Peloton sweetened incentives for its workers with one-time cash bonuses and changes to its stock compensation plan as it fights to hold onto employees and fix its struggling business, according to internal memos seen by CNBC.
The changes come a little more than five months since Barry McCarthy, a former Spotify and Netflix executive, works to boost the morale at Peloton as part of a turnaround push.McCarthy was named CEO in early February, replacing founder John Foley, as the company’s expenses spiraled out of control and demand for its bikes waned from a pandemic peak.
At that time of the C-suite shakeup, Peloton announced it was slashing roughly $800 million in annual costs. 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.
Peloton shares on Tuesday hit an all-time low of $8.73, 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.
Shari Eaton, Peloton’s chief people officer, said in an interview Wednesday that the company is taking the actions so employees can benefit as the company 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,” Eaton said.
In one of the internal memos, Peloton told employees that eligible team members will have their post-IPO options repriced to Peloton’s closing price on July 1 of $9.13.
As an example, Pelton said options granted granted on March 1 had an exercise price of $27.62, meaning they were “underwater,” and employees were not benefitting financially until the stock passed that threshold. After the repricing, Peloton employees will be able to exercise their options after the price passes $9.13.
Peloton said it does not have plans for any future repricing events.
The company is also accelerating the vesting requirement by one year for eligible unvested restricted stock units that have more than eight vesting dates left in their vesting schedule. That lets employees access the value of the stock units sooner, Eaton said.
The change does not apply to hourly employees or C-suite executives, the company noted.
Not every Peloton employee owns or wants stock in the company. Instead of an equity grant, Peloton’s hourly workers in September will be eligible for a one-time cash bonus to be paid before the end of February, according to one of the internal Peloton memos.
Many of the company’s hourly employees have said they would prefer to receive cash compensation over longer-term equity grants, Eaton said in a phone interview.
Peloton said people who are employed on an hourly basis as of July 1 will be eligible for the one-time bonus as long as they stay with the company through Jan. 23. The amount of the bonus will vary for people across the business, Eaton said. Any equity awards granted in the past will remain unaffected.
Peloton also told its employees Wednesday that it recently finished conducting its first pay equity study with Aon, a third party consultancy.
The company said it identified less than 4% of its workforce, or 206 people, had a base pay disparity relative to peers that could not be explained by factors such as level of work, geography or tenure. Peloton said it took immediate action to eliminate the disparities.
Disgraced Rep. Santos Defiant After Local GOP Officials Call for ‘immediate’ Resignation Over Campaign Lies
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The Nassau County Republican Committee and dozens of local elected GOP officials from New York are making a “major announcement” on Wednesday about freshman Rep. George Santos, R-N.Y. who is under scrutiny by federal and local lawmakers for embellishing key elements of his resume.
The Republican county political committee, which is chaired by Joseph Cairo, said in press release announcing the event that Santos is a “disgraced” member of Congress, but he did not provide details on the upcoming remarks. Santos has been caught embellishing and, at times, outright lying, about his past, including his claims that he worked on Wall Street.
Santos has apologized to anyone “disappointed by resume embellishments,” but he vehemently denies committing any crimes.
Cairo has previously said that Santos has “broken the public trust by making serious misstatements regarding his background, experience and education, among other issues.” As a member of Congress, Santos represents parts of Queens and Nassau County, a region of Long Island in New York. House Republican leadership have been quiet regarding Santos since he’s been sworn into Congress.
“Obviously, he’s addressed some of the concerns that we’ve had. In New York, they’re having a lot of internal conversations too. But at the end of the day, you know, he was seated, nobody objected to him being seated,” House Republican Majority Leader Steve Scalise, R-La., told CNBC on Wednesday after being asked whether Santos will serve his full two-year term.
Santos has said that all he’s guilty of is embellishing his resume and has committed no crimes.
The lies and embellishments he told during the election have also led to scrutiny from prosecutors in the Eastern District of New York who are examining Santos’ finances, including potential irregularities involving financial disclosures and an over $700,000 loan Santos made to his campaign while he was running for Congress during the 2022 midterms, according to NBC News.
The Campaign Legal Center, a nonpartisan campaign finance watchdog, filed an ethics complaint with the Federal Election Commission against Santos on Monday for allegedly violating campaign finance laws. Santos told reporters that he’s done nothing unethical.
Santos’ fundraising efforts during his successful 2022 run was also based, in part, on some of the false claims he’s made about his past. He would suggest to donors that he was Jewish when he was not and falsely told people he worked at Wall Street banks that don’t have any record of his employment. A Santos campaign staffer impersonated as Kevin McCarthy’s chief of staff in order to raise money for the campaign, CNBC and The Washington Times reported.
Bed Bath & Beyond Jumps 50% to Lead ‘nonsense’ Rally in Meme Stocks; AMC Gains 16%
A group of highly speculative stocks rallied double digits on Wednesday as retail investors pushed meme names up again in the new year following a dismal 2022.
Meme stocks rallying one more time
The rally in Bed Bath & Beyond was initially triggered by news that it would lay off more employees in an attempt to reduce costs and stay in business.
The home goods retailer told employees that it is eliminating the chief transformation officer role, which is held by Anu Gupta, on the same day it reported disappointing fiscal third-quarter results. Bed Bath & Beyond is approaching a potential bankruptcy, as its sales decline and losses grow.
“We don’t love the strength in nonsense stocks like AMC, CVNA, GME, BBBY, PRTY, etc.,” said Adam Crisafulli, founder of Vital Knowledge. “This just means people are blindly chasing.”
During early 2021, a band of retail traders joined forces on social media to bid up a slew of heavily shorted stocks, creating massive short squeezes that inflicted high pain on short sellers. These meme stocks experienced big pullbacks last year when risk sentiment shifted amid aggressive rate hikes. GameStop fell 50% in 2022, while AMC tumbled 75% and Bed Bath & Beyond plunged 82%.
While the short interest in these names has come down from its peak after the jaw-dropping episode, it still remains much higher than average.
About 48% of Bed Bath & Beyond’s float shares are sold short, compared with an average of 5% short interest in a typical U.S. stock, according to S3 Partners. For GameStop, the short interest stands at 21%, down from more than 100% at the height of the meme stock mania in 2021, according to FactSet. AMC has also 21% of shares sold short.
A short squeeze happens when a stock jumps sharply higher, it forces short sellers to buy back shares in order to limit their losses. The short covering tends to fuel the stock’s rally further.
Crypto Exchange Binance Plans 15%-30% Hiring Spree in 2023 Even As Rivals Slash Jobs
Binance is planning a hiring spree in 2023, CEO Changpeng Zhao said Wednesday, taking a somewhat contrarian view as crypto firms lay off huge swathes of staff amid continued pressure on coin prices.
Zhao said Binance, the world’s largest cryptocurrency exchange, said the company increased head count in 2022 from 3,000 people to “almost” 8,000.
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In 2023, Binance plans to increase the number of staff by between 15% and 30%, Zhao said at the Crypto Finance Conference in St. Moritz, Switzerland.
In November, Kraken announced it was laying off 30% of staff, and this year Huobi and Coinbasesecond round of job cuts for Coinbase in the last year.
Zhao said Binance needs to get the company “well-organized” ahead of the next crypto bull run and admitted the exchange is “not super efficient.”
“We will continue to build and hopefully we will ramp up again before the next bull market,” Zhao said.
The industry was plagued last year by collapses of major projects, liquidity issues, bankruptcies and the high-profile failure of crypto exchange FTX. Sam Bankman-Fried who founded FTX has been charged with eight criminal counts by U.S. prosecutors, including fraud. He has pleaded not guilty.
Binance had a big role to play in FTX’s collapse. In November, Binance offered to buy FTX’s non-U.S. businesses which were facing liquidity issues but then later backed out of the deal. Zhao said publicly his company was selling its holdings in FTX’s native token, FTT, which exacerbated the collapse of that digital coin, adding to FTX’s downward spiral.
Zhao has said he “did not master plan” the collapse of FTX.
In response to a CNBC question on the sidelines of the CFC St Moritz conference, the Binance CEO said the “actual damage is not that high” on the crypto industry from the FTX collapse. He said FTX “is not a big player, they just make a lot of noise.”
“There’s definitely damage [but] the industry will be fine,” Zhao said.
Original Post: cnbc.com
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