Peloton Interactive (A)

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.