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Peloton Interactive (A)

Srinivasan, Suraj; Paine, Lynn Sharp; Lane, David

Product #:323005
Supplier:Harvard Business School
Discipline:General Management
Setting:United States, 2022
Details:Case (PDF) • 31 pages • 2023-01-31 (Rev: 2023-05-24)

Subjects:

Asset managementBusiness growthCorporate governanceLeadershipFinance and investingCorporate strategyBusiness managementLeadership and managing peopleLeadership and managing peopleManagement

Industries:

Media, entertainment, and professional sports

Geography:

United StatesNorth America
Your Price:$12.40

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Early in February 2022, the board of Peloton Interactive faced some knotty challenges. Immense pandemic demand for its stationary exercise bicycles and treadmills had prompted the firm to scale up production rapidly. But as gyms reopened and the virulence of the virus ebbed, demand had ebbed too, leaving Peloton with unsold inventory, an unsustainable cost structure, and Nasdaq's worst-performing stock for 2021. Activist shareholders were calling on the board to remove the founder CEO, who was board chair and a controlling shareholder through a dual-class share structure, and sell the company to a strategic investor. Complicating external pressure for change was a dual-class share structure that gave insiders a high degree of control over governance.

Learning Objectives

To consider the practical implications of the debate over shareholder rights To explore the challenges that directors of dual-class share companies face when the company is in distress and the target of a shareholder activist campaign. To help prospective entrepreneurs/founders understand the pros and cons of different governance arrangements Note: the case can be taught from the perspective of the board, the entrepreneur/founder, and/or investors.
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Case Study: Peloton Interactive (A) (English version) | Ivey Publishing