Dive Brief:
- Patient monitoring company Masimo and activist investor Politan Capital Management have exchanged counter proposals in a bid to avert a repeat proxy battle at the patient monitoring company.
- Politan wants to expand Masimo’s board to seven members with the addition of two new directors it has nominated.
- After Masimo offered to support one of the two nominees, Politan said the response “falls well short of resolving the fundamental governance problems at Masimo.”
Dive Insight:
Last year, Politan successfully backed two candidates for Masimo’s board: Quentin Koffey, the firm’s chief investment officer, and Michelle Brennan, a former Johnson & Johnson executive.
Following that victory, the firm this year proposed former Agilent Technologies Chief Technology Officer Darlene Solomon and former Stryker CFO William Jellison for board seats at Masimo.
On Thursday, Masimo said it’s prepared to appoint Jellison as a director if Politan withdraws its other nominee and drops the proxy contest.
Craig Reynolds, Masimo’s lead independent director, said the company hopes to avoid ongoing procedural disputes, the potential loss of additional independent board members, and a fight by Politan to remove CEO and founder Joe Kiani.
“That fight cannot be in anyone’s best interest,” Reynolds said in a letter addressed to Koffey.
In response, Koffey said the proposal to seat one Politan nominee would deadlock a six-person board and allow Kiani to “do whatever he wants however he wants with no Board oversight.”
Masimo should add both Solomon and Jellison to its board immediately, Koffey responded in a letter Thursday to Reynolds, adding that Politan will not oppose the re-election of Kiani to the board.
The exchange comes in a week in which Masimo reported declines in first-quarter revenue and earnings and the U.S. approval of its Stork baby monitor that tracks oxygen saturation, pulse rate and skin temperature for at-home use without a prescription.
Masimo is preparing to separate its consumer business, including the Stork monitor, Freedom smartwatch and consumer audio products.
On a May 7 earning call, Masimo executives said the structure could take the form of a spinoff or sale of a majority stake to a third party.
“The board and management are confident we have come up with a way to enact our shareholders' wishes without materially sacrificing the vision we have for making lives better and building greater shareholder value,” Kiani said on the call.
