October 4, 2022

In this photo illustration, the Peloton Interactive logo is shown on the smartphone screen.

Rafael Henrique | Light Rocket | Getty Images

Peloton has improved incentives for its workers with one-time cash bonuses and changes to its stock compensation plan as it struggles to retain employees and fix its struggling business, according to internal memos seen by CNBC.

The changes come a little more than five months after Barry McCarthy, the former CEO of Spotify and Netflix, lifted morale at Peloton as part of a transformation push. McCarthy was named CEO in early February, replacing company founder John Foley, as company expenses spiraled out of control and demand for its bikes waned from the height of the pandemic.

At the time of the C-suite change, Peloton announced that it would cut approximately $800 million in annual costs. This included eliminating 2,800 jobs, or about 20% of corporate positions. Now, investors are waiting to see if McCarthy can increase sales and win customers because high inflation squeezes budgets and a competitive job market makes it difficult for companies to retain employees.

Peloton shares on Tuesday hit an all-time low of $8.73, down more than 70% since the start of the year, amid a broader market sell-off. The stock traded as high as $129.70 about 1 year ago.

Shari Eaton, Peloton’s chief human resources officer, said in an interview Wednesday that the company is taking measures so employees can benefit while the company works on transformation efforts.

“The exceptional circumstances we find ourselves in now really give us that opportunity to stop and look at what we can do to ensure future success,” Eaton said.

open property rights

In an internal memo, Peloton told employees that eligible team members will re-price their post-IPO options to Peloton’s July 1 closing price of $9.13.

For example, Pelton said the options granted on March 1 had an exercise price of $27.62, meaning they were “underwater,” and the employees were not benefiting financially until the stock crossed that limit. After the requote, Peloton employees will be able to exercise their options after the price exceeds $9.13.

Peloton said it has no plans for any future repricing events.

The company is also accelerating the one-year vesting requirement for unvested eligible restricted stock units that have more than eight remaining vesting dates on the vesting schedule. This allows employees to access the value of inventory units sooner, Eaton said.

The company noted that the change does not apply to hourly employees or C Suite executives.

cash rewards

Not every Peloton employee owns or wants stock in the company. In lieu of the stock bonus, hourly peloton workers in September will be eligible for a one-time cash bonus paid before the end of February, according to an internal Peloton memo.

Eaton said in a phone interview that many of the company’s hourly employees said they would rather receive cash compensation than long-term stock awards.

Peloton said that people who work on an hourly basis starting July 1 will be eligible for the one-time bonus as long as they remain with the company through January 23. The amount of the reward will vary for people across the company, Eaton said. Any stock awards granted in the past will not be affected.

Peloton also told its employees on Wednesday that it had recently completed its first pay equity study with third-party consultancy Aon.

The company said it has determined that less than 4% of its workforce, or 206 people, have a base pay disparity compared to their peers that cannot be explained by factors such as job level, geography or tenure. Peloton said it has taken immediate action to eliminate the disparities.

Source link

Leave a Reply

Your email address will not be published.