Dive Brief:
- Masimo shareholders should elect both board candidates nominated by activist investor Politan Capital Management, proxy advisory firm Institutional Shareholder Services said Tuesday.
- Politan, which has accused the maker of patient monitoring systems and sensors of underperformance and poor corporate governance, has nominated its chief investment officer, Quentin Koffey, and former Johnson & Johnson employee Michelle Brennan for seats on Masimo’s board.
- ISS pointed to “lack of accountability to shareholders” as the key issue necessitating a boardroom change.
Dive Insight:
Politan has argued for a new direction at Masimo because, in its view, the company’s current corporate governance “has resulted in a deeply discounted valuation and an inability to profitably innovate and grow.”
Masimo previously said it was opposed to working with Koffey but agreed to support Brennan if its shareholders voted to expand the size of the board. A Masimo spokesperson did not immediately respond to a request for comment on the ISS recommendation. Politan has a 9% stake in Masimo.
ISS said Masimo CEO Joe Kiani assembled the company’s board, which “undermines” its independence.
“MASI is a public company that operates like a private business, and is disregarding shareholders in the process. The board needs to repair its relationship with shareholders, and needs to credibly establish an ability to effectively oversee management. These requirements can only be fulfilled through board change,” the ISS report said. ISS shared its report by email with MedTech Dive.
Adding Koffey, a shareholder representative, to the Masimo board would be a step toward repairing the board’s relationship with its investor base, ISS added. Brennan would bring a relevant background and industry perspective, including experience evaluating the viability of new product lines.
“Brennan and Koffey would together represent a presence that could credibly impose effective board oversight of management, which will be necessary to establish the accountability to shareholders that has long been missing,” ISS said .
ISS recommended that shareholders vote for both of Politan’s nominees and that two expansion seats be filled with additional independent directors, if the proposal to expand the board to seven members is approved.
Masimo’s annual meeting of shareholders is scheduled for June 26.