation as a named executive officer.
Eachnon-management director is encouraged to hold Common Shares and/or vested equity awards with aan aggregate value equal to five times such director’s annual retainer within
|
two five years of such director’s appointment or election to the Board of Directors.
As of the date of this Proxy Statement, all of our Board members other than our Executive Chairman have served for two or more years
non-management directors and all such non-management directors werecurrent named executive officers are in compliance with these guidelines. All of our NEOs were in compliance with thesethe current guidelines.
12 | Corporate governance |
Shareholder communicationsoutreach
We value the viewpoint of all investors and have actively engaged with shareholders to better understand their perspectives, and strongly consider their feedback when evaluating our governance provisions and practices.
Since the 2021 Annual General Meeting of Shareholders, we engaged with a number of shareholders to initiate new, and deepen existing, relationships with our investor
base. We reached out to top Herbalife Nutrition shareholders that, in the aggregate, owned in excess of 57% of our outstanding Common Shares, and covered various governance topics including Board composition and compensation, risk oversight, shareholder rights and environmental & social initiatives across the Company. In aggregate, we had discussions with investors who hold approximately 33% of outstanding Common Shares.
Communications with the board of directorsBoard
Shareholders and other parties interested in communicating directly with the Board of Directors,non-management or independent directors as a group or individual directors, including the Chair or Lead Director in his or hersuch capacity, as such, may do so by writing to Herbalife Ltd.,our Corporate Secretary at c/o Corporate Secretary,Herbalife International of America, Inc., 800 W. Olympic Blvd,Blvd., Suite 406, Los Angeles, CACalifornia 90015, or by email attocorpsec@herbalife.com, indicating to whose attention the communication should be directed. Under a process approved by the BoardThe Office of Directors for handling communications received by the Company and addressed tonon-management directors, the Corporate Secretary of the Company reviews and logs all such correspondence and forwards to members of the audit committeeBoard of Directors a summary and/or
and/or copies of any such correspondence that, in the opinion of the Corporate Secretary, deal with the functions of the Board of Directors or committees thereof, or that he otherwise determines requires their attention. Directors may at any time review a log of all communications received by the Company and addressed to members of the Board of Directors and request copies of any such correspondence. Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of the Company’s internal audit department and handled in accordance with procedures established by the audit committee with respect to such matters.
Director orientation and continuing education
Herbalife Nutrition is in the business of providing health and wellness products to consumers in 95 countries and territories through our direct-selling business model. As part of our onboarding process, we introduce new directors to our company with an overview of our business through a review of background and reference materials, meetings with senior management and their direct reports, and, where feasible, tours of manufacturing facilities and nutrition clubs. Our comprehensive orientation sessions are designed to provide new directors a thorough understanding of their fiduciary duties and familiarize them with the Company’s business and strategic plans, significant financial matters, risk management approach, compliance and ethics programs, corporate governance practices, and other key policies and practices. These orientation sessions allow new
directors to begin making contributions to the Board at the start of their service.
The Company also provides, on an ongoing basis, additional opportunities for directors to further familiarize themselves with the Company’s business, finances and operations, which may include, among other things, presentations from members of management of the Company and visits to Herbalife Nutrition Members events, such as Extravaganzas and Herbalife Honors. Additionally, we encourage our directors to participate in external continuing director education programs, and provide reimbursement of expenses associated with our independent directors’ attendance at one outside director education program each fiscal year.
Our Board of Directors has a standingan audit committee, nominating and corporate governance committee, compensation committee, and compensationESG committee. Our Board of Directors has also constitutedadopted a written charter for each of these committees, and the implementation oversight committee as discussed below.charters for current
Audit committee
The audit committee consists of Messrs. Bermingham, Montelongo and Nelson. Each director who servedcommittees are available on the auditCompany’s website at https://ir.herbalife.com/corporate-governance, and in print to any shareholder who requests it as set forth under Part 7 —“Annual report, financial and additional information”.
Corporate governance | 13 |
Current committee in 2017 is or was independent as discussed above under “— Director Independence.” As required by Rule 303A.07 of the NYSE Listed Company Manual, the Board of Directors has affirmatively determined that each of Messrs. Bermingham, Montelongo and Nelson is financially literate, and that Mr. Bermingham is an “audit committee financial expert,” as defined in Item 407(d)(5) ofRegulation S-K.memberships
Directors(1) | Audit(2) | Compensation(3) | Nominating and Corporate | ESG(4) | ||||
Richard H. Carmona † | Chair | |||||||
Kevin M. Jones † | ● | |||||||
Sophie L’Hélias † | ● | Chair | ||||||
Alan W. LeFevre * † | ● | ● | ||||||
Don Mulligan * † | Chair | ● | ||||||
Maria Otero † | Chair | ● | ● | |||||
Dr. John Agwunobi | ● |
* Audit Committee “financial expert” † Independent • Member
(1) | In connection with the termination of the Support Agreement, Messrs. Christodoro, Gary, Graziano, Lynn and Nelson resigned from the Board and all of its committees effective January 3, 2021. For additional details regarding the Support Agreement, please see page 4. |
(2) | Mr. Montelongo and Ms. Paláu-Hernández served on the committee until April 28, 2021. Ms. L’Hélias and Mr. Mulligan were appointed to the audit committee on April 28, 2021. Mr. Mulligan assumed responsibilities as chair of the audit committee on July 1, 2021. Each member who currently serves on the audit committee, or served on the committee during 2021, is or was financially literate and met the independence requirements of the NYSE and Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Board determined each of Messrs. Mulligan and LeFevre as an “Audit Committee financial expert” as such term is defined in SEC rules and regulations. |
(3) | Ms. Paláu-Hernández and Dr. Carmona served on the committee until April 28, 2021. Messrs. Jones and Mulligan were appointed to the compensation committee on April 28, 2021. Each member who currently serves on the compensation committee, or served on the compensation committee during 2021, is or was (a) independent under the listing standards of the NYSE, including the heightened standards applicable to members of a listed company’s compensation committee, and (b) a “nonemployee director” under Rule 16b-3 of the Exchange Act. |
(4) | Mr. Montelongo and Ms. Paláu-Hernández both served on the ESG committee until April 28, 2021. Mmes. L’Hélias and Otero were appointed to the ESG committee on April 28, 2021 with Ms. L’Hélias serving as its chair starting from such date. |
Audit committee | ||
The audit committee represents and assists the Board in fulfilling its responsibilities for overseeing our financial reporting processes and the audit of our financial statements. | Meetings Held in 2021: 6 |
The principal duties of the audit committee are as follows:include the following:
monitoring the integrity of the Company’s financial reporting process and systems of internal controls regarding finance, accounting and reporting;
monitoring the independence and performance of the Company’s independent auditorsregistered public accounting firm and internal auditing department; andaudit function;
monitoring compliance with legal and regulatory requirements and performance of the Company’s ethics and compliance program; and
reviewing the Company’s framework and guidelines with respect to provide an avenuerisk assessment and risk management, including the Company’s enterprise risk management program and risks and practices related to cyber security, privacy and product safety matters.
Compensation committee | ||
The compensation committee discharges the Board’s responsibilities related to the compensation of our executives and directors, and provides general oversight of our compensation structure, including our equity compensation plans and benefits programs. | Meetings Held in 2021: 5 |
14 | Corporate governance |
The principal duties of communication amongthe compensation committee include the following:
overseeing and approving compensation policies and programs, and administering existing incentive compensation plans and equity-based plans;
reviewing and approving corporate goals and objectives relevant to the compensation of the Company’s CEO and other executive officers;
evaluating the performance of the CEO and recommending the compensation level of the CEO for approval by the independent auditors, management, the internal auditing department andmembers of the Board of Directors.Directors;
Our Boardevaluating the performance of Directors has adopted a written charterexecutive officers and, considering the CEO’s recommendations, setting the compensation level for such executive officers;
reviewing the audit committee which is available oncompensation of directors, and making recommendations to the Board;
overseeing management succession planning processes; and
overseeing the Company’s website atwww.herbalife.com by following the links through “Investor Relations”response to “Corporate Governance,” and in print to any shareholder who requests it as set forth under Part 7 — “Annual report, financial and additional information.” In 2017, the audit committee met six times.regulatory developments affecting executive compensation.
Nominating and corporate governance committee
Nominating and corporate governance committee | ||
The nominating and corporate governance committee oversees, and represents and assists the Board in fulfilling its responsibilities relating to, our corporate governance, and director nominations and elections. | Meetings Held in 2021: 9 |
The nominating and corporate governance committee consists of Messrs. Carmona, Christodoro, Dunn and Lynn.
Each director who served on the nominating and corporate governance committee in 2017 is independent as discussed above under “— Director Independence.” The principal duties of the nominating and corporate governance committee are as follows:include the following:
recommending to the Board of Directors proposed nominees for election to the Board of Directors both at annual general meetings of shareholders and to fill vacancies that occur between annual general meetings; and
reviewing and makemaking recommendations to the Board of Directors regarding the Company’s corporate governance matters and practices.
In identifying candidates to serve on the Board, the nominating and corporate governance committee first
The ESG committee assists the Board in discharging its oversight responsibility relating to the Company’s significant environmental, social and related governance activities and practices, including policies, programs and practices, strategy, stakeholder engagement and risks. | 4 |
determines the evolving needs of the Board taking into account such factors as it deems appropriate, including, among others, the current composition of the Board of Directors, the range of talents, experiences and skills that would best complement those already represented on the Board of Directors, the balance of management and independent directors and the need for financial or other specialized expertise, as discussed in greater detail below under Part 3 — “Proposal 1: The Election of Directors — Director Qualifications.” Applying these criteria, the nominating and corporate governance committee considers candidates for director suggested by its members and other directors, as well as by management and shareholders. The nominating and corporate governance committee also retains a third-party executive search firm on anad-hoc basis to identify and review candidates upon request of the committee from time to time.
If the nominating and corporate governance committee decides, on the basis of its preliminary review, to proceed with further consideration, the committee members, as well as other directors as appropriate, interview the nominee. After completing this evaluation and interview, the nominating and corporate governance committee makes a recommendation to the full Board of Directors, which makes the final determination whether to nominate the candidate after considering the nominating and corporate governance committee’s report.
A shareholder who wishes to recommend a prospective nominee for the Board of Directors pursuant to the provisions of the Articles should notify the Corporate Secretary in writing with the appropriate supporting materials, as more fully described under Part 7 — “Shareholder nominations.”
The Board of Directors has adopted a written charter for the nominating and corporate governance committee, which is available on the Company’s website atwww.herbalife.com by following the links through “Investor Relations” to “Corporate Governance” or in print to any shareholder who requests it as set forth under Part 7 — “Annual report, financial and additional information.” In 2017, the nominating and corporate governance committee met four times.
Compensation committee
The compensation committee consists of Mme. Otero and Messrs. Bermingham, Christodoro and Gary. Each director who served on the compensation committee in 2017 is independent as discussed above under “— Director Independence.” The principal duties of the compensationESG committee are as follows:include the following:
recommending to overseethe Board on the Company’s environmental and approve compensationsocial sustainability strategy, programs, policies and programs;investments that support the Company’s overall business strategy;
overseeing the review and approve corporate goalsevaluation of risks and objectives relevantopportunities related to the compensation ofenvironmental and social sustainability topics that may arise in connection with the Company’s CEOactivities and other executive officers;
Among other duties, the compensation committee is responsible for making the initial risk assessment of the Company’s compensation programs and determining whether those programs require modification to remain consistentopportunities in coordination with the Board’s determinations as to the levels of risk that are appropriate for the Company. In its assessment, the compensation committee reviewedother committees; and
reviewing and discussing with management the Company’s compensation structurepublic disclosures and noted numerous ways in which risk is potentially mitigated by practicescommunication strategies with investors and policies that include: the balanced mix between short- and long-term incentives; the use of multiple performance measures for the CEO’s annual incentive awards; strong internal controls; the use of stock ownership guidelines; and the existence of an anti-hedging policy. In light of its analysis, the compensation committee believes that the architecture of the Company’s compensation programs provide various safeguards to protect against undue risk-taking.
Our Board of Directors has adopted a written charter for the compensation committee which is available on the Company’s website atwww.herbalife.com by following the links through “Investor Relations” to “Corporate Governance” or in print to any shareholder who requests it as set forth under Part 7 — “Annual report, financial and additional information.” In 2017, the compensation committee met eight times.
Implementation oversight committee
On July 18, 2016, the Board of Directors established the implementation oversight committee to oversee the implementation of the Federal Trade Commission’s Consent Order entered into on July 15, 2016, or the Consent Order. The implementation oversight committee is comprised of independent members of the Board of Directors and will exist for a period of two years, unless otherwise determined by the Board of Directors. After two years, the duties and responsibilities of the implementation oversight committee will become the
duties and responsibilities of the audit committee. Mr. Nelson serves as chair of the implementation oversight committee, and Ms. Otero and Mr. Lynn serve as members ofother stakeholders regarding such committee. For more informationtopics.
regarding the Consent Order, see note 7,Contingencies, of the notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
Compensation committee interlocks and insider participation
During the fiscal year ended December 31, 2017, Mme.2021, Dr. Carmona and Messrs. Gary, Graziano, Jones and Mulligan and Mmes. Otero and Messrs. Bermingham, Christodoro and GaryPaláu-Hernández served on the compensation committee of the Board of Directors.Board. During the fiscal year ended December 31,
2017, 2021, there were no relationships or transactions between the Company and any member of the compensation committee requiring disclosure hereunder.
None of our executive officers currently serves, or during the fiscal year ended December 31, 2021 served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or compensation committee.
15 |
| Proposals to be voted on at the |
Proposal 1: The election of directors
Generally
The Articles presently provide for not less than one nor more than 15 directors. The Board of Directors has, by resolution, presently fixed the number of directors at 14. There9, and there is currently is a full complement of 149 members of the Board. There are 10 Board nominees recommended for election at the Annual Meeting. The number of Directors.directors will be increased to 10 if the 10 director nominees are elected at the Annual Meeting. Directors are elected at each annual general meeting of shareholders to hold office forone-year terms until the next annual general meeting of shareholders.
The Board has nominated each of John O. Agwunobi, Richard H. Carmona, Michael O. Johnson, Jeffrey T. Dunn, Richard H. Carmona, Jonathan Christodoro, Hunter C. Gary, Nicholas Graziano,Kevin M. Jones, Sophie L’Hélias, Alan W. LeFevre, Jesse A. Lynn, Michael Montelongo, Juan Miguel Mendoza, James L. Nelson,Don Mulligan, Maria Otero, Margarita Paláu-Hernández and John Tartol for election as directors to serveone-year terms expiring at the 20192023 annual general meeting. Mme. Paláu-HernándezConsidering his prior service with the Company as chair and chief executive officer, Mr. Johnson was nominatedidentified and recruited by Messrs. Cozza, Gary and Lynn, all of whom are members of the Board; Mr. Mendoza wasnominating and corporate governance committee. Directors are elected under a majority voting standard in uncontested director elections (i.e., an election where the number of persons nominated byfor election does not exceed the Company’s Executive Chairman, Mr. Johnson; and Mr. LeFevre was nominated by the Company’s Chief Executive Officer, Richard Goudis.number of directors to be elected). The nominationselection of Messrs. Christodoro, Gary, Lynn, Graziano and Nelson were made pursuant to that certain Second Amended and Restated Support Agreement, or the Support Agreement, dated July 15, 2016, by and among the Company and Carl C. Icahn, Icahn Partners Master Fund LP, Icahn Offshore LP, Icahn Partners LP, Icahn Onshore LP, Beckton Corp., Hopper Investments LLC, Barberry Corp., High River Limited Partnership, Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings L.P. and Icahn Enterprises G.P. Inc., or collectively, the Icahn Parties. A copy of the Support Agreement was filed by the Company on Form8-K on July 15, 2016. In consideration of these nominations, the Icahn Parties have agreed to vote their Common Shares in favor of the Board’s nominees for directordirectors at the Meeting constitutes an uncontested director election. Under a majority voting standard in uncontested director elections, each vote is required to be counted “for” or “against” a director nominee’s election. In order to be elected, the votes cast “for” such nominee’s election must exceed the number of votes cast “against” such nominee’s election. Abstentions and thereafter for so long as any Icahn Party designee is a member“broker non-votes” will not affect the outcome of the Board. The Icahn Parties beneficially own approximately 22,872,324election of our Common Shares. The Support Agreement also includes standstill and voting provisions applicable to the Icahn Parties’ ownership of Company Common Shares. The Company did not receive any shareholder nominations for director.directors.
The persons named as proxies on the accompanying proxy card intend to vote the Common Shares as to which they are granted authority to vote for the election of the nominees listed above.herein. The form of proxy card does not permit shareholders to vote for a greater number of nominees than 14.10. Although the Board of Directors does not know of any reason why any nominee will be unavailable for election, in the event any nominee should be unavailable
at the time of the Meeting, the proxies may be voted for a substitute nominee as selected by the Board of Directors or just for the remaining nominees, leaving a vacancy. Alternatively, the Board may reduce the size of the Board.
Director qualifications
The Board believes that the Board, as a whole, should possess a combination of skills, professional experience and diversity of backgrounds necessary to oversee the Company’s business. In addition, the Board believes that there are certain attributes that every director should possess, as reflected in the Board’s membership criteria discussed below.hereunder. Accordingly, the Board and the nominating and corporate governance committee consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition, andas well as the Company’s current and future needs.
The nominating and corporate governance committee is responsible for developing and recommending Board membership criteria to the Board for approval. The criteria, which are set forthdiscussed in the Company’s Principles of Corporate Governance, are available on the Company’s website at www.herbalife.com,https://ir.herbalife.com/corporate-governance,by following the links through “Investor Relations” to “Corporate Governance,” and include business experience and skills, independence, judgment, integrity, the ability to commit sufficient time and attention to Board activities and the absence of potential conflicts with the Company’s interests. In addition, the nominating and corporate governance committee periodically evaluates the composition of the Board to assess the skills and experience that are currently represented on the Board, as well as the skills and experienceexperiences that the Board will find valuable in the future,
given the Company’s current situationneeds and strategic plans. The nominating and corporate governance committee seeks a variety of occupational, educational and personal backgrounds on the Board in order to obtain a range of viewpoints and perspectives and to enhance the diversity of the Board as a group in such areas asincluding professional experience, geography, race, gender, ethnicity and age. While the nominating and corporate governance committee does not have a formal policy with respect to diversity, the nominating and corporate governance committee believes that it is essential that Board members represent diverse viewpoints. This periodic assessment of the Board’s composition enables the Board to update the skills and experience it seeks in the Board as a whole, and in individual directors, as the Company’s needs evolve and change over time and to assess the effectiveness of efforts at pursuing diversity.
16 | Proposals to be voted on at the meeting |
In identifying and recruiting director candidates through a combination of internal referrals, from time to time,both management and members of the Board, and third-party executive search firms, the nominating and corporate governance committee may establish specific skills and experienceexperiences that it believes the
Company should seek in order to constitute a balanced and effective Board.
In evaluating director candidates, and considering incumbent directors forre-nomination to the Board, the nominating and corporate governance committee considers a variety of factors. These include each nominee’s independence, financial literacy, personal and professional accomplishments and experience, each in light of the composition of the Board as a whole and the needs of the Company in general, and for incumbent directors, past performance on the Board. We believe that our director nominees represent an effective mix of skills, experiences, diversity and perspectives, including gender and ethnic/racial diversity.
Additionally, the nominating and corporate governance committee believes it is important that the viewpoints of independent distributors of Herbalife Nutrition products are represented on the Board. As of the date of this Proxy Statement, two independent distributors of Herbalife Nutrition products sit on the Board: Messrs. Mendoza and Tartol.
The nominating and corporate governance committee also considerswill consider director candidates recommended by shareholders under the termssame criteria and processes outlined above. A shareholder who wishes to recommend a prospective nominee for the Board of Directors pursuant to the provisions of the Support Agreement. Articles should notify the Corporate Secretary in writing with the appropriate supporting materials, as more fully described under Part 7 — “Shareholder nominations.”
Director skills and experience
The process undertakenfollowing summarizes the qualifications and experiences identified by the nominating and corporate governance committee in recommending qualified director candidates is described above under Part 2 — “Committees of the board — Nominating and corporate governance committee.”Corporate Governance Committee as being relevant to the Company’s business and structure, and important in creating a diverse and well-rounded Board, as reflected by the current slate of nominees:
Executive officer of a public company
Direct sales, multi-level marketing or consumer packaged goods
Public policy, diplomatic relations or governmental agencies
Technology or cybersecurity
ESG and CSR
Sales and marketing
The below reflects: (1) the tenure of our non-employee director nominees and (2) the racial/ethnic and gender diversity of our director nominees:
1 | Calculation reflects number of years of service of Michael O. Johnson before his departure from Herbalife Nutrition Ltd. If prior years of service were not included, average tenure would be 5.11 years. |
Proposals to be voted on at the meeting | 17 |
Set forth below is biographical information about the 1410 nominees standing for election at the Meeting, including each such person’s specific experience, qualifications, attributes and skills that led our Board of Directors to conclude that such individual should serve on our Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED IN THIS PROXY STATEMENT TO THE BOARD OF DIRECTORS.
Nominees for Electionelection as Directorsdirectors
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Chairman and Chief Executive Officer Age
Director since |
Mr. Johnson has servedDr. Agwunobi currently serves as the Company’s Chairman and Chief Executive ChairmanOfficer and has held such positions since June 2017April 29, 2020 and Chairman of the Board since 2007. Mr. JohnsonMarch 30, 2020, respectively. He previously served as the Company’s Chief ExecutiveHealth and Nutrition Officer from February 2016 to March 2020, and assumed the additional role of Co-President from February 2018 to March 2020. Prior to joining the Company, from April 2003 until May 2017. Mr. Johnson spent 17 years with The Walt Disney Company, where2014 to February 2016, Dr. Agwunobi advised a number of privately-held companies and, from September 2007 to April 2014, served as Senior Vice President and President, Health and Wellness for Walmart Stores, Inc. From December 2005 to September 2007, he served as Presidentthe Assistant Secretary of Walt Disney International,Health for the U.S. Department of Health and also servedHuman Services, where he was responsible for disease prevention and health promotion. Dr. Agwunobi is currently a director at the U.S. African Development Foundation.
Other Public Board Memberships: bluebird bio (since June 2017).
Previous Public Board Memberships (Past Five Years): Magellan Health Services, Inc. (from December 2014 to June 2019).
Director Qualifications: Dr. Agwunobi has an extensive professional background focused on health and wellness, including his service as PresidentAssistant Secretary of Asia PacificHealth for The Walt Disneythe U.S. Department of Health and Human Services, his executive experience with the Company, and President of Buena Vista Home Entertainment. Mr. Johnson has also servedas well as his prior experience as a publisher ofAudio Times magazine,physician and has directedpublic health official. Having the regional sales efforts of Warner Amex Satellite Entertainment Company for three of its television channels, including MTV, Nickelodeon and The Movie Channel. Mr. Johnson formerly servedCompany’s CEO serve as a director also provides an open channel of Univision Communications, Inc., a television company serving Spanish-speaking Americans, until March 2007, and on the Board of Regents for Loyola High School of Los Angeles. Mr. Johnson received his Bachelor of Arts in Political Science from Western State College.
Mr. Johnson’s qualifications to serve on our Board include his fourteen years of experience as our Chief Executive Officer, his 11 years of experience as our Chairman ofcommunication between the Board and his significant experience in international business matters.management.
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Mr. Dunn has served as a venture partner at Acre Venture Partners since February 2016. Mr. Dunn previously served as the Chief Executive Officer of Juicero, Inc., a manufacturer of commercial grade juicers and related customer support applications, from October 2016 until November 2017. Prior to joining Juicero, Inc., Mr. Dunn was President of Campbell Fresh, a division of Campbell Soup Company, where he led the launch of the company’s premium juice and salad dressing businesses, a position he assumed February 2015. Before joining Campbell Soup Company, Mr. Dunn was Chief Executive Officer and President of Wm. Bolthouse Farms, Inc., a company he joined in May 2008. Prior to joining Wm. Bolthouse Farms Inc., he was President and Chief Executive Officer of Ubiquity Brands, a rollup of several regional snack food businesses. Mr. Dunn also held various leadership roles within The Coca-Cola Company, including serving as president of Coca-Cola North America from 1985 until 2004. He earned a bachelor’s degree in business from the University of Georgia and an MBA in management from Pepperdine University.
Mr. Dunn’s qualifications to serve on our Board include his significant consumer marketing experience, which is relevant to the Company’s business operations in selling and manufacturing packaged food and nutritional supplement products; his significant knowledge and experience regarding international business matters, which is relevant to the Company in light of its operations across 94 countries worldwide; and his service as a chief executive officer, which helps the Board better understand management’sday-to-day actions and responsibilities.
![]() | Dr. Richard H. Carmona Independent Director Age
Director since 2013 |
Dr. Carmona has served as Chief of Health Innovations of Canyon Ranch, a life-enhancement company, since August 2017. He previously served as Vice Chairman of Canyon Ranch, Chief Executive Officer of the Canyon Ranch Health division, and the president of the nonprofit Canyon Ranch Institute, from October 2006 until August 2017. Dr. Carmona is also a Distinguished Professor of Public Health at the Mel and Enid Zuckerman College of Public Health at the University of Arizona. Prior to joining Canyon Ranch, Dr. Carmona served as the 17th Surgeon General of the United States from August 2002 through July 2006. Previously, he was Chairman of the State of Arizona Southern Regional Emergency Medical System; a professor of surgery, public health, and family and community medicine at the University of Arizona; and surgeon and deputy sheriff of the Pima County, Arizona, Sheriff’s Department. Dr. Carmona served in the U.S. Army and the Army’s Special Forces.
Other Public Board Memberships: McKesson Corporation (since September 2021); Better Therapeutics (since November 2017, and which went public October 2021); and Clorox Company (since February 2007).
Previous Public Board Memberships (Past Five Years): Dr. Carmona is a directorretired from the board of directors of Axon Enterprise Inc. and(formerly Taser International), effective the Clorox Company.date of Axon’s next annual shareholder meeting, which is expected to occur in late May 2022. He will have served on the board of Axon Enterprise from March 2007 to May 2022.
Director Qualifications: Dr. Carmona’s qualifications to serve on our Board include hisexperience as the Surgeon General of the United States, extensive experiencebackground in public health, including as CEO of a hospital and clinical sciences. His commitment to prevention as an effective means to improvehealthcare system, and service on other public health and reduce health care costs bringscompany boards bring valuable and significant insight to the Board, and his experience serving on other public company boards adds a depth of knowledge as to best practices in corporate governance.
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Mr. Christodoro served as a Managing Director of Icahn Capital LP, the entity through which Carl C. Icahn manages investment funds, from July 2012 to February 2017. Mr. Christodoro was responsible for identifying, analyzing and monitoring investment opportunities and portfolio companies for Icahn Capital. Prior to joining Icahn Capital, Mr. Christodoro served in various investment and research roles at P2 Capital Partners, LLC, Prentice Capital Management, LP and S.A.C. Capital Advisors, LP. Mr. Christodoro began his career as an investment banking analyst at Morgan Stanley, where he focused on merger and acquisition transactions across a variety of industries. Mr. Christodoro has been a director of: PayPal Holdings, Inc., a technology platform company that enables digital and mobile payments worldwide, since July 2015; Lyft, Inc., a mobile ride-sharing application, since May 2015; and Enzon Pharmaceuticals, Inc., a biotechnology company, since October 2013 (and has been Chairman of the Board of Enzon since November 2013). Mr. Christodoro was previously a director of: Xerox Corporation, a provider of document management solutions, from June 2016 to December 2017; Cheniere Energy, Inc., a developer of natural gas liquefaction and export facilities and related pipelines, from August 2015 until August 2017; Hologic, Inc., a supplier of diagnostic, medical imaging and surgical products, from December 2013 to March 2016; eBay Inc., a global commerce and payments company, from March 2015 to July 2015; Talisman Energy Inc., an independent oil and gas exploration and production company, from December 2013 to May 2015; and American Railcar Industries, Inc., a railcar manufacturing company, from June 2015 to February 2017. American Railcar Industries is indirectly controlled by Carl C. Icahn. Mr. Icahn has or previously hadnon-controlling interests in each of Xerox, Cheniere, PayPal, eBay, Lyft, Hologic, Talisman, Enzon and Herbalife through the ownership of securities. Mr. Christodoro received an M.B.A from the University of Pennsylvania’s Wharton School of Business with Distinction, majoring in Finance and Entrepreneurial Management. Mr. Christodoro received a B.S. in Applied Economics and Management Magna Cum Laude with Honors Distinction in Research from Cornell University. Mr. Christodoro also served in the United States Marine Corps.
Mr. Christodoro’s qualifications to serve on our Board include his service on other boards as well as his extensive investment, research and investment banking experience in a variety of industries. Mr. Christodoro was recommended by the Icahn Parties pursuant to the Support Agreement.Board.
Proposals to be voted on at the meeting |
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Age
Director |
Mr. Gary hasJohnson previously served as Senior Vice PresidentChairman of Icahn Enterprises L.P., or IEP, a master limited partnershipthe Company and diversified holding company engaged in ten primary business segments which include investment, automotive, energy, gaming, railcar, mining, food packaging, metals, real estateheld this position from 2007 to April 2020. He also previously served as Chief Executive Officer of the Company and home fashion, since November 2010. At IEP,held such position from January 2019 to March 2020 . He previously served as the Company’s Executive Chairman from June 2017 until January 2019 and as the Company’s Chief Executive Officer from April 2003 until May 2017. Prior to joining the Company, Mr. Gary is responsible for monitoring portfolio company operations, implementing operational value enhancement as well as leads a variety of operational activities for IEP which focus on a variety of areas including, technology, merger integration, supply chain, organization transformation, real estate, recruiting and executive compensation. Mr. Gary hasJohnson spent 17 years with The Walt Disney Company, where he served as President of IEP’s Real Estate segment since November 2013Walt Disney International, and has lead the Information Technology and Cybersecurity group at IEP since September 2015 while servingalso served as President of Sfire Technology LLC (f.k.a. IEH Technology LLC) since December 2015.Asia Pacific for The Walt Disney Company and President of Buena Vista Home Entertainment. Mr. GaryJohnson has also served as Presidenta publisher of Audio Times magazine, and Chief Executive Officerhas directed the regional sales efforts of Cadus Corporation, or Cadus, a company engaged in the acquisitionWarner Amex Satellite Entertainment Company for three of real estate for renovation or constructionits television channels, including MTV, Nickelodeon and resale, since March 2014 andThe Movie Channel. Mr. Johnson formerly served as a director since February 2014. Prior to IEP and Cadus, Mr. Gary was employed by Icahn Associates Corporation, an affiliate of IEP, in various roles beginning in June 2003, most recently as the Chief Operating Officer of Icahn Sourcing LLC (n.k.a. Insight Portfolio Group LLC). From 1997 to 2002, Mr. Gary worked, most recently as a Managing Director, at Kaufhof Warenhaus AG, a former subsidiary of the Metro Group which was acquired by Hudson’s Bay Company.
Mr. Gary has been a director of: The Pep Boys — Manny, Moe & Jack, or PBYS, an automotive parts installer and retailer, since February 2016; IEH Auto Parts LLC, or IEHAP,
a distributor of automotive aftermarket parts, since June 2015; Ferrous Resources Limited, or Ferrous, an iron ore mining company, since June 2015; PSC MetalsUnivision Communications, Inc., or PSC, a metal recycling company, since May 2012; Tropicana Entertainment Inc., or TPCA, a company that is primarily engaged in the business of owning and operating casinos and resorts, since March 2010; and WestPoint Home LLC, a home textiles manufacturer, since June 2007. Mr. Gary has also been a member of the Executive Committee of ACF Industries LLC (“ACF”), a railcar manufacturingtelevision company since July 2015.
serving Spanish-speaking Americans, until March 2007, and on the Board of Regents for Loyola High School of Los Angeles. Mr. Gary was previously a director of: XO Holdings, XO, a competitive provider of telecom services, from September 2011 until January 2018; Federal-Mogul Holdings Corporation (formerly known as Federal-Mogul Holdings Corporation; or FDML), a supplier of automotive powertrain and safety components, from October 2012 to February 2016; Voltari Corporation, or VLTC, a mobile data services provider, from October 2007 to September 2015; American Railcar Industries, Inc. , or ARI, a railcar manufacturing company, from January 2008 to June 2015; and Viskase Companies Inc., or VKSC, a meat casing company, from August 2012 to June 2015.
ACF, ARI, Cadus, FDML, Ferrous, IEHAP, IEP, PBYS, PSC, TPCA, VKSE, VLTC, WPH and XO are each are indirectly controlled by Carl C. Icahn. Mr. Icahn also has anon-controlling interest in Herbalife through the ownership of securities.
Mr. GaryJohnson received his Bachelor of Arts in Political Science degree with senior honors from Georgetown University as well as a certificate of executive development from Columbia Graduate School of Business.Western State College.
Other Public Board Membership: None.
Previous Public Board Memberships (Past Five Years): Herbalife Nutrition Ltd. (from April 2003 to April 2020).
Director Qualifications:Mr. Gary’sJohnson’s qualifications to serve on our Board include his extensive experience dealing with operations and oversight matters for a variety15 years of companies which, in addition to his experience as our Chief Executive Officer, his 13 years of experience as our Chairman of the Board, and his significant experience in international business matters.
![]() | Kevin M. Jones Independent Director Age 53 Director since 2021 |
Mr. Jones has served as the Chief Executive Officer of Rackspace Technology, Inc., a directorcloud computing company, since April 2019. Prior to joining Rackspace Technology, Mr. Jones served as Chief Executive Officer of MV Transportation, Inc., a passenger transportation contracting service, since October 2017. From April 2017 until October 2017, Mr. Jones served as Senior Vice President and General Manager of Americas at DXC Technology Company, a multinational end-to-end IT services and solutions company. Mr. Jones served as Senior Vice President and General Manager at Hewlett Packard Enterprise Company from August 2014 until March 2017 and as the Chief Customer and Sales Officer for Dell Services at Dell Inc. from 2011 until 2014. Before joining Dell, Mr. Jones held various companies, enables him to advise ourleadership roles at Hewlett Packard and Electronic Data Systems. Mr. Jones is on the board of CareerBuilder, an Apollo Global Management portfolio company. Mr. Jones holds a Bachelor’s degree from James Madison University and is a Certified Management Accountant.
Other Public Board onMembership: Rackspace Technology (since April 2019).
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications: Mr. Jones is an accomplished business leader with 30 years of technology services experience and a range of matters. Mr. Gary was recommended by the Icahn Parties pursuant to the Support Agreement.track record in leading business transformations.
Proposals to be voted on at the meeting |
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Independent Director Age
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Mr. Graziano hasMs. L’Hélias is the President and Founder of LeaderXXchange, a purpose-driven firm that advises and promotes diversity and sustainability in governance, leadership and investment. She is co-founder of the International Corporate Governance Network (ICGN) and served as Portfolio Manager of Icahn Capital,an advisor to the entity through which Carl C. Icahn manages investment funds, since February 2018. Mr. Graziano was previously the Founding Partner and Chief Investment OfficerUN Global Compact’s Blueprint for SDG Leadership. Ms. L’Hélias is Chair of the hedge fund Venetus Partners LP, where he was responsible for portfolioBoard of Suez SA, a utility company in environmental services, and risk management, along witha day-to-daynon-executive firm management, from June 2015 to August 2017. Prior to founding Venetus, Mr. Graziano was a Partner and Senior Managing Director at the hedge fund Corvex Management LP from December 2010 to March 2015. At Corvex, Mr. Graziano played a key role in investment management and analysis, hiring and training of analysts and risk management. Prior to Corvex, Mr. Graziano was a Portfolio Manager at the hedge fund Omega Advisors, Inc., where he managed a proprietary equity portfolio and made investment recommendations, from September 2009 until December 2010. Before Omega, Mr. Graziano served as a Managing Director and Head of Special Situations Equity at the hedge fund Sandell Asset Management, where he helped build and lead the special situations team responsible for managing a portfolio of concentrated equity and activist investments, from July 2006 to July 2009. Mr. Graziano previously serveddirector on the Board of DirectorsAfrica50, a development impact infrastructure fund, Agence France-Locale, a community lending financial institution, and Echiquier Positive Impact fund. She is a Fellow at The Conference Board ESG Center in New York, serves on the Advisory Board of each of: Fair Isaac Corporation (FICO) from February 2008 to May 2013; WCI Communities Inc. from August 2007 to August 2009;the Hawkamah Governance Institute in Dubai, the Board of the ECGI in Brussels and InfoSpace Inc. from May 2007 to October 2008. Sandell Asset Management hadnon-controlling interestsis a member of the Haut Comite de Gouvernement d’Entreprise (HCGE) in FICO and InfoSpace through the ownership of securities.
Mr. Graziano completed a five year undergraduate/MBA program at Duke University earning a BA in Economics andFrance. Ms. L’Helias holds an MBA from The Fuqua SchoolINSEAD; a Master of Business.Laws (LLM) from the University of Pennsylvania, Law School; Master of Laws from the Université Paris I, Panthéon-Sorbonne Law School; and a law degree from the University of Saarbrucken, European Law Institute.
Mr. Graziano’s qualificationsOther Public Board Membership: None.
Previous Public Board Memberships (Past Five Years): Kering SA (Euronext Paris-listed) (from April 2016 to serve on our Board include his service on other boards as well as his extensive investment, researchMarch 2022).
Director Qualifications: Ms. L’Hélias is an experienced and investment banking experience in a varietyaccomplished international business, corporate governance and ESG expert with deep knowledge of industries. Mr. Graziano was recommended by the Icahn Parties pursuant to the Support Agreement.financial markets, ESG, corporate governance and investor sentiment.
![]() ![]() | Alan W. LeFevre Independent Director Age
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Alan W.Mr. LeFevre is the former Executive Vice President – Finance and Chief Financial Officer for Jarden Corporation, (“Jarden”), a leading provider of consumer products with a portfolio of over 120 brands sold globally, a position he held from June 2014 to April 2016. Prior to Jarden, from February 1997 to June 2014, Mr. LeFevre worked for Jarden Consumer Solutions, (“JCS”), a subsidiary of Jarden and formerly the Sunbeam Corporation, a manufacturer of home appliances. Fromappliances, including from April 2002 until June 2014, Mr. LeFevre wasas the Executive Vice President of Operations and Chief Financial Officer, for JCS. In this role, in addition to his responsibilities over accounting and finance, Mr. LeFevre alsowhere he led the Supply Chain, Manufacturing, Sourcing, Engineering, and Information Technology groups for JCS.JCS, and oversaw accounting and finance. From February 1997 to April 2002, Mr. LeFevre held positions of increasing responsibilities within the same business unit. Mr. LeFevre started his career with Arthur Andersen & Co. in 1982. Mr. LeFevre graduated with distinction from Valparaiso University with a Bachelor of Science in Business Administration degree and was a certified public accountant.
Other Public Board Memberships: None.
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications:Mr. LeFevre’s qualificationsLeFevre brings significant finance and operations experience to serve on our Board include his significant financial experience, which provides the Board as a former chief financial officer of a public company and a former CPA with important knowledge regarding financial matters and operational and executivemore than 30 years of experience which is relevant to the Company’s business operations.
Proposals to be voted on at the meeting |
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Mr. Lynn has been General Counsel of Icahn Enterprises L.P. (a diversified holding company engaged in a variety of businesses, including investment, automotive, energy, gaming, railcar, food packaging, metals, real estate and home fashion) since January 2015. From September 2004 to January 2015, Mr. Lynn was Assistant General Counsel of Icahn Enterprises. Prior to joining Icahn Enterprises, L.P., Mr. Lynn worked as an associate in the New York office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. in its business and finance department from February 2000 until September 2004. From September 1996 until February 2000, Mr. Lynn was an associate in the corporate group at Gordon Altman Butowsky Weitzen Shalov & Wein. Mr. Lynn previously served as a director of The Manitowoc Company, Inc., a capital goods manufacturer, from April 2015 to February 2018. Mr. Lynn received a B.A. in 1992 from the University of Michigan and a J.D. in 1996 from the Boston University School of Law.
Mr. Lynn’s qualifications to serve on our Board include his legal and finance experience gained both in private practice as well as his positions with Icahn Enterprises. Mr. Lynn was recommended by the Icahn Parties pursuant to the Support Agreement.
![]() | Juan Miguel Mendoza Distributor Director Age
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Mr. Mendoza has been an independent Herbalife distributor for 25almost 29 years and a member of the Company’s Chairman’s Club since 2013. He has been active in training independent Herbalife distributors around the world, and is a member of various strategy and planning groups for Herbalife.
Other Public Board Membership: None.
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications: Mr. Mendoza’s qualifications to serve on our Board include his 25almost 29 years of experience as an independent distributor of Herbalife distributor, which bringsNutrition products bring a first-hand understanding of the function and specific needs of our independent Herbalife distributors, the ultimate drivers of our business, to the Board.Company’s business. His tenure as a distributor also provides valuable insight into the Company’s growth and development over the25-year29-year period.
![]() | Don Mulligan Independent Director Age 61 Director since 2021 |
Mr. Mulligan served as Chief Financial Officer at General Mills, a multinational manufacturer and marketer of branded consumer foods, from 2007 to 2020. Mr. Mulligan previously held executive positions with General Mills from 2001 to 2007, including Vice President, Finance for the International division; Vice President, Finance for Operations and Technology; and Vice President, Treasurer. Prior to General Mills, Mr. Mulligan served as Chief Financial Officer, International, for the Pillsbury Company from 1999 to 2001, and held various international positions with PepsiCo Inc. and YUM! Brands, Inc., including Regional CFO, Americas; Finance Director, Asia; and Finance Director, Canada, from 1987 to 1998. Mr. Mulligan started his career with GTE Corporation in 1985. Mr. Mulligan earned his Bachelor of Arts from Duke University and his MBA from University of Michigan Graduate School of Business.
Other Public Board Membership: Energizer Holdings, Inc. (since April 2021); and Tennant Company (since 2009).
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications: Mr. Mulligan is a seasoned business builder with extensive experience as a Fortune 200 company CFO and public company director. He has worked extensively in Asia and Latin America and has cultivated strong relationships with institutional investors and the analyst community. Mr. Mulligan is a National Association of Corporate Directors Certified Director, and brings a strong track record of global expansion, talent development, capital structure evolution, risk management, business restructuring, investment oversight, M&A and corporate governance and social responsibility.
Proposals to be voted on at the meeting |
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The Honorable Michael Montelongo, a former presidential appointee and Senate-confirmed official, has been President and Chief Executive Officer of GRC Advisory Services, LLC, a private firm specializing in board governance, risk management, and compliance matters, since July 2016. He is also a senior advisor at leadershipForward, Inc., a premier leadership performance firm serving Fortune 500 and small business clients and serves on the boards of the Larry H. Miller Management Corporation, Exostar LLC, and Aerospace Corporation. Mr. Montelongo is an experiencedc-level executive and board governance leader who has led commercial, government, andnon-profit organizations and brings a unique and broad service industry and customer experience skill set in facilities and food service management, retail services, outsourced technical services, telecommunications, professional services, and aerospace/defense, including government service in the military, the U.S. Senate, the Pentagon, and the National Aeronautics and Space Administration (NASA). Focusing on strategy, financial and risk management (including cyber-risk), policymaking, and operations excellence for global commercial and public sector enterprises, he is recognized for leading change in large organizations.
Most recently, Mr. Montelongo served as chief administrative officer and senior vice president, public policy and corporate affairs for Sodexo, Inc., a quality of life services enterprise in North America from January 2008 until July 2016. Previously, he was a George W. Bush White House appointee serving as the 19th assistant secretary for financial management and chief financial officer of the U.S. Air Force from August 2001 until March 2005 and concluded his tenure at the Pentagon as acting secretary of the Air Force. A public policy expert, he is a lifetime member of the Council on Foreign Relations. Before joining the George W. Bush administration, Mr. Montelongo was an executive with a global management consulting firm, a regional telecommunications company, and completed a career in the U.S. Army that included line and staff assignments, a Congressional Fellowship in the U.S. Senate, and service as an assistant professor teaching economics and political science at West Point. Mr. Montelongo is also a member of the Council on Foreign Relations.
Mr. Montelongo earned his bachelor’s degree in science from West Point and an M.B.A. from Harvard Business School.
Mr. Montelongo’s qualifications to serve on our Board include his experience as ac-level executive and corporate governance leader for commercial, government, andnon-profit organizations, which helps the Board better appreciate federal government and regulatory matters and understand management’sday-to-day actions and responsibilities; his current and past professional financial and audit committee experience, which provides the Board with important financial and compliance insight; his service with a global food service firm focused on health, wellness, and nutrition, which is relevant to the Company’s business operations in selling and manufacturing packaged food and nutritional supplement products; his significant experience regarding international business and global security matters, which is relevant to the Company in light of its operations across 94 countries worldwide; his standing in and deep knowledge of the U.S. Latino community and market and his experience on other private and public company boards, which adds a depth of knowledge to our Board as to best practices in corporate governance.
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Mr. Nelson currently serves as Chief Executive Officer of Global Net Lease, Inc., or GNL, a publicly-traded real estate investment trust, a position he has held since July of 2017, and, since March of 2017, as a director of GNL. Mr. Nelson previously served as a member of the GNL’s audit committee from March 2017 until July 2017. Mr. Nelson also serves as a director and member of the audit committee of Icahn Enterprises GP, or IEP, a position he has held since June of 2001. Mr. Nelson was previously a director of New York REIT, Inc. from November 2015 until June 2017; a director and chairman of the audit committee of the Viskase Companies, Inc. from April 2003 through April 2010; a director of American Entertainment Properties Corp. from December 2003 until March 2013; a director of Tropicana Entertainment Inc. from March 2010 until May 2014, and a member of its audit committee from March 2010 until December 2013 and a member of its nominating and governance committee until his resignation in May 2014; a director of Orbitex Financial Services Group from August 1995 until March 2001; a director and as Chairman of the audit committee of Cequel Communications, an owner and operator of a large cable television system, from April 2008 to November 2012; a director and member of the audit committee of Take Two Interactive Software, Inc. a publisher, developer, and maker of video games and video game peripherals, from April 2010 through November 2013; a director and member of the compensation, governance and strategic alternatives committees of Voltari Corporation (f/k/a Motricity Inc.) from June 2011 to September 2015, and as Chairman of Voltari’s board of directors from January 2012 to September 2015; a director of VII Peaks Co-Optivist Income BDC II, Inc., an externally managed,closed-end management investment company, from November 2013 until August 2014; and a director of Ubiquity Corp from April 2014 until August 2014. Mr. Nelson was Chairman and Chief Executive Officer of Eaglescliff Corporation, a specialty investment banking, consulting and wealth management company, from 1986 until 2009. From March 1998 through 2003, he was Chairman and Chief Executive Officer of Orbit Aviation, Inc., a company engaged in the acquisition and completion of Boeing Business Jets for private and corporate clients; and from August 1995 until July 1999, Mr. Nelson was Chief Executive Officer andCo-Chairman of Orbitex Management, Inc., a financial services company in the mutual fund sector.
Mr. Nelson brings to his service as a director his significant experience in leadership roles serving as Chief Executive Officer, Director and Chairman of audit committees. Mr. Nelson was recommended by the Icahn Parties pursuant to the Support Agreement.
![]() | Maria Otero Independent Director Age
Director since 2013 |
Ms. Otero currently serves on the board of Development Alternatives Inc. In 2009 she was nominated by President Obama and confirmed byThe first Latina undersecretary in the US Senate to serveU.S. Department of State’s history, Ms. Otero served as Undersecretary of State for Democracy and Global Affairs. On January 17, 2012, Secretary Clinton named Maria Otero asAffairs and Undersecretary for Civilian Security, Democracy, and Human Rights a newly created office and position at the State Department, where she served until 2013.under President Obama. During her time at the Department of State, Undersecretary Otero also served as the President’s Special Coordinator for Tibetan Issues. She becamePrior to serving the highest ranking Hispanic official at the State Department and the first Latina undersecretary in its history. Fromgovernment, from 2000 to 2009 Ms. Otero served as President and CEO of Accion International, a global microfinance organization operating in 26 countries. In that capacity sheAt Accion International, Ms. Otero chaired the board of Accion Investments, a global equity investment fund and represented Accion on the board of several microfinance banks. She was appointed by President Clinton to chair the board of the Inter-American Foundation and by President Bush to serve as vice-chair on the board of the US Institute of Peace. In 2006, she was appointed by Secretary General Kofi Annan to the U.N. Advisors Group on Inclusive Financial Sectors. Ms. Otero has served on the boards of The Kresge Foundation since 2013, the Public Welfare FoundationBancosol, a Bolivian microfinance bank since 2013, Oxfam America since 2014, and2015, the Smithsonian Institution National Portrait Gallery since 2016, and is a member of the Council of Foreign Relations.American University since 2021. She also chaired the board of Bread for the World, and served on the boards of the Calvert Foundation and BRAC in Bangladesh. Ms. Otero was adjunct professor at Johns Hopkins School of Advanced International Studies (SAIS), Washington, DC from 1998 to 2008. Ms. Otero also worked as an economist for Latin America and the Caribbean in the Women in Development Office of USAID.
Ms. Otero holds an M.A. in literature from the University of Maryland; an M.A. in International Relations from the Paul H. Nitze School of Advanced International Studies (SAIS), at the Johns Hopkins University; and holds an honorary Doctorate of Humane Letters from Dartmouth College.
Other Public Board Membership: None.
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications:Ms. Otero’s qualifications to serve on our Board include an expansive career focused on empowering those less fortunate around the world, her standingleadership experience and extensive background in and deep knowledge of the U.S. Latino community and market, and her leadership, extensive public service, microfinance and microfinance experience which addboard governance bring a valuable breadthwealth of expertise in public affairs, finance and depth of knowledgegovernment to the Board.
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Ms. Paláu-Hernández is the founder and Chief Executive Officer of Hernández Ventures, a private firm engaged in the acquisition and management of a variety of business interests, a position she has held since November 1988. Prior to founding Hernández Ventures, Ms. Paláu-Hernández was an attorney with the law firm of McCutcheon, Black Verleger & Shea, where she focused on domestic and international business and real estate transactions from September 1985 until August 1988. Ms. Paláu-Hernández has been a director and member of the Compensation and Nominating and Corporate Governance Committees of ALJ Regional Holdings, Inc., a publically traded holding company, since November 2015. She is also a member of the following non-profit commissions and boards: the Woodrow Wilson International Center for Scholars and the Consejo Mexicano de Asuntos Internacionales Commission on Building a Secure and Competitive U.S.-Mexico Border, since January 2017; Pacific Counsel on International Policy, since April 2017; Yale School of Management Council of Global Advisors, since March 2016; Ex-Officio member of the Yale School of Management Board of Advisors, since March 2016; Smithsonian National Latino Board, since August 2016; UCLA School of Law Board of Advisors, since October 2008; and Trustee Emeritus of the University of San Diego Board of Trustees, since December 2017. Ms. Paláu-Hernández also served on the University of San Diego Board of Trustees from September 2007 until July 2016.
Ms. Paláu-Hernández has a B.A. from the University of San Diego and a J.D. from the UCLA School of Law.
Ms. Paláu-Hernández’s qualifications to serve on our Board include her experience in starting a business, which allow her to appreciate the challenges many of our distributors face, her finance and legal experience gained both her role at Hernández Ventures and in her private practice, her standing in and deep knowledge of the U.S. Latino community and market, and her leadership and extensive non-profit experience which add a valuable breadth and depth of knowledge to the Board.
![]() ![]() | John Tartol Distributor Director Age
Director since 2005 |
Mr. Tartol has been an independent Herbalife distributor for 3640 years and a member of the Company’s Chairman’s Club since 2000. He is active in training other independent Herbalife distributorsNutrition Members all over the world and has served on various strategy and planning groups for Herbalife. He is also active on behalf of various charities in his community and worldwide on behalf of the Herbalife FamilyNutrition Foundation. He has a Bachelor’s degree in finance from the University of Illinois.
Mr. Tartol’s qualifications to serve on ourOther Public Board include his 36Membership: None.
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications: With over 40 years of experience as an independent distributor of Herbalife distributor, whichNutrition products, Mr. Tartol brings a first-hand understanding of the function and specific needs of our independent Herbalife distributors, the ultimate drivers of our business, to the Board.distributors. His tenure as a distributor also provides valuable insight into the Company’s growth and development over the36-year40-year period.
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Proposals to be voted on at the meeting |
Proposal 2: Approve, on an advisory basis, the compensation of the Company’s named executive compensationofficers
As required by Section 14A of the Exchange Act, the Company is seeking an advisory shareholder vote on the compensation of the named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative disclosure, in this Proxy Statement.
Our executive compensation program is designed to pay for performance, and to attract motivate and encourage a long-term commitment from talented and high-performing executivesretain an accomplished executive team to lead the Company’s global success selling nutrition products including: food, dietary supplements and personal care products that are regulated at varying levels in the 9495 markets where we operate through a direct selling independent sales organization. Our program is further designed to advance our shareholders’ interests in a manner that is consistent with our Company value of “operating with integrity and transparency.”operate. The executive compensation program places strong emphasis on long-term sustainable growth and enhanced value for our shareholders through an annual equity grant program that rewardsprovides executives with the ability to participate in our share price appreciation and to share equally in potential downside if key targets that drive shareholder value are not achieved. By encouraging long-term performance and enhanced shareholder value, our executives are encouraged to operate our business with integrity, focusing on fostering strategic growth while being mindful to mitigate against risk. In addition to emphasizing long-term growth, our compensation program attracts talented executives by offering a competitive base salary and annual cash incentives, which encouragespromote retention and encourage our executives to achieve short-term financial goals.
The vast majority of the compensation of the Company’s named executive officers — the officers identified in Part 4 — “Compensation discussion and analysis” — is tied to Company operating and share price performance. Volume Points, operating income and earnings per share (adjusted, as applicable) are used to determine executives’ annual incentive compensation. Long term incentives were provided to our named executive officers in 2017 in the form of an annual grant of stock appreciation rights, or SARs, and performance share units, or PSUs, all of which are subject to performance and service criteria. These awards directly align the long-term interests of our executives with those of our shareholders.
At our 20172021 annual general meeting of shareholders, our shareholders expressed strongcontinued support forof our 2016 executive compensation program, with over 88%approximately 85% of votes cast in favor of the advisory vote proposal. When designing our 20172021 executive compensation program, the compensation committee of the Board of Directors, or the Committee, considered, among other things, the Company’s growth, profit and non-financial
profit andnon-financial (i.e., sales leader retention) objectives, benchmarking against market practices, the Company’s financial performance, incentives that reward shareholder value creation and any shareholder feedback. While the Committee did not make any changes to our 2017 executive compensation program as a result of the say on pay vote in respect of our 2016 executive
compensation program, the Committee determined to make the following changes, which applied to our 2017 program:
We believe that the Company’s financial performance is facilitated by the “pay for performance” design of our compensation program. Our program motivates our executives to deliver financial results, with the appropriate level of risk taking,risk-taking, against three performance metrics in a manner that ultimately aligns with the realized growth of shareholder equity value.
Additional information regarding the Company’s compensation program applicable to the named executive officers is described in Part 4 — “Compensation discussion and analysis” and the related tables and narrative disclosure. For the reasons discussed above, the Board of Directors unanimously recommends that shareholders vote in favor of the following resolution:
“Resolved, that the shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to Item 402 ofRegulation S-K and described in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative disclosure, in the proxy statement.”
While the shareholder vote on the resolution isnon-binding, the Board of Directors values the opinions that shareholders express in their votes and in any additional dialogue. It will consider the outcome of the vote and those opinions when making future compensation decisions. The next shareholder advisory vote on the Company’s executive compensation is expected to occur at the 20192023 annual general meeting and the Company currently intends to offer shareholders this advisory vote on an annual basis.of shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY RESOLUTION ON THE COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION.
Proposals to be voted on at the meeting | 23 |
Proposal 3: Approve the name change of the Company from “Herbalife Ltd.” to “Herbalife Nutrition Ltd.”
In proposal 3, we are asking shareholders to pass the following resolution:
“Resolved, that, as a special resolution, the name of the Company is changed from “Herbalife Ltd.” to “Herbalife Nutrition Ltd.”
If this proposal is approved by the shareholders, the name change will be effective as of May 7, 2018. Subsequent to the name change, the Company will not change its trading symbol on the NYSE and the Common Shares will continue to trade on the NYSE.
The Board of Directors determined that it would be in the Company’s best interest to change the Company’s name to better align it with the Company’s principal business operations and to reinforce the Company’s purpose as a global nutrition company that focuses on weight management, targeted nutrition, and energy, sports and fitness products. The Board of Directors, together with management, believes that the proposed name change would allow the Company to better represent our business strategy to customers, business partners and the investment community.
Under the Articles and Cayman Islands Law, the affirmative vote of not less than 66.67% of the Common Shares present or represented by proxy and entitled to vote must approve a change to the Company’s name.
If the name change is approved by our shareholders, Article 1 of our Articles will be amended to read as follows:
“The name of the Company is Herbalife Nutrition Ltd.”
The change of name will not affect in any way the validity or transferability of share certificates outstanding at the time of the name change, our capital structure or the trading of the Common Shares on the NYSE.
Following the date of the Meeting, shareholders should continue to hold their existing share certificates regardless of whether the shareholders approve this proposal 3 to change the Company’s name, proposal 4 to amend and restate the Articles and/or proposal 5 to effect a two-for-one stock split of the Company’s Common Shares. Shareholders should not destroy any share certificates and should not deliver any share certificates to the transfer agent or take any other action with respect to their Common Shares solely as a result of this proposal, proposal 4 or proposal 5. If the name change is approved by shareholders at the Meeting, uncertificated shares currently held in direct registration accounts and any new share certificates that are issued after the name change becomes effective will bear the name “HERBALIFE NUTRITION LTD.”
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO CHANGE THE NAME OF THE COMPANY FROM “HERBALIFE LTD.” TO “HERBALIFE NUTRITION LTD.”
Proposal 4: Approve the amendment and restatement of the Company’s Amended and Restated Memorandum and Articles of Association
The Company’s Board of Directors is recommending to shareholders to pass the following resolution to account for the Company’s proposed name change (if approved), the stock split proposal (if approved) and to provide for additional changes as summarized below:
“Resolved, that, as a special resolution, from the Effective Time, the memorandum and articles of association of the Company currently in effect be amended and restated in the form attached as Annex A to this Proxy Statement and notice of annual general meeting.”
The Effective Time for the purposes of the above resolution is May 7, 2018.
Article references in the summary below are to the sections reflected inAnnex A and not necessarily the Articles in effect as of the date hereof. The description of the proposed changes to the Articles contained in this Proxy Statement does not purport to be complete and is qualified in its entirely by reference to the full text of the form of the second amended and restated memorandum and articles of association attached to this Proxy Statement as Annex A.
Proposed Changes to the Articles
Articles 2.10 and 2.11 have been added to permit electronic execution and/or delivery of documents pursuant to the provisions of the Electronic Transactions Law (2003 Revision) of the Cayman Islands.
Articles 30 and 31 have been updated to provide for the repurchase of Common Shares by the Company and to conform with recent updates to Cayman Islands Law.
Articles 37 and 38 of the Articles have been added to permit the Company to hold its Common Shares as treasury shares as treasury shares are now permitted by Cayman Islands Law.
Article 87 has been added to permit a shareholder who holds more than one share to split his votes “for” or “against” a resolution and/or abstain from voting some or all of the his shares.
Articles 95 and 99 have been updated to remove references to classification of directors as the declassification of the Board was completed in 2016.
Article 117 has been updated to authorize the Board to delegate their powers, authorities and discretionary duties to committees of the Board.
Article 161 has been added to permit the Company to merge or consolidate with one or more constituent companies on such terms as the Board of Directors may determine and with shareholder approval of a special resolution related thereto.
Additionalnon-material changes have been made to the Articles in order correct minor typographical errors, reflect general legislative updates since the last full adoption of the amended and restated memorandum and articles of association in April 2015 and to include all prior amendments already made to the Articles since December 2004.
The form of the second amended and restated memorandum and articles of association, as it will appear if the name change proposal, this proposal 4 and proposal 5 are approved, is attached to this Proxy Statement asAnnex A.
Under the Articles and Cayman Islands Law, the affirmative vote of not less than 66.67% of the Common Shares present or represented by proxy and entitled to vote must approve the amendment to the Articles set forth in this proposal 4.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSED AMENDMENT AND RESTATEMENT OF THE COMPANY’S ARTICLES IN THE FORM ATTACHED AS ANNEX A.
Proposal 5: Effect atwo-for-one stock split of the Company’s Common Shares.
The Company’s Board of Directors has approved, and is recommending to shareholders for approval at the Meeting, the following resolution to effect a two-for-one stock split of the Common Shares, or the Stock Split Proposal:
“Resolved, that, from the Effective Time, the Company’s outstanding Common Shares be subject to a stock split at a ratio of two-for-one (2:1) by:
The Effective Time for the purposes of the above resolution is May 7, 2018.”
If the Stock Split Proposal is approved, on May 7, 2018 each issued and outstanding Common Share, par value US $0.001 per share, would be subdivided into two Common Shares, par value US $0.0005 per share, and the Company’s currently authorized share capital of 1,000,000,000 Common Shares, par value US $0.001 per share, would be subdivided into 2,000,000,000 Common Shares, par value US $0.0005 per share. The Company is currently authorized to issue 7,500,000 preferred shares, par value US $0.002 per share, and the proposed stock split will not affect this authorization.
The purpose of the Stock Split Proposal is to effect a two-for-one stock split of the Common Shares. The two-for-one stock split will increase the number of shares held in the public market, and the Board of Directors believes that this will place the market price of a Common Share in a range that is more affordable to investors, particularly individuals. As a result, potentially more people would be able to buy our Common Shares and provide more liquidity in each shareholder’s investment. We cannot be certain that these effects will occur.
If the Stock Split Proposal is approved by the shareholders, it will be effective on May 7, 2018, the record date for the stock split. The Company will apply to the NYSE for the listing of the additional Common Shares that would be issued as a result of the stock split. Provided the listing application is approved by the NYSE, the stock split would be accomplished by providing each shareholder of record as of the close of business on the stock split record date an additional Common Share, par value $0.0005 per share, in book entry form for each Common Share held by the shareholder on that date. The additional Common Shares will be distributed on or about May 14, 2018.
FOLLOWING THE STOCK SPLIT, EXISTING SHARE CERTIFICATES REPRESENTING COMMON SHARES, PAR VALUE US $0.001 PER SHARE, WOULD BE DEEMED TO REPRESENT THE SAME NUMBER OF COMMON SHARES HAVING A PAR VALUE OF US $0.0005 PER SHARE. EXISTING CERTIFICATES WILL NOT BE EXCHANGED FOR NEW CERTIFICATES AND CERTIFICATES SHOULD NOT BE RETURNED TO THE COMPANY OR ITS TRANSFER AGENT AS A RESULT OF THE STOCK SPLIT.
There are no preemptive rights with respect to the Common Shares, and shareholders will not have any dissenters’ or appraisal rights in connection with adoption of the Stock Split Proposal. The additional Common Shares issuable upon the effective date of the stock split would have the identical powers, preferences and rights as the currently outstanding Common Shares. Adoption of the Stock Split Proposal would not affect the rights of the holders of currently outstanding Common Shares, except for rights incidental to increasing the number of Common Shares outstanding. Appropriate adjustments will be made to all awards granted under the Company’s equity incentive and other employee incentive plans as well as the number of Common Shares reserved for issuance thereunder.
Assuming transactions of an equivalent dollar amount, brokerage commissions on purchases and sales of Common Shares after the stock split may be higher than before the stock split because the same ownership interest would be represented by a greater number of shares.
Tax Effect of the Two-for-One Stock Split
Under existing United States federal income tax laws, the proposed two-for-one stock split would not result in any gain or loss or realization of taxable income to owners of Common Shares. The cost basis for tax purposes of each new Common Share and each retained Common Share would be equal to one-half of the cost basis for tax purposes of the corresponding Common Share immediately preceding the stock split. The holding period for each additional Common Share issued pursuant to the stock split would be deemed to be the same as the holding period for the original Common Share. The laws of jurisdictions other than the United States may impose income taxes on the receipt of additional shares pursuant to the stock split.
This summary is based upon the Internal Revenue Code, existing and proposed Treasury Regulations promulgated thereunder, administrative pronouncements and judicial decisions, all as in effect on the date of this Proxy Statement, and all of which are subject to change, possibly on a retroactive basis. Any such change could affect the continuing validity of this discussion. This discussion does not address the effect of any applicable state, local or foreign tax laws. The foregoing summary does not purport to be a complete analysis of all potential tax effects of the stock split. Each shareholder is urged to consult with his or her own tax advisor to determine the particular tax consequences to such shareholder of the stock split, including the applicability and effect of state, local and foreign tax laws and the possible effects of any changes in U.S. federal or other applicable tax laws.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSED TWO-FOR-ONE STOCK SPLIT CONTEMPLATED BY THE STOCK SPLIT PROPOSAL.
Proposal 6:3: Ratification of the appointment of independent registered public accountantsaccounting firm
The audit committee has selected PricewaterhouseCoopers, or PwC, as the Company’s independent registered public accountantsaccounting firm for the fiscal year ending December 31, 2018.2022. Services provided to the Company and its subsidiaries by PwC in fiscal 2017years 2021 and 20162020 are described below under “— Fees“Fees to independent registered public accountantsaccounting firm for fiscal 2017years 2021 and 2016.”2020”. Additional information regarding the audit committee is set forth in the “Audit committee report.”report”.
The Articles do not require that our shareholders ratify the selection of PwC as the Company’s independent registered public accountants.accounting firm. However, we are requesting ratification because we believe it is a matter of good corporate practice. If the Company’s shareholders do not ratify the selection, the audit committee will reconsider whether or not to retain PwC, but may, nonetheless, retain PwC as the Company’s independent registered public accountants.accounting firm. Even if the selection is ratified, the audit committee in its discretion may change the appointment at any time if it determines that the change would be in the best interests of the Company and its shareholders.
The Company has been advised that representativesRepresentatives of PwC will be present atare expected to attend the Meeting where they will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
The audit committee is responsible for monitoring our financial auditing, accounting and financial reporting processes and our system of internal controls, and selecting the independent registered public accounting firm on behalf of the Board of Directors. Our management has primary responsibility for our internal controls and reporting process. Our independent registered public accounting firm, PwC, is responsible for performing an independent audit of our consolidated financial statements and the effectiveness of our internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States), or the PCAOB, and issuing an opinion thereon. In this context, the audit committee met regularly and held discussions with management and PwC. Management represented to the audit
committee that the consolidated
financial statements for fiscal year 20172021 were prepared in accordance with U.S. generally accepted accounting principles.
The audit committee hereby reports as follows:
Based on the reviews and discussions referred to above, the audit committee recommended to the Board of Directors that the audited consolidated financial statements be included in our Annual Report onForm 10-K for the year ended December 31, 2017,2021, which have been filed with the Securities and Exchange Commission, or the SEC. The audit committee also selected PwC to serve as our independent registered public accounting firm for the year ending December 31, 2018.2022.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Richard P. Bermingham (Chairman)Don Mulligan (Chair)
Michael MontelongoSophie L’Hélias
James L. NelsonAlan W. LeFevre
Proposals to be voted on at the meeting |
Fees to independent registered public accountantsaccounting firm for fiscal 2017years 2021 and 20162020
The following fees were for services provided by PwC:
2021 | 2020 | |||||||||||||||
2017 | 2016 | |||||||||||||||
Audit fees(1)
| $6,818,000 | $5,883,000 |
| $7,645,000 |
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| $7,459,000 | |||||||||
Audit-related fees(2)
| $211,000 | $38,000 |
| $80,000 |
|
| $120,000 | |||||||||
Tax fees(3)
| $1,409,000 | $2,185,000 |
| $2,274,000 |
|
| $2,471,000 | |||||||||
Total
| $8,438,000 | $8,106,000 |
| $9,999,000 |
|
| $10,050,000 |
(1) | Audit fees for |
(2) | Audit-related fees consist of assurance and related services that were reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and which are not reported under “Audit fees”. |
(3) | Tax fees were for tax compliance and tax guidance. |
The audit committee has adoptedpre-approval policies and procedures for audit andnon-audit services which the Company’s independent auditorsregistered public accounting firm have historically provided. Pursuant to those policies and procedures, the Company’s external auditorindependent registered
public accounting firm cannot be engaged to
provide the Company any audit ornon-audit services to the Company unless the engagement ispre-approved by the audit committee in compliance with the Sarbanes-Oxley Act of 2002. All fees and services described in the table above werepre-approved pursuant to this policy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF PwC AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANTSACCOUNTING FIRM FOR FISCAL 2018.YEAR 2022.
Proposals to be voted on at the meeting |
| Executive compensation |
Compensation discussion and analysis
This section explains the Company’s 20172021 executive compensation program as it relates to our “namednamed executive officers”,officers, or NEOs:
and Chief Executive Officer | ||
President | ||
Chief Financial Officer | ||
Alan Hoffman | Executive Vice President, Global Corporate Affairs | |
Mark Schissel | Chief Operating Officer(1) | |
David Pezzullo | Senior Operations Advisor (Former Chief Operating |
Executive summary of our compensation program
Financial performance for purposes of our annual incentive program
The Company’s financial performance is a material factor in determining the total compensation for our NEOs. As discussed further below,top-line growth stated in terms of Volume Points and profitability stated in terms of Operating Income and EPS (each adjusted, as applicable, in the manner discussed below) are the performance metrics used for purposes of our annual incentive program.
For purposes of our 2017 annual incentive program, the targets for Operating Income and EPS were set lower than the 2016 results, primarily reflecting changes in foreign currency rates, but the Volume Point target was set above 2016 results based upon the Company’s expectations for revenue growth. In 2017, we exceeded our performance targets for Operating Income and EPS due to strong expense controls, but fell slightly short of meeting our Volume Points target primarily because of changes in the way we do business in the United States in response to the consent order entered into with the Federal Trade Commission, or the FTC Consent Order. We continued to deliver positive business performance despite facing events with macro-economic consequences, such as natural disasters including earthquakes, hurricanes and floods occurring domestically and abroad in August, September and October.
Results for Bonus Purposes
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2014 | 2015 | 2016 | 2017 | 2017 Target
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Volume Points (millions)
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| 5,443
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| 5,336
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| 5,582
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| 5,379
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| 5,752
|
| |||||
Operating Income ($, millions)
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| 792.1
| (1)
|
| 648.0
| (1)
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| 637.9
| (1)
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| 575.3
| (2)
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| 558.3
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EPS ($) (diluted)(1)
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| 5.93
| (1)
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| 5.00
| (1)
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| 4.83
| (1)
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| 4.10
| (2)
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| 3.83
|
| |||||
Adjusted closing share price at year end ($)
|
| 37.70
|
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| 53.62
|
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| 48.14
|
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| 67.72
|
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| N/A
|
|
(1) |
(2) | Effective August 2, 2021, as part of his planned retirement, Mr. Pezzullo stepped down from his position as the Chief Operating Officer and |
Executive compensation |
Our Executive Compensation Structure
The following table generally summarizes the 2017 annual incentive awards for the NEOs. All 2017 annual incentive awards to NEOs were based solely on the calculated results to target performance levels. For a more detailed discussionkey elements of our 2017 annual incentive awards for the NEOs, please refer to the discussion below under “— Annual incentive awards.”executive compensation program in 2021:
| Short-Term Incentives (Annual Incentive Plan) | ||||
Fixed cash compensation for NEOs which is reflective of job scope and responsibilities, demonstrated sustained performance, capabilities and experience. | Annual cash incentive designed to reward NEOs for achievement of challenging annual financial targets for the prior year.
| For 2021, performance was evaluated against preset goals for the following financial metrics:
| • Operating Income (70%)
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• Volume Points (30%) | |||||
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| ¡ Payout up to 200% of target shares
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| • 25% in the form of time-vesting restricted stock units (RSUs)
¡ Vests 20% each on the first and second anniversaries of grant date and 60% on the third anniversary of grant date. |
In addition toThe Company achieved the financial performance discussed above, the Company achievedfollowing key strategic accomplishments in 20172021 that provided significant support for the Company’s continued growth and success. These include:
and promotes efficient business practices, which was launched in 20 additional markets in 2021; |
Executive compensation | 27 |
Compensation program that aligns pay and performance
Our executive compensation program is designed to pay for performance, and to attract motivate and encourage a long-term commitment from talented and high-performing executivesretain an accomplished executive team to lead the Company’s global success selling nutrition products. Our
program is further designed to advance our shareholders’ interests in a manner consistent with our Company value of “operating with integrity and transparency.” The compensation program places strong emphasis on actions that create long-term sustainable growth and enhanced value for our shareholders through an annual equity grant program that rewards executives with the ability to participate in our share price appreciation and to share equally in potential downside if key targets that drive shareholder value are not achieved. By encouraging long-term performance and enhanced shareholder value, our executives are committedincentivized to operatingoperate our business with integrity, focusing on fostering strategic growth while being mindful to mitigate against risk. In addition to emphasizing long-term growth, our compensation program attracts talented executives by offering a competitive base salary and annual cash incentives, which encourage our executives to achieve short-termannual financial goals. The Compensation Committee of the Board of Directors, or the Committee has the responsibility for establishing, developing and implementing these programs while ensuring an appropriateagainst excessive level of risk-taking by the Company’s executives.
The direct compensation of our NEOs in 20172021 consisted of base salary, annual cash incentives, and grants of equity in
the form of performance stock appreciation rights, or SARs, and performance share units, or PSUs.PSUs, and time-vesting restricted share units, or RSUs. To create and reinforce a pay“pay for performanceperformance” philosophy and culture, and increase alignment with the expectations of investors in the Company, the annual cash incentives and equity components of compensation comprise the vast majority of the total compensation of our NEOs. In setting target compensation, the Committee annually reviews and assesses the total compensation opportunity for each executive compared toNEO primarily against comparable executives within the Herbalife Peer Group,list of comparator companies selected by the Committee to serve as defined below,a market benchmark, along with other comparative factors.factors such as scope and responsibilities of a given executive role. Although there is no targeted mix of
compensation elements, the proportion of compensation designed to be delivered in variable pay versus base salary increases with the ability of the executive to influence overall Company performance.
For 2017,2021, the percentage of targeted direct compensation provided in the form of annual and long-term incentives
tied to the Company’s performance was 87%between 64% to 85% for our current CEO and between 77% and 80% for our other NEOs.NEOs who were executive officers as of December 31, 2021. As reflected under the “2017 Summary“2021 summary compensation table,”table”, actual compensation paid provided in the form of such incentives was 87%between 66% to 86% of total compensation for our current CEO and between 76% and 82%NEOs who were executive officers as of total compensation for our other NEOs.December 31, 2021.*
Percentages may not total due to rounding.
* | Percentages may not total 100% due to rounding. Compensation for Mr. Pezzullo, who was no longer an executive officer effective August 2, 2021, is not included. |
In 2017, except with respect to Mr. Johnson’spro-rated annual incentive award while serving as CEO of the Company, the Committee determined to consolidate the three performance measures previously used in annual incentive plans for our NEOs (i.e., Volume Point, Operating Income and EPS) into two key financial performance measures, Volume Point and Operating Income, to be applied to all NEOs with a weighting of 30% and 70%, respectively. The Committee made such change in order to simplify the performance measures and to align all NEOs to the same performance targets. The Committee further believes these two performance measures better drive the Company’s share value. While Mr. Johnson’s supplemental annual incentive award applicable during the time he served as CEO of the Company (as described in more detail under “— Annual incentive awards” below) was subject to the same two performance metrics, the performance measure for Mr. Johnson’spro-rated annual cash incentive award for the period where he served as our CEO was based entirely on EPS. Each of these performance measures is more fully described in “Annual incentive awards — Targets and award determination” below.
Long-term incentives grantedGrants to our NEOs in 2017 were exclusively in the formexecutive officers pursuant to our long-term incentive program generally consist of PSUs (~75% of equity value) and RSUs (~25% of equity value). With this allocation of equity awards, subject to performance targets, which provide athe Company’s executive compensation program retains its most effective feature, its direct alignmentemphasis on multi-year performance. This aligns executive pay with the expectationsCompany’s sustained performance over several years, while also aligning the interests of the Company’s investors to enhance long-term shareholder value. NEOs with our shareholders through share ownership.
The NEOs each received performance SARsPSUs and RSUs in February 20172021 as part of their long-term incentive award granted in the ordinary course. WhileMr. Amezquita received an additional equity grant of 25% RSUs and 75% PSUs in March 2021 as part of a subsequent adjustment following his transition to CFO in November 2020, and Mr. Schissel received an additional equity grant of 100% PSUs when he transitioned to the use of SARsChief Operating Officer role and the executive team in and of themselves only have value to our NEOs if our share price increases, the vesting of these SARs requires achieving sales leader retention goals (i.e., retention of the Company’s independent distributor sales leaders). August 2021.
28 | Executive compensation |
The use of this sales retention metric helps management alignPSUs accomplishes the business strategies to ensure that marketing and sales
programs and promotions lead to enhanced retention of the Company’s most senior distributors.
As part of the Company’s “build it better” philosophy, the Committee continued to evaluate our executive compensation program during 2017 and determined to introduce PSUs as part of the long-term equity incentive program in order to:following goals:
Messrs. Goudis and Pezzullo received PSUs in June 2017 and August 2017, respectively, in connection with their promotions to CEO and COO, respectively.
In 2018, in furtherance of its commitment to improve the alignment ofAdditionally, our executive compensation program includes the following practices and policies, which we believe reinforce our executive compensation philosophy and objectives that are aligned with the interests of shareholders, the Committee determined to eliminate performance SARs from the design of our long-term incentive program. Beginning in 2018, grants to NEOs pursuant to our long-term incentive program will consist of PSUs (75%) and time-vesting restricted share units, or RSUs (25%). With this change, the Company’s executive compensation program will retain its most effective feature, its direct emphasis on multi-year performance, which ensures that NEO pay is aligned with
shareholders:
the Company’s performance over several years, while also aligning the interests of NEOs with our shareholders through share ownership.
Our shareholders have consistently expressed strong support for our executive compensation program, with over 87%, on average, of votes cast in favor of our executive compensation program since the shareholder advisory vote over our executive compensation program was sought beginning with our 2011 annual general meeting. At our 2017 annual general meeting, our shareholders continued to show their strong support, with approximately 88% of votes cast in favor of the advisory “say on pay” vote proposal in respect of our 2016 executive compensation program. When designing our 2017 executive compensation program, the Committee considered, among other things, the Company’s growth, profit andnon-financial (i.e., sales leader retention) objectives, benchmarking against market practices, the Company’s financial performance, incentives that reward shareholder value creation and any shareholder feedback. The Committee determined to make the following changes, which applied to our 2017 program:
At our 2021 annual general meeting of shareholders, our shareholders demonstrated their continued support of our executive compensation program, with approximately 85% of votes cast in favor of the advisory “say on pay” vote proposal. We believe this vote reflects continued support for our executive compensation program structure, which focuses on optimizing (a) incentives and metrics that result in the greatest degree of alignment with all stakeholder interests, and (b) recruitment, engagement, motivation and retention of executives. Additionally, through our meetings with shareholders, our
investors expressed continued support for our executive compensation program. Accordingly, no changes were made to our executive compensation program in response to the 2021 say-on-pay vote. We continue to consider the results from our advisory votes on executive compensation, as well as feedback received throughout the year, and evaluate our program to find ways we can further align management incentives with the interests of our shareholders, our distributors and our employees, which we view to be essential to our long-term success.
29 |
The Committee determined to make changes to our executive compensation program for 2018 as part of the Company’s “build it better” philosophy. As part of this philosophy, we are committed to continue to improve the alignment of our compensation program with shareholder value creation, while balancing the need to retain a strong leadership team. The Committee believes the changes being made to our 2018 compensation program further improves the alignment between executive compensation and the interests of shareholders. Highlights of our 2018 changes and the primary reasons for such changes are described below:
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Executive compensation program objectives
As a leaderglobal nutrition business, we operate in the nutritional products industry, generally manufacturingan environment of challenging regulatory, economic and geopolitical uncertainty. We manufactured approximately 65%60% of our own inner nutrition products that arewere sold through a direct selling distribution channelworldwide, and generatinggenerated approximately 80%76% of our net sales outside the United States for the year ended December 31, 2017, we operate in an environment of challenging regulatory, economic and geopolitical uncertainty.2021. Our continued success depends on the leadership of a highly-talented,highly talented, adaptive and dedicated executive team. Our executive compensation program for our NEOs provides competitive rewards to executivesour NEOs who contribute to our annual success in achieving growth in revenues and profitability, creating and growing a global network that provides customers with personalized nutrition solutions, as well as making strategic decisions that should lead to increasing shareholder returns to stakeholders over time.
The Committee believes that shareholderstakeholder interests are advanced ifwhen the Company assembles, motivates and rewards a high-performing management team. To promote this objective, the Committee developed its executive compensation program guided by a “pay for performance” organizing framework and the resulting underlying principles listed below:
Principle | Implication on HLF Program | Rationale | ||||
Alignment of Executives’ and Long-Term Shareholders’ Interests. Long-term incentives should be provided in Company equity, where allowed by local law, to encourage executives to plan and act with the perspective of shareholders and with the Company’s vision, mission and values in mind, and be rewarded for the successful implementation of our growth strategies.
| • • The Company has competitive share ownership guidelines. | • PSUs and RSUs align executive rewards with the Company’s sustained long-term performance and shareholder value creation.
• |
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value. | ||
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Incentive compensation must provide superior pay for superior performance that meets or exceeds the expectations of our shareholders. | • Superior performance expectations are built into performance targets and ranges of our incentive plans such that when incentive targets are met, the Company is exceeding peer financial performance and meeting shareholder expectations.
• Our incentive plans are calibrated to deliver above-median compensation for meeting superior performance targets, value.
| • The only way for our executives to earn |
Balanced Incentives to Promote Sustainable Value-Creation.Incentive compensation should reflect a balanced time horizon between annual and long-term performance in order to promote sustainable growth in the value of the enterprise. | • Annual incentive is paid in cash, based on achievement of annual financial performance targets.
•
| • A mix of cash and equity compensation is a competitive practice.
• Paying a mix of cash and equity based on a “portfolio” of equity vehicles and performance metrics also |
30 | Executive compensation |
| Implication on HLF Program | Rationale | ||
Focus on Performance-Based Incentives. A majority of total compensation is at-risk and tied to achievement of annual financial and non-financial performance goals and improvement in long-term stakeholder value. | •
• |
• Annual and long-term incentive plans use growth objectives and profit objectives. These plans are forward-looking and backward-looking, to provide ensure a comprehensive set of metrics are used to consider overall performance of the Company and our executive team. | ||
Attract and Retain Talented Executives.The program must attract and encourage a long-term commitment from talented executives necessary to lead our global nutrition business and advance stakeholders’ interests in a manner consistent with our company value of operating with integrity and transparency.
| •
• | • Focus on long-term performance and shareholder • Operating with integrity and transparency is a key corporate value that is central to how we conduct our business and is reflective of our focus on all stakeholders. | ||
Competitive Pay Opportunities. Compensation opportunities must be competitive with the pay practices of companies that operate in global markets and enable us to attract and retain high-performing, highly employable executive talent with similar executive skills and capabilities. | • Peer group reflects the market in which we reasonably compete for executive talent. • We reference both proxy-sourced market data from our peer group as well as general industry survey data from nationally recognized compensation surveys. • The Committee’s independent advisor provides the Committee with the 25th, 50th and 75th percentiles of market data to understand the scope of the market, with target compensation for top executives positioned relative to market references based on a variety of factors, including individual performance, internal equity, succession planning and business strategy. • Overall, our executives are within a competitive range of market, with appropriate variance based on incumbent-specific characteristics. | • The Company recruits high-performing executives with known track records in competitive, complex and global businesses. • To attract the talent the Company needs to lead its business, compensation opportunities must be attractive relative to similar opportunities at our peers. |
Executive compensation |
PurposeElements of compensation elementsCompensation
The compensation and benefits program for our NEOs consists of and is designed to achieve the following:
Direct | Purpose | |
Base salary | Provide a competitive foundation for total compensation to each executive
| |
Annual cash incentives | Reward
| |
Long-term equity-based incentives (PSUs and | Provide
| |
Indirect | ||
Retirement benefits | Encourage
| |
Life insurance benefits | Provide a competitive benefit in the event of death of an executive.
| |
Severance benefits | Enable each
| |
Change in control benefits | Enable
|
The Chair of the Committee, with input from the independent compensation advisor, recommends the CEO’s compensation to the Committee in an executive session not attended by the CEO. Once a recommendation has been established by the Committee, the CEO’s compensation is reviewed with, and approved by, the independent members of the Board in an executive session not attended by the CEO or any non-independent members of the Board.
Role of executive officers in executive compensation decisions
The CEO reviews compensation data gathered from a group of peer companies approved by the Committee and described belowon page 41 under “— Peer“Peer Group”, or the Herbalife Nutrition Peer Group, and, along with general industry compensation surveys, considers each executive officer’s performance and scope of responsibility, and makes a recommendation to the Committee on changes to base salary, annual incentive awards and equity awards for each executive officer other than himself. The CEO participates in Committee meetings at the Committee’s request to provide relevant background information regarding the Company’s strategic objectives and to evaluate the performance of and compensation recommendations for the other executive officers. The Committee utilizes the information provided by the CEO along with input from its independent compensation advisor and the knowledge and experience of Committee members in making compensation decisions.
Executive compensation |
Base salaries for our NEOs are intended to reflect the scope of their responsibilities, performance, skills and experience as compared with relevant and comparable market talent. When establishing base salaries for NEOs, the Committee considers market data and positions target pay for the NEOs based on a number of factors, including experience and tenure of the executive, scope of responsibilities, business performance and individual performance.
The Committee generally reviews base salaries of our NEOs annually, generally in February.February of each year. In its annual review of the base salaries for our NEOs for 2017,in February 2021, the Committee determined to have the base salaries of our NEOs
remain generally unchanged. On June 1, 2017,unchanged, other than Mr. Johnson transitionedAmezquita as described below. Mr. Schissel was not an executive officer and not subject to the role of Executive ChairmanCommittee review in February 2021, and Mr. Goudis transitioned to the role of CEO. On August 1, 2017, Mr. Pezzullo became the Chief Operating Officer of the Company. In connection with these transitions, the Committee approved changes to each of their base salaries.received a merit increase as described below. The chart below shows the 20152021 and 20162020 base salaries for the NEOs, the base salaries approved by the Committee for 2017, the current base salaries as of December 31, 2017,each NEO, and the rationale for the applicableany salary changes.
In connection with the elimination of the executive wellness program, executive physical and financial planning benefits, the base salaries of our NEOs increased by approximately 3% effective January 1, 2017.changes in 2021.
NEO | 2015 Salary | 2016 Salary | 2017 Salary | Current Salary (as of December 31, 2017)
| Rationale for Change
| |||||||||||||
Michael O. Johnson | $1,236,000 | $1,236,000 | $1,236,000 | (1) | $650,000 | Ø Transition to Executive Chairman
| ||||||||||||
Richard P. Goudis
|
| $675,680
|
|
| $675,680
|
|
| $675,680
|
|
| $1,000,000
|
| Ø Appointed to CEO
| |||||
Desmond Walsh
|
| $675,680
|
|
| $675,680
|
|
| $694,680
|
|
| $694,680
|
| Ø 3% increase
| |||||
John G. DeSimone
|
| $600,000
|
|
| $600,000
|
|
| $619,000
|
|
| $619,000
|
| Ø 3% increase
| |||||
David Pezzullo | $438,626 | $438,626 | $457,626 | $525,000 | Ø Appointed to Chief Operating Officer
|
NEO | 2020 Salary(1) | 2021 Salary(1) | Rationale for 2021 Change | |||||||||
John O. Agwunobi | $900,000 | $1,000,000 | (2) | Ø Subsequent adjustment following transition to CEO | ||||||||
John DeSimone | $695,000 | $695,000 | ||||||||||
Alexander Amezquita | $400,000 | $500,000 | (3) | Ø Subsequent adjustment following transition to CFO | ||||||||
Alan Hoffman | $637,570 | $637,570 | ||||||||||
Mark Schissel | $463,500 | $530,000 | (4) | Ø Merit increase and Promotion to COO | ||||||||
David Pezzullo | $565,000 | $282,500 | (5) | Ø Transition to part-time position |
(1) |
(2) | Effective January 1, 2021, Dr. Agwunobi’s base salary |
(3) | Effective March 1, 2021, Mr. Amezquita’s base salary increased from $400,000 to $500,000. |
(4) | Effective March 1, 2021, Mr. Schissel, who was |
(5) | Effective August 2, 2021, with his transition from Chief Operating Officer to a part-time position as the Company’s Senior Operations Advisor, Mr. Pezzullo’s base salary was |
Annual incentive awards & long-term incentive program
Our annual cash incentive plan is designed to motivate and reward the achievement of annual financial targets that create value for our shareholders.stakeholders. The Committee establishes financial performance targets and goals for our annual incentive plan each year, taking into consideration that such targets and goals align with and support the Company’s business strategy, recognize current business conditions, align with the current year financial budget, align with Wall Street analysts and public investor expectations and require performance that is competitive with those of the Herbalife Nutrition Peer Group. In 2017, as part of the Committee’s commitment
Incentive bonus awards are subject to further strengthen a “pay for performance” culture and align our employees with the interest of our shareholders and investor expectations,approval by the Committee, consolidatedand continuous employment through the performance measures that had been used from 2009 to 2016. In this way,date such bonus award payment is made.
Notwithstanding the foregoing, the Committee, simplifiedin its sole and absolute discretion, may provide for payment of any incentive bonus award to a terminated employee, which award shall be paid at the performance measures and aligned all the NEOstime incentive bonus awards are paid to the same targets. Except as described below under “— Pre-Transition Annual Incentive Opportunities –active employees.
January 1, 2017 through May 31, 2017,”theThe criteria used for 20172021 consisted of targeted Volume Points, serving as a proxy for sales, and targeted Operating Income, subject to adjustments as discussed below, which ensureswe believe incentivizes our executives make decisions that improve our profitability.
In addition to setting performance targets, the Committee has established two limits within the annual incentive plan that can affect the aggregate value of the awards. The first limit is the requirement that the aggregate payments made under the annual incentive plan cannot exceed 10% of the Company’s Operating Income for the year. The second limit is the requirement that the total bonus payout to all employees of the Company should not exceed the annual bonus payout to the Company’s most senior independent members.
Pre-Transition Annual Incentive Opportunities — January 1, 2017 through May 31, 2017
Prior to Mr. Johnson’s transition to the role of Executive Chairman on June 1, 2017, Mr. Johnson’s target and maximum annual incentive as a percentage of his base salary was set forth in his March 2008 employment
agreement. Although Mr. Johnson’s March 2008 employment agreement provided for a “base” annual
incentive award equal to three-quarters of his total annual incentive opportunity payable to the extent the Company achieves EPS targets set by the Committee, the Committee determined to increase the percentage to 100%. Mr. Johnson’s March 2008 employment agreement also provides for a supplemental annual incentive award payable in the event of the achievement of an alternative performance target, or APT, equal toone-fourth of his total annual incentive opportunity. The APT incentive provides the Committee a degree of flexibility in incentivizing and rewarding Mr. Johnson for the achievement of key strategic and financial targets. Volume Points and Operating Income were used for the period between January 1, 2017 through May 31, 2017 to determine Mr. Johnson’s APT incentive.
Prior to Mr. Goudis’ transition to the role of Chief Executive Officer (together with Mr. Johnson’s transition to Executive Chairman, the “Transition”), the minimum and maximum target annual incentive as a percentage of base salary for Mr. Goudis was set forth in his January 2010 employment agreement. Under such agreement, Mr. Goudis’ minimum annual target bonus opportunity
could be no less than 80% of his base salary and no more than two times the annual target bonus.
Post-Transition Annual Incentive Opportunities – June 1, 2017 through December 31, 2017
Following the Transition, Mr. Johnson’s annual target bonus opportunity as a percentage of his base salary is set forth in his November 2016 employment agreement, which became effective on June 1, 2017. This agreement provides for an annual target bonus opportunity equal to 80% of Mr. Johnson’s base salary.
Following the Transition, Mr. Goudis’ annual target opportunity as a percentage of his base salary is set forth in his November 2016 employment agreement, which became effective on June 1, 2017. This agreement provides for an annual target bonus opportunity equal to 120% of Mr. Goudis’ base salary.
Subject to the limits described above, targetTarget incentives for our executives are set by the Committee depending on the employee’s position, scope of responsibilities, ability to influence Company results, and competitive pay practices among the Herbalife Nutrition Peer Group.
Executive compensation | 33 |
The chart belowfollowing table summarizes the 2017target bonus and target bonus as a percentage of base salary for each of the NEOs:
Bonus Eligible Base Salary(1) | Target Bonus | |||||||||||
NEO | (% of Salary)(2)
| $
| ||||||||||
John O. Agwunobi | $1,000,000 | 120% | $1,200,000 | |||||||||
John DeSimone | $695,000 | 80% | $556,000 | |||||||||
Alexander Amezquita | $483,836 | 58.7% | $283,836 | |||||||||
Alan Hoffman | $637,570 | 60% | $382,542 | |||||||||
Mark Schissel | $497,060 | 64.4% | $320,307 | |||||||||
David Pezzullo | $447,356 | 75% | $335,517 |
(1) | Calculated using prorated salaries for Messrs. Amezquita, Schissel and Pezzullo due to salary changes during the year, as further outlined under “Base Salaries” above. |
(2) | Calculated using prorated percentages for Messrs. Schissel and Amezquita. Prior to August 2, 2021, Mr. Schissel’s annual target bonus opportunity was 60%, and effective August 2, 2021, increased to 70%. Prior to March 1, 2021, Mr. Amezquita’s annual target bonus opportunity was 50%, and effective March 1, 2021, increased to 60%. |
The following table summarizes the performance metrics, targets, weightings, actual performance and eligible payout percentages for the components of the 2021 annual incentive plan performance measures and weightings for each NEO, which were used in calculating annual incentive awards.our executive officers:
Executive |
Weight in determining | ||||||||||||||
EPS | Operating Income | Volume Points | |||||||||||||
Michael O. Johnson (January 1, 2017 – May 31, 2017) –Base annual incentive award
|
| 100%
|
|
| —
|
|
| —
|
| ||||||
Michael O. Johnson (January 1, 2017 – May 31, 2017) –APT
|
| 70%
|
|
| 30%
|
| |||||||||
Michael O. Johnson (June 1, 2017 – December 31, 2017)
|
| 70%
|
|
| 30%
|
| |||||||||
Richard P. Goudis
|
| 70%
|
|
| 30%
|
| |||||||||
Desmond Walsh
|
| 70%
|
|
| 30%
|
| |||||||||
John G. DeSimone
|
| 70%
|
|
| 30%
|
| |||||||||
David Pezzullo
|
| 70%
|
|
| 30%
|
| |||||||||
2021 Annual Incentive Plan Performance Metrics | Performance Metrics Weightings | 2021 Target | 2021 Results | 2021 Results as a % of target | Payout as a % of Target | Weighted Payout | ||||||||||||||||||
Operating income (millions) | 70% | $772.1 | $794.9 | (1) | 102.95% | 136.85% | 95.8% | |||||||||||||||||
Volume Points (millions) | 30% | 7,201 | 7,098 | 98.57% | 85.72% | 25.7% | ||||||||||||||||||
Total Payout Achieved: | 121.5% |
(1) | Operating Income presented as adjusted, as discussed below. |
Bonuses are only awarded for results at or above 95% of the applicable target, with payouts capped at performance levels at and above 108% of the applicable target. Results below the 95% level would result in no payout, at the 95% level would result in a 50% payout as a percentage of applicable target, and at or above the maximum 108% level would result in a 200% payout as a percentage of applicable target. Bonuses are calculated utilizing linear interpolation for performance outcomes between levels. This bonus scale is designed to encourage realistic target-setting and prudent risk-taking while simultaneously creating consequences for not meeting target and capping the potential payout in order to avoid excessive incentive awards as compared to performance.
Targets and award determination
Annual financial performance targets are aligned to what we believe to be the expectations of our investors and what we believe is achievable at the time of the annual budget review process. The annual budget review for the 2017 performance period2021 occurred in February 2017.2021. Budget figures are built from the “bottom up” based on input from operating regions regarding trends in their respective markets, including the general economic environment, sale and consumption of our products, sales
leader activity and retention, and the degree of risk in achieving forecasted revenue and expense levels.
For purposes of our annual incentive plan, the performance measures are defined and calculated as follows:
Volume Points are point values assigned to each of our products for use by the Company to determine an independent member’s sales achievement level. We assign a Volume Point value to a product when it is first introduced into a market and that value is unaffected by subsequent exchange rate and price changes. The specific number of Volume Points assigned to a product, generally consistent across all markets, is based on a Volume Point to suggested retail price ratio for similar products in the market. Volume Points are used by management as a proxy for sales trends because in general, excluding the impact of price changes, an increase in Volume Points in a particular geographic region or country indicates an increase in our local currency net sales while a decrease in Volume Points in a particular geographic region or country typically indicates a decrease in our local currency net sales. Management evaluates each year our current approach to assigning and maintaining Volume Point value for
Executive compensation |
|
For 2021 annual incentive plan performance purposes, our Operating Income was calculated consistent with our adjusted EPS presentations and earnings guidance provided to the investment community, adjusting for: expenses related to legal accruals as described in the Company’s Form 10-K for the year ended December 31, 2021; COVID-19 expenses that are not expected to recur once the effects have largely receded; non-income tax assessments, recoveries, and credits related to tax contingencies for prior years; and expenses related to our transformation program. Our Operating Income was further adjusted, consistent with prior years, to include the following for bonus purposes: impact of changes in
currency exchange rates; China grant income, and China growth program.
COVID-19 Adjustments to Operating Income. Non-recurring COVID-19 expenses in 2021 include temporary hazard pay to employees, personal protective equipment (PPE) provided to employees, penalties for non-performance of contracts, and lost deposits on event cancellations, the total of which adjustments to the 2021 Operating Income were approximately $13.8 million. Certain additional COVID-19 expenses incurred during 2021 were not excluded because the Company anticipates this will be a recurring expense, such as increased home delivery expenses.
Motivating Operating Income growth permits Volume Point growth to be achieved in a cost-effective manner so that cost efficiencies and productivity enhancements are pursued throughout the Company.
We believe that the Company’s financial performance is facilitated by the pay“pay for performanceperformance” design of our compensation program. Our program motivates our executivesNEOs to deliver financial results, with the appropriate level of risk taking,risk-taking, against performance metrics in a manner that ultimately aligns with the realized growth of shareholder equity value. Our executivesNEOs have the opportunity to earn annual incentive awards provided that the Company achieves aggressive growth targets in Volume Points and Operating IncomeIncome. The Committee reviews and EPS.
Because we assign a Volume Point valuediscusses the performance metrics and applicable weightings in approving the annual incentive award program each year to a product whenensure it is first introduced into a market, which value is unaffected by subsequent exchange rate and price changes, we believe that Volume Points exhibitproviding the most accurate available measure of organic growth or decline in the local demand for our products.
Motivating Operating Income growth ensures that Volume Point growth is achieved in a cost-effective manner and that cost efficiencies and productivity enhancements are pursued throughout the Company. Motivating EPS growth ensures that the favorable contribution from Operating Income growth is realized within an efficient capital structure.
The following table shows the performance targets set by the Committee with respect to 2017 and the Company’s performance relative to those targets.appropriate incentives.
2017 AnnualThe following table summarizes the results for bonus purposes under the 2021 annual incentive plan performance targetsas compared to the results in the preceding three years:
2017
| 2017
| 2017 Results
| |||||||||||||
Target
| |||||||||||||||
EPS
|
| $3.83
|
|
| $4.10
| (1)
|
| 107.1%
|
| ||||||
Volume Points (millions)
|
| 5,751
|
|
| 5,379
|
|
| 93.5%
|
| ||||||
Operating income (millions)
|
| $558.3
|
|
| $575.3
| (1)
|
| 103.0%
|
| ||||||
Results for Bonus Purposes | 2021 Target | |||||||||||||||||||
2018
| 2019 | 2020 | 2021 | |||||||||||||||||
Operating Income ($, millions) | 703.2 | (1) | 660.8 | (2) | 797.9 | (3) | 794.9 | (4) | 772.1 | |||||||||||
Volume Points (millions) | 5,861 | 6,069 | 6,926 | 7,098 | 7,201 |
(1) |
Annual incentive awards for 2017 are payable only if and to the extent EPS, Volume Points or Operating Income meet and exceed 100% of the applicable performance target. Targets are set as part of the annual budget process, and modified, if necessary, at the first Board meeting of the performance period. For 2017 annual incentive plan performance purposes, our EPS and Operating Income were calculated consistent with our adjusted EPS presentations and earnings guidance provided to the investment community, adjusting for:
Our EPS and Operating Income were further adjusted to include the following for bonus purposes:
(2) | Operating Income for 2019 was adjusted to exclude expenses relating to regulatory inquiries and legal accruals, China grant income, Mexico VAT assessment, income related to finalization of insurance recoveries, impact from changes in currency exchange rates, and our China growth program. |
Operating Income for 2020 was adjusted to exclude expenses relating to regulatory inquiries and legal accruals, China grant income, impact from changes in currency exchange rates, COVID-19 expenses and our China growth program. |
For 2017, target-level bonuses were awarded for results between 100% and 106% of the applicable target, and bonus awards above 103% of target increase on a prorated basis in steps. Mr. Johnson’s APT bonus applicable during his service as CEO of the Company was awarded for results equal to or in excess of 100% of the applicable Volume Point and Operating Income targets in ratable increases above 100% of target achievement. Should the financial targets not be achieved, there is no bonus funding or payouts to the NEOs. This bonus scale is designed to encourage realistic target setting and prudent risk taking while simultaneously creating consequences for not meeting target and capping the potential payout in order to avoid excessive incentive awards as compared to performance. For 2017, annual incentive opportunities as a percentage of base salary were established as follows:
2017 Annual incentive opportunities by executive and target
Performance target achievement range — % of target
| ||||||||||||||||||||||||||||||||||||||
Executive | Target | Below 100% | 100% | 103.0% | 103.5% | 104.0% | 104.5% | 105.0% | 105.5% | 106.0% | ||||||||||||||||||||||||||||
Max
| ||||||||||||||||||||||||||||||||||||||
Johnson (January 1, 2017 – May 31, 2017)
| EPS | 0% | 112.5 | % | 112.5 | % | 168.8 | % | 191.3 | % | 208.1 | % | 213.8 | % | 219.4 | % | 225 | % | ||||||||||||||||||||
Johnson (January 1, 2017 – May 31, 2017)
| Volume Point Operating Income | | 0% 0% |
| | 11.25 26.25 | % % | | 16.875 39.375 | % % | | 17.814 41.566 | % % | | 18.75 43.75 | % % | | 19.689 45.941 | % % | | 20.625 48.125 | % % | | 21.564 50.316 | % % | | 22.5 52.5 | % % | ||||||||||
Johnson (June 1, 2017 – December 31, 2017)
| Volume Point Operating Income | | 0% 0% |
| | 24 56 | % % | | 27 63 | % % | | 38.4 89.6 | % % | | 42 98 | % % | | 44.7 104.3 | % % | | 45.6 106.4 | % % | | 46.5 108.5 | % % | | 48 112 | % % | ||||||||||
Goudis (January 1, 2017 – May 31, 2017)/ Walsh
| Volume point Operating income | | 0% 0% |
| | 24 56 | % % | | 27 63 | % % | | 38.4 89.6 | % % | | 42 98 | % % | | 44.7 104.3 | % % | | 45.6 106.4 | % % | | 46.5 108.5 | % % | | 48 112 | % % | ||||||||||
Goudis (June 1, 2017 – December 31, 2017)
| Volume Point Operating Income | | 0% 0% |
| | 36 84 | % % | | 40.5 94.5 | % % | | 57.6 134.4 | % % | | 63 147 | % % | | 67.05 156.45 | % % | | 68.4 159.6 | % % | | 69.75 162.75 | % % | | 72 168 | % % | ||||||||||
DeSimone / Pezzullo | Volume Point Operating income
| | 0% 0% |
| | 22.5 52.5 | % % | | 25.31 59.07 | % % | | 36 84 | % % | | 39.375 91.875 | % % | | 41.91 97.78 | % % | | 42.75 99.75 | % % | | 43.59 101.72 | % % | | 45 105 | % % | ||||||||||
For 2018, after reviewing the Company’s historical results, the Committee determined to adjust the performance target achievement range to 95% and 108% to better align with market practices. Should 95% of the applicable financial target not be achieved, there is no bonus funding or payouts to the NEOs. The Committee determined to increase the maximum percentage to 108% in order to encourage the Company’s high performance culture.
The following table shows the incentive eligible earnings (i.e., 2017 base salary), target and maximum incentive percentages and amounts expressed as a percentage of base salary, and 2017 incentive awards for each NEO participating in the annual incentive plan. All 2017 awards to NEOs were based solely on the calculated results to target performance levels. For 2017, the Company exceeded its maximum funding levels for EPS and Operating Income targets, but fell slightly short of meeting its Volume Point target.
2017 Actual incentive award calculation
Executive | Salary | Target incentive % | Max incentive % | Actual results (% of target)
| Award % | Award Amount | ||||||||||||||||||||||||||
EPS(1) | Volume Point | Operating income
| ||||||||||||||||||||||||||||||
Michael O. Johnson | $521,260 | |||||||||||||||||||||||||||||||
1/1/17 – 5/31/17 | ||||||||||||||||||||||||||||||||
EPS incentive | 112.5 | 225 | 107.1 | — | — | 225 | $1,172,835 | |||||||||||||||||||||||||
APT – Volume Point portion | 11.25 | 22.5 | — | 93.5 | — | — | $0 | |||||||||||||||||||||||||
APT – Operating Income portion | 26.25 | 52.5 | — | — | 103.0 | 39.38 | $205,246 | |||||||||||||||||||||||||
6/1/17 – 12/31/17 | $381,096 | |||||||||||||||||||||||||||||||
Volume Point incentive | 24 | 48 | — | 93.5 | — | — | $0 | |||||||||||||||||||||||||
Operating Income incentive | 56 | 112 | — | — | 103.0 | 63 | $240,090 | |||||||||||||||||||||||||
Total
|
| $902,356
|
|
| $1,618,172
|
| ||||||||||||||||||||||||||
Richard P. Goudis | $287,388 | |||||||||||||||||||||||||||||||
1/1/17 – 5/31/17 | ||||||||||||||||||||||||||||||||
Volume Point incentive | 24 | 48 | — | 93.5 | — | — | $0 | |||||||||||||||||||||||||
Operating Income incentive | 56 | 112 | — | — | 103.0 | 63 | $181,055 | |||||||||||||||||||||||||
6/1/17 – 12/31/17 | $586,301 | |||||||||||||||||||||||||||||||
Volume Point incentive | 36 | 72 | — | �� | 93.5 | — | — | $0 | ||||||||||||||||||||||||
Operating Income incentive | 84 | 168 | — | — | 103.0 | 94.5 | $554,055 | |||||||||||||||||||||||||
Total
|
| $873,689
|
|
| $735,110
|
| ||||||||||||||||||||||||||
Desmond J. Walsh | $694,680 | |||||||||||||||||||||||||||||||
Volume Point incentive | 24 | 48 | — | 93.5 | — | — | $0 | |||||||||||||||||||||||||
Operating Income incentive | 56 | 112 | — | — | 103.0 | 63 | $437,648 | |||||||||||||||||||||||||
Total
|
| $437,648
|
| |||||||||||||||||||||||||||||
John G. DeSimone | $619,000 | |||||||||||||||||||||||||||||||
Volume Point incentive | 22.5 | 48 | — | 93.5 | — | — | $0 | |||||||||||||||||||||||||
Operating Income incentive | 52.5 | 112 | — | — | 103.0 | 59.06 | $365,597 | |||||||||||||||||||||||||
Total
|
| $365,597
|
| |||||||||||||||||||||||||||||
David Pezzullo | $525,000 | |||||||||||||||||||||||||||||||
Volume Point incentive | 22.5 | 48 | — | 93.5 | — | — | $0 | |||||||||||||||||||||||||
Operating Income incentive | 52.5 | 112 | — | — | 103.0 | 59.06 | $310,078 | |||||||||||||||||||||||||
Total
|
| $310,078
|
| |||||||||||||||||||||||||||||
Executive compensation |
2021 Annual incentive plan payouts
The following table details the eligible payout percentage and the resulting payout for each of our NEOs.
Bonus Eligible Base Salary(1) | Target Bonus | Actual Bonus | ||||||||||||||||||
NEO | (% of Salary)(2) | $ | $ | (% of Target)(1)(2) | ||||||||||||||||
John O. Agwunobi | $1,000,000 | 120% | $1,200,000 | $1,458,157 | 121.5% | |||||||||||||||
John DeSimone | $695,000 | 80% | $556,000 | $675,613 | 121.5% | |||||||||||||||
Alexander Amezquita | $483,836 | 58.7% | $283,836 | $344,897 | 121.5% | |||||||||||||||
Alan Hoffman | $637,570 | 60% | $382,542 | $464,839 | 121.5% | |||||||||||||||
Mark Schissel | $497,060 | 64.4% | $320,307 | $389,215 | 121.5% | |||||||||||||||
David Pezzullo | $447,356 | 75% | $335,517 | $407,697 | 121.5% |
(1) | Calculated using prorated salaries for Messrs. Amezquita, Schissel and Pezzullo due to salary changes during the year, as further outlined under “Base Salaries” above. |
(2) | Calculated using prorated percentages for Messrs. Schissel and Amezquita. Prior to August 2, 2021, Mr. Schissel’s annual target bonus opportunity was 60%, and effective August 2, 2021, increased to 70%. Prior to March 1, 2021, Mr. Amezquita’s annual target bonus opportunity was 50%, and effective March 1, 2021, increased to 60%. |
Long-term incentive awards are designed to provide a link to long-term shareholder value through equity awards for our executives. Each year, the Committee determines the form of equity grant. For 2017,Consistent with prior years, the totalmajority of these equity awards are performance-based. With the exception of Mr. Schissel, who received a PSU grant value was made in August 2021 in connection with his promotion to COO, the formequity awards to NEOs are comprised of performance SARs75% PSUs and PSUs.25% RSUs. All equity awards are subject to our share ownership guidelines. An update regarding our 2021 progress against these guidelines is included on page 12 under “Share ownership guidelines”.
Additional details of the 20172021 equity awards made to our executivesNEOs can be found below and in the tabular disclosure below under “— 2017“2021 Grants of Plan-Based Awards.”plan-based awards” on page 44.
20172021 Long-term incentive awards — annual grant program
Executive | SAR grant value(1) | Total SARs awarded | PSU grant value(1) | Total
| ||||||||||||
Michael O. Johnson
|
|
$2,500,012
|
|
|
88,276
|
|
|
—
|
|
|
—
|
| ||||
Richard P. Goudis
|
|
$1,806,020
|
|
|
63,771
|
|
|
$3,193,983
|
|
|
45,805
|
| ||||
Desmond J. Walsh
|
|
$1,806,020
|
|
|
63,771
|
|
|
—
|
|
|
—
|
| ||||
John G. DeSimone
|
|
$1,735,021
|
|
|
61,264
|
|
|
—
|
|
|
—
|
| ||||
David Pezzullo
|
|
$683,251
|
|
|
22,951
|
|
|
$549,976
|
|
|
8,403
|
| ||||
NEO | PSU grant value(1) | Total PSUs awarded(2) | RSU grant value | Total RSUs awarded | ||||||||||||
John O. Agwunobi | $3,375,000 | 69,832 | $1,125,000 | 23,277 | ||||||||||||
John DeSimone | $1,687,500 | 34,916 | $562,500 | 11,638 | ||||||||||||
Alexander Amezquita | $450,000 | 9,380 | $150,000 | 3,126 | ||||||||||||
Alan Hoffman | $750,000 | 15,518 | $250,000 | 5,172 | ||||||||||||
Mark Schissel | $937,500 | 19,543 | $162,500 | 3,362 | ||||||||||||
David Pezzullo | $1,125,000 | 23,277 | $375,000 | 7,759 |
(1) | The Committee approved the awards in February 2021, with the exception of the COO promotional grant to Mr. Schissel in August 2021, which such increase was approved by the Committee in April 2021 to be made in August 2021 following the promotion. All equity grants reflected in this table were made under the 2014 Plan. Grant values are |
Performance SARs
Performance SARs are less dilutive to our shareholders than many forms of equity compensation. Performance SARs provide an opportunity for executives to earn additional compensation if the following criteria are achieved: (i) the Company’s sales leader retention target is achieved and (ii) our share price increases over the share price on the grant date. As a company that sells nutrition products through the direct selling channel, the success and retention of our sales leaders is critical to the financial success of our Company as a whole.
Immediately prior to the targeted grant date for 2017, the Committee established guideline grant values for the NEOs in consideration of individual performance, scope of job responsibilities, prior equity grants and competitive practices using published compensation surveys based on the Herbalife Peer Group. Using these value guidelines, our then current Chairman and CEO proposed to the Committee equity grants for each of the NEOs other than himself. At the same time, the Committee, separately and without the involvement of the Chairman and CEO, evaluated and proposed equity grants for the Chairman and CEO to the independent members of the Board of Directors for their approval. The number of SARs granted is calculated by dividing the grant value by the option value determined in accordance with financial accounting and disclosure rules under ASC Topic 718 “Share Based Payments” using our closing share price on the date of grant.
In 2017, SARs were granted to our NEOs on February 27, 2017 when the SAR fair grant value was $28.32 and our share closing price was $57.19.
All of the SARs awarded on February 27, 2017, or the 2017 SARs, will, subject to continued Company service, vest and become exercisable in February 2020, three years from the grant date, in the percentages set forth in the table below to the extent the Company’s average sales leader retention rate (independent members engaged in the Company’s business opportunity) from fiscal 2017 through 2019 equals or exceeds 48%. Any portion of the award that is unvested as of February 2020 will be forfeited. At exercise, the gains on SARs are settled by issuing Common Shares.
The 2017 SARs are subject to potential, partial early vesting as follows. If the Company’s sales leader retention rate for fiscal 2017 equals or exceeds 52%, then 20% of the 2017 SARs will vest in February 2018. If the Company’s sales leader retention rate for fiscal 2018 equals or exceeds 52%, then an additional 20% of the 2017 SARs will vest in February 2019.
In previous years, the Committee set the average sales leader retention performance target for SARs awarded to NEOs at 50% as an aspirational performance hurdle in light of the Company’s annual sales leader retention rates over fiscal years 2004 to 2011, during which the Company’s median annual sales leader retention rate was approximately 44% and a rate in excess of 45% was achieved only twice. Annual sales leader retention rates in excess of 50% were achieved for fiscal years 2011 to 2016. In order to drive continual improvement, the Committee determined to increase the difficulty to achieve the performance criteria of SARs for 2017 by increasing the threshold and maximum target percentage levels as set forth below.
(2) | Total PSUs are listed at target level of performance. |
Executive compensation |
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Performance Share Unitsshare units
In 2017,2021, the Committee continued to evaluate the design of our long-term incentive program, and determined to introduceutilized PSUs as part of the Company’s long-term incentive program. In connection with his promotion to CEO, PSUs with a grant value of $3,193,983 were granted to Mr. Goudis on June 6, 2017 when our share price was $69.73. In connection with his promotion to COO, PSUs with a grant value of $549,976 were granted to Mr. Pezzullo on August 3, 2017 when our share price was $65.45. These grant amounts were determined based on benchmarking data from the Committee’s independent compensation consultant, Meridian Compensation Partners, or Meridian, and were in addition to the equity incentive awards previously granted to Messrs. Goudis and Pezzullo in 2017 in the ordinary course. All of such PSUs awarded in 2021 will subject to continued Company service, vest and become exercisable on December 31, 2019,2023, subject to the Company’s achievement of the performance targets set by the Committee as measured over the three-year performance period beginning on JulyJanuary 1, 20172021 and ending on December 31, 2019. Such targets were established based on the Company’s Five-Year plan that was reviewed by the Company’s Board of Directors in January 2017.2023, subject further to continued Company service. The number of PSUs that will become earned and vested will be determined based on the Company’s performance against the financial and operating performance targets. These targets correspond to the Company’s long-range forecast and, in setting such targets, the Committee took into account the continued uncertainty caused by the COVID-19 pandemic and related impact on the Company’s business, anticipating such uncertainty to continue throughout 2021. The minimum number of PSUs that may become earned is zero. The maximum number of PSUs that may become earned and vested is 200% of the target PSU award granted to the participant.
The number of PSUs that will become earned upon vesting is based on achievement of performance targets for the followingLocal Currency Net Sales and Adjusted EBIT. Each of these metrics each of which makes upone-thirdone-half of the PSU award granted to the participant: Volume Points, Adjusted EBITNEOs, and Adjusted EPS, which are defined as follows:
|
contingencies for tax matters related to periods prior to the beginning of the applicable performance period; long-term asset impairment charges; inventory reserves related to defective raw materials and finished goods obtained from third parties; expenses related to attacks on the Company’s business model, regulatory inquiries and regulatory settlements; litigation costs and settlements not budgeted for in the Company’s five-year plan presented to the Board in January 2017, or the Five-Year Plan;long-range forecast; China grant income;income and associated China growth program expenses; impact from business acquisitions and dispositions; impact from new accounting pronouncements adopted;
and one-time costs related to internal restructuring transactions. |
We believe that the grant of PSUs increases the alignment of equity compensation with shareholder value and reward our NEOs for accelerating the Company’s growth. Further, if PSUs are earned, the NEOs will be aligned with shareholders through share ownership. PSUs comprised 75% of the Company’s 2021 long-term incentive program for our NEOs, other than Mr. Schissel, as described above.
2019 PSU Results. Each of the NEOs, other than Mr. Amezquita who was not an executive officer at the time, were granted PSUs in February 2019, the vesting of which were subject to the Company’s achievement level for three performance metrics set by the Committee as measured over a three-year performance period beginning January 1, 2019 and ending December 31, 2021, subject further to continued Company service. Each metric made up one-timeone-third costs relatedof the 2019 PSU award granted to internal restructuring transactions.
We believe that Each metric is weighted equally to determine total payout and linear interpolation is used to determine the grantnumber of PSUs will increase the alignmentearned and vested for performance. In February 2022, following completion of equity compensation with shareholder value as well as reward our NEOs for accelerating the Company’s growth. Further, provided that PSUs are earned, the NEOs will be aligned with shareholders through share ownership.
2018 Long-term Incentive program design updates
To improve the alignment of our executive compensation program with the interests of our shareholders, the
Executive compensation |
performance period, the Committee updatedcertified a final total payout for the equity mix and2019 PSU awards of 114.4% of target,
based on the below achievements during the 2019-2021 performance measures applicable to long-term incentive awards to be granted in 2018. First, the long-term incentive awards will be comprised of 75% PSUs and 25% RSUs. period:
2019 PSU Results
2019-2021 Performance Period
2019 PSU Performance Metrics | Performance Metrics Weightings(1) | Criteria Range | Performance Based Eligibility Range | Actual Achievement | Actual % Achievement | Actual % Payout | ||||||||||||||||||
Local Currency Net Sales (in billions) | 33.3% | < $15.231 – $19.462 | 0% – 200% | $16.619 | 98.2% | 91.0% | ||||||||||||||||||
Adjusted EBIT (in billions) | 33.3% | <$2.026 – $2.702 | 0% – 200% | $2.299 | 102.1% | 107.0% | ||||||||||||||||||
Adjusted EPS | 33.3% | <$8.859 – $11.812 | 0% – 200% | $11.18 | 113.6% | 145.3% | ||||||||||||||||||
Actual Total Payout: |
| 114.4% |
(1) | Does not total to 100% due to rounding. |
Restricted stock units
The Committee determined to incorporateincorporates RSUs as a component of long-term equity compensation to the executive officers in order to align the Company’s compensation program with general market practices and align executives with shareholders through share ownership. Further, while Adjusted EBITRSUs awarded to our NEOs in fiscal year 2021 will vest, subject to continued employment, in three annual installments: 20% on the first and Adjusted EPS will continue to serve as performance measures forsecond anniversaries of the PSUs, in order to avoid usinggrant date and 60% on the same performance measure for boththird anniversary of the annual incentive program andgrant date. RSUs comprised 25% of the Company’s 2021 long-term incentive program the Committee determined to replace Volume Pointsfor our NEOs (other than Mr. Schissel, as a performance measure for PSUs with Local Currency Net Sales. Local Currency Net Sales is the Company’s total reported net sales, adjusted in the same manner that the Company makes adjustments for public presentations and annual bonus purposes, including without limitation adjustments for changes attributable to mergers, acquisitions, and divestitures not assumed in the Company’s five-year plan as presented to the Board in February 2018, and adjusted to reflect currency rates assumed in such five-year plan.described above).
Annual long-term incentive grants of performance SARs and PSUs were made to our NEOs. It is the Company’s policy to make annual equity grants to our executive officers inall eligible employees during an “open trading window,”window”, which typically begins the second trading day following our release of quarterly financial results. We also follow a quarterly grant approval process where awards are authorized for newly-hired employees and to newly promoted executives other than our executive officers. In the case of SARs, the policy provides that the exercise price of SARs granted to executive officers and other employees, if any, will be established as the closing share price on the grant date. All equity awards made to our NEOs and other executives are made pursuant to this equity grant policy, which was approved by the Committee.
We encourage all Section 16 officers to utilize a10b-5Rule 10b5-1 trading plan when exercising or selling any Herbalifeof the Company’s equity.
Because hedging transactions often result in the establishment of a short position in companyCompany securities and limit or eliminate an employee’s ability to profit from an increase in value of a company’s securities, Company policy prohibits all employees, including Section 16 Officers, and all members of the Board from entering into hedging transactions with respect to the Company’s Common Shares.
Company policy prohibits executives and directors from pledging their Common Shares as collateral for a loan or for any other purpose.
The CommitteeBoard has adopted a policy that enables the Committeeit to clawback both cash and equity incentive compensation earned by our Section 16 Officers, and anysuch other employee under certain circumstancesexecutives as determined by the Committee.Board. Specifically, in the event of a material restatement of the Company’s financial results, the Board may, among other things, recoup all or part of any compensation paid to an executive that was based upon the achievement of financial results that were subsequently restated. The 2014 Stock Incentive Plan provides that all awards made thereunder are subject to the Company’s clawback policies.
The Company’s U.S.-based employees, including the NEOs, participate in a variety of savings, health and welfare and paidtime-off benefits typically provided by competitors for the services of the Company’s employees. Health and welfare and paidtime-off benefits help ensure that Herbalife hasthe Company maintain a healthy, productive and focused workforce.
In addition, in fiscal 2017,year 2021, our NEOs were eligible to participate in the following executive benefits and perquisites:
Retirement Benefits — Our NEOs participate in ourtax-qualified 401(k) Plan and our Senior Executive Deferred Compensation Plan described in more detail under“— Non-Qualified Deferred Compensation Plans.”Plans” on page 48. We maintain these plans for the purposes of providing a competitive benefit, allowing NEOs an opportunity to defer compensation to encourage our NEOs to save for retirement. The 401(k) plan provides an employer match on the first 1% of employee deferral at 100%. On the next 5% of employee deferral, the employer match is 50%. The annual maximum employee deferral is $18,000 plus an additional $6,000 if over the age of 50. Employer matching contributions vest 100% after two years of service.
38 | Executive compensation |
on the first 3% of employee deferral at 100%. On the next 3% of employee deferral, the employer match is 50%. The annual maximum employee deferral is $19,500 plus an additional $6,500 if over the age of 50. Employer matching contributions vest 100% after two years of service. |
Life Insurance — We provide basic life insurance coverage of 200% of base salary up to a maximum of $1,000,000$1,500,000 to our executives and up to $600,000$1,000,000 to all
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In 2013, we received information that led us to conclude that there were threatscritical to our Companybusiness. We host worldwide Member events to continue to strengthen our relations with Herbalife Nutrition Members and encourage our senior executives to invite their spouses or partners, as the case may be, to attend certain international Member events to help foster and build relationships with Herbalife Nutrition Members and their spouses or partners. Beginning August 2018, we reimburse senior executives for authorized travel expenses of our executives, and specifically Mr. Johnson. Based on that information and ongoing dialogue with third-party advisors, security systems were installed and/an accompanying spouse or monitoring services were provided at the personal residences of some of our executives,partner to Member events, including severalany related tax impact, in support of the NEOs. These services continued to be provided to Mr. Johnson until June 2017.
Because these services are not designed to provide a personal benefit (other than the intended security), we do not view these security arrangements as compensationCompany’s business. Due to the individuals. However, we are reporting these security arrangements as perquisites
as required under applicable SEC rules. We regularly review the nature of the threatongoing COVID-19 pandemic, no in-person international Member events were held in 2021 and associated vulnerabilities with security specialists and will continue to revise our security program as appropriate.no reimbursements were made for fiscal year 2021.
Employment and severance agreements
In order to attract highly qualified executives capable of leading the Company, we have previously entered into employment agreements with Mr. Johnson, our Executive Chairman, and Mr. Goudis, our Chief Executive Officer. Those agreements establish the terms and conditions for the employment relationship each executive has with the Company and specifies compensation, executive benefits, preservation of confidential and proprietary information,non-solicitation,non-disparagement, and other conditions. The Company has also previously entered into severance agreements with Messrs. Walsh and DeSimone. These agreements contain severance and change in control provisions as detailed further below. Further, Messrs. Goudis and PezzulloOur NEOs participate in the Herbalife International of America, Inc. Executive Officer Severance Plan, or the Severance Plan, which was approved by the Committee on October 31, 2016 and effective as of November 1, 2016.
As a result of these agreements, each of the NEOs is eligibleprovides for certain benefits and payments if his employment terminates for various reasonsupon death, disability, resignation by the executive with good reason or as a result of a change in control oftermination by the Company as applicable. The Company has provided these benefits to these NEOs to allow them to focuswithout cause. For additional details regarding the Severance Plan, please see “Potential Payments Upon Termination or Change in Control” on the value of strategic alternatives to shareholders without concern for the impact on their continued employment, as each of their offices is at heightened risk of turnover in the event of a change in control. page 48.
Separation benefits include cash payments and
other benefits in an amount the Company believes is appropriate, taking into account the time it is expected to take a separated executive to find another job. Separation benefits are intended to ease the consequences to the executive of an unexpected termination of employment. The Company requires a general release withnon-compete andnon-solicitation provisions in connection with the individual separation agreements.
We consider it likely that it will take more time for higher-level employees to find new employment commensurate
with their prior experience, and therefore senior management generally are paid severance for a longer period. Additional payments may be approved by the Committee in some circumstances as a result of negotiation with executives, especially where the Company desires particularnon-disparagement, cooperation with litigation,non-competition andnon-solicitation terms.
The severance agreement for each of Messrs. WalshCompany’s 2014 Stock Incentive Plan and Mr. DeSimone and the Severance Plan specifically detail various provisions for benefits and cash payments
in the event of a separation. Generally, these agreements provide for certain benefits upon death, disability, resignation by the executive with good reason or termination by the Company without cause. They also provide for the acceleration of unvested equity awards in connection with a change in control.
The equity compensation awards granted to the NEOs contain change in control and termination provisions. In general, these arrangements provide for benefits upon a termination of such executive’s employment in connection with a change in control. Accelerated vesting of equity-based awards is generally triggered when a change in control event occurs and either the acquiring or surviving entity fails to assume or continue the stock-based award or the executive is involuntarily terminated, other than for disability, cause or gross misconduct, within a certain period of time after the effective date of the change of control event. These arrangements are intended to preserve morale and productivity and encourage retention in the face of the disruptive impact of a change in control of the Company. Based on a competitive analysis of the severance and change in control arrangements maintained by the corporations in the Herbalife Nutrition Peer Group, the Committee believes that these benefits are customary among the Herbalife Nutrition Peer Group for executives in similar positions as these three executives.positions. Please refer to the discussion belowon page 48 under “— Potential“Potential Payments Upon Termination or Change in Control” for a more detailed discussion of our severance and change in control arrangements.
The Committee retained Meridian through 2017Company has provided these benefits to assistthe NEOs to allow them to focus on the value of strategic alternatives to shareholders without concern for the impact on their continued employment, as each of their offices is at heightened risk of turnover in evaluating our executivethe event of a change in control. We believe the severance and change of control benefits strike a balance between providing sufficient protections for the NEO while still providing post-termination compensation programsthat we consider reasonable and in setting executive officer compensation.the interests of the Company and our shareholders.
During its period of engagementMr. Schissel, prior to becoming Chief Operating Officer and an NEO, entered into a retention agreement with the Company effective April 6, 2020. As contemplated in 2017, Meridian regularly participated in Committee meetings and advised the Committee with respect to compensation trends and best practices, plan design, competitive pay levels, CEO long-term performance equity grants, individual payagreement, the Company provided a cash retention bonus
Executive compensation |
decisionsin the amount of $1,000,000, less withholdings and deductions, and an RSU grant with respecta grant value equal to our NEOs$1,500,000. The RSU was granted in April 2020, and vests 100% on April 7, 2023, subject to Mr. Schissel’s continued employment through the vesting date, provided that Mr. Schissel has not given notice of his intent to resign from employment, and the Company has not given Mr. Schissel notice of its intent to terminate Mr. Schissel’s employment for “Cause” before the vesting date. If Mr. Schissel terminates his employment or if the Company terminates Mr. Schissel for “Cause” (as defined below) prior to the vesting date, Mr. Schissel will be required to repay the cash retention bonus in full to the Company within fifteen days of the last date of employment. For purposes of the retention agreement, “Cause” means: (i) willful failure to perform substantially all of his duties, including carrying out or complying with any lawful and reasonable material directive of the Company’s CEO; (ii) engagement in an act of fraud, embezzlement, dishonesty or of any policy or written agreement with the Company or any of its subsidiaries, including the Code of Conduct and any employment or non-disclosure agreement; (iii) conviction of or pleas of guilty or nolo contendere to a crime that constitutes a felony; or (iv) willful misconduct or gross negligence resulting in material economic harm to the Company, any of which occur, or which first become known to the Company after the date of the retention agreement.
The Committee is authorized by its charter to retain independent compensation consultants and other advisors. In 2021, the Committee engaged Meridian Compensation Partners LLC to serve as its independent consultant and to assist in evaluating our executive officers,compensation programs and proxy statement disclosure. Whilein setting executive officer
compensation. Meridian reports directly to the Committee.
During its period of engagement in 2021, Meridian regularly consultedparticipated in Committee meetings and provided analyses and recommendations that inform the Committee’s decisions; identified peer group companies for competitive market comparisons; evaluated market pay data and competitive-position benchmarking; provided analyses and inputs on program structure, performance measures, and goals; provided updates on market trends and the regulatory environment as it relates to executive compensation; reviewed various management proposals presented to the Committee related to executive and board compensation; and worked with managementthe Committee to validate and strengthen the pay-for-performance relationship.
The Committee assessed the independence of Meridian. In its assessment, the Committee considered the following factors specified in performing work requestedthe NYSE listing standards: (i) the provision of other services by the consulting firm to the Company; (ii) the amount of fees paid as a percentage of the total revenue of the consulting firm; (iii) the policies and procedures of the consulting firm that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the consultant with a member of the Committee; (v) any stock of the Company owned by the consultant; and (vi) any business or personal relationship of the consultant or consulting firm with an executive officer of the Company. Meridian provided the Committee Meridian did not perform any separate services for management.
Thewith confirmation of its independent status. Based on this evaluation, the Committee has determined that Meridian is independentmet the criteria for independence and that its work with the Committee during fiscal 2017year 2021 did not raise any conflict of interest.
40 | Executive compensation |
Our level of compensation for our NEOs was compared to compensation paid by the Herbalife Nutrition Peer Group. The criteria used to identify the Herbalife Nutrition Peer Group were: (1) principal operations in the U.S. with an international presence — we operate in 94 countries95 markets around the world in a highly regulated business where approximately 80%76% of our net sales for the year ended December 31, 2017,2021, were generated outside of the United States; (2) financial scope — our management talent should be similar to that of companies of a similar size in terms of revenues and market capitalization; (3) industry — we compete for talent with other companies in consumer product related industries; and (4) common “peer of peers” — we examined companies that are most frequently considered peers by Herbalife’sHerbalife Nutrition’s peers. Annually, the Committee reviews the peer group and updates the group as appropriate.
With respect to pay decisions regarding 20172021 NEO compensation, the industry peer group was comprised of the following fourteen (14) companies. At the time the Herbalife Peer Group was established, Mead Johnson Nutrition Co. and WhiteWave Foods Co. were included in such peer group; however, Mead Johnson Nutrition Co. was acquired by Reckitt Benckiser in June 2017, and WhiteWave Foods Co. was acquired by Danone in April 2017. As a result, thesefifteen (15) companies were removed from the Peer Group in July 2017.listed below. All of the peer companies were within the range of approximately 50%34% and 178%200% of Herbalife’s trailing twelve-month revenues.revenues at the time the peer group was established in July 2020. The peer group median revenue of $4.0$5.2 billion and median market capitalization of $6.3$6.1 billion, in each case at the time the Herbalife Nutrition Peer Group was established, were comparable to those of Herbalife.Herbalife Nutrition. During this period, the Herbalife Nutrition Peer Group consisted of the following:
Company | Industry | Revenue
| Market capitalization as of 12/31/17 ($ millions) | |||||||
Avon Products Inc.
| Personal Products | $5,715 | $946 | |||||||
Campbell Soup Co
| Packaged Foods and Meats | $7,849 | $14,462 | |||||||
Church & Dwight Inc.
| Household Products | $3,639 | $12,539 | |||||||
Dr Pepper Snapple Group, Inc.
| Soft Drinks | $6,625 | $17,523 | |||||||
Edgewell Personal Care Co
| Personal Products | $2,298 | $3,271 | |||||||
GNC Holdings Inc.
| Specialty Stores | $2,465 | $309 | |||||||
Hain Celestial Group Inc.
| Packaged Foods and Meats | $2,880 | $4,400 | |||||||
International Flavors & Fragrances
| Specialty Chemicals | $3,307 | $12,539 | |||||||
The J.M. Smucker Company
| Packaged Foods and Meats | $7,335 | $14,113 | |||||||
McCormick & Co, Inc.
| Packaged Foods and Meats | $4,834 | $13,334 | |||||||
Nu Skin Enterprises Inc.
| Personal Products | $2,144 | $3,592 | |||||||
Post Holdings Inc.
| Packaged Foods and Meats | $5,409 | $5,247 | |||||||
Spectrum Brands Holdings, Inc.(1)
| Household Products | $5,007 | $6,477 | |||||||
Tupperware Brands Corp
| Housewares and Specialties | $2,256 | $3,191 | |||||||
Herbalife Ltd.
| Personal Products | $4,379 | $5,593 | |||||||
Data Source: Standard & Poor’s CapIQ as of December 31, 2017.
Company | Industry | Revenue
| Market capitalization* ($ millions) | |||||||
Campbell Soup Co | Packaged Foods and Meats |
| $8,372 |
|
| $13,114 |
| |||
Church & Dwight Inc. | Household Products |
| $5,190 |
|
| $25,025 |
| |||
The Clorox Company | Household Products |
| $7,080 |
|
| $21,422 |
| |||
Conagra Brands, Inc. | Packaged Foods and Meats |
| $11,223 |
|
| $16,381 |
| |||
Coty Inc. | Personal Products |
| $5,040 |
|
| $8,804 |
| |||
Edgewell Personal Care Co | Personal Products |
| $2,100 |
|
| $2,485 |
| |||
Hain Celestial Group Inc. | Packaged Foods and Meats |
| $1,875 |
|
| $4,030 |
| |||
International Flavors & Fragrances | Specialty Chemicals |
| $11,656 |
|
| $38,348 |
| |||
The J.M. Smucker Company | Packaged Foods and Meats |
| $7,905 |
|
| $14,718 |
| |||
McCormick & Co, Inc. | Packaged Foods and Meats |
| $6,318 |
|
| $25,804 |
| |||
Nu Skin Enterprises Inc. | Personal Products |
| $2,696 |
|
| $2,529 |
| |||
Post Holdings Inc. | Packaged Foods and Meats |
| $6,412 |
|
| $7,053 |
| |||
Spectrum Brands Holdings, Inc. | Household Products |
| $2,998 |
|
| $4,190 |
| |||
TreeHouse Foods, Inc. | Packaged Foods and Meats |
| $4,328 |
|
| $2,261 |
| |||
Tupperware Brands Corp | Housewares and Specialties |
| $1,602 |
|
| $747 |
| |||
Herbalife Nutrition Ltd. | Personal Products |
| $5,803 |
|
| $4,180 |
| |||
Percentile Rank |
| 54 | % |
| 35 | % |
The Committee reviewed the Herbalife Nutrition Peer Group in July 2021, and no changes were made for 2022 pay decisions.
41 |
Section 162(m) of the Code
The Tax Act was signedCommittee takes into law on December 22, 2017. Prioraccount the tax and accounting implications (including with respect to the enactmentexpected lack of such law,deductibility under Section 162(m) of the Internal Revenue Code generally disallowed aCode) when making compensation decisions, but reserves its right to continue to make compensation decisions based on other factors if it determines that it is in the best interests of the Company and its shareholders to do so. Further, interpretations of and changes in applicable tax deduction forlaws and regulations, as well as other factors beyond the control of the Committee, may affect deductibility of compensation, over $1 millionand there can be no assurance that compensation paid to our NEOsexecutive officers who are “covered employees” under this rule. Performance-based compensation was exempt from this deduction limitation if specified requirements set forth in the Code and applicable Treasury Regulations were met. Our 2005 Stock Incentive Plan, 2014 Stock Incentive Plan, grants of stock options, SARs and PSUs were designed to be deductible (or, as applicable, permit the grant of awards that could be deductible) under Section 162(m).
Commencing with our fiscal 2018 year, the Tax Act will eliminate the performance-based compensation exception to the deductibility limitation under Section 162(m), other than with respect to certain “grandfathered” performance-based awards granted prior to November 2, 2017; provided such awards are not materially modified. The Committee will review the Tax Act and its impact on our executive compensation program; however, no assurance
can be given that compensation intended to satisfy the requirements for exemption fromcovered by Section 162(m) will do so.
The Committee retains discretion and flexibility to awardnon-deductible compensation to our NEOs as it deems appropriate andbe deductible in furtherance of its compensation philosophy and objectives.the future.
The Compensation Committee of the Board of Directors is currently composed of three independent directors. The Compensation Committee oversees the Company’s compensation program on behalf of the Board. The Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis with management.Analysis. Based on its review and discussion with management, the Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.Statement for the Company’s 2022 Annual General Meeting of Shareholders and the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Maria Otero (Chairperson)(Chair)
Richard P. BerminghamKevin M. Jones
Jonathan Christodoro
Hunter C. GaryDon Mulligan
Executive officers of the registrant
Executive Officer | Age | Position with the company | Officer since | |||||
John O. Agwunobi |
| 57 |
| Chairman and Chief Executive Officer | 2018 | |||
John DeSimone |
| 55 |
| President | 2009 | |||
Alexander Amezquita |
| 48 |
| Chief Financial Officer | 2017 | |||
Alan Hoffman |
| 55 |
| Executive Vice President, Global Corporate Affairs | 2014 | |||
Mark Schissel |
| 53 |
| Chief Operating Officer | 2021 | |||
Henry C. Wang |
| 52 |
| Executive Vice President, General Counsel and Corporate Secretary | 2018 |
Set forth below is certain informationa brief description as of the date hereof regarding each NEO.
Name
| Age | Position with the company | Officer since | |||||||||
Michael O. Johnson
| 63 | Executive Chairman | 2003 | |||||||||
Richard Goudis
| 56 | Chief Executive Officer | 2004 | |||||||||
Desmond Walsh
| 61 | President | 2006 | |||||||||
John G. DeSimone
| 51 | Chief Financial Officer | 2009 | |||||||||
David Pezzullo
| 52 | Chief Operating Officer | 2004 |
Michael O. Johnsonthe business experience of all executive officers other than Dr. Agwunobi, who is the Executive Chairman of the Company and has held this position since June 2017. Prior to June 2017, Mr. Johnson was the Chairman and Chief Executive Officer of the Company. Mr. Johnson joined the Company in April 2003 as Chief Executive Officer and became Chairman of the Board in May 2007. Before joining the Company, Mr. Johnson spent 17 years with The Walt Disney Company, where he most recently served as President of Walt Disney International, and also served as President of Asia Pacific for The Walt Disney Company and President of Buena Vista Home Entertainment. Mr. Johnson has also previously served as a publisher ofAudio Timesmagazine, and has directed the regional sales efforts of Warner Amex Satellite Entertainment Company for three of its television channels, including MTV, Nickelodeon and The Movie Channel. Mr. Johnson formerly served as a director and whose business experience is set forth under “— Proposals to be voted on at the meeting – Proposal 1: The election of Univision Communications, Inc., a television company serving Spanish-speaking Americans, from 2005 until 2007, and on the Board of Regents for Loyola High School of Los Angeles. Mr. Johnson received his Bachelor of Arts in Political Science from Western State College.directors”.
Richard GoudisMr. is Chief Executive Officer of the Company and has held this position since June 2017. Prior to June 2017, Mr. Goudis was the Chief Operating Officer of the Company and held such position since January 2010. Mr. Goudis joined the Company in June 2004 as Chief Financial Officer after serving as the Chief Operating Officer, from 1998 to 2001, of Rexall Sundown, Inc., or Rexall, a multinational manufacturer and distributor of nutritional supplements and sports nutrition products and a Nasdaq 100 company that was sold to Royal Numico in 2000. After the sale to Royal Numico, Mr. Goudis had operations responsibility for all of Royal Numico’s U.S. investments, including General Nutrition Centers, or GNC, Unicity International and Rexall. From 2002 to May 2004, Mr. Goudis was a partner at Flamingo Capital Partners, a firm he founded in 2002. Mr. Goudis also previously worked at Sunbeam Corporation and Pratt & Whitney. Mr. Goudis graduated from the University of Massachusetts with a degree in Accounting and he received his Master in Business Administration from Nova Southeastern University.
Desmond Walsh DeSimone is the President of the Company and has held this position since January 2010.March 2020. Mr. Walsh joined
the Company in January 2004 as Senior Vice President, Worldwide Member Sales and was promoted to Executive Vice President for Worldwide Operations and Sales in April 2008. From 2001 to 2004, Mr. WalshDeSimone previously served as the Senior Vice President of the commercial division of DMX Music. Prior to DMX Music, Mr. Walsh spent five years as Vice President and General Manager of Supercomm, Inc., a subsidiary of the Walt Disney Company. Mr. Walsh also previously served in management positions at MovieQuik Systems, a division of The Southland Corporation (nowCompany’s 7-Eleven),Co-President and at Commtron Corporation, a leading consumer electronics and video distribution company.Chief Strategic Officer from May 2018 until March 2020. From January 2010 until May 2018, Mr. Walsh received his Bachelor of Laws degree fromDeSimone served as the University of London.
John G. DeSimoneisCompany’s Chief Financial Officer of the Company and has held this position since January 2010.Officer. Mr. DeSimone joined the Company in November 2007 as Senior Vice President, — FinanceCorporate Financial Planning and Analysis and was promoted to the position of Senior Vice President, — Finance & MemberDistributor Operations in December 2008. From June 2004 through October 2007, Mr. DeSimone served as the Chief Executive Officer of Mobile Ventures, LLC (formerly known as Autoware, Inc.), an automotive aftermarket accessory member and retailer. Prior to working at Mobile Ventures, LLC, Mr. DeSimone served as the Controller, Vice President of Finance and Chief Financial Officer of Rexall.January 2009. Mr. DeSimone received his Bachelor of Science in Business Administration from Bryant College (now known as Bryant University).
David PezzulloMr. Amezquita is the Chief OperatingFinancial Officer of the Company and has held this position since August 2017.November
2020. Mr. Amezquita previously served as the Company’s Senior Vice President, Finance, Strategy and Investor Relations from November 2018 to November 2020. From October 2017 to November 2018, Mr. Amezquita was the Senior Vice President, Finance and Strategic Planning. Prior to Augustjoining the Company in October 2017, Mr. PezzulloAmezquita was Senior Vice President at Moelis and Company from August 2012 to October 2017. Mr. Amezquita holds an MBA in finance from the Wharton School at the University of Pennsylvania, and a Master and Bachelor of Science degree in electrical and computer engineering from Carnegie Mellon University.
Mr. Hoffman is the Executive Vice President, Worldwide OperationsGlobal Corporate Affairs of the Company and has held suchthis position since 2010. Mr. Pezzullo joined the Company in 2004 as the Senior Vice President of Finance and Chief Accounting Officer.August 2014. Prior to joining the Company, Mr. PezzulloHoffman served as Directorthe Senior Vice President for Global Public Policy at PepsiCo. Before joining PepsiCo, Mr. Hoffman served as Deputy Chief of Tax and Treasury, Assistant Controller and Corporate Controller of Rexall and, afterStaff to the sale of Rexall to Royal Numico, Mr. Pezzullo was Vice President of Finance for Royal Numico’s North American Operations, responsible for the financial integrationUnited States, Joe Biden, and Deputy Assistant to the President of the operations,United States, Barack Obama. Mr. Hoffman previously served in a variety of government positions, including Rexall and GNC. Mr. Pezzullo received his BachelorChief of Science in Business Administration from Bryant College (now known as Bryant University).Staff to Senator
Executive compensation |
Joe Biden. Mr. Hoffman holds a Juris Doctorate and Masters of Public Administration from the University of Southern California in Los Angeles, California and a Bachelor of Arts degree from Lafayette College in Easton, Pennsylvania.
Mr. Schissel is the Company’s Chief Operating Officer and has held this position since August 2021. Mr. Schissel previously served as the Company’s Executive Vice President, Worldwide Operations from August 2017 until August 2021. From April 2010 to August 2017, Mr. Schissel served as the Company’s Chief Information Officer. Mr. Schissel joined the Company in May 2007 as Vice President, IS Enterprise Applications, a position he held until April 2010. Mr. Schissel holds a Bachelor of Business Administration degree with a major in Accounting from Iowa State University.
Mr. Wang is Executive Vice President, General Counsel and Corporate Secretary of the Company. He has been the Executive Vice President, General Counsel since May 2018 and the Corporate Secretary since February 2019. Mr. Wang was Senior Vice President, Deputy General Counsel and Chief Compliance Officer from August 2016 until May 2018. Mr. Wang joined the Company in December 2013 as Senior Vice President, Associate General Counsel, from the law firm of Lee, Tran, Liang and Wang LLP. Prior to that, he was a partner at Manatt, Phelps & Philips LLP, and Reed Smith LLP. Mr. Wang holds a bachelor’s degree from University of California, Berkeley and a Juris Doctor from Tulane University Law School.
20172021 Summary compensation table
The following table sets forth the total compensation for the fiscal years ended December 31, 2017, 20162021, 2020 and 2015,2019, of the Company’s Chief Executive Officer, Chief Financial Officer, and each of the three other most highly compensated executive officers.our NEOs.
Name and principal position | Year | Salary ($) | Stock ($)(1) | Option awards ($)(1) | Non-equity incentive plan compensation ($)(2)
| All other compensation ($)(3) | Total ($) | |||||||||||||||||||||
Michael O. Johnson | 2017 | 902,356 | — | 2,500,012 | 1,618,172 | 330,392 | (4) | 5,350,932 | ||||||||||||||||||||
Executive Chairman | 2016 | 1,236,000 | — | 4,999,991 | 3,708,000 | 929,466 | 10,873,457 | |||||||||||||||||||||
| 2015
|
|
| 1,236,000
|
| — | 4,999,996 | 2,781,000 | 836,570 | 9,853,566 | ||||||||||||||||||
Richard Goudis | 2017 | 873,689 | 3,193,983 | 1,806,020 | 735,110 | 31,243 | 6,640,045 | |||||||||||||||||||||
Chief Executive Officer | 2016 | 675,680 | — | 1,805,997 | 918,925 | 40,249 | 3,440,851 | |||||||||||||||||||||
| 2015
|
| 675,680 | — | 3,120,308 | 756,762 | 55,303 | 4,608,053 | ||||||||||||||||||||
Desmond Walsh | 2017 | 694,680 | — | 1,806,020 | 437,648 | 25,201 | 2,963,549 | |||||||||||||||||||||
President | 2016 | 675,680 | — | 1,805,997 | 918,925 | 34,287 | 3,434,889 | |||||||||||||||||||||
| 2015
|
| 675,680 | — | 3,120,308 | 756,762 | 51,871 | 4,604,621 | ||||||||||||||||||||
John G. DeSimone | 2017 | 619,000 | — | 1,735,021 | 365,597 | 22,552 | 2,742,170 | |||||||||||||||||||||
Chief Financial Officer | 2016 | 600,000 | — | 1,735,009 | 900,000 | 22,860 | 3,257,869 | |||||||||||||||||||||
| 2015
|
| 600,000 | — | 2,073,151 | 900,000 | 39,005 | 3,612,156 | ||||||||||||||||||||
David Pezzullo(5) | 2017 | 485,699 | 549,976 | 683,251 | 310,078 | 21,402 | 2,050,407 | |||||||||||||||||||||
Chief Operating Officer | — | — | — | — | — | — | — | |||||||||||||||||||||
| —
|
| — | — | — | — | — | — | ||||||||||||||||||||
Name and principal position | Year | Salary ($) | Stock ($)(1) | Option awards ($)(1) | Non-equity incentive plan compensation ($)(2) | All other compensation ($) | Total ($) | |||||||||||||||||||
John O. Agwunobi | 2021 | 1,000,000 | 4,499,958 | — | 1,458,157 | 38,584 | (3) | 6,996,699 | ||||||||||||||||||
Chairman and Chief | 2020 | 824,346 | 4,589,062 | — | 1,792,422 | 29,512 | 7,235,342 | |||||||||||||||||||
Executive Officer | 2019 | 600,923 | 1,279,989 | — | 322,246 | 21,662 | 2,224,820 | |||||||||||||||||||
John DeSimone | 2021 | 695,000 | 2,249,955 | — | 675,613 | 27,909 | (4) | 3,648,477 | ||||||||||||||||||
President | 2020 | 674,539 | 2,824,202 | — | 1,067,378 | 24,269 | 4,590,388 | |||||||||||||||||||
2019 | 619,000 | 1,279,989 | — | 330,778 | 46,001 | 2,275,768 | ||||||||||||||||||||
Alexander Amezquita* | 2021 | 480,769 | 599,942 | — | 344,897 | 20,411 | (5) | 1,446,019 | ||||||||||||||||||
Chief Financial Officer | 2020 | 385,673 | 499,957 | — | 320,678 | 10,635 | 1,216,943 | |||||||||||||||||||
— | — | — | — | — | — | — | ||||||||||||||||||||
Alan Hoffman* | 2021 | 637,570 | 999,948 | — | 464,839 | 25,899 | (6) | 2,128,256 | ||||||||||||||||||
Executive Vice President, | 2020 | 633,999 | 1,136,522 | — | 761,370 | 22,850 | 2,554,741 | |||||||||||||||||||
Global Corporate Affairs | — | — | — | — | — | — | — | |||||||||||||||||||
Mark Schissel* | 2021 | 494,960 | 1,099,906 | — | 389,215 | 20,908 | (7) | 2,004,989 | ||||||||||||||||||
Chief Operating Officer | — | — | — | — | — | — | — | |||||||||||||||||||
— | — | — | — | — | — | — | ||||||||||||||||||||
David Pezzullo | 2021 | 456,346 | 1,499,970 | — | 407,697 | 19,556 | (8) | 2,383,569 | ||||||||||||||||||
Senior Operations Advisor | 2020 | 565,000 | 1,363,827 | — | 847,500 | 20,435 | 2,796,762 | |||||||||||||||||||
2019 | 565,000 | 1,199,947 | — | 301,922 | 44,063 | 2,110,932 |
* | Mr. Schissel was an NEO for the first time in fiscal year 2021. Accordingly, only information relating to his fiscal year 2021 compensation is included in the compensation tables and related discussions of NEO compensation. Mr. Amezquita was an NEO for the first time in fiscal year 2020. Mr. Hoffman has previously been an NEO prior to 2018, but was not an NEO in 2019. Accordingly, only information relating to Messrs. Amezquita and Hoffman’s fiscal years 2021 and 2020 compensation is included in the compensation tables and related discussions of NEO compensation. |
(1) | Amounts represent the aggregate grant date fair value of the relevant award(s) presented in accordance with FASB ASC Topic 718, “Compensation — Stock Compensation.” See |
Executive compensation | 43 |
performance at the maximum level, would be |
(2) | Incentive plan amounts determined as more specifically discussed under “— Compensation |
(3) |
Name | Deferred compensation plan matching contributions(A) $
| Executive life insurance $ | 401(k) plan – $ | Total all other compensation $ | ||||||||||||||||
Michael O. Johnson
| 22,563 | 12,798 | 9,450 | 44,811 | ||||||||||||||||
Richard Goudis
| 20,893 | 900 | 9,450 | 31,243 | ||||||||||||||||
Desmond Walsh
| 14,851 | 900 | 9,450 | 25,201 | ||||||||||||||||
John G. DeSimone
| 12,202 | 900 | 9,450 | 22,552 | ||||||||||||||||
David Pezzullo
| 11,052 | 900 | 9,450 | 21,402 | ||||||||||||||||
(4) |
(5) | Amounts disclosed in this column for Mr. |
Amounts disclosed in this column for Mr. Hoffman for 2021 include: (i) $12,165 contributed to the Senior Executive Deferred Compensation Plan, which represents the Company’s matching contribution earned in 2021 but credited to Mr. Hoffman’s account in 2022; (ii) $684 in Company-paid premiums for executive life insurance; and (iii) $13,050 in Company paid 401(k) matching contributions. |
Amounts disclosed in this column for Mr. Schissel for 2021 include: (i) $7,174 contributed to the Senior Executive Deferred Compensation Plan, which represents the Company’s matching contribution earned in 2021 but credited to Mr. Schissel’s account in 2022; (ii) $684 in Company-paid premiums for executive life insurance; and (iii) $13,050 in Company-paid 401(k) matching contributions. |
(8) | Amounts disclosed in this column for Mr. Pezzullo for 2021 include: (i) $5,822 contributed to the Senior Executive Deferred Compensation Plan, which represents the Company’s matching contribution earned in 2021 but credited to Mr. Pezzullo’s account in 2022; (ii) $684 in Company-paid premiums for executive life insurance; and (iii) $13,050 in Company-paid 401(k) matching contributions. |
20172021 Grants of plan-based awards
The following table sets forth all grants of plan-based awards made to the NEOs during the fiscal year ended December 31, 2017.2021. For further discussion regarding the grants see “— Compensation Discussiondiscussion and Analysisanalysis — Annual Incentive Awardsincentive awards and long-term incentive awards — Long-Term Incentive Awards.”Long-term incentive awards” on page 36.
Name | Grant Date(1) | Estimated future payouts under non-equity incentive plan awards | Estimated future payouts under equity incentive plan awards(1) | All other option awards: number of securities underlying SARs ($) | Exercise or base price of SAR Awards ($/share) | Grant date fair value of SAR Awards ($) | ||||||||||||||||||||||||||||||
Target ($) | Maximum ($) | Threshold (#) | Target (#)
| Maximum (#) | ||||||||||||||||||||||||||||||||
Michael O. Johnson |
| 1,086,768
|
| 2,173,534 | ||||||||||||||||||||||||||||||||
| 02/27/2017
|
| 44,138 | 88,276 | — | — | 57.19 | 2,500,012 | ||||||||||||||||||||||||||||
Richard Goudis |
| 933,473
|
| 1,866,943 | — | |||||||||||||||||||||||||||||||
02/27/2017 |
| 54,788
|
| 109,576 | — | — | 57.19 | 1,806,020 | ||||||||||||||||||||||||||||
| 06/06/2017
|
| 22,902 | 45,805 | 91,610 | — | — | 3,193,983 | ||||||||||||||||||||||||||||
Desmond Walsh | 555,744 |
| 1,111,488
|
| — | |||||||||||||||||||||||||||||||
| 02/27/2017
|
| 31,885 | 63,771 | — | — | 57.19 | 1,806,020 | ||||||||||||||||||||||||||||
John G. DeSimone | 464,250 |
| 928,500
|
| — | |||||||||||||||||||||||||||||||
| 02/27/2017
|
| 30,632 | 61,264 | — | — | 57.19 | 1,735,021 | ||||||||||||||||||||||||||||
David Pezzullo |
| 393,750
|
| 787,500 | — | |||||||||||||||||||||||||||||||
| 02/27/2017
|
| 11,475 | 22,951 | — | — | 57.19 | 683,251 | ||||||||||||||||||||||||||||
| 08/03/2017
|
| 4,201 | 8,403 | 16,806 | — | — | 549,976 |
NEO | Grant Date(1) | Estimated future payouts under non-equity incentive plan awards | Estimated future payouts under equity incentive plan awards(1) | All other stock awards: number of shares or | Exercise of base price of SAR Awards ($/share) | Grant date fair value of Stock ($) | ||||||||||||||||||||||||||||||
Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||
John O. Agwunobi |
| 1,200,000 |
|
| 2,400,000 |
| ||||||||||||||||||||||||||||||
| 02/19/2021 |
|
| 58,193 |
|
| 93,109 |
|
| 162,941 |
|
| — |
|
| — |
|
| 4,499,958 |
| ||||||||||||||||
John DeSimone |
| 556,000 |
|
| 1,112,000 |
| ||||||||||||||||||||||||||||||
| 02/19/2021 |
|
| 29,096 |
|
| 46,554 |
|
| 81,470 |
|
| — |
|
| — |
|
| 2,249,955 |
| ||||||||||||||||
Alexander Amezquita |
| 283,836 | (3) |
| 567,672 | (3) | ||||||||||||||||||||||||||||||
| 02/19/2021 |
|
| 6,465 |
|
| 10,345 |
|
| 18,104 |
|
| — |
|
| — |
|
| 499,974 |
| ||||||||||||||||
| 03/03/2021 |
|
| 1,350 |
|
| 2,161 |
|
| 3,782 |
|
| — |
|
| — |
|
| 99,968 |
| ||||||||||||||||
Alan Hoffman |
| 382,542 |
|
| 765,084 |
| ||||||||||||||||||||||||||||||
| 02/19/2021 |
|
| 12,931 |
|
| 20,690 |
|
| 36,208 |
|
| — |
|
| — |
|
| 999,948 |
| ||||||||||||||||
Mark Schissel |
| 320,307 | (4) |
| 640,614 | (4) | ||||||||||||||||||||||||||||||
| 02/19/2021 |
|
| 8,405 |
|
| 13,448 |
|
| 23,534 |
|
| — |
|
| — |
|
| 649,942 |
| ||||||||||||||||
| 08/05/2021 |
|
| 4,728 |
|
| 9,457 |
|
| 18,914 |
|
| — |
|
| — |
|
| 449,964 |
| ||||||||||||||||
David Pezzullo |
| 335,517 | (5) |
| 671,034 | (5) | ||||||||||||||||||||||||||||||
| 02/19/2021 |
|
| 19,397 |
|
| 31,036 |
|
| 54,313 |
|
| — |
|
| — |
|
| 1,499,970 |
|
(1) | All equity grants |
44 | Executive compensation |
(2) | For the |
(3) | Estimated future payouts for Mr. Amezquita are based upon a prorated bonus eligible salary of $483,836. |
(4) | Estimated future payouts for Mr. Schissel are based upon a prorated bonus eligible salary of $497,060. |
(5) | Estimated future payouts for Mr. Pezzullo are based upon a prorated bonus eligible salary of $447,356. |
Narrative disclosure to summary compensation table and grants of plan-based awards
We have entered into employment agreements withEquity Awards. In fiscal year 2021, we granted each of Messrs. Johnsonour NEOs long-term performance-based compensation in the form of PSUs and Goudis, certain termsRSUs. The number of PSUs granted was calculated by dividing 75% of the total equity award value by the closing price of our stock on the date of grant, other than the grant to Mr. Schissel in August 2021 which are summarized below. A more detailed descriptionwas comprised solely of payments that would be duePSUs. All equity awards shown in this table were granted under the 2014 Plan. PSUs awarded to our NEOs in fiscal year 2021 will vest, subject to continued employment, on December 31, 2023, and subject further to the achievement of the performance targets set by the Committee as measured over the performance period beginning on January 1, 2021 and ending on December 31, 2023 as determined by the Committee. Such targets were established based on the Long-Range Forecast. The number of PSUs that will become earned and vested will be determined based on the Company’s performance against the performance targets. As such, the minimum number of PSUs that may become earned and vested is 0%. The maximum number of PSUs that may become earned and vested is 200% of the PSU award granted to the participant. The final
number of PSUs earned will be based on the assessment of three-year performance against pre-determined goals for Local Currency Net Sales and Adjusted EBIT as further discussed in the “Long-Term Incentive Awards” section. RSUs awarded to our NEOs in connection with certain terminations or a changefiscal year 2021 will vest, subject to continued employment, in controlthree annual installments: 20% on the first and second anniversaries of the Company is set forth under “— Potentialgrant date and 60% on the third anniversary of the grant date. The circumstances pursuant to which PSUs and RSUs have accelerated vesting are described below in the section entitled “Potential Payments Upon Termination or Change in Control.”Control” on page 48.
Michael O. Johnson.Non-Equity Incentive Plan Compensation Awards. Herbalife International entered intoThese amounts reflect the potential threshold, target and maximum annual incentive bonus awards payable to our NEOs as annual incentive bonuses for fiscal year 2021. Target bonus amounts assume achievement of the objective goals at the target amounts. Maximum bonus amounts assume achievement of the objective goals at the maximum for a letter agreement with Mr. Johnson effective aspayout of June 1, 2017, or the Johnson Employment Agreement, pursuant to which he serves as the Company’s Executive Chairman. Pursuant to the Johnson Employment Agreement, Mr. Johnson receives an annual salary200% of $650,000 and is eligibletarget. The NEOs received actual bonuses for an annual bonus targeted at 80% of his annual salary. Under the Johnson Employment Agreement, Mr. Johnson is eligible to participatefiscal year 2021 in the Company’s long-term incentive plan, withamounts shown in the size, form, and timing of grants, if any, subject to the approval“Non-Equity Incentive Plan Compensation” column of the independent members of the Board or the Committee.
Richard Goudis. Herbalife International also entered into an amended and restated executive employment agreement with Mr. Goudis effective as of June 1, 2017, or the Goudis Employment Agreement, pursuant to which he serves as the Company’s Chief Executive Officer. Pursuant to the Goudis Employment Agreement, Mr. Goudis receives an annual salary of $1,000,000 and, should the Company achieve certain financial targets established by the Committee, Mr. Goudis is eligible for an annual bonus targeted at 120% of his annual salary. Under the Goudis Employment Agreement, Mr. Goudis is eligible to participate in the Company’s long-term incentive plan, with the size, form, and timing of grants, if any, subject to the approval of the Committee; however, under the Company’s Principles of Corporate Governance, the CEO’s compensation is subject to the approval by the independent members of the Board. Additionally, Mr. Goudis is entitled to an award of performance share units having a grant date fair value equal to $5,000,000, reduced by the grant date fair value of the equity incentive awards previously granted to Mr. Goudis in 2017 in the ordinary course. Mr. Goudis participates in the Severance Plan in accordance with its the terms and conditions as described under “— Potential payments upon termination or change in control — Richard Goudis.”2021 Summary Compensation Table.
45 |
Outstanding equity awards at 20172021 fiscalyear-end
The following table sets forth equity awards of the NEOs outstanding as of December 31, 2017.2021.
Grant Date | Option/Stock Appreciation Right Awards
| Stock Unit Awards
| ||||||||||||||||||||||||||
Number of securities underlying unexercised options/SARs (#) exercisable | Equity incentive plan awards: number of securities unexercised options/SARs (#)
| Exercise Price ($) | Expiration date | Equity incentive plan awards: number of unearned stock units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) | |||||||||||||||||||||||
Michael O. Johnson | 12/19/2013 | 151,331 | 79.58 | 12/19/2023 | (1) | |||||||||||||||||||||||
04/30/2014 | 192,455 | 59.98 | 04/30/2024 | (1) | ||||||||||||||||||||||||
03/02/2015 | 163,132 | 244,698 | 30.44 | 03/02/2025 | (2) | |||||||||||||||||||||||
05/09/2016 | 33,591 | 134,363 | 62.51 | 05/09/2026 | (2) | |||||||||||||||||||||||
02/27/2017 | 88,276 | 57.19 | 02/27/2027 | (3) | ||||||||||||||||||||||||
Richard P. Goudis | 02/27/2009 | 83,333 | 6.82 | 02/27/2019 | (1) | |||||||||||||||||||||||
01/04/2010 | 120,000 | 20.67 | 01/04/2020 | (1) | ||||||||||||||||||||||||
05/07/2010 | 53,093 | 22.94 | 05/07/2020 | (1) | ||||||||||||||||||||||||
05/18/2011 | 58,009 | 53.29 | 05/18/2021 | (1) | ||||||||||||||||||||||||
05/31/2012 | 118,426 | 44.79 | 05/31/2022 | (1) | ||||||||||||||||||||||||
12/19/2013 | 54,661 | 79.58 | 12/19/2023 | (1) | ||||||||||||||||||||||||
04/30/2014 | 83,402 | 59.98 | 04/30/2024 | (1) | ||||||||||||||||||||||||
03/02/2015 | 48,940 | 73,409 | 30.44 | 03/02/2025 | (2) | |||||||||||||||||||||||
05/07/2015 | 33,300 | 49,950 | 47.80 | 05/07/2025 | (2) | |||||||||||||||||||||||
05/09/2016 | 12,133 | 48,532 | 62.51 | 05/09/2026 | (2) | |||||||||||||||||||||||
02/27/2017 | 63,771 | 57.19 | 02/27/2027 | (3) | ||||||||||||||||||||||||
06/06/2017 | 45,805 | (4) | $3,101,915 | |||||||||||||||||||||||||
Desmond Walsh | 06/30/2008 | 30,000 | 19.38 | 06/30/2018 | (1) | |||||||||||||||||||||||
02/27/2009 | 150,000 | 6.82 | 02/27/2019 | (1) | ||||||||||||||||||||||||
01/04/2010 | 120,000 | 20.67 | 01/04/2020 | (1) | ||||||||||||||||||||||||
05/07/2010 | 66,366 | 22.94 | 05/07/2020 | (1) | ||||||||||||||||||||||||
05/18/2011 | 58,009 | 53.29 | 05/18/2021 | (1) | ||||||||||||||||||||||||
05/31/2012 | 118,426 | 44.79 | 05/31/2022 | (1) | ||||||||||||||||||||||||
12/19/2013 | 54,661 | 79.58 | 12/19/2023 | (1) | ||||||||||||||||||||||||
04/30/2014 | 83,402 | 59.98 | 04/30/2024 | (1) | ||||||||||||||||||||||||
03/02/2015 | 48,940 | 73,409 | 30.44 | 03/02/2025 | (2) | |||||||||||||||||||||||
05/07/2015 | 33,300 | 49,950 | 47.80 | 05/07/2025 | (2) | |||||||||||||||||||||||
05/09/2016 | 12,133 | 48,532 | 62.51 | 05/09/2026 | (2) | |||||||||||||||||||||||
02/27/2017 | 63,771 | 57.19 | 02/27/2027 | (3) | ||||||||||||||||||||||||
John G. DeSimone | 02/27/2009 | 50,000 | 6.82 | 02/27/2019 | (1) | |||||||||||||||||||||||
01/04/2010 | 80,000 | 20.67 | 01/04/2020 | (1) | ||||||||||||||||||||||||
05/07/2010 | 30,466 | 22.94 | 05/07/2020 | (1) | ||||||||||||||||||||||||
05/18/2011 | 41,667 | 53.29 | 05/18/2021 | (1) | ||||||||||||||||||||||||
05/31/2012 | 79,475 | 44.79 | 05/31/2022 | (1) | ||||||||||||||||||||||||
12/19/2013 | 45,399 | 79.58 | 12/19/2023 | (1) | ||||||||||||||||||||||||
04/30/2014 | 57,736 | 59.98 | 04/30/2024 | (1) | ||||||||||||||||||||||||
03/02/2015 | 35,888 | 53,834 | 30.44 | 03/02/2025 | (2) | |||||||||||||||||||||||
05/07/2015 | 20,000 | 30,000 | 47.80 | 05/07/2025 | (2) | |||||||||||||||||||||||
05/09/2016 | 11,656 | 46,624 | 62.51 | 05/09/2026 | (2) | |||||||||||||||||||||||
02/27/2017 | 61,264 | 57.19 | 02/27/2027 | (3) | ||||||||||||||||||||||||
David Pezzullo | 02/27/2009 | 50,000 | 6.82 | 02/27/2019 | (1) | |||||||||||||||||||||||
05/07/2010 | 19,832 | 22.94 | 05/07/2020 | (1) | ||||||||||||||||||||||||
05/18/2011 | 10,382 | 53.29 | 05/18/2021 | (1) | ||||||||||||||||||||||||
03/01/2012 | 3,408 | 67.70 | 03/01/2022 | (1) | ||||||||||||||||||||||||
05/31/2012 | 31,967 | 44.79 | 05/31/2022 | (1) | ||||||||||||||||||||||||
12/19/2013 | 14,754 | 79.58 | 12/19/2023 | (1) | ||||||||||||||||||||||||
04/30/2014 | 18,764 | 59.98 | 04/30/2024 | (1) | ||||||||||||||||||||||||
03/02/2015 | 21,206 | 31,811 | 30.44 | 03/02/2025 | (2) | |||||||||||||||||||||||
05/09/2016 | 4,367 | 17,467 | 62.51 | 05/09/2026 | (2) | |||||||||||||||||||||||
02/27/2017 | 22,951 | 57.19 | 02/27/2027 | (3) | ||||||||||||||||||||||||
08/03/2017 | 8,403 | (4) | $569,051 | |||||||||||||||||||||||||
NEO | Grant Date | Option/Stock Appreciation Right Awards
| Stock Unit Awards
| |||||||||||||||||||||||||
Number of securities underlying unexercised options/SARs (#) exercisable | Equity incentive plan awards: number of securities unexercised options/SARs (#)
| Exercise Price ($) | Expiration date | Equity incentive plan awards: number of unearned stock units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) | |||||||||||||||||||||||
John O. Agwunobi | 02/29/2016 | 55,324 | 27.375 | 02/28/2026 | (1) | |||||||||||||||||||||||
02/27/2017 | 21,186 | 28.595 | 02/27/2027 | (1) | ||||||||||||||||||||||||
02/21/2019 | 19,565 | (2) | $800,795 | |||||||||||||||||||||||||
02/21/2019 | 3,421 | (3) | $140,022 | |||||||||||||||||||||||||
02/20/2020 | 25,363 | (4) | $1,038,108 | |||||||||||||||||||||||||
02/20/2020 | 6,764 | (3) | $276,851 | |||||||||||||||||||||||||
03/30/2020 | 57,652 | (4) | $2,359,696 | |||||||||||||||||||||||||
03/30/2020 | 15,374 | (3) | $629,258 | |||||||||||||||||||||||||
02/19/2021 | 69,832 | (5) | $2,858,224 | |||||||||||||||||||||||||
02/19/2021 | 23,277 | (3) | $952,728 | |||||||||||||||||||||||||
John DeSimone | 05/09/2016 | 116,560 | 31.255 | 05/09/2026 | (1) | |||||||||||||||||||||||
02/27/2017 | 122,528 | 28.595 | 02/27/2027 | (1) | ||||||||||||||||||||||||
02/21/2019 | 19,565 | (2) | $800,795 | |||||||||||||||||||||||||
02/21/2019 | 3,421 | (3) | $140,022 | |||||||||||||||||||||||||
02/20/2020 | 25,363 | (4) | $1,038,108 | |||||||||||||||||||||||||
02/20/2020 | 6,764 | (3) | $276,851 | |||||||||||||||||||||||||
03/30/2020 | 25,190 | (4) | $1,031,027 | |||||||||||||||||||||||||
03/30/2020 | 6,717 | (3) | $274,927 | |||||||||||||||||||||||||
02/19/2021 | 34,916 | (5) | $1,429,112 | |||||||||||||||||||||||||
02/19/2021 | 11,638 | (3) | $476,343 | |||||||||||||||||||||||||
Alexander Amezquita | 02/21/2019 | 2,459 | (3) | $100,647 | ||||||||||||||||||||||||
02/20/2020 | 4,861 | (3) | $198,961 | |||||||||||||||||||||||||
11/09/2020 | 4,866 | (3) | $199,165 | |||||||||||||||||||||||||
02/19/2021 | 7,759 | (5) | $317,576 | |||||||||||||||||||||||||
02/19/2021 | 2,586 | (3) | $105,845 | |||||||||||||||||||||||||
03/03/2021 | 1,621 | (5) | $66,348 | |||||||||||||||||||||||||
03/03/2021 | 540 | (3) | $22,102 | |||||||||||||||||||||||||
Alan Hoffman | 03/02/2015 | 26,504 | 15.22 | 03/02/2025 | (1) | |||||||||||||||||||||||
05/09/2016 | 26,200 | 31.255 | 05/09/2026 | (1) | ||||||||||||||||||||||||
02/27/2017 | 36,722 | 28.595 | 02/27/2027 | (1) | ||||||||||||||||||||||||
02/21/2019 | 9,935 | (2) | $406,640 | |||||||||||||||||||||||||
02/21/2019 | 1,737 | (3) | $71,095 | |||||||||||||||||||||||||
02/20/2020 | 19,815 | (4) | $811,028 | |||||||||||||||||||||||||
02/20/2020 | 5,284 | (3) | $216,274 | |||||||||||||||||||||||||
02/19/2021 | 15,518 | (5) | $635,152 | |||||||||||||||||||||||||
02/19/2021 | 5,172 | (3) | $211,690 | |||||||||||||||||||||||||
Mark Schissel | 02/21/2019 | 9,935 | (2) | $406,640 | ||||||||||||||||||||||||
02/21/2019 | 1,737 | (3) | $71,095 | |||||||||||||||||||||||||
02/20/2020 | 12,879 | (4) | $527,137 | |||||||||||||||||||||||||
02/20/2020 | 3,435 | (3) | $140,595 | |||||||||||||||||||||||||
04/07/2020 | 50,284 | (6) | $2,058,124 | |||||||||||||||||||||||||
02/19/2021 | 10,086 | (5) | $412,820 | |||||||||||||||||||||||||
02/19/2021 | 3,362 | (3) | $137,607 | |||||||||||||||||||||||||
08/05/2021 | 9,457 | (5) | $387,075 | |||||||||||||||||||||||||
David Pezzullo | 02/21/2019 | 18,342 | (2) | $750,738 | ||||||||||||||||||||||||
02/21/2019 | 3,207 | (3) | $131,263 | |||||||||||||||||||||||||
02/20/2020 | 23,778 | (4) | $973,234 | |||||||||||||||||||||||||
02/20/2020 | 6,341 | (3) | $259,537 | |||||||||||||||||||||||||
02/19/2021 | 23,277 | (5) | $952,728 | |||||||||||||||||||||||||
02/19/2021 | 7,759 | (3) | $317,576 |
46 | Executive compensation |
(1) | These |
(2) | Subject to continued |
(3) | Subject to continued employment, these RSUs vest annually, 20% on the first anniversary, 20% on the second anniversary and 60% on the third anniversary of the grant |
(4) |
(5) | Subject to continued employment, these PSUs vest 100% on December 31, 2023; provided that the applicable performance criteria are met. The number of PSUs reflected assumes a target level of performance. |
Subject to continued employment, these RSUs vest 100% on the third anniversary of the grant date. |
20172021 Option exercises and stock vested
The following table sets forth information with respect to Common Shares acquired upon the exercise of stock optionsoptions/SARs and the vesting of stock awards of the NEOs during the fiscal year ended December 31, 2017.2021.
Name | Option awards
| Stock awards
| ||||||||||||||
Number of shares acquired on exercise (#)
| Value realized on exercise ($)
| Number of shares acquired on vesting (#)
| Value realized on vesting ($) | |||||||||||||
Michael O. Johnson
| 1,054,084 | 72,229,750 | — | — | ||||||||||||
Richard Goudis
| — | — | — | — | ||||||||||||
Desmond Walsh
| 40,502 | 2,455,732 | — | — | ||||||||||||
John G. DeSimone
| — | — | — | — | ||||||||||||
David Pezzullo
| — | — | — | — |
NEO | Option awards | Stock awards | ||||||||||||||
Number of shares acquired on exercise (#)
| Value realized on exercise ($)
| Number of shares acquired on vesting (#)
| Value realized on vesting ($)
| |||||||||||||
John O. Agwunobi | — |
| — |
| 49,140(1) |
| $2,633,446 |
| ||||||||
John DeSimone | — |
| — |
| 46,976(1) |
| $2,535,460 |
| ||||||||
Alexander Amezquita | — |
| — |
| 6,448 |
| $293,610 |
| ||||||||
Alan Hoffman | — |
| — |
| 23,463(1) |
| $1,271,179 |
| ||||||||
Mark Schissel | — |
| — |
| 23,000(1) |
| $1,248,802 |
| ||||||||
David Pezzullo | 146,658 |
| 3,552,403 |
| 42,468(1) |
| $2,305,817 |
|
(1) | Number includes PSUs that vested as of December 31, 2020, but were not received or acquired until February 2021 following certification of the performance thresholds by the Compensation Committee once the metrics results were available. |
20172021 Non-qualified deferred compensation table
The following table sets forth allnon-qualified deferred compensation of the NEOs for the fiscal year ended December 31, 20172021 pursuant to the Herbalife International of America, Inc. Senior Executive Deferred Compensation Plan, effective January 1, 1996, as amended and restated, on January 1, 2001, or the Senior Executive Plan.
Name | Executive contributions in last FY ($)
| Company contributions in last FY ($)(1)
| Aggregate earnings in last FY ($)
| Aggregate withdrawals/ distribution ($)
| Aggregate balance at last FYE ($)(2)
| ||||||||||||||||||||
Michael O. Johnson
| 36,586 | 22,563 | 49,136 | — | 1,657,065 | ||||||||||||||||||||
Richard Goudis
| 43,347 | 20,893 | 78,583 | — | 786,835 | ||||||||||||||||||||
Desmond Walsh
| 487,235 | 14,851 | 514,697 | — | 3,889,329 | ||||||||||||||||||||
John DeSimone
| 30,932 | 12,202 | 56,942 | — | 346,351 | ||||||||||||||||||||
David Pezzullo
| 72,066 | 11,052 | 35,952 | 303,892 | 1,379,904 |
NEO | Executive contributions in last FY ($)
| Company contributions in last FY ($)(1)
| Aggregate earnings in last FY ($)
| Aggregate withdrawals/ distribution ($)
| Aggregate balance at last FYE ($)(2)
| |||||||
John O. Agwunobi | 637,727 | 24,850 | 121,137 | 349,819 | 1,078,774 | |||||||
John DeSimone | 34,750 | 14,175 | 98,112 | — | 811,102 | |||||||
Alexander Amezquita | 16,827 | 6,677 | 675 | — | 17,502 | |||||||
Alan Hoffman | 22,315 | 12,165 | 13,950 | — | 232,556 | |||||||
Mark Schissel | 17,324 | 7,174 | 17,908 | 236,903 | 376,840 | |||||||
David Pezzullo | 103,004 | 5,822 | 48,551 | — | 1,508,212 |
(1) |
(2) |
Executive compensation | 47 |
Non-qualified deferred compensation plans. We maintain the Senior Executive Plan, which is applicable tocovers all eligible employees at the rank of Senior Vice President and higher.
The Senior Executive Plan is unfunded and benefits are paid from the Company’s general assets, except that the Company has contributed amounts to a “rabbi trust” whosewhich assets will be used to pay benefits if we remain solvent, but can be reached by our creditors if we become insolvent. The Senior Executive Plan allows eligible employees, who are selected by the administrative committee that manages and administers the plan, or the
Deferred Compensation Committee, to elect annually to defer up to 75% of their annual base salary and up to 100% of their annual bonus for each calendar year, or the Annual Deferral Amount. We make matching contributions on behalf of each participant in the Senior Executive Plan, which matching contributions are 100% vested at all times.
Effective January 1, 2013, the matching contribution under the Senior Executive Plan was changed to 3.5% of a participant’s annual base salary in excess of the qualified plan annual compensation limit and the amount by which deferrals reduce 401(k) eligible pay below the IRS limit.
Each participant in the Senior Executive Plan may determine how his or her Annual Deferral Amount and matching contributions, if any, will be deemed to be invested by choosing among several investment funds or indices designated by the Deferred Compensation Committee. The Senior Executive Plan, however, does not require us to actually acquire or hold any investment fund or other assets to fund the Senior Executive Plan. The entire interest of each participant in the Senior Executive Plan is always fully vested andnon-forfeitable.
In connection with a participant’s election to defer an Annual Deferral Amount, the participant may also elect to receive a “ScheduledIn-Service Withdrawal” equal to the Annual Deferral Amount and the matching contributions, if any, attributable thereto plus earnings, and shall be payable two or more years after the end of the plan year in which the Annual Deferral Amount is actually deferred. As of January 2004, the Senior Executive Plan was amended to allow for deferral of the short-term payout date if the deferral is made within the time period specified therein. Subject to the short-term payout provision and specified exceptions for unforeseeable financial emergencies, a participant may not withdraw, without incurring a ten percent (10%) withdrawal penalty, all or any portion of his or her account under the Senior Executive Plan prior to the date that such participant either (1) is determined by the Deferred Compensation
Committee to have incurred permanent and total disability or (2) dies or otherwise terminates employment.
Potential payments upon termination or change in control
The information below describes certain compensation that would have become payable under existing plans and contractual arrangements assuming a termination of employment and/or change in control had occurred on December 31, 20172021 based upon the closing price of a Common Share on the NYSE on December 29, 201731, 2021 of $67.72,$40.93, given the NEOs’ compensation and service levels as of such date. In addition to the benefits described below, upon any termination of employment, each of the NEOs would also be entitled to the amount shown in the column labeled “Aggregate Balance at Last FYE” in the “2017“2021 Non-Qualified Deferred Compensation” table.
As of December 31, 2017, the Company had entered into employment agreements that were effective for fiscal 2017 with each of Messrs. Johnson and Goudis and severance agreements that were effective for fiscal 2017 with each of Messrs. Walsh and DeSimone. On October 31, 2016, the Committee approved the Severance Plan. As of December 31, 2017, Messrs. Goudis and Pezzullo are2021, each of our NEOs were participants in the Severance Plan. Our other executive officers other than the Executive Chairman are eligible to participate in the Severance Plan, subject to being designated to participate by the Committee. The
employment agreements, severance agreements and participation in the Severance Plan areis described in more detail below. In addition, the Company has also entered into award agreements governing the equity-based compensation awards (including SARs, RSUs and PSUs) granted to each of the NEOs.
Michael O. Johnson
Pursuant to the Johnson Employment Agreement, Mr. Johnson’s employment may be terminated at any time for any reason without payment of severance or any additional consideration, provided that Herbalife International provides Mr. Johnson with 60 days’ notice of termination. In the event that Mr. Johnson’s employment is terminated, Mr. Johnson would be entitled to receive apro-rated annual bonus for the year of termination based on actual results for the full year and number of days he was employed during such year. In the event of his termination, Mr. Johnson and his spouse would also be entitled to participate in the Company’s health and welfare plans through COBRA until the age of 65, with the premiums for such continued coverage to be covered by the Company.
Mr. Johnson’s award agreements governing his SARs contain change in control and termination provisions. The Committee may accelerate the vesting of Mr. Johnson’s awards in the event of a Change of Control, as defined in the 2014 Plan. Except as set forth above, all unvested SARs shall be forfeited upon the termination of Mr. Johnson’s employment with the Company.
Richard Goudis
Pursuant to the Goudis Employment Agreement, Mr. Goudis’ employment can be terminated at any time for any reason or for no reason without payment on termination.
Under the Severance Plan, in the event Mr. Goudis’an NEO’s respective employment is terminated by Herbalife International of America, Inc. without “Cause” (as defined in the Severance Plan), other than in connection with histheir death or disability, or by Mr. Goudissuch NEO for “Good Reason” (as defined in the Severance Plan), he willDr. Agwunobi would be entitled to a lump sum severance payment equal to 2.0x his annualized base salary, whichand the other NEOs would each be entitled to a lump sum severance payment equal to 1.0x their annualized base salary. Such lump sum amount as of December 31, 2017 was2021 would be equal to (i) $2,000,000 for Dr. Agwunobi, reduced to 1.5x after five years of participation in the Severance Plan, and (ii) $695,000 for Mr. DeSimone, $500,000 for Mr. Amezquita, $637,570 for Mr. Hoffman, $530,000 for Mr. Schissel, $282,500 for Mr. Pezzullo, in each case reduced to 0.5x after five years of participation in the Severance Plan. Additionally, such NEO would be entitled in such case to a payment of apro-rata annual cash bonus payment for the fiscal year in which the date of termination occurs (based on the actual performance of Herbalife International of America, Inc. over the entire year and the number of days worked by Mr. Goudis in such year), payable at the same time as bonuses are paid to executives generally for such year. In the event Mr. Goudis’ employment is terminated for reason of death, disability, for Cause or resignation without Good Reason, Mr. Goudis will not receive any payments other than for accrued but unpaid obligations. Payment of the
severance payment is subject to and conditioned upon the execution of a general release in favor of the Company and additional requirements set forth in the Severance Plan.
Mr. Goudis’ award agreements governing his SARs contain change in control and termination provisions. The Committee may accelerate the vesting of Mr. Goudis’ awards in the event of a Change of Control, as defined in the 2014 Plan. Except as set forth above, all unvested SARs shall be forfeited upon the termination of Mr. Goudis’ employment with the Company.
Pursuant to Mr. Goudis’ PSU award agreement, upon a Change in Control, as defined in the 2014 Plan, Mr. Goudis will have the right to receive a payment based on performance through a date determined by the Committee prior to the Change in Control, unless such performance cannot be determined, in which case Mr. Goudis will have the right to receive a payment equal to the target amount payable. If Mr. Goudis’ employment is terminated prior to the vesting of his PSUs, such unvested PSUs will be forfeited.
Desmond Walsh
Pursuant to our severance agreement with Desmond Walsh, or the Walsh Severance Agreement, if Mr. Walsh is terminated by the Company without Cause or resigns for Good Reason, each as defined below, he is entitled to be paid a lump sum amount equal to two times his then-current annual salary, which lump sum amount as of December 31, 2017 was equal to $1,389,360, in addition to all other accrued but unpaid entitlements. The Company will also provide Mr. Walsh with outplacement services for up to six months by a provider selected and paid for by the Company in an amount not to exceed $20,000. In the event that Mr. Walsh is qualified for and elects COBRA coverage under the Company’s health plans after a termination without Cause or a resignation for Good Reason, the Company will continue to pay its share of the cost of premiums under such plans until Mr. Walsh is reemployed, or for a period of two years, whichever occurs first. If Mr. Walsh is terminated by the Company without Cause, resigns for Good Reason, or retires, dies, or resigns as a result of a disability, he will be entitled to receive a pro rata bonus payment, at such time bonuses are paid to the Company’s other senior executives, based on the number of months worked in the applicable year. Upon the occurrence of a Change of Control, as defined below, 100% of all unvested stock options, SARs and stock unit awards granted to Mr. Walsh prior to or after the date of the Walsh Severance Agreement will immediately vest and, to the extent applicable, become exercisable as of immediately prior to such Change of Control. As a precondition to the Company’s obligation to pay the amounts described above, Mr. Walsh must execute a general release of claims.
Mr. Walsh’s award agreements governing his SARs contain change in control and termination provisions. The Committee may accelerate the vesting of Mr. Walsh’s awards in the event of a Change of Control, as defined in the 2014 Plan. Except as set forth above, all unvested SARs shall be forfeited upon the termination of Mr. Walsh’s employment with the Company.
John G. DeSimone
Pursuant to our severance agreement with John DeSimone, or the DeSimone Severance Agreement, if Mr. DeSimone is terminated by the Company without Cause or resigns for Good Reason, each as defined below, he is entitled to be paid a lump sum amount equal to two times his then-current annual salary, which lump sum amount as of December 31, 2017 was equal to $1,238,000, in addition to all other accrued but unpaid entitlements. The Company will also provide Mr. DeSimone with outplacement services for up to six months by a provider selected and paid for by the Company in an amount not to exceed $20,000. In the event that Mr. DeSimone is qualified for and elects COBRA coverage under the Company’s health plans after a termination without Cause or a resignation for Good Reason, the Company will continue to pay its share of the cost of premiums under such plans until Mr. DeSimone is reemployed, or for a period of two years, whichever occurs first. If Mr. DeSimone is terminated by the Company without Cause, resigns for Good Reason, or retires, dies, or resigns as a result of a disability, he will be entitled to receive a pro rata bonus payment, at such time bonuses are paid to the Company’s other senior executives, based on the number of months worked in the applicable year. Upon the occurrence of a Change of Control, as defined below, 100% of all unvested stock options, SARs and stock unit awards granted to Mr. DeSimone prior to or after the date of the DeSimone Severance Agreement will immediately vest and, to the extent applicable, become exercisable as of immediately prior to such Change of Control. As a precondition to the Company’s obligation to pay the amounts described above, Mr. DeSimone must execute a general release of claims.
Mr. DeSimone’s award agreements governing his SARs contain change in control and termination provisions. The Committee may accelerate the vesting of Mr. DeSimone’s awards in the event of a Change of Control, as defined in the 2014 Plan. Except as set forth above, all unvested SARs shall be forfeited upon the termination of Mr. DeSimone’s employment with the Company.
David Pezzullo
Under the Severance Plan, in the event Mr. Pezzullo’s employment is terminated by Herbalife International without “Cause” (as defined in the Severance Plan), other than in connection with his death or disability, or by Mr. Pezzullo for “Good Reason” (as defined in the Severance Plan), he will be entitled to a lump sum
severance payment equal to 1.0x his annualized base salary, which lump sum amount as of December 31, 2017 was equal to $525,000, reduced to 0.5x after five years of participation in the Severance Plan, and a payment of apro-rata annual cash bonus payment for the fiscal year in which the date of termination occurs (based on the actual performance of Herbalife International over the entire year and the number of days worked by Mr. PezzulloNEO in such year), payable at the same time as bonuses are paid to executives generally for such year. Payment of the severance payment is subject to and conditioned upon the execution of a general release in
48 | Executive compensation |
favor of the Company and additional requirements set forth in the Severance Plan.
Mr. Pezzullo’sPursuant to each of the NEO’s RSU award agreements, governing his SARs contain change in control and termination provisions. Thethe Committee mayhas the discretion to accelerate the vesting of Mr. Pezzullo’s awards in the event of a Change of Control, as defined in the 2014 Plan. Except as set forth above, all unvested SARs shall be forfeited upon the termination of Mr. Pezzullo employment with the Company.
Pursuant to Mr. Pezzullo’s PSU award agreement,RSUs upon a Change in Control, as defined in the 2014 Plan.
Pursuant to each of the NEO’s PSU award agreements, in the event of their respective involuntary termination of employment within twenty-four months following a Change in Control, as defined in the 2014 Plan, Mr. Pezzulloor if the acquiring entity fails to assume or continue the stock-based award, each will have the right to receive a payment based on performance through a date determined by the Committee prior to the Change in Control, unless such performance cannot be determined, in which case Mr. Pezzulloeach will have the right to receive a payment equal to the target amount payable. If Mr. Pezzullo’s employment is terminated prior to the vesting of his PSUs, such unvested PSUs will be forfeited.
Definitions
For the purposes of the Walsh and DeSimone Severance Agreements, the following terms have the following definitions:
|
A “Change of Control” for the purposes of the summaries of the Walsh and DeSimone Severance Agreements and a “Change in Control” for purposes of the summary of the 2014 Plan means the occurrence of any one of the following (i) an acquisition (other than directly from the Company after advance approval by a majority of the directors comprising the Board of Directors as of the effective date of the 2014 Plan, or the incumbent board) of Common Shares or other voting securities of the Company by any person (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act), other than the Company, any subsidiary of the Company, any employee benefit plan of the Company or any subsidiary of the Company, or any person in connection with a transaction described in clause (iii) of this definition, immediately after which such person has beneficial ownership (within the meaning of Rule13d-3
promulgated under the Exchange Act) of 50% or more of the then outstanding Common Shares or the combined voting power of the Company’s then-outstandingthen outstanding voting securities; (ii) members of the incumbent board cease for any reason during any24-month period to constitute at least a majority of the members of the Board; provided, however, that if the election, or nomination for election by the Company’s shareholders, of any new director was approved by a vote of at least a majority of the incumbent board, such new director shall, for purposes of the 2014 Plan, be considered as a member of the incumbent board; or (iii) the consummation of: (A) a merger, consolidation or reorganization with or into the Company, unless the voting securities of the Company, immediately before such merger, consolidation or reorganization, own directly or indirectly immediately following such merger, consolidation or reorganization, at least 50% of the combined voting power of the outstanding voting securities of the entity resulting from such merger or consolidation or reorganization in substantially the same proportion as their ownership of the voting securities
immediately before such merger, consolidation or reorganization; (B) a complete liquidation or dissolution of the Company; or (C) the sale, lease, transfer or other disposition of all or substantially all of the assets of the Company to any person (other than a transfer to a subsidiary of the Company). The table below sets forth the estimated value of the potential payments to each of our NEOs, assuming the executive’s employment had terminated on December 31, 2017 and/or that a change in control of the Company had also occurred on that date. Amounts are reported without any reduction for possible delay in the commencement or timing of payments.
For the purposes of the award agreements governing the NEOs’ SARs,PSUs and RSUs, a “Change in Control” has the Company shall have “Cause” to terminate the executivesame meaning as set forth in the event of any of the following acts or circumstances: (i) conviction of a felony, a crime of moral turpitude, dishonesty, breach of trust or unethical business conduct, or any crime involving the Company or any of its subsidiaries; (ii) willful misconduct, willful or gross neglect, fraud, misappropriation or embezzlement; (iii) performance of the executive’s duties in a manner that is detrimental to the Company or any of its subsidiaries, including, but not limited to that which results in, the severe deterioration of the financial performance of the Company or any of its subsidiaries; (iv) failure to adhere to the reasonable/lawful directions of the CEO of the Company or the Board, as applicable, to adhere to the Company’s or any subsidiary’s policies or practices or to devote substantially all of executive’s business time and efforts to the business of the Company; (v) breach of any provision of any agreement, including an employment agreement, between the executive and the Company or any of its subsidiaries, which covers confidentiality or proprietary information or contains nonsolicitation ornon-competition provisions; or (vi) breach in any material respect of the terms and provisions of Participant’s
employment agreement, if any, or any agreement between Participant and the Company or any of its subsidiaries.paragraph immediately stated above.
For the purposes of the Severance Plan, the following terms have the following definitions:
The executive will be deemed to have a “Good Reason” to terminate his employment in the event of (i) a material reduction in the executive’s annual base salary unless such reduction is part of anacross-the-board reduction in executive officer base salaries approved by the Company’s Chief Executive Officer; (ii) a material diminution in the executive’s authority, duties and responsibilities from those either previously in effect or, if applicable, as defined in an employment agreement between the executive and the Company (serving in a similar functional role (e.g., financial, legal) following a corporate transaction shall not in and of itself be deemed a material diminution); or (iii) the relocation of the executive’s primary office location of more than 50 miles that places the primary office farther from the executive’s residence than it was before; provided, however, that Good Reason shall not exist unless the executive has given written notice to the Company within ninety (90) days of the initial existence of the Good Reason event or condition(s) giving specific details regarding the event or condition; and unless the Company has had at least thirty (30) days to cure such Good Reason event or condition after the delivery of such written notice and has failed to cure such event or condition within such thirty (30) day cure period.
49 |
however, that Good Reason shall not exist unless the executive has given written notice to the Company within ninety (90) days of the initial existence of the Good Reason event or condition(s) giving specific details regarding the event or condition; and unless the |
Company has had at least thirty (30) days to cure such Good Reason event or condition after the delivery of such written notice and has failed to cure such event or condition within such thirty (30) day cure period. |
The table below sets forth the estimated value of the potential payments to each of our NEOs, assuming the executive’s employment had terminated on December 31, 20172021 and/or that a change in control of the Company had also occurred on that date. Amounts are reported without any reduction for possible delay in the commencement or timing of payments.
Name | Termination without cause or with good reason not in connection with a change of control
| Termination without cause or with good reason in connection with a change of control
| Change in control (without termination)(1) | Death or disability | ||||||||||||||||||||||||||||
Michael O. Johnson | ||||||||||||||||||||||||||||||||
NEO | Termination without cause or with good reason not in connection with a change in control
| Termination without cause or with good reason in connection with a change in control
| Change in control (without termination)(1) ($)
| Death or Disability ($)
| ||||||||||||||||||||||||||||
John O. Agwunobi | ||||||||||||||||||||||||||||||||
Severance(2) | — | — | — | — |
| 2,000,000 |
|
| 2,000,000 |
|
| — |
|
| — |
| ||||||||||||||||
Bonus(3) | $1,618,172 | $1,618,172 | — | $1,618,172 |
| 1,458,157 |
|
| 1,458,157 |
|
| — |
|
| 1,458,157 |
| ||||||||||||||||
Equity acceleration(4) | — | $10,751,919 | $10,751,919 | — |
| — |
|
| 8,954,911 |
|
| 1,998,857 |
|
| — |
| ||||||||||||||||
Outplacement service | — | — | — | — | ||||||||||||||||||||||||||||
Medical coverage | $35,935 | $35,935 | — | — | ||||||||||||||||||||||||||||
Life insurance
|
| —
|
|
| —
|
|
| —
|
|
| $1,000,000
|
|
| — |
|
| — |
|
| — |
|
| 1,500,000 |
| ||||||||
Richard P. Goudis | ||||||||||||||||||||||||||||||||
John DeSimone | ||||||||||||||||||||||||||||||||
Severance(2) | $2,000,000 | $2,000,000 | — | — |
| 695,000 |
|
| 695,000 |
|
| — |
|
| — |
| ||||||||||||||||
Bonus(3) | $735,110 | $735,110 | — | $735,110 |
| 675,613 |
|
| 675,613 |
|
| — |
|
| 675,613 |
| ||||||||||||||||
Equity acceleration(4) | — | $7,757,967 | $7,757,967 | — |
| — |
|
| 5,366,414 |
|
| 1,168,142 |
|
| — |
| ||||||||||||||||
Outplacement service | — | — | — | — | ||||||||||||||||||||||||||||
Medical coverage | — | — | — | — | ||||||||||||||||||||||||||||
Life insurance
|
| —
|
|
| —
|
|
| —
|
|
| $1,000,000
|
|
| — |
|
| — |
|
| — |
|
| 1,390,000 |
| ||||||||
Desmond Walsh | ||||||||||||||||||||||||||||||||
Alexander Amezquita | ||||||||||||||||||||||||||||||||
Severance(2) | $1,389,360 | $1,389,360 | — | — |
| 500,000 |
|
| 500,000 |
|
| — |
|
| — |
| ||||||||||||||||
Bonus(3) | $437,648 | $437,648 | — | $437,648 |
| 344,897 |
|
| 344,897 |
|
| — |
|
| 344,897 |
| ||||||||||||||||
Equity acceleration(4) | — | $4,656,052 | $4,656,052 | — |
| — |
|
| 1,010,644 |
|
| 626,720 |
|
| — |
| ||||||||||||||||
Outplacement service | $20,000 | $20,000 | — | — | ||||||||||||||||||||||||||||
Medical coverage | $29,199 | $29,199 | — | — | ||||||||||||||||||||||||||||
Life insurance
|
| —
|
|
| —
|
|
| —
|
|
| $1,000,000
|
|
| — |
|
| — |
|
| — |
|
| 1,000,000 |
| ||||||||
John G. DeSimone | ||||||||||||||||||||||||||||||||
Alan Hoffman | ||||||||||||||||||||||||||||||||
Severance(2) | $1,238,000 | $1,238,000 | — | — |
| 637,570 |
|
| 637,570 |
|
| — |
|
| — |
| ||||||||||||||||
Bonus(3) | $365,597 | $365,597 | — | $365,597 |
| 464,839 |
|
| 464,839 |
|
| — |
|
| 464,839 |
| ||||||||||||||||
Equity acceleration(4) | — | $3,492,553 | $3,492,553 | — |
| — |
|
| 2,300,716 |
|
| 499,059 |
|
| — |
| ||||||||||||||||
Outplacement service | $20,000 | $20,000 | — | — | ||||||||||||||||||||||||||||
Medical coverage | $40,855 | $40,855 | — | — | ||||||||||||||||||||||||||||
Life insurance
|
| —
|
|
| —
|
|
| —
|
|
| $1,000,000
|
|
| — |
|
| — |
|
| — |
|
| 1,275,140 |
| ||||||||
Mark Schissel | ||||||||||||||||||||||||||||||||
Severance(2) |
| 530,000 |
|
| 530,000 |
|
| — |
|
| — |
| ||||||||||||||||||||
Bonus(3) |
| 389,215 |
|
| 389,215 |
|
| — |
|
| 389,215 |
| ||||||||||||||||||||
Equity acceleration(4) |
| — |
|
| 4,089,930 |
|
| 2,407,421 |
|
| — |
| ||||||||||||||||||||
Life insurance |
| — |
|
| — |
|
| — |
|
| 1,060,000 |
| ||||||||||||||||||||
David Pezzullo | ||||||||||||||||||||||||||||||||
Severance(2) | $525,000 | $525,000 | — | — |
| 282,500 |
|
| 282,500 |
|
| — |
|
| — |
| ||||||||||||||||
Bonus(3) | $310,078 | $310,078 | — | 310,078 |
| 407,697 |
|
| 407,697 |
|
| — |
|
| 407,697 |
| ||||||||||||||||
Equity acceleration(4) | — | $2,087,642 | $2,087,642 | — |
| — |
|
| 3,290,608 |
|
| 708,376 |
|
| — |
| ||||||||||||||||
Outplacement service | — | — | — | — | ||||||||||||||||||||||||||||
Medical coverage | — | — | — | — | ||||||||||||||||||||||||||||
Life insurance
|
| —
|
|
| —
|
|
| —
|
|
| $1,000,000
|
|
| — |
|
| — |
|
| — |
|
| 565,000 |
|
(1) | With respect to |
(2) | Based on base salary as of December 31, |
(3) | Represents bonus amounts earned in |
(4) |
50 | Executive compensation |
In August 2015, pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer.
For purposes of determining the required ratio, in order to better reflect our employee compensation practices, annual total compensation for our median employee and for our CEO includes the dollar value of non-discriminatory medical, dental and vision benefits, group life insurance and employer contributions for disability insurance coverage and our employee assistance program, which are not required to be reported as compensation for our CEO in the 2021 Summary Compensation Table included in this Proxy Statement. Our median employee’s annual total compensation for 2021 was $37,222.
Dr. Agwunobi had a total compensation in 2021 of $7,007,360. As a result, we estimate that Dr. Agwunobi’s 2021 compensation is approximately 188 times that of our median employee.
The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
The reported pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. For these purposes, we identified the median compensated employee using base salary and bonus paid from October 1, 2020 through September 30, 2021, which we annualized for any employee who did not work for the entire year. We identified our employee population as of October 1, 2021 based on our Human Resources records.
Executive compensation |
| Security ownership of certain beneficial |
The following table sets forth the beneficial ownership of Herbalife Common Shares as of February 26, 2018,March 1, 2022, the Record Date, of (1) each director, or director nominee, (2) each of the named executive officers, (3) all directors and executive officers as a group and (4) each person or entity known to Herbalifethe Company to beneficially own more than five percent (5%) of the Company’s outstanding Common Shares. The Common Shares are the Company’s only class of voting securities that are issued and outstanding.outstanding.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to Common Shares. Except as otherwise indicated below, to our knowledge, all persons listed below have sole voting and investment power with respect to their Common Shares, except to the extent authority is shared by spouses under applicable law. Common Shares subject to stock options, warrants and other equity awards that are exercisable or have vested or will become exercisable or vest within 60 days of March 1, 2022 are considered outstanding and beneficially owned by the person holding the security for the purpose of computing the percentage ownership of that person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
Name of beneficial owner | Amount and nature of beneficial ownership
| Percentage ownership(1) | ||||||
Non-management directors and nominees
| ||||||||
Richard P. Bermingham(2)
|
| 7,544
|
|
| *
|
| ||
Pedro Cardoso(3)
|
| 21,916
|
|
| *
|
| ||
Dr. Richard Carmona(4)
|
| 8,094
|
|
| *
|
| ||
Jonathan Christodoro(4)
|
| 8,094
|
|
| *
|
| ||
Keith Cozza(4)
|
| 8,094
|
|
| *
|
| ||
Jeffrey T. Dunn(5)
|
| 36,281
|
|
| *
|
| ||
Hunter C. Gary(4)
|
| 8,094
|
|
| *
|
| ||
Jesse A. Lynn(4)
|
| 8,094
|
|
| *
|
| ||
Michael Montelongo(4)
|
| 6,094
|
|
| *
|
| ||
James L. Nelson(4)
|
| 8,094
|
|
| *
|
| ||
Maria Otero(6)
|
| 6,846
|
|
| *
|
| ||
John Tartol(3)
|
| 201,132
|
|
| *
|
| ||
Named executive officers
| ||||||||
Michael O. Johnson(7)
|
| 2,521,984
|
|
| 2.88%
|
| ||
Richard Goudis(8)
|
| 584,941
|
|
| *
|
| ||
Desmond Walsh(9)
|
| 657,334
|
|
| *
|
| ||
John G. DeSimone(10)
|
| 328,399
|
|
| *
|
| ||
David Pezzullo(11)
|
| 190,227
|
|
| *
|
| ||
All directors and executive officers as a group (29 persons)(12)
|
| 5,248,711
|
|
| 6.19%
|
| ||
Greater than 5% beneficial owners
| ||||||||
Capital Research Global Investors(13)
|
| 10,920,765
|
|
|
13.25% |
| ||
Nomura Holdings, Inc.(14)
|
| 7,942,823
|
|
| 9.64%
|
| ||
FMR LLC(15)
|
| 6,092,242
|
|
| 7.39%
|
| ||
Carl C. Icahn(16)
|
| 22,872,324
|
|
| 27.75%
|
| ||
The Vanguard Group —(17)
|
| 5,129,231
|
|
| 6.22%
|
| ||
Route One Investment Company, L.P.(18)
|
| 6,723,654
|
|
| 8.16%
|
| ||
Deccan Value Investors L.P. (19)
|
| 7,520,766
|
|
| 9.12%
|
| ||
Credit Suisse AG(20)
|
| 4,519,682
|
|
| 5.48%
|
| ||
Bank of America Corporation(21)
|
| 4,877,499
|
|
| 5.91%
|
| ||
HBL Swiss Financing GmbH(22)
|
| 5,012,510
|
|
| 6.08%
| (23)
| ||
D.E. Shaw & Co., L.P.(24)
|
| 4,748,284
|
|
| 5.76%
|
|
Name of beneficial owner | Amount and nature of beneficial ownership | Percentage ownership(1) | ||||||
Directors and Director Nominees | ||||||||
Richard H. Carmona(2) | 17,836 | * | ||||||
Michael O. Johnson | 244,160 | * | ||||||
Kevin M. Jones(3) | 3,173 | * | ||||||
Sophie L’Hélias(3) | 3,173 | * | ||||||
Alan W. LeFevre(4) | 18,600 | * | ||||||
Juan Miguel Mendoza(2) | 11,206 | * | ||||||
Don Mulligan(3) | 3,173 | * | ||||||
Maria Otero(5) | 26,120 | * | ||||||
John Tartol(2) | 303,606 | * | ||||||
Named executive officers | ||||||||
John O. Agwunobi(6) | 79,533 | * | ||||||
John DeSimone(7) | 118,105 | * | ||||||
Alexander Amezquita(8) | 16,899 | * | ||||||
Alan Hoffman(9) | 62,352 | * | ||||||
Mark Schissel | 36,974 | * | ||||||
David Pezzullo(10) | 169,667 | * | ||||||
All directors and executive officers as a group (14 persons)(11) | 728,891 | * | ||||||
Greater than 5% beneficial owners | ||||||||
Capital Research Global Investors(12) | 8,132,290 | 8.15% | ||||||
FMR LLC(13) | 5,739,856 | 5.75% | ||||||
Renaissance Technologies LLC(14) | 8,394,564 | 8.41% | ||||||
Route One Investment Company, L.P. (15) | 9,112,732 | 9.13% | ||||||
The Vanguard Group(16) | 11,261,873 | 11.28% | ||||||
HBL Swiss Services GmbH(17) | 10,025,020 | 10.04% | (18) |
* | Less than 1% security ownership by certain beneficial owners and management. |
Security ownership of certain beneficial owners and management |
(1) | Applicable percentage is based upon |
(2) | Includes |
(3) | Includes 3,173 RSUs with restrictions that may lapse and |
(4) | Includes 3,114 RSUs with restrictions that may lapse and be paid in Common Shares within 60 days of March 1, 2022. |
(5) | Includes 2,971 RSUs with restrictions that may lapse and be paid in Common Shares within 60 days of March 1, 2022. |
(6) | Dr. Agwunobi is also a director. Includes 76,510 SARs equivalent to 17,050 Common Shares which have vested or will vest and become exercisable within 60 days of March 1, 2022 and 3,843 RSUs with restrictions that may lapse and be paid in Common Shares within 60 days of March 1, 2022. |
(7) | Includes 239,088 SARs equivalent to 38,673 Common Shares which have vested or will vest and become exercisable within 60 days of March 1, 2022 and 1,679 RSUs with restrictions that may lapse and be paid in Common Shares within 60 days of March 1, 2022. |
(8) | Includes 108 RSUs with restrictions that may lapse and be paid in Common Shares within 60 days of March 1, 2022. |
(9) | Includes 89,426 SARs equivalent to 25,702 Common Shares which have vested or will vest and become exercisable within 60 days of March 1, 2022. |
(10) | Includes 84,132 vested but deferred RSUs that are convertible to Common Shares. |
Includes 426,352 SARs equivalent to 84,975 Common Shares which have vested or will vest and become exercisable within 60 days of March 1, 2022 and 29,394 RSUs with restrictions that may lapse and be paid in Common Shares within 60 days of March 1, 2022. |
(12) | The information regarding the beneficial ownership of Capital Research Global Investors is based on the Schedule 13G/A filed with the SEC by Capital Research Global Investors on February |
The information regarding the beneficial ownership of FMR LLC is based on the Schedule |
(14) | The information regarding the beneficial ownership of Renaissance Technologies LLC is based on the Schedule 13G/A filed jointly with the SEC by Renaissance Technologies LLC and Renaissance Technologies Holdings Corporation on February 11, 2022. According to this Schedule 13G/A, |
The information regarding the beneficial ownership of |
(16) | The information regarding the beneficial ownership of The Vanguard Group — 23-1945930, or the Vanguard Group, is based on the Schedule 13G/A filed with the SEC by the Vanguard Group on February 10, 2022. According to this Schedule 13G/A, the Vanguard Group has (i) sole power to vote 0 Common Shares, (ii) shared power to vote 72,729 Common Shares, (iii) sole power to dispose of 11,110,005 Common Shares, and (iv) shared power to dispose of 151,868 Common Shares. The address for the Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
(17) | HBL Swiss Services GmbH has (i) sole power to vote 10,025,020 Common Shares, (ii) shared power to vote 0 Common Shares, (iii) sole power to dispose of 10,025,020 Common Shares and (iv) shared power to dispose of 0 Common Shares. The address for HBL Swiss Services GmbH is Hansmatt 32, CH-6370 Stans NW, Switzerland. |
(18) | Number of outstanding Common Shares used to calculate percentage excludes Common Shares held by HBL Swiss Services GmbH, the Company’s indirect wholly-owned subsidiary, in accordance with Instruction 1 to Item 403 of Regulation S-K. If the Common Shares held by HBL Swiss Services GmbH are included in the total number of Common Shares outstanding as of March 1, 2022, or 109,866,338, its percentage ownership would be 9.12%. |
Security ownership of certain beneficial owners and management |
| Certain relationships and related |
The Company has several writtenPursuant to the audit committee charter, the audit committee is responsible for establishing and periodically reviewing policies applicable toand procedures for the review and approval of related party transactions. Pursuant totransactions (as defined in the audit committee charter, anySEC rules), and reviewing, approving and overseeing such related party transaction in whichtransactions. The Company has a director has an interest must be reviewed and approved by the audit committee. The Company’s Conflicts of Interest Policy generally prohibits any Company employee from conducting any activity that is or could be construed as a conflict with the Company’s interests or as an interference with the employee’s duty to serve the Company at all times to the best of his or her ability. Pursuant to that policy, any related party transaction involving employees, including executive officers, must be reviewed and approved by both the Company’s legal and internal audit departments.
In February 2016, our Board of Directors approved a written policy, or the Related Party Transaction Policy, regarding the consideration by thewhich requires audit committee approval or ratification of transactions between the Company and any director, executive officer or holder of more than 5% of our voting securities and their affiliates (each, a related party) involving or expected to involve an amount of at least $120,000 in any fiscal year in which the related party has a direct or indirect interest. Transactions, along with all relevant facts and circumstances, shallare to be submitted to the audit committee for consideration unless it is not possible to convene an
audit committee meeting, in which caseconsideration. In between regularly scheduled meetings, the chair of the audit committee,
after consulting with the Company’s General Counsel, may reviewapprove or not approve the transaction with his or her determination(provided the chair has no interest in such transaction), after which, if approved, such transaction would be submitted to the full audit committee for its review and consideration at its next regularly scheduled meeting.meeting for ratification. The Related Party Transaction Policy also outlines certain transactions that are deemed to bepre-approved by the audit committee. The Related Party Transaction Policy is in addition to the Conflict of Interest Policy described above.
The transactions summarized under “Transactions prior to Related Party Transaction Policy” below were entered into prior to the implementation of the Related Party Transaction Policy. Mr. Tartol’s sister’sfamily’s earnings as distributors of Herbalife Nutrition products, Mr. Mendoza’s family’s earnings as distributors of Herbalife Nutrition products, and the compensation of the spouse of one of ournon-NEO former executive officers summarized under the subsection “Other transactions” below fall within the category of transactions that are deemed to bepre-approved pursuant to the Related Party Transaction Policy. Mr. Mendoza’s and his family’s compensation also fall within the category of transactions that are deemed to be pre-approved pursuant to the Related Party Transaction Policy; however, they were not considered related parties under the policy at the time such compensation was earned in 2017, which was prior to Mr. Mendoza’s nomination as a director.
Transactions prior to Related Party Transaction PolicyOngoing related party transactions
Registration rights agreement
Michael O. Johnson, our Executive Chairman is a party to a registration rights agreement with the Company. If we at any time propose to register any Company securities under the Securities Act of 1933, as amended, or the Securities Act, for sale to the public, in certain circumstances, Mr. Johnson, may require us to include his shares in the securities to be covered by the registration statement. Such registration rights are subject to customary limitations specified in the agreement.
Indemnification of directors and officers
The Articles provide that, to the fullest extent permitted by Cayman Islands Law, every director, agent or officer of the Company shall be indemnified out of the assets of the Company against any liability incurred by him as a result of any act or failure to act in carrying out his functions other than such liability (if any) that he may incur by his own willful misconduct. To the fullest extent permitted by
Cayman Islands Law, such director, agent or officer shall not be liable to the Company for any loss or damage in carrying out his functions unless the liability arises through the willful misconduct of such director, agent or officer.
The Company is a Cayman Islands exempted company incorporated with limited liability. As such, it is governed by the laws of the Cayman Islands with respect to the indemnification provisions. Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. The Articles provide for indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such, except in the case of (a) any fraud or dishonesty of such director or officer, (b) such
director’s or officer’s conscious, intentional or willful breach of his obligation to act honestly, lawfully and in good faith with a view to the best interests of the Company or (c) any claims or rights of action to recover any gain, personal profit or other advantage to which the director or officer is not legally entitled.
The Company has entered into an indemnification agreement with each of its directors and certain of its officers to supplement the indemnification protection available under the Articles. These indemnity agreements generally provide that the Company will indemnify the parties thereto to the fullest extent permitted by law.
In addition to the indemnification provisions set forth above, the Company maintains insurance policies that indemnify itscovering our directors and officers against variouswith respect to certain liabilities, including those arising under the Securities Act and the Exchange Act that might be incurred by any director or officer in his capacity as such.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to managers, officers or persons controlling us pursuant to the foregoing, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Mr. Tartol’s sister earned approximately $1.3 million in compensation in 2017 under the Company’s Marketing Plan resulting from her activities as an independent Herbalife distributor.
A spouse of one of our executive officers who is not a named executive officer was paid approximately $373,083.48 in fiscal 2017. This amount is converted from GBP based on the average exchange rate of 1.289 in 2017 as reported by the Federal Reserve Board. This amount is based on total base salary, bonus, payments for vested restricted cash unit awards and all other compensation. The spouse also received 3,707 SARs in 2017, which have
an aggregate grant date fair value of approximately $105,000.
Mr. Mendoza, who is a nominee for director, and his wife received $1,241,410.23 in compensation in 2017 under the Company’s Marketing Plan resulting from their activities as Herbalife Members and earned $44,000 in fees for speaking at Herbalife events. Additionally, Mr. Mendoza’s sister and brother-in-law earned approximately $1,560,000 and his sister-in-law and her husband earned approximately $56,000 in 2017 under the Company’s Marketing Plan resulting from their activities as Herbalife Members.
In August 2015, pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer. In 2017, Mr. Goudis had an annual total compensation of $6,641,979. For purposes of determining the required ratio, in order to better reflect our employee compensation practices, annual total compensation for our median employee and for our CEO includes the dollar value of non-discriminatory medical, dental, vision and health benefits and employer contributions for life and disability insurance coverage and our employee assistance program, which are not required to be reported as compensation for our CEO in the Summary Compensation Table included in this Proxy Statement. Our median employee’s annual total compensation for 2017 was $34,379. As a result, we estimate that Mr. Goudis’ 2017 annual total compensation was approximately 193 times that of our median employee.
The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain
exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
The reported pay ratio reported is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. For these purposes, we identified the median compensated employee using base salary and bonus paid from October 1, 2016 through September 30, 2017, which we annualized for any employee who did not work for the entire year. We identified our employee population as of October 1, 2017 based on our HR records. Because the median employee we initially identified had anomalous compensation characteristics, we substituted another employee to serve as our median employee who had substantially similar base salary and bonus paid from October 1, 2016 through September 30, 2017 as the initial median employee.
Certain relationships and related transactions |
The sister of Mr. Tartol, a director, earned approximately $1,632,506 in compensation in 2021 under the Company’s Marketing Plan resulting from her activities as an Herbalife Nutrition Member, which included $5,000 of speaker fees. Mr. Tartol’s brother and sister-in-law earned approximately $585,874 in compensation in 2021, and Mr. Tartol’s son earned approximately $132,756 in compensation in 2021, in each case under the Company’s Marketing Plan resulting from their respective activities as Herbalife Nutrition Members.
The sister and brother-in-law of Mr. Mendoza, a director, earned approximately $1,966,964 in 2021 under Herbalife Nutrition’s Marketing Plan resulting from their activities as Herbalife Members. Mr. Mendoza’s sister-in-law earned approximately $134,342 in 2021 under Herbalife Nutrition’s Marketing Plan resulting from her activities as an Herbalife Member.
A spouse of one of our former executive officers, who is not an NEO, is an employee of the Company and was paid approximately $787,665 in fiscal year 2021, based on the
average exchange rate of $1.3299 per GBP in 2021. This amount is based on total base salary, bonus, vesting of restricted stock units and all other compensation, including car allowance. The spouse also received a grant of 4,758 RSUs in 2021, which have an aggregate grant date fair value of approximately $229,954.
Carl C. Icahn beneficially owned over 5% of the Company’s outstanding Common Shares until May 2021. In 2021, the Company paid approximately $871,434, based on applicable exchange rates, for products from Newell Brands Inc., a company in which Mr. Icahn beneficially owned an over 10% equity interest in 2021.
On January 7, 2021, the Company purchased an aggregate of 12,486,993 Common Shares from Mr. Icahn and the Icahn Parties for approximately $600 million, or $48.05 per common share, the closing price of a Common Share on the NYSE on December 31, 2020, the last trading day prior to the execution of the purchase agreement.
Certain relationships and related transactions | 55 |
| Additional information |
Section 16(a) beneficial ownership reporting complianceInformation with respect to securities authorized for issuance under equity compensation plans
Section 16(a)The following table sets forth as of December 31, 2021, information with respect to (a) the Exchange Act requires the Company’s directors and executive officers and persons who beneficially own more than ten percentnumber of a registered class of the Company’s equity securities to file withbe issued upon exercise of outstanding options, warrants, and rights, (b) the SEC initial reportsweighted-average exercise price of ownershipoutstanding options, warrants, and reportsrights and (c) the number of changes in ownership ofsecurities remaining available for future issuance under equity securities of the Company. Directors, officers andgreater-than-ten-percent beneficial owners are required by SEC regulations to furnish the Companycompensation plans.
with copies of all Section 16(a) forms filed by them. To the Company’s knowledge, based solely on a review of the copies of such filings on file with the Company and written representations from the Company’s directors and executive officers, all Section 16(a) filing requirements applicable to the Company’s directors, executive officers andgreater-than-ten-percent beneficial owners were complied with on a timely basis for fiscal year 2017.
Number of Securities | Weighted-Average | Number of Securities | ||||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders(1) | 4,285,549 | 27.10 | 10,165,110 | |||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 4,285,549 | 27.10 | 10,165,110 |
(1) | Consists of the Amended and Restated Herbalife Ltd. 2005 Stock Incentive Plan and the Amended and Restated Herbalife Ltd. 2014 Stock Incentive Plan. In February 2008, a shareholder-approved Employee Stock Purchase Plan was implemented. See note 9 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 regarding share-based compensation. |
(2) | Number of securities to be issued upon exercise of SARs was calculated using the market price as of December 31, 2021. Number of securities to be issued upon vesting of PSUs was calculated assuming the maximum level of performance is achieved. |
(3) | Includes 3.0 million Common Shares available for future issuance under the shareholder approved Employee Stock Purchase Plan which was implemented in February 2008. |
“Householding” of proxy materials.materials
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for certain proxy materials with respect to two or more shareholders sharing the same address by delivering a single set of these proxy materials addressed to those shareholders. This process, which is commonly referred to as “householding,”“householding”, potentially provides extra convenience for shareholders and cost savings for companies. The Company and some brokers household proxy materials, unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker or us that they or we will be householding materials to your address,
householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and
would prefer to receive a separate set of proxy materials, or if you are receiving multiple copies of the proxy materials and wish to receive only one, please notify your broker if your Common Shares are held in a brokerage account or the Company if you hold Common Shares directly. You can notify the Company by sending a written request to Herbalife Ltd.,our Corporate Secretary at c/o Herbalife International of America, Inc., Corporate Secretary, 800 W. Olympic Blvd., Suite 406, Los Angeles, CACalifornia 90015, or by calling the Corporate Secretary at(213) 745-0500.email to corpsec@herbalife.com. However, please note that if you
56 | Additional information |
want to receive a paper proxy or voting instruction form or other proxy materials with respect to the Meeting, you should follow the instructions to request such materials
included in the Notice of Internet Availability of Proxy Materials that was sent to you.
Your attention is drawn to Articles 7377 to 7680 of the Articles in relation to the requirements applicable to any shareholder who wishes to nominate a person for election as a director.
For such nomination to be properly brought before an annual general meeting by a shareholder, a shareholder notice addressed to the Corporate Secretary must have been delivered to or mailed and received at the registered office of the Company or such other address as the Corporate Secretary may designate not less than 90 days prior to the date of the meeting, or not later than the 10th day following the date of the first public announcement of the date of such meeting, whichever is later, nor more than 120 days prior to the date of such meeting.
The notice to the Corporate Secretary must set forth (a) as to each person whom the shareholder proposes to nominate, all information relating to such person that is required to be disclosed in solicitations of proxies for appointment of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, including such person’s written consent to being named in the proxy
statement as a nominee and to serving as a director if appointed, and (b) as to the shareholder giving the notice (i) the name and address of such shareholder, as they appear on the register of members, (ii) the class and number of Common Shares that are owned beneficially
and/or of record by such shareholder, (iii) a representation that the shareholder is a registered holder of Common Shares entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination and (iv) a statement as to whether the shareholder intends or is part of a group that intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding share capital required to approve or elect the nominee for appointment and/or (y) otherwise to solicit proxies from shareholders in support of such nomination.
The Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as a director of the Company. No person nominated by a shareholder shall be eligible for election as a director of the Company unless nominated in accordance with these procedures. Nominations not meeting these requirements will be disregarded.
In addition, if a shareholder wishes to solicit proxies in support of nominees submitted under these provisions of the Articles, under Rule 14a-19, the SEC’s universal proxy rule, notice must be received by our Corporate Secretary at the address noted above no later than the close of business on February 26, 2023.
Shareholder proposals for the 20192023 annual general meeting
Pursuant to the Articles, for a shareholder to bring a matter before the 20192023 annual general meeting, the business must be legally proper and written notice of the shareholder proposal must have been filed with the Corporate Secretary of the Company not less than 90 days prior to the date of the meeting, or not later than the 10th day following the date of the first public announcement of the date of such meeting, whichever is later, nor more than 120 days prior to the meeting. For notice to be proper, it must set forth: (i) the name and address of the shareholder who intends to make the proposal as it appears in the Company’s records, (ii) the class and number of Common Shares of the Company that are owned by the shareholder submitting the proposal and (iii) a clear and concise statement of the proposal and the shareholder’s reasons for supporting it.
If the ChairmanChair of the meeting determines that any such
proposed business has not been properly brought before the meeting, he shall declare such business out of order, and such business shall not be conducted at the meeting.
Shareholders interested in submitting a proposal for inclusion in the Company’s proxy statement and form of proxy for the 20192023 annual general meeting of shareholders may do so by following the procedures prescribed in SECRule 14a-8 promulgated under the Exchange Act. To be eligible for inclusion, notice of shareholder proposals must be received by the Company’s Corporate Secretary no later than November 14, 2018.16, 2022. Proposals should be sent to our Corporate Secretary Herbalife Ltd.,at c/o Herbalife International of America, Inc., 800 W. Olympic Blvd., Suite 406, Los Angeles, CACalifornia 90015. Proposals not meeting the applicable requirements will be disregarded.
57 |
Codes of business conduct and ethics and principles of corporate governance
Our Board of Directors has adopted a corporate Code of Business Conduct and Ethics applicable to our directors, officers, including our principal executive officer, principal financial officer and principal accounting officer, and employees, as well as Principles of Corporate Governance, in accordance with applicable rules and regulations of the SEC and the NYSE. Each of our Code of Business Conduct and Ethics and Principles of Corporate Governance are available on our website atwww.herbalife.comhttps://ir.herbalife.com/corporate-governance, by following the links through “Investor Relations” to “Corporate Governance,” or in print to any shareholder
who requests it, as set forth below under the
subsection “Annual report, financial and additional information.”
Any amendment to, or waiver from,of a provision of the Company’s Code of Business Conduct and Ethics requiring disclosure under applicable rules with respect to any of the Company’s principal executive officer, principal financial officer, principal accounting officerofficers or controller, and any waivers for directors will be posted on the Company’s website within four business days of such amendment or waiver atwww.Herbalife.com.www.herbalife.com.
Annual report, financial and additional information
The Annual Financial Statements and Review of Operations of the Company for fiscal year 2017 can be found in the Company’s Annual Report onForm 10-K for the year ended December 31, 2017, which2021 was filed with the SEC on February 22, 2018.23, 2022. A copy of the Company’s Annual Report onForm 10-K will be made available with and,furnished to each shareholder of record on the Record Date who requests such materials mailed concurrently with, this Proxy Statement.as set forth below.
The Company’s filings with the SEC are all accessible by following the links to “Investor Relations”, “Financial Information” and “SEC Filings” on the Company’s website atwww.herbalife.com.https://ir.herbalife.com/financial-information/sec-filings. The Company will furnish without charge a copy of its SEC filings to any person requesting in writing and stating that he or she is a beneficial owner
of Common Shares. In addition, the Company will furnish without charge a copy of the Company’s Annual Report onForm 10-K, including the
financial statements and schedules thereto, and the other documents referenced herein as available to shareholders upon request, to any person requesting in writing and stating that he or she is the beneficial owner of Common Shares of the Company.
Requests and inquiries should be addressed to:
Investor Relations
Herbalife Nutrition Ltd.
c/o Herbalife International of America, Inc.
800 W. Olympic Blvd.
Suite 406
Los Angeles, California 90015
The management of the Company knows of no other business to be presented at the Meeting. If, however, other matters properly come before the Meeting, it is intended that the persons named in the accompanying proxy will vote thereon in accordance with their best judgment.
By Order of the Board of Directors
RICHARD WERBER
HENRY C. WANG
Acting General Counsel and Corporate Secretary
Dated: March 13, 201815, 2022
THE COMPANIES LAW (2016 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION
OF
HERBALIFE NUTRITION LTD.
(as adopted by special resolution passed on April 24, 2018
and effective on May 7, 2018)
AMENDED AND RESTATED ARTICLES OF ASSOCIATION
TABLE OF CONTENTS
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THE COMPANIES LAW (2016 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF
HERBALIFE NUTRITION LTD.
(as adopted by special resolution passed on April 24, 2018 and effective on May 7, 2018)
SHARE CAPITAL: ISSUE OF SHARES
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REDEMPTION AND REPURCHASE OF SHARES
AMENDMENT OF MEMORANDUM AND ARTICLES OF ASSOCIATION AND ALTERATION OF CAPITAL
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
PROCEEDINGS AT GENERAL MEETINGS
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VACATION OF OFFICE OF DIRECTOR
POWERS AND DUTIES OF DIRECTORS
RESTRICTIONS ON THE COMPANY ENGAGING IN BUSINESS COMBINATIONS
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DELEGATION OF THE BOARD’S POWERS
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DIVIDENDS, DISTRIBUTIONS AND RESERVE
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TRANSFER BY WAY OF CONTINUATION
MERGERS AND CONSOLIDATIONS
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. IMPORTANT ANNUAL MEETING INFORMATION Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Time, on April 23, 2018. Vote by Internet Go to www.envisionreports.com/HLF Or scan the QR code with your smartphone Follow the steps outlined on the secure website Vote by telephone Outside the USA, US territories & Canada, call1-781-575-2300 on a touch tone telephone. Standard rates will apply. Call toll free1-800-652-VOTE (8683) within the USA, US territories &HERBALIFE NUTRITION VOTE Using a black ink pen, mark your votes with an X as shown in X Canada on a touch tone telephone this example. Please do not write outside the designated areas. FollowYour vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 11:59 p.m., Eastern Time, on April 26, 2022. Online Go to www.envisionreports.com/HLF or scan the instructions provided byQR code – login details are located in the recorded messageshaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/HLF 2022 Annual Meeting Proxy Card q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals —– The Board of Directors recommendsrecommend a vote FOR all the nomineeseach nominee listed FORin Proposal 2, FOR Proposal 3, FOR Proposal 4, FOR Proposal 51 and FOR Proposal 6.Proposals 2 and 3. 1. Election of Directors: For Against Abstain 01 - John O. Agwunobi [ ] [ ] [ ] For Against Abstain 02 - Richard H. Carmona [ ] [ ] [ ] For Against Abstain + 01—03 - Michael O. Johnson 02—Jeffrey T. Dunn 03—Richard H. Carmona 04—Jonathan Christodoro 05—Hunter C. Gary 06—Nicholas Graziano 07—[ ] [ ] [ ] 04 - Kevin M. Jones [ ] [ ] [ ] 05 - Sophie L’Hélias [ ] [ ] [ ] 06 - Alan W. LeFevre 08—Jesse A. Lynn 09—[ ] [ ] [ ] 07 - Juan Miguel Mendoza 10—Michael Montelongo 11—James L. Nelson 12—[ ] [ ] [ ] 08 - Don Mulligan [ ] [ ] [ ] 09 - Maria Otero 13—Margarita 14—[ ] [ ] [ ] 10 - John TartolPaláu-Hernández [ ] [ ] [ ] + 2. Approve, on an advisory basis, the compensation of the Company’s named executive officers. For Against Abstain For Against Abstain 2. Advisory vote to approve the Company’s executive[ ] [ ] [ ] 3. Approve, as a special resolution, the name compensation. change of the Company from “Herbalife Ltd.” to “Herbalife Nutrition Ltd.” 4. Approve, as a special resolution, the amendment and 5. Effect atwo-for-one stock-split of the Company’s restatement of the Company’s Amended and Restated Common Shares. Memorandum and Articles of Association. 6. Ratify the appointment of the Company’s independent registered public accountantsaccounting firm for fiscal year 2018. IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A—C ON BOTH SIDES OF THIS CARD. 1UP X2022. For Against Abstain [ ] [ ] [ ] B Authorized Signatures – This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) – Please print date below. Signature 1 – Please keep signature within the box. Signature 2 – Please keep signature within the box. / / 1UPX + 02S48D03LFCC
Important notice regarding the Internet availability of proxy materials for the 2018 Annual General Meeting of Shareholders. The 2018 Proxy Statement and the 2017 Annual Report to Shareholders arematerial is available at: http://www.envisionreports.com/HLF qIF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/HLF IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy — HERBALIFE LTD.- Herbalife Nutrition Ltd. + Notice of 2022 Annual General Meeting of Shareholders Proxy Solicited by Board of Directors for Annual General Meeting of Shareholders – April 24, 2018 THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY The undersigned hereby appoints Richard P. Goudis27, 2022 John Agwunobi and Richard Werber, andHenry Wang, or each of them, each with power to act without the other and with power of substitution, as proxies andattorneys-in-fact andare hereby authorizes themauthorized to represent and vote as provided on the other side, allshares of the Common Shares of Herbalife Ltd.undersigned, with all the powers which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come beforewould possess if personally present, at the Annual General Meeting of Shareholders of the CompanyHerbalife Nutrition Ltd. to be held on April 24, 201827, 2022 at 8:30 a.m., Pacific Daylight Time, at 800 W. Olympic Blvd., Suite 406, Los Angeles, CA 90015 or at any adjournment(s)postponement or postponement(s) thereof, with all powers whichadjournment thereof. Shares represented by this proxy will be voted by the undersigned would possess if present atshareholder. If no such directions are indicated, the Proxies will have authority to vote FOR each nominee listed in Proposal 1 and FOR Proposals 2 and 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” EACH NOMINEE FOR DIRECTOR AND “FOR” PROPOSALS 2, 3, 4, 5 and 6. (Continued and(Items to be marked, dated and signed,voted appear on the otherreverse side) BC Non-Voting Items Change of Address —– Please print new address below. Comments —– Please print your comments below. C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A—C ON BOTH SIDES OF THIS CARD. +
. IMPORTANT ANNUAL MEETING INFORMATIONHERBALIFE NUTRITION VOTE Using a black ink pen, mark your votes with an X as shown in X this example. Please do not write outside the designated areas. 2022 Annual Meeting Proxy Card q PLEASE FOLD ALONG THE PERFORATION,IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals —– The Board of Directors recommendsrecommend a vote FOR all the nomineeseach nominee listed FORin Proposal 2, FOR Proposal 3, FOR Proposal 4, FOR Proposal 51 and FOR Proposal 6.Proposals 2 and 3. 1. Election of Directors: For Against Abstain 01 - John O. Agwunobi [ ] [ ] [ ] For Against Abstain 02 - Richard H. Carmona [ ] [ ] [ ] For Against Abstain + 01—03 - Michael O. Johnson 02—Jeffrey T. Dunn 03—Richard H. Carmona 04—Jonathan Christodoro 05—Hunter C. Gary 06—Nicholas Graziano 07—[ ] [ ] [ ] 04 - Kevin M. Jones [ ] [ ] [ ] 05 - Sophie L’Hélias [ ] [ ] [ ] 06 - Alan W. LeFevre 08—Jesse A. Lynn 09—[ ] [ ] [ ] 07 - Juan Miguel Mendoza 10—Michael Montelongo 11—James L. Nelson 12—[ ] [ ] [ ] 08 - Don Mulligan [ ] [ ] [ ] 09 - Maria Otero 13—Margarita 14—[ ] [ ] [ ] 10 - John TartolPaláu-Hernández [ ] [ ] [ ] + 2. Approve, on an advisory basis, the compensation of the Company’s named executive officers. For Against Abstain For Against Abstain 2. Advisory vote to approve the Company’s executive[ ] [ ] [ ] 3. Approve, as a special resolution, the name compensation. change of the Company from “Herbalife Ltd.” to “Herbalife Nutrition Ltd.” 4. Approve, as a special resolution, the amendment and 5. Effect atwo-for-one stock-split of the Company’s restatement of the Company’s Amended and Restated Common Shares. Memorandum and Articles of Association. 6. Ratify the appointment of the Company’s independent registered public accountantsaccounting firm for fiscal year 2018. IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A AND2022. For Against Abstain [ ] [ ] [ ] B ON BOTH SIDES OF THIS CARD. 1UP XAuthorized Signatures – This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) – Please print date below. Signature 1 – Please keep signature within the box. Signature 2 – Please keep signature within the box. / / 1UPX + 02S49D03LFFC
Important notice regarding the Internet availability of proxy materials for the 2018 Annual General Meeting of Shareholders. The 2018 Proxy Statement and the 2017 Annual Report to Shareholders arematerial is available at: http://www.edocumentview.com/HLF q PLEASE FOLD ALONG THE PERFORATION,IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy — HERBALIFE LTD. +- Herbalife Nutrition Ltd. Notice of 2022 Annual General Meeting of Shareholders Proxy Solicited by Board of Directors for Annual General Meeting of Shareholders – April 24, 2018 THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY The undersigned hereby appoints Richard P. Goudis27, 2022 John Agwunobi and Richard Werber, andHenry Wang, or each of them, each with power to act without the other and with power of substitution, as proxies andattorneys-in-fact andare hereby authorizes themauthorized to represent and vote as provided on the other side, allshares of the Common Shares of Herbalife Ltd.undersigned, with all the powers which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come beforewould possess if personally present, at the Annual General Meeting of Shareholders of the CompanyHerbalife Nutrition Ltd. to be held on April 24, 201827, 2022 at 8:30 a.m., Pacific Daylight Time, at 800 W. Olympic Blvd., Suite 406, Los Angeles, CA 90015 or at any adjournment(s)postponement or postponement(s) thereof, with all powers whichadjournment thereof. Shares represented by this proxy will be voted by the undersigned would possess if present atshareholder. If no such directions are indicated, the Proxies will have authority to vote FOR each nominee listed in Proposal 1 and FOR Proposals 2 and 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” EACH NOMINEE FOR DIRECTOR AND “FOR” PROPOSALS 2, 3, 4, 5 and 6. (Continued and(Items to be marked, dated and signed,voted appear on the otherreverse side) B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A AND B ON BOTH SIDES OF THIS CARD. +