2020/02/20 Minutes

Minutes of the Meeting of the CIRA Board of Directors held at Terminal City Club in Vancouver, on February 20, 2020 at 9:00 a.m. PT

Directors attending: Iris Almeida-Côté, Colleen Arnold, Ryan Black, Don Bowman, Andrew Escobar, Matthew Gamble, Jill Kowalchuk, Tyson Macaulay, Helen McDonald, Crystal Nett, Bill Sandiford, Rob Villeneuve

Advisors: John Demco

Regrets: Byron Holland, Charles Noir

Corporate Secretary: Brigitte LeBlanc-Lapointe

Recording Secretary: Lynn Gravel

Guests: Sanita Alias, Steven Barry, Dave Chiswell, David Fowler, Andrew Fraser, Paul Havey, Jacques Latour

Recording Secretary: Lynn Gravel

The Board of Directors held an in camera session.

Sanita Alias, Steven Barry, Dave Chiswell, David Fowler, Andrew Fraser, Paul Havey, Jacques Latour and Lynn Gravel joined the meeting.

Approval of Agenda

It was agreed to review the action items register under Other Business and change the order of the Committee Reports.

It was therefore moved by I. Almeida-Côté and seconded by M. Gamble that the agenda for the meeting be adopted with these changes. The motion was unanimously carried.

Chair’s remarks

The Chair did not have any remarks.

Consent Agenda

The Chair called for any items to be removed from the consent agenda for discussion.

3.1 Draft Minutes of the November 21, 2019 Board of Directors’ Meeting

3.2 Report on Statutory Obligations

3.3 Q3/FY20 Actual to Budget Financial Results

3.4 Management Report

3.5 Appointment of Assistant Returning Officer

It was requested that the Q3/FY20 Financial Results be moved to the regular agenda for discussion.

It was therefore resolved that items 3.1 and 3.5 on the consent agenda be approved and the remaining items be received.

(Moved: M. Gamble, seconded: I. Almeida-Côté, motion unanimously carried)

Operational Plan and Budget FY21

The Chair of the FAIR Committee noted the Committee had met on two occasions to review the Operational Plan and FY21 Budget. The Committee initially reviewed the preliminary high-level revenue and expenditure allocation assumptions, followed by the detailed budget. In addition, the Chair noted that leading up to the meeting the proposed marketing expenditure for .CA was further reviewed by a working group and additional information was presented to the full Board on an early February telephone call with sufficient time for questions and discussion.

Staff presented the FY21 Detailed Operating Budget, noting that this was the first year in the new five-year Strategic Plan. In summary, the FY21 budget proposal includes an operating deficit of approximately ($2.33M), a revenue increase of $1.4M and an increase of $2.3M to the Core Operating Expenditures. The proposed Community Investment Program expenditure was proposed to remain at approximately the same level as the prior year.

With respect to the expected revenue increase, Staff noted that given the uncertainty of the registration business with slowing rates of growth, only nominal growth for the .CA business revenue was assumed. Accordingly, the proposed revenue increase was driven primarily by diversified services. Additional revenue of $240K for the Internet Performance Test (IPT) Program was fully conditional on obtaining program funding from the federal government. With respect to the core operating expenditure increase, staff noted that this was primarily driven by further investment in.CA brand marketing, channel engagement and lead generation, as well as additional staffing resources.

Staff presented an overview of the key priorities to achieve the objectives of the FY21-25 Strategic Plan: 1) continue investment in .CA brand advertising and channel programs; 2) focus on innovation in the area of product expansion; 3) continue the granting program, internet exchange program and other community investment areas and 4) maintain commitment to operational excellence with a focus on talent, processes, tools, and culture.

Staff illustrated various revenue scenarios, including in-depth discussion of variables in respect of: (i) registration revenue relating to domains under management, (ii) DNS, registry and other services, and (iii) IPT sponsorship. Staff also reviewed core operating expenditures in detail, by presenting a breakdown of the nature and function of such expenditures, as well as highlighting principal changes in respect thereof. Staff also noted that the proposed capital expenditures were down by approximately $900K, mostly due to the commencement of exploratory work towards moving to a cloud-based environment and given that most of the build-out of CIRA’s primary datacentre sites was now complete. Finally, staff reviewed the proposed community investment program expenditures. Throughout the presentation there was discussion of risk and Staff committed to develop key performance indicators.

Staff presented a Target Operating Model (TOM) to illustrate the financial sustainability, accountability and responsibility from both product and corporate viewpoints across five (5) portfolio level “thermometers” and illustrating three (3) key metric measurement levels for cost recovery, being Gross Margin, Contribution Margin and Net Operating Profit (Loss). Staff noted that CIRA is already financially sustainable and the tool is intended to assist in improving financial sustainability and the relative balance between each portfolio, over time, in light of the slowing of the domain name market. It was noted that the FAIR Committee continues to oversee the evolution of the TOM tools.

Staff highlighted the key changes around the the .CA advertising program evaluation for FY19 & FY20 and recommended path forward. Staff believes that there is still growth in the market and a market share opportunity for .CA with the right strategy and level of investment.

Staff illustrated the expectation of the estimated new domain unit registrations under three (3) different levels of marketing expenditure over a three (3) year period. The relative financial framework presented assumed three (3) scenarios for the level of marketing expenditures: a minimal floor; the current level of expenditure; and the proposed level of expenditure in the FY21 budget submission. Staff also illustrated what the marginal cost associated with the incremental new domain units would be between the various levels of marketing. Staff also noted that the crude discounted return on investment (ROI) improves over the proposed three (3) year spend based upon achieving higher levels of new domain unit registrations under the same proposed level of marketing expenditure. There was discussion regarding the exit strategy or the critical decision point, as well as which checkpoints should be in place along the way. Staff will be reporting on the campaign metrics and measurement framework as reviewed by the working group and presented to the full Board in early Q4 FY21.

After questions and lengthy discussion, it was therefore resolved that the Board approve the FY21 detailed budget submission, as recommend by the FAIR Committee.

(Moved: M. Gamble, seconded: I. Almeida-Côté, against: D. Bowman, motion carried)

Committee Reports

5.1 Report from the Governance Committee

The Chair of the Committee reported on the activities of the Governance Committee, which met on February 4, 2020. It was proposed that to avoid confusion, the Community Investment Evaluation Committee would be renamed as the Community Investment Evaluation Panel. The Panel would therefore be a sub-committee that would report to the Community Investment Committee. The Co-Chairs of the Community Investment Committee will continue to work with staff on updating the wording of both Terms of Reference, which are expected to be presented at the next board meeting.

The Chair of the Governance committee discussed the appointment of additional independent non-Directors to complete the composition of the Community Investment Evaluation Panel. The Committee reviewed a list of existing and potential committee members’ qualifications including French speaking abilities, area of expertise, community focus and diversity representation. M. Gamble declared a conflict of interest.

The Committee was therefore recommending the appointment of the following Community Investment Evaluation Panel Members:

It was therefore resolved that the Board of Directors approve:

1) the re-appointment of Paul Andersen to the Community Investment Evaluation Panel for a one-year term; and 2) the appointment of Denise Williams, Madeleine Redfern, Heather MacLean and Katie Tuck to the Community Investment Evaluation Panel for a two-year term.

(Moved: R. Black, seconded: C. Nett, abstaining: M. Gamble, motion carried)

The Committee also reviewed the changes to the 2020 Policy on Nominations and Elections. Overall, the Committee was supportive of the changes to the policy, with the exception of the changes in section 11.2 of the Election Rules, the provision to allow candidates on the final ballot to submit on an optional basis, their photo, promotional video, links to their website and social media channels. The Committee agreed with removing promotional video and links to a candidate’s website and keeping the links to the social media channels, which is what is reflected in the version submitted to the directors. There was however disagreement within the Committee on whether CIRA should allow candidate photos to be included on the candidate profiles, but ultimately this was included in the version submitted to the directors. Staff noted that including candidate photos was being proposed in an effort to increase member engagement, and that many organizations are now including candidate photos in their elections. Some Directors expressed concern with the impact on equity and inclusion, as well as the dynamics of the voting process. It was therefore agreed to include the candidate photo and limit to one social media link. The impact of these changes will be monitored.

The Governance Committee was therefore recommending that the Board of Directors approve the 2020 Policy on Nominations and Elections with this amendment.

(Moved: J. Kowalchuk, seconded: M. Gamble, opposed: A. Escobar, motion carried)

The Chair of the Committee noted that the Committee reviewed the changes to the Privacy Policy. The three substantive changes proposed included 1) the collection of Registrant contact information; 2) marketing communications; and 3) service provider arrangements. It was noted that these changes to the Policy reflect the changes to CIRA’s business and practices since the last update in 2012. The Board supported these changes and requested that the Governance Committee continue with a further review of the Privacy Policy to ensure it is forward-looking and aligned with best practices.

The Governance Committee was therefore recommending that the Board of Directors approve the Privacy Policy as presented.

(Moved: J. Kowalchuk, seconded: A. Escobar, motion unanimously carried)

The Chair of the Committee also noted that the Committee reviewed the Board Skills Matrix and Skills Gap Assessment. Directors will be asked in the next week to refresh and submit their self-assessment forms, indicating their level of knowledge in each of the different areas. The results from these self-assessment forms will then be used to complete the Diversity Report to the Nomination Committee.

The Chair of the Committee presented the Terms of Reference for the Committee. The only proposed change was to correct a typographical error pertaining to the Community Investment Committee in that it should reference “non-Director members”. The Board also agreed to remove the requirement to include the Board Chair in the composition of the Committee.

It was therefore resolved that the Board of Directors approve the Terms of Reference of the Governance Committee as amended.

(Moved: R. Black, seconded: M. Gamble, motion unanimously carried)

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

The Chair of the Committee reported that the Committee had met on two occasions. At one meeting, staff presented the FY20 ($,%), FY21 ($,%) & FY23 (% low and high ranges) Aspirational Organizational and Portfolio Level Target Operating Models. At its second meeting, the Committee reviewed and discussed concepts around risk appetite statements; possible areas for which appetite statements could be developed; means of expressing appetite; and the subsequent development of risk tolerances. The concepts will be shared with the Board during a facilitated risk management session to be held at a later date.

The Chair of the Committee also reported that the Committee had reviewed the proposed changes to the Corporate Authorization Matrix (Purchasing Commitments and Signing Authorities) & Financial Bank Signing Authorities Policies. Staff proposed to increase the budgeted and unbudgeted dollar thresholds in light of the increased scale of the organization’s operations and non-salary purchase commitments, as well as to introduce non-financial commitment considerations for procurement. The changes to Financial Bank Signing Authorities policy primarily reflected the corresponding CAM dollar threshold increases.

The FAIR Committee was therefore recommending the approval of the Corporate Authorization Matrix (Purchasing Commitments) & Financial Bank Signing Authorities Policies as presented.

(Moved: C. Nett, seconded: M. Gamble, motion unanimously carried)

A. Escobar withdrew from the meeting.

5.3 Report from the Service Strategy Committee

The Chair of the Committee reported that the Committee had met recently to discuss the Committee’s mandate and the work plan for the upcoming year. The mandate will be reviewed to include product diversification and the market needs. Staff provided a brief update on the product scorecard noting the market opportunities, the competitive landscape and sales activities.

5.4 Report from the Community Investment Committee

The Co-Chair of the Committee reported that the Committee was in the process of formalizing the Terms of References of the Committee and sub-committee. It was noted that Round 7 of granting program was well underway.