Home » Employment News » Peloton offers staff pay and stock boost as the fight to improve sales continues

Peloton offers staff pay and stock boost as the fight to improve sales continues

By Nagasunder in Employment News, posted July 7, 2022

Peleton has offered its staff a bonus and improvements to their stock options as it tries to turn its business around

Barry McCarthy, a former executive at Spotify and Netflix, has been trying to increase morale at the company as part of a turnaround effort for a little over five months.

Early in February, McCarthy took over as CEO from firm founder John Foley as the company's costs spiraled out of hand and demand for its bikes began to decline after reaching a pandemic peak.

At that time of the C-suite shakeup, Peloton announced it was slashing roughly $800 million in annual costs.

2,800 jobs were terminated as a result of roughly 20 percent of corporate roles.

Investors are now watching McCarthy to see whether his changes can increase sales and attract clients as rising inflation puts a strain on budgets and a competitive labor market makes it challenging for businesses to retain staff.

In the midst of a wider market selloff, on Tuesday, July 5, Peloton shares reached an all-time low of $8.73, down more than 70 percent year to date.

Almost precisely one year prior, the stock reached a high of $129.70.

Peloton's chief people officer, Shari Eaton, said in an interview on Wednesday, July 6, that the business is taking these steps so that workers can benefit as it works on its recovery strategy.

She said: “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."

Employees of Peloton were informed in one of the internal letters that qualified team members will have their post-IPO options revalued to Peloton's closing price of $9.13 on Friday, July 1.

For instance, Peloton claimed options given on March 1 had an exercise price of $27.62, making them "underwater," and that until the stock rose above that price, employees would not get any financial gain.

When the price hits $9.13, Peloton employees will be able to exercise their options following the repricing. Such repricing occurrences are not anticipated,

Additionally, for qualifying unvested restricted stock units with more than eight vesting dates remaining, the corporation is expediting the vesting requirement by one year. Employees are able to access the stock unit value earlier as a result.

The change does not apply to hourly employees or C-suite executives. Not every Peloton employee owns or wants stock in the company. Instead of an equity grant.

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Peloton’s hourly workers in September will be entitled to a one-time cash bonus to be paid before the end of February, according to one of the internal Peloton memos.

As of Friday, July 1, hourly employees will be eligible for the incentive as long as they remain with the firm until Sunday, January 23, according to Peloton.

According to Eaton, the bonus amounts will differ depending on the employee and the firm. Previously issued equity awards won't be impacted.

Source: CNBC

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