GORDON PITTS
Globe and Mail Update Last updated on Tuesday, Mar. 31, 2009 09:20PM EDT
In life, Ted Rogers was an obsessively controlling entrepreneur who commanded every aspect of the company he had built into Canada's communications giant.
In death, Mr. Rogers has fastidiously separated the roles of owner and chief executive officer in Rogers Communications Inc, and left behind an intricate structure of checks and balances that, in life, would have driven him crazy.
Mr. Rogers, often headstrong in operations and strategy, was clearly willing to listen to outsiders on the key matter of succession.
He was particularly influenced by John A. Tory, sage consigliere to the Thomson family, a friend for 50 years and now one of the key architects of the Rogers succession plan.
Mr. Rogers, who died Tuesday at 75, also paid attention to role models, both positive and negative, among Canadian business families.
He admired the Thomson family and the way that it scrupulously separated the ownership function – embodied in the family – from the executive function – as practised by professional managers.
More than anything else, that distinction has contributed to the ability of the Thomsons to think long term and build value through three generations.
But the Toronto business class that spawned the Thomsons also contained the Eatons, who, over four generations of increasingly splintered ownership and voting rights, ultimately lost the commitment and drive to save their retail empire.
Thus, Mr. Rogers created a trust arrangement in which a single family member is always deeply engaged in ownership. This member will vote the family's class A shares at any given time. It is similar to the role filled by David Thomson, chairman of Thomson Reuters Corp., in his own family's system.
At the moment, the Rogers family member designated for this role is Ted's son, Edward Rogers, although the position is for a two-year term and trustees can strip this privilege if he fails to act responsibly. Hence, there is authority, but there are also checks – a system Ted Rogers compared with the U.S. constitutional balance of power.
This picture of carefully constructed succession emerges from conversations with Ted Rogers, his managers and advisers over the past decade, as well as a reading of his recent autobiography, Relentless.
Mr. Rogers's planning was clearly driven by his sense of mortality. He always thought he would die young – his father fell dead from a ruptured aneurysm at 38 – and therefore a swift and clear-cut succession would be essential.
Hence Alan Horn, the company's chairman and a trusted former chief financial officer, will be the caretaker chief executive officer until a special committee of the board can choose a successor. That committee will certainly include Mr. Horn and John A. Tory, the one RCI board member who perhaps best understands Ted Rogers' intentions.
The committee will recommend someone, but the board could still choose somebody else. Still, the presence of Mr. Horn and Mr. Tory will be influential.
The odds are in favour of a non-family member, Nadir Mohamed, the respected president of RCI's communications group. Still, current CFO Bill Linton and two of Ted Rogers' children, Edward and Melinda, could be on the short list. Ted Rogers' hope was always that his successor would come from within.
There is, therefore, the potential for Edward Rogers to hold both the controlling shareholder role and the CEO job, just as his father did. But in the son's case, it is subject to the oversight of the board of directors and the 15 advisers to the family trust.
The trust arrangements will also reflect that it is important for family harmony that there is ample cash to look after all children and grandchildren. The cash flow is, in effect, separated from voting control.
Even through he built what appears to be the foolproof succession, Mr. Rogers must have known it could be torn asunder by personal animus among family members. This is the element he cannot control from the grave. In successions at other companies, for example, in-laws have sometimes disrupted family accord.
The challenge will be managing the relationship between the two camps of Edward and Melinda, both competent and ambitious. When Ted Rogers was alive there was no problem. Now it becomes the potential Achilles heel. The good thing is that they know it is essential to work together.
One way to help assuage concerns is to find someone who can speak to all four Rogers children. Ted Rogers in Relentless praised John A. Tory's son, John H. Tory, a former RCI executive and now Ontario Progressive Conservative Party Leader, for being a bridge to the younger generation. The younger Mr. Tory may continue to play this role.
Ted Rogers had his wise adviser, but now his children need to find their own version of John A. Tory.
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