Politan’s Efforts to Take Control of Masimo Are
Not in Stockholders’ Best Interests
Masimo (NASDAQ: MASI) today confirmed that Politan Capital
Management LP (“Politan”) has provided notice of its intent to
nominate two candidates to stand for election to the Masimo Board
of Directors at the company’s 2024 Annual Meeting.
While Masimo respects and values the input and ideas of all its
stockholders and respects their right to nominate and elect the
directors of their choice, the Company believes that Politan’s
efforts to take control of the Board and unseat the Company’s
Chairman and CEO, Joe Kiani, run counter to stockholders’ best
interests, as well as those of the hundreds of millions of patients
who rely on Masimo’s innovations.
When Politan’s Managing Partner, Quentin Koffey, and its
nominee, Michelle Brennan, were elected to the Board last year, Mr.
Koffey claimed to be seeking a minority voice on the Board from
which to offer input and direction. Yet Mr. Koffey has always been
intent on taking control. While Mr. Koffey continues to suggest he
desires an “independent” board, it appears from his continued
attacks and misleading claims, including in Politan’s recent press
release, that what he really seeks is a Board that agrees with him.
Until it does, he will continue to claim the Board is not
independent, despite the fact that two-thirds of the Board members
are independent directors appointed in the last nine months. Masimo
stockholders and the hundreds of millions of people who depend on
Masimo innovation cannot afford the destructive and chaotic path
that Mr. Koffey continues to pursue, even as the Company endeavors
to separate its consumer business.
The facts undermine Mr. Koffey’s arguments and expose his
willingness to mislead stockholders in pursuit of control of
Masimo. Stockholders have a right to know the truth as outlined
below:
Politan Claim: “…repeatedly held Board meetings excluding
us…”
Reality: Mr. Koffey and Ms. Brennan have been invited to and
attended all 11 Board meetings held since they joined the Board,
along with all respective committee meetings. Mr. Koffey also
attends Nominating, Compliance and Corporate Governance Committee
meetings as an invited guest.
---
Politan Claim: “…Chairman & CEO Joe Kiani refused to give us
basic information…”
Reality: Quentin Koffey and Michelle Brennan have received
thousands of pages of documents, including historical Board books
and minutes and a substantial number of additional documents and
analyses provided at Mr. Koffey’s request. A list of some of the
documents and information Mr. Koffey has been provided is attached
as Exhibit A.
---
Politan Claim: “…denied access to management…”
Reality: Mr. Koffey has had numerous discussions with
Masimo’s CEO and CFO both inside and outside of Board meetings and
has met with nearly every member of senior management. A list of
the members of senior management Mr. Koffey has had discussions
with is attached as Exhibit B. In addition, as part of their
on-boarding, Mr. Koffey and Ms. Brennan spent a day at Masimo with
Mr. Kiani and others where they discussed the Company’s history,
technology, and vision for the future. They received an extensive
tour of the Company’s Discovery Lab and Home Health Lab.
---
Politan Claim: “…the Board has been provided zero details [on
the proposed separation]…”
Reality: The full Board has been engaged in discussions
regarding a potential separation of the consumer business since Mr.
Kiani originally proposed it in January following a stockholder
tour―a review that Politan is now trying to take credit for.
Despite being on the Board since June 2023, Mr. Koffey did not
propose a separation of the consumer business until Mr. Kiani
discussed it with him in January. Further, Mr. Koffey was appointed
as Chair of a Special Committee formed to explore certain issues of
the separation. He has discussed the structure of the separation
with Board members and advisors to the Board on numerous occasions
and provided input.
---
Politan Claim: “…no independent director knows basic facts such
as what COGS, SG&A or R&D dollars are actually spent
on.”
Reality: Mr. Koffey is a member of the Audit Committee with
full access to the CFO, CAO and internal and external auditors,
which allows him to review the detailed financials and ask
questions regarding spending. Further, all Board members have been
provided detailed financial and operational information related to
Masimo’s consumer and healthcare businesses. Mr. Koffey has been
provided with a significant amount of information relevant to these
topics and has had numerous discussions with Masimo’s management
team and the Board’s advisors on these subjects. For Mr. Koffey to
admit to not knowing basic facts about the Company is
concerning.
---
Politan Claim: “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,
authorization or even knowledge.”
Reality: The Board reviews and discusses the Company’s annual
operating plan and guidance, and the Compensation Committee
approves financial targets in connection with executive
compensation.
---
Politan Claim: “This is why it is clearer than ever that a
majority of truly independent directors are needed at Masimo…”
Reality: In the past nine months, Masimo has seated four new
independent directors ―including two nominated by
Politan―constituting two-thirds of the Board, ensuring continued
independent oversight and fresh perspectives. The two newest
independent directors, Bob Chapek and Rolf Classon, had no
pre-existing relationship with Mr. Kiani or Masimo and were
appointed as part of a rigorous nomination process.
---
Politan Claim: “We have serious concerns that Mr. Kiani, without
proper oversight, will seek to push through a spin-off with poor
corporate governance and IP arrangements where assets are allocated
in such a manner designed to maintain his control and influence of
both separated companies.”
Reality: Mr. Kiani is committed to pursuing a separation that
would result in two separate companies (consumer and healthcare)
having the best chance at future success. The proposed separation
would result in a full deconsolidation of the financial statements
for the two businesses. The Board, including with
significant input from Mr. Koffey, is fully involved in evaluating
the separation and will ultimately be responsible for approving
it.
---
Politan Claim: “A rushed Friday afternoon announcement that the
Company was exploring the Separation – which came after being
informed that Politan intended to nominate directors this week –
only further confirms our concerns.”
Reality: It is Politan that rushed the announcement of
its nominations on the morning of Monday, March 25, in an effort to
take credit for the positive market reaction following the
separation announcement on Friday, March 22. Unfortunately,
Politan’s press release and related Wall Street Journal article
dampened the positive stock reaction that was already apparent in
after-hours trading following Friday’s announcement.
---
The Masimo Board and its Nominating, Compliance and Corporate
Governance Committee will review Politan’s proposed nominees and
present the Board’s recommendations in Masimo’s definitive proxy
materials, which will be filed with the U.S. Securities and
Exchange Commission and mailed to all Masimo stockholders eligible
to vote at the 2024 Annual Meeting. The Company will announce
details regarding the 2024 Annual Meeting in due course.
Masimo stockholders are not required to take action at this
time.
Forward-Looking Statements - Masimo
This communication includes forward-looking statements as
defined in Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
in connection with the Private Securities Litigation Reform Act of
1995. These forward-looking statements include, among others,
statements regarding the potential separation of our consumer
business, the evaluation of Politan’s nominees and the
recommendations of the Board and its Nominating, Compliance and
Corporate Governance Committee, as well as other matters related to
the 2024 Annual Meeting. These forward-looking statements are based
on current expectations about future events affecting us and are
subject to risks and uncertainties, all of which are difficult to
predict and many of which are beyond our control and could cause
our actual results to differ materially and adversely from those
expressed in our forward-looking statements as a result of various
risk factors, including, but not limited to (i) uncertainties
regarding future actions that may be taken by Politan in
furtherance of its nomination of director candidates for election
at the 2024 Annual Meeting of Stockholders, (ii) the potential cost
and management distraction attendant to Politan’s nomination of
director nominees at the 2024 Annual Meeting of Stockholders and
(iii) factors discussed in the “Risk Factors” section of our most
recent reports filed with the Securities and Exchange Commission
(“SEC”), which may be obtained for free at the SEC’s website at
www.sec.gov. Although we believe that the expectations reflected in
our forward-looking statements are reasonable, we do not know
whether our expectations will prove correct. All forward-looking
statements included in this communication are expressly qualified
in their entirety by the foregoing cautionary statements. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of today’s date. We do not
undertake any obligation to update, amend or clarify these
statements or the “Risk Factors” contained in our most recent
reports filed with the SEC, whether as a result of new information,
future events or otherwise, except as may be required under the
applicable securities laws.
Additional Information Regarding the 2024 Annual Meeting of
Stockholders and Where to Find It
The Company intends to file a proxy statement and GOLD proxy
card with the U.S. Securities and Exchange Commission (the “SEC”)
in connection with its solicitation of proxies for its 2024 Annual
Meeting. THE COMPANY’S STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ
THE DEFINITIVE PROXY STATEMENT (AND ANY AMENDMENTS AND SUPPLEMENTS
THERETO) AND ACCOMPANYING GOLD PROXY CARD WHEN THEY BECOME
AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders
may obtain the proxy statement, any amendments or supplements to
the proxy statement and other documents as and when filed by the
Company with the SEC without charge from the SEC’s website at
www.sec.gov.
Certain Information Regarding Participants
The Company, its directors and certain of its executive officers
and employees may be deemed to be participants in connection with
the solicitation of proxies from the Company’s stockholders in
connection with the matters to be considered at the 2024 Annual
Meeting. Information regarding the ownership of the Company’s
directors and executive officers in the Company common shares is
included in their SEC filings on Forms 3, 4, and 5, which can be
found through the SEC’s website at www.sec.gov. Information can
also be found in the Company’s other SEC filings. More detailed and
updated information regarding the identity of these potential
participants, and their direct or indirect interests of the
Company, by security holdings or otherwise, will be set forth in
the proxy statement and other materials to be filed with the SEC.
These documents can be obtained free of charge from the sources
indicated above.
Exhibit A: Documents and
Information Provided to Mr. Koffey
February 2021 Board Book
April 2021 Board Book
July 2021 Board Book
October 2021 Board Book
February 2022 Board Book
March 2022 Board Book
April 2022 Board Book
August 2022 Board Book
November 2022 Board Book
February 2023 Board Book
March 2023 Board Book
May 2023 Board Book
August 2023 Board Book
October 2023 Board Book
February 2024 Board Book
10/21/2021 Board and Committee Minutes
10/21/2022 Board Minutes
10/25/2021 Committee Minutes
10/4/2023 Committee Minutes
10/7/2022 Board Minutes
11/1/2022 Board and Committee Minutes
1/13/2023 Board Minutes
1/14/2022 Board Minutes
11/7/2022 Committee Minutes
12/21/2022 Board Minutes
1/24/2023 Board Minutes
1/31/2023 Board Minutes
2/10/2021 Committee Minutes
2/10/2022 Board and Committee Minutes
2/13/2022 Board Minutes
2/14/2022 Committee Minutes
2/15/2022 Board Minutes
2/18/2021 Board and Committee Minutes
2/18/2022 Committee Minutes
2/20/2023 Board and Committee Minutes
2/22/2021 Committee Minutes
2/27/2023 Committee Minutes
2/3/2023 Board Minutes
2/4/2023 Board Minutes
2/5/2023 Board Minutes
2/7/2022 Board Minutes
2/7/2023 Board Minutes
3/19/2023 Board Minutes
3/22/2023 Board and Committees Minutes
3/30/2022 Board and Committees Minutes
4/1/2021 Board and Committees Minutes
4/22/2021 Board and Committee Minutes
4/25/2021 Committee Minutes
4/26/2022 Board Minutes
5/2/2022 Committee Minutes
5/2/2023 Board Minutes
6/14/2023 Board Minutes
6/24/2023 Board Minutes
7/22/2021 Board Committee Minutes
7/26/2021 Committee Minutes
8/16/2022 Board Minutes
8/4/2022 Board Minutes
8/4/2023 Committee Minutes
8/5/2022 Committee Minutes
9/16/2022 Board Minutes
9/21/2022 Board Minutes
9/2/2022 Board Minutes
9/5/2022 Board Minutes
9/7/2022 Board Minutes
Q1 2021 Financial Update
Q1 2022 Financial Update
Q1 2023 Financial Update
Q2 2021 Financial Update
Q2 2022 Financial Update
Q3 2021 Financial Update
Q3 2022 Financial Update
Q3 2023 Financial Update
Q4 2021 Financial Update
Q4 2022 Financial Update
Q2 2023 Financial Update
Q3 2023 Financial Update
Q4 2023 Financial Update
2023 and Quarterly Revenue Guidance by
Clinical Platform
2023 Board Calendar
2024 Board Calendar
Board Committee List
2023 Board Contact Information
2022-2023 Board Consulting/Advisory
Agreements
Masimo Healthcare Org Chart
Masimo Consumer Org Chart
2021 Full Year Forecast by Platform
Engagement Letter 4/24/2023
Global Purchase Approval Matrix
Engagement Letter 2/10/2023
Engagement Status Report 6/21/2023
Project [ ] Summary
Project [ ] Financial Model
Q2 & FY 2023 Revenue 7/13/2023
Project [ ] Analysis
Q3 2023 UBS CA Hospital Takeaways
Q3 2023 Earnings Call Script
Q3 2023 Earnings
2023 Revenue Guidance by Clinical
Platform
Wells Fargo Healthcare Conference
Presentation - 9/8/2023
2023 [ ] Financial Projections
[ ] Financial Overview - 10/2023
Amended and Restated Certificate of
Incorporation - 6/26/07
Certificate of Amendment to Certificate of
Incorporation - 6/28/2023
Amended and Restated Bylaws
Audit Committee Charter
Compensation Committee Charter
Nominating, Compliance, and Corporate
Governance Committee Charter
Stock Incentive Plan
Equity Incentive Plan
Executive Bonus Incentive Plan
Amended and Restated Non-Employee Director
Compensation Policy
Amended and Restated Severance Protection
Plan & Summary Plan Description
Equity Grant Policy
Clawback Policy
Non-Executive Annual Cash Bonus Award
Plan
Policy Regarding Gross-Up Provisions
Code of Business Conduct and Ethics
Corporate Governance Guidelines
Director Nominees Consideration Policy
Executive Officer Stock Ownership
Policy
Non-Employee Director Stock Ownership
Policy
Open Door Policy for Reporting,
Accounting, Audit, & Other Compliance Concerns
Policy Regarding Security Holder
Recommendation of Director Nominees
Related Person Transactions Policy
Cash Investment Policy
Corporate Disclosure Policy
Insider Trading Policy
Process for Security Holder Communications
with the Board of Directors
Q2 2023 Financial Update
Amended Complaint
Q2 and FY Revenue
Engagement Letter - 2/10/23
Compliance & Cybersecurity Review
Complaint Scorecards
SOX Review
Procedures for closing books each
quarter
Application of accounting policies
Overview of finance group policies
including cash investment policy
Detailed walk through of financial
statements
Legal overview
Regulatory and quality overview
Compliance policies
Specific items requiring detail for
2023
Sensor discounts
Debt covenants
Inventory valuation
Impairment analysis
Apple Litigation expenses
Consumer expenses
Malaysia manufacturing transition
Masimo Foundation Grants
Cercacor Royalty
Exhibit B: Senior Managers Mr. Koffey
Has Had Discussions With
Chief Executive Officer (Joe Kiani)
Chief Operating Officer (Bilal Muhsin)
Chief Operating Officer, Consumer (Blair
Tripodi)
Chief Financial Officer (Micah Young)
General Counsel (Tom McClenahan)
Chief Accounting Officer (Paul
Hataishi)
VP, Internal Audit
Senior Director, Compliance
Senior Director, Privacy/Data Protection
Counsel
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240401659063/en/
Investor Contact: Eli Kammerman (949) 297-7077
ekammerman@masimo.com
Media Contact: Evan Lamb (949) 396-3376
elamb@masimo.com
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