Minutes | Meeting of the Finance Committee of the Board (BFC) | 26 August 2024

BFC Attendees: Harald Alvestrand, Maarten Botterman, Edmon Chung, Danko Jevtović (Chair), Patricio Poblete, and León Sánchez

Other Board Member Attendees: Sally Costerton, James Galvin, and Sajid Rahman

ICANN Org Attendees: Ted Bartles (Director, Event Design and Production), Xavier Calvez (SVP, Planning and Chief Financial Officer), Franco Carrasco (Board Operations Manager), John Crain (SVP and Chief Technology Officer), Marika Konings (VP, New gTLD Program Lead), Elizabeth Le (Deputy General Counsel), Sally Newell-Cohen (SVP, Global Communications), Ergys Ramaj (VP, Public Responsibility Support), Vivek Sengupta (Senior Director, Procurement), Amy Stathos (Deputy General Counsel) and Theresa Swinehart (SVP, Global Domains and Strategy)

The following is a summary of discussions, actions taken and actions identified:

1. Contracting Approvals
   • ICANN84 Contracting Approval – ICANN org presented the BFC with a proposed hotel and venue engagement for the ICANN84 Public meeting. The item is in front of the BFC because the cost of the renewal contract is greater than US$500,000. ICANN org performed a thorough analysis of the proposals and prepared a paper to identify those that met the meeting location selection criteria. Based upon the proposals received and analysis, ICANN org has identified a location and venue for ICANN84. In terms of due diligence, the BFC determined that the procurement process has been followed and that several alternative locations were evaluated against the ICANN meeting location selection criteria. The recommended venue adheres to the geographic rotation guidelines established by the Meeting Strategy Working Group. The BFC also determined cost estimates for the location are reasonable and consistent with historical meeting costs. The Committee noted that its evaluation pertains to the financials for the ICANN84 Public meeting and does not extend to the security and human rights assessments for the proposed venue, which will be separately considered by the Board. Following discussion, the BFC approved a recommendation to the Board to authorize ICANN org to enter into the hotel and venue contracts for ICANN84.
     • Action: ICANN org to prepare relevant materials for Board consideration.
   • RZMA Contract Renewal – ICANN org presented the BFC with the proposed renewal of the Root Zone Maintainer Agreement (RZMA) between ICANN and Verisign for an eight-year term unless or until earlier terminated pursuant to its terms and conditions. The contract, initially established in 2016 after the IANA stewardship transition, is for the distribution of the root zone, crucial for the stability and security of the Internet. The item is in front of the BFC because the cost of the contract is greater than US$500,000. ICANN org reported that at the renewal of the agreement after the initial term of eight years, ICANN and Verisign have mutually agreed to make minor amendments to the RZMA, including some additions. ICANN has a need to renew the RZMA to ensure continued high levels of quality and service delivery for the performance of the maintainer function. Under the RZMA, Verisign would continue providing services relating to the production and distribution of the DNS root zone, as directed by the IANA functions, for a nominal fee. By renewing the current agreement, ICANN is continuing to promote the security, stability and resiliency of root zone maintenance operations. The BFC determined that the specific procurement process in this case has been respected and that costs are reasonable and affordable. Following discussion, the BFC approved a recommendation to the Board to authorize ICANN org to enter into an eight-year renewal of the RZMA with Verisign.
     • Action: ICANN org to prepare relevant materials for Board consideration.
   • Next Round PR Campaign Contract Extension – Harald Alvestrand, Edmon Chung, and James Galvin recused themselves from the discussion, out of an abundance of caution to avoid any conflict of interest. ICANN org presented the BFC with the proposed contract extension with the selected vendor for the implementation of global awareness campaign in support of the New gTLD Program: Next Round. This global campaign is intended to create early awareness and understanding of the New gTLD Program: Next Round among as many potential applicants around the world as possible with sufficient time to prepare and apply for a new gTLD. The resources provided by the selected vendor have already demonstrated their value and expertise as part of the initial engagement that ICANN org entered into with the vendor. The item is in front of the BFC because the cost of the renewal contract is greater than US$500,000. The BFC determined that the procurement process has been respected and that costs are reasonable and affordable. Following discussion, the BFC approved a recommendation to the Board to authorize ICANN org to extend the contract.
     • Action: ICANN org to prepare relevant materials for Board consideration.
2. FY24 Financial Results – Harald Alvestrand, Edmon Chung, and James Galvin recused themselves from the discussion, out of an abundance of caution to avoid any conflict of interest. The BFC received an update on the FY24 financials. The ICANN FY24 operating deficit is US$5.5 million where the deficit is purely operational, as other programs such as the New gTLD Program: Next Round and the Grant Program are funded through separate funds. The actual deficit for FY24 was lower than anticipated at US$1.2 million instead of the projected US$6.7 million. Key reasons for the lower-than-expected deficit include higher funding from domain registrations and gTLD transactions, lower-than-expected legal fees, reduced travel expenses (especially for ICANN80), and savings from staff changes. ICANN org explained the volatility and unpredictability of the new and legacy gTLD registrations and renewals that led ICANN org to adopt a conservative approach to forecasting the new gTLD funding in order to maintain healthy reserves and ensure stability in the period of financial fluctuations.