Historical Resolution Tracking Feature » 2012-09-13 - Criteria for Determining Chair Compensation for Non-Standing Board Committees
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2012-09-13 - Criteria for Determining Chair Compensation for Non-Standing Board Committees
/Board approves criteria for determining Chair Compensation for Non-Standing Board Committees.
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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 previously approved the recommendation from the Independent Valuation Expert (as that term is defined in §53.4958-1(d)(4)(iii)(C) of the IRS Regulations), made in its Report or Reasoned Written Opinion, (as that term is defined in §53.4958-1(d)(4)(iii)(C) of the Regulations), that it is reasonable to "[i]ntroduce annual cash retainer of $35,000 for outside directors and maintain the $75,000 for Chairman of the Board" and "[a]n additional $5,000 annual retainer would be provided for committee chair (except the Chairman of the Board)." (Resolution 2011.12.08.11.)
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.
Resolved (2012.09.13.08), the Board approves that at least the following criteria be applied in the consideration of whether it is reasonable to offer a voting director an additional US $5,000.00 annual remuneration for service as chair of a non-standing committee of the Board:
- 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.
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.
- The resolution does not address funding for the items identified therein.