Herbalife Nutrition (HLF) - Get Report shares fell 5.6% by the close of trading on Thursday after a report in the Wall Street Journal suggested that former CEO Richard Goudis resigned last month due to comments that were recorded years ago about bypassing the company's internal accounting policies.
Goudis reportedly made the comments while he was the company's chief financial officer about a decade ago. He told a colleague working in Hong Kong or mainland China to ignore the company's expense-account limit on entertainment spending.
The phone call was recorded by another employee and last year the recording was given to the Justice Department, which has been investigating for the last two years whether the nutritional supplement company violated foreign bribery laws in its business dealings with China.
Herbalife announced on January 8 that Goudis would be leaving the company after 18 months as head of the company and that Michael Johnson, the person he replaced, would be taking over on an interim basis.
The company's board was not considering replacing Goudis until the recording came to light, according to the Journal. Goudis will receive $3.5 million in severance as part of a separation agreement that also prohibits him from competing against the company in 2019.