They say he has a pattern of overstepping
By Amanda OYE
VANCOUVER – On its face, the court case this week between Edward Rogers as the chair of the Rogers Control Trust and Rogers Communications Inc. (RCI) is largely about the interpretation of the company’s articles in conjunction the B.C. Business Corporations Act.
Tangled up in this, however, are two competing storylines of what has happened at RCI over the last two months and of what the company’s founder, the late Ted Rogers, would have wanted.
This became clear last Friday when several affidavits were filed in response to Edward Rogers’s affidavit, filed Oct. 26. This includes affidavits from Loretta Rogers and John MacDonald.
At issue before the court is whether Mr. Rogers as the chair of the Rogers Control Trust can remove and replace RCI board members without holding a shareholders meeting.
Loretta Rogers in her affidavit said not only did she disagree with Mr. Rogers’s portrayal of facts of the matter, but she also disagreed “with his personal view that he is entitled to exploit his entrusted position as Control Trust Chair to circumvent Ted’s wishes, the interests of other Rogers family members, and the governance structure that has allowed Rogers to become a successful public company despite family control.”
Mr. Rogers seeking to replace RCI board members was a tipping point for her.
“The final straw was when the media reported that Edward would be seeking to remove and replace five independent members of the Rogers Board of Directors by written resolution, contrary to Ted’s clear wishes, which I helped him to draft,” her affidavit reads.
She indicated removal and replacement of board directors must be consulted on with the Control Trust advisory committee and should follow input from the board’s nomination committee.
According to Loretta Rogers, her son did not consult with the advisory committee before he announced he was making changes to the RCI board. “It is not clear to me how Edward obtained authorization from the Advisory Committee to make this petition given that I was not a part of any meetings considering it,” her affidavit reads.
Ted Rogers’s wishes
Ted Rogers created the Control Trust so there was “a clear separation between the ownership of Rogers and the voting of the shares so that stewardship of the family control could be entrusted to one family member without that person having all of the wealth associated with the shares, but subject to certain protections for other family members,” Loretta Rogers’s affidavit reads.
She included Ted Rogers’s Memorandum of Wishes in her affidavit, which “specifies the steps that the Control Trust Chair is expected to take in the event a significant conflict arises between a majority of the Board and the interest of the Rogers family.”
If an issue arises between the Control Trust and RCI board members that “is of bed-rock seriousness”, the Memorandum of Wishes indicates the chair of the Control Trust “would have to go through the public gauntlet of immediately calling a special shareholders meeting to replace them, unless they have resigned first.”
The memorandum also, however, directs the chair to consider “whether the issue is important enough to the Rogers family to risk a very public spectacle.” Later in her affidavit, Loretta Rogers said: “Nothing worried [Ted Rogers] more than a needless public spectacle.”
For Mr. Rogers, the Control Trust structure affirms his authority to make decisions including the one to remove and replace five board members. In his affidavit, Mr. Rogers said his father believed in consultation and discussion “but emphasized the need to have one final decision maker. This is reflected in the Control Trust structure he created.”
His affidavit indicated that as a check and balance to the chair’s power, the advisory committee was given “the power to constrain the Chair’s exercise of the Control Trust’s voting power, or ultimately to replace the Chair.” Mr. Rogers remains Control Trust chair, suggesting he has the support of most of the advisory committee since two-thirds of the committee are needed for either of these measures to be passed.
The firing of CEO Joe Natale
While the court case is focused on whether Mr. Rogers’s changes to the RCI board are valid, an important underlying storyline is the firing of Rogers CEO Joe Natale. The affidavits filed last Friday suggest the RCI board did not make the decision to fire Natale, rather, Mr. Rogers fired him, and then the board approved his resignation package.
According to Loretta Rogers’s affidavit, sometime around Sept. 19, Mr. Rogers terminated Natale without calling a board meeting, without board approval and without even notifying the board.
On Sept. 22, the RCI board met to consider a resolution to accept “Natale’s resignation and approve a severance package,” Loretta Rogers’s affidavit reads. At this point, she supported the change in CEOs. This was because she chose to trust information provided to her by Mr. Rogers and Alan Horn (who is on both the RCI board and the Control Trust’s advisory committee), noting “it would later become clear to me that this trust may have been misplaced.”
She said she was under the impression Natale had been performing well as CEO until Sept. 11 when Horn visited her and her daughter Martha Rogers to advise them Mr. Rogers was planning to replace Natale as CEO with Tony Staffieri.
She delivered a speech at the Sept. 22 meeting supporting the CEO change, which was written by her son and Horn, according to her affidavit (Mr. Rogers’s affidavit said it was put together by himself and Martha Rogers, who Mr. Rogers said supported her mother giving the speech).
According to MacDonald’s affidavit, the board met on Sept. 24, at which point it approved Natale’s retirement package and an arrangement for him to continue consulting.
Mr. Rogers, in his affidavit, said the board “voted 10-1 in favour of a resolution accepting Mr. Natale’s resignation and entering into a consulting agreement.” There is no mention in his affidavit of him firing Natale beforehand (around Sept. 19), as Loretta Rogers’s affidavit indicated.
In his affidavit, MacDonald stated: “To be clear: at no time did I, or the other members of the Director Group, approve the termination of Mr. Natale’s employment. That had already been done by Edward. We also understood that Mr. Staffieri had in effect already been anointed by Edward without any search committee or process being undertaken.”
MacDonald said even though he and the other independent directors believed Natale was the better choice for CEO, they were under the impression the Rogers family supported Natale’s termination, which would mean the independent directors were outvoted.
Martha Rogers later informed Loretta Rogers there was serious concern amongst RCI’s independent directors “about the process through which Mr. Natale was departing and concerns about Edward’s behaviour as Chair of the Control Trust,” Loretta Rogers’s affidavit reads.
After speaking with a few board members, Loretta Rogers decided it was “imperative” to undo the board’s decision from its Sept. 24 meeting, which they did on Sept. 29.
Mr. Rogers stated in his affidavit he wanted to have the Sept. 29th board meeting moved so he could meet with the Control Trust advisory committee but was told the majority of the board did not want to move the meeting. MacDonald, in his affidavit, said he was not aware until later Mr. Rogers scheduled a meeting of the advisory committee for the same time.
Initially, MacDonald, according to his affidavit, was told by Mr. Rogers one of the reasons he wanted to postpone the meeting was “he was not prepared “to lose control of the company” and that he intended to call a shareholders’ meeting to replace the Director Group. He wanted to delay the Board meeting to consider the implications of calling the shareholders’ meeting on the Shaw Communications transaction.”
Trouble had been brewing for a while
For Mr. Rogers, the trouble was Joe Natale. He said in his affidavit he had been voicing concerns about Natale since 2019. A statement from Robert Gemmell said it was not just Mr. Rogers who was concerned about Natale’s performance, rather several directors including him had been concerned “for months and even years.”
Loretta Rogers’s affidavit, however, indicates she only heard about Mr. Rogers’s plans to remove Natale in September 2021, before which she was under the impression he was performing well.
For the RCI board’s independent directors, the trouble is and has been with Mr. Rogers. MacDonald indicated in his affidavit the “situation was symptomatic of a pattern of behaviour that was all too familiar – Edward’s direct involvement with the Chief Executive Officer, bypassing the Board altogether.”
He pointed to the termination of RCI’s CEO Guy Laurence in 2016 as one example. Laurence’s termination was abrupt and was not discussed with the board beforehand, nor was his replacement, according to MacDonald. “Edward consistently operated outside his job description to the detriment of proper Board governance,” said MacDonald.
The power struggle at Rogers is likely to go on for a while, but a step forward is coming on Friday when a B.C. Supreme Court judge is expected to announce a decision on the current court case.
