2009/03/17 Minutes

Minutes of the Meeting of the CIRA Board of Directors held at the Hilton Hotel, Gatineau, Quebec on March 17, 2009 at 8:30 a.m. Ottawa time.

Directors attending: Paul Andersen, Kerry Brown, John Demco (ex-officio), Heather Dryden (ex-officio), Christopher Goodfellow, Byron Holland (ex-officio), Ron Kawchuk, Lynne Mackan-Roy,  Ross Rader (via teleconference), Bill Reid, Jeff Rybak, Barry Shell, Rick Sutcliffe, Tom Williams

Corporate Secretary:  Michael Stewart

Guests: Kathy Fisher (Industry Canada), David Fowler, Nancy Philip, Norm Ritchie

Regrets: Richard Anderson

Recording Secretary: Lynn Gravel    

The Chair introduced Kathy Fischer, Director of International Telecommunications Policy and Coordination with Industry Canada.  K. Fischer joined the meeting as a guest observer.

1. Approval of Agenda

The Chair proposed that the agenda be amended to include as item 2, an update on the Conficker Worm and under item 7.4 Report from the Audit Committee, the approval of the Auditor’s fee.

It was the consensus of the Board of Directors that the agenda distributed with the material for the meeting be adopted with these amendments. 

2. Conficker Worm

N. Ritchie updated the Board of Directors on Conficker, a form of malicious Internet software program known as a worm.  The latest variant of Conficker is expected to appear on April 1.  A coalition of concerned parties have banded together to offer a response to the threat.   Since the dot-ca domain is on of the 110 domains, amongst 109 other domains, targeted by Conficker, CIRA has taken a leadership role in helping foster the response, especially on the technology aspect.  The creator of this worm has gone to great effort to engineer this threat and it is quite technically sophisticated. CIRA will be pre-emptively registering and isolating a number of previously unregistered dot-ca domain names expected to be generated over the next 12 months by Conficker C. In the small number of cases where the domain name has already been registered, CIRA will actively investigate and monitor activities at those domains and take appropriate action if suspicious activity is detected.

D. Fowler, L. Gravel, N. Philip, N. Ritchie and M. Stewart withdrew from the meeting.

3. In Camera Session

The Board of Directors held an in camera session regarding the Conficker worm and steps Staff proposed to take to address the matter.  Following the presentation by staff, the Board concurred with the proposed plan of action.

4. CEO Update
 
The CEO and Board of Directors held an in camera session.

Following the in camera session, D. Fowler, L. Gravel, N. Philip, N. Ritchie and M. Stewart rejoined the meeting.

5. Financial and Operational Updates

5.1 Report on all Statutory Obligations

This report was provided to the Board of Directors as information and tabled at the meeting.

5.2 Management Report

This report was provided to the Board of Directors as information and tabled at the meeting.

5.3 Review of Q3 2009 Financial Results

N. Philip presented the actual versus the budgeted Q3 2009 financial statements as well as the forecast to the end of the fiscal year.  It was noted that the salaries were up as a result of implementing a semi-annual bonus to staff and additional resources.  The Consulting expenditure was higher than budgeted in the quarter mostly due to the website re-design and the strategic marketing research.  The Office and General expenditure was higher than budgeted due to the rent and insurance.  The Products and Media was lower than budgeted since the foundation was put in place this fiscal year and the implementation costs will be carried over to the next fiscal year.  The surplus revenue for the projected year-end is expected to be over budget.  Overall the Statement of Financial Position shows a strong balance sheet.  The deferred revenue is up when compared to last year and the allocation of cash amongst accounts will be made at the end of the fiscal year.  

5.4 Projected Year-End

This item was discussed under item 5.3 Review of Q3 2009 Financial Results.

6. Operational Plan and Budget 2009-2010

The Board of Directors approved the strategic plan as well as the six deliverables for fiscal year 2010, at its meeting in December 2008. B. Holland noted that the general focus this fiscal year was to build the basic engine of the organization by re-designing the system, operational upgrades, strategic marketing framework and process improvements followed by member outreach, channel management, growth of the dot-ca and some activities in CIRA Labs in the next year.  For the third year, the organization’s focus will be on engaging in international activities and the execution of CIRA Labs (CIRA Labs being the temporary placeholder operating name for activities relating to Object 3 of Letters Patent).  

B. Holland highlighted some of the key strategic projects for fiscal year 2010 and the overall timelines to complete these projects. The proposed operational plan also identified two additional resources to meet the strategic objectives.  

N. Ritchie identified the key projects for Registry and Operations as: DNS infrastructure, DNSSEC trial, the migration of the new registry from the development environment to production, disaster recovery testing and the deployment of a second Anycast Cloud. Also included in the proposed budget was the replacement of equipment at the primary site.

D. Fowler highlighted some of the key projects in Marketing and Communications for the upcoming year.  It was noted that the development and implementation of the channel management strategy will be a significant undertaking.  Other activities include the implementation of the marketing and communication plans as well as the dot-ca customization.  

N. Ritchie noted that Research and Development included the development and testing teams as well as CIRA Labs.  The key projects in this group included the design, coding and testing of .ca customization, the development of CIRA Lab’s operating guidelines and BIND 10. R. Kawchuk raised concern over the placement of CIRA Labs under Research and Development and it was clarified that it was merely a placeholder for budgeting purposes.  In particular, Staff and the Board agreed that CIRA Labs was far more than simply research and development matters, and would be defined at a later date as described in the Strategic Plan.

M. Stewart noted that the key projects for Legal and Policy were: the formation of the compliance function, the on-going governance review and preparation and administering of the WHOIS online public consultation. Staff will be meeting with Industry Canada to review the WHOIS public consultation proposal and at the request of the Board of Directors, will keep them informed on the progress of the consultation.

N. Philip indicated that the key projects for Finance and Administration were: the development and implementation of the project management office, the development of a risk management program and supporting the operational plan for the offering of registry services.  It was noted that the business case for such services was proceeding with market and environmental research and the Board of Directors will be kept informed on the progress.   

N. Philip presented the fiscal year 2010 corporate budget and outlined the total expenditures for each department.  The net surplus for the year is slightly under $24,000, when funds are allocated to the CIRA Labs or Object 3 project.

In response to enquiries from the Board of Directors, B. Holland presented some comparatives from other ccTLDs, on the operating costs versus the number of domains.  Internationally, CIRA was well positioned.  CIRA’s operating costs and capital expenditures versus the number of domain names and DNS queries since its inception were also presented.   CIRA’s proposed operating expense ratios are consistent with historical trends.

Overall, the Board of Directors discussed the revenue projection, and given the current market conditions, appreciated that the organization could address the situation should registrations slow down. The Board of Directors expressed concerns that costs and expenses were rising. B.Holland noted that there was a one time major project being funded in the coming year – the complete re-write and implementation of a new, completely updated .ca registry.  Further, it was noted that unlike most organizations, CIRA is required to fund all long term capital expenditures and investments out of current operating revenue.  A question was raised as to whether Staff had considered price increases.

P. Andersen turned the chair to the Vice-Chain L. Mackan-Roy.

Staff confirmed that the budget was based on no price increase and a conservative, relative to historical trends, growth assumption of 15%.  In addition, changes to pricing had not been contemplated at this time.  Any such changes would need research, review and discussion.  In addition, Staff did look at a growth assumption of 10% as a worse case scenario and will be monitoring all financials on a monthly basis.   

P. Andersen resumed the Chair.

It was therefore resolved that the Board of Directors approve the FY10 Operational Plan and Budget as presented.

(Moved: R. Sutcliffe, seconded: B. Reid, abstaining: R. Rader, motion carried)

7. Update on Committees

7.1 Report from the Governance Committee

R. Rader reported that the Governance Committee had not met since the last Board of Directors’ meeting.  Based on the feedback from the Committee and the Board of Directors, the Committee and staff have been      working with Deloitte and BLG to incorporate proposed modifications.  A working session is scheduled for next week and revised recommendations will be tabled at the next meeting of the Board of Directors in June.  

7.2 Report from the Technical Oversight Committee

R. Kawchuk reported that the Technical Oversight Committee had met the previous day to review the operating plan being presented today so as to have a better understanding. The Committee’s terms of reference were discussed and it was agreed that IT Governance was a better fit for the Committee’s mandate.  A revised version of the terms of reference will be circulated to the Committee.  N. Ritchie also updated the Committee on the Conficker worm which was discussed earlier in the meeting with the Board of Directors.

7.3 Report from the Executive Committee

P. Andersen reported that the Committee had met on February 26, 2009 to review the agenda for today’s meeting.  The Executive Committee requested that each Committee distribute their minutes, once approved, to the Board of Directors.  The Executive Committee has also begun the CEO’s annual performance review.

7.4 Report from the Audit Committee

On behalf of the Chair of the Audit Committee, C. Goodfellow reported that the Audit Committee had met the previous day to review the Auditor’s engagement letter and some of the issues from last year’s audit.  The draft financial statements will be completed by May 19, 2009 and the Audit Committee will be meeting on June 1, 2009 to review.  The Audit Committee also approved, upon the recommendation of staff, the appointment of the Investment Advisors for the organization’s short and long term portfolios.

It was therefore resolved that the Board of Directors approve the remuneration paid to the firm of Kriens Larose LLP for serving as auditor of the Canadian Internet Registration Authority until the next annual meeting of CIRA or until its successor is appointed, whichever is earlier, will not exceed $9,800.

(Moved: C. Goodfellow, seconded: K. Brown, unanimously carried)

8. Report on meeting with Industry Canada
P. Andersen reported that he, the President and CEO and the Vice-Chair had met with the Senior Assistant Deputy Minister of Industry Canada on February 24, 2009.  The discussion focused mostly on the organization’s strategic objectives, the governance review and external relationships.  As well, Industry Canada encouraged the organization to participate in both the domestic and international communities and possibly host events in Canada.      

H. Dryden noted that Industry Canada and the organization could help ensure good communication by having annual meetings at a senior level and holding regularized working level meetings.  It was also noted that Industry Canada thought it prudent for the organization to explore other sources of revenue, including the potential offering of additional registry services.  H. Dryden further noted that Industry Canada is quite interested in participating in the discussions around the Governance Review. H. Dryden also requested that the Board of Directors consider hosting a Canadian Internet Governance Forum.

9. Other business
A request was made as to whether staff could accelerate the planned framework on CIRA Labs, so that is was ready for the next meeting.  After further discussion it was agreed that, in order to maintain the priorities set out in the Operating and Strategic Plan, , staff would continue to develop the guidelines on CIRA Labs as set out in the Operational plan.  

10. Next Meeting
The next meeting of the Board of Directors will be held in Vancouver on Tuesday, June 2, 2009.

D. Fowler, L. Gravel, B. Holland, N. Philip and N. Ritchie withdrew from the meeting.  

11. In Camera Session

The Board of Directors held an in camera session.

Following the in camera session, L. Gravel rejoined the meeting.

12. Adjournment

There being no further business, on motion by J. Rybak and seconded by B. Reid, the meeting was concluded at 3:35 p.m.