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ICANN board bill tops $2 million

Kevin Murphy, November 1, 2014, Domain Policy

ICANN’s board of directors cost the organization over $2 million in pay and expenses in its fiscal 2014, a document released last night shows.

The total bill for the year ended June 30 was $2,000,609, up 16% on FY13’s $1,721,191 and up 27% on the FY12 figure.

The majority of the expenditure went on travel and other expenses. Just $538,983 went on compensation.

ICANN directors get $35,000 per year basic, plus another $5,000 for each board committee they chair. Board chair Steve Crocker gets $75,000 and accumulated $149,000 in FY2014 expenses.

Six directors chose to receive no compensation whatsoever, though they all racked up travel expenses.

The $2 million total does not include any contribution from CEO Fadi Chehade.

Chehade’s salary was $559,999. He also received $253,826 in bonuses and accumulated expenses totaling $519,421.

FY14 was of course the year in which Chehade and members of the board traveled extensively for outreach related to the IANA stewardship transition process and the NetMundial initiative.

Verisign steps up anti-gTLD campaign with attack on ICANN’s war chest

Verisign wants ICANN to publish a list of all the reasons it might be sued over the new gTLD program, claiming security and stability risks might be one of them.

In the latest salvo fired in its war against new gTLDs, the company now suggests that the $115 million “risk fund” surplus that ICANN has accumulated is for fending off lawsuits when it breaks the internet.

In a letter (pdf) sent Friday, Verisign asks ICANN to justify the existence of this war chest in light of the fact that it has managed to secure legal indemnities from pretty much everyone involved in the program.

It attempts to link the risk fund to the possible security risks of introducing new gTLDs to the internet, which Verisign has been haranguing ICANN about for the last few months.

“We believe ICANN should be forthcoming about the risks it is shifting and the need for the substantial risk reserve fund, in particular,” the letter, signed by general counsel Richard Goshorn, says.

It’s been well known for a few years that $60,000 of each $185,000 new gTLD application fee was to be allocated to a risk fund created to cover unexpected extra program costs.

The reserve was designed to cover things like underestimating the costs or time needed to evaluate applications, but also, crucially, the lawsuits that ICANN expected but has not yet received.

The cash pile is often to referred to, usually with black humor, as the “legal defense fund”.

Now Verisign seems to be saying that the legal risks are not limited to trademark disputes or the usual antitrust nonsense, but to the security risks ICANN is “transferring” to others.

As we’ve been reporting for the last few months, Verisign has suddenly decided that new gTLDs pose a risk to the internet, largely due to the potential for clashes between newly delegated strings and the unnofficial domains that many organizations already use on their intranets.

For a great discussion on the merits of this argument check out this DI article and comment thread.

With the latest letter, Verisign suggests that ICANN knows it might be sued for messing up corporate intranets, but is keeping that fact quiet.

Referring to a report it issued in March, when its security concerns first emerged, it says:

We believe that ICANN may have established and be maintaining the Risk Reserve in such a high amount in anticipation of significant claims relating to one or more risks identified in the Verisign Report.

If ICANN does get sued on these grounds, the defense cost will effectively have been covered by new gTLD applicants (and therefore their customers, assuming the costs are passed on), Verisign says.

It’s therefore asking for ICANN to disclose the reasons why its risk fund is so big, “in particular, the details regarding what ‘possible litigation’ factored into ICANN’s decisions”.

In other words, Verisign is asking ICANN to publish a list of reasons people might sue it, something I can’t imagine its general counsel agreeing to any time soon.

Is this an effort to shame ICANN into taking its security concerns more seriously, or just more FUD designed to disrupt the new gTLD program and protect its .com dominance?

Opinions, no doubt, will be split.

ICANN’s new gTLD fund at $352.3m

Kevin Murphy, November 2, 2012, Domain Policy

ICANN had $352.3 million in its new gTLD program bank account as of October 13, according to notes from a recent board meeting.

The numbers suggest that ICANN had only spent about $6 million on the program since the application window closed at the end of May.

With 1,930 applications at $186,000 a pop, excluding the seven refunds, ICANN should have grossed about $358 million.

The money is being held in a non-interest-bearing account, partly due to ICANN’s insistence that the program is not an exercise in self-enrichment.

Notes from the October 13 Board Finance Committee meeting also reveal that ICANN plans to revise its 2013 budget to account for the accelerated gTLD timetable.

The current budget was prepared before Digital Archery was scrapped and ICANN expected to process its applications in batches over two years. It now expects one batch lasting one year.

ICANN budgets for 2,000 new gTLDs

Kevin Murphy, May 2, 2012, Domain Policy

ICANN could net $150 million from a 2,000-application new gTLD round.

That’s according to a proposed budget published for comment last night, which for the first time contemplates more than 500 new generic top-level domain applications.

The budget also contains budgets for 500-application and 1,000-application rounds.

But with ICANN revealing this week that it has 1,268 registered users of its TLD Application System, 2,000 applications is beginning to look extremely plausible.

ICANN would receive $368 million in fees from a 2,000-app round, according to the budget, of which an estimated $33 million would be returned in refunds when applicants withdraw.

But the operating cost of the program would only come in at $156 million – slightly cheaper on a per-application basis than a 500-app round due to volume discounts from its contractors.

What happens to the rest of the money?

About $30 million is returned to the ICANN contingency fund to recoup program development costs. A $31 million surplus could be considered “profit” – it’s budgeted as an increase in net assets.

But the majority – $120 million – is budgeted to the amorphous “risk costs” line item.

The risk fund – sometimes flippantly referred to as the legal war chest – was budgeted to cover unanticipated costs such as delays and litigation.

ICANN evidently does not anticipate any economies of scale here. The $120 million in the budget is a simple multiple of the $30 million it said it needed to cover risk in a 500-application round.

It’s quite possible that ICANN won’t even need to dip into the risk fund, or that it might only need to withdraw a small amount, which would leave it sitting on an embarrassingly large wedge of cash.

The organization has yet to decide how its surplus would be deployed, but it’s going to be kept in a separate bank account and accounted for separately.

As new gTLDs loom, ICANN expands

Kevin Murphy, September 21, 2011, Domain Policy

ICANN plans to upgrade its offices in California and Brussels to deal with anticipated staff growth as the new top-level domains program kicks off.

In a resolution passed late last week, the board of directors said that ICANN should start negotiating for more space at its current location, or to find a new location in Marina Del Rey.

It also resolved to lease a permanent office in Brussels, where it’s currently paying month-to-month at a Regus managed office facility.

Both resolutions are redacted of the specifics of price and locations of interest, presumably in order to not jinx ICANN’s negotiating position with its landlords.

ICANN employs 124 staff, and has job openings for 21 more, according to its latest CEO’s report. Many of its open positions are intended to support the new gTLD program.

Its fiscal 2012 budget includes $2.1 million to pay for its offices in Marina Del Rey, Brussels, Washington DC, Palo Alto and Sydney.

Also in Friday’s board meeting, ICANN approved the formation of a search committee to find itself a new CEO, following the announcement of Rod Beckstrom’s July 2012 departure.

The committee isn’t likely to be formed until the next meeting, in Dakar, October 28, so don’t all start typing up your resumes just yet.

The board also approved the appointment of new chief financial officer Xavier Calvez, who was named to the post on an interim basis earlier this month.

He will receive a salary of $250,000, with a 30% ($75,000) performance-based bonus. That’s compared to his predecessor’s $170,000 base and 20% bonus.