The board and management of Masimo Corp. (NSDQ:MASI) are battling a proxy challenge ahead of the patient monitoring firm’s annual meeting next week, looking to convince shareholders to approve its executive compensation package.
The Irvine, Calif.-based company’s annual meeting is scheduled for June 1 at the company’s headquarters, where shareholders and their proxies will vote on a slate of five proposals, including the compensation package and another that would maintain the way Masimo selects its board members.
A proxy advisory firm, ISS Proxy Advisory Services, is urging shareholders to veto the pay package and to bind board elections to a majority vote, rather than the current plurality vote rules. ISS took particular issue with chairman and CEO Joe Kiani’s compensation, claiming the value of stock options in his pay package rose nearly 25 percent from 2009 to 2010.
In a letter to shareholders signed by CFO Mark de Raad, the company blasts the ISS proposals, saying that they’re based "in part on errors and a clear failure to understand our Compensation Committee’s compensation plan," according to a regulatory filing.
"Specifically, the ISS report mistakenly asserts that Joe Kiani’s compensation has increased 24.6 percent from 2009 to 2010, whereas in reality his pay increase was only 3.4 percent," according to the SEC filing. "Our board of directors vehemently disagrees with ISS’s analysis, as well as the underlying methodology and assumptions used in the ISS report. … The factual inaccuracies and flaws in the assumptions underlying ISS’s analysis described above call into question the integrity of the ISS report and suggest that ISS conducted only a narrow, cursory and incomplete review of our proxy statement and compensation practices for 2010."
Masimo was also dismissive of the ISS proposal to move from plurality voting, in which candidates who win the most number of votes are elected, with a majority-based voting scheme.
"Our board of directors believes that its processes for identifying and proposing director candidates provide the best foundation for a strong and effective board of directors and excellence in corporate governance," de Raad wrote. "We believe that our stockholders are satisfied with the composition of our board of directors, as our stockholders have a history of electing a strong and independent board of directors, by plurality, and all of our directors have previously been elected by the affirmative vote of substantially more than a majority of our outstanding shares."