President who sold NutriSystem to Tivity is out; deputy Krausz will diversify

The people who run Nutrisystem, the Horsham-based diet-meals company that plans to add home food shipments to recovering patients next month, are seeking to convince shareholders the departure of its former President Dawn M. Zier won’t knock owner owner Tivity Health Inc. off track, by emphasizing that a familiar team headed by Zier’s top aide Keira Krausz remains in charge of the business.

Zier “was mutually terminated,” Tivity said in a statement Monday, one year after she announced Tivity had agreed to buy Nutrisystem for $1.4 billion. Zier had run Nutrisystems since 2012, and as Chief Operating Officer had reported to CEO Donato Tramuto. The job paid a salary of $875,000, plus a bonus of $875,000, and stock options worth millions -- when the stock does well.

Tivity shares was down as much as $2 on news of her departure -- which “is not related to any disagreement” about “operations, policies or practices,” Tivity emphasized. The stock, which traded above $40 before the Nutrisystem acquisition was announced last year, this week is trading below $20.

Under the deal she negotiated with Tivity in late 2018, Zier had a year to leave without losing a stock and cash separation package, worth an estimated $10.1 million at the time of the merger, so long as she left for any reason “within 60 days” of that one-year anniversary.

She also had incentives to stay -- a $2 million bonus if she remained until next May, another bonus of up to $4 million more if she stayed through 2021 and the company hit financial targets. But investors have taken a skeptical view of Tivity’s prospects lately, as reflected in the fallen share price.

The company did not announce a replacement for Zier, whose board seat has also been eliminated.

Nutrisystem will continue to be managed by Krausz, who had been Zier’s chief marketing officer starting in 2013 and was named President of the renamed Nutrition Business Unit after the merger, according to a Tuesday statement by the company. Top aides including chief operating officer David Burton, marketing chief Steve Mikuliak and contact center leader Bill MacBride, all veterans of the Zier years, also remain.

In a statement, Tramuto called Krausz “a proven leader committed to aggressively pursuing” plans to “diversify the nutrition business.” He credited Krausz’s team with having “revamped its ecommerce team,” boosted revenue per customer by 30 percent by building a customer experience-and-retention team, and expanding the company’s South Beach Diet program.

Tivity didn’t return calls seeking comment on changes at Nutrisystem, which employed 544 in February before the merger was completed.

Tivity’s other businesses, including the SilverSneakers and Whole Health exercise programs for members of Medicare plans, also employed around 500. The company’s combined sales are expected by stock analysts to top $1 billion a year.

Zier gave no sign she was planning to leave in a conference call with investors Dec. 3. She boasted the Nutrition business was “on plan,” increasing digital marketing and “refining (our) creative messaging.” She said the company would be launching a new line of Wisely Well, non-diet, nutrient-dense meals “to nurture and energize the body” and “fuel healthy living” for convalescents, starting next month, and will be more closely linking its senior-care and diet services with partners such as Walmart stores and Humana hospitals.

In the same call, Krausz talked up Nutrisystem’s NuMi free smartphone app. The company noted such “digital marketing,” rather than advertising, now accounts for a majority of its new customers.

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