2016/06/16 Minutes

Minutes of the meeting of the CIRA Board of Directors held at CIRA Offices, 979 Bank Street, Ottawa on June 16, 2016 at 10:00 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, Pamela Miller

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

Recording Secretary:  Lynn Gravel

1. Approval of Agenda

The agenda for the meeting be adopted as presented.

2. Approval of the Draft Minutes of the April 26, 2016 and May 11, 2016 Board of Directors' Meetings

It was resolved that the minutes of the April 26, 2016 Board of Directors' meeting be approved as presented.

(Moved: K. Brown, seconded: M. Moll, unanimously carried)

It was further resolved that the minutes of the May 11, 2016 Board of Directors’ meeting be approved as presented.

(Moved: F. West, seconded: H. McDonald, unanimously carried)

3. Chair’s remarks

The Chair noted that a round table discussion will be held during tomorrow’s session.

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 the completion of the 3-year strategic plan ending in FY16 and the activities in the first half of fiscal year 2017 that are critical to beginning the execution of the new strategic plan. 

As of Q4/16, the total operating deficit was positive compared to the planned budgeted deficit of $1.5M. The favourable variance of $977K was mostly due to total revenues being $249K higher than budgeted and core expenditures $783K lower than budgeted.  CIRA continues to have a healthy net asset position of $8.5M at the end of the fiscal year and is in the same net asset position as it was at the end of FY13 when it embarked upon the last three year strategic plan.

It was noted that through Q4/16 and the first quarter of FY17, CIRA undertook the necessary ground work to establish CIRA Labs in order to increase the pace of innovation at CIRA. Some initial ideas were also launched. 

4.3 Preliminary Unaudited Q4-FY16 Financial Results

The preliminary unaudited financial statements for the year FY16 were presented.

Highlights of the presentation noted that total revenue had exceeded the forecast budget by $249K.  This was attributed to better than anticipated cumulative new domain registration by 5.5% and cumulative domain renewals by 5.8%. Core operations expenditures were under budget by $977K mostly due to timing of FTE hires and unpaid leave of absences and 3 months operating rent savings in connection to Lansdowne facility.

Staff provided an overview of the Registry and DNS evolution and what capability had been developed by the organization over the last three years.  It was noted that the Fury Registry platform was built and was production ready at the generic level, with multi-tenant capability. As well, with a few enhancements to reflect the unique .CA operating and policy environment, .CA could  be integrated next year. The D-Zone Managed DNS service had a similar timeline, by building our own robust DNS server networks in Canada and then globally to serve and protect .CA and provide access to information.

The D-Zone Managed DNS Service continues to see positive sales traction and a steady increase in the volume of websites/zones being served and queries being answered monthly on our Canadian and global DNS infrastructure. As at year end, CIRA had 86 unique customers utilizing our D-Zone service.

Staff provided an update on the FY16 Restricted Investments portfolio.  It was noted that the markets underwent a downward adjustment before reviving in the last half of the fiscal year to over perform at the end of Q4.

5. FY14-16 Strategic Plan Review

Staff provided a review of the last 3-year planning cycle.  It was noted that at the time, CIRA and the industry was marked mainly by plateauing growth and the virtual deregulation of our industry with the imminent introduction of nearly 1,000 gTLDs. The results of the FY14-16 strategic plan are remarkably close to the forecast and the organization has successfully executed according to the plan.  The four strategic pillars did achieve what we said we wanted to do by dramatically enhancing the Registry and improving resiliency. Our marketing efforts and support with Registrars were improved, and we invested significantly in our own organization to ensure we had the skills and infrastructure required to execute on our strategy. From a growth standpoint, the growth rate for FY16 was just over 4%, just over the 3% growth rate that was forecasted.  As well, our market share continues to grow at 31.4% from 30.4% at the start of the strategic planning period, while the market share for .com fell by nearly 2% to 53.9%.

Looking forward, we are seeing a very strong start to .CA registrations for the year and we continue to explore new opportunities around our new lines of products.

6. Update on Committees

6.1 Report from the Market Strategy Committee

The Chair of the Committee reported that the Committee had met in advance of the board meeting.  Staff had presented the product scorecard, progress on the new product filter and an update on D-Zone against plan. The Committee also applied the new product filter and was able to validate the process against a primary DNS partner product. 

Staff provided an update on the D-Zone product strategy and market segment activities.  Staff also reported on the customer acquisition costs and service development & delivery costs incurred in FY16. An industry software-as-a-service (SAAS) break even analysis based on these annual recurring costs against anticipated annual recurring revenue from domestic D-Zone sales was also presented and discussed. 

6.2 Report from the Compensation and Review Committee

The report from the Compensation and Review Committee was deferred to the in-camera session.  

6.3 Report from the Governance Committee

The Chair of the Governance Committee reported that the Committee had met to review the Board and Committee Effectiveness survey that the Directors will be asked to complete this year. The Chair noted that a few changes were made from last year’s survey.  One question was added to solicit feedback on the strategic planning process and two questions were expanded to include comments on the leadership of the Chair, Vice-Chair and Committee Chairs. The survey results will be reviewed by the Chair, Governance Committee Chair and Corporate Secretary, as appropriate.

6.4 Report from the Community Investment Committee

Staff provided an update on the overall Community Investment Program.  It was noted that the findings of the Canadian Internet Forum (CIF) session held on June 1, 2016 would be incorporate into the Internet Governance Forum (IGF) discussion to be held later this fall.  The data collected from the .CA Internet Performance Test (IPT) during the past year (160K tests) was published for first time on April 28th, 2016. On-going support for existing IXPs and emerging new IXPs was being provided.

As for the granting program, staff reported that 93% of round one reports were received by end of FY16 and a 100% of round two reports are expected to be received by end of FY17.  In round three, 181 applications were received, representing a 38% increase year over year.  The Committee selected 25 projects for a total of $1.04M. Staff has begun working with the grant recipients to identify and leverage public relations and engagement opportunities.

Staff reported that the social impact assessment and analysis by Deloitte was now complete. The objective of the assessment was to understand the social/community investment measurement; identify where CIRA is advancing with the program; and determine the next steps required for measurement.  Staff will be reviewing the results of the assessment with the Committee then report back to the board at a later date.

6.5 Report from the Finance, Audit, Investment and Risk Management (FAIR) Committee

The Chair of the FAIR Committee reported that at its last meeting, the Committee had reviewed the FY16 unaudited financial statements and that the audit field work had been completed. 

The Q4/FY16 Investment Management Report from Phillips, Hager & North (PH&N) and the Q4 Enterprise Risk Management report prepared by management were both tabled.

The Committee also reviewed the investment management report from PH&N, our Investment Manager.  It was noted that the portfolio had increased by 1.3% during the last quarter of the fiscal year and exceeded the related benchmark.  At year-end, the asset mix was in compliance with the Statement of Investment Policies & Practices (SIPP).

A report on the high and strategic level risk inventory was also presented to the Committee as of March 31, 2016. Staff noted that overall the risk count had increased by 7 over the same period and the risk exposure value had declined by 105 over the fiscal year. 

7. By-law No. 1 – Term Limits

The Chair of the Governance Committee reported that there are currently no term limits for Directors and was therefore recommending that the By-law be amended to incorporate term limits.

The term limits would consist of three consecutive 3 year terms (e.g. 9 consecutive years), after which a Director would be required to take a one year of absence before resuming office on the Board. It was noted that existing Directors would be grandfathered and since some of the existing Directors will be in the middle of their term at the time when the By-law is approved by the Members, such Directors would only be eligible for 2 additional consecutive terms.

On the recommendation of the Governance Committee

It was therefore resolved that:

1. Section 3.06 of CIRA’s Amended and Restated By-law No. 1 be amended to include (b) and (c) as follows:

(b) Each Director shall be eligible for re-election, provided that such Director shall not be elected for a term that will result in the Director serving more than nine (9) consecutive years. After serving nine (9) consecutive years, a Director shall be required to be absent from the Board between the end of her last term until thefollowing Election Period.

(c) In determining the length of service of a Director, service prior to the coming into force of this section shall be excluded.

2. The aforementioned amendments be approved effective today, in accordance with the Canada Not-for-profit Corporations Act.

(Moved: F. West, seconded: A. Escobar, unanimously carried)

8. Other Business

There was no other business to discuss.

9. Next Meeting

The next meeting will be held on September 21, 2016 in Toronto.  

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 4:30 p.m.