CHFC 2018 Proxy Statement

Committee review and approval, including but not limited to the compensation of executive officers (other than the Chief Executive Officer), the design of our incentive plans and the financial goals on which these incentive plans are based. The Compensation Committee retains absolute discretion as to whether to approve recommendations of executive leadership. Role of Consultant The Compensation Committee, after a thorough search and selection process in 2011, retained Aon Hewitt as its independent compensation consultant to advise it on all matters related to executive and director compensation. Aon attends and provides guidance at each of our Compensation Committee’s meetings, and: • assists the Compensation Committee in identifying best practices related to executive and director compensation and compensation risk management; • provides market reference data for the Compensation Committee to consider in its deliberations; • updates the Compensation Committee on legislative, tax and regulatory matters that impact executive compensation; and • issues independent opinions on anticipated or planned decisions. The Compensation Committee conducted a review of its relationship with Aon in 2017 and determined that Aon’s work for the Compensation Committee did not create any conflicts of interest. The Compensation Committee determined that Aon was independent under the criteria included in NASDAQ listing standards. Compensation Risk Assessment The Compensation Committee annually evaluates our compensation programs to assess whether these, by design or administrative process, would facilitate or encourage excessive risk-taking by executives or other employees. The Compensation Committee has concluded that our compensation programs are not reasonably likely to have a material adverse effect on the Corporation, in part due to the following program elements: • Limits on the amounts that may be earned under annual and long-term incentive awards diminish the potential reward of excessive risk taking; • The financial metrics on which incentives are based aligned to our financial goals and strategic plan and are both challenging and reasonable, motivating our executives to take appropriate, rather than risky or excessive actions, to achieve those goals; and • Stock ownership guidelines require executives to have significant “skin-in-the-game,” creating a disincentive for imprudent decision making. Additional best practices we employ to mitigate risk include; an anti-hedging policy, five year vesting of equity awards, a formal clawback policy and double-trigger change of control agreements. 29 Competitive Market Analysis Our Compensation Committee compares our executive compensation levels and programs to a group of like peer companies with whom we compete for talent. The Compensation Committee reviews peer group market data and practices at least annually, and evaluates it as one important reference point when making decisions. 2017 Peer Group Each year theCompensationCommitteeworkswith our independent compensation consultant to reviewcompensation for executive positions at other corporations within a designated peer group of companies to ensure the overall appropriateness and competitiveness of our compensation levels and programs.