Joe Kiani isn’t the kind of person who gives up easily.

As a child, his family struggled with poverty, bouncing around public housing projects in Huntsville, Ala., and San Diego, Calif., upon relocating to the United States from their native Iran.
Yet Kiani refused to give up on his dreams.

Determined to leave an indelible mark on the world, Kiani parlayed his altruism and love of engineering into a career as an inventor/entrepreneur. His first creation was a low-cost pulse oximeter for a startup. He discovered the devices often emitted false alarms when patients accidentally moved their finger. With his knowledge of signal processing and adaptive filters (i.e., noise-eliminating software), Kiani designed a prototype oximeter that worked regardless of movement or blood flow levels.

The startup, however, was not interested in the prototype. But Kiani persevered, starting his own company in 1989 in order to bring his invention to the masses. He financed the business—which he named Masimo—with a $40,000 second mortgage on his condominium.

Masimo’s infancy was rough. Kiani perfected his pulse oximeter prototype after hours in his Southern California garage while holding down a full-time job and simultaneously searching for funding and commercial partners.

Kiani could find neither. But he never gave up.

“When I think about our story, it’s a story of persistence,” Kiani told the social publishing platform Medium in September 2021. “When you know you have something that can help people, you just don’t give up. Ultimately we made it—bigger than I ever expected—but the first 15 years, if we’d stopped moving forward, we would have gone out of business. But we refused to give up.”

Indeed, Kiani’s persistence paid off: The company and technology that failed to attract funding and partners in its early days is now a $2 billion (annual) leader in pulse oximetry and other patient monitoring solutions that serves more than 200 million people.

It’s no surprise then, that Kiani is not giving up control of his company without a fight. Masimo has been locked in a bitter proxy battle for nearly two years with Politan Capital Management, which owns a 9% stake in the company.

The clash for control was triggered by Masimo’s $1 billion acquisition of Sound United, a consumer-focused audio, speaker and headphone business. Within 24 hours of the deal’s announcement, Masimo’s stock plunged 37%, eliminating about $5 billion in market value.

Politan gained two seats on Masimo’s six-member board in June 2023 and nominated two additional candidates this past spring amid the company’s plans to spin out its consumer business, including its home audio equipment as well as its high-tech baby monitor system and health-focused smartwatches.

“We invested in Masimo over two years ago because we believe in the company’s tremendous promise,” Politan Managing Partner and Chief Investment Officer Quentin Koffey told stakeholders in a June 26 letter. “However, it has become clear that to protect shareholder value, let alone realize Masimo’s potential, the company needs a majority of truly independent directors.”

Koffey’s letter provides a peek into the proxy fight mindset. He presents shareholders with a laundry list of reasons for electing independent directors to Masimo’s governing body: lack of board oversight and expansion, poor communication, and non-existent governance, among others. Koffey also takes issue with Masimo’s financial performance and Kiani’s compensation. “Masimo pays Mr. Kiani annual compensation 2x that of peer CEOs while at the same time paying $19 million annually to Cercacor (where Mr. Kiani is CEO and majority owner),” Koffey’s letter reads. “Mr. Kiani also is permitted to spend lavishly on inessential items such as his personal use of a G550 private jet that he has used 56 times in the last two years alone to fly to his personal ranch only a two-hour drive away.”

Masimo countered Koffey’s letter with a lawsuit that aims to force Politan to “correct material misstatements and omissions” in the materials sent to shareholders. The company also rescheduled its annual meeting and board vote from July 25 to Sept. 19.

“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,” a Sept. 12 company statement read. “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. Our recent earnings clearly show that our strategy is working. We urge stockholders not to put this momentum at risk by handing control to an inexperienced team with no strategy or leadership plan for the business…”

Politan called Masimo’s lawsuit an entrenchment maneuver and denied providing shareholders with misstatements. Just days before Masimo’s annual meeting, Politan Capital was found in contempt of court for releasing a Sept. 12 news release on court proceedings despite being subject to a sealing order.

Masimo’s current board urged investors to vote against Politan Capital’s board candidates, since it would effectively oust Kiani.

However, on September 19, Masimo’s shareholders elected Politan candidates Darlene Solomon and Bill Jellison to the board rather than Kiani and Masimo nominee Christopher Chavez. About a week later, Kiani tendered his resignation from Masimo.

Michelle Brennan, a current board member, was appointed interim CEO in the wake of Kiani’s departure.