Martha Rogers has hired her own lawyers as the family struggle over control of Rogers Communications heads to court in British Columbia, she announced Wednesday.
Rogers siblings and company board members have attacked her brother Edward in public for his power play at the family-controlled company for days now.
Both sides in the battle for control insist they want to continue with Rogers’s $26-billion acquisition of former rival Shaw Communications, but “it’s kind of hard to make such a big decision at the time when there’s obvious conflict between the owners of the firm,” said Jan Bena, an associate professor and chair of the finance division at the University of British Columbia’s Sauder business school.
These disputes are common, but it’s rare to see one with so many dimensions, Bena said. To name a few: Family members have personal feuds. Heirs to a family company frequently disagree about direction after a founder dies or gives up control. Directors lose faith in managers. Large shareholders’ interests diverge from those of small investors.
In the Rogers battle, it’s been all of the above.
Bena studies corporate ownership and governance structures, which in Rogers’s case are critical to the fight. Founder Ted Rogers left command of the company to a family trust, which owns nearly all of its Class A voting shares. Regular investors can trade Class B shares, which come with periodic dividends and rise and fall in value (they rose 3.36 per cent today but are still below last week’s price), but don’t give their owners the usual say in corporate direction.
Ted Rogers died in 2008 and it’s taken nearly 13 years for an intra-family battle to burst into the open. “It’s all happening at the worst time—[at the same time] as a major acquisition,” Bena said.
Dual-share structures are common among tech startups, in which founders with visions want to retain command of their companies, and investors, knowing the risks, decide to let them. Google parent Alphabet has three classes: ordinary shares that come with one vote each and are widely traded; shares owned by founders and insiders with 10 times the voting rights, which are not tradeable; and shares, like Rogers’s Class B stock, with no voting rights at all. Facebook has two classes; so does Shopify. And Ford, for that matter.
This isn’t necessarily bad, said Bana, as long as investors know what they’re getting and that in the case of a fight like the Rogers family’s, they’ll be bystanders. “They are buying the stock with the risk that this can happen.”