Minutes | Board Finance Committee (BFC) | 24 March 2022
BFC Attendees: Becky Burr, Avri Doria, Danko Jevtović (Chair), Mandla Msimang, Ihab Osman, and Tripti Sinha
BFC Member Apologies: Harald Alvestrand
Other Board Member Attendees: James Galvin, Manal Ismail, Patricio Poblete, and Katrina Sataki
ICANN org Attendees: Michelle Bright (Board Content Coordination Director), Xavier Calvez (SVP, Planning and Chief Financial Officer), John Jeffrey (General Counsel and Secretary), Elizabeth Le (Associate General Counsel), Karen Lentz (VP Policy Research and Stakeholder Porgrams), Becky Nash (VP, Planning), Shani Quidwai (Sr. Director, Finance), Lisa Saulino (Board Operations Specialist), and Theresa Swinehart (SVP, Global Domains and Strategy)
The following is a summary of discussions, actions taken and actions identified:
- BFC Workplan – The BFC discussed its Workplan. The Committee noted that the updated meeting schedule was distributed on 23 March 2022, and that there will not be a meeting in April. The next BFC meeting will be held in May.
- FY23-27 Operating and Finanical Plan (O&FP) and FY23 Operating Plan and Budget (OP&B) – Public Comments Review – The Committee received a briefing on the public comments received on the draft FY23-27 O&FP and FY23 OP&B. A total of 100 comments were received from six groups relating to the following themes: document structure, financial management, functional activities plan, operating intiatives plans, and operating plan. The comments were broken down as follows: 13 comments from five groups were submitted on document structure, 32 comments from six groups were submitted on financial management, 24 comments from four groups were sumibtted on the functional activities plan, 22 comments from four groups were submitted on the operating initiatives plan, and six comments from three groups were submitted on the operating plan. ICANN org carefully considered all the comments received and prepared responses to each comment in the Public Comment Summary Report, which is scheduled for publication on 30 March 2022. Overall, ICANN org made a few minor changes to the draft FY23-27 O&FP and FY23 OP&B for greater clarification to the text, however, no material changes were required. Following discussion, the BFC reviewed the next steps in the FY23 planning process. The remaining steps include: (a) publication the Public Comment Summary Report; (b) BFC consideration of FY23 Plans for recommendation to Board for adoption, which is anticipated to occur in May 2022; (c) Board consideration of FY23 Plans for adoption in May 2022; and (d) the Empowered Communtiy Period, which is anticipated to ocurrent in May/June 2022.
- ICANN Funds Under Management Update – The BFC received an update on the status of the funds under management, particularly how the investments have been trending based on the events within the financial markets. In the past several months, there has been significant volatility in the markets due to inflation concerns and the Russia-Ukraine conflict. ICANN org has been working with its banking partners to understand the situation and impact on the org's investments and strategy. ICANN org's noted that total investments have declined by three percent as compared to the financial markets themselves that have declined by approximately 15-20 percent. The committee discussed that org's investments experienced a lower impact as compared to the decline in the financial markets due to the historical conservative investment strategy that the BFC and Board have put in place. Given the long-term goals of ICANN's investments, there is no short-term changes to the investment strategy needed based on movements in the market. ICANN org will continue to monitor the situation and keep the BFC informed.
- FY22 Forecast – ICANN org provided the Committee with forecast of FY22, having concluded eight months and forecasting the remaining four months of the fiscal year. The FY22 forecast projects an increase of US$28 million to the Operating Fund. Funding remains stable and is growing modestly compared to the past several years. The FY22 Forecast Funding is US$5.6 million higher than FY22 Budget, primarily due to better than planned growth from domain name registrations. The FY22 Forecast Expenses is US$21.3 million lower than the FY22 Budget, primarily due to savings in previously budgeted travel and meeting expenses for the ICANN72 and 73 public meetings that were be held virtually, and savings in personnel expenses as staff continue working from home due to the pandemic and headcount is lower than planned. The Committee discussed the org's need to grow headcount and that the draft FY23 budget reflects that growth. The Committee also discussed the potential impact of hybrid meetings and market conditions such as inflation on next year's budget.
- New Generic Top-Level Domain Subsequent Procedures (SubPro) Operational Design Phase (ODP) Costs and Resource Tracking - The BFC received an update on the expenses for the New Generic Top-Level Domain Subsequent Procedures (SubPro) Operational Design Phase (ODP). The org reported that the SubPro ODP work commenced in January 2022 and ICANN org has been tracking costs and resources for this work according to the work tracks and deliverables to which they relate. The reporting and analysis will be shared with the Board and the community as the ODP progresses. Through the first two months of the SubPro ODP, 22 staff worked on the project. These staff spent a fraction of their time on the project. Collectively, the work of the 22 staff equate to 6.1 full-time equivalent (FTE) staff, which translates to approximately 1900 hours of work for two months, and US$389,000. These hours and costs do not include executive management time and resources spent of the project.
- AOB – The BFC received an informational update on an engagement for registry service testing that ICANN org will be undertaking. As the contract amount is lower than US$500,000, Board approval is not required. ICANN org has worked with the vendor previously, and the vendor has capabilities and demonstrated ability to provide the needed services.
Published on 25 May 2022