Peloton CEO John Foley said on Tuesday that the company will lay off about 2,800 employees, but as part of a severance package, they will receive 12 months of free exercise classes.
A Peloton monthly membership usually costs about $40. Laid-off employees will receive that perk along with cash severance payments, extended health care coverage and help finding new jobs.
"We are equipping every team member leaving Peloton with helpful tools to make them as comfortable as possible as they explore their career path post-Peloton," Foley said in a statement.
It was also announced that Foley will be stepping down as CEO, being replaced by former Netflix and Spotify CFO Barry McCarthy, but will stay with the company as an executive chairman of the board.
Peloton's stock rose more than 25% because of the news, growing to $37.27 per share. The company's 52-week low was $22.81 per share, and the 52-week high was $155.22 in January of 2021.
Corporate employees were notified of the layoffs in an email that was sent at 5 a.m. on Tuesday, as about 20% of the corporate workforce was fired.
“There are folks freaking out right now wondering if they are on the [layoff] list,” a Peloton source told The New York Post. “Everything has been so hush-hush.”
Peloton instructors were not included in the layoffs, and the company said the layoffs "will not impact the Member experience."
“The company’s roster of instructors is foundational to the user experience, and Peloton will continue to invest in its content creators for the benefit of its loyal and growing community,” Peloton said in the statement.
Peloton corporate employees have voiced their frustration with the company's treatment of them compared to instructors in the past. Foley hosted an invite-only holiday party for instructors in December, after cancelling the companywide party.
"All of the instructors and their plus-ones were invited to attend but companywide there was a moratorium on hiring and any holiday parties," a Peloton employee said at the time. "Morale is at an all-time low."
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