Masimo Management Walks a Fine Line Between Cooperation and Coercion

This week in Pedersen's POV, our senior editor investigates alleged employee coercion as Masimo's proxy battle heats up.

Amanda Pedersen

July 8, 2024

2 Min Read
Pedersen's POV graphic featuring headshot and quote from Amanda Pedersen, MD+DI Senior Editor, about corporate coercion and proxy battle ethics.

More than 300 Masimo engineers and sales leads have endorsed their CEO in the company’s latest proxy war with Politan Capital Management.

But at least some of those employees felt pressured into signing the endorsement letter, which states they “may leave” if CEO Joe Kiani is fired.

The fact that employees were even asked to sign such a letter—prepared on their behalf—is nothing short of corporate coercion. Regardless of loyalty, how much choice did they truly have?

Screenshots included in proxy materials Politan filed last week with the Securities Exchange Commission show those signatures were coerced.

"Employees are asked to sign a blank page without being given a copy of the letter," according to one anonymous message to Politan’s campaign. "Those who refuse are questioned, 'Why not?' in front of their peers."

Another anonymous message to Politan claims that management "wrangled all of engineering into small rooms and pressured them to sign a document which amounts to committing seppuku when your lord loses control of a territory."

The relationship between management and their direct reports is inherently unequal. That power dynamic makes it nearly impossible for an employee to consent to putting their name on a prepared letter without feeling some amount of pressure.

“People are signing out of fear of retaliation,” another anonymous message to Politan reads. The same message, along with others, states that employees are being told the activist investor will lay off most of the workforce if wins control.

I reached out to nearly all the names on Masimo’s letter over the weekend to anonymously ask (via SurveyMonkey) if they felt pressured to sign. I did this not to shoot additional fireworks into their holiday weekend, but for the sake of due diligence.

Of the 18 responses to the poll, four respondents felt pressured to sign; 13 said they did not feel pressured; and one person chose “other,” commenting that they “Did not feel pressured, but had the feeling we will all be fired anyway, so it doesn’t really matter if we signed or not. Hope it is not true.”

In addition to the survey results, some Masimo engineers chose to respond to me directly. They raised some other interesting questions, which I intend to share next week in Pedersen’s POV.

I’m glad that not all Masimo engineers felt pressured to toe the company line in this power struggle, but that’s really beside the point. Masimo never should have solicited employee endorsement in this way to begin with.

There are more ethical ways to show shareholders ahead of the vote that employees are happy with the current direction of the company. Certifications based on third-party, anonymous employee surveys, for example, and the company’s ranking on Fortune’s Best Large Workplaces in Manufacturing and Production.

Even if employees genuinely support the CEO—and I believe many do—proxy wars should be fought in the C-suite, not the R&D lab. Leave the engineers alone to focus on their job.

This column has been updated to reflect current survey results.

About the Author(s)

Amanda Pedersen

Amanda Pedersen is a veteran journalist and award-winning columnist with a passion for helping medical device professionals connect the dots between the medtech news of the day and the bigger picture. She has been covering the medtech industry since 2006.

Sign up for the QMED & MD+DI Daily newsletter.

You May Also Like