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Core Principles and Corporate Governance Guidelines

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(Please submit your comments in time for consideration at ICANN's Board meeting in Mar del Plata, Argentina, on 8 April 2005.)

The bottom-up, consensus-based policy formation process, inter-related constituency groups, and the global nature of the Internet community require that ICANN maintain and enforce a carefully crafted set of Corporate Governance Principles in order to ensure the organization’s reputation for independence and fairness

1. Board independence and leadership

1. Substantial majority of the Board are non-Executive Directors.
2. The appointment of suitably qualified members to the governing body of a public benefit nonprofit, or indeed any, organization is a critical factor in that body and the organization’s performance. – Best practice suggests that a nomination committee such as the one currently utilized be established for identifying and screening new Board members.
3. Directors meet minimum once a year without the CEO and Executive directors.
4. CEO and Chairman are separate. The Board should consider succession planning.
5. Certain committees consist entirely of independent directors where fiduciary responsibility would warrant such independence – E.g., audit, board governance, dispute resolution and compensation committees. It is normal practice that the CEO be invited to attend where he or she is not formally a committee member.

2. Board processes and evaluation

1. Board executes written statement of its own governance principles. – The Board’s basis for such a statement could be in following the core values of Article I of the bylaws and ensuring that the key objectives are met.
2. Board should possess the mix of experiences, talents, and skills necessary to be effective. – The Nominating Committee charter requires that it should be mindful of the talents, skills and experiences of incumbent Board members with a view towards diversity.
3. Board reviews its own performance regularly. – The Board Governance committee should periodically provide a full review of the overall performance of the Board and the performance of individual Board members. Board evaluation should include an assessment of whether the Board has the necessary diversity of skills, backgrounds, experiences, races and genders appropriate to the company's ongoing needs.
4. Board reviews CEO performance criteria and performance. – The compensation committee shall periodically review the CEO’s performance criteria and review the CEO’s performance.
5. All directors should have access to senior management.
   The Board should clearly articulate appropriate levels of communication between senior management and the Board. Access to the information the management team is working with and working on. Such information will be provided on request channeled through one of the C-level managers. Tasks will be allocated by Board or committee decision after appropriate consultation with the CEO or top-level management, thus keeping good governance practice in that Directors avoid handing tasks to staff without coordinating with senior management.
6. Flow of information – The Board should be kept aware and well informed regarding all important issues. Forms of communication include:
   1. Board papers and briefings,
   2. Monthly reports,
   3. Financial statements.
7. Risk management: the board of a nonprofit corporation should have clear strategies for dealing with the significant risks that have been identified. For example, the organization’s code of conduct, human resource policies and performance reward systems should support the organization’s objectives and the risk management or internal control systems. The Board should also ensure that authority, responsibility and accountability levels are clearly defined so that decisions are made and actions taken by appropriate members of the management team.
8. Board's interaction with advisors and stakeholders. The Board believes that as a general matter management speaks for and to the organization operating within ICANN’s bylaws, established procedures and policies. If appropriate the Chairman may also speak for and on behalf of the organization.

3. Executive compensation – the Board should have a compensation committee which can implement, as it sees fit and it accordance with the criteria below, the findings of an independently performed executive compensation study.

1. Compensation programs should align with the long-term interest of the internet community.
2. Compensation policies should be transparent.

4. Individual director characteristics:

1. Each director should bring something unique. – Each director should be evaluated individually; to be re-nominated, directors must perform satisfactorily; the Board should publish a list of desired characteristics.
2. Guidelines should govern competing time commitments. – These commitments include participation on other boards.
3. No director should violate the conflicts policy of the organization. – The director may not serve as a consultant or service provider to the company or to any of the constituency groups or members of constituency groups, unless authorized by the Board.
4. Preservation of corporate interests. – Each director must place the collective interests of the organization and its constituencies (including the public) ahead of any person or group, including a constituency that caused the director to be selected.
5. Directors should follow the ICANN Guidelines for Directors (as provided annually to the Board Members) and should be guided by ICANN’s and the Board’s counsel (inside and/or outside counsel as appropriate) – These guidelines set out California Law on: the Role of Director, Director Conduct and Duties; Private Inurement and Private Benefit Transactions.

5. Staff and Board-Staff interaction.

1. Board Members must ensure there is a clear understanding of the scope of authority delegated to the chief executive.
2. Policies and strategies agreed by Board members should be expressed in unambiguous and practical terms, so that the chief executive and staff responsible for implementing those policies are clear what they need to do. Directions given to the chief executive and the staff should come from the Board as a whole.
3. Board members should act fairly and in accordance with good employment and equal opportunities principles in making decisions affecting the appointment recruitment, professional development, appraisal, remuneration and discipline of the chief executive and other staff.
4. Board members must understand, accept and respect the difference in roles between the Board, the chief executive and senior staff, ensuring that the honorary officers, the Board, the chief executive and his/her senior team work effectively and cohesively for the benefit of the organization and develop a mutually supportive and loyal relationship.
5. Having given the chief executive delegated authority, Board members should be careful – individually and collectively – not to undermine it by word or action.

Board Member Declaration

I have read and understand the foregoing Core Principles and Corporate Governance Guidelines, as set forth above, and have been given a copy to retain for my reference. I hereby agree to be bound by these principles and guidelines:

________________________________

Member, Board of Directors, ICANN

Signed: _______________________ (date)

BIBLIOGRAPHY

The Cain Consulting Group, Dan Cain

CalPERS Corporate Governance Core Principles and Guidelines

PriceWaterhouseCoopers, Financial Reporting and Corporate Governance in Not-for-Profit Organisations

General Motors Corporate Governance Guidelines

Council of Institutional Investors – Policies – The Board of Directors

Internet Corporation for Assigned Names and Numbers Guidelines for Directors, Revised as of 2 June 2003, as approved by ICANN Board Resolution 03.51

United Kingdom Principles – CalPERS International Corporate Governance