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(Reuters) -The board of Rogers (NYSE:ROG) Communications Inc voted to remove Edward Rogers as chairman, the company said on Thursday, amid a tussle between the family members of late founder Ted Rogers over who should lead one of Canada’s biggest telecoms companies.
Edward Rogers’ exit caps a choppy time for the company after he attempted to replace Chief Executive Officer Joe Natale with the company’s now former chief financial officer in late September, a move that put him at odds with his sisters and mother, all of whom are fellow board directors and said they supported Natale.
The rare family feud to erupt into the open in the Canadian corporate landscape sparked a review of Rogers’ corporate governance with experts saying the episode highlighted the need for strong independent directors.
The boardroom tussle caught investors and analysts by surprise just as Rogers was negotiating its biggest ever takeover.
John A. MacDonald, the independent board director who replaced Edward Rogers as chair, said in a statement this has been a “challenging time” for the company.
“I want to reaffirm on behalf of the majority of the Board our support for and total confidence in the management team and CEO of Rogers Communications.”
Edward Rogers will remain a director, the company said in a statement. He is chair of Rogers Control Trust, the family-controlled entity that holds voting control in Rogers Communications.
Earlier on Thursday, Natale told analysts that Thursday’s board meeting to consider third-quarter earnings had “a very strong, collaborative and thoughtful discussion” on the future of the business, including the C$20 billion ($16.2 billion) bid for smaller rival Shaw Communications (NYSE:SJR).
That deal would further boost its position in Canada’s highly concentrated telecoms market and has attracted scrutiny from multiple government regulators over whether it will decrease competition.
PATRIARCH’S ABSENCE ‘CREATES VACUUM’
Rogers’ earnings beat estimates, while revenue matched expectations. Still, Rogers shares fell 1.8% on Thursday, taking their year-to-date gains to 1.6%, compared with a 15.6% rally in BCE (NYSE:BCE) Inc and a nearly 13.5% gain in Telus (NYSE:TU) Corp.
Natale’s comments were the first since the boardroom dispute last month.
In documents released alongside its third-quarter earnings results, the board said it had created a committee comprised of three directors, including Melinda Rogers-Hixon, sister of Edward Rogers, to “establish clear protocols for interactions between the Chair and members of management.”
The board would also undertake a corporate governance review, it said.
The review is essential, said Richard Leblanc, a professor of governance, law and ethics at York University in Toronto, adding that having an independent chair “from the get-go” could have avoided the whole situation.
“It’s hard when the patriarch isn’t there,” Leblanc said, referring to the late Ted Rogers. “It creates a vacuum. That’s when independent directors really need to step up and earn their pay.”
He noted many of the directors are either family members or longtime friends of the Rogers family. Ted Rogers, who passed away in 2008, founded the company in 1960.
On Tuesday, Edward Rogers said there was “room for improvement” in the company’s long-term performance following a report he had held talks with potential candidates to replace board members.
Apart from the core telecoms business, Rogers owns a variety of businesses, including the Toronto Blue Jays baseball team, a franchising agreement with the National Hockey League, and a stake in Maple Leaf Sports & Entertainment Ltd, which owns the Toronto Maple Leafs hockey team and the Toronto Raptors basketball team.
Rogers added 175,000 subscribers who pay a monthly bill as demand rebounded on easing pandemic-led travel restrictions, while wireless service revenue increased 3%.
($1 = 1.2327 Canadian dollars)
