\nStadium Capital Management, LLC (together with certain of its affiliates, \u201cStadium Capital\u201d or \u201cwe\u201d) is the largest shareholder of Sleep Number Corporation (NASDAQ: SNBR) (\u201cSleep Number\u201d or the \u201cCompany\u201d), owning approximately 11.7% of the Company\u2019s outstanding shares. Today, Stadium Capital issued the below letter to shareholders regarding its nomination of four highly qualified, independent candidates for election to the Company\u2019s Board of Directors (the \u201cBoard\u201d) at the 2025 Annual Meeting of Shareholders (the \u201cAnnual Meeting\u201d).<\/p>\n
\n***<\/p>\n
\nDecember 2, 2024<\/p>\n
\nFellow Shareholders:<\/p>\n
\nStadium Capital is Sleep Number\u2019s largest shareholder, holding approximately 11.7% of the Company\u2019s outstanding shares. Last week, we expressed our grave concerns with Sleep Number\u2019s financial underperformance, corporate governance and flawed CEO search process and made specific proposals to solve these pressing issues. Based on the conversations we had with many of you both before and after the publication of our letter, we are confident the majority of you share our frustrations. That is why it was so surprising to see the Board respond by vehemently defending its actions, instead of pursuing the path of private collaboration with its largest shareholder (as we have done with Sleep Number previously).<\/p>\n
\nToday we are writing to inform you that we have nominated four exceptionally qualified directors with capital allocation, product innovation, business turnaround and unrivaled industry experience for election to Sleep Number\u2019s Board at the upcoming Annual Meeting. We did not come to this decision lightly, as we strongly prefer private engagement with the management teams and boards of our portfolio companies on ideas for value creation and improved governance. In this case, our hand has been forced because Sleep Number\u2019s Board is unwilling to work with its largest shareholder to add new directors to the boardroom to ensure an independent CEO search, and most concerningly, seems intent on continuing on its current perilous path. This was made particularly evident by the Board\u2019s decision to reject our November 12th<\/sup> and November 25th<\/sup> proposals (seemingly without entertaining them whatsoever) that would have ensured a truly independent CEO search process. Concerningly, the Board\u2019s obstinance is occurring in the face of investors embracing the prospect of change, with Sleep Number\u2019s shares appreciating 20% since we highlighted the path to enhanced value in our letter last week.<\/p>\n \nMost troubling in the Board\u2019s response, which failed to address any of our concerns, was its characterization of our request as \u201cunusual\u201d for direct participation in the CEO search \u2013 the most consequential decision facing the Company over the next decade. Under standard circumstances, we believe a willing and experienced owner who holds more stock than the entire Board by many multiples should have a seat at the table for such a momentous decision. In these specific circumstances, where the long-tenured directors directly involved in this critical decision have such abysmal track records of value destruction, it is especially vital. A thoughtful and open-minded Board should welcome the input of a diligent, patient and large owner who brings a valuable and differentiated perspective to this enormously consequential decision.<\/p>\n \nUnfortunately for this Board, the facts are starkly obvious: Sleep Number\u2019s long-tenured directors (Shelly Ibach, Stephen Gulis, Brenda Lauderback, Michael Harrison and Barbara Matas, in particular) have failed all of us as fiduciaries. They have not only harmed but are now also insulting key constituents \u2013 the shareholders they are supposed to represent and the employees who are the heart and soul of the organization they govern \u2013 by wasting our money to protect their lucrative roles as directors for as long as possible. Their indefensible long-term record and recent self-serving actions make it overwhelmingly clear that they cannot be trusted with the important decisions that lie ahead.<\/p>\n \nTo fix this broken situation, we have nominated four highly qualified individuals who have the necessary expertise and independence to address Sleep Number\u2019s most pressing issues. Our nominees are:<\/p>\n Patrick A. Hopf<\/b><\/p>\n Mr. Hopf is the former Interim CEO and Chairman of Sleep Number and a successful private investor in consumer-oriented companies. He will bring a positive track record of value creation as well as strategic change and board development experience.<\/i><\/p>\n Jeffrey T. Jackson<\/b><\/p>\n Mr. Jackson is an experienced CEO and public company director with an outstanding record of value creation and extensive experience managing cyclical companies across market cycles, which will be particularly relevant for Sleep Number.<\/i><\/p>\n Jessica M. Prager<\/b><\/p>\n Ms. Pragerhas extensive experience building and scaling high-performing, culturally relevant brands. Her expertise in leveraging consumer data, driving product innovation and bridging digital and physical touchpoints will be particularly relevant in helping Sleep Number achieve its growth potential.<\/i><\/p>\n Kevin Baker<\/b><\/p>\n Mr. Baker is a Managing Partner at Stadium Capital, Sleep Number\u2019s largest owner, and will bring a much-needed ownership perspective to Sleep Number\u2019s boardroom.<\/i><\/p>\n \nOur nominees\u2019 highly effective and complementary skillsets will ensure that a refreshed, unbiased Board works constructively to identify the biggest causes of Sleep Number\u2019s underperformance, uses those insights to identify the best CEO, and empowers and incentivizes Sleep Number\u2019s next CEO to reignite the Company\u2019s growth, profitability and market value. Most importantly, this refreshed Board will put Sleep Number\u2019s owners\u2019 interests above its own.<\/p>\n \nWe continue to believe that it is in the best interest of all shareholders for Sleep Number to collaborate with us by pursuing the path we articulated in our November 25th<\/sup> letter: work with us to refresh the Board, appoint an Executive Chairman and ensure a wholly independent CEO search process to identify the Company\u2019s next leader. That is certainly the overwhelming message we have heard from fellow shareholders, and to be clear, that is our preferred outcome. However, if the Board continues down a self-serving path and unnecessarily squanders resources to defend those who are most responsible for the current calamity, then we will look forward to letting the owners decide the future of our Company at the Annual Meeting in spring 2025.<\/p>\n \nSincerely,<\/p>\n \nThe Stadium Capital Investment Team<\/p>\n \n***<\/p>\n About Stadium Capital<\/b><\/p>\n \nStadium Capital Management, LLC seeks to apply a patient, private equity approach to public market investing, anchored by deep fundamental research. Since our strategy inception in 1997, we have invested in a concentrated portfolio of smaller-cap, public companies across North America and Europe with a long-term investment horizon and a focus on high-quality businesses with durable free cash flow. We have almost three decades of deep investment experience through multiple full market cycles, working closely and collaboratively with our portfolio companies. For more information, visit www.StadiumCapital.com<\/a>.<\/p>\n CERTAIN INFORMATION CONCERNING THE PARTICIPANTS<\/b><\/p>\n \nStadium Capital Partners, L.P. (\u201cSCP<\/span>\u201d), together with the other participants named herein (collectively, \u201cStadium Capital<\/span>\u201d), intend to file a preliminary proxy statement and accompanying WHITE<\/b> universal proxy card with the Securities and Exchange Commission (\u201cSEC<\/span>\u201d) to be used to solicit votes for the election of Stadium Capital\u2019s slate of highly-qualified director nominees at the 2025 annual meeting of shareholders of Sleep Number Corporation, a Minnesota corporation (the \u201cCompany<\/span>\u201d).<\/p>\n \nSTADIUM CAPITAL STRONGLY ADVISES ALL SHAREHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS, INCLUDING A PROXY CARD, AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP:\/\/WWW.SEC.GOV<\/a>. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’ PROXY SOLICITOR.<\/p>\n \nThe participants in the anticipated proxy solicitation are expected to be SCP, Stadium Special Opportunity I, L.P. (\u201cSSO<\/span>\u201d), Stadium Capital Management GP, L.P. (\u201cSCMGP<\/span>\u201d), Stadium Capital Management, LLC (\u201cSCM<\/span>\u201d), Alexander M. Seaver, Kevin Baker, Patrick A. Hopf, Jeffrey T. Jackson and Jessica M. Prager.<\/p>\n \nAs of the date hereof, SCP directly beneficially owns 2,215,000 shares of Common Stock, par value $0.01 per share (the \u201cCommon Stock<\/span>\u201d), of the Company. As of the date hereof, SSO directly beneficially owns 401,459 shares of Common Stock. SCMGP, as the general partner of SCP and SSO, may be deemed to beneficially own the 2,616,459 shares of Common Stock owned in the aggregate by SCP and SSO. SCM, as the investment advisor to SCP and SSO and as the general partner of SCMGP, may be deemed to beneficially own the 2,616,459 shares of Common Stock owned in the aggregate by SCP and SSO. Mr. Seaver, as the manager of SCM, may be deemed to beneficially own the 2,616,459 shares of Common Stock owned in the aggregate by SCP and SSO. As of the date hereof, Mr. Hopf directly beneficially owns 51,500 shares of Common Stock, which includes 1,500 shares of Common Stock underlying certain call options that are currently exercisable. As of the date hereof, Messrs. Baker and Jackson and Ms. Prager do not beneficially own any shares of Common Stock.<\/p>\n View source version on businesswire.com: <\/span>https:\/\/www.businesswire.com\/news\/home\/20241202287994\/en\/<\/a><\/span><\/p>\n \nLongacre Square Partners KEYWORDS:<\/b> Connecticut United States North America<\/p>\n INDUSTRY KEYWORDS:<\/b> Home Goods Other Retail Retail Professional Services Other Professional Services<\/p>\n MEDIA:<\/b><\/p>\n Stadium Capital Management Nominates Four Exceptionally Qualified Director Candidates to Sleep Number\u2019s Board of Directors Slate Includes Sleep Number\u2019s Former Chairman and Interim CEO and Director Candidates with Significant Shareholdings, Capital Allocation and Product Innovation Expertise and Track Records Overseeing Value-Enhancing Turnarounds Contends that its Director Candidates \u2013 Patrick A. Hopf, Jeffrey T. Jackson, Jessica M. Prager and Kevin Baker \u2013 Are Best Positioned to Identify Sleep Number\u2019s Next CEO and Put the Company Back on the Path to Growth and Profitability NEW CANAAN, Conn.–(BUSINESS WIRE)– Stadium Capital Management, LLC (together with certain of its affiliates, \u201cStadium Capital\u201d or \u201cwe\u201d) is the largest shareholder of Sleep Number Corporation (NASDAQ: SNBR) (\u201cSleep Number\u201d or the \u201cCompany\u201d), owning approximately 11.7% of the … <\/p>\n\n
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Charlotte Kiaie \/ Bela Kirpalani, 646-386-0091
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ckiaie@longacresquare.com<\/a> \/ bkirpalani@longacresquare.com<\/a><\/p>\n\n","protected":false},"excerpt":{"rendered":"