Minutes of the Meeting of the CIRA Board of Directors held via Webex on September 22, 2020 at 12:00 p.m. ET
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, Byron Holland, Charles Noir
Corporate Secretary: Brigitte LeBlanc-Lapointe
Recording Secretary: Lynn Gravel
Guests: Sanita Alias, Albert Chang, Steven Barry, Dave Chiswell, David Fowler, Andrew Fraser, Paul Havey, Jacques Latour, Wendy Wagner (Gowling WLG)
1. Approval of Agenda
It was moved by M. Gamble and seconded by I. Almeida-Côté that the agenda for the meeting be adopted as presented. The motion was unanimously carried.
2. Chair’s Remarks
The Chair provided a brief overview of the purposes of the meeting.
3. Consent Agenda
The Chair called for any items to be removed from the consent agenda for discussion.
3.1 Approval of the Draft Minutes of the July 22, 2020 and August 12, 2020 Board of Directors’ Meetings
3.2 Report on Statutory Obligations
3.3 Management Report
It was therefore resolved that item 3.1 on the consent agenda be approved and the remaining items be received.
(Moved: I. Almeida-Côté, seconded: R. Black, motion unanimously carried)
4. Q1/FY21 Financial Report
The financial statements were provided to the Board of Directors as information and tabled at the meeting.
Staff gave an overview of the Q1/FY21 financial results as compared to the budget, including reviewing specific line items in the Statement of Operations and more significant variances from the budget. In particular, Staff noted that DNS, Registry & Other service revenues were approximately $51K lower than budget expectations, offset by registration revenues approximately $49K higher than budgeted (which was partially driven by an increase relating to COVID-19 and general movement towards creation of an online presence). The core operational expenditures were approximately $64K under budget as at Q1/FY21, and Staff highlighted the impact of expenditures relating to consulting, staff travels and staff training & development due to a travel and training being suspended as result of the COVID-19 environment. Staff also provided an update on the Community Investment Program disbursements. Finally, as for the investment portfolio, Staff noted there was a positive rebound in the world financial markets during Q1-FY21. Overall, the quarter had a surplus of $952K as compared to the budget deficit of $1.17M.
In light of the impact of the COVID-19 pandemic, Staff also provided a preliminary forecasted Year End Expectancy (YEE). Staff identified certain emerging cost pressures on CIRA’s operations, despite the expectation for better than budgeted revenues (resulting from a lack of staff turnover; limited use of vacation entitlements; higher than anticipated salary costs; increased consulting costs; offset by travel savings and lower staff training).
Staff updated the board on the Target Operating Model (“TOM”), noting that its focus is the FY21 Budgeted TOM – Gross Margin and Contribution Margin. Staff also presented a first illustrative Beta Q1 Actual to Budget TOM for diversified services, manually prepared to supplement the standard Q1 Actual to Budget reporting package, by nature and function.
Following discussion and questions from the board in respect of the contribution margin, Staff noted it was in the process of reviewing the impact of some of the larger opportunities secured or possibly coming to fruition, but that it was still too early for a positive contribution margin this year. The Board underscored wanting an understanding of when the Diversified Services business unit would reach a positive Contribution Margin, as well as defining a target in respect thereof. Staff is also looking at the possibility of decreasing third party licensing costs and/or increasing CIRA sales that don’t attract licensing costs over time.
Staff will report back at the November Board meeting with a “forward looking” Year End Expectancy (“YEE”) forecast from the business and/or product owners on a TOM basis.
The board also discussed CIRA’s employee vacation policy and requested that staff examine best practices having regard to employee mental health and carryover / financial risk, among other factors.
5. Committee Reports
5.1 Report from the Service Strategy Committee
The report from the Service Strategy Committee was tabled and discussed at the meeting.
Staff provided an update on the product scorecard for Q1/FY21, noting the market opportunities and strategic alignment for the following core services: DNS, Canadian Shield, Registry Platform, Internet Performance Test, Cyber Awareness and Diversified Financials, as well as updates relating to each of the foregoing.
The Chair of the Committee presented the following four (4) diversified products questions and metrics for discussion: 1) financial (how much tolerance does the board have for financial losses associated with diversified services); 2) risk (what are the risks associated with diversification and how are they evolving in additional to financial losses); 3) public good (how does the board value the public good of the diversified services); and 4) expatriate services (how significant should services to non-Canadians become relative to services to Canadians). In regard to the expatriate services, and to set the context, Staff noted that the typical Anycast model as well as CIRA’s, is to use 3 – 4 separate outsourced providers, this would apply to any mature Registry operator. It was further noted that CIRA has gained a reputation as a DNS Anycast provider, and is in the building stage, therefore it will take some time before realizing a positive contribution margin. A board member noted that staff and board time devoted to the growing lines of business should be considered, as well as the tipping point from the strategic plan.
The Chair of the Committee noted that the metrics, discussion and comments will be be the focus of the Committee, in collaboration with the FAIR Committee.
5.2 Report from the Community Investment Committee
The report from the Community Investment Committee was tabled and discussed at the meeting.
The Co-Chairs of the Committee noted that the Board had requested that staff review and look to synchronize the Community Investment Program (“CIP”) grants budget approval to align with the corporate budget approval, to coincide with the annual cycle that culminates in February. The Committee reviewed the proposal drafted by staff and did not highlight any substantial concerns with the recommendation. The recommendation had been presented by the Committee to the Governance Committee to make the formal recommendation to the Board.
It was therefore resolved that the Community Investment Committee and the Governance Committee recommend that the Board of Directors approve a shift in the annual CIP grants timeline to better align with the CIRA corporate planning and budgeting calendar, such that the application period, panel review and project selection would follow the annual CIRA budget approval.
(Moved: I. Almeida-Côté, seconded: C. Arnold, motion unanimously carried)
The Committee also reviewed and provided feedback on the CIP metrics reporting framework. The measurement framework is comprehensive and would include all community investment activities undertaken by CIRA – both grants and corporate initiatives. The Co-Chairs noted that the challenge of reporting both management led and granting program initiatives. Management led initiatives are typically executed in a single fiscal year, whereas the granting program operates with a different cycle, typically 18 – 24 months. The Committee will review the framework once more at its next meeting and report to the Board at the November meeting.
5.3 Report from Governance Committee
The report from the Governance Committee was tabled and discussed at the meeting.
The Chair of the Committee reported that the Committee had met recently. The Committee reviewed the responses from the Meeting Effectiveness Survey of its last meetings. Overall, respondents were satisfied with the effectiveness of the meetings. The Committee was recommending that, instead of completing a survey, some time be set aside at the end of each meeting to assess the Board meeting effectiveness.
The Governance Committee also discussed the re-appointment of the Corporate Secretary. The Chair of the Committee noted that according to CIRA’s By-laws, it was not necessary to re-appoint the Corporate Secretary every year, as the Secretary of the Corporation shall hold office from the date of appointment until her successor is appointed or her earlier resignation or removal. Overall, members of the Committee were supportive of re-appointing the Corporate Secretary for another year. It was agreed that the Chair of the Board, CIRA’s Corporate Counsel and the Corporate Secretary would discuss any areas of improvement.
Finally, there was discussion of the composition of the Governance Committee, in particular in respect of the participation of the Chair of the Board.
6. CIRA’s IXP Sustainability Strategy
The report on CIRA’s internet exchange point (“IXP”) sustainability strategy was tabled and discussed at the meeting.
Staff noted that the IXP program strategy is focused on supporting CIRA’s mission to build a trusted internet for Canadians. IXPs are a fundamental component of internet architecture and are critical for CIRA’s operation of the .CA TLD, as well as DNS and cybersecurity services.
Staff noted that the sustainability of an IXP can be assessed from many perspectives and is not solely financial in nature. As a guideline, the following IXP sustainability criteria were defined: 1) local network traffic and population potential; 2) financial autonomy; 3) governance diversity; 4) technical community (volunteer & best practice); and 5) remote communities. It was underscored that CIRA is not responsible for the sustainability of individual IXPs, because each IXP is its own entity with a governance structure and community. As such, CIRA does not control any IXP in Canada.
Overall the Board was very satisfied with the strategy. Staff was asked to add to the IXP report a reference to any partnerships and an overview of the process of evaluation.
There was discussion on CIRA’s position on open peering strategy. It was noted that IXPs themselves have an open peering policy, and the IXP members have their own peering policies (who they exchange traffic with in Canada). Staff noted that CIRA has an open peering policy. Staff noted that success can be measured by member and traffic growth. Another success metric being investigated is tracking the number or rural Internet Service Providers connecting and exchanging traffic in Canadian IXPs (show the availability of rural transport availability).
Finally, there was discussion of CIRA’s role in IXPs, including through the delivery of certain diversified services, such as Canadian Shield, education, advocacy and funding.
Staff noted that the purpose of the memorandum is to address the foreign privacy questions that were raised following the FAIR committee meeting of July 13, 2020. It was noted that in Staff’s view, CIRA is compliant with the various foreign pieces of privacy legislation that were identified in the FAIR meeting.
W. Wagner joined the meeting.
Overall, the Board was very satisfied with the report.
W. Wagner withdrew from the meeting.
8. Other Business
Staff provided an overview of the proceedings of the Annual General Meeting to be held on September 23, 2020.
On behalf of the Board and staff, the Chair thanked Tyson Macaulay for his time and effort to the organization as a director and member of various committees throughout his term.
9. Next Meeting
The next meeting of the Board will be held on November 19, 2020.
S. Alias, S. Barry, A. Chang, D. Chiswell, D. Fowler, A. Fraser, L. Gravel, P. Havey, B. Holland, and J. Latour withdrew from the meeting.
10. In-Camera Session
The Board of Directors held an in camera session.
There being no further business, on motion by R. Black and seconded: A. Escobar, the meeting was adjourned at 5:26 p.m.