Purpose
The purpose of this policy is to establish parameters and internal controls governing the expenditures of BankFirst Capital Corporation (together with its subsidiary bank, BankFirst Financial Services, and controlled affiliates, referred to hereafter as the Corporation). Expenditures of the Corporation should be customary, prudent, consistent with applicable laws and regulations, and reasonably related to the Corporation’s business objectives and needs. This policy identifies expenditures that are excessive or luxury expenditures, creates processes that are reasonably designed to eliminate such expenditures, and establishes accountability for compliance. Routine operating expenses, capital expenditures, and other reasonable expenses are not prohibited by this policy.
Authority
The Corporation has authority to provide compensation and benefits that are reasonable. This policy establishes a prohibition on expenditures that are excessive or luxury expenditures as required by the Department of the Treasury’s Emergency Capital Investment Program regulations (31 CFR Part 35), and as may be required by other statutes and regulations.
Responsibility
This policy is the responsibility of the Corporation’s Board of Directors (Board). The Board has approved this policy and will review compliance of this policy no less frequently than annually, and summary data on excessive or luxury expenditures will be reported to the Board as part of the compliance review.
Scope
This policy applies to all employees, officers, and directors of the Corporation with regard to any expenditures of the Corporation. In making any expenditure on behalf of the Corporation, employees, officers, and directors should consider whether the expenditure is an excessive or luxury expenditure that is prohibited under this policy.
Excessive or Luxury Expenditures
“Excessive or luxury expenditure” means excessive expenditures on any of the following to the extent not reasonable or appropriate expenditures for business development, staff development, reasonable performance incentives, or other similar reasonable measures conducted in the normal course of the Corporation’s business operations:
- Entertainment. All expenditures by employees or directors for entertainment must comply with applicable Corporation policies and procedures and must have a business purpose. This category includes fees, dues, tickets costs related to social, athletic, artistic and dining clubs, activities, celebrations or other events, and similar expenditures. Expenditures for charitable contributions and charitable events are not prohibited under this policy. Requests for reimbursement of such expenditures must be justified and supported by documentation in accordance with applicable Corporation policies and procedures. Entertainment or events expenditures in an amount less than $75,000 per instance, and $500,000 on an annual aggregate basis per individual, are exempt from this policy.
- Events. Events are defined to include meetings, conferences, and employee recognition events that are intended to provide the Board, management, and employees with opportunities for individual and team education, development and recognition, business planning, market and industry network, and related business purpose objectives. Meetings may include both those that are internally organized as well as those organized by other banks, trade associations, vendors, and similar organizations. Occasionally, Corporation-organized meetings are held in non-Corporation facilities such as restaurants and hotels in order to accommodate the size of the group, facilitate better delivery of the meeting or provide participants with a venue that is most conducive for the meeting’s purpose. Directors, management, and employees may also participate in meetings hosted by other business partners that have a clear business purpose. The cost associated with meetings must be approved by a member of executive management. Conferences typically offer educational, skill development, and industry networking opportunities that enhance participant performance. These conferences should be related to the financial services industry and have a direct correlation to attendee’s job. At times it may be appropriate that a spouse would travel to these conferences with Corporation attendees. Conference participation is subject to approval by a member of executive management. Employee recognition meetings, dinners, and events are held occasionally to recognize the contribution of an individual, team, or all employees. The cost of such meetings must be approved in advance by a member of executive management.
- Office and facility renovations. Employees’ offices, including executive offices, shall be appropriate for the employee’s position but not ostentatious in size, furnishings, or decoration. Materials used to construct or renovate offices and facilities shall be selected on the basis of their quality, appearance, cost, and durability, considering their intended use and avoiding opulence. This category includes costs and allowances for office renovation, including expenditures related to furniture, art, office personalization, interior finishing, design and decoration, and similar expenditures. All expenditures for constructing, renovating, or furnishing offices must be approved by the Building Committee and/or Board of Directors. Office and facility renovations expenditures in an amount less than $100,000 per instance, and $500,000 on an annual aggregate basis per individual, are exempt from this policy. An exception to this policy 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.
- Aviation and other transportation services. Air travel on Corporation business shall be by commercial airline. Air travel by first or business class for trips less than four hours requires prior approval of the Chief Executive Officer. The Corporation does not own or lease, and does not intend to purchase or lease, any private aircraft for use by Corporation employees or directors. This category includes charter fees, tickets, slip or docking fees, vehicle installment payments, reservation and travel agent expenses, and similar expenditures associated with transportation services (e.g., airline, train, rental cars, or vans). Mileage reimbursable according to current Internal Revenue Service mileage rates is exempt from this policy. Transportation services in an amount less than $50,000 per instance, and $500,000 on an annual aggregate basis per individual, are exempt from this policy. The principal executive officer may establish or delegate to an appropriate executive officer the authority to establish processes for reimbursement of reasonable travel expenditures, which processes must be reviewed by executive management no less frequently than annually.
- Tax gross-ups. This category includes any reimbursement of taxes owed with respect to any compensation. This category does not apply to tax equalization agreements for employees subject to tax from a non-U.S. jurisdiction.
- Other similar items, activities, or events for which the Corporation may reasonably anticipate incurring expenses or reimbursing an employee for incurring expenses. Expenditures related to other items not listed in the preceding categories are exempt from this policy in an amount less than $50,000 per instance, and together with all expenditures permitted under this policy, may not exceed $500,000 on an annual aggregate basis per individual.
For the avoidance of doubt, reasonable capital investments in technology, equipment, and similar items that expand long-term capability of an ECIP recipient to provide products and services to its customers and community are not excessive or luxury expenditures.
The principal executive officer may establish or delegate to an appropriate executive officer the authority to establish processes for the evaluation and approval of expenditures in the preceding categories that are not luxury or excessive expenditures and that are not otherwise exempt from this policy. These processes must be reviewed by executive management no less frequently than annually, as well as any additional threshold expenditure amounts per item, activity, or event, or a threshold expenditure amount per employee receiving the item or participating in the activity or event under this policy. Such approvals must be reported to the Board of Directors (which may be in an appropriate summary form) no less frequently than annually.
Exceptions or violations
Any exception or violation of this policy must be promptly reported to the Corporation’s (i) principal executive officer, (ii) officer with primary responsibility for the Corporation’s compliance function, or (iii) officer designated with primary responsibility for overseeing the administration, monitoring, and compliance with this policy. Exceptions and violations must be reported to the Board of Directors no less frequently than annually, or more frequently as the nature and severity of violation may warrant. All employees, officers, and directors of the Corporation must adhere to this policy and will be held accountable for compliance. Any employee or officer who violates this policy may be subject to disciplinary action up to and including termination of employment.
Any employee or officer that is aware of any circumstances that may indicate a violation of this policy is required to report such circumstances to their supervisor or the Corporation’s principal compliance officer or compliance group. The Corporation prohibits retaliation against any employee or officer for making a good faith report of actual or suspected violations of the Corporation’s code of conduct, laws, regulations, or other Corporation policies, including this policy. A finding of retaliation against any such employee or officer may result in disciplinary action up to and including termination. Failure to promptly report known violations by others may also be deemed a violation of the Corporation’s code of conduct.
Employees and officers may ask questions, raise concerns, or report instances of non-compliance with this policy and/or any of the existing underlying relevant policies by contacting the following:
- Website: http://www.lighthouse-services.com/bankfirstfs
- Anonymous Reporting App: Keyword – bankfirstfs
- Toll-Free Telephone:
- English speaking USA and Canada: (833) 860-0001 (not available from Mexico)
- Spanish speaking USA and Canada: (800) 216-1288
- Email: reports@lighthouse-services.com (must include company name, BankFirst, with report)
- Fax: (215) 689-3885 (must include company name, BankFirst, with report)
Certification
On an annual basis, the ECIP recipient will deliver to the Department of the Treasury a certification, executed by two senior executive officers (one of which must be either the ECIP recipient’s principal executive officer or principal financial officer) certifying that (i) the Corporation is in compliance with this policy and (ii) the approval of any expenditure requiring the prior approval of any senior executive officer, any executive officer of a substantially similar level of responsibility, or the Board of Directors (or a committee of such Board), was properly obtained with respect to each such expenditure.