MGMT1125 Business Ethics: Herbal Reborn

18-3 Products

Herbalife sells weight management, targeted nutrition, energy and fitness, and personal care products, all intended to support a healthy lifestyle. Formula 1 Nutritional Shake Mix is a protein and fiber shake with minerals, vitamins, and nutrients offered in a variety of flavors. Formula 2 Multivitamin Complex is a multivitamin that contains over 20 vitamins, minerals, and herbs essential to healthy living. Formula 3 Cell Activator promotes absorption of minerals and vitamins while improving energy levels. These three core products are at the heart of the Herbalife product line and serve as the baseline for customer nutrition and weight management goals.

The weight management line consists of a variety of Formula 1 protein shakes, supplements, weight loss enhancers, protein bars, and snacks, all serving the purpose of helping customers attain their weight goals. There are three weight management program sets, each with a combination of shakes, supplements, and enhancers designed for different types of weight management needs. For instance, the Personalized Protein Powder and the Protein Drink Mix offerings provide an alternative to traditional meals while supplying energy and curbing hunger cravings, whether consumers want to lose or maintain their weight or build muscle mass.

Targeted nutrition products include dietary and nutritional supplements that contain herbs, vitamins, minerals, and other natural ingredients to strengthen specific areas of the body that tend to be problematic for many people. For example, Tri-Shield helps the heart stay healthy by maintaining good cholesterol levels and providing antioxidants, while Ocular Defense Formula and Joint Support Advanced offer nutritional aid for the eyes and joints of aging adults. Herbalife also offers nutrition products specifically designed for women, men, and children.

In addition, Herbalife provides energy and hydration options for those engaged in sports and fitness activities. Customers can choose from drink mix-ins such as the H 3 O Fitness Drink, which enhances clarity and rehydrates the body, or they can go with supplements such as N-R-G Nature’s Raw Guarana Tablets, which also promote mental clarity. Herbalife24 is an athlete-focused program set, including drink mix-ins, shakes, and supplements, that includes formulas for hydration, prolonged endurance, restoration of strength, and recovery.

18-4 Multilevel Marketing

Direct selling is the marketing of products to end consumers through person-to-person sales presentations at non-retail locations such as consumer homes, jobs, or online. This should not be confused with on-site salespeople such as at car dealerships; direct sellers go to the consumer, such as at their home or job, to sell the product. Also, direct sellers are generally not actually employees of the companies they represent but rather are autonomous individuals who enter into independent contractor agreements with a company to sell its products.

People are attracted to becoming direct sellers for many reasons. Some are passionate about a product and want to promote the company. Others want to receive a discount on their personal orders, a common perk of being a direct seller. Many find working as a direct seller to be a flexible, part-time opportunity for extra income. Additionally, a lot of direct sellers simply enjoy the social aspect of the job.

Within the direct selling model are two compensation models: single-level marketing and multilevel marketing. Single-level marketing is when direct sellers only earn commissions for sales they make themselves. Multilevel marketing, sometimes called network marketing, means direct sellers earn income from their own sales of products as well as commissions from sales made by those they have recruited. The multilevel marketing model is permitted in nearly all countries but is often strictly regulated and/or closely scrutinized due to its capacity to be abused and become a fraudulent pyramid scheme (discussed later in this case). In order for a multilevel marketing company to be legitimate, it cannot force sales or recruitment. It should also not be necessary for direct sellers to recruit others in order to earn a profit; this should merely be a choice available to sellers if they want to increase their earnings.

This aspect of direct selling, where the seller purchases products at a discount from the firm for his or her own use, is known as internal consumption. Internal consumption is common in many industries; for example, most retailers provide internal consumption incentives by offering discounts to their employees. Department stores, automobile manufacturers, and airline companies provide incentives such as discounts that encourage internal consumption. Many direct selling customers become resellers to get discounts on the products for their own use. They believe in the brands, use them, and want to “spread the word” by creating a broader sales and communication network. Some do not even necessarily care about making a profit from their status as a reseller. This is a common and legal approach for direct selling products around the world. In fact, most direct selling companies use multilevel marketing and permit or even encourage internal consumption.

18-5 Herbalife’s Direct Sellers

Sellers enjoy discounts on Herbalife products ranging from 25 to 50 percent depending on the level of contractorship (contractors move up levels by achieving certain sales and recruitment goals). Herbalife sellers usually purchase inventory themselves and then resell it to buyers; however, it is possible for the distributor to make the sale and then have Herbalife ship the product directly to the buyer. Contractors can sell the products at any price they want and can generally make most decisions on how they want to position and sell their Herbalife inventory, although they are subject to both legal and company rules and restrictions. The more successful an Herbalife seller, the higher up he or she moves on the contractorship ladder, gaining corresponding benefits at each step such as increased product discounts and networking and training opportunities. Seller success is measured by “Volume Points” and “Royalty Override Points.” Volume Points are awarded when the seller purchases Herbalife products for resale or has Herbalife ship products directly to a buyer, and Royalty Override Points are accumulated based on the volume of products sold by the seller’s personally sponsored recruits. Royalty Override Points, however, cannot be earned until the seller has already reached a certain contractorship level through his or her own sales.

To go from basic distributor to the Senior Consultant level, a Herbalife member must accumulate a minimum of 500 Volume Points in one month. To keep the Senior Consultant designation and perks, the member must maintain that minimum level of sales monthly. The second level of Senior Consultant requires 2,000 Volume Points in a month, or a seller can be named a Success Builder for the month by arranging a single sale valued at over 1,000 Volume Points. Levels after these include Qualified Producer (2,500 Volume Points accumulated within one to three months), Supervisor (either 4,000 Value Points in one month, 2,500 Value Points in each of two consecutive months, or 5,000 personally purchased Value Points within 12 months), and World Team (either 10,000 Volume Points in one month, 2,500 Value Points in each of four consecutive months, or 500 Royalty Override Points in one month). Once a contractor reaches the Supervisor level, he or she unlocks the maximum product discount of 50 percent as well as the ability to earn Royalty Override Points through sales of his or her recruits.

In the event that a contractor no longer wants to sell Herbalife products, the company will buy back any remaining inventory the contractor has on hand. Herbalife goes beyond the Direct Selling Association’s ethical guidelines for buying back products by reimbursing the distributor for everything he or she initially paid for (100 percent buyback policy). The company also limits the amount of inventory a seller can initially buy in order to avoid association with inventory loading, defined by the Federal Trade Commission (FTC) as requiring a contractor to make a large upfront purchase of nonreturnable inventory (a fraud-inviting tactic often used by pyramid schemes). To renew their membership, contractors pay a $10 annual membership fee to Herbalife.

A 2013 independent survey conducted by Nielsen, a reputable global information and measurement company, showed the number of end consumers Herbalife serves in the United States. The study, which took place online over the course of two months, sampled 10,525 consumers and was balanced in terms of demographics, income, and geographic placement. The results indicated that 3.3 percent of the general U.S. population made a Herbalife purchase sometime within a three-month period. This percentage of the population translates into 7.9 million customers. This number does include Herbalife’s direct sellers as internal consumers, but the number of U.S. contractors at the time was only approximately 550,000, indicating that the number of end users was much higher than the number of independent contractors. This is a good sign for the strength and legitimacy of the company’s model, as pyramid schemes generally do not make significant sales outside of their own networks. Additionally, the study showed that those who had made a purchase in the last three months tended to make Herbalife purchases consistently (approximately every two months) and that the most popular products were those dealing with weight management (making up 95 percent of purchases recorded by the study).

One aspect of Herbalife’s model that has raised concern is its approach to line commissions or the way sellers can make money off the sales of their recruits. Currently, Herbalife contractors can earn commissions on what every recruit below them buys or sells, including not only the recruits they themselves sign up but also those brought in by their recruits, and so on down the line. This structure, known as “unlimited down lines,” means that those at the very top of the recruiting structure can make large amounts of money simply through recruiting, a classic warning sign of a pyramid scheme. Many other multilevel marketing companies limit commissions to, for example, three levels down line only, to avoid this issue.

18-6 Pyramid Schemes

A pyramid scheme is a fraudulent business model that eventually inevitably collapses, with the vast majority of participants losing their investments while the few at the top of the “pyramid” profit. The four defining characteristics of a pyramid scheme are laid out by the Koscot Test, the foundational legal analysis used in the United States to determine whether a business is a pyramid scheme. These characteristics are

· (1)

people pay the company to participate;

· (2)

in return, they gain the right to sell a product or service;

· (3)

they also are compensated for recruiting others; and

· (4)

this compensation is unrelated to whether or not any of the product or service is actually sold.

In other words, participants have little or no incentive to sell products but only to continually recruit others into the scheme. Each person recruited pays an up-front fee (usually expensive), and these fees trickle up the pyramid to be collected by the fraudsters at the top. Newcomers continue joining because, as explained by the FTC, they are promised large profits for buying in and continuing to recruit others. The Federal Bureau of Investigation (FBI) warns of pyramid schemes that come in the form of apparent marketing and investment opportunities where the individual is offered a contractorship or franchise to market a particular product. The key is where the real profit is earned; if it is not by actual product sales but by sales of new contractorships, it is likely a pyramid scheme.

Pyramid schemes and legitimate multilevel marketing businesses are both based on recruiting new participants into selling the product. The California Department of Justice explains the difference as the following: In a multilevel marketing model, money is primarily made through the eventual sale of the product to an end user, whereas in an illegal pyramid scheme, money is primarily or only made through recruiting new sellers. The participants at the top of the pyramid earn money when new members are recruited through the newcomers paying membership fees and/or buying initial product inventory. Each new member is then incentivized or required to recruit more new participants. As this cycle continues, the possible pool of untapped participants shrinks, making it hard for those at the bottom to gain a return on their investment (as the only money for them is in further recruitment). Because of this, a pyramid scheme will always ultimately collapse due to a lack of new recruits and is therefore unsustainable. Another important point is that the products offered by pyramid schemes are usually low quality or very overpriced, again making recruitment the only financially viable option for those involved. The recruits are being sold on an idea or model that, in reality, is unprofitable.

18-7 Is Herbalife a Pyramid Scheme? Ackman’s Allegations

Herbalife, like most other multilevel marketing companies, has been accused of being a pyramid scheme more than once. However, considering the firm’s long and successful history, these claims were given little weight until 2012, when prominent hedge fund manager and billionaire investor William Ackman announced that he and his company, Pershing Square Capital Management, had spent a year studying Herbalife and concluded it was an elaborate pyramid scheme. Ackman is known as an “activist investor” and claimed it was his civic duty to expose Herbalife as fraudulent. Of course, his company also stood to profit heavily, having invested $1 billion in a short sale off Herbalife’s stock (a complex investment strategy that earns money if the stock price falls, rather than rises). Ackman’s target stock price for Herbalife was $0. In other words, he believed the company should and would fail. He has since continued to campaign and advocate against Herbalife and has plunged the company into a never-before-faced level of controversy over its legitimacy as a business.

Ackman’s accusations against Herbalife were initially laid out in a three-hour, 342-slide presentation, the result of months of research and analysis by his team. The accusations included the following:

· (1)

the majority of contractors for Herbalife lose money,

· (2)

Herbalife pays out more for recruiting new contractors than selling actual products, and

· (3)

only the top 1 percent of contractors earn most of the money.

Ackman argues that Herbalife recruits contractors under false pretenses by unrealistically suggesting they can earn the income of those few at the top. Furthermore, he alleges that the real money in Herbalife comes not from selling products but from recruiting other contractors, as all the top earners make the vast majority of their income through down line commissions from the sales of those in their recruiting chain. Although Herbalife has published results showing that the majority of its money is made through product sales, Ackman believes this information is false and/or misleading, instead estimating sales to be only 3 percent of Herbalife’s revenue, with the rest made via recruiting.

Ackman also contends that when people go to purchase Herbalife products, the sellers usually try to convince them to become recruits rather than remain only customers. He claims that the only thing keeping the company running is new recruits, and it will soon run out of available people to bring into the business—which is why it keeps entering new countries.

Supporters of Herbalife point out that many consumers and organizations buy and use Herbalife products and see them as high quality and credible. For example, Los Angeles fire and police departments offer Herbalife products in their fitness centers, and Herbalife products have even been adopted by some Chinese Olympic teams. Pyramid schemes, in contrast, do not offer high-quality, respected products. Additionally, because independent research such as the previously mentioned Nielsen study shows that the number of Herbalife end users is much larger than the number of Herbalife contractors, supporters of Herbalife claim it cannot possibly be operating a pyramid scheme. These viewpoints help validate Herbalife as a valid and successful business model that is producing profits directly related to product sales and is growing and expanding globally.

Herbalife has also been accused of issuing false accounting statements, although there has never been any official legal claim brought about how it records its sales. According to allegations, all products sold to contractors are shown as retail sales on the company’s revenue numbers, without always tracking whether the product was consumed by the contractor (that is, internal consumption) or to whom the contractor sold the product. Critics believe the company should not be recording sales revenue off the contractors’ consumption but only from sales made to end users. This argument falls into the larger backdrop of the legitimacy of internal consumption, which is sometimes contested in the context of direct selling. It should be noted that internal consumption is a common practice found in nearly every industry. For example, Coca-Cola has 100 percent internal consumption because all of its products are sold to resellers. Costco also has 100 percent internal consumption because all of its products are sold to Costco members. A high percentage of internal consumption has never been by itself enough to indicate a pyramid scheme, and there has never been major criticism of companies encouraging internal consumption except with the direct selling, multilevel marketing compensation model.

Furthermore, sometimes when new contractors are recruited, they need to buy products that they can consume themselves or sell to others. This practice has caused suspicion among Herbalife’s critics, who draw similarities between it and inventory loading. On the other hand, contractors are only required to buy more products beyond the initial startup purchase if they want or need them for personal or business purposes, and generally the amount of products Herbalife contractors are required to purchase is lower than many other multilevel marketing businesses.

Ackman’s allegations—harsh, apparently well-researched, and made by a respected investor—launched an unprecedented storm of controversy for Herbalife. Four days after Ackman’s initial presentation, the company’s stock fell 43 percent. The debate over the company has become polarized, with prominent investors, analysts, public interest groups, and loyalists presenting heated arguments both for and against Herbalife’s legitimacy. Recognizing the seriousness of the situation, Herbalife responded in force, including hiring an expensive lobbying team and launching one of the largest marketing campaigns in its history to bolster and reemphasize its brand. At this point, both Ackman and Herbalife have spent tens and possibly hundreds of millions of dollars supporting their positions and

18-8 Criticism against William Ackman

As mentioned earlier, while Ackman accused Herbalife of operating a pyramid scheme, his investment company bet against its stock in the amount of $1 billion. Naturally, many people saw this coupling of a short sale and subsequent accusations as a serious conflict of interest that threw Ackman’s motives and the validity of his claims into doubt. In an attempt to defuse this criticism, Ackman pledged to give any personal profit he makes from the short sale to charity, but his company still stands to benefit both financially and reputationally from Herbalife’s setbacks. So far, Herbalife’s stock has not yet fallen low enough for Ackman’s short sale to be profitable, although it has come close a few times. Ackman continues to hold to his all-in $0 stock price prediction and claims he is committed to it over the long term, with no plans to cash out early even if the opportunity presents itself.

Ackman has also been criticized for the methods he has used in attempting to bring Herbalife down. For example, because one of Ackman’s contentions is that Herbalife disproportionately targets vulnerable low-income and low-education minorities to pay into being part of its “pyramid,” Ackman’s company paid civil rights organizations $130,000 to collect names of people who were allegedly victims of Herbalife. However, the Nevada Attorney General found issues with some of the letters Ackman was supposed to have received from those organizations. Three of the letters from nonprofit groups signed by Hispanic community leaders were identical, and none of the leaders could identify any Herbalife victims by name. Other attorneys general had similar experiences. Some of the leaders who allegedly wrote the letters later denied they had written them. Such inconsistencies cast doubt over Ackman’s claims and research as a whole.

Another example of potentially questionable methods came in 2015, when it was revealed that federal prosecutors and FBI agents were investigating Ackman and his company for evidence of illegal manipulation of Herbalife’s stock. Agents reviewed documents and conducted interviews of lobbyists and consultants hired by Ackman. Proving illegal stock manipulation is not easy, requiring evidence that Ackman and his company knowingly made false or misleading statements in order to incite investigations against Herbalife and affect its market valuation. Eventually, the investigation cleared Ackman of wrongdoing.

An article in the March 15, 2014 issue of The Economist as well as a similar article in The New York Times provided a critical assessment of Ackman’s attempts to use state-of-the-art lobbying in Washington to support his $1 billion short bet against Herbalife by attempting to convince legislators and regulators to investigate, speak out about, and otherwise stand against Herbalife. Ackman has been at the heart of well-executed lobbying. According to The Economist, Ackman sees himself as a moral crusader against Herbalife, but his critics see him as simply a “greedy billionaire who is now exploiting America’s newly laissez-faire attitude to political spending in pursuit of a big financial payday.” Herbalife has responded in kind, spending millions on its own lobbying efforts to stave off regulators and call for investigations of Ackman instead.

18-9 The Controversy Continues

The threat of an official governmental probe was one of the most looming potential consequences of the controversy for Herbalife. In the wake of Ackman’s claims, special interest groups such as the Hispanic Federation and the National Consumers League began urging the FTC to investigate Herbalife’s operations. Not only did they stand behind the contention that Herbalife was operating a massive pyramid scheme, but they also claimed the company targeted vulnerable groups including low-income Hispanic immigrants and low-income African Americans. They alleged that Herbalife used aggressive recruiting techniques, promises of getting rich with minimal work, and other shady methods to take advantage of disadvantaged people with little or no business experience.

In response to these and other requests for an investigation, both the FTC and the Securities and Exchange Commission (SEC) opened official inquiries into Herbalife in 2014. Herbalife stated it would cooperate fully with investigators and invited the opportunity to prove the legitimacy of its business model. The agencies reviewed documents, asked Herbalife for information about its policies and processes, and interviewed top Herbalife sellers on their business practices. Ackman made much of these investigations, touting them as a major win for his position and the beginning of the end for Herbalife. He also stated that top Herbalife executives were in the process of preemptively hiring criminal defense lawyers. However, Ackman refused to reveal his source for this information.

The situation has also spawned several independent lawsuits claiming Herbalife defrauded investors by pretending to be a legitimate company. One, brought by two pension funds with investments in Herbalife, was dismissed by the U.S. District Court, which found the arguments that Herbalife was a pyramid scheme to be “unpersuasive.” Another, however, led to a $17.5 million settlement after an 18-month legal battle. The suit was a class action complaint brought by a former Herbalife contractor on behalf of hundreds of thousands of distributors who claimed, among other serious allegations, the company was operating as a pyramid scheme. One of the key specific claims of the case was that a large majority of all Herbalife contractors (approximately 71 percent) make few, if any, external sales and are forced to self-consume the Herbalife products. As part of the settlement, Herbalife agreed to make a variety of changes to its business model for at least three years, including modifications to its corporate policies and the wording of its membership agreement, as well as paying for shipping of legitimately returned items by members. Herbalife will likely continue to face similar accusations in the future and must remain proactive in addressing them.

The concept of internal consumption—although in and of itself legitimate—also continues to be questioned by regulators. The belief prevails that a large amount of internal consumption in direct selling companies indicates a pyramid scheme. In 2012 a U.S. judge ordered an organization called BurnLounge to disband and reimburse customers $17 million after the FTC determined that the company was operating a pyramid scheme. BurnLounge marketed itself as a way for entrepreneurs to sell digital music and earn large incomes. Participants paid to enter the scheme. Very few sales were recorded, and 90 percent of participants did not act as independent distributors selling a product.

The federal appeals court upheld the FTC’s decision that BurnLounge was operating an illegal pyramid scheme. However, the ruling was viewed favorably by the direct selling industry overall because it did not rely on an analysis of internal consumption; rather, BurnLounge was determined to be a pyramid scheme due to the fact that participants had to pay to join and were mainly motivated by recruiting others into the scheme (versus selling an actual product). The biggest relief for organizations like Herbalife was that the court did not rule that commissions generated from goods sold within the distribution network were illegal. Internal consumption was defined as purchases made by distributors for personal consumption or resale. The court distinguished this from buying products simply to qualify for bonuses or get a discount. Like any other reseller, direct sellers purchasing products for internal consumption have the option of consuming the products or selling them to others. It is unnecessary and likely impossible to measure the exact percentage of the product being consumed by independent contractors versus the exact percentage being sold to consumers.

Rather than singling out the amount of internal consumption as the key factor, the BurnLounge decision seemed to focus more on whether the emphasis of the business in question is sales of products or recruitment. Other important factors included how an organization calculates commissions and the importance of selling the product for the successful operation of the business. The intent for purchase is also a crucial component—if purchases are driven by the product’s value, instead of by money-making ventures, then it is most likely a legitimate operation.

Additionally, the BurnLounge decision described some tests that could indicate a pyramid scheme. Specifically, red flags include focusing more on recruitment than merchandise; paying bonuses primarily based on recruitment activity; promoting the program instead of selling the product; having participants purchase the right to earn profits through the recruitment of other individuals; developing strong incentives for recruitment; motivating package purchases by the opportunity to earn money; and making it unlikely that meaningful retail sales will occur. Although each of these is not necessarily a red flag by itself, several of them taken together could indicate a pyramid scheme. For instance, the court found that 95 percent of BurnLounge distributors brought premium products but only 35 percent of non-distributors did so. BurnLounge products had little value, and distributors were required to buy premium packages if they wanted to be eligible to receive additional commissions.

Both Herbalife and Ackman claimed the BurnLounge decision validated their position. Herbalife argued that because Herbalife contractors sell products of value, participants do not have to pay simply to participate, and significant retail sales do occur, the decision lends credence to Herbalife’s legitimacy. Ackman’s company, on the other hand, issued a statement pointing to similarities between his allegations and several of the warning signs laid out by the court and argued that Herbalife’s business model is dangerously similar to that of BurnLounge.

Interestingly, one of the practices Herbalife promised to change is to begin differentiating between those salespeople who want to sell the product and those who only join to receive a discount. Herbalife has announced that buyers who only join to receive discounts will no longer receive rewards or be eligible to sell Herbalife products. Additionally, Herbalife has agreed that two-thirds of its distributor rewards will be based on retail sales, and 80 percent of its sales must be to legitimate customers in order to continue paying distributors at current levels. This places more emphasis on the selling of products rather than recruitment.

While this might seem like a blow to Herbalife, the FTC agreed not to charge Herbalife with being a pyramid scheme. This is important because while it shows the government viewed some of Herbalife’s practices as questionable, the government did not charge it with running an illegal operation. In fact, Fortune magazine later reported that hundreds of the alleged victims of Herbalife’s selling practices who received compensation from the company were actually discount buyers. Herbalife claims that the FTC’s ruling proves that its operations are legitimate. Ackman, on the other hand, claims the ruling and penalties imposed on Herbalife proved that Herbalife is running an illegal pyramid scheme.

Nearly a year after the ruling, Herbalife’s profits are going strong. Herbalife CEO Michael Johnson stepped down from his role and was replaced by COO Richard Goudis. Goudis claims that Herbalife’s success shows that Ackman’s claims were nothing more than “fake news.” Herbalife claims that changing certain practices, such as verifying its distributors by examining their receipts, have actually aided the company in understanding its customers and distributors better. Meanwhile, Ackman’s Pershing Square has lost hundreds of millions due to its bet on Herbalife. Despite this fact, Ackman continues to maintain that Herbalife is operating a pyramid scheme and that it will be unable to fulfill the promises it made to the government to overhaul its business practices. He still maintains that Herbalife will go out of business eventually.

18-10 Herbalife’s Social Responsibility

The corporate social responsibility section of Herbalife’s website makes it clear the company is proud of its corporate social responsibility program, which it believes summarizes its top values of doing “the right, honest, and ethical thing.” Herbalife’s corporate governance helps to create increased accountability toward stakeholders and allows the firm to meet transparency requirements set forth by the New York Stock Exchange for publicly listed companies.

Another aspect of Herbalife’s social responsibility program is its philanthropic efforts. The Herbalife Family Foundation (HFF) and the Casa Herbalife program, founded in 1994 by Mark Hughes, provide funds and volunteerism to charities committed to supporting at-risk children. HFF also provides support to nutrition initiatives and disaster relief. Its partnership with the Global Alliance for Improved Nutrition and DSM Nutritional Products—a producer of vitamins and nutrition ingredients—focuses on providing essential nutrients to improve the health of women and children worldwide. In a similar vein, Herbalife in 2015 announced a one-year partnership with Global Health Strategies Institute to improve the nutritional intake of over 10,000 young children in India.

As part of Herbalife’s corporate social responsibility program, it also focuses on its internal stakeholders. For instance, Herbalife proactively embraces employee wellness and eco-friendly initiatives. The company incentivizes employees to be healthy and participate in fitness activities. Such incentives include complimentary products and lower individual health insurance costs. The company has even been recognized by Men’s Fitness magazine as One of the 15 Fittest Companies in America. In terms of being environmentally conscious, Herbalife’s headquarters have received accolades for its LEED certification and environmentally friendly design. It also encourages distributors to increase their own sustainability activities.

Reference

Ferrell, O. C. (2018). Business Ethics: Ethical Decision Making & Cases (12th ed.). Cengage Learning.