2014/02/25 Minutes

Minutes of the Meeting of the CIRA Board of Directors held at the Marriott Hotel, Ottawa on February 25, 2014 at 10:00 a.m.

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

Advisors: John Demco, Byron Holland, Adam Scott

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

Recording Secretary: Lynn Gravel

1. Approval of Agenda

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

(Moved: B. St.Arnaud, seconded: L. Macdonald)

2. Approval of the Draft Minutes of the December 3, 2013 Board of Directors' Meeting

It was resolved that the minutes of the December 3, 2013 Board of Directors’ meeting be approved as presented.

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

3. Chair’s remarks

The Chair informed the Board of Directors that the main focus of the meeting would be the FY15 Operational Plan and Budget. The Market Strategy Committee, Compensation and Review Committee and FAIR Committee will each provide a report on different aspects of the budget prior to a recommendation to adopt the FY15 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 renewals remained strong and growth was slightly ahead of budget. There were questions on the Performance Evaluation Enhancements and the AON Hewitt Top 50 Best Small-Medium Employers in Canada Program survey. It was agreed that the matter would be referred to the Compensation and Review Committee for consideration and a summary of the survey findings would be provided to committee members.

4.3 Review of Q3 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 Q3-FY14 actual financial results as compared to the budget noting the current operating surplus of approximately $1.5M. Highlights noted that anticipated year-end expected results would include a larger operating surplus than forecast. As previously indicated, cumulative Net New Domain Registrations and renewals continue to exceed budget. Registration revenue is therefore higher than originally anticipated. An overall favourable expenditure variance was also noted mostly due to timing of new hires, consulting services, travel savings and ramping up the New Product Development team and activities.

5. Update on Committees

5.1 Report from the Market Strategy Committee

The Chair of the Committee reported that the Committee had met to review the Product Development strategy. No material issues were raised with respect to the Product strategy.

5.2 Report from the Compensation and Review Committee

The Chair of the Compensation and Review Committee reported that the Committee had met to discuss the CEO’s performance and bonus review for FY14. It was noted that the Committee will be making a recommendation to the Board of Directors at its next meeting.

The Committee also reviewed the organization’s current challenges in hiring and retaining the best qualified people, particularly in the Information Technology sector. A recommendation from management for more flexibility in paying competitive market rates had been reviewed and endorsed.

It was therefore resolved that the Board of Directors approve that CIRA’s Base Compensation mid-market rate be moved to the competitive market rate.

(Moved: B. Gibson, seconded: K. Brown, unanimously carried)

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

The Chair of the Finance, Audit, Investment and Risk Management (FAIR) Committee reported that the Committee had met twice to review the high level and detailed budget proposal. The Committee was therefore recommending that the Board of Directors approve the FY15 Budget and the underlying Corporate Plan as submitted.

The Committee had reviewed the preliminary draft of the soft-launch of the Balanced Scorecard, a measuring tool for management to report to the Board of Directors. It had also considered the structure and format of the Risk Management Report to be used to convey the status of the principal threats and opportunities to the Board of Directors. The Committee had approved the new format and will report to the Board of Directors on risk on a semi-annual basis.

The Chair of the Committee referred the Board of Directors to a memorandum that had been received from the company’s insurance broker. CIRA has been advised of recent changes to the Competition Act regarding indemnification of Directors and Officers/Errors & Omissions for claims and litigation covered by not for profit policies. Exemptions limiting coverage will now apply. The Committee will be examining the implications for CIRA and considering possible mitigation strategies. A report will be made to the Board at a future meeting.

Staff made a presentation of the proposed changes in the Investment Policy Statement and a proposed change in the Investment Management approach. The purpose of the revision is to reflect a shift in the investment objective, increase flexibility in the nature of acceptable investments and to change the investment approach. It was understood that should the Board of Directors accept the proposed Investment Policy Statement, finalization of the policy requires further input from the selected Investment Manager and the Board of Directors. A suggestion was made that the issue of ethical investing be considered under this approach.

It was therefore resolved that the FAIR Committee recommend to the Board of Directors that staff:

1) finalize the Investment Policy Statement based on the proposed direction in the revised draft; and

2) move to a Discretionary Investment Management approach.

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

5.4 Report from the Governance Committee

The Chair of the Governance Committee reported on matters discussed at its meeting the previous day. Highlights noted discussion of the Board Skills Matrix Self-Assessment document Directors had completed in 2013. The value of the matrix was reviewed and confirmed It was agreed that subject to approval of the Board, all Board members would receive a copy of the text they had completed last year and asked to confirm or revise their assessment. Only the Director, elected in October 2013, would be requested to complete the self-assessment.

The Committee had also reviewed the status of the recommendations arising from the 2013 Board effectiveness survey and agreed that a similar survey be conducted in 2014.

Other matters discussed included corporate policies which remain under review; a draft 2014 committee work plan; as well as document outlining priority responsibilities of the Corporate Secretary. The report was accepted as made.

5.5 Report from the Community Investment Committee

The Chair of the Community Investment Committee reported that the Community Investment Program had been successfully launched and the deadline for submission was on February 28, 2014. The Committee is expected to review the applications the following week then meet in mid-March to make their final recommendations to the Board of Directors.

A. Scott withdrew from the meeting. P. Miller joined the meeting at 12:00 p.m.

6. Operational Plan and Budget 2014-2015

Staff reported that the budget presented was a consolidation of the presentations made to the different Committees. It was noted that the operational plan and budget presented would demonstrate a material step function for the organization and entail incurring a deficit in FY15. Overall operational results would balance out over the two fiscal years. It was further noted that the proposed FY15 budget was intended to increase CIRA’s overall organizational capacity, inject critical new skill sets into the organization and proactively position CIRA to achieve its’ strategy, its ability to respond to a new competitive landscape and pursue new opportunities.

A general overview was presented of the major activities the proposed budget is intended to fund, including the carry over projects from FY14 to FY15 and the new initiatives to be undertaken in FY15

The FY15 revenue assumptions based on the portfolio of Domains under Management ("DUM") as at December 31, 2013 and a projection of the level & mix of the FY14 Year-end DUM portfolio as at March 31, 2014 were presented. As for the expenditures assumptions, it was reported that the core operating budget included a provision for salary increase allowance and additional expenditures to support priority undertakings and projected ramp-up. Other assumptions noted the new venture ramp-up and the carry forward of non-utilized Community Investment Program funds from FY14 to FY15.

The increased investment in headcount, mostly under New Ventures and the creation of the CTO position were noted. These additional positions will allow the organization to focus on Research & Development of new products and services as well as to pursue new market opportunities. The proposal to invest in the following areas: DNS infrastructure, Registry services and other complimentary channel service offerings is premised on these assumptions.

B. Sandiford withdrew from the meeting at 2:00 p.m.

The meeting reviewed the breakdown of the Internet related activities including funds to be expended under the Community Investment Program. The impact and resulting reduction in funds available for internally driven activities was highlighted. Concern was expressed and, after consideration, it was proposed that funds be transferred to the Internally Directed Activities account to provide for some of these activities.

It was therefore resolved that the FAIR Committee recommend to the Board of the Board the approval of the FY15 Budget and the underlying Corporate Plan, as submitted and subject to the transfer of $70,000 from Other NFP Entity to Internally Directed Activities under the Internet Related Activities budget.

(Moved: R.Liang, seconded: A. Escobar, abstaining: K. Brown, motion carried) 

7. Update on AGM Venue

It was reported that due to a reduced budget in FY15, a simplified Annual General Meeting is planned. The event will include the proceedings, a lunch and speaker. The cost of the event was discussed and it was agreed that staff will seek sponsorships to cover the costs of this year’s event to the extent possible.

8. Other Business

There was no other business to discuss.

9. Next Meeting

The next meeting will be held in Ottawa on April 17, 2014.

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.

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

11. Adjournment

There being no further business, the meeting was concluded at 4:00 p.m.