CHFC 2018 Proxy Statement

Long-Term Equity Compensation 2017 Plan Overview We deliver a significant portion of our executive officer compensation through long-termequity grants that are specifically designed to: • ensure that executives have material “skin in the game” thereby aligning executive and shareholder interests; • reward executives for building long-term, sustainable shareholder value; and • complement our annual cash incentive plan to appropriately balance executive focus on both short- and long-term objectives. Our long-standing practice has been to grant the majority of our long-term equity grants on a single day in the first quarter of the calendar year. However, in 2017, we granted equity awards to our named executive officers on January 4, February 21, August 9 and September 1 due to the Talmer merger integration, the mid-year appointments of certain named executive officers to new positions, and the entering into of new employment agreements with certain named executive officers. These awards were delivered in the form of Performance-Based Restricted Stock Units (“PRSUs”), Time-Vested Restricted Stock Units (“TRSUs”), Stock Options, and Fully-Vested Common Shares. The composition of these awards differed by individual and grant, and did not each include all of the elements listed above. For PRSUs, similar to the annual incentive plan, the Compensation Committee established threshold, target and maximum performance levels and weights for each selected goal. Threshold represents the minimum level of performance at which, if achieved, a payment is earned on each goal. If performance is below the threshold level for any particular goal, no payment will be earned; however, payment will be earned for other goals that are achieved at least at a threshold level of performance. Payments for achievement of the threshold, target and maximum goals are 50%, 100% and 150% of the target payment, respectively. Actual performance between threshold, target and maximum performance levels will be interpolated to determine the amount of payment based on relative achievement of the corporate goals. January 4, 2017 Equity Awards to Mr. Klaeser and Mr. Shafer Mr. Klaeser and Mr. Shafer received equity awards on January 4, 2017. These awards were based, in part, on the terms of their respective employment agreements entered into with us in August 2016, shortly after joining the Corporation through our merger withTalmer, and onmodifications determined in the sole discretion of theCompensationCommittee and agreed to by the executives. These initial awards provided each officer with an initial equity stake in the Corporation. Under these employment agreements, we initially agreed to issue the following grants to Mr. Klaeser and Mr. Shafer, with such grants to be made as soon as administratively feasible after the effective date of their agreements: • Mr. Klaeser - an equity award equal to 80% of his base salary, to consist of 60% PRSUs, 40% of TRSUs • Mr. Shafer - an equity award equal to 70% of his base salary, to consist of 60% PRSUs, 30% stock options and 10% TRSUs We issued these equity awards to Mr. Klaeser and Mr. Shafer on January 4, 2017, as modified and determined by the Compensation Committee and agreed to by Mr. Klaeser and Mr. Shafer. Specifically, Mr. Klaeser received an award with a target value of $508,052, consisting of approximately 60% PRSUs and 40% TRSUs. The TRSUs granted to Mr. Klaeser vest 40% on August 31, 2019 and 60% onAugust 31, 2021, which are the third and fifth anniversaries of the Talmer merger. Mr. Shafer received an award with a target value of $345,066, consisting of approximately 50% PRSUs and 50% TRSUs. The TRSUs granted to Mr. Shafer vest in their entirety on August 31, 2021. The PRSUs granted to both Mr. Klaeser and Mr. Shafer are subject to conditional vesting based on the attainment of the pre- established corporate goals and continued service through the date our audit opinion is issued at the end of the two-year performance period of January 1, 2017 through December 31, 2018. The corporate goals include 2018 adjusted diluted earnings per share, with a goal weighting of 75%, and 2018 adjusted efficiency ratio, with a goal weighting of 25%. The Compensation Committee established threshold, target and maximum performance levels for each selected goal. Payments for achievement of the threshold target and maximum goals are 50%, 100% and 150% of the target payment, respectively. Actual performance between threshold, 35