UPDATE 2-Herbalife to add two Icahn representatives to its board

* Herbalife increases board size to 11 from 9

* New members to be chosen by Icahn

* Herbalife shares up nearly 7 pct

(Adds Icahn comment, background on Ackman)

Feb 28 (Reuters) - Herbalife Ltd said on Thursday it will add two directors chosen by activist investor Carl Icahn to its board and the shares of the embattled nutrition company jumped 6.7 percent.

Thursday's move by Icahn, one of the world's best known investors, spells bad news for William Ackman of Pershing Square Capital Management, who has a large bet against the company based on his view that Herbalife is a "pyramid scheme."

Following news of Ackman's short position, Icahn revealed that he owns over 14 million shares, or 13.6 percent of Herbalife.

His new directors expand the size of Herbalife's board to 11 members and under the terms of the agreement, Icahn can increase the size of his stake to 25 percent of the company.

Herbalife Chief Executive Michael Johnson said in a statement that the company looks forward to working with the Icahn representatives.

"We appreciate the Icahn parties' shared views on the inherent value of Herbalife's operations, products and future prospects," Johnson said.

Icahn said in the statement that he expects the representatives to provide "positive input into board decisions affecting the future of the company." He did not say who the representatives might be or in what strategic direction he would like to see the company move.

He was not immediately available to comment. Ackman was also not immediately available.

Herbalife shares jumped $2.52, or 6.7 percent, to $39.96 in afternoon trading on the New York Stock Exchange.

(Reporting by Martinne Geller in New York and Svea Herbst in Boston; Editing by Jeffrey Benkoe, Gerald E. McCormick and Andre Grenon)