CHFC 2018 Proxy Statement

(11) 2015 PRSUs will vest at 150% of target, while 2016 and 2017 PRSUs are estimated to vest at 100% of target. This amount represents the fair value as of the August 9, 2017 modification date of the 2015, 2016 and 2017 PRSU awards, computed using our NASDAQ Stock Market® common stock price at August 9, 2017 of $46.95 per share. 59 Pay Ratio As required by Section 953(b) of the Dodd-FrankWall Street Reform and Consumer ProtectionAct and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our Chief Executive Officer and President, David Provost. For 2017, our last completed fiscal year: • the median of the annual total compensation of all employees of our company (other than our Chief Executive Officer) was $39,972; and • the total annual compensation of our Chief Executive Officer was $1,932,464, as reported in the Summary Compensation Table included elsewhere in this Proxy Statement. Based on this information, for 2017 the ratio of the annual total compensation of Mr. Provost, our Chief Executive Officer and President, to the median of the annual total compensation of all employees was approximately 48.3 to 1. To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our Chief Executive Officer, we took the following steps: 1. We determined that as of December 31, 2017, our employee population consisted of 3,132 individuals with all of these individuals located in the United States. This population included our full-time, part-time, seasonal and temporary employees. However, it did not include independent contractors who were employed by and had their compensation determined by unaffiliated third parties. 2. To identify the “median employee” from our employee population, we compared the wages of our employees as reflected in our payroll records and reported in Box 5, Medicare Wages, to the Internal Revenue Service on Form W-2 for 2017. Because we offer a variety of compensation arrangements to our employees, including base salary, bonus, commissions and other incentive arrangements, we believe this was the most appropriate and comprehensive methodology for capturing the many different compensation arrangements we offer. We identified our median employee using this compensation measure, which was consistently applied to all of our employees included in the calculation. 3. We annualized the compensation of employees that we hired in 2017, who were not employed for the full year, by dividing their 2017 W-2 Box 5, Medicare Wages, by (a) the number of regular hours they worked in 2017, plus (b) the number of overtime hours they worked in 2017 times 1.5, and then multiplied the result by their full-time or part-time standard annual hours. This methodology enabled us to annualize compensation for part-time employees without making a full- time equivalent adjustment for part-time employees. 4. Since all of our employees are located in the United States, as is our Chief Executive Officer, we did not make any cost- of-living adjustments in identifying our “median employee.” 5. Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2017 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $39,972. 6. With respect to the annual total compensation of our Chief Executive Officer, we used the amount reported in the “Total” column of our Summary Compensation Table included in this Proxy Statement. Director Compensation Effective May 1, 2017, the board of directors implemented changes to director compensation in light of the completion of the Talmer merger, which significantly increased our size and subjected us to enhanced regulatory requirements and scrutiny, as a result of crossing $10 billion in total assets. Accordingly, we engaged Aon to perform a market analysis of director compensation compared to our 2017 peer group, which demonstrated that our total director compensation was below that of the peer group median. In order to retain and to continue to be able to recruit qualified directors, the board of directors made the following modifications to our director compensation program to be more competitive with the peer group.