Rogers CEO Joe Natale was set to earn up to $200-million severance package before family fought to retain him

Rogers President and CEO Joe Natale, right, agreed to leave the company in late September, after discovering an internal plot to oust him led by Edward Rogers, left.Chris Young/The Canadian Press

Rogers Communications Inc. CEO Joe Natale was set to receive nearly $200-million in cash, consulting fees and equity as part of a mammoth severance package before the company’s board abruptly switched course and fought to keep him.

Details of Mr. Natale’s exit package are included in documents that Edward Rogers, chair of the family trust that controls the company, filed in the British Columbia Supreme Court on Tuesday.

Mr. Rogers and his family are in a bitter and public fight for control of the telecom conglomerate that has erupted in the midst of the $26-billion acquisition of rival Shaw Communications Inc. The son of the late company patriarch Ted Rogers is petitioning the court to sanction his move to replace five independent members of the company’s board with his own slate without calling a shareholders meeting.

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Mr. Natale agreed to leave the company in late September, after discovering an internal plot to oust him led by Mr. Rogers, but in a sudden turn of events, was asked by the board and other members of the Rogers family to remain.

The documents show that Mr. Natale’s base severance for his negotiated retirement was $13.7-million, an amount he would have received in normal circumstances, consisting of two years of salary, benefits and pension. In addition, the company agreed to offer him a lump sum of $10-million for the closing of the Shaw deal, as well as an early advance on preferred stock units worth $4.1-million, and a performance bonus of $1.3-million for the entirety of 2021.

Mr. Natale was also offered a separate two-year consulting contract with Rogers immediately after his departure, under which he would shepherd the integration of Rogers and Shaw if the deal closed after regulatory approval. That contract would have paid $20-million ($10-million each year), on top of a $4-million “success fee” after the close of the Shaw deal.

Under the terms of the exit package, Mr. Natale would also be allowed to hold on to his unvested restricted share units for 10 years, until 2031, which the company estimated could be worth $142-million by that time based on an internal target share price of $125 within five years. Under the terms of the deal, the value of his unvested share units would rise by $21.9-million for every $10 gain in Rogers’ share price until 2031.

Mr. Rogers’ affidavit said Mr. Natale was “pleased” with the termination package and had begun informing the senior executive team of his departure on the weekend of Sept. 25.

Paul Gryglewicz, senior partner at the Toronto-based compensation consulting firm Global Governance Advisors, said Mr. Natale’s overall severance package appeared designed to avoid litigation between employer and employee. “The way I’m seeing it … they are incentivizing Mr. Natale to not file a lawsuit saying he was compensated inappropriately after bringing the Shaw deal to the table.”

The company’s 2020 proxy statement detailing executive compensation states that if an executive were to be terminated without cause, he or she would have to forfeit remaining unvested shares, meaning that the employee would not be able to benefit from future share price increases.

In the case of Mr. Natale’s exit deal, Rogers would have allowed Mr. Natale’s unvested equity to continue to vest in normal course, such that he would benefit from any future stock price increase.

“They are sweetening the deal for him by applying retirement treatment to that equity,” Mr. Gryglewicz said. “That makes sense. Because in this case, he could make a strong legal argument saying that he fundamentally changed the business for the better by orchestrating the Shaw deal, and doesn’t get to reap the benefits of it.”

Ryan Resch, senior partner at Toronto-based compensation consulting firm Southlea Group, said the severance package appeared “fairly consistent” with what he had seen in similar negotiations where the executive had not been planning to leave. “The only uniqueness of this situation is the Shaw deal. They are providing favourable treatment on his equity by treating it as if this is a retirement instead of a termination without cause,” Mr. Resch told The Globe.

Mr. Natale is bound by a non-compete clause, the documents show, meaning that he would not be able to join a rival company after his departure. The $20-million consulting agreement is effectively to keep him tied to the company, Mr. Gryglewicz said. “Many companies would regardless pay a consulting firm like McKinsey, for example, to ensure a successful integration following a deal of this size.”

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