Masimo Corp (MASI.O) shareholders elected two director candidates proposed by Politan Capital Management, the investment firm said on Monday, in one of the year’s biggest board room challenges.
The Politan nominees — the firm’s chief investment officer, Quentin Koffey, and veteran health-care executive Michelle Brennan — were elected to Masimo’s five-person board,reported earlier in the day.
Politan, which owns 9% of Masimo’s shares, has long criticized the company’s capital allocation and board oversight and expressed particular concern about last year’s $1 billion purchase of consumer audio device maker Sound United.
“This election represents a clear mandate from shareholders that significant change is needed at Masimo,” Koffey, Politan’s founder, said in the statement.
Based on preliminary analysis from Politan’s proxy solicitor, each of Politan’s nominees received at least 70% of the total votes cast, with the majority of the top 20 shareholders voting for both of Politan’s candidates, the firm said in a statement after the voting ended.
The hedge fund received backing from proxy advisory firms Institutional Shareholders Services and Glass Lewis two weeks ago when both urged shareholders to elect the Politan nominees. ISS and Glass Lewis often help guide investor voting with their recommendations.
The Vanguard Group, one of Masimo’s largest shareholders, backed both Politan nominees, two sources said.
Vanguard declined to comment.
Masimo, which is currently valued at $8.5 billion, is expected to make preliminary voting results public later on Monday.
A representative for Masimo did not have a comment.
Last year Politan’s campaign made huge headlines in the corporate governance world when Masimo, in an effort to defend itself against the hedge fund, adopted bylaws that would have required anyone nominating directors to identify their own clients and say if they planned to nominate directors elsewhere.
Activist hedge funds feared other companies might adopt similar rules forcing them to disclose top-secret information and corporations flocked to their lawyers to ask whether they, too, should implement these rules. In the end, Masimo reversed course and dropped the requirements after Politan sued in Delaware court.