2013/09/17 Minutes

Minutes of the Meeting of the CIRA Board of Directors held at the Centre Mont-Royal in Montréal on September 16 and 17, 2013.

Directors attending: Paul Andersen, Kerry Brown, Andrew Escobar, Michael Geist, Bill Gibson, Rowena Liang, Louise Macdonald, Carole Mackaay (Secretary), Kevin McArthur, Susan Mehinagic, Bill Sandiford, Bill St.Arnaud

Board Advisors: John Demco, Byron Holland, Andreea Todoran

Guests: David Chiswell, David Fowler, Paul Havey, Jacques Latour, Pamela Miller (Industry Canada)

Recording Secretary: Lynn Gravel

The meeting was called to order at 8:20 a.m. on September 16, 2013.

1. Appointment of Corporate Secretary

It was resolved that the Board of Directors appoint Carole Mackaay to the position of Secretary to hold office for a period of one year or until the next Board meeting after the expiry of such one year period and until the successor is appointed, whichever is later or until earlier resignation or removal.

(Moved: S. Mehinagic, seconded: B. Sandiford, unanimously carried)

The meeting was adjourned at 8:25 a.m. and it was agreed to reconvene on September 17, 2013 at 11:30 a.m.

The meeting was called to order at 11:50 a.m. on September 17, 2013.

2. Approval of Agenda

It was the consensus of the Board of Directors that the agenda be amended to include a Note of Thanks under Other Business.

3. Approval of the Draft Minutes of the May 30, 2013 and August 20, 2013 Board of Directors' Meetings

It was resolved that the minutes of the May 30, 2013 Board of Directors’ meeting be approved with an amendment to item 7. Internet Activities – Advisory Committee.

(Moved: B. Sandiford, seconded: C. Mackaay, unanimously carried)

It was further resolved that the minutes of the August 20, 2013 Board of Directors’ meeting be approved as presented.

(Moved: B. Gibson, seconded: R. Liang, abstaining: L. Macdonald and B. St.Arnaud, motion carried)

4. Financial and Operational Updates

4.1 Report on all Statutory Obligations

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

4.2 Management Report

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

Highlights noted a slight increase in new registrations over the amount budgeted and that globally, the domain industry was seeing a lift in domain growth.

4.3 Review of Q1 2014 Financial Results

The financial statements were provided to the Board of Directors as information and tabled at the meeting.

Staff gave a brief overview of the Q1-FY14 actual financial results as compared to the budget. It was noted that the cumulative Net New Domain Registrations during the quarter exceeded the budget by 10.1% or 11K units. There was also a $279K overall favourable expenditure variance to the budget as of the end of Q1-FY14 mostly due to the timing of new hires and savings on travel.

Staff identified that the loss from investments of ($84K) represents the potential unrealized paper loss to CIRA for Q1-FY14 had CIRA had sold all of its restricted investment holdings as of the end of the quarter. This new category on the Statement of Operations is as a result of adopting the new Canadian GAAP standards for not-for-profits.

With respect to Q2, it was noted that Q2-FY14 actual revenues would likely exceed budget by approximately $250K due to the effect of the pull through of the full revenue impact from additional units already sold and the expectation of a continuation of that registration trend into Q2. On the expenditure side, the favorable variance is expected to increase much more significantly in the next quarter for reasons outlined to the meeting.

5. Bank Signing Authority

Due to the change in management, staff requested that any two of the Chair of the Board, Chair of the Audit Committee, President and CEO, Director of Finance and Administration, or Vice President of Product Development be certified by the Secretary as authorized to conduct the banking affairs of the Company in accordance with the terms of the “Form-203 (Banking Resolution)”.

(Moved: B. St.Arnaud, seconded: R. Liang, unanimously carried)

6. Travel Expense Guideline for CIRA Board Members

The travel expense guideline was tabled at the meeting.

On the recommendation of the Governance Committee, it was agreed that the Travel Expense Guideline for CIRA Board Members be approved as presented.

(Moved: S. Mehinagic, seconded: B. Sandiford, unanimously carried)

7. Update on Strategic Plan

7.1 Growth Initiatives Update

Staff reported on the recent organizational changes that were made to reflect the new direction for the organization and to deliver on the 2014-2016 Strategic Plan. D. Chiswell, VP of Product Development will primarily be responsible for new product and service offerings that are complementary to CIRA’s core domain registration service. The overall approach to develop additional revenue sources will be focused in two primary areas: 1) .CA advanced Registry services delivered through to the Channel; and 2) CIRA new lines of business.

Staff reported that the following product concepts had undergone an initial research with CIRA’s Channel partners and Registrants and were currently under assessment: 1) Registry lock would allow the Registrant to set a registry “lock” on their domain(s) to prevent unauthorized changes thereby eliminating the potential for hijacking; 2) Redemption protection would extend the period of time that a Registrant could redeem a domain name thereby minimizing the potential loss of the domain name due to unintended deletion; 3) Domain Alert would provide both Registrars and Registrants with notices following domain specific zone file updates that could help identify potential phishing, fraud and identity theft; and 4) Renewal consolidation would allow Registrars to offer Registrants a choice of renewal dates to help them better manage large domain portfolios. As for next steps, staff will be reviewing the business assessments to determine the product(s) and/or service(s) for further development.

As for the new lines of business, staff reported that some market research was being conducted on business opportunities such as managed DNS services, alternate registration services and IXP management (if service and infrastructure support were requested of CIRA). It was noted that the initial data supports a market need for one of more of these services and a potential opportunity for the organization. Staff is therefore continuing with the opportunity assessment, product definition and business case analysis.

Staff also provided an update on the Channel programs. The Price-Off Incentive and Co-op Advertising programs were launched and so far 7 Registrars were participating in each program. Staff also noted it was working with .CA Registrars’ Resellers on a pilot program to promote .CA and was working on a unique strategic opportunity with a Registrar to promote and position .CA through a joint TV/Online campaign. A strategic pricing study was also conducted in August this year where the .CA service pricing was reviewed against gTLDs and ccTLDs.

There was some discussion regarding the different service offerings by Registrars and overall the Board of Directors was satisfied with the new initiatives.

7.2 Community Investment Program – Update on Advisory Committee

The Chair of the Governance Committee reminded the Board of Directors that at its last meeting, the Board had approved the Terms of Reference and Structure of the Committee. It was noted that the Committee members had yet to be populated except for the Chair of the Committee. In order to get the Advisory Committee up and running, staff was tasked to prepare additional details and processes in the composition and selection of Committee members and the structure and procedures. It was further noted that the Governance Committee had discussed the $1 million financial commitment to the fund. A commitment of $1 million for the initial twelve months had been allocated as follows: $600K budgeted to be spent in the fiscal year prior to March 31, 2014 and the remaining $400K in FY15. There was also discussion on the issue of advocacy and it was agreed that funds could not be used for public advocacy campaigns. An initial list of possible candidates to serve on the committee was reviewed. Directors were urged to submit any additional suggestions they might have to the Chair of the Advisory Committee by the following week. It was the consensus of the Board that upon receipt of all suggestions from Board Members that the Chair of the Committee and the CEO would agree upon and seat the independent members of the Committee.

There was discussion regarding the funding of multi-year projects. It was reiterated that projects requiring ongoing funding would be addressed by the Committee since the Committee had the flexibility to extend the funds. A suggestion was made by the Chair of the Audit, Finance and Investment Committee that consideration should be given to the manner in which unspent budgeted funds should roll-over or be taken into account in the following year to preserve the $1M financial commitment. Another question was raised regarding the funding of operational costs. The Chair of the Advisory Committee reported that operational costs would not be directly funded; however the Committee would likely fund overhead costs and the amount was to be determined by the Committee members.

The Board of Directors agreed to accept the additional processes and details in the documents as presented.

7.3 Community Investment Program – Update on External Organization

K. Brown declared a potential conflict of interest and withdrew from the meeting for this item of business.

The Chair reminded the Board of CIRA's undertaking to fund an external organization up to the amount of $100,000 to help educate Canadians on internet policy issues. Staff has reviewed several organizations but to date has not yet recommended an organization. Recently, a proposal was received from ISOC Canada requesting $30,000 to commence its Canadian branch; the funds to cover start up costs and digital activities.

Initially, it had not been envisaged that funds would be used to facilitate the creation of a new entity. A discussion ensued and it was the consensus of the Board that the request from ISOC does qualify for funding and, further, that the request from ISOC be approved. However, it was understood that ISOC has not been selected to be the ongoing funding source in this matter.

K. Brown returned to the meeting.

8. NX Domain Discussion

The Chair reminded the Board of Directors that the subject of DNS Redirection had been presented to the Board in the past. A suggestion had been received to explain outstanding issues regarding the NX Domain names, including a mitigation plan to protect the NX Domain responses of the .CA registry. Highlights noted that CIRA has played an active role in this field since 2009 and continues to be involved. It was agreed that management would revisit this issue in the coming fiscal year.

9. Board and Committees Effectiveness Survey and Discussion

The Board and Board Committees Evaluation report was tabled at the meeting.

The Chair of the Governance Committee summarized the feedback received from the evaluation. Overall, the majority of Board members are satisfied with the operation of the

Board. More detailed highlights of the feedback included suggestions that Directors receive a better understanding of CIRA's relationship with Industry Canada and also, the role of CIRA in the international context. CEO succession planning and the process by which Board and Board committee business is managed are areas mentioned as requiring improvement.

It was agreed that the Corporate Secretary would undertake a review of Board procedures ( managing meetings, schedules, agendas, materials and minutes). Minor issues would be addressed immediately and others would form the work plan of the Governance committee in the coming year.

D. Chiswell, D. Fowler, P. Havey and J. Latour withdrew from the meeting.

10. Update on Committees

10.1 Report from the Governance Committee

The Chair of the Governance Committee reported that they had met earlier. The Committee presented a revised Director Compensation Policy to include compensation for the Corporate Secretary if a Director.

It was therefore resolved that the Corporate Secretary (if a Director) be paid the same as the Vice-Chair and Committee Chairs as stated in the Director Compensation Policy, effective September 16, 2013.

(Moved: S. Mehinagic, seconded: K. Brown, abstaining: C. MacKaay, motion carried)

It was noted that since several Directors were interested in running for the position of Chair and Vice-Chair, the Committee had discussed the process for electing the Chair and Vice-Chair. The Committee was therefore recommending the following process:

• No self-nominations

• Anyone could nominate another Director; however, the person nominating someone would not be able to run

• A vote would be conducted until someone had a majority of the eligible voters

• The vote would be done by way of secret ballot

• If after one round, there was no clear majority, the Director with the least number of votes would get dropped off. The voting process would continue until there was a majority

• Any Director running could voluntarily withdraw after each round

• Candidates would be told how many votes they received after each round

• In the event that there is a tie in the number of Directors with the least number of votes and no clear majority (i.e. 6 – 3 – 3, or 6 – 2 – 2 – 2), the Directors with the least number of votes would all get dropped off.

There was some concern regarding the drop off of more than two candidates in each round, therefore it was agreed that only one Director would be dropped off in each round. A run-off vote would then be held for those Directors with the least number of votes to determine which one Director would be dropped off.

10.2 Report from the Audit, Finance and Investment Committee

The Chair of the Audit, Finance and Investment Committee reported that the Committee had met the previous week to discuss the bank signing authority and the organization’s investment risk tolerance. The Committee reviewed the risk return relationship on its investment portfolio, and while some preferred strict capital preservation, others were of the view that CIRA should have a less conservative investment objective and consider other investment vehicles, including possibly investing a small amount in suitable equities. Staff was directed to revise the Investment Policy Statement policy accordingly and report back to the Committee at its next meeting.

10.3 Report from the Risk Management Committee

The Chair of the Risk Management Committee reported that the Committee had met earlier. Staff had provided an update on the risk disposition (i.e. the change in the status of risks and the related risk assessment/exposure between reporting periods), risk tolerance by strategic objective and risk appetite. The Committee also accepted the Enterprise Risk Management Report prepared by staff. Staff was asked to revise the reporting to more effectively indicate the progress, work and actions that have been undertaken in risk remediation activities over the past year that may not be completely evidenced solely through the reporting of the risk exposure rating. . The Chair of the Committee reported that although the Committee had made significant progress, the Committee anticipated convening a few more meetings before transferring its mandate to the Audit, Finance and Investment Committee.

11. Other Business

11.1 Thank you to retiring Chair

It was resolved that

Whereas, Paul Andersen has diligently served CIRA as a director for the better part of 12 years, the last 5 of which he has been the Board Chair;

And whereas, during those years CIRA has thrived and expanded, with Paul playing a significant role in that success;

And whereas, Paul has led by example by, amongst other things, always being a pleasant, cooperative, and able working colleague and friend;

And whereas, Paul has decided to not seek re-election of his position as a CIRA director and will move on to other endeavours at the conclusion of his current term;

Therefore, the Board of Directors of the Canadian Internet Registration Authority, on behalf of CIRA Members, Staff, and themselves, does hereby extend to Paul its sincere thanks and appreciation for a job well done, and wishes Paul all the best in his future endeavours.

(Moved: B. Sandiford, seconded: S. Mehinagic, abstaining: P. Andersen, motion carried)

12. Next Meeting

The next meeting of the Board of Directors will be held in Ottawa on October 29, 2013.

L. Gravel and B. Holland withdrew from the meeting.

13. In Camera Session

The Board of Directors held an in camera session.

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

14. Adjournment

There being no further business, on motion by P. Andersen, the meeting was concluded at 5:15 p.m.