EXCESSIVE AND LUXURY EXPENDITURE POLICY
ADOPTED: September 27, 2010
The Board of Directors and Senior Executives of Buffalo Cooperative FCU are committed to fulfilling the requirements set forth in the Emergency Economic Stabilization Act of 2008 (“EESA”), as amended by 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 Credit Union-wide policy regarding excessive or luxury expenditures, as identified by the Secretary of the Department of the U.S. Treasury.
The objective of this policy is to fulfill Buffalo Cooperative FCU’s requirement pursuant to the TARP Standards for Compensation and Corporate Governance as defined by the Department of Treasury (31 CFR Part 30) to have in place a Credit Union-wide policy regarding excessive or luxury expenditures as defined by the Department of the Treasury pursuant to EESA and ARRA.
It is the policy of Buffalo Cooperative FCU that excessive or luxury expenditures on entertainment or events, office and facility renovations, aviation or other transportation services, and other similar items, activities or events for which Buffalo Cooperative FCU may reasonably anticipate incurring expenses or reimbursing an employee for incurring expenses are prohibited to the extent that such expenditures are not reasonable expenditures for staff development, reasonable performance incentives, or other similar reasonable measures conducted in the normal course of business.
Expense Categories, Definitions and Expectations
Entertainment is defined as an activity that an Employee or Executive would use corporate funds for business development purposes relating to a current customer or prospective customer, or to further enhance the Credit Union’s marketing efforts.
Our policy is that all expenses incurred to the Credit union would be for Credit Union purposes, and used to drive business to the Credit Union. These expenses should be documented and detailed as to the benefit derived by the Credit Union through the normal accounts payable process.
Events and parties focused on customers for the purpose of attracting their business would not fall under this Policy.
We encourage our staff to attend conferences that are appropriate educational opportunities. These conferences must 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 Credit Union attendees. Typically these conferences are sponsored by vendors, Credit Union associations, or other industry related entities.
Employee Recognition/Holiday Parties:
We feel that employee recognition/holiday parties are part of an employee appreciation process. These events should be local in geographic nature, and may not cost the Credit Union more than an average day’s payroll per employee, on average. (Example: If the payroll is $90,000 annually divided by 260 days, equals $346. in expense available per employee for an appropriate holiday party.)
Retreats shall 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.
Renovations of facilities and office spaces should be relative to the approved project and current profit plan of the Credit Union. An exception to this can 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 member perspective.
Transportation for Credit Union staff to outlying locations, conferences, business development purposes and merger and acquisition research, should be conducted in the most cost appropriate way for the Credit Union. Modes of transportation to be used may consist of vehicle, commercial air or rail service. The selection of transportation services will factor in cost, efficiency and timeliness of travel. Private air services are not allowed without the approval of the Chairman of the Buffalo Cooperative Federal Credit Union Board of Directors.
Administration Role of Senior Executives
Senior Executives are members of management such as the Treasurer and General Manager.
Senior Executives are responsible for the effective implementation of this Policy and have the following roles:
Review the monitoring of expenditures addressed in this Policy to ensure compliance with this Policy.
Research, document and justify any exceptions to this Policy and report exceptions to the Board of Directors.
Promptly recommend potential modifications of this Policy to the Board of Directors to ensure it remains compliant.
Enforce consequences upon any employee(s) for violation of the Policy in one or more of the following ways: verbal or written counseling, disciplinary action such as repayment, suspension, etc. and/or termination of employment.
Ensure that this Policy is posted on the Buffalo Cooperative FCU internet web site.
The Treasurer has certified that the Board of Directors has established an excessive or luxury expenditures policy, as defined in the regulations established under section 111 of EESA, will provide this policy to Treasury and its primary regulatory agency, and Buffalo Cooperative FCU and its employees have complied with this policy and that any expenses requiring approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility, were properly approved.
Administration Role of the Board of Directors
The Board of Directors is required by the TARP Standards for Compensation and Corporate Governance as defined by the Department of the Treasury (31 CFR Part 30) to adopt a policy regarding excessive and luxury expenditures. The Board has oversight responsibility for Buffalo Cooperative FCU’s compliance with requirements of TARP Standards for Compensation and Corporate Governance as defined by the Department of the Treasury (31 CFR Part 30). In support of its oversight responsibilities, the Board shall have the following roles:
The Board of Directors must review and approve this Policy on an annual basis, or, in the event of subsequent amendments to the TARP Standards for Compensation and Corporate Governance as defined by the Department of the Treasury (31 CFR Part 30), in such time frame required by the amendment.
Ensure that the Chief Executive Officer and Chief Financial Officer have complied with the certification requests as it relates to this Policy.
The Board of Directors shall review any exceptions to this Policy at the next regularly scheduled meeting following the granting of the exception.
The General Manager shall review and monitor office and facility renovations for compliance to this Policy and report any discrepancies to the Board of Directors.