Dive Brief:
- The shareholders of pulse oximeter maker Masimo elected both candidates nominated by activist investor Politan Capital Management to the company’s board of directors at its annual meeting Monday, according to a statement from Politan.
- Politan nominees Quentin Koffey, the firm’s chief investment officer, and Michelle Brennan, a former Johnson & Johnson executive, each received at least 70% of the votes cast, excluding company insiders, based on a preliminary analysis from Politan’s proxy solicitor, the investment firm said.
- Masimo, in an emailed statement, said it was disappointed to lose the contributions of two current directors.
Dive Insight:
The contentious proxy battle pitted Koffey against Masimo Chairman and CEO Joe Kiani, the company’s founder and a co-inventor of its pulse oximetry technology to measure blood oxygen saturation.
Politan, which holds a 9% stake in Masimo, argued a lack of management oversight at the company resulted in an ill-advised acquisition that destroyed $5 billion in Masimo’s market value. Masimo paid $1 billion last year to acquire consumer audio company Sound United, whose brands include Marantz and Denon. Masimo shares plunged after the deal was announced.
“We believe this election represents a clear mandate from shareholders that significant change is needed at Masimo,” Koffey said in Politan’s statement on the vote results.
Masimo, which has defended both its performance in the healthcare industry and the Sound United acquisition, opposed Koffey’s candidacy for a board seat but said it would support Brennan as a member of an expanded board.
Proxy advisory firms Glass Lewis and Institutional Shareholder Services both endorsed the Politan board candidates, citing governance concerns.
Koffey and Brennan replace H. Michael Cohen and Julie Shimer on the five-member Masimo board.
“We are disappointed to have lost the valuable contributions of two very qualified and capable board members. We are committed to continuing to innovate revolutionary products for patients and consumers worldwide,” a Masimo spokesperson said Tuesday in an email.
BTIG analyst Marie Thibault wrote in a note to clients Tuesday that key questions remain, including whether the new directors will be able to change the direction of Masimo’s strategy.
“We do not feel we have exact details or timelines on what the activist hopes to accomplish, or whether these efforts will be successful,” Thibault wrote. “We understand the frustration with the company's strategy and the push for improved corporate governance practices. But, we also think it will be important for MASI's near-term stock performance that the new board nominees can achieve a collaborative relationship with MASI's management team.”
Koffey said he and Brennan are “fully focused on putting the election behind us and working constructively with the incumbent directors to improve the Company’s corporate governance, enhance capital allocation and instill better strategic oversight.”
Masimo shares fell 1.7% to $160 in morning trading Tuesday on the Nasdaq.
This story has been updated with a statement from Masimo.
