Resignation letter from Angus Hanton, Nominet director, 12 November 2008

Dear Board and Co. Secretary,

I am resigning my position as a non-executive Nominet director with immediate effect. As you know I have been unhappy for some time about how the company is being run – I have had to take legal advice on at least eight separate occasions over the last few months and on each one of them I was advised that what the company was doing was wrong. Furthermore the chairman has refused to pay the costs of non-executive directors getting independent legal advice which runs contrary to good corporate governance, as does too much else at Nominet. The problems clearly lie not with the corporate structure, as David Hendon of BERR has suggested, but with the way the company is actually being run.

Personally I do not believe Bob Gilbert and Lesley Cowley are the right people to lead Nominet at this point and I agree that their positions should be put to an immediate member vote.

I have been shocked by the board’s attitude on executive pay and senior staff disciplinary issues – both in substance and in procedure. I have also been concerned about unanswered questions relating to the last AGM and board elections. However, directors have collective responsibility for the actions and decisions of the board and I can no longer share responsibility for what is being done in the company’s name.

The company is meant to be controlled by, and answerable to, its membership as well as having duties to the wider community. My firm impression is that some other directors would like to eliminate the membership’s control of the organisation and are not committed to the company’s not-for-profit objectives.

On a more positive note, I am very pleased about the setting up of the Nominet Foundation and I am sure it will be a great success. I have also been privileged over the last 18 months to work with the Nominet staff who are a dedicated, friendly and efficient group of people – I wish them all the very best in their work.

Yours sincerely,
Angus Hanton

Resignation letter from Jim Davies, Nominet director, 20 January 2009

Dear Mr Gilbert

I hereby tender my resignation as a Director of Nominet UK with immediate effect. I regret having to resign; and I hope that the many members whose support enabled me to be appointed do not feel I am letting them down. However, the conduct of the Board is not something that I feel I have any prospect of influencing by reasoned debate; and it is certainly not something I wish to be associated with.

There are many reasons for my resignation, but the main one is exemplified by the recent approval by the rest of the Board of the LTIP executive bonus scheme, enabling the Chief Executive (Lesley Cowley) and the other senior executives to given a three year back-dated bonus of around half a million pounds – on top of their existing generous salaries and their annual PRP. To be making this payment in a not-for- profit company during the worst recession in living memory is, in my view, obscene. Nominet may be largely insulated from the current economic turmoil, due to its uniquely privileged position issuing all .uk domains, but to further reward the Chief Executive and others on profits that I believe flow directly from that monopoly is particularly inappropriate and I think it is a gross abuse of the company’s privileged position.

Even worse, you have done it secretly and without seeking the approval of the membership. To implement such a bonus scheme without membership authorisation is – as you know – contrary to the Combined Code of good corporate governance. Nominet purports to follow the Combined Code, but you have chosen not to in this case.

You are also aware of the independent legal advice that Angus Hanton and I obtained – which made it clear that this was a matter that should be put the members for authorisation at the next AGM before being implemented.

As you know, the Remuneration Committee that sets executive pay has been improperly constituted for some time – due to the fact that you (as Executive Chairman) sat on the Committee. It is also worth noting that Lesley Cowley routinely attended the meetings and (as I understand it) participated in discussions about the proposed LTIP, although she did not vote on it.

Certainly, I was not aware of the LTIP when I first joined the Board in May 2008; and it did not become an issue that was raised until Lesley Cowley returned to work in August. Likewise, much of what appeared to have been agreed in that three month period was subsequently overturned or sidelined, a process that was very frustrating when these were serious issues (such as what many see as the overcharging of British consumers and industry for their .uk domains) that needed dealing with.

I believe your contempt for the company’s constitution is demonstrated by the contract you entered into for the provision of your services as an Executive Chairman; when in fact it now seems clear that it was agreed between you and Lesley Cowley that you would be a de facto Non-Executive Chairman. As a consequence, your contract of engagement – which states that you are an Executive Director and Chairman – appears to have been a deliberate misrepresentation of the actual position. This arrangement is also contrary to Nominet’s Articles – something that you tried (and failed) to get altered at the first EGM in 2006.

A further case in point in relation to the management style at the head of Nominet is the way that you and Lesley Cowley dealt with Jay Daley as IT Director. As you know, he was very concerned about an email that Lesley Cowley sent immediately after the AGM, which revealed that she had advance knowledge of the AGM results. The email also indicated that she was so personally disappointed by the results that she felt unable to come into work for the rest of that week and to deal with the results on behalf of the company.

Jay Daley raised his concerns with a non-executive Director and in due course I became aware of it. I raised it with the company’s external legal advisers, since I had been advised that it could strengthen the company’s position in respect to any claim that Lesley Cowley might make at that time. However, rather than view this as proper conduct for a senior manager, you and the Chief Executive (on her return) chose to deal with it as a breach by him – notwithstanding the clear advice from Leading Counsel that Angus Hanton and I obtained to the contrary. As Counsel said, the way this was dealt with was unjustified and misconceived. As a consequence, the company has needlessly lost a valuable and very highly regarded member of the senior management team.

The points I have raised above also form an integral part of my defence to the specious claims that you and Lesley Cowley have brought against me in the company’s name. Over the years, you have allowed clear conflicts of interests to exist – most recently Gordon Dick’s involvement in the pre-AGM propaganda. Now you have levelled three false claims against me for alleged breaches and you have also sought outrageous undertakings – which were obviously aimed at preventing me from earning a legitimate living, despite the fact that you had specifically approved the nature of my work when Lesley Cowley was absent.

These claims are just a smokescreen and they will be vigorously defended. When they fail – and if you are still in situ – I trust the membership and other stakeholders will take the appropriate action against you and those on the Board who supported them.

Yours sincerely

Jim Davies

Yet another extraordinary statement has come out of Nominet – the .uk registry owner – today.

This time, the chairman Bob Gilbert lambasts a “number of false allegations” made in a resignation letter from former director Jim Davies.

The letter was posted on the Nominet members’ private mailing list, nom-steer, and contains “sensitive and confidential board and HR matters”.

In it, Davies provides details of an executive compensation package through which he accuses the CEO of unfairly profiting from the non-profit organization, and also alleges that the previous head of IT was kicked out the company for raising a concern about the CEO’s behaviour.

This is just the latest broadside in a war that has been raging at the heart of Nominet for almost a year.

Davies was voted onto the Board as a non-executive director in May 2008 by an increasingly well-organised group of domainers. It wasn’t long before he started criticising the organization, its CEO and the chairman, initially internally, then to its members and then in the press.

Nominet knew what was coming – it sent a letter to all of its members on 21 April effectively warning them off Jim Davies. It also actively canvassed against candidates. The letter asked for all the candidates to disclose:

• Any previous occasions that they have stood for election to the Nominet Board and the platforms on which they stood.
• How they would deal with the conflicts of interest that will arise from their current employment or roles.
• All legal actions involving domain names, or Nominet DRS cases where they have been a respondent, or otherwise involved.
• Any ongoing matters/ investigations of any nature to which they may be subject.

Those implicit accusations – that Jim Davies has conflicts of interest – has grown and grown and eventually enabled the Board of Directors to push Davies out because of his refusal to sign an agreement stating that he would act in the interests of Nominet’s stakeholders – the implication being that was acting in his own or other parties’ interest.

That was just the latest in an avalanche of public and private battles since Davies and to a lesser degree fellow non-exec director Angus Hanton started making things difficult following Davies’ election. The situation became so bad that chairman Bob Gilbert and CEO Lesley Cowley ended up paying a visit to the UK government – a close partner of Nominet – to discuss the problem. The result was a letter from the Department for Business, Enterprise & Regulatory Reform (BERR) – formerly the DTi. Its head honcho David Hendon suggested a corporate governance review.

This was of course a gentlemen’s agreement for how to deal with the fact that Nominet is genuinely concerned that the registry will be overrun by domainers and its status – and in many respects the UK online industry – will be damaged or undermined by those who profit from the quick sale and resale of domains.

Review! Review!

Quick as lightning, Nominet announced a corporate governance review on 29 October. At the same time, the Board upped its pressure on Davies to sign the conflict-of-interests agreement. He refused.

This led to the previous troublemaker-in-chief Hazel Pegg (who I should say I like very much) to immediately call on Davies to resign. Davies responded by calling on the CEO and chairman to resign, and also infuriated them further by disclosing details of Board discussions and making various accusations.

Nominet responded by taking legal action against Davies to “to require him to comply with his statutory duties and remove and avoid conflicts of interest”.

So Davies went public just a few days later, going to the press – my old and favourite IT news outlet The Register – making vague threats and accusations against both the chairman and CEO and calling for them to resign a second time.

The only resignation though was that of Angus Hanton just two days after that. Angus was clearly very unhappy about what had been happening and also turned the screws on Bob Gilbert and Lesley Cowley in his resignation letter. “I do not believe Bob Gilbert and Lesley Cowley are the right people to lead Nominet at this point and I agree that their positions should be put to an immediate member vote,” he argued.

Pressure builds

This caused Andrew Bennett – another domainer that has also stood for election – to set up a whole blog specifically to call on the Nominet members to vote off Gilbert and Cowley.

With the domainers adding this much pressure, others were prompted into action in favour of the management. No less than eight previous non-executives directors signed a letter just over a week later in support of Gilbert and Cowley. And the two current non-executives directors did the same. “We believe that you have both worked tirelessly to further the development of Nominet and the .uk domain in the interests of our members and all stakeholders since your appointment and to suggest otherwise is palpable nonsense,” they wrote.

On top of this the CEOs of no less than six other registries soon signed another letter in support of Gilbert and Cowley: Australia, Canada, France, the Netherlands, Norway and PIR – the people that run .org.

But still Jim Davies refused to budge. That was November, and Nominet hired a new non-executive director to fill Angus Hanton’s post just before Xmas. Maybe it was the lack of support from a fellow Board member, very possibly the management upped the pressure a third time internally. But finally this Monday, Davies realised the game was up and resigned.

But not without posting a resignation letter and throwing out the worst accusations he could muster against Gilbert and Cowley in a last-ditch effort to bring them down. All that prompted the chairman’s response today, accusing Davies of “false allegations” and “a clear breach of his duties”.

The end game?

So, the big question is: is it all over?

Well, it has been a very shaky year for Nominet and the management team has been sorely tested. They have done what they felt was necessary to prevent Nominet from falling into the hands of individuals who did not have the organizations best interests at heart. And it is all too probable that in the heat of battle a number of things were done that will be regretted in retrospect.

Angus Hanton was a troublemaker but the right sort of troublemaker. And Jay Daley is as sweet and honest a bloke as you will ever come across. He is also extremely talented as made clear by his recent appointment as chief executive of New Zealand’s .nz registry operator NZRS.

But Gilbert and Cowley do appear to have staved off the threat of a Nominet with a strong domainer influence. It is a threat that a large number of registries worldwide are concerned about as domainers have the profit incentive and hence the will to get on the Boards of companies created in a much more gentle time by Internet pioneers and idealists.

Threat: real or imagined

Is this threat real? At the moment, yes. Domaining remains a very young industry led by cyberpunks in search of quick and easy profits. There are clear signs of that industry maturing and it wouldn’t surprise me at all if in just a few years the Nominet Board was seeking a representative from the domaining community to be on the Board. But at the moment that’s not the case.

Is there a risk that the domainers will rise again, infuriated by the tactics used by Nominet’s management to defeat them and this time breach the barricades? Well that all depends on Nominet’s members – companies that have been defiantly lazy and unbothered by all the drama over the past three years. Just so long as they get cheap domains, the rest of it is a hassle. And with Nominet’s member structure as it is, it does remain susceptible to capture by apathy.

That is almost certainly what Professor Bob Garratt is looking at revising in Nominet’s Corporate Governance review. So, the window of opportunity for domainers to muscle their way in is rapidly diminishing. And when the door is closed, they will have to come in the front way like everyone else.

Which, in the long run, is good for the Internet and for the .uk registry in particular.

To: Bob Gilbert, Chairman, Nominet
From: Former non-executive directors of Nominet: Richard Almeida, Alex Bligh, Rob Blokzijl, Stephen Dyer, Fay Howard, Keith Mitchell, Jonathan Robinson, Nigel Titley

11th November 2008

Re:
Letter from BERR to Nominet dated 15th October 2008
Board Communique dated distributed 29th October 2008
Open Letter from Jim Davies distributed 7th November 2008

Dear Bob,

We read with great concern the Board Communique circulated on 29th October 2008, the letter from BERR to Nominet dated 15th October 2008 attached to the same email, and the open letter written by one of your non-executive directors, Jim Davies, calling for your resignation and that of your Chief Executive, Lesley Cowley.

We all, as former elected non-executive directors of Nominet, have both a deep concern to ensure Nominet’s continued stable operation of the .uk namespace in the interests of its stakeholders, and collectively a wealth of first-hand experience of Nominet’s operation at Board level.

The BERR letter raises significant concerns on the part of the department about Nominet’s governance and the ongoing applicability of self-regulation to the domain name sector. It suggests an independent review of Nominet’s corporate governance, in particular Nominet’s Board structure and ensuring directors represent the wider stakeholder interests.

The Board Communique states that at Nominet’s Board meeting on 21st October 2008, the Board upheld, having taken leading counsel’s advice, two complaints of serious conflicts of interest on the part of one of your directors, Jim Davies, and noted that Mr Davies had not yet signed the service agreement required of all non-executive directors.

The communique also notes that Angus Hanton abstained on the two conflict of interest complaints. This followed the August Board Communique, which stated that the Board resolved, having again taken leading counsel’s advice, that Mr Davies was conflicted in his role as a DRS adviser.

We cannot comment on the substance of the complaints made against Mr Davies and his alleged conflicts of interest as we have no knowledge of the facts. What is, however, clear is that these complaints and alleged conflicts could not have come at a worse time for Nominet, particularly given the BERR letter. It is difficult to see how directors can be perceived as representing wider stakeholder interests when they are subject to continuing allegations of conflicts of interest, and, in particular, representing the interests of specific registrars.

We emphasise the duties of a director under the Companies Act 2006 to act in the best interest of the Company as a whole; in Nominet’s case, this means, as set out in its constitution, not only its members but also its stakeholders. We further emphasise the new provisions under the Act setting out duties to declare and avoid conflicts of interest, the latter having come into force on 1st October 2008.

Whilst we recognise non-executive directors’ roles include challenging management and acting as a check and balance, Nominees Board should be collegiate in nature. It is hard to see how a Board can be effective when it is so clearly riven with internal divisions. As Mr Davies’ call for your and Ms Cowley’s resignation has made clear, it is now quite impossible for both Mr Davies on the one hand, and Ms Cowley, you and those other directors who support your and Ms Cowley’s continuing tenure on the other, to continue to serve on the Board.

We write to express our support for both you and Ms Cowley continuing in your positions as Chairman and Chief Executive Officer. We have seen no credible evidence of any wrongdoing by either of you. Further, change of executive leadership at this difficult time would be hugely damaging to both the Company and to its stakeholders.

If, as the support of both the Board and leading counsel would suggest, the allegations made against Mr Davies are in fact correct, it is clear that he should not remain a director of Nominet. This would also raise serious questions about the reasons for Mr Hanton’s abstention.

In the light of our serious concern, we call upon Nominet to take immediately all necessary actions to ensure that all directors abide by their duties both under the Companies Act 2006 and otherwise, and not to tolerate any breaches of those duties or any other behaviour which brings Nominet into disrepute. We further call upon Nominet to take whatever action is necessary to ensure its Board can provide a functioning strategic and policy lead for the Company, unencumbered by partisan conflicts of interests and internal disputes.

We recognise that aside from the particular allegations raised, there are longer term concerns as to Nominees corporate governance. We welcome BERR’s suggestion of an independent review of Nominet’s corporate governance, and Nominet’s acceptance of the need to progress this urgently. However, it is difficult to see how any proposed changes could be effected with the Board as divided as it currently seems.

We call upon all current Board members, and all members of Nominet to support the proposals set out above.

Yours sincerely,

Richard Almeida, Alex Bligh, Rob Blokzijl, Stephen Dyer, Fay Howard, Keith Mitchell, Jonathan Robinson, Nigel Titley

Former Nominet non-exec directors support letter to CEO and Chair [pdf]

Well, Nominet’s annual general meeting finished an hour or so ago in London and thanks to Rob, we have a clear rundown of what happened.

In a nutshell: a change of accountants because Nominet is getting bigger; another bit of vote chaos that may blow up tomorrow when the result from the Board election is announced; Nominet is making too much money for its own good; a tentative move forward on another EGM to let Nominet get at ENUM and other registry services (maybe.eu, they say).

As for the Board election, well according to a poll I quickly knocked up on this site and which an extraordinary 15 people voted on, the winners are due to be Gordon Dick and Lord Erroll.

Actually I was surprised in talking to each of them how plausible each person was for the role. And from the people that I’ve spoken to, they were struck by the same thing. Gordon is very capable and approachable and knows Nominet; Lord Erroll knowledgeable and well-connected; Andrew Bennett has a perspective that Nominet needs to understand; Fay Howard is very experienced; Angus Hanton is also very experienced, especially as a Board member; and Peter Gradwell knows the business side of things.

I’ll predict that Andrew Bennett won’t get it because he’s too young and a domainer – but I hope that Nominet members and staff sit down with him and try to pull him into Nominet’s processes. Peter Gradwell is viewed with suspicion because of Pipex and the recent aborted EGM. I’m not sure Angus Hanton is well enough known within the voting Nominet community. And I suspect that Fay Howard will lose out because people want to have at least some kind of change in the Board and Lord Erroll is clearly very capable.

So that’s my weak prediction – which of course aligns with the poll on this blog :-). Of course, if it’s a close run thing, Nominet may be forced to re-run the whole shebang after some discussion about confused voting procedures.

The vote is now on my “polls archive” page, and I’ve stuck up another one about what the most pressing issue on the Net at the moment is. Please feel free to vote. I’ll be able to run this one a little longer than two days (Nominet really has to change its incredibly short voting process).

Poll result

Who gets your vote in the Nominet board elections?

* Gordon Dick (33%)
* Lord Erroll (27%)
* Andrew Bennett (20%)
* Fay Howard (13%)
* Angus Hanton (7%)
* Peter Gradwell (0%)

There are two Board positions going at UK registry Nominet that will be decided on Wednesday (27 September) at the company’s annual general meeting in London.

Last week, Nominet announced that there were six candidates and released a statement from each. Despite the extremely tight time period (for example postal votes have to be with Nominet tomorrow (Monday)), I thought it would be a good idea to do very brief interviews with each candidate asking what I hope are the questions that Nominet members would wish to ask and then post them on the Net to help people arrive at a decision.

So far I have done and edited four of the six, and I have just received an email from Lord Erroll so will hopefully talk to him this evening and post his tonight [Update 8.30pm: Done and now up]. I have yet to hear from Andrew Bennett which is a shame, but if he wants to get in contact and get his points across, there is still time [Another update 12pm: Andrew got in touch and his interview is now also up].

You can read each candidate’s statement here [pdf], but below are MP3s of the interviews. They are slightly different in length but average at around four minutes, and I don’t believe I have given anyone an advantage one way or another, although I may have been a little more aggressive with Fay Howard due to tiredness.

Also during Angus Hanton’s interview either myself or he was called by someone else so there is “call waiting” blip at various points (just in case you were wondering). And Fay Howard was on her mobile so the very beginning is slightly garbled.

In alphabetical order:

• Andrew Bennett (mp3)

• Gordon Dick (mp3)

• Lord Erroll (mp3)

• Peter Gradwell (mp3)

• Angus Hanton (mp3)

• Fay Howard (mp3)

If anyone has any problems getting or listening to these files, please leave a comment below or email me.

Update: Yes, the MP3 player has started playing at odd speeds again. It must be the recorded bitrate, or maybe the fact it’s a variable bitrate. Anyway the files themselves work fine, so click on the MP3 link to listen while I try to sort out the problem.

Second update: No, I’ve wasted 40 minutes on it, so I’ll kill the Flash player until I can get it working without mishap.