Historical Resolution Tracking Feature » 2011-08-25 - Process Steps for Consideration of Board Remuneration
Important note: The explanatory text provided through this database (including the summary, implementation actions, identification of related resolutions, and additional information) is an interpretation or an explanation that has no official authority and does not represent the purpose behind the Board actions, nor does any explanations or interpretations modify or override the Resolutions themselves. Resolutions can only be modified through further act of the ICANN Board.
2011-08-25 - Process Steps for Consideration of Board Remuneration
Board directs ICANN staff to consider compensation for voting Directors and authorizes retention of Towers Watson as Independent Valuation Expert to advise Board regarding Director compensation arrangements.
- Take all steps necessary to allow consideration the appropriateness of compensation for voting Directors.
- Responsible entity: ICANN staff
- Due date: None provided
- Completion date: 8 December 2011
- Meet with Independent Valuation Expert to discuss Expert's Opinion.
- Responsible entity: Board
- Due date: After receipt of Opinion
- Completion date: October 2011
- Document basis for any determination Board makes regarding Director compensation arrangements.
- Responsible entity: Board
- Due date: None provided
- Completion date: 8 December 2011
- Retain Towers Watson as Board's Independent Valuation Expert to advise Board regarding Director compensation arrangements.
- Responsible entity: ICANN General Counsel
- Due date: None provided
- Completion date: August 2011
- Post proposed, revised Conflicts of Interest Policy and proposed, revised Bylaws that will be required if Board approves change to Director compensation arrangements.
- Responsible entity: ICANN Staff
- Due date: None provided
- Completion date: 2 September 2011
Whereas, ICANN currently provides compensation to the Chair of its Board for the services the Board Chair renders as a Chair of the Board.
Whereas, ICANN desires to investigate whether it is appropriate to expand the availability of compensation for service on the Board to other Board members ("Directors").
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").
Resolved (2011.08.25.09), the Board shall direct staff to take all steps necessary to consider the appropriateness of compensation for voting Directors.
Resolved (2011.08.25.10), as part of the process of reviewing any Director compensation, the Board shall retain an Independent Valuation Expert, as that term is defined in §53.4958-1(d)(4)(iii)(C) of the Regulations (an "Expert"), to consult with and to advise the Board regarding the appropriateness and level of any Director compensation arrangements, and to issue to the Board a Reasoned Written Opinion, as that term is defined in §53.4958-1(d)(4)(iii)(C) of the Regulations (the "Opinion"), from such Expert regarding the ranges of Reasonable Compensation for any such services by a Director.
Resolved (2011.08.25.11), the Expert's opinion shall include all factors the Expert determines to be appropriate regarding the appropriateness and the level of compensation to be paid a voting Director for services to ICANN as a Director, including offices held on the Board, attendance at Board and Committee meetings, the nature of service on the Board and on Board Committees, and Appropriate Data as to Comparability, as that term is defined in §53.4958-6(c)(2) of the Regulations, regarding director compensation arrangements for U.S.-based, nonprofit, tax-exempt organizations possessing a global employee base.
Resolved (2011.08.25.12), after having reviewed the Expert's Opinion, the Board shall meet with the Expert to discuss the Expert's Opinion and to ask questions of the Expert regarding the Opinion, the Comparability Data obtained and relied upon, and the conclusions reached by the Expert.
Resolved (2011.08.25.13), that the Board shall adequately document the basis for any determination the Board makes regarding Director compensation arrangements concurrently with making that determination.
Resolved (2011.08.25.14), ICANN's General Counsel is authorized and directed to retain Towers Watson as the Board's Independent Valuation Expert to consult with and to advise the Board regarding Director compensation arrangements and to issue to the Board the Reasoned Written Opinion described above regarding the appropriateness of and ranges of Reasonable Compensation for any such services by a Director.
Resolved (2011.08.25.15), ICANN's staff is herby directed to post for public comment a proposed revised Conflicts of Interest Policy and proposed revised Bylaws that will be required if the Board approves a recommendation that eligible Board members should be compensated for services to ICANN as Directors of ICANN.
Over the past several years, ICANN has been considering issues surrounding Board compensation. The Board has publicly discussed the matter and has reviewed independent analysis and advice on the matter. For example: (i) there were calls from the community in relation to ICANN Framework for Accountability and Transparency that the entire Board be compensated; (ii) budget contingency discussions since FY08 have involved the concept of possible Board remuneration; (iii) independent evaluation experts provided studies on other non-profit organizations and Board member remuneration; (iv) the Boston Consulting Group ("BCG") that conducted the Board Review suggested that relatively modest fees to compensate directors for time may be appropriate; (v) the Board Review working group acknowledged general support from BCG and community for director remuneration, but recommended further study in coordination with General Counsel; and (vi) the Accountability and Transparency Review Team specifically recommended that the Board should implement a compensation scheme for voting Directors.
In August of 2010, the Board approved compensation for the Board Chair. Since that time a call for all voting directors to be compensated has continued, most recently through Recommendation 5 from the Accountability and Transparency Review Team.
Taking all steps necessary to ensure that consideration of voting director compensation is done in accordance with all appropriate laws, rules and regulations positively impacts the accountability and transparency of ICANN. Further, informing the community through posting all of the process steps the Board is following, as well as the proposed revisions for the Conflicts of Interest Policy and the Bylaws, significantly enhances ICANN's transparency in this matter.
Following these steps will have some fiscal impact on ICANN as it will cost some to engage the Independent Valuation Expert, however that eventually was budgeted for when the Board adopted the ATRT Recommendations. Taking these steps will not negatively affect the security, stability or resiliency of the domain name system.
- Potential Revisions to the ICANN Conflicts of Interest Policy available at: http://www.icann.org/en/general/proposed-revisions-coi-policy-01sep11-en.pdf.
- Potential Revisions to ICANN Bylaws available at: http://www.icann.org/en/general/proposed-bylaws-revision-vi-01sep11-en.pdf.
- Background information and public comments regarding Potential Revisions to the ICANN Conflicts of Interest Policy and ICANN Bylaws available at: http://www.icann.org/en/public-comment/bylaws-amend-vi-coi-policy-01sep11-en.htm.
- Revised ICANN Conflicts of Interest Policy is available at: http://www.icann.org/en/committees/board-governance/coi/.
- Revised ICANN Bylaws are available at: http://www.icann.org/en/general/bylaws.htm#VI.
- Independent Valuation Expert's Report regarding ATRT Recommendation 5: Board Compensation available at: http://www.icann.org/en/general/report-board-directors-compensation-considerations-13oct11-en.pdf.
- Background information on Independent Valuation Expert's Report regarding ATRT Recommendation 5: Board Compensation available at: http://www.icann.org/en/announcements/announcement-3-04nov11-en.htm.
- ATRT Final Report ("Board Action on, and Implementation of, the Accountability and Transparency Review Team Final Report"), June 2011, available at: http://www.icann.org/en/accountability/atrt-report-25jun11-en.pdf.
- The resolution does not address funding for the items identified therein.