Mission Valley Bancorp / Mission Valley Bank
Luxury Expenditure Policy
This 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.
Mission Valley Bank and it’s Holding Company, Mission Valley Bancorp, both referred to as Company in this policy, prohibit 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 of Mission Valley Bank or Mission Valley Bancorp.
Renovations of facilities and office spaces should be relative to the approved project and strategic plan, and tracked within the capital expenditure guidelines of the Company. Office and facility renovations should be designed to: enhance operational efficiency, comply with applicable fire codes and ADA requirements, maintain a safe, sanitary and clean working environment, enhance the public image of the organization, improve employee morale, or such other worthwhile purpose as may be identified by the organization 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.
AAt no time should renovations be done that would have the appearance of being extraordinary, or excessive from a shareholder perspective.
Entertainment is defined as an activity where an Employee or Executive would use corporate funds for business development purposes relating to a current customer(s) or prospective customer(s) or to further enhance the Company’s marketing efforts.
The Company’s expectation is that all expenses charged to the Company would be for Company purposes, and used to drive business to the Company. Occasional events such as taking customers or prospects on trips, playing golf, eating dinner, 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 “entertainment” or a violation of the Luxury Policy. These expenses should be documented and detailed as to the benefit derived by the Company through the normal accounts payable process.
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 and have a direct correlation to their job. In rare instances it may be appropriate that a spouse would travel to these conferences with Company attendees. In these instances, the Company attendee is required to pay for any additional expenses that would not have been otherwise incurred if the spouse had not attended. For example, a taxi ride from the airport and lodging expenses can be fully expensed by the attendee because those costs would have been incurred regardless of the spouse’s attendance. Conversely, any additional meal expense incurred by the spouse should be paid for by the Company attendee, as an example. Any travel with a spouse requires prior approval of the President/CEO or other Bank Executive Officer. Typically these conferences are sponsored by vendors, banking associations, or other industry related entities.
This Policy would EXCLUDE reward conferences whether paid for by the Company or other vendors as a violation of this policy if the purpose is meant to be a reward, or would have no value of education to the employee or executive.
Holiday Parties and Employee Recognition Events:
The Company believes that employee recognition and holiday parties are part of an employee appreciation process. Holiday parties 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.
Expenses for activities or events should enhance staff development, provide reasonable performance incentives for employees, or otherwise be conducted in the normal course of the operation of the business. Expenditures of this type may be made at the sole discretion of the President/Chief Executive Officer, or an officer designated by the President/Chief Executive Officer, and is not considered excessive.
Retreats are for educational or business planning purposes and the associated costs should be viewed with the same consideration and discretion as all other expenses. Board education is a vital part of maintaining, and keeping directors and this policy should not limit a retreat that is focused on strategic planning or education.
Transportation for Company staff to conferences, for business development purposes, and merger and acquisition research, should be conducted in the most cost appropriate way for the Company. The Human Resource Department will maintain, when appropriate, an analysis of trips to determine which mode of transportation is the most appropriate for the Company and its Shareholders. Modes of transportation to be used for the analysis, for example may consist of vehicle, and commercial air service. A determination of transportation analysis will factor in cost, efficiency and timeliness of travel. Private air services are not allowed without the approval of the Chairman of the Company’s Board of Directors.
Company Sponsored Events:
All proposed events organized by the Company must serve one or more legitimate business purposes and each proposed event with a total cost exceeding $15,000.00 must be supported by a written business outline identifying the specific business purpose.
The business case for every proposed event exceeding the thresholds set forth above must be approved in writing by the President/Chief Executive Officer of the Company.
A copy of this policy, and any material amendments to this policy, shall be filed with the Department of the Treasury and the Company’s primary regulatory agency, and posted on the Company’s website, in accordance with applicable government regulations and guidance.
Any violation of this policy must be promptly reported to the Board of Directors of the Company. Violation of this policy may result in disciplinary action against those accountable for policy adherence, up to and including termination of employment.
The President/CEO and SVP/CFO of the Company shall certify to the Board of Directors, to the Department of the Treasury and to the Company’s primary regulatory agency at least annually, in accordance with applicable government regulations and guidance, that the Company and it’s employees have complied with the foregoing policy during the applicable period, and that all expenses requiring approval pursuant to this policy have been properly approved in accordance with the requirements of this policy. Appropriate documentation and records to substantiate such certifications shall be preserved for six (6) years after the date of each certification in accordance with applicable government regulations and guidance.