Meeting of the Executive Committee Minutes 16 August 2001

INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS

A meeting of the Executive Committee of the Board of Directors of the Internet Corporation for Assigned Names and Numbers ("ICANN") was held by teleconference on 16 August 2001. The following members of the Committee were present by telephone: Vint Cerf, Hans Kraaijenbrink, Sang-Hyon Kyong, Alejandro Pisanty, and Nii Quaynor. (Mr. Pisanty and Mr. Quaynor joined the meeting shortly after it began.) Also present on the teleconference were M. Stuart Lynn, ICANN's President and Chief Executive Officer, and Louis Touton, ICANN's Vice-President, Secretary, and General Counsel.

The meeting was called to order by Dr. Cerf at 8:10 am U.S. Eastern Standard Time.

Approval of Minutes

Dr. Cerf noted that minutes of the Executive Committee's last meeting, which was held on 30 January 2001, had been prepared and distributed to the Committee. Dr. Pisanty joined the meeting during this discussion. Dr. Kyong made the following motion, which Mr. Kraaijenbrink seconded:

Resolved [EC01.7] that the Minutes of the Meeting of the Executive Committee held on 30 January 2001 are hereby approved and adopted as presented.

The motion carried unanimously, with Dr. Quaynor not yet present.

Repayment of Loans

The Executive Committee next considered whether to authorize repayment of loans ICANN had received from MCI WorldCom, Inc. (since renamed WorldCom, Inc.) and 3Com Corporation.

Mr. Touton explained that ICANN received loans from four companies in 1999 totalling US$1,025,000, which greatly assisted ICANN in paying its operating costs prior to the time ICANN attained sufficient regular funding sources. The loans were for one year and could be extended by up to one additional year at the lenders' options. At the time of the meeting, the extended terms of two of the loans had just expired or would soon expire. ICANN has sufficient funds to repay these loans and it is recommended that it do so.

During this discussion, Dr. Quaynor joined the meeting.

Upon motion by Mr. Kraaijenbrink, seconded by Dr. Pisanty, the Executive Committee adopted the following resolution, with Dr. Cerf not participating due to his employment by WorldCom:

Whereas, MCI WorldCom, Inc. has loaned ICANN a principal amount of US$500,000, which was due for repayment on 28 July 2001;

Whereas, the principal due to MCI WorldCom for repayment is US$500,000 and the unpaid interest that will be accrued through 21 August 2001 is US$31,958;

Whereas, in resolution 99.121 the Board delegated to the Executive Committee the authority (with exceptions not here relevant) to exercise all the Board's powers in the oversight of the management of the affairs of ICANN;

Resolved [EC01.8], that the President is authorized to disburse, on or about 21 August 2001, US$531,958 to MCI WorldCom, Inc. in full repayment of its loan to ICANN.

Upon motion by Mr. Kraaijenbrink, seconded by Dr. Pisanty, the Executive Committee adopted the following resolution:

Whereas, 3Com Corporation has loaned the Corporation a principal amount of US$175,000, which will be due for repayment on 23 August 2001;

Whereas, the principal due to 3Com for repayment is US$175,000 and the unpaid interest that will be accrued through 23 August 2001 is US$11,375;

Whereas, in resolution 99.121 the Board delegated to the Executive Committee the authority (with exceptions not here relevant) to exercise all the Board's powers in the oversight of the management of the affairs of ICANN;

Resolved [EC01.9], that the President is authorized to disburse, on or about 21 August 2001, US$186.375 to 3Com Corporation in full repayment of its loan to ICANN.

Payment of Legal Expenses

Mr. Touton noted that during 2001 ICANN has been involved in several intensive negotiations of appropriate contractual arrangements with the operators and sponsors of the seven new TLDs selected by the ICANN Board in November 2000. These agreements are complex (in large part due to the likelihood that they will serve as models for future agreements and therefore should be sufficiently robust and flexible to allow them to be used in those situations as well). To meet the need to move forward with negotiating several agreements at once and to handle disputes arising from the selection process, it has been necessary to enlist the assistance of ICANN's outside lawyers, Jones, Day, Reavis & Pogue.

During the months of February and May 2001, the fees associated with these outside services were US$105,209.90 and US$78,650.70, respectively. Given the discounts ICANN receives from Jones Day in recognition of its non-profit character, the effective hourly rate for the legal services covered by these two invoices is approximately US$200, well under the rates ordinarily charged by lawyers with comparable experience and credentials for work of this type.

Under exisitng Board resolutions, payments in excess of US$50,000 must be approved by the Board. The Board has delegated approval authority to the Executive Committee. There are three general considerations that the Executive Committee applies in making these approvals:

1. Is the payment for a valid indebtedness of ICANN?

2. Was the indebtedness incurred on behalf of ICANN according to actual, implied, or apparent authority?

3. Does ICANN have sufficient funds so that it can responsibly pay its debt?

It was noted that both Dr. Lynn and Mr. Touton reviewed the two invoices, concluded that these three conditions were satisfied, and have recommend that the two invoices be paid. After further discussion, Mr. Kraaijenbrink moved and Dr. Kyong seconded the following resolution:

Whereas, ICANN had significant needs for legal services in the months of February and May 2001 concerning implementation of the new TLD program authorized by resolutions 00.46 through 00.51;

Whereas, Jones, Day, Reavis & Pogue provided extensive legal services to meet these needs;

Whereas, ICANN received invoices from Jones, Day for US$105,209.90 and US$78,650.70 for legal services provided to ICANN in connection with the introduction of new TLDs and related matters during the months of February and May 2001;

Whereas, the President reviewed the invoices and determined that in his opinion they represent a proper indebtedness of ICANN, are for authorized services, and should be paid;

Whereas, the President has advised the Executive Committee that ICANN has adequate funds to pay these expenses;

Whereas, in resolution 99.121 the Board delegated to the Executive Committee the authority (with exceptions not here relevant) to exercise all the Board's powers in the oversight of the management of the affairs of the Corporation;

Whereas, the President advised the Executive Committee's members of his opinion that the invoices should be paid;

Resolved [EC01.10] that the payment to Jones, Day, Reavis & Pogue of US$105,209.90 and US$78,650.70 for legal services provided to ICANN in connection with the introduction of new TLDs and related matters during the months of February and May 2001 is hereby approved and authorized.

The resolution passed unanimously.

Director/Officer Travel Reimbursement

The Executive Committee then took up the topic of reimbursement of travel expenses incurred by ICANN Directors and Officers. Three aspects were discussed:

1. A statement of travel-reimbursement procedures prepared by Diane Schroeder, ICANN's Business Manager. An earlier version of this statement has been followed administratively for some time, but the statement has been updated recently. The Executive Committee discussed the procedures in detail, considering particularly whether the principle that business-class air travel should be reimbursed for flights of greater than five hours' duration should be refined in various ways. After evaluating various proposals for refinements, the Executive Committee concluded that the refinements led to inequities or significant complexities in ICANN's international context and should not be made at this time. The Executive Committee requested the President to provide a report of experience under the procedures in approximately six months.

2. Approval of reimbursement of US$45,754.29 in travel expenses incurred by Dr. Lynn. The Executive Committee reviewed the nature of these expenses and concluded they were appropriate for reimbursement.

3. The ICANN Bylaws require that reimbursement of the President's expenses be authorized by the Board or an authorized Committee of the Board. Obtaining approval, however, ordinarily takes considerable time, which requires Dr. Lynn to bear a significant float in view of his extensive travel responsibilities. Accordingly, the Board discussed a procedure (described in item 8 of the travel-reimbursement procedures) under which the Vice-President and General Counsel may authorize payment to the President of an advance, not to exceed US $20,000 at any time, toward expenses already incurred by the President but for which reimbursement has not yet been authorized by the Board, with the reimbursement to be later approved by the Board or Executive Committee. During this discussion, Dr. Lynn stated that he would provide written assurance that he would promptly repay any amounts advanced where the Board or Executive Committee declined to approve the reimbursement. With this commitment, the Executive Committee concluded that the procedure was appropriate.

Upon a motion by Dr. Kyong and a second by Dr. Pisanty, the Executive Committee unanimously adopted the following resolutions:

Whereas, Article V, Section 22 and Article VII, Section 7 of the ICANN bylaws authorize the Board to authorize the reimbursement of actual and necessary reasonable expenses incurred by Directors performing duties as Directors and Committee Members;

Whereas, Article VIII, Section 9 of the ICANN bylaws provides that expenses incurred by ICANN Officers in connection with performance of their Officer duties may be reimbursed to Officers of the President (in the case of Officers other than the President) or the Board;

Whereas, in resolution 99.121 the Board delegated to the Executive Committee the authority (with exceptions not here relevant) to exercise all the Board's powers in the oversight of the management of the affairs of the Corporation;

Whereas, the Executive Committee has considered a statement of 'Administrative Procedures for Reimbursement of Expenses' presented by Diane Schroeder, ICANN Business Manager, dated 16 August 2001;

Whereas, the Executive Committee believes that it is appropriate to approve formal procedures for the reimbursement of Director's and Officer's expenses;

Whereas, the President has incurred and requested reimbursement for US$45,754.29 in expenses in the course of his duties as President;

Resolved [EC01.11] that the procedures for reimbursement of expenses of Directors and Officers stated in the 16 August 2001 'Administrative Procedures for Reimbursement of Expenses' are hereby adopted;

Resolved [EC01.12] that the payment of US$45,754.29 to M. Stuart Lynn in reimbursement of expenses he incurred as President is hereby approved and ratified; and

Resolved [EC01.13] that, as stated in item 8 of the 'Administrative Procedures for Reimbursement of Expenses', the Vice-President and General Counsel may authorize payment to the President of an advance, not to exceed US $20,000 at any time, toward expenses already incurred by the President but not yet authorized by the Board, with the expenses to be later approved by the Board (or an authorized Committee of the Board).

It was noted that Mr. Kraajenbrink had recently attended the PSO General Assembly and the London meeting of the Internet Engineering Task Force on behalf of ICANN. His assistance in this regard allowed ICANN staff to attend to other matters, including the intensive work on various agreements ICANN is negotiating with registry operators and sponsors. Upon Dr. Pisanty's motion, with a second by Dr. Kyong, the Executive Committee adopted the following resolution:

Resolved [EC01.14] that the Executive Committee approves reimbursement of the expenses of Director Hans Kraaijenbrink for trips he made, prior to adoption of the Administrative Procedures for Reimbursement of Expenses, on behalf of ICANN to the 11 July 2001 PSO General Assembly in Sophia Antipolis, France and to the 5-10 August 2001 Internet Engineering Task Force meeting in London, England.

Mr. Kraaijenbrink did not participate in this action of the Executive Committee in view of his financial interest in the resolution.

At this point, Mr. Touton left the meeting.

Executive Committee Composition

It was noted that in resolution 00.95, the Board appointed the members of the Executive Committee including Michael M. Roberts, then ICANN's President. With Mr. Roberts' March 2001 retirement as President, he became ineligible to remain a member of the Executive Committee, but no resolution appointed Dr. Lynn to serve on the Committee in Mr. Roberts' place. The Executive Committee discussed the situation and concluded that the Board should be requested to appoint Dr. Lynn as an additional member of the Executive Committee.

Personnel Matters

The Executive Committee discussed various personnel matters. Pursuant to Article III, Section 2(c) of the bylaws, a record of this discussion is not included in these minutes.

There being no further business, the meeting was adjourned at 9:00 am U.S. Eastern Standard Time.

 

_______________________
Louis Touton
Secretary