The chief executive officer of dietary supplements maker Mannatech Inc. resigned, amid pressure on the company from shareholders and regulators who have accused it of using illegal sales tactics.
The resignation of Sam Caster, who helped found the Coppell, Texas, company in 1993, is effective immediately, Mannatech said, but added that Mr. Caster will remain chairman.
Mr. Caster resigned to focus on changing company marketing practices, said board member Larry A. Jobe. The company's marketing tactics have drawn complaints from shareholders and a Texas state attorney general's lawsuit. The company said in a statement that Mr. Caster will focus on working with field sales leaders. A company spokesman said Mr. Caster wasn't available for comment.
Mannatech's board turned to President and Chief Operating Officer Terry L. Persinger as interim CEO, and said it planned to begin searching for a permanent replacement. Mr. Persinger has said he intends to retire from Mannatech in June 2008. Terence L. O'Day, executive vice president of global operations, was promoted to executive vice president and chief operating officer.
Mr. Caster suggested his own resignation so he could focus on company marketing, said Mr. Jobe. Mr. Jobe said the board wasn't displeased with Mr. Caster, but that the lawsuits gave members "a lot of concern."
Mannatech shares closed yesterday at $8.49, down 1.1%, or nine cents, in 4 p.m. Nasdaq Stock Market composite trading. The shares are off from a 52-week high of $19.89 in October.
Mannatech was the subject of a page-one Wall Street Journal article in May that reported on ill people who said they were told that taking the supplements could cure them, and on speakers at its annual conference who claim their ailments disappeared after taking Mannatech products the company calls glyconutrients.
Mannatech went public in 1999 and sales have grown steadily. Last year, Mannatech earned $32.4 million on sales of $410 million, compared with $1.9 million earned in 2002 on sales of $141 million.
But the company has faced numerous challenges as a network marketing firm with a free-lance sales force that is paid commissions and bonuses based on their sales and those of people they recruit. Last month, the Texas attorney general asked a state court to bar the company from allegedly illegal sales and marketing practices, saying associates had been falsely claiming its products cured, mitigated, treated or prevented diseases such as cancer, autism and Down syndrome, in violation of state and federal laws.
Mr. Caster has repeatedly denied that the company makes such claims.
In July, soon after the Texas lawsuit was filed, Mannatech announced that sales associates should immediately stop using marketing materials that link the benefits of company products to any disease.
Mannatech is facing several shareholders lawsuits that accuse it of engaging in illegal sales practices, boosting sales and artificially inflating the stock's value.