As Masimo works to fend off a proxy fight from Politan Capital Management, nearly 300 of the medtech’s engineers and global managers—as well as its chief operating officer—have signed on to letters saying they might follow founder and CEO Joe Kiani out the door if he is ousted from his position.
Politan, which holds about a 9% stake in the maker of pulse oximeters and other patient monitors, obtained two board seats last year after assailing Masimo’s “$5 billion drop in market value” following its $1 billion deal to acquire Sound United in early 2022, including its audio brands such as Denon, Polk, Marantz and others.
The battle reignited this past spring after the activist investor nominated two additional board candidates amid Masimo’s plans to spin out its consumer businesses—including its home audio equipment as well as its high-tech baby monitor system and health-focused smartwatches.
In a letter to shareholders (PDF) in late June, Politan said the company split may take with it intellectual property that could end up creating a new competitor to Masimo. Kiani is also slated to serve as chairman of the new spinoff while holding onto his current role of chief.
“Last year, shareholders overwhelmingly elected us to Masimo’s Board. Yet, Mr. Kiani and his selected directors ignored the vote results and refused to repair Board oversight,” Politan wrote. “Instead, they embarked on a damaging entrenchment strategy, including the currently proposed separation—a transaction that is not the divestment of Sound United that shareholders want, but instead is a transfer of valuable IP, trade secrets and trademarks to an entity Mr. Kiani will lead.”
Politan’s nominees to the board are Darlene Solomon, formerly the chief technology officer of Agilent, and William Jellison, Stryker’s former chief financial officer. Masimo, meanwhile, has put up Christopher Chavez as an independent director, who has previously served as CEO of Advanced Neuromodulation Systems and TriVascular.
In its responding July 1 letter (PDF), Masimo said it does “not believe that any of Politan’s current directors or nominees are qualified to serve as an interim CEO.”
“Politan is demanding control of Masimo without providing any concrete transition and leadership plan to shareholders. That is not an approach we think will maximize value for stockholders. Quite the opposite,” the company wrote.
At the same time, Masimo has posted letters of support from regional managers, sales directors and presidents as well as one signed by more than 280 members of the company’s healthcare engineering team. “The prospect of losing our founder and CEO threatens to derail the progress we have made and jeopardize the future of Masimo,” they wrote.
Additionally, COO Bilal Muhsin inked a conditional resignation letter “in the event that Joe is removed as Chairman and CEO,” saying he has “no intention of remaining with the company” if Politan gains control.
Politan has said it does not oppose the reelection of Kiani to an expanded board. Masimo’s annual shareholder meeting is scheduled for July 25.