Masimo CEO Resigns Days After Proxy Battle Ejected Him From Board

None of Masimo’s high-tech monitors helped its leader read the room. 

Three and a half decades after he founded the medical device company, CEO Joe Kiani stepped down Wednesday following a litigious, tenacious, two-year skirmish with an activist investor that ejected him from his own board despite owning just 9% of the company. And the backstabbing and braggart-filled battle isn’t quite over yet.

Proxy with Moxie

There have been few boardroom battles quite like — or anywhere near as vitriolic as — the one between Kiani and Quentin Koffey, founder of the $1.65 billion activist investor Politan Capital. Kiani’s Masimo — with tech cutting-edge enough to have bested Apple in a patent dispute over blood-oxygen measuring — reached record highs in 2021. But, since then, shares have fallen around 60%.

Last year, Politan won two board seats and ripped into Kiani for both missing targets and his acquisitions record. The Financial Times reported that Kiani and Koffey, earlier this year, hashed out a spin-off plan that would let Kiani take over the consumer wearables business; however, a committee — with Koffey on it — blocked the plan, and Koffey filed to contest two more board seats, including Kiani’s. 

In the intervening months, Masimo sued to get Politan barred from the proxy battle and lost — then, Politan was held in contempt of court for bragging about its victory before the decision was unsealed. The final blow came last week, when Politan won the additional board seats: bye, bye Joe. With Kiani walking away, the dust began to settle on Wednesday:

• Michelle Brennan, a former Johnson & Johnson executive who was elected to the board with Politan support last year, was tapped as interim CEO. 
• The company also affirmed its third-quarter financial guidance of $495 million to $515 million in sales (“Everything’s under control,” in other words).

Masimo shares rose 6%, with investors perhaps keen on a company suddenly carrying a little less drama.

The Last Duel: According to a Masimo disclosure, it’s not over yet. The company said that, after Kiani told the board he planned to quit following last week’s defeat, he filed a lawsuit in California “seeking declaratory relief that he had validly terminated his employment for ‘good reason.’” Round two is on the way.