Independent directors made offers to step down from Rogers board

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John MacDonald, who was elected to replace Edward Rogers as chair of the board of Rogers Communications Inc. last week, says he and other independent directors offered to step down several times in recent weeks over their concerns with Mr. Rogers’s conduct and his “disregard of good governance practices.”

However, Mr. MacDonald and the other directors ultimately decided that such a move would be highly disruptive to the company and could jeopardize its $26-billion acquisition of Shaw Communications Inc., he said in a court filing Friday.

“We believed in good faith that we would better serve the interests of the company by defending good governance protocols and remaining on the board until a shareholders’ meeting is convened or our terms come to a proper end,” Mr. MacDonald said in an affidavit filed with the B.C. Supreme Court.

The court will hold a hearing on Monday to consider a dispute over control of the Toronto-based telecom giant.

Edward, the son of company founder Ted Rogers, is asking the court to sanction his move to replace five directors with his own candidates for the board seats. Mr. Rogers’s attempt to reconstitute the board is part of a power struggle within the upper ranks of the company and within the Rogers family itself.

Mr. Rogers attempted to oust several executives, including replacing CEO Joe Natale with the company’s then-chief financial officer, Tony Staffieri, but met resistance from some board members and from his mother, Loretta, and sisters Martha and Melinda.

A spokesperson for Mr. Rogers declined to comment.

The conflict boiled over last week when the board met to replace Mr. Rogers as chair – though he remains the chair of the family trust that controls the telecom company. Mr. Rogers subsequently held another meeting, which his mother and two sisters called “invalid,” at which he was reinstated as chair of the company’s board.

Mr. Rogers said his concerns about Mr. Natale stemmed from the company’s lagging performance relative to competitors, its “stagnated” share price and budget targets that had been missed in the past two years.

Mr. Rogers contends that his position as chair of the Rogers Control Trust, which controls 97.5 per cent of the company’s voting shares, gives him the authority to reconstitute the board through a written resolution.

But in another court filing on Friday, Loretta Rogers countered that a memorandum of her late husband’s wishes specified that the chair of the family trust must face “the ‘public gauntlet’ of a shareholders’ meeting” in order to do so.

In his own court filings, Edward Rogers said that while his father stressed “the importance of consultation and discussion,” Ted Rogers also provided “ultimate authority” to the chair to act on the trust’s behalf. Mr. Rogers also said he consulted with members of his family and certain board members about his concerns regarding Mr. Natale’s performance, and his plan to replace him as CEO.

In the filing on Friday, Mr. MacDonald said he does not agree with “many” of the statements in Mr. Rogers’s affidavit, and said that Mr. Rogers was “acting on his own initiative” in firing Mr. Natale and attempting to remove five members of the company’s board without holding a shareholder meeting. He also said that the attempt to oust Mr. Natale happened “without input from, or the approval or knowledge of, the board.”

[ image ] - In his own court filings, Edward Rogers says that while his father stressed ‘the importance of consultation and discussion,’ Ted Rogers also provided ‘ultimate authority’ to the chair to act on the trust’s behalf. Edward Rogers

Mr. MacDonald said the first time that Mr. Rogers told him that he had lost confidence in Mr. Natale was during a call on Sept. 15. During the call, Mr. Rogers also said that he had full confidence in Mr. Staffieri and that he planned to make other management changes, Mr. MacDonald said.

“Up until that time, there had been no discussion at the board or, to my knowledge, any of the board’s committees regarding the replacement of Mr. Natale with Mr. Staffieri,” Mr. MacDonald said in his affidavit.

“The board, which oversaw the establishment of the chief executive officer’s performance objectives and the assessment of his performance against those objectives, was of the view that Mr. Natale had met the requisite performance criteria and exceeded his goals,” Mr. MacDonald said.

A number of independent directors were prepared to resign over Mr. Rogers’s conduct, Mr. MacDonald said. At a board meeting on Sept. 22, several of them “spoke out forcefully and at length” against Mr. Rogers for sidestepping the board when deciding to oust Mr. Natale, he added.

“To be clear: at no time did I, or other members of the director group, approve the termination of Mr. Natale’s employment. That had already been done by Edward,” Mr. MacDonald said. “We also understood that Mr. Staffieri had in effect already been anointed by Edward without any search committee or process being undertaken,” he added.

Mr. MacDonald said the situation was “symptomatic of a pattern of behaviour” by Mr. Rogers, who had also bypassed the board when he terminated a previous CEO, Guy Laurence, in 2016.

John Clappison, the previous lead independent director, resigned in January, 2021 over Mr. Rogers’s “repeated efforts to override board-approved policies and practices,” Mr. MacDonald said. (Mr. Clappison was recently reappointed to the board.)

Mr. Rogers also “constantly interfered in the chief executive officer’s decisions to hire or fire company executives,” Mr. MacDonald added. “Put simply, Edward tried to operate as an executive chairman when the board had specifically provided in the position’s job description that that was not the role.”

With reports from Mike Hager in Vancouver