[At-Large] CCWG Briefings - Presentation

Karl Auerbach karl at cavebear.com
Sat Feb 27 00:01:58 UTC 2016

On 2/26/16 3:01 PM, Evan Leibovitch wrote:
> In most ​jurisdictions in which I have been involved in the creation 
> of nonprofits, the kind of member-less, mostly-unaccountable-Board 
> that is the cornerstone of ICANN's present structure could not exist.
In California the memberless approach is intended for use by things like 
theatre companies that tend to reflect the artistic direction of a 
director.   The creation of ICANN intentionally mis-used the memberless 
approach (and we saw the legal scurrying when ICANN held the 2000 
"selection" that was actually an "election" that triggers the mandatory 
use of a membership structure.)

However, a member based organization can be created - and often is 
created - in California.  The rules of membership organizations here are 
pretty decent.  And given that ICANN is already a California 
public-benefit/non-profit those rules would slide onto the organization 
like a well tailored glove.  Or to pick a different simile - moving 
ICANN (including its assets and contracts) to another jurisdiction and 
imposing these proposals would be somewhat like attaching a helicopter 
to El Capitan in Yosemite and trying to air lift it to Iceland - at best 
hard, more likely impossible.
> In most other nonprofits in most other places where one exists, a 
> Nominating Committee does exactly that
Nominating committees are troublesome, because one needs a solid legal 
structure to create them, populate them, run them, impose standards of 
care on the committee members, resolve disputes, and use their output.

The use of nominating committees is particularly ICANN-ish; it is not a 
common form of organization largely because they contain all of the 
structural issues of a board of directors.  In a sense they become 
simply a higher level board of super-directors.  And then one turns the 
recursion crank and ask "who nominates the nominating committee, and 
what if there is disagreement?"  One might think that there is no risk 
of competing panels each claiming to be "the nominating committee".  But 
world history has demonstrated that this thing can, and has, occurred.

> -- nominate a slate that must be elected or ratified by some greater 
> body. It is this body -- not the Board itself or the NomComm -- that 
> determines the fiduciary duty and the good to be served.
Fiduciary duty is to the corporate body, period.  It is not levied onto 
a board or directors or individual directors by an outside body, 
particularly not by a nominating or electing body.  That duty of care to 
the corporate interest alone is a fairly primary foundational element of 
corporate structures.

That said, in public-benefit/non-profit corporations, such as ICANN the 
corporate interest is measured by how well the corporation improves the 
public interest.  That twist is something that is not well understood by 
most people who sit in board seats on public-benefit/non-profit 

But let's be clear - a corporate director owes no fiduciary duty to 
follow the opinions of a nominating committee or a membership.  The 
entire duty of care is to the corporate interest (which in our case 
includes the public interest.)  Ethics, politics, and simple good sense 
indicate that those opinions should be heard and considered. But, again, 
there is no duty to accept them or give them more weight than any other 
source of information.

One of the best ways to destroy a corporation is to create marionette 
strings in which parties such as shareholders or debt holders or members 
or nominating committee can affect the decisions of a board of directors.

That penetration of the corporate structure is the great danger that I 
see in these proposals.  The result of such a failure would be chaos.  
It is foolish to consider proposals that contain that risk. And these 
proposals do.

> ​I had never encountered the ability of a nonprofit to unilaterally 
> shed itself of Board oversight by its members until ICANN.
ICANN does not have that ability.  It can not wave a wand and say that 
it does.  People should laugh (or as I did, take legal action) when 
ICANN makes such assertions.

But, unfortunately, people have accepted ICANN's assertions about 
membership.  It might legal action to dispel years of propaganda from 
the law firm that created ICANN and still serves ICANN (and is still 
makes a lot of money from ICANN.)

But the current effort at reform should use the current window of 
malleability to demand that ICANN adopt a membership structure.  But 
that membership structure should not be this silly (and probably 
not-viable) proposed system that is as overtly contrived as is ICANN's 
present form.

The California law of membership in public-benefit corporations is good, 
it is easy, it is apt.  It is such an obvious path that I remain 
astounded at the level of effort being expended trying to not follow it.


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