Slashing staff gut-wrenching but necessary, Shaw boss says
An ongoing massive restructuring program at Calgary’s Shaw Communications that will reduce the size of the company by 25 per cent is taking an emotional toll on management and staff, CEO Brad Shaw said Thursday.
More than 1,500 employees have already left the company under the terms of a voluntary buyout program announced in March 2018.
At the time, Shaw said it expected 650 people to take the buyouts, part of a larger restructuring aimed at transforming the legacy cable company into a cutting-edge digital and wireless provider. However, a total of 3,300 employees — about one-quarter of Shaw’s workforce — ultimately accepted packages, with those who have not yet left expected to exit the company by early 2020.
The buyout program was, in hindsight, the right move and will allow the company to focus on automation of services and other digital innovations, Shaw told reporters Thursday at the company ’s annual general meeting in Calgary.
However, it has not been easy, he said.
“It doesn’t go to the impact of 3,000 people leaving the company — the relationships, the longterm employees,” said Shaw, who briefly teared up during his address to shareholders while thanking employees and management for their work. “Being a family company with the culture we have ... you know, it’s all for the better, but certainly when you have that it’s a little bit emotional.”
The company — which expects to save $220 million annually by 2020 as a result of the restructuring — has incurred $447 million in severance and employee-related costs since the buyouts were announced in March 2018.
As part of the restructuring, CFO Vito Culmone — a former WestJet executive who joined Shaw in 2015 — departed, replaced by fellow Shaw executive Trevor English, who now serves in a combined finance and corporate development role. Shaw’s executive pay disclosures reveal Culmone received a severance package of $6.6 million upon his departure.
“There are certain packages that you sign and it’s kind of standard these days,” Shaw said of Culmone’s payout. “We never have the intention when we hire someone that they’re actually going to be gone that fast but, you know, things change in the company. We made a pivotal change, we restructured the company in certain ways and in the end we made that move.”
There are early indications that Shaw’s efforts to transform itself into a more modern company are paying off. While revenue from its core residential services remained flat, in 2018 the company added a net 255,000 wireless subscribers through Freedom Mobile, the wholly owned subsidiary it acquired in 2016 with the purchase of Wind Mobile. Freedom Mobile — which operates in Ontario, Alberta and B.C. and aims to be the leading alternative for mobile services to the big three national wireless carriers — ended the year at more than 1.4 million customers, a 22-per-cent increase compared with a year earlier.
The company’s overall revenue for fiscal 2018 improved 7.3 per cent from the year before to $5.24 billion, while operating income — before restructuring costs and amortization — was up 4.6 per cent from 2017, to $2.09 billion.
Shaw said that in 2019 the company will continue to push for more wireless growth by investing in network improvements and opening more retail locations for Freedom Mobile products and services. He added that as the restructuring program winds down in 2020, the positive effects of the changes will become even more apparent.
“I look at this year as a big, deep breath. We’ve taken a big sigh, we’ve really repositioned ourselves,” he said.
“All of this is in setup for the future.”