Sonos, Inc. [Nasdaq: SONO] announced today that its Board of Directors has decided to appoint Tom Conrad – current Interim CEO – as the new official Chief Executive Officer, effective immediately. Conrad, who was a member of the Board of Directors when it chose to dismiss previous CEO Patrick Spence, was named as the Interim CEO back in January.
Learn more about Sonos making Tom Conrad its CEO
In advance of the release of its third-quarter Fiscal 2025 results, the company chose to officially announce the upgrade of Conrad’s role at the company today. This announcement is not a total surprise, Conrad likely had the inside track to potentially nab the permanent job from the beginning.
However, having said that and looking at the situation from the outside, it does seem as though Conrad has, in a very short time, succeeded in placing the company’s narrative on a more positive track. That narrative was horribly poisoned – rightly or wrongly – under Spence in the wake of the great app disaster of 2024. It is hard to overstate just how terribly bungled the new “rearchitected app” rollout was, and how its defects and failures stunned and disappointed consumers.
The Great App Disaster of 2024 Damaged the Company’s Reputation
The processes that allowed such a flawed application to be greenlighted and distributed is clearly on Spence. Also, the many months it took to right the ship with multiple bi-weekly interim app downloads with adjustments and fixes that slowly, incrementally improved a few issues at a time was painfully frustrating for those customers whose issues weren’t addressed until the end of the process.
In fact, it wasn’t until Conrad assumed control that we finally saw the app become completely functional, if not particularly stylistically impressive. The mood in online consumer discussion groups began to immediately improve measurably when the company finally distributed an app that…simply worked.
Tom’s Our Guy
Following a comprehensive and competitive search, the Board is confident that Tom is the best person to lead Sonos into its next chapter of delighting customers, spearheading innovation, and driving growth. Over the past six months, Tom has earned the confidence of our employees, customers, partners and shareholders by restoring urgency and a deep commitment to delivering ever-improving experiences. He has a compelling vision for Sonos’ future, with strong plans to harness technology to benefit our customers, as AI and other advances reframe the landscape and unlock new opportunities. We’re energized by what Sonos’ next chapter holds for all our stakeholders.
Julius Genachowski, Sonos Chairman of the Board
As I mentioned in my brief profile of Conrad when he was first named Interim CEO, he has a unique background that is distinctly different than that of his predecessor, Spence. Spence’s background was predominantly in sales and marketing with Blackberry. Conrad, on the other hand, is a product guy, holding multiple product development roles with a variety of tech companies – mostly apps and other web properties.
From Strategic Oversight to Commanding Daily Tactical Activities
In the general business community, it is a little unusual to name a product guy CEO. More common is a financial or business management person. However, in tech, it is not that uncommon.
Furthermore, it is likely an additional asset that Conrad will move from a board oversight role to an active tactical management role – in a role that includes direct product responsibility. While he undoubtedly had input on product direction as a board member, he is now responsible for guiding the product roadmap. Yes, there are product planning and management people with direct responsibility for products – they now report to Conrad…a product guy.
Conrad: ‘We’re Just Getting Started’
By the way, Conrad remains on the Board of Directors.
Since the beginning of this year, we’ve reestablished clarity, focus, and momentum at Sonos. We’ve dramatically improved our software products and recommitted to delivering the kind of premium experience our customers expect. We’re just getting started. The opportunity in front of us is enormous and I’m so excited to move from rebuilding to imagining the next generation of experiences: more immersive, more intelligent, and more seamlessly integrated into our customers’ lives.
Tom Conrad, Sonos CEO
Upgraded Role Gets an Upgraded Compensation Package
Conrad was offered a significantly upgraded package over his “Interim CEO” pay, as you would expect. But, notably, his package is substantially upgraded over previous CEO Patrick Spence’s pay as well. In a filing with the Securities and Exchange Commission (SEC), Sonos reported it will pay Conrad a base salary of $850,000 per year. By comparison, that is 55% more than Spence’s final salary of $550,000 per year.
He is also eligible for a cash annual bonus of 100% of his base pay for a total annual cash compensation of $1.7 million. In addition to this, the board is granting him CEO equity of $7 million, half of that amount ($3.5 million) in restricted stock units (RSUs) to be paid out over four years…and half of that amount (the remaining $3.5 million) as performance share units (PSUs) to be paid based on company performance over the next two years.
This all means that by the end of four years as CEO, Conrad will have received cash and stock compensation worth at least $13.8 million, or about $3.45 million per year.
The Path Forward is Now Totally Conrad’s Responsibility
So now the company’s performance is 100% Conrad’s responsibility. No excuses…
Let’s see where the company goes from here.
Learn more about Sonos by visiting sonos.com.
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