CHFC 2018 Proxy Statement

For 2017, the Compensation Committee set the potential incentive payment at the following threshold, target and maximum levels for each of the named executive officers, expressed as a percentage of base salary. Name Threshold (%) Threshold Incentive Payment ($) Target (%) Target Incentive Payment ($) Maximum (%) Maximum Incentive Payment ($) David T. Provost (1) — — — — — — Gary Torgow (1) — — — — — — Dennis L. Klaeser 32.5% $178,750 65% $357,500 97.5% $536,250 Thomas C. Shafer (2) 37.5% $281,250 75% $562,500 112.5% $843,750 Robert S. Rathbun (3) 30% $99,000 60% $198,000 90% $297,000 DavidB. Ramaker (4) 40% $328,000 80% $656,000 120% $984,000 (1) Mr. Provost and Mr. Torgow entered into new a one-year employment agreement, effective September 1, 2017, and agreed to forgo annual incentive compensation in 2017. (2) The Compensation Committee increased Mr. Shafer’s annual incentive target from 60% to 90% of base salary on July 1, 2017 in connection with his appointment as Vice Chair and President and Chief Executive Officer of Chemical Bank. This table reflects his potential incentive payout as 75% of base salary, which is the pro-rated percentage based on six months at the 60% rate and six months at the 90% rate. (3) In accordance with his Offer Letter Agreement, Mr. Rathbun’s 2017 annual incentive payout was based on his base salary prior to November 17, 2017, the effective date of the agreement. (4) Mr. Ramaker did not receive an annual cash incentive payment in 2017, because he retired before year-end. 2017 Performance Metrics The Compensation Committee is responsible for establishing the corporate and individual performance goals that, when compared to actual results, determine the amount of payout that is earned with respect to the plan. In setting these goals the Compensation Committee considers our annual budget, our short- and long-term business strategy, shareholder performance expectations, and guidance provided by our executive leadership team. In the first quarter of 2017, the Compensation Committee determined that annual incentive metrics for Mr. Ramaker would consist of corporate goals weighted at 80% and individual performance goals weighted at 20%, and determined that the annual incentive metrics for Mr. Shafer and Mr. Klaeser would consist of corporate goals weighted at 70% and individual performance goals weighted at 30%. The Compensation Committee determined that Mr. Rathbun’s annual incentivemetrics would consist of corporate goals weighted at 40%, department goals with respect to the business units he oversawweighted at 40%, and individual performance goals weighted at 20%. The Compensation Committee further established that the 2017 corporate goals would consist of three metrics: • adjusted earnings per share; • customer deposit growth; and • core non-interest expense control. How we define each of these corporate goals is included in the table under "2017 Performance Goals" below. These metrics were selected to serve as a reliable proxy for the short- and long-term health and success of our business. Adjusted earnings per share was selected and weighted most heavily because overall profitability is the most basic, primary metric by which we assess our performance relative to internal objectives and shareholder expectations. Deposit growth was selected because deposits serve as the fuel for expanding our lending activities and thereby funding growth in accordance with our 2017 strategy. Core noninterest expense was selected because it measures the extent to which we achieved synergies associated with the Talmer merger and is subject to significant influence by executive leadership. 32