CHFC 2018 Proxy Statement

Pension Plan benefits are based on the annual base salary of eligible employees as of January 1 of each year. The amount shown in the “Salary” column in the Summary Compensation Table represents the most recent calendar year compensation used in calculating average pay under the Pension Plan (subject to any applicable cap under ERISA for employees who are not included in the Supplemental Plan described below). Upon retirement at age 65, a retiree will receive an annual benefit of 1.52% of his or her average annual base salary for the five highest consecutive years during the ten years preceding his or her date of retirement (subject to any applicable cap under ERISA for employees who are not included in the Supplemental Plan), multiplied by the retiree’s number of years of credited service (subject to a maximum of 30 years). Benefits at retirement ages under 65 are also determined based upon length of service and pay, as adjusted in accordance with the Pension Plan. The Pension Plan provides for vesting of benefits after attaining five years of service, disability and death benefits, and optional joint and survivor benefits for the employee and his or her spouse. Additionally, unreduced Pension Plan benefits are available for retirement at age 60 and above, when the retiree’s age plus vested years of service equals at least 85. Pension Plan benefits for non-grandfathered employees will be based on years of credited service as of June 30, 2006 and generally average annual base salary as of January 1 for the five years preceding June 30, 2006. The present value of accumulated benefits under the Pension Plan shown in the above table is based on the assumption that an employee retires at the earliest unreduced retirement age defined under the Pension Plan; which is the earlier of normal retirement age, or age 60 or older with 85 points (age plus vested years of service). The assumed retirement age is age 60 for all named executive officers. The present value of accumulated benefits is also based on the assumption that the employee will elect a benefit for his or her life with 120 monthly payments guaranteed. If the employee were to elect a benefit payable to a surviving spouse of 50% or more of the employee’s retirement benefit or for the employee’s life only, or retire beyond age 65, the retirement benefit for the employee would be adjusted. The benefits listed in the Pension Benefits table are not subject to a deduction for social security or any other offset amount. The Chemical Financial Corporation Supplemental Pension Plan ("Supplemental Plan") was designed to provide benefits to which executive officers would have been entitled, calculated under the provisions of the Pension Plan, as if the limits imposed by the Internal Revenue Code did not apply. Mr. Ramaker, our former Chief Executive Officer, is the only participant in the Supplemental Plan. As result of our merger with Talmer, a change in control of the Corporation occurred under the Supplemental Plan, which caused the benefit owing Mr. Ramaker under the plan to become payable in a lump-sum payment. As of December 31, 2017, the amount payable as a result of the change in control was $2,015,227. Pursuant to the First Amendment to his release agreement, the Compensation Committee and the board of directors determined to delay payment of this amount to Mr. Ramaker as provided in Internal Revenue Code Section 162(m), with such payments to be made on the first payroll period of the seventh month after his August 8, 2017 separation from service . Accordingly, this payment is no longer reflected in the “Present Value of Accumulated Benefit” column in the table above, because it is no longer owing to Mr. Ramaker under the Supplemental Plan, and instead, is considered deferred compensation and is reflected in the table below under the heading “2017 Nonqualified Deferred Compensation.” The amount for Mr. Ramaker reflected in the table above includes the present value of accumulated benefit under the Supplemental Plan since August 31, 2016 (the date of completion of the Talmer merger). The present value of accumulated Pension Plan and Supplemental Plan benefits at December 31, 2017 was computed using discount rates of 3.68% and 3.38%, respectively, and the RP-2014 mortality tables projected using the mortality improvement scale MP-2017 as required by the Pension Protection Act of 2006 (PPA). Lump-sum retirement benefits are not available in the Pension Plan, unless an employee is involuntarily terminated, the option was available in a predecessor plan, or the aggregate benefit payable is less than or equal to $5,000. In the event the named executive officers are involuntarily terminated, lump-sum retirement benefits would be $1,435,611 for Mr. Ramaker and $899,132 for Mr. Rathbun. Deferred Compensation In September 2006, the board of directors approved the Chemical Financial Corporation Deferred Compensation Plan (the "DC Plan"), a voluntary nonqualified supplemental retirement program for a select group of management personnel. The DC Plan is unfunded for tax purposes and for purposes of ERISA. The named executive officers in this proxy statement are eligible to participate in the DC Plan. The DC Plan was amended on January 1, 2017 to allow an employer discretionary contribution to make up for lost employer contributions in the 401k Plan. Participants may elect to defer up to 85% of their salary, excluding bonus, to the DC Plan. The election to defer compensation under the DC Plan is irrevocable for each plan year as of the beginning of the plan year. Participant contributions are made into a grantor trust for the purpose of providing for payment of the deferred compensation under this plan. The investment of employee contributions are self-directed by participants within an established array of money market, equity and fixed income mutual funds. The aggregate earnings on these investments, by each named executive officer who is a participant in the DC Plan, are included in the table below, and are attributable to the specific investments selected by each participant. Participants may change the designation of their investments at such times as mutually agreed by the parties. As of December 31, 2017, participants could change their investment designation on a daily basis. Participants elect, in 51