ICANN Resolutions » Board Member Compensation

Important note: The Board Resolutions are as reported in the Board Meeting Transcripts, Minutes & Resolutions portion of ICANN's website. Only the words contained in the Resolutions themselves represent the official acts of the Board. 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.

Board Member Compensation


Resolution of the ICANN Board
Topic: 
Board Member Compensation
Summary: 

Board approval of changes to Board Compensation

Category: 
Administration and Budget
Board
Meeting Date: 
Wed, 30 Jul 2014
Resolution Number: 
2014.07.30.10 – 2014.07.30.12
Resolution Text: 

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.

Rationale for Resolution: 

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.

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 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-01sep1...) 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-...). 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.