Former Rogers CEO Joe Natale suing for wrongful dismissal, breach of contract

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Joe Natale, who was ousted as chief executive officer of Rogers Communications Inc. in 2021 amid a dramatic power struggle in the telecom’s upper ranks, is suing the company for at least $24-million for wrongful dismissal and breach of contract, while also alleging that its chairman Edward Rogers engaged in “malicious, high-handed and oppressive conduct.”

Rogers RCI-B-T countered with a statement on Friday alleging that an independent investigation found that Mr. Natale “engaged in serious misconduct” by awarding himself “excessive compensation” without proper board approval. The company has decided to retroactively make Mr. Natale’s November, 2021, termination for cause.

The dispute between Mr. Natale and the telecom giant is a rare instance of a high-profile chief executive going to war with a blue chip company and airing their grievances in public. Mr. Natale claims he was stiffed out of millions of dollars, while Rogers alleges he is attempting to enrich himself with a pay package not properly approved by the board. Neither side’s allegations have been proven in court.

Mr. Natale was replaced by the company’s former chief financial officer, Tony Staffieri, after a battle between opposing factions of the Rogers family and the company’s board that resulted in Mr. Rogers replacing five independent directors with his own slate of candidates.

In a statement of claim filed on Thursday, Mr. Natale argues that he excelled in his role as the president and CEO of Rogers, including orchestrating the $20-billion takeover of Shaw Communications, and was rated as outperforming the company’s expectations of him on all four of his annual performance reviews.

Mr. Natale claims that his employment terms were enhanced “amidst significant acrimony” between members of the company’s board to keep him in his role during a pivotal moment for the telecom, as it dealt with corporate governance challenges and worked to secure approval from three federal regulators for its takeover of Shaw.

He argues that since he was terminated without cause in November, 2021, the company “refuses to fulfill its contractual obligations” to him. Those obligations, according to the statement of claim, include a $4-million bonus payable on closing of the Shaw deal, which took place in April, 2023, as well as an additional $20-million that Mr. Natale claims he was owed 30 days after closing. He is also seeking additional payments of undisclosed amounts relating to performance-related restricted stock units.

Mr. Natale is also seeking “punitive, moral, and aggravated damages,” claiming that the company’s chairman and controlling shareholder, Edward Rogers, and his wife Suzanne Rogers “intentionally disparaged Natale and took steps to tarnish his reputation.”

Mr. Natale said that one such effort involved Mr. Rogers or his wife hiring Brian Cox, the actor who portrays media mogul Logan Roy on HBO’s acclaimed television drama Succession, to create a disparaging video about Mr. Natale. In the video, Mr. Cox congratulates Mr. Rogers for his “real-life Succession at Rogers Communications” and for ousting Mr. Natale.

“Edward Rogers and/or Suzanne Rogers distributed the Viral Video to family members, friends, colleagues, and contacts. As a result, the Viral Video was viewed by numerous members of Natale’s family, business, and personal communities,” the statement of claim reads. It was also reported on by various media outlets and disseminated widely on social media channels, the statement of claim said.

Rogers, meanwhile, said the company has “made the necessary decision to terminate [Mr. Natale] for cause” after an independent investigation.

“The investigation reveals that in October 2021, Mr. Natale knew that steps were being taken to make changes to the board and this would end his tenure as CEO. Before his departure, he awarded himself excessive compensation without proper board approval. This, and other actions, were a serious breach of his fiduciary duties as a chief executive officer and director of a public company,” reads a statement provided to The Globe and Mail by Rogers spokesperson Sarah Schmidt.

“Mr. Natale was aware of the investigation and given an opportunity to respond. He understood the implications of its findings and the lawsuit is an attempt to get ahead of the investigation. While we would have preferred to deal with this matter privately, Mr. Natale has left us with no choice. The company will defend itself vigorously against his baseless claim and will file a counterclaim to address his improper behaviour.”

The investigation was carried out by law firm Bennett Jones LLP and involved interviews with a number of former employees, including Mr. Natale himself, according to three sources. The Globe and Mail is not identifying the sources because they are not authorized to speak publicly about the matter.

The power struggle at Rogers erupted in the fall of 2021 after Mr. Rogers first attempted to fire Mr. Natale and replace him with Mr. Staffieri. The move met resistance from two of his sisters, Melinda Rogers-Hixon and Martha Rogers, and his mother, Loretta Rogers, as well as the majority of the company’s board, who fought to retain Mr. Natale. On Sept. 29, the board voted in favour of a resolution that reinstated Mr. Natale, amended the terms of his employment and terminated Mr. Staffieri.

In a move that ultimately landed in a B.C. courtroom, Mr. Rogers later removed five independent directors through a written resolution, without holding a shareholder meeting, and the reconstituted board ultimately voted to fire Mr. Natale and reinstate Mr. Staffieri as CEO.

The company’s allegation that changes to Mr. Natale’s compensation did not have proper board approval stems from a debate about whether Robert Dépatie remained a director of the company at the time when the changes were made, according to the sources. The company’s position is that Mr. Dépatie, as chair of the human resources committee, would have had to sign off on the changes, and did not do so.

However, former lead director John MacDonald said in an affidavit previously filed in court that Mr. Rogers advised the board at a Sept. 22, 2021, meeting that Mr. Dépatie had resigned from the board because he was conflicted by virtue of a plan to join the telecom’s management team.

“It should be noted that Edward subsequently took the position, and continues to take the position, that Mr. Dépatie actually remains on the board,” Mr. MacDonald’s affidavit states.

According to draft minutes from the Sept. 22 meeting filed in court by Mr. Rogers’s lawyers, Mr. Dépatie “did not comply with the formal requirements to resign from the board” and, as a result, remained a director.

Robert Gemmell, the company’s lead director, said he attended the meeting in question and that “at no time at that meeting did Edward Rogers or anyone else report that Robert Dépatie had resigned from the Board. Full stop.”

”I am confident in saying that no Board member in attendance was under any other impression. To suggest so is, in my opinion, wrong,” Mr. Gemmell said in a statement provided to The Globe.

A spokesperson for Mr. Natale said he “remains proud of his achievements at Rogers Communications.”

“It is unfortunate that Rogers will not honour its commitments made to Mr. Natale. His employment agreement, put in place by the Board of Directors at the time was clearly articulated, duly executed and designed to ensure continuity during the Shaw merger. We are confident that the courts will share this view,” Bill Walker of MidtownPR said in a statement.