Masimo Corp. (MASI) Issues Shareholder Letter

Masimo Corporation (“Masimo” or the “Company”) (NASDAQ: MASI) today issued a letter to stockholders in connection with the Company’s 2024 Annual Meeting of Stockholders. The letter highlights the fierce independence and deep medtech experience of nominee Christopher Chavez and contrasts it to Politan’s handpicked and paid nominees. Masimo believes that ceding control of Masimo to Politan by electing its nominees would jeopardize the value of your investment in Masimo. The Board encourages stockholders to vote FOR Masimo’s highly qualified director nominees, Joe Kiani and Christopher Chavez.

Find more information on why your vote is so important to the future of Masimo at www.ProtectMasimosFuture.com. The full text of the letter to our stockholders can be found here:

Dear Fellow Masimo Stockholders:

Masimo’s Board has a duty to stockholders to share its views on the nominees proposed for election at this year’s annual meeting. The three of us signed below, constituting all the non-Politan directors, have led public companies as CEOs and senior executives and served on public company boards for many years. Through our service, we have seen how directors can be effective and value additive for stockholders in the boardroom. Most critically, we understand that every boardroom needs robust discussion and a healthy, open dialogue and believe that stockholders should have representatives with the experience, expertise and independence to provide objective counsel to management. That is why we nominated Christopher Chavez, and why we believe Politan’s nominees are clearly inferior to ours.

What we find most disappointing, and troubling, is that Politan’s central argument to cede control of Masimo to Politan is the “refusal by Masimo to permit independent oversight.” It appears to us that Politan is repeating a false narrative over and over in the hopes that stockholders will believe it to be true. It is simply not the case that having met Joe Kiani in the past, whether at an industry event, on the opposite side of the negotiating table, or at a civic function, compromises the independence of our directors, creates an obligation to him or interferes with their duty to provide oversight. The success Mr. Chavez and our non-Politan directors have had at the highest levels of leadership allow them to challenge and counsel management and help make the best decisions for Masimo at the Board level. Meanwhile, Politan continues to admit that its nominees will vote in a bloc regardless of what is presented and discussed in the boardroom: “Electing only one of our two nominees would not be sufficient to effect this type of change. Adding just Darlene Solomon or William Jellison would result in a deadlocked Board.”

The assertion that Mr. Chavez would rubber stamp anything Mr. Kiani wants to do is frankly nonsensical. Mr. Chavez is widely respected for his industry knowledge and decades of experience working for and leading medical technology companies. We invite stockholders to compare Mr. Chavez’s independence and experience with Mr. Jellison’s or Dr. Solomon’s, who are being paid by Politan.

Mr. Chavez is a self-made businessman who rose from the bottom to leading public medtech companies. He brings more than 30 years of leadership experience in the medical technology industry, including two past appointments as a public company CEO and many years as an independent public company director. He has dealt with complex strategic, operational, regulatory and transactional matters unique to the medtech industry that neither Politan nominee – and neither of the Politan directors – has experienced. His personal involvement in product development, commercialization and revenue growth in the medtech industry will add significant value to the Board.

It should come as little surprise to stockholders that Mr. Kiani and Mr. Chavez became professionally acquainted many years ago, given they were both leading medtech CEOs who as a result served on the board of the Medical Device Manufacturers Association (MDMA). However, while Mr. Kiani still serves on MDMA’s board, Mr. Chavez left more than 12 years ago. Since that time, Mr. Kiani has had only one brief meeting with Mr. Chavez, when Masimo considered – but did not pursue – the acquisition of a company at which he was a director.

Mr. Jellison is by contrast a serial activist nominee. He recently joined the board of Anika Therapeutics (a company with a market cap well under $400 million) as a nominee of activist investor Caligan Partners. Notwithstanding Politan’s claims that Mr. Jellison is “unquestionably independent” and “found via nationally recognized, third-party search firm,” it is no coincidence that Caligan Partners’ attorney also happens to be Politan’s attorney.1 Moreover, in a recent publication an executive at Anika Therapeutics indicated that he believes that Mr. Jellison is simply a stand-in for Caligan:

“[Jellison] is not what is important. It’s Caligan. Jellison is a proxy,” the executive said. The activist investor approach is their worst nightmare because if they don’t reach an agreement, “it tears you apart.”

Dr. Solomon has a technical background, but her expertise is in a field unrelated to Masimo’s business, and she does not have familiarity with medical technology development or the regulatory processes to which Masimo is subject, all of which are critical to Masimo’s innovation engine. She has dealt with few, if any, of the industry-specific challenges through which Mr. Chavez has successfully led the companies he served during his long career.

It is our belief that Politan selectively chose nominees who depend on activist investors to advance their director careers or have limited perspective on, background in, or knowledge of the medical device sector to ensure they will simply follow Mr. Koffey’s lead on issues before the Board, as Ms. Brennan has done. It is clear Politan wants Board members that will vote with Mr. Koffey. Politan’s mantra, “Masimo Urgently Needs a Truly Independent Board,” should truthfully state, “Politan Urgently Wants a Quentin Koffey-Controlled Board.”

We also do not believe that any of Politan’s current directors or nominees are qualified to serve as an interim CEO. Politan is demanding control of Masimo without providing any concrete transition and leadership plan to shareholders. That is not an approach we think will maximize value for stockholders. Quite the opposite.

If Masimo stockholders want knowledgeable, independent Board members to lead and guide the company, Mr. Chavez is the ally they need on the Board. In our view, Politan has already told stockholders what they will get voting for their slate: control of Masimo by Politan. An activist with less than 9% of Masimo’s shares in control of Masimo with an inexperienced Board and with no actual plan for running Masimo is a threat to Masimo’s current and future value. We believe it is also a disservice to patients around the world and to stockholders to seek to reduce innovation. As we have presented recently, we expect Masimo’s continued investments in R&D to support patient-focused, innovation-based revenue growth will allow Masimo to achieve $8 non-GAAP EPS in 5 years.

Thank you for your continued support,
Craig Reynolds
Bob Chapek
Joe Kiani

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