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Excessive and Luxury Expenditures Policy This Policy is intended to fulfill the requirements of the Emergency Economic Stabilization Act of 2008 (the “EESA”), as amended by the American Recovery and Reinvestment Act of 2009 (the “ARRA”) and regulation adopted thereunder (the “TARP Standards for Compensation and Corporate Governance”) requiring each TARP recipient to have a company-wide policy regarding excessive or luxury expenditures. Policy Statement It is the policy of Worthington Financial Holdings, Inc. (the “Company”) that expenditures for (a) entertainment or events, (b)office and facility renovations, (c) aviation or other transportation services, and (d) other similar items, activities or events for which the Company or any of its subsidiaries might reasonably anticipate incurring expenses, are prohibited to the extent that such expenditures are not reasonable expenditures for staff development, performance incentives, or other similar activities conducted in the normal course of the Company’s business operations. Policy Approval and Revision At the time of this policy, the United States Department of Treasury has not established regulations or guidance on specific types of expenditures considered excessive or luxuries. This policy will be amended as further guidance is issued. The Company’s Board of Directors is responsible for approving this policy, or any subsequent revision, on a regular basis, but no less than annually, until such time that the requirements of the CPP repayment have been met. Any material amendments to this Policy shall be approved by the Board of Directors and filed with the Treasury and the Bank’s primary regulatory agency, and posted on the Company’s website, in accordance with the TARP Standards for Compensation and Corporate Governance. Policy Objective It is the Company’s policy that directors and employees of the Bank utilize corporate assets in a prudent manner and as such are herby precluded from engaging in excessive or luxury expenditures. Excessive or luxury expenditures can occur in the following areas:
All such expenditures shall be reasonable and appropriate under the circumstances as determined by the Audit Committee. Any expenditure in the above categories that is unreasonably high shall be considered extravagant. Expenditures Covered Expenses should be approved in accordance with the COA (Committees, Officers, and Authorizations) and other Policies of the Company and its subsidiaries. The following policies, in addition to the COA provide guidance with respect to the expenses covered within this policy: Fixed Asset Policy and Management Succession Policy. Entertainment, Events and other Similar Items Entertainment Entertainment is defined as an activity in which an employee of the Bank uses corporate funds for business development purposes relating to a current customer or prospective customer, or to further enhance the Company’s marketing efforts. The expectation is that all entertainment expenses incurred by the Company or any of its subsidiaries would be for company purposes, and used to drive business to the Company or its subsidiaries. Occasional events with customers or prospects such as playing golf, eating meals, or taking them to other events the customer/prospect would find pleasurable are a necessary part of the Bank’s marketing efforts and are not deemed to be a “luxury” or a violation of this Policy. All entertainment expenses in excess of $250 require the prior approval of the President. All entertainment expenses in excess of $2,500 require the prior approval of the Executive Management Committee. All entertainment expenses should be documented and detailed as to the identity of the customer/prospect and the benefit derived by the Company through the normal accounts payable process. Conferences We encourage our employees to attend conferences that are appropriate educational and networking opportunities. These conferences should be related to the financial services or related industry and have a direct correlation to the attending employees’ job. Conference attendance requires prior approval of an Executive Vice President or higher. At times it may be appropriate for a spouse to travel to a conference with a Company attendee, although such travel by the spouse shall be the financial responsibility of the attendee and not the Company. Employee Recognition/Holiday Parties Employee recognition/holiday parties are part of the employee appreciation process and culture. These events should be local in geographic nature, and may include costs for such things as service awards and nominal door prizes. Any proposed event costing more than $5,000 must be approved by the President (if an employee or senior executive officer meeting or event) or the Executive Committee of the Board (if a director or CEO meeting or event). Board/Management Retreats Retreats should only be used for educational or business planning purposes, and should be kept in consideration and 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 limit a retreat that is focused on strategic planning or education. Office and Facility Renovations Renovations of facilities and office spaces should be relative to the approved project, tracked within the established policies of the Company and its subsidiaries. At no time should renovations be done that would have the appearance of being extraordinary or excessive from a shareholder perspective. Air Travel or Other Transportation Services Transportation for Bank staff to outlying locations, including conferences, business development purposes and mergers and acquisitions, should be conducted in the most cost appropriate way for the Bank. Modes of transportation to be used may consist of vehicle, commercial air or rail service. The selection of transportation services should factor in the cost, efficiency and timeliness of travel. Private air services are not allowed without the prior approval of the Executive Committee of the Board. 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 Bank’s President or the Executive Committee. Violations and Monitoring All expenditures that may be construed as extravagant or luxurious must be submitted the Chief Risk Management Officer and is subject to the approval of the Audit Committee. Any individual who violates this Policy, or knows of any such violation by any other individual, must report the violation immediately to the Chief Risk Management Officer. Any employee or director who violates this Policy shall be subject to discipline up to and including termination of employment and / or directorship. Certification of Compliance The Chief Executive Officer and Chief Financial Officer of the Bank shall certify, in accordance with the TARP Standards for Compensation and Corporate Governance, and to the Board of Directors of the Company, that the Company and its employees have complied with this Policy and that all expenses requiring approval pursuant to this Policy have been properly approved in accordance with the requirements of this Policy. Documentation and records necessary to substantiate such certifications shall be preserved in accordance with the TARP Standards for Compensation and Corporate Governance. |
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