CHFC 2018 Proxy Statement

With respect to the PRSU component of the long-term incentive award, 2018 metrics will include two goals: Cumulative Three- Year Adjusted EPS (weighted at 75%) and Relative TSR (weighted at 25%). The Compensation Committee has reaffirmed its decision to continue utilizing the relative TSR metric first implemented in 2017. The EPS measure has been retained in the 2018 PRSU plan because it was removed from the annual incentive plan and replaced with Adjusted Core Net Income. However, in order to better reflect performance over the entire performance period and limit the impact of annual volatility, the 2018-2020 PRSU award will measure EPS cumulatively over the three-year performance period rather than EPS at the end of 2020 alone. The Compensation Committee also affirmed its practice of adjusting any performance measures to the extent necessary to prevent dilution or enlargement of an incentive award as a result of extraordinary events or circumstances, including changes in tax laws, accounting principles, or other laws or provisions affecting reported results. The Compensation Committee indicated that it would apply this principle to the outstanding PRSU awards for the 2016-2018 and 2017-2019 performance periods impacted by the Tax Cuts and Jobs Act of 2017. 38 Additional Compensation Policies and Practices Clawback Policy ("Recoupment") In the interest of further aligning the interests of our named executive officers with those of our shareholders, the Compensation Committee adopted a "clawback" policy for incentive-based compensation awards made in 2014 and thereafter. The clawback policy provides that all long-term and annual incentive-based compensation, including service-vested equity compensation and discretionary awards, that is earned after January 1, 2014 will be subject to repayment if it is paid to an executive officer in the three-year period preceding any date on which we are required to disclose a restatement of our financial statements due to material noncompliance with financial reporting requirements under the federal securities laws or as a result of misconduct or fraud. Repayment under the clawback provision is limited to the amount of incentive-based compensation that exceeds the amount of such compensation which would have been paid to such executive officer if the financial statements had been originally filed in their restated form. Any employee who has reasonable cause to believe that a violation under the clawback provision has occurred must promptly report such matters to the Compensation Committee. The Compensation Committee will exercise its business judgment in the fair application of the clawback policy and consider all relevant factors in determining whether the Compensation Corporation will seek to recover incentive compensation from the executive officer and the amount, timing and form of any incentive compensation recovery. Stock Ownership Guidelines Our stock ownership guidelines are designed to encourage share ownership so that our executives have a direct stake in the Corporation and to align their interests with the long-term interests of our shareholder. The ownership guidelines cover all named executive officers and are as follows: Position Required Salary Multiple President and Chief Executive Officer 5x base salary All other executive officers 3x base salary In general, stock ownership is determined in the same manner as beneficial ownership for SEC reporting purposes. The following share types are included under these guidelines: shares directly owned, family-owned shares, retirement plan shares, and unvested time-vested restricted stock. Stock options that are unexercised, regardless of their vesting status and in-the-money value, are not counted toward satisfaction of these guidelines. Unvested PRSUs are also not counted toward stock ownership. Executives are required to be in compliance with these guidelines within five years of becoming subject to this policy. Individuals who acquire shares of common stock under our equity-based incentive plans must hold at least 50% of all net after-tax acquired shares until stock ownership guidelines are satisfied, or 36 months following acquisition of such shares. Anti-Hedging Policy Our anti-hedging policy aligns the interests of our directors and executive officers with our shareholders. The policy prohibits our directors and executive officers from engaging in any transaction which could hedge or offset decreases in the market value of our common stock, including short-selling, put or call options, forward sale or purchase contracts, equity swaps, and exchange funds.