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Darren Entwistle, Telus Corp.’s chief executive, is pictured on May 9, 2013. (CHRISTINNE MUSCHI/REUTERS)
Darren Entwistle, Telus Corp.’s chief executive, is pictured on May 9, 2013. (CHRISTINNE MUSCHI/REUTERS)

New chair, same boss at Telus Add to ...

The Entwistle era is far from over.

Darren Entwistle, Telus Corp.’s long-serving president and chief executive officer, will step aside in May, making room for chief commercial officer, Joe Natale, to succeed him in those roles. But Mr. Entwistle will remain at the helm as the telecom giant’s new executive chair, partnering with his protégé on corporate strategy and performance.

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Telus made that surprise announcement on Monday, stating the management shuffle would take effect May 8 in conjunction with its annual general meeting. After that time, Mr. Entwistle will continue to work out of its Vancouver headquarters. Mr. Natale plans to remain in Toronto and continue reporting to his long-time boss.

As executive chair, Mr. Entwistle would “retain ultimate accountability” for Telus’s strategy, operations and succession planning in a newly combined management and board role. Mr. Natale, meanwhile, will broaden his reach by taking charge of Telus’s day-to-day operations. Dick Auchinleck will function as “lead director” to safeguard the independence of the board of directors – a position he also holds at ConocoPhillips.

It is an arrangement that is meant to provide Telus’s shareholders with assurances about the “continuity” of a winning business strategy. Nonetheless, it is fuelling criticisms from some observers that too much power will be focused at the top.

“Executive chairs in Canada are permitted, but they’re frowned upon. The better model is a completely separate non-executive chair,” said Richard Leblanc, associate professor of law, governance and ethics at York University. “It signals potential undue influence by an incumbent CEO, and it is anomalous. This type of succession planning is not normal.”

The executive chair model, he said, is often used by companies where the founder or controlling shareholder has a desire remain active in its operations. Although Telus has named a lead director to maintain a check on corporate governance, Mr. Leblanc contends that a non-executive chair is a more robust role.

“Now the executive chair has a huge concentration of power because the CEO is accountable to him and he is also running the board meetings,” said Mr. Leblanc, who once advised U.S. hedge fund Mason Capital Management LLC on a previous proxy fight with Telus.

Josh Blair, Telus’s chief corporate officer, flatly rejected that criticism.

“When combined with a lead director role, as in our case, they are considered very effective. The structure is common in the U.S. In our case, this structure allows Telus to benefit from both Darren and Joe driving the performance of the company,” Mr. Blair said in a statement, noting that many Canadian companies have lead directors, such as Bombardier Inc., CGI Group Inc., George Weston/Loblaw, Finning International Inc. and Thomson Reuters Corp.

“Darren is committed to Telus for the long term and he’ll be a very active executive chair,” Mr. Blair said in an interview, adding the two men have a strong track record for working as a team. He later added: “If you think about it, it’s not a stepping aside or a stepping down. It really is continuity of Darren’s exceptional leadership.”

The succession plan was triggered by Brian Canfield’s desire to retire as non-executive chair – a post he has held since 1999.

“We believe Mr. Entwistle remaining with the organization as executive chairman will also ensure a smooth transition for the company,” Jeff Fan, an analyst with Scotia Capital Inc. wrote in a note to clients.

Dvai Ghose of Canaccord Genuity echoed those sentiments adding: “Some have assumed that Natale was promoted as a retention strategy. We do not believe that this is relevant, as the process seems to have started before Nadir Mohamed announced his retirement as [Rogers Communications Inc.] CEO at the beginning of 2013.”

Mr. Entwistle has been CEO since 2000. During his tenure, he developed a reputation as a hard-driving executive who had the grit to make unpopular decisions, such as slashing the company’s dividend by more than half in 2001, to position Telus ‎as an aggressive competitor in the wireless, television and high-speed Internet markets.

Under his leadership, Telus spearheaded the acquisition ‎of Clearnet in 2000 and years later collaborated with rival BCE Inc. to build a next generation wireless network that broke Rogers’s exclusive grip on offering the iPhone.

On television and Internet, Telus began rolling its Optik service in recent years and succeeded in poaching market share from key western rival Shaw Communications Inc.

“I am very pleased that our best-in-class succession planning process has resulted in Joe Natale being named as our next President and CEO and am excited to continue working with him in leading the progression of our national growth strategy,” Mr. Entwistle said in a release.

Mr. Natale, who was long expected to succeed Mr. Entwistle as CEO, ‎has been with Telus since 2003. After serving in a number of roles, he became chief commercial officer in 2010.

“I look forward to working closely with Darren and the Telus executive leadership team to further the progression of our national growth strategy and in particular, to continue advancing our top priority of always putting our customers first,” Mr. Natale said.

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