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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

For the fiscal year ended January 31, 2012

OR

For the Transition Period from                  to

Commission file number 001-35354

MATTRESS FIRM HOLDING CORP.

(Exact Name of Registrant as Specified in Its Charter)

5815 Gulf Freeway

Houston, Texas 77023

(Address of Principal Executive Offices)(Zip Code)

Registrant’s telephone number, including area code (713) 923-1090

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.  Yes o  No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o  No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o  No x

As of August 2, 2011, the last business day of the registrant’s most recently completed second fiscal quarter, the registrant’s common stock was not publicly traded.

As of May 29, 2012, 33,768,828 shares of common stock, par value $0.01 per share, of the registrant were outstanding.

DOCUMENTS TO BE INCORPORATED BY REFERENCE

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EXPLANATORY NOTE

This Amendment No. 1 to Form 10-K (this “Amended Report”) amends the original Annual Report on Form 10-K of Mattress Firm Holding Corp. (“Mattress Firm” or the “Company”) for the fiscal year ended January 31, 2012, as filed with the Securities and Exchange Commission (“SEC”) on April 20, 2012 (the “Original Report”). Pursuant to General Instruction G(3) to Form 10-K, the Company incorporated by reference the information required by Part III of Form 10-K from its definitive proxy statement for the 2012 annual meeting of stockholders (the “2012 Proxy Statement”), which the Company originally intended to file with the SEC no later than 120 days after January 31, 2012, the end of its fiscal 2011 year-end. As the 2012 Proxy Statement will not be filed with the SEC before such date, the Company is filing this Amended Report to provide the additional information required by Part III of Form 10-K. The Company has included in this Amended Report new certifications by its principal executive officer and principal financial officer as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and a new Exhibit List to update information provided in the Exhibit List under Item 15(a)(3) of the Original Report.

Except as set forth in this Amended Report, no other changes are made to the Original Report. Unless expressly stated, this Amended Report does not reflect events occurring after the filing of the Original Report, nor does it modify or update in any way the disclosures contained in the Original Report, which speak as of the date of the Original Report. Accordingly, this Amended Report should be read in conjunction with the Original Report and the Company’s other SEC filings subsequent to the filing of the Original Report. Some of the information provided in this Amended Report may be superseded by the information provided in the 2012 Proxy Statement to be filed with the SEC.

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MATTRESS FIRM HOLDING CORP.

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Part III

Item 10.      Directors, Executive Officers and Corporate Governance

Board of Directors

The Company’s business and affairs are managed under the direction of the Company’s Board of Directors (the “Board”).  The Board consists of seven directors divided into three classes of two or three directors who serve in staggered three-year terms.  The Company believes that a staggered Board is the most effective way for the Board to be organized because it ensures greater certainty of continuity from year-to-year, which provides stability in organization and experience.  As a result of the three classes, at each annual meeting of stockholders, two or three directors are elected for a three-year term, while the other directors do not have to stand for election as their term is not then expiring.  The Company’s current directors are as follows:

·                  Class I directors are R. Stephen Stagner and William E. Watts, and their terms will expire at this year’s Annual Meeting;

·                 Class II directors are Charles R. Eitel, David A. Fiorentino and Frederick C. Tinsey III, and their terms will expire at the annual meeting of stockholders to be held in 2013; and

·                 Class III directors are John W. Childs and Adam L. Suttin, and their terms will expire at the annual meeting of stockholders to be held in 2014.

In fiscal year 2011, the Board met five times for both regular and special meetings.  Each of the directors attended all of the meetings of the Board and committees on which he was a member.  Each director who is up for election at the Company’s annual meeting or who has a term that continues after such annual meeting is expected to attend the annual meeting.

The common stock of the Company is listed on NASDAQ.  The Board has determined that Messrs. Eitel and Tinsey are considered (i) “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended; (ii) “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act; and (iii) “independent directors” within the meaning of Section 10A(m)(3) of the Exchange Act and the NASDAQ Listing Rules (the “NASDAQ Rules”).

Leadership of the Board

The Board is responsible for the oversight of the Company’s overall strategy and operations.  The Board is committed to objective oversight of the Company’s management, especially through its independent directors and committee membership.

The Company does not have a fixed policy regarding the separation of the offices of Chairman of the Board and Chief Executive Officer and believes that it should maintain the flexibility to select the Chairman of the Board and its Board leadership structure, from time to time, based on the criteria that it deems to be in the best interests of the Company and its stockholders. Currently, the roles of Chief Executive Officer and Chairman of the Board are separate.  The Chief Executive Officer is responsible for the general management, oversight, leadership, supervision and control of the day-to-day business and affairs of the Company, and ensures that all directions of the Board are carried into effect.  The Chairman is charged with presiding over all meetings of the Board and the Company’s stockholders, and providing advice and counsel to the Chief Executive Officer and other Company officers regarding the Company’s business and operations.

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The Board’s Role in Risk Oversight

The role of the Board in managing risk at the Company is to have ultimate oversight for the risk management process.  Management has day-to-day responsibility for the identification and control of risk facing the Company including timely identifying, monitoring, mitigating and managing those risks that could have a material effect on the Company.  Further, management has the responsibility to report these risks as they arise to the Board and its committees and the Company’s auditors.  The Board has delegated certain risk assessment responsibilities to the audit committee (the “Audit Committee”), its compensation committee (the “Compensation Committee”) and its nominating and corporate governance committee (the “Nominating and Corporate Governance Committee”).  In particular, the Audit Committee focuses on financial risk, including internal controls covering the safeguarding of assets and the accuracy and completeness of financial reporting.  The Compensation Committee sets compensation programs for management to ensure that compensation decisions both represent sound fiscal policy as well as enables the Company to attract and motivate qualified personnel.  The Nominating and Corporate Governance Committee oversees the annual Board self-evaluation and director nomination process in order to ensure a diverse and well balanced Board, and it reviews and recommends corporate governance principles applicable to the Company’s executive officers.  These committees meet regularly and report their findings to the Board throughout the year.

Committees of the Board

The Board has a complex set of duties and responsibilities, both practically and as provided under Delaware law, rules and regulations promulgated by the SEC and NASDAQ, the Company’s Amended and Restated Certificate of Incorporation and the Company’s Amended and Restated Bylaws.  However, to govern a modern corporation, there are numerous activities that must be performed and that are more effectively and efficiently performed by smaller groups of people.  To do this, Delaware law gives the Board the authority to establish “committees” of the Board to take on directed duties.  Moreover, various regulatory bodies with jurisdiction over the Company mandate certain committees, and, other various applicable laws give the Board the latitude to satisfy some of its duties and responsibilities through these committees.

To this end, the Board has established three committees: the Audit Committee; the Compensation Committee; and the Nominating and Corporate Governance Committee.  Each committee operates under a charter approved by the Board.  Copies of each committee’s charter are posted on the Corporate Governance section of the Investor Relations section of the Company’s website, www.mattressfirm.com.  The membership, principal duties, and responsibilities of each committee are set forth below.

In connection with the Company’s initial public offering (the “IPO”) that was completed in November 2011, the Company availed itself of the “controlled company” exception under the NASDAQ Rules, and does not have a majority of independent directors and the Nominating and Corporate Governance Committee and the Compensation Committee are not composed entirely of independent directors as defined under the NASDAQ Rules. The “controlled company” exception did not modify the independence requirements for the Audit Committee, and the Company remains in compliance with the applicable requirements of the Sarbanes-Oxley Act and the NASDAQ Rules relating to its Audit Committee. These rules require that the Audit Committee be composed of at least three members, one of whom was to be independent upon the listing of the Company’s common stock on NASDAQ, a majority of whom were to be independent within 90 days of the IPO and all of whom are to be independent within one year of the IPO.  The Audit Committee currently includes two independent directors, who constitute a majority of such committee.

The membership of the Committees is set forth below:

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(1)                    Mr. Eitel joined the Audit Committee in February 2012.

(2)                    The Board has determined that each of Messrs. Tinsey and Eitel is an “audit committee financial expert” as defined in applicable SEC rules and has the requisite financial sophistication under the applicable NASDAQ Rules.

Audit Committee

The committee’s charter provides that the principal duties and responsibilities of the Audit Committee include:

·                 appointing, compensating, retaining and overseeing the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services and reviewing and appraising the audit efforts of the Company’s independent registered public accounting firm;

·                 establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters;

·                 engaging independent counsel and other advisers, as necessary;

·                 reviewing and pre-approving various services provided by accountants retained by the committee;

·                 serving as an independent and objective party to oversee the Company’s internal controls and procedures system;

·                  providing an open avenue of communication among the independent registered public accounting firm, financial and senior management and the Board; and

·                 overseeing any other such matters as the Board shall deem appropriate from time to time.

In addition, all audit and non-audit services, other than de minimis non-audit services, provided by the Company’s independent registered public accounting firm must be approved in advance by the Audit Committee.  In fiscal year 2011, the Audit Committee met two times for both regular and special meetings.

Compensation Committee

The committee’s charter provides that the principal duties and responsibilities of the Compensation Committee include:

·                  reviewing and approving corporate and individual goals and objectives relevant to executive officer compensation and evaluating the performance of executive officers in light of the goals and objectives;

·                  reviewing and approving executive officer compensation;

·                  reviewing and approving the chief executive officer’s compensation based upon the compensation committee’s evaluation of the chief executive officer’s performance;

·                  making recommendations to the Board regarding the adoption of new incentive compensation and equity-based plans, and administering the Company’s existing incentive compensation and equity-based plans;

·                  making recommendations to the Board regarding compensation of the board members and its committee members;

·                  reviewing and discussing with management the compensation discussion and analysis to be included in the Company’s filings with the SEC and preparing an annual compensation committee report for inclusion in the Company’s annual proxy statement;

·                  reviewing and approving generally any significant non-executive compensation and benefits plans;

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·                  reviewing the Company’s significant policies, practices and procedures concerning human resource-related matters; and

·                  overseeing any other such matters as the Board shall deem appropriate from time to time.

In fiscal year 2011, the Compensation Committee met one time for a regular meeting.

Nominating and Corporate Governance Committee

The committee’s charter provides that the principal duties and responsibilities of the Nominating and Corporate Governance Committee include:

·                  recruiting and retention of qualified persons to serve on the Board;

·                  proposing such individuals to the Board for nomination for election as directors;

·                  evaluating the performance, size and composition of the Board;

·                  compliance activities; and

·                  overseeing any other such matters as the Board shall deem appropriate from time to time.

In fiscal year 2011, the Nominating and Corporate Governance Committee met two times for both regular and special meetings.

The Nominating and Corporate Governance Committee is responsible for reviewing with the entire Board from time to time the appropriate skills and characteristics required of Board members in the context of the current make-up of the Board.  The Board believes that directors should bring to the Company a variety of perspectives and skills that are derived from high quality business and professional experience and that are aligned with the Company’s strategic objectives.  Although the Company does not have a formal policy considering diversity in indentifying nominees for director, the Board and the Nominating and Corporate Governance Committee generally consider an array of factors, including all aspects of diversity.  The composition of the Board should at all times adhere to the standards of independence promulgated by applicable NASDAQ and SEC rules.  The Company also requires that directors be able to attend all Board and applicable committee meetings.  In this respect, directors are expected to advise the Nominating and Corporate Governance Committee in advance of accepting any other public company directorship.

The Nominating and Corporate Governance Committee identifies nominees for election to the Board by first evaluating the current members of the Board willing to continue in service.  Current members of the Board with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective.  If any member of the Board does not wish to continue in service or if the Nominating and Corporate Governance Committee or the Board decides not to re-nominate a member for re-election, the Committee will identify the desired skills and experience of a new nominee in light of the criteria above.  Current members of the Committee and Board may be consulted for suggestions as to individuals meeting the criteria above.  Research may also be performed to identify qualified individuals.

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee during fiscal 2011 were as set forth above under “—Committees of the Board.”  During the 2011 fiscal year, there were no compensation committee interlocks between the Company and any other entity involving the Company’s or such entity’s executive officers or Board members.

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Code of Business Conduct and Ethics

The Company has adopted a written code of business conduct and ethics that applies to the Company’s directors, officers, employees and certain other persons, including the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.  The current version of the code is posted on the Corporate Governance section of the Investor Relations section of the Company’s website, www.mattressfirm.com.

Communications to the Board

Stockholders and other interested parties may communicate with the Board or individual directors, as applicable, by sending a letter to the director, c/o Secretary, Mattress Firm Holding Corp., 5815 Gulf Freeway, Houston, Texas 77023.  All such letters will be promptly forwarded to the respective director.

Directors

The following table sets forth the members of the Board and their ages as of May 30, 2012:

R. Stephen Stagner became the Company’s Chief Operating Officer in January 2005 as a result of the merger between Mattress Firm and his former Mattress Firm franchise, Elite Management Team, or Elite. He was promoted to President and Chief Executive Officer in February 2010 and has served as a Director of the Company since February 2010. From 1996 to 2004, Mr. Stagner was the Chief Executive Officer of Elite, after which he served as the Company’s President and Chief Operating Officer from February 2006 until his promotion to President and Chief Executive Officer. Mr. Stagner has 19 years of experience in the bedding industry, including employment with Sealy Corporation and Simmons Bedding Company, and owning and operating the largest franchise in the Mattress Firm network while with Elite. Mr. Stagner has also served in various capacities with the Mattress Firm Foundation, including as its President since January 2011 and director from January 2007 until December 2010. Since October 2009, Mr. Stagner has served as director of Rousche College of Business Advisory Council at the Stephen F. Austin State University. Mr. Stagner’s experience as the Company’s President and Chief Executive Officer, and formerly his experience as Chief Operating Officer, coupled with his in-depth knowledge of the Company and industry, led to the conclusion that he should serve as a director of the Company.

John W. Childs joined the Company as a Director in August 2007. Mr. Childs has been Chairman and Chief Executive Officer of J.W. Childs, one of the Company’s affiliates, since 1995. From 1991 to 1995, Mr. Childs was Senior Managing Director of the Thomas H. Lee Company and from 1987 to 1990 was a Managing Director of Thomas H. Lee Company. Prior to 1987, Mr. Childs was associated with the Prudential Insurance Company of America for 17 years where he held various executive positions in the investment area, ultimately serving as Senior Managing Director in charge of the Capital Markets Group where he was responsible for Prudential’s approximately $77 billion fixed income portfolio, including all the Capital Markets Group’s investments in leveraged acquisitions. He is currently Chairman of the Board of CHG Healthcare Services, Inc. and a Director of Sunny Delight Beverages Co., Esselte Ltd. and Simcon, Inc. and was a Director at Advantage Sales and Marketing, Inc. from 2006 until 2010. Mr. Childs’s experience serving as a director of various companies, including his experience with Mattress Firm, and his expertise in private equity led to the conclusion that he should serve as a director of the Company.

Adam L. Suttin joined the Company as a Director in August 2007 and was a member of the Audit Committee until his resignation from the committee in February 2012. Mr. Suttin is also a Partner of one of the Company’s affiliates, J.W. Childs, which he co-founded in July 1995. Previously, Mr. Suttin was an Associate at

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Thomas H. Lee Partners, where he was employed from 1989 until 1995. Mr. Suttin is currently a Director of Brookstone, Inc., The Nutrasweet Company, Sunny Delight Beverages Co., JA Apparel Corp. and Esselte Ltd., and was a Director at Advantage Sales and Marketing, Inc. from March 2006 until December 2010. Mr. Suttin’s experience as a co-founder of J.W. Childs, coupled with his experience as a director of various companies, including Mattress Firm, led to the conclusion that Mr. Suttin should serve as a director of the Company.

David A. Fiorentino joined the Company as a Director in August 2007 and is currently a member of the Audit Committee. Mr. Fiorentino is also a Partner at J.W. Childs, which is one of the Company’s affiliates. Prior to arriving at J.W. Childs in July 2000, Mr. Fiorentino worked in the investment banking division of Morgan Stanley. He is currently a Director of CHG Healthcare Services, Inc., WS Packaging Group, Inc., Fitness Quest, Inc. and JA Apparel Corp. Mr. Fiorentino’s financial industry background as well as his experience as a Partner at J.W. Childs and as a director of various companies, including Mattress Firm, led to the conclusion that Mr. Fiorentino should serve as a director of the Company.

William E. Watts joined the Company as a Director in January 2007. Mr. Watts is also an Operating Partner of J.W. Childs, which is one of the Company’s affiliates. Prior to joining J.W. Childs in 2001, Mr. Watts was President and Chief Executive Officer of General Nutrition Companies from 1991 until 2001. Prior to being named President and Chief Executive Officer in 1991, Mr. Watts held the positions of President and Chief Operating Officer of General Nutrition, President and Chief Operating Officer of General Nutrition Center, Senior Vice President of Retailing and Vice President of Retail Operations. Mr. Watts currently serves as Chairman of the board of JA Apparel Corp. and is a Director of Brookstone, Inc. and Fitness Quest, Inc. and was a Director at EmployBridge, Inc. from September 2006 until May 2011. Mr. Watts’s experience as a director of various companies, including Mattress Firm, as well as his experience as Chief Executive Officer of a company with a well-known brand, led to the conclusion that he should serve as a director of the Company.

Frederick C. Tinsey III joined the Company as a Director in August 2007, currently serving as chairman of the Audit Committee, and is a certified public accountant with a degree in Accounting and Finance. Mr. Tinsey is the owner of Tinsey Financial Consulting, at which he has served since 2003, and he has served on the board and audit committees of various privately held companies, including Murray’s Discount Auto Stores, Fitness Quest Inc., WS Packaging Group, Inc. and IDQ Holdings. Mr. Tinsey was at PricewaterhouseCoopers LLP from 1973 until 1993 and served as the co-head of its national retail practice from 1991 to 1993, having engaged with various private and public retail clients. From 1994 through 2003, Mr. Tinsey served as the President and Chief Financial Officer of Murray’s Discount Auto Stores. His experience as a certified public accountant, coupled with his experience as an officer or director of various companies, including Mattress Firm, led to the conclusion that he should serve as a director of the Company.

Charles L. Eitel joined the Company as a Director in January 2012 and is currently a member of the Company’s audit committee. He co-founded Eitel & Armstrong in December 2009, a consulting practice that provides hands-on operating and financial guidance to middle market companies. Mr. Eitel is also a partner at E&A Advisors, which provides financial advice to middle market companies on capital formation, acquisitions, divestures, restructurings and private placements. Prior to forming Eitel & Armstrong, Mr. Eitel served as Vice Chairman of the board of The Simmons Bedding Company, an Atlanta based manufacturer of mattresses, from October 2008 to December 2009. Mr. Eitel served as Chairman and Chief Executive Officer of The Simmons Bedding Company from January 2000 until his appointment to Vice Chairman in 2008. Mr. Eitel currently serves on the board of directors of Duke Realty Corporation, American Fidelity Assurance Corporation, and Criterion Brock, owned by Wedbush Capital Partners. Mr. Eitel also serves on the Advisory Board of Advanced Sleep Concepts, a bedding manufacturer. Mr. Eitel’s extensive experience in the Company’s industry as well as his experience as a director of various companies led to the conclusion that he should serve as a director of the Company.

Executive Officers of the Registrant

The following table sets forth the Company’s executive officers and their ages as of May 30, 2012:

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The present principal occupations and recent employment history of each of the Company’s executive officers (other than Mr. Stagner, whose information is set forth under “—Board of Directors—Directors” above) listed above are as follows:

Stephen G. Fendrich became the Company’s Chief Strategy Officer upon his return to Mattress Firm in September 2010. He co-founded Mattress Firm in 1986 with two other partners. He was involved with all aspects of the business but was directly responsible for the financial, real estate, information technology and franchise areas of Mattress Firm until 2002. From 2002 to 2010 he held several management positions within the bedding industry, including President and Chief Executive Officer of The Sleep Country, Inc., and Executive Vice President of Sales and President and Chief Operating Officer of Simmons Bedding Company. While with Simmons, the company filed for Chapter 11 bankruptcy and, during 2009, Mr. Fendrich led Simmons through its balance sheet restructuring that culminated with its sale in January 2010.

James R. Black became the Company’s Executive Vice President and Chief Financial Officer in September 2000. Prior to joining Mattress Firm, Mr. Black spent 20 years with public accounting firms, the majority with the international firms of Ernst & Young, LLP and PricewaterhouseCoopers, LLP. He is a certified public accountant and member of the American Institute of Certified Public Accountants.

Kenneth E. Murphy III became the Company’s Executive Vice President, Sales and Operations, effective January 15, 2012 after holding various positions within Mattress Firm since 2005, including National Vice President of Sales, Director of Training and Recruiting, Vice President of Field and Talent Management and Regional Vice President of Sales. From 2003 to 2005, Mr. Murphy was as an account manager at Sealy. Mr. Murphy is also currently serving on the board of the David F. Miller Center for Retailing Education and Research at the University of Florida and the Stephen F. Austin University General Business Advisory Board.

Bruce Levy became the Company’s Vice President of Real Estate and Construction in January 2009 to focus on continuing the Company’s nationwide expansion. From 2005 until the time he joined Mattress Firm, Mr. Levy was a Limited Partner at Interface Properties, Inc., having been involved with locating land and developing multi-tenant retail buildings. Mr. Levy has over 25 years of experience as a senior officer of several Fortune 500 companies in the real estate and construction sector, including the Office Depot, Inc., Blockbuster L.L.C., Gateway, Inc., Tweeter Home Entertainment Group, Inc. and PETCO Animal Supplies, Inc. Mr. Levy’s experience includes opening retail stores throughout the United States, Europe and Asia.

Karrie Forbes became the Company’s Executive Vice President, Marketing and Merchandising effective January 15, 2012.  Prior to this new appointment, she served as the Company’s Vice President of Marketing for four years.  Ms. Forbes is responsible for the strategic direction of the marketing, advertising and communication. Ms. Forbes joined a Mattress Firm franchise in 1997 and held positions of increasing responsibility in sales, customer service, recruiting, training and advertising through 2005, when she joined Mattress Firm as Director of Merchandising. Ms. Forbes also serves on the advisory board with the Better Sleep Council and Clear Channel Radio Houston. Ms. Forbes is married to Matthew Forbes, the Company’s Director of Sales and Field Operations.

George W. McGill was promoted to Vice President of Field Operations in July 2009 from his previous position as the Company’s Vice President of Operations, which he held from January 2007, until his promotion. Prior to joining Mattress Firm in 2007, he was Vice President of Operations for Ultimate Acquisition Partners, LP (f/k/a Ultimate Electronics) from 2002 to 2006. Mr. McGill worked for 12 years at Circuit City Stores, Inc. in supply chain management.

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s executive officers, directors, and persons who own more than ten percent of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater than 10%  stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.  Based solely on its review of copies of such reports received by it and written representations from certain persons that no other reports were required for those persons, the Company believes that all filing requirements applicable to its officers, directors and greater than 10% stockholders were complied for fiscal 2011, except that the initial reports on Form 3 for Karrie Forbes and Kenneth E. Murphy III, and the subsequent reports on Form 4 for Ms. Forbes and Messrs. Watts, Suttin, Fiorentino, Tinsey, Stagner and Murphy (each with respect to one transaction), were not filed timely, but each such Form was subsequently filed and the information reported therein is reflected in this Amended Report.

Item 11.    Executive Compensation

Compensation Committee Report

The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” set forth below with management.  Based on these reviews and discussions, we recommended to the Board, and the Board approved, that the Compensation Discussion and Analysis be included in this Amended Report.

Compensation Committee

William E. Watts (Chair)

David A. Fiorentino

Adam L. Suttin

Compensation Discussion and Analysis

This section discusses the principles underlying our policies and decisions with respect to the compensation of our executive officers who are named in the “Summary Compensation Table” and the most important factors relevant to an analysis of these policies and decisions. Our “named executive officers” for the 2011 fiscal year were:

·                  R. Stephen Stagner, Chief Executive Officer and President (“CEO”);

·                  James R. Black, Executive Vice President and Chief Financial Officer (“CFO”);

·                  Stephen G. Fendrich, Chief Strategy Officer (“CSO”);

·                  Kenneth E. Murphy III, Executive Vice President, Sales and Operations; and

·                  Karrie Forbes, Executive Vice President, Marketing and Merchandising.

Overview of Fiscal 2011 Performance and Compensation

We believe our success depends on the continued contributions of our named executive officers. Our executive compensation programs are designed to attract and retain experienced and qualified executive officers and to incentivize them to achieve overall business results and individual performance goals. Our executive compensation programs also support our strategic objectives by aligning the interests of our executive officers with those of our stockholders through the use of operational and financial performance goals and equity-based compensation.

Our compensation policies and compensation-related decisions center on the following objectives:

·                  attracting and retaining talented and experienced executives;

·                  motivating and rewarding executives whose knowledge, skills and performance are critical to our success;

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·                  aligning the interests of our executive officers and stockholders by incentivizing executive officers to increase stockholder value and rewarding executive officers when stockholder value increases and performance goals are met;

·                  providing a competitive compensation package in which total compensation is largely performance-based;

·                  ensuring fairness among the executive management team by recognizing the contributions each executive makes to our success; and

·                  fostering a shared commitment among our executive officers by coordinating Company and individual goals.

Each of the key elements of our executive compensation programs is discussed in more detail below. Our executive compensation programs are designed to complement and to collectively serve the compensation objectives described above. We have not adopted formal policies for allocating compensation between short-term and long-term compensation, between cash and non-cash compensation or among different forms of cash and non-cash compensation; we have, however, created base salary, annual bonus and equity award guidelines to enable us to set compensation amounts and opportunities in a manner internally consistent across job positions for all employees, including our named executive officers.

Highlights of Fiscal 2011 Performance

During fiscal 2011, we achieved strong financial performance, and we believe our named executive officers were instrumental in helping us achieve these results. Highlights of our 2011 fiscal year performance include the following:

·                  Net income increased $34.1 million to $34.4 million for fiscal 2011 compared with $0.3 million for fiscal 2010.

·                  Adjusted EBITDA increased $30.4 million to $87.5 million for fiscal 2011 compared with $57.1 million for fiscal 2010. Adjusted EBITDA as a percentage of sales increased to 12.4% during fiscal 2011 compared with 11.6% for fiscal 2010.  We define “Adjusted EBITDA” as earnings before interest, taxes, depreciation and amortization and other adjustments (such as goodwill impairment charges, loss on store closings and acquisition expenses).  Adjusted EBITDA is not a performance measure under accounting principles generally accepted in the United States. See “Item 6. Selected Financial Data” of the Original Report for a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income.

·                  Net sales increased $209.8 million, or 42.5%, to $703.9 million for fiscal 2011, compared to $494.1 million for fiscal 2010. Comparable-store sales increased 20.5% during fiscal 2011.

·                  We opened 106 new stores and acquired 55 stores. New and acquired stores, net of stores closed, added $110.8 million in net sales during fiscal 2011.

·                  We ended fiscal 2011 with no outstanding borrowings and total borrowing capacity of $24.0 million on the revolving credit line portion of our 2007 Senior Credit Facility.

·                  In November 2011, we successfully completed an initial public offering and our common stock became listed on the NASDAQ Global Select Market under the symbol “MFRM.” The stock’s closing price on January 31, 2012 (the last day of fiscal 2011) was $33.03, up from an IPO price of $19.00 per share.

Compensation Framework: Policies and Processes

Roles of the Compensation Committee and Executive Officers in Setting Compensation

During fiscal 2011, the Board established the Compensation Committee. Following our IPO, our Compensation Committee generally has been responsible for developing and administering our executive compensation programs and determining the nature and amount of compensation paid to our named executive officers, and, for all of our employees

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other than our named executive officers, administering our equity compensation plans and awards.  The Compensation Committee has adopted a written charter under which it operates. This charter is available on our website.

Prior to the IPO, we had a Company-level compensation committee, which was comprised of three voting members (our CEO, CFO and CSO) and four non-voting members (all of whom were members of either our human resources or finance departments).  The Company-level compensation committee had been responsible for recommending and determining base salary amounts and increases for our executive officers (other than themselves), and for recommending the annual bonus goals under our annual incentive program to the board of managers of our then-sole shareholder, Mattress Holdings, LLC (the “Board of Managers”), for its approval.  Prior to the IPO, the Board of Managers was responsible for determining the elements that comprise our executive compensation programs in general, as well as approving the performance objectives associated with our annual bonus programs and approving the equity grants made to employees, both as described below.

The compensation for our CEO, CFO and CSO is governed by their respective employment agreements, which are described below. These agreements were amended and restated in September 2011 and approved by our Board.  Prior to the IPO, the Board of Managers provided oversight of the Company’s compensation practices with respect to these three named executive officers. Our Company-level compensation committee, which is described above, did not make any compensation determinations for these three individuals.

Use of Comparative Market Data

As part of our preparation in 2011 to become a public company, our Board engaged Pearl Meyer & Partners, or “Pearl Meyer,” an independent compensation consulting firm, to advise on certain aspects of compensation for our executives, including assisting us in determining the size and terms of the grants of equity awards to be made under our newly-established equity plan in connection with the IPO. Grants made to our named executive officers at the time of the IPO reflected the recommendations that Pearl Meyer provided to the Board related to such awards.  In addition, Pearl Meyer developed, and our Board approved, a peer group of companies against which to assess the following key components of our named executive officers’ compensation following the IPO: base salary, annual cash bonus and long-term incentives.  Since the IPO, our Compensation Committee has not benchmarked total executive compensation or individual compensation elements against a peer group.

As a public company, we expect to use market data, and may decide to continue to use the services of a compensation consultant, to provide input in establishing the level and types of certain elements of our executive compensation program. While we anticipate that we will take a more systematic approach to reviewing competitive data on executive compensation levels and practices, we expect to continue to apply the compensation philosophies and strategies that we believe are appropriate for our business, and that focus more on long-term and performance-based incentive compensation than on fixed compensation.

Prior to the IPO, certain members of our human resources department conducted, on an annual basis, an analysis of our executive compensation programs relative to those of other comparable companies to gain a general understanding of whether our executive compensation programs were competitive. During fiscal 2011, prior to the IPO, Triad Consultants, Inc., an independent consultant, performed a compensation review under which it used a number of sources to provide us with relevant market data.  While we had historically reviewed the data provided by our human resources department and Triad Consultants, Inc., and from time to time adjusted our compensation practices in light of such data, prior to the IPO we did not formally benchmark our executive compensation levels against the gathered survey data or against any specific group of companies.

Elements of Named Executive Officer Compensation

The following is a discussion of the primary elements of compensation for each of our named executive officers for fiscal 2011. Compensation for our named executive officers consisted of the following elements for fiscal 2011:

·                  Base Salary.  A fixed cash payment intended to attract and retain talented individuals, recognize career experience and individual performance, and provide competitive compensation.

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·                  Short-Term Incentives.  An annual cash incentive based on Company performance intended to promote and reward achievement of the Company’s annual financial and strategic objectives.

·                  Long-Term Incentives.  Historically, grants of time-based and performance-based units of our then-sole shareholder, Mattress Holdings, LLC and, in connection with the IPO, grants of time-based and performance-based stock options under our equity plan, both of which are intended to align the executive’s interests with those of our stockholders by tying value to long-term Company performance.

·                  Retirement and Welfare Benefits.  Retirement benefits (including a 401(k) plan and non-qualified deferred compensation plan) intended to provide tax-efficient retirement savings, and health and welfare benefits (including medical, dental, vision, life and AD&D insurance and short-term and long-term disability insurance) intended to provide comprehensive benefits.

·                  Executive Perquisites.  Additional benefits offered to certain of our named executive officers to provide competitive supplemental benefits, such as Company payment of the premiums associated with health and welfare benefits (including medical, dental, and vision coverage), and separate Company-paid life and disability insurance policies for Messrs. Stagner, Black, and Fendrich.

Base Salary

We believe that a competitive base salary is required in order to provide our named executive officers with a stable income stream that is commensurate with their responsibilities and competitive market conditions. The base salaries of Messrs. Stagner, Black and Fendrich are set forth in their respective employment agreements, which were amended and restated effective September 14, 2011 and approved by our Board. The employment agreements also provide, in very limited circumstances, for an automatic annual cost of living adjustment to base salaries.

At the beginning of our 2011 fiscal year, Mr. Stagner’s base salary was increased from $400,000 to $406,100 due to a cost of living adjustment.  Mr. Stagner’s employment agreement was amended and restated, effective September 14, 2011, to provide for an increase in his annual base salary to $500,000, effective upon the consummation of the IPO. In addition, at the beginning of our fiscal 2011, due to a cost of living adjustment, Mr. Black’s base salary was increased from $285,500 to $289,900.  Mr. Fendrich’s base salary, which was set at $325,000 in accordance with the terms of his employment agreement, effective September 24, 2010, remained the same at the beginning of our fiscal 2011. Messrs. Black’s and Fendrich’s employment agreements were amended and restated, effective September 14, 2011, to each provide for an increase in such executives’ annual base salary to $350,000, effective upon the consummation of the IPO.  When determining the IPO-based increase to the base salaries of these named executive officers, our Board took into account the Company’s performance during fiscal 2011 and expansion over the prior two fiscal years, as well as the increased roles and responsibilities the executives would have as executives of a publicly traded company.

Prior to the IPO, recommendations for the base salaries of Mr. Murphy and Ms. Forbes were made by our human resources department, in accordance with our salary administration policy. Our salary administration policy is an internal tool that establishes a salary range for each job position covered by the policy. We generally do not deviate from these guidelines when setting base compensation or increasing base salary, although from time to time we have done so in circumstances warranting special considerations. Our human resources department, when recommending an executive’s initial base salary, reviews the salary guidelines, the individual’s role, expected responsibilities, skills, experience and prior compensation levels and general market data. When recommending subsequent increases to base salary, our human resources department reviews the salary guidelines, the executive’s contributions to the Company, individual performance, and general market trends.

Each year prior to the IPO, our human resources department presented, for review and approval by our CEO, CFO and CSO, initial salary recommendations and recommendations for base salary increases for all other employees, including Mr. Murphy and Ms. Forbes. Our CEO, CFO and CSO then recommended to the chairman of the Board of Managers an aggregate amount for base salary increases for all employees. The chairman of the Board of Managers approved the aggregate amount, but not any individual base salary increases. Our CEO, CFO and CSO then reviewed and approved the individual base salary increases for our other executive officers.

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At the beginning of our 2011 fiscal year, Ms. Forbes’ base salary was increased from $200,000 to $206,500 based on the factors described above.  Mr. Murphy’s base salary was not increased at the beginning of our 2011 fiscal year because he had received a base salary increase in connection with his promotion to National Vice President of Sales in September 2010.  Following the IPO, in connection with their promotions to Executive Vice President of Sales and Operations and Executive Vice President of Marketing and Merchandising, respectively, Mr. Murphy and Ms. Forbes entered into amended and restated offer letters, effective January 15, 2012, to provide for an increase in each such executive’s annual base salary to $230,000.  Our Board reviewed the base salaries increases for these named executive officers proposed by the CEO, CFO and CSO, after consultation with our human resources department, and approved such increases based on both the changes in and enhancement of the roles and responsibilities of these executives following the IPO.

Bonus and Short-Term Incentive Arrangements

In addition to receiving base salaries, our named executive officers are eligible to earn annual cash bonuses under our Executive Annual Incentive Plan based upon the attainment of specific performance objectives. During fiscal 2011, our named executive officers were each eligible for a bonus based solely on achievement of the Company’s Adjusted EBITDA goals.

The cash bonuses (as a percentage of base salary) payable to each named executive officer if the relevant performance goals associated with his or her bonus were achieved for fiscal 2011 were as follows:

(1) Each of Messrs. Stagner, Fendrich and Black’s target and maximum percentages are established by the terms of his respective employment agreement, and each of Mr. Murphy’s and Ms. Forbes’ target percentage is established by the terms of his or her respective letter agreement, in each case as described below.

(2) Under Ms. Forbes’ amended and restated offer letter, effective January 15, 2012, her target percentage was increased from 25% to 35% of base salary.  The target percentage increase was effective beginning in fiscal year 2012.

The Board of Managers was responsible for establishing bonus targets and opportunities granted prior to the IPO. For fiscal years beginning with our 2012 fiscal year, our Compensation Committee will determine the performance criteria applicable to our annual bonuses. The Board of Managers, after consultation with the CEO, CFO and CSO, set the fiscal 2011 Adjusted EBITDA target at a level it believed was both challenging and achievable. By establishing a target that was challenging, the Board of Managers believed that the performance of our employees, and therefore our performance, would be maximized. By setting a target that was also achievable, the Board of Managers believed that employees would remain motivated to perform at the high level required to achieve the target. Adjusted EBITDA goals for fiscal 2011 and their commensurate payouts are in detailed in the chart below. Bonus payouts are interpolated when performance falls between the discrete points shown.

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At the conclusion of the fiscal year, Adjusted EBITDA results were calculated by our finance department and were presented to our Compensation Committee for review and approval. Actual Adjusted EBITDA for fiscal 2011 was $87.5 million, which is in excess of the maximum Adjusted EBITDA level of $78.5 million. This resulted in a payout to Messrs. Stagner, Black, Fendrich, and Murphy and Ms. Forbes of 200% of their target cash bonus.

In addition to the bonuses described above, the employment agreements for Messrs. Stagner, Black, and Fendrich establish a supplemental bonus pool, whereby such executives are eligible to share with other members of the senior management of the Company in an incremental bonus pool of 10% of the actual amount of annual Adjusted EBITDA in excess of the annual Adjusted EBITDA maximum level target for each fiscal year that the executive is employed by us.  For fiscal 2011, the actual amount of annual Adjusted EBITDA of $87.5 million exceeded the fiscal 2011 maximum level Adjusted EBITDA target of $78.5 million by a total of $8.99 million, which resulted in an incremental bonus pool of $899,000 for fiscal 2011.  After the size of the pool was determined, Messrs. Stagner, Black and Fendrich recommended to our Compensation Committee the employees eligible to share in the incremental bonus pool and, for all such employees (other than themselves), the allocation of such bonus amounts.  Our Compensation Committee reviewed the bonus recommendations for employees proposed by Messrs. Stagner, Black and Fendrich and approved such bonuses, as well as the bonuses to Messrs. Stagner, Black and Fendrich, based on these employees’ contributions to the Company throughout and following the IPO process.  For fiscal year 2011, all of our named executive officers were eligible to share in this incremental bonus pool.  Messrs. Stagner, Black and Fendrich received additional bonuses equivalent to 22.2%, 19.5% and 12.2% of the incremental bonus pool, respectively, and Mr. Murphy and Ms. Forbes each received additional bonuses of 6.1% of the incremental bonus pool.

The actual bonuses paid to our named executive officers with respect to fiscal 2011 are set forth in the “Summary Compensation Table” below.

Stock-Based Incentive Arrangements

In connection with the IPO, the Company established the Mattress Firm Holding Corp. 2011 Omnibus Incentive Plan, or the “Omnibus Plan,” for grants of all equity-based awards in connection with or after the IPO.  The primary goals of the Omnibus Plan are to align the interests of our named executive officers with the interests of our shareholders and to encourage executive retention through the use of both service-based and performance-based vesting requirements.

In connection with the IPO, our Compensation Committee recommended and our Board approved the Company employees to whom stock options would be granted and the amount and terms and conditions of such grants, in each case based on the contributions of these employees to the Company throughout the IPO process and the level of equity previously granted to these employees by the Board of Managers prior to the IPO.  In connection with the IPO, our Board granted the following awards of stock options under the Omnibus Plan to our named executive officers: Mr. Stagner received a stock option to acquire 173,940 shares of common stock; Messrs. Black and Fendrich each received a stock option to acquire 86,970 shares of common stock; and Mr. Murphy and Ms. Forbes each received a stock option to acquire 50,596 shares of common stock. One-half of each stock option grant to our named executive officers is subject to a five-year pro-rata time-based vesting schedule, while the remaining one-half of the stock option is subject to a four-year performance-based vesting schedule, with such performance vesting based on specified stock price increase targets.  Our Compensation Committee determined to grant time-based awards to encourage employee retention and performance-based awards to reward the achievement of specified performance goals related to our stock price and thereby provide value to our executives only when our shareholders also benefited.

Prior to the IPO, Mattress Holdings, LLC, the sole stockholder of the Company, established a class of equity ownership units, or “Class B Units,” that were issued to employees of the Company providing services to or for the benefit of Mattress Holdings, LLC at the discretion of the Board of Managers. The Class B Units are administered by the Board of Managers.

Each holder of vested Class B Units is entitled to its pro rata share of future distributions to the equity owners of Mattress Holdings, LLC after certain other equity holders have received aggregate preferred distributions equal to the greater of (i) $154.3 million or (ii) the fair value of Mattress Holdings, LLC’s equity on the relevant grant date of the Class B Units. Each Class B Unit grant is comprised of four tranches with separate vesting criteria. The Class B-1 Unit tranche comprises 40% of the total units granted and vested over five years in 20% increments on January 18 of each year,

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subject to continued employment.  These units vested in full immediately prior to the IPO. The Class B-2, B-3 and B-4 Unit tranches comprise the remaining portion of each Class B Unit grant and were scheduled to vest in their entirety immediately prior to a change of control or, if earlier, the date of expiration of the lock-up agreements entered into by JWC Mattress Holdings, LLC, JWC Equity Funding III, Inc. and their respective affiliates that are unit holders of Mattress Holdings, LLC (collectively, the “JWC Investors”) in connection with the IPO (the “Lock-up Expiration Date”), in each case if the return on investment to entities affiliated with the JWC Investors meets or exceeds established performance thresholds.  The thresholds were met and the Class B-2, B-3 and B-4 Units vested on May 15, 2012.

In addition, Messrs. Stagner, Black and Murphy and Ms. Forbes hold Class C-2 Units. Each holder of the Class C-2 Units is entitled to his or her pro rata share of future distributions to the equity holders of Mattress Holdings, LLC after certain other equity holders have received aggregate preferred distributions equal to the aggregate amount of the 2009 equity investment in Mattress Holdings LLC, until the cumulative distributions to all of the Class C Unit holders (including the Class C-2 Unit holders) equals $154,109,670. The Class C-2 Unit holders also share in any additional distributions beyond this threshold. The Class C-2 Units were fully vested on the date of grant. No Class C-2 Units were granted in fiscal 2011.

Employment and Severance Arrangements

We have entered into employment agreements with Messrs. Stagner, Black and Fendrich and letter agreements with Mr. Murphy and Ms. Forbes. The employment agreements with Messrs. Stagner, Black and Fendrich were amended and restated, effective September 14, 2011, to extend the terms of such agreements through the end of fiscal 2014, and, effective upon the consummation of the IPO, to increase the annual base salaries of Messrs. Stagner, Black and Fendrich to the amounts set forth below.  The letter agreements with Mr. Murphy and Ms. Forbes were amended and restated, effective January 15, 2012, to increase their annual base salaries to the amounts set forth below.  As discussed above, when determining the increase to the base salaries of these named executive officers, our Board took into account the Company’s performance during fiscal 2011 and its expansion over the prior two fiscal years, as well as the increased roles and responsibilities the executives would have as executives of a publicly traded company. None of the agreements provide for any tax-gross-ups on severance payments made in relation to a change-in-control. The material terms of these arrangements are summarized below.

·                  Employment Agreement with Mr. Stagner.  Mr. Stagner is a party to an amended and restated employment agreement, effective September 14, 2011, under which he is entitled to receive an annual base salary of $500,000 (effective upon the consummation of the IPO) and is eligible for an annual target cash bonus. The agreement also provides for certain payments and benefits to be provided upon a qualifying termination of Mr. Stagner’s employment, as described below under “Potential Payments Upon Termination or Change of Control.”  In addition, the agreement provides that the term of his employment will be automatically extended for subsequent one-year terms, unless three (3) months notice of non-renewal is provided by either the Company or Mr. Stagner.

·                  Employment Agreements with Messrs. Fendrich and Black.  Messrs. Fendrich and Black are each a party to an employment agreement, effective September 14, 2011, under which each is entitled to receive an annual base salary of $350,000 (effective upon the consummation of the IPO) and is eligible for an annual target cash bonus. Each agreement also provides for certain payments and benefits to be provided upon a qualifying termination of Messrs. Fendrich’s or Black’s employment, as described below under “Potential Payments Upon Termination or Change of Control.”  In addition, each agreement provides that the term of Messrs. Fendrich’s or Black’s employment will be automatically extended for subsequent one-year terms, unless three (3) months notice of non-renewal is provided by either the Company or Messrs. Fendrich or Black, as applicable.

·                  Letter Agreements with Mr. Murphy and Ms. Forbes.  Mr. Murphy and Ms. Forbes are each a party to an offer letter agreement with the Company, effective January 15, 2012, under which they each are entitled to receive an annual base salary of $230,000.  The agreements also provide that Mr. Murphy and Ms. Forbes are each eligible for an annual target cash bonus. Mr. Murphy is not entitled to payments upon a termination of employment, while Ms. Forbes is entitled to certain payment upon a qualifying termination of her employment, as described below under “Potential Payments Upon Termination or Change of Control.”  Under both of these agreements, Mr. Murphy and Ms. Forbes are at-will employees.

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Retirement and Welfare Benefits

We maintain a retirement savings plan, which is a 401(k) defined contribution plan (the “401(k) Plan”), for the benefit of all eligible employees, including our named executive officers (on the same basis as all eligible employees). The 401(k) Plan provides for an annual match of 331/3% of contribution amounts up to the IRS-imposed plan maximums.

In addition to the 401(k) Plan, we sponsor the Executive Nonqualified Excess Plan, an unfunded, unsecured nonqualified deferred compensation plan under which certain management employees may elect to defer a percentage or specific dollar amount of their compensation until a later date. We offer this plan because it facilitates retirement savings and provides financial flexibility for our key employees. While the Company may, at its discretion, provide matching and profit-sharing contributions under the Executive Nonqualified Excess Plan, we have not, as of this time, elected to make any such contributions.

We also provide our eligible employees, including our named executive officers, with medical, dental, and vision coverage, life and accidental death and dismemberment insurance, short-term and long-term disability insurance, and the opportunity to enroll in our flexible spending account program.

Executive Perquisites

We provide limited executive perquisites, including Company payment of medical, dental and vision premiums for certain named executive officers, as well as provision and payment of separate life and disability insurance policies for Messrs. Stagner, Black and Fendrich. The costs associated with all perquisites are included in the “Summary Compensation Table” below.

Risk Assessment of Compensation Policies and Practices

Our Board and our Compensation Committee have considered whether the risks arising from our compensation practices or policies are reasonably likely to have a materially adverse effect on the Company.  We believe that the structure of our compensation programs does not incentivize unnecessary or excessive risk-taking.  Our policies and practices include the following risk-mitigating characteristics: our compensation programs are generally administered by our Compensation Committee; there is an annual cap on the amount of bonuses that may be paid to our named executive officers and other employees; the performance goals upon which annual bonuses are paid are approved by our Compensation Committee and our Board; bonus amounts are only paid after the performance is certified by this committee after receiving input from our finance department following a review of our audited financials; and our equity awards are subject to multi-year vesting and the ultimate value of such awards is tied to the Company’s long-term stock price performance.  As a result of this review, the Company does not believe that our compensation policies and practices create or encourage the taking of risks that are reasonably likely to have a material adverse effect on the Company.  In addition, we have adopted an insider trading policy that generally prohibits insiders from pledging shares of our common stock and requires prior approval for any hedging of their ownership of our common stock.

Tax and Accounting Considerations

Section 162(m) of the Internal Revenue Code, or “Section 162(m),” disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1 million in any taxable year for certain of its executive officers, other than its chief financial officer, unless such compensation qualifies as performance-based under such section. As we were not publicly traded prior to the IPO, neither our Compensation Committee nor the Board of Managers had previously taken the deductibility limit imposed by Section 162(m) into consideration in setting compensation. At such time as we are subject to the deduction limitations of Section 162(m), we expect that our Compensation Committee will consider the deductibility of compensation, but may, in its judgment, authorize compensation payments that do not comply with the exemptions, in whole or in part, under Section 162(m) or that may otherwise be limited as to tax deductibility.

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Our Compensation Committee, in connection with decisions that relate to our equity incentive award plans and programs, consider the accounting implications of significant compensation decisions. As accounting standards change, we may revise certain programs to appropriately align the accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.

Compensation of Named Executive Officers

The tables in the following sections provide information required by the SEC regarding compensation paid to or earned by our named executive officers.

Summary Compensation Table

The following table sets forth the total compensation awarded to, earned by, or paid to our named executive officers for all services rendered in all capacities to us or Mattress Holdings, LLC in fiscal 2010 and 2011.

(a)                                  Amounts shown in this column are not reduced to reflect any deferrals under the Executive Nonqualified Excess Plan (our nonqualified deferred compensation plan) or the 401(k) Plan.

(b)                                 Amounts shown in the column reflect the fair value of Class B Unit awards on their grant date. The underlying valuation assumptions for Class B Unit awards are further discussed in Note 14 to the consolidated financial statements for fiscal 2011 (the “2011 Financials”), which are included in the Original Report.

(c)                                  Amounts shown in this column represent the dollar amounts of the aggregate grant date fair value of stock option awards determined in accordance with ASC Topic 718.  The underlying valuation assumptions for stock option awards are further discussed in Note 14 to the 2011 Financials, which are included in the Original Report.

(d)                                 Amounts shown in this column represent the named executive officer’s annual bonus payment. For each named executive officer, the annual bonus is based solely on achievement of the Company’s Adjusted EBITDA target. Bonus amounts also include a portion of the incremental bonus pool of 10% of the Company’s actual Adjusted EBITDA over the Company’s Adjusted EBITDA maximum level target.  Bonus amounts are not reduced to reflect any deferrals under the Executive Nonqualified Excess Plan or the 401(k) Plan. See “Compensation Discussion and Analysis—Elements of Named Executive Officer Compensation—Bonus and Short-Term Incentive Arrangements”.

(e)                                  Mr. Fendrich joined the Company as Chief Strategy Officer on September 24, 2010. The amounts shown for Mr. Fendrich during fiscal 2010 reflect his compensation for the portion of fiscal 2010 during which he was employed by the Company.

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(f)                                    Amounts shown in the “All Other Compensation” column include the following items, as applicable to each named executive officer, for fiscal 2010 and 2011: Company-paid premiums for life and disability insurance and health coverage, Company contributions to the 401(k) Plan, relocation and temporary housing expenses.

All Other Compensation Table

(a)                                  Amounts shown reflect Company-paid premiums for Messrs. Stagner and Black’s life and disability insurance.

(b)                                 Amounts shown reflect Company-paid premiums for Messrs. Stagner, Fendrich and Black’s health coverage, including medical, dental and vision coverage.

(c)                                  Amounts shown reflect the Company’s matching contributions to the named executive officer’s 401(k) Plan account. The 401(k) Plan provides for an annual match of 331/3% of contribution amounts.

(d)                                 Amount shown reflects reimbursement of relocation expenses in connection with Mr. Fendrich’s relocation to Houston, Texas, including temporary housing expenses of $25,600, and a “gross-up” of $13,328 to cover taxes on his temporary housing expenses.

Grants of Plan-Based Awards Table

The following table sets forth information regarding grants of plan-based awards made to our named executive officers during fiscal 2011:

(a)                                      Non-equity incentive plan compensation for Messrs. Stagner, Fendrich and Black is determined and paid in accordance with the terms of their respective employment agreements, and is based on achievement of Company performance targets that were approved by the Board of Managers prior to the IPO.

(b)                                     Non-equity incentive plan compensation for Mr. Murphy and Ms. Forbes is determined and paid in accordance with the terms of their respective letter agreements, and is based on achievement of Company performance targets that were approved by the Board of Managers prior to the IPO.

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(c)                                      These amounts represent target and maximum bonus opportunities for each of the named executive officers.  Messrs. Stagner, Fendrich and Black’s employment agreements provide that their target bonus opportunity for fiscal 2011 will be based on base salaries of $406,100, $325,000 and $289,900, respectively, regardless of whether an IPO had been consummated during such fiscal year.  For fiscal 2011, each named executive officer also received a supplemental bonus based of a portion of an incremental bonus pool of 10% of the Company’s actual Adjusted EBITDA over the Company’s Adjusted EBITDA maximum level target.  The actual amount of the bonus earned by each named executive officer for fiscal 2011 is reported in the “Summary Compensation Table” under the heading “Non-Equity Incentive Plan Compensation.”  For a description of the supplemental bonuses and performance targets relating to the Company’s bonus opportunities for fiscal 2011, please refer to “Compensation Discussion and Analysis—Elements of Named Executive Officer Compensation—Bonus and Short-Term Incentive Arrangements” above.

(d)                                     All stock option awards included in this column were granted under the Omnibus Plan in connection with the IPO and are options to purchase common stock of the Company.  The award, included in this column, which comprises one-half of the stock options granted to each of our named executive officers, is subject to a four-year performance-based vesting schedule.  The performance vesting component is based on specified stock price increase targets.  For a description of the stock option awards, please refer to “Compensation Discussion and Analysis—Elements of Named Executive Officer Compensation—Stock-Based Incentive Arrangements”.

(e)                                      All stock option awards included in this column were granted under the Omnibus Plan in connection with the IPO and are options to purchase common stock of the Company.  The award, included in this column, which comprises one-half of the stock options granted to each of our named executive officers, is subject to a five-year time-based vesting schedule.  For a description of the stock option awards, please refer to “Compensation Discussion and Analysis—Elements of Named Executive Officer Compensation—Stock-Based Incentive Arrangements”.

(f)                                        The exercise price of the stock options is the fair market value of a share of our common stock on the date of grant, which was determined based on the per share offering price of our common stock in the IPO.

(g)                                     Amounts shown reflect the fair value of the stock option awards on the grant date. The underlying valuation assumptions for stock option awards are further discussed in Note 14 to the 2011 Financials, which are included in the Company’s Original Report.

Narrative Disclosure to Summary Compensation Table and Grant of Plan-Based Awards Table

Each of our named executive officers is party to an employment agreement (in the cases of Messrs. Stagner, Fendrich and Black) or a letter agreement (in the cases of Mr. Murphy and Ms. Forbes), each of which provides for a base salary and other benefits, as described above in the Compensation Discussion and Analysis. All of our named executive officers are eligible to participate in our Executive Nonqualified Excess Plan (our nonqualified deferred compensation plan) and our benefit plans and programs.

Our named executive officers were also eligible to receive bonuses based on the Company’s achievement of an Adjusted EBITDA target for fiscal 2011. For 2011, the Adjusted EBITDA target was set by the Board of Managers, after consultation with our CEO, CFO and CSO. If the Adjusted EBITDA target was achieved, Messrs. Stagner, Fendrich and Black were entitled to receive a target bonus equal to 50% of base salary, Mr. Murphy was entitled to receive a target bonus equal to 35% of base salary and Ms. Forbes was entitled to receive a target bonus equal to 25% of base salary. If the Company achieved between 90% and 100% of the annual Adjusted EBITDA target, the cash bonus would be determined by linear interpolation between the target percentages described above. If the Company achieved greater than 100% of the annual Adjusted EBITDA target, each executive had the opportunity to receive a bonus of up to two times his or her respective target cash bonus.

In addition to the bonuses described above, our named executive officers are eligible to share with other members of the senior management of the Company in an incremental bonus pool of 10% of the actual amount of annual Adjusted EBITDA in excess of the annual Adjusted EBITDA maximum level target.  The amounts paid in respect of such incremental bonus pool are described above under “Compensation Discussion and Analysis—Elements of Named Executive Officer Compensation—Bonus and Short-Term Incentive Arrangements”.

Outstanding Equity Awards as of Fiscal Year End

The following table summarizes the number of stock options and Class B Units underlying outstanding equity awards for each named executive officer as of January 31, 2012, the last day of our 2011 fiscal year. Stock options were granted by the Company under our Omnibus Plan and are option to purchase common stock of the Company. The Class B Units

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are equity awards made prior to the IPO by our then-sole stockholder, Mattress Holdings, LLC, and are not equity awards of the Company.

(a)                                      The Class B Units are divided into four tranches: Class B-1 Units; Class B-2 Units; Class B-3 Units; and Class B-4 Units. For a description of the Class B Units, please refer to “Compensation Discussion and Analysis—Elements of Named Executive Officer Compensation—Stock-Based Incentive Arrangements”.  Stock option awards granted under the Omnibus Plan are not divided into separate equity classes.

(b)                                     Reflects stock options granted under the Omnibus Plan that vest based on service-based vesting conditions.  Such stock options vest in equal annual installments over five years beginning on the first anniversary of the grant date.  No such stock options are currently exercisable.

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(c)                                      Reflects stock options granted under the Omnibus Plan that are subject to performance-based vesting conditions for which the performance conditions have not been satisfied at the end of fiscal year 2011.  Such stock options are subject to a four-year performance-based vesting schedule, with such performance vesting based on specified stock price increase targets.

(d)                                     The exercise price of stock options is the fair market value of a share of our common stock on the grant date.  The exercise price for the stock options granted on November 17, 2011 was $19.00 per share, and was determined based on the per share offering price of our common stock in the IPO.  No stock options have been granted since the IPO.

(e)                                     All stock options have a ten-year term.

(f)                                        The Class B-2 Units vest in their entirety immediately prior to a change of control or, if earlier, the Lock-up Expiration Date, if the return on investment to the JWC Investors meets or exceeds a specified annual internal rate of return on invested capital and a specified return on invested capital of such JWC Investors. Any unvested Class B-2 Units become “earned” ratably over five years, with 20% of such units vesting on January 18 of each year, subject to continued employment.  In general, once a Class B-2 Unit becomes earned, it will not be subject to forfeiture in the event of a named executive officer’s termination of employment. However, a named executive officer will forfeit his or her earned Class B-2 Units if such executive terminates his or her employment without good reason or the Company terminates the executive’s employment for cause. In the case of Messrs. Stagner and Black, however, their earned Class B-2 Units will not be subject to forfeiture if the executive terminates employment without good reason, provided such termination occurs after January 18, 2012.  As described under “—Elements of Named Executive Officer Compensation—Stock-Based Incentive Arrangements,” above, all of the Class B-2 Units vested in full after the end of fiscal 2011 year end as a result of the applicable performance thresholds being met in full.

(g)                                     The Class B-3 Units vest in their entirety immediately prior to a change of control or, if earlier, the Lock-up Expiration Date, if the return on investment to the JWC Investors meets or exceeds a specified return on invested capital of such JWC Investors.  As described under “—Elements of Named Executive Officer Compensation—Stock-Based Incentive Arrangements,” above, all of the Class B-2 Units vested in full after the end of fiscal 2011 year end as a result of the applicable performance thresholds being met in full.

(h)                                     The Class B-4 Units vest in their entirety immediately prior to a change of control or, if earlier, the Lock-up Expiration Date, if the return on investment to the JWC Investors meets or exceeds a specified return on invested capital of such JWC Investors.  As described under “—Elements of Named Executive Officer Compensation—Stock-Based Incentive Arrangements,” above, all of the Class B-2 Units vested in full after the end of fiscal 2011 year end as a result of the applicable performance thresholds being met in full.

(i)                                       Value is determined using the fair value of Class B Units on the last day of our 2011 fiscal year based on a valuation performed by the Company. Each holder of the vested Class B Units is entitled to his or her pro rata share of future distributions to the equity owners of Mattress Holdings, LLC after certain other equity holders have received aggregate preferred distributions equal to the greater of (i) $154.3 million or (ii) the fair value of Mattress Holdings, LLC’s equity on the applicable grant date of the Class B Units. No value was actually realized by the holders of such Class B Units at fiscal year end.

Option Exercises and Stock Vested Table

The following table sets forth information regarding the number and value of vested Class B Units for each named executive officer during fiscal 2011.  No stock options were exercised by our named executive officers during fiscal 2011.