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):  October 24, 2024 

SLEEP NUMBER CORPORATION

(Exact name of registrant as specified in its charter)

Minnesota

(State or other jurisdiction of incorporation)

000-25121	41-1597886
(Commission File Number)	(IRS Employer Identification No.)

1001 Third Avenue South, Minneapolis, MN  55404

(Address of principal executive offices) (Zip Code) 

(763) 551-7000

(Registrant’s telephone number, including area code)

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SNBR	Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). 

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

ITEM 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Retirement of Shelly R. Ibach, Chair, President and Chief Executive Officer

On October 24, 2024, Shelly R. Ibach, Chair, President and Chief Executive Officer of Sleep Number Corporation (the “Company”), informed the Company’s Board of Directors that she will retire from the Company and Board no later than the 2025 Annual Meeting of Shareholders (the “2025 Annual Meeting”). The Board of Directors has engaged an independent executive search firm to help identify Ibach’s successor. To support an effective transition, Ibach will continue to serve as Board Chair through the conclusion of the 2025 Annual Meeting and has agreed to serve as a strategic advisor to the new CEO and Board of Directors through the end of 2025 pursuant to a Transition and Advisory Agreement.

Transition and Advisory Agreement

On October 24, 2024, the Company and Ibach entered into a Transition and Advisory Agreement (the “Transition and Advisory Agreement”) wherein Ibach will retire as Chair, President, and CEO no later than the 2025 Annual Meeting, continue to serve as Board Chair through the 2025 Annual Meeting, and thereafter serve as a strategic advisor to the new CEO and Board of Directors through the end of 2025, as further detailed in the Transition and Advisory Agreement. If the new CEO is appointed prior to the 2025 Annual Meeting, Ibach will continue her employment with the Company in a non-executive role as senior advisor of the Company through the 2025 Annual Meeting and no later than May 31, 2025. Thereafter, Ibach will provide consulting and advisory services to the Company until December 31, 2025.

Ibach will continue to receive her annual base salary as in effect immediately prior to the date of the Transition and Advisory Agreement, will be eligible to receive a prorated bonus under the Company’s 2025 annual incentive plan (subject to achievement of the applicable performance objectives), will not be awarded any new equity awards, will remain eligible for substantially similar employee benefits and perquisites that Ibach received immediately prior to the date of the Transition and Advisory Agreement as further detailed in the agreement, and will be reimbursed for up to $68,000 in legal fees incurred related to review of the Transition and Advisory Agreement.

Ibach’s outstanding performance adjusted restricted stock unit (“PSU”) awards issued under the Company’s 2020 Equity Incentive Plan, as amended, (“2020 Equity Plan”) will be treated in accordance with Section 2.2(c)(iii) of the PSU award agreements, which provides for the treatment of such PSUs in the event of Ibach’s retirement at or beyond age 60 with five or more years of service with the Company; provided, however, the Company waived the requirement, as applicable, that Ibach provides written notice of her intention to retire one year before her actual retirement date. Ibach’s outstanding restricted stock unit (“RSU”) awards issued under the 2020 Equity Plan will become fully vested upon her separation of employment from the Company and will be treated in accordance with the RSU award agreements provided that the Company waived the requirement that Ibach remain in continuous employment or service with the Company during the regular vesting period set forth in the RSU award agreements. Ibach’s outstanding non-statutory stock options issued under either the 2020 Equity Plan or the Company’s prior Amended and Restated 2010 Omnibus Incentive Plan, as amended, (“2010 Equity Plan”) will be treated in accordance with Section 3.2(c) and Paragraph A, respectively, of the applicable Non-Statutory Stock Option Award Agreements, which provide for the treatment and exercise deadlines of such stock options in the event of Ibach’s retirement at or beyond age 60 with five or more years of service with the Company; provided, however, the Company waived the requirement, as applicable, that Ibach provides written notice of her intention to retire one year before her actual retirement date. Ibach remains subject to the other terms of her outstanding equity award agreements, including certain restrictive covenants.

The Transition and Advisory Agreement also provides that following her employment with the Company, Ibach will serve as a non-employee strategic consultant to the Company and provide advisory consulting services as reasonably requested by the Company’s CEO or the Board until December 31, 2025 (such period, the “Consulting Period”). As full payment for Ibach’s services during the Consulting Period, the Company agrees to pay Ibach a cash consulting fee of $150,000 per month (pro-rated for any partial months of service). The Transition and Advisory Agreement also contains customary provisions such as an assignment of intellectual property inventions, confidentiality, clawback and a release of claims.

Ibach’s decision to retire was not due to any disagreement with the Company on any matter related to the Company’s operations, policies or practices.

A copy of the Transition and Advisory Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K. The summary of the Transition and Advisory Agreement is qualified in its entirety by the Transition and Advisory Agreement.

Retirement of Steve Gulis and Brenda Lauderback and Conclusion of Jean-Michel Valette’s Director Emeritus Role.

On October 24, 2024, each of Steve Gulis and Brenda Lauderback informed the Company’s Board of Directors that they will retire from the Board by the 2026 Annual Meeting of Shareholders (“2026 Annual Meeting”), prior to the expiration of their terms at the 2027 Annual Meeting of Shareholders. Jean-Michel Valette’s non-voting, advisory Director Emeritus role was concluded as of September 30, 2024, three months prior to its planned expiration on December 31, 2024. Neither Gulis nor Lauderback’s decisions to retire, nor the early conclusion of Valette’s Director Emeritus role, were due to any disagreement with the Company on any matter related to the Company’s operations, policies or practices.

ITEM 7.01. REGULATION FD DISCLOSURE.

In connection with Ibach’s retirement, other Board changes and corporate governance advancements, the Company issued a press release including a Letter to Shareholders, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 7.01.

In addition to Ibach’s retirement, the press release and Letter to Shareholders disclosed that Ibach will not stand for reelection to the Board when her term expires in 2025 and that the Board has unanimously determined its intent to appoint Michael J. Harrison as independent Chair following the 2025 Annual Meeting. The Company also disclosed that each of Gulis and Lauderback plan to retire from the Board at or before the 2026 Annual Meeting, at which time, the Board intends to reduce its size. The Board has identified incumbent directors Steve Macadam and Phil Eyler as successor chairs of the Audit Committee and the Management Development and Compensation Committee, respectively. The Company also disclosed plans to broaden the mandate of its Capital Allocation and Value Enhancement Committee to include oversight of the Company’s capital structure while continuing its work on capital allocation. The Company also disclosed plans to seek shareholder approval at the 2025 Annual Meeting to amend the Company’s governing documents, including commencing a process to declassify the Board and to adopt a majority voting standard for approvals of mergers and future amendments to the Company’s Articles of Incorporation.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d)    Exhibits.

Exhibit No.	Description of Exhibit
10.1	Transition and Advisory Agreement, dated October 24, 2024, between Sleep Number Corporation and Shelly R. Ibach
99.1	Press Release dated October 30, 2024
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

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

	SLEEP NUMBER CORPORATION
	(Registrant)
Dated:  October 30, 2024	By:	/s/ Samuel R. Hellfeld
	Name:	Samuel R. Hellfeld
	Title:	Executive Vice President, Chief Legal and Risk Officer

EX-10.1

Exhibit 10.1

TRANSITION AND ADVISORY AGREEMENT

This Transition and Advisory Agreement (“Agreement”) is entered into as of October 24, 2024 (“Effective Date”), by and between Sleep Number Corporation, a Minnesota corporation (the “Company”), and Shelly R. Ibach (“Executive”) (collectively referred to herein as the “Parties”).

WHEREAS, on October 24, 2024, Executive notified the Company and its Board of Directors (the “Board”) that Executive intends to (a) retire from her position as the Company’s President and Chief Executive Officer effective upon the earliest to occur of (i) the employment commencement date of Executive’s successor as Chief Executive Officer (the “CEO Transition”), (ii) the date of the Company’s next Annual Meeting of Shareholders (the “Annual Meeting”), and (iii) May 31, 2025 (the earliest to occur of (i), (ii) and (iii), the “CEO Transition Date”) and (b) not stand for reelection to the Board at the Annual Meeting, serving as the Board Chair through the conclusion of the Annual Meeting;

WHEREAS, if the CEO Transition occurs before the date of the Annual Meeting, then Executive will continue her employment with the Company in a non-executive role as senior advisor of the Company from the CEO Transition Date until the earlier to occur of (i) the Annual Meeting and (ii) May 31, 2025 (the earlier to occur of (i) and (ii), the “Employment Separation Date”);

WHEREAS, the Board believes that it is in the best interests of the Company and its shareholders to establish an orderly transition of the duties and responsibilities of the role of the Chief Executive Officer from Executive to her successor;

WHEREAS, Executive and the Company wish to enter into this Agreement setting forth the terms and conditions upon which Executive will (i) continue to serve as the Company’s President and Chief Executive Officer until the CEO Transition Date, (ii) if the CEO Transition Date is before the Employment Separation Date, continue her employment with the Company from the CEO Transition Date until the Employment Separation Date as a non-executive senior advisor, (iii) continue to serve as Chair of the Board through the conclusion of the Annual Meeting; and (iv) provide consulting advisory services to the Company after the Employment Separation Date until December 31, 2025;

NOW THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, including the respective covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree, effective as of the Effective Date, as follows:

1.    Continued Employment and Board Service.

(a)    The Company will continue to employ Executive, and Executive will remain in the employ of the Company, as the Company’s President and Chief Executive Officer until the CEO Transition Date and, if the CEO Transition Date is before the Employment Separation Date, the Company will continue to employ Executive, and Executive will remain in the employ of the Company, in a non-executive role as senior advisor from the CEO Transition Date until the Employment Separation Date, unless Executive’s employment is earlier terminated by the Company for Cause (as defined in the Company’s Executive Severance Pay Plan) or by Executive; provided, however, that Executive agrees in good faith not to resign without Good Reason (as defined in the Company’s Executive Severance Pay Plan). The period during which Executive remains employed by the Company from the date of this Agreement to the Employment Separation Date is referred to herein as the “Employment Period”.

(b)    Executive will continue to serve as the Chair of the Board until the conclusion of the Annual Meeting and will not stand for reelection to the Board as part of the Annual Meeting and Proxy Statement for the Annual Meeting.

(c)    During the Employment Period, Executive (i) will continue to receive Executive’s annual base salary as in effect immediately prior to the date of this Agreement, (ii) will be eligible to receive a bonus under the Company’s 2025 annual incentive plan, which will be subject to the achievement of the applicable performance objectives set forth in the Company’s 2025 annual incentive plan and such bonus, if any, will be pro-rated based on the portion of the Employment Period that occurs during fiscal year 2025 (i.e., from December 29, 2024 to Employment Separation Date) and paid to Executive in cash at the time the Company pays annual bonuses for 2025 to its senior executives generally, but not later than March 15, 2026, (iii) will not be awarded any new equity awards, (iv) will remain eligible for substantially similar employee benefits and perquisites that Executive receives immediately prior to the date of this Agreement, including medical, dental and vision insurance (including an annual executive physical exam at the Mayo Clinic), participation in the Company’s Executive Deferral Plan and Profit Sharing and 401(k) Plan (including matching Company contributions), life insurance and short-term and long-term disability insurance, and an annual financial counseling benefit up to $20,000, (v) will be reimbursed for the costs of Executive’s individual dues and other related fees for Executive’s membership in the National Association of Corporate Directors (the “NACD Dues”), and (vi) within 30 days of the Company’s receipt of an invoice with time entries containing fully redacted narratives from the law firm that Executive engaged to represent her in connection with her retirement, including legal review of this Agreement and the transactions contemplated by this Agreement, the Company will pay directly to such law firm up to $68,000 for such legal fees.

(d)    All outstanding performance adjusted restricted stock units awarded to Executive pursuant to the Company’s 2020 Equity Incentive Plan, as amended (the “Equity Plan”), will be treated in accordance with Section 2.2(c)(iii) of the Performance Adjusted Restricted Stock Unit Award Agreements governing such performance adjusted restricted stock units (the “PSU Award Agreements”), which provides for the treatment of such performance adjusted restricted stock units in the event of Executive’s retirement at or beyond age 60 with five or more years of service with the Company; provided, however, the Company hereby waives the requirement, as applicable, that Executive provides written notice of Executive’s intention to retire one year before Executive’s actual retirement date (for the avoidance of doubt, the three-month notice period as set forth in the PSU Award Agreement for the performance adjusted restricted stock units granted in 2024 shall be satisfied pursuant to the terms and conditions of such PSU Award Agreement and this Agreement); provided, further, that applicable change in control provisions set forth in the Equity Plan and PSU Award Agreements shall remain outstanding even after the Effective Date (and shall be applicable to the extent the application of such provisions result in better treatment for the Executive relative to this Section 1.d., as determined on an award-by-award basis).

(e)    All outstanding restricted stock units awarded to Executive pursuant to the Equity Plan (the “RSUs”) will become fully vested on the Employment Separation Date and will otherwise be treated in accordance with the terms of the Restricted Stock Unit Award Agreement(s) governing such RSUs (the “RSU Award Agreements”); provided that the shares issuable with respect to the RSUs shall be issued as soon as reasonably possible after the Employment Separation Date provided, further, that applicable change in control provisions set forth in the Equity Plan and RSU Award Agreements shall remain outstanding even after the Effective Date (and shall be applicable to the extent the application of such provisions result in better treatment for the Executive relative to this Section 1.e., as determined on

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an award-by-award basis). The Company hereby waives the requirement that Executive remain in continuous employment or service with the Company during the regular Vesting Period (as defined in the RSU Award Agreement).

(f)    All outstanding stock options awarded to Executive pursuant to (i) the Equity Plan or the Select Comfort Corporation Amended and Restated 2010 Omnibus Incentive Plan, as amended (the “2010 Equity Plan”), as applicable, will be treated in accordance with Section 3.2(c) of the Non-Statutory Stock Option Agreements (to the extent therein) governing such stock options and (ii) the 2010 Equity Plan will be treated in accordance with Paragraph (a) of the Nonstatutory Stock Option Award Agreements (to the extent therein) governing such stock options (collectively, the “Stock Option Award Agreements”), which provide for the treatment of such stock options in the event of Executive’s retirement at or beyond age 60 with five or more years of service with the Company such that Executive may exercise such stock options within the three-year period following December 31, 2025 (but not beyond the expiration date of the applicable stock options); provided, however, that the Company hereby waives the requirement that Executive provides written notice of Executive’s intention to retire one year before Executive’s actual retirement date; provided, further, that applicable change in control provisions set forth in the Equity Plan or the 2010 Equity Plan, as applicable, and Stock Option Award Agreements shall remain outstanding even after the Effective Date (and shall be applicable to the extent the application of such provisions result in better treatment for the Executive relative to this Section 1.f., as determined on an award-by-award basis). For the avoidance of doubt, all stock options granted to Executive shall be fully vested on the Employment Separation Date.

2.    Consulting Transition Services. Subject to the Executive remaining employed with the Company through the Employment Separation Date, beginning on the date following the Employment Separation Date and continuing until December 31, 2025 (such period, the “Consulting Period”), Executive’s employment with the Company will terminate on the Employment Separation Date and Executive shall serve as a strategic consultant to the Company and provide advisory consulting services as reasonably requested by the Company’s Chief Executive Officer or the Board to assist in the leadership transition and the Company’s operations (“Services”). As full payment for Executive’s Services during the Consulting Period, the Company agrees to (i) pay Executive a cash consulting fee of $150,000 per month (pro- rated for any partial months of service) during the Consulting Period, which fees will be payable monthly in arrears, and will be paid by the Company within 30 days of the end of the month, and (ii) reimburse Executive for the NACD Dues during the Consulting Period. In her capacity as a strategic consultant, Executive agrees that she will be performing the Services as an independent contractor and will not be an employee of Company. Nothing in this Agreement shall in any way be construed to constitute Executive as an agent, employee or representative of the Company following the Employment Separation Date. Accordingly, as a strategic consultant, Executive will not be eligible to participate in any employee benefit plans sponsored by the Company, or other employee compensation or benefits, policies, or programs, in connection with any Services performed during the Consulting Period. Executive agrees, in her capacity as a strategic consultant, to pay all taxes applicable to her performance of Services during the Consulting Period. The Company agrees that it will provide Executive with IRS Form 1099 for the payments provided to Executive for the performance of the Services. Executive agrees to indemnify and hold the Company harmless against any claim or liability (including penalties) resulting from failure of the Executive to pay taxes with respect to compensation paid by the Company to Executive or failure by the Executive to report compensation paid by the Company to Executive and/or submit the appropriate tax forms on which compensation paid by the Company to Executive must be reported to applicable governmental entities (including, solely for purposes of this sentence, the amount set forth in subsection (vi) of Section 1(c) of this Agreement). During the Consulting Period, Executive

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will control the performance of the Services and will furnish all tools and materials necessary to the performance of the Services. Notwithstanding the foregoing, the Company will reimburse Executive for certain reasonable expenses in accordance with the Company’s reimbursement policies applicable to independent contractors. Executive acknowledges that she will remain subject to the Company’s Insider Trading Policy in accordance with its terms, including during the Consulting Period.Executive further agrees: (i) that all right, title, and interest in and to any notes, records, designs, inventions, improvements, developments, discoveries, copyrightable material, ideas, and/or trade secrets conceived, discovered, authored, invented, developed, or reduced to practice by Executive, solely or in collaboration with others, arising out of, or in connection with, performing the Services and/or in the scope of her prior employment and any copyrights, patents, trade secrets, mask work rights or other intellectual property rights relating to the foregoing (collectively, “Inventions”) are the sole property of the Company; (ii) to promptly disclose to Company in writing any Inventions; (iii) and that Executive hereby irrevocably assigns and agrees to assign (or cause to be assigned) all Inventions to Company. During the Consulting Period and thereafter, Executive agrees that the terms relating to the protection of Confidential Information as set forth in Executive’s Employee Inventions, Confidentiality and Non-Compete Agreement shall continue to apply.

3.    Release of Claims. Executive hereby agrees to execute the release of claims in the form attached to this Agreement as Exhibit A (the “Release”) no earlier than the close of business on the Employment Separation Date (or such other date agreed to by the Company and Executive). Executive’s eligibility to receive the consideration set forth in Sections 1(d), 1(e), 1(f) and 2 of this Agreement is subject to, and contingent upon, Executive executing the Release no earlier than the close of business on the Employment Separation Date (or such other date agreed to by the Company and Executive), and not rescinding the Release.

4.    No Good Reason. Executive acknowledges and agrees that Executive’s termination of employment, including her transition from President and Chief Executive Officer to strategic consultant and, if applicable, from President and Chief Executive Officer to a non-executive employment position from the CEO Transition Date to the Employment Separation Date, does not constitute “Good Reason” as defined in the Company’s Executive Severance Pay Plan or any other agreement or policy governing Executive’s employment relationship with the Company. Notwithstanding the foregoing, in the event of a Change in Control (as defined in the Company’s Executive Severance Pay Plan) that occurs prior to the Employment Separation Date, Executive shall remain eligible for the severance compensation and benefits as set forth in the Company’s Executive Severance Pay Plan as a “Tier I” executive.

5.    Governing Law; Venue. All issues and questions concerning the application, construction, validity, interpretation and enforcement of this Agreement will be governed by and construed in accordance with the laws of the State of Minnesota, without giving effect to any principles of conflicts of law, whether of the State of Minnesota or any other jurisdiction. Each of the Parties agrees that any legal action or proceeding with respect to this Agreement will be brought exclusively in the state court of Minnesota located in Hennepin County, or the federal courts of the United States of America for the District of Minnesota, unless the Parties to any such action or dispute mutually agree to waive this provision. By execution and delivery of this Agreement, each of the Parties irrevocably consents to service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized express carrier or delivery service, to the applicable Party at their address referred to herein. Each of the Parties irrevocably waives any objection which they may now or hereafter have to the laying of venue of any of the aforementioned actions or proceedings arising out of or in connection with this Agreement, or any related agreement, certificate or instrument referred to above, brought in the courts referred to above and hereby

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further irrevocably waives and agrees, to the fullest extent permitted by applicable law, not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in any inconvenient forum. Nothing herein will affect the right of any Party to serve process in any other manner permitted by law.

6.    Validity. The invalidity or unenforceability of any provision or provisions of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.

7.    Entire Agreement. The terms of this Agreement and the terms of the PSU Award Agreements, the RSU Award Agreements, and the Stock Option Award Agreements, as such agreements are modified by the terms of this Agreement, and the Employee Inventions, Confidentiality and Non-Compete Agreement that Executive signed as a condition of employment and that accompanies such aforementioned award agreementsare intended by the Parties hereto to be the final expression of their agreement with respect to Executive’s employment and post-employment transition services, and may not be contradicted by evidence of any prior or contemporaneous agreement. The Parties further intend that this Agreement will constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

8.    Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by Executive and a duly authorized officer of the Company and approved by the Board, which expressly identifies the amended provision of this Agreement. By an instrument in writing similarly executed and approved by the Board, Executive or a duly authorized officer of the Company may waive compliance by the other Party hereto with any provision of this Agreement that such other Party was or is obligated to comply with or perform; provided, however, that such waiver will not operate as a waiver of, or estoppel with respect to, any other or subsequent failure to comply or perform. No failure to exercise and no delay in exercising any right, remedy, or power hereunder will preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.

9.    Construction. This Agreement will be deemed drafted equally by both of the Parties hereto. Its language will be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any Party hereto will not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation.

10.    Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision will be fully severable; this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there will be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

11.    Section 409A. The parties hereto acknowledge and agree that any amounts payable hereunder are intended to be exempt from Section 409A of the Internal Revenue Code, but that, to the extent applicable,

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this Agreement will be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A. The Company and Executive will work together in good faith to consider either (a) amendments to this Agreement or (b) revisions to this Agreement with respect to the payment of any awards, which are necessary or appropriate to avoid imposition of any additional tax or income recognition prior to the actual payment to Executive under Section 409A. 

12.    Clawback and Forfeiture Policy. Executive acknowledges and agrees that the Company’s Executive Clawback and Forfeiture Policy and any other applicable compensation recoupment policy will continue to apply following the Employment Separation Date in accordance with the terms and conditions of such policies.

IN WITNESS WHEREOF, and intending to be legally bound, the Parties have executed this Transition and Advisory Agreement as of the Effective Date.

SLEEP NUMBER CORPORATION By: /s/ Samuel R. Hellfeld Name: Samuel R. Hellfeld Title: Chief Legal and Risk Officer EXECUTIVE By: /s/ Shelly R. Ibach Name: Shelly R. Ibach Title: Chair, President and Chief Executive Officer

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[omitted pursuant to Item 601(a)(5) of Regulation S-K]

Exhibit A

Form of Release

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EX-99.1

Exhibit 99.1

Sleep Number Chair, President and CEO Shelly Ibach Announces Retirement

Minnesota’s longest tenured female public company CEO transformed mattress retailer into wellness technology company, built iconic Sleep Number brand

Company also shares plans for additional Board and corporate governance changes

MINNEAPOLIS – (BUSINESS WIRE) – Sleep Number Corporation (Nasdaq: SNBR) announced today that Shelly Ibach has shared her plans to retire as Chair, President and Chief Executive Officer, no later than the 2025 Annual Meeting of Shareholders (the “2025 Annual Meeting”). Pursuant to its established succession plan, the Board of Directors (the “Board”) has engaged an independent executive search firm to help identify Ibach’s CEO successor. To support an effective transition, Ibach will continue to serve as Chair through the conclusion of the 2025 Annual Meeting and has agreed to serve as a strategic advisor to the new CEO and Board through the end of 2025.

“Throughout her 12-year tenure as CEO, Shelly transformed the company by consistently demonstrating visionary, results-oriented leadership and driving significant business innovation. Her authenticity has inspired the commitment of the entire Sleep Number team to its purpose: to improve the health and wellbeing of society through higher quality sleep,” said Michael Harrison, Sleep Number Board independent Lead Director. “Shelly’s passion for Sleep Number’s bold vision, combined with her courage, ingenuity, and resolve, have propelled the company’s strategic differentiation and growth in a highly commoditized market, earning Shelly and the company well-deserved recognition. Building on this legacy, the company’s sleep wellness technology and the operating model transformation position it for accelerated profitable growth with strong free cash flow when the bedding industry and macroeconomic environment recover.”

“I am filled with gratitude for my nearly 18 years at Sleep Number and our team members’ unwavering dedication to our mission and purpose, which has led to improving almost 16 million lives through our beloved brand. I am so proud of the innovative and resilient company we’ve built together,” said Shelly Ibach. “Our purpose has inspired the revolutionary Sleep Number smart bed and digital wellness platform that provide life-changing value for our customers. I am honored to have led this incredible team and diverse Board through many transformations and challenging environments to emerge a stronger company and have tremendous confidence in Sleep Number’s enduring competitive advantages and continued stakeholder value creation.”

Ibach’s Impact

As Minnesota's longest tenured female leader of a public company, Ibach has transformed nearly every aspect of the company: its talented team, iconic brand, industry leading sleep innovations, vertical business model, and values-based culture. Under her guidance, the company completed a multi-year transformation from Select Comfort, a specialty mattress infomercial retailer with a limited addressable market and $743 million in annual sales, to Sleep Number, a digitally connected, sleep wellness brand with 2023 revenues of $1.9 billion. Sleep Number became the innovation market leader by introducing the first commercialized smart bed with a multi-sided platform and proprietary ecosystem. This enabled strategic collaborations with the NFL and world-renowned health and research institutions, including the Mayo Clinic and American Cancer Society. Throughout her tenure, Ibach deliberately aligned the company’s strategic evolution and operational execution with progressive Board governance to drive long-term shareholder value.

Board Changes and Corporate Governance Enhancements

With Ibach’s retirement, she will not stand for reelection to the Board upon the expiration of her term at the 2025 Annual Meeting. The Board has unanimously determined its intent to appoint Michael Harrison as independent Chair following the 2025 Annual Meeting. Harrison has served as Sleep Number’s independent Lead Director since May 2022, drawing on deep institutional knowledge and broad consumer-facing experience.

Sleep Number Chair, President and CEO Shelly Ibach Announces Retirement - Page 2 of 4    

Sleep Number also announced today that two of its longer serving directors plan to retire by the 2026 Annual Meeting of Shareholders, at which time the Board intends to reduce its size. With these retirements, the Board will implement changes to its committee leadership with overlapping chair tenures to ensure effective transitions. The Board also plans to seek shareholder approval at the 2025 Annual Meeting to amend the company’s governing documents, including commencing a process to declassify the Board and to adopt a majority voting standard for approvals of mergers and future amendments to the Company’s Articles of Incorporation. Additional details regarding these changes are outlined in the following Letter to Shareholders.

The company also separately announced its 2024 Third Quarter performance results today.

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Letter to Shareholders

Dear Shareholders:

In addition to Shelly’s retirement, we announced changes to the Board and advancements to our corporate governance, which are described in more detail in this letter. These important changes have been structured to ensure business continuity while executing our ongoing transformation and supporting long-term shareholder value creation.

Sleep Number has many strengths: a track record of innovation superiority, a vertically integrated business model, an ecosystem of millions of engaged customers, an iconic brand, and 3,700 talented team members who are dedicated to our mission. To maintain and build on these strengths, even in the face of a prolonged bedding industry recession, requires thoughtful continuous improvement; this underpins our efforts to expand Sleep Number’s differentiation while transforming our operating model for greater financial resilience. The Board and governance changes that we announced today are the result of a comprehensive, carefully considered plan.

Board Composition

The Board is committed to ongoing refreshment, maintaining a composition that reflects diverse perspectives, including a complementary mix of professional and personal backgrounds and experiences. This deliberate approach positions us to sustain progressive innovation, navigate disruptions and support long-term success. In support of this continuous evolution, last year we added two new directors who were identified by one of our shareholders. With these additions, the Board acknowledges its expanded size in relation to the scale of our company. While we value the contributions of each of our talented directors, we believe that strategically reducing the size of the Board at the appropriate time will enhance our governance.

To that end, two of our longer-serving directors, Steve Gulis and Brenda Lauderback, have decided to retire from the Board by the 2026 Annual Meeting of Shareholders, prior to the expiration of their terms. Steve and Brenda have been valuable contributors to Sleep Number throughout their years of service. To prepare for their retirements, the Board has identified incumbent directors Steve Macadam and Phil Eyler as successor chairs of the Audit Committee and the Management Development and Compensation Committee, respectively. They will rotate into their new roles over time to provide overlap with the tenures of Steve and Brenda and facilitate an effective transition in the leadership of these core committees. We are also broadening the mandate of our Capital Allocation and Value Enhancement Committee so that it can provide oversight of our capital structure while continuing its important work on capital allocation.

Governance Advancements

Consistent with feedback we have received from our shareholders, the Board plans to seek shareholder approval at the 2025 Annual Meeting for important amendments to the company’s governing documents. The Board expects to garner shareholder support to begin a process to declassify the Board and to adopt a majority voting standard for approvals of mergers and future amendments to the company’s Articles of Incorporation. These changes reflect the Board’s ongoing commitment to progressive and effective corporate governance and accountability to shareholders.

Sleep Number Chair, President and CEO Shelly Ibach Announces Retirement - Page 3 of 4    

A Continued Focus on Transformation

As we move forward with these changes and continue to improve the company’s financial resilience, we remain committed to preserving and strengthening the company’s competitive advantages. We are deeply grateful to our dedicated, mission-driven team members, whose tenacity, ingenuity and commitment to embracing change and innovation consistently drive our progress. Their exceptional efforts have enabled our initiatives to create a more durable operating model, yielding positive results and positioning Sleep Number to capitalize on the expanding market for sleep-related health and wellness products when industry and macroeconomic conditions improve.

On behalf of the full Board, we want to thank you, our shareholders. We value your perspectives, which have informed many of the actions we announced today, and we will continue to work diligently on your behalf to drive profitable growth and sustainable long-term value.

Sincerely,

/s/ Shelly Ibach

Shelly Ibach

Board Chair, CEO, and President

Sleep Number® setting 40, average SleepIQ® score of 82

/s/ Michael J. Harrison

Michael J. Harrison

Independent Lead Director

Sleep Number® setting 50, average SleepIQ® score of 84

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About Sleep Number Corporation

Sleep Number is a wellness technology company. We are guided by our purpose to improve the health and wellbeing of society through higher quality sleep; to date, our innovations have improved nearly 16 million lives. Our wellness technology platform helps solve sleep problems, whether it’s providing individualized temperature control for each sleeper through our Climate360® smart bed or applying our more than 29 billion hours of longitudinal sleep data and expertise to research with global institutions.

Our smart bed ecosystem drives best-in-class engagement through dynamic, adjustable, and effortless sleep with personalized digital sleep and health insights; our millions of Smart Sleepers are loyal brand advocates. And our 3,700 mission-driven team members passionately innovate to drive value creation through our vertically integrated business model, including our exclusive direct-to-consumer selling in nearly 650 stores and online.

To learn more about life-changing, individualized sleep, visit a Sleep Number® store near you, our newsroom and investor relations sites, or SleepNumber.com

Sleep Number Chair, President and CEO Shelly Ibach Announces Retirement - Page 4 of 4    

Forward-looking Statements

Statements used in this news release relating to future plans and events such as the statements about the company’s board and leadership retirements and succession plans, position for accelerated profitable growth, enduring competitive advantages and continued stakeholder value creation, and intentions to update governance documents, are forward-looking statements subject to certain risks and uncertainties which could cause the company’s results to differ materially. The most important risks and uncertainties are described in the company’s filings with the Securities and Exchange Commission, including in Item 1A of the company’s Annual Report on Form 10-K and other periodic reports. Forward-looking statements speak only as of the date they are made, and the company does not undertake any obligation to update any forward-looking statement.

Investor Contact: Dave Schwantes; (763) 551-7498; investorrelations@sleepnumber.com

Media Contact: Julie Elepano; (414) 732-9840; julie.elepano@sleepnumber.com

XML

Document and Entity Information	Oct. 24, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Oct. 24, 2024
Entity Registrant Name	SLEEP NUMBER CORP
Entity Central Index Key	0000827187
Amendment Flag	false
Entity Incorporation, State or Country Code	MN
Entity File Number	000-25121
Entity Tax Identification Number	41-1597886
Entity Address, Address Line One	1001 Third Avenue South
Entity Address, City or Town	Minneapolis
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55404
City Area Code	763
Local Phone Number	551-7000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	SNBR
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false