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Board Finance Committee (BFC) Minutes

BFC Attendees: Sébastien Bachollet, Cherine Chalaby (Chair), Chris Disspain, and George Sadowsky

Other Board attendees: Steve Crocker, Erika Mann, Gonzalo Navarro and Bruce Tonkin

Staff Members Present: Xavier Calvez – Chief Financial Officer; Megan Bishop, Michelle Bright, Elizabeth Le, and Amy Stathos.


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

The meeting was called to order at 4:34 p.m. in Beijing, China.

  1. BFC Minutes/Report Approval: The BFC approved the minutes of the prior meeting held on 13 January 2013.

  2. BFC Schedule: The BFC reviewed its working schedule for the year and the status of the work remaining for the Committee. The BFC discussed the schedule for the posting of the proposed budget by 8 May 2013, followed by 21 days for public comments and 21 days thereafter for a reply period. The final draft would be presented on or about 11 June 2013. The BFC considered whether an additional face-to-face meeting prior to the posting of the budget might be required, but determined that another two to three hour telephonic meeting would be sufficient.

  3. FY13 Budget Recap: The BFC reviewed the FY13 budget.

  4. Contingency Fund: The BFC reviewed the status of the contingency fund line item within the FY13 budget.

  5. Operating Fund: The BFC reviewed the position of ICANN's operating fund at the end of the three most recent quarters.

  6. Reserve Fund: The BFC reviewed the position of the Reserve Fund balance, noting that the balance has remained steady since the last review. The BFC discussed the reserve fund size analysis, including the work ongoing to develop a recommendation on the handling of the reserve fund. The BFC further discussed the process by which the historical costs for the New gTLD Program will be returned to the operational fund and then to the reserve fund, as appropriate.

  7. New gTLD Cash: The BFC reviewed the position of the new gTLD-related funds.

  8. SO/AC Fast Track Budget Requests: The SO and AC submitted 24 budget requests for projects planned to occur during the first four months of ICANN's fiscal year. The panel convened by the BFC to review the requests approved 12 of the 24 requests. The 12 approved requests, include, among others, the SSAC Retreat and the additional GNSO leadership travel requests for meetings, which after this year will become part of the ongoing budget and will not require additional requests in the future. The BFC also reviewed and discussed the 12 requests that were not approved and agreed with the panel's determinations from a budget perspective. The BFC also passed a motion recommending that the Board approve the panel recommended budget requests from the SOs and ACs for the first four months of the fiscal year.

    • Actions:

      • Staff to draft a resolution for Board consideration at its meeting on 11 April 2013.

  9. At-Large Summit: The BFC discussed a summit proposed by the At Large for the fiscal year 2014. Subject to the PPC approval, the cost would be included in the overall FY14 budget. Due to the exceptional nature and high cost of this request, this proposal is to be handled separately from the standard SO/AC budget requests. The At Large Advisory Committee (ALAC) Chair will make a full presentation of the proposal to the PPC in Beijing. The BFC agreed that additional details of the proposal is needed and requested that the PPC seek clarification.

    • Actions:

      • Staff to provide the PPC Chair with questions to ask the ALAC Chair.

      • PPC Chair to seek clarification from the ALAC Chair and revert to the BFC.

  10. Status on New gTLD Investment Strategy Implementation: The BFC discussed the status on the new gTLD investment strategy implementation. The planned completion date of April 2013 for finalizing all contracting and investment conduct is reported to be on track.

  11. Status of Reserve Fund Target Setting: The BFC discussed the process to be used to define how ICANN might set the target for the reserve fund. During the last BFC meeting, it was suggested that ICANN identify and retain a firm that could analyze and recommend a target amount and governance approach. Since then, ICANN has evaluated several potential firms and has selected an experienced advisor to submit an initial proposal. The Committee referred to an earlier version of the ICANN investment policy, which contained a statement that there be a goal of a 12-month reserve fund, but recognized that this was developed over six years ago. The Committee agreed that since this decision was made prior to the new gTLD program, re-examination of the recommendation is prudent.

  12. New gTLD Historical Development Costs: The BFC discussed what expenses qualify as "historical development costs". According to a position paper during FY09, the expenses that qualify are costs incurred to design and launch the program from October 2008 until launch on 12 January 2012. After 12 January 2013, costs cease to qualify as historical development costs. The "historical development costs" have been paid for by the ICANN operational fund, which will be recovered from the New gTLD Program fund.

  13. Total New gTLD Program Costs To Be Recovered: In addition to the Historical Development Costs, there are two other new gTLD cost categories that have been funded by ICANN operations since the launch of the Program on 12 January 2012 and which will continue through the end of the Program. These are: (1) new gTLD department costs (personnel compensation, travel, professional services and administration); and (2) ICANN allocation costs for staff and overhead. Like the historical development costs, these costs have been accounted for in ICANN operations and will be recovered from New gTLD Program.

  14. Update on ccTLD Contribution Model: The BFC provided an update on the ccTLD contribution model. The work of the ccNSO Finance Working Group, which was launched in 2010, is still on-going. In June 2012, staff suggested a change in the base for the contribution model from Expense Area Groups to a Value Exchange. The draft Value Exchange model presented by ICANN to the Finance Working Group in January and March 2013 consists of three categories of costs: Specific, Shared, Global. A final review of the draft model is planned for Beijing. After Beijing, the next steps for the Finance Working Group are: (i) approval of the final Value Exchange model; and (ii) Definition of the methodology for allocating the voluntary contributions by the ccNSO members.

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""icann.org"" is not an IDN."