CHFC 2018 Proxy Statement

believes that performance expectations should be clearly articulated and directly tied to compensation outcomes so that executive wealth creation is linked to, and dependent upon, the production of long-term sustainable value for shareholders. Our executive pay program consists of three major elements: Element Performance Period Objective Base Salary Annual To pay an equitable wage relative to an individual's role and responsibilities: to provide stable income and promote retention. Annual Cash Incentives Annual To encourage, recognize and reward achievement of annual corporate financial goals and individual performance objectives. Equity Compensation Long-Term To promote the retention and stability of the executive ranks; to increase or decrease an executive’s realizable compensation in direct alignment with shareholder value creation. Compensation Program Governance What We Do What We Don't Do ü We tie the majority of our named executive officer compensation to long-term performance û Our incentive programs do not encourage excessive risk taking ü Our Change-in-Control provisions require a double-trigger û We prohibit hedging of our securities ü We maintain strong stock ownership guidelines of 5x salary for our CEO, and 3x salary for our other named executive officers û Our equity plan does not allow repricing of underwater options without shareholder approval ü We have stock holding guidelines, until minimum share ownership requirements are achieved û We do not provide excise tax-gross ups ü We have adopted a clawback policy û We do not provide significant executive perquisites ü We have appropriate caps on incentive plan payouts ü Our Compensation Committee is comprised entirely of independent directors ü Our Compensation Committee engages an independent consultant ü Our Compensation Committee regularly meets in executive session without management present ü We perform an annual risk assessment of the compensation program 2017 Say-on-Pay Vote Results At our 2017 annual meeting of shareholders, approximately 96% of the votes cast on the Say-on-Pay proposal were in favor of approving the resolution. The Compensation Committee considered the results of this advisory resolution when evaluating our executive compensation programs. The Compensation Committee believes that these voting results reflect strong confidence in the Board of Directors to exercise good judgment in structuring a thoughtful, creative and reasonable executive compensation program for the benefit of the Corporation and its shareholders. The Compensation Committee intends to continuously improve the executive compensation arrangements and programs it offers to meet evolving business conditions and ensure consistent alignment with shareholder interests. 27