Analysis On Monday, 740 members of .uk internet registry operator Nominet made the drastic decision to ditch five of its 11-strong board of directors, including the CEO and chairman, in a fierce rebuke of the company’s efforts to move from a non-profit organisation to a commercial one.
Today, Nominet has an interim chair – one of the remaining non-executive directors – and no CEO. Two of its senior management – Eleanor Bradley and Ben Hill – were also removed from the board, and remain in their jobs at Nominet for the moment. The fifth board member to get the boot is non-executive director Jane Tozer MBE, OBE.
And while the remainder of the board have said they “will be working on a strategic change in direction,” the reality is that they have all supported the CEO and chair’s action over the past five years, all unanimously opposed the vote, and in some cases were highly critical of the reasoning behind it.
The vote was close. The 740 members in favor faced 632 opposing, resulting in a narrow five per cent margin of victory. Of those opposed, many acted on the former chair and CEO’s claims that a yes vote would be destabilizing for the organisation. That still might be the case.
As things stand, Nominet’s board and senior management are at loggerheads with their own members, the membership is split, and the path forward is unclear. So what happens next?
Right now there are two statements pointing to the direction in which Nominet is likely to head. The first is from interim chair Rob Binns who emailed Nominet members late on Monday shortly after the results were made public.
“I’m writing to let you know that the EGM motion has passed,” he began before promising that the board had “heard the clear message from members, and Nominet will change.” The board had developed a contingency plan in case it lost the vote, he said.
“The board’s immediate priority is stability, beginning with governance and leadership for Nominet while getting on with the seven-point plan and starting to address the issues raised over the last weeks.”
And that’s where the problems begin.
The seven-point plan that Binns identifies as the basis for moving forward was only developed in light of the EGM and was intended to mollify Nominet members and encourage them to vote against the resolution to fire the CEO and chair.
The plan was produced quickly, reactively, and by the two men who have just been ousted – chairman Mark Wood and CEO Russell Haworth. It’s unclear whether the plan was ever formally approved by the board (because Nominet’s board stopped publishing its meetings) but even if it was, the 740 members who voted yes did so in full awareness of the plan’s contents. It is not hard to argue that the seven-point plan has little or no legitimacy.
Chairman, CEO of Nominet ousted as member rebellion drives .uk registry back to non-commercial rootsREAD MORE
Binns second paragraph is equally problematic. “In particular our work together on the Registry Advisory Council, designed by members to create stronger and closer engagement around critical issues of the .UK registry, including pricing, will progress quickly to full implementation.”
But, again, the sudden push to approve the Registry Advisory Council (RAC) was done in the light of the EGM vote. One board member even put pressure on a Nominet member who refused to sign up to it until the EGM was over. Many members do not agree with the RAC’s structure or approach, and don’t feel it has sufficient autonomy or authority.
Back to Binns: “We have heard strong views from many of our members and Nominet will change in response. In addition to the actions already underway, we will start with an intensive period engaging on the issues raised by the campaign so that we understand the breadth and depth of member concerns. This is the first step to review and implement changes to purpose, strategy and structure. We aim to complete the journey in 6-12 months.”
And it is at this point – where there appears to be the ability to avoid another major clash between members and management – that we turn to a second statement; this one put out by Simon Blackler who spearheaded the PublicBenefit.uk campaign that successfully threw out the five board members.
Out the back of the watershed
Blackler’s letter is addressed to the remaining board members, and refers to the vote as “a watershed moment in Nominet’s history and demonstrates the resolve of the membership to restore its original purpose.”
He gets straight to the point: he wants new leadership and he names the two men he wants. “As you are aware, my original plan contained a second resolution that called for Sir Michael Lyons and Axel Pawlik to be appointed (note, not 'elected') as interim chair and deputy chair respectively. The Public Benefit campaign always sought to provide for a stable transition but Nominet refused to put the second resolution to a vote.”
His statement is entirely true: PublicBenefit.uk put forward the EGM initially with two resolutions: one removing the five board members, and a second appointing two caretaker directors – ex-BBC Trust chairman Sir Michael, and industry veteran Pawlik. Nominet’s former leadership argued, however, that the second resolution was not legal and refused to put it to members.
Putting the validity of that argument aside, Public Benefit has a strong case that the members that voted to throw out the chair and CEO had also approved of the plan to replace them temporarily with Sir Michael and Pawlik.
It is worth noting that Sir Michael is not only a former chair of the BBC Trust, and so heavily experienced, but that he was also the author of a report, commissioned by Nominet, into how to resolve the simmering resentment in the British internet industry toward the organization. Sir Michael made a series of recommendations, almost all of which were rejected by Nominet’s board, and five years later that decision very conclusively came back to bite it. As for Pawlik, he is one of the most experienced internet registry executives in the world having been the head of RIPE NCC for 20 years.
To its credit, the “remnant board” of Nominet recognized that both Sir Michael and Pawlik came with specific legitimacy. Binns said in his letter to members: “The board will now begin the process of appointing a new Chair and a NED to fill the vacancies created by the EGM vote. I wanted to confirm that we will invite Sir Michael Lyons and Axel Pawlik to participate in the process. That process will, of course, be open, rigorous and thorough, based on merit, and encouraging diversity, as any responsible company would. The board and I certainly hope that they will take part. I intend to personally call each of them to ask them to participate.”
Blackler anticipated that the remnant board would argue that a new chair, CEO, and non-executive director has to be elected through the typical election process, and had an argument ready: “Nominet has appointed interim directors previously so there seems no valid objection to appointing these two new interim directors now. Sir Michael and Axel are willing and able to guide Nominet through this transitional period and to implement the campaign’s five-point plan to restore trust between Nominet and its members.”
That five-point plan, incidentally, is very different to the seven-point plan that Nominet’s remnant board seems keen to implement.
Blackler then puts in a kicker: the appointment of Sir Michael and Pawlik is supported not only by the same members who just voted out five board members but also the public support of five founding members of Nominet, who have “pledged their advice and time to the board under Sir Michael and Axel, should you confirm their appointment.” Those five members include Dr Willie Black, who almost single-handedly ran the .uk registry before Nominet even existed and then became its first chair before resigning in 2004. All five members have signed Blackler's letter to today's board.
The letter also warns the remaining board members that if any of them are opposed to the campaign’s clearly stated goals, “you may wish to take the opportunity to consider your continuing involvement with Nominet, in the best interests of the membership and the company as a whole.”
Nominet to get unelected board membersFROM THE ARCHIVES
There was genuine surprise by some members on Tuesday that some of the remaining directors had not resigned, especially given their previous support of the CEO and chair and their critical comments against the successful campaign.
Blackler then gave the remnant Nominet Board until this Friday to make a decision over what it intended to do: a deadline that the board has since indicated it will stick to, although no one is sure what it will decide.
“I've spoken to Rob Binns twice today,” Blackler informed the successful campaign members on Tuesday. “We're starting the process of trying to build trust and enact meaningful change. I'm expecting them to release something Friday. It's very early doors but [Binns] certainly seems to be much more interested in progress than his predecessor.”
So what are the big issues?
As things stand, the next step is whether Nominet chooses to appoint Sir Michael and Pawlik to lead the organisation in the interim. There is no legal reason why the board cannot do that, despite the previous leadership’s claims. So if it refuses and insists on the usual election process, things could get heated.
If, and likely when, the two men are appointed, Pawlik will be expected to ensure that Nominet’s core business continues to run without a hitch while Sir Michael begins the process of reform that should have started back in 2015 with his original report [PDF].
Before that process begins, however, there is the very real likelihood of staff and board resignations. Two senior executives, registry boss Eleanor Bradley and CFO Ben Hill, were removed from the board, remain employed by Nominet, and have been responsible more than anyone, save former CEO Russell Haworth, for the decisions and actions that were so roundly rejected in the vote on Monday.
Not only has their status been significantly downgraded by being removed from the board but while on the board they not only sat on several key committees that approved the plans that were at the heart of the EGM's concerns but also received hundreds of thousands of pounds in bonuses; another significant bone of contention.
Another staff member, general counsel Nick Wenban-Smith, is also likely to be considering his future. Though the job of general counsel is to carry out the executives' wishes, Wenban-Smith frequently put himself in direct opposition to the very members who just fired his boss.
For instance, he refused to accept a petition by over 100 members at a public meeting over a widely disliked plan for Nominet to take over domain auctions, claiming the paperwork wasn’t valid. Then there was the time he refused to hear a complaint against the CEO for claiming Nominet's online forum had become “increasingly aggressive and hostile, not least toward our staff."
When one of the forum's denizens challenged that assertion, Wenban-Smith replied: "We’ve never said that you have been aggressive and hostile towards Nominet staff. You seem to have drawn an inference from our statements that simply isn’t there."
And then there are the remaining non-exec board members. David Thornton attracted the ire of EGM supporters with his full-throated approval of Nominet’s move to commercialism, even suggesting the registry operator be turned into a for-profit company with shares handed to members... when one of the EGM’s main goals was to get back to Nominet’s non-profit roots.
Thornton may choose to remain for the rest of his term though if he does, it will be on the understanding that he has lost the support of those who elected him.
Likewise Phil Buckingham, who was explicitly called out by the PublicBenefit.uk campaign for failing to respond to member concerns, questions, and comments for months before the EGM was called. In a long stream of logged and ignored calls and emails listed on the campaign website, one call on January 4 is summarized as: “Phil admits to mutual contact he’s been ignoring communications from members, not just mine. Having sought advice from Nominet secretary Rory Kelly he’s advised to talk to membership. We’re put in touch via email by said mutual contact, no reply.”
Even James Bladel, who has been the rare case of a Nominet non-exec director willing to at least discuss the organisation’s problems and admit to faults in how the board has handled them, is not free of problems. Bladel is an employee of GoDaddy and although he stands as an independent director, GoDaddy is Nominet’s largest member and it voted against the EGM. In addition, his comments during the EGM itself in which he appeared to revert to old talking points about how a small number of members were unreasonable and “toxic” and had to change their ways, created their own headaches even after he tried to clarify them over Twitter.
One prominent member called him out on the matter: “The only thing ‘toxic’ at Nominet are the people who continue to say it on camera.”
And so, with the situation uncertain, the remnant board pushing in one direction, the PublicBenefit.uk campaign pushing very firmly in the other direction, members feeling vindicated and resentful toward some staff and board members, and those same staff and board having been invited to consider their positions, the path forward is neither clear nor easy.
And that’s before Nominet even begins to address the stockpile of issues that provoked the EGM in the first place. ®