Rogers CEO Joe Natale’s demands rejected by board, leading to his exit

Joe Natale presented the board of Rogers Communications Inc. with a list of demands aimed at protecting his authority as CEO, but the board rejected the requests, resulting in his dismissal this week.

The board of the telecom and media giant voted on Tuesday night to remove Mr. Natale as chief executive officer and install Tony Staffieri, the company’s former chief financial officer, in the role on an interim basis. The move followed weeks of boardroom tension that broke out in late September, when chair Edward Rogers attempted to put Mr. Staffieri into the top job.

Before Tuesday’s meeting, the board was presented with a document outlining Mr. Natale’s requests, according to five sources familiar with the matter.

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The document indicated that Mr. Natale would remain at the helm of Canada’s largest wireless carrier at least until the closing of the $26-billion acquisition of Shaw Communications Inc., according to the sources.

But it also stipulated that Mr. Natale would need discretion over hiring and firing members of his management team, some of the sources said.

The Globe and Mail is not identifying the sources because they are not authorized to speak publicly about the matter.

The document also specified that Mr. Staffieri not rejoin the company. The chief financial officer left in late September after Mr. Natale overheard him discussing a plan that would give the top job to Mr. Staffieri and oust a number of senior executives.

It also asked that Robert Dépatie, a director who was to become president of the cable division under Mr. Rogers’s plan, not join the management team, two of the sources said.

Mr. Natale’s request regarding Mr. Staffieri was at odds with Mr. Rogers’s desire to bring him back into the CFO role, several of the sources said. Some board members felt that Mr. Staffieri’s financial experience would help the company manage the debt it will need to take on to finance the Shaw takeover, according to one of the sources.

Mr. Natale attended the Tuesday evening meeting of the board, which Mr. Rogers recently reconstituted through a written resolution. Several board members expressed outrage over some of the requests in the document, one source said. Mr. Rogers, who is also chair of the family trust that controls the Toronto-based telecom, indicated that several conditions would interfere with the board’s ability to oversee management, another said.

Among the key sticking points was a condition that directors would not engage directly with the company’s employees other than members of the senior leadership team without the approval of the CEO or an executive.

The request came after former chair John MacDonald accused Mr. Rogers of meddling in company affairs, including interfering with the CEO’s decisions to hire and fire executives.

Several directors also opposed a condition that the board’s human resources committee could only increase, and not decrease, managers’ scores on their performance evaluations, and therefore their bonuses.

Mr. Natale had also requested a two-person committee to mediate between himself and Mr. Rogers in case of a disagreement.

During the ensuing discussion, Mr. Rogers’s mother, Loretta Rogers, and sisters Martha Rogers and Melinda Rogers-Hixon, continued to lobby for Mr. Natale to remain CEO, according to one of the sources. However, the majority of the board voted in favour of a resolution to remove Mr. Natale. Loretta, Martha and Melinda, who voted against it, said in a statement Tuesday evening that the decision creates “great uncertainty” for the company, its employees and the Shaw takeover.

A spokesperson for Rogers Communications declined to comment.

The future of the Toronto-based telecom’s senior leadership team is unclear. Dave Fuller, the president of the company’s wireless division, suggested in a court document that he would leave Rogers if Mr. Natale were no longer CEO.

Mr. Natale’s dismissal was the latest event in a months-long battle for control of Rogers Communications. The showdown broke out when Mr. Rogers’s attempt to unseat Mr. Natale met resistance from the majority of the company’s board, including his mother and sisters, and resulted in Mr. Staffieri leaving instead.

The board later voted to remove Mr. Rogers as chair, although an attempt by family members to restrain his ability to exercise his voting control over the company failed to garner sufficient support.

Mr. Rogers then announced plans to remove five of the company’s independent directors and replace them with his own candidates. The company challenged the legality of reconstituting the board in this manner, and for about two weeks, Rogers Communications essentially had two boards, each claiming to be the legitimate one.

On Nov. 5, a B.C. Supreme Court judge ruled that Mr. Rogers’s move to replace the directors through a shareholder resolution is valid.

Robert Gemmell, the company’s lead director, said in a statement on Tuesday evening that the board worked “earnestly and in good faith” with Mr. Natale to establish a “constructive working relationship” that would keep him on as CEO through the closing of the takeover. However, an agreement could not be reached.

On Twitter, Martha Rogers noted on Tuesday evening that less than two weeks ago, on Nov. 5, Mr. Rogers had said that the board supports Mr. Natale as CEO. “Guess he didn’t pinky swear,” she wrote.

Richard Powers, an associate professor at the University of Toronto’s Rotman School of Management, said the board, which is divided, will have to “get on the same page for that company to effectively move forward.”

“That’s going to be very difficult given the history, and particularly what’s happened over the last couple of months,” he said.

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