2011/02/24 Minutes

Minutes of the Meeting of the CIRA Board of Directors held at the CIRA Offices, 350 Sparks Street, Ottawa on February 24, 2011 at 12:00 p.m. Ottawa time.

Directors attending: Paul Andersen, Richard Anderson, Kerry Brown, John Demco (ex-officio), Byron Holland (ex-officio), Jim Grey, John King, Rowena Liang, Louise Macdonald, Lynne Mackan-Roy (by telephone), Ross Rader, Barry Shell (by telephone), Tom Williams(by telephone), Victoria Withers

Regrets: Heather Dryden

Corporate Secretary: Michael Stewart

Guests: Kathy Fisher (Industry Canada), David Fowler, Paul Havey, Jacques Latour

Recording Secretary: Lynn Gravel

The Chair welcomed Kathy Fisher, Director of International Telecommunications Policy and Coordination with Industry Canada and Paul Havey, CIRA’s newly appointed Director of Finance and Administration.

1. Approval of Agenda

The Chair proposed that the agenda be amended to exclude: item 7.1 (Strategic Issue Discussion) and defer that item to another meeting; and item 3.5 (Report from the Budget Committee), which will be covered under item 5. (Operating Plan and Budget 2011-2012).

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. Financial and Operational Update

2.1 Report on all Statutory Obligations

This report was provided to the Board of Directors as information and tabled at the meeting. There was a discussion regarding the cash and investment balances and it was agreed that the Audit Committee would review the current investment policy with staff.

2.2 Management Report

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

B. Holland noted that there was a spike in renewals in the last quarter then again in January as a result of the auto renew feature. It is anticipated that renewals will spike up month over month but they will then eventually settle. B. Holland also noted that the net new growth was up for the period and most likely attributed to the overall activities in Marketing and Communications and the raised awareness of the .CA. Going forward, staff will provide a more detailed analysis of the registration activities in the management report.

B. Shell withdrew from the meeting.

2.3 Review of Q3 2011 Financial Results

P. Havey provided a brief overview of the financial results for the period ending December 25, 2010. The surplus from ongoing operations was at $1,717,810 for the period or approximately $475,000 over the forecast presented in September 2010. Revenue is up mostly due to new registration at 23% over budget and renewals for the quarter at 80% compared to the 77% budgeted.

P. Havey reviewed the expenditures with variances over $100K by functional area and noted that Infrastructure/DNS was under budget in two areas: 1) head count – budgeted for an additional System Administrator; and 2) ITIL Program.

Salaries in Finance & Administration were under budget due to the departure of staff. Marketing & Communication were under budget mostly due to the timing of certain expenditures. The cost associated with the Canadian Internet Forum was moved to the last quarter as well as planned advertising and the public website refresh. Amortization expense will remain a permanent difference because of under spending in capital equipment. Staff will be reviewing the forecast until the end of the year, however, because of the increase in revenue and under expenditure in several departments, expect a greater FY11 surplus than originally forecasted in September 2010.

There was some discussion in regard to the variance between the budget and the actual expenses and revenue. Some expressed the view that staff should be budgeting more aggressively. It was agreed that staff would work on the revenue model and include a strategy to identify new opportunities or initiatives should the trend in revenue continue.

T. Williams joined the meeting.

B. Shell rejoined the meeting.

3. Composition of Nomination Committee

The Working Group of the Governance Committee provided a brief overview of the work completed. It was noted that there are currently five members on the Nomination Committee and according to CIRA’s By-law, the Board of Directors may appoint up to five members for the Nomination Committee to hold terms of 2 years. The Working Group held several meetings in the past month to review the list of applicants and from the short list of candidates, reached out to them to confirm their interest and availability. The Working Group was therefore putting forward five candidates to be appointed to the Nomination Committee. It was noted that considerable amount of work was done in the selection of the candidates based on various industry experience, not-for-profit or public sector work experience and management experience.

It was therefore resolved that the Board of Directors appoint the following people to the Nomination Committee for a term of two (2) years: Bill Graham; Michel Lamontagne; Debi Rosati; Len St-Aubin; and Andrew Sullivan.

(Moved: T. Williams, seconded: R. Rader, unanimously carried)

T. Williams withdrew from the meeting.

4. Update on Committees

4.1 Report from the Governance Committee

The Chair of the Governance Committee reported that the Committee had held three meetings thus far and from the work projects, the most active was the review of the Nomination and Election process. Other projects included the Committee structures, in particular the Budget Committee since it was disbanding as scheduled as of February 28, 2011 and the Board Effectiveness Assessment. The Board Effectiveness Assessment will be completed again this year with a focus on Director Performance and presented at the Board of Directors’ meeting in June 2011. It was noted that the Governance Committee had reviewed the Directors’ Liability Insurance and had agreed to renew the coverage with the current provider.

4.2 Report from the Technical Oversight Committee

The Chair of the Committee reported that the Committee had met earlier to discuss the IT roadmap and vision. It was noted that the Budget Committee had requested that the Technical Oversight Committee examine a 3 to 5 year plan and staff did provide a high level roadmap but will come back with a more detailed plan.

4.3 Report from the Audit Committee

The Chair of the Audit Committee reported that the Committee had met on February 18, 2011. KPMG had presented the audit plan and informed the Committee of the applicability of some new Canadian auditing standards. There was extensive discussion with respect to the adoption of the International Financial Reporting Standards (IFRS) and readiness of the organization. Staff confirmed they were confident that the end goal of issuing full IFRS financial statements for the year ending March 31, 2012 would still be achieved. Staff presented the Risk Management framework and a separate session to develop the reporting to the Board will be scheduled with the Audit Committee in July 2011. The Risk Management process will also incorporate how to most effectively obtain Board input into the identification of risks and opportunities for the organization.

4.4 Report from the Executive Committee

The Chair of the Board reported that the Committee had met once in the last month to continue discussions on HR matters.

4.5 Policy Advisory Committee

R. Rader was now proposing that the Board of Directors adopt the terms of reference, which had been amended since the last Board meeting. It was noted that, if the terms of reference were adopted, a list of a list of possible community members was also provided for the Board’s consideration.

It was therefore resolved that:

1. The Policy Advisory Committee Terms of Reference be adopted as presented;

(Moved: R. Rader, seconded: R. Liang, unanimously carried)

2. The initial membership shall consist of John Demco, Ross Rader, Michael Stewart and the Community Members shall consist of Alain Chesnais, Tim Denton, Kirk LaPointe and Michael Geist;

(Moved: R. Rader, seconded: K. Brown, unanimously carried)

3. The Chair of the Committee shall be Ross Rader for the initial term of the Committee; and

4. The first action of the new Committee will be to solicit additional Committee nominees for consideration by the Board at a later date, taking into account the need to balance and diversify the Committee.

(Moved: R. Anderson, seconded: J. Grey, abstaining: R. Rader, motion carried)

5. Operating Plan and Budget 2011-2012

The Chair of the Budget Committee reported that the Committee had met on several occasions in the last two months to review the operating budget with staff. The Board of Directors was reminded that all the documents had been made available to them prior to the meeting.

The Chair of the Budget Committee provided a summary of the operating budget for fiscal year 2011-2012. It was noted that the revenue was based on a growth assumption of 15% which is in line with the past 12 month growth of 14%, and a breakeven plan with $1.17M or 7.4% being allocated to the Community Investment Program.

It was noted that the key focus in the operating plan was to build on the resource and technical capability of the organization and enhance the service offerings. Some of the key projects and deliverables for the upcoming year include IDN, DNSSEC, and IPv6 as well as .CA product enhancement, implementation of “middleware software” and increasing staff. The Infrastructure/DNS and Development increases of 15% and 50% respectively reflect this focus.

Marketing and Communications will be introducing new channel promotions and incentives: a channel co-op program; and a price-off promotion targeted to generate an increase of over 20% in new registrations over the previous year run-rate during the promotion period. This represents a budget increase of 22% in Marketing and Communications and an increase of 72% in Channel Management. Legal & Policy and Finance & Administration budgets are by comparsion not increasing in this budget. It was noted that Finance & Administration will be implementing IFRS and a Risk Management Program. The Board of Directors budget was reduced by 20% by eliminating the annual review cost, media/products and miscellaneous costs.

The Budget Committee also recommended several follow up reviews: a review of the election process, coordinated through the Governance and Audit Committees, to identify opportunities to streamline the process including a value assessment of current governance cost; develop and review a 3-5 year technology plan through the Technical Oversight Committee and including a strategy for hardware and software platforms; program assessment of the success of the major Community Investment programs; program assessment of the success and future potential of new channel programs; and program assessment of the success of .CA advertisement.

P. Havey presented three revenue scenarios with a 5% growth assumption being the worse-case scenario, a 17% optimistic scenario and a 15% growth assumption built in the budget. All scenarios assumed a renewal rate of 77%.

Staff noted the major activities over $100K from each of the functional areas. Operations and Development are seeing an increase in budget of 15% for six additional staff and the “middleware software”. Marketing and Communication will be adding one additional resource and an increase in budget for the AGM, awards and new activities. Channel management has a large increase in budget due to two new initiatives being launched during the fiscal year.

Overall the Board of Directors was satisfied with the proposed budget and endorsed the work of the Budget Committee. The Board of Directors also requested that when comparing the budget to the previous year, the actual revenue and expenses should be presented as well as what was previously budgeted. Staff will monitor revenue closely in the new fiscal year and should it increase over the planned budget, will identify new initiatives should this occur.

Be it resolved that the Board of Directors approve the FY12 Budget as presented.

(Moved: J. Grey, seconded: J. King, unanimously carried)

It was further resolved that the Board of Directors extend the term of the Budget Committee from February 28, 2011 to March 31, 2011 and report back at the Board of Directors’ meeting in June 2011.

(Moved: R. Rader, seconded: K. Brown, unanimously carried)

B. Shell withdrew from the meeting.

P. Andersen turned the chair to R. Anderson.

6. Update on CDRP Consultation

M. Stewart informed the Board of Directors that the results of the consultation together with the report, the changes, blacklined draft policies and details of the additional proposed changes will be published on March 1, 2011 with a goal of implementation in May 2011.

In addition, CIRA will be seeking further input from stakeholders on some additional, potential changes that we believe will greatly alleviate the cost and effort required for certain unopposed CDRP cases.

B. Shell rejoined the meeting.

P. Andersen resumed the Chair.

7. Next Meeting

The next meeting of the Board will be held on June 14, 2011.

R. Rader withdrew from the meeting

8. Other Business

8.1 Legal Update

Staff provided the Board of Directors with a legal update in camera.

R. Rader rejoined the meeting.

D. Fowler, L. Gravel, P. Havey, J. Latour and M. Stewart withdrew from the meeting.

9. CEO Update

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

Following the CEO Update, B. Holland withdrew from the meeting.

10. In-Camera Session

The Board of Directors held an in camera session.

11. Adjournment

There being no further business, on motion by R. Rader and seconded by J. King, the meeting was concluded at 4:35 p.m.