According to The Wall Street Journal and the Securities and Exchange Commission, Peloton CEO Barry McCarthy made $168 million last year. Most of that is in underwater stock options that vest over four years. Nevertheless, the fact that the board would consider something like this at a small, failed company is obscene. (These CEOs of major companies make 1,000 times more than their employees.)
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It would be hard for Peloton’s grant not to be underwater. The stock is down 90% in the past two years. Peloton makes expensive rowing machines and stationary bikes. It has had quality problems for most of the time McCarthy has been chief executive.

Peloton had revenue of $749 million in the most recently reported quarter. That was down 22% from the year before. It posted a loss of $276 million, compared to $751 million in the year-ago period. McCarthy was bold enough to write, “Last quarter I described our performance as the best in my twelve months with Peloton. Our Q3 performance was even better.” Really.

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Peloton has changed business models several times. First, it was a maker of expensive home exercise equipment. Then, it was a maker of these sold through Amazon and Dick’s Sporting Goods. Then, it sold them at Hilton Hotels. Then, it sold refurbished, lightly used versions of its products, putting it into competition with itself. Then, it recalled more products. McCarthy never could figure out what the company should be.

McCarthy’s latest plan has been what he calls its “relaunched” brand. This includes a free app, a cheap paid app ($12.99 a year) and a more expensive cheap app for $24 a month. People do not even have to buy Peloton hardware to use these.

Maybe Peloton’s board thought McCarthy would save the company. They were wrong. The pay package was a wild gamble that made no sense.

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