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.
RCB Financial Corporation and its wholly-owned subsidiary, River City Bank (hereinafter known as the “Company”), prohibit excessive or luxury expenditures for:
- 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 measure conducted in the normal course of business operations.
Entertainment is defined as an activity for which an officer or employee would use Company funds for business development purposes relating to current customers or prospective customers or to further enhance the Company’s marketing efforts. Excessive entertainment or an excessive event is defined as any single occurrence or event where the activity is not designed to enhance the marketing efforts of the Company or support business development efforts of the Company.
Our expectation is that all such expenses paid for by the Company would be for company purposes, and used to generate business for the Company.
Renovations of facilities and office spaces should be relative to current business plans and needs. An exception to this will 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.
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. Modes of transportation to be used for the analysis, for example, may consist of vehicle, commercial air service and private air service. A determination of the appropriateness of transportation will factor in cost, efficiency and timeliness of travel. Excessive aviation or other transportation services expenditures are prohibited.
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. 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.
This policy would exclude reward conferences if the purpose is meant to be a reward, or would have no value of education to the employee or executive.
We feel that holiday parties are part of the employee appreciation process. Holiday parties should be local in geographic nature, and should not cost the Company more than an average day’s payroll per employee, on average.
Board retreats should only be used for educational purposes, and should be considered and looked at in the same view and with discretion as all other expenses. Board education is a vital part of maintaining and keeping a dynamic director base, and this policy should not limit a retreat that is focused on strategic planning or education.
Events and parties focused on customers for the purpose of attracting or retaining their business would not fall under this policy.
Review and Approval of Expenditures
Questions regarding this Policy, including the review and prior approval of any expenditure as to its reasonableness shall be directed to the chief financial officer, who shall consult with the General Counsel and make a recommendation to the Company’s Senior Executive Officers (as defined under the EESA was amended by ARRA) for a determination, provided that no Senior Executive Officer shall make any determination with respect to his or her own expenditures. All determinations by such persons shall be final, binding and conclusive on all persons for all purposes.
Any violation of this Policy must be promptly reported to the chief executive officer or the General Counsel, and all such violations shall be reported to the Compensation Committee of the Board of Directors at its next subsequent meeting. Violations of this Policy may result in disciplinary action against those accountable for policy adherence, up to and including termination of employment or removal from the Board.
The Principal Executive Officer and the Principal Financial Officer of the Company (as defined under the EESA as amended by ARRA) shall certify to the Board of Directors, to the U.S. Treasury and to the Board of Governors of the Federal Reserve System at least annually, in accordance with applicable U.S. Treasury regulations and guidance, that the Company has complied with this Policy during the applicable period, and that all expenditures 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 such certification in accordance with applicable government regulations and guidance.
At all times during the TARP period, the Company will maintain this Policy, ensure it is posted on the Company website and provide a copy of this Policy, and any material amendments thereto, to the U.S. Treasury and the Board of Governors of the Federal Reserve System within 90 days of any material amendment.
Amendments to the Policy will be made as necessary based upon the recommendation of the Compensation and the approval of the Board of Directors.