Sleep Number investor withdraws board nominees, averting potential power struggle

Minneapolis-based Sleep Number and its largest shareholder, Stadium Capital Management, have agreed that the investor will withdraw its nominees to the board of directors, heading off a potential power struggle ahead of the company’s upcoming annual meeting.

Connecticut-based Stadium Capital Management, a longtime shareholder, owns nearly 12% of Sleep Number’s outstanding shares.

Stadium Capital had been pushing for management and board changes at the smart-bed company, having grown dissatisfied with its governance and performance.

In December, the investor nominated four potential directors to the Sleep Number board, including former interim CEO and board chair Pat Hopf.

Stadium Capital wanted new directors to help search for a fresh CEO at Sleep Number after longtime CEO Shelly Ibach announced her retirement, effective April 7.

But on March 5, Sleep Number announced it had hired Linda Findley, former CEO of meal kit delivery company Blue Apron, to succeed Ibach as president and CEO, and named independent board member Phillip Eyler as the chairman of the board.

Sleep Number also announced Thursday that current board member Barbara Matas would step down at the annual meeting, and board members Brenda Lauderback and Stephen Gulis Jr. would accelerate their plans to retire.

With the appointment of Findley and Eyler and significant turnover of the Sleep Number board, Stadium Capital agreed to withdraw its board nominees.

“Over the past few weeks, we have had the opportunity to get to know Linda and Phil through several extensive discussions about the business,“ Stadium Capital Managing Partner Alexander Seaver said in a news release. ”There is significant work to be done to reposition and strengthen Sleep Number, and we believe this new leadership team is focused on the right priorities and can accelerate Sleep Number’s transformation.”

The changes at Sleep Number come amid a downturn in the mattress industry. Peter Keith, an analyst with Piper Sandler, noted recently that February saw the worst month-over-month decline in mattress sales nationally since March 2022.

“I appreciate the time Stadium Capital has spent with Linda Findley, our incoming president and chief executive officer, and me,” Eyler said in the release. “We are pleased to have reached this agreement so that Linda and the Board can focus their full attention on strengthening Sleep Number’s performance during this challenging market environment.”