Policy on Excessive or Luxury Expenditures
As a recipient of financial assistance under the Troubled Asset Relief Program (TARP) we, as a Bank, are
required to establish standards for identification, monitoring, approval and reporting of expenditures on
activities that may be deemed excessive and in contravention of the Bank’s duties under its agreement with
the Treasury Department (“Treasury”). In compliance with those regulations, the Board of Directors of
Exchange Bank has implemented the following policy concerning “excessive or luxury expenditures”:
Our shareholders expect and deserve our full attention to increasing shareholder value. While revenue
and earnings growth are the components most often discussed, expense control is just as important. The
standards set forth in this Luxury Expenditure Policy apply to each and every employee of Exchange Bank
and each employee is expected to read, understand and comply with the standards set forth in this policy.
It is similarly expected that each employee shall report any instances of non–compliance that an employee
is aware, to the employee’s immediate supervisor and/or via the Whistleblower procedures documented in our
Ethics Policy. Failure to report actual or perceived breaches of this policy will result in disciplinary
actions taken by the Bank against any employee, who knew of, should have known of and/or participated in
a breach of this policy.
The following activities are considered within the scope of the Luxury Expenditures Policy and to the
extent such expenditures are not reasonable expenditures for staff development, reasonable performance
incentives, or other similar reasonable measures conducted in the normal course of the Bank’s business
operations, certain expenditures may be deemed excessive:
- Entertainment or events;
- Office and facility renovations
- Aviation or other transportation services; and
- Other similar items, activities, or events for which the Bank may reasonably anticipate incurring
expenses, or reimbursing an employee for incurring expenses.
The Bank will not approve any expenditure unless it is reasonably expected to contribute explicitly to
staff development, furtherance of the Bank’s strategic initiatives, staff retention through reasonable and
appropriate performance incentives or in furtherance of some other Bank or community objective or goal.
Expenditures for entertainment, events, seminars, conferences, aviation and other transportation services
which, as a single item or as a total project or service, exceeds $5,000 will require CEO approval. Any
such items exceeding $25,000 will also require Board approval. Both such approvals need to be obtained
prior to the expense being committed. The CFO will ensure that the Bank maintains records of expenditures,
and their appropriate level of approval.
Office and facility renovations must be pre–approved by the Facilities Manager and the Chief Operating
Officer. Office and facility expenditures in excess of $5,000 are reported and approved by the Bank’s
Executive Committee.
The following are prohibited under the Luxury Expenditures Policy:
- The reimbursement of any non–business related expense incurred by Bank employees;
- The hiring of vendors who are owned, in whole or in part, or employ immediate or extended family
members of Bank Senior Management Officers.
- The reimbursement of any expenses incurred by employee’s immediate or extended family members; and
- The reimbursement of any expenses incurred which would otherwise be prohibited under the
Bank’s Ethics Policy.
As required, the Exchange Bank Board of Directors has formally adopted this Luxury Expenditures Policy.
Additionally, the CEO and CFO will certify, no less than annually that the approval of any expenditure
requiring CEO or Board approval was properly obtained with respect to each such expenditure.
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