He tolerates you until he doesn’t, and once he’s mentally moved on, the breakup can be brutal. It’s the Edward Rogers doctrine.
Since his father, Ted, died in 2008, the same pattern has played out at Rogers Communications with three consecutive chief executives. The latest, Joe Natale, may yet survive. But even if he does, the company’s current CEO will be forced to manage with his hands tied. Edward wants him gone – and now, it seems, Rogers family confidantes like Phil Lind do, too.
It is all a reminder that so much of what Rogers Communications presents to the public is a charade. The telco promotes a blue-chip image, complete with a board of directors stacked with Canadian business elites.
But there is a board above the board, and that’s the Rogers family trust. Conveniently, Edward Rogers chairs it. While every investor theoretically knows this, because the company has dual-class shares and public investors don’t really get a vote, the past month revealed the extent to which the family still pulls the strings.
Who holds the power? Depends on the day. All it takes is for one family member to throw a fit, and the fault lines are exposed. On Friday, Edward released a statement declaring that he had thrown out five public board directors and replaced them with his own picks.
“The need for an effective board that is independent of management is precisely the reason that changes were necessary,” Edward said. Rogers says the move is “invalid.”
Considering how this has all played out, the company might as well scrap its public board of directors, because it ultimately has very little power. The mirage of independent governance only makes matters worse.
And this mirage exists at far too many public companies. Dual-class shares have long been a feature in Canadian business, because so many big companies here are family-owned, but they are becoming more pervasive, particularly in the tech sector where founders have far too much control. Facebook’s scandals keep accumulating, but very little changes because Mark Zuckerberg doesn’t care to shake things up. And no one can force his hand.
At Rogers, Nadir Mohamed was the first CEO to learn how things really worked. He’d been hired away from Telus in 2000 to run Rogers’s wireless division at a time when cellphones were beginning to explode in popularity, and early on, he and Edward co-existed, with the family’s only son taking over responsibility for the company’s cable division in 2003.
After Ted Rogers died in 2008, Mr. Mohamed won the top job. To appease the family, he accepted that Edward would be an executive vice-president and that Edward’s sister, Melinda Rogers-Hixon, would be a senior vice-president. That bought him five years to run the show. But when it was time to renegotiate his contract, Mr. Mohamed reportedly asked for more freedom, and that meant Edward and Melinda might have to go.
The opposite happened. Mr. Mohamed was all but disappeared, and no one would say why.
Next up was Guy Laurence, the former head of Vodafone UK, who wowed the board with visionary bluster. Mr. Laurence appreciated what he was dealing with in terms of the fractured family and its close confidantes, so he tried to wrap himself in the founder’s cloak when he could. In one example, he ended his 100-word mission statement with Ted’s enduring line: “The best is yet to come.”
Miraculously, he left such an impression that Mr. Laurence found a way to make sure Edward and Melinda did not have executive roles with the company. Yet during his reign, Mr. Laurence got a taste of just how ruthless Edward can be.
Rogers owns the Toronto Blues Jays, and in 2014, Edward decided he was done with long-time team president Paul Beeston. Mr. Beeston, however, was deeply entrenched in Major League Baseball, having worked as the league’s chief operating officer. So when Edward started making calls to find a replacement, he made the mistake of calling Jerry Reinsdorf, who owned the Chicago White Sox, to inquire about hiring the club’s executive vice-president.
The problem: Mr. Reinsdorf and Mr. Beeston were very good friends. News of the firing campaign got back to the Blue Jays, and everything got awkward from there. Mr. Beeston eventually left at the end of the 2015 season.
Mr. Laurence faced his own exile a year later, and like his predecessor, the CEO’s exit was dizzying, especially given all the praise heaped on him when he arrived from Britain. Mr. Laurence certainly had operational woes, such as a troubled cable strategy that resulted in a $500-million writedown, but he also lost the support of the family – and Edward, in particular, wanted him gone. In the end, the brash Brit lasted only three years.
The answer to this volatile era was supposed to be Mr. Natale. Explaining why Mr. Laurence was punted, Phil Lind, vice-chair of the board, said the decision “was greatly influenced by the fact that Joe Natale was available.” He added: “Joe is seen as the most valuable player that’s available.”
Mr. Natale hasn’t been able to gather much steam during his tenure. He didn’t start until 2017 because of a non-compete clause with Telus Corp., where he previously worked as a deputy to Darren Entwistle, and the past 18 months or so have been consumed by the pandemic. Rogers has suffered of late because the company has a big wireless division, and high margin fees such as roaming charges have largely dried up.
Edward has cited business performance as the reason why he thinks Mr. Natale needs to go. On Friday, two long-term Rogers family advisers, including Mr. Lind, lined up behind Edward.
This time around, Edward isn’t on the same page as his immediate family, and his own mother pushed for him to be removed as chair of the company’s public board. But what hasn’t changed is that power is fluid at Rogers, and players switch teams with very little public explanation. For investors, it is a harsh reminder of who really steers the ship.
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