Fidelity Bancorp, Inc.
Excessive or Luxury Expenditure Policy
Adopted – August 18, 2009
Updated – June 14, 2010
This Policy fulfills the requirements under the American Recovery and Reinvestment Act of 2009 (ARRA) enacted February 17, 2009. AARA 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.
Fidelity Bancorp, Inc. (Company) and it’s subsidiary, Fidelity Bank, PaSB (Bank), prohibit 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 measures conducted in the normal course of business operations.
The Board of Directors of Fidelity Bancorp, Inc. has adopted this policy to ensure that potentially excessive and/or luxury expenditures are minimized and are subject to appropriate review and approval. This policy is not intended to be all-inclusive, but rather to establish standards by which potential expenditures can be judged. The spirit of the guidelines established here should be applied to potential expenditures not specifically addressed in the policy.
Renovations:
Renovations of facilities and office spaces should be relative to the approved project and current business plan of the Company. 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 shareholder perspective.
Entertainment:
Entertainment is defined as an activity where 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 Company’s marketing efforts.
Our policy is that all expenses incurred for these activities would be for Company purposes with the objective of generating business for the Bank. Examples of entertainment include taking customers or prospects to restaurants, theater, sports events, concerts, golf and other activities the customer/prospect would find enjoyable and provide an opportunity to enhance business relationships. Expenditures for this purpose in the normal course of business are a necessary part of the Company and Bank’s marketing efforts and are not deemed as “luxury” or a violation of this Policy. Prior approval of expenditures for this purpose is not required, consistent with the Company and Bank’s prior practices. These expenses should continue to be documented and detailed as to the benefit derived by the Bank through the normal accounts payable process.
As a community bank, it has been part of our policy and commitment to the communities we serve to support local cultural and charity events. All requests for support and/or attendance at such events must be reasonable in amount and approved by the Chief Executive Officer.
Conferences:
We encourage our staff and Board 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 Company attendees, however, costs incurred by the spouse are generally the responsibility of the employee or director. Typically these conferences are sponsored by vendors, banking associations, or other industry related entities. Out of town conferences for staff must be pre-approved by the Chief Executive Officer. Out of town conferences for the Chief Executive Officer or a Board member must be pre-approved by the Board of Directors.
Events:
Events are defined to include meetings 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 networking, 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, Company and/or Bank organized meetings are held in non-Bank 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 costs associated with these events must be included in the Board approved annual business plan. Employee recognition meetings, dinners and events are held occasionally to recognize the contribution of an individual, team or all employees. These events should be held locally. A member of executive management must approve the cost of such meetings in advance.
Board/Management Retreats:
Retreats shall only be used for educational or business planning purposes, and the same discretion should be used as for 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.
Aviation Services:
Transportation for Company 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 Company. 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. Only coach class or similar fares are allowed. Private air services are not allowed.
Administration:
The CFO is responsible for the day-to-day administration of this Policy, and the CEO is accountable for overall adherence to this Policy and must approve any exceptions. Strict adherence to this Policy is mandated for all Company employees. Violations of this Policy shall be promptly reported to the Board of Directors. The Board of Directors will review the suspected or actual violation at its next regularly scheduled meeting and take appropriate corrective action.
This Policy, and any amendments hereto, shall be posted on the Company’s Internet website and provided to the U.S. Department of the Treasury and the Federal Deposit Insurance Corporation.
Board Approved
6/14/10