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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

Staff Members Present: Akram Attalah – President, Generic Domains Division, Susanna Bennett – Chief Operating Officer, Xavier Calvez – Chief Financial Officer, Fadi Chehade – President & CEO, John Jeffrey – Secretary & General Counsel; Megan Bishop, Michelle Bright, Elizabeth Le, and Amy Stathos

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

  1. BFC Schedule – The BFC discussed its schedule, which is on track as planned. The new BFC schedule for FY14 will be available at the Board workshop in September 2013.

  2. Contingency Fund – The BFC reviewed the status of the FY13 Contingency Fund. The BFC was advised that none of the US$3.7 million that had been allocated the contingency fund has been used.

  3. Operating Fund – The BFC discussed the status of the operating fund, noting that a decrease of approximately US$7 million. The primary driver for decrease is the expenses incurred related to the New gTLD Program for staff allocations because the reimbursement from the New gTLD Program cash to the operating cash is not scheduled until July 2013. The BFC discussed that the reimbursement schedule will occur on a monthly basis going forward.

  4. Reserve Fund – The BFC reviewed the status of the reserve fund, which is currently set for a 12-month period. The BFC was advised that the fund amount has remained relatively unchanged at approximately US$50-55 million.

  5. New gTLD Cash/Investments – The BFC reviewed the status of the New gTLD cash/investments, noting that the cash on hand has decreased by US$50 million over the past six months as a result of applicant evaluation expenses incurred and refunds of withdrawn applications.

  6. Singapore Office Lease – Staff presented the BFC with a proposal for a two-year lease of the ICANN Singapore Hub Office. The initial two-year lease term will allow the office time to ramp up and assess its long-term space needs. The BFC passed a motion recommending that the Board approve a budget expense for a two-year office lease in Singapore in an amount not to exceed US$750,000.

    • Action:

      • Staff to forward the recommendation to the Board for approval.

  7. CRM/E&Y Contract – Staff presented the BFC with a proposal regarding implementation of the Customer Relationship Management System (CRM) on the platform to support New gTLD Program operational activities. The proposed platform will contain enhanced capabilities that will enable the New gTLD team to coordinate and manage the remaining phases of the New gTLD Program. ICANN has successfully completed a pilot program of the CRM platform and is now prepared to fully implement the platform. The BFC recommended that the Board adopt a resolution authorizing the President, Generic Domains Division to enter into one or more agreements and make all disbursements required under the agreements for the necessary CRM implementation work to support New gTLD Program operational activities.

    • Action:

      • Staff to submit the proposed resolution to the Board for approval at the 17 July 2013 Board meeting.

  8. Budget Approval Timeline – The BFC discussed the approval timeline for the FY2014 Budget. The BFC previously recommended that the Board approve the FY2014 Budget at the public meeting in Durban. However, since the FY2014 Budget was initially posted for public comment, additional items that should be included in the budget have been identified. These items were shared with the community on 5 July 2013. As the changes were not part of the draft FY2014 Budget that was posted for public comment, the BFC agreed and recommended that the Board approve the FY2014 Budget after the Durban meeting by no later than the end of August 2013. The BFC further recommended that the Board adopt a resolution directing the President and CEO to operate ICANN in a manner consistent with the draft FY2014 Budget that was posted for public comment pending formal approval of the Budget in order to allow ICANN to operate during the beginning of FY2014.

    • Action:

      • Staff to submit the proposed resolution to the Board for approval at the 18 July 2013 Board meeting.

  9. FY2014 Budget Changes – The BFC discussed the changes that have occurred since the draft FY2014 Budget was posted for public comment and how these changes should be treated. These additional costs relate to, among other things, the implementation of the ICANN Strategy Panels (US$3.5 million) and the At Large 2014 Summit (Atlas II) (US$800,000). The BFC recommended that each cost be treated as a separate one-off extraordinary item on the budget because the ICANN Strategy Panels expense is limited to one year and the Atlas II occurs only once every several years. With respect to the New gTLD Program, the BFC noted that the costs budget has increased by US$4.3 million due to the progress of the Program. The BFC recognized that as a result of ICANN's revenue recognition policy, there is a related revenue recognition from the increase of costs. These changes were previously announced to the community on the budget wiki and via email to community leaders: the proposed revised FY2014 Budget will be presented to community on 17 July 2013.

  10. FY2014 Budget: Public Comments – Staff provided a summary on the approximately 75 public comments received to the draft FY2014 Budget for the period closing on 20 June 2013. Responses to the comments were published on 5 July 2013. Overall, the comments indicated that the community favored the fact that there is more information in the current budget presentation for FY2014 than in previous years. The BFC noted that the comments/questions were more strategic in nature rather than budget-specific. The BFC further noted there were no recommended changes to the draft FY2014 Budget as a result of the comments.

  11. SO/AC Additional Budget Requests – The BFC received an update on the SO/AC additional budget requests for FY14 totaling US$649,000 for both fast and regular tracks. The Board previously approved the fast track request SO and AC requests for US$279,000. The SOs and ACs requested an additional US$347,330 for FY14 for both fast and regular a track. The BFC discussed the its recommendation that the SO/AC additional budget requests be approved for US$372,050 to include additional travel funding for each of the organizations for FY14 as a pilot program in the "travel & meeting" budget request category. The BFC noted that the requested $349,000 does not include the expense for Atlas II because it is treated differently given the size, nature and infrequency of the event.

  12. Status Update on Reserve Fund Target Setting - The BFC received an update on the status of the reserve fund target setting. ICANN is in the process of engaging an independent advisor to analyze and recommend a target amount and governance approach. The project will begin once the contract is finalize and will include data gathering, interviews, preliminary report, communication/reviews, and final report. Completion of a preliminary report is currently estimated by the Buenos Aires meeting.

  13. Funding Objections – Staff reported that the Board previously committed to fund certain objections filed by the independent objector, ALAC, and governments. ICANN has already budgeted the amount needed to fund such objections. A total of 27 objections for these three groups have been identified and are now pending before the International Chamber of Commerce (ICC). The ICC has accepted the objections and invoiced ICANN for payment of costs. The BFC recommended that the New gTLD Program Committee (NGPC) authorize the President, Generic Domains Division to distribute all fees necessary to the ICC for the objection proceedings. Sébastien Bachollet abstained from discussion and voting on this matter.

    • Action:

      • Staff to submit the proposed resolution to the NGCP for approval.

Published on 8 May 2014

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