The chief executive of beleaguered fitness brand Peloton has been named one of America’s richest executives, despite the company shedding nearly 5,000 jobs last year and seeing revenue fall 22 percent.
Former Spotify boss Barry McCarthy was coaxed out of retirement in February 2022 with a competitive compensation package of $168 million a year to take on the tottering empire. Most of his salary comes from stock options that are tied to Peloton’s performance.
The 68-year-old was originally given a base salary of $1 million, but it was increased to $1.25 million in May of this year, according to documents from the Securities and Exchange Commission (SEC).
The staggering sum comes even as McCarthy is struggling to turn the company around after it experienced a dramatic boom and bust during the pandemic.
In total, the compensation package is 2,299 times higher than the median salary for a Peloton employee, which was $73,117 last year, according to the New York Post.
Peloton CEO Barry McCarthy has been named one of the richest CEOs in the US thanks to his $168 million a year compensation package.
McCarthy’s base salary increased from $357,692 in 2022 to $1.25 million in May this year, Dailymail.com can reveal
McCarthy was sworn in to manage Peloton after sales plummeted and the company suffered a series of controversies that caused 2,800 workers to lose their jobs early last year.
The ultra-private Wall Street veteran was previously paid an estimated $7 million a year as Spotify’s chief financial officer, a role he held for more than four years.
He also served as Netflix’s CFO between April 1999 and December 2010, taking the company public while still shipping DVDs to customers’ homes.
But since taking on Peloton, his luck has yet to turn. SEC filings show Peloton posted revenue of $749 million in the three months to March 31, up from $964.3 million in the same period last year.
However, it pared its losses from $751 million in the year-ago quarter to $276 million in 2023. Today, Peloton shares are hovering around $8 a share.
Under McCarthy’s watch, some 784 jobs were cut last August and 570 manufacturing employees were also laid off in July. The company also said it planned to cut some of its 86 retail stores.
In October, he announced another 500 job layoffs, bringing the total number of layoffs in 2022 to around 4,600. At least 2,400 were made under McCarthy’s watch.
Despite this, the Peloton board approved a $250,000 salary increase from $1 million to $1.25 million for McCarthy in May of this year.
And it has maintained a bullish attitude. A leaked memo sent by the CEO – and seen by Business Insider – after the layoffs in August he said: ‘It has never been more important that we succeed in managing our change.’
He added: “Change is constant, and we must embrace it and make it one of our superpowers.”
McCarthy’s focus has been on growing his subscription revenue. For example, last year she increased the price of her All Access subscription plan from $39 to $44 per month.
Peloton was founded in 2012 as a fitness equipment and media company designed to deliver an upscale spin class experience at home.
Peloton experienced a dramatic boom and bust during the pandemic after sales spiked during the lockdown as households looked for ways to stay fit indoors
Peloton shares are now hovering around $8 currently, down from a high of $171 during the pandemic.
It saw a huge increase in sales in 2020 as households looked for ways to stay fit while stuck indoors during lockdown.
At its peak, Peloton shares were worth $171 per share, while its market capitalization hovered around $50 billion.
But the lawsuit tanked and the company experienced a series of setbacks, including a case in which a six-year-old boy died after being dragged by a Peloton treadmill.
The company was also at the center of a plot in the Sex and the City spin-off And Just Like That in which the character Mr. Big died while exercising on his Peloton bike.
By February 2022, it had lost more than 85 percent of its market value from its peak, prompting founder John Foley to step down as CEO while 2,800 jobs were cut.
Investors accused Foley – whose wife was on the company’s payroll as vice president of boutique and apparel – of mismanagement.
McCarthy was subsequently persuaded to come out of retirement and encouraged to take over the company.
His compensation package is primarily made up of shares in the company rather than a direct salary.
He could not cash in his shares until the shares rose to at least $38.77, according to the New York Post.
This is a common tactic by which corporations pay wealthy CEOs. Most of the CEO pay packages ranked in the Wall Street Journal came from restricted stock or options.
This means that its value can fluctuate. And many are only awarded, meaning they become wholly owned by the executive, if certain performance targets are met.
The Wall Street Journal analyzed the pay packages of CEOs who make more than $100 million a year.
McCarthy shares are awarded monthly for four years. Currently, his investments are considered ‘underwater’, as they would cost more to withdraw than they are worth.
But he’s not quite the highest-paid executive in America, having been surpassed by Blackstone CEO Stephen Schwarzman, Alphabet boss Sundar Pichai and Hertz executive Stephen Scherr.
The bosses earn $253 million, $226 million and $182 million respectively. Overall, the median salary for CEOs of S&P 500 companies was $14.5 million last year, up from $14.7 million the year before.