Activist Politan Capital Responds to Masimo’s Settlement Offer

Activist Politan Capital has responded to Masimo’s settlement offer by proposing to add two new directors to the company’s board. In a letter viewed by CNBC, Politan stated that they would not engage in a proxy fight to remove Masimo CEO Joe Kiani if the company agreed to appoint their nominees. The original settlement offer from Masimo included adding one of Politan’s nominees, William Jellison, to the board to fill a vacant seat. However, Politan’s Quentin Koffey countered this offer by suggesting that both Jellison and another nominee, Darlene Solomon, be added to the board immediately.

Politan emphasized the need for a majority of truly independent directors on Masimo’s board. Koffey pointed out that expanding the board to include Solomon and Jellison would fulfill the company’s previous promise to have a seven-person board. By accepting this proposal, Politan would not oppose the re-election of Kiani at the upcoming annual shareholder meeting. This move would give the activist nominees control over the board while allowing Kiani to avoid a contentious proxy contest.

Masimo’s lead independent director, Craig Reynolds, highlighted the benefits of reaching a settlement, stating that it would prevent the distraction and expense of a proxy fight. The company is currently in the process of spinning off its consumer technology division with a joint-venture partner, as announced by CEO Joe Kiani. Politan expressed willingness to engage in genuine settlement discussions but raised concerns about the company’s approach to the negotiations.

According to Koffey, Masimo had not been forthcoming with information about the joint venture, requiring directors to sign nondisclosure agreements to access crucial details. The activist criticized the company’s governance failures and expressed skepticism about the sincerity of the settlement offer. Koffey accused Masimo of engaging in gamesmanship rather than genuinely addressing the deep-rooted issues affecting the company and its shareholders.

Politan’s previous proxy fight at Masimo resulted in the addition of himself and another nominee to the board. The activist attributed Masimo’s governance shortcomings to the approval of questionable acquisitions, particularly in the consumer technology sector. With a renewed effort to remove Kiani from his position, Politan highlighted the lack of oversight within the board and the detrimental impact on shareholders.

Overall, Politan Capital’s response to Masimo’s settlement offer underscores the activist’s commitment to improving governance practices at the company. By pushing for the appointment of independent directors and advocating for greater transparency in decision-making, Politan seeks to protect the interests of shareholders and enhance Masimo’s long-term sustainability. The ongoing negotiations between the two parties will determine the future composition of the board and the direction of the company’s strategic initiatives.