The Canadian version of real life Succession-Or is that game of Thrones?– is unfolding before the eyes of the public, with the Rogers family in a tense battle over who really controls Rogers Communications Inc.On one side is Edward Rogers, son of the late Ted Rogers, the patriarch who founded the media giant in 1960 and died. in 2008. On the other side is Loretta Rogers, Ed’s mother whose own parents gave Ted the money to start his company, and his sisters Melinda and Martha. (Older sister Lisa is also in the mix, but it’s unclear which side she’s on.)
It’s a complicated drama, with several board members, including Toronto Mayor John Tory, also taking sides, but it basically comes down to Ed wanting to replace current Rogers CEO Joe Natale with the now-former CEO. company financier, Tony Staffieri. Ed’s mother and sisters want to keep Natale in his place and make sure Ed doesn’t take on all the decision-making power.
Rogers is a household name; one of the largest Canadian corporations. Millions of people have a wireless plan or cable package with the company; they obsessively follow at least one of their sports teams, be it the Toronto Maple Leafs or the Toronto Blue Jays (Rogers has a 37.5 percent stake in the former and owns the latter); or they may have worked for the organization or know someone who has. Many people also own Rogers stock, either in their mutual funds or in the stocks themselves. So while family infighting can be fascinating to watch unfold, many Canadians are rightly concerned that this situation may adversely affect them. This is what you need to know.
What exactly is happening?
This family feud came to the public’s radar in late September when the company announced in a brief statement that Staffieri had left Rogers. October 8 The balloon and the mail reported that Natale and Staffieri have been at odds for years and that the CEO wanted to replace his CFO. Unbeknownst to Natale, until he learned of the plan through a butt dial—Ed wanted to appoint Staffieri CEO, which would require board approval. When he tried to make that play, the board, which includes Loretta, Melinda, and Martha, shut him down.
What makes this conflict particularly complicated is that there are two Rogers boards of directors: the board of directors, which all public companies have, and the Rogers Control Trust, which is basically a family board of directors that sits above the board. of the board of directors. The trust owns 97.5 percent of all voting shares, which means it can decide who sits on the corporate board, the group that ultimately decides who runs the business. Ed is the president of the Rogers Control Trust, while Sister Melinda is the vice president. The Rogers sisters want Ed removed from his trust position, but they need seven of the 10 trust members to remove him and, so far, the non-family members sitting on that board, all old. Ted’s friends, they seem to want him to stay. .
In late October, Ed was removed by the board of directors as president (but remained president of the family trust). As a result, he removed five directors who voted against him, replaced them with people of his own choosing and announced that he is returning as chairman of the board, a move Ed maintains is within his rights as head of the family trust. His family says he is illegitimate and it is not a chair.
The grieving press releases began with Rogers, the company, saying no one can replace the directors and Ed saying he can. Younger sister Martha began tweeting saying that she would tell the world “what is really going on” and hinted that Ed was involved in a Trump scandal. (Ed faced public scrutiny in May after his wife, Suzanne Rogers, posted a photo of their family with Donald Trump on their social media accounts.)
In a strange twist, it seems that Natale he was going to retire in september“It’s not clear if it was his idea or not” from Rogers, with Staffieri ready to take over after he left. For reasons still unknown, the board decided, while Ed was away, to keep Natale close.
Now, the family goes to the BC Supreme Court (Rogers is incorporated in BC) to determine who is really in control.
What is the involvement of Toronto Mayor John Tory?
Tory was CEO of Rogers Media in the 1990s and later CEO of Rogers Cable. He has a close relationship with the Rogers family and was friends with Ted. who supposedly told him “To help take care of their family and try to keep them in a position where they could have a good business and keep thousands of people employed in the city of Toronto.”
Tory remains an advisory member of the family trust and potentially has a casting vote on Ed’s future at Rogers. He says that his involvement with the family does not interfere with his work as mayor and helps to mediate in his free time, although Martha Rogers suggests otherwise.
Will this drama affect my investments?
It is very likely that you have at least some Rogers shares in your portfolio. Perhaps you are one of the many thousands of Canadians who worked for the company and contributed to its stock plan (Rogers currently employs 25,000 people), or you have a Canadian mutual fund or exchange-traded fund, many of which include stocks.
Depending on what part of the company you own, your portfolio could take a hit in the short term, as its share price has dropped nearly six percent in the last week. The longer the family continues to fight publicly, the more the stock could fall, but the price should rebound once this dispute is resolved.
While some analysts have lowered their 12-month stock price targets at the company, such as Vince Valenti of TD Securities, which now expects Rogers shares to reach $ 69 over the next year instead of the $ 76 previously projected; the review has more to do with the potential for instability in the short term than with the fundamentals of the business itself.
Morningstar analyst Matthew Dolgin said in a report that “this situation is an ordinary, albeit extreme, occurrence of board disagreement that was resolved as shareholders expected, with each director taking the position that he or she believes is in the best interest of the company and leaving the majority rule “.
Will this affect the Shaw merger?
In March, the company announced that it wanted to buy Shaw Communications Inc. for $ 26 billion. If the deal goes through, Rogers will have a true footprint across Canada, something he has wanted for a long time. A lots of experts predicts that the union will not be derailed by the current conflict, there is too much money at stake, but others I’m not sure. Could the Shaw family (yes, another family that controls a major telecommunications company) decide that Rogers will not properly manage their business and back down? Maybe. Shaw’s share price has fallen about three percent over the past week, indicating that some investors are nervous about what’s to come.
Will the fights affect my bills?
The average Canadian is unlikely to notice anything different about their cable, internet, or wireless services or bills as a result of this drama.
Where customers may be concerned is what the Shaw merger means for prices for services and industry innovation. Once the deal is finalized, it will further narrow telecom providers’ options for Canadians, giving Rogers an even greater share of the market, and could will ultimately result in higher bills for customers.
And my sports teams?
It’s too early to say what this specific situation means for Rogers’ sports empire, which, as part of its stake in Maple Leafs Sport and Entertainment (MLSE), also includes the Raptors, Argos and Toronto FC. TSN’s Rick Westhead said on Twitter that a senior baseball executive told him that the infighting at Rogers “could affect the Blue Jays’ efforts to rehire star players and attract others,” and that “other teams will try to use the appearance of instability within the league. ownership of the Azulejos in their favor. ”
More concerning to sports fans may be Ed’s general meddling with their teams: Toronto star Recently reported that Ed didn’t want to give up Masai Ujiri, the Raptors’ beloved president, while the other MLSE owners, Bell Canada and Larry Tanenbaum, did. The last two won.
What does this battle say about corporate Canada?
If anything, this saga shows how little influence Canadians have in some of the largest companies in the country, and how a board of directors means little when you have a family that runs a business. Rogers has a dual class share structure, where the majority of the shareholders’ voting rights remain with the Rogers family, rather than with investors. In more typical share structures, investors get a vote equal to the number of shares they own. In dual class stocks, investors can make money from the stocks, but they don’t get a vote. Other family-owned or entrepreneur-owned businesses, especially in the tech industry, have similar dual-class share structures, making it difficult for average investors, or the pension funds and mutual funds that represent them, to express their dissatisfaction with the board.
Dual class share structures are not uncommon in Canada; they are also used by Canadian Tire and Shaw, for example. But many shareholder advocates would like to see the system abolished: Some experts say that shareholders structures are problematic and it can lead to a lack of responsibility.
Where does it all go from here?
The fight is now in court, where the two factions will argue over whether Ed should be chairman of the board. Ed recently filed a petition with the Supreme Court of BC for his new board to be declared legitimate, and said his family previously supported his moves and also questioned Natale’s leadership. Loretta, Ed’s mother, disputes the claim and argues that Ed. mislead her about CEO performance.
As long as the business itself operates as usual, then it is primarily the Rogers family that will be affected by what is happening.