Stocks in Australian-founded fitness franchise F45 have gone into meltdown, with the shares plunging more than 60 per cent.
It has prompted the company’s chief executive and founder Adam Gilchrist to step down — but not before getting a $10.1 million handshake.
Along with Mr. Gilchrist’s departure, the global giant — which is financially backed by Hollywood star Mark Wahlberg — will also say goodbye to 110 employees as it slashes operating costs.
F45 ranks as one of the world’s fastest growing franchises with more than 1750 gyms in 45 countries, amassing a cult following for its 45-minute group training workouts that combine resistance, metabolic and cardio movements.
Rapid growth since its launch in 2012 in Sydney caught the attention of Wahlberg, who became its second-largest shareholder after Mr. Gilchrist and attributed his toned physique to the regime.
The company’s move to the New York stock exchange made headlines in July 2021, making Mr. Gilchrist $500 million overnight.
Wahlberg enjoyed a similar windfall and sold 1.1 million shares in March and April 2022 for $17.45 million.
But there are reports F45 had less than $20 million in cash when it last filed its accounts, meaning Mr. Gilchrist’s payout uses up half of its funds.
The New York Stock Exchange recorded the company’s shares opening at $US3.51 ($5.02) and closing at $US1.35 ($1.93) on Wednesday.
Even before the meltdown, F45 stocks had fallen sharply since it went public with an initial offer of $22.89 a share.
Wahlberg is not the only high-profile celebrity to be associated with F45.
The fitness franchise has also been endorsed by David Beckham, Mario Lopez, J. Balvin, Steve Aoki, Magic Johnson, Greg Norman and Cindy Crawford.
In a statement, Mr Gilchrest said he was “forever grateful” to the franchise and thanked staff, investors and members for their support.
“To the staff that have worked tirelessly since our inception, you have been incredible in your efforts, and I thank you for all of your support,” he said.
“To the investors who have joined us along our journey, I thank you for your commitment to F45.
“Lastly, I am forever grateful to our franchisees who deliver the world’s best workout each day to F45 members around the world.”
Mr. Gilchrist’s $10.1 million handshake includes 12 months’ rent on his Florida mansion and 18 months of health insurance for his family.
He also boasts a $14 million home in Sydney and an $18.8 million mansion in Byron Bay.
Mr Gilchrist will remain on the board of F45 as a director, with independent director Ben Coates taking the reins until a new boss is appointed.
Chief Financial Officer Chris Payne said the company was “taking the necessary steps to right-size our business in light of shifting macroeconomic and business conditions”.
He said it was an “incredibly difficult decision” to cut staff but it was an important step in allowing the company to obtain long-term, sustainable success.
“Despite the headwinds, F45’s business fundamentals remain strong, and we are as excited as ever to continue bringing the world’s best workout to a growing base of members every day,” Mr Payne said.