Exhibit 10.1 McLaughlin Ltr



    Exhibit
      10.1

    


    


    March
      2,
      2006

    


    


    Mr.
      William R. McLaughlin

    Chairman
      and CEO

    Select
      Comfort Corporation

    6105
      Trenton Lane North

    Minneapolis,
      MN 55442

    


    Dear
      Bill:

    


    As
      we
      have discussed, we are writing to secure your commitment to remain in your
      position as Chairman
      and CEO of Select Comfort Corporation for at least the next five years and
      to
      outline the
      consideration we would provide for this commitment in the form of long-term,
      performance-based
      incentive compensation.

    


    Our
      proposal is to provide you with a one-time grant of options to purchase an
      aggregate of
      375,000 shares of the company’s common stock, representing five (5) times the
      size of your

    normal
      annual grant, which options would be exercisable at the current fair market
      value but would
      not
      vest until the end of five (5) years from the date of grant, subject to your
      continuing service
      with the company. These options would otherwise be subject to all of the
      company’s standard
      option terms relative to the ultimate term, period of exercise following
      separation from service
      and acceleration of vesting upon a change in control, as defined in the Stock
      Incentive Plan. This
      proposal would not contemplate any additional stock option grants during the
      five-year
      vesting period of the options described above.

    


    In
      addition, you would receive your normal annual performance-based restricted
      stock grant, which
      would be in the amount of 25,000 shares for the current year. We would expect
      future annual
      grants at the same dollar value level, subject to upward or downward adjustment
      based on company
      performance, similar to existing and contemplated senior management grants.
      These restricted
      stock grants would be fully vested on a cliff basis at the end of four years
      from the date of
      grant,
      subject to your continuing service with the company.

    


    In
      addition, your annual base salary and short-term incentive compensation target
      level would be subject
      to annual review and adjustment based on individual and company performance
      and
market
      conditions.

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    


    


    Please
      indicate your acceptance of the foregoing terms and your commitment to continue
      in the position of Chairman and CEO of Select Comfort Corporation for at least
      the next five years by executing and returning a counterpart of this letter
      where indicated below.

    


    On
      behalf
      of the Board of Directors of Select Comfort Corporation,

    


    /s/
      Michael A. Peel

    


    Michael
      A. Peel,

    Chair,
      Management Development and Compensation Committee

    


    /s/
      Ervin
      R. Shames

    


    Ervin
      R.
      Shames,

    Lead
      Director

    


    


    I
      accept
      the foregoing terms and hereby indicate my commitment to continue to serve
      as
      Chairman and CEO of Select Comfort Corporation for at least the next five
      years.

    


    /s/
      William R. McLaughlin

    


    William
      R. McLaughlin