Massimo activist Politan reveals proxy fight plans and letters | Wilnesh News

although Vote for change At last year’s annual meeting, shareholders of the medical device manufacturer field Activist investor Politan Capital Management said their governance concerns remained largely unresolved.

With just a month left until the 2024 annual meeting, Politan, which has already won two board seats, is looking to take another step forward. Led by Quentin Koffey, Politan nominated two additional directors to the company’s board and said without their election, management would continue to operate without oversight. Masimo founder and CEO Joe Kiani said he would not return if shareholders voted him out.

“This is the last opportunity for shareholders to effect meaningful change,” Politan wrote in a letter to Masimo shareholders on Wednesday, outlining his views to investors ahead of the meeting. Minsheng Banking obtained a copy of the letter and accompanying brief.

Masimo, known for its successful patent litigation apple Watch was initially targeted by Politan last year after the activist argued that poor management, a lack of independent board leadership and a flawed acquisition caused the company to stray from its core business.

Influenced by Politan’s views, investors last year voted to elect Coffey and Michelle Brennan to the board.

But Coffey wrote in the letter that governance improvements have not yet reached the level shareholders deserve, noting that Masimo’s board “does not review, approve or view the budget.”

“This resulted in Mr. Chiani spending whatever he wanted,” Coffey wrote.

For this year’s conference, Politan nominated Darlene Solomon; Agilentand Bill Jellison, former CFO Stryker.

Masimo’s shares have continued to slide, falling 18% since last year’s meeting, while the S&P 500 has gained 26% in that period. Politan said it has been unable to make any meaningful changes to the way the company operates, adding that Masimo’s board remains unable to oversee Chiani or the company’s direction.

The activist said that with proper governance, the company’s shareholder value could increase by $10 billion. Its current market capitalization is $7 billion.

“Fundamentally, the purpose of the upcoming vote is simple: to address Massimo’s longstanding and willful refusal to allow independent oversight,” Coffey wrote in his latest letter.

Last year’s proxy battle was fiercely competitive and expensive. Massimo took active steps to fend off Politan, introducing charters forcing the company to disclose its shareholder list. Many of those efforts were rejected by Delaware judges. Chiani threatened to resign if Kofi was elected.

A spokesman for Masimo said in a statement that Politan’s letters and presentation showed “in their own words, a fundamental lack of understanding of our business.”

A spokesman for Massimo added that Politan’s efforts amounted to a “desperate attempt” for control.

A key part of Politan pitch to shareholders last year The $1 billion surrounding Masimo get Sound United is the owner of high-end audio brands such as Bowers & Wilkins and Denon. Massimo’s Stocks plummet Shares jumped 37% after the acquisition was announced, with Politan highlighting the 2022 deal as an example of what happens when a poor governance structure exists.

While Kiani continues to claim the partnership will help Masimo bring its medical technology into homes, the company said in March it would heed investor concerns and divest itself of consumer brands.

But things are still hard to resolve. Politan said in Wednesday’s letter that Chiani disbanded the special spinoff committee headed by Coffey because it “rejected or modified” many of the chief executive’s requests. Chiani has been seeking Masimo’s valuable intellectual property rights, licensing of the Masimo name, corporate headquarters and aircraft, as well as a $150 million cash infusion for the new company, according to documents filed by activists and companies.

Politan believes the proposed transaction would result in the loss of Sound United and key intellectual property rights critical to Masimo shareholder value.

“This is a transfer of valuable intellectual property licenses, trade secrets and trademarks that could permanently harm Masimo’s valuation and create future competitors, while personally benefiting Mr. Kiani,” Coffey wrote.

Politan also highlighted Chiani’s alleged “huge compensation” and “lavish” spending, noting vacations in the Caribbean and Europe aboard Massimo’s corporate jet and stock pledges worth hundreds of millions of dollars.

Chiani told CNBC earlier this year that third parties were interested in the joint venture, but he did not provide specific details. Coffey said he and Masimo’s board were informed of the names of potential partners only after the tentative agreement was signed. Shareholders have not yet been notified.

“Politan wants the separation to be done properly,” Coffey wrote in Wednesday’s letter. “For 18 months we have been calling for a strategic review of Sound United’s business and consumer healthcare spending.”

Politan also pointed out in the letter that investors have opposed the company’s compensation practices and director selections for more than a decade.

Politan noted that Masimo has consistently ranked in the bottom 0.1% of the Russell 3000’s pay voting power vote for companies in the Russell 3000 since the metric’s existence.

Chiani believes he would be entitled to more than $400 million in change-of-control payouts if he loses his board seat or if the company completes a spinoff in his favor. Supervision filing.

Politan argued that Chiani’s payment was unenforceable under Delaware law and that Chiani’s ouster from the board would not trigger a The payment is due.

Politan said its action must succeed because management’s intransigence will make it difficult for other shareholders to take similar action in the future.

“For more than two years, Politan has overcome unprecedented obstacles posed by Masimo’s board,” the activist said. “We doubt any shareholder will try to do this again.”

watch: Masimo CEO Kiani says healthcare investors don’t understand the consumer side of the business