These board conflicts can end up very badly: David Baskin on tension within Rogers
Rogers Communications Inc. Chairman Edward Rogers had a plan that would have seen as many as nine of 11 senior executives leave, but it was blocked by members of his own family who feared the move would create chaos just as the Canadian company tries to close a US$16 billion takeover.
The plan to remove Chief Executive Officer Joe Natale and most of the company’s senior team was shot down at a Rogers board meeting last month, leaving a fractured family that pits Edward Rogers against his sisters, Melinda Rogers-Hixon and Martha Rogers, the children of late founder Ted Rogers, and Loretta Rogers, Ted’s widow.
Now the family is trying to resolve the dispute before a board meeting that’s scheduled to take place prior to the company’s third-quarter results on Oct. 21, according to people familiar with the matter.
Edward Rogers and Natale were scheduled to meet Wednesday afternoon, the people said. Meanwhile, board members are preparing for the meeting next week at which some directors might seek to put new limits on Edward Rogers’ authority within the company. Rogers shares were up 3.5 per cent, the biggest increase since March, to $60.47 as of 10:30 a.m. in Toronto.
It isn’t clear what prompted the chairman’s move against Natale. The company’s wireless business -- Canada’s largest, with 11 million subscribers -- has not performed as well as major rivals BCE Inc. and Telus Corp. by some metrics, according to BMO Capital Markets. The company was hit harder by the pandemic, partly because of its reliance on revenue from wireless roaming and professional sports, both of which were crushed by COVID-19 restrictions.
On the other hand, Natale scored a major victory with the landmark takeover agreement with Shaw Communications Inc., announced in March. The deal would extend Rogers’ cable business across western Canada and widen its lead in wireless services. Many analysts believe Rogers will be able to close the deal next year if it’s willing to make changes to satisfy regulators, including divesting some wireless assets.
Edward Rogers’ proposal would have seen Chief Financial Officer Tony Staffieri promoted to CEO and tasked with getting the Shaw deal to the finish line. Most of the current senior executives would have been replaced, with some being pushed out and others considered certain to resign out of loyalty to Natale.
But the effort failed when a majority of the Rogers board backed Natale, according to people familiar with the matter, and Staffieri left the company suddenly on Sept. 29, stunning analysts.
Rogers Communications spokesperson Andrew Garas declined to comment, as did spokespeople for Edward Rogers and Melinda Rogers.
In addition to being chairman of Rogers Communications, he’s head of the board’s finance committee, nominating committee and executive committee and chairman of the Toronto Blue Jays baseball club, which the company owns.
That arguably gives him more direct influence over the company’s affairs than any of the Rogers family members. However, voting control of Rogers Communications is held by a family trust.
Rogers shares had sagged 1.8 per cent on Tuesday, the first trading day in Canada after the Globe and Mail newspaper reported the boardroom clash.
Natale appears to have “a clear mandate from the majority of the board to continue with his team and his strategy, which includes navigating the recovery from the pandemic as well as closing and successfully integrating a major acquisition,” TD Securities analyst Vince Valentini said in a note to investors on Wednesday.