CHFC 2018 Annual Report

Item 9B. Other Information. Given the timing of the following events, the following information is included in this Annual Report on Form 10-K pursuant to Item 5.02 of Form 8-K, “Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensation Arrangements of Certain Officers” in lieu of filing a Form 8-K. On February 25, 2019, the Compensation and Pension Committee (the “Committee”) of our board of directors met to determine annual cash incentive plan awards for 2018 under the Chemical Financial Corporation ExecutiveAnnual Incentive Plan (the “Plan”). The Committee determined that each of David Provost, our President and Chief Executive Officer, and Gary Torgow, our Executive Chairman, were each eligible to receive a cash incentive payment of at least $950,000 under the Plan in 2018, based on our corporate performance and their individual performance relative to the goals established by the Committee. However, the Committee had previously determined that, to more closely align the interests of Mr. Provost and Mr. Torgow with those of our shareholders through greater stock ownership tied to tenure with Chemical, it would exercise its discretion under the Plan not to award a cash incentive payment to either Mr. Provost or Mr. Torgow in 2018. Instead, the Committee awarded each of Mr. Provost and Mr. Torgow 20,364 shares of time-vesting restricted stock units (“TRSUs”) under the Chemical Financial Corporation Stock Incentive Plan of 2017 (the “Equity Plan”) with a grant date fair value equal to approximately $950,000 (the target amount each officer would have been eligible to receive under the Plan). Under the restricted stock unit agreement, the TRSUs will vest in equal annual installments over a three-year-period, subject to each officer’s continued service through the vesting date, subject to certain exceptions (described below). The foregoing description of the TRSU agreement does not purport to be complete and is qualified in its entirety by reference to the form of TRSU agreement attached hereto as Exhibit 10.32 and incorporated by reference herein. On February 25, 2019, the Committee approved a new form of award agreement for TRSUs and performance-based restricted stock units (“PRSUs”) and awarded annual long-term incentive awards to our named executive officers under these award agreements in accordance with the terms of the Equity Plan, consistent with our historical practice of providing long term equity compensation as a portion of overall executive compensation, as follows: Executive Officer Number of Time-Vested Restricted Stock Units Number of Performance-Based Restricted Stock Units (1) David Provost 16,292 27,117 Gary Torgow 16,292 27,117 Dennis Klaeser 5,145 8,563 Thomas Shafer 8,146 13,559 Robert Rathbun 965 1,606 (1) Amount shown is the target amount of the award. The range of PRSUs actually earned can be in the range of 0% of target for below threshold performance, to 50% of target for threshold performance, to 150% of target for maximum performance. Under the terms of the TRSUs, the restricted stock units vest in equal annual installments over a five year period, based on the named executive officer’s continued employment. Under the terms of the PRSUs, the restricted stock units vest based on our achievement of performance targets determined by the Committee for the performance period at a threshold, target and maximum performance level, if the named executive officer remains employed through the restricted period. Both the TRSU agreements and the PRSU agreements provide that, in the event of the executive’s termination without “cause” by us, or if the executive terminates his employment for “good reason” (each as defined in the agreement), or if the executive dies or is disabled, or if the executive provides one year written notice before his intended retirement after reaching age 55 with ten years of service, or, with respect to Mr. Provost and Mr. Torgow only, if the executive terminates his employment on or after 18 months following the consummation of our merger with TCF, then (a) with respect to the TRSUs, all remaining restrictions will lapse and such award will 100% vest, and (b) with respect to the PRSUs, the award will vest at the target (100%) level. In addition, under the TRSU agreements, if the executive is terminated without cause by us or the executive terminates his employment for good reason, in either case following a “change in control” (as defined in the agreement), all TRSUs granted to the executive, including TRSUs issued under prior agreements and plans, will 100% vest. Under the PRSU agreements, in the event of a “change in control” (as defined in the agreement), all PRSUs granted to the executive, including PRSUs issued under prior agreements and plans, for which performance results have not been measured will be measured as of the latest practicable date prior to the consummation of the change in control and the number of PRSUs will be fixed at the greater of the target (100%) performance level or actual performance (the “Earned Awards), and such Earned Awards will vest and be subject to forfeiture 172