2016/02/23 Minutes

Minutes of the Meeting of the CIRA Board of Directors held at the Delta Victoria Hotel in Victoria, British Columbia on February 23, 2016 at 9:00 a.m.

Directors attending: Kerry Brown, Andrew Escobar, Michael Geist, Rowena Liang, Louise Macdonald, Helen McDonald, Kevin McArthur, Susan Mehinagic, Marita Moll, Bill Sandiford, Rob Villeneuve, Faye West

Advisors: John Demco, Byron Holland

Regrets: Adam Scott

Guests: Steven Barry, Dave Chiswell, David Fowler, Paul Havey

Recording Secretary: Lynn Gravel

1. Approval of Agenda

It was resolved that the agenda for the meeting be adopted as presented.

2. Approval of the Draft Minutes of the November 5, 2015 and December 11, 2015 Board of Directors' Meetings

Minor edits were noted to the minutes of the November 5, 2015 meeting. 

It was therefore resolved that the minutes of the November 5, 2015 Board of Directors' meeting be approved with these changes.

(Moved: B. Sandiford, seconded: Helen McDonald, unanimously carried)

It was further resolved that the minutes of the December 11, 2015 Board of Directors’ meeting be approved as presented.

(Moved: L. Macdonald, seconded: K. Brown, unanimously carried)

3. Chair’s remarks

The Chair informed the Board of Directors that the main focus of the meeting would be the FY17 Operational Plan and Budget. 

4. Financial and Operational Updates

4.1 Report on 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 as information and tabled at the meeting.

Highlights noted registrations for the period ending December 31, 2016.  It was noted that although the net change in the Domains Under Management (DUM) for the month of December is the lowest level in the last three years (due to the increased level of absolute cancellations offsetting traditionally lower December growth), CIRA remains one of the strongest growing ccTLDs in the world.  

Staff presented a preliminary narrative style Management Discussion & Analysis Report along with the standard operational domain registration trends/statistics and outline of current project status & forward looking priorities provided at each Board meeting. It was agreed that the Board would provide comments on the usefulness of the Management Discussion & Analysis Report and bring them back to the next meeting.

There was discussion regarding the level of DUM holdings by particular Registrars.  Staff noted that several programs are in place to help assist Registrars and we continue to invest broadly in our Channel.

4.3 Review of Q3-FY16 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 Q3-FY16 financial results as compared to the budget noting that revenue was $130K higher than budget at the end of the quarter. It was noted that the cumulative New Domain Registrations at the end of Q3/FY16 were in line with the overall budget; while cumulative Domain Renewals exceeded budget by 8.7%.  Overall expenditures for Core Operations and Product Development were $1.1M under budget as at the end of Q3/FY16 due to timing of new hires, timing of expenditures on brand awareness and rent savings.

Product Investment –Year-to-date (YTD) Product Investment revenue of $47K is a combination of $8K in Registry Lock revenue & $39K of D-Zone Managed DNS Service revenue. Staff noted that although YTD Product Investment revenue was ($168K) lower than budget, the D-Zone Managed DNS Service continues to see positive sales traction. CIRA secured seven (7) new D-Zone customers during the quarter raising the cumulative number of customers to approximately fifty (50) since the product was launched. 

As at December 31, 2015 the total customer base had a Total Sales Booking Value of $109K, of which FY16 Anticipated Revenue is $58K. A concern was raised regarding the revenue target for new products and services.  Staff reminded the Board this is the initial year of selling the D-Zone product, that CIRA was required to pivot and develop its’ own direct sales team and that CIRA is in the nascent stage of developing our sales capability.

5. 2016 Policy on Nominations and Elections

Staff noted that the changes to the 2016 Policy on Nominations and Elections dealt mostly with date changes. Also noted was that this year, both Nomination Committee Nominees and Member Nominees would be required to submit a resume as part of their application.

It was moved by F. West and seconded by M. Geist, that the Board of Directors approve the Policy on Nominations and Elections 2016, as presented.

A. Escobar moved that the Policy on Nominations and Elections 2016 be amended under section 4.02 Applications of Members’ Nominees, that Members’ Nominees are not obliged to submit a resume as part of their application (i.e. optional). Seconded by K. McArthur, motion defeated.

The motion to approve the Policy on Nominations and Elections 2016 as presented was therefore carried, opposed: A. Escobar, M. Moll.          

6. Operational Plan and Budget 2016-2017

Staff noted that the FY17 Operational Plan and Budget represented the first budget of the new four year Strategic Plan and the third year of our ongoing investment intended to increase our organizational scale, capacity and velocity, diversity our product/service offerings.  The FY17 operating budget will allocate resources across the strategic pillars in support of new Strategic Plan goal of Building a Better Online Canada. It was further noted that CIRA continues to explore specific actions to change the Curve and over a two year transition and return to a full balanced budget in FY18.  In this context, another operating deficit of ($1.17M) before net investment income [($750K) after net investment income] is anticipated in FY17.

A general overview was presented of the major activities the proposed budget is intended to fund, including the carry over projects from FY16 to FY17 and the new initiatives to be undertaken in FY17.  Revenue scenarios were presented from different perspectives (Pessimistic, Reference Plan and Optimistic) and the level of risk around various revenue streams was identified.

Staff presented the FY17 Core Operating Expenditures by nature and function. Assumptions for the core operating expenditures includes integration of the previous Product Development function and step function investment under the core operating expenditures; assumes a 2.5% inflationary salary envelope and a comparable headcount level to the previous year; and other OPEX expenditures increased where appropriate, such as Computer Operations & Networking and Consulting pertaining to enterprise initiatives to enhance operational efficiencies and/or reduce cost. The Community Investment Program is increased to $1.5M representing approximately 7.0% of the Total Revenue. Management’s community investment activities will focus on three key programs, State of the Internet and the IXP program; the Canadian Internet Forum (CIF) and a new Smart Cities initiative.  Management will eliminate multiple internet community sponsorships and instead fund a single Internet Smart Cities initiative.  The CIF budget will be permitted to expand by $50K to enhance the event, dependent on obtaining advance sponsorship of equal value.

Staff noted how total revenue and the planned operating deficit would be monitored and organizational expenditures adjusted should there be a material variance.

A four year operating forecast was also presented to illustrate the return of a balanced budget by FY18 and maintains a balanced budget prospectively.  

On the recommendation of the FAIR Committee, it was resolved that the FY17 Budget (Operating and Capital Expenditures) and the underlying Corporate Plan be approved as submitted.

(Moved:  R. Liang, seconded: A. Escobar, unanimously carried)

7. Update on Committees

7.1 Report from the Compensation and Review Committee

The Chair of the Committee reported that the Committee had met in January to review the terms of reference and Committee work plan.  The CEO performance review has also been initiated and will be completed by mid-April, when the Committee will be seeking Board input.

7.2 Report from the Finance, Audit, Investment and Risk Management Committee

The Chair of the Committee reported that the Committee had met several times since the last meeting.  The Committee reviewed the investment portfolio and reported that the global financial markets had posted sharp negative returns during the last quarter as a result of China’s slowing growth and decline in commodity prices.  As a result, the portfolio posted a small negative return of 0.24% during the last quarter.

The Committee also received the audit plan and discussed the appointment of the auditors.  Overall the Committee and staff were satisfied with the work of the auditors but uncertain about the reasonableness of their audit fees.  Staff will be examining other organizations of similar size to assess the reasonableness of the audit fees.

7.3 Report from the Governance Committee

The Chair of the Committee reported that the Committee had met recently to review the recommendations from the Nomination Committee on the election process.

7.4 Report from the Community Investment Committee

Staff reported that 25 of the projects were now complete from the first round of funding and 29 projects from Rounds 1 and 2 were ongoing. It was noted that the program is making a positive impact on Canadians and we are now able to aggregate the data and share it publically.

Staff noted some key changes in Round 3 of the program.  The application period was extended to 6 weeks versus 4 weeks in the previous rounds; and previous grant recipients must complete their projects and submit a final report before re-applying for funding. 

Staff also noted that an external resource would be engaged to define, create and measure the social impact of the program at a macro-level.

7.5 Report from the Market Strategy Committee

The Chair of the Committee reported that the Committee met earlier in February to review its mandate and work plan. Staff provided an update on the sales for the D-Zone Managed DNS  service.  There was also discussion on standardizing the reporting for the current projects and the new product filter.  It was agreed that the Committee would report back at the next meeting on the approval process for new products.

8. Other Business

8.1 .CA Brand Repositioning

Staff noted that CIRA’s organizational focus had changed over the years with new products and services outside of the .CA registry. With the launch of D-Zone, CIP and Labs, it became clear that CIRA needed a refreshed brand that reflected this innovation and investment. The refreshed brand conveys sophistication, modernity and flexibility. CIRA’s various programs and products will be connected through a simple colour palette, people-focused imagery and lighter typography. Moving forward, the CIRA and .CA brands will be used for separate corporate activities. The .CA brand will only be used for marketing and communications of .CA domains, while everything else will align with the new CIRA brand.

8.2 Board Committees and Electronic Resolutions

The following motions were presented to the Board of Directors:

1. Open Committee Membership:

Be it resolved that, at any time, any member of the Board of Directors may become a member of any regularly constituted Board committee. This does not apply to designated arms-length committees such as the Community Investment Committee or Nomination Committee.

(Moved: K. McArthur, seconded: K. Brown, in favour: K. Brown, A. Escobar, K. McArthur, M. Moll, opposed: M. Geist, R. Liang, L. Macdonald, H. McDonald, Bill Sandiford, R. Villeneuve, F. West, motion defeated)

2. Maintenance of Confidence

Be it resolved that a Board committee chair is required to maintain the ongoing confidence of a majority of the committee's members. In the event that a committee chair loses the confidence of their committee, a replacement chair will be selected by the committee's members.

(Moved: K. McArthur, seconded: M. Moll, in favour: K. McArthur, opposed: M. Geist, R. Liang, L. Macdonald, H. McDonald, Bill Sandiford, R. Villeneuve, F. West, abstaining: K. Brown, A. Escobar, M. Moll, motion defeated)

3. Electronic Motions

As the following motion would require a by-law change, it was withdrawn and referred to the Governance Committee for review:

Be it resolved that, at any time, any two members of the Board of Directors may move a motion by electronic means.

9. Next Meeting

The next meeting currently scheduled for April 26, 2016 will be confirmed at a later date. 

S. Barry, D. Chiswell, D. Fowler, P. Havey, B. Holland and L. Gravel withdrew from the meeting.

10. In-Camera Session

The Board of Directors held an in camera session.

11. Adjournment

There being no further business, the meeting was concluded at 6:00 p.m.