Minutes | Meeting of the Finance Committee of the Board (BFC) | 26 March 2024

BFC Attendees: Maarten Botterman, Edmon Chung, Danko Jevtović (Chair), and Patricio Poblete

BFC Member Apologies: Harald Alvestrand and León Sánchez

Other Board Member Attendees: Catherine Adeya, Sally Costerton, James Galvin, Sajid Rahman, and Katrina Sataki

ICANN Org Attendees: Xavier Calvez (SVP, Planning & Chief Financial Officer), Steve Fessler (Treasury Director), Elizabeth Le (Associate General Counsel), Becky Nash (VP, Planning), Shani Quidwai (Senior Director, Finance), Lisa Saulino (Board Operations Manager), and Amy Stathos (Deputy General Counsel)

Invited Guests: Representatives of ICANN's Reserve Fund Investment Manager

The following is a summary of discussions, actions taken and actions identified:

  1. Reserve Fund Investment Performance Review – The BFC received a presentation from ICANN's Reserve Fund investment manager, State Street Global Advisors (SSGA). They reviewed the overall performance of the portfolio since 2023, noting the improvements, especially regarding inflation and monetary policy. The portfolio saw growth, illustrating diversification benefits. SSGA noted that equity markets contributed significantly to growth. SSGA highlighted the strategic conservative asset allocation with 65% in bonds and 35% in equities, and while bank loans were initially considered, they were replaced with high-yield bonds due to logistical constraints, with similar performance outcomes observed in 2023. The Committee discussed the investment strategy of the Reserve Fund, highlighting its conservative nature and the flexibility to adjust the allocation to reflect changes in risk appetite. The Committee also discussed tools to analyze historical and forward-looking returns as well we the historical performance of the Reserve Fund, recent market trends and importance of diversification. The Committee discussed potential hidden risks in the current market peak, particularly with regards to U.S. equities. While markets are not cheap, they are not at extreme valuations, and potential risk can be managed given the fund's balanced approach.
  2. Public Comment Review of Draft ICANN FY25-29 Operating and Financial Plan (O&FP), Draft ICANN FY25 Operating Plan and Budget (OP&B), and Draft IANA FY25 OP&B – The Committee received a briefing on the public comments received on the draft ICANN FY24-29 O&FP, draft ICANN FY25 OP&B, and draft IANA FY25 OP&B. A total of 160 comments were received from six groups and one individual relating to the following categories: operating initiatives plan; functional activities plans; financial management; operating plan; and document structure. The comments were broken down as follows: 49 comments from five groups and one individual were submitted on the operating initiatives plan; 46 comments from five groups and one individual were submitted on the functional activities plans; 41 comments from six groups and one individual were submitted on financial management; 10 comments from three groups were submitted on the operating plan; and 14 comments from six groups and one individual were submitted on document structure. Several commenters noted their support for the activities planned and the transparency of activities for the operating initiative plans. Several suggestions about future enhancements were received on document structure as well as progress measurement and reporting of activities on the operating initiative plans. ICANN org noted that commenters also requested that ICANN evaluate whether resourcing is adequate to fulfill activities listed in the operating initiatives and functional activities. ICANN org further reported that there was also overall support on the Activity Based Reporting as an improvement towards the reporting process. ICANN org also reported that the financial management comments related to financial reporting structure and schedules, additional budget requests (ABR) and the ABR sunsetting process, headcount, and constituent travel and meetings expenses. ICANN org also noted that some of the comments sought clarification on the use of the Supplemental Fund for Implementing Community Recommendations (SFICR) for the Grant Program and the New gTLD Program: Next Round, as well as the treatment of existing and future ABR requests. ICANN org carefully considered all the comments received and prepared responses to each in the Public Comment Summary Report, which is scheduled for publication on 2 April 2024. ICANN org determined no significant changes are needed as a result of the public comments received. Following discussion, the BFC reviewed the next steps in the FY24 planning process. The remaining steps include: (a) publication the Public Comment Summary Report; (b) BFC consideration of adoption plans for recommendation to Board for adoption, which is anticipated to occur on or about 23 April 2024; (c) publication of the proposed for adoption plans, which is anticipated to occur on or about 25 April 2023; (d) Board consideration of ICANN FY24-29 O&FP, draft ICANN FY25 OP&B, and draft IANA FY25 OP&B for adoption, which is anticipated to occur on or about 5 May 2024; and (e) the Empowered Community Period, which is anticipated to occur in May/June 2024.

    • Action(s): ICANN org to publish the Public Comment Summary Report.

Published on 24 April 2024