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Major Shake-Up Alert: Foley Out as Peloton CEO, 2,800 Job Cuts

Major Shake-Up Alert: Foley Out as Peloton CEO, 2,800 Job Cuts

Barry McCarthy, formerly of Spotify and Netflix, will assume the new role at the connected fitness company

In a message on Peloton’s blog, Foley announced Barry McCarthy will assume the role as Peloton’s CEO & President. Foley will transition to an Executive Chair position. The shake-up, writes Foley, has been the culmination of a months-long succession plan that he’d been working on with Peloton’s Board of Directors. Peloton also plans to cut about 2,800 jobs.

In his announcement, Foley called McCarthy an “incredible leader” and acknowledged his successful track record of working to scale Spotify and Netflix. 

Foley assured that the changes at Peloton will not impact instructor rosters, classes, or fitness modalities. 

“I still believe as strongly in this brand and in connected fitness as I did on Day One.  But in order for us to continue to deliver the best possible Member experience and lead us into the future, I need to hand the day-to-day reins of running the business to a seasoned and gifted executive who has helped transform and grow some of the world’s best streaming media companies – first in video, then in music, now in connected fitness,” Foley shared.

In a separate letter, Foley addressed Peloton employees. He wrote that while the decision to move ahead with job cuts was difficult, Peloton will equip employees with “helpful tools” to make the transition as “comfortable as possible” as they start job hunting. 

To help soften the blow, Peloton will offer cash compensation based on job level and tenure, equity through the end of the month, extended healthcare coverage for a period of time, career services, and a complimentary Peloton membership for 12 months. 

The fitness company will also “wind down” its Peloton Output Park plan and realign and reduce its North American warehousing and logistics operations.

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“Our restructured organization will enable us to improve our execution and incrementally remove added stress from our team. A lot has changed at Peloton in a relatively short period of time. I get that. I know at times that’s come with lots of adversity and challenges. However, I deeply believe that getting back to basics, in many ways, will help us execute with precision and innovation, and that will lead to even greater impact in the long term for all of us who are part of the Peloton journey,” wrote Foley. 

Just a couple of weeks ago, Jason Aintabi, Blackwell’s chief investment officer, sent a scathing letter outlining his demand for Foley to be fired. The letter, sent to Peloton’s board of directors, alleges improprieties such as nepotism, a reluctance to work with the Consumer Product Safety Commission, misleading investors, and accused Foley of trying to “salvage his legacy.”

Peloton had also recently reduced its 2022 sales targets for its apparel division, according to internal documents obtained by CNBC. The reports showed “momentum” for the apparel line, overseen by Peloton VP of Apparel Jill Foley, the wife of CEO John Foley, is fading.

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