What a shame. Herbalife is clearly an MLM, a modern form of a ponzi scheme. Their long term value is clearly zero, they just didn't manage to tank in the period Ackman projected.
In most mlm compensation schemes, you would receive the same amount of money if you were at the very top of the pyramid or somewhere much lower, assuming you have the same size team built below you.
That being said, as I mentioned above, the top nodes don't necessarily make more money than those below them.
So it is actually very common for someone at the top of the pyramid to have a smaller income than someone several levels below them. Because if you have a much larger team closer to you, you are getting a larger share of their revenue than the guy 5 levels up. In fact, he may be so far above you, that he doesn't get any share of your revenue.
In fact, I would say that your very earliest people usually earn substantially less than those below them who may still be actively working and building. (because the earliest may be retired or focusing on other things). The compensation schemes are built this way to keep people from simply resting on their laurels and not building anything of value after finding a few good men.
The problem is if you share profits with N people then you are not creating extra profit and the average person is no better off.
Rank speculation-- at its core, every mlm depends on not paying people for their time. E.g., want to make a "home visit" by abusing my web of trust? FU pay me. Want me to "attend" a sales pitch? FU pay me. Want to invite me to dinner and use my social time to sell me on vitamins? FU pay me.
Am I right about this?
As for not paying for people's time, yes, they don't, because most everyone in an MLM is considered a business owner. So you are basically franchising a business model rather than getting hired by a company.
If I choose to go and give the Cinnabon at the mall a five dollar bill, they give me some crap and my change. End of transaction.
With every MLM I've ever seen, the salesperson comes to me (or leverages a pre-existing friendship to sneak in to my space) without my permission, tries to pitch me on why I want some product, and then tries to pitch me on becoming part of the MLM. During that time I am not doing what I set out to do-- instead I'm listening to their sales pitch. That's my time and consequent opportunity cost.
I'm claiming that the only way any MLM makes money is if they don't pay their potential customers/underlings for the time it takes to pitch them on what they are selling.
Am I right? Can you think of an example of an MLM that violates my claim?
Example-- Mary Kay salesperson uses someone's residence for their showroom, but doesn't pay the resident for use of their real estate.
https://en.wikipedia.org/wiki/Amway#Pyramid_scheme_accusatio...
Why invest in something that has an activist fighting against it? Better to go with something unopposed.