<SEC-DOCUMENT>0000921895-24-002938.txt : 20241212
<SEC-HEADER>0000921895-24-002938.hdr.sgml : 20241212
<ACCEPTANCE-DATETIME>20241212163023
ACCESSION NUMBER:		0000921895-24-002938
CONFORMED SUBMISSION TYPE:	DFAN14A
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20241212
DATE AS OF CHANGE:		20241212

SUBJECT COMPANY:	

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Sleep Number Corp
		CENTRAL INDEX KEY:			0000827187
		STANDARD INDUSTRIAL CLASSIFICATION:	HOUSEHOLD FURNITURE [2510]
		ORGANIZATION NAME:           	04 Manufacturing
		IRS NUMBER:				411597886
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1228

	FILING VALUES:
		FORM TYPE:		DFAN14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-25121
		FILM NUMBER:		241545286

	BUSINESS ADDRESS:	
		STREET 1:		1001 THIRD AVENUE SOUTH
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55404
		BUSINESS PHONE:		7635517000

	MAIL ADDRESS:	
		STREET 1:		1001 THIRD AVENUE SOUTH
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55404

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	SELECT COMFORT CORP
		DATE OF NAME CHANGE:	19980821

FILED BY:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			STADIUM CAPITAL MANAGEMENT LLC
		CENTRAL INDEX KEY:			0001105087
		ORGANIZATION NAME:           	
		IRS NUMBER:				770500018
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DFAN14A

	BUSINESS ADDRESS:	
		STREET 1:		199 ELM STREET
		CITY:			NEW CANAAN
		STATE:			CT
		ZIP:			06840-5321
		BUSINESS PHONE:		(203) 972-8235

	MAIL ADDRESS:	
		STREET 1:		199 ELM STREET
		CITY:			NEW CANAAN
		STATE:			CT
		ZIP:			06840-5321
</SEC-HEADER>
<DOCUMENT>
<TYPE>DFAN14A
<SEQUENCE>1
<FILENAME>dfan14a07785006_12122024.htm
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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>UNITED
STATES</B></FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>SECURITIES
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">INFORMATION REQUIRED IN PROXY STATEMENT</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0">SCHEDULE 14A INFORMATION</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(Amendment No. )</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Filed by the Registrant &#9744;</P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">&#9744;</TD><TD>Preliminary Proxy Statement</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top"><TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">&#9744;</TD><TD>Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))</TD></TR></TABLE>



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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top"><TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">&#9744;</TD><TD>Definitive Proxy Statement</TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top"><TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">&#9744;</TD><TD>Definitive Additional Materials</TD></TR></TABLE>



<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top"><TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">&#9746;</TD><TD>Soliciting Material Under &sect; 240.14a-12</TD></TR></TABLE>



<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;&nbsp;</P>

<P STYLE="margin-top: 0; margin-bottom: 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <TD STYLE="width: 100%; text-align: center; vertical-align: top; border-bottom: Black 0.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">SLEEP NUMBER CORPORATION</P>
</TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD STYLE="text-align: center; vertical-align: top"><P>(Name of Registrant as Specified In Its Charter)</P>

</TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 0.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">STADIUM CAPITAL PARTNERS, L.P.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">STADIUM SPECIAL OPPORTUNITY I, L.P.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">STADIUM CAPITAL MANAGEMENT GP, L.P.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">STADIUM CAPITAL MANAGEMENT, LLC</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">ALEXANDER M. SEAVER</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">KEVIN BAKER</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">PATRICK A. HOPF</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">JEFFREY T. JACKSON</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">JESSICA M. PRAGER</P>
</TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD STYLE="text-align: center; vertical-align: top"><P>(Name of Persons(s) Filing Proxy Statement, if other than the Registrant)</P>

</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Payment of Filing Fee (Check all boxes that apply):</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify; text-indent: 0.5in">Stadium Capital Partners,
L.P., together with the other participants named herein (collectively, &ldquo;Stadium Capital&rdquo;), intend to file a preliminary proxy
statement and accompanying <B>WHITE</B> universal proxy card with the Securities and Exchange Commission to be used to solicit votes for
the election of its highly-qualified director nominees at the 2025 annual meeting of shareholders of Sleep Number Corporation, a Minnesota
corporation (the &ldquo;Company&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify; text-indent: 0.5in">On December 12, 2024, Stadium
Capital issued the following press release and public letter to the Company&rsquo;s board of directors:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 15pt">Stadium Capital Management
Urges Sleep Number&rsquo;s Board of Directors to Respect Shareholders&rsquo; Calls for Boardroom Changes</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><I>Calls on Long-Tenured Directors Stephen Gulis, Michael
Harrison, Shelly Ibach, Brenda Lauderback and Barbara Matas to Respect the Will of Shareholders and Step Aside </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><I>Cites Support for Stadium Capital&rsquo;s Recommended
Path Forward from Shareholders Representing More than 45% of Sleep Number&rsquo;s Outstanding Shares</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><I>Asserts that the Mere Prospect of Boardroom Upgrades
Has Caused Sleep Number&rsquo;s Shares to Rise by More Than 63% Since Stadium Capital&rsquo;s November 25<SUP>th</SUP> Letter</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">NEW CANAAN, Conn.--(BUSINESS WIRE)&mdash;Stadium Capital
Management, LLC (together with certain of its affiliates, &ldquo;Stadium Capital&rdquo; or &ldquo;we&rdquo;) is the largest shareholder
of Sleep Number Corporation (NASDAQ: SNBR) (&ldquo;Sleep Number&rdquo; or the &ldquo;Company&rdquo;), owning approximately 11.7% of the
Company&rsquo;s outstanding shares. Today, Stadium Capital issued the below letter to the Company&rsquo;s Board of Directors (the &ldquo;Board&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">***</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">December 12, 2024</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Members of the Board:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The legendary investor Benjamin Graham famously said,
 &ldquo;In the short run, the market is a voting machine but in the long run, it is a weighing machine.&rdquo; The voting machine has been
unequivocal at Sleep Number &ndash; shareholders resoundingly support the changes we suggested in our public letter issued on November
25, 2024 (the &ldquo;November 25<SUP>th</SUP> Letter&rdquo;<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>1</SUP></FONT>).
We are confident that with the prompt implementation of our suggestions, the weighing machine will reflect significantly more value creation
at Sleep Number over time. However, without the right changes, or with changes that take too long to occur, we remain concerned that the
Board will continue to destroy shareholder value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Since we published the November 25<SUP>th</SUP> Letter,
we have received feedback from shareholders representing more than 45% of the outstanding shares (which equates to a majority of votes
cast at the Company&rsquo;s recent annual meetings) in support of our recommended path forward. We also understand that many of these
shareholders have expressed (or attempted to express) their views directly to the Board as well. With <B><U>Sleep Number&rsquo;s share
price up over 63% since we published the November 25<SUP>th</SUP> Letter</U></B>, and no intervening news from the Company, it is incumbent
upon the members of the Board to stop burying their heads in the sand and recognize that shareholders are clamoring for the changes we
are seeking.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>

<HR ALIGN="LEFT" SIZE="1" STYLE="width: 5pc; margin-top: 12pt">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: left"><FONT STYLE="font-size: 10pt"><SUP>1</SUP></FONT> https://www.businesswire.com/news/home/20241125024731/en/Stadium-Capital-Management-Issues-Letter-to-Sleep-Number-Shareholders-Regarding-the-Need-for-a-Reconstituted-Board-and-Independent-CEO-Search</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Consider the Company&rsquo;s staggering relative performance
for relevant periods before and after the issuance of the November 25<SUP>th</SUP> Letter:<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>2</SUP></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right; white-space: nowrap; width: 40%; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right; white-space: nowrap; width: 12%; padding-right: 5.4pt; padding-left: 5.4pt">1-Year</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right; white-space: nowrap; width: 12%; padding-right: 5.4pt; padding-left: 5.4pt">3-Year</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right; white-space: nowrap; width: 12%; padding-right: 5.4pt; padding-left: 5.4pt">5-Year</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right; width: 12%; padding-right: 5.4pt; padding-left: 5.4pt">Ibach<BR>
Tenure</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right; width: 12%; padding-right: 5.4pt; padding-left: 5.4pt"><B>Post <BR>
Letter</B></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">Sleep Number Corp</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">23%</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">-85%</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">-74%</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">-52%</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><B>63%</B></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">Tempur Sealy International</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">40%</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">29%</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">172%</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">430%</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><B>1%</B></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: #C0E6F5">
    <TD STYLE="white-space: nowrap; border-top: Black 1pt solid; border-bottom: Black 1pt solid; border-left: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><B>Out (Under) Performance</B></TD>
    <TD STYLE="white-space: nowrap; border-top: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><B>-17%</B></TD>
    <TD STYLE="white-space: nowrap; border-top: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><B>-113%</B></TD>
    <TD STYLE="white-space: nowrap; border-top: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><B>-246%</B></TD>
    <TD STYLE="white-space: nowrap; border-top: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><B>-482%</B></TD>
    <TD STYLE="white-space: nowrap; border-top: Black 1pt solid; border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><B>62%</B></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In our view, the market reaction clearly indicates
that the long-tenured Company directors we identified for replacement in the November 25<SUP>th</SUP> Letter (Stephen Gulis, Michael Harrison,
Shelly Ibach, Brenda Lauderback and Barbara Matas) lack credibility with investors. These directors have destroyed hundreds of millions
of dollars of value during their tenures. In glaring contrast, <B><U>the prospect of meaningful change at Sleep Number has now increased
shareholder value by over 63%</U></B>. Let that sink in: <I>the prospect of these directors&rsquo; departure from the Board has increased
the value of Sleep Number by more than $175 million</I>. We cannot recall a more damning indictment by the market. Shielding yourselves
with shareholder-unfriendly governance policies while, appallingly, spending investors&rsquo; money to defend your positions in the face
of the catastrophic harm endured by Sleep Number&rsquo;s owners and employees, not to mention overwhelming shareholder opposition, is
unacceptable and, frankly, embarrassing. The Company&rsquo;s performance under your leadership demonstrates that you are failed fiduciaries,
and it is time to step aside. The owners whom you supposedly represent want change, now.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">To be abundantly clear, we do not support the current
CEO search process, especially given the influence of the Company&rsquo;s failed, lame duck CEO. We firmly believe the process cannot
continue under current leadership. Instead, we have a specific plan of action, with the right people to execute it, that we are prepared
to implement immediately to stabilize Sleep Number&rsquo;s business. It is inexplicable that the Board has not reached out to engage with
us following the issuance of the November 25<SUP>th</SUP> Letter or our nomination of four exceptionally qualified director candidates<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>3</SUP></FONT>
on December 2, 2024.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In our view, it is past time for you to put the interests
of the constituents you legally represent ahead of your own self-serving interests. In the interests of Sleep Number&rsquo;s shareholders,
employees and other key stakeholders, we implore you to step aside and respect the will of shareholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify">Sincerely,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Stadium Capital Investment Team</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">***&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify"></P>

<HR ALIGN="LEFT" SIZE="1" STYLE="width: 5pc; margin-top: 12pt">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><FONT STYLE="font-size: 10pt"><SUP>2</SUP></FONT> The 1-, 3-, 5-year and Ibach tenure performance periods are calculated as of market close on November 22, 2024, the immediately preceding trading day to the November 25<SUP>th</SUP> Letter, which was issued pre-market on November 25, 2024. The &ldquo;Post Letter&rdquo; period is calculated from market close on November 22, 2024 to market close on December 11, 2024, the trading day immediately preceding the issuance of this letter. Source of share price data is Capital IQ.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><FONT STYLE="font-size: 10pt"><SUP>3</SUP></FONT> https://www.businesswire.com/news/home/20241202287994/en/Stadium-Capital-Management-Nominates-Four-Exceptionally-Qualified-Director-Candidates-to-Sleep-Number%E2%80%99s-Board-of-Directors</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify"><B>About Stadium Capital</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Stadium 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 <FONT STYLE="color: #467886"><U>www.StadiumCapital.com</U></FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.25in; text-align: center"><B>CERTAIN INFORMATION CONCERNING THE PARTICIPANTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify">Stadium Capital Partners, L.P. (&ldquo;<U>SCP</U>&rdquo;),
together with the other participants named herein (collectively, &ldquo;<U>Stadium Capital</U>&rdquo;), intend to file a preliminary proxy
statement and accompanying <B>WHITE</B> universal proxy card with the Securities and Exchange Commission (&ldquo;<U>SEC</U>&rdquo;) to
be used to solicit votes for the election of Stadium Capital&rsquo;s slate of highly-qualified director nominees at the 2025 annual meeting
of shareholders of Sleep Number Corporation, a Minnesota corporation (the &ldquo;<U>Company</U>&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify">STADIUM 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&rsquo;S WEB SITE AT HTTP://WWW.SEC.GOV.
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&rsquo; PROXY SOLICITOR.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify">The participants in the anticipated proxy solicitation
are expected to be SCP, Stadium Special Opportunity I, L.P. (&ldquo;<U>SSO</U>&rdquo;), Stadium Capital Management GP, L.P. (&ldquo;<U>SCMGP</U>&rdquo;),
Stadium Capital Management, LLC (&ldquo;<U>SCM</U>&rdquo;), Alexander M. Seaver, Kevin Baker, Patrick A. Hopf, Jeffrey T. Jackson and
Jessica M. Prager.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify">As of the date hereof, SCP directly beneficially
owns 2,215,000 shares of Common Stock, par value $0.01 per share (the &ldquo;<U>Common Stock</U>&rdquo;), 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>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">***</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><U>Contacts </U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Longacre Square Partners</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Charlotte Kiaie / Bela Kirpalani, 646-386-0091</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="color: #467886"><U>ckiaie@longacresquare.com</U></FONT> / <FONT STYLE="color: #467886"><U>bkirpalani@longacresquare.com</U></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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