UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

Dear Shareholders,

The next gen smart beds were developed based on a robust combination of real-world sleep behaviorsscience and their related health implications and developing meaningful sleep health solutions through collaboration with prominent strategic partners and leading physicians, researchers and institutions. In the face of serious global challenges, Sleep Number’s significant contributions to improving lives through proven quality sleep are needed now more than ever.

Later this year we will also transition to the next evolution of our Sleep Number™ app, which will integrate all Sleep Number digital touchpoints to simplify our Smart Sleeper’s experience. It will also further advance our connected health strategy. With over 2.5 million Smart Sleepers engaging with our smart beds, our smart bed ecosystem offers an accurate, nonintrusive, real-world method to conduct sleep research that is improving lives and benefiting society. Meaningful collaborations with organizations like the National Football League and health and wellness institutions including the Mayo Clinic and American Cancer Society – who named us their 2022 Corporate Partner of the Year – accelerate our positive effect and we delivered record 2021 financial performance. Comparedhave vast societal impact.

Prioritizing innovation leadership and maintaining thoughtful progress on our strategic initiatives are essential to 2020 (excluding its 53rd week)continuously strengthening our competitive advantages, increasing our business model efficiency, and despite substantial supply chain constraints:

Our innovation roadmap is informed by sleep sciencefulfillment network meaningfully benefits our customers and research. In late 2022, we planour business. This integrated model enables us to introduce the new Sleep Number Climate 360™ smart bed which will capture a sleeper’s skin and microclimate temperature to facilitate adjustments that improve sleep comfort and quality throughout the night. In 2023, we will introduce our all-new 360deliver 100% pre-assembled smart beds to all our customers and improves reliability and flexibility. Additionally, with advanced sensing capabilitiesmore visibility and smart furniture. This new technology platform expands featuresconnectivity throughout our manufacturing and distribution processes, we have greater control of product quality, less waste across our network, and the ability to proactively monitor and improve an individual's sleep and health over time, responding to their changing needs through evolving life stages, suchrealize incremental efficiencies as pregnancy and aging.we grow.

TO THE SHAREHOLDERS OF SLEEP NUMBER CORPORATION:

Shareholders of record at the close of business on March 15, 202214, 2023 will be entitled to vote at the meeting and any adjournments thereof. Your vote is important. Please be sure to vote your shares in favor of the Board of Directors’ recommendations in time for our May 12, 202211, 2023 meeting date. Your attention is directed to the Proxy Statement for a more complete statement of the matters to be considered at the meeting.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDERS’ MEETING TO BE HELD ON MAY 12, 2022:11, 2023:

Minneapolis, Minnesota

March 31, 202230, 2023

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Sleep Number Corporation for use at the 20222023 Annual Meeting of Shareholders.

When is the Annual Meeting and how can I attend?

What if I have technical difficulties during the meeting or trouble accessing the virtual Annual Meeting?

We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during check-in or the meeting, please call the technical support number that will be posted on the virtual meeting platform log-in page.

Who is entitled to vote?

Shareholders of record at the close of business on March 15, 202214, 2023 (the Record Date) are entitled to vote at the meeting. As of the Record Date, there were 22,158,71922,032,590 shares of common stock outstanding. Each share is entitled to one vote on each matter to be voted on at the Annual Meeting. Shareholders do not have cumulative voting rights.

What is the difference between “Shareholders of Record” and “Beneficial Owners”?

If your shares are registered in your name in the records maintained by our stock transfer agent, you are a “Shareholder of Record.” If you are a Shareholder of Record, notice of the meeting was sent directly to you.

If your shares are held in the name of your bank, broker, nominee or other holder of record, your shares are held in “street name” and you are considered the “Beneficial Owner.” Notice of the meeting has been forwarded to you by your bank, broker, nominee or other holder of record, who is considered, with respect to those shares, the Shareholder of Record. As the Beneficial Owner, you have the right to direct your bank, broker, nominee or other holder of record how to vote your shares by using the voting instructions you received.

How can I receive proxy materials?

We are furnishing proxy materials to our shareholders primarily via the Internet. On or about March 31, 2022,30, 2023, we will begin mailing to certain of our shareholders a Notice of Internet Availability of Proxy Materials (the Shareholder Notice), which includes instructions onon: (a) how to access our Proxy Statement and Annual Report on the Internet,Internet; (b) how to

request that a printed copy of these proxy materials be forwarded to youyou; and (c) how to vote your shares. If you receive the Shareholder Notice, you will not receive a printed copy of the proxy materials unless you request a printed copy by following the instructions in the Shareholder Notice. All other shareholders will be sent the proxy materials by mail beginning on or about March 31, 2022.30, 2023.

What does it mean if I receive more than one proxy card or Shareholder Notice?

If you receive more than one proxy card or Shareholder Notice, it generally means you hold shares registered in more than one account and you should vote once for each proxy card or Shareholder Notice that you receive. If you receive a paper copy of the Proxy Statement and you choose to vote by mail, sign and return each proxy card you receive. If you choose to vote by Internet or telephone, vote once for each proxy card and/or Shareholder Notice you receive.

What are shareholders being asked to vote on?

There are threefour items to be voted on at the meeting:

What are my voting choices?

For proposal 1 the(the election of Directors,Directors) you may:

For each of proposal 2 (the advisory vote to approve executive compensation) andyou may:

For proposal 3 (the advisory vote to approve the frequency of future advisory votes on executive compensation) you may:

For proposal 4 (the advisory vote to ratify the selection of independent auditors) you may:

How does the Board recommend that I vote?

Sleep Number’s Board unanimously recommends that you vote your shares:

How are votes counted?

Proxies marked “Withhold” on proposal 1 (election of Directors), or “Abstain” on proposal 2 (the advisory vote to approve executive compensation) or proposal 34 (the advisory vote to ratify the selection of independent auditors), will be counted in determining the total number of shares entitled to vote on such proposals and will have the effect of a vote “Against” a Director or such proposal. Proxies marked “Abstain” on proposal 3 (the advisory vote to approve the frequency of future advisory votes on executive compensation), will not have an effect on the outcome of the vote.

If you are a Beneficial Owner and hold your shares in “street name,” such as through a bank, broker, nominee or other holder of record, you generally cannot vote your shares directly and must instead instruct the broker how to vote your shares using the voting instruction form provided by the broker.

What is a Broker Non-Vote?

If a Beneficial Owner does not provide timely instructions, the broker will not have the authority to vote on any non-routine proposals at the Annual Meeting, which includes proposals 1, 2 and 2.3. Brokers will have discretionary authority to vote on proposal 34 because the ratification of the appointment of independent auditors is considered a routine matter. If the broker votes on proposal 34 (the advisory vote to ratify the selection of independent auditors) but does not vote on another proposal because the broker does not have discretionary voting authority and has not received instructions from the Beneficial Owner, this results in a “broker non-vote” with respect to such other proposal(s).

Broker non-votes on a matter may be counted as present for purposes of establishing a quorum for the meeting but are not considered entitled to vote on that particular matter. Consequently, broker non-votes generally will have no effect on the outcome of the matter. However, if and to the extent that broker non-votes are required to establish the presence of a quorum at the Annual Meeting, then any broker non-votes will have the same effect as a vote “Withheld” or “Abstained” on any matter that requires approval of a majority of the minimum number of shares required to constitute a quorum for the transaction of business at the Annual Meeting.

What is the vote required to approve each proposal?

Assuming that a quorum is present to vote on each of the proposals, proposals 1, 2 and 34 will require the affirmative vote of holders of a majority of the shares represented and entitled to vote in person or by proxy on such action.

point of view or preference on these proposals, but are not binding on the Company or its Board of Directors and do not require the Company or its Board of Directors to take any particular action in response to the shareholder vote. The Board intends to consider fully the votes of our shareholders in the context of any further action with respect to these proposals.

What constitutes a “quorum,” or how many shares are required to be present to conduct business at the Annual Meeting?

The presence, directly or by proxy, of the holders of a majority of the outstanding shares of common stock entitled to vote (i.e., at least 11,079,36011,016,296 shares) will constitute a quorum for the transaction of business at the Annual Meeting. In general, shares of common stock represented by a properly signed and returned proxy card or properly voted by telephone or via the Internet will be counted as shares represented and entitled to vote at the Annual Meeting for purposes of determining a quorum, without regard to whether the card reflects abstentions and withhold votes (or is left blank) or reflects a “broker non-vote” on a matter.

How do I vote my shares?

The telephone and Internet voting procedures have been set up for your convenience. We encourage you to save corporate expense by submitting your vote by telephone or Internet. The procedures have been designed to authenticate your identity, to allow you to give voting instructions and to confirm that those instructions have been recorded properly.

Beneficial Owners should be aware that brokers are not permitted to vote shares on non-routine matters, including the election of Directors or matters related to executive compensation, without instructions from the Beneficial Owner. As a result, brokers are not permitted to vote shares on proposal 1 (election of Directors) or, proposal 2 (the advisory vote to approve executive compensation) or proposal 3 (the advisory vote to approve the frequency of future advisory votes on executive compensation) without instructions from the Beneficial Owner. Therefore, Beneficial Owners are advised that if they do not timely provide instructions to their bank, broker or other holder of record with respect to proposals 1, 2 or 2,3, their shares will not be voted in connection with any such proposal for which they do not provide instructions. Proposal 34 (the advisory vote to ratify the selection of independent auditors) is considered a routine matter and, as such, brokers will still be able to vote shares held in brokerage accounts with respect to proposal 3,4, even if they do not receive instructions from the Beneficial Owner.

Your vote is important. Whether or not you plan to attend the meeting, we urge you to vote your shares in time for our May 12, 202211, 2023 meeting date.

May I revoke a proxy and change my vote?

Yes. Any shareholder giving a proxy may revoke it at any time prior to its use at the Annual Meeting by:

Can I receive future proxy materials electronically?

Yes. If you are a Shareholder of Record and you received a paper copy of the proxy materials, you may elect to receive future Proxy Statements and Annual Reports online as described in the next paragraph. If you elect this feature, you will receive an email message notifying you when the materials are available, along with a web address for viewing the materials. If you received this Proxy Statement electronically, you do not need to do anything to continue receiving proxy materials electronically in the future.

Whether you are a Shareholder of Record or a Beneficial Owner holding shares through a bank or broker, you can enroll for future electronic delivery of Proxy Statements and Annual Reports by following these steps:

What are the costs and benefits of electronic delivery of Annual Meeting materials?

There is no cost to you for electronic delivery of annual meeting materials. You may incur the usual expenses associated with Internet access as charged by your Internet service provider. Electronic delivery ensures quicker delivery, allows you to view or print the materials at your computer and makes it convenient to vote your shares online. Electronic delivery also conserves natural resources and saves the Company printing, postage and processing costs.

Who bears the proxy solicitation costs?

The proxies being solicited hereby are being solicited by the Board of Directors of the Company. The cost of preparing and mailing the notice of Annual Meeting, this Proxy Statement and the accompanying proxy and the cost of solicitation of proxies on behalf of the Board of Directors will be borne by the Company. The Company may solicit proxies by mail, Internet (including by email, Twitter,social media, the use of our Investor Relations website and other online channels of communication), telephone facsimile and other electronic channels of communication, town hall meetings, personal interviews, press releases and press interviews. Our Directors, officers and regular team members may, without compensation other than their regular compensation and the reimbursement of expenses, solicit proxies by telephone or personal conversation. In addition, we may reimburse brokerage firms and others for their reasonable and documented expenses incurred in connection with forwarding proxy materials to the Beneficial Owners of our common stock.

* Less than 1% of the outstanding shares.

Nomination

Article XIV of our Third Restated Articles of Incorporation, as amended, provides that the number of Directors must be at least one but not more than 12 and must be divided into three classes as nearly equal in number as possible. The exact number of Directors is determined from time to time by the Board of Directors. The term of each class is three years and the term of one class expires each year in rotation.

Vote Required

The election of each nominee for Director requires the affirmative vote of a majority of the shares represented and entitled to vote on the election of Directors at the Annual Meeting. Any broker non-votes on the election of each nominee for Director will be treated as shares not entitled to vote on that matter, and thus will not be counted in determining whether the Director has been elected.

Board Recommendation

If prior to the Annual Meeting, the Board should learn that any nominee will be unable to serve for any reason, the proxies that otherwise would have been voted for such nominee will be voted for such substitute nominee as selected by the Board. Alternatively, the proxies, at the Board’s discretion, may be voted for such fewer number of nominees as results from the inability of any such nominee to serve. The Board has no reason to believe that any of the nominees will be unable to serve.

Information about the Board’s Nominees and Other Directors

The following table provides information as of the date of this Proxy Statement about each individual serving as a Director of our Company and each individual nominated by the Board to serve as a Director. Each Director or Nominee has furnished the information included below that relates to his or hertheir respective age, principal occupation and business experience, as well as the names of other boards on which he or shethey currently servesserve as a Director or hashave served in the past. In addition, the table below highlights the relevant experience, qualifications, attributes and skills that led our Board to conclude that each Director or nominee is qualified to serve as a Director of our Company.

Directors not standing for three-yearelection this year whose terms expiringexpire in 2025:

Information about the Board of Directors and its Committees

The Board of Directors has determined that each of the following Directors who served as a member of our Board during any part of fiscal 20212022 is an “independent Director” as defined by applicable rules of the Nasdaq Stock Market and the rules and regulations of the Securities and Exchange Commission (SEC):

The Board has determined that each Director serving on a committee meets the independence and other requirements applicable to such committee prescribed by applicable rules and regulations of the Nasdaq Stock Market, the SEC and the Internal Revenue Service.

The Board of Directors has further determined that three current members of the Audit Committee, Stephen L. Gulis, Jr., Julie M. Howard and Barbara R. Matas, meet the definition of “audit committee financial expert” under rules and regulations of the SEC and meet the qualifications of “financial sophistication” under the Marketplace Rules of the Nasdaq Stock Market. These designations related to our Audit Committee members’ experience and understanding with

The Board of Directors met in person or virtually five times during 2021.2022. The Audit Committee met in person or virtually eight times during 2021.2022. The Management Development and Compensation Committee met in person or virtually five times during 2021.2022. The Corporate Governance and Nominating Committee met in person or virtually ninefive times during 2021.2022. Each of the members of our Board of Directors serving in 20212022 attended 75% or more of all meetings of the Board and committees on which they served.

Audit Committee

Management Development and Compensation Committee

Corporate Governance and Nominating Committee

The Corporate Governance and Nominating Committee (the CGNC) is comprised entirely of independent Directors, currently including Michael J. Harrison (Chair), Stephen L. Gulis, Jr. (Chair), Deborah L. Kilpatrick, Ph.D., Angel L. Mendez, and Kathleen L. Nedorostek.Jean-Michel Valette. The primary functions of the CGNC are to develop and recommend to the Board corporate governance principles to govern the Board, its committees and our executive officers and team members in the conduct of the business and affairs of our Company; to identify and recommend to the Board individuals qualified to become members of the Board and its committees; and to develop and oversee the annual Board and committee evaluation process.

Board Leadership Structure

Our Board is currently comprised of eleventen independent Directors, including an independent Lead Director, and one executive Director Shelly R. Ibach, who has served as our President and Chief Executive Officer since June 2012.Chair of the Board (Chair). The Board does not have a fixed policy regarding the separation of the offices of the Chair of the Board (the Chair) and the Chief Executive Officer (CEO) and believes that it should maintain the flexibility to select the Chair and its leadership structure, from time to time, based on the criteria that it deems in the best interests of the Company and its shareholders. During any period in which the positions of the Chair and CEO are combined, the Board will appoint a lead directorLead Director from among the independent members of the Board, (Lead Director), who will have the significant Board leadership responsibilities specified in our Corporate Governance Principles and described below. Currently,

On March 14, 2022, we announced the Board’s unanimous decision to combine the roles of Chair and CEO are separate. Jean-Michel Valette,and appoint an independent Director,Lead Director. Since the conclusion of the 2022 Annual Meeting of Shareholders on May 12, 2022, Shelly R. Ibach, President and CEO, has served as Chair, and Michael J. Harrison, an independent director, has served as Lead Director. The Board believes that it is in the best interests of the Board since May 2010.Company and its stakeholders for Ms. Ibach to

On March 14, 2022, we announcedserve as the Board���s decision to combine the roles of Board Chair and Chief Executive OfficerCEO, providing innovative and appoint an independent Lead Director. Effective immediately afterproven leadership in a dynamic marketplace. Ms. Ibach’s leadership and vision reflects her deep understanding of the 2022 Annual Meeting of Shareholders on May 12, 2022, Shelly R. Ibach will assumeCompany’s business, the role of Chairconsumer, and Michael J. Harrison will assume the role of Lead Director. Jean-Michel will continuecommitment to serve as an independent Director and will join the Corporate Governance and Nominating Committee and the Management Development and Compensation Committee effective immediately after the 2022 Annual Meeting of Shareholders on May 12, 2022.

The Lead Director provides a clear and independent voice on the Board that appropriately balances our leadership structure. This leadership is supplemented by the Board’s three standing committees, each of which is comprised of, and chaired by, independent directors. Consistent with the Company’s Corporate Governance Principles, the Board retains the right to review this determinationits leadership structure and to either have combined Chair and CEO positions or to separate the positions, as the Board determines to be in the best interests of the Company at the time.

Board Role in Risk Oversight

Our Board is responsible for overseeing the Company’s policies and practices with respect to risk assessment and risk management and has delegated to the Audit Committee the responsibility of assisting the Board in fulfilling this role. Among its duties and processes, the Audit Committee: (a) reviews and discusses with management the Company’s policies and practices with respect to enterprise risk assessment and risk management, including with respect to financial risk exposures, internal controls over financial reporting and cybersecurity; (b) oversees the Company’s internal audit function and processes; (c) establishes and oversees procedures for receiving and addressing complaints regarding accounting, internal controls or auditing matters; (d) reviews legal compliance and other legal matters with the Company’s legal counsel; and (e) reports to the full Board with respect to matters within its area of responsibility.

The Audit Committee oversees the Company’s internal audit function. The leader of the internal audit function which function is responsible for undertaking an annual enterprise risk assessment process and reportingreports directly to the Audit Committee and the Board with respect to internal audit matters, and the Audit Committee has authority to review and approve the appointment, replacement or dismissal of this assessment and related risk management and mitigation strategies.leader. The Audit Committee reviews and approves, at least annually, the Company’s internal audit plan and receives quarterly reports with respect to the results of internal audits. The leader of the Company’s internal audit function reports directly tomeets regularly with the chair of the Audit Committee with respect to internal audit matters, and the Audit Committee has authority to review and approve the appointment, replacement or in executive

dismissalsession with the Audit Committee, as needed, outside the presence of the leader of this function.Company’s management team. The Company’s risk assessment and risk management process is led by the Chief Legal and Risk Officer and the leader of the internal audit function, meets regularly in executive session with guidance from outside advisors as needed. This process includes an annual enterprise risk assessment with quarterly reporting to the Audit Committee without any other members ofand Board regarding the Company’sassessment and related risk management team present.and risk mitigation strategies.

In addition to the Audit Committee’s role, each of the other committees considers risks within its respective areas of responsibility. We believe our Board leadership structure helps ensure proper risk oversight, based on the allocation of duties among committees and the role of our independent Directors in risk oversight.

Director Nominations Process

The Corporate Governance and Nominating Committee (the CGNC) administers the process for nominating candidates to serve on our Board of Directors. The CGNC recommends candidates for consideration by the Board as a whole, which is responsible for appointing candidates to fill any vacancy that may be created between meetings of the shareholders and for nominating candidates to be considered for election by shareholders at our Annual Meeting. Consistent with the Company’s Corporate Governance Principles, the CGNC periodically reviews with the Board the appropriate skills and characteristics required of Board members in the context of the current membership of the Board and the strategic direction of the Company.

The Board has established selection criteria to be applied by the CGNC and by the full Board in evaluating candidates for election to the Board. These criteria, which are set forth in our Corporate Governance Principles, include general characteristics, areas of specific expertise and experience and considerations of diversity. The general characteristics include:

The below chart highlights certain key skills and experiences of our current Board members.

Our Director selection and nomination process specifically includes consideration of diversity, including gender identity, race, ethnicity, age, sexual orientation, educational and professional experience and differences in viewpoints. The CGNC considers Director candidates in the context of the Board’s overall composition, including whether the Board has an appropriate combination of professional experience, skills, knowledge and variety of viewpoints and backgrounds in light of the Company’s current and expected future needs. We are committed to seeking Director candidates who reflect diverse perspectives, including a complementary mix of professional and personal backgrounds and experiences, which we believe is critical to the success of the Company and its ability to create long-term value for our stakeholders. The below matrix depicts the gender identity and demographic background of our current Board members. 

The CGNC reviews these selection criteria and the overall Director nomination process at least annually in connection with the nomination of Directors for election at the Company’s annual meeting for consistency with best practices in corporate governance and effectiveness in meeting the needs of the Board.

The CGNC may use a variety of methods for identifying potential nominees for election to the Board, including consideration of candidates recommended by Directors, officers or shareholders of the Company. The CGNC also has the authority under its charter to engage professional search firms or other advisors to assist the CGNC in identifying candidates for election to the Board, or to otherwise assist the CGNC in fulfilling its responsibilities.

Shareholder nominations of candidates for membership on the Board, submitted in accordance with the terms of our Bylaws, will be reviewed and evaluated by the CGNC in the same manner as for any other nominations. Any shareholder who wishes the CGNC to consider a candidate should submit a written request and related information to our corporate Secretary. Under our Bylaws, if a shareholder intends to nominate a person for election to the Board of Directors at a shareholder meeting, the shareholder is required to give written notice of the proposed nomination to the corporate Secretary at least 120 days prior to the first anniversary of the date that the Company first released or mailed its proxy materials to shareholders in connection with the preceding year’s regular or annual meeting. The shareholder’s notice must include, for each nominee whom the shareholder proposes to nominate for election as a Director: (a) the name, age, business address and residence address of the nominee; (b) the principal occupation or employment of the nominee; (c) the class and number of shares of capital stock of the Company that are beneficially owned by the nominee; and (d) any other information concerning the nominee that would be required under the rules of the SEC in a proxy statement soliciting proxies for the election of such nominee. The shareholder’s notice must also include: (a) the name and address of the nominating shareholder, as they appear on the Company’s books; and (b) the class and number of shares of the Company that are owned beneficially and of record by the shareholder. The shareholder’s notice must also be accompanied by the proposed nominee’s signed consent to serve as a Director of the Company.

Shareholder Engagement

Our Board of Directors and management team maintain a deep commitment to strong corporate governance. Engagement with, and accountability to, our shareholders are cornerstones of this commitment. Accordingly, we maintain an active shareholder engagement program that facilitates channels of communication and aims to foster relationships with our shareholders to drive sustainable, long-term growth and shareholder value. As part of our engagement program, members of our management team regularly meet with shareholders, in-person, virtually or by phone, occasionally joined by one or more members of our Board, to discuss strategy, governance, pay for performance orientation and other matters of shareholder interest. Our ongoing shareholder engagement and commitment to long-term value creation will continue to inform our Board’s deliberations in 20222023 and beyond.

Shareholders may communicate with the Board of Directors, its committees or any individual member of the Board by sending a written communication addressed to our corporate Secretary atby mail to Sleep Number Corporation, 1001 Third Avenue South, Minneapolis, MN 55404.55404 or by email to investorrelations@sleepnumber.com. The corporate Secretary will promptly forward any communication so received to the Board, any committee of the Board or any individual Board member specifically addressed in the communication. In addition, if any shareholder or other person has a concern regarding any accounting, internal control or auditing matter, the matter may be brought to the attention of the Audit Committee, confidentially and anonymously, by calling 1-800-835-5870. The Company reserves the right to revise or make exceptions to this policy in the event that the process is abused, becomes unworkable or otherwise does not efficiently serve the purposes of the policy.

Policy Regarding Director Attendance at Annual Meeting

Our policy is to require attendance by all our Directors at our Annual Meeting of Shareholders, except for absences due to causes beyond the reasonable control of the Director. All the Directors then serving on our Board were in attendance at our 20212022 Annual Meeting of Shareholders.

Corporate Governance Principles

A substantial majority of the members of the Board should be independent, non-employee Directors. It is the responsibility of the Board to establish the standards for independence, and the Board has followed the independence standards for companies listed on The Nasdaq Stock Market. All of our Directors are independent except our Chief Executive Officer, Shelly R. Ibach, who the Board appointed to the role of Chair effective immediately following our 2022 Annual Meeting of Shareholders. In combining the roles of Chair and CEO, the Board also appointed Michael J. Harrison as the independent Lead Director. All committees of the Board are composed entirely of independent Directors.

Our Director selection and nomination process specifically includes consideration of diversity, including gender identity, race, ethnicity, age, sexual orientation, educational and professional experience and differences in viewpoints. The CGNC considers Director candidates in the context of the Board’s overall composition, including whether the Board has an appropriate combination of professional experience, skills, knowledge and variety of viewpoints and backgrounds in light of the Company’s and Board’s current and expected future needs. We are committed to seeking Director candidates who reflect diverse perspectives, including a complementary mix of professional and personal backgrounds and experiences, which we believe is critical to the success of the Company and its ability to create long-term value for our stakeholders.

We believe that specific or fixed term or age limits could cause the Company to arbitrarily lose important contributors to the Board. It is the sense of the Board, however, that a Director who reaches the age of 72 should promptly tender their resignation to the Chair of the CGNC, and the Board should have an opportunity to review the qualifications of the Director for continued Board membership. The CGNC will review the qualifications of the Director for continued Board membership annually and make a recommendation to the Board each year, which will make a final determination with respect to the tendered resignation.

Directors who retire or who have a change in their principal employment or affiliation after joining the Board should not necessarily leave the Board. There should, however, be an opportunity for the Board to review the qualifications of the

Director for continued Board membership. Any Director who undergoes a material change in principal employment or affiliation will promptly tender their resignation to the Chair of the CGNC. The CGNC will review the qualifications of the Director for continued Board membership and make a recommendation to the Board, which will make a final determination with respect to the tendered resignation.

The Board recognizes that service on other boards can, in some circumstances, limit the time that Directors may have to devote to fulfilling their responsibilities to the Company. It is the Board’s guideline that no Director shall serve on more than a total of four public company boards (including the Sleep Number Board), no Director who is a named executive officer (of another public company) shall serve on more than a total of two public company boards (including the Sleep

The Chief Executive Officer may not serve on more than one public company board other than the Sleep Number Board of Directors.

The Board believes that the Company’s governance and the Board’s effectiveness can be continually improved through evaluation of both the Board as a whole and its committees. The CGNC is responsible for overseeing the annual evaluation of the Board’s effectiveness in these areas and reviewing the results and recommendations for improvement with the full Board. The evaluation process includes an annual self-evaluation of the Board and its committees, as well as periodic individual Director evaluations. The CGNC retains an independent third party from time to time to manage the evaluation process to ensure that it remains as thorough and transparent as possible.

Executive sessions or meetings of independent Directors without management present will be held at least twice each year. At least one session will be to review the performance criteria applicable to the Chief Executive Officer and other executive officers, the performance of the Chief Executive Officer against such criteria and the compensation of the Chief Executive Officer and other executive officers. Additional executive sessions or meetings of independent Directors may be held from time to time as required. The Board’s practice is to meet in executive session for a portion of each regularly scheduled meeting of the Board. Any member of the Board may request at any time an executive session without the presence of management. Executive sessions or meetings with the Chief Executive Officer shall be held from time to time for a general discussion of relevant topics.

The Board believes that the Company should not enter into paid consulting arrangements with independent Directors.

Board compensation should encourage alignment with shareholders’ interests and should be at a level equitable to comparable companies. The Management Development and Compensation Committee is responsible for periodic assessments to assure these standards are being met.

Under our policy with respect to trading in the Company’s securities, Directors, officers, director-level and above team members and other team members designated by Sleep Number from time to time as “insiders” are prohibited from engaging in any form of hedging or monetization transactions involving the Company’s securities, including, but not limited to, the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. In addition, insiders are prohibited from engaging in short sales of the Company’s securities and from trading in

Directors are expected to avoid any action, position or interest which conflicts with an interest of the Company, or that gives the appearance of a conflict. If any member of the Board becomes aware of any such conflicting or potentially conflicting interest involving any member of the Board, the Director should immediately bring such information to the attention of the Chair (and the Lead Director if the Chair and Chief Executive Officer is combined), the Chief Executive Officer and the Chief Legal and Risk Officer of the Company.

The Management Development and Compensation Committee is responsible for establishing the procedures for setting annual and long-term performance goals for the Chief Executive Officer and for the evaluation by the full Board of their performance against such goals. The Management Development and Compensation Committee meets at least annually with the Chief Executive Officer to receive their recommendations concerning such goals. Both the annual goals and the annual performance evaluation of the Chief Executive Officer are reviewed and discussed by the independent Directors at a meeting or executive session of that group. The Management Development and Compensation Committee is also responsible for setting annual and long-term performance goals and compensation for all executive officers.

The Management Development and Compensation Committee annually reviews the Company’s compensation philosophy and approach. The Board, through the Management Development and Compensation Committee, supports and oversees team member compensation programs that are closely linked to superior business performance and designed to support our long-term strategic orientation.

The Chief Executive Officer reports to the Board, at least annually, on senior management depth and development, including a discussion of assessments, leadership development, succession planning and other relevant factors.

The Board will periodically review (not less often than every three years) the Company’s Third Restated Articles of Incorporation and Bylaws and various provisions that are designed to maximize shareholder value in the event of an unsolicited takeover attempt or proposal. Such review includes consideration of matters such as the Company’s state of incorporation, whether the Company should opt in or out of applicable control share acquisition or business combination statutes, and provisions such as the Company’s classified Board structure. The objective of this review is to maintain a

proper balance of provisions that will not deter bona fide proposals from coming before the Board and that will position the Board and the Company to maximize the long-term value of our Company for all shareholders.

Shareholder approval will be sought for all equity-based compensation plans.

Corporate Sustainability

Sustainability considerations are included in the way we design and manufacture our innovations, the products and services we offer our customers, the programs and opportunities we create to ensure the wellbeing of our team members, how we support the communities where we operate, the way we engage with our suppliers and business partners and the dialogue we have with – and returns we generate for – our shareholders. In short, our environmental stewardship, social priorities, and strong governance (ESG) are integrated into our strategy, culture and operations.

While we have incorporated sustainable practices and policies into our business for years, we continue to make ESG investments that are aligned with our purpose, our pursuit of profitable growth and our creation of stakeholder value.

In 2020, Sleep Number became a signatory to the United Nations Global Compact (UNGC), demonstrating our support for the Ten Principles related to human rights, labor, environment and anti-corruption. We are dedicated to making the UNGC principles part of our strategy, culture, day-to-day operations and enterprise-wide approach to measure, advance and report on our ESG initiatives. Recognizing the critical importance of good governance in adopting and integrating social and environmental strategies, we start our corporate sustainability reporting with a description of our governance approach.

Our management team is responsible for leading our ESG strategy, initiatives and results. Our full Board of Directors is responsible for overseeing Sleep Number's strategy, including policies and practices with respect to risk assessment, risk management and our ESG approach.

The Sleep Number management team engages with the entire Board, and with each of the three standing Board committees in ESG discussions annually, quarterly and on an interim basis, as appropriate. In 2021,Each December, the entire Board also engagedengages in a dedicated education session that coveredcovers key global ESG trends as well as specific Sleep Number ESG initiatives.

Sleep Number has integrated fundamental principles of human rights, respect for individuality and a passion to make the world better through higher quality sleep into our strategy and operations. We take our responsibility to our stakeholders, including team, community and suppliers, seriously and are tireless in our efforts to advance social sustainability goals. To advance our social impact priorities and coordinate enterprise-wide initiatives, in 2022 we established a Social Impact Team, comprised of leaders with broad, cross-functional representation.

We are committed to being a good steward of the environment, as we work to better understand and reduce the impact of our manufacturing, supply chain and retail operations and our products throughout their life cycles. While we have incorporated practices and policies into our business for years, we recognize that we have an opportunity – and responsibility – to elevate our commitment and prioritize initiatives that align with our values, benefit the environment and contribute to our financial results. To accelerate the transition to a low-carbon economy, we created theOur Sleep Number Environmental Impact Team is a cross-functional team focused on near-term efforts – and longer-term opportunities – to measureaccelerate the transition to a low-carbon economy. Recent areas of focus include measuring and divertdiverting landfill waste through reuse and recycling, measuremeasuring and reducereducing energy consumption in our buildings, more effectively managemanaging the environmental impact of our logistics through optimal routing and fuel efficiency and identifyidentifying opportunities to integrate renewable energy options into our operations. Meaningful actions taken in 2022 include measurement of Scope 1 and 2 greenhouse gas (GHG) emissions, initial assessment of Scope 3 GHG emissions and inaugural reporting to CDP, a not-for-profit organization considered the gold standard for environmental reporting.

Code of Business Conduct

We are committed to the highest standards of ethical business practices throughout our Company. Our Company values, team member training, Company policies and culture underscore our expectations for integrity and provide clear guidelines for business decisions and behavior. We have a Code of Business Conduct, provided to all team members, which addresses legal and ethical issues that may be encountered by our team members during their normal course of business. The Code of Business Conduct is reviewed annually with the Audit Committee and instructs and requires that our team members comply with applicable laws, engage in ethical and safe conduct in our work environment, avoid conflicts of interests, conduct our business with integrity and high ethical standards and safeguard our Company’s assets.

Team members are required to report any conduct that they believe in good faith violates our Code of Business Conduct. The Code of Business Conduct also sets forth procedures under which team members or others may report through our management team and, ultimately, directly to our Audit Committee (confidentially and anonymously, if so desired) any questions or concerns regarding accounting, internal accounting controls or auditing matters. All of our team members are required to periodically certify their commitment to abide by our Code of Business Conduct. We regularly monitor compliance with the Code of Business Conduct and report findings to our Audit Committee. We also provide training in key areas covered by the Code of Business Conduct to help our team members to comply with their obligations.

Related-Party Transactions Policy

The Board of Directors has adopted a written policy intended to ensure the proper approval and reporting of transactions between the Company and any of its Directors, nominees for Director, executive officers or significant shareholders or entities or persons related to them that would be required to be disclosed by the Company pursuant to Item 404 or Regulation S-K of the Federal securities laws. Under this policy, any proposed or existing related party transaction is subject to the approval or ratification of the Corporate Governance and Nominating Committee. A copy of the Related Party Transactions Policy can be accessed through our Investor Relations website at

COMPENSATION COMMITTEE REPORT

The Management Development and Compensation Committee of the Board of Directors (the Committee), consisting entirely of independent Directors, has reviewed and discussed the following Compensation Discussion and Analysis with management, and based on this review and discussion, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement. 

Brenda J. Lauderback, Chair

Daniel I. Alegre

Table of Contents

Introduction

The Compensation Discussion and Analysis (CD&A) describes our executive compensation program, including the objectives and elements of compensation as well as determinations made by the Committee regarding our named executive officers (NEOs). 

For 2021,2022, the following five executive officers were determined to be NEOs as a result of their position during the year as chief executive officerChief Executive Officer (CEO), or chief financial officerChief Financial Officer (CFO), or their total compensation making them among the three other highest paid executives for the fiscal year.

Purpose Driven Company

AsSleep Number is a mission-driven company, Sleep Number’swellness technology company. With a purpose is to improve the health and wellbeing of society through higher quality sleep. Thesleep, the Company — along with its 5,000 passionate team members — is dedicated to improving lives and committed to changing society’s understanding of how quality sleep positively influences wellbeinglifelong relationships with meaningful innovations. With dedication to our mission, the Company has improved nearlySmart Sleepers. Over 14 million people have had their lives improved by the Company’s award-winning sleep innovations. Our proprietary smart beds combine the physical and grown to over $2 billion in salesdigital worlds, integrating exceptional sleep with over 5,500 passionate team members.a highly advanced digital technology platform.

Sleep Number’sThrough investments in its consumer innovation strategy vertically-integratedand vertically integrated business model, and investments strengthen the Company’sSleep Number strengthens its competitive advantages and createcreates a digital flywheel for sustainable growth, driving consumer demand and performance. The Company is positionedcommitted to continue delivering sustainable, superior stakeholder value.value over time.

20212022 Performance and Accomplishments

Our strategySleep Number’s financial performance in 2022 reflected the sustained impact of external business and executioneconomic disruptions that began early in the year. Among the many challenges we faced were the global constraints on semiconductor chips and the strengthrecord low consumer sentiment, which reduced consumer demand and pressured profits. As a result, we fell short of our mission enabled usfinancial goals for the year, following record financial performance in 2021. Our mission-driven team members navigated through this challenging environment to achieve a record year of financial performance and value creation for all stakeholders. We successfully managedsignificant strategic milestones which strengthen the effects on our business of global supply chain disruptions, inflationary pressures and the ongoing pandemic. We drove strong results in 2021 through our consumer-focused innovation, vertical business model, digitization, a deep engagement with smart sleepers and a mission-driven, highly-engaged team to deliver strong results in 2021. The groundwork for our sustainable performance began years ago with an understanding that qualityCompany’s sleep is highly correlated with health and wellbeing. This strategic clarity, reinforced by disciplined investment to strengthen our competitive advantages and growth drivers, has resulted in sustainable, profitable growth, including a 5-year compound annual growth rate (CAGR) through 2021 of 11% in net sales, 14% in adjusted EBITDA and 41% in EPS. This included performance in 2021 that exceeded our plans. There was strong consumer demandwellness technology leadership for our revolutionary 360 smart beds, with another year of double-digit growth in orders.the future.

Note: For additional information on our non-GAAP financial measures, such as adjusted EBITDA and adjusted ROIC, and their reconciliation to operating income and net income, as applicable, see “Non-GAAP Data Reconciliations” on pages 3136 and 3237 of our Annual Report on Form 10-K filed on March 1, 2022.

We remain focusedmaintain a long-term perspective and continue to build on initiatives that strengthenour superior sleep health and wellness technology positioning by strengthening our competitive advantages and deliver meaningful value for our team, customers, shareholders and communities. We expect our advantaged and efficient business model, combined with near- and long-term investments, will continue to deliver long-term superior value creation for all of our stakeholders.

The Company’s mission-driven team members are dedicatedcommitted to strengthening Sleep Number’s purpose of improving the health and wellbeing of society through higher quality sleep. Their resilience, courage and teamwork to constantly pivot and discover new paths to overcome challenges during extraordinary uncertainty was a differentiator that will continue to expand the Company’s vitality. This is evident in the many accomplishments and milestones achieved in 2021, including: