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Herbalife shares drop more than 3% on earnings, CEO change announcement

Michael Johnson, chairman and chief executive officer of Herbalife Ltd.
Patrick T. Fallon | Bloomberg | Getty Images
Michael Johnson, chairman and chief executive officer of Herbalife Ltd.

Herbalife shares fell 2 percent in extended trade Tuesday after the company reported earnings and announced a transition at the CEO position.

The company reported adjusted earnings of $1.21 per share, beating estimates of $1.09 a share. It also reported revenues of $1.12 billion, which is about in line with analysts' estimates.

The change in leadership for the company takes place when Chairman and CEO Michael Johnson becomes the company's executive chairman, effective June 1, 2017. At that time, Chief Operating Officer Richard Goudis will succeed Johnson as CEO of the company.

Johnson told CNBC he's confident in Goudis' ability to serve as CEO. He said the reason he's leaving in June has little to do with hedge fund manager Bill Ackman, who has a short position in Herbalife.

Johnson said he wants the company to comply with FTC regulations and wants to see that through 100 percent.

"Every CEO has a life term, and new blood is important," he said. "We have a great exec waiting in the wings ... He's the right age and the right time," he added.

Johnson further said he is proud that he took the company from $1 billion in sales in 2003 to $5 billion in 2016. One thing he wishes he had done, however, is putting measures in place earlier to better identify who the company's customers are.

Billionaire investor and Herbalife-backer Carl Icahn praised Johnson on a job well done.

"We would like to applaud Michael Johnson for doing a superb job navigating the company through a number of libelous attacks during this period," Icahn said. "I am glad he intends to stay meaningfully involved in the company and I fully support the Board's choice of Rich Goudis becoming CEO while Michael remains actively engaged as Executive Chairman."

— CNBC's Scott Wapner contributed to this report