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Minutes – Board Finance Committee (BFC) Meeting

BFC Attendees: Rajasekhar Ramaraj – Chair; George Sadowsky; Bruce Tonkin (Observer).

Apologies: Gonzalo Navarro

Other Board Attendees: Rod Beckstrom – President and CEO; Steve Crocker; Peter Dengate Thrush; Dennis Jennings; Katim Touray.

Staff Members Present: Akram Atallah – Chief Operating Officer; John Jeffrey – General Counsel and Secretary; Kurt Pritz – Senior Vice President, Services; Kevin Wilson – Chief Financial Officer; Juan Ojeda, Diane Schroeder and Amy Stathos

Guests: Representative from KPMG; Representatives from UBS

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

  1. Introductions: Welcome to new ICANN controller, Juan Ojeda, who thanked the Board and Kevin for the opportunity.

  2. Preliminary Report: The BFC reviewed and approved the preliminary report from the last BFC meeting.

  3. Project List: Staff discussed the development of the project list as an ongoing document.

  4. FY10 Performance: The BFC received a brief staff report on FY10 budget. They discussed the overall management, revenue, budget variance, and the current financial picture. The committee also discussed the various postings made or to come, including the clean audit for FY10, Board member contractual relationships notice, Board member expense reimbursement report, fluctuation report, the Annual Report and the Form 990. Staff also reported on material line item budgets. The committee also discussed the interaction between the new gTLD budget and the overall budget.

    • Actions:

      • Staff to provide more statistical analysis of line item variances to be provided in the posted fluctuation analysis and finance blog.

      • Staff to look into opening additional account(s) to maximize interest return on working capital.

      • Staff to consider adding cash flow analysis to future performance reviews.

  5. FY11 Financial Performance: Staff provided status update on FY11 finances for the BFC to review. BFC discussed various aspects relating to reporting, including how the current year budget should be viewed with the understanding that funds allocated to new gTLD start-up will be recovered in the future.

    • Action: Staff to distribute historical budget analysis for discussion in Cartagena.

  6. FY12 Development Process: Staff presented proposals for changes in the development process for FY12 budget. The committee discussed the process for including SOs and ACs in the development process and discussed allocation and disbursement authority for funds earmarked for the SOs and ACs and the challenges in developing a plan. The committee also discussed the idea of developing a three-year budget cycle to provide for longer-term planning.

    • Action: Staff to continue working on development plan for further discussion in Cartagena.

  7. Investment Policy: KPMG representative presented results of survey to Board re: Investment Policy. Objectives of the reserve fund have not changed, but there did appear to be a change in risk tolerance. KPMG recommended that more detail should be included around income benchmarks, foreign investment profile should remain as is, and there could be expanded focus on commodities, real estate and emerging markets as part of investment profile and asset allocation.

    • Actions:

      • Staff to present committee with recommendations for revision of investment policy.

  8. Reserve Fund: Representatives from UBS, ICANN’s Investment Management Company, made a presentation about the current state of the reserve fund. The committee discussed issues around non-U.S. currency exposure and the various other risks inherent in reserve fund investments.

    • Actions:

      • Staff to present recommendations to the committee, including exploring alternative strategies such as using low load index funds.

      • Staff to quantify total investment fees paid in FY10, including any embedded fees in investment portfolio.

Domain Name System
Internationalized Domain Name ,IDN,"IDNs are domain names that include characters used in the local representation of languages that are not written with the twenty-six letters of the basic Latin alphabet ""a-z"". An IDN can contain Latin letters with diacritical marks, as required by many European languages, or may consist of characters from non-Latin scripts such as Arabic or Chinese. Many languages also use other types of digits than the European ""0-9"". The basic Latin alphabet together with the European-Arabic digits are, for the purpose of domain names, termed ""ASCII characters"" (ASCII = American Standard Code for Information Interchange). These are also included in the broader range of ""Unicode characters"" that provides the basis for IDNs. The ""hostname rule"" requires that all domain names of the type under consideration here are stored in the DNS using only the ASCII characters listed above, with the one further addition of the hyphen ""-"". The Unicode form of an IDN therefore requires special encoding before it is entered into the DNS. The following terminology is used when distinguishing between these forms: A domain name consists of a series of ""labels"" (separated by ""dots""). The ASCII form of an IDN label is termed an ""A-label"". All operations defined in the DNS protocol use A-labels exclusively. The Unicode form, which a user expects to be displayed, is termed a ""U-label"". The difference may be illustrated with the Hindi word for ""test"" — परीका — appearing here as a U-label would (in the Devanagari script). A special form of ""ASCII compatible encoding"" (abbreviated ACE) is applied to this to produce the corresponding A-label: xn--11b5bs1di. A domain name that only includes ASCII letters, digits, and hyphens is termed an ""LDH label"". Although the definitions of A-labels and LDH-labels overlap, a name consisting exclusively of LDH labels, such as"""" is not an IDN."