By Forrester Sorensen, Staff Writer
Over the past few weeks, the Rogers family’s public struggle for control of Rogers Communications has been a real-life Canadian soap opera and has drawn comparisons to the hit HBO show Succession.
If you grew up with siblings, you likely have an inherent understanding of petty family squabbles and all that comes with them. Insignificant issues like who ate the last cookie or whose turn it is to take out the trash are typically resolved quickly and in private, without the need for intervention. Though this may be the case for most families, it is clearly not the Rogers family’s style.
The drama started innocuously enough. In September of 2021, while in the midst of a 26 billion dollar takeover of rival Canadian telecom company Shaw Communications, former CEO Joe Natale called then CFO Tony Staffieri, who accidentally accepted the call. He unintentionally revealed his and Edward Rogers’ plan to fire Natale, replace him with Staffieri, and reconstruct the company’s upper management team. Edward is the only son of Ted Rogers Jr., founder of Rogers Telecommunications. From there the situation began to spiral.
On September 19th, Edward fired Natale. This was countered on the 29th when Rogers’ two sisters, mother, and five additional board members voted to reinstate Natale and fire Staffieri. The conflict continued to escalate, and on October 21st Edward was removed from his position as Chairman of the company, replaced by lead director John MacDonald.
However, the Rogers family drama did not end there as Edward leveraged his remaining position as Chairman of the family-owned Rogers Control Trust. The trust owns 97.5% of the company’s Class A shares, those representing voting rights.
On the 22nd, Edward signed the resolution to unseat the five board members that ousted him, sending the company a letter stating “[The resolution] took immediate effect as it was executed by holders of 97% of the Class A shares”.
On the 26th, Edward took the matter to British Columbia’s supreme court in hopes of legitimizing a newly constructed executive team. Finally, on November 5th, after weeks of scheming, backstabbing, and drama, Justice Shelley Fitzpatrick determined that Edward’s new board was valid, as his resolution was within the law and the company’s constitution.
As the company has elected not to appeal the judge’s ruling, it appears the dramatics have ceased for the moment. However, concerns about the company’s corporate governance remain. This conflict has illustrated that owning and controlling a company are not the same thing. Edward Rogers’ capability to essentially exercise his will on a company that is supposed to be publicly owned may be worrisome to existing shareholders and could be detrimental to the company’s ability to attract new investors.
The equity structure of having Class A and B shares, where Class B shares pay dividends but do not come with voting rights, “creates an inferior class of shareholders”, and an environment in which the board of directors lacks accountability according to Glenn Rowe, a professor at Ivey School of Business at Western University.
This sentiment is echoed by Richard LeBlanc, professor of governance, law, and ethics at York University who stated, “Good governance is one share, one vote”.
Seventy percent of the company’s equity is held by Class B shareholders, who are unable to exert any influence over the company’s direction. It will be interesting to see how Rogers reconciles this imbalance of power at the risk of sacrificing its newfound stability.
Though Rogers is responsible for a large portion of Canada’s telecommunications infrastructure, the uncertainty currently surrounding the company may be a blessing in disguise for Canadians. The company’s efforts to restabilize and repair its reputation may impede its acquisition of Shaw Communications, one of the few legitimate competitors in Canada’s telecommunications oligopoly of Rogers, Bell, and Telus. Canadians already pay some of the highest rates in the world for phone and mobile data services, and reducing competition will likely exacerbate the problem. Therefore, a delayed takeover may postpone a rate hike and save Canadians some money on their phone and internet bills in the next few months.
The Rogers family drama was so gripping for Canadians because it offered a window into the surreal lives of the rich and powerful. However, the resultant uncertainty within the telecom giant has very real economic implications for everyday Canadians, both now and in the future.
Photo by Juan Rojas on Unsplash