ICANN's Two-Bit Answer to A Twenty Dollar Question.: "
My comments on ICANN's
Core Principles and Corporate Governance Guidelines
The oath at the bottom is contrary to the obligations imposed as a matter
of law on Directors to make independent judgements.
As a director I sued ICANN on exactly this kind of unlawful restriction -
and I won. See the file at:
http://www.eff.org/Infrastructure/DNS_control/ICANN_IANA_IAHC/Auerbach_v_ICANN/
These principles unlawfully restrict the Directors individually and as a
body from properly exercising their obligations. On this basis alone
these 'principles' are fatally flawed.
In addition many of these 'principles' have nothing to do with corporate
governance and, instead, amount to a kind of kow-tow procedure through
which the Board, and the individual directors, reduce themselves to a
subservient status vis-a-vis the corporate management. That is the
obverse of what corporate governance is all about.
Overall, this document is unacceptable. The principles are naive and
demonstrate a lack of adequate appreciation of the proper and legal
relationship between the parts of a corporation, particularly the
relationship between the board and management.
These principles also fail to address institutional shortcomings that
have been with ICANN since before its inception - a lack of open access by
those concerned (particularly the community of internet users), a lack of
transparent decision making, and a lack of accountability in the making of
decisions.
Where, for example, is an expression that all meetings (such as the
board's telephone meetings) should be at least hearable by the public?
Where, for example, is a requirement that management ('staff') back its
decisions with a written opinion that fairly expresses the opposing
viewpoints, articulates the process through which the decison will be
made, identifies the weights to be given to different goals, states the
assumptions, and visibly works through the decision process to reach the
result?
Where, for example, is an expression that meeting agendas should be
published sufficently in advance as to prevent surprise and to allow
proper deliberation before a meeting? And where is an expression that
minutes be published in a timely manner? (ICANN's failure to meet even
the minute-publishing obligations contained in the existing bylaws speaks
volumes regarding the degree of committment, or lack thereof, to any
principle.)
Where is an expression that indicates that governance of ICANN requires
that those affected by a decision have a role in the making of that
decision, or are even given access to the fora in which those decisions
are to be made?
In the rest of this note I will speak more specifically about a few, but
not all, of the more egregious failures of these 'principles':
Section 2.f greatly waters down the rights of directors under law, which
is that each director, without the need to obtain any approval whatsoever
from any other director or from the Board, has the absolute right to
inspect and copy (and retain those copies) of any and all corporate
documents and to inspect any and all corporate property, even such
property as the corporation may consider 'secret' (such as the IANA root
server.)
Section 2.f, were it to be written properly, could allude to the fact that
a Director who does avail him/herself of the right to copy and inspect is
subject to extremely strong fiduciary obligations that govern how that
information is to be used.
Section 2.h is unlawful. It is true that an individual director - whether
that director be the chairman or not - has no right to speak on behalf of
the corporation. However, in the exercise of an individual Director's
duties it is often necessary for that director to interact with the
community. Section 2.h as it is written amounts to a gag order that not
only improperly restricts the ability of a Director to carry out his/her
obligations but it also creates an improper role for the Chairman as an
official spokesman of corporate policy even without action by, or a
decision by, the board.
As a whole, section 2 reminds me that it has long been my opinion that
any person who considers a role on the ICANN board take a course on the
rights, duties, and liabilities of a Director of a California
non-profit/public-benefit corporation and should retain his/her own
counsel. Perhaps ICANN should consider whether a Director's fee would be
an appropriate vehicle to help directors deal with the expense?
Section 3 has nothing to do with corporate governance and should be elided
in its entirety.
Item 4.e misconstrues the relationship of individual Directors and the
corporate counsel - Corporate counsel represents the corporation.
Corporate counsel does *not* represent individual directors.
Section 4.e should be replaced by a section that clearly indicates that
corporate counsel is not in a position to advise individual directors and
that to do so would put corporate counsel into a situation of potential
conflict. Section 4.e should also clearly suggest to individual Directors
that they obtain advice from their own separate legal counsel.
Section 4.e also, to the extent that the word 'should' is more than merely
advisory, is unlawful. A Director is obligated to exercise independent
and informed judgement and to make his/her own determinations as what
constitutes the best interests of the corporation. For a Diretor to
pre-bind the outcome of his/her decisions in the way suggested by section
4.e would be an abrogation of that Director's fiduciary duties.
Section 5 is very simplistic. Section 5 conceives of an almost
peer-to-peer relationship between the Board as a body and the corporate
management. Nothing could be further from the truth. The Board has the
ultimate power over the corporation. The board has ultimate
responsibility. Management is merely the hired means through which the
board decisions are concretely realized. In other words, corporate
management works for the board; there is no peer relationship at all.
The board retains the right to remove any and all management from their
posts. (The board may have to continue salaries and benefits, but that
does not diminish the board's authority to place new hands on the
corporations day-to-day controls.)
In a well governed corporation the board sets policy and defines the scope
of authority and the degree of flexibility that the board is delegating to
management. ICANN's board has historically been very lax in making such
definitions and in holding management to those definitions that have been
set forth.
Section 5.e is unacceptable. It is neither the role nor the duty of the
Board or of any Director to refrain from critical thought, particularly if
that critical thought might bring into question the acts or decisions of a
member of corporate management. Indeed, it would be a dereliction of a
Director's fiduciary duties to reduce him/herself to that of a bowing and
curtseying courtier who simply flatters and never contradicts or raises
potentially unpleasent questions.
--karl--
Karl Auerbach
Former North American Elected Director
Board of Directors, ICANN
"
(Via CaveBear Blog.)