VANCOUVER – In his capacity as chair of the Rogers Control Trust, Edward Rogers filed documents in the Supreme Court of British Columbia on Tuesday in a move towards establishing the validity of his version of the board of Rogers Communications Inc. (RCI).
In his petition, Mr. Rogers asks the court to declare “the written consent resolution dated October 22, 2021, signed by the shareholders holding at least two-thirds of the Class A Voting Shares of RCI is valid and effective.” This would resolve the issue of there currently being two boards claiming to be the one and only RCI board of directors.
This is how we got here, according to Rogers’s filings and various news reports:
Sept. 18: An affidavit signed by Mr. Rogers and filed with the Court, says that on the evening of Sept. 18, RCI CEO Joe Natale told him he overheard Tony Staffieri, RCI’s then chief financial officer, discussing replacing him (the Globe reported two sources revealed Natale learned of the plan through a pocket-dial from Staffieri.) Mr. Rogers also claims in his affidavit Natale told him that night he wanted to terminate Staffieri.
Sept. 19: The affidavit says RCI board member John MacDonald and Mr. Rogers met with Natale on Sept. 19, at which point Natale “insisted” Staffieri be fired, saying if Staffieri did not go, he would.
Mr. Rogers said in his affidavit that by then he had been growing “increasingly concerned” about the company’s performance under Natale over the course of two years. He indicated he raised his concerns at meetings of the Rogers Control Trust’s advisory committee in 2019, 2020 and 2021. “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,” his affidavit reads.
As Cartt.ca reported previously, an analyst report from Jeff Fan at Scotiabank says RCI has been underperforming relative to its peers since before the pandemic, with figures indicating concerns started in 2019.
Sept. 22: Mr. Rogers says after discussions with board members on Sept. 19 and Sept. 20, a board meeting was set for Sept. 22. Mr. Rogers’s affidavit says he had discussed the situation at length with Loretta Rogers (his mother) and Martha Rogers (his sister), claiming they both “firmly supported removing Mr. Natale.” In the affidavit, Mr. Rogers says his “mother said that she wanted to make a statement to the Board in support of this and in support of appointing Mr. Staffieri as CEO.” He says he and his sister helped her prepare the statement, which she read at the Sept. 22 meeting.
Sept. 24: The affidavit claims that during a board meeting held Sept. 24, the board “voted 10-1 in favour of a resolution accepting Mr. Natale’s resignation and entering into a consulting agreement” where he would stay on to manage the Shaw transaction. According to Mr. Rogers, the board also “approved in principle appointing Mr. Staffieri as the new CEO, but we deferred the resolution appointing him until a later meeting so that we could finalize his compensation package.” The only one to vote against was David Peterson (one of the five board members Mr. Rogers would later move to remove from the board).
Natale’s retirement package, according to the affidavit, included a lump sum termination payment of $20 million plus 24 months base salary (according to Rogers’ annual report, he earns $2.8 million/year in salary), allowance and target bonus, ongoing benefits for 24 months after the Shaw deal closes, pension accrual until April 2024, etc., retirement treatment for awarded stock options, non-compete requirement as outlined in his employment agreement, and mutually agreed upon messaging. The affidavit also outlines terms of a transition and long-term support agreement, which would see Natale continue to work as a contract employee until the Shaw deal closes or is terminated. The package also included an additional $4 million bonus for continuing to work on, and completing, the Shaw transaction.
“At no time did the majority of the Board vote to remove Joe Natale as CEO of Rogers Communications.” – John MacDonald
The company, however, disputes the claim the majority of the board ever voted Natale out. MacDonald said in a statement released late Tuesday: “At no time did the majority of the Board vote to remove Joe Natale as CEO of Rogers Communications. There are several critical and material items that are categorially false in the Chair of the Trust’s affidavit and I plan to fully set the record straight when given the opportunity through the court process.”
The court is moving quickly on this one and will hear arguments on Monday, November 1st.
Sept. 26: Mr. Rogers says in his affidavit there was a board meeting on Sept. 26, prior to which proposed compensation terms for Staffieri in his new role as CEO were circulated to board members. The proposed compensation package, according to the affidavit, included a base salary of $1.35 million and a target bonus of 100% of salary with a max of 200%. It also included, among other things, a $100,000 executive allowance per year and stock options.
The affidavit says during the Sept. 26 board meeting that was to address this with the board, MacDonald interrupted Mr. Rogers and turned the floor over to Martha Rogers who read out a new resolution, which included among other items, rescinding the resolution accepting Natale’s resignation, immediately terminating Staffieri and establishing an Executive Oversight Committee.
The Globe reported today Loretta Rogers said in a statement her son misled her regarding the performance of Natale. She said it was Mr. Rogers and Alan Horn (who is on the board of RCI and the advisory committee of the Control Trust) who gave her data about Natale’s performance. “I regret that I wasn’t able to validate that data with RCI’s independent directors before delivering the statement,” she said.
Sept. 29: Another board meeting was held, which Mr. Rogers says in his affidavit he tried to have moved to Oct. 1 so he could meet with the Control Trust’s advisory committee. Mr. Rogers says he was informed the majority of the board did not want to move the meeting. The RCI Board met without Mr. Rogers, Horn or Phil Lind (who is also both on the RCI board and the Control Trust advisory committee), who attended the advisory committee meeting while Loretta Rogers, Melinda Rogers and Martha Rogers (who are all on both the board and the committee) opted to attend the RCI board meeting instead. Mr. Rogers claims in his affidavit that at the RCI board meeting, all the directors in attendance “with the exception of Robert Gemmell, voted in favour of the resolution first proposed at the September 26 Board meeting.”
That night, a press release was issued by Rogers announcing Staffieri was out as the company’s CFO, which caught most by surprise because none of the above was yet public.
Oct. 4: Mr. Rogers indicates in his affidavit he requested a list of the company’s Class A and B shareholders, which he claims RCI delayed giving to him.
Oct. 8: The boardroom issues at RCI became public when the Globe and Mail reported Staffieri left Rogers due to “a high-level power struggle”.
Oct. 16: The Globe published an interview with Loretta Rogers, who had responded to emailed questions saying she is “very supportive of where we are today and where we’re going. One of the wonderful things about being a family run company is we take a long-term view, not just quarter by quarter.” She went on to say her late husband, Ted Rogers, “planned for professional leaders taking over the company, with the family continuing to be deeply involved. That meant we needed to find the right CEO to lead us forward, and we have that in Joe.”
Oct. 19: The Globe reported several independent board members including MacDonald “presented their case to curtail the chair’s powers at a meeting of Rogers family members and advisors” late on Oct. 19.
Oct. 21: RCI announced the board has voted Mr. Rogers out as chair and voted for MacDonald to replace him. Mr. Rogers was to remain on the board as a director, and he remained as chair of the Control Trust.
“This is against what Ted wanted.”
A source with knowledge of the situation who spoke with Cartt.ca on condition of anonymity said these moves run counter to the wishes of the company founder who made it clear in additional documents prior to his death that should the board of directors of the company end up at odds with the Control Trust, the trust is then to replace the company board. “So this is against what Ted wanted,” said the source.
Mr. Roger’s affidavit filed Tuesday says after an advisory committee meeting on Oct. 21, he instructed his “counsel to set in motion the procedures needed to execute a consent resolution removing the Director Group from the Board and replacing them with a new slate of independent directors.” He said that evening a letter with a proposed resolution and the bios of proposed new directors was sent to all registered Class A voting shareholders.
Late that night, he released a press release saying he planned to replace five RCI board members. He said in a statement he was confident the new board would reinstate him as chair.
Oct. 22: Mr. Rogers’s affidavit indicates once the resolution was signed on Oct. 22, his counsel sent a letter to RCI’s counsel, which “set out the process followed, contained a detailed explanation of the statutory basis for and validity of the resolution, and attached the relevant documents.”
The morning of Oct. 22, RCI issued a press release saying it is unaware “of this mechanism ever having been utilized in respect of a public company in Canada.”
The evening of Oct. 22, RCI issued a press release in which MacDonald confirmed the company had received the written resolution from the Control Trust. The release goes on to say, however, that after reviewing the resolution with external legal counsel, RCI “determined the resolution is invalid.”
Mr. Rogers sent out a statement later that night stating the reconstituted board was in control of the company as of that morning and that there was “no legal basis for declaring the resolution invalid.”
Oct. 23: Natale and MacDonald issued their own press releases reiterating that the new board was not legal. Martha Rogers, who had been tweeting in the very early hours of the morning, posted a message that read: “We’ll spend every penny defending the company, employees & Ted’s wishes, nothing you can do will deter us. Bring. It. On.”
“I don’t know how we’re going to piece the Rogers family together again.”
Oct. 24: A board meeting called by Mr. Rogers, Horn and Lind took place “with all directors in attendance except Mr. Natale, Melinda, Martha, and my mother,” the affidavit reads. Mr. Rogers says at that meeting, the new board appointed him chair. “As we were holding this meeting, RCI issued another press release with a statement on behalf of Melinda, Martha, my mother, and the Director Group saying they “unequivocally support Joe Natale as CEO” and again asserting that the Board of the company remain unchanged.”
Oct. 26: This takes us to Tuesday when, in his capacity as chair of the Control Trust, Mr. Rogers filed his petition in the Supreme Court of B.C.
In a statement made today, MacDonald said the claims made in the court documents are an “unfortunate and one-sided view of events.” He goes on to say they do “not represent what actually took place during our board deliberations. Any suggestion that the board had pervasive and serious performance concerns at Rogers are utterly false, especially in the context of a business that had been materially and disproportionately impacted by the pandemic – any suggestion otherwise undermines the hard work of our 24,000 team members.”
MacDonald’s statement goes on to praise the work Natale has done at Rogers and the says he and the RCI team have delivered on a number of key goals while “the board has supported each of the key strategic decisions, including coming together with Shaw.” MacDonald indicates “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.”
A statement issued by RCI late this evening announced, “the Supreme Court of British Columbia will hold a hearing on November 1, 2021 to hear submissions by the Company and the Rogers Control Trust regarding the legality of Edward Rogers’ attempt last week to replace five of the Company’s independent directors with nominees of the Rogers Control Trust through a written resolution, without convening a meeting of shareholders.”
The press release says RCI, which maintains the resolution to change its board is invalid, “welcomes the opportunity for the Court to consider the importance to shareholders and all stakeholders of conducting a shareholders meeting to change the Board of Directors.”
No one knows just how this will end, but analysts have their own views. A report from analyst Tim Casey at BMO Capital Markets says: “We think Edward Rogers will retain control of the family trust, and therefore the company. Our view is underpinned by the fact that he has the support of Alan Horn and Phil Lind, two very influential directors on both Boards.”
As well, according to our source, the only members of the Control Trust who want to remove Edward Rogers as chair are Loretta, Melinda and Martha Rogers, making it “extremely unlikely” a change of heart will happen. This means should Mr. Rogers win the case on Monday and no appeal is filed, the new board would be moved into place and Staffieri made the president and CEO.
But while the industry waits on that, “it’s horrible for employees… just awful because they’re working their butts off every day and they don’t expect a bunch of owners to be fighting in public,” added our source. “I don’t know how we’re going to piece the Rogers family together again.”
