DEF 14A of Somnigroup International Inc.
Filed Mar 31, 2025 · FY20240001206264-25-000098
Committees of the Board
Committees of the Board The standing committees of the Board are the Audit Committee, the Human Resources/Capital and Talent Committee and the Nominating and Corporate Governance Committee, each of which is composed entirely of independent directors. Each committee operates under a written charter adopted by the Board. Each charter is available on our investor website at http://somnigroup.com in the "Corporate Governance" section under the "Investor Resources" tab and available in print upon request. The following table identifies the current committee members.
Committees of the Board
| Name of Director | Audit Committee | Human Resources/Capital and Talent Committee | Nominating and Corporate Governance Committee | | Evelyn S. Dilsaver | Chair | | √ | | Cathy Rogers Gates | √ | | | | John A. Heil | | √ | Chair | | Meredith Siegfried Madden | | √ | | | Richard W. Neu | √ | Chair | √ |
Committees of the Board
The Audit Committee The Audit Committee is responsible for providing independent, objective oversight with respect to Somnigroup's accounting and financial reporting functions, internal and external audit functions and systems of internal controls over financial reporting and legal, ethical and regulatory compliance as well as data privacy and cybersecurity risks. The Audit Committee met six (6) times in 2024. Some of the Audit Committee's responsibilities include: •reviewing the scope of internal and independent audits; •reviewing the Company's quarterly and annual financial statements and related SEC filings; •reviewing the adequacy of management's design and assessment of internal controls over financial reporting; •reviewing the Company's accounting policies and procedures and significant changes in accounting policies; •reviewing the Company's business conduct, legal and regulatory requirements and ethics policies and practices; •reviewing the Company's policies with respect to risk assessment and risk management, including with respect to data privacy and cybersecurity; •reviewing information to be disclosed and types of presentations to be made in connection with the Company's earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies; •reviewing the Company's risk management processes and system of internal control over the Company's disclosures surrounding its environmental, social and governance efforts; •reviewing the Company's risk management processes and system of internal control over the Company's compliance with the Foreign Corrupt Practices Act of the United States, the Bribery Act of 2010 of the United Kingdom and similar laws and regulations to which the Company is subject; •preparing an annual evaluation of the committee's performance and reporting to the Board on the results of this self-evaluation; •reporting regularly to the Board on the committee's activities; •preparing and publishing an annual audit committee report in the Company's proxy statement; and •appointing the independent public accountants and reviewing their independence and performance and the reasonableness of their fees. The Audit Committee has established whistleblower procedures, which provide for (a) the receipt, retention and treatment of complaints received regarding accounting, internal accounting controls or auditing matters; and (b) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. Somnigroup International Inc. also has a confidential, anonymous ethics violation reporting system via mail, telephone and internet, all of which are available to all employees, vendors and customers. All reports are treated confidentially. The Human Resources/Capital and Talent Committee The Human Resources/Capital and Talent Committee assists the Board in fulfilling its oversight responsibilities relating to compensation. The Human Resources/Capital and Talent Committee met five (5) times in 2024. Some of the Human Resources/Capital and Talent Committee's responsibilities include: •reviewing and approving on an annual basis the corporate goals and objectives with respect to compensation for the CEO, evaluating at least once a year the CEO's performance in light of these established goals and objectives and, based upon these evaluations, determining and approving the CEO's annual compensation, including salary, bonus, incentive, equity compensation, perquisites and other personal benefits; •reviewing and approving on an annual basis, with the input of the CEO, the corporate goals and objectives with respect to the Company's compensation structure for all executive officers (other than the CEO), including perquisites and other personal benefits, and evaluating at least once a year the executive officers' performance in light of these established goals and objectives and, based upon these evaluations, determining and approving the annual compensation for these executive officers, including salary, bonus, incentive, equity compensation, perquisites and other personal benefits; •reviewing on an annual basis the Company's compensation policies, including salaries and annual incentive bonus plans, with respect to the compensation of employees whose compensation is not otherwise set by the Human Resources/Capital and Talent Committee; •reviewing the Company's incentive compensation and stock-based plans and approving changes in such plans as needed, subject to any approval of the Board required by applicable law or the terms of such plans, and having and exercising all the authority of the Board with respect to the administration of such plans; •reviewing on an annual basis the Company's compensation structure for its Directors and making recommendations to the Board regarding the compensation of Directors; •reviewing at least annually the Company's compensation programs with respect to overall risk assessment and risk management, particularly with respect to whether such compensation programs encourage unnecessary or excessive risk taking by the Company; •reviewing and discussing with management the "Compensation Discussion and Analysis," and based on such review and discussions, making recommendations to the Board regarding inclusion of that section in the Company's proxy statement for any annual meeting of stockholders; •preparing and publishing an annual executive compensation report in the Company's proxy statement; •reviewing and recommending to the Board for approval the frequency with which the Company will conduct Say-on-Pay Votes and reviewing and approving the proposals regarding Say-on-Pay Vote and the frequency of the Say-on-Pay Vote to be included in the Company's proxy statement for any annual meeting of stockholders; •reviewing and approving employment agreements, severance arrangements and change in control agreements and provisions when, and if, appropriate, as well as any special supplemental benefits; •conducting an annual evaluation of the committee's performance and reporting to the Board on the results of this self-evaluation; •administering our Clawback Policy; and •reporting regularly to the Board on the Committee's activities. The Human Resources/Capital and Talent Committee, in its role as administrator under the Company's current Amended and Restated 2013 Equity Incentive Plan, as last amended on May 5, 2022 (the "2013 Equity Incentive Plan"), recommended, and the Board approved, the delegation of authority to the Company's President and CEO to grant equity awards under the 2013 Equity Incentive Plan within certain specified parameters. The Human Resources/Capital and Talent Committee engages an independent executive compensation consultant to advise the Committee on matters related to executive and director compensation. For a further description of the services the compensation consultant provided, see "Compensation Discussion and Analysis - What Guides Our Program - The Decision Making Process - The Role of the Independent Consultant" in this Proxy Statement. The Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee assists the Board in fulfilling some of its oversight responsibilities relating to director nominations and corporate governance matters. The Nominating and Corporate Governance Committee met four (4) times in 2024. Some of the Nominating and Corporate Governance Committee's responsibilities include: •identifying individuals qualified to become members of the Board; •recommending to the Board Director nominees to be presented at the Annual Meeting of Stockholders and to fill vacancies on the Board; •developing appropriate criteria for identifying properly qualified director candidates; •annually reviewing the composition of the Board and the skill sets and tenure of existing Directors and discussing longer-term transition issues;
Committees of the Board
•annually reviewing and recommending to the Board specific members for each standing committee of the Board; •monitoring and participating in the Company's overall stockholder communications effort so that all of the communications elements are unified and consistent; •members of the Committee, individually or collectively, may attend, with management, meetings with stockholders of the Company when requested by the Board or management; •establishing procedures to assist the Board in developing and evaluating potential candidates for executive positions, including the CEO; •reviewing various corporate governance-related policies, including the Code of Business Conduct and Ethics, the Related Party Transactions Policy, and the Policy on Insider Trading and Confidentiality and recommending changes, if any, to the Board; •reviewing and evaluating related party transactions; •developing, annually reviewing and recommending to the Board corporate governance guidelines for the Company; •establishing procedures to exercise oversight of the Company's adherence to such guidelines and the evaluation of the Board and Company management; •reviewing and exercising oversight of environmental, social and governance issues that may impact the Company's business and key stakeholders; •reviewing at least annually the reports on the Company prepared by the major proxy advisory firms and providing a report to the Board; •developing and overseeing, when necessary, a Company orientation program for new Directors and a continuing education program for current Directors and periodically reviewing these programs and updating them as necessary; •making recommendations to the Board in connection with any Director resignation tendered pursuant to the Company's Amended and Restated By-Laws; •preparing an annual evaluation of the committee's performance and reporting to the Board on the results of this self-evaluation; and •reporting regularly to the Board on the committee's activities.
Board of Directors
Board of Directors The Board has set seven directors as the number to be elected at the 2025 Annual Meeting and has nominated the individuals named below. All nominees are currently directors and Ms. Dilsaver, Mr. Dyer, Ms. Gates, Mrs. Madden, Mr. Neu and Mr. Thompson have been previously elected by our stockholders. On February 5, 2025, the Company completed its acquisition of Mattress Firm Group Inc. pursuant to the terms of the Agreement and Plan of Merger dated as of May 9, 2023, as amended (the "Merger Agreement"), by and among the Company, Mattress Firm Group Inc. and the other parties named therein. Pursuant to the terms of the Merger Agreement, the Board approved an increase of the size of the Board from 7 to 8 members and filled the newly created vacancy by appointing Mr. Sachse, as an independent director, to serve on the Board, effective on the same day. Mr. Heil, a current director, will not stand for re-election when his term expires at the 2025 annual meeting. As a result of Mr. Heil's departure, the size of our Board will decrease to seven members, which is consistent with the size range (7-8) of the Board over the last 10-years. The Directors standing for re-election are: Evelyn S. Dilsaver, Simon John Dyer, Cathy Rogers Gates, Meredith Siegfried Madden, Richard W. Neu, Peter R. Sachse and Scott L. Thompson. The nominees, if elected, will each serve a one-year term until Somnigroup's Annual Meeting of Stockholders in 2026 or until his or her respective successor is elected and qualified. Each of the nominees has consented to serve a one-year term. There are no family relationships among our executive officers and Directors.
Vote Required to Elect Director Nominees
Vote Required to Elect Director Nominees Each Director will be elected by the affirmative vote of a majority of the shares of common stock cast at the Annual Meeting. In the event that the number of votes "against" a Director exceeds the number of votes "for" that Director, that Director must tender his or her resignation to the Board. The Nominating and Corporate Governance Committee will make a recommendation to the Board whether to accept the resignation. The Board of Directors will then consider the recommendation and make a decision to accept or reject the resignation within 90 days after the certification of the election results. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION TO THE BOARD OF DIRECTORS OF EACH OF THE FOLLOWING NOMINEES:
Nominees to Board of Directors
Nominees to Board of Directors Evelyn S. Dilsaver, 69, has served as a member of Somnigroup International Inc.'s Board of Directors since December 2009. Ms. Dilsaver was President and Chief Executive Officer of Charles Schwab Investment Management from July 2004 until September 2007. Prior to that, Ms. Dilsaver held various senior management positions with The Charles Schwab Corporation since December 1991, including Executive Vice President and Senior Vice President, Asset Management Products and Services, of Charles Schwab Investment Management and Chief Financial Officer for U.S. Trust Company. Ms. Dilsaver currently serves as a member of the Board of Directors of HealthEquity, Inc. (HQY), a non-bank health savings trustee, where she serves as Chair of the Nominating, Governance and Sustainability Committee and as a member of the Talent Compensation and Culture Committee. Ms. Dilsaver was recently appointed to the Board of PACS Group, Inc. (PACS), a post-acute healthcare company, where she also serves as Chair of Nominating and Corporate Governance Committee and as a member of the Compensation Committee and of the Audit Committee. In addition, Ms. Dilsaver serves as a member of the Board of Directors of QuidelOrtho Corporation (QDEL), a healthcare diagnostics company, and of Bailard Private Real Estate Fund and several non-profit boards. Ms. Dilsaver serves as a member of the advisory board of Protiviti Inc., a global consulting company. Previously, Ms. Dilsaver served as a Director of Aeropostale, a specialty retailer, and, recently, Blue Shield of California. Ms. Dilsaver is a certified public accountant and holds a B.S. degree in accounting from California State University-Hayward. Ms. Dilsaver brings to the Board a long professional career in finance, accounting and general management and considerable experience with consumer-oriented businesses as a senior executive of a large investment management firm and her many years of serving as a director of companies in a variety of businesses. Simon John Dyer, 66, was elected to serve as a member of Somnigroup International Inc.'s Board of Directors effective January 1, 2022. Mr. Dyer is a beneficial equity interest holder, director and/or executive of Dyer Holdings Pty Ltd and various entities (collectively, the "Dyer Group") that have formed joint ventures (the "JVs") with indirect, wholly-owned subsidiaries of the Company. Please refer to "Certain Relationships and Related Transactions" for more information. Mr. Dyer joined Dyer Holdings Pty Ltd in 1983, was appointed Chief Executive Officer in 1986 and Chairman in 2008. Mr. Dyer holds a Master's Degree from the MIT Sloan School of Management and Bachelors' Degree in Law and Commerce from the University of Queensland. Mr. Dyer has over 41 years of experience in the mattress and bedding industry and brings entrepreneurial, strategic, international and growth-focused experience to the Board. Cathy Rogers Gates, 66, was elected to serve as a member of Somnigroup International Inc.'s Board of Directors on July 5, 2018. Prior to her retirement in June 2017, Ms. Gates served as an Assurance Partner at Ernst & Young LLP in Tulsa, Oklahoma. From 2008 until 2017, she served as the Managing Partner of that office. Ms. Gates began working at Ernst & Young LLP in 1986, and during her tenure there worked with both public and privately-held clients throughout the southwestern United States in the retail/consumer products, transportation, manufacturing and contract drilling industries. Ms. Gates' areas of expertise include working with internal audit departments, coordinating financial statement audits, accounting and financial reporting. In December 2022, Ms. Gates was elected to the Board of Directors of OGE Energy Corp. (OGE), where she currently serves on the Audit Committee and Compensation Committee. During 2023, she served on OGE's Nominating, Corporate Governance and Stewardship Committee. Ms. Gates currently serves on the Tulsa Area United Way Board of Directors where she chairs the Governance Committee. She also serves on the Tulsa Area United Way Community Investment Cabinet and the Walton College of Business Dean's Executive Advisory Board at the University of Arkansas. In 2022, Ms. Gates was appointed to the Arkansas Business Hall of Fame Board of Directors. She previously chaired the Finance and Audit Committee of the Tulsa Area United Way and previously served on the Tulsa Regional Chamber of Commerce Board of Directors. Ms. Gates holds a Masters of Science in Accounting from the University of Arkansas. Ms. Gates brings a wealth of experience in auditing, accounting and financial reporting to the Board gained through her past service as an Assurance and Managing Partner of Ernst & Young LLP. Meredith Siegfried Madden, 51, was elected to serve as a member of Somnigroup International Inc.'s Board of Directors effective January 1, 2022. Mrs. Madden serves as the Chief Executive Officer of The NORDAM Group Inc., a private, family-owned global aerospace manufacturing company and has served in this position since 2011. The NORDAM Group Inc. filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in July 2018 and emerged from bankruptcy protection on April 9, 2019. Mrs. Madden joined The NORDAM Group in 1999 and served in a variety of operations and sales positions until her appointment in 2009 as Chief Operating Officer, NORDAM Repair Group. She served in this position until her appointment in 2011 as Chief Executive Officer of The NORDAM Group. Prior to joining The NORDAM Group, Mrs. Madden worked in corporate finance consulting at Arthur Anderson & Co. from 1996-1999. Mrs. Madden holds a Master's Degree in Business Administration from the University of Chicago and a Bachelor's Degree in Business Administration and Finance from the University of Notre Dame. Mrs. Madden currently serves on the Board of Directors, as Chair of the Safety and Compliance Committee, and as a member of the Compensation Committee and of the Nominating & Corporate Governance Committee of SkyWest, Inc. (SKYW), a passenger airline company providing service to the United States, Canada, Mexico and the Caribbean. She previously served on the Audit Committee of SkyWest, Inc. Mrs. Madden brings a wealth of international and domestic experience in sales, operations, manufacturing and finance to the Board.
Nominees to Board of Directors
Richard W. Neu, 69, has served as a member of Somnigroup International Inc.'s Board of Directors since October 2015. Mr. Neu's professional career has spanned over 41 years. For the last 19 years Mr. Neu has served in a variety of Board roles. Mr. Neu currently serves on the Board of Directors, as Chair of the Audit Committee, as a member of the Nominating and ESG Committee and as a member of the Executive Committee of Huntington Bancshares Incorporated (HBAN). Mr. Neu also served as a Director of Oxford Square Capital Corp. (OXSQ) from 2016 to 2021. Until the sale of the company in 2012, he was the Lead Director and a member of the Audit Committee and Governance Committee of Dollar Thrifty Automotive Group, Inc. Mr. Neu also served as a Director of MCG Capital Corporation, a business development corporation, from 2007 until its sale in 2015, and during this period served as Chairman of the Board from 2009 to 2015 and as Chief Executive Officer from November 2011 to November 2012. Mr. Neu served from 1985 to 2004 as Chief Financial Officer of Charter One Financial, Inc., a major regional bank holding company, and a predecessor firm, and as a Director of Charter One Financial, Inc. from 1992 to August 2004. Mr. Neu previously worked for KPMG as a senior audit manager. Mr. Neu received a B.B.A. from Eastern Michigan University with a major in accounting. Mr. Neu has extensive knowledge and experience handling complex financial and operational issues through his service as both a director and executive officer of a variety of public companies. Peter R. Sachse, 67, has served as a member of Somnigroup International Inc.'s Board of Directors since February 5, 2025. Mr. Sachse serves as the CEO of Tailored Brands, Inc., a men's omnichannel retailer. He was appointed to the Tailored Brands Board of Directors in March of 2021, served as interim Co-CEO, from March of 2021 through March of 2022, then served as Co-CEO from March 2022 to January 2024 at which time he was appointed as sole CEO. Previously, Mr. Sachse spent 34 years in various positions at Macy's, Inc., including as the Chief Growth Officer from February 2016 until January 2017, Chief of Innovation and Business Development from February 2015 to February 2016, Chief Stores Officer from February 2012 to February 2015 and Chief Marketing Officer from February 2009 to February 2012 (a title which he also held from June 2003 to May 2007). Mr. Sachse was also Chairman and Chief Executive Officer of the macys.com division of Macy's, Inc. from April 2006 to February 2012. In addition to these roles, Mr. Sachse has served as Director at the Sachse Family Fund, an early-stage investor in digital startups, since 2017 and as a Director of Citi Trends, Inc. (CTRN), a specialty value retailer of apparel, accessories and home trends, since 2019 through March 2025 and its Executive Chairman since March 2020 through March 2025. He also served as a Director of Mattress Firm and Compensation Committee Chair from 2019 until the Company's acquisition of Mattress Firm. Mr. Sachse holds a BBS from the University of Wisconsin. Mr. Sachse's extensive career in the retail industry and experience as an executive officer make him well-qualified to serve on the Company's Board. Scott L. Thompson, 66, has served as Chairman of Somnigroup International Inc.'s Board of Directors since September 2015. Mr. Thompson was appointed President and Chief Executive Officer of Somnigroup in March 2025 and previously served as President and Chief Executive Officer of Tempur Sealy International from September 2015 to March 2025. In connection with the Company's recent acquisition of Mattress Firm, Mr. Thompson is also currently serving as Interim Chief Executive Officer of Mattress Firm. Mr. Thompson previously served as Chief Executive Officer and President of Dollar Thrifty Automotive Group, Inc. until it was purchased by Hertz Global Holdings, Inc. in 2012. Prior to serving as CEO and President, Mr. Thompson was a Senior Executive Vice President and Chief Financial Officer of Dollar Thrifty. Prior to joining Dollar Thrifty in 2008, Mr. Thompson was a consultant to private equity firms and was a founder of Group 1 Automotive, Inc., a NYSE and Fortune 500 company, serving as its Senior Executive Vice President, Chief Financial Officer and Treasurer. Mr. Thompson served as Chairman of Dollar Thrifty from December 2011 to September 2012. He served as a member of the Board of Directors, and for part of that time as the Non-Executive Chairman, of Houston Wire & Cable Company, a publicly-traded provider of industrial products, from November 2007 until September 2015. Mr. Thompson also served as a member of the Board of Directors of Conn's, Inc., a publicly traded retailer of consumer furniture, from June 2004 to September 2015 and of Asbury Automotive Group, Inc., a publicly traded automotive retailer, from January 2015 to February 2018. Mr. Thompson earned a Bachelor of Business Administration degree from Stephen F. Austin State University in Nacogdoches, Texas, and began his career with a national accounting firm. Mr. Thompson brings to the Board extensive financial, retail, operational and entrepreneurial experience in his roles as an executive officer and director of publicly traded companies.
2024 CD&A At-A-Glance
| Continued our stockholder outreach efforts with a significant focus on executive compensation matters | ■The Lead Director from the Board of Directors, along with members of senior management, outreached with 5 top stockholders representing approximately 33% of shares outstanding ■Management met with over 50 stockholders throughout 2024 as part of a continuous process to meet stockholders | | Continued to reinforce the link between pay and performance in our Long-Term Incentive Plan ("LTIP") | ■For 2024 regular LTIP awards, continued to grant 50% using performance-based restricted stock units ("PRSUs"); and 50% using time-based restricted stock units ("RSUs") ■For 2024, continued to align our PRSU awards with market best practices: •Retained the maximum payout opportunity for all NEOs at 300% of target •Continued using three performance metrics: added adjusted Earnings Per Diluted Share ("EPS")(1) (which replaced as a performance metric, Relative Total Shareholder Return ("TSR")); retained adjusted EBITDA(1); and expanded the strategic initiatives component, to include not only ESG initiatives as it has done previously, but also performance metrics relating to leadership development and capital allocation |
Results of 2024 Say on Pay / Board Responsiveness to Stockholder Feedback
| What We Heard | What We Did | | Stockholders prefer a mix of performance-based and time-based equity grants. | LTIP awards were granted; 50% using performance-based PRSUs and 50% using time-based RSUs. | | Stockholders would like to see maximum payout opportunities for the long-term incentive award targeted closer to market practices. | In 2021, the LTIP maximum award opportunity was lowered from 600% to 300% of target and has remained at that level. | | Stockholders seek a more diversified use of performance metrics in the incentive plans, and more clarity around the performance metrics in the incentive plans. | In 2024, the LTIP performance metrics added adjusted EPS(1) (which replaced as a performance metric, relative TSR); retained adjusted EBITDA(1); and expanded the strategic initiatives components to include not only ESG initiatives as it has done previously, but also performance metrics relating to leadership development and capital allocation. Rebalanced performance weighting of the foregoing performance metrics. Details about the performance metrics and their rationale are provided below in "2024 Long-Term Incentive Plan ("LTIP") Grants." |
Compensation Governance and Best Practices
| What We Do | What We Don't Do | | •Emphasize incentive-based compensation to align pay with performance | •No stock option repricing without stockholder approval | | •Place primary emphasis on long-term incentive compensation to link executive and stockholder interests | •No uncapped incentive award opportunities | | •Have significant stock ownership guidelines and holding requirements | •No stock hedging or stock pledging activities | | •Maintain a Clawback Policy requiring the recovery of excess compensation in the event of an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period | •No multi-year pay guarantees within employment agreements | | •Engage an independent compensation consultant to advise the Human Resources/Capital and Talent Committee | •No single trigger acceleration of equity awards in the event of a change of control unless these awards are not assumed, continued or substituted by the surviving corporation | | •Conduct annual risk assessment | •No single trigger or modified trigger vesting for cash severance in the event of a change of control | | •Solicit stockholder feedback | •No excessive perquisites or benefits to our NEOs | | •Use tally sheets and other analytical tools to assess executive compensation | •No tax gross-ups in the event of a change of control |
The Role of the Peer Group
The Role of the Peer Group Our Human Resources/Capital and Talent Committee examines competitive peer group and survey information, compiled by its independent compensation consultant, as one of many factors to assist in determining base salary, annual incentive compensation and stock-based long-term equity awards. In addition to market data, the Committee considers factors such as individual performance, internal equity among executives, promotion potential and retention risk in determining total compensation for our NEOs. The Committee periodically benchmarks our executive compensation against the compensation paid to executives at a peer group of publicly-traded companies of similar size and in similar industries to the Company (the "Peer Group") to obtain a general understanding of current compensation practices. The nineteen companies currently comprising the Peer Group provide a useful comparison to the Company based, among other things, on their similarity in size, revenues, market capitalization, EBITDA, scope of operations and branded consumer product focus. The Human Resources/Capital and Talent Committee periodically evaluates the appropriateness of the size and composition of the Peer Group and makes changes to its membership in response to mergers and acquisitions and changes in organizational comparability. During the summer of 2023, the Committee reviewed its Peer Group for compensation decisions to be made in 2024. Based on this review and the advice of its independent compensation consultant, the Committee approved the following changes to the Peer Group to better align with the Company's revenue in 2023; removed Sleep Number Corporation because this company no longer meets the revenue and business comparability criteria used by the Committee and replaced it with Mohawk Industries, Inc. The Peer Group companies for 2024 are listed below:
2024 Peer Group
2024 Peer Group
2024 Peer Group
| Brunswick Corporation (BC) | Hasbro, Inc. (HAS) | RH (RH) | | Capri Holdings Limited (CPRI) | Leggett & Platt, Incorporated (LEG) | Skechers U.S.A., Inc. (SKX) | | Carter's, Inc. (CRI) | Levi Strauss & Co. (LEVI) | Tapestry, Inc. (TPR) | | Columbia Sportswear Company (COLM) | Mohawk Industries, Inc. (MHK) | Under Armour, Inc. (UA) | | Deckers Outdoor Corporation (DECK) | Polaris Industries Inc. (PII) | Williams-Sonoma, Inc. (WSM) | | Gildan Activewear Inc. (GIL) | PVH Corp. (PVH) | | | Hanesbrands Inc. (HBI) | Ralph Lauren Corporation (RL) | |
2024 Annual Incentive Plan
2024 Annual Incentive Plan Our annual incentive plan ("AIP") ensures that a significant portion of each NEO's annual compensation is at risk and dependent on overall Company performance. The plan is designed to focus the NEOs on achieving critical short-term financial and operating targets and/or strategic initiatives. The Human Resources/Capital and Talent Committee is responsible for administering the AIP pursuant to the terms of our Second Amended and Restated Annual Incentive Bonus Plan for Senior Executives, which was approved by our stockholders in May 2015. 2024 Target Bonus Opportunities. On average, target bonus opportunities for our NEOs were targeted at the median of a 50/50 blend of publicly filed peer company proxy data and published market survey data. The following table sets forth the targeted annual incentive levels for each NEO in 2024, shown as a percentage of annual base salary at 2024 year-end, along with the maximum potential incentive opportunity:
2024 Annual Incentive Plan
| NEO | Target Award as a % of Salary | Target Award ($) | Maximum Award as a % of Salary | | Scott L. Thompson | 135% | $1,575,450 | 270% | | Bhaskar Rao | 75% | $369,750 | 150% | | H. Clifford Buster, III | 85% | $464,950 | 170% | | Steven H. Rusing | 75% | $328,500 | 150% | | Scott J. Vollet | 75% | $369,750 | 150% |
2024 Annual Incentive Plan
2024 Performance Goals, Metrics and Results. The performance goals set for AIP awards are intended to be at a reasonable level of difficulty that requires the Company and NEOs to perform at a high level in order to meet them. Payouts in any year above 100% (target level) indicate significant accomplishment with performance above expectation. The Human Resources/Capital and Talent Committee changed the primary performance metric for its 2024 AIP from adjusted EBITDA(1) to adjusted EPS(1) to better capture the Company's profitability and financial health. While adjusted EBITDA(1) focuses on core operational performance and efficiency, it does not account for costs associated with capital structure, tax strategies, or non-cash expenses. Adjusted EPS(1), on the other hand, provides a more comprehensive view of profitability, offering stronger insights into earnings quality and facilitating better comparisons across periods and with other companies. By emphasizing adjusted EPS(1), management is incentivized to prioritize long-term, sustainable growth over short-term gains, aligning executive and stockholder interests. This change was also implemented for the 2024 AIP for non-NEOs to foster teamwork at all levels. The Human Resources/Capital and Talent Committee believes that the adjusted EPS(1) targets for 2024 drove strong business performance in light of the challenged category demand and global macroeconomic factors. While the market was robust in 2021 and 2022, the Company experienced strong category headwinds across market specific and macroeconomic factors in 2023 and 2024. Recognizing the difficult environment, the Committee established performance targets it believed would effectively motivate employees in the expected challenging market conditions of 2024. The potential AIP payouts were interpolated percentages on adjusted EPS(1) as follows:
2024 Annual Incentive Plan
| Adjusted EPS(1) as of the end of the Performance Period | Payout* Based Upon Target Award (which is a % of Salary) | | Below $2.15 | —% | | $2.15 | 25% | | $2.70 to $3.00 Inclusive | 100% | | $3.70 | 300% | | •Adjusted EPS between $2.15 and < $2.70 will result in an interpolated payout % (sliding scale). Adjusted EPS between $3.01 and < $3.70 will result in an interpolated payout % (sliding scale). Adjusted EPS below $2.15 will result in 0% payout. | |
2024 Annual Incentive Plan
2024 AIP Payouts. Based on these targets, the following payouts were made under our 2024 AIP to our NEOs based upon an adjusted EPS(1) of $2.55, i.e. 82% of target.
2024 Annual Incentive Plan
| NEO | 2024 Target ($) | 2024 Actual Payment ($) | | Scott L. Thompson | $1,575,450 | $1,291,869 | | Bhaskar Rao | $369,750 | $303,195 | | H. Clifford Buster, III | $464,950 | $381,259 | | Steven H. Rusing | $328,500 | $269,370 | | Scott J. Vollet | $369,750 | $303,195 |
2024 Long-Term Incentive Plan ("LTIP") Grants
2024 Long-Term Incentive Plan ("LTIP") Grants The focus of our long-term incentive plan is achieving profitable growth while balancing investments in business initiatives and driving long-term stockholder value creation. For awards in 2024, we used a balanced mix of quantifiable absolute and relative financial metrics, as well as qualitative strategic initiative metrics to measure performance and support the following key objectives: •Motivate and reward an experienced management team with performance-based equity awards and long-term incentive compensation to encourage both retention and performance •Foster a culture of relentless pursuit towards execution of delivering earnings growth and strong stockholder returns •Encourage leadership development •Drive ESG initiatives, leadership development and capital allocation strategies Since 2021, and in response to stockholder feedback, we have been using three performance metrics for PRSUs. Our first performance metric is adjusted EPS(1), which we introduced in 2024 in lieu of relative total stockholder returns. This is consistent with our revised 2024 AIP performance metric as described in "2024 Executive Compensation Program In Detail - 2024 Annual Incentive Plan" above. While relative total stockholder returns allow companies to compare their performance against a peer group, providing a picture of how well they are doing relative to their competitors, as stated above in our discussion of the AIP, the Committee believes adjusted EPS(1) provides a more comprehensive view of profitability, offering stronger insights into earnings quality and facilitating better comparison across periods and with other companies. The Human Resources/Capital and Talent Committee also believes that using adjusted EPS(1) ensures that management is incentivized to focus on long-term, sustainable growth rather than short-term gains, aligning executive and stockholder interests. The Committee allocated a performance weighting of 50% of target to adjusted EPS(1). Our second performance metric is adjusted EBITDA(1). The Committee allocated a performance weighting of 30% of target to adjusted EBITDA(1). This represents a decrease from the 80% of target allocation in previous years. For our third performance metric, the Committee broadened our strategic initiatives to include not only ESG initiatives as it has done previously, but also leadership development and capital allocation strategies. The performance weighting for this category was increased from 10% to 20% of target. While we changed the metrics in 2024, we continued using three performance metrics because it diversifies our LTIP, allowing for strong alignment across stockholder interests. The following table illustrates why the Committee believed adjusted EPS(1), adjusted EBITDA(1) and a broader set of strategic initiatives was appropriate for motivating performance and supporting the key objectives described above.
2024 Long-Term Incentive Plan ("LTIP") Grants
| Plan | Annual Incentive Plan ("AIP") Awards | LTIP | | | | | | | PRSUs = 50% of the total LTIP award value | | | RSUs = 50% of total LTIP award value | | Performance Metrics | Company-Wide Adjusted EPS(1) | Company-Wide Adjusted EPS(1) | Company-Wide Adjusted EBITDA(1) | Strategic Initiatives | Not Applicable | | Weightings | 100% | 50% of 50% | 30% of 50% | 20% of 50% | 50% | | Key Points | *Adjusted EPS(1) is directly related to earnings and provides stockholders a more comprehensive view of the Company’s net profitability *Adjusted EPS(1) emphasizes growth while continuing strong accountability for returns *Adjusted EPS(1) strongly aligns management and stockholder interests *After performance metrics satisfied for PRSUs, additional time vesting enhances retention | | *Adjusted EBITDA(1) emphasizes growth while continuing strong accountability for returns *Using a Company-wide performance goal based on adjusted EBITDA(1) promotes collaboration and focuses the entire Company on a goal that strongly correlates with stockholder value creation *After performance metrics satisfied for PRSUs, additional time vesting enhances retention | *Qualitative assessment of leadership development, which promotes long-term Company success *Qualitative assessment of accomplishments aligned with Company ESG initiatives, which ensures focus on our global responsibility to serve all stakeholders, community, and environment *Qualitative assessment of accomplishments aligned with capital allocation strategies *After performance metrics satisfied, additional time vesting enhances retention | *4-year time vesting supports leadership retention objectives *Reinforces ownership mentality through enhanced equity stakes |
2024 LTIP Awards
2024 LTIP Awards In determining the size of each 2024 LTIP award granted, the Committee considered a variety of factors, including benchmarking data on competitive long-term incentive values, the percentage of long-term incentive value to be allocated to PRSUs and time-based RSUs, and the NEO's position within the Company. The actual number of target PRSUs and time-based RSUs granted was calculated by dividing the dollar value of the award by the closing price of the Company's stock on the equity award grant date. The table below shows the dollar value of the target PRSUs and time-based RSUs awarded for fiscal 2024 for each of the NEOs:
2024 LTIP Awards
| NEO | 2024 PRSUs | 2024 RSUs | | Scott L. Thompson | $4,000,000 | $4,000,000 | | Bhaskar Rao | $775,000 | $775,000 | | H. Clifford Buster, III | $1,250,000 | $1,250,000 | | Steven H. Rusing | $775,000 | $775,000 | | Scott J. Vollet | $775,000 | $775,000 |
Employment Agreements
Employment Agreements Each of our NEOs is a party to an employment agreement with the Company. These employment agreements provide for severance arrangements in the event of termination of employment in certain circumstances and also provide for non-competition, non-solicitation and confidentiality agreements. These severance arrangements are discussed in more detail below under "Potential Payments upon Termination or Change in Control." We believe that these agreements, including the severance provisions, are necessary to allow us to be competitive in recruiting and retaining top talent for executive officer positions. However, as part of its analysis of the reasonableness of each individual element of compensation and each NEO's compensation package as a whole, the Human Resources/Capital and Talent Committee periodically analyzes these arrangements for reasonableness and market competitiveness.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | | Scott L. Thompson Chairman, President and Chief Executive Officer, Somnigroup and Interim Chief Executive Officer, Mattress Firm | 2024 | 1,167,000 | 8,201,668 | — | 1,291,869 | 268,042 | 10,928,579 | | | 2023 | 1,133,000 | 8,298,422 | — | 2,126,075 | 272,690 | 11,830,187 | | | 2022 | 1,100,000 | 8,307,337 | 8,934,336 | 1,024,650 | 293,055 | 19,659,378 | | Bhaskar Rao EVP and Chief Financial Officer, Somnigroup | 2024 | 493,000 | 1,589,099 | — | 303,195 | 33,892 | 2,419,186 | | | 2023 | 478,000 | 1,607,785 | — | 498,315 | 25,864 | 2,609,964 | | | 2022 | 464,000 | 1,609,560 | — | 240,120 | 23,942 | 2,337,622 | | H. Clifford Buster, III Chief Executive Officer, Tempur Sealy International | 2024 | 547,000 | 2,563,008 | — | 381,259 | 12,220 | 3,503,487 | | | 2023 | 531,000 | 2,593,253 | — | 627,377 | 12,664 | 3,764,294 | | | 2022 | 515,000 | 2,596,023 | — | 302,048 | 11,742 | 3,424,813 | | Steven H. Rusing President, Mattress Firm | 2024 | 438,000 | 1,589,099 | — | 269,370 | 25,365 | 2,321,834 | | | 2023 | 425,000 | 1,607,785 | — | 443,063 | 25,603 | 2,501,451 | | | 2022 | 412,000 | 1,609,560 | — | 213,210 | 30,987 | 2,265,757 | | Scott J. Vollet EVP, Global Operations, Tempur Sealy International | 2024 | 493,000 | 1,589,099 | — | 303,195 | 25,714 | 2,411,008 | | | 2023 | 478,000 | 1,607,785 | — | 498,315 | 25,864 | 2,609,964 | | | 2022 | 464,000 | 1,609,560 | — | 240,120 | 28,866 | 2,342,546 |
Summary Compensation Table
(1)For stock and option awards, the value set forth is the aggregate grant date fair value, in accordance with FASB ASC 718. See Note 1 "Summary of Significant Accounting Policies" and Note 11 "Stock-based Compensation" to the Company's Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 for a complete description of the valuation. Stock awards include grants of RSUs and PRSUs, both of which are described in the Compensation Discussion and Analysis section and discussed elsewhere in this Proxy Statement. The grant date fair values of the PRSU awards represent the value at the grant date based upon the probable outcome of the performance conditions set forth in the awards, which was the target value. The grant date fair value of the stock awards granted in 2024 at maximum value was $16,604,951 for Mr. Thompson, $5,189,036 for Mr. Buster and $3,217,277 for each of Messrs. Rao, Rusing and Vollet. For the 2024 PRSU awards, the NEOs received 80% of the target PRSU award allocated to adjusted EPS(1), 69% of the target PRSU award allocated to adjusted EBITDA(1) and 300% of the target PRSU award allocated to Strategic Initiatives. The grant date fair value of the stock awards granted in 2023 at maximum value was $15,498,333 for Mr. Thompson, $4,843,304 for Mr. Buster and $3,002,819 for each of Messrs. Rao, Rusing and Vollet. The grant date fair value of the stock awards granted in 2022 at maximum value was $15,507,307 for Mr. Thompson, $4,845,983 for Mr. Buster and $3,004,468 for each of Messrs. Rao, Rusing and Vollet. (2)Non-Equity Incentive Plan Compensation payouts are reported in the year they are earned although paid in the following year. As discussed in the Compensation Discussion and Analysis section above, 82% of the target for the 2024 AIP was earned by each NEO. (3)Represents amounts paid in 2024 on behalf of each of our NEOs for the following:
Summary Compensation Table
| Named Executive Officer | Life Insurance Premiums ($) | Contributions to Qualified Defined Contribution Plans ($) | Tax Preparation, Legal and Financial Planning Fees($) | Use of Corporate Aircraft ($)(a) | Income Tax Gross-Up ($)(b) | Total ($) | | Scott L. Thompson | 1,965 | 13,800 | 10,000 | 235,555 | 6,722 | 268,042 | | Bhaskar Rao | 1,914 | 13,800 | 10,000 | 8,178 | | 33,892 | | H. Clifford Buster, III | 2,220 | — | 10,000 | | | 12,220 | | Steven H. Rusing | 1,701 | 13,800 | 9,864 | | | 25,365 | | Scott J. Vollet | 1,914 | 13,800 | 10,000 | | | 25,714 |
Summary Compensation Table
a.Corporate aircraft use is governed by the Company's Corporate Aircraft Policy adopted by the Human Resources/Capital and Talent Committee in connection with the Company's decision to allow members of the Board and executive team to use company-owned, chartered or leased aircraft. In 2022, the Board modified the policy to require the CEO to use the Company airplane to limit travel time and enhance personal security and health. Pursuant to SEC rules, certain uses of corporate aircraft, including commuting from an executive's personal residence to the Company's headquarters in a different city, is considered "personal" and thus must be disclosed as a perquisite. For 2024, $128,825 of Mr. Thompson's use of Company aircraft was comprised of commuting flights. b.The Company does not provide for United States Federal, State or local income tax gross-ups relating to imputed income to employees except in limited circumstances. The Company does provide for such gross-ups in certain circumstances under its Corporate Aircraft Policy. The total amount of such gross-ups during 2024 was $6,722.
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table provides information about annual and long-term incentive award opportunities granted to our NEOs during 2024. These incentive award opportunities are described in the Compensation Discussion and Analysis section of this Proxy Statement under "2024 Executive Compensation Program In Detail - 2024 Annual Incentive Plan" and "2024 Executive Compensation Program In Detail - 2024 Long-Term Incentive Plan ("LTIP") Grants".
Grants of Plan-Based Awards
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | | Name/Type of Award | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Scott L. Thompson | | | | | | | | | | | | | Annual Incentive Bonus | | 393,863 | 1,575,450 | 3,150,900 | | | | | | | | | LTI Plan - PRSUs | 1/4/2024 | | | | 20,868 | 83,472 | 250,416 | | | | 4,201,642 | | LTI Plan - RSUs | 1/4/2024 | | | | | | | 83,473 | | | 4,000,026 | | Bhaskar Rao | | | | | | | | | | | | | Annual Incentive Bonus | | 92,438 | 369,750 | 739,500 | | | | | | | | | LTI Plan - PRSUs | 1/4/2024 | | | | 4,043 | 16,173 | 48,519 | | | | 814,089 | | LTI Plan - RSUs | 1/4/2024 | | | | | | | 16,173 | | | 775,010 | | H. Clifford Buster, III | | | | | | | | | | | | | Annual Incentive Bonus | | 116,238 | 464,950 | 929,900 | | | | | | | | | LTI Plan - PRSUs | 1/4/2024 | | | | 6,521 | 26,085 | 78,255 | | | | 1,313,015 | | LTI Plan - RSUs | 1/4/2024 | | | | | | | 26,085 | | | 1,249,993 | | Steven H. Rusing | | | | | | | | | | | | | Annual Incentive Bonus | | 82,125 | 328,500 | 657,000 | | | | | | | | | LTI Plan - PRSUs | 1/4/2024 | | | | 4,043 | 16,173 | 48,519 | | | | 814,089 | | LTI Plan - RSUs | 1/4/2024 | | | | | | | 16,173 | | | 775,010 | | Scott J. Vollet | | | | | | | | | | | | | Annual Incentive Bonus | | 92,438 | 369,750 | 739,500 | | | | | | | | | LTI Plan - PRSUs | 1/4/2024 | | | | 4,043 | 16,173 | 48,519 | | | | 814,089 | | LTI Plan - RSUs | 1/4/2024 | | | | | | | 16,173 | | | 775,010 |
Grants of Plan-Based Awards
| (1) These columns reflect the 2024 annual award opportunities under the AIP. They reflect the amounts that would have been payable under the program, based on a Threshold, Target and Maximum attainment. The 2024 Company-wide adjusted EPS(1) results were less than the target threshold goal and therefore 82% of the target AIP payout was made under the 2024 AIP and is reflected in the Summary Compensation Table. See "2024 Executive Compensation Program In Detail - 2024 Annual Incentive Program" for more information. | | (2) These awards represent PRSUs awarded as part of our 2024 LTIP. Each of the NEOs received 50% of their 2024 target LTIP award in the form of PRSUs based on the estimated grant date fair value as of January 4, 2024. Each PRSU granted in 2024 represents a contingent right to receive shares of our common stock, with the final number of shares to be issued based on the 2024 Company-wide adjusted EPS achievement, Company-wide adjusted EBITDA achievement and qualitative Strategic Initiatives performance during the one-year period ending on December 31, 2024. For the 2024 PRSU awards, the NEOs received 80% of the target PRSU award based on adjusted EPS, 69% of the target PRSU Award based on adjusted EBITDA and 300% of the target PRSU award based upon qualitative Strategic Initiatives, resulting in an overall weighted average payout of 120.4% of the total target PRSUs. The PRSUs remain subject to time vesting. See "2024 Executive Compensation Program In Detail - 2024 Long-Term Incentive Plan ("LTIP") Grants" for more information. | | (3) These awards represent RSUs awarded as part of our 2024 LTIP. Each of the NEOs received 50% of their 2024 target LTIP award in the form of RSUs based on the estimated grant date fair value as of January 4, 2024. These awards vest over the first four anniversaries of the grant date except that Mr. Thompson's award vests in full on the first anniversary of the grant date. | | (4) This column shows the grant date fair value of RSUs and of the PRSUs, computed in accordance with FASB ASC 718. See Note 1 "Summary of Significant Accounting Policies" and Note 11 "Stock-based Compensation" to the Company's Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 for a complete description of the valuations. For the RSUs and the PRSUs, the grant date fair value displayed represents the value of the shares based on the closing price of the Company's common stock, par value $0.01 per share (the "Stock") on the NYSE on the grant date. The grant date fair values of the PRSU awards represent the value at the grant date based upon the probable outcome of the performance conditions set forth in the awards, which was the target value. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The table below sets forth the outstanding stock option awards classified as exercisable and unexercisable and our unvested stock awards as of December 31, 2024, for each of our NEOs. The table assumes a market value of $56.69 per share, the closing market price of our common stock on December 31, 2024.
Outstanding Equity Awards at Fiscal Year-End
| | | Option Awards | | | | Stock Awards | | | Name | Grant Date | Number of Securities Underlying Options | | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock that Have Not Yet Vested | Market Value of Shares or Units of Stock that Have Not Yet Vested | | | | (#) Exercisable | (#) Unexercisable | ($) | | (#) | ($) | | Scott L. Thompson | | | | | | | | | | 9/4/2015 | 1,240,000 | — | 17.94 | 09/03/25 | | | | | 1/5/2017 | 1,357,904 | — | 17.38 | 01/04/27 | | | | | 1/5/2018 | 501,644 | — | 15.61 | 01/04/28 | | | | | 7/6/2022 | 200,000 | 200,000(1) | 25.00 | 7/5/2032 | | | | | 7/6/2022 | 200,000 | 200,000(1) | 30.00 | 7/5/2032 | | | | | 7/6/2022 | 200,000 | 200,000(1) | 35.00 | 7/5/2032 | | | | | 1/4/2021 | | | | | 37,793(2) | 2,142,485 | | | 1/4/2021 | | | | | 151,170(3) | 8,569,827 | | | 1/4/2023 | | | | | 230,861(5) | 13,087,510 | | | 1/4/2024 | | | | | 83,473(6) | 4,732,084 | | | 1/4/2024 | | | | | 83,472(7) | 4,732,028 | | Bhaskar Rao | | | | | | | | | | 1/5/2018 | 18,182 | — | 15.61 | 01/04/28 | | | | | 1/4/2021 | | | | | 7,322(2) | 415,084 | | | 1/4/2021 | | | | | 29,286(3) | 1,660,223 | | | 1/4/2022 | | | | | 8,038(2) | 455,674 | | | 1/4/2022 | | | | | 9,175(4) | 520,131 | | | 1/4/2023 | | | | | 16,640(2) | 943,322 | | | 1/4/2023 | | | | | 44,731(5) | 2,535,800 | | | 1/4/2024 | | | | | 16,173(2) | 916,847 | | | 1/4/2024 | | | | | 16,173(7) | 916,847 | | H. Clifford Buster, III | | | | | | | | | | 1/5/2018 | 35,248 | — | 15.61 | 01/04/28 | | | | | 1/4/2021 | | | | | 11,810(2) | 2,677,752 | | | 1/4/2021 | | | | | 47,235(3) | 2,677,752 | | | 1/4/2022 | | | | | 12,964(2) | 734,929 | | | 1/4/2022 | | | | | 14,797(4) | 838,842 | | | 1/4/2023 | | | | | 26,839(2) | 1,521,503 | | | 1/4/2023 | | | | | 72,147(5) | 4,090,013 | | | 1/4/2024 | | | | | 26,085(2) | 1,478,759 | | | 1/4/2024 | | | | | 26,085(7) | 1,478,759 | | Steven H. Rusing | | | | | | | | | | 1/5/2018 | 10,448 | — | 15.61 | 01/04/28 | | | | | 1/4/2021 | | | | | 7,322(2) | 415,084 | | | 1/4/2021 | | | | | 29,286(3) | 1,660,223 |
Outstanding Equity Awards at Fiscal Year-End
| | | Option Awards | | | | Stock Awards | | | Name | Grant Date | Number of Securities Underlying Options | | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock that Have Not Yet Vested | Market Value of Shares or Units of Stock that Have Not Yet Vested | | | | (#) Exercisable | (#) Unexercisable | ($) | | (#) | ($) | | | 1/4/2022 | | | | | 8,038(2) | 455,674 | | | 1/4/2022 | | | | | 9,175(4) | 520,131 | | | 1/4/2023 | | | | | 16,640(2) | 943,322 | | | 1/4/2023 | | | | | 44,731(5) | 2,535,800 | | | 1/4/2024 | | | | | 16,173(2) | 916,847 | | | 1/4/2024 | | | | | 16,173(7) | 916,847 | | Scott J. Vollet | | | | | | | | | | 1/5/2018 | 18,812 | — | 15.61 | 01/04/28 | | | | | 1/4/2021 | | | | | 7,322(2) | 415,084 | | | 1/4/2021 | | | | | 29,286(3) | 1,660,223 | | | 1/4/2022 | | | | | 8,038(2) | 455,674 | | | 1/4/2022 | | | | | 9,175(4) | 520,131 | | | 1/4/2023 | | | | | 16,640(2) | 943,322 | | | 1/4/2023 | | | | | 44,731(5) | 2,535,800 | | | 1/4/2024 | | | | | 16,173(2) | 916,847 | | | 1/4/2024 | | | | | 16,173(7) | 916,847 |
Outstanding Equity Awards at Fiscal Year-End
| (1) These options become exercisable in equal installments over four years, beginning with the one-year anniversary date of the grant. | | (2) These RSUs vest over four years, beginning with the one-year anniversary of the date of the grant. | | (3) On February 22, 2022, the Human Resources/Capital and Talent Committee of the Board of Directors determined that the maximum performance conditions for the performance restricted stock units (PRSUs) granted on January 4, 2021 were achieved. The PRSUs vested in approximately three equal installments on January 4, 2023, 2024 and 2025. | | (4) On February 17, 2023, the Human Resources/Capital and Talent Committee of the Board of Directors determined that the performance conditions for the performance restricted stock units (PRSUs) granted on January 4, 2022 met the following thresholds: 46% of the target PRSU award based on adjusted EBITDA, 188% of the target PRSU award based on Relative TSR Percentile and 300% of the target PRSU award based upon qualitative ESG performance. The PRSUs vested and will vest in approximately three equal installments on January 4, 2024, 2025 and 2026. | | (5) On February 16, 2024, the Human Resources/Capital and Talent Committee of the Board of Directors determined that the performance conditions for the performance restricted stock units (PRSUs) granted on January 4, 2023 met the following thresholds: 177% of the target PRSU award based on adjusted EBITDA, 300% of the target PRSU award based on Relative TSR Percentile and 300% of the target PRSU award based upon qualitative ESG performance. The PRSUs vested and will vest in approximately three equal installments on January 4, 2025, 2026 and 2027 except the PRSUs for Mr. Thompson vested in full on January 4, 2025. | | (6) These RSUs, granted on January 4, 2024, vested in full on the first anniversary of the date of grant. | | (7) On February 28, 2025, the Human Resources/Capital and Talent Committee of the Board of Directors determined that the performance conditions for the performance restricted stock units (PRSUs) granted on January 4, 2024 met the following thresholds: 80% of the target PRSU award based on adjusted EPS, 69% of the target PRSU Award based on adjusted EBITDA and 300% of the target PRSU award based upon qualitative Strategic Initiatives. The PRSUs will vest in approximately three equal installments on January 4, 2026, 2027 and 2028 except the PRSUs for Mr. Thompson will vest in full on January 4, 2026. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table sets forth certain information regarding options exercised and stock awards vested during the year ended December 31, 2024, for our NEOs.
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) | | | (#) | ($) | (#) | ($) | | Scott L. Thompson | — | — | 906,431 | 43,641,296 | | Bhaskar Rao | — | — | 132,274 | 6,370,360 | | H. Clifford Buster, III | — | — | 163,394 | 7,861,630 | | Steven H. Rusing | — | — | 103,358 | 4,973,428 | | Scott J. Vollet | — | — | 132,274 | 6,370,360 |
Option Exercises and Stock Vested
(1) The value realized on vesting is calculated by multiplying the number of shares shown in the table by the market value of the shares on the vesting date.
Pension Benefits Table
Pension Benefits Table No table is included for defined benefit pension or similar plans since none of the Named Executive Officers are covered by such a plan.
Nonqualified Deferred Compensation Table
Nonqualified Deferred Compensation Table While we do not maintain a traditional nonqualified deferred compensation plan for our NEOs, when Mr. Thompson was hired in 2015 he was awarded 472,000 RSUs under his RSU agreement dated September 4, 2015. These RSUs vested over three years and are now fully vested. Except for RSUs distributed as stock and sold to pay for taxes, these RSUs have not been paid as stock to Mr. Thompson and he is entitled to receive the remaining 454,364 RSUs as shares of common stock within thirty days of his termination for any reason.
Nonqualified Deferred Compensation Table
| Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) | Aggregate Balance at Last FYE ($) | | Scott L. Thompson(1) | — | — | 2,598,962 | 25,757,895 | | Bhaskar Rao | — | — | — | — | | H. Clifford Buster, III | — | — | — | — | | Steven H. Rusing | — | — | — | — | | Scott J. Vollet | — | — | — | — |
Nonqualified Deferred Compensation Table
(1) All earnings shown are attributable to an increase in our stock price as measured on December 31, 2024 from December 29, 2023. No amounts shown were reported in the Summary Compensation Table for calendar year 2024. The grant date fair value of Mr. Thompson's deferred RSU award granted on September 4, 2015 of $8,466,500 was previously reported in the Summary Compensation Table for calendar year 2015.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Somnigroup has entered into agreements and adopted plans that require us to provide compensation and/or other benefits to each NEO during employment and in the event of that executive's termination of employment under certain circumstances. Those arrangements are described below.
CEO Pay Ratio
CEO Pay Ratio As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and Regulation S-K promulgated under the Exchange Act, we are providing the following information about the relationship of the annual total compensation of our CEO and the annual total compensation of our Tempur Sealy International median employee for 2024 (our "CEO pay ratio"). Our CEO pay ratio information is a reasonable good faith estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. CEO Pay Ratio. The ratio of the annual total compensation of our CEO, calculated as described above, to the annual total compensation of our Tempur Sealy International median employee for 2024 was 201 to 1. To calculate the ratio, we used the same median employee that we had identified as of October 1, 2022. Methodology for Determining Our Median Employee. For purposes of the above CEO pay ratio disclosure, we are required to identify a median employee based on our worldwide workforce, without regard to their location, compensation arrangements, or employment status (full-time versus part-time). The median employee is determined by identifying the employee whose compensation is at the median of the compensation of our employee population (other than our CEO). Accordingly, to identify the median of the compensation of our employee population, the methodology and the material assumptions and estimates that we used were as follows: Employee Population •Total Global Population. This is the third year in which we used the same median employee that we selected as of October 1, 2022. When we selected our median employee in 2022 our employee population consisted of approximately 11,500 individuals working for Somnigroup International Inc., and there was no change in our employee population or employee compensation arrangements during 2024 that we believe would have significantly impacted the pay ratio analysis Compensation Measure Used to Identify the Median Employee •Given the geographical distribution of our employee population, we used a variety of pay elements to structure the compensation arrangements of our employees. Consequently, for purposes of measuring the compensation of our employees to identify the median employee, rather than using annual total compensation, we selected base salary/wages and overtime pay, plus actual annual cash incentive compensation (annual bonus) paid through October 1, 2022 as the compensation measure. We annualized the compensation of employees to cover the full calendar year, and also annualized any new hires in 2022 as if they were hired at the beginning of the fiscal year, as permitted by SEC rules, in identifying the median employee. We did not change our compensation practices in 2024, so believe the methodology used in 2022 is applicable to 2024 and, thus, using the same median employee is appropriate. •We did not make any cost-of-living adjustments in identifying the median employee. Annual Total Compensation of Median Employee. In order to determine the annual total compensation of the median employee, we recalculated the elements of compensation that we calculated in 2022 for our Tempur Sealy International median employee with the employee's compensation for 2024 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation in the amount of $54,432 for 2024. Annual Total Compensation of Chief Executive Officer. With respect to the annual total compensation of our CEO, in accordance with SEC rules, we included the amount reported for Mr. Thompson in the "Total" column for 2024 in the Summary Compensation Table included in this Proxy Statement.
Pay Versus Performance
Pay Versus Performance Pay Versus Performance Table. The following table sets forth certain information required to be disclosed by the Securities Exchange Commission pursuant to Item 402(v) regarding the compensation of our CEO and the compensation of our other Named Executive Officers as compared to Company performance during the past 5-years. For a more comprehensive discussion about how our Human Resources/Capital and Talent Committee determines compensation, please refer to Compensation Discussion and Analysis section under "What Guides Our Program.".
Pay Versus Performance
| Year | Summary Compensation Table Total for CEO (1) ($) | Compensation Actually Paid to CEO (1)(2) ($) | Average Summary Compensation Table Total for Non-CEO Named Executive Officers (1) ($) | Average Compensation Actually Paid to Non-CEO Named Executive Officers (1)(2) ($) | Value of Initial Fixed $100 Investment Based On: | | Net Income (in millions) ($) | Adjusted EPS(4) ($) | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return (3) ($) | | | | 2024 | 10,928,579 | 22,546,664 | 2,663,879 | 4,873,504 | 271.90 | 179.62 | 384.3 | 2.55 | | 2023 | 11,830,187 | 51,812,982 | 2,871,418 | 8,000,002 | 242.05 | 164.16 | 368.1 | 2.40 | | 2022 | 19,659,378 | 18,110,581 | 2,592,685 | 1,219,787 | 161.29 | 132.09 | 455.7 | 2.60 | | 2021 | 19,854,617 | 96,048,367 | 4,648,423 | 15,355,127 | 217.83 | 167.26 | 624.5 | 3.19 | | 2020 | 14,251,338 | 31,623,113 | 2,751,200 | 5,482,948 | 124.05 | 130.99 | 348.8 | 1.91 |
Pay Versus Performance
(1) Scott L. Thompson served as the CEO for each of the years presented in the table. Bhaskar Rao, H. Clifford Buster, III, Steven H. Rusing and Scott J. Vollet served as the non-CEO Named Executive Officers during 2021-2024. For 2020, Mr. Rao, Mr. Buster, Mr. Vollet and Mr. David Montgomery served as the non-CEO Named Executive Officers. (2) The following amounts were deducted or added from the Summary Compensation Table Total for the CEO for each of the following years. With respect to the other NEOs, amounts shown represent averages.
Pay Versus Performance
| Year | Summary Compensation Table Total for CEO ($) | Less Grant Date Fair Value of Stock Awards ($)(a) | Less Grant Date Fair Value of Option Awards ($)(a) | Plus Fair Value as of the Vesting Date of Awards Granted and Vested During Same Fiscal Year ($) | Outstanding and Unvested Awards as of December 31 | | Awards Vested or Forfeited During Fiscal Year | | Compensation Actually Paid to CEO ($) | | | | | | | Plus the Fair Value of all Awards Granted During the Fiscal Year ($)(b) | Plus the Annual Change in Fair Value (+ or -) of Awards Granted in Any Prior Fiscal Year ($)(c) | Plus the Change in Fair Value (+ or -) as of the Vesting Date for Awards Granted in Any Prior Fiscal Year ($)(d) | Less the Fair Value as of the December 31 in Preceding Fiscal Year for Any Forfeited Awards ($) | | | CEO | | | | | | | | | | | 2024 | 10,928,579 | 8,201,668 | — | — | 10,443,488 | 10,734,370 | (1,358,106) | — | 22,546,664 | | 2023 | 11,830,187 | 8,298,422 | — | — | 17,603,815 | 27,185,592 | 3,491,810 | — | 51,812,982 | | 2022 | 19,659,378 | 8,307,336 | 8,934,336 | — | 24,585,484 | (9,348,088) | 455,479 | — | 18,110,581 | | 2021 | 19,854,617 | 15,571,024 | — | — | 14,219,238 | 77,409,095 | 136,441 | — | 96,048,367 | | 2020 | 14,251,338 | 10,000,082 | — | — | 12,622,824 | 8,735,164 | 6,013,869 | — | 31,623,113 | | Other NEOs (Average) | | | | | | | | | | | 2024 | 2,663,879 | 1,832,576 | — | — | 2,333,360 | 2,084,987 | (376,146) | — | 4,873,504 | | 2023 | 2,871,418 | 1,854,152 | — | — | 3,933,444 | 3,044,926 | 4,366 | — | 8,000,002 | | 2022 | 2,592,685 | 1,856,176 | — | — | 1,181,227 | (696,517) | (1,432) | — | 1,219,787 | | 2021 | 4,648,423 | 3,479,177 | — | — | 3,177,135 | 10,798,627 | 210,119 | — | 15,355,127 | | 2020 | 2,751,200 | 1,550,005 | — | — | 1,956,528 | 1,168,586 | 1,156,639 | — | 5,482,948 |
Pay Versus Performance
(a) Represents the grant date fair value of the stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. (b) Represents the fair value as of the indicated fiscal year-end of the outstanding and unvested stock awards granted during such fiscal year, computed in accordance with the methodology used for financial reporting purposes. (c) Represents the change in fair value during the indicated fiscal year of each stock award that was granted in a prior fiscal year and that remained outstanding and unvested as of the last day of the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year. Excludes the change in value of the CEO's deferred RSUs since such awards were fully vested prior to January 1, 2020, see the table "Nonqualified Deferred Compensation" for additional information. (d) Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each stock award that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. (3) The Peer Group Total Shareholder Return is based upon cumulative stockholder returns of the Standard & Poor's ("S&P") 400 Consumer Discretionary Sector. The values that appeared in the Company's Notice of 2023 Annual Meeting of Stockholders were mistakenly based upon cumulative stockholder returns of the S&P 500 Consumer Discretionary Sector. The values for the years 2020 - 2022 above have been revised to reflect the cumulative stockholder returns of the S&P 400 Consumer Discretionary Sector. (4) This is a Non-GAAP financial measurement. Please refer to Appendix A for a discussion of this measure. Tabular List. Pursuant to the requirements of Item 402(v), we provide the following list of the three most important measures for determining the pay of our Named Executive Officers. Please refer to the section entitled "Executive Compensation Program In Detail - 2024 Long-Term Incentive Plan ("LTIP") Grants" for more information.
Pay Versus Performance
| Measure 1 | Company-wide adjusted EPS* | | Measure 2 | Company-wide adjusted EBITDA* | | Measure 3 | Qualitative assessment of accomplishments aligned with Company strategic initiatives, namely capital allocation, leadership development and ESG initiatives |
Pay Versus Performance
* This is a Non-GAAP financial measurement. Please refer to Appendix A for a discussion of this measure. Relationship Between Compensation and Our Performance. The following graphics demonstrate the relationship between Compensation Actually Paid (as calculated in accordance with SEC rules) of our NEOs and our performance in net income, adjusted EPS and total shareholder return. For a more comprehensive discussion about how our Human Resources/Capital and Talent Committee reviews and assesses the relationship between the pay of our NEOs and Company performance, please refer to Compensation Discussion and Analysis section under "2024 Executive Compensation Program in Detail.".
Director Compensation
Director Compensation
Overview of Director Compensation Program
Overview of Director Compensation Program During the calendar year ended December 31, 2024, the Company's non-employee Directors received annual compensation for their service on the Board as described below. The compensation described represents the Director compensation programs in effect for the 2023 and 2024 Board years, which covered the periods from the 2023 Annual Meeting in May 2023 to the 2024 Annual Meeting in May 2024 ("2023 Board Year") and from the 2024 Annual Meeting to the 2025 Annual Meeting scheduled for May 14, 2025 ("2024 Board Year").
Overview of Director Compensation Program
| Description of Compensation | 2023 Board Year | 2024 Board Year | | Annual Retainer: | $110,000 cash retainer, payable in equal quarterly installments | $110,000 cash retainer, payable in equal quarterly installments | | Annual Equity Award Grant: | An annual equity award targeted at $150,000 and granted as restricted stock units ("RSUs") | An annual equity award targeted at $150,000 and granted as restricted stock units ("RSUs") | | Annual Lead Director Retainer: | A cash retainer of $45,000 | A cash retainer of $45,000 | | Annual Committee Chair Retainer: • Audit • Compensation • Nominating and Corporate Governance | • Cash retainer of $20,000 • Cash retainer of $15,000 • Cash retainer of $15,000 | • Cash retainer of $20,000 • Cash retainer of $15,000 • Cash retainer of $15,000 | | Committee Member Retainer: • Audit • Compensation • Nominating and Corporate Governance | • No Additional Compensation • No Additional Compensation • No Additional Compensation | • No Additional Compensation • No Additional Compensation • No Additional Compensation | | Expense Reimbursements: | Reimbursement of reasonable expenses incurred in attending meetings | |
Overview of Director Compensation Program
The following table sets forth the cash, equity awards and other compensation earned, paid or awarded, as the case may be, to each of the Company's non-employee Directors during the calendar year ended December 31, 2024. Mr. Thompson does not receive any additional compensation for serving on the Board.
Overview of Director Compensation Program
| | Fees Earned Or Paid In Cash ($)(1) | Stock Awards(2)(4) | | Option Awards(3)(4) | | Non-Equity Incentive Plan Compensation($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings($) | All other Compensation ($) | | | Name | | $ | # | $ | # | | | | Total ($) | | Evelyn S. Dilsaver | 130,000 | 149,984 | 2,778 | — | — | — | — | — | 279,984 | | Simon John Dyer | 110,000 | 149,984 | 2,778 | — | — | — | — | — | 259,984 | | Cathy Rogers Gates | 110,000 | 149,984 | 2,778 | — | — | — | — | — | 259,984 | | John A. Heil | 125,000 | 149,984 | 2,778 | — | — | — | — | — | 274,984 | | Meredith Siegfried Madden | 110,000 | 149,984 | 2,778 | — | — | — | — | — | 259,984 | | Richard W. Neu | 170,000 | 149,984 | 2,778 | — | — | — | — | — | 319,984 |
Overview of Director Compensation Program
| (1) Director compensation is based on the Board year, which is the period from one annual meeting to the next annual meeting, and fees are paid in arrears at the end of July, October, January and April. As required by SEC rules, the amounts shown in this table were paid during calendar year 2024. The table reflects amounts paid during the second half of the 2023 Board Year (which ended on May 9, 2024) and amounts paid through December 31, 2024 of the 2024 Board Year. |
Overview of Director Compensation Program
| (2) The RSUs granted to all of the non-employee Directors on May 11, 2024 vest in full on the first year anniversary of the grant date. Vesting of each RSU is subject to the applicable grant recipient being a member of the Board as of the applicable vesting date, or if no longer a member of the Board, then completion of the Board year that ended immediately prior to the vesting date. All RSUs which become vested shall be paid on the first anniversary date of the grant date applicable to each RSU. The value of the RSU awards set forth is the grant date fair value, calculated in accordance with FASB ASC 718. See the Company's Annual Report on Form 10-K for the year ended December 31, 2024 for a complete description of the valuations. | | (3) No stock options were granted to non-employee Board members during calendar year 2024. | | (4) The following table sets forth the aggregate number of options and stock awards outstanding for each director as of December 31, 2024, other than for Mr. Thompson whose outstanding equity awards are set forth in the "Outstanding Equity Awards at Fiscal Year-End" table elsewhere in this Proxy Statement. |
Overview of Director Compensation Program
| Name | Aggregate Option Awards Outstanding As of December 31, 2024 | Aggregate RSU Awards Outstanding As of December 31, 2024(a) | | | | | Vested | Unvested | | Evelyn S. Dilsaver | 6,612 | 8,624 | 2,778 | | Simon John Dyer | — | — | 2,778 | | Cathy R. Gates | — | — | 2,778 | | John A. Heil | — | — | 2,778 | | Meredith Siegfried Madden | — | — | 2,778 | | Richard W. Neu | — | 8,624 | 2,778 |
Overview of Director Compensation Program
(a) Reflects RSUs granted to members of the Board that are unvested, or are vested, but are still subject to the applicable deferral period required by deferral election. Shares are released upon satisfaction of the vesting conditions or the applicable deferral period. These RSUs and deferred shares are also reflected in the Beneficial Ownership Table elsewhere in this Proxy Statement.