Source: https://www.icann.org/resources/board-material/minutes-2012-09-13-en
Timestamp: 2019-04-23 23:05:04+00:00

Document:
A Special Meeting of the ICANN Board of Directors was held on 13 September 2012 at 4:00 pm local time in Los Angeles, California.
In addition to the Chair the following Directors participated in all or part of the meeting: Akram Atallah (Interim President and CEO), Sébastien Bachollet, Cherine Chalaby, Bertrand de La Chapelle, Chris Disspain, Bill Graham, Gonzalo Navarro, Ray Plzak, R. Ramaraj, George Sadowsky, Mike Silber, Bruce Tonkin (Vice Chair), Judith Vazquez, and Kuo-Wei Wu.
Invited Observers: Fadi Chehadé (President and CEO Designate) and Olga Madruga-Forti (Board Member Designate).
The following staff members were in attendance in all or part of the meeting: John Jeffrey, General Counsel and Secretary; Xavier Calvez, Chief Operating Officer; Michelle Bright, Samantha Eisner, Denise Michel, Diane Schroeder, Amy Stathos and Alina Syunkova.
Erika Mann and Heather Dryden (GAC Liaison) sent apologies.
Prior to voting on the consent agenda, Sébastien Bachollet and Ram Mohan each noted changes made to proposed resolutions to provide clarification to the resolutions.
Resolved (2012.09.13.01), the Board approves the minutes of the 28 August 2012 ICANN Board Meeting.
Resolved (2012.09.13.04), the Board requests that the President and CEO instruct Staff to consider the public comments and community input, assess the Recommendations, evaluate the potential implementation paths for each Recommendation, and provide the Board with guidance and advice on the Report, including, where appropriate, potential implementation plans and budgets, by the ICANN Toronto meeting.
Most of the Team's Recommendations address matters relevant to, and/or of interest to ICANN's Supporting Organizations and Advisory Committees. The Board is requesting input from these groups to help inform the Board's action on the Report.
Whereas, on July 2, 2012, the ICANN Board received a letter from Patrik Fältström, Chairman of the ICANN Security and Stability Advisory Committee, http://www.icann.org/en/news/correspondence/faltstrom-to-icann-board-02jul12-en.pdf, providing an update of the SSAC's views on the status of the new gTLD process.
Whereas, the Board seeks to respond to the recommendations set forth in the letter.
Resolved (2012.09.13.05), the Board thanks SSAC for its advice of 2 July 2012.
Recommendation (1), the Board requests the CEO direct staff to work with the root server operators via RSSAC to complete the documentation of the interactions between ICANN and the root server operators with respect to root zone scaling.
Recommendation (2), the Board recommends the CEO to direct staff to work with NTIA and Verisign to explore publication of one or more statements regarding preparation for the proposed changes.
Recommendation (3), the Board recommends the CEO to direct staff to publish current estimates of the expected growth rates of TLDs. The Board recognizes there is currently re-examination of the process for evaluating gTLD applications, particularly including whether to use multiple or a single batch, and with the completion of the application submission process there is now much more specific information on the number and other characteristics of applications to process. Accordingly, the Board suggests the publication of the expected growth rates of TLDs be coordinated with the re-examination.
Recommendation (4), the Board hereby formally asks RSSAC for its advice on this topic and an update on plans to satisfy this recommendation. The Board also asks the CEO whether there are other parties who should be consulted, and to ask such parties to participate.
Recommendation (5), the Board hereby formally requests SSAC for its advice on how interdisciplinary studies of security and stability implications from expanding the root zone more than an order of magnitude should be carried out and whom else should be consulted, and tasks staff with formulating and executing one or more studies, as needed.
As part of ICANN's commitment to Accountability & Transparency, ICANN is committed to reviewing advice provided by its Advisory Committees. The SSAC concerns set out in the above-referenced letter identify areas where ICANN could perform additional work for the benefit of the ICANN community. Undertaking the work called for in the resolution will have an impact on ICANN and community resources. The outcomes of this work may ultimately resolution a positive impact on the security, stability & resiliency of the DNS.
Whereas, there are currently two induction periods to the ICANN Board each year, one at or around the Mid-Year Meeting for members appointed by the Supporting Organizations and the At-Large Community, and the other at the conclusion of the Annual General Meeting for members selected by the Nominating Committee.
Whereas, the ICANN Board has long considered the coordination of Board member term transition as an issue of Board efficiency and effectiveness.
Whereas, the Board Governance Committee (BGC) considered how Board terms could be aligned to allow all Board members selected in any year to begin their terms at the same time, while still preserving the ability for the Nominating Committee to consider the geographic diversity of the Board.
Whereas, proposed revisions to the ICANN Bylaws have been drafted to achieve alignment of Board term transitions while preserving the ability for the Nominating Committee to consider the geographic diversity of the Board.
Whereas, the Board encourages the Supporting Organizations and At-Large Community to consider how the timing of their selection processes may need to be modified to meet the proposed Bylaws revisions to align Board terms.
Resolved (2012.09.13.07), the Board directs the President and CEO to have the proposed Bylaws revisions posted for public comment for an initial comment period of no less than 30 days and any reply period, if applicable, for no less than 21 days.
The Board's action in approving the posting of these proposed Bylaws revisions for public comment is part of an effort to improve the efficiency and effectiveness of the Board, addressing a concept raised by the Board Review Working Group in its January 2010 Final Report. The posting for public comment is not expected to have any impact on the resources of the community or ICANN. Ultimately, if the proposed Bylaws revisions are adopted, this is expected to have a positive effect on ICANN resources in streamlining induction efforts and Board planning. This decision is not expected to have any impact on the security, stability or resiliency of the DNS.
Fifteen members of the Board voted in favor of Resolutions 2012.09.13.01, 2012.09.13.02, 2012.09.13.03, 2012.09.13.04, 2012.09.13.05, 2012.09.13.06, and 2012.09.13.07. Erika Mann was unavailable to vote on the resolutions. The resolutions carried.
R. Ramaraj introduced this item to the Board, discussing the Compensation Committee work towards a recommendation on when it may be appropriate to award additional annual compensation to a Board member for service as a chair of a non-standing Board committee. Ramaraj clarified that the Board is being asked to approve guidelines for when this should happen. The issue arose upon consideration of the amount of work George Sadowsky had put in as the Chair of the CEO Search Committee over the past year.
The Board as a whole reviewed the resolution and requested clarifications to the language.
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 directors 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 establish a presumption of reasonableness in the level of voting Board member compensation as approved on 8 December 2011, including additional retainers for voting directors that serve as chairs of Board committees.
Whereas, the Board agrees that there are certain non-standing committees of the Board for which it is reasonable to offer a voting director of the Board the additional $5,000.00 annual remuneration for service as chair, as contemplated within the recommendation of the Independent Valuation Expert.
At the time of establishment of the non-standing committee, the work of the committee is expected to last longer than six months; based upon the expected duration of the committee, consideration should be given to the propriety of offering a pro-rata or full annual remuneration to reflect the expected length of service.
At the time of establishment of the non-standing committee, the Chair is anticipated to devote a significant amount of time over the duration of the committee.
The committee is expected to experience periods of extremely heavy workload at times throughout the duration of the committee.
These criteria shall be evaluated, and a recommendation made on the offering of a $5,000.00 additional annual remuneration to the Chair, at the time of the establishment of the non-standing committee.
The limitations on this additional retainer, as set forth in Resolutions 2011.12.08.16 and 2011.12.08.17, remain in force.
Resolved (2012.09.13.09), the Board approves the offering of a US$5,000.00 additional remuneration for 2012 to George Sadowsky for his service as Chair of the CEO Search Process Management Work Committee.
Fourteen members of the Board voted in favor of Resolutions 2012.09.13.08 and 2012.09.13.09. George Sadowksy abstained from voting. Erika Mann was unavailable to vote on the resolutions. The resolutions carried.
The history of the Board's consideration of voting Board member compensation is set forth in detail in the Rationale for Resolutions 2011.12.08.14 – 2011.12.08.16 and the Board incorporates that rationale in full by reference. In undertaking the 8 December 2011 resolution regarding the reasonableness of compensation to voting Board members, the Board followed 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.
The Board sought a recommendation from an Independent Valuation Expert ("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 was recommended by the National Association of Corporate Directors to serve as the Expert. The Expert Report, which was posted for public feedback, can be found with the Announcement at http://www.icann.org/en/announcements/announcement-3-04nov11-en.htm.
The Board has taken all steps necessary to ensure that consideration of voting Board member compensation for services provided was done in accordance with all appropriate laws, rules and regulations, including that any compensation be Reasonable Compensation under the standards set forth in §53.4958-4(b) of the Treasury Regulations.
The creation of criteria for consideration of offering additional compensation to Board members who devote substantial amounts of time in chairing non-standing committees assures that a predictable process will be used to consider compensation, and also assists Board members who may otherwise not be able to undertake the substantial time commitments required by these special projects.
The considerable amount of time expended by the CEO Search Process Management Work Committee has been previously acknowledged. George Sadowsky's service as chair of that committee exemplifies the application of the criteria defined by the Compensation Committee, as his service was for over six months, averaging in excess of 15 hours per week, and often requiring substantial attention as the Board was searching for a new CEO.
Compensating voting directors who serve as chairs of non-standing committees of the Board will have a nominal fiscal impact on ICANN, though the exact numbers of chairs eligible for the annual retainer cannot be predicted based upon the special nature of the non-standing committees. The specific amount required for compensating George Sadowsky, if he chooses to elect to receive the additional retainer, is within the budget currently allocated for Board member compensation.
This decision will have no impact on the security, stability or resiliency of the domain name system.
Kuo-Wei Wu introduced the resolution to the Board.
Chris Disspain noted that while these issues may likely be outside of the consideration of this redelegation request, there is a need for a standard, internal process to address situations where the sponsoring organization effectively moves operations to a new organization prior to seeking redelegation. Chris also commented that striving for complete accuracy in the database (for non-nameserver entries) should not serve as a basis unto itself for justifying redelegation requests.
Bertrand de La Chapelle inquired about changing the wording used within the resolutions on delegation and redelegations to indicate the request met the criteria of the process, instead of the more subjective language included.
Kuo-Wei provided the Board with more background on the request and confirmed that the past sponsoring organization is working very closely with the new sponsoring organization.
Elise Gerich explained the process for reviewing documentation that was followed in the IANA Functions Department in reviewing this request.
Chris encourage staff to consider coming up with notification letters to submit to requester when further clarifications are needed within the request process.
Bruce Tonkin supported Chris' request and suggested that further process would need to be defined around those sorts of notifications, such as who would be responsible for signing and sending.
Elise confirmed that the requirements under the new IANA Functions Contract will likely increase transparency onto the delegation/redelegation process, which will address some of the Board member concerns.
Resolved (2012.09.13.10), the proposed redelegation of the .MO domain to the Bureau of Telecommunications Regulation (DSRT) is approved.
Fourteen members of the Board voted in favor of Resolution 2012.09.13.10. Bertrand de La Chapelle abstained from voting. Erika Mann was unavailable to vote on the resolution. The resolutions carried.
Staff present delegation and redelegation requests for country-code domains to the Board for decision, once staff is satisfied the applicant has provided a sufficiently complete application that has a reasonable prospect of a positive Board decision. In line with ICANN's commitments to perform timely processing of requests relating to the IANA function, and the DNS root zone in particular, the ICANN Board seeks to evaluate such requests at its next scheduled Special Meeting.
The proposal is to approve a request to IANA to change or designate the sponsoring organization (also known as the manager or trustee) of a country-code top-level domain. In line with established practice, the ICANN Board is involved in making the decision to proceed with such requests as one step of this multi-step process.
The Board considers factors described in the public report, in relation to the basic principles of country-code domain delegation described earlier. Of particular note in this application, the Board considered that the application proposed redelegation of the top-level domain to a non-operational entity; the lack of significant community engagement in developing this application; and that the redelegation away from the existing sponsoring organization was performed prior to contacting ICANN.
On balance, the Board found that while all of these elements are undesirable, both individually and as a whole, returning the request on this basis would leave known-bad information for the domain the IANA Root Zone Database which is counter to ICANN's stability goals.
Bruce Tonkin, as the Chair of the Board Governance Committee, gave an update to the Board on the status of the work of the BGC in identifying recommendations to the Board on candidates for Nominating Committee Chair and Nominating Committee Vice-Chair. Bruce confirmed that the selection needs to be complete in time for the Nominating Committee to have its first meeting in Toronto, and the Board agreed to hold a telephonic meeting in early October to allow for that selection.
The Chair introduced the proposed resolution, noting that Fadi Chehadé is available to begin his service prior to the date initially noted. The Chair also discussed that conversations within the workshop over the week brought to light that it may be appropriate at this time to lift the deferral of strategic objectives related to the expansion of ICANN's international presence and engagement in the 2012-2015 Strategic Plan.
The Board had a brief discussion about the proposed language for the lifting of the deferral and agreed that the rationale for the lifting should be incorporated into the Board's rationale as part of the Board's demonstration of confidence in Fadi Chehadé.
Whereas, on 31 May 2012, the ICANN Board elected Fadi Chehadé as President and Chief Executive Officer, with a term to begin on 1 October 2012, to serve at the pleasure of the Board and in accordance with the Bylaws of the Corporation, and shall hold his office until his resignation, removal, or other disqualification from service, or until his successor shall be elected and qualified http://www.icann.org/en/groups/board/documents/resolutions-31may12-en.htm.
Whereas, Fadi Chehadé's term was to begin on 1 October 2012 at 12:00 am PDT, and contingent upon the execution of an agreement based on terms that had been approved by the Board.
Whereas, the Board appointed Akram Atallah, ICANN's current Chief Operating Officer as interim President and Chief Executive Officer for the period of 1 July 2012 through 30 September 2012 http://www.icann.org/en/groups/board/documents/resolutions-31may12-en.htm.
Whereas, an agreement based on the terms that had been approved by the Board has been executed with Fadi Chehadé.
Whereas, Fadi Chehadé's prior commitments have come to conclusion, and he is available to assume his role with ICANN earlier than anticipated. He will assume his duties as President and Chief Executive Officer on 14 September 2012 at 12:00am PDT.
Whereas, pursuant to according to Article VI, Section 2.1.f. of the Bylaws http://www.icann.org/en/about/governance/bylaws#VI, the person serving as President and Chief Executive Officer Fadi Chehadé shall also serve ex-officio as a voting member of the Board when he assumes his position as President and Chief Executive Officer.
Whereas, Akram Atallah will step down from his role as interim President and Chief Executive Officer on 13 September 2012 at 11:59 pm PDT, while continuing in his role as ICANN's Chief Operating Officer.
Resolved (2012.09.13.11), Akram Atallah's service as Interim President and Chief Executive Officer will conclude on 13 September 2012 at 11:59 pm PDT. The Board thanks Akram Atallah for his service as interim President and Chief Executive Officer from 1 July 2012 through 13 September 2012, and affirms that Akram Atallah continues as ICANN's Chief Operating Officer.
Resolved (2012.09.13.12), effective 14 September 2012 at 12:00 am PDT, Fadi Chehadé is elected as President and Chief Executive Officer, to serve at the pleasure of the Board and in accordance with the ICANN Bylaws, and shall hold his office until his resignation, removal, or other disqualification from service, or until his successor shall be elected and qualified.
Resolved (2012.09.13.13), effective 14 September 2012 at 12:00 am PDT, Fadi Chehadé is hereby appointed as a member of the New gTLD Program Committee.
Resolved (2012.09.13.14), the deferral of strategic objectives related to the expansion of ICANN's international presence and engagement in the 2012-2015 Strategic Plan is lifted.
All members of the Board in attendance approved Resolutions 2012.09.13.11, 2012.09.13.12, 2012.09.13.13, and 2012.09.13.14 by acclamation. The resolutions carried.
The Board applauded the election when the vote was complete, and the Chair noted regrets on behalf of Erika Mann for not being able to participate in this vote due to an early flight.
Approval of this resolution will positively affect ICANN's accountability and transparency by informing the community of the changes within the leadership in a timely fashion. This resolution will have an effect on the resources of ICANN, which have already been considered in the ICANN budget.
Further, the development of a global strategy for ICANN's operations is key to ICANN remaining accountable to all of its stakeholders around the world. Given the anticipation that ICANN's new President and CEO would bring a new focus to this work, in May 2012 the Board resolved that strategic objectives in this area would be deferred. See http://www.icann.org/en/groups/board/documents/resolutions-06may12-en.htm#1.6. With the election of Fadi Chehadé as ICANN's President and CEO, the Board notes that his work while serving as ICANN's President and CEO Designate evidenced strong collaboration in this area. To that end, the lifting of the deferral will have a positive affect on the ICANN community, as it will allow this work to proceed.
This action is not expected to have an effect on the security, stability and resiliency of the domain name system.
Whereas; Xavier Calvez is considered critical to the successful continuity of the organization, including key projects that are currently underway.
Whereas, independent market data provided by outside compensation consultants indicates that current compensation for Xavier Calvez, ICANN's Chief Financial Officer, is below ICANN's target of the 50th to 75th percentile based on market data supplied by ICANN's compensation consultants.
Whereas, the Compensation Committee and the full Board have confirmed that they are not conflicted with respect to the Chief Financial Officer's compensation package.
RESOLVED (2012.09.13.15), the Board authorizes the CEO to make compensation adjustments for this compensation year (effective 1 September 2012) for Xavier Calvez, Chief Financial Officer in accordance with the independent study on comparable compensation received, subject to a limitation that his annual base salary shall not increase by more than 15% per annum from its current rate for this year.
Attracting and retaining high caliber staff by providing a competitive compensation package is crucial to the organization. An improving job market will make more opportunities available for high caliber performers outside of ICANN. ICANN has consulted with independent compensation experts to obtain comparable market data, which indicates that some current officers are earning less than market rates, i.e. what they could earn at another employer.
Continuity and retention of key personnel during key organization phases is beneficial to all aspects of the organization. Thus, the salary adjustment called for in this resolution likely will have a positive impact on the organization and its effort to serve the public interest, as well as on the transparency and accountability of the organization. There will be some fiscal impact to the organization, but that impact will not have an effect on the overall current fiscal year budget. This resolution will not have any direct impact on the security, stability and resiliency of the domain name system.

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