Peloton stock surges 12% as the company replaces co-founder John Foley as CEO and slashes 2,800 jobs - but laid-off workers are offered a free year of fitness classes (worth $468) after finding out they'd been let go when their Slack access was cut off

 Peloton is replacing its CEO and co-founder John Foley and slashing 2,800 jobs in a desperate bid to cut costs and revive the struggling exercise company.

Barry McCarthy, the former chief financial officer of Spotify and Netflix, will take the helm as Peloton's new CEO starting on Wednesday. 

Shares of Peloton surged 12 percent on Tuesday morning as the company issued a flurry of announcements on cost-cutting and reorganization, following an 80 percent dive in the company's valuation over the past year. 

Some Peloton employees reportedly learned that they were among the 20 percent of global staff laid off when they found their access to to the company's Slack channel switched off on Tuesday morning. 

In a memo, Foley said that the axed employees would get 12 months of free fitness classes as part of their severance packages, a value of about $468, according to the New York Post. 

The company expects to spend about $130 million in total cash on severance packages as part of the restructuring, as well as $80 million in non-cash charges.

The layoffs are only targeted at corporate staff and will not affect Peloton fitness instructors, some of whom have become quasi-celebrities with large followings. 

Foley, the company's co-founder who has led the company for nearly a decade, will step down as CEO and will become the executive chair. The terms of his personal severance package were not immediately clear.  

The fitness firm, which boomed during lockdown as people took to home exercising, has seen its share price plunge 80% from its peak during the pandemic

Peloton CEO John Foley (left) is stepping down and will be replaced by Barry McCarthy (right), the former chief financial officer of Spotify and Netflix

Outgoing CEO John Foley co-founded Peloton with his wife Jill Foley (with him above) but some activist investors questioned her appointment as an executive at the company 

Outgoing CEO Foley has drawn the ire of activist investor Blackwells Capital in recent months as the company struggled to maintain the breakneck growth that propelled its valuation to $52 billion in early 2021. Shares have since tumbled nearly 80 percent.

The investment firm called for his removal and even urged the company to sell itself, blaming the stock's underperformance to 'gross mismanagement,' Foley's poor decision making and a lack of credibility.

Jason Aintabi, Blackwells' chief investment officer, accused Foley of 'repeated failures' including hiring his wife as vice president of apparel.  

Blackwells, however, said Tuesday's moves did not address investors' concerns.

'Foley has proven he is not suited to lead Peloton, whether as CEO or Executive Chair, and he should not be hand-picking directors, as he appears to have done (on Tuesday),' said Aintabi. 

Peloton also said on Tuesday that it appointed two new directors, Angel Mendez and Jonathan Mildenhall, to its board. 

Mendez runs a private AI company for supply-chain management, and Mildenhall is the former chief marketing officer for AirBNB. 

Erik Blachford, who has served as a director since 2015, will step down.

Peloton on Tuesday also slashed its forecast full-year revenue expectations after it reported a bigger-than-expected quarterly loss.

'They came out this morning with lower guidance, CEO is leaving but obviously there is still a potential that we could see a deal... that is why [the stock] is not getting as hit,' said Dennis Dick, head of markets structure, proprietary trader at Bright Trading LLC.

Peloton will wind down the development of its planned factory in Ohio, where it was set to invest about $400 million and add more than 2,000 jobs over the next few years.

Overall the company said its restructuring changes would save it about $800 million annually in reduced expenses. 

Jason Aintabi (above), Blackwells' chief investment officer, accused outgoing CEO John Foley of 'repeated failures' including hiring his wife as vice president of apparel

Peloton stock rose 12% on Tuesday on news of the cost-cutting and reorganization