Minutes | Board Finance Committee (BFC) Meeting 25 January 2019

BFC Attendees: Maarten Botterman, Ron da Silva (Chair), Danko Jevtovic, and Tripti Sinha

BFC Apologies: Khaled Koubaa

Other Board Member Attendees: Cherine Chalaby, Avri Doria, Lito Ibarra, and Göran Marby

ICANN Org Attendees: Michelle Bright (Board Content Coordination Director), Xavier Calvez (SVP, Chief Financial Officer), Franco Carrasco (Board Operations Specialist), Samantha Eisner (Deputy General Counsel), Alex Morshed (Senior Financial Analyst III), Becky Nash (VP Finance), Wendy Profit (Manager, Board Operations), and Shani Quidwai (Director of FP&A)

Invited Guests: Representatives from State Street Global Advisors (SSGA) and DWS Group (a subsidiary of Deutsche Bank AG)

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

1. BFC Workplan – The BFC reviewed its Workplan, which is on target. Key activities include the close of the public comment period for the draft FY20 Operating Plan and Budget on 8 February 2019. At the next BFC meeting, the Committee anticipates on receiving a report of the comments received and proposed responses to those comments.

   • Action: ICANN org to prepare an overview of the public comments received by 8 February 2019 and to provide the BFC a summary of the number and type of comments received at the next BFC along with draft proposed responses to those comments. The staff report on public comments is targeted to be published the week of 18 March 2019.

2. ICANN Reserve Fund Investment Performance Review – The BFC received a presentation from fund manager SSGA, which is one of highest rated investment management firms and custodian with a global presence. SSGA reviewed the overall performance of the portfolio, noting that from a performance perspective, there was a depreciation ("unrealized loss") during the last quarter of 2018,, just slightly over US$2 million due to the challenging capital markets in the US and across the world. The portfolio has appreciated approximately US$25 million since inception, which was October 2011. At the end of December 2018, the portfolio value was close to US$105 million. SSGA provided an overview of the construction of the strategic asset allocation benchmark for ICANN's portfolio and its compliance with ICANN's investment policies. SSGA advised that the portfolio outperformed its custom benchmark in 2018. The Committee engaged in a discussion concerning the financial market outlook and SSGA's strategy for 2019. SSGA reviewed the international investment portion of the portfolio, which is primarily 12% exposure to international bonds which is right in line with ICANN's investment policy which has a limit of 15% for international investment.

   • Action: BFC to review the Reserve Fund Investment policy and assess whether any revisions should be considered.

3. Environmental, Social and Governance (ESG) Investing – The BFC received a presentation from representatives of DWS Group regarding socially responsible investing and what environmental, social, and governance factors really mean to investors. The main principle of socially responsible investing is how an investment has impact beyond just a financial impact. Specifically, socially responsible investing focuses on three factors: environmental factors, social factors, and governance factors. The BFC noted that ESG investing is a sustainable way forward in the long run. The Committee explored possible risks associated with ESG investing.

   • Action: BFC to assess ESG related investments, including mapping ICANN values to ESG metrics and to make a recommendation to the Board thereafter.

Published on 26 March 2019