Masimo's Fate To Be Decided Thursday

After a two-month delay, an avalanche of SEC filings, and allegations of employee coercion, Masimo shareholders are expected to decide the company’s fate on Thursday.

The vote to settle the latest proxy battle between Masimo and Politan Capital Management was originally scheduled for July 25, but about a week before that date, the company postponed its shareholder meeting by eight weeks.

Here’s a refresher of the twists and turns of this proxy war to date, starting with Masimo’s controversial purchase of Sound United.

*MD+DI independently verified that at least some engineers who signed the letter of support for Kiani were pressured into doing so. It seems most of the engineers did not feel pressured to sign, but this is based on just 19 responses to our survey of nearly 300 engineers.

What's happened between Masimo and Politan since July 16?

Essentially, what has happened since July 16 in the proxy war between Masimo and Politan, an 8.9% shareholder of Masiomo, is an avalanche of press releases and SEC filings—sometimes daily—from both parties.

Of note, Masimo reported last week that the lawsuit it filed in July against Politan forced the activist investor to issue several new disclosures to correct alleged false and misleading statements and to provide information previously concealed from shareholders and proxy advisors.

For example, Masimo claims that Politan and Koffey lied about the spinoff of the company's consumer business. Koffey allegedly claimed that a special committee had unanimously rejected the term sheet he had previously signed with Kiani, Masimo's CEO. However, the company notes, Politan's corrective disclosures revealed that Koffey never shared the agreed upon term sheet with any other member of the special committee.

Masimo also accused Koffey of falsely claiming that the board authorized Kiani to carry out a sale of the company without further board oversight. Politan's corrective disclosures, Masimo notes, reveal that Koffey "knew this not to be true."

Finally, Koffey allegedly lied about the outcome of the sale process by implying that Kiani unilaterally rejected offers for Masimo because those offers didn't satisfy Kiani personally. Politan's corrective disclosures revealed that Koffey knew Masimo had not received or rejected any offers.

“Politan and Quentin Koffey have relied on misleading and false statements to distract both stockholders and proxy advisory firms from their lack of a plan or strategy for Masimo," the company said in a release September 12. "In stark contrast, Masimo has made concrete commitments to usher in changes that stockholders have said they want, including separating our consumer business and expanding the board with more independent directors."

Meanwhile, Politan has leaned heavily on its endorsement from Glass Lewis, a proxy advisory firm.

"We remain decidedly concerned with the efficacy of Masimo's status quo oversight architecture," Glass Lewis said in a report cited by Politan. "We further maintain investors should have exceedingly limited confidence in the existing board's ability to credibly advance a thoughtful and independent review of key strategic alternatives, including a separation of Masimo's much maligned consumer millstone.”

In the same report, Glass Lewis endorsed Politan's nominees, writing that they would "go a long way to ensuring the interests of all investors are clearly and consistently represented at a particularly critical juncture for the company."

Kiani has said he will depart the company if Politan gains control of the board. Masimo COO Bilal Muhsin has also said he intends to resign if this happens, and more than 300 other employees have indicated that they may follow suit. As noted above, however, at least some of those employees told MD+DI they felt pressured into signing a letter to that effect, while other employees told MD+DI they signed the letter of their own volition.