CHFC 2018 Proxy Statement

Leadership and Compensation Decisions in 2017 As our business strategy evolved to meet the needs of our rapidly increasing scale and complexity over the course of 2017, we made significant investments in our leadership team. The staffing and compensation decisions of the past year have been prudent and thoughtful, with long-term, sustainable growth serving as the ultimate goal of these changes. An overview of our leadership changes, and some of the relevant compensation decisions are listed below: Top leadership evolution • On June 21, 2017, we announced that our former President and Chief Executive Officer, David B. Ramaker, would retire in the third quarter of 2017. • On June 21, 2017, we announced that David T. Provost would succeedMr. Ramaker as President and Chief Executive Officer of the Corporation. At the same time, Thomas C. Shafer was announced as Vice Chair and President and Chief Executive Officer of Chemical Bank. Both Mr. Provost and Mr. Shafer joined the Corporation as a result of our merger with Talmer and have demonstrated strong leadership in developing and executing on our strategic plan. Other leadership changes • Under the leadership of Mr. Provost and Mr. Shafer, our board determined that certain additions and changes to leadership would best position us for future success and the successful execution of our immediate and long-term business initiatives. Accordingly, in the second half of 2017 we hired or appointed, as applicable, a new Chief Risk Officer, Chief Accounting Officer, Chief Transformation Officer, Chief Human Resources Officer, Chief Delivery Officer and other senior leadership positions in the second half of 2017 to our executive leadership team. • In addition, Robert S. Rathbun, formerlyExecutiveVice President andChief OperatingOfficer - Customer Experience of Chemical Bank, was appointed to a new role, Executive Vice President, Retail and East Region President, effective November 17, 2017. Restructuring of certain pay arrangements In connection with our leadership changes, we entered into new employment arrangements with certain members of management as further described in this Compensation Discussion and Analysis and the narrative disclosure that follows. • Effective September 1, 2017, we entered into new one year term employment agreements with Mr. Provost and Mr. Torgow, replacing former 2016 service agreements entered into in connection with the Talmer merger that provided for base salaries of $1,000,000 per year for a period of two years. These new employment agreements stipulated that each of Mr. Provost and Mr. Torgow would be paid a base salary of $1.00 per year and receive 23,000 fully-vested common shares. The Compensation Committee, along with each of these executives, agreed to this arrangement due to the shared belief that this would better align the executives’ interests with those of our shareholders by immediately increasing their stock ownership in the Corporation in lieu of additional cash salary payments, and thus further incent each executive to intently focus on future growth and the execution of our strategic plan. • Effective October 16, 2017, given his substantially enhanced role and responsibilities, we entered into a new employment agreement with Mr. Shafer, replacing his 2016 employment agreement entered into in connection with the Talmer merger. The new employment agreement was intended to align the terms of his employment and compensation for his new role and additional responsibilities as Vice Chair and President and Chief Executive Officer of Chemical Bank. 26 Overview of Our Executive Compensation Program Our executive compensation program is aligned with our business strategy and is designed to drive short- and medium-term performance results as well as long-term, shareholder value creation. We provide pay packages to our executives that are intended to compensate fairly, attract the best leaders in the banking industry, and engage and motivate them to deliver strong results. TheCompensationCommittee considers peer groupmarket data and the advice of its independent consultant whenmaking decisions related to executive compensation amounts and design. It seeks to create and annually calibrate an appropriate mix of cash and non-cash compensation, short and long-term incentives, and fixed and at-risk compensation to balance internal priorities with shareholder expectations, short term results with long-term vision and stability with innovation. The Compensation Committee