Bhaskar Rao
About Bhaskar Rao
Bhaskar Rao, 59, is Executive Vice President and Chief Financial Officer of Somnigroup International Inc. (SGI) since February 2025, after serving as EVP & CFO at Tempur Sealy International (TSI) since October 2017; he joined TSI in 2004, progressing through FP&A and as Chief Accounting Officer, and previously worked at Ernst & Young (2002–2003) and Arthur Andersen (1994–2002). He holds B.A. degrees in Accounting and Economics from Bellarmine University and is a Certified Public Accountant . Under his financial leadership, SGI reported 2024 net sales of $4.9B, adjusted EPS of $2.55, and adjusted EBITDA of $923.8M , and the company’s five-year total shareholder return (TSR) value-of-$100 rose to 271.90 in 2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Somnigroup (TSI prior to renaming) | EVP & CFO | Oct 2017–Feb 2025 (TSI); Feb 2025–Present (SGI) | Led finance through industry downturn, capital allocation, and M&A; administered pay-for-performance programs |
| Tempur Sealy International | SVP & Chief Accounting Officer | Apr 2011–Oct 2017 | Strengthened accounting controls and reporting |
| Tempur Sealy International | Director, FP&A (and roles of increasing responsibility) | Jan 2004–Apr 2011 | Built FP&A capabilities, supported growth initiatives |
| Ernst & Young | Professional Staff | 2002–2003 | Assurance/advisory foundation |
| Arthur Andersen | Professional Staff | 1994–2002 | Audit/accounting expertise |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Bellarmine University | B.A. Accounting & Economics; CPA | — | Technical credentials underpin CFO role |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $464,000 | $478,000 | $493,000 |
| Target Bonus % of Salary | — | — | 75% |
| Target Bonus ($) | — | — | $369,750 |
| Actual AIP Payout ($) | $240,120 | $498,315 | $303,195 |
| AIP Metric & Outcome | Adjusted EBITDA (legacy design) | Adjusted EBITDA (legacy design) | Adjusted EPS focus; 82% of target AIP |
Notes:
- In 2024, SGI’s AIP primary performance metric changed from adjusted EBITDA to adjusted EPS to better align with profitability quality and long-term growth . 2024 adjusted EPS was $2.55, yielding ~82% of target AIP payout for NEOs .
Performance Compensation
Long-Term Incentive Plan (LTIP) Design (2024)
| Component | Metric | Weighting | Target Design | Actual (2024) | Earned | Vesting |
|---|---|---|---|---|---|---|
| PRSUs | Company-wide Adjusted EPS | 50% (of PRSU) | Interpolated scale; EPS aligns management-stockholder interests | $2.55 | 80% of target | PRSUs vest in ~3 equal installments beginning 2nd anniversary (Bhaskar follows standard vesting) |
| PRSUs | Company-wide Adjusted EBITDA | 30% (of PRSU) | Interpolated scale; promotes operational discipline | $924M | 69% of target | Same as above |
| PRSUs | Strategic Initiatives (ESG, leadership, capital allocation) | 20% (of PRSU) | Qualitative assessment | Committee determined ‘exceeded expectations’ | 300% of target | Same as above |
| RSUs | Time-based | 50% of LTIP value | Retention and ownership | N/A | N/A | Vests over 4 years (standard); CEO exception noted |
Overall 2024 PRSU weighted payout: 120.4% of target (EPS 80%, EBITDA 69%, Strategic 300%) .
2024 Grant Detail (Bhaskar Rao)
| Award Type | Grant Date | Threshold (#) | Target (#) | Max (#) | Grant Date Fair Value ($) |
|---|---|---|---|---|---|
| PRSUs | Jan 4, 2024 | 4,043 | 16,173 | 48,519 | $814,089 |
| RSUs | Jan 4, 2024 | — | 16,173 | — | $775,010 |
Multi-year Equity Grant Values (Grant Date Fair Value)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Stock Awards ($) | $1,609,560 | $1,607,785 | $1,589,099 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total Beneficial Ownership | 426,372 shares as of March 18, 2025; “<1% of class” indicated |
| Shares Outstanding | 208,582,329 shares at March 18, 2025 |
| Ownership % of Outstanding | ~0.20% (426,372 / 208,582,329) |
| Options – Exercisable | Right to acquire 18,812 shares within 60 days (beneficial ownership table) |
| Options – Outstanding Detail | 18,182 options (exercisable) from 1/5/2018, strike $15.61, expiring 01/04/2028 |
| Unvested RSUs/PRSUs (selected) | 2021 grants: 7,322 RSUs; 29,286 PRSUs (performance achieved; vesting schedule noted) |
| 2022 grants | 8,038 RSUs; 9,175 PRSUs (performance mix achieved; scheduled vesting 2024–2026) |
| 2023 grants | 16,640 RSUs; 44,731 PRSUs (performance achieved; vesting 2025–2027) |
| 2024 grants | 16,173 RSUs; 16,173 PRSUs (performance earned at 120.4%; vesting 2026–2028) |
| Ownership Guidelines | 3x base salary for other executive officers; 5 years to comply; retain 50% of net shares until compliant; all executives in compliance for 2024 |
| Hedging/Pledging | Prohibited; limited exceptions for margin accounts/pledging not allowed; policy applies to executives |
Employment Terms
| Provision | Key Terms |
|---|---|
| Employment Agreement | Executed Oct 13, 2017; auto-renews annually each April 1; base salary minimum $430,000; eligible for AIP and future equity awards |
| Severance (No Cause / Good Reason) | 12 months base salary; health/welfare continuation for one year; release required |
| Good Reason | Defined (incl. relocation or material breach; cure rights) |
| For Cause | Defined (willful failure, material breach, misconduct, felony, fraud, etc.) |
| Change-of-Control (Equity) | Double-trigger: termination without cause or resignation for good reason within 12 months → immediate vesting; if awards not assumed/continued/substituted, single-trigger accelerates vesting at close |
| Clawback | Amended Oct 2, 2023 to comply with SEC Rule 10D-1 and NYSE 303A.14; mandatory recovery of erroneously awarded incentive comp within 3-year lookback, regardless of misconduct |
| Non-Compete / Non-Solicit | Prohibitions during employment and for two years thereafter; confidentiality obligations |
| Tax Gross-ups | No tax gross-ups for change-of-control payments; aircraft policy gross-ups limited and none for Bhaskar in 2024 |
| Perquisites (2024) | Life insurance $1,914; 401(k) match $13,800; financial planning $10,000; corporate aircraft usage $8,178; total other compensation $33,892 |
Compensation Structure Analysis
- Increased fixed pay: Base salaries rose ~3% in 2024, including Rao from $478k to $493k, to address market positioning below 25th percentile and retain talent .
- Shift to EPS-centric incentives: 2024 AIP pivoted from adjusted EBITDA to adjusted EPS to better reflect earnings quality and align long-term performance; PRSUs also replaced relative TSR with adjusted EPS (50% weighting), reducing EBITDA weight (30%) and expanding strategic initiatives (20%) .
- Conservative governance: No option repricing without shareholder approval; no single-trigger cash severance on change-of-control; no tax gross-ups; anti-hedging/anti-pledging policy; robust clawback .
- Strong pay-for-performance: 2024 AIP paid ~82% of target on $2.55 adjusted EPS; PRSU weighted payout was 120.4%, with strategic initiatives earning the maximum, reflecting execution on ESG, leadership, and capital allocation .
Say-on-Pay & Peer Group
- Say‑on‑pay approval: Over 98% support in 2024, indicating strong investor endorsement of compensation design and stockholder outreach .
- Benchmarking peer group: 19 consumer/brand peers including DECK, WSM, PVH, TPR, MHK, etc.; program targets generally near median of blended proxy and survey data .
Performance & Track Record
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Company TSR – Value of $100 | 124.05 | 217.83 | 161.29 | 242.05 | 271.90 |
| Net Income ($MM) | 348.8 | 624.5 | 455.7 | 368.1 | 384.3 |
| Adjusted EPS | $1.91 | $3.19 | $2.60 | $2.40 | $2.55 |
Additional 2024 highlights: Net sales $4.9B; adjusted EBITDA $923.8M; deleveraging progress (Net debt/Adj. EBITDA 2.31x) .
Equity Ownership & Vesting Schedules (Detail)
| Date | Instrument | Quantity | Status | Notes |
|---|---|---|---|---|
| 01/05/2018 | Stock Options | 18,182 | Exercisable | $15.61 strike; expires 01/04/2028 |
| 01/04/2021 | RSUs | 7,322 | Unvested | 4-year vesting |
| 01/04/2021 | PRSUs | 29,286 | Unvested | Max performance achieved; vest 2023–2025 |
| 01/04/2022 | RSUs | 8,038 | Unvested | 4-year vesting |
| 01/04/2022 | PRSUs | 9,175 | Unvested | Performance outcomes set; vest 2024–2026 |
| 01/04/2023 | RSUs | 16,640 | Unvested | 4-year vesting |
| 01/04/2023 | PRSUs | 44,731 | Unvested | Performance outcomes set; vest 2025–2027 |
| 01/04/2024 | RSUs | 16,173 | Unvested | 4-year vesting |
| 01/04/2024 | PRSUs | 16,173 | Unvested | EPS/EBITDA/Strategic earned; vest 2026–2028 |
Risk Indicators & Red Flags
- Clawback compliant with SEC/NYSE – mitigates restatement risk and misaligned incentives .
- No hedging/pledging; executives in compliance with ownership guidelines – reduces misalignment and collateral risks .
- No single-trigger cash severance on change-of-control; no option repricing – governance-friendly .
- Perquisites modest for CFO; no tax gross-ups – shareholder-friendly cost controls .
Investment Implications
- Alignment: Rao’s compensation is tightly linked to earnings quality (adjusted EPS) and strategic execution; 2024 PRSU outcomes (120.4% payout) indicate strong performance against qualitative initiatives even as EPS/EBITDA earned below 100% of target, suggesting disciplined but constructive goal-setting .
- Retention/pressure: Multi-year unvested RSUs/PRSUs and ownership guidelines (3x salary, five-year compliance) create retention hooks and reduce near-term selling pressure; anti-hedging/pledging further aligns long-term interests .
- Change-of-control economics: Double-trigger vesting and one-year health continuation (no bonus multiple) limit cash leakage while preserving equity alignment—moderate shareholder protection in corporate events .
- Governance signal: >98% say‑on‑pay approval and no repricing/tax gross-ups support confidence in comp design; focus on adjusted EPS may favor sustainable earnings expansion and capital allocation discipline under Rao’s CFO oversight .