Sleep Number ‘surprised’ by Stadium demand, ‘confident’ in CEO succession plan

Sleep Number (SNBR) Corporation issued the following statement in response to the public letter to shareholders from Stadium Capital Management, LLC: “The Board of Directors (the “Board”) and leadership team of Sleep Number welcome shareholder input and suggestions. To that end, we have engaged extensively with Stadium and last November added two directors recommended by Stadium to the Board. Over the last 12 months, members of our Board and leadership team have spoken with Stadium on more than a dozen occasions, and Stadium participated in four meetings with the Board’s Capital Allocation and Value Enhancement Committee. On October 30, 2024, Sleep Number announced a set of comprehensive and thoughtfully considered changes to the Company’s leadership and governance, including a CEO transition and Board refreshment and declassification. These reforms, which were carefully planned, were consistent with nearly all the suggestions we had received from Stadium over the past year. As we expressed to Stadium at the time, executing an effective CEO succession process and identifying and recruiting the next CEO is the highest priority for the Board. The Board has prepared extensively for this process and is confident in its approach to CEO succession… Given our robust approach, we were surprised when Stadium made the highly unusual demand that it be granted direct participation in the CEO succession process. There is no predicate, in our view, for changing the Board’s best-in-class CEO search process. As noted, our process has been underway for many months and has already identified highly qualified candidates. Resetting the process to accommodate a single shareholder’s desire for direct participation on the Committee may discourage participation by CEO candidates and would likely delay the appointment of a new CEO. That said, the Committee and Sleep Number’s Board remain interested in Stadium’s perspectives and input. To that end, three independent directors met with Stadium to describe our process and listen to Stadium’s views on the qualities it desires in a new CEO. Further, the Committee invited Stadium to present its views and ask questions to the entire Committee and Korn Ferry last week. Stadium abruptly withdrew its participation less than 24 hours before the meeting was scheduled to take place. The Board invited the Company’s top 20 shareholders to share their views on CEO succession. The Board appreciates the contributions of those shareholders that have shared their views already and welcomes all stakeholders to provide their perspectives. Despite Stadium’s refusal to present its views to the Committee and Korn Ferry, Sleep Number’s Board and the Committee remain open to Stadium’s input. The Board reiterates that its highest priority is identifying and recruiting the optimal candidate.”