Edward Rogers makes his move: Can he succeed in replacing members of the board that just ousted him as chairman?

Article content

If there was any doubt Edward Rogers was stepping out from the long shadow cast by his father and Rogers Communications Inc. founder Ted Rogers, it evaporated late Thursday when Edward unveiled a bold and “unprecedented” plan to remove five of the telecommunications company’s independent directors and replace them with his own preferred candidates.

Article content

The $30 billion company called the move unprecedented and said it has reviewed the resolution with external legal counsel “and has determined the resolution is invalid.”

Accordingly, the board, including its independent directors, remains unchanged, the statement said.

One person close to situation described the attempted board shakeup as the “nuclear option” because of the likelihood neither side will come out unscathed. As another source suggested, management could refuse to work with the reconfigured board

Stepping further out on his own has driven a wedge between Edward Rogers and his closest relatives, who have disagreed with his recent machinations including behind-closed-door efforts to overhaul the company’s senior management and get rid of CEO Joe Natale.

Article content

In a statement Friday, his mother Loretta and sisters Martha and Melinda said they are “obviously disappointed” in Edward’s decision to try to replace board members and don’t think he has a legal leg to stand on.

”Simply put, his actions demonstrate a disregard for good governance and create a grave amount of risk for the company at an especially sensitive time,” they said, in a likely reference to the company’s pending $26 billion (including debt) takeover of rival telecom Shaw Communications Inc.

They, too, believe he has “miscalculated” his legal position and say he is ignoring the interests of multiple stakeholders including employees, shareholders and customers.

Article content

“There is no precedent by which he can simply fire five independent Rogers directors and replace them at a whim,” his mother and sisters said. “The law is clear… (and) while Edward appears unwilling to grasp this basic fact, this doesn’t make it any less true or relevant in this case.”

But while corporate governance experts agree Edward’s move is very unusual, they’re not sure the 52-year-old scion can’t pull it off, largely because of the mechanisms his father put in place through a family control trust before he died in 2008.  

“As I see it, Edward Rogers has authority, which rests with the trust and the 97 per cent of the company’s votes it controls,” said Richard Leblanc, a professor of governance, law & ethics at York University.

Article content

“I’ve never seen a voting trust with this degree of authority, but I think it’s the brilliance of Ted Rogers that he really wanted professional management (but) he didn’t want the ability to crunch a family member — either from the outside or from another family member,” Leblanc said.

In a victory for Edward, at least in this round, that authority was reaffirmed this week when a motion to restrict his powers fell three votes short of the seven of it needed from members of the 10-member advisory committee that oversees the trust, according to sources familiar with the situation.

The uniqueness of the trust structure “doesn’t mean that it’s not legitimate” or that it can’t be used to successfully reconfigure the public company’s board of directors, Leblanc said.

Article content

“I think it has a high probability of success.”

There is no precedent by which he can simply fire five independent Rogers directors and replace them at a whim

He added that his reading of the arrangements Ted Rogers made before his death has him questioning whether Rogers Communications made a miscalculation of its own in stripping Edward of his role as chair of the board this week.

“The estate arrangements provide that the control trust chair should be a senior officer of RCI (Rogers) such as the chair or deputy chair of the board or a member of senior management,” he said. “So in removing Mr. Rogers from chair of the board, that may not have been permitted.”

Edward has suggested that his reconfigured board would re-assess that decision.

The twists and turns of the ongoing corporate and family drama has drawn comparisons to the TV show Succession, in which three fictional siblings jostle for position to run the family’s sprawling media company, often privately undermining one another and pushing the boundaries of what they are prepared to do to win.

Article content

A Globe and Mail report this week that said Natale found out about Edward’s plan to oust him through an ill-timed “butt dial” by former company chief financial officer Tony Staffieri, who was slated to replace him, did little to tamp down comparisons to the drama dreamed up by Hollywood script writers.

If Edward Rogers were a character, he might be written as the shy, slightly awkward son who finally steps into the limelight. He was groomed alongside his sister Melinda and brought into the company fold by their father in his late twenties after cutting his teeth in junior jobs at cable company Comcast in Philadelphia.

His initial steps were tentative. At one of the company’s annual meetings, Edward trailed behind his father by a few steps as he made the rounds. He also joined the odd conference call with Bay Street analysts in the early days, attempting to joke and take on his father’s penchant for throwing out cavalier remarks about the company’s competitors.

Article content

But Edward persevered, working in the cable division and rising to the level of executive vice-president. Ultimately, though, both Edward and Melinda were moved out of their executives roles, after Ted’s death, and held positions in the boardroom while executives brought in from outside the family ran the company.

According to published interviews and books, Ted Rogers had longings for his children to take over the business and ensure its survival, as he had resurrected his own father’s dreams and innovations in radio — cut short by his death at the age of 38 — and turned them into a multi-million-dollar company. But, as he got older, Ted recognized that Rogers would be in good hands with professional management after he was gone.

Article content

He told author Caroline Van Hasselt, who published a biography on Ted in 2007, the year before he died, that Edward needed to more time to develop.

“He’s like a good wine; he needs some time to mature,” Ted explained.

For his part, Edward told the author that he found the idea of working in the business “more appealing” than running things from the boardroom. And he didn’t get over that idea quickly. According to a 2014 article in Toronto Life, Edward put his name in to succeed his father as CEO after his death, despite widespread knowledge of Ted’s desire to see a professional manager get the job rather than a family member.

Jostling between Edward and the three CEOs (plus interim CEO and longtime executive Alan Horn) that have run the family-controlled company since Ted’s death have rarely leaked out into the public eye. That was largely true for the inevitable family squabbles as well — until now.

Article content

One thing that has become clear as the gulf between Edward and his family grows is that some of his biggest supporters and those he is drawing close loomed large on the Canadian media scene alongside his father.

Public support for Edward in the latest battle has come from two of Ted’s oldest supporters and confidantes, important players because they are also on the board and members of the family trust advisory committee.

Phil Lind worked at Rogers for 53 years, and his long relationship with Ted was often held up as an example of the latter’s loyalty because Lind was kept on following a physically debilitating stroke that sidelined him many years ago.

In a statement Thursday supporting Edward’s boardroom changes, Lind invoked his decades-long relationship with Ted and said his primary focus will be to help “ensure a successful completion” of Rogers’ planned transformational acquisition of Calgary-based Shaw, which Ted would certainly have embraced.

Article content

Alan Horn, another Rogers old-schooler who worked there for nearly 30 years, many of them as chief financial officer directly under Ted, came out in support of his son as well.

“I look forward to working with Edward, the Rogers family, and the reconstituted board to help the company complete its game-changing transaction with Shaw,” Horn said.

Edward has also turned to luminaries and fixtures from his father’s heyday to sit on the board he is seeking to build.

Ivan Fecan, for example, ran the CTV television empire from the late 1990s to 2011 when it was acquiring properties across the country and nabbing prized specialty cable channels like TSN, and teaming up with the Globe and Mail newspaper when convergence was the buzzword of the industry.

Article content

He shared stages with Ted at glitzy industry conferences in the early aughts and likely exchanged quips with him between appearances before the powerful licence-granting Canadian Radio-television and Telecommunications Commission.

Another figure on Edward’s list to join the board is Jan Innes, who managed communications and government relations at Rogers Communications for two decades. When Ted was in charge, she was the gatekeeper for anyone who wanted to get close to him.

The other directors Edward intends to put on the board are Michael Cooper, Jack Cockwell and John Kerr. He is planning to get rid of Canadian corporate stalwarts such as former Hudson’s Bay Co. president Bonnie Brooks and telecom veteran and lead Rogers director John MacDonald — who was appointed chair after Edward was pushed out this week.

Article content

As the positioning of some players becomes clear, where the loyalties of others lie in the inner circle remains less clear.

John Tory — by day mayor of Canada’s largest city — is on the advisory committee to the Rogers Control Trust. His father, a lawyer at the blue-chip Bay Street law firm that bears their name, was a lifelong friend of Ted Rogers, and during his lifetime he advised some of Canada’s major media families including the Thomsons.

The younger Tory worked for Rogers Communications for years, rising the ranks to run the company’s media and cable divisions before leaving for a life in politics.

In what surprised even some close to the family and corporate drama at Rogers, Tory took several hours out of his schedule earlier this week to chair a meeting of the Rogers family, the trust advisory committee members, and independent directors.

Article content

He told reporters he did so out of obligation to his former mentor, Ted Rogers.

Edward, in one of his rare public statements on the events of the past month, suggested he, too, has his father in mind.

“In accordance with the wishes of the last Ted Rogers … I am announcing changes to the board of directors that will help guide RCI (Rogers) through the closing and integration of the Shaw transaction and into an exciting new phase of growth,” he said Thursday.

One could imagine some he has surrounded himself with invoking the phrase Ted closed every speech with: “The best is yet to come.” His mother and sisters might disagree.

— With additional reporting from Stephanie Hughes