The Rogers family feud: From a butt-dial to a B.C. Supreme Court case, here’s what’s happening inside Canada’s biggest telecom boardroom

Overview

The first sign of fighting at the highest levels of power at Rogers Communications Inc. appeared in late September. That’s when it was announced that chief financial officer Tony Staffieri was leaving. Soon afterward, The Globe reported that his departure was connected to an attempt he made to oust Rogers chief executive officer Joe Natale with the help of chair of the board, Edward Rogers.

In the weeks since, there has been a lot of fallout as the rift in the company – and within the Rogers family itself – has deepened.

What does the corporate drama mean for one of Canada’s biggest telecoms and the family that runs it? Here’s what you need to know.

The butt-dial

An inadvertent phone call exposed the plan that has plunged one of the country’s largest telecom and media empires into chaos and ignited the most spectacular boardroom and family dramas in Canadian corporate history.

On Sept. 17, Rogers CEO Joe Natale accidentally overheard CFO Tony Staffieri discussing plans to unseat Mr. Natale and other executives with the support of company chair Edward Rogers. Alexandra Posadzki reports:

Tensions between Mr. Natale and Mr. Staffieri had been brewing for years, according to people familiar with the matter. Mr. Staffieri, who joined Rogers in 2012 and developed a close relationship with the company’s chairman, had ambitions to be chief executive officer, and frequently butted heads with Mr. Natale regarding strategic direction, sources say.

After learning of the plan, which included removing nine other senior executives, Mr. Natale informed an independent director, triggering an emergency weekend board meeting. The majority of the board and Rogers family backed Mr. Natale and his management team. Mr. Staffieri left the company three days later on Sept. 29 – and Mr. Natale still holds the top job.

The Globe and Mail reports on the news of the company’s power struggle:

On November 16, The Globe and Mail reported that Joe Natale was removed as chief executive of Rogers by the company’s board led by chair Edward Rogers. The company’s former chief financial officer, Tony Staffieri, will be interim CEO – tasked with closing the $26-billion takeover of Shaw Communications and paying down the deal’s roughly $20-billion debt load.

The Rogers boardroom

The attempted management shakeup triggered a boardroom rift that split the family, with Edward Rogers on one side, and his mother, Loretta Rogers, and sisters Martha Rogers and deputy chair Melinda Rogers-Hixon on the other.

During an emergency board meeting on Sept. 26, the majority of the company’s directors and the Rogers family backed Mr. Natale and his management team. Alexandra Posadzki and Andrew Willis report on the battle from inside the Rogers board room:

On Oct. 20, the Rogers family and its closest advisers gathered in a meeting led by Toronto Mayor John Tory to discuss the power struggle. The meeting was held ahead of the release of the company’s third-quarter results. Several independent Rogers board members, including lead director John MacDonald, presented their case to curtail the chair’s powers.

Key decisions at Rogers, such as the composition of the board, are ultimately made by two entities – the family trust and an advisory committee. The Rogers Control Trust, and other family holding companies it controls, together own 97.5 per cent of the company’s voting class A shares, according to the company’s 2021 management information circular. (The Rogers family also owns about 10 per cent of the outstanding class B non-voting shares.)

As the trust’s chair, Edward Rogers is responsible for liaising with other family members and voting the proxies on the election of company directors, among other duties. The vice-chair of the trust, Ms. Rogers-Hixon, assists him in that role.

Overseeing the trust is an advisory committee comprising 10 people, six of them Rogers family members. Edward’s sisters Martha and Lisa Rogers, as well as Loretta’s nephew David Robinson, sit on the committee with Loretta, Edward and Melinda. The non-family members are Alan Horn, who served as the company’s chief financial officer and as interim CEO; Thomas Hull, a childhood friend of Ted’s and the founder of insurance brokerage The Hull Group; Mr. Tory, who ran Rogers’s cable operations under Ted; and Ted’s long-time adviser Phil Lind.

The aftermath

In a meeting on Oct. 21, the board voted to replace Edward Rogers as chair with John MacDonald.

Hours after the company’s board voted, Mr. Rogers announced his intention to replace five independent directors, including Mr. MacDonald, with his own slate of candidates, through a written resolution.

Mr. Rogers issued a news release announcing his plan to remove John Clappison, David Peterson, Bonnie Brooks, Ellis Jacob and Mr. MacDonald from the board. The press release said he would replace those directors, who opposed the attempted overhaul of the company’s management, with Michael Cooper, Jack Cockwell, Jan Innes, Ivan Fecan and John Kerr.

In an opinion piece, Andrew Willis writes that Edward Rogers needs to learn that timing is everything and reflects on how his actions could have jeopardized the Shaw takeover:

Less than a week later, Mr. Rogers was reappointed chair at a Sunday board meeting that was called invalid by three family members and the five company directors who Mr. Rogers says he replaced.

The $26-billion Shaw takeover

The power struggle comes at a crucial time for Canada’s largest wireless carrier, which is spending billions to build 5G wireless networks and has struck a deal to acquire Shaw Communications Inc. for $26-billion, including debt.

The company’s proposed acquisition of Shaw requires approval from three regulatory bodies – the Competition Bureau, the Canadian Radio-television and Telecommunications Commission (CRTC) and the Ministry of Innovation, Science and Economic Development. The deal is expected to face intense regulatory scrutiny, as it would eliminate the fourth-largest wireless carrier.

The deal, which Rogers expects to close in the first half of 2022, comes after a failed bid for Cogeco Inc. and Cogeco Communications Inc. last year. In September, 2020, Rogers paired up with Altice USA Inc. to launch a hostile takeover bid for the Quebec cable companies that was repeatedly rebuffed by their controlling shareholder, the Audet family, despite being sweetened to $11.1-billion.

Shaw Communications says it remains committed to the takeover and that the boardroom rift at Rogers is a “family and board matter.”

The five-day CRTC hearing kicked off on Nov. 22 in Gatineau, Quebec. Edward Rogers and Brad Shaw told Canada’s telecom regulator that the takeover will give the combined telecoms the scale they need to compete effectively against global streaming giants such as Netflix, Amazon Prime and Disney+, which pose a threat the Canadian broadcasting system, and to deliver 5G wireless services.

Meanwhile, rival Telus Corp. told the CRTC that the takeover would “greatly reduce” competition and choice for consumers of broadcasting services.

The B.C. Supreme Court case

A B.C. Supreme Court judge has ruled that Edward Rogers can replace five of the independent directors of Rogers Communications Inc. without holding a shareholder meeting, meaning Mr. Rogers is once again chair of the telecom and media giant’s board of directors.

The two sides squared off in court over who sits on the company’s board, after Mr. Rogers’s move to replace the five independent directors who had opposed him was declared invalid by the company.

Lawyers for Edward Rogers were at loggerheads with Rogers Communications Inc. over the legality of replacing independent directors without holding a shareholder meeting. Mr. Rogers said the law in British Columbia, where Rogers is incorporated, allowed this change to be made through a written resolution – an assertion the other directors challenge.

Lawyers for Rogers Communications argued that making the kind of changes Mr. Rogers proposes required a shareholder meeting – even though the class B shares held by minority shareholders don’t come with voting power.

The case drew hundreds of pages of court filings containing conflicting versions of events leading up to the boardroom brawl, opposing views on the leadership of Mr. Natale and varying interpretations of the wishes of the company’s late founder, Ted Rogers.

On Nov. 7, Rogers Communications said it won’t appeal the ruling. The announcement means the decision by B.C. Supreme Court Justice Shelley Fitzpatrick will go unchallenged, ending weeks of uncertainty over control of the telecom and media giant.

More reading:

• Dave Fuller, head of Rogers Communications’ wireless unit, to exit in wake of tumultuous boardroom battle
• Rogers removes CEO Joe Natale after boardroom power struggle for control of telecom giant
• Close Shaw takeover, pay down debt are top jobs for new Rogers CEO Tony Staffieri
• Melinda Rogers-Hixon says it’s time to move past the boardroom battle for the sake of family and company
• On his deathbed, Ted Rogers looked into the future. This is not what he saw
• Rogers-Shaw deal would give both the scale to compete globally and deliver 5G, telecoms tell CRTC
• Rogers says it won’t appeal B.C. court decision that seals Edward Rogers’s control over the telecom giant

Compiled by Abigale Subdhan

Based on reporting from Alexandra Posadzki, Andrew Willis, Susan Krashinsky Robertson, Brent Jang and David Berman

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