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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.

Goldwater Bank, N.A. prohibits 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 measure conducted in the normal course of business operations of Goldwater Bank, N.A.

The following restrictions are in conjunction with the Bank’s fixed asset approval requirement. All fixed asset purchases over $100,000 require board approval.

Renovations:

Office and facility renovations will 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. Quantitatively office and facility renovations may be deemed excessive if the all-inclusive cost of the renovation exceeds $200 per square foot.

Entertainment:

Entertainment is defined as an activity that 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 Bank’s marketing efforts.

The Bank’s expectation is that all expenses incurred to the Bank would be for company purposes, and used to drive business to the bank. Occasional events such as taking customers or prospects on business trips, golf outings, dining, and other events is a necessary part of the Bank’s marketing efforts and is not deemed as “entertainment” or a violation of the Luxury Expenditure Policy. These expenses should be documented and detailed as to the benefit derived by the Bank. Sponsorships of individual events of no more than $15,000 at banking related conferences or conventions would not be considered a violation of this policy. Over $15,000 for an individual event sponsorship would require board approval.

Conferences:

We encourage our staff to attend conferences/conventions/seminars that provide appropriate educational and business development opportunities. These conferences should be related to the financial services industry and have a direct correlation to an employee’s job. At times it may be appropriate that a spouse would travel to these conferences with Bank attendees. In the event that an employee must attend an event of this nature, the maximum allowable cost per employee shall not exceed $5,000. Over $5,000 in costs for an employee to attend an educational or business development conference would require board approval.

This Policy would EXCLUDE reward conferences whether paid for by the Bank 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.

Staff Functions:

Holiday parties or other staff functions are an important part of the employee appreciation process. Holiday parties, and employee appreciation events, should be local in geographic nature and should not cost the company more than $500 per employee. Anything greater would require board approval.

Board retreats should only be used for educational purposes and should be 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.

Events and parties focused on customers for the purpose of attracting their business would not fall under this policy.

Travel:

Transportation for Bank staff to outlying locations, including bank locations, conferences, business development purposes, and merger and acquisition research, should be conducted in the most cost appropriate way for the Bank. The President/CEO will review all transportation, meal, hotel accommodations, and entertainment expenses for employee business trips to determine if the mode of transportation and other travel expenditures were appropriate and consistent with the objectives of the Bank and its shareholders. The travel analysis will factor in cost, efficiency and timeliness of travel, as well as the appropriateness of other travel expenditures.

Any violation of this policy will be reported to the Chief Executive Officer and will be addressed with the appropriate employee, with disciplinary action taken if necessary. Any violation of this policy by the Chief Executive Officer will be reported by the HR Director to the Chairman of the Board of Directors of the Bank, with disciplinary action taken if necessary.

The Chief Executive Officer and the Chief Financial Officer of the bank shall certify that proper approval was obtained for all expenses that exceed the established thresholds.

Approved 07/13

 
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