Jameson Berkow

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Edward Rogers has officially asked a judge to order the telecom giant that bears his family name to accept his authority to overhaul the company’s board at his discretion as chair of its controlling shareholder.

In a petition to the Supreme Court of British Columbia filed Tuesday afternoon, the only son of company founder Ted Rogers asked for a declaration that his move to sack five independent Rogers Communications Inc. (RCI) directors last week via a written resolution was “valid and effective.” Mr. Rogers is also seeking a declaration that his hand-picked replacements were “validly appointed as directors of RCI” on the same day.

The five board members Mr. Rogers claimed to have replaced had all voted to remove him as chair of the RCI board one day earlier after he attempted to oust Rogers Chief Executive Officer Joe Natale in September. In his filing Tuesday, Mr. Rogers said “members of the Rogers family and directors of RCI discussed concerns they had regarding Mr. Natale’s leadership” shortly after the company agreed to acquire Shaw Communications Inc. for $20-billion last spring, with their concern allegedly focused on Natale’s “ability to manage the combined company.”

The filing says the RCI board had even “adopted corresponding resolutions accepting the retirement of Mr. Natale” on Sept. 24 and accepted Mr. Rogers’ recommendation to appoint Tony Staffieri, the company’s long-time chief financial officer, as the new CEO. Those resolutions were rescinded at a subsequent board meeting on Sept 29, the filing claims.

What happened during the five days between those two RCI board meetings, according to an accompanying affidavit submitted by Mr. Rogers, was that several directors - including his own mother and one of his sisters (Martha) - flipped their positions.

Two days prior to the Sept. 24 meeting, Mr. Rogers claimed his mother, Loretta Rogers, told the RCI board the plan to replace Natale with Staffieri had her “full support.”

None of the claims have been tested or proven in court. A hearing is scheduled for Nov. 1, according to a statement from Rogers Communications late Tuesday. 

“Edward knows those words, because he wrote them for me,” Loretta Rogers said in a statement released after Mr. Rogers’ submitted his court filing, adding her son and fellow Rogers director Alan Horn provided her “with what they claimed was full, complete and accurate data about Joe’s performance.”

“I regret that I wasn’t able to validate that data with RCI’s independent directors before delivering the statement,” she said. “However, as soon as I was able to confer with the independents and develop a complete and unbiased perspective on the issue, I reversed course.”

In an accompanying statement, Mr. Rogers’ sister Melinda Rogers-Hixon (one of Mr. Rogers' sisters) accused him of advancing “a false narrative regarding our mother to provide cover for his misguided position.”

On Sept. 26, Mr. Rogers claimed to have been interrupted by then-lead independent director John MacDonald shortly after he had called another board meeting to order.

“Mr. MacDonald then turned the floor over to my sister Martha,” Mr. Rogers said in his affidavit. He went on to claim that Martha then read out a resolution that would, among other things, “rescind the resolution accepting Mr. Natale’s resignation” and “gratuitously amend Mr. Natale’s employment agreement” and “immediately terminate Mr. Staffieri as CFO.”

Martha’s resolution also established a new committee “with the express purpose of restricting” Mr. Rogers’ “interaction with management,” his affidavit said.

“A number of members of the board, including me, Robert Gemmell, Alan Horn and Phil Lind, expressed shock at this development,” Mr. Rogers said in his affidavit. “After Martha read out the resolution, Mr. MacDonald was asked several times why he and others had reversed themselves in the space of 48 hours [and] Mr. MacDonald did not have an answer, except to say they thought this resolution was better.”

In a statement responding to those claims released Tuesday evening, Mr. MacDonald said Mr. Rogers’ view of events was “unfortunate and one-sided” and did “not represent what actually took place during our board deliberations.”

“Any suggestion that the board had pervasive and serious performance concerns at Rogers are utterly false,” Mr. MacDonald said. “Unfortunately, the first time any issues were raised was when [Mr. Rogers] initiated this unfortunate series of events that led to where we are today.”

MacDonald added “there are several critical and material items that are categorically false” in Mr. Rogers’ affidavit, and that he intends to “set the record straight” during the court process. He specifically stated that the majority of RCI’s board never voted to oust Natale.

As chair of the Rogers Control Trust, Mr. Rogers is empowered to support - or remove - members of the RCI board at his discretion, since the trust controls 97.5 per cent of the company’s voting shares. However, his mother and two of his sisters - all of whom hold seats on the trust’s 10-person advisory board - along with the company itself, insist that power can only be exercised at a shareholder meeting.

During a meeting of the trust’s advisory committee on Oct. 21, Mr. Rogers said he outlined his plans to replace the group of RCI directors that he considered to be “undermining” his position of Control Trust chair and the committee held a vote on whether to constrain his ability to make those changes. His sisters Melinda and Martha “argued in favour of constraining me” but that ultimately “a majority of the advisory committee voted against placing any constraints on my proposed course of conduct.”

In the petition filed on Tuesday, which BNN Bloomberg reported earlier in the day was due to be filed within hours, Mr. Rogers’ lawyer Ken McEwan detailed a rationale for the board overhaul being allowed to occur via a written resolution according to B.C.’s Business Corporations Act.

“Subject to the provisions of the Act, the shareholders may by ordinary resolution remove any director from office and the vacancy created by such removal may be filled at the same meeting,” the petition states, noting “ordinary resolution” is defined by law as either “a simple majority of the votes cast by shareholders voting shares that carry the right to vote” at a general meeting, or “by being consented to in writing by shareholders holding shares that carry the right to vote at general meetings.”
 
Mr. Rogers is seeking “urgent confirmation of the validity” of his actions, the petition states. He is asking for the case to be heard “urgently in light of the disputed constitution of RCI’s board of directors and to provide clarity to those directors, RCI’s stakeholders, and the public markets.”
 
According to Ted Rogers’ autobiography, published under the title “Relentless” shortly before his death in 2008, he said he intended to design the Rogers Control Trust in such a way that power could be wielded by a single person in order to “ensure someone is in charge.”
 
“There has to be an individual controlling shareholder,” reads an excerpt from page 331, someone “to whom the board of directors and the chief executive officer can turn when needed.” 
 
In his affidavit, Mr. Rogers said “before his death, my father frequently told me he believed in the importance of consultation and discussion, but emphasized the need to have one final decision maker. This is reflected in the Control Trust structure he created.”