Luxury Expenditure Policy
I. Statement of Need
The Board of Directors and Executive Management of National Bancshares, Inc. (NBI) and its subsidiary Triumph Community Bank collectively (TCB) are committed to complying fully with the requirements of the TARP (Troubled Asset Relief Program) Standards for Compensation and Corporate Governance as defined by the Department of the Treasury (31 CFR Part 30) pursuant to requirements set forth in the Emergency Economic Stabilization Act of 2008 ("EESA"), as amended by the American Recovery and Reinvestment Act of 2009 ("ARRA") during the period that TCB participates in the TARP Capital Purchase Program.
II. Policy Objectives
The objective of this policy is to fulfill TCB's requirement pursuant to the TARP Standards for Compensation and Corporate Governance as defined by the Department of the Treasury (31 CFR Part 30) to have in place a company-wide policy regarding excessive or luxury expenditures as defined by the Department of the Treasury pursuant to EESA and ARRA.
III. General Policy
It is the policy of NBI and TCB that their respective directors and employees utilize corporate assets in a prudent manner and as such are hereby precluded from engaging in excessive or luxury expenditures. The following are the organization's minimum standards. Directors and employees are encouraged to impose more strict standards upon themselves when they deem the relevant circumstances require such standards.
IV. Types of Excessive or Luxury Expenditures
Excessive or luxury expenditures can occur in the following areas:
- office and facility improvements and/or renovations
- entertainment and
- other activities or events that involve expenditures that are not for staff development, performance incentives or other similar matters conducted in the normal course of business and which are not reasonable in amount
V. Travel Expenses
A. Procedure for Reimbursement. All travel related expenses incurred by an employee in the ordinary course of business shall be submitted by the employee on an employee expense report and approved by such employee's supervisor before being submitted to Accounts Payable for reimbursement. Travel expenses incurred by a director shall be submitted to the Chief Financial Officer (CFO) ("Policy Officer"). Reimbursement requests by the Chief Executive Officer ("CEO") must be made to the Chairman of the Board of Directors of TCB or NBI.
Any travel expenditures that are not covered by the foregoing provisions must be approved in writing by the Chairman of the Board (if requested by a director or the CEO) or the employee's supervisor (if requested by an employee) prior to being incurred.
B. Automobile and Mileage Related Expense. The standard rate for mileage reimbursement for directors and employees using their personal vehicles for business purposes is the IRS guideline in effect at the time of travel. Mileage should be tracked from the beginning point of travel (home or office) to the point of destination for business of the Bank. Directors and employees will be reimbursed for parking and tolls when these expenses are required in the course of business related travel.
C. Lodging. Employees and directors are encouraged to avoid overnight stays when one way travel time for a one day meeting is three hours or less. Exceptions are conferences, group meetings, etc. that have been previously approved by the employee's supervisor or the CEO. When possible, all lodging should be booked through the appropriate personnel with knowledge of any corporate rates or discounts the Bank has negotiated with selected hotels (Hampton Inn/Holiday Express style hotel or equivalent should be used whenever possible). Expenses such as spas, fitness facilities, in-room movies, mini bar, laundry and dry cleaning services, etc., must be paid personally by the employee or director and will not be reimbursed by the Bank.
D. Meals. The Bank will reimburse directors and employees for reasonable meal expenses that are incurred during business related travel. The maximum reimbursement for meals is $55 per day when incurred during out-of-town business travel that includes overnight lodging. Actual expenses will be reimbursed. All meal costs must be substantiated with a valid receipt and submitted for reimbursement on the employee's expense report. Alcoholic drinks may be reimbursed in the course of entertaining customers, prospective employees or with the approval of the CEO of NBI or TCB. If alcoholic beverages are served as part of the meal, moderation and reasonable expenses are expected. Alcohol should not be consumed during the regular workday.
E. Commercial Airlines. Use of commercial airlines must be approved by the Chairman of the Board, the CEO or the employee's supervisor, as applicable. All plane fares and reservations should be booked in a method to facilitate obtaining the lowest reasonable rate. Additional cost for first class or business class seating will not be approved.
F. Rental Cars. The use of rental cars for business purposes may be necessary under certain circumstances. Reservations for car rentals should be made through the Purchasing Department to obtain the corporate discount.
G. Taxi. Taxi fares will be reimbursed if incurred during the normal course of business. Receipts should be submitted on an employee expense report.
H. Charter Aircraft. No aircraft may be chartered by an employee or director without the prior express consent of the Chairman of the Board of NBI or TCB. Approval will be based on demonstrated cost efficiencies.
I. Spouse/Travel Expenses. The Bank does not pay the expenses of a spouse, a guest or a family member accompanying a director or employee who is attending Bank related functions.
VI. Office and Facility Improvements and Renovations
Renovations of facilities and office space are the responsibility of the Vice President – Facilities Manager and the Senior Vice President/Chief Operations Officer. Each year, an annual budget for renovations is prepared and approved by executive management. All proposed office and facility capital improvements and/or renovations with a cost exceeding $20,000 also require the signature of the Bank President. Expenditures of more than $50,000 (anything outside of previously approved budget) must be presented to the Board of Directors for approval.
All proposed meetings and events organized by the Bank must serve one or more legitimate business purposes. Each proposed meeting or event with a cost exceeding $2,500 must be supported by a written business case identifying the specific business purpose and approved by the CEO (if an employee or senior executive officer meeting or event) or the Chairman of the Board (if a director or CEO meeting or event).
The CEO may establish reasonable entertainment allowances for employees, and the Board may establish such an allowance for the CEO. In the absence of such an allowance, all reimbursements for employee entertainment expenses exceeding $1,000 must be approved by the CEO, and CEO entertainment expenses exceeding $2,000 must be approved by the Chairman of the Board. The Board may establish a reasonable entertainment allowance for directors. Director expenditures exceeding the director's allowance must be approved by the Chairman of the Board. If a guest or customer is being entertained, the individual's name, affiliation, place of meeting or entertainment, and business reason for the entertainment must be included on the employee expense report or accounts payable voucher that is submitted for reimbursement.
IX. Other Activities
All other activities or events that are not reasonable expenditures for staff development, performance incentives in accordance with written plans and policies or other similar expenditures incurred in the normal course of business must be approved by the CEO or the Chairman of the Board.
X. Reporting of Violations
Any individual who violates this Policy, or knows of any such violation by any other individual, must report the violation immediately to such individual's supervisor who shall then report the violation to the CEO or to the Chairman of the Board (if an alleged CEO violation). Any employee or director who engages in extravagant spending shall be subject to discipline up to and including termination of employment or removal from or omission of renomination to the Board.
The respective CEO and the Chief Financial Officer of TCB and NBI shall certify to the Board at least annually that the provisions of this Policy are being enforced and are sufficient to provide reasonable assurance that the expenditures for such purposes are not excessive. This policy will be posted to, and included on, TNB's website for public viewing.
XII. Amendments and Modifications
This Policy shall be subject to modification only with the approval of the Board stating the specific business rationale for the change in policy.