Special Meeting of the Board Minutes
MINUTES OF SPECIAL MEETING
17 October 2000
A meeting of the Board of Directors of the Internet Corporation for Assigned Names and Numbers ("ICANN") was held by teleconference on 17 October 2000. The following Directors of the Corporation were present by telephone: Esther Dyson, Chairman, Robert Blokzijl, Geraldine Capdeboscq, Greg Crew, Phil Davidson, Frank Fitzsimmons, Ken Fockler, Hans Kraaijenbrink, Sang-Hyon Kyong, Michael Roberts, Helmut Schink, and Linda S. Wilson. Directors Amadeu Abril i Abril, Vint Cerf, Alejandro Pisanty, and Eugenio Triana joined the call while it was in progress. Also present on the teleconference were Louis Touton, Vice-President, Secretary, and General Counsel of the Corporation; Andrew McLaughlin, Chief Financial Officer of the Corporation; and Diane Schroeder, the Corporation's Business Manager.
The meeting was called to order by Esther Dyson at 5:06 am U.S. Pacific Daylight Time.
The Board welcomed Sang-Hyon Kyong and Helmut Schink, who were seated as directors on 1 October 2000. Dr. Kyong was selected by the Address Supporting Organization and Mr. Schink was selected by the Protocol Supporting Organization.
Mr. Roberts gave a report on ICANN's financial position. After reviewing the increasing formalization of ICANN's budgetary and accounting practices, he reported that ICANN's expenditure levels during the fiscal year ended 30 June 2000 and during the quarter ended 30 September 2001 were substantially less than budgeted due mainly to several staff positions remaining unfilled, but that this was more than offset by a shortfall in revenue due to US$2,553,000 in receivables not yet collected, including a substantial amount of contributions not yet collected from ccTLD operators.
Mr. Roberts noted that through October 2000 ICANN's out-of-pocket costs for the at-large membership program were slightly over US$300,000, with the Markle Foundation grant covering US$200,000 of this amount. In addition to this US$100,000 in unfunded expenditures, there will be substantial costs involved in the upcoming at-large study and in continuing to operate the at-large web site. He outlined three possible levels of support of the web site, ranging from an orderly shutdown to a fully staffed, actively operated web site, and requested guidance on what the level of support should be. After discussion in which Board members stressed the importance of directing financial resources toward a sound, comprehensive study of the at-large program, which could result in costs in excess of US$100,000, the Board informally advised that the web site should be kept online but in a "maintenance mode." Although new registrations should not be accepted until the study is completed, the program should be managed in a way that permits the study to survey those who registered on their experiences, consistent with reasonable restrictions on use of their personal data.
Mr. Roberts noted that somewhat over US$2,000,000 had been recently received from application fees from those proposing to sponsor or operate new TLDs. He pointed out that ICANN's current intention is to treat TLD application fee income as restricted to covering the costs associated with introducing the new TLDs. Because of the large number of applications received, the costs of reviewing the applications will be greater than originally projected. In addition, there will be significant expenses associated with negotiating agreements with the selected applicants, and a very significant level of expenses could result if litigation arises in connection with the introduction of new TLDs. To allow for meeting these costs, the application fees should be retained until such time as total income and total expenses have been fully recorded. During this period, ICANN will have a significant sum of cash that should be managed to enhance interest earned while avoiding imprudent levels of risk. He suggested that the funds on hand from the new TLD application fees could be invested in the U.S. commercial paper market at interest rates several percent higher than ICANN ordinarily receives on its checking account, without significant risk of loss. After some discussion, the Board members voiced their support for this strategy, noting that the Executive Committee could adopt any resolutions that may be necessary to authorize this investment.
Ms. Wilson gave a report on behalf of the Audit Committee. She noted that the independent auditing firm, KPMG, has nearly completed its audit of ICANN's financial statements for the fiscal year ending 30 June 2000. The auditors have concluded that they should issue a report affirming the integrity of the statements, with one qualification regarding the collectability of approximately $1,355,500 in the accounts of country-code top-level domain (ccTLD) operators at June 30, 2000. This qualification is due to the failure of ICANN and the ccTLD operators to achieve agreements for the payment of these contributions towards ICANN's cost recovery. Approximately 75 of the nearly 250 operators have paid all or some of their contribution amounts (and some have paid in excess of their amount), but a large majority of the ccTLD contributions have not yet been received. Although many of the ccTLD operators that have not yet made their full contributions are supportive of ICANN and its goals, they are reluctant to make the contributions until more progress is made toward an agreement defining their relationships with ICANN. This progress has been slow due to differences of views among the ccTLD operators, the governments of the nations and territories involved, and other stakeholders in the global Internet community who are affected by the operation of ccTLDs.
Board members expressed the view that the Board should place particular emphasis on helping the various parties resolve these differences, so that the responsibilities and roles of ccTLD operators within the global Internet community become better defined. It is important for ICANN to make significant progress on this over the year, so that future audit reports are not subject to a similar qualification.
Mr. Touton proposed that the Board formally approve the minutes of the Board meetings of 16 July and 30 August 2000, as presented to the Board.
Upon motion duly made and seconded, the Board adopted the following resolution:
The vote was unanimous, except that Mr. Abril i Abril abstained because recent eye surgery had prevented him from reviewing the minutes.
Mr. Roberts noted that Jean-François Abramatic and Pindar Wong had recently completed their service as ICANN directors. In the ensuing discussion, Board members noted the important contributions of Mr. Abramatic and Mr. Wong in ICANN's early progress and expressed the hope that they would continue their contributions to ICANN's development. Upon motion duly made and seconded, the Board unanimously adopted the following resolution:
Whereas, Jean-François Abramatic and Pindar Wong have served as Directors of the Internet Corporation for Assigned Names and Numbers from October 1999 to September 30, 2000. In fulfilling their duties on the ICANN Board, Jean-François and Pindar have acted with energy, dedication, and fortitude in attacking the numerous challenges to ICANN during its startup and transition period. Each has made many sacrifices in his professional and personal life in order to participate fully in the resolution of the difficult issues which the Board has addressed.
THEREFORE [00.82], their fellow Directors take this opportunity to express their deepest appreciation to Directors Jean-François Abramatic and Pindar Wong for their extraordinary service to ICANN and the worldwide Internet community. May unbroken packets and a plenitude of bandwidth bless your future efforts!
Mr. McLaughlin gave a report on the recently concluded at-large voting process. He noted that approximately 34,000 ballots were cast, resulting in a 45% turnout of those voters that returned to the members.icann.org web site to activate their registrations. The percentage turnout was lowest in North America and highest in Europe. Mr. McLaughlin reported that the voting process went relatively smoothly, though near the end of the voting period there was a forty-five minute outage of the voting site, which resulted in extending the voting period for approximately one hour.
The Board members discussed various reports they had received about, and their own experience with, the voting process. They noted that the voting process provided many topics to consider in the contemplated at-large study, which can lead the way to improved procedures. Several Board members noted that the process would not have been possible without extraordinary assistance by members of the community, personnel at the voting vendor (election.com), and the ICANN staff. Upon motion duly made and seconded, the Board unanimously adopted the following resolutions:
Whereas, ICANN has recently completed a global on-line vote to select five At-Large Directors;
Whereas, the voting process posed unprecedented challenges, including a number of registrations far beyond initially anticipated;
Whereas, despite these challenges the process has been declared satisfactory by an independent monitoring authority, with a finding that "vote tabulations appear to reflect accurately the expressed choices of the ICANN electorate in each region and properly identify the five winning candidates";
Whereas, while some minor technical difficulties were experienced during the vote, these were swiftly rectified by ICANN and contractor staff;
Whereas, these accomplishments in the face of the challenges required tireless efforts by many involved;
RESOLVED [00.83], the ICANN Board acknowledges the work of all involved in achieving this successful result, including:
The members of the board Nominating and Election Committees;
The staff of ICANN, who coped successfully with a heavy demand for registration before the vote, the candidates' communications with voters, and the administration of the whole process;
The contractor, election.com, who conducted this historic world-wide on-line vote; and
The candidates and At-Large voters who participated.
RESOLVED [00.84], the ICANN board believes the experience gained in the conduct of this vote will be of great value to its forthcoming review of the ICANN At-Large selection process.
Mr. Cerf reported that various CEO candidates are being considered by the Executive Search Committee and that a further report will be made in the near future.
Mr. Touton reported on the status of the evaluation team's review of proposals to operate or sponsor new TLDs. He noted that forty-seven proposals were received through 2 October 2000, and that forty-four of these proposals were under active consideration. Although discussion of the substance of the evaluation team's analysis of any particular proposals was premature, he noted the importance of ensuring an appropriate and careful process for the Board to proceed with its review of the proposals and the team's analysis of them. The team expected to prepare a detailed report on the evaluation that could be posted in early November.
Mr. Touton noted that several of the submissions proposed telephony-related TLDs, which may be affected by ongoing standardization efforts of the Internet Engineering Task Force and the International Telecommunications Union. In the ensuing discussion, the Board (recused members not participating) recommended that the staff write a letter to the IETF and ITU, with a copy to the members of the Protocol Council, soliciting views on the submissions involved.
During the above discussion, Mr. Cerf and Mr. Crew left the teleconference.
The Board then discussed the procedure to be followed in its consideration of the proposals. It was agreed that the evaluation team should give the Board an initial briefing as to its analysis, directed mainly to the evaluation procedure rather than the results, during a teleconference on 31 October 2000. It was agreed that directors who have recused themselves should not join that teleconference.
Near the conclusion of the teleconference, the Board discussed arrangements for the meetings in June and September 2001. It was also noted that the nine original at-large directors were still in discussions among themselves regarding which of them would continue to fill the four at-large seats not being filled by the at-large selection process just concluded.
The meeting was adjourned at 7:10 am U.S. Pacific Daylight Time.