[At-Large] Voting seat for CEO Was: Re: ICANN75: Mandatory Funded Traveler Registration for Roberto Gaetano

Wed Jul 27 19:26:00 UTC 2022

One of the things that has long concerned me about ICANN is that the 
method of filling board seats tends to create a board of directors that 
is more a board of passive worthies who may not fully understand their 
duties and who tend to not fully understand their powers.  The result 
is, as we have seen, an imbalance in which the board of directors 
largely sits and watches while the hired executives and an ever 
expanding staff run roughshod and unrestrained.

I am not aware of the current arrangement, but many of ICANN's 
Presidents (that is the word used in the bylaws, "president" of which 
CEO is merely one of his/her tasks) is not hired directly but, rather is 
linked to ICANN by a contract with a professional services corporation 
that markets the person to ICANN via a contract with that corporation, 
that in turn, is the employer of that person.  This is a really weird 
arrangement because it substantially muddies the legal relationship 
between ICANN, that professional services corporation, and the person 
with the title "President".  I always thought that this was an ill 
advised practice that ought to have been avoided in the past and ought 
not be used in the future.

ICANN's President is a hireling, not a king.

ICANN's board *does* have the ability and power and right to remove any 
officer, including the President, at any time.  That means plucking that 
person out of his/her box on the org chart or redefining the duties and 
title of any box on that org chart.

Now, that does mean that the employment contract is voided and that 
ICANN and the former officer simply part ways.

One of the definitions of a contract is that it is an agreement over how 
much it will cost to *not* do what you promised to do. And a principal 
of American law (and the law of many other places) is that civil matters 
can usually be compensated with the payment of money.  (Note that I used 
the word "compensated".  Punitive remedies not related to actual harms 
and losses are usually frowned upon.)

So if ICANN's board says "bye bye" to a President, or substantially 
changes his/her duties (such as eliminating the ex-officio seat on the 
board) then that President can claim that the employment contract was 
breached and that he/she is owned compensation.  That compensation is 
usually established by the contract as liquidated damages (i.e. money) 
or is computed and converted into a monetary amount.  (California law 
generally frowns on "penalty" amounts that are not tied to actual loss 
of contractual benefits.)  Only rarely are breached contract provisions 
remedied through what is called "specific performance", such as an order 
to transfer a specific house or a specific painting rather than paying 
money damages.  It is likely that changing ICANN's President's 
employment status or duties would be insufficient grounds for a court to 
order specific performance to keep the President in the prior status and 
role.

So, if ICANN removes its President or changes his/her duties, ICANN may 
have a lingering obligation to pay salary and benefits to that person.  
Or a severance fee or liquidated damages may have to be paid.  ICANN 
could soften the blow and make the event look prettier to the public by 
retaining the person with some poo-bah title that carries no authority.

The point I'm making here is that the person who argued that ICANN is 
not able to change its bylaws and not have the President as an 
ex-officio, voting member of the board of directors is not adequately 
informed.

Yes, such a change could have a transient cost that runs through the end 
of the employment contract and could lead to some minor litigation over 
things like titles and other poo-bah mooing by a President who objects 
to being removed from the board of directors, but still retains the job 
of President/CEO, including the salary and benefits.

So the cleaner approach is to make that change to the bylaws but have it 
take effect upon the end of the present term of the employment agreement.

         --karl--

On 7/27/22 2:41 AM, Roberto Gaetano wrote:
> Karl,
>
> Following on your “off-topic” (I changed the subject line) I wold like 
> to add a bit of history.
>
> You wrote:
>>
>> A lot of our BWG proposals are still quite relevant, for instance, 
>> not putting the President/CEO into a seat on the board of directors ….
>>
>
> When I was chairing the Board Review WG, I argued against having the 
> CEO as a voting member rather than ex-officio observer. Besides any 
> governance model, having to vote on issues that he would have been 
> called to execute could put the CEO in an embarrassing position: what 
> if he voted against, and the motion passed? This was, IMHO, not just a 
> theoretical exercise, but something that could really happen on 
> politically sensitive issues, like the .xxx delegation (in that case, 
> Paul abstained, and the application was rejected by one or two votes).
>
> My approach was considered, but the Chair argued that for the current 
> CEO the provision was built in the contract, and could not be changed, 
> but this would have been taken into account for the next CEO. Then I 
> left the Board, and lost track of the later events, but it looks that 
> the situation still remains unchanged.
>
> Cheers,
> Roberto
>
>
>
>
>> On 26.07.2022, at 21:39, Karl Auerbach via At-Large 
>> <at-large at atlarge-lists.icann.org> wrote:
>>
>> I'm going to be somewhat diverging from the main topic....
>>
>> On 7/26/22 8:14 AM, Marita Moll wrote:
>>>
>>> And so it is with ICANN. It exists -- a unique multistakeholder 
>>> governance system. Lots of things wrong with it. But it exists. So, 
>>> for those who want to, they can keep working at it, keep looking for 
>>> improvement, keep challenging the system.
>>>
>> I've long been in opposition to the "stakeholder" model of 
>> governance.  I was horrified when I first saw it just after Jon 
>> Postel died, and became more horrified watching Joe Sims of Jones Day 
>> ramming it down our collective throats.  In the Boston Working Group 
>> proposal for "NewCo" we tried to mitigate some of the worst aspects.
>>
>> See https://cavebear.com/archive/bwg/ for the Boston Working Group 
>> proposals.
>>
>> A lot of our BWG proposals are still quite relevant, for instance, 
>> not putting the President/CEO into a seat on the board of directors 
>> and moving some ICANN powers into the Articles of Incorporation and 
>> requiring exercise of those powers to be approved by more than merely 
>> the board (in those days that larger body could have been "the 
>> members" but ICANN sank that ship long ago - but it can be, and ought 
>> to be, re-floated.)
>>
>> My most recent piece in opposition to stakeholder based systems may 
>> be found here:
>>
>> Democracy Versus Stakeholderism - 
>> https://www.cavebear.com/cavebear-blog/stakeholder_sock_puppet/
>>
>>             --karl--
>>
>>
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