The board of Rogers Communications Inc. removed Edward Rogers as chair on Thursday, after his attempts to overhaul the company’s management kicked off a weeks-long battle that has divided the family that controls Canada’s largest wireless carrier.
Rogers named John MacDonald as its new chair, putting the telecom-industry veteran at the helm of the board in a bid to restore stability at the company amid a high-profile power struggle that saw Mr. Rogers attempt to push out chief executive officer Joe Natale and nine other top executives.
The boardroom rift, which erupted amid the $26-billion takeover of Shaw Communications Inc. , set Mr. Rogers against his sisters and mother, and included a cast of Canada’s business and political elite. Toronto Mayor John Tory was among the family members and advisers who gathered at the Toronto law firm of Torys LLP for a daylong meeting on Thursday. By late afternoon, the board had voted to remove Mr. Rogers as chair.
“This has been a challenging time for the corporation and I want to reaffirm on behalf of the majority of the board our support for and total confidence in the management team and CEO of Rogers Communications,” said Mr. MacDonald, who has been a director at the company since 2012 and was previously the president of MTS Allstream’s enterprise division and Bell Canada’s chief operating officer.
Mr. Rogers remains on the board as a director, the company said in a statement.
Growing tensions over the company’s leadership came to a head late last month after Mr. Natale learned of Mr. Rogers’s plan to replace him with chief financial officer Tony Staffieri, triggering an emergency weekend board meeting.
The move was opposed by Mr. Rogers’s mother, Loretta Rogers, and two of his sisters, Martha Rogers and deputy chair Melinda Rogers-Hixon, as well as other directors. Mr. Staffieri left the company several days later.
A sternly worded letter from the company’s independent directors sent to Mr. Tory late on Wednesday cautioned that Mr. Rogers’s “unilateral actions” could pose a risk to the Shaw acquisition. Mr. Tory sits on the advisory committee overseeing the family trust that controls Rogers through its ownership of 97.5 per cent of the company’s class A voting shares.
The letter, which was sent by director Bonnie Brooks and viewed by The Globe and Mail, said Rogers needs to raise $20-billion in the next few months to finance the acquisition of Calgary-based Shaw, and that changing the company’s CEO would pose a “massive risk” with financial backers, since Mr. Natale has been their main point of contact.
Changes to the company’s management or board could also cause ratings agencies to believe there is “chaos” within the company and lead to a downgrade in its credit rating that would wipe out all the financial benefits of the acquisition, the letter says. Shaw chief executive officer Brad Shaw has requested no more changes to the company’s board or management, the letter also notes.
Spokespeople for Rogers and Shaw declined to comment on the letter. A spokesperson for Mr. Rogers did not immediately respond to a request for comment.
Mr. Rogers resumed his attempts to overhaul the company’s leadership in recent days by recruiting new prospective independent directors to replace the current ones. In a statement earlier this week, Mr. Rogers said there is room for improvement in the company’s long-term performance.
“In my role as chair of the Rogers Control Trust, the controlling shareholder of the company, it is my responsibility to put the interests of Rogers Communications first. It’s disappointing the focus of others has strayed from what is best for the business,” Mr. Rogers said.
The board members’ letter said: “The independent directors, governance committee and HR committee have been creating and trying to implement fencing to keep the chair from interference in the management of the business and continuous scheming behind the leader’s back in this company for the past seven years.” It adds that Mr. Rogers wants to run the company and believes that he does.
“No CEO or management team can operate effectively under these conditions,” the letter reads.
Rogers on Thursday reported a 4-per-cent dip in its third-quarter profit and flat year-over-year revenue, but added 175,000 net new postpaid wireless subscribers during the quarter – its best result in 13 years. (Postpaid subscribers are those who are billed at the end of the month for the services they used, versus prepaid customers, who pay upfront for wireless services.) Its churn – the rate of customer turnover on a monthly basis – was 0.95 per cent, a record low.
Members of the Rogers family and Mr. Tory looked tired as they left the emergency meeting of the family trust, convened in the hopes of resolving the impasse and to consider limiting Mr. Rogers’s ability to exercise voting control. Mr. Rogers was not among the family members trickling out after nine hours of discussions; a source said he left via the freight elevator.
Loretta Rogers, the widow of company founder Ted Rogers who, according to a source, moved the motion to oust her son as chair, was guided by her daughter Martha Rogers towards a black SUV limousine that had been waiting outside the downtown Toronto tower all afternoon. The Globe is not identifying either of the sources, who are close to the board, because they are not authorized to speak publicly about the matter.
Ms. Rogers-Hixon joined her mother in the car several minutes later.
“As my late father would say, the best is yet to come at Rogers,” Ms. Rogers-Hixon said, adding, “This was a long, tough day.”
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