Excessive Luxury PolicyThis policy fulfills the requirements under the American Recovery and Reinvestment Act of 2009 (ARRA) enacted February 17,2009. ARRA requires each recipient of funds under the Capital Purchase Program (CPP) of the Troubled Assets Relief Program (TARP) to have in place a company-wide policy regarding excessive or luxury expenditures, as identified by the Secretary of the Department of the U.S. Treasury.
POLICYLiberty Financial Services, Inc. prohibits excessive or luxury expenditures on entertainment and events, office or facility renovations, aviation or other transportation services or other activities or events that are not reasonable expenditures for conferences, staff development, reasonable performance incentives or other similar measures conducted in the normal course of business operations. The Excessive and Luxury Expenditure Policy applies to the following activities, events, and expenditures:
Renovations of facilities and office spaces should be relative to the approved project and current profit plan, and tracked within the capital expenditure policy of the Company. An exception to this can be allowed if management must deal with an emergency situation, such as an act of nature, and the expenditure is necessary to make the facility operational for customer use. At no time should renovations be done that would have the appearance of being extraordinary or excessive from a shareholder perspective.
Expenditures for facility or office renovations must be approved by either the President and Chief Executive Officer or the Board of Directors of Liberty Financial Services, Inc. or the appropriate subsidiary. The President and Chief Executive Officer is not required to get prior approval from the Board of Directors for any renovation projects, although the Board of Directors must be kept apprised of all proposed renovation projects as well as the status of such projects. Emergency renovations or repair only require the approval of the President and Chief Executive Officer; or an Executive Vice President; or any two (2) Vice Presidents.
Entertainment is defined as an activity for which an Employee or Executive would use corporate funds for business development purposes relating to a current customer or prospective customer, or to further enhance the Company's marketing efforts.
Our expectation is that all expenses incurred to the Bank would be for company purposes, used to drive business to the bank. Occasional events such as taking customers or prospects on trips, playing golf, eating dinner, or taking them to other events the customer/prospect would find pleasurable is a necessary part of the Company's marketing efforts and is not deemed as "luxury" or a violation of this Policy. These expenses should be documented and detailed as to the benefit derived by the Bank through the normal accounts payable process. Employees seeking payment or reimbursement for entertainment activities must submit a Check Expense Request Form or an Expense Reimbursement Form to their direct supervisors or any member of management at the Vice President level or higher for approval prior to submission to Accounts Payable. Events and parties focused on customers for the purpose of attracting their business would not fall under this policy.
We encourage our staff to attend conferences that are appropriate educational opportunities. These conferences should be related to the financial services industry or have a direct correlation to their job. At times it may be appropriate that a spouse would travel to these conferences with Company attendees. Typically these conferences are sponsored by vendors, banking associations, or other industry related entities.
Staff seeking to attend conferences and/or continuing education programs must get the prior approval of their immediate supervisors. In the event an employee requests that a spouse's travel to a conference, training or continuing education program is paid for by LFS or any of its subsidiaries, such approval may be granted only by the President and Chief Executive Officer, or an Executive Vice President, and any such approved cost may not exceed $2,500.00.
Failure to request prior approval for attendance at a conference, training or continuing education program may result in disallowance of the conference costs and any related expenses, including travel, hotel, and meals. Failure to request prior approval to cover an accompanying spouse's expenses for such a program shall result in disallowance of any costs associated with the spouse's travel.
4. Employee Recognition/Holiday Parties
We feel that employee recognition and/or holiday parties are part of an employee appreciation process. These events should be local in geographic nature, and would include costs for such things as service awards and nominal door prizes. An event should not cost the sponsoring business unit more than an average day's payroll per employee.
A sponsoring business unit must get prior approval from an Executive Vice President or the President and Chief Executive Officer and submit a Check Expense Request Form or Expense Reimbursement Form for processing by accounts payable.
5. Board/Management Retreats
Retreats should be used for educational or business planning purposes, and should be looked at in the same view and discretion as all other expenses. Board education is a vital part of maintaining, and keeping a dynamic director base, and this policy should not be limited to retreats focused on strategic planning or education. Board and management retreats should include a business meeting and costs should be reasonable. Liberty Financial Services or the sponsoring subsidiary shall be responsible for the costs of a Board or management retreat.
6. Aviation Services or Other Transportation Services
Transportation for Company staff to outlying locations, including bank locations, conferences, business development purposes and merger and acquisition research, should be conducted in the most cost appropriate way for the Company. Modes of transportation to be used may consist of vehicle, commercial air or rail service. The selection of transportation services will factor in cost, efficiency and timeliness of travel. Private air services or commercial first class service are not allowed without the prior written approval of the Chairman of the Board of Directors of Liberty Financial Services, Inc. or of the appropriate subsidiary.
ComplianceThis Policy is applicable to all employees of Liberty Financial Services, Inc., Liberty Bank and Trust Company, and all LFS subsidiaries and related entities. Failure to comply with the procedures listed in this policy may result in disallowance of the expense.
At the end of the fiscal year for which Liberty Financial Services is receiving TARP funding, on behalf of Liberty Financial Services and its subsidiaries, the Principal Executive Officer (PEO) or the Principal Financial Officer (PFO) shall submit a certification that the procedures and approvals outlined in this policy were properly obtained for the applicable types or categories of expenditures.
Violation ReportingIf an employee suspects that there has been a violation of this policy and related procedures, the Chief Financial Officer should be notified, in writing, of any suspected violations. The Chief Financial Officer shall direct an investigation into the alleged violation and all expenditures or reimbursements related to it. If the Chief Financial Officer finds that the policy and procedures have been violated, the violation(s) shall be referred to the President and Chief Executive Officer. The President and Chief Executive Officer and Chief Financial Officer shall determine appropriate action to be taken for any policy violations.
If there is an allegation of violation by an Executive Officer, the matter shall be referred to the Board of Directors of Liberty Financial Services or the appropriate subsidiary for follow-up action. The Board may then direct whichever officer(s) it so designates to investigate the alleged violation and provide a recommended course of action to the Board.