Politan Capital Management, the activist hedge fund firm that already holds two seats on the board of Masimo Corporation as well as 8.9% share in the healthtech and consumer electronics company, has made another two board candidate nominations.
The move to have Dr Darlene Solomon and William “Bill” Jellison elected to the board at the company’s upcoming annual meeting, comes after Politan said it has to date failed in its efforts to engage and work productively with the rest of the company’s directors.
On Friday, Masimo’s board announced that it had authorised management to evaluate a proposed separation of its consumer business, which saw shares jump by 9.5% in extended trading.
Masimo said that it expects the separation to include its consumer audio and consumer health products, including the Stork baby monitor and the Freedom smart watch and band, with the company retaining its professional healthcare and telehealth products.
Masimo Chairman and CEO is expected tomretain his positions and be anmed as Chairman of the newly created company.
In a statement, Quentin Koffey, Managing Partner and Chief Investment Officer of Politan, and a current director on the Masimo Board, said: “When shareholders overwhelmingly elected Michelle Brennan and me to the Masimo Board last year, we were optimistic we could work productively with the rest of the Board to drive positive change. Unfortunately, our efforts were continually rebuffed, as Chairman & CEO Joe Kiani refused to give us basic information, denied us access to management, repeatedly held Board meetings excluding us, and refused to even consider allowing any review of capital allocation or strategy.
“Politan supports a strategic review to evaluate a separation of the Consumer Business (the “Separation”), as evidenced by our ongoing efforts over the last 18 months. However, at this stage the Board has been provided zero details, and Politan has serious concerns given the lack of basic governance and oversight we have observed since joining the Board.
“Information is controlled tightly by the Chairman & CEO and almost never shared. As a result, no independent director knows basic facts such as what COGS, SG&A or R&D dollars are actually spent on. There is no budget approval process by the Board, thereby allowing the Chairman & CEO to spend however much he wants on whatever he wants without Board review, authorisation or even knowledge.”
Politan’s says it worked with an “independent, nationally recognised search firm” to identify its new candidates which its says have the “crucial expertise that is sorely needed on the Board”.
