Chief executive Joe Natale in an awkward place as Rogers tries to calm the waters

“There will never be a relationship of trust and mutual respect between Edward and Natale, which is essential for this relationship to work effectively,” says one observer.

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Joe Natale, chief executive of Rogers Communications Inc., met with equity investors in Montreal on Monday in what a company spokesman called “business as usual” after the British Columbia Supreme Court ruled on Friday that Edward Rogers has the power to replace five of the company. independent directors with their own hand-picked slate.

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The corporate and family brawl over control that landed in the BC court was sparked after Edward – who chairs the family trust that controls the telco and was also reaffirmed as chairman of the company’s board courtesy of Friday’s verdict – tried unsuccessfully replace Natale.

But while Edward, the only son of the company’s founder Ted Rogers, issued a conciliation statement after the court ruled in his favor and said Natale has the support of the board, observers said the public broadcast of the loss of Edward’s faith in Natale’s performance is almost certain. shortening his tenure as CEO, a task he was expected to hold for at least a few more years before events began to unfold in September.

“There will never be a relationship of trust and mutual respect between Edward and Natale, which is essential for this relationship to work effectively,” said Beverly Behan, president of New York-based Board Advisor LLC, which works with the boards of publicly traded companies. companies in Canada and the United States.

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She questioned whether both sides will be able to hold it long enough for the company to get regulatory approvals for its acquisition of $ 26 billion from rival Shaw Communications, including a crucial regulatory hearing next month before the Canadian Radio-television and Telecommunications Commission.

That question also seemed to be in the minds of members of Edward’s family who sit on the board, who all ultimately opposed his attempt to get rid of Natale and opposed his board review. In a statement Friday, his mother Loretta and two of his sisters warned of “a very real prospect of management disorder and a prolonged period of uncertainty, perhaps at the worst possible time.”

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The company declined to comment on speculation about Natale’s departure, and a spokesman for Edward Rogers reiterated his statement Friday, saying the focus “should be on the trade, return to stability and closing of our transformational merger with Shaw Communications.”

Adam Shine, a telecommunications analyst at National Bank of Canada, said in a note to clients that “calming the waters” would serve Rogers well as it seeks to obtain regulatory and financial approvals to complete Shaw’s acquisition.

But Richard Leblanc, a professor of governance, law and ethics at York University, said he sees the saga continuing to play as a unique activist investment campaign – from within – and he expects Natale not to stay long.

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“Chiefs are not irreplaceable,” Leblanc said. “Part of the gamebook (of activist campaigns) is to replace directors, and then replace a CEO to increase efficiency.”

Independent directors, to whom Edward Rogers pointed the door late last month, defended the CEO’s performance, saying they initially approved a compensation package for him in September just because it was presented to them as something Natale wanted.

A malfunctioning board is like kryptonite to any outside prospective CEO

Two days later, they voted instead to keep Natalen, with an increased compensation package he had negotiated to leave, and to terminate the employment of chief financial officer Tony Staffieri, whom Edward Rogers lined up to replace Natale.

Leblanc said that while Staffieri could ultimately be caught to take over as CEO, the family separation within the board of directors could make it difficult to find an outside candidate.

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“A dysfunctional board is like kryptonite to any outside prospective CEO,” he said, adding that Friday’s court ruling makes it clear to any candidate that they will actually respond to only one person.

“If you as an outside candidate coming fall into bad grace with only one person, then your days will be counted,” Leblanc said.

Edward Rogers said in an affidavit filed at the BC court that he has grown increasingly concerned with Natale’s performance over the past two years, and that Rogers has lagged rivals Bell and Telus on key metrics such as adding new customers and stock prices. Analysts said Rogers was hit harder by the pandemic than rivals because it relied more on wandering fees, which were limited by travel restrictions.

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Rogers Communications is unique among Canadian corporations because the Rogers family controls 97.5 per cent of the telecommunications’ voting shares through a trust. The Rogers Control Trust is, by design, guided by a single chair. That person – Edward for the past 13 years since his father passed away – responds only to a 10-member advisory committee made up of family members and long-term partners and counselors. He may be replaced only by a vote of at least seven of the 10. Several members of the trust’s advisory committee are also on the board of Rogers Communications, including former executives Alan Horn and Phil Lind, and Edward himself.

Claude Lamoureux, an advocate for corporate governance and former chief executive of the Ontario Teachers ’Pension Plan Board, said there should be a special category of management for such companies when it comes to the composition of their boards.

“All directors of corporations in a similar situation as Rogers should be listed as dependent,” he suggested.

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