IDAHO BANCORP & IDAHO BANKING COMPANY
LUXURY EXPENDITURES LIMITATION POLICY
Adopted May 28, 2009
Revised June 3, 2010
Revised July 26, 2012
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.
Idaho Bancorp and its subsidiary, Idaho Banking Company (collectively “Company”), prohibit excessive or luxury expenditures on entertainment and events, office or facility renovations, aviation or other transportation services, and other activities or events that are not reasonable expenditures for conferences, staff development and performance incentives. It is the intention of the Company that all expenditures incurred in the normal course of business operations are reasonable and not of an excessive nature.
Renovations: Renovations of facilities and office spaces should be relative to the enhancement of operational efficiency, compliance with applicable fire codes and ADA requirements, maintenance of safe and sanitary working environments, improvement of public image, branch or workspace expansion, or any other worthwhile purpose as may be identified by the Company. At no time should renovations be done that would have the appearance of being extraordinary or excessive from a shareholder perspective.
Entertainment: Entertainment is defined as an activity that an employee, executive or director would use corporate funds for business development purposes relating to current customer(s) or perspective customer(s), or to further enhance the Company’s marketing efforts. Our expectation is that all expenses incurred to the Company would be used for Company purposes and to drive business to the Bank. Occasional events such as playing golf, eating meals and taking customers or prospects to functions they would find enjoyable are a necessary part of the Company’s marketing efforts and therefore not deemed as “entertainment” or a violation of this policy. Event sponsorship expenditures will be considered reasonable and acceptable as they relate to past and present corporate sponsorships that support and enhance our local communities and charities.
Conferences: 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 job responsibilities or the normal course of operations of the Company. At times it may be appropriate that a spouse would travel to these conferences with the Company attendee. Any expenses incurred by the employee’s immediate or extended family members that are not business-related will not be reimbursed. The Company has appropriate controls in place for the review, approval and attendance of designated personnel to such conferences and educational events, and does not consider these types of activities to be excessive and unreasonable. Board retreats should only be used for educational and strategic planning purposes, 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 shall not consider a board retreat that is focused on strategic planning or education as excessive.
Holiday Parties and Customer Events: We believe that holiday parties and other gatherings are part of the employee and director appreciation process as well as necessary for teambuilding. Parties should be local in geographical nature, and similar to venues and costs that have typically been expensed in the past. Events and parties focused on customers for the purpose of attracting their business or showing appreciation for their business are considered reasonable and a normal part of doing business and thus will not violate this policy.
Aviation/Transportation: Excessive aviation or other transportation services expenditures are prohibited. Transportation to outlying areas for Company staff to conduct business activities such as attending conferences, business development purposes, merger and acquisition activity, and training/education will be conducted in a prudent manner for the Company.
Other Similar Items, Events, or Activities: The Company encourages all employees to manage expenses carefully. We also have a pay-for-performance culture that believes reasonable recognition awards or incentives are appropriate when rewarding significant achievements or performance standards. In addition, expenditures incurred on behalf of the company and reimbursement of those expenditures must be in accordance with established company policies and practices considered to be customary, acceptable and lawful business practices. Any expenditure that would exceed $1,000 will require pre-approval.
Requests for Pre-Approval: If an expenditure requires pre-approval, the employee or board member, as applicable, must submit the request and any related documentation to the appropriate reviewer(s) as established by this policy.
Pre-approval requests for all employees other than the Chief Executive Officer (CEO) must be submitted in writing to his/her manager as established by the Company’s Expense Reimbursement Policy. Approvals or disapprovals will be documented and maintained in an Accounts Payable file held in Accounting.
Pre-approval requests for the CEO or any board member must be submitted in writing to the Chairman of the Board of Directors or the Audit Committee Chairman of the Board of Directors who will indicate approval or disapproval in writing. Any pre-approval decision will be recorded in the minutes of the meeting of the Audit Committee during which the decision was made if the Audit Committee is available to meet in time, or by the Chairman of the Board of Directors. Preapprovals will always be recorded in the minutes of the Board of Directors.
All pre-approval requests and their respective approval decisions will be audited each year through the Company’s internal audit process and reported to the Audit Committee.
Certification: The Company will file this policy with the Treasury Department and post the text of this policy on its Internet Website. Additionally, within ninety (90) days of the completion of each fiscal year the Company’s CEO and CFO will certify compliance with this policy and that any expenditure requiring prior approval was properly obtained.
Accountability and Adherence: Any employee who engages in excessive spending and/or violates this policy shall be subject to corrective action up to and including termination of employment. It is the responsibility of every employee to raise concerns promptly about behavior that may violate the Company’s Luxury Expenditures Limitation Policy, or applicable laws, rules, and regulations. Per the Company’s Whistle Blower Policy, there are instructions in place for reporting (including anonymous submissions) such behaviors or violations. It is also the responsibility of members of the Board of Directors of the Company to raise concerns or report actions that may violate this policy by contacting the chairman of the Audit Committee of the Board of Directors.
Adherence to this policy will be audited from time to time through the Company’s internal audit process and results will be reported to the Audit Committee of the Board of Directors.