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[Formal Minutes are still to be approved by the ICANN Board]
Note: This has not been approved by the Board and does not constitute minutes but does provide a preliminary attempt setting forth the unapproved reporting of the resolutions from that meeting. Details on voting and abstentions will be provided in the Board's Minutes, when approved by the Board at a future meeting.
NOTE ON ADDITIONAL INFORMATION INCLUDED WITHIN PRELIMINARY REPORT – ON RATIONALES -- Where available, a draft Rationale for each of the Board's actions is presented under the associated Resolution. A draft Rationale is not final until approved with the minutes of the Board meeting.
A Special Meeting of the ICANN Board of Directors was held telephonically on 30 July 2014 in at 22:00 UTC.
Steve Crocker, Chair, promptly called the meeting to order.
The following Directors participated in all or part of the meeting: Sébastien Bachollet, Cherine Chalaby, Fadi Chehadé (President and CEO), Chris Disspain, Bill Graham, Ray Plzak, Wolfgang Kleinwächter, Bruce Tonkin (Vice Chair), Mike Silber, and Kuo-Wei Wu.
The following Directors sent their apologies: Olga Madruga-Forti, George Sadowsky, Bruno Lanvin, Gonzalo Navarro, and Erika Mann.
The following Board Liaisons participated in all or part of the meeting: Heather Dryden (GAC Liaison), Jonne Soininen (IETF Liaison) and Suzanne Woolf (RSSAC Liaison).
Secretary: John Jeffrey (General Counsel and Secretary)
ICANN Executives and Staff in attendance for all or part of the meeting: Akram Atallah (President, Global Domains Division); Megan Bishop (Board Support Coordinator); Michelle Bright (Board Support Manager); Sally Costerton (Senior Advisor to the President, Global Stakeholder Engagement); Samantha Eisner (Senior Counsel); Tarek Kamel (Senior Advisor to the President, Government Engagement); David Olive (Vice President, Policy Development); Erika Randall (Counsel); Amy Stathos (Deputy General Counsel); and Theresa Swinehart (Senior Advisor to the President on Global Strategy).
This is a preliminary report of the approved resolutions resulting from the Special Meeting of the ICANN Board of Directors, which took place on 30 July 2014.
- Consent Agenda
- Approval of Board Meeting Minutes
- Approval of audit firm for FY14 independent audit
- Proposed GAC-related Bylaws revisions
- 2015 October Meeting Venue in Europe
- Istanbul Office Lease
- Main Agenda
- Confidential Session (Main Agenda Continued)
The Chair provided a brief overview of the items on the consent agenda. The Chair then called for a vote and the Board took the following action:
Resolved, the following resolutions in this Consent Agenda are approved:
Approval of Board Meeting Minutes
Resolved (2014.04.30.01), the Board approves the minutes of the 26 June 2014 Meeting of the ICANN Board.
Approval of audit firm for FY14 independent audit
Whereas, Article XVI of the ICANN Bylaws (http://www.icann.org/general/bylaws.htm) requires that after the end of the fiscal year, the books of ICANN must be audited by certified public accountants, which shall be appointed by the Board.
Whereas, the Board Audit Committee, which is tasked with recommending the independent auditors for selection each year, discussed the engagement of the independent auditor for the fiscal year ending 30 June 2014, and determined that given ICANN's growth, including its expanding global presence and level of revenue, it was important to conduct an RFP for a new audit firm.
Whereas, staff conducted an open RFP process, received responses from several firms and, after careful consideration and discussion with the Audit Committee, staff and the Audit Committee recommend that the Board engage BDO USA, LLP to serve as ICANN's new independent audit firm.
Resolved (2014.07.30.02), the Board authorizes the President and CEO, or his designee(s), to engage BDO USA, LLP as the audit firm for the financial statements for the fiscal year ending 30 June 2014.
Rationale for Resolution 2014.07.30.02
The engagement of an independent audit firm is in fulfillment of ICANN's Bylaws' obligation to undertake the annual independent audit of its financial statements. This furthers ICANN's accountability to its Bylaws and processes, and the results of the independent audit firms' work are publicly available.
ICANN has used the same audit firm, Moss Adams, for the past eight years (with one partner rotation after five years), and considered it important to examine its current and future needs in relation to existing audit services offered among top tiers audit firms. As a result an open RFP was conducted. Several firms responded, ICANN staff evaluated the various responses, discussed the top two firms with the Audit Committee and has now identified the top choice.
There is a fiscal impact to the engagement, but that has already been budgeted for in the FY15 budget. There is no impact on the security or the stability of the DNS as a result of this appointment.
This is an Organizational Administrative Function not requiring public comment.
Proposed GAC-related Bylaws revisions
Whereas, Recommendation 11 of the first Accountability and Transparency Review Team (ATRT1), called for the formalization of a process for Board consideration of advice from the Governmental Advisory Committee (GAC).
Whereas, the Board/GAC Recommendation Implementation Working Group was formed to address this and other recommendations, and developed a "Process for Consultations between the ICANN Board of Directors ("Board") and the Governmental Advisory Committee ("GAC"), including those required pursuant to Article XI Section 2.1.j of the ICANN Bylaws" (Process for Consultations), which includes a requirement that 2/3 of Board members eligible to vote on an issue approve any action in contravention of GAC advice.
Whereas, revisions to ICANN's Bylaws are required to give implement this new voting threshold.
Resolved (2014.07.30.03), the Board approves the posting for public comment of proposed revisions to the ICANN Bylaws to give effect to the Process for Consultations.
Rationale for Resolution 2014.07.30.03
The posting for public comment of these proposed Bylaws is the logical next step in the implementation of Recommendation 11 of the first Accountability and Transparency Review Team (calling for the development of a formal process for Board/Governmental Advisory Committee consultations on GAC advice) as well as Recommendation 6.5 of the second Accountability and Transparency Review Team (calling for the consideration of Bylaws changes to give effect to the developed process). Though a formal "Process for Consultation between the ICANN Board of Directors ("Board") and the Governmental Advisory Committee ("GAC"), including those required pursuant to Article XI Section 2.1.j of the ICANN Bylaws" [DOC, 42 KB] was developed and accepted in April 2013, Bylaws revisions to give full effect to that process have not yet been presented to the Board due to the potential for additional proposed Bylaws changes to be identified. At the Board/GAC Recommendation Implementation Working Group session at ICANN's June 2014 meeting in London, England, it was determined that it is now timely to bring these changes to the Board.
The posting of these Bylaws changes for public comment is in line with ICANN's commitment to accountability and transparency. All public comments will be evaluated and presented to the Board for consideration and decision. There are no fiscal impacts in submitting this document for public comment. The posting of these proposed Bylaws changes is not anticipated to have any impact on the security, stability or resiliency of the DNS.
This is an Organizational Administrative Function for which public comment is not required.
2015 October Meeting Venue in Europe
Whereas, ICANN intends to hold its third Public Meeting of 2015 in the Europe region.
Whereas, staff has completed a thorough review of all proposed venues in Europe and finds the one in Dublin, Ireland to be the most suitable.
Whereas, during its meeting on 18 July 2014 the Board Finance Committee reviewed the financial implications of contracting with the venue identified to hold the ICANN meeting in Dublin, Ireland, and agrees with the recommendation from staff.
Whereas, the Board Finance Committee has recommended that the Board delegate to the President and CEO, or his designee(s), the authority to take all actions to hold the October 2015 ICANN Public Meeting in Dublin, Ireland, including all necessary contracting and disbursements.
Resolved (2014.07.30.04), the Board approves Dublin, Ireland as the location of the ICANN 2015 Public Meeting from 18-22 October 2015, and authorizes the President and CEO, or his designee(s), to take all actions necessary to hold the October 2015 ICANN Meeting in Dublin, Ireland.
Resolved (2014.07.30.05), that Board authorizes the President and CEO, or his designee(s), to engage in and facilitate all necessary contracting and disbursements for the Meeting venue of the October 2015 ICANN Public Meeting, in an amount not to exceed [REDACTED FOR NEGOTIATION PURPOSES] and that the Dublin Meeting be designated as the 2015 Annual Meeting.
Resolved (2014.07.30.06), specific items within this resolution shall remain confidential for negotiation purposes pursuant to Article III, section 5.2 of the ICANN Bylaws until the President and CEO determines that the confidential information may be released.
Rationale for Resolutions 2014.07.30.04 – 2014.07.30.06
As part of ICANN's public meeting schedule, three times a year ICANN hosts a meeting in a different geographic region (as defined in the ICANN Bylaws). ICANN Meeting 54, scheduled for 18-22 October 2015, is to occur in the Europe geographic region. A call for recommendations for the location of the meeting in Europe was posted on 03 May 2013. Various parties sent a proposal to ICANN.
The staff performed a thorough analysis of the proposals and prepared a paper to identify those that met the Meeting Selection Criteria (see http://meetings.icann.org/location-selection-criteria). Based on the proposals and analysis, staff has recommended that ICANN 54 be held in Dublin, Ireland.
The Board reviewed staff's recommendation for hosting the meeting in Dublin, Ireland and the determination that the proposal met the significant factors of the Meeting Selection Criteria used to guide site selection work. The process for selection of this site does not call for public consultation, as the assessment of the feasibility of a site is the primary consideration.
There will be a financial impact on ICANN in hosting the meeting and providing travel support as necessary, as well as on the community in incurring costs to travel to the meeting. But such impact would be faced regardless of the location of the meeting.
There is no impact on the security or the stability of the DNS due to the hosting of the meeting.
The Board thanks all who recommended sites for ICANN Meeting 54.
This is an Organizational Administrative function that does not require public comment.
Istanbul Office Lease
Whereas, ICANN has stated its objective to maintain a Hub Office in Istanbul, Turkey.
Whereas, staff has identified and evaluated both the location and costs of a suitable office facility.
Whereas, during a meeting on 18 July 2014, the Board Finance Committee (BFC) reviewed the financial implications of the lease for a new ICANN Hub Office facility in Istanbul, Turkey, and agrees with staff's recommendation.
Whereas, the BFC has recommended that the Board delegate to the President and CEO, or his designee(s), the authority to take all actions to lease the new Hub Office in Istanbul, Turkey, including all necessary contracting and disbursements.
Resolved (2014.07.30.07), the Board delegates to the President and CEO, or his designee(s), the authority to take all necessary actions to execute, and make disbursements in accordance with, the lease for a new office facility in Istanbul, Turkey in an amount not to exceed [REDACTED FOR NEGOTIATION PURPOSES].
Resolved (2014.07.30.08), specific items within this resolution shall remain confidential for negotiation purposes pursuant to Article III, section 5.2 of the ICANN Bylaws until the President and CEO determines that the confidential information may be released.
Rationale for Resolutions 2014.07.30.07 – 2014.07.30.08
To support its globalization strategy, ICANN established a Hub Office in Istanbul to better service its stakeholders. Currently, ICANN is using a serviced office, which is typically much more expensive per square meter than a leased office. To meet the demand for increased space to accommodate the projected growth in staff in Istanbul, it is now the appropriate time to move to a more permanent facility. As the existing location has proven to be a good one from which to conduct business in Istanbul, and for commuting staff, office space in the same building has been identified.
The staff performed a thorough analysis of the costs associated with leasing the new office space, and finds it to be a viable, cost-effective solution.
The Board reviewed staff's recommendation for moving the ICANN Istanbul Hub Office to a more permanent location and the determination that the proposal met the financial and business requirements of the organization. The process for selection of this office location does not call for public consultation, as staff assessment of the feasibility of the location is the primary consideration.
There will be a financial impact on ICANN to relocate the Istanbul Hub Office. But such impact would be faced regardless of the location of the office, as a move must be made to accommodate the projected increase in staff growth in that location.
There is no impact on the security or the stability of the DNS due to the relocation of the ICANN Istanbul Hub Office.
This is an Organizational Administrative function that does not require public comment.
All members of the Board that were in attendance voted in favor of Resolutions 2014.07.30.01, 2014.07.30.02, 2014.07.30.03, 2014.07.30.04, 2014.07.30.05, 2014.07.30.06, 2014.07.30.07, and 2014.07.30.08. Five members of the Board were unavailable to vote on the Resolutions. The Resolutions carried.
Final Report of BWG-NomCom
Ray Plzak introduced the agenda item and provided a brief overview of the process for posting the BWG-NomCom Report for public comment. Sebastian Bachollet suggested postponing the posting of the Report for public comment, which the Board discussed.
Mike Silber moved and Bill Graham seconded the following and the Board took the following action:
Whereas, the Board Working Group on Nominating Committee (BWG‐NomCom) was formed in February 2014 and charged with performing the review called for in Recommendation 10 of the Nominating Committee Review Finalization Working Group, addressing issues of the size and composition of the Nominating Committee, as well as the related issues of NomCom's recruitment and selection functions.
Whereas, in performing its work, the BWG‐NomCom considered the role of the NomCom in ICANN, as well as issues of representation and parity among the entities across ICANN that have members serving on the NomCom.
Whereas, the BWG‐NomCom completed a report with 15 recommendations, and provided that report to the Structural Improvements Committee as required in the BWG-NomCom charter.
Whereas, the SIC recommends that this report should be posted for public comment prior to the potential adoption of the 15 recommendations.
Resolved (2014.07.30.09), that the Report of the ICANN Board Working Group on the Nominating Committee be posted for public comment.
Ten members of the Board voted in favor of Resolution 2014.07.30.09. One member of the Board abstained. Five members of the Board were unavailable to vote on the Resolution. The Resolution carried.
Rationale for Resolution 2014.07.30.09
The BWG-NomCom was created in order execute the recommendation of the Review Finalization Working Group (recommendation 10) to address the size and composition, and the recruitment and selection process of the NomCom, as well as address the related issues, including:
Whether a representational model is appropriate for the NomCom in the future;
Determination of the appropriate length of term of service by NomCom members and whether term limits should be imposed;
Whether the NomCom should continue to fill other key positions in addition to Board members.
The BWG-NomCom completed its work and issued a report, including 15 recommendations.
In accordance with ICANN's commitment to the bottom-up multi-stakeholder approach, the report and recommendations will be posted for public comment. All public comments will be evaluated and the report finding will be adapted as appropriate, in preparing a final report, for consideration and decision by the ICANN Board. There are no fiscal impacts in submitting this report for public comment. The posting of this report is not anticipated to have any impact on the security, stability or resiliency of the DNS.
This is an Organizational Administrative Function for which public comment is not required.
Board Member Compensation
Bruce Tonkin introduced the agenda item and provided a brief overview of the Compensation Committee's recommendation regarding Board compensation. Staff provided an overview of the applicable U.S. taxation factors for the Board to confirm.
Ray Plzak moved and Bruce seconded the following and the Board took the following action:
Whereas, when ICANN instituted compensation for all of its voting Board members for their services to ICANN, the Board committed to regularly review whether compensating those voting Board members was reasonable, and if so, what level of compensation is reasonable.
Whereas, ICANN is a nonprofit California public benefit corporation that is exempt from Federal income tax under §501(a) of the Internal Revenue Code of 1986, as amended (the "Code") as an organization described in §501(c)(3) of the Code.
Whereas, ICANN may not pay voting Board members more than Reasonable Compensation as determined under the standards set forth in §53.4958-4(b) of the regulations issued under §4958 of the Code (the "Regulations").
Whereas, ICANN has taken all steps necessary, and to the extent possible, to ensure that the level of voting Board member compensation is reasonable, including seeking advice and recommendations from an Independent Valuation Expert.
Whereas, there are no barriers that would prohibit ICANN from offering compensation to ICANN's non-voting Board Liaisons.
Whereas, the Compensation Committee and the Board have considered and evaluated the public comments on this matter.
Resolved (2014.07.30.10), the Board approves: (i) the Towers Watson Recommendation that the offer of compensation to all voting Directors be raised to the equivalent of US$45,000.00 effective 1 August 2014, and that no change be made to the Board Chair compensation which is US$75,000; (ii) offering non-voting Liaisons (except the Governmental Advisory Committee Liaison) compensation at the same level as voting Directors effective 1 August 2014; and (iii) the proposed Bylaws revisions relating to non-voting Board Liaison compensation.
Resolved (2014.07.30.11), all Board members should be required to complete a new Board Compensation election form to reflect an affirmative acceptance
Resolved (2014.07.30.12), the Board will continue to consider other comments raised in the public comment forum that are not addressed by this resolution.
Eleven members of the Board voted in favor of Resolutions 2014.07.30.10, 2014.07.30.11, and 2014.07.30.12. Five members of the Board were unavailable to vote on the Resolutions. The Resolutions carried.
Rationale for Resolutions 2014.07.30.10 – 2014.07.30.12
Since August 2010, ICANN's Board chair, and since December 2011, all voting members of ICANN's Board, have had the choice whether to accept compensation. The resolutions approving such compensation can be found at http://www.icann.org/en/groups/board/documents/resolutions-05aug10-en.htm#5 and http://www.icann.org/en/groups/board/documents/resolutions-08dec11-en.htm#3, respectively.
Significant research, analysis, document revisions and public comment went into the ultimate decision to compensate the Board. For example, and among other things: (i) there were calls from the community in relation to the ICANN Framework for Accountability and Transparency that voting Board members be compensated; (ii) budget discussions since FY08 have involved the concept of Board compensation and such compensation is now included in each annual budget; (iii) Towers Watson continues to provide updated studies on comparable organizations' Board member compensation and making recommendation on what level of compensation is reasonable; (iv) the Boston Consulting Group ("BCG") that conducted the Board Review some years ago suggested that compensation for voting directors for service may be appropriate; (v) the Board Review working group acknowledged general support from the BCG and the community for director compensation; (vi) the first Accountability and Transparency Review Team ("ATRT") specifically recommended that the Board implement a compensation scheme for voting Board members; (vii) following public comment on required changes to ICANN's Conflicts of Interest Policy and Bylaws, as well as on the Independent Expert Report that initially recommended voting Board member compensation, revisions to the referenced documents were made and a modest, reasonable level of compensation was approved; (viii) the second ATRT has recommended that the Board regularly evaluate the appropriate level of Board compensation; and (ix) ICANN continues to comply with its commitment to regularly review, with the assistance of an Independent Valuation Expert, whether and at what level, Board member compensation is reasonable.
ICANNfollowed a process calculated to pay an amount that is in its entirety Reasonable Compensation for such service under the standards set forth in §53.4958-4(b) of the Treasury Regulations.
First, the Board sought a recommendation from an Independent Valuation Expert1 ("Expert") as to the reasonableness of, and if so, the amount of compensation. The Board approved Towers Watson (TW) to be engaged to serve as the Expert. TW is a leading global professional services company with expertise in compensation for non-profit organizations. TW had originally provided advice on the Board Chair compensation and was recommended by the National Association of Corporate Directors to serve as the Expert. TW was also recently selected to provide an updated Expert Report, regarding voting Board member compensation.
Second, before initially approving compensation at any level and following public comment, both ICANN's Conflicts of Interest (COI) Policy (see http://www.icann.org/en/committees/coi/coi-policy-30jul09-en.htm) and ICANN's Bylaws (see http://www.icann.org/en/public-comment/bylaws-amend-vi-coi-policy-01sep11-en.htm) were revised allowing all voting Directors to be compensated.
Finally, the Board has thus taken all steps necessary to ensure that consideration of voting Board member compensation for services was done in accordance with Reasonable Compensation under the standards set forth in §53.4958-4(b) of the Treasury Regulations.
In its most recent Report dated April 2014, TW recommended that all voting Board members, except the President and CEO and the Board Chair, be compensated at the same level (equivalent of US$40,000-$45,000) that it had previously recommended that most Board committee chairs be compensated (which was the equivalent of US$35,000 plus $5,000 for committee chair position). Based on the Report, this reflects the recognition that committee members dedicate a relatively equivalent amount of time preparing for committee meetings and all serve on at least one, but generally more than one Board committee. Out an abundance of caution, the Compensation Committee asked staff to have another Independent Valuation Expert evaluated Board member compensation. This "second opinion" came to the same recommendations as TW.
In addition, the Board Governance Committee asked the Compensation Committee to evaluate whether there are any barriers that would prohibit ICANN from offering compensation to non-voting Board liaisons. Absent voting, Board liaisons are asked to spend the same amount of time and make the same level of commitment to the ICANN Board as the voting Board members. This issue has also been evaluated and it has been determined that there are no such barriers to offering compensation to ICANN's non-voting Board liaisons.
Both the TW April 2014 Report and a set of proposed Bylaws changes were posted for public comment (https://www.icann.org/public-comments/bylaws-amend-compensation-2014-05-02-en). A total of seven comments were received (http://forum.icann.org/lists/comments-bylaws-amend-compensation-02may14). Not one of those comments suggested that Board members, including voting Directors and non-voting Liaisons, should not be compensated. Most commenters who commented on Board compensation suggest that it is appropriate and they endorsed it.
Two commenters raised the question of whether compensation was appropriate, financial or otherwise, for some of the leadership in the volunteer community, such as the Chairs of the Supporting Organizations Advisory Committees. This is something that the Board has raised occasionally and will be something that the Board continues to consider. The Internet Architecture Board (IAB) wonders whether this proposed addition of payment for non-voting Liaisons is the first step in a change to the status of the non-voting liaisons. The IAB suggests that if this is the case, maybe we should wait until all such considerations have played out before moving forward in piecemeal.
Regularly reviewing and revising as appropriate the level of compensation for voting Board members also conforms with the ATRT1 recommendation (and more recently the ATRT2 recommendation) and with the Board's commitment to do so when voting Board member compensation was first approved.
Taking this action in changing the compensation for many voting ICANN Board members, as well as offering compensation to three of the non-voting Liaisons who choose to accept compensation will have a slight fiscal impact on ICANN, but is within the FY15 Budget.
This decision will have no direct impact on the security, stability or resiliency of the domain name system.
This decision is an Organizational Administrative Function that has already been the subject of public comment, which has been considered by the Board.
Internet Governance Update and Follow-up from Discussion at ICANN 50
Fadi Chehadé introduced the agenda item and provided an update on Internet governance related matters, particularly the community work following the NetMundial meeting in Brazil.
The Board then took the following action:
Whereas, the Internet ecosystem is being strengthened through recent global coordination efforts towards developing principles for the use of the multi-stakeholder model as a means for evolving Internet governance.
Whereas, on 28 September 2013, the ICANN Board authorized the CEO to, among other things, "work with other key organizations and leaders to establish a coalition towards the formation of a movement or initiative" ("Coalition"), in order to address increasing concerns regarding the effectiveness of a "global, open, multi-stakeholder Internet governance system."
Whereas, the Board considered that without strengthening a global, coherent approach to Internet governance, ongoing and emerging issues will not be properly addressed in a collective, collaborative way, which may inadvertently affect the operational unity of the Internet, consistent with ICANN's mandate.
Whereas, on 28 September 2013, the Board further resolved that "… should the CEO recommend an additional longer term strategy based on Coalition results, the CEO shall present such a plan of action, including any additional financial resources required, for further consideration by the Board."
Whereas, on 17 November 2013, the ICANN Board directed the CEO to continue supporting the emerging initiatives on multistakeholder internet governance, and recognized ICANN as one of the many participants supporting these initiatives.
Whereas, on 23-24 April 2014, the NetMundial meeting convened in Sao Paolo, Brazil, as a Global Multistakeholder Meeting on the Future of Internet Governance, to begin the establishment of Internet Governance Principles and the Roadmap for the future evolution of the Internet Governance Ecosystem.
Whereas, the Board congratulates the conveners and supporters of the NetMundial meeting, including the Government of Brazil, the Brazilian Internet Steering Committee (CGI.br), the World Economic Forum, and others – including participants from across all sectors – in a successful meeting that resulted in the consensus-based NetMundial Principles to guide further coordination work.
Whereas, in May 2014, the Panel on Global Internet Cooperation and Governance Mechanisms issued its report with recommendations for an evolving Internet Governance framework.
Whereas, the CEO has executed the mandate of the Board's 28 September 2013 and 17 November 2013 resolutions in enabling each of these above-referenced efforts, the outcomes of which are enhancing the Internet ecosystem and facilitating positive changes in Internet governance, while upholding the multi-stakeholder model.
Whereas, the Board continues to monitor the progress of each of these initiatives, and recognizes that continued work is necessary to continue with the work on the evolution of global multi-stakeholder participation in Internet governance.
Whereas, ICANN is participating in these initiatives in furtherance of ICANN's mission and anticipates continued participation in these endeavors well into the future.
Resolved (2014.07.30.13), the Board hereby directs the CEO to continue to support the emerging initiatives, relating to addressing the outcomes of the NETMundial meeting and the NETMundial Principles, as well as the recommendations of the Panel on Global Internet Cooperation and Governance Mechanisms.
Resolved (2014.07.30.14), the Board highly encourages all parties interested in the Internet ecosystem and Internet governance to continue participation in these emerging initiatives and notes the importance of active and committed participation by all stakeholders.
Eleven members of the Board voted in favor of Resolutions 2014.07.30.13, and 2014.07.30.14. Five members of the Board were unavailable to vote on the Resolutions. The Resolutions carried.
Rationale for Resolutions 2014.07.30.13 – 2014.07.30.14
This resolution is a continuation of the Board's 28 September 2013 and 17 November 2013 resolutions providing ICANN's President and CEO with a mandate to explore how ICANN could coordinate with stakeholders from across the globe to address the pressing issue of the future of Internet governance. In September, the Board directed the President and CEO to work towards the establishment of a coalition to start an effort to form an Internet cooperation agenda, and to do so in a manner consistent with ICANN's mission. In November, the Board recognized the efforts undertaken so far and directed further support for these important efforts.
Since the 17 November 2013 resolution, a substantial amount of coordination work has been achieved, and the discussions among stakeholders around the world have been ignited. The NetMundial meeting convened in Brazil, developing a Multistakeholder Statement on Internet Governance.
The Panel on Global Internet Cooperation and Governance Mechanisms issued its report with recommendations for an evolving Internet Governance framework. Discussion on the evolution of Internet governance and technical coordination continued with the 1net initiative.
Further progress from the results of the NetMundial meeting is now continuing and it is important for ICANN to continue to support this important endeavor. To remain accountable to ICANN's mission and community, the Board recognizes that the future of the work in all of these strains of work is not ICANN's; while ICANN has important contributions to make towards each of these efforts, the necessary work requires all other parties interested in the Internet ecosystem to participate in this work, with multi-stakeholder involvement and support.
Encouraging further coordination among all Internet stakeholders does not have any immediate impact on the security, stability or resiliency of the DNS, though the outcomes of these initiatives are likely to have positive benefits on the coordination of DNS stability and security issues in the future.
This is an Organizational Administrative Function for which public comment is not required.
Any Other Business
Update on Preparations for the Enhancing ICANN Accountability Review
Fadi Chehadé led a short discussion for the Board on the planning for the Enhancing ICANN Accountability review.
No resolution was taken.
Tarek Kamel introduced the item and provided an update on the upcoming Internet Governance Forum in Istanbul and planning for ICANN's attendance.
No resolution was taken.
Confidential Session (Main Agenda Continued):
The Board entered into an Executive Session without staff present. The General Counsel and Secretary remained in attendance.
President and CEO FY14 T3 At-Risk Compensation
Whereas, each Board member has confirmed that he/she does not have a conflict of interest with respect to establishing the amount of payment for the President and CEO's FY14 T3 at-risk compensation payment.
Whereas, the Compensation Committee recommended that the Board approve payment to the President and CEO for his FY14 T3 at-risk compensation.
Resolved (2014.07.30.15), the Board hereby approves a payment to the President and CEO for his FY14 T3 at-risk compensation component.
Resolved (2014.07.30.16), specific items within this resolution shall remain confidential as an "action relating to personnel or employment matters", pursuant to Article III, section 5.2 of the ICANN Bylaws.
Eleven members of the Board voted in favor of Resolutions 2014.07.30.15, and 2014.07.30.16. Five members of the Board were unavailable to vote on the Resolutions. The Resolutions carried.
Rationale for Resolutions 2014.07.30.15 – 2014.07.30.16
When the President and CEO was hired, he was offered a base salary, plus an at-risk component of his compensation package. Consistent with all ICANN staff members, the President and CEO is to be evaluated against specific goals that he sets in coordination with the Compensation Committee.
In London, the Compensation Committee reviewed with the President and CEO his FY14 T3 goals and discussed his achievements against those goals. Following that discussion, the Compensation Committee has recommended that the Board approve the President and CEO's at-risk compensation for the third trimester of FY14 and the Board agrees with that recommendation.
While this will have a fiscal impact on ICANN, it is an impact that was contemplated in the FY14 budget. This decision will not have an impact on the security, stability or resiliency of the domain name system.
This in an Organizational Administrative Function that does not require public comment.
Ombudsman FY14 At-Risk Compensation
Whereas, the Compensation Committee recommended that the Board approve payment to the Ombudsman of his FY14 at-risk compensation.
Resolved (2014.07.30.17), the Board hereby approves a payment to the Ombudsman of his FY14 at-risk compensation component.
Eleven members of the Board voted in favor of Resolution 2014.07.30.17. Five members of the Board were unavailable to vote on the Resolution. The Resolution carried.
Rationale for Resolution 2014.07.30.17
Annually the Ombudsman has an opportunity to earn a portion of his compensation based on specific performance goals set by the Board, through the Compensation Committee. This not only provides incentive for the Ombudsman to perform above and beyond his regular duties, but also leads to regular touch points between the Ombudsman and Board members during the year to help ensure that the Ombudsman is achieving his goals and serving the needs of the ICANN community.
Scoring of the Ombudsman's objectives results from both the Ombudsman self-assessment, as well as review by the Compensation Committee, with a recommendation to the Board. The score provides the Ombudsman with an understanding of areas in which he has done well and where he may need to improve or increase certain activities.
Scoring the Ombudsman's annual performance objectives is in furtherance of the goals of ICANN and helps increase the Ombudsman's service to the ICANN community. While there is a fiscal impact from the results of the scoring, that impact is already accounted for in the annual budget. This action will have no impact on the security, stability or resiliency of the domain name system.
This is an Organizational Administrative Function that does not require public comment.
Discussion of CEO Compensation and Contract
Whereas, under its Charter, the Compensation Committee is charged with recommending to the full Board the appropriate elements of individual compensation arrangements (base salary, at-risk component, and benefits) for Officers of ICANN, and in particular the President and Chief Executive Officer ("CEO").
Whereas, on 14 July 2014, the Compensation Committee recommend that the Board extend Fadi Chehadé's Employment Agreement as ICANN's President and CEO through 30 June 2017.
Whereas, on 14 July 2014, the Compensation Committee further recommended that ICANN increase Mr. Chehadé's annual compensation to the following: (i) annual base salary of US$630,000.00; and (ii) at-risk compensation component of up to US$270,000.00 per year based on the President and CEO's achievement of the established performance goals, to be paid out on a semi-annual basis. No changes to the President and CEO's benefits package are recommended.
Whereas, as a not-for-profit California public benefit corporation that is exempt from Federal income taxes because it is an organization described in § 501(c)(3) of the Internal Revenue Code of 1986, as amended, ICANN may not pay more than "reasonable compensation" for services rendered to ICANN.
Whereas, under its Charter, the Compensation Committee is required to obtain, review, and consider comparable compensation data for officer-level positions, like the President and CEO, taking into account size, geographic considerations, international presence, complexity and other relevant factors.
Whereas, under its Charter, the Compensation Committee is authorized to engage and to seek advice from independent professionals with appropriate expertise in compensation arrangements for U.S.-based, not for profit, tax-exempt organizations possessing a global employee base.
Whereas, in connection with its evaluation of a potential increase in the Mr. Chehadé's compensation package, the Compensation Committee exercised its authority and directed staff to engage the services of Towers Watson, an international expert compensation firm, to assist the Compensation Committee in compiling and analyzing appropriate data as to comparability with respect to compensation for the President and CEO position for ICANN.
Whereas, the Compensation Committee also directed staff to engage a second international expert compensation firm for confirmation of the comparable data; this second firm's recommendations were consistent with those of Towers Watson.
Whereas, in reviewing the terms and conditions of the compensation to be paid to the Mr. Chehadé as ICANN's President and CEO, the Compensation Committee followed the process set forth in U.S. Treasury Regulation § 53.4958-6, which was intended by the Compensation Committee to enable the Board to establish the presumption that the compensation to be paid to the ICANN President and CEO is reasonable compensation for Federal income tax purposes.
Whereas, upon due inquiry of its members, the Compensation Committee concluded that no member of the Committee had a conflict of interest with respect to the increases recommended for Board approval to Mr. Chehadé's compensation package as ICANN's President and CEO.
Whereas, the Compensation Committee has reported its activities to the Board.
Whereas, the Compensation Committee has shared with the Board the Towers Watson comparability materials, including the recommendation and advice received from Towers Watson, and, has been available to answer questions from the Board regarding the compensation recommended for Mr. Chehadé as ICANN's President and CEO.
Whereas, under ICANN's Articles of Incorporation and California law, the Board is the authorized body of ICANN vested with the authority to determine, among other things, the compensation to be paid to Mr. Chehadé as ICANN's President and CEO.
Whereas, upon due inquiry of its members, the Board has concluded that no member of the Board has a conflict of interest with respect to the compensation arrangement recommended by the Compensation Committee for Mr. Chehadé as ICANN's President and CEO.
Whereas, the Board has considered the comparability data provided by the Towers Watson, and the advice and counsel of Towers Watson.
Whereas, the Board has discussed Mr. Chehadé's performance and the terms and conditions of his continued employment, including the compensation package for Mr. Chehadé as ICANN's President and CEO.
Whereas, in reviewing the recommendations of the Compensation Committee regarding the compensation to be paid to Mr. Chehadé as ICANN's President and CEO, the Board has followed the process set forth in Treasury Regulation § 53.4958-6, which is intended by the Board to enable the Board to establish the presumption that the compensation to be paid to the President and CEO is reasonable compensation for Federal income tax purposes.
Whereas, after consideration of all the relevant facts and circumstances, the Board has concluded that Compensation Committee's of compensation to be paid to Mr. Chehadé as President and CEO, effective 1 July 2014, is in its entirety reasonable compensation for the services to be rendered by Mr. Chehadé as ICANN's President and CEO.
Whereas, based upon the foregoing, the Board has concluded that it is in the best interests of ICANN to extend Mr. Chehadé's Employment Agreement as ICANN's President and CEO through 30 June 2017, and to pay Mr. Chehadé the compensation described below, beginning on 1 July 2014.
It is in the best interests of ICANN to extend Fadi Chehadé's Employment Agreement to serve as President and CEO of ICANN through 30 June 2017.
It is in the best interests of ICANN to increase Fadi Chehadé's compensation as ICANN's President and CEO, effective 1 July 2014, as follows: (i) a base salary of a fixed amount of US$630,000.00 per year; and (ii) an at-risk component of compensation of up to US$270,000.00 per year based on the President and CEO's achieving the performance goals as agreed by the Board.
The extension of Fadi Chehadé's Employment Agreement as ICANN's President and CEO through 30 June 2017, and the increased compensation as referenced above, shall be evidenced by an appropriate amendment to the Agreement already in place between ICANN and Mr. Chehadé, which per Amendment No. 1, was effective 14 September 2012.
ICANN's Chairman and its General Counsel are authorized to finalize the Amendment to Fadi Chehadé's Employment Agreement as ICANN's President and CEO based on the general terms set forth above.
Eleven members of the Board voted in favor of Resolution 2014.07.30.18. Five members of the Board were unavailable to vote on the Resolution. The Resolution carried.
Rationale for Resolution 2014.07.30.18
ICANN's current President and CEO, Fadi Chehadé, has been working with ICANN, first as an independent contractor and then as employee, for over two years. The initial term of his current Employment Agreement, absent extension, is set to end on 1 July 2015. Both ICANN and Mr. Chehadé are interested in having Mr. Chehadé continue as ICANN's President and CEO, at least for two years beyond the initial term of his current Agreement.
The full Board has discussed and agreed, following a recommendation from the Compensation Committee, to extend Mr. Chehadé's Employment Agreement through 30 June 2017. In addition, the Board has determined to increase Mr. Chehadé's base and at-risk compensation components. The decision to increase Mr. Chehadé's compensation was done with recognition and acknowledgment of the work done by the Compensation Committee with Towers Watson to ensure that the increase recommended is reasonable and in line with comparable positions, as noted in the resolution above, which is incorporated by reference as though fully set forth as part of this rationale.
Taking this action will help ensure the stability in leadership that it is important for ICANN to have, particularly during this time. It also shows the support for, and confidence that the Board has in, Mr. Chehadé in his role as ICANN's President and CEO. This action will have a financial impact on ICANN, but it is not an impact that cannot be covered by ICANN's FY15 budget. This action will not have any direct impact on the security, stability and resiliency of the domain name system.
This is an Organizational Administrative Function that is not subject to public comment.
The Chair called the meeting to a close.
Published on 8 August 2014
1 An "Independent Valuation Expert" means a person retained by ICANN to value compensation arrangements that: (i) holds itself out to the public as a compensation consultant; (ii) performs valuations regarding compensation arrangements on a regular basis, with a majority of its compensation consulting services performed for persons other than ICANN; (iii) is qualified to make valuations of the type of services involved in any engagement by and for ICANN; (iv) issues to ICANN a Reasoned Written Opinion regarding a particular compensation arrangement; and (v) includes in its Reasoned Written Opinion a certification that it meets the requirements set forth in (i) through (iv) of this definition.