Opinion: The surprise Telus CEO switch makes you wonder: What did the board do for 14 years?
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Telus CEO Darren Entwistle in Toronto in 2022. The company has announced that Mr. Entwistle will be replaced by Victor Dodig, former CEO of Canadian Imperial Bank of Commerce.JENNIFER ROBERTS/for The Washington Post
Of all the questions swirling around Telus Corp.’s chief executive shuffle, and there are many, two stand out.
The first: Was there really no one else? And, second, if that’s true, why not?
On Thursday, the telco stunned Bay Street with the news that long-time CEO Darren Entwistle would be leaving. His replacement: Victor Dodig, the former CEO of Canadian Imperial Bank of Commerce who has been on Telus’s board since 2022.
Mr. Entwistle has been in charge since 2000 – save for a brief, unusual interregnum – and Telus shares are in trouble, trading at 2014 prices. It was time for change. As for Mr. Dodig, he’s well known in Canada. He may not be from the telco world, but he’s not a wild-card outsider who might spook investors.
Telus names ex-CIBC chief Victor Dodig as CEO, replacing Darren Entwistle
Yet none of that helps to answer why or how it came to this. Of the many things boards of directors are responsible for, nothing matters more than succession planning – not just for the CEO, but for the entire executive management team.
Picking Mr. Dodig, who, by coincidence or not, also worked with Telus board chair John Manley when the latter chaired CIBC’s board, brings back all the whispers about Canada’s old boys club. And it’s particularly confusing after the recent controversy at Bank of Nova Scotia, when the lender named someone off its own board to be the next CEO – and he didn’t have industry experience, either. That one stunned Bay Street, and yet Telus figured it would still try it.
Even more confounding: Mr. Manley said Thursday he’s been talking to Mr. Entwistle about succession since 2012. After all that time, was someone from a different industry, who has a close relationship with the board chair, really the only option?
“Fourteen years is a long enough time to groom people internally, to have a set of very viable candidates‚” said Sarah Kaplan, a professor emerita at the University of Toronto’s Rotman School of Management who specializes in corporate governance.
But it can’t all be pinned on the board, she added. “The CEO’s efforts in creating a talent pipeline is also important.”
Prof. Kaplan was speaking generally, but the point is particularly apt for Telus. There are CEOs who can’t let go, and then there’s Darren Entwistle. In a 2006 ROB Magazine profile that described him as something of a control freak, a consultant who’d worked closely with him said Mr. Entwistle operated on the “blind assumption that everybody had the same levels of energy and passion” as he himself did.
Mr. Entwistle has acknowledged this, and he’s said his low point came in December, 2004, when his dad was dying in the oncology unit of Montreal’s Jewish General Hospital. While that played out, Mr. Entwistle was downstairs in the lobby, focusing on a corporate deal. He said it was the ”biggest regret of my life.”
This drive, if you want to call it that, came out the last time Telus tried to change CEOs. In 2014, the company named chief commercial officer Joe Natale as its next leader, yet Mr. Entwistle wanted to remain executive chair and “retain ultimate accountability” for Telus’s strategy, operations and succession planning.
It lasted exactly one year. In 2015, Mr. Natale was out. The company tried to say it was for family reasons.
To the board’s credit, for the next seven years there wasn’t a burning reason to make another switch happen. Interest rates remained ultralow, and Telus, which has historically been loved by retail investors for its yield, saw its shares soar.
The question is why wasn’t more done during this era to nurture internal candidates. It’s been a rough go since, and Telus shares are now down 45 per cent from their 2022 peak. Investors are worried about the company’s debt level, and expansion opportunities, such as Telus Health, haven’t panned out.
The lesson from all this is that CEOs never want to let go. No one gets to that role without having a healthy ego. But it’s on boards to prepare and act during the good times. It’s tricky to make a change when everything feels right, but it’s so much worse when it looks like desperation.
