Review of Board Compensation
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 establish a presumption of reasonableness in the level of voting Board member compensation.
Whereas, there are no barriers that would prohibit ICANN from offering compensation toICANN's non-voting Board liaisons.
Resolved (2014.04.30.06), the Board hereby approves the posting for public comment the Towers Watson's April 2014 Report, as well as proposed Bylaws revisions that would allow for compensation of non-voting Board liaisons (with the exception of the Governmental Advisory Committee's (GAC) liaison to the Board). The Board will take all relevant public comments into consideration when evaluating whether or not to adopt Towers Watson's Recommendation as to the level of voting Board member compensation, and whether to offer such compensation to non-voting Board liaisons (except the GAC Liaison).
Rationale for Resolution 2014.04.30.06
Since August 2010, ICANN's Board chair has had the opportunity to elect compensation, 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#5and 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.
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.
ICANN 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.
First, 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 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 approving compensation at any level, and following public comment, bothICANN'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 from April 2014, TW recommended that all voting Board members, except the President and CEO (who is compensated as an employee) and the Board Chair (for whom no change in compensation is recommended), be compensated at the same level ($40,000-$45,000). TW's previous recommendation, which was adopted on 8 December 2011, was that most those who served as Board committee chairs be compensated an additional $5,000 for committee chair position. Based on the new TW 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.
In addition, the Board Governance Committee has 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 ICANNBoard 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. However, the Governmental Advisory Committee (GAC) liaison explained that the GAC liaison is not allowed to accept compensation at any level. Therefore, the proposed Bylaws revisions excludes the GAC liaison.
In making this decision and passing this resolution, the Board recognizes the need for transparency in this effort, including the need for public comment as it relates to the suggestion of offering compensation to non-voting Board liaisons.
Regularly reviewing and revising as appropriate the level of compensation for Board members also conforms with the ATRT1 recommendation and with the Board's commitment to do so when voting Board member compensation was first approved.
The actual posting of the materials for public comment will not have a fiscal impact onICANN, although, compensating voting Board members and most non-voting liaisons who choose to accept compensation at the amount recommended and approved will have a slight fiscal impact on ICANN.
This decision will have no impact on the security, stability or resiliency of the domain name system.
Making the decision to post these items for public comment is an Organizational Administrative Function which itself does not require public comment. The public comment received as a result of this action will be considered in the Board ultimate decision about Board compensation.
https://www.icann.org/resources/board-material/resolutions-2014-04-30-en#/2.b.rationale
