Dear Co-Chairs and Members of and Participants in CCWG Accountability: You have asked us to provide background on why Section 27.2(b)(viii) was included in Article 27 of the Bylaws (the “Transition Article”). That Section provides as follows: Section 27.2(b): The CCWG-Accountability recommended in its Supplemental Final Proposal on Work Stream 1 Recommendations to the Board, dated 23 February 2016 (“CCWG-Accountability Final Report”) that the below matters be reviewed and developed following the adoption of the New Bylaws (“Work Stream 2 Matters”), in each case to the extent set forth in the CCWG-Accountability Final Report: … (viii) Guidelines for standards of conduct presumed to be in good faith associated with exercising removal of individual ICANN Board Directors; …. This Bylaw provision was included to implement the very specific instruction found in Annex 4, Paragraph 54 of the CCWG Accountability Final Report, under the title, “Indemnification associated with the removal of individual ICANN Board Directors” that “Guidelines for standards of conduct that will be presumed to be in good faith (for example, conducting reasonable due diligence as to the truthfulness of a statement) will be developed in Work Stream 2.” (Note that an apparent drafting error resulted in this not making it into the list of Work Stream 2 topics included in Annex 12 of the CCWG Accountability Final Report, but since it is a specific requirement in the Final Report we included it in the Bylaws.) To understand the specific instruction regarding this Work Stream 2 item, it is helpful to read Paragraph 54 of Annex 4 in its entirety: Indemnification associated with the removal of individual ICANN Board Directors: · If a Director initiates a lawsuit in connection with his or her removal or recall (for example, a Director claims that he was libeled in the written rationale calling for his removal), ICANN will provide indemnification and advance expenses as provided below. · Indemnification will be available (1) to a member of an SO, an AC, the Nominating Committee, or the Empowered Community (2) who is acting as a representative of such organization or committee (3) for actions taken by such representative in such capacity pursuant to processes and procedures set forth in the Bylaws (for example, the chair of an SO submitting a written rationale for the removal of a Director). · As required by California law and consistent with ICANN's current Bylaws, indemnification will only be available if the actions were taken (1) in good faith and (2) in a manner that the indemnified person reasonably believed to be in the best interests of ICANN. · Guidelines for standards of conduct that will be presumed to be in good faith (for example, conducting reasonable due diligence as to the truthfulness of a statement) will be developed in Work Stream 2. · Indemnification will cover amounts actually and reasonably incurred in connection with the lawsuit, such as reasonable attorneys’ fees of no more than one firm, judgments, and settlements approved by the Board in its reasonable discretion. · ICANN will advance funds to cover defense expenses where the person meeting the requirements set forth above undertakes to repay to ICANN amounts received for expenses for which the requirements for indemnification are ultimately determined not to have been met. Based on the full provision outlined above it is clear that the Work Stream 2 item referenced in Section 27.2(b)(viii) relates to the standard of conduct that will qualify for indemnification of a community representative if that person is sued by a Director for efforts in seeking the Director’s removal. The Work Stream 2 task is to provide guidance by defining what types of behavior will be considered actions in good faith for purposes of indemnification of a representative of an SO, an AC, the Nominating Committee, or the Empowered Community for actions taken by that representative in his or her representative capacity with respect to efforts to remove an individual as a Director of ICANN, in the event that the person serving as the subject Director brings a lawsuit against such representative. As we recall, the CCWG-Accountability included this requirement in its Final Report to reassure ICANN Legal and the Board that indemnification of community representatives for their actions in Director removal efforts would be limited to good faith conduct and the CCWG’s concern that guidance be provided about what constitutes good faith conduct. (Note that Bylaws Article 20 in Section 20.2 provides for the indemnification of a community representative, consistent with the CCWG-Accountability Final Report.) (Just for clarification, this is NOT about Options 1 or Options 2 as identified by Jordan below, but is about the Option 3 he defines.) Please let us know if there is anything else that we can provide on this issue. Kind regards, Holly and Rosemary HOLLY J. GREGORY Partner and Co-Chair, Global Corporate Governance & Executive Compensation Practice SIDLEY AUSTIN LLP +1 212 839 5853 holly.gregory@sidley.com<mailto:holly.gregory@sidley.com> From: <accountability-cross-community-bounces@icann.org<mailto:accountability-cross-community-bounces@icann.org>> on behalf of James Gannon <james@cyberinvasion.net<mailto:james@cyberinvasion.net>> Date: Tuesday, June 21, 2016 at 2:54 PM To: Jordan Carter <jordan@jordancarter.org.nz<mailto:jordan@jordancarter.org.nz>>, "accountability-cross-community@icann.org<mailto:accountability-cross-community@icann.org>" <accountability-cross-community@icann.org<mailto:accountability-cross-community@icann.org>> Subject: Re: [CCWG-ACCT] The Board standards topic Hey Jordan, As I think I managed to get into the chat at the end of the call, my understanding of the WS2 topic was your Option 1, I think we need to get feedback from whomever put it on the table (Im still not clear on who that was other than a joint ‘from the lawyers’ response on what the expectation was for this topic. -James From: <accountability-cross-community-bounces@icann.org<mailto:accountability-cross-community-bounces@icann.org>> on behalf of Jordan Carter <jordan@jordancarter.org.nz<mailto:jordan@jordancarter.org.nz>> Date: Tuesday 21 June 2016 at 21:24 To: "accountability-cross-community@icann.org<mailto:accountability-cross-community@icann.org>" <accountability-cross-community@icann.org<mailto:accountability-cross-community@icann.org>> Subject: [CCWG-ACCT] The Board standards topic Hi all This email teases out what seems to be three separate options for what the WS2 item on Board standards means, to see if others are clearer or share my view that a number of topics are on the table. When we (ages ago, early in WS1) were discussing the removal of Board members community power, there was agreement - from memory in Dublin - that it would be helpful to generate some community norms for Board members. Let's refer to this as Option 1 for now. This was seen as having two benefits that I can remember being discussed - that Board members would have some insight into what the community was looking for beyond the procedural "rules" of Board membership, and removal processes by the community would be guided by such norms (since, presumably, they would be embedded in the community's views of what it needed from the Board - not for procedural reasons). A few weeks ago a discussion suggested that this topic might be going in a different direction - perhaps Option 2 - creating standards against which a Board removal decision might be objectively judged (i.e. creating criteria for removal). That was rebutted at the time - the CCWG never agreed to that. Today a different interpretation - Option 3!? - has emerged on the call just now - from Annex 4 para 54 of the final Proposal, the fourth bullet point: "Guidelines for standards of conduct that will be presumed to be in good faith (for example, conducting reasonable due diligence as to the truthfulness of a statement) will be developed in Work Stream 2." I confess I had not read or noticed the implications of this text in previous readings of the draft. It appears the topic noted here is to create standards for COMMUNITY members not for Board members, relating to indemnity. It may be useful to clarify this through discussion on list before Helsinki. From my point of view Option 1 remains important and useful for the community to express some views that will help inform current and future Board members or candidates for the same about some things the community wants to see, beyond what can/should be written in bylaws or rules language. Option 3 seems to be required too but is not the same thing. I'd be strongly opposed to Option 2 coming back on the agenda. Look forward to your thoughts! Jordan -- Jordan Carter Wellington, New Zealand +64 21 442 649 jordan@jordancarter.org.nz<mailto:jordan@jordancarter.org.nz> **************************************************************************************************** This e-mail is sent by a law firm and may contain information that is privileged or confidential. If you are not the intended recipient, please delete the e-mail and any attachments and notify us immediately. ****************************************************************************************************