Just over a week ago, hundreds of Western graduates came together to commemorate the end of their Mountaineer careers—or, for a select few moving on to graduate school at Western, celebrate a major milestone before continuing on with their academics.
A cornerstone of graduation ceremonies, along with the reading of hundreds of names, the elaborate regalia, and the cap-throwing, is the commencement address. While many commencement speakers do little more than briefly recount their careers before offering a series of tips, cheery anecdotes, and motivational phrases for life in the “real world,” a few go above and beyond.
Comedians Stephen Colbert and Conan O’Brien brought their crowds to joyous tears of laughter, while one incredibly generous speaker, Robert F. Smith, paid off an entire graduating class’s student debt. Of course, not every commencement speaker can be as famous or charitable as the aforementioned.
But still, you would think that Western, with our proud alumni numbering in the thousands, could summon a better candidate to launch the Class of 2022 into the rest of their lives than Michael O. Johnson, a Western alumnus who served as Herbalife Nutrition’s CEO starting in 2003— a role he retained through 2017.
Johnson also became the company’s Chairman starting in 2007, a position he held through 2020. Plus, he resumed the role of CEO on an interim basis in 2019, before resigning both positions in early 2020.
But just a couple months ago, Johnson was nominated to join Herbalife’s Board of Directors and continue his saga with the company. And while the firm’s market value grew substantially during his tenure as CEO (by several billion, in fact), the company also became the frequent target of criticism that its sales model constituted a pyramid scheme.
Here are the facts: Herbalife exclusively utilized its millions of “members”, essentially super customers who bought Herbalife product in bulk (often many thousands of dollars’ worth), to move their products into the market.
These members, having invested significant capital in Herbalife products—in many cases more than they could ever possibly consume—would then venture out for themselves and try to resell the products, recruiting new “members” and hopefully at least recouping their investment in the process.
The recruitment of new “members” netted the old members financial bonuses, and the more products the new members purchased to consume or sell themselves, the more money the old members would make. Sound legit?
There exists a legal gray area for these types of practices that are not your hyper-obvious, Bernie Madoff-ian “give me your money and you will be wildly rich soon” schemes. And Herbalife and Johnson attempted to curb the damage in the midst of an ongoing public relations nightmare, countering that the company’s tactics were not illegal.
Most of the negative attention around Herbalife came between 2012 and 2016—including the 2014 The Atlantic article linked above.
That time period also featured a well-publicized feud between hedge fund manager Bill Ackman (who shorted the company’s stock and loudly claimed fraud) and Herbalife, backed by billionaire Carl Icahn (who then invested in the company’s stock).
The opposing wealthy investors traded a series of media and legal barbs with many millions in investment capital on the line for all involved.
But in 2016, Reuters reported that Herbalife had paid the federal government $200 million and agreed to make fundamental changes to its business practices to avoid legal action. This came after the U.S. The Federal Trade Commission concluded its investigation into Herbalife it had launched in 2014. From the July 16, 2016, Reuters Article:
“The FTC pointed out that the overwhelming majority of Herbalife’s distributors earn little or no money.”
Does this all sound like the kind of leader we want to represent Western values, and to send off our graduates into a world where they will undoubtedly have to make difficult ethical decisions in their professional lives?
If we are to follow Johnson’s lead, then it’s entirely okay, and even implicitly encouraged, to employ (a generous word, seeing as most didn’t actually make any money for their efforts) millions of “members” to sell your corporation’s products and reap huge profits for many years, so long as you pay huge fines to federal regulators before any real consequences come about.
Then, a few years after your eventual semi-retirement, and after drawing millions in compensation for yourself (In 2011 alone, Johnson received nearly $90 million in compensation from Herbalife), you too can give a rousing, victory-lap speech to celebrate your illustrious, and most thoroughly lucrative, business career.
Well, let me throw in my two cents: Johnson, both his career and his personal celebration at Western’s graduation ceremony, do not reflect the values of Western, or of any other self-respecting academic institution.
And you do not have to go back far to find exemplary commencement speakers at Western, like Dr. Gloria Beim (2019), a doctor who lives in the Gunnison Valley and has served both the Olympics and Paralympics in a sports medicine capacity, Western’s current Interim President and business leader Nancy Chisholm (2017), and current U.S. Senator and then-Colorado Governor John Hickenlooper (2014).
Please do better next year, Western.