8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  February 21, 2008

 

SELECT COMFORT CORPORATION

(Exact name of registrant as specified in its charter)

Minnesota

(State or other jurisdiction of incorporation or organization)

0-25121	41-1597886
(Commission File No.)	(IRS Employer Identification No.)

9800 59th Avenue North, Minneapolis, Minnesota 55442

(Address of principal executive offices)           (Zip Code)

(763) 551-7000

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01.  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

Effective as of February 21, 2008, the Board of Directors of Select Comfort Corporation has separated the positions of Chairman of the Board of Directors and Chief Executive Officer, and has appointed Ervin R. Shames as the non-executive Chairman of the Board.  The Board also approved the payment of an annual retainer of $100,000 to the non-executive Chairman of the Board in addition to the previously established annual retainer for independent directors of $25,000.  Further information regarding the Board’s action is set forth in the press release attached as Exhibit 99.1 to this Current Report on Form 8-K.

Effective as of February 21, 2008, the Board of Directors accepted Bill McLaughlin’s proposal to forego his annual base salary for the balance of 2008 until the company has achieved growth in same store sales of at least 1% for not less than four consecutive weeks.  This proposal is set forth in a letter agreement attached as Exhibit 10.1 to this Current Report on Form 8-K.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

10.1	Letter Agreement between William R. McLaughlin and Select Comfort Corporation dated as of February 21, 2008.
99.1	Press Release, dated February 27, 2008.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SELECT COMFORT CORPORATION
	(Registrant)
Dated:  February 27, 2008	By:
	Name:  Mark A. Kimball
	Title:    Senior Vice President

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EXHIBIT INDEX

Exhibit No.                                Description                                                                                                

10.1 Letter Agreement between William R. McLaughlin and Select Comfort Corporation dated as of February 21, 2008.

99.1 Press Release, dated February 27, 2008.

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EX-10.1

February 21, 2008                                                           EXHIBIT 10.1

Mr. Michael A. Peel
Chairman, Compensation Committee
Board of Directors of Select Comfort Corporation

Dear Mike:

Last December, when it became clear that we needed to restructure our organization, I began considering ways to lead by example, demonstrating that sacrifices would have to be made to protect our ability to invest in growth.  In order to demonstrate my belief in and commitment to Select Comfort’s mission and our Annual Operating Commitment for 2008, I propose to forego my annual base salary for the balance of 2008 until such time as we begin to show consistent growth in sales.

Specifically, my proposal is as follows:

(1)    My base salary would be $0 commencing immediately and would continue at that rate until such time as the company achieves year-over-year growth in same store sales of at least 1% for not less than four consecutive weeks.  If and when this objective is achieved, my base salary would thereafter be paid at the normal rate of $660,000 per year.

(2)    Any annual cash incentive compensation that may become payable to me for achievement of 2008 individual or company-wide performance targets would be calculated on the basis of the full normal annual base salary set forth above (regardless of the amount of salary foregone).

(3)    To the extent that I may become eligible for severance compensation under the terms of the Select Comfort Corporation Executive Severance Pay Plan, the amount payable thereunder would be calculated on the basis of the full normal annual base salary set forth above (regardless of the amount of salary foregone).

(4)    To the extent that I or my beneficiaries become eligible for payments under the company’s standard Life and AD&D Insurance or Long Term Disability benefit plans, the amount payable thereunder would be calculated on the basis of the full normal annual base salary set forth above (regardless of the amount of salary foregone).

(5)    I will pay the employee portion of company benefits that I have elected and fund my health savings account out of my own pocket until my base salary again becomes payable pursuant to paragraph (1) above.

This proposal relates solely to the base salary that would otherwise be paid to me during 2008 and is not applicable to any period thereafter.  The company would agree to promptly amend any benefit plans or agreements and obtain riders to any insurance policies as necessary to implement this proposal.

Please review this proposal with the Compensation Committee and, if acceptable, please so indicate by your signature below.  With your agreement, I will share this discussion with the company.

Sincerely,

/s/ William R. McLaughlin

William R. McLaughlin

The Compensation Committee of the Board of Directors of Select Comfort Corporation has accepted the proposal set forth above effective as of February 21, 2008.

             /s/ Michael A. Peel

             Michael A. Peel, Chairman of the
                &# 160;     Compensation Committee

EX-99.1

FOR IMMEDIATE RELEASE       EXHIBIT 99.1

 Media Contact:     Investor Contact:

 Gabby Nelson         Jim Stoffel

 (763) 551-7460      (763) 551-7498

 gabby.nelson@selectcomfort.com       investorrelations@selectcomfort.com

SELECT COMFORT ANNOUNCES SEPARATION OF CHAIRMAN AND CEO ROLES

Ervin Shames appointed non-executive chairman;

Bill McLaughlin to continue as president and chief executive officer

MINNEAPOLIS– (Feb. 27, 2008) – Select Comfort Corporation (NASDAQ: SCSS), the nation’s leading bed retailer and creator of the SLEEP NUMBER^® bed, today announced that the company has separated the positions of chairman of the board and chief executive officer.  The company’s board of directors has appointed Ervin Shames as chairman.  Bill McLaughlin, who has held both positions of chairman and chief executive officer since 2004, will continue in his role as president and chief executive officer of the company as well as board director.

            “Today’s decision is the result of the board’s ongoing review of best practices with regard to corporate governance,” said Shames.  “On behalf of the board, I want to thank Bill for his four years of leadership in the role of chairman. I look forward to continuing to work with him and his team in my new capacity as chairman as we continue to position Select Comfort for long-term success.”

            Shames has served on Select Comfort’s board since 1996. From 1996 to 1999, he held the position of chairman and has been the company’s lead director since 2004.

            “The board and I agree that separating the roles of chairman and chief executive officer is consistent with leading corporate governance principles,” said McLaughlin. “With this new structure, I will now be able to devote all my energy to the leadership and management of this company, as well as entirely focus on

-more-

driving our growth and profitability initiatives. I look forward to continuing to work with our board as we further build on Select Comfort’s status as the industry leader in innovative sleep products.”

            Separately, the company announced that McLaughlin has voluntarily reduced his 2008 compensation by foregoing his annual base salary until certain performance measures are met. McLaughlin added, “These are challenging times for the company – and the overall retail sector. It’s clear that everyone must make sacrifices. Therefore, I am pleased that the board has accepted my proposal to forego a salary until such time as the company achieves specific goals related to same-store growth. I truly believe in the long-term value of Select Comfort, and my commitment to leading the company back to solid growth remains steadfast.”

About Select Comfort Corporation

            Founded more than 20 years ago, Select Comfort Corporation is the nation’s leading bed retailer⁽¹⁾. Based in Minneapolis, the company designs, manufactures, markets and supports a line of adjustable-firmness mattresses featuring air-chamber technology, branded the Sleep Number^® bed, as well as foundations and sleep accessories. SELECT COMFORT^® products are sold through its more than 470 company-owned stores located across the United States; select bedding retailers; direct marketing operations; and online at www.sleepnumber.com.

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⁽¹⁾Top 25 Bedding Retailers, Furniture/Today, August 2007.