Natale, executives consider exiting

The turmoil engulfing Canada’s largest wireless carrier has turned to near chaos as Edward Rogers fights to cement control over Rogers Communications Inc. after being ousted as chair, and CEO Joe Natale and top executives consider a mass exodus from the company.

Key players in the power struggle at the telecom and media giant exchanged increasingly harsh words in dueling statements on Friday, culminating in a bizarre stalemate between Mr. Rogers and the company over which independent directors currently sit on the board.

The weeks-long boardroom battle has split Mr. Rogers from his mother, Loretta Rogers, and sisters Martha Rogers and deputy chair Melinda Rogers-Hixon in the middle of the $26-billion takeover of Shaw Communications Inc.

Mr. Natale and the majority of his 11-member executive team are prepared to leave the telecom and media company if Mr. Rogers’s move to replace the company’s independent directors succeeds, sources told The Globe and Mail on Friday.

The Globe is not identifying the sources because they are not authorized to speak publicly about the matter.

Mr. Rogers said in a statement to The Globe that he is willing to work with the company’s leadership, but “we need a management team that is committed to this business and to closing the Shaw merger.” Mr. Rogers remains the chair of the Rogers Control Trust, which is the family trust that controls the Toronto-based telecom.

“It is unfortunate to learn of Mr. Natale’s intentions through the media. If Mr. Natale is no longer committed to our company, its employees, and our shareholders, he should resign and we will turn the page,” said Mr. Rogers.

Hours after the company’s board voted on Thursday to remove him as chair, Mr. Rogers announced his intention to replace five independent directors, including newly elected chair John MacDonald, with his own slate of candidates, through a written resolution.

The company and Ms. Rogers-Hixon issued statements in which they challenged the legality of replacing the directors without convening a shareholder meeting.

The conflict at the telecom’s highest ranks erupted after Mr. Rogers attempted to replace Mr. Natale with chief financial officer Tony Staffieri and oust other executives. Mr. Natale and the board became aware of the plan after Mr. Staffieri inadvertently dialed the CEO’s phone number while discussing it. At an emergency weekend board meeting in late September, a majority of the directors voted to keep the CEO in place; Mr. Staffieri left the company several days later.

Mr. Rogers issued a press release late Thursday announcing his plan to remove John Clappison, David Peterson, Bonnie Brooks, Ellis Jacob and Mr. MacDonald from the board. The press release said he would replace those directors, who opposed Mr. Rogers’s attempted overhaul of the company’s management, with Michael Cooper, Jack Cockwell, Jan Innes, Ivan Fecan and John Kerr.

Mr. Rogers said in a statement on Friday that the change took effect that morning, “immediately upon execution of the shareholder resolution.” He said that while he is disappointed that he was removed as chair, he is confident the move will be reviewed and addressed by the newly constituted board.

Mr. MacDonald said the company has reviewed Mr. Rogers’s resolution to reconstitute the board and determined it is invalid.

“Accordingly, the board of directors of Rogers, including its independent directors, remain unchanged,” Mr. MacDonald said in a statement. “The company’s CEO, Joe Natale, and management team remain steadfast in their commitment to driving the performance of the business and executing on the proposed merger with Shaw.”

At a meeting of the Rogers Control Trust on Thursday, Toronto mayor John Tory, Loretta Rogers, Martha Rogers and Ms. Rogers-Hixon supported a motion to restrict Mr. Rogers’s ability to exercise voting control over the company, according to a source close to Rogers and its board. Mr. Tory sits on the advisory committee overseeing the trust, which controls Rogers through its ownership of 97.5 per cent of the company’s voting Class A shares.

The motion failed because it did not have the support of two thirds of the 10member committee.

Walied Soliman, chair of Norton Rose Fulbright in Canada and the lawyer representing Ms. Rogers-Hixon, said it’s false that the company’s directors could be removed by a written resolution.

“The board of [Rogers] remains constituted exactly the same as it was yesterday. The change that Edward Rogers is seeking will conservatively take many months,” Mr. Soliman said in an e-mailed statement.

Rogers Communications said in a statement that the company “is not aware of this mechanism ever having been utilized in respect of a public company in Canada.”

The company said directors of public companies are typically removed after shareholder meetings convened with proper notice to all shareholders so they have time to consider the information. The process generally takes several months or occurs at the company’s annual meeting, the statement said.

“The company is concerned that its controlling shareholder, the Rogers Control Trust, would seek to make such a fundamental change to the company’s independent governance framework in this unprecedented manner,” the statement reads.

Ms. Rogers-Hixon said she is disappointed that her brother has decided to continue to set aside the interests of Rogers employees, shareholders and customers. “His actions demonstrate a disregard for good governance and create a grave amount of risk for the company at an especially sensitive time,” she said in a statement.

“Most importantly, Edward has miscalculated his legal position. There is no precedent by which he can simply fire five independent Rogers directors and replace them at a whim. The law is clear, and as the company stated today, directors of public companies are removed at meetings of shareholders, convened after proper notice and with full disclosure to all shareholders. While Edward appears unwilling to grasp this basic fact, this doesn’t make it any less true or relevant in this case,” Ms. Rogers-Hixon added.

Mr. Natale and the executive team he recruited since taking the top job at Rogers four years ago are unhappy about the recent turmoil, according to a source familiar with management’s discussions.

At a meeting on Friday, members of the Rogers executive team expressed concerns that governance and leadership issues are disrupting operations, said the source, who The Globe is not identifying because they are not authorized to speak publicly for the executives. The source said the team decided it was prepared to leave if the five independent directors were replaced.

Brad Shaw, the chief executive of Shaw Communications, said Friday that the company remains committed to its merger with Rogers, and that the rift at Rogers is a “family and board matter.” The acquisition is still awaiting regulatory approval from three federal bodies.

“On behalf of my family, the Shaw board of directors, and our management team, I want to reiterate our continued commitment to work with Rogers Communications Inc. to close the transaction that was announced on March 15, 2021,” Mr. Shaw said in an e-mailed statement to The Globe.

Late Wednesday, the independent directors sent a letter to Mr. Tory that said ousting Mr. Natale would pose a risk to the acquisition and that Mr. Shaw has requested no more changes to the company’s management and board.

“Any recent reports or descriptions regarding comments made by me or Shaw Communications with respect to the composition of the Rogers board of directors or its management team are false,” Mr. Shaw said. “This is a Rogers family and board matter, and out of respect for the Rogers family it is not appropriate for Shaw Communications to comment on recent developments.”

Mr. Rogers’s move to replace directors is

backed by veteran Rogers directors Phil Lind and Alan Horn, who worked with founder Ted Rogers for decades.

“I worked alongside Ted for most of my 53 years at RCI and am supportive of the changes that have been announced today,” Mr. Lind said in an e-mailed statement. “My primary focus going forward is to assist the members of the Rogers and Shaw teams to ensure a successful completion of the transaction.”

Mr. Horn, who was chief financial officer and interim CEO twice at Rogers, said: “Having started working with Ted in 1979, and with over 30 years at RCI as CFO, interim CEO, and chairman, I’ve always been focused on helping RCI realize its full potential. 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.”