Peloton, the fitness and technology company, announced Tuesday that it was laying off 2,800 people as it attempts to right the ship following a string of controversies and corporate missteps that led to production stoppages, price increases, and a plunging share price.
As part of the severance package, the company said, it would offer its North American employees compensation (based on tenure and job title); health care (for an unspecified period of time); and, most notably, a complimentary Peloton membership for 12 months.
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The layoffs come as the company rejiggers its leadership. CEO John Foley will step down from the role and become executive chairman. He will be replaced by Barry McCarthy, a former executive at companies like Spotify and Netflix. Peloton’s president, William Lynch, is stepping down from his role, as is Foley’s wife, Jill, who had been vice president of apparel.
In addition, the company made other changes, like “creating more space for debate” and reducing its investment in warehouse and delivery.
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Inside and outside Peloton, it was clear changes were needed after it turned in the worst year of any company in the Nasdaq 300 Index in 2021, according to the investment firm Blackwell Capital. Foley, who called Tuesday “one of the more challenging” days in the company’s history, tried to explain some of the mistakes the company had made in recent years, which he said included “heavily in near-term capacity, inventories, and logistics” amid supply-chain issues. Previously, Foley has admitted the company took an “undisciplined” hiring approach following a surge in interest during the initial months of the COVID-19 pandemic.
The public-facing empathy stands in marked contrast to what executives said behind closed doors in the weeks leading up to Tuesday’s news. “We can make it pretty easy by just stripping out low performers,” one executive said in a meeting, according to audio reviewed by Insider.
Leadership made the mistake of building the company during the pandemic as if interest in at-home exercise would only continue to grow even as pandemic-related restrictions eased. But there is some evidence that at least some of them knew it wouldn’t.
Over the last year and change, executives and insiders reportedly sold $496 million in stock, according to Securities and Exchange Commission filings. Among them were Foley and Lynch, the now-departing president, each of whom pulled in north of $100 million from stock sales.
