(Bloomberg) — Loretta Rogers, the matriarch of the family that controls Rogers Communications Inc., says her son’s unilateral move to take a grip on the company’s board goes against her late husband’s wishes, which said major disputes between the firm and the family should be put to a shareholder vote.
The statement of Ted Rogers’s last wishes is contained in an affidavit filed Friday in the Supreme Court of British Columbia.
Her filing is the latest legal twist in a boardroom drama that has fractured one of Canada’s wealthiest families, pitting Loretta Rogers against her only son, Edward Rogers. The feud has created confusion about who is in charge of Rogers Communications, even as the company navigates a pending $16 billion takeover of rival Shaw Communications Inc.
Rogers Communications, Canada’s largest wireless company, is controlled by a family-owned trust that has about 97% of the company’s voting shares. Edward Rogers is attempting to use his position as chair of that trust to change the 14-person board on his own, without a shareholder vote.
Two of Edward’s sisters, Martha Rogers and Melinda Rogers-Hixon, and the company itself have joined Loretta Rogers in opposing his move.
The boardroom struggle — which created a bizarre situation where two different men claim to be chairman — has weighed on the company’s shares. Rogers fell 4.1% this week, making it one of the worst performers in the S&P/TSX 60 Index.
War Over CEO
Tensions within the Rogers family boiled over in recent weeks after Edward Rogers attempted to get rid of Chief Executive Officer Joe Natale and install Chief Financial Officer Tony Staffieri in the top job.
The board went so far as to approve a term sheet with Natale’s exit package before Loretta Rogers and two of her daughters, Melinda Rogers-Hixon and Martha Rogers, joined with five independent directors to push back against the change. Instead, Staffieri was fired.
“I believe this campaign waged by Edward was unconscionable; inconsistent with his duties and limited authority as the control trust chair; inconsistent with Ted’s wishes; and inconsistent with Rogers’ well-established corporate governance practices,” Loretta Rogers said in the affidavit.
The attempt to dump Natale ignited a war within the family and the board, as Edward Rogers sought to replace the independent directors who were aligned against him with five of his allies.
He then filed a petition with the Supreme Court of British Columbia to confirm that he has the power to make such a move. The case will be heard by a judge in Vancouver starting on Monday.
Through a spokesperson, Edward Rogers declined to comment, citing the pending court hearing.
‘Bedrock Seriousness’
Loretta Rogers said that Ted Rogers wrote a “memorandum of wishes” before his death in 2008 that outlined how disagreements like the current one should be handled.
“If the issue is of bedrock seriousness then the control trust chair would have to go through the public gauntlet of immediately calling a special shareholder meeting to replace them, unless they have resigned first,” she quoted her late husband in the documents.
Already, the battle has cost Edward Rogers one of his roles within the Toronto-based wireless, cable and sports empire. The board of Rogers Communications voted on Oct. 21 to replace him as chairman with former AT&T executive John MacDonald.
Loretta said in the documents that her motion that day to replace her son as chairman was “extremely difficult.” But it came after weeks of unsuccessful attempts by the family and its advisers to get him to change his mind about replacing directors, she said.
She claimed her son tried to terminate Natale without board approval, without even notifying the board, and without calling a board meeting, during the week of Sept. 19.
“This has never happened before. We had always clearly understood that meaningful consultation was required,” she said.
The company’s independent directors criticized Edward Rogers for trying to insert himself as the “de facto CEO of Rogers” and jeopardizing the Shaw deal, Loretta Rogers said in the filing. They also maintained that a shareholder vote was needed to remove directors, she said.
Performance Question
Nevertheless, the board met on Sept. 22 to discuss Natale’s departure and approve his severance package. At the meeting, Loretta Rogers said she read a statement prepared by Edward Rogers and Rogers director Alan Horn, expressing support for promoting Staffieri to CEO.
“I did not draft the statement,” she said. “I relied upon Edward’s representation regarding Mr. Natale’s performance trusting that my son would not mislead me.”
She said she spoke with Martha Rogers on Sept. 25, who informed her that several of the independent directors on the board expressed reservations about how events had played out and with Edward’s behavior.
After speaking with a group of independent directors, she concluded that what her son told her about Natale’s performance was inaccurate.
When the board met on Sept. 29, a majority decided to keep Natale as CEO, fire Staffieri and implement new controls on Edward Rogers’s communication with top executives at the company.
(Updates with new information from court documents, note from Edward Rogers spokesperson, share price)
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