Edward Rogers is out as chair of the company his father founded, after a failed attempt to oust its chief executive officer.
Telecommunications giant Rogers Communications Inc. announced after stock markets closed on Thursday that Edward Rogers, the only son of company founder Ted, has been replaced as chair of the board by independent director John A. MacDonald.
“This has been a challenging time for the corporation and I want to reaffirm on behalf of the majority of the Board our support for and total confidence in the management team and CEO,” MacDonald said in a press release.
The stunning development comes after a failed bid by Edward Rogers to oust the company’s chief executive officer Joe Natale from the job.
Rogers attempted to replace Natale as CEO with the company’s Chief Financial Officer Tony Staffieri last month. Staffieri left the company abruptly when the attempt failed to gather enough support from other board members, including two of Edward’s sisters and his mother, Loretta.
Although he has been ousted as chair of the board, he will remain a director at the company that bears his name, the company said in a release.
None of the parties have said much publicly about the rift, but it is clear that there is a lot of turmoil behind the scenes.
Although Rogers is a public company with shares that trade on the Toronto Stock Exchange, the family controls the company through voting shares held in an entity known as the Rogers Control Trust.
In one of his few public statements on the matter, Edward Rogers made it clear he thinks there is “room for improvement” in the company’s performance.
“In my role as chair of the Rogers Control Trust, the controlling shareholder of the company, it is my responsibility to put the interests of [the company] first,” he said in a statement on Tuesday.
“It’s disappointing the focus of others has strayed from what is best for the business.”
Associate professor Richard Powers with the Rotman School of Management in Toronto says corporate power struggles behind the scenes are not unheard of, but having one play out in public at a company the size of Rogers is.
“The fact that we’re seeing it is both fascinating and just shows that … family dynamics are difficult … when there’s billions of dollars at risk,” he said in an interview with CBC News.
“This is Canada’s Succession right now,” he went on, referring to the popular HBO show that details cutthroat battles between family members to take control of a fictional billion-dollar company. “The fact that it’s playing out in the media makes it all that more intriguing.”
Corporate governance review
Prior to making the change at the board level, the company announced on Thursday it would be undertaking a review of its corporate governance.
The review is essential, said Richard Leblanc, a professor of governance, law and ethics at York University in Toronto, adding that having an independent chair “from the get-go” could have avoided the whole situation.
“It’s hard when the patriarch isn’t there,” Leblanc said, referring to the late Ted Rogers. “It creates a vacuum. That’s when independent directors really need to step up and earn their pay.”
Power agrees that it will be good to have someone independent in the top job to balance all the competing interests. “A good decision made by the board,” he said, “[with] an independent chair being put in place …let’s hope that the family can repair the relationships and move forward.”
The drama is the second time the Rogers family has been embroiled in a public controversy in recent months, as the family was photographed hobnobbing with former U.S. president Donald Trump at his Florida resort in May.
On a conference call with analysts to discuss the company’s quarterly results on Thursday, Natale said he is pleased to have the full support of the company’s board.
“I have got strong, unequivocal support from the board to direct the strategy of the company,” he said.
He told analysts that Thursday’s board meeting was “a very strong, collaborative and thoughtful discussion with all board members.”
Natale is the third person to hold the CEO title at Rogers since the death of patriarch Ted in 2008. Nadir Mohammed ran the company until 2013, followed by Guy Laurence, who helmed it until Natale took over.
The attempted palace coup comes as the company is trying to get a proposed $26 billion merger of rival Shaw approved, a pact that would significantly increase Rogers’ already impressive size in Canada’s telecom market.
Powers says this battle is all the more amazing considering how important the Shaw deal is to the company’s future.
“The timing for something like this could not be worse,” he said. “You really have to question Edward Rogers’ motives in bringing this up at such a sensitive time, at such a pivotal time in the company’s history. Why would you engage in a boardroom battle at this time?”
Rogers shares have lagged behind those of rivals Telus and Bell for most of the pandemic, and the company is worth about the same today as it was when Natale took the reins in 2017.
Rogers earnings on Thursday show the company’s quarterly revenue was flat at $3.6 billion , while its profit declined to $490 million from $512 million for the same period last year.
The investment community is watching the drama play out with interest. When Staffieri left, Vince Valentini, a stock analyst with TD, said that his departure was likely due to a desire by the CEO to bring in his own people, since Staffieri held the top finance job before he became CEO.
“Our suspicion and belief is that it became clear that he would not retain the CFO role if/when Rogers becomes a bigger company in the future, so he decided to move on right away,” Valentini said at the time.
In a note to clients on Thursday, he called the situation “messy.”