Shaken, not stirred: Herbalife's $200 million settlement with the government prompts a new spin on the nutrition company's approach to recruiting.

• Author: Otterbourg, Ken
• Position: POINT TAKEN

Let's admit it, there is something both naughty and delicious about watching billionaire investors fight over the fate of companies. These are people who think they are skilled in the art of war, and they invariably have the ego and resources to execute their battle plan. None of this "leading from behind" claptrap. Their armored vehicles don't have a reverse gear.

For the past few years, I've gotten a charge in the epic feud between Carl Icahn and Bill Ackman over the value of Herbalife Ltd., which is based in California but owns an enormous manufacturing operation that employs more than 400 people near Winston-Salem. The building was where Dell, engorged with local and state incentives, made PCs until-- of course--it didn't, but that's a story for another day. In a nutshell, Ackman had bet against Herbalife, first asserting it was a pyramid scheme, and then doing everything in his power to get the government to agree and trigger a plunge in the stock. Icahn had taken the opposing view, that Herbalife was simply a multilevel marketing operation--maybe not for everybody, but definitely not illegal.

Icahn won. In July, Herbalife agreed to pay $200 million to settle a long-running investigation by the Federal Trade Commission over its practices. The government's initial complaint was harsh in its descriptions of Herbalife's marketing and recruitment tactics. But in the end, the lawyers hashed it all out. Bygones. Herbalife didn't admit fault but just said settling was the prudent course of action. Again, bygones. As a reward for its gracious surrender, it avoids having to wear the scarlet P (as in Pyramid), so life goes on. For his part, Icahn got to increase his holdings from 25% to just under 35%, a stake now worth $2.2 billion. Ackman, who has lost at least $500 million on the investment according to Fortune, has said he still believes Herbalife will crash and burn. Don't count on it. One reason: The vast majority of Herbalife's business takes place outside the U.S. and the FTC's oversight.

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So, the other day, on an analysts' call reviewing its quarterly results, company executives were practically giddy at their long-term prospects.

Herbalife's direct-selling model isn't going anywhere, said Michael Johnson, the company's super-charged, somewhat evangelistic CEO. "It is the ability to give a voice to our products and through a conversation with a...