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Herbalife Chairman Found Dead

David Evans

Daniel Taub

©2000 Bloomberg, LP

May 22, 2000

Herbalife International Inc. Chairman and Chief Executive Mark Reynolds Hughes, 44, was found dead Sunday at his $27 million oceanfront mansion in Malibu, California. Hughes appeared to have died of natural causes, the Los Angeles Sheriff's Department said. An autopsy will be performed tomorrow.

Hughes, whose formal education ended in the ninth grade, owned 60% of the Los Angeles-based maker of weight-loss and nutritional products, which he founded in 1980. Herbalife products range from snack bars and pills to cosmetics and are marketed by independent distributors who earn sales commissions.

Class A shares fell 1 3/16 to 8 11/16, and are down 47 percent from a January high of 16 3/8. Class B shares fell 1 1/16 to 8, down from their high of 16 1/4.

Herbalife officials said the company was "deeply saddened" and that its executive committee was meeting to ensure the company "will continue with the spirit and vitality of the founder's vision."

Herbalife reported 1999 earnings of $56.9 million, or $1.86 a share, on sales of $1.8 billion.

In 1987, the company agreed to pay California $850,000 to settle civil charges that it made false medical claims in promoting its products. The same year, it stopped selling two products after a safety and labeling review by the U.S. Food and Drug Administration: Tang Quei Plus for menstrual cramps and K-8 to relieve stress and moodiness.

Herbalife last month ended a $510 million buyout offer announced by Hughes in September because it couldn't arrange funding, either through loans or a proposed junk-bond sale.

Hughes owned 5.4 million shares, or 54% of the company's Class A shares, and 10.8 million shares, or 58%, of Class B shares, according to regulatory filings.

Hughes often told sales meetings that he was inspired to start his company after his mother died from taking diet pills. He said in a message on the company's Web site that his mother "totally destroyed her entire life just trying to lose 30 pounds." Jo Ann Hartman, his mother, died in 1975 of what the Orange County coroner called a likely overdose of propoxyphene, a narcotic used for pain relief. She was 5 foot 6 inches and, at her death, weighed 105 pounds, the autopsy showed Hughes is survived by his wife Darcy, a son Alex, his father Stuard and a brother Kirk.