Rogers succession no family affair
Founder says offspring 'have to earn it'
It's likely professional management -- and not a Rogers family member -- that will take the helm of Rogers Communications Inc. when founder Ted Rogers steps down.
"I expect there would be a period of professional management before either one of the young Rogers would feel themselves ready to apply for that position," Mr. Rogers, president, chief executive officer and the controlling shareholder of Rogers said yesterday after the company's annual general meeting in Toronto. "I don't think that because a person has the same last name that means that . . . they must be CEO. They have to earn it," Mr. Rogers said.
Succession at the cable television, cellular phone and media company has been a source of speculation for several years. Company watchers believe senior management has spent many hours agonizing over who will lead the company when the hands-on CEO retires.
Earlier this year, the board of directors extended Mr. Rogers' employment contract until Dec. 31, 2006. The executive, who turned 69 yesterday, has had a long list of ailments in recent years, including bypass surgery and eye surgery that left him temporarily blind.
In a media briefing, Mr. Rogers described his board-approved retirement date as "an outside period" and suggested a "phasing in of the new guard" was his preference.
"Let's be honest. It's very hard for the founder just to sort of walk out the door. And it's something that takes time to get used to," Mr. Rogers said. "No company can survive without that professional management in partnership with a family-controlled business where a family's job is to provide stability over a period of time."
Mr. Rogers has four children, two of whom hold senior positions within the communications company. Son Edward Jr. is a company director and senior vice-president of planning, while daughter Melinda is vice-president of venture investment.
Within the company, John Tory, president and CEO of Rogers Cable Inc., is widely considered the front-runner to take over the executive office when Mr. Rogers retires. Mr. Tory, an adviser to former Ontario premier Bill Davis, considered running as a candidate to replace Ontario Conservative premier Mike Harris last fall.
There were signals during yesterday's general meeting that Mr. Rogers is preparing for his eventual departure. Shareholders approved a motion increasing the voting rights attached to special class A voting shares to 25 votes a share from one. The voting rights were changed to provide "maximum flexibility" to the Rogers family in relation to "personal and estate arrangements," the company said.
"When you've got a bunch of kids, you need flexibility," Mr. Rogers said after the meeting. In addition, Melinda Rogers was appointed to the board, boosting the total number of directors to 17. The appointment increases the number of directors with ties to either the company or Mr. Rogers to a majority of nine, a "cause for concern about the independence of the board for shareholders," Rob Maxwell, special programs director for the Carpenters District Council of Ontario, told investors. The union's pension fund owns 40,000 class B shares in Rogers Communications.
Rogers chairman Garfield Emerson assured shareholders that board meetings "are as open as they could possibly be" and comply with regulatory requirements. The Carpenters District Council had a series of questions about the communications company's relationship with KPMG LLP. Last year, the firm was paid $4-million for auditing fees, a figure that includes $1.8-million for professional services. Alan Horn, Rogers chief financial officer, said the company has "absolutely no issues" regarding the independence of KPMG and its officers. William MacKinnon, KPMG chairman and CEO, said audits of Rogers' business groups are conducted independently and reviewed externally.
In other developments, Mr. Rogers said the potential spinoff of its media assets into a separate public company, an idea floated at last year's annual meeting, is unlikely in the near future. Rogers Media, a division that includes 43 radio stations and dozens of consumer magazines, is "small and we are not keen on starting another public company with a small float," Mr. Rogers said following the meeting. Entering the local telephone service market is an opportunity in the company's "not too distant future," he said. The service, likely a joint offering from Rogers Communications's cable and wireless businesses, must be technically and economically viable to proceed, he said.
Written by Keith Damsell for The Globe and Mail
Tuesday May 28, 2002