Sleep Number Corp.’s headquarters in downtown Minneapolis Photo courtesy of Sleep Number

Weeks after Sleep Number Corp. chair and CEO Shelly Ibach announced plans to retire in 2025, the company’s largest shareholder, Stadium Capital Management, issued a statement Monday expressing its lack of confidence in the current board to find her replacement. The Connecticut-based investment group is calling for several board directors to be replaced, and for an independent CEO search.

The group made a similar demand for a board shakeup in September 2023, which led to the appointment of two new board directors in November 2023, expanding the board to 12 members. But following ongoing losses and continued struggles for the mattress maker and retailer, Stadium remains unsatisfied, and on Monday, its public pressure grew harsher.

“Given that these are the same directors who have overseen massive value destruction and failed to hold Ms. Ibach accountable for far too long, shareholders cannot trust the board as currently constructed to get this decision right,” Stadium Capital’s investment committee said. “A decision that will define the future of Sleep Number.”

Stadium, which owns 11.7% of company shares, blamed Ibach for “a colossal destruction of shareholder value.” The group said it remains convinced a turnaround is possible, but not under current leadership.

On Monday afternoon, shares of Sleep Number were trading at $14.85 per share, down considerably from a peak of over $142 a share back in March 2021. The company’s stock value has largely declined since that time. Sleep Number has reported losses in every quarter of 2024 so far, and for all of 2023.

In response to the criticism, Sleep Number late Monday said the company and three of its board directors have engaged in more than a half dozen meetings with Stadium Capital’s principals and invited them to join a meeting with independent executive search firm Korn Ferry, which was engaged to find a new CEO. According to Sleep Number, Stadium did not participate in that meeting.

“Stadium’s demand to insert itself in this process risks disrupting and delaying the search and could discourage qualified individuals and reduce the candidate pool, without any benefit to the Company or shareholders,” the company said Monday in response to Stadium. “While we openly welcome input into the process from Stadium and other shareholders (and have received such input), we will not deviate from the approach our expert advisors have recommended because Stadium demands to have outsized influence.”