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In a surprising move that has sent ripples through Bay Street, Telus Corp. has announced the departure of its long-standing Chief Executive Officer, Darren Entwistle, who has held the position since 2000. Victor Dodig, the former CEO of the Canadian Imperial Bank of Commerce (CIBC) and a board member at Telus since 2022, will take the helm. This transition raises critical questions about the company’s succession strategy and the decision-making process that led to Dodig’s appointment.
A Sudden Shift in Leadership
The announcement came on Thursday, catching many in the investment community off guard. Telus shares have plummeted to levels not seen since 2014, prompting the need for a leadership change. Dodig’s familiarity with the Canadian business landscape comforts some investors, despite his lack of direct experience in the telecommunications sector. His relationship with Telus board chair John Manley, which dates back to their time at CIBC, has also ignited speculation about the influences behind his selection.
Critics are questioning whether Dodig was truly the most suitable candidate for the role. Sarah Kaplan, a corporate governance expert from the University of Toronto’s Rotman School of Management, expressed concern over the board’s failure to cultivate internal talent over the past decade, suggesting that there should have been viable candidates prepared for such a transition.
The Legacy of Darren Entwistle
Darren Entwistle’s tenure has been marked by a relentless drive for success, but it has not been without its controversies. Acknowledging his tendency to dominate decision-making, Entwistle has admitted that his intense focus on corporate matters has sometimes come at a personal cost. Notably, he has cited a poignant moment in 2004 when he prioritised a business deal over spending time with his dying father—a decision he now regards as his greatest regret.
Entwistle’s leadership style has often been described as controlling, which some believe hindered the development of a robust internal succession plan. His previous attempt to anoint Joe Natale as his successor in 2014 ended abruptly, with Natale stepping down just a year later. The lack of a clear succession plan has left Telus vulnerable, particularly as the company faces a challenging economic landscape.
Unanswered Questions About Succession Planning
The board’s decision to appoint Dodig raises serious concerns about their commitment to effective succession planning. Manley stated he has been in discussions with Entwistle regarding succession since 2012, yet the choice of Dodig suggests a lack of readiness to promote from within. This situation mirrors a recent incident at the Bank of Nova Scotia, where a board member was appointed as CEO despite lacking relevant industry experience, leading to broader questions about governance practices in Canadian corporations.
Kaplan pointed out that a successful transition involves not just board decisions but also the CEO’s responsibility to foster a pipeline of talent. The apparent oversight in developing internal candidates during a period of relative stability could be a costly misstep for Telus.
The Financial Landscape
Telus’s financial performance has been uninspiring lately, with shares declining approximately 45 per cent from their peak in 2022. The company is grappling with high levels of debt, and its ambitious ventures—such as Telus Health—have yet to yield the expected returns. The telecom industry is notoriously competitive, and investors are anxious about Telus’s ability to navigate its challenges effectively under new leadership.
The question remains: why did Telus’s board wait until now, amid a troubling financial backdrop, to initiate such a significant leadership change? As the company enters a new chapter, stakeholders will be closely observing Dodig’s strategies for revitalising the brand and addressing investor concerns.
Why it Matters
The leadership change at Telus represents a pivotal moment for the company and the telecom sector at large. It underscores the critical importance of succession planning and the need for boards to proactively nurture internal talent. As Victor Dodig steps into his new role, the effectiveness of his leadership will be scrutinised not only in terms of financial performance but also in how well he can navigate the complexities of the telecommunications industry while addressing the longstanding concerns surrounding governance and strategic direction. The outcome of this transition could set a precedent for corporate leadership practices in Canada, impacting investor confidence and corporate governance standards across the board.
