2016/09/21 Minutes

Minutes of the Meeting of the CIRA Board of Directors held at the Renaissance Hotel in Toronto on September 21, 2016 at 9:00 a.m.

Directors attending: Kerry Brown, Andrew Escobar, Michael Geist, Rowena Liang, Louise Macdonald, Helen McDonald, 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, Joe Solly (Deloitte)

Regrets: Kevin McArthur

Recording Secretary: Lynn Gravel

1. Approval of Agenda

It was resolved that the agenda be approved as presented.

(Moved: K. Brown, seconded: R. Liang)

2. Approval of the Draft Minutes of the June 16, 2016 and July 27, 2016 Board of Directors’ Meetings

It was resolved that the minutes of the June 16, 2016 Board of Directors’ meeting be approved as presented.

(Moved: F. West, seconded: M. Moll, unanimously carried)

It was resolved that the minutes of the July 27, 2016 Board of Directors’ meeting be approved as presented.

(Moved: H. McDonald, seconded: M. Geist, unanimously carried)

3. Chair’s Remarks

The Chair noted that the summary of the issues raised from the round table discussion of June 17, 2016 would be distributed after the meeting. The Chair invited members to provide her with their comments and feedback.  Further discussion on the key matters would be scheduled in the next meetings.

Deloitte will be presenting, later in the meeting, their findings on the assessment of CIRA’s broader Community Investment Program. Recommendations will be presented that identify changes that will aid overall measurement goals. This will be followed by a Board discussion.

The Chair further noted that she would be evaluating the Committees and its membership in time for the next meeting.  Each Committee Chair will be expected to give enhanced engagement, sufficient time and attention to participating fully in Committee activities and preparing material to report out at  board meetings.

4. Appointment of Corporate Secretary

On the recommendation of the Governance Committee, it was resolved that the Board of Directors appoint Paul Havey to the position of Corporate 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: F. West, seconded: K. Brown, unanimously carried)

5. Financial and Operational Updates

5.1 Report on all Statutory Obligations

This report was provided as information and tabled at the meeting.  

5.2 Management Report

This report was provided as information and tabled at the meeting.

Highlights noted registration revenue at $19K higher than our quarterly budgeted revenue.  This is attributable to increased new domain registrations (10K units over budgeted amount); and higher than anticipated domain renewals (48K additional unit sales). These improved results make a $19K contribution towards our total Stretch Revenue Target, yet leave us with a ($50K) unfavourable variance against our registration revenue budget. Management is indifferent to sources of revenue that will address the stretch target.

It was noted that while our percentage growth in our Registry operations has been steadily declining in past years similarly to other ccTLD registries, the portfolio of domains under management (DUM) will continue to drive the majority of the organization’s revenue until our product diversification strategy takes root and we achieve wider adoption of our new Registry Services and DNS products. However, in order to fundamentally change the trajectory of our registration business, management may need to examine all other means to grow the Registry operations, such as: the level of financial resources allocated to and/or the structure of our marketing programs and brand awareness activities; re-examining our implementation of a bundled IDN solution; two-letter domains; bundling in other value added product/service offerings; our overall pricing structure; and our renewal process.

It was also noted that the Fury Registry platform was developed to be multi-tenant, to handle the more generic and standardized requirements of the emerging gTLD market,  and to provide the flexibility to handle tailored promotional activities and pricing structures. The primary intention behind the development of the Fury Registry platform was to migrate the .CA Registry onto it.  Staff will examine, in the next 12 to 18 months, how best to migrate .CA to the Fury Registry Platform and the possible implications on functionality, business process and policies.

As previously communicated, the organization has been working on a refresh of its business processes and alignment of these processes along a Product/Business type view. As a result, management foresees a possible evolution in the interaction of management and the Board, in particular in the timing of certain Committee work to be more supportive and conductive to the renewed focus and cadence established within the organization as a result of the internal process changes.

5.3 Review of Q1 2017 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/FY17 financial results as compared to the budget noting that Registration revenue was $19K higher than the quarterly budget prior to inclusion of “Stretch Revenue Target” of $69K per quarter.  The result is a total ($50K) unfavourable variance on Registration revenue.

It was noted that the Domestic D-Zone Managed DNS Service continues to see positive sales traction and as of the end of Q1/FY17, CIRA had 109 unique customers utilizing our D-Zone service. CIRA’s DNS product offering was also chosen and secured by two ccTLDs.

Staff noted that the core operating expenditures are approximately $210K lower than budgeted as at the end of Q1/FY17 driven primarily by savings in Salaries & Benefits and timing differences on Consulting expenditures. 

Investment income for the quarter is $425K favorable driven primarily by unrealized gains on our investment portfolio.

Staff noted that they are obtaining tax advice with respect to the value added tax (“VAT”) and corporate tax considerations and exposure pertaining to the D-Zone sale in Sweden and would share such advice with the FAIR Committee.

6. Committee Reports

6.1 Report from Market Strategy Committee

The Chair of the Market Strategy Committee reported that the Committee had reviewed and approved, at its last meeting, the new product filter.  It was noted that the new product filter will serve as a guideline to evaluate and review New Product opportunities.  The Committee will continue to update the filter as conditions require and evaluate its effectiveness in one year.  The Committee will update the Board when changes occur and when products are evaluated with the new product filter. 

Staff provided an update on the current product development initiatives which are underway. An update was provided on the D-Zone product offerings and acceptance. It was noted the Fury Registry Services will be launched as soon as it becomes ICANN accredited.  Staff also provided an update on launch of the city Internet Performance Test into trial in July.  So far the data set was maturing nicely with approximately 180,000 tests.  

6.2 Report from the Compensation and Review Committee

The Chair of the Compensation and Review Committee reported that the Committee will be having the CEO’s mid-term performance review in November.

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

The Finance, Audit, Investment and Risk Management (FAIR) Committee had not met since its last meeting in June.

6.4 Report from the Governance Committee

The Chair of the Governance Committee reported on its meeting held earlier in the month.  The Committee had reviewed the appointment of the Corporate Secretary, a listing of CIRA policies as well as the Board policies and Board Effectiveness Feedback report.  In response to the Board Effectiveness Feedback report, it was agreed that the Committee would report back to the Board with an action list then with the progress made at a later date.  

6.5 Report from the Community Investment Committee

The Chair of the Community Investment Committee reported that the Committee had met recently to do a lesson’s learned on the third round of applications.  The Committee was recommending improvements to the scoring methodology and a few minor process improvements. The Committee unanimously commended staff for their work and support.

The Community Investment Committee was therefore recommending that the Board approve a provisional FY18 budget for the CIP Fund of $1M for program grant disbursements, in advance of the formal budgeting process.

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

Joe Solly joined the meeting.

7. Community Investment Program (CIP)

Staff reminded the Board that Deloitte had been retained to assist the organization in defining changes that will assist with measurement of the program. As such, they conducted a best practices review, reviewed where CIRA is relative to best practices, and recommended a path forward for the organization.

J. Solly from Deloitte presented the findings of the social impact assessment of the organization’s community investment activity.  It was noted that overall, from internal interviews to external peer group comparison to an analysis of the social impact model for CIRA, there were positive trends and strong beliefs that CIRA was making a positive impact on Canadian society through its contributions to improving the Canadian internet, and that measuring that impact was important for CIRA’s business strategy. However, there were some unclear expectations about the alignment with CIRA’s business objectives; and the need for more measurable results across the whole of CIRA’s Corporate Social Responsibility (CSR) portfolio.

Deloitte noted in their report that CIRA was well positioned with the program given the relatively short timeframe that the organization has been funding CSR activity. The organization’s program was clearly linked to the strategic direction of the organization, has established relatively clear protocols around funding, and was doing a good job on measuring inputs, activities and outputs.

In addition, Deloitte also noted that there was room for improvement. Specifically, the organization could be more effective in articulating program goals/objectives, establishing clear areas of focus, and measuring impacts.

Joe Solly withdrew from the meeting.

8. Open Discussion of Community Investment Program (CIP) and its Components

The Chair proposed a discussion on the potential changes for the future of the program now that three rounds of funding had been executed and Deloitte had presented their report on social impact assessment and analysis. The goal was to determine if a review of the CIP objectives and activities within the program was needed or if the program should maintain status quo with some process improvements.

There was discussion regarding the nomenclature surrounding the terminology used to describe various aspects of the program. In addition overall program goals, strategies and tactics were discussed. It was agreed that in future meetings the Board would discuss overall program goals, strategies/tactics and nomenclature pertaining to CIRA’s program.

9. Other Business

There was no other business to discuss.

10. Next Meeting

The next meeting of the Board of Directors will be held in Ottawa in November 2016.

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

11. In Camera Session

The Board of Directors held an in camera session.

12. Adjournment

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