Medical Innovation Exchange

Masimo faces another proxy challenge from Politan Capital

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Dive Brief:

  • Politan Capital Management is launching a second proxy battle at Masimo, aiming to gain two additional board seats at the patient monitoring company.
  • The brewing battle comes as Masimo pursues a plan, unveiled last month, to split off its consumer audio and consumer health products businesses.
  • Masimo, in a release Monday, said Politan’s efforts to take control of the board and unseat Chairman and CEO Joe Kiani are against the best interests of investors and the patients who use its products.

Dive Insight:

Politan is nominating Darlene Solomon, former chief technology officer at Agilent Technologies, and William Jellison, former CFO at Stryker, for board seats at Masimo.

Politan, which supports Masimo’s strategic review looking at a separation of the consumer business, contends that Kiani has withheld details of the company’s budget from the rest of the board.

Quentin Koffey, Politan’s managing partner, was named a Masimo director last year. In a March 25 statement, Koffey accused Kiani of maintaining tight control of information, “allowing the Chairman & CEO to spend however much he wants on whatever he wants without Board review, authorization or even knowledge.”

Masimo, in a statement, denied the accusations and said Koffey has been intent on taking control of the board despite having claimed to want to offer input as a minority voice. The company said it has provided thousands of pages of documents, including historical board books and minutes, to Koffey and Masimo director Michelle Brennan, whom Politan supported in last year’s proxy contest.

Koffey and Brennan have attended all 11 board meetings held since they joined the board, and Koffey attends nominating, compliance and corporate governance committee meetings, Masimo said, responding to Politan’s allegation that the company has excluded the two directors from meetings.

As Masimo looks to split off the consumer business, Koffey said Kiani is looking to allocate assets in a manner designed to maintain his control of both separated companies.

“We have serious concerns that Mr. Kiani, without proper oversight, will seek to push through a spin-off with poor corporate governance and IP arrangements,” Koffey said.

Masimo refuted that claim as well, noting that the proposed separation of the consumer and healthcare operations would “result in a full deconsolidation of the financial statements for the two businesses.”

The pulse oximeter maker is gearing up to split off its consumer business nearly two years after its $1 billion acquisition of Sound United, which sells a range of consumer audio brands. Kiani is expected to remain chairman and CEO of Masimo and to be named chairman of the audio spinoff. 

Susan Kelly

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