CHFC 2018 Proxy Statement

Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table Employment Agreements with Mr. Provost and Mr. Torgow On August 9, 2017, following Mr. Ramaker’s retirement, we entered into new employment agreements with: • Mr. Provost to serve as our Chief Executive Officer and President; and • Mr. Torgow to serve as our Chair. These employment agreements superseded and replaced the Service Agreements that we previously entered into with each of Mr. Provost and Mr. Torgow in connection with our merger with Talmer which provided for a base salary of $1,000,000. Each employment agreement has an initial term of one year commencing on September 1, 2017 that automatically renews for successive one year periods, until either party provides 30 days’ advance written notice of non-renewal. Under the employment agreements, each executive officer is: • entitled to an annual base salary of $1.00 (which was decreased from each executive’s annual salary of $1.0 million under each of their previous Service Agreements); • received a grant of 23,000 fully-vested shares of our common stock on September 1, 2017; • eligible to participate in our annual bonus and equity programs for senior executives; • entitled to an annual taxable stipend to cover deduction for other benefits under our group health care plan in the amount of $20,000; • entitled to a monthly automobile allowance of $900; and • reimbursement for membership in two country clubs of his selection. Each of the employment agreements provides for certain payments upon termination, as described belowunder "Potential Payments upon Termination or Change in Control." Each employment agreement also requires the executive officer to keep company information confidential. In addition, each executive officer is subject to provisions related to non-competition and non-solicitation of customers and employees for a period of 24-months following termination of his employment. Employment Agreement with Mr. Klaeser On August 31, 2016, we entered into an employment agreement with Mr. Klaeser to serve as our Executive Vice President, Chief Financial Officer and Treasurer. The agreement has an initial term of two years that automatically extends for additional one year terms unless either party gives the other notice of intention to terminate at least 30 days before the anniversary of the effective date. Under the employment agreement, Mr. Klaeser is entitled to an annual base salary of $550,000 and he is entitled to participate in any stock option or other equity compensation programs that we offer at a level commensurate with his position. He is also eligible to participate in our annual bonus programs for senior executives at a level commensurate with his position, with an annual target bonus for 2017 equal to 65% of his base salary. Mr. Klaeser is also entitled to participate in health and dental, life insurance, short and long term disability insurance, retirement and other employee fringe benefit programs covering our salaried employees as a group, and in any programs applicable to our senior executives. We also agreed to reimburse Mr. Klaeser up to $12,000 per year for country club membership dues. Under his employment agreement, we initially agreed to issue Mr. Klaeser restricted stock units equal to 80% of his base salary, consisting of 60% PRSUs and 40% TRSUs, with such grant to be made as soon as administratively feasible after the effective date of his agreement. We issued these restricted stock units to Mr. Klaeser on January 4, 2017, in an amount equal to 92% of his base salary, as modified and determined by the Compensation Committee and agreed to by Mr. Klaeser. The terms of these awards are further explained under "Elements of Compensation – Long-Term Equity Compensation" in the Compensation Discussion and Analysis section of this Proxy Statement. Under his employment agreement, we also agreed to issue Mr. Klaeser restricted stock units equal to 80% of his base salary in 2017, consisting of 60% PRSUs and 40% TRSUs. We issued these restricted stock units to Mr. Klaeser on February 21, 2017. The terms of these awards are further explained under "Elements of Compensation – Long-Term Equity Compensation" in the Compensation Discussion and Analysis section of this Proxy Statement. For purposes of all of Mr. Klaeser’s equity awards, under his employment agreement, if he provides us with written notice at least 12 months prior to his anticipated retirement date and his retirement date is after December 31, 2019, then all of his unvested awards will vest on the effective date of his retirement. 44