CHFC 2018 Proxy Statement

Executive Compensation Compensation Discussion and Analysis The following Compensation Discussion & Analysis ("CD&A") describes the philosophy, objectives and structure of, as well as other matters relevant to, our fiscal year 2017 executive compensation programs, particularly as they pertain to our named executive officers (as identified below). Name Title David T. Provost President and Chief Executive Officer Dennis L. Klaeser Executive Vice President and Chief Financial Officer Thomas C. Shafer Vice Chair and President and Chief Executive Officer of Chemical Bank Gary Torgow Executive Chairman of the Board of Directors Robert S. Rathbun Executive Vice President, Retail and East Region President David B. Ramaker (1) Former President and Chief Executive Officer (1) David B. Ramaker served as our President and Chief Executive Officer until June 2017 and is a "named executive officer" for 2017 under applicable SEC rules. 24 Executive Summary The year ended December 31, 2017 has been one of transition, progress and continued growth for Chemical Financial Corporation. Following the completion of our merger with Talmer Bancorp Inc. ("Talmer"), effective August 31, 2016, we have transformed into a much larger and more complex financial institution. We have taken many steps to enhance operational efficiency, achieve sustainable long-term growth ambitions, and fulfill the performance expectations that we established upon our merger with Talmer. These steps included achieving strong growth targets, while simultaneously successfully executing a restructuring effort during the third quarter of 2017. The restructuring efforts produced more than $20 million of annualized savings, while half, or more, is planned to be reinvested in the hiring of new commercial bankers and key operational staff as well as making investment to enhance our core operating systems. 2017 Highlights Continued Net Income Growth Our net income was $149.5 million for 2017. Net income excluding significant items, a non-GAAP financial measure that excludes the fourth quarter of 2017 charge to income tax expense of $46.7 million resulting from the revaluation of our net deferred tax assets completed following the signing of the Tax Cuts and Jobs Act in December 2017, merger and restructuring expenses of $28.4 million and fourth quarter of 2017 losses of $7.6 million on sales of investment securities as part of our treasury and tax management objectives, continued its upward trajectory, reaching $219.6 million in 2017, compared to $143.7 million for 2016. This achievement further validates our business strategy and long-term vision. Net Income (GAAP) Significant items (after-tax) Net Income and Net Income Excluding Significant Items(1) $300 $200 $100 $0 Millions 2015 2016 2017 $86.8 $108.0 $149.5 $92.3 (1) $143.7 (1) $219.6 (1) (1) Denotes a non-GAAP Financial Measure. Please see “ Reconciliation of Non-GAAP Financial Measures ” beginning on page 43 in our Annual Report on Form 10-K for the year ended December 31, 2017, for reconciliation of this non-GAAP measure to the most directly comparable GAAP financial measure.