Rogers Communications Inc. CEO Joe Natale was preparing to leave the telecom in late September after discovering a plot to oust him. But just two days after approving his retirement, the company’s board suddenly reversed course and began a battle to keep him at the helm of the wireless giant.
The board’s abrupt reversal is detailed in documents that Edward Rogers, chair of the family trust that controls the Toronto-based telecom, filed in the B.C. Supreme Court on Tuesday. Mr. Rogers is petitioning the court to sanction his move to reconstitute the company’s board without calling a shareholder meeting.
The move faces opposition from his mother, Loretta Rogers, two of his sisters, Martha Rogers and deputy chair Melinda Rogers-Hixon, and the five independent directors he is trying to remove.
In the court documents, Mr. Rogers said he discussed his deepening concerns about Mr. Natale’s performance with company directors, and that Loretta and Martha Rogers had expressed support for his plan to replace Mr. Natale with the company’s chief financial officer, Tony Staffieri.
“While Mr. Natale has received some positive reviews, RCI has continued to lag behind its two main competitors, Bell and Telus, the company has missed its budgets the previous two years and its share price has stagnated,” Mr. Rogers said.
But members of Mr. Rogers’s family and John MacDonald, who was appointed chair of the company’s board last week, presented starkly different versions of the events leading up to the attempt to push Mr. Natale out in late September.
“It is unfortunate that Edward has advanced a false narrative regarding our mother to provide cover for his misguided position to replace the independent directors of RCI by the stroke of a pen,” Ms. Rogers-Hixon said in a statement.
The battle for control of Rogers Communications erupted in the middle of the $26-billion acquisition of Shaw Communication Inc.
On Sept. 18, Mr. Natale told Mr. Rogers he had overheard Mr. Staffieri talking about replacing him, according to the court documents, and met with Mr. Rogers the following day, saying that either he or Mr. Staffieri would have to go. “I said I did not support terminating Mr. Staffieri but was prepared to work with Mr. Natale on a fair resignation package and consulting agreement for the Shaw transaction,” Mr. Rogers said in the document.
On Sept. 24, the board accepted Mr. Natale’s retirement, but two days later suddenly reversed course and terminated Mr. Staffieri instead, according to the court filings.
Loretta Rogers said in a statement on Tuesday that her son’s claims are “as unfortunate as they are untrue,” and that he misled her about Mr. Natale’s performance. She said she had read from a statement that he had written for her when she expressed support for her son’s plan to oust Mr. Natale at a Sept. 22 board meeting.
“Indeed, it was Edward and Alan Horn who provided me with what they claimed was full, complete and accurate data about Joe’s performance,” Loretta Rogers said in a statement. (Mr. Horn is a director and a member of the advisory committee that oversees the Rogers Control Trust.)
“I regret that I wasn’t able to validate that data with RCI’s independent directors before delivering the statement. However, as soon as I was able to confer with the independents and develop a more complete and unbiased perspective on the issue, I reversed course,” Loretta Rogers said. She added that she and her daughters Martha and Melinda fully support Mr. Natale and believe he is the right CEO to lead the company and finish the Shaw deal.
Mr. MacDonald said it’s “utterly false” that the company’s board had “pervasive and serious performance concerns,” particularly in light of the fact business had been disproportionately impacted by the pandemic.
When Mr. Natale joined Rogers, his goals were to turn around the company’s lagging wireless network, improve customer service and bring in a new management team after years of “chronic underinvestment and instability,” Mr. MacDonald said in a statement on Tuesday.
“Joe and the team have delivered on each of these goals and throughout Joe’s tenure the board has supported each of the key strategic decisions, including coming together with Shaw, and has been exceptionally positive on company performance, plan and long-term vision. Unfortunately, the first time any issues were raised was when the chair of the trust initiated this unfortunate series of events that led to where we are today,” Mr. MacDonald said.
Mr. Rogers is asking the court to sanction his decision to reconstitute company’s board by declaring a shareholder “consent resolution” to replace five of the company’s directors “valid and effective.”
The court will hear the case on Nov. 1, the company said in a statement.
Mr. Rogers was removed as chair of the company’s board last week, after The Globe and Mail reported that he planned to oust Mr. Natale and several top executives. After he was removed as board chair, Mr. Rogers announced his intention to replace the independent directors who had opposed the plan.
On Sunday, at a board meeting that his mother, two of his sisters and the five directors say was invalid, Mr. Rogers was reinstated as board chair.
Tuesday’s filing asks the court to require Rogers to change its register of directors to remove the names of John Clappison, David Peterson, Bonnie Brooks, Ellis Jacob and John MacDonald, and to replace them with the names of Mr. Rogers’ chosen directors: Michael Cooper, Jack Cockwell, Jan Innes, Ivan Fecan and John Kerr. Mr. Rogers is also seeking legal costs.
The issue that will be debated in court deals with the legality of making such changes to the board without calling a meeting of shareholders. Mr. Rogers argues that the law in British Columbia, where Rogers is incorporated, allows such changes through a written resolution.
The family trust controls 97.5 per cent of Rogers’ voting shares.
Mr. Rogers’s claim quotes the company’s articles of incorporation, stating that “the shareholders may by ordinary resolution remove any director from office.” B.C.’s Business Corporations Act defines an “ordinary resolution” as one that is either passed by a majority of votes at a shareholder meeting, or is passed after being submitted to any shareholders entitled to vote and consented to in writing by shareholders controlling at least two-thirds of the votes.
Lawyers representing the company plan to argue that Mr. Rogers’s push to reconstitute the board without holding a shareholder meeting deprives the telecom’s non-voting shareholders of the information they need to make investment decisions, according to a source familiar with the matter. The Globe is not identifying the person because they are not authorized to speak publicly.
While the votes of other shareholders cannot make a meaningful difference because the Rogers Control Trust holds the majority of votes, those opposing the move argue that such disclosures matter, because public shareholders make investment decisions affecting the value of the company, and their support for the company is based on such disclosures.
Rogers’s legal team will argue that this process reflects the best practices of public companies and should not be subverted, according to the source.
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