How Peloton’s Big Turnaround Plan Puts Employees First
Peloton has had rough year, but it sees investing in its employees as the key to bouncing back in a big way.
Over the years, Peloton has managed to get millions of people excited about indoor cardio. Founded in 2012, the media and exercise equipment company’s primary products are Internet-connected stationary bicycles and treadmills that allow subscribers to participate in remote classes through streaming media. But the New York-based firm has been going through a rough patch recently, with expenses spiraling out of control and demand for its bikes waning from its pandemic peak.
To boost company morale, Peloton is now offering a variety of incentives to retain employees amid a tumultuous year for the company. The at-home fitness brand is changing its stock compensation plan for eligible staff members and granting cash bonuses to hourly workers. The company told eligible employees that their post-IPO stock options will be repriced to Peloton’s closing value of $9.13 on July 1st. This means the threshold to exercise stock options for many staffers has been significantly lowered, Business Insider reports.
But this offering does not apply to hourly employees or executives in the C-suite. Instead, many of Peloton’s hourly workers told the company they would prefer cash to stock grants. Those workers will be given a one-time bonus, which will be paid out at the end of February. The amount of the bonus will vary for people across the business. Speaking to the publication, a spokesperson for the fitness brand said Peloton was committed to competitive and equitable compensation for our people. The groundbreaking move comes as the firm fights to fix its struggling business.
The changes come just over five months after Barry McCarthy, a former Spotify, and Netflix executive working to boost the morale at Peloton, was named CEO in early February. He replaced founder John Foley and slashed roughly $800 million in annual costs, amid steady quarterly losses. That included cutting 2,800 jobs or about 20% of corporate positions. Now, investors are waiting to see if McCarthy can grow sales and win over customers as surging inflation squeezes budgets and a competitive labor market makes it harder for companies to hold onto employees, CNBC reports.
Lower demand hasn’t been the company’s only problem in the last few months. Last year, HBO’s Sex and the City reboot featured a main character dying of a heart attack after using a Peloton exercise bike. Although completely fictional, the plotline sent the fitness brand’s stock plummeting. To make matters worse, Peloton shares hit an all-time low of $8.73 this week, down more than 70% year to date, amid a broader market selloff. The stock had traded as high as $129.70 almost exactly one year ago.
Speaking about the fitness brand’s financial crisis, Peloton’s Chief People Officer Shari Eaton said that the company is introducing incentive actions so employees can benefit as the firm works on its turnaround efforts. “The extraordinary circumstances that we find ourselves in now really give us that chance to pause and look at what it is that we can do to ensure future success,” she told CNBC. She added that any equity awards granted to employees in the past will remain unaffected.
