Shaklee

Shaklee Corporation

Type	Public
Traded as	JASDAQ: 8205
Industry	Wellness, Personal care, Multi-level marketing
Founded	1956
Founder	Forrest C. Shaklee
Headquarters	Pleasanton, California
Key people	Roger Barnett, Chairman & CEO
Products	Nutrition, Weight management, Beauty, Household
Revenue	US$148.7 million (2007).[1]
Website	www.shaklee.com

Shaklee Corporation is an American manufacturer and distributor of natural nutrition supplements, weight-management products, beauty products, and household products. The company is based in Pleasanton, California with global operations in Canada, Japan, Malaysia, Mexico, Taiwan, China and Indonesia.

History

Founding

Forrest C. Shaklee created "Shaklee's Vitalized Minerals" in 1915. In 1956, Shaklee founded the Shaklee Corporation with his two sons to manufacture nutritional supplements.^[2] Shaklee chose the multi-level marketing business model to market their product.^[3] Starting in 1960, Shaklee began marketing organic, biodegradable cleaning products. He continually emphasized "natural" and "environmentally friendly" in his marketing messages.

Expansion, divestiture, changes of ownership

Shaklee headquarters in Pleasanton

Shaklee Corporation was a publicly traded company in the late 1970s and was listed on the New York Stock Exchange. The corporation began to diversify in November 1986 when it purchased the Bear Creek Corporation, a direct marketing company best known for its Harry and David Fruit-of-the-Month Club operation, from RJR Nabisco for $123 million.^[4] In February 1989 Shaklee sold its 78 percent interest in Shaklee Japan to the Yamanouchi Pharmaceutical Company for $350 million, while maintaining its licensing agreement and continuing to collect royalty payments from the Japanese operations.^[5] Then in March 1989, Shaklee Corporation received an unsolicited acquisition proposal from a group led by Irwin L. Jacobs, the Minneapolis financier known also by his nickname "Irv the Liquidator". Analysts placed the leveraged buyout value of Shaklee at $35 a share. The Jacobs group had been aggressively accumulating Shaklee shares, and disclosed it currently held a 14.98 percent stake in the San Francisco-based company. Shaklee immediately declared a special dividend of $20 a share, seen as a poison pill—a way to discourage takeover interest in Shaklee, though the company disputed that view. Shaklee's anti-takeover provisions came into play when an investor reached 15 percent.^[6] After a few tense weeks, during which time Jacobs increased his stake in Shaklee,^[7] Shaklee Corporation announced it was being acquired by Yamanouchi Pharmaceutical for $28 a share in cash, or about $395 million. Yamanouchi's partnership with Shaklee in Japan helped make the transaction possible, and cast Yamanouchi as a "white knight" in helping Shaklee fend off the hostile takeover bid by Jacobs.^[8] Jacobs announced he would not challenge the Yamanouchi bid^[9] and the deal with Yamanouchi was quickly finalized.^[10] Shaklee became a privately held company.

In April 2004, Yamanouchi sold Shaklee Corporation to American billionaire Roger Barnett, managing partner of Activated Holdings LLC, for $310 million. Bear Creek and the Harry and David line was sold to Wasserstein Perella & Co. for $260 million.^[11][12]

Shaklee promotes itself as a company committed to being green.^{[13][14][15][16][17][18]}

FTC complaint

In 1974, Shaklee fell under scrutiny of the Federal Trade Commission, and was ordered to cease its marketing its product "Instant Protein" to infants, and to cease misrepresentation of the amount of protein in "Instant protein."^[19] Shaklee was further sanctioned by the FTC in 1976 for "requiring, coercing, threatening, or otherwise exerting pressure" on its distributors to maintain or advertise suggested retail prices.^[20]

Controversy

Iowa distributor, Elizabeth Dopf, publicly raised specific concerns about Shaklee in December 2013. The publication of her experience online^[21] compelled 96 former Shaklee distributors to come forward, prompting regional media coverage in the US.^[22] Dopf was recruited into "The Pinnacle Group" led by controversial former Amway promoter, Bo Short.^[23] According to the former distributor, inventory loading was encouraged by "upline" supervisors who allegedly convinced the participant to join Shaklee by offering a lucrative income opportunity to sell high quality products. After paying the initial start up cost, Dopf was told to order monthly minimum product inventory shipments from Shaklee in order to qualify for commissions which would form the residual income she sought. According to her first hand experience published on a prominent Shaklee distributor website,^[21] Dopf's "upline" superiors placed virtually all emphasis and time on motivational phone calls to promote the unlimited recruitment of friends and family members into Shaklee by using the suggestion of a lucrative "business opportunity selling products." When Elizabeth complained that none of her product inventory had been sold, her specific supervisors whose names are published on the Shaklee distributor website, told Dopf that it was essential to keep purchasing inventory even if it wasn't selling. The allegation is consistent with two of the Federal Trade Commission's hallmark traits of an illegal pyramid scheme called chain recruiting and inventory loading.^[24]

These actions are in direct violation of Shaklee's distributor agreements and ethical standards, and the offending parties are no longer allowed to be involved in Shaklee business operations.

Cycling team

From 1988 to 2000 Shaklee was the title sponsor of an American-based UCI professional cycling team managed by Frank Scioscia. In its final year of existence (2000) Team Shaklee was the top-ranked UCI tier III team in the world^[25] and included United States Olympic Team members Jamie Carney, Jonas Carney, Adam Laurent, and Kent Bostick. There is no information listed as to whether or not the team members actually used Shaklee products.

Customers

NASA

Beginning in 1993 and through the end of the NASA shuttle program, Shaklee provided NASA with a customized version of its rehydration beverage, Performance, under the name Astroade for use by Shuttle astronauts.^{[26][27][28][29][30]}

Notes and references

External links

• Corporate web site
• "Eco-Socialites Make Cleaning Green a Priority", New York Times, April 22, 2007
• "James Whittam, 49, President And Chief of Shaklee Companies", New York Times, May 3, 1999