By Josh Beckerman
Sleep Number shares closed higher after Stadium Capital Management called for board changes and said recently announced plans related to its board and the retirement of Chief Executive Shelly Ibach are inadequate.
The stock gained 19%, to close at $14.85 on Monday. Shares were recently down 5%, to $14.11, after hours.
Stadium called the CEO search process flawed, saying current directors oversaw value destruction and failed to hold Ibach accountable and that a meaningfully reconstituted board would be better positioned to select a new CEO.
Sleep Number said it engaged extensively with Stadium and welcomes shareholder input, but said it was "surprised when Stadium made the highly unusual demand that it be granted direct participation in the CEO succession process."
"The Board has a committee of independent directors to execute a formal, best-in-class CEO succession process, with extensive guidance from Korn Ferry, which has been engaged for nearly a year," the company said.
Stadium's one-year cooperation agreement with the bed and mattress company recently expired. The firm, which has a stake of about 11.7%, said Nov. 4 that it is concerned with "long-term underperformance".
"Should our requests and concerns continue to fall on deaf ears, we will be compelled to nominate several exceptionally qualified directors for election at Sleep Number's 2025 Annual Meeting of Shareholders," Stadium said Monday.
On Oct. 30, Sleep Number said Ibach would retire as chair, president and CEO no later than the 2025 annual meeting. It said Michael Harrison will become independent chair after the 2025 meeting.
The company also said two longer-serving directors plan to retire by the 2026 annual meeting and that it would seek stockholder approval in 2025 to amend governing documents, including adopting a majority voting standard for approvals of mergers.
Write to Josh Beckerman at josh.beckerman@wsj.com
(END) Dow Jones Newswires
November 25, 2024 18:29 ET (23:29 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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