Moneybox

The Real-Life Canadian Boardroom Drama That’s Wilder Than Succession

Kendall Roy from Succession in a red Canadian flag sweater
Basically. Photo illustration by Slate. Photo by HBO.

From time to time, you’ll read a story about a mega-public fight for influence over a mega-large corporation. Sometimes it involves activist shareholders who are not directly related to the founders of the company or its insiders. An example was when something called “Engine No. 1”—that’s a hedge fund, not a firehouse—bullied three ExxonMobil board members out of their seats in favor of some hand-picked directors who wanted Exxon to reduce its carbon footprint.

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Other times, family members fight among themselves over who gets to call the shots at a company their dad started. There’s a little-known TV show that’s been on HBO for a few years now, called Succession, which tracks a fictional family in that kind of situation. (Check it out—it’s not bad!) There are many technicalities involved in these fights. Companies have bylaws and have to follow actual laws. Not everyone’s stock carries equal voting power. But at root, these stories are usually simple enough: Someone tries to persuade the board of a company to do something (like firing someone), and the board either does or doesn’t go along, ostensibly based on what’s best for the company. It’s really a fight between family members, but everyone else gets a vote because it’s a company. Here is such a scene from Succession, dropped here only as an illustration and not as a shameless traffic grab:

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What is happening right now at Rogers Communications, the largest telecom provider in Canada, is more fun than anything on HBO. (And I say this as a Succession disciple.) Rogers is a giant firm that sells phone service and cable. It owns a bunch of stuff and is very important. There are a couple generations of now-dead Rogerses who factor into the company’s origin story, but I am picking it up at Edward Rogers Jr., who was the founder, CEO, and president of Rogers Communications and died in 2008. Some time after that, according to a bunch of reporting this week, members of his family got very contentious over who got control of what. Bloomberg describes “a nasty, internecine feud that had been brewing behind closed doors” since Rogers’ death. Now, as you may have guessed, it’s no longer behind closed doors.

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Rogers’ son, Edward Rogers III, is now—or was, maybe, but will be again?—the chairman of the board of his dad’s company. Edward III decided he wanted to oust the company’s CEO and replace him with its CFO, as has been extensively reported on by the Globe and Mail and others. Other board members found out about this plan because the guy Edward wanted to appoint as CEO butt-dialed the current CEO (who’s a board member) while talking about the plan, allowing him to overhear, per the Globe and Mail. (Note: Different outlets have described it as a “butt-dial” and a “pocket-dial.” It’s not clear if that means the phone was in his back pocket, up against his rear end, or if someone’s facts aren’t straight.) Edward’s plan compromised, he did not have the votes to push it through. Two of his sisters, Martha and Melinda, and his mother, Loretta, are also board members and opposed the action along with enough directors to block it. The board then fired Edward as chairman, and the company now says another guy is chairman.

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That would ordinarily be game, set, and match. But as Matt Levine explains in detail in his excellent Money Stuff newsletter, this is an unusual situation. Every member of the Rogers family does not have an equal number of voting shares or equal ability to fire and nominate board members. In fact, they don’t seem to own many (or even any) shares at all. Ninety-seven percent of the voting shares in the company belong to the “Rogers Control Trust,” which seems to more or less be a Rogers family piggy bank. As Levine writes, a trust like this might also function to mitigate conflict among family members: “One advantage of putting the shares in a trust might be to concentrate the voting power and make all 97% of the shares vote the same way. So instead of each family member owning some shares and voting however they like, possibly against each other, the trustees—family members or outside advisers or a mix—get together, vote on how to vote the shares, and then all of the shares are voted in an insurmountable bloc.”

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Edward, fired though he was by the big company board, controls the trust, the entity that controls the board. His mother and sisters reportedly tried to make a rule for the trust that said Edward couldn’t use the trust’s voting power to install his own directors, but that didn’t work, and Edward has in turn fired five members of the Rogers Communications board—remember, that’s a different board than the family trust, which effectively controls the board—and now there will be a big legal fight over who has the authority in the family to fire whom. The company says its board looks one way, and Edward says it looks another. The saying that “billable hours are undefeated” has never had a more resounding victory than this.

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So here we are, with what really amounts to a double Succession story, wherein the chairman of the board of the biggest telecom in an entire country had a big plan, lost control of the plan because someone butt-dialed the wrong guy, got fired, and may or may not have in turn fired the people who fired him and reinstated himself at the top of the food chain by replacing those people with his own allies. He seems to have the upper hand as the person who controls the family trust that controls the board, but it would also not be wrong to say that the massive company is actually controlled by, uh [waves hands around ungracefully in the board and Edward’s direction].

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This is all obviously stupid, because it stems from a beef between members of an über-rich family who have enough money that they could just not do this and spend their time doing almost anything else. It would surely be less stressful. Anyone else who owns Rogers shares is worse off, as the company’s stock price for regular people has dropped sharply if not yet all that dramatically (from around $49 last week to around $45 this week). I am not a sophisticated investor, but do think shareholders prefer that companies avoid confusion over questions like “Who is the person in charge of the company?” I do not think this is the dumbest financial story of the year, because that was when one guy who’d already admitted to insider trading was able to bring multiple investment banks to their knees and destroy several huge companies’ stock prices by making bad bets with borrowed money. But this one is close! A $30ish billion company has lost about 7 percent of its value over a week of family infighting! It would be ideal if dysfunctional billionaire families did not have this much influence over such large things.

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In one way, though, this is a reassuring story. Many of us think of Canadians as unfailingly polite and competent. The Rogers family and the company it controls are extremely Canadian. They don’t own Tim Hortons and the Royal Canadian Mounted Police. But they do own a lot of the country’s technological infrastructure, as well as, either directly or through an intermediary, large chunks of the Toronto Raptors, Maple Leafs, and Blue Jays. (The firm owns 37.5 percent of the Raptors, and Edward recently tried to get that organization not to re-sign the executive who led it to an NBA championship, per the Toronto Star, in case you are sensing a theme.) I find it quaint that Canada’s actual, real-life ruling families can, it turns out, be even messier than America’s fictional ones.

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