Doing the CEO shuffle
After a few days of intense – and accurate – public speculation, Rogers Communications named Guy Laurence as its new CEO. The former head of Vodaphone UK will replace Nadir Mohammed, who announced last February that he will retire in January 2014.
There’s no question that, however accomplished an executive Mr. Laurence may be, he’s got his work cut out for him.
Canada’s family-controlled communications companies are a special breed. They also come with a matched set of family, regulatory and political baggage.
Conglomerates, furthermore, are cumbersome beasts to manage – and to value. Making sure that Rogers’ parts are as great as its sum will be a challenge from the outset.
Mr Laurence is stepping into the midst of a contentious spectrum auction (which will be held at the same time he takes on his new role in January), the scar tissue from a nasty battle with the federal government over wireless market competition (a battle that’s by no means over), new regulatory requirements for conduct in dealing with wireless consumers (the three major telecom carriers are now challenging the code in the federal Court of Appeal), a money-losing conventional television operation and a publishing/content business that is chronically struggling.
While it can certainly be argued that a cold, outsider’s eye might help Mr Laurence make and execute some tough decisions, there’s no question that the Rogers family could complicate that. For one thing, they retain a soft spot for the unprofitable, content side of the business because of the late Ted Rogers’ commitment to it.
In fact, the board’s selection committee deliberately sought out a Brit or European, figuring they’d be more compatible with this uniquely Canadian culture and ownership structure. Americans have a record of being rather less sensitive to corporate quirks.
But whatever headaches may lie ahead, the new CEO of Rogers can take some comfort in the fact that he is by no means alone.
In the last 18 months, there’s been an influx of new leaders at many of Canada’s largest, and most high-profile corporations.
Among them are new CEOs installed or in the wings at TD Bank, Scotiabank and HSBC Canada as well as at Barrick Gold, CP Rail, Suncor, Blackberry and Talisman Energy.
Given this bumper crop of new arrivals, it will be interesting to track whether or not they have a significant impact on the direction and strategy of the organizations they lead – especially at this juncture.
Canadian companies are sitting on record reserves of cash – something that Mark Carney, the former Governor of the Bank of Canada, publicly exhorted them to put to use. At last count, it totaled about $575 billion or an average of $200 million per Canadian company.
Some, like beleaguered Blackberry, have close to $3 billion in cash stashed away. That’s something that could make the company look a lot more gorgeous now that it’s openly attempting to attract a suitor.
How these CEOs put all that capital to work will, of course, have a great bearing on Canada’s economy at a delicate point. Although there are signs that the U.S. economy is re-gaining some momentum – which usually portends good things for it’s largest trade partner – so far, Canada’s economic growth and job creation has been lukewarm.
There’s also the issue of creating value and growth for shareholders. Given the number of pension funds and mutual funds that hold stocks in these companies and stakes in their management, any shifts are all the more relevant.
Furthermore, these CEOs are all being extremely well paid to have a positive impact on the companies they’ve been hired to run.
(Jamie Sokalsky’s term at the helm of Barrick has already been blooded by howls of outrage over his $11.9 million “signing bonus.”) Over at CP Rail, Hunter Harrison made almost $50 million in his first year including certain benefit and pension payouts.)
The ultimate thing to bear in mind for each of the newly-installed senior managers is that the average tenure for a CEO is now under five years. And the dismissal rate is running at a record 25.5 per cent.
That makes for an awfully short honeymoon.
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