‘Is This Apple’s Corporate Hit Job?’

Last week I addressed the fine line between employee endorsement and employee coercion, citing Masimo’s latest proxy battle with Politan Capital Management as a case in point. Some readers mistook my stance on that specific aspect of the Masimo-Politan drama as taking Politan’s side when, in truth, I don’t have a horse in this race.

If I were to choose sides, it wouldn’t be that of the activist investor or management. It would be on the side of engineers. And yes, some of those engineers (4 out of 18 respondents) felt pressured into signing a letter of support for their CEO. Others (13 of 18 respondents) felt no pressure at all to sign. And then there was at least one engineer who walked away from signing the letter feeling as though it didn't really matter either way because they were probably all losing their jobs regardless. That's whose side I'm truly on—those engineers who feel like they don't have a voice.

But some of the engineers who genuinely support management in the proxy war did raise some interesting questions to me last week, such as the timing of the proxy war after Masimo’s big legal victory against Apple last fall.

“Many times, we’ve asked each other at the lunch table, ‘Is this Apple’s corporate hit job?’" One engineer told me. “Is this the cost of standing up to Apple?’ ... This whole movement is highly suspicious to anyone I’ve discussed it with.”

I don’t buy into this conspiracy theory, but it tells me a lot about where the engineers’ heads are at. It also confirms my belief that both Masmio management and Politan have allowed a corporate power struggle to distract its best problem solvers and creative thinkers from their jobs.

The U.S. International Trade Commission (ITC) ruled last October that the latest Apple Watch models infringed upon two of Masimo's patents for pulse oximeters. Apple preemptively halted sales of the Apple Watch Series 9 and Apple Watch Ultra 2 products ahead of the ITC ban going into effect December 26.

Not surprisingly, the Cupertino, CA-based tech giant promptly filed an appeal. While the ban impacted the company's newest Apple Watch models, Apple has included the blood oxygen measurement feature in its watches starting with the Apple Watch Series 6 released in 2020.

The import ban lasted only a day before Apple convinced a U.S. federal appeals court to halt the ban while the federal circuit considered whether the appeal should put the ITC's decision on hold. In another victory for the underdog, however, the federal court upheld the earlier ruling, forcing Apple to disable the blood oxygen feature from the Apple Watch Series 9 and Ultra 2.

Aside from the unavoidable distractions of a high-profile lawsuit, Masimo engineers have also been distracted with what many investors saw as a flawed billion-dollar acquisition of Sound United in 2022, which took focus away from the company’s core medtech business. That purchase was a focal point in Politan’s initial proxy war against Masimo last year, which resulted in the investor winning two board seats. Politan, an 8.9% shareholder of Masimo, has since accused Masimo’s top executives of keeping the board in the dark on key corporate processes. Politan also raised concerns about how the company would handle its proposed separation of its consumer tech business.

“I personally do not trust Politan and find them and their movement very suspicious,” wrote the engineer. “They do not reveal exactly what they plan to do. They do not reveal who funded their $600 million purchase of Masimo stock. They want Masimo to do what made BlackBerry irrelevant.”

On the flip side of that argument, other Masimo engineers told me the purchase of Sound United shifted priorities by adding consumer tech to the mix.

So no, I do not believe there is some clandestine relationship between Apple and Politan driving this proxy war to punish Masimo for having the gull to take on the big bad Apple. Nor have I picked sides in the fight.

I simply want both sides to play fair and leave the engineers out of it as much as possible. The lunch table is for discussing important things, like what shows your colleagues are streaming and how far along you are with your Lego Back to the Future DeLorean Time Machine set.