Pursuant to the requirements of Section 111(d) of the Emergency Economic Stabilization Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009 (the "Act"), and the interim final rules ("IFR") issued thereunder (31 C.F.R. Part 30), Metropolitan Capital Bancorp, Inc. (the "Company") and its subsidiary, Metropolitan Capital Bank (the "Bank"), are required to implement a company-wide policy regarding excessive or luxury expenditures, as identified by the U.S. Department of the Treasury ("Treasury"), in connection with the Company's participation in the Treasury's TARP Capital Purchase Program. The Board of Directors and Executive Management of each entity are committed to complying fully with this requirement and the objective of this policy is to implement various guidelines regarding excessive or luxury expenditures to ensure that they meet the requirements of Section 111(d) of the Act.
Role of the Board of Directors and Compensation Committee
The Board of Directors is required by the Act and the IFR to adopt a policy regarding excessive and luxury expenditures. The Board and the Compensation Committee also have oversight responsibility for compliance with the various compensation and corporate governance requirements under the Act and the IFR. In support of their oversight responsibilities, the Board of Directors and the Compensation Committee of each entity shall have the following roles, among others:
Executive management is responsible for the effective implementation of this policy. To that end, executive management shall have the following roles:
Entertainment is defined as activities for which an employee or officer would use corporate funds for business development purposes relating to current or prospective customers or to enhance the perception of the Company and the Bank in the market. Our expectation is that all expenses incurred for these activities would be for corporate purposes with the objective of attracting business to the Bank and its affiliates. Examples of entertainment activities include taking customers or prospects to restaurants, theater, sports events, concerts, golf and other activities that the customer/prospect would find enjoyable and provide an opportunity to enhance business relationships.
Expenditures for these purposes in the normal course of business are a necessary part of the marketing efforts of the Company and its subsidiaries and are not deemed as "luxury" or a violation of this Policy. Prior approval of expenditures for this purpose, which are consistent with Company's prior practices is not required. These expenses should continue to be documented and detailed as to the benefit derived by the Bank and its affiliates through the normal accounts payable process. Entertainment and event expenditures anticipated to be in excess of $500 must be reviewed with and approved by a member of executive management prior to expenditure.
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 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-organized meetings are held in non-Company 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 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 Company/Bank 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 should 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-in cost of the renovation exceeds $500 per square foot. By way of example, relocating or adding to movable worker stations, improving the air flow or temperature, altering the wall, ceiling or lighting configuration of a work or storage space, establishing a new branch office or sales office are not considered excessive by their very nature.
All other office and facility renovations are permitted only for approved projects that are part of the corporation's Board approved annual financial plan or are otherwise approved by the Board. 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. Renovations must be in all regards consistent with the Company's historical standards of utility and finish.
Aviation and Other Travel Matters
Aviation and other transportation services for Company/Bank staff to outlying locations, including for conferences, business development purposes and other purposes should be conducted in a cost-efficient manner. Permitted modes of transportation include automobiles and commercial air, bus or rail service. The selection of transportation services should include assessment of cost, efficiency and timeliness of travel. Private air services are not allowed without the approval of the Board of Directors. The Company/Bank will not be financially responsible for expenses that are incurred in connection with spousal travel to any conferences and/or sponsored events unless the spouse's attendance is work related.
Expenses for employee use of personal vehicles for Company/Bank business will be reimbursed at a rate that does not exceed the published IRS mileage rate. Documentation in support of such use must be provided in accordance with applicable Company policies and procedures.
All expenditures covered by this policy shall be documented, reported, supported by written invoices and receipts, and subject to audit in accordance with standard, uniformly-applied Company policies and procedures.
Reporting Violations; Disciplinary Action
An employee or director who learns of a violation of this policy shall promptly report the violation to the Chief Executive Officer and the Chairpersons of the Audit Committee and the Compensation Committee. Violators of the policy may be subject to disciplinary action up to and including termination of employment.