Washington, D.C. 20549
The Annual Meeting of Shareholders of TCF Financial
Corporation is scheduled as shown below:
12:00 p.m. Eastern Time
You are entitled to vote at the Annual Meeting
if you owned TCF common stock at the close of business on the record date, March 9, 2020. If you plan to attend the Annual Meeting,
you will need to bring a valid form of photo identification and proof that you own shares of TCF common stock. More information
regarding admission requirements can be found under “Additional Information – How Do I Attend the Annual Meeting”
on page 69 of the Proxy Statement.
Whether or not you plan to attend the Annual Meeting,
we urge you to vote now to make sure there will be a quorum for the Annual Meeting. You may access TCF’s proxy materials
and vote your shares online by following the instructions on the Notice. If you receive a proxy card, you may vote your shares
online, by telephone, or by mail by following the instructions on your proxy card. You may revoke your proxy by submitting another
timely proxy, by notifying the Corporate Secretary of TCF in writing before your shares are voted at the Annual Meeting, or by
voting your shares in person at the Annual Meeting. If you hold shares through a broker or other nominee, please follow the voting
instructions provided to you by that broker or other nominee.
TCF is making its Proxy
Statement for the 2020 Annual Meeting of Shareholders and its 2019 Annual Report to Shareholders available through the Investor
Relations section of TCF’s website at http://ir.tcfbank.com. A free webcast of the Annual Meeting also will be available
at http://ir.tcfbank.com on May 6, 2020, at 12:00 p.m. Eastern Time.
The Board of Directors (the
“Board”) of TCF Financial Corporation (“TCF Financial,” “TCF,” “we,” “our”
or the “Company”) requests your proxy for the 2020 Annual Meeting of Shareholders (the “Annual Meeting”),
which is being solicited on behalf of the Board and TCF. The Annual Meeting is scheduled for May 6, 2020 at 12:00 p.m. Eastern
Time at the TCF Center – 1 Washington Boulevard, Detroit, MI 48226.
The Notice of Internet Availability
of Proxy Materials (the “Notice”) or, in some cases, this Proxy Statement, and the accompanying form of proxy, will
first be mailed on or about March 25, 2020. Shareholders are entitled to vote at the Annual Meeting if they owned shares of TCF’s
common stock at the close of business on March 9, 2020 (the “Record Date”). There were 152,304,000 shares of TCF common
stock outstanding on the Record Date.
The Board unanimously recommends that shareholders
take the following actions at the Annual Meeting:
Compensation Committee Interlocks and Insider
Participation
Current and former Directors Fitterling, Grandstrand,
Klein, Mahone, Opperman, Sit, Tate, Weiss, and Wheatlake served on the Compensation Committee in 2019. None of these Directors
has ever served as an officer or employee of TCF or any of its subsidiaries. The Board has determined that all members of the Compensation
Committee were independent for 2019 under standards outlined below and under applicable Nasdaq rules. Certain relationships with
Directors are disclosed below under “Director Independence and Related Person Transactions - What Transactions Were Considered
Non-Material?”
Corporate
Governance and Nominating Committee
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|
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All members of the Nominating Committee
are listed above and are independent under the standards outlined below under “Director Independence and Related Person
Transactions – How Does the Board Determine Which Directors are Independent?”. The Nominating Committee operates under
a formal charter that may be accessed on our website at https://www.tcfbank.com/about-tcf/corporate-governance/corporate-governance-nominating-committee-charter.
Our Nominating Committee oversees our corporate
governance responsibilities on behalf of the Board and is responsible for the identification and recommendation of individuals
qualified to become members of the Board for each vacancy that occurs and for each election of directors at an annual meeting of
shareholders of TCF or our subsidiaries. The Nominating Committee has full power and authority to perform the responsibilities
of a public company nominating and corporate governance committee under applicable law, regulations, Nasdaq listing rules, and
public company custom and practice. The Nominating Committee may establish subcommittees and delegate authority and responsibility
to subcommittees or any individual member of the committee. The Nominating Committee has the authority to engage consultants, advisors
and legal counsel at the expense of TCF.
Director Independence and Related Person Transactions
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|
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How Does the Board Determine Which Directors
are Independent?
Nasdaq listing rules require a majority of our
Directors and each member of our Audit, Compensation, and Nominating Committees to be independent. Our Board has adopted Categorical
Director Independence Standards to help fulfill its obligations under Nasdaq rules to determine whether any Director has a relationship
that would interfere with the exercise of the Director’s independent judgment in carrying out the responsibilities of a director,
which we refer to as a “material relationship.” The categorical standards provide that a Director shall be deemed not
to have a material relationship with the Company if the Director satisfies each of the Director Independence Standards listed below
(the term “Family Member” means a person’s spouse, parents, children and siblings, whether by blood, marriage
or adoption, or anyone residing in such person’s home):
•
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No Material Employment with the Company. The Director is not, and has not
within the past three years been, a team member of TCF, and no Family Member of the Director is, or within the past three
years has been, an executive officer of TCF.
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•
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No Material Direct Compensation from the Company. Neither the Director nor a Family
Member of the Director has received more than $120,000 of compensation during any twelve-month period within the three years
preceding the determination of independence. In calculating such compensation, the following is excluded: (a) compensation
for Board or Board Committee service; (b) compensation paid to a Family Member who is an employee of TCF (other than an Executive
Officer); and (c) benefits under a tax-qualified retirement plan or non-discretionary compensation.
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•
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No Material Relationship Involving TCF in Business Dealings with TCF. Neither
the director nor a Family Member is a partner in, or a controlling equity holder (as defined below), or an executive
officer of, any organization to which the Company has made, or from which the Company has received, payments for property
or services in the current or any of the past three fiscal years that exceeds the lesser of $120,000 or 1% of the other
company’s consolidated gross revenues for that year, other than the following: (a) payments arising solely from
investments in the company’s securities; or (b) payments under non-discretionary charitable contribution matching
programs.
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•
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No Material Relationship Involving Tax-Exempt or Other Charitable
Organizations to which TCF Contributes. Neither the Director nor a Family Member of the Director is currently an
executive officer or director of a tax-exempt or other charitable entity to which TCF has made contributions in the
current fiscal year or any of the past three fiscal years representing more than the greater of $200,000 or 5% of such
organization’s annual consolidated gross revenues.
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2020 Proxy
Statement
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18
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•
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No Material Affiliation with Our Auditor. (a) The Director is not a current
partner of a firm that is TCF’s outside auditor; (b) the Director has no Family Member who is a current partner
of a firm that is TCF’s outside auditor; and (c) neither the Director nor a Family Member of the Director was, within
the last three years, a partner or employee of a firm that is TCF’s outside auditor and personally worked on TCF’s
audit within that time.
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What Transactions Were Considered Non-Material?
During 2017 through 2019, TCF was a party to relationships
with certain Directors, their related companies, or immediate family members, each of which was determined by the Board not to
be material for purposes of Director independence for each Director who served during 2019 and for each Nominee.
Commercial Loans, Consumer Loans, and Retail Banking Accounts
Each of the following transactions and relationships
was reviewed by the Board and was determined to not constitute a material relationship for purposes of Director independence:
•
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The following Directors have, or had during 2017 through 2019, retail deposit
accounts or consumer loans with TCF, all of which are on ordinary retail consumer terms and conditions: Dahl, King, Klein,
Mahone, Sit, Tate, Weiss, Wheatlake and Wise.
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All commercial loans and leases, and all home
mortgages and consumer loans, were made in the ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable transactions with persons not related to TCF and do not involve
more than the normal risk of collectability, nor do they present other unfavorable features. All such loans and leases have been
approved by the Board when required by Regulation O.
Related Person Transactions Involving Independent
Directors
Mr. King is an executive officer of Thomson Reuters.
During 2019, TCF made payments to Thomson Reuters and its related entities in the ordinary course of business totaling $799,398
under standard terms and conditions. Many of these payments are related to products and services first acquired before Mr. King
joined the Board. Thomson Reuters’ total revenue for the year ended December 31, 2019 was $5.9 billion. Mr. King’s
only interest in these transactions is as an officer of Thomson Reuters. The Board considered these payments in light of the annual
revenue of Thomson Reuters and Mr. King’s status as an officer of Thomson Reuters, and affirmatively determined (with Mr.
King abstaining) that the payments were on ordinary market terms and would not impair the independent judgment of Mr. King,
and therefore determined that Mr. King is independent.
Other Business Relationships Involving Independent
Directors
Each of the following additional transactions
and business relationships was reviewed and was determined by the Board to be not material, either individually or in the aggregate,
for purposes of Director independence:
•
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Dr. Sullivan is the President of the University of St. Thomas, a non-profit corporation.
TCF made payments to the University of St. Thomas totaling $1,739 in 2019 for goods and services under standard terms and
conditions. The Board considered these payments and Dr. Sullivan’s status as President of the University of St. Thomas,
and affirmatively determined (with Dr. Sullivan abstaining) that the payments were on ordinary market terms and would not
impair the independent judgment of Dr. Sullivan;
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•
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Mr. Opperman sits on the board of Thomson Reuters. As discussed above, TCF made payments to
Thomson Reuters totaling $799,398 for 2019 in the ordinary course of business. The Board considered these payments in light
of the annual revenue of Thomson Reuters and Mr. Opperman’s status as a director of Thomson Reuters, and affirmatively
determined (with Mr. Opperman abstaining) that the payments were on ordinary market terms and would not impair the independent
judgment of Mr. Opperman;
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•
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Legacy Chemical Bank entered into an independent contractor agreement, effective July 1, 2018,
with Geld Capital, LLC, which is principally owned by one of our former directors, Richard Lievense, who resigned from
our Board on the Merger Date. Under the agreement, Geld Capital, LLC provided certain services to Insite Capital, LLC, a subsidiary
of TCF, for a fee of $40,000 per calendar quarter (which did not exceed $120,000 in the aggregate for 2019), during the term
of the agreement. The agreement terminated and Mr. Lievense ceased providing services on September 30, 2019; and
|
•
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The Board has also reviewed Director ownership of shares of common stock and preferred stock
of TCF and affirmatively determined that such ownership does not constitute a material relationship between any of those Directors
and TCF for purposes of Director independence because no such Director owns 10% or more of any voting class of outstanding
TCF securities.
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Which Directors are Independent?
Our Board, in coordination with our Nominating
Committee, evaluated the relevant relationships between each Director (and his or her immediate family members and affiliates)
and TCF and our subsidiaries and affirmatively determined that all of our Directors/Director nominees are independent, except for
Messrs. Dahl, Provost, and Torgow due to their employment with TCF. Specifically, the following 13 of our 16 Directors/Director
nominees are independent under Nasdaq listing rules and our categorical standards: Directors Bell, Grandstrand, King, Klein, Mahone,
McQuade, Opperman, Sit, Sullivan, Tate, Weiss, Wheatlake, and Wise. All members of the Audit, BSA and Compliance, Compensation,
Nominating, Finance, Risk, Strategic Initiatives and Technology Committees and the Risk Management Subcommittee are independent
under all applicable rules.
2020 Proxy
Statement
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19
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In addition, Messrs. Fitterling, Pelizzari, and
Stauffer resigned from the Board on the Merger Date. In 2019, our Board determined each was independent under Nasdaq listing rules
and all applicable rules for service on the Committees on which he served. Mr. Lievense, who also resigned from our Board
on the Merger Date, was not considered an independent director under Nasdaq listing rules.
Related Person Transactions
During 2019, TCF engaged in transactions in the
ordinary course of business with some of its Directors and executive officers, and entities with which they are associated. As
noted above under “What Transactions Were Considered Non-Material?”, all such transactions except as discussed below
were made in the ordinary course of business and all loans and leases with Directors, executive officers, and their related entities
were on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions
with others not related to TCF and did not involve more than the normal risk of collectability or present other unfavorable features.
On May 31, 2019, Legacy Chemical Bank and 28 Associates
LLC, a Michigan limited liability company, entered into a lease agreement for the development and lease of a new headquarters building
for Chemical Bank (now TCF Bank) in Detroit. 28 Associates is 50% owned by the five adult children of TCF’s Chair, Gary Torgow,
through their ownership of a member of 28 Associates, Park Elizabeth Associates LLC. The members of Park Elizabeth Associates are
Elie Torgow, Yoni Torgow, Rachel H. Torgow Krakauer, Moshe Torgow, and Jacob Torgow. Mr. Torgow recused himself from all Board
deliberations related to this agreement, and none of these adult children are directors, officers or employees of TCF or TCF Bank.
The Audit Committee of the Board (of which Mr. Torgow is not a member) also approved this lease agreement. Elie Torgow is also
the manager of 28 Associates and owns less than .01% of TCF’s outstanding common stock. The approximate aggregate value of
the interest of Mr. Torgow’s children in the development and lease transaction is equal to approximately 50% of the amounts
payable to 28 Associates thereunder. The lease agreement provides for a triple net lease by TCF Bank of a proposed office building
at the initial rate of $35 per rentable square foot for office space, or approximately $6,977,950 annually, and $50 per rentable
square foot for retail space, or approximately $190,050 annually, with two percent annual increases during the initial term. The
lease will have a term of 22.5 years and a rent commencement date of January 1, 2022. TCF Bank has four renewal options of 84 months
for each renewal option. The leased property will be approximately 421,481 square feet of gross area comprised of (a) a 203,171
square-foot building containing approximately (i) 199,370 square feet of rentable office space and (ii) 3,801 rentable square feet
of 1st floor retail space, and (b) a parking garage and related parking facilities, including without limitation, 311
parking spaces. The four renewal terms will be at 95% fair market rental, with two percent annual increases, provided the base
rent during each renewal term shall not be less than the immediately preceding lease year before commencement of each renewal term.
28 Associates, which owns the property, will remediate and improve the property and build the office building. TCF Bank will lease
the 311 parking spaces within the premises at an estimated monthly cost of $300 per spot, or $1,119,600 annually, provided that
up to 60 parking spaces may be subleased back by 28 Associates for the same amount, reducing the net leased parking spaces to 251,
or by $216,000 annually. TCF Bank will also retain all parking rental income realized at the property from event parking rental
services.
Related Person Transaction Approval Process
By written policy and regulation, loans to Directors,
executive officers or their immediate family members are submitted for review to the Board of Directors of TCF Bank as and to the
extent required by Regulation O. Transactions with Directors, executive officers or their immediate family members that present
a possible conflict of interest under the Code of Ethics are reviewed by the General Counsel and submitted to the Board where appropriate
or required under the Code of Ethics. In addition, the Audit Committee reviews and approves any related person transaction (as
defined in Item 404 of Regulation S-K) between TCF and Directors, Director nominees, executive officers and their immediate family
members or related companies.
The Board and the respective Committees are responsible
for reviewing and evaluating any transactions submitted to them and, where appropriate or otherwise required under applicable regulations,
for approving, denying, ratifying, or terminating such transactions. The Board, or a Committee of the Board, evaluates these transactions
and specifically determines whether or not they serve the best interest of TCF and its shareholders, whether they present a conflict
of interest for the affected person, and whether the relationship should be continued or eliminated. Any such action is reflected
in the minutes of the Board or the respective Committee.
2020 Proxy
Statement
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20
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Director Compensation
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TCF’s compensation of non-employee Directors
in 2019, including cash and other non-cash compensation, is shown in the following table. Messrs. Dahl, Provost and Torgow are
executive officers of TCF and do not receive any compensation for their service as Directors.
Name
|
|
Fees Earned or
Paid in Cash
($)(3)
|
|
|
Stock Awards
($)(4)
|
|
|
All Other
Compensation
($)(5)
|
|
|
Total
($)
|
|
Peter Bell(1)
|
|
$
|
66,250
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
66,250
|
|
James R. Fitterling(2)
|
|
$
|
105,000
|
|
|
$
|
80,813
|
|
|
$
|
5,999
|
|
|
$
|
191,812
|
|
Karen L. Grandstrand(1)
|
|
$
|
69,583
|
|
|
$
|
—
|
|
|
$
|
13,000
|
|
|
$
|
82,583
|
|
Richard H. King(1)
|
|
$
|
67,917
|
|
|
$
|
—
|
|
|
$
|
1,000
|
|
|
$
|
68,917
|
|
Ronald A. Klein
|
|
$
|
118,203
|
|
|
$
|
80,813
|
|
|
$
|
12,440
|
|
|
$
|
211,456
|
|
Richard M. Lievense(2)
|
|
$
|
97,500
|
|
|
$
|
80,813
|
|
|
$
|
4,771
|
(6)
|
|
$
|
183,084
|
|
Barbara J. Mahone
|
|
$
|
139,245
|
|
|
$
|
80,813
|
|
|
$
|
14,601
|
|
|
$
|
234,659
|
|
Barbara L. McQuade
|
|
$
|
94,870
|
|
|
$
|
80,813
|
|
|
$
|
10,742
|
|
|
$
|
186,425
|
|
Vance K. Opperman(1)
|
|
$
|
70,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
70,000
|
|
John E. Pelizzari(2)
|
|
$
|
112,500
|
|
|
$
|
80,813
|
|
|
$
|
7,251
|
|
|
$
|
200,564
|
|
Roger J. Sit(1)
|
|
$
|
67,917
|
|
|
$
|
—
|
|
|
$
|
20,000
|
|
|
$
|
87,917
|
|
Larry D. Stauffer(2)
|
|
$
|
85,000
|
|
|
$
|
80,813
|
|
|
$
|
6,927
|
|
|
$
|
172,740
|
|
Julie H. Sullivan(1)
|
|
$
|
67,917
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67,917
|
|
Jeffrey L. Tate
|
|
$
|
97,786
|
|
|
$
|
80,813
|
|
|
$
|
15,139
|
|
|
$
|
193,738
|
|
Arthur A. Weiss
|
|
$
|
119,870
|
|
|
$
|
80,813
|
|
|
$
|
6,061
|
|
|
$
|
206,744
|
|
Franklin C. Wheatlake
|
|
$
|
124,036
|
|
|
$
|
80,813
|
|
|
$
|
12,350
|
|
|
$
|
217,199
|
|
Theresa M.H. Wise(1)
|
|
$
|
76,917
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
76,917
|
|
(1)
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Legacy TCF Director whose service began on the Merger Date.
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(2)
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Legacy Chemical Director who resigned on the Merger Date.
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(3)
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Represents the aggregate dollar amount of all fees earned or paid in cash for services as
a Director, including the cash retainer, any committee and/or committee chair fees, Lead Director fee, and meeting fees, including
any fees voluntarily deferred.
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(4)
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Represents the grant date fair value computed in accordance with Financial Accounting Standards
Board Accounting Standards Codification, Topic 718 (“ACS 718”). The amounts reported represent the annual
equity retainer grants made to each Legacy Chemical Director in 2019 and deferred and invested in stock units representing
shares of common stock.
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(5)
|
Includes dividend equivalents paid in 2019 on stock units in the Directors’ Deferred
Stock Plan (“DDSP”), as well as community advisory fees paid in 2019 to Legacy Chemical Directors. As permitted
by SEC regulation, perquisites that in the aggregate total less than $10,000 are not included. This column also includes matching
charitable gift contributions by the TCF Foundation after the Merger Date on behalf of Directors. The material terms regarding
the matching charitable gift program are described below under “Material Information Regarding Directors’ Compensation.”
The amounts for Messrs. King, Klein, Sit, Tate, Wheatlake, and Mses. Grandstrand, Mahone, and McQuade, reflect $1,000, $10,000,
$20,000, $10,000, $10,000, $13,000, $10,000, and $7,445, in contributions, respectively, made in 2019 that were matched by
the TCF Foundation in 2019.
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(6)
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Does not include $120,000 in independent contractor fees paid by TCF Bank to Geld Capital,
LLC, which is principally owned by Mr. Lievense, as described in “Director Independence and Related Person Transactions”
above.
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2020 Proxy
Statement
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21
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Material Information Regarding Directors’
Compensation
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Upon completion of the
Merger, the Board undertook a review of director compensation in light of the significant increase in our size and the
complexity of our business. We engaged Pay Governance to perform a market analysis of director compensation for a financial
institution of our size. After reviewing this market analysis, the Compensation Committee recommended to the full Board that
to enable us to continue to retain and recruit qualified directors, it was in our best interests to revise the Board
compensation program, as follows, which the Board did effective as of August 1, 2019:
•
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The annual cash retainer was increased from $50,000 to $100,000.
|
•
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The annual equity retainer was increased from a grant date fair value of $80,813 to a grant
date fair value of $100,000, to be paid in the form of time-based restricted stock vesting one year from the grant date.
|
•
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Directors no longer receive additional compensation for service as Lead Director, Committee
member or Chair.
|
•
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The Chemical Financial Corporation Directors’ Deferred Stock Plan (DDSP) was terminated
effective December 31, 2019, and replaced by the Legacy TCF Directors Deferred Compensation Plan, which permits voluntary
deferrals of both cash and equity retainers.
|
•
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Following the Merger, in December 2019, we paid our Directors a “true-up” payment
equal to the sum of (a) their 2019 pre-Merger total earned compensation calculated by prorating their expected annual compensation
from their relative organization over a seven month period, plus (b) $83,333 representing the new $200,000/year cash and equity
compensation total prorated over five months, less (c) the value of any cash and equity paid to such director by their relative
organization before the Merger Date. This “true-up” payment was intended to harmonize the timing of compensation
which differed at Legacy Chemical and Legacy TCF and to avoid excess payments to either Legacy Chemical or Legacy TCF Directors.
|
The following terms represent the structure of
our Director compensation program:
Name
|
|
Effective prior to
August 1, 2019
|
|
|
Effective on
August 1, 2019
|
|
Annual Cash Retainer
|
|
$
|
50,000
|
|
|
$
|
100,000
|
|
Annual Equity Retainer
|
|
$
|
80,813
|
|
|
$
|
100,000
|
|
Lead Independent Director Retainer
|
|
$
|
30,000
|
|
|
$
|
—
|
|
Annual Cash Retainers for Audit Committee Service
|
|
$
|
25,000
|
(1)
|
|
$
|
—
|
|
|
|
$
|
12,500
|
(2)
|
|
|
|
|
Annual Cash Retainers for ALCO and Risk Management Committee
|
|
$
|
20,000
|
(1)
|
|
$
|
—
|
|
|
|
$
|
7,500
|
(2)
|
|
|
|
|
Annual Cash Retainers for Compensation and Pension Committee Service
|
|
$
|
20,000
|
(1)
|
|
$
|
—
|
|
|
|
|
10,000
|
(2)
|
|
|
|
|
Per Meeting Cash Retainer for BSA Committee Service
|
|
$
|
750
|
|
|
$
|
—
|
|
Annual Cash Retainers for Service on All Other Board Committees
|
|
$
|
15,000
|
(1)
|
|
$
|
—
|
|
|
|
|
7,500
|
(2)
|
|
|
|
|
•
|
Employee Directors (Messrs. Dahl, Provost, Torgow and formerly Shafer) are not
compensated for service as Directors.
|
•
|
Effective January 1, 2020, TCF offers the TCF Matching Gift Program to supplement
donations made by non-employee Directors to charitable organizations of their choice up to a maximum of $20,000 annually.
For 2019, we offered Legacy Chemical Directors only a match of up to $10,000.
|
•
|
Stock Ownership Guidelines:
|
|
–
|
Non-employee Directors are required to own shares of TCF common stock worth an
amount equal to five times their cumulative cash and equity retainers.
|
|
–
|
All shares of TCF common stock owned directly or indirectly by a Director will be considered
in determining whether the Stock Ownership Guidelines have been met. Stock options will not be counted toward the Stock Ownership
Guidelines.
|
|
–
|
Directors have until the fifth anniversary of their appointment to the Board to reach the
applicable target ownership level.
|
•
|
Indemnification rights are provided to Directors under TCF’s Articles of
Incorporation and Bylaws, to the fullest extent permitted under the Michigan Business Corporation Act, and through Directors
and Officers Insurance maintained by TCF.
|
•
|
TCF reimburses Directors for travel and other expenses to attend Board meetings
or attend to other Board business as a business expense.
|
2020 Proxy
Statement
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22
|
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Compensation Discussion and Analysis
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This Compensation Discussion and Analysis (“CD&A”)
describes our compensation programs, our underlying compensation philosophy and the fundamental elements of the compensation paid
to our named executive officers, or NEOs, whose 2019 compensation information is provided in the tables following this discussion.
In this proxy statement, our “named executive officers” are the individuals who served at any point during the fiscal
year as our principal executive officer or our principal financial officer, as well as our three other most highly compensated
executive officers in 2019, as set forth in the following table:
Named Executive Officers
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Executive
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Current Title
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Legacy Company and Pre-Merger Title
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Craig R. Dahl
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President and Chief Executive Officer
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Legacy TCF Chairman, President, and Chief Executive Officer
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David T. Provost
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Executive Vice Chairman
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Legacy Chemical President and Chief Executive Officer
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Dennis L. Klaeser(1)
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Executive Vice President, Chief Financial Officer
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Legacy Chemical Executive Vice President, Chief Financial Officer and Treasurer
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Gary Torgow
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Executive Chairman
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Legacy Chemical Executive Chairman
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Thomas C. Shafer(2)
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Chief Operating Officer of TCF Financial, and President and Chief Operating Officer
of TCF Bank
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Legacy Chemical Vice Chairman, Legacy Chemical Bank President and Chief Executive Officer
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Brian W. Maass(1)(2)
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Executive Vice President, Deputy Chief Financial Officer, Treasurer
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Legacy TCF Executive Vice President and Chief Financial Officer
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(1)
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Mr. Klaeser will be leaving
TCF in October 2020, at which time Mr. Maass will step into the role of Chief Financial Officer.
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(2)
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These executives received equity retention awards because they experienced a “Change
in Control” (as defined in their employment agreements) due to their change in title following our Merger, and would
have been able to terminate their employment, resulting in cash payments and the loss of their valuable expertise. For a detailed
description of these retention awards, see the discussion herein under “Compensation Highlights – Equity Retention
Awards.”
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Our Senior Leadership Structure
Our senior leadership team, comprised of our Executive
Chairman, Executive Vice Chairman and President & Chief Executive Officer has successfully developed and is executing on a
strategy to position TCF as a leader within the regional banking industry. This strategy includes: establishing an unmatched operating
platform, delivering organic growth through the consistent performance of our core businesses, investing in TCF’s strategic
growth drivers, and identifying and executing on strategic acquisitions that will enhance the Company’s long-term growth
prospects and shareholder value creation. Each of these senior leaders brings a unique skill set and deep industry knowledge that
the independent directors of the Board believe are vital to us successfully delivering on this strategy. As elected representatives
of shareholders, the independent directors of the Board are committed to achieving a return on this leadership structure by ensuring
a strong linkage between pay and performance.
2019 Highlights
2019 was a transformational year for us, with
our most significant accomplishment being the announcement and closing of our merger with Legacy TCF (the “Merger”),
creating a premier Midwest bank with $47 billion in total assets, top-10 deposit market share in our Midwest markets, and becoming
the 28th largest publicly traded bank holding company in the United States based on total assets at December 31,
2019. This partnership will accelerate value creation for our shareholders and deliver full-service solutions for our broader customer
base.
The Merger and subsequent integration are possible
through the efforts of the leadership team assembled from both banks. This team includes banking industry veterans and executives
who have deep acquisition and integration expertise, experience that is critical to the success of the Merger. The complementary
skillsets of executives from each company cannot be overstated, particularly given the complementary strengths of the respective
organizations.
While the Merger brought together two talented
groups of executives, retaining the right talent and creating a cohesive and high-functioning team was a unique challenge and opportunity.
This was in part due to the structure of the merger of equals partnership. Both companies were deemed to have experienced a change
in control that triggered provisions in contracts of key executives and employees. In order to retain the executives
2020 Proxy
Statement
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needed to make the Merger a success, both companies
worked together to develop a structure that we believe will engage and challenge the individuals necessary to make the Merger a
success, including each of our NEOs.
To create this structure, we started at the top,
with a Board of Directors composed of equal numbers of Legacy Chemical and Legacy TCF directors. We named Craig Dahl, an industry
veteran who had demonstrated the ability to grow significant businesses organically at Legacy TCF, as Chief Executive Officer of
the combined organization, while also naming David Provost, a talented executive with deep experience in bank mergers and integrations,
as Vice Chairman of TCF and Chairman of our bank subsidiary, in order to support a thorough and timely integration process. Through
the retention of both Dennis Klaeser, as our current Chief Financial Officer, and Brian Maass, as Mr. Klaeser’s successor,
we ensured continuity at the Chief Financial Officer position and retained two leaders with complementary skillsets who are working
together to ensure financial goals are realized through integration synergies. Tom Shafer, a banking industry veteran who has been
instrumental to both the development of our banking business and integration over the course of our numerous acquisitions, will
serve a pivotal role as Chief Operating Officer of TCF and President and Chief Executive Officer of TCF Bank, leveraging his strengths
of both integrating merged businesses and supporting continued business development efforts. Continuing to oversee the Board of
Directors is Gary Torgow, whose community involvement and strategic experience made the Bank what it is today.
Achieving this structure and retaining and motivating talented
executives following a merger is one of the most challenging and important things to do. We believe that we have struck the proper
balance to make our integration a success while continuing to focus on our core business. So far this has been an overwhelming
success. We were also able to accelerate the Merger, closing two months ahead of schedule on August 1, 2019
(the “Merger Date”), while still making great progress towards a successful integration, as exemplified by:
1)
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Being on track for integration activities and programs, including progress toward capturing our announced
expense synergies from the Merger;
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2)
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Sustaining the momentum that each bank had in its core businesses, which was demonstrated by our strong first full quarter
for the combined organization. These results included $1.0 billion of held-for-investment loan growth in the fourth quarter,
increasing by 2.9% for the quarter, or 11.6% annualized; and
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3)
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Completing numerous activities to position TCF for the future. This included completing the sale of the Legacy TCF auto
finance portfolio, announcing a transaction to divest our Arizona branch operations and focus on core market opportunities,
and repositioning the investment securities portfolio to enhance liquidity and improve capital efficiency.
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In 2019, we continued our practice of proactively
engaging with shareholders to solicit feedback on a variety of subjects, including business, compensation, and governance issues.
During the year, TCF management met with or engaged with investors representing over 75% of institutionally owned shares as of
December 31, 2019. We value these discussions as they provide thoughtful insight into the topics that are important to our shareholders,
and we have put this feedback into action, including amending our agreements with Messrs. Torgow and Provost in response to shareholder
feedback as described more fully below.
Overall, our investors have been supportive of
the Merger and our strategic vision for the future. In fact, TCF’s total shareholder return between the closing of the Merger
on August 1, 2019 and December 31, 2019 ranked #1 among the 14 banks in the 2019 Peer Group and #4 among the 18 banks in the post-Merger
2020 Peer Group, which is now more reflective of our larger asset size.
As we move into 2020, we will be focused on the
following strategic priorities:
1)
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Delivering on Merger cost savings;
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2)
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Continuing to grow organically and leveraging the best of both banks;
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3)
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Maintaining strong risk and credit culture; and
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4)
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Executing and completing our integration program.
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Compensation Highlights
In connection with the Merger, the Compensation
and Pension Committee (the “Compensation Committee”) determined that it was important to establish the compensation
for, and ensure the retention of, executive officers of the Company following the Merger. Therefore, in January 2019, the Compensation
Committee approved the retention agreements to be entered into with Messrs. Torgow and Provost, each to become effective on the
Merger Date.
After further review by the Compensation Committee,
consideration of shareholder input and to continue our philosophy of best practices in corporate governance, the Compensation Committee
determined that it was in the best interests of TCF and shareholders to eliminate Messrs. Provost and Torgow’s right to voluntarily
resign without Good Reason after 18 months following the Merger Date and receive full compensation for the remaining contract term.
As a result, on March 10, 2020, we entered into amended and restated retention agreements with Messrs Provost and Torgow eliminating
the provisions of the retention agreements related to cash severance payments and accelerated equity benefits upon retirement after
18 months following the Merger Date.
During 2019, the Compensation Committee also reviewed
the compensation of our other executive officers and entered into new agreements further described below under “Equity Retention
Awards” and “New Named Executive Officer Agreements.”
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Below is a summary of 2019 results and key actions
taken, which are more fully detailed in the CD&A below:
Merger-Related Adjustments to Our Common Stock
Structure
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Under the Merger Agreement, at the Merger Date, each Legacy TCF common shareholder had the right to
receive 0.5081 shares (the “Exchange Ratio”) of our common stock for each share of common stock of Legacy TCF.
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•
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At the Merger Date, each unvested and outstanding equity award granted under Legacy TCF’s equity plans (a “Legacy
TCF Equity Award”) was adjusted so that its holder was entitled to receive, subject to ongoing vesting criteria as enumerated
below, a number of shares of our common stock equal to the number of shares of Legacy TCF common stock subject to such Legacy
TCF equity award multiplied by the Exchange Ratio. For equity awards of ours and of Legacy TCF that were subject to performance-based
vesting, the number of shares of our and of Legacy TCF common stock underlying such awards was calculated and fixed as of
the Merger Date assuming achievement of the applicable performance conditions at the greater of the target (100%) level performance
and the actual level of achievement of such conditions based on our and Legacy TCF’s performance results through the
latest practicable date before the Merger Date, and such awards converted into service-based vesting awards with the applicable
vesting date to remain unchanged as the last day of the original performance period.
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Annual Incentive Plan and Metrics
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For 2019, the Compensation Committee established performance metrics under the Chemical Financial Corporation
Executive Annual Incentive Plan, which we refer to as our annual incentive plan, including corporate financial metrics (adjusted
core net income and adjusted efficiency ratio) and individual performance objectives.
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Each of our NEOs participated in our annual incentive plan in 2019 (except for Messrs. Dahl and Maass, whose employment
began on the Merger Date, and whose cash incentive awards were determined by Legacy TCF’s compensation committee as
described below).
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•
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For 2019, under our annual incentive plan, 80% of each participating NEO’s cash incentive awards were tied to the
corporate financial metrics established by the Compensation Committee and were measured through June 30, 2019, the most recently
completed quarter before the Merger Date, and were earned at 139.1% of target based on our performance through that date.
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The remaining 20% of the cash incentive awards were based on individual performance objectives and were determined based
on the Compensation Committee’s qualitative assessment of each participating NEO’s performance relative to their
individual goals for the year and were earned at 150% of target.
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•
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Messrs. Dahl and Maass were awarded a cash incentive award for 2019 under Legacy TCF’s 2019 Management Incentive
Plan (the “MIP”), based on Legacy TCF’s 2019 net income.In connection with the Merger, Legacy TCF’s
net income was calculated on a monthly basis through June 30, 2019, the last month practicable before the Merger Date, resulting
in the maximum payout of 200% of target, as determined by the Legacy TCF compensation committee, or 200% and 150% of
base salary earned for 2019 for Messrs. Dahl and Maass, respectively.
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Annual Long-Term Equity Incentive Awards
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In February 2019, we granted annual long-term equity incentive awards to our NEOs (except for Messrs.
Dahl and Maass, whose employment began on the Merger Date) under the Chemical Financial Corporation Stock Incentive Plan of
2017 (the “2017 Stock Plan”). These awards consisted of a mix of 60% performance-based restricted stock units,
or PRSUs, and 40% time-based restricted stock units, or TRSUs, as set forth in the table below. The TRSUs vest in 20% annual
increments over a period of five years. The performance metrics underlying the PRSUs were aggregate earnings per share and
relative total shareholder return compared to our peer group over a three-year performance period, vesting on the last day
of the performance period.
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•
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Because the Merger resulted in a change in control of the Company, under the terms of all outstanding PRSUs, performance
metrics were measured as of the latest practicable date before the Merger Date (which the Compensation Committee determined
was the most recently completed calendar quarter before the Merger), and the number of PRSUs was fixed at the greater of the
target (100%) performance level or actual performance, which we refer to as the “earned PRSUs,” and such earned
PRSUs are now subject only to time-based vesting requirements based on the NEO’s continued service through the applicable
performance period. For PRSUs granted in 2017, our adjusted diluted earnings per share was $3.53 and our relative total shareholder
return measured from January 2017 to June 30, 2019 was in the 16th percentile compared to the KBW Nasdaq Regional
Banking Index, each of which was below target performance. For PRSUs granted in 2018, our aggregate earnings per share was
$5.95, which was above maximum performance and weighted at 75% of the payout calculation, and our relative total shareholder
return measured from January 2018 to June 30, 2019 on a relative basis was in the 8th percentile compared to the
KBW Nasdaq Regional Banking Index, which was below target performance and weighted at 25% of the payout calculation. For PRSUs
granted in 2019, our aggregate earnings per share was $2.03, which was above maximum performance and weighted at 75% of the
payout calculation, and our relative total shareholder return measured from January 2019 to June 30, 2019 on a relative basis
was in the 20th percentile compared to the KBW Nasdaq Regional Banking Index, which was below target performance
and weighted at 25% of the payout calculation. Consequently, the PRSUs granted in 2017, 2018 and 2019 were converted into
earned PRSUs at rates equal to 100%, 112.5% and 100% of the target number of shares, respectively, and vest(ed) on December
31, 2019, 2020 and 2021, subject to the NEO’s continued service through the end of the applicable performance period.
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2020 Proxy
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•
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In each of 2017, 2018, and 2019, Messrs. Dahl and Maass were each granted equity incentive awards by
Legacy TCF under Legacy TCF’s 2015 Omnibus Incentive Plan, consisting of time-based restricted stock and PRSUs based
on Legacy TCF’s three-year total shareholder return compared to its peer group for that year. Under the Merger Agreement,
performance metrics were measured on all Legacy TCF PRSUs outstanding on the Merger Date and the number of earned PRSUs, which
remain subject to time-based vesting requirements was fixed at the greater of the target (100%) performance level or actual
performance measured through the latest practicable date before the Merger Date, subject to time-based vesting requirements,
and assumed by us in the Merger (as adjusted for the Exchange Ratio). Legacy TCF total shareholder return through July 15,
2019 since January 1, 2017, 2018, and 2019, was 11.68%, 4.81% and 7.48%, respectively, ranking 4th of 21,
3rd of 21 and 13th of 20 among the 2017, 2018 and 2019 peer groups, respectively, and resulting in PRSUs
granted in 2017 and 2018 converting into earned PRSUs at 150% of the target number of shares and PRSUs granted in 2019 being
converted into earned PRSUs at 100% of the target number of shares. Since vesting was not accelerated, earned PRSUs granted
by Legacy TCF in 2017, 2018 and 2019 will vest on December 31, 2019, 2020, and 2021, respectively, subject to the NEO’s
continued service through the end of the applicable performance period.
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Approximate Grant Date Fair Value
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2019 Annual LTI
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Executive
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PRSUs(1)
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TRSUs
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2019 Total LTI
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Craig R. Dahl(2)
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—
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—
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—
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David T. Provost
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$
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1,140,000
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$
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760,000
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(3)
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$
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1,900,000
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Dennis L. Klaeser
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$
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360,000
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$
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240,000
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$
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600,000
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Gary Torgow
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$
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1,140,000
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$
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760,000
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(3)
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$
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1,900,000
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Thomas C. Shafer
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$
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570,000
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$
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380,000
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$
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950,000
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Brian W. Maass(2)
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—
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—
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—
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(1)
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Amount shown is the target amount of the 2019 Annual LTI award.
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(2)
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Messrs. Dahl and Maass did not receive any long-term equity incentive grants from the Company in 2019 due to their
employment beginning on the Merger Date. Messrs. Dahl and Maass each received long-term equity awards from Legacy TCF that
were subsequently converted to TRSUs of the Company with a grant date fair value of $1,839,840 for Mr. Dahl and $546,212 for
Mr. Maass. Mr. Maass also received a long-term equity retention award with a grant date fair value of $2,500,011. See the
discussion under “TCF and Legacy TCF Combined 2019 Total Compensation” in this CD&A.
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(3)
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In February 2019, the Compensation Committee determined that to more closely align the interests of Messrs. Provost
and Torgow with those of our shareholders, it would exercise its discretion under the annual incentive plan not to award a
cash incentive payment for 2018 to either Messrs. Provost or Torgow. At that time, the Compensation Committee awarded each
of Messrs. Provost and Torgow TRSUs under the 2017 Stock Plan with a grant date fair value equal to approximately $950,000,
which approximated the target amount each executive would have been eligible to receive in 2018 under the annual incentive
plan. This award of TRSUs is not included in this table, as it was not part of our 2019 Annual LTI award.
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Equity Retention Awards
We believe that retaining our key leadership and
talent is critical to our successful integration and to supporting our future growth. Because the Merger was a merger of equals,
certain of our NEOs, including Messrs. Shafer and Maass, experienced a change in control event under their employment or change
in control agreements, and would have been able to terminate their employment for “Good Reason”, which would have resulted
in cash severance payments to Messrs. Shafer and Maass and the loss of their valuable expertise and services.
The Compensation Committee determined that it
was important not to incentivize key talent to leave based on payments that certain executives were entitled to receive if they
voluntarily elected to terminate their employment following the Merger. Separately, the Compensation Committee adopted an executive
retention strategy to incentivize leaders to remain with the Company and focus on working toward a successful integration and implementation
of our key strategic initiatives following the Merger. As part of this retention strategy, the Compensation Committee granted an
equity retention award with a grant date fair value of $4,184,583 to Mr. Shafer which was determined by: (i) calculating his potential
cash severance payment related to the Merger under his employment agreement, (ii) increasing that amount by 25%, and (iii) awarding
him TRSUs in that amount, with 50% vesting based on his continued service through the first anniversary of the Merger Date, and
50% vesting based on his continued service through the second anniversary of the Merger Date. Mr. Shafer also executed a new
employment agreement which excludes his right to receive a severance payment with respect to the Merger or if he otherwise experiences
a qualifying termination (as discussed below under “New Named Executive Officer Agreements”) within two years of the
Merger Date. Similarly, in connection with Mr. Maass’ salary increase after being named our future Chief Financial Officer
effective October 1, 2020, Mr. Maass was also granted an equity retention award of TRSUs with a grant date fair value of $2,500,011
that will vest equally in 2020 and 2021, subject to his continued service through the vesting date. Mr. Maass also executed a new
employment agreement on December 13, 2019 which excludes his right to terminate his employment and receive a change in control-related
severance payment with respect to the Merger.
Messrs. Dahl, Torgow, Provost and Klaeser did
not receive equity retention awards.
New Named Executive Officer Agreements
In 2019, we entered into new employment agreements,
letter agreements or retention agreements with each of our NEOs with terms that we believe are in the best interests of the Company
and our shareholders. Despite doubling in size following our Merger and increases in responsibility and complexity, our executive
compensation has remained largely unchanged. In attracting and retaining a talented executive team, we believe we have positioned
TCF to successfully execute our growth strategy and vision.
2020 Proxy
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•
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On January 27, 2019, in connection with the Merger, we entered into retention agreements with Messrs.
Provost and Torgow, which became effective on the Merger Date and replaced their prior employment agreements. These retention
agreements provide, among other things, that Mr. Provost will serve as Executive Vice Chair of the Board of the Company and
Chair of the Board of TCF Bank, and Mr. Torgow will serve as the Executive Chair of the Board of the Company, each of their
base salaries were left unchanged at $950,000, and each executive will receive certain severance payments and benefits in
the event either executive (i) experiences a “Termination Without Cause” (as defined in each retention agreement),
(ii) terminates his employment for “Good Reason” (as defined in each retention agreement), or (iii) terminates
his employment without Good Reason at least 18 months following the Merger Date (as set forth below, this last provision was
eliminated in March 2020).
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In March 2020, the Compensation Committee determined that it was in the best interests of the Company and shareholders
to eliminate the right of Messrs. Provost and Torgow to voluntarily resign without Good Reason after 18 months following the
Merger Date and receive full compensation for the remaining contract term. As a result, on March 10, 2020, we entered into
amended and restated retention agreements with them eliminating the provisions of the retention agreements related to cash
severance payments and accelerated equity benefits upon retirement after 18 months following the Merger Date.
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•
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On July 31, 2019, we entered into a new employment agreement with Mr. Shafer that replaced his prior employment agreement.
Under his new employment agreement, in the event of a termination by TCF without “Cause,” or by Mr. Shafer with
“Good Reason” (each as defined in his new employment agreement and each a “qualifying termination”),
he is entitled to receive certain severance payments and benefits; except that, he will not be entitled to such severance
payments if he experiences a qualifying termination within two years of the Merger Date. If Mr. Shafer experiences an otherwise
qualifying termination within two years following a “Change in Control” (as defined in his new employment agreement,
and excluding the Merger), or within six months before the date of a Change in Control, we will pay him certain severance
payments and benefits. Mr. Shafer’s employment agreement provides he will serve as Chief Operating Officer of TCF Financial,
and President and Chief Operating Officer of TCF Bank, and left unchanged his base salary of $950,000.
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•
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On November 6, 2019, we amended and restated our agreement with Mr. Dahl to align certain terms related to termination
benefits with those of other executive officers of the Company. Mr. Dahl’s agreement provides that he will serve as
President and Chief Executive Officer of the Company and as Chief Executive Officer of TCF Bank, and left unchanged his base
salary of $1,050,000.
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•
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On December 13, 2019, we entered into a letter agreement with Mr. Klaeser that supplements his current employment agreement
dated as of July 1, 2018, and provides that Mr. Klaeser will remain employed by TCF as TCF’s Chief Financial Officer
through October 1, 2020, at which time (unless his employment is earlier terminated for cause or due to death or disability),
he will incur a “Termination Without Cause” (as defined in his employment agreement) and he will be entitled to
receive his “Change in Control Severance Pay” (as defined in and previously provided for in his employment agreement).
Under the letter agreement, Mr. Klaeser will also receive equity grants in 2020 at a level not less than the target levels
set forth in his employment agreement, and his outstanding equity awards will vest on October 1, 2020. In addition, Mr. Klaeser
will receive a pro rata bonus for 2020.
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•
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On December 13, 2019, in connection with the retention of Mr. Maass, and his appointment as
Chief Financial Officer to be effective on October 1, 2020, we entered into an employment agreement with Mr. Maass that
replaced his prior change in control agreement with Legacy TCF. Under the employment agreement, he receives an annual
base salary of $575,000 effective as of December 13, 2019, subject to annual review and adjustment, and is entitled to
participate in our equity-based compensation programs and annual incentive programs. Under his new employment agreement,
in the event of a termination by TCF without “Cause,” or by Mr. Maass with “Good Reason” (each as
defined in his employment agreement), he is entitled to receive certain severance payments and benefits.
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These agreements with our NEOs are described in
more detail below under “Employment, Retention and Equity Award Agreements” and “Grants of Plan-Based Awards
Table.” As noted above, each of these agreements includes certain severance payments upon termination of employment, and
our employment agreements with Messrs. Dahl, Klaeser, Shafer and Maass include “double trigger” severance benefits
in connection with a change in control of the Company if we terminate the officer’s employment without cause or the executive
terminates his employment for good reason in connection with a change in control. For a detailed description of the severance and
change in control benefits applicable to our NEOs, see the discussion below under “Potential Payments Upon Termination or
Change in Control.”
Overview
of Our Executive Compensation Program
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Our executive compensation program is
aligned with our growth-oriented business strategy and is designed to drive short- and medium-term performance results as
well as long-term, shareholder value creation. We provide pay packages to our executives that are intended to compensate
fairly, attract the best leaders to the Company, and engage and motivate them to deliver strong results.
The Compensation Committee considers peer group
market data and the advice of its independent consultant when establishing compensation packages for executives or making decisions
related to incentive plan design. We seek to create an appropriate mix of cash and non-cash compensation, short and long-term incentives,
and fixed and at-risk compensation to balance internal priorities with shareholder expectations, short-term
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results with long-term vision
and stability with innovation. The Compensation Committee believes that performance expectations should be clearly articulated
and directly tied to compensation outcomes. Our executive pay program consists of a number of practices explicitly designed to
promote good governance and is comprised of three major elements: base salary, annual cash incentive awards, and long-term equity
incentive awards. For a detailed description of these elements and the objectives of each element, see the discussion below under
“Compensation of Named Executive Officers”.
Compensation Program Governance
WHAT WE DO
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WHAT WE DON’T DO
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We tie the majority of our NEO compensation to performance
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Our incentive programs do not encourage excessive risk taking
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Our change-in-control provisions require a double-trigger
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We prohibit hedging or pledging of our securities by our executives
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We maintain strong stock ownership guidelines of 5x salary for our Chief Executive Officer, and 3x salary for our other NEOs
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Our equity plan does not allow repricing of underwater options without shareholder approval
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We have appropriate caps on incentive plan payouts
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We do not provide excise tax gross-ups
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Our Compensation Committee is comprised entirely of independent directors
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Our Compensation Committee engages an independent consultant
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Our Compensation Committee regularly meets in executive session without management present
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We perform an annual risk assessment of our compensation program
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Objectives and Philosophy
Our philosophy on executive
compensation is to align the interests of our executive management with the interests of our shareholders and to ensure that the
total compensation paid to our executive officers is reasonable, motivating and competitive. We also recognize the need to differentiate
compensation by individual, reflecting on his or her role, experience, performance, and expected contributions.
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Guiding Principles
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Align Executive Compensation with Shareholder Value Creation
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Within our overall compensation strategy, we use equity-based compensation to
align the financial interests and objectives of our NEOs with those of our shareholders.
In addition, our annual and long-term incentive goals and payouts are designed so that
target and above-target compensation levels are achieved only when our financial and relative
market performance indicate that intrinsic value has been created.
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Attract, Retain and Motivate High-Performing Executive Talent
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We operate in a competitive employment environment and our employees, led
by our NEOs, are essential to our success. The compensation of our NEOs, while designed
to be competitive within the marketplace for similar positions with bank holding companies
of comparable size, is also designed to motivate the NEOs to achieve high performance
for the Company. We believe that our high-performing executives should receive compensation
that reflects their value to our organization and retains them in our service.
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Link Pay to Performance
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Our compensation program is designed to provide a strong correlation between
the performance of the NEOs and the compensation the NEOs receive. We accomplish this
by including compensation elements that are designed to reward our NEOs based on our overall
performance and the executives’ achievement of the performance priorities established
by the Compensation Committee.
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Manage Risk
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|
We employ features to mitigate against our executives taking excessive risk in
order to maximize payouts, including varied and balanced performance targets, discretionary
authority of the Compensation Committee to reduce award pay-outs, maximum caps on annual
incentive payments, and an incentive compensation recoupment, or “clawback”
policy.
|
2020 Proxy
Statement
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28
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2019 Say-on-Pay Vote Results
At our 2019 annual
meeting of shareholders, approximately 96% of the votes cast on the Say-on-Pay proposal were in favor of approving the
resolution. The Compensation Committee considers the results of this advisory resolution when evaluating and establishing our
executive compensation programs. The Compensation Committee believes that these voting results reflect strong confidence in
our board to exercise good judgment in structuring a thoughtful executive compensation program that benefits our
shareholders. The Compensation Committee intends to continuously improve our executive compensation arrangements and programs
to meet evolving business conditions, address retention concerns and ensure consistent alignment with shareholder
interests.
Compensation Decision-Making Process
|
|
|
Role of the Compensation Committee
The Compensation Committee
assists the Board of Directors in discharging its responsibilities relating to executive compensation and in fulfilling its responsibilities
relating to our compensation and benefit programs and policies. Under the Compensation Committee Charter, the Compensation
Committee is responsible for reviewing and approving total compensation, including base salary, bonus, annual cash incentive awards,
long-term incentive awards, benefits and other compensation of our Chief Executive Officer and all other executive officers of
the Company. The Compensation Committee is also responsible for, among other things:
•
|
Annually reviewing and approving the corporate and individual goals and objectives relevant in setting the compensation of our Chief Executive Officer;
|
•
|
Annually reviewing and approving the compensation of our other executive officers;
|
•
|
Reviewing, recommending and approving the design of retirement, stock incentive, cash incentive, welfare and other compensation and benefit plans and administering such plans as approved by the board, subject to the provisions of each plan; and
|
•
|
Reviewing, recommending and approving employment agreements and other arrangements for executive officers.
|
The Compensation Committee
currently consists of six directors, all of whom are independent under Nasdaq listing rules.
Role of Leadership
The Compensation Committee
calls upon our executive leadership team from time to time to support the Compensation Committee in the fulfillment of its duties.
Executive leadership provides recommendations related to a number of matters that are subject to the Compensation Committee’s
review and approval, including the compensation of executive officers other than the Chief Executive Officer, the design of our
incentive plans and the financial goals on which these incentive plans are based. The Compensation Committee retains absolute discretion
in determining whether to approve recommendations made by our executive leadership.
Role of Compensation Consultants
Since November 2018, the
Compensation Committee has retained Pay Governance LLC (“Pay Governance”) to serve as independent compensation consultant.
In its role, Pay Governance has consulted with the Compensation Committee and has provided information on peer group selection,
market analysis for executive compensation, and has reviewed our incentive plans. Pay Governance also consulted with the Compensation
Committee on post-Merger compensation for NEOs and Directors of the combined company. Representatives of Pay Governance attend
Compensation Committee meetings and communicate with the Chair of the Compensation Committee between meetings as necessary. The
Compensation Committee makes all final decisions with respect to compensation matters. Pay Governance has been and will only be
engaged for compensation-related services performed for the Compensation Committee.
The Compensation Committee
conducted a review of its relationships with Pay Governance and determined that their work did not create any conflicts of interest.
The Compensation Committee also determined that Pay Governance is independent under the criteria included in Nasdaq listing standards.
During 2019, the Compensation
Committee used compensation analyses prepared by Pay Governance in determining NEO compensation before and after our Merger, which
analyzed each element of compensation, as well as total compensation and included comparisons to peer data to assist with determining
whether the objectives of our executive compensation program are being met. The Compensation Committee reviewed the analyses to
ensure that the compensation of each NEO was sufficiently tied to our financial performance, and made adjustments to compensation
as it deemed appropriate. In light of the Merger, the Compensation Committee also reviewed outstanding equity and change in control
severance payments that each NEO would receive in the event of various termination and change in control scenarios to determine
retention bonuses.
2020 Proxy
Statement
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29
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Compensation Risk Assessment
The Compensation Committee
annually evaluates our compensation programs to assess whether our programs, by design or administrative process, would facilitate
or encourage excessive risk-taking by executives or other employees. In 2019, following the Merger, the Compensation Committee
reviewed materials regarding both our and Legacy TCF compensation programs, including a report of our incentive compensation risk
officer, and concluded that our compensation programs are not reasonably likely to have a material adverse effect on the Company.
With respect to our executive compensation programs specifically, the Compensation Committee based its conclusion, in part, on
the fact that our programs contain the following design elements:
•
|
the amounts that may be earned under annual and long-term incentive awards are capped, which diminishes the potential reward of excessive risk taking;
|
•
|
financial metrics for incentive awards are aligned with our financial goals and strategic plan and are both challenging and reasonable, which motivates our executives to take appropriate actions, rather than risky or excessive ones, to achieve those goals; and
|
•
|
stock ownership guidelines require executives to have significant “skin-in-the-game,” creating a disincentive for imprudent decision-making.
|
In addition to the above
considerations, best practices we employ to mitigate executive compensation risk include: a policy prohibiting the hedging and
pledging of stock by executives and directors, multi-year vesting of equity awards, and double-trigger change of control arrangements.
Competitive Market Analysis
Our Compensation Committee
compares our executive compensation levels and programs to a group of like peer companies. The Compensation Committee reviews
peer group market data and practices at least annually, and evaluates it as one important reference point when making decisions.
The Compensation Committee meets at least once annually in executive session to review market assessments provided by its independent
consultant for certain executives, including NEOs.
2019 Peer Group
Each year the Compensation
Committee works with our independent compensation consultant to review compensation for executive positions within a designated
peer group of companies to ensure the overall appropriateness and competitiveness of our compensation levels and programs. The
Compensation Committee generally does not, however, set compensation components to meet specific benchmarks as compared to a peer
group, such as targeting salaries at a specific percentile or range with respect to our peer group.
From January 1, 2019 through
the Merger Date, our Peer Group consisted of the following 16 companies:
2019 Legacy Chemical Peer Group
|
• BancorpSouth,
Inc.
|
• IBERIABANK
Corporation
|
• Trustmark
Corporation
|
• BankUnited,
Inc.
|
• MB
Financial, Inc.
|
• UMB
Financial Corporation
|
• F.N.B.
Corporation
|
• Old
National Bancorp
|
• United
Bankshares, Inc.
|
• Flagstar
Bancorp, Inc.
|
• TCF
Financial Corporation
|
• Valley
National Bancorp
|
• Fulton
Financial Corporation
|
• Texas
Capital Bancshares, Inc.
|
|
• Hancock
Holding Company
|
• TFS
Financial Corp
|
|
In connection with the Merger,
the Compensation Committee engaged Pay Governance to review our peer group and recommend a new peer group to account for changes
in size and other aspects of the organization following the Merger. Our 2020 peer group was developed from a group of publicly
traded financial institutions with assets between approximately 0.4 and 2.5 times that of TCF following the Merger. These companies
were compared against TCF based on key metrics including assets, market capitalization, revenue, balance sheet composition, branch
and employee profile, and other financial metrics. Each peer received a score for each metric based upon numerical criteria, the
highest scoring companies that most closely resemble TCF on the evaluation criteria were selected to determine the final peer group.
2020 Peer Group
Based on the application
of the process described above, following the Merger we adopted the following 2020 Peer Group:
2020 Peer Group
|
• Associated Banc-Corp
|
• First Citizens BancShares, Inc.
|
• M&T Bank Corporation
|
• BankUnited, Inc.
|
• First Horizon National Corporation
|
• People’s United Financial, Inc.
|
• CIT Group Inc.
|
• First Republic Bank
|
• Regions Financial Corporation
|
• Comerica Incorporated
|
• Huntington Bancshares Incorporated
|
• Synovus Financial Corp.
|
• East West Bancorp, Inc.
|
• IBERIABANK Corporation
|
• Valley National Bancorp
|
• F.N.B. Corporation
|
• Keycorp
|
• Zions Bancorporation, N. A.
|
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30
|
Our total assets as of December
31, 2019 were slightly below the median of the 2020 Peer Group while our total revenue in the fourth quarter of 2019 (annualized)
was above the median of the 2020 Peer Group, as shown below. Total assets for the 2020 Peer Group ranged from $31.7 billion to
$145.0 billion while total revenue ranged from $0.9 billion to $6.5 billion.
Source: S&P Global Market Intelligence
Compensation of Named Executive
Officers
|
|
|
The compensation of our NEOs
primarily consists of base salary, annual cash incentives and long-term equity awards. The amount and mix of these elements are
individually calibrated to each executive based on his or her level of responsibility and expected impact on our results. Executives
also participate in our retirement plans, and may receive discretionary awards to recognize extraordinary performance as approved
by the Compensation Committee. Each component of compensation is intended to accomplish one or more of the compensation objectives
discussed below.
Compensation
Component
|
Objective
|
Determination
|
Base Salary
|
Provide a measure of income stability competitive with organizations of comparable size and complexity to allow executives to focus on the execution of our strategic goals and to attract and retain highly qualified NEOs.
|
The Compensation Committee reviews base salary market practices at least annually through the use of a peer group comparative analysis and an analysis prepared by its compensation consultant. The Compensation Committee reviews the base salaries of the NEOs individually and uses a variety of peer data in determining salary levels.
|
Annual Cash Incentive Awards
|
Designed to (i) encourage, recognize and reward achievement of annual corporate financial metrics and individual performance objectives, (ii) reward NEOs for shareholder value creation, and (iii) align NEO and shareholder interests.
|
Annual cash incentive awards are contingent upon TCF and/or individuals achieving predetermined performance metrics. The performance metrics are based on one or more performance criteria chosen by the Compensation Committee from a list of measures set forth in the annual incentive plan.
|
Long-Term Equity Incentive Awards
|
Designed to reward NEOs for shareholder value creation, to align NEO and shareholder interests, and to retain and motivate talented NEOs. Long-term incentives are equity-based and are provided under shareholder-approved plans that permit us to grant a variety of equity-based awards, including restricted stock, restricted stock units, and stock options.
|
Long-term incentives are generally determined using a formula- based approach further described below under “Compensation of Named Executive Officers – NEO Pay Determinations – 2019 Long-Term Equity Compensation.” The size, form and performance criteria, if any, of long-term incentive awards are determined by the Compensation Committee based on a number of factors, including its evaluation of market practice, base salary, length of service, responsibilities of the NEO, ownership of TCF common stock and the quantity, amount, and vesting schedule of previous grants.
|
NEO Pay Determinations
In overseeing executive compensation,
the Compensation Committee seeks to construct a compensation structure that will attract and retain highly qualified executives
by providing compensation that is competitive relative to those companies with which we compete for executive talent. The Compensation
Committee also believes strongly in linking compensation paid to each NEO to performance.
In determining compensation,
the Compensation Committee considers a number of factors, including, among others, overall performance in the areas of scope of
responsibility, management and communication skills, department objectives, leadership qualities, innovation and creative abilities,
risk controls and difficulties encountered in achieving results, as well as specified corporate financial metrics. The Compensation
Committee uses competitive market data as a reference point when setting each component of compensation and target compensation
levels, but ultimately uses its own business judgment and expertise to determine the appropriate components and levels of compensation
for our executive officers, including the NEOs. After evaluating these factors and taking the Chief Executive
2020 Proxy
Statement
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|
31
|
Officer’s recommendations
into consideration, the Compensation Committee establishes base salary levels, annual cash incentive opportunities and long-term
incentive awards for each NEO other than the Chief Executive Officer. A similar process is followed by the Compensation Committee
in determining the Chief Executive Officer’s compensation.
Base Salary
The Compensation Committee
generally attempts to set base salaries at levels which it believes are appropriate to attract and retain highly qualified executives
using data provided by its compensation consultant and other sources, as appropriate. In 2019, we entered into new employment agreements,
letter agreements, or retention agreements with each of our NEOs. Each of these employment agreements or retention agreements,
as applicable, set the executive’s base salary, subject to annual review by the Compensation Committee (other than Mr. Klaeser,
whose base salary remained unchanged). When determining the base salaries under each executive’s new employment agreement
or retention agreement, as applicable, the Compensation Committee also considered a variety of factors for each executive, including:
•
|
individual performance, skills and achievements;
|
•
|
level of experience and corresponding current compensation, if applicable; and
|
•
|
ability to contribute to our performance.
|
2019 Annual Cash Incentive Plan
We provide an annual cash-based incentive plan
in which our executive officers participate because we believe it is a critical tool for:
•
|
holding executive leadership accountable for the financial results of the organization;
|
•
|
rewarding and reinforcing the behaviors and achievements that produce positive financial results; and
|
•
|
hiring and retaining the best executive talent in the banking industry.
|
Under our annual incentive
plan, each year the Compensation Committee selects eligible executives who will participate in the annual incentive plan and sets
the amount of each participant’s threshold, target and maximum award that can be awarded under the annual incentive plan,
determined as a percentage of the participant’s base salary. The Compensation Committee also establishes one or more performance
measures and a formula to determine the amount of the award that will be earned at different levels of achievement of the performance
measures. For 2019, the Compensation Committee set the potential incentive payment, expressed as a percentage of base salary, as
follows (except in the case of Messrs. Dahl and Maass, whose opportunities were set and approved by the Legacy TCF compensation
committee and assumed by us as a condition of the Merger).
Name
|
|
Salary
|
|
Threshold
(% of salary)
|
|
Threshold
Incentive
Payment
($)
|
|
Target
(% of salary)
|
|
Target
Incentive
Payment
($)
|
|
Maximum (%
of salary)
|
|
Maximum
Incentive
Payment ($)
|
Craig R. Dahl(1)
|
|
$
|
1,019,615
|
|
50%
|
|
$
|
509,808
|
|
100%
|
|
$
|
1,019,615
|
|
200%
|
|
$
|
2,039,230
|
David T. Provost(2)
|
|
$
|
950,000
|
|
50%
|
|
$
|
475,000
|
|
100%
|
|
$
|
950,000
|
|
150%
|
|
$
|
1,425,000
|
Dennis L. Klaeser(2)
|
|
$
|
750,000
|
|
40%
|
|
$
|
300,000
|
|
80%
|
|
$
|
600,000
|
|
120%
|
|
$
|
900,000
|
Gary Torgow(2)
|
|
$
|
950,000
|
|
50%
|
|
$
|
475,000
|
|
100%
|
|
$
|
950,000
|
|
150%
|
|
$
|
1,425,000
|
Thomas C. Shafer(2)
|
|
$
|
950,000
|
|
50%
|
|
$
|
475,000
|
|
100%
|
|
$
|
950,000
|
|
150%
|
|
$
|
1,425,000
|
Brian W. Maass(1)
|
|
$
|
482,885
|
|
37.5%
|
|
$
|
181,082
|
|
75%
|
|
$
|
362,164
|
|
150%
|
|
$
|
724,328
|
(1)
|
Represents Form W-2 wages paid by Legacy TCF prior to the Merger Date and then by TCF following the Merger, Messrs. Dahl and Maass began their employment on August 1, 2019 and did not participate in our annual incentive plan for 2019. Each of their cash incentive payments was awarded by Legacy TCF pursuant to Legacy TCF’s 2019 MIP and is described below.
|
(2)
|
Potential incentive payments are based on the executive’s December 31, 2019 base salary, as the Compensation Committee determined that each executive would receive the benefit, on a relative basis, for increases in base salary that occurred after the potential incentive payments were determined in February 2019.
|
2019 Performance Metrics
Annual Incentive Plan Metrics
Under the annual incentive
plan, the Compensation Committee is responsible for establishing the corporate and individual performance measures that, when compared
to actual results, determine the amount of payout that is earned with respect to the annual incentive plan. In setting these goals,
the Compensation Committee considers a number of factors, including our annual budget, our short- and long-term business strategy,
investor performance expectations, and guidance provided by our executive leadership team. In the first quarter of 2019, the Compensation
Committee determined that the performance measures under the annual incentive plan for each NEO (except for Messrs. Dahl and Maass,
whose employment began on the Merger Date and who participated in Legacy TCF’s 2019 MIP) would consist of corporate financial
metrics weighted at 80% and individual performance metrics weighted at 20%.
The 2019 corporate financial
metrics, weighted at 80%, were (a) adjusted core net income (weighted at 80% of the corporate metrics), and (b) adjusted efficiency
ratio (weighted at 20% of corporate metrics). The Compensation Committee believes these metrics reflect the most reliable, comprehensive
financial indicators of our performance relative to our key 2019 strategic priorities of increasing profitable loan growth and
improving our operating efficiency. The corporate financial metrics were set at levels representing growth and improvement over
2018, and generally corresponded to our budgeted financial plan.
2020 Proxy
Statement
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32
|
The Compensation Committee
established threshold, target and maximum performance goals for each of the two corporate financial metrics for 2019, with threshold
representing the minimum level of performance for which the executive officer would earn a payment. For performance below the threshold
level for one of the corporate financial metrics, the executive officer would not earn a payment for that metric; however, each
metric is independently evaluated for purposes of determining payments. Maximum represents the level of performance required to
achieve the maximum payment on each of the metrics. If performance exceeds the maximum level for any corporate or individual performance
metric, the executive officer will not earn a further incentive above the maximum incentive for such metric. Actual performance
between threshold, target and maximum performance levels is interpolated linearly to determine the exact level of achievement,
as shown below:
In connection with the Merger,
the 2019 corporate financial metrics, weighted at 80%, were determined as of the most recently completed quarter before the Merger.
A 12-month target goal was established at the beginning of 2019. In anticipation of the Merger being completed mid-year, the Compensation
Committee assessed quarterly targets due to seasonal volatility during the year and set a 6-month target as of June 30, 2019 in
light of the first and second quarter targets (as opposed to taking a pro-rata portion of an annual target). The remaining 20%
of each NEO’s possible payout under the annual incentive plan (excluding Messrs. Dahl and Maass) related to individual performance
metrics and was evaluated at year-end. The individual performance objectives that the Compensation Committee considered were based
on non-formulaic objectives, such as the implementation of actions to achieve revenue growth and profitability, managing the integration
process, improving practices related to risk management, engaging in leadership development, and continuing to build the TCF brand
and culture.
Legacy TCF MIP Metrics
Messrs. Dahl and Maass did
not participate in our annual incentive plan, but were awarded a cash incentive award for 2019 by Legacy TCF under Legacy TCF’s
2019 MIP, the amount of which was based on Legacy TCF’s net income achievement relative to incentive plan goals. Legacy TCF’s
compensation committee determined that net income was the most appropriate metric due to operational and strategic uncertainties
created by the potential Merger. Pursuant to the 2019 MIP, Legacy TCF net income was calculated on a monthly basis through June
30, 2019, the last month practicable before the Merger Date, and compared to monthly targets set by Legacy TCF’s compensation
committee in January 2019. Because Legacy TCF experienced seasonally variable income during the year, financial targets were set
by month rather than simply taking a pro-rata portion of an annual target. Based on these monthly targets, for the period ended
June 30, 2019, the target achievement was $161.3 million, with the threshold and maximum amounts being $155.7 million (96.5% of
target) and $166.9 million (103.5% of target), respectively. Through June 30, 2019, Legacy TCF’s net income was $171.4
million (excluding $10.4 million of Merger-related expenses) or 106.2% of target. As a result, Messrs. Dahl and Maass received
awards of 200% and 150% of salary earned for 2019, respectively.
2019 Annual Incentive Payments
Our 2019 annual incentive
plan, in which each of our NEOs with the exception of Messrs. Dahl and Maass participated, included corporate performance metrics
of adjusted core net income and adjusted efficiency ratio. In July 2019, before the Merger, the Compensation Committee determined
the achievement level for each of our corporate financial metrics based on our pre-Merger performance in the first and second quarters
of 2019. As noted above, the Compensation Committee converted our 12-month full year target to a 6-month target using the first
and second quarter targets set by the Compensation Committee at the beginning of the year to determine our target as of June 30,
2019 to account for seasonal variability in our earnings. The Compensation Committee determined that we achieved the corporate
metrics of $146.6 million in adjusted core net income, and a 51.5% adjusted efficiency ratio, resulting in a payout of 139.1% of
target, as shown in the following two tables.
2020 Proxy
Statement
|
|
33
|
|
|
|
|
2019 6-Month Corporate Goal Levels
(% payout opportunities)
|
|
2019 Actual
Performance as of
6/30/2019
|
|
Weighted
|
|
|
Assigned
Weight
|
|
Threshold
(50%)
|
|
Target
(100%)
|
|
Maximum
(150%)
|
|
Performance
|
|
% of
Target
|
|
Average
Achievement(1)
|
Adjusted Core Net Income(1)
|
|
80%
|
|
$132.5M
|
|
$141.0M
|
|
$146.2M
|
|
$146.6
|
|
146.6%
|
|
117.3%
|
Adjusted Efficiency Ratio(2)
|
|
20%
|
|
55%
|
|
52%
|
|
49%
|
|
51.5%
|
|
108.8%
|
|
21.8%
|
TOTAL
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
139.1%
|
(1)
|
Adjusted Core Net
Income under our annual incentive plan is our reported net income, excluding (a) certain merger-related expenses, (b) the
change in fair value of loan servicing rights, and (c) certain gains from the sale of investment securities.
|
(2)
|
Adjusted Efficiency Ratio under our
annual incentive plan is our total operating expenses, excluding (a) the impairment of income tax credits, (b) amortization
of intangibles, and (c) merger-related expenses, divided by the sum of (i) net interest income, excluding the net interest
income fully-tax equivalent adjustment, and (ii) noninterest income, excluding the change in fair value of loan servicing
rights and gain on sales of investment securities.
|
In addition, based on the factors described below
under each NEO’s compensation summary (excluding Messrs. Dahl and Maass), the Compensation Committee determined that Messrs.
Provost, Torgow, Shafer and Klaeser each achieved 150% of his individual performance metrics, resulting in total annual incentive
payments of 141.2% of his base salary, as set forth in the table below.
The following table reflects amounts earned and
actually paid under our annual incentive plan to those NEOs who participated in, and received payments under, our annual incentive
plan in 2019, as well as the amounts paid to Messrs. Dahl and Maass as determined by the Legacy TCF compensation committee and
paid by us pursuant to the terms of the Merger.
|
|
|
|
|
|
|
Performance Metrics
|
|
|
|
|
|
|
|
|
|
|
|
Target Incentive
|
|
|
Corporate
|
|
Individual
|
|
Potential Payout
|
|
|
|
|
|
Named
Executive Officer
|
|
% of
Salary
|
|
Value(2)
|
|
|
Result
|
|
Weight
|
|
Result
|
|
Weight
|
|
% of
Target
|
|
Value
|
|
|
Discretion
|
|
Actual
Payout
|
Craig R. Dahl(1)
|
|
100%
|
|
$
|
1,019,615
|
|
|
200%
|
|
100%
|
|
N/A
|
|
N/A
|
|
200%
|
|
$
|
2,039,230
|
|
|
N/A
|
|
$
|
2,039,230
|
David T. Provost
|
|
100%
|
|
$
|
950,000
|
|
|
139.1%
|
|
80%
|
|
150%
|
|
20%
|
|
141.2%
|
|
$
|
1,341,780
|
|
|
N/A
|
|
$
|
1,341,780
|
Dennis L. Klaeser
|
|
80%
|
|
$
|
600,000
|
|
|
139.1%
|
|
80%
|
|
150%
|
|
20%
|
|
141.2%
|
|
$
|
847,440
|
|
|
N/A
|
|
$
|
847,440
|
Gary Torgow
|
|
100%
|
|
$
|
950,000
|
|
|
139.1%
|
|
80%
|
|
150%
|
|
20%
|
|
141.2%
|
|
$
|
1,341,780
|
|
|
N/A
|
|
$
|
1,341,780
|
Thomas C. Shafer
|
|
100%
|
|
$
|
950,000
|
|
|
139.1%
|
|
80%
|
|
150%
|
|
20%
|
|
141.2%
|
|
$
|
1,341,780
|
|
|
N/A
|
|
$
|
1,341,780
|
Brian W. Maass(1)
|
|
75%
|
|
$
|
362,164
|
|
|
200%
|
|
100%
|
|
N/A
|
|
N/A
|
|
200%
|
|
$
|
724,328
|
|
|
N/A
|
|
$
|
724,328
|
(1)
|
Awards made pursuant to Legacy
TCF’s 2019 MIP based on W-2 wages and assumed by TCF in connection with the Merger.
|
(2)
|
Represents base salary for Messrs. Provost, Klaeser,
Torgow and Shafer in accordance with our annual incentive plan, and wages reported on Form W-2 for Messrs. Dahl and Maass,
representing salary paid by both us and Legacy TCF.
|
The Compensation Committee
had the power to reduce or eliminate the payments under the annual incentive plan for each NEO in its discretion, which could include
its subjective evaluation of performance as well as evaluation of each NEO’s individual performance and risk management considerations.
2019 Long-Term Equity Compensation
We deliver a significant portion of our executive
officer compensation through long-term equity grants made under shareholder-approved plans that are specifically designed to:
•
|
ensure that executives have material “skin in the game,”
thereby aligning executive and shareholder interests;
|
•
|
reward executives for building long-term, sustainable shareholder
value; and
|
•
|
complement our annual cash incentive plan to appropriately balance
executive focus on both short- and long-term objectives.
|
2020 Proxy
Statement
|
|
34
|
Annual Long-Term Incentive Awards
In February 2019, we continued
our long-standing practice of granting annual long-term equity awards to our NEOs (except for Messrs. Dahl and Maass, whose employment
began on the Merger Date). In setting the amount of equity awards in 2019, the Compensation Committee considered a variety of factors,
including the terms of each executive officer’s employment agreement, peer group data and the Compensation Committee’s
assessment of individual retention risk. In 2019, the Compensation Committee established annual long-term incentive awards with
grant date fair values equal to between 80% and 200% of each executive’s base salary in effect at the time of the award,
as indicated in the table below, which consisted of 60% PRSUs and 40% TRSUs, as described below under “Components of Annual
Long-term and Strategic Awards.” The actual value that the NEOs realize from these 2019 long-term equity awards may differ
from the grant date fair value of such awards due to share price appreciation or depreciation.
Name
|
|
Base Salary
on Grant
Date
|
|
Long-Term Incentive Award
as a Percent of Base Salary
|
|
Approximate
Grant
Date Fair Value of Award
|
Craig R. Dahl(1)
|
|
—
|
|
—
|
|
—
|
David T. Provost
|
|
$950,000
|
|
200%
|
|
$
|
1,900,000
|
Dennis L. Klaeser
|
|
$750,000
|
|
80%
|
|
$
|
600,000
|
Gary Torgow
|
|
$950,000
|
|
200%
|
|
$
|
1,900,000
|
Thomas C. Shafer
|
|
$950,000
|
|
100%
|
|
$
|
950,000
|
Brian W. Maass(1)
|
|
—
|
|
—
|
|
|
—
|
(1)
|
Messrs. Dahl and Maass joined the Company
pursuant to the Merger on August 1, 2019, and therefore did not receive long-term incentive awards from the Company in February
2019.
|
Components of Annual Long-Term Incentive Awards
The 2019 long-term equity
incentive awards granted to our NEOs in February 2019 consisted of 60% PRSUs and 40% TRSUs. The TRSUs vest in equal 20%
increments on each of the first five anniversaries of the February 25, 2019 grant date. Before the Merger, the PRSUs were
subject to conditional vesting based on the attainment of pre-established corporate performance metrics and continued service
through the date our audit opinion is issued at the end of the three-year performance period ending December 31, 2021. The
corporate performance metrics were aggregate earnings per share weighted at 75%, and relative total shareholder return,
weighted at 25%. The Compensation Committee established threshold, target and maximum performance levels for each selected
performance metric with payments for achievement of the threshold, target and maximum performance metrics of 50%, 100% and
150% of the target payment, respectively. See “Compensation of Named Executive Officers – 2019 Long-term Equity
Compensation – Annual Long-Term Incentive Awards” above for a table that describes the grant date fair value of
our annual long-term awards.
|
|
|
|
Performance
Goals
|
|
Actual Achievement
|
Measure(1)
|
|
Weighting
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Result
|
|
Funding
|
|
Weighted
|
2019 Aggregate EPS
|
|
75%
|
|
$1.86
|
|
$1.98
|
|
$2.06
|
|
$2.03
|
|
131.25%
|
|
98.44%
|
2019 Relative Total Shareholder
Return(2)
|
|
25%
|
|
25th
|
|
50th
|
|
75th
|
|
20th
|
|
0%
|
|
0%
|
(1)
|
Performance metrics set forth in this table for the
six months ended, and results set forth in this table were measured as of June 30, 2019.
|
(2)
|
Represents TCF’s total shareholder return as a
percentile relative to the KBW Nasdaq Regional Banking Index.
|
Because the Merger resulted in
a change in control of the Company, under the terms of the PRSUs, all PRSU performance metrics were measured as of the latest practicable
date before the Merger Date (which the Compensation Committee determined was the most recently completed calendar quarter before
the Merger), and the number of PRSUs was fixed at the greater of the target (100%) performance level or actual performance, which
we refer to as the “earned PRSUs,” and such earned PRSUs are now subject only to time-based vesting requirements based
on the NEO’s continued service through the applicable performance period. As shown in the above table, our actual performance
for aggregate earnings per share as of June 30, 2019 exceeded target, while our relative total shareholder return was below target,
resulting in achievement being fixed at target, with vesting subject to continued employment through the original performance periods
subject to the terms of the awards.
2020 Proxy
Statement
|
|
35
|
Merger-Related Equity Retention Awards
As noted above, Mr. Shafer received
a retention award of TRSUs in the amount of $4,184,583 which will vest in equal amounts on the first and second anniversary of
the Merger Date. Mr. Maass also received a retention award of TRSUs with a grant date fair value of $2,500,011, which will
vest in equal amounts on December 1, 2020 and the second anniversary of the Merger Date. For a detailed description of these retention
awards, see the discussion herein under “Compensation Highlights – Equity Retention Awards.”
Other Forms of Compensation
Retirement and Other Benefits
The Compensation Committee believes
that benefits are an important aspect of our ability to attract and retain quality employees, and believes that our benefit programs
are consistent with market practices based on its supervision of management’s analysis of industry peers and other employers
with whom we compete for employees. Each NEO generally has access to the benefits provided to all full-time employees, including
the Chemical Financial Corporation 401(k) Savings Plan (the “Chemical 401(k) Plan”) and, following the Merger, we assumed
the TCF 401K Plan (the “TCF 401K Plan” and together with the Chemical 401(k) Plan, the “401(k) Plans”)
which provided benefits to Legacy TCF employees, including Messrs. Dahl and Maass, through 2019. Standard benefits received by
each NEO as a full-time employee have no impact on the amount of other elements of compensation awarded to the NEO. As of December
31, 2019, the Chemical 401(k) Plan was merged into the TCF 401K Plan, with the TCF 401K Plan surviving the merger, and as a result,
as of January 1, 2020, all of our NEOs are eligible to participate in the TCF 401K Plan.
401(k) Plans and Deferred Compensation Plan
Under the TCF 401K Plan, we offer
matching contributions after six months of service (in the case of Legacy TCF employees, service with Legacy TCF is counted towards
this requirement). The TCF 401K Plan qualifies as an employee stock ownership plan and a qualified tax or deferred compensation
plan, or 401(k) Plan, under the Code. In combination with the Deferred Compensation Plans (as defined below), each NEO may receive
the same match percentage as any employee. Before its merger with the TCF 401K Plan on December 31, 2019, the Chemical 401(k) Plan
also qualified as a deferred compensation plan under the Code.
The Code limits the amount of
employee contributions and Company matching contributions under the 401(k) Plans for certain individuals, including each NEO. We
created the TCF Financial Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”), a nonqualified
supplemental plan, to address these limitations. For the 166 participants as of January 31, 2020, eligible participants, including
each of our NEOs, are eligible to contribute a portion of their salary to the Deferred Compensation Plan. Amounts contributed to
the Deferred Compensation Plan are matched at 5% of the amount contributed to the Deferred Compensation Plan. The Compensation
Committee believes the Deferred Compensation Plan is an important tool to attract and retain executive talent. In addition, upon
completion of the Merger, we assumed the obligations of Legacy TCF under its TCF 401K Supplemental Plan (the “Legacy TCF
Supplemental Plan” and together with the Deferred Compensation Plan, the “Deferred Compensation Plans”), which
provided benefits similar to those provided under the Deferred Compensation Plan to Legacy TCF employees (including Messrs. Dahl
and Maass). As of January 1, 2020, the TCF 401K Supplemental Plan is no longer eligible to receive employee contributions, and
each of our NEOs is eligible for the Deferred Compensation Plan.
Pension Benefits in 2019
We have a noncontributory Chemical
Pension Plan that is considered a tax-qualified retirement plan. Under the Chemical Pension Plan, we have the authority to change
or terminate the plan at any time. Effective June 30, 2006, we stopped accepting new participants in the Chemical Pension Plan.
Since all of our NEOs joined TCF after 2006, none of our NEOs are participants in the Chemical Pension Plan. In addition, in July
2017, the Compensation Committee determined to freeze the Chemical Pension Plan such that no additional benefits would be accrued
under the Chemical Pension Plan, and we approved the termination of the Chemical Pension Plan effective August 31, 2019. We
believe that because the benefits to participants had been frozen, and because the Chemical Pension Plan was overfunded that it
was in the best interests of both TCF and the participants to terminate the Chemical Pension Plan.
We assumed the obligations of
the Legacy TCF Cash Balance Pension Plan in connection with the Merger, which was frozen in 2004 and had further compensation credits
discontinued in 2006. The termination of the Legacy TCF Cash Balance Pension Plan was approved by Legacy TCF, effective November
1, 2019. Mr. Dahl is the only NEO participating in the Legacy TCF Pension Plan. His pension benefits are disclosed below in the
“Pension Benefits in 2019” table and described in the narrative following that table.
Insurance Benefits
NEOs are eligible for the same
group medical, dental, disability, life insurance and other similar benefits that are generally available to our full-time employees.
Perquisites
Perquisites received by NEOs
include use of Company-owned or leased automobiles or car allowances, use of a driver, club memberships, executive physicals, life
insurance, incentive trips, and tax return preparation. Messrs. Torgow, Dahl and Provost may receive personal use of our corporate
aircraft. The purpose of these perquisites is to provide competitive benefits, reduce security risks, and enhance scheduling and
efficient use of the NEOs’ time. The Compensation Committee reviews the perquisites of the NEOs and other officers annually.
2020 Proxy
Statement
|
|
36
|
Looking Forward: 2020 Annual Cash Incentive
For 2020, the Compensation Committee
determined, with input from Pay Governance, that adjusted earnings per share and adjusted efficiency ratio are the best corporate
performance metrics to measure our financial performance for our annual cash incentive, and that 80% of each participating NEO’s
annual cash incentive award will be tied to those metrics. Consistent with 2019, the remaining 20% of the cash incentive awards
will be tied to individual performance objectives. The Compensation Committee also determined levels for threshold, target, and
maximum payouts for corporate performance metrics for use in 2020 for all NEOs. The 2020 annual incentive plan will be discussed
in greater detail in next year’s proxy statement.
Looking Forward: 2020 Long-Term Incentives
For 2020, the Compensation Committee
determined, with input from Pay Governance, that total shareholder return relative to our peer group is the best metric to measure
our financial performance for our long-term incentive awards. Long-term incentive awards will consist of 60% PRSUs vesting at the
end of a three-year performance period, and 40% TRSUs vesting in 25% annual increments over a period of four years. The Compensation
Committee also determined levels for threshold, target, and maximum payouts for use in 2020 for all NEOs. The 2020 long-term incentives
will be discussed in greater detail in next year’s proxy statement.
TCF and Legacy TCF Combined 2019 Total Compensation
The following sections describe
the primary roles of our NEOs following our Merger and their total compensation received in 2019, including payments and equity
awards granted by Legacy TCF prior to our Merger.
Craig R. Dahl
Mr. Dahl is our President and
Chief Executive Officer, as well as a Director, roles to which he was appointed upon completion of the Merger. Prior to that, he
had served as President and Chief Executive Officer of Legacy TCF since 2016 and Chairman since 2017.
Mr. Dahl’s wealth of experience
spans all aspects of a diversified commercial bank. He joined Legacy TCF as President and Chief Executive Officer of Legacy TCF’s
Equipment Finance business when this business was launched in 1999, and has also played a pivotal role in leading the development
and growth of Legacy TCF’s inventory finance and national residential mortgage lending businesses. In addition, Mr. Dahl
had a key leadership role in overseeing Legacy TCF’s full Commercial Banking business. As Chief Executive Officer, he also
supervised all of Retail Banking, and transformed the bank’s business strategy to deliver profitable growth for shareholders.
Mr. Dahl’s insight and
experience in both the banking industry and at Legacy TCF were critical to developing our organizational structure and assuring
that taking “the best of both banks” was more than just words on a page. In developing our business structure and retaining
key executives from both organizations, he and our Chairman collaborated closely to ensure that individuals were included in roles
where they could continue to deliver on the successes of each organization, while positioning TCF to compete and win in the future.
As a result of this careful planning and measured execution, we believe that we have created an organization that leverages the
strengths of each organization, which we believe will translate to superior execution and business growth.
His compensation for 2019 is provided
below:
2019 Compensation
|
Salary(1)
|
|
$
|
1,019,615
|
|
Annual Cash Incentive(2)
|
|
$
|
2,039,230
|
|
Restricted Stock(3)
|
|
$
|
1,839,840
|
|
Total Compensation
|
|
$
|
4,898,685
|
|
% Performance-Based(4)
|
|
|
60%
|
|
(1)
|
Represents Mr. Dahl’s Form W-2 wages paid by Legacy
TCF prior to the Merger Date and then by TCF following the Merger.
|
(2)
|
Represents Mr. Dahl’s annual cash incentive awarded
for 2019 through Legacy TCF’s 2019 MIP, the obligations of which we assumed in the Merger.
|
(3)
|
Represents PRSUs and time-based restricted stock awards
granted to Mr. Dahl by Legacy TCF in January 2019. These awards were subsequently converted to TRSUs or earned PRSUs, respectively,
of TCF in connection with the Merger. Dollar amount is the grant date fair value as of the Merger Date.
|
(4)
|
Performance-based compensation includes Mr. Dahl’s
annual cash incentives and the grant date fair value of Mr. Dahl’s PRSUs as of the Merger Date.
|
For information regarding Mr. Dahl’s employment
agreement, see “Executive Compensation – Employment, Retention and Equity Award Agreements.”
2020 Proxy
Statement
|
|
37
|
David T. Provost
Mr. Provost is Executive Vice Chairman of the Board
and Chairman of TCF Bank, roles to which he was appointed upon completion of the Merger. Prior to that, he served as Chief Executive
Officer and President. Mr. Provost is an expert in bank acquisitions, completing nine since acquiring First Michigan Bank in 2009.
Previously, Mr. Provost was the Chairman and Chief Executive Officer of Talmer Bank and Trust, which merged with Chemical Bank.
Under his leadership, Talmer Bank and Trust and its predecessor, First Michigan Bank, was the fastest growing bank in the country
from 2010 to 2015, completing nine bank acquisitions. Previously, Mr. Provost established two banks, The Bank of Bloomfield Hills
and The Bank of Rochester, which he combined and sold to PrivateBancorp in 2005. Mr. Provost is also active in community and civic
organizations. Mr. Provost’s banking expertise, connections with the Detroit and greater Michigan business community, experience
in acquisitions and community engagement are essential to TCF’s continued integration and maintaining key relationships in
several of TCF’s primary markets.
His compensation for 2019 is provided below:
2019 Compensation
|
Salary(1)
|
|
$
|
931,731
|
|
Annual Cash Incentive
|
|
$
|
1,341,780
|
|
Restricted Stock(2)
|
|
$
|
1,905,172
|
|
Total Compensation
|
|
$
|
4,178,683
|
|
% Performance-Based(3)
|
|
|
60%
|
|
(1)
|
Represents Mr. Provost’s Form W-2 wages paid in
2019.
|
(2)
|
In February 2019, the Compensation Committee determined
that to more closely align the interests of Mr. Provost with those of our shareholders, it would exercise its discretion under
the annual incentive plan not to award a cash incentive payment for 2018 to Mr. Provost. At that time, the Compensation Committee
awarded Mr. Provost TRSUs under the 2017 Stock Plan with a grant date fair value equal to approximately $950,000, which approximated
the target amount he would have been eligible to receive in 2018 under the annual incentive plan. This award of TRSUs is not
included in this table.
|
(3)
|
Performance-based compensation includes Mr. Provost’s
annual cash incentives and the grant date fair value of Mr. Provost’s PRSUs.
|
For information regarding Mr.
Provost’s employment agreement, see “Executive Compensation – Employment, Retention and Equity Award Agreements.”
For information regarding Mr. Provost’s 2019 long-term incentive awards, see “Compensation of Named Executive Officers
– 2019 Long-term Equity Compensation” in this CD&A.
Dennis L. Klaeser
Mr. Klaeser has been Chief Financial Officer of TCF
and TCF Bank (formerly Chemical Bank) since August 2016, upon completion of our merger with Talmer Bancorp, Inc. Mr. Klaeser is
a member of the TCF Executive Leadership Team and is a member of the board of directors of TCF Bank. Mr. Klaeser has extensive
experience serving as Chief Financial Officer. Prior to that, Mr. Klaeser served as Chief Financial Officer and an Executive Managing
Director of Talmer Bancorp, Inc. from May 2010 until Talmer Bancorp’s merger with the Chemical Financial Corporation in August
2016. Mr. Klaeser also served as Chief Financial Officer and a director of First Place Bank following its acquisition by Talmer
Bancorp, Inc. from January 2013 until it was merged into Talmer Bank and Trust in February 2014. Mr. Klaeser’s experience
and expertise will be instrumental in guiding TCF’s integration and the transition to Mr. Maass, who will serve as Chief
Financial Officer when Mr. Klaeser ceases his employment with TCF in October 2020
His compensation for 2019 is provided below:
2019 Compensation
|
Salary(1)
|
|
$
|
735,577
|
|
Annual Cash Incentive
|
|
$
|
847,440
|
|
Restricted Stock
|
|
$
|
601,629
|
|
Total Compensation
|
|
$
|
2,184,646
|
|
% Performance-Based(2)
|
|
|
55%
|
|
(1)
|
Represents Mr. Klaeser’s Form W-2 wages paid in
2019.
|
(2)
|
Performance-based compensation includes Mr. Klaeser’s
annual cash incentives and the grant date fair value of Mr. Klaeser’s PRSUs.
|
For information regarding
Mr. Klaeser’s letter agreement and employment agreement, see “Executive Compensation – Employment,
Retention and Equity Award Agreements.” For information regarding Mr. Klaeser’s 2019 long-term incentive awards,
see “Compensation of Named Executive Officers – 2019 Long-term Equity Compensation” in this CD&A.
2020 Proxy
Statement
|
|
38
|
Gary Torgow
Mr. Torgow serves as Executive Chairman of the Board,
a position he has held since his appointment in August 2016, upon the completion of our merger with Talmer Bancorp, Inc. As Executive
Chairman, Mr. Torgow has responsibility for leading the Board in its agenda and consideration of strategic issues as well as monitoring
corporate governance and shareholder issues. As Executive Chairman, Mr. Torgow may serve as an advisor and confidant to the Chief
Executive Officer, and advises on strategic plan development. In addition, given Mr. Torgow’s background as an attorney,
his extensive community involvement and his government and corporate relations expertise, he serves a key role in corporate and
community relations and in providing insight and strategic advice in an industry where a deep understanding of legislative and
regulatory trends is especially important.
Mr. Torgow was instrumental in the founding and board
oversight of Talmer Bancorp and here, and he brings strong experience with publicly-held bank holding companies. Additionally,
Mr. Torgow brings deep expertise and familiarity within the business community within the Michigan and Detroit markets, which
are key to TCF’s strategy. Mr. Torgow plays a significant role in supporting and advocating for TCF across its business and
customer relationships.
His compensation for 2019 is provided below:
2019 Compensation
|
Salary(1)
|
|
$
|
931,731
|
|
Annual Cash Incentive
|
|
$
|
1,341,780
|
|
Restricted Stock(2)
|
|
$
|
1,905,172
|
|
Total Compensation
|
|
$
|
4,178,683
|
|
% Performance-Based(3)
|
|
|
60%
|
|
(1)
|
Represents Mr. Torgow’s Form W-2 wages paid in
2019.
|
(2)
|
In February 2019, the Compensation Committee determined
that to more closely align the interests of Mr. Torgow with those of our shareholders, it would exercise its discretion under
the annual incentive plan not to award a cash incentive payment for 2018 to Mr. Torgow. At that time, the Compensation Committee
awarded Mr. Torgow TRSUs under the 2017 Stock Plan with a grant date fair value equal to approximately $950,000, which approximated
the target amount he would have been eligible to receive in 2018 under the annual incentive plan. This award of TRSUs is not
included in this table.
|
(3)
|
Performance-based compensation includes Mr. Torgow’s
annual cash incentives and the grant date fair value of Mr. Torgow’s PRSUs.
|
For information regarding Mr. Torgow’s employment
agreement, see “Executive Compensation – Employment, Retention and Equity Award Agreements.” For information
regarding Mr. Torgow’s 2019 long-term incentive awards, see “Compensation of Named Executive Officers – 2019
Long-Term Equity Compensation” in this CD&A.
Thomas C. Shafer
Mr. Shafer is our Chief Operating Officer of TCF and
President and Chief Operating Officer of TCF Bank, roles to which he was appointed on the Merger Date. Before that, he served as
Vice Chairman, President and Chief Executive Officer of Chemical Bank (which merged into TCF Bank on the Merger Date), from June
2017. Mr. Shafer has responsibility for National Banking, Regional Banking, IT and Operations, and has extensive experience
in banking and executive leadership. Mr. Shafer joined Chemical Bank through the acquisition of Talmer Bancorp Inc. and served
as Executive Vice President, Director of Regional and Community Banking of Chemical Bank from August 2016 to June 2017. Mr. Shafer
joined Talmer Bank in 2010 and upon the organization’s 2013 acquisition of First Place Bank was appointed to serve as President,
Chief Executive Officer and director of First Place Bank. Prior to joining Talmer Bank, Mr. Shafer spent 16 years with Citizens
Republic Bancorp, where he held various executive level positions within Commercial and Retail Banking and also served as Chief
Credit Officer. As he did with Chemical Bank’s and Talmer Bank’s previous mergers, Mr. Shafer plays a key leadership
role in integrating both the retail and commercial businesses of Legacy TCF and Chemical Bank.
His 2019 compensation is provided below:
2019 Compensation
|
Salary(1)
|
|
$
|
931,731
|
|
Annual Cash Incentive
|
|
$
|
1,341,780
|
|
Restricted Stock(2)
|
|
$
|
5,137,196
|
|
Total Compensation
|
|
$
|
7,410,707
|
|
% Performance-Based(3)
|
|
|
26%
|
|
(1)
|
Represents Mr. Shafer’s W-2 wages paid in 2019.
|
(2)
|
Includes Mr. Shafer’s retention award, which had
an approximate value of $4,184,583, and represents TRSUs and PRSUs granted during 2019 and valued at the grant date fair value.
|
(3)
|
Performance-based compensation includes Mr. Shafer’s
annual cash incentives and the grant date fair value of Mr. Shafer’s PRSUs.
|
For information regarding Mr. Shafer’s employment
agreement, see “Executive Compensation – Employment, Retention and Equity Award Agreements.” For information
regarding Mr. Shafer’s 2019 long-term incentive awards, see “Compensation of Named Executive Officers – 2019
Long-term Equity Compensation” in this CD&A.
2020 Proxy
Statement
|
|
39
|
Brian W. Maass
Mr. Maass currently serves as TCF’s Executive
Vice President, Deputy Chief Financial Officer and Treasurer, roles to which he was appointed on the Merger Date. Mr. Maass currently
has responsibility for Treasury, Financial Planning & Analysis and Investor Relations, and we were pleased to announce in December
2019 that effective October 1, 2020, Mr. Maass will assume the role of Chief Financial Officer. Prior to the Merger, Mr. Maass
served as Executive Vice President and Chief Financial Officer of Legacy TCF.
Mr. Maass has already been instrumental in leading
significant integration projects including balance sheet repositioning, investor messaging and materials, capital management (including
subordinated debt issuance and stock buyback approval), enhanced management reporting for new business segments, reduced deposit
costs and maintained strong liquidity. We believe that the talents and experience that he brings to TCF, together with his deep
knowledge of Legacy TCF and its business, will be instrumental in realizing the planned merger synergies and cost savings, as well
as integrating the Finance teams of both organizations.
Due to his change in role following the Merger, Mr.
Maass would have had Good Reason under his Change in Control Severance Agreement with Legacy TCF, which would have permitted him
to voluntarily terminate his employment and receive severance compensation. In order to incentivize him to remain with TCF and
focus on working towards a successful integration and implementation of our key strategic initiatives, following the Merger, we
granted him a retention equity award and entered into a new Executive Employment Agreement that eliminated his ability to terminate
his employment and receive a change in control severance payment with respect to the Merger.
His compensation for 2019 is provided below:
2019 Compensation
|
Salary(1)
|
|
$
|
482,885
|
|
Annual Cash Incentive(2)
|
|
$
|
724,328
|
|
Restricted Stock(3)
|
|
$
|
3,046,223
|
|
Total Compensation
|
|
$
|
4,253,436
|
|
% Performance-Based(4)
|
|
|
23%
|
|
(1)
|
Represents Mr. Maass’ Form W-2 wages paid by Legacy TCF prior to the Merger Date and then by TCF following the Merger.
|
(2)
|
Represents Mr. Maass’ annual cash incentive awarded for 2019 through Legacy TCF’s 2019 MIP, the obligations of which we assumed in the Merger.
|
(3)
|
Represents PRSUs and time-based restricted stock awards granted to Mr. Maass by Legacy TCF in January 2019. These awards were subsequently converted to TRSUs of TCF in connection with the Merger. Dollar amount is the grant date fair value as of the Merger Date. Also includes Mr. Maass’ retention award, which had a value of $2,500,011 valued at the grant date fair value.
|
(4)
|
Performance-based compensation includes Mr. Maass’ annual cash incentives and the grant date fair value of Mr. Maass’ PRSUs as of the Merger Date.
|
For information regarding Mr. Maass’ employment
agreement, see “Executive Compensation – Employment, Retention and Equity Award Agreements.”
Compensation & Governance Best Practices
|
|
|
Recovery (“Clawback”) of Performance-Based
Compensation
The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”)
requires recovery of certain compensation from the Principal Executive Officer and the Principal Financial Officer in the event
of a restatement of financial results due to misconduct. The Audit Committee is responsible for determining whether annual cash
incentive or long-term incentive compensation paid to the Principal Executive Officer or the Principal Financial Officer should
be recovered in the event of a restatement. Mr. Dahl’s employment agreement sets forth his obligations to comply with these
provisions of Sarbanes-Oxley, if applicable.
The Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010 (“Dodd-Frank”) required the SEC to issue rules that require all public companies to adopt additional mandatory
clawback policies to recover any incentive-based compensation paid to current and former executive officers based on financial
information that was subsequently required to be restated due to material noncompliance with any financial reporting requirements.
In 2015 the SEC issued proposed rules. There are a number of areas addressed by the proposed rules, however, that require clarification
and will likely result in material changes to the proposed rules. As a result, the Compensation Committee believes it is appropriate
to await comprehensive final rules and subsequent changes to Nasdaq Listing Rules before it adopts a clawback policy. Mr. Dahl’s
employment agreement sets forth his obligations to comply with these provisions of Dodd-Frank, when applicable.
Compensation Policies and Practices as They Relate
to Risk Management
On an annual basis, the Compensation Committee performs
a review of our incentive compensation policies and practices for senior executive officers and others, individually or in the
aggregate, who may have the potential to expose TCF to material levels of risk. The Compensation Committee bases this review in
part on an analysis of such compensation arrangements by our incentive compensation risk officer. The analysis and the Compensation
Committee’s review considers, among other things, the balance between short- and long-term components of incentive compensation
for the senior executive officers, the factors used to determine eligibility for annual cash incentive awards, terms of vesting
for long-term incentive awards to the senior executive officers, risk management considerations, and how these elements relate
to TCF’s most significant risks. In the case of senior executive officers, the Compensation Committee places significant
reliance on its ability to reduce or withhold an award if it determines that the executive incurred excessive risk. We believe
that our incentive compensation arrangements, and compensation policies and practices in general, are not reasonably likely to
have a material adverse effect on TCF.
2020 Proxy
Statement
|
|
40
|
Stock Ownership Guidelines for Executive Officers
Our stock ownership
guidelines are designed to encourage share ownership so that our executives have a direct stake in TCF and to align their
interests with the long-term interests of our shareholders. The ownership guidelines cover all NEOs and are as follows:
|
|
Required Salary
|
Position
|
|
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-based 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 performance-based
restricted stock is also not counted toward stock ownership.
Executives are required to comply 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 the earlier of the date at which they satisfy our stock
ownership guidelines, or 36 months following acquisition of such shares. Currently, all named executive officers are either in
compliance with the guidelines or within the five-year compliance window.
The Board adopted the Stock Ownership Guidelines because
it believes that it is in our and our shareholders’ best interests to further align the long-term financial interests of
executive management with those of our shareholders by encouraging stock ownership among our executives. The Board believes that
executive stock ownership demonstrates a long-term commitment to our growth and profitability.
Anti-Hedging and Anti-Pledging Prohibitions under
our Insider Trading Policy
Our Insider Trading Policy prohibits our directors,
executive officers and employees from engaging in any transaction which could hedge or offset decreases in the market value of
our common stock. In addition, all of directors and executives, including our NEOs, are prohibited from pledging stock under our
Insider Trading Policy.
Deductibility of Executive Compensation
Internal Revenue Code Section 162(m) generally prohibits
a federal income tax deduction to public companies for compensation over $1,000,000 paid to a “covered employee.” A
“covered employee” includes (i) the Chief Executive Officer, (ii) the Chief Financial Officer, (iii) the three other
most highly compensated executive officers, and (iv) any individual who was a covered employee for any taxable year beginning after
December 31, 2016. Before 2018, we were permitted to receive a federal income tax deduction for qualifying “performance-based”
compensation as defined under Code Section 162(m) without regard to this $1,000,000 limitation. However, recent U.S. tax legislation
eliminated the performance-based exception. These new rules became effective starting in 2018 for us, except that certain awards
that were granted on or before November 2, 2017 may still qualify as performance-based compensation. To the extent that in 2018
or any later year, the aggregate amount of any covered employee’s salary, bonus, and amount realized from option exercises
and vesting of restricted stock units or other equity awards, and certain other compensation amounts that are recognized as income
for federal income tax purposes by the covered employee exceeds $1,000,000 in any year, we will not be entitled to a federal income
tax deduction for the amount over $1,000,000 in that year.
|
Compensation Committee Report
|
The Compensation Committee has reviewed and discussed
the preceding Compensation Discussion and Analysis with management. Based on that review and discussion, the Compensation Committee
recommended to the Board that the Compensation Discussion and Analysis be included in TCF’s Proxy Statement.
Arthur A. Weiss, Chair
Karen L. Grandstrand
Barbara J. Mahone
Vance K. Opperman
Roger J. Sit
Jeffrey L. Tate
2020 Proxy
Statement
|
|
41
|
|
Executive Compensation
|
Summary Compensation Table
|
|
|
The following summary compensation table (the
“Summary Compensation Table”) identifies the cash and non-cash compensation awarded to or earned by the NEOs in 2019,
2018, and 2017. The positions listed in the table are those in which the NEO served at December 31, 2019.
Name and
Principal Position
|
|
Year
|
|
Salary
($)(1)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)(2)
|
|
|
Option
Awards
($)(3)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)(4)
|
|
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)(5)
|
|
|
All Other
Compensation
($)(6)
|
|
|
Total
($)(7)
|
|
Craig
R. Dahl(8)
Director, President, and Chief Executive Officer
|
|
2019
|
|
$
|
423,077
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,039,230
|
|
|
$
|
3,890
|
|
|
$
|
35,515
|
|
|
$
|
2,501,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
T. Provost
Executive Vice-Chairman, Former President and Chief Executive
Officer
|
|
2019
|
|
|
931,731
|
|
|
|
—
|
|
|
|
2,855,154
|
|
|
|
—
|
|
|
|
1,341,780
|
|
|
|
—
|
|
|
|
117,204
|
|
|
|
5,245,869
|
|
|
2018
|
|
|
456,731
|
|
|
|
—
|
|
|
|
2,980,668
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
96,181
|
|
|
|
3,533,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
823,390
|
|
|
|
—
|
|
|
|
1,047,880
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
61,194
|
|
|
|
1,932,464
|
|
Dennis
L. Klaeser
Executive Vice President and Chief Financial Officer
|
|
2019
|
|
|
735,577
|
|
|
|
—
|
|
|
|
601,629
|
|
|
|
—
|
|
|
|
847,440
|
|
|
|
—
|
|
|
|
75,784
|
|
|
|
2,260,430
|
|
|
2018
|
|
|
703,846
|
|
|
|
—
|
|
|
|
993,556
|
|
|
|
—
|
|
|
|
612,000
|
|
|
|
—
|
|
|
|
47,383
|
|
|
|
2,356,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
550,000
|
|
|
|
157,581
|
|
|
|
944,839
|
|
|
|
—
|
|
|
|
342,419
|
|
|
|
—
|
|
|
|
36,654
|
|
|
|
2,031,493
|
|
GaryTorgow
Executive Chairman
|
|
2019
|
|
|
931,731
|
|
|
|
—
|
|
|
|
2,855,154
|
|
|
|
—
|
|
|
|
1,341,780
|
|
|
|
—
|
|
|
|
117,733
|
|
|
|
5,246,398
|
|
|
2018
|
|
|
456,731
|
|
|
|
—
|
|
|
|
2,980,668
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
69,170
|
|
|
|
3,506,569
|
|
|
2017
|
|
|
823,390
|
|
|
|
—
|
|
|
|
1,047,880
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
32,303
|
|
|
|
1,903,573
|
|
Thomas
C. Shafer
Chief Operating Officer and President of TCF Bank
|
|
2019
|
|
|
931,731
|
|
|
|
—
|
|
|
|
5,137,196
|
|
|
|
—
|
|
|
|
1,341,780
|
|
|
|
—
|
|
|
|
152,931
|
|
|
|
7,563,638
|
|
|
2018
|
|
|
903,846
|
|
|
|
—
|
|
|
|
993,556
|
|
|
|
—
|
|
|
|
969,000
|
|
|
|
—
|
|
|
|
59,252
|
|
|
|
2,925,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
562,500
|
|
|
|
111,229
|
|
|
|
647,341
|
|
|
|
132,005
|
|
|
|
538,771
|
|
|
|
—
|
|
|
|
52,975
|
|
|
|
2,044,821
|
|
Brian
W. Maass(8)
Executive Vice President and Deputy Chief Financial Officer
|
|
2019
|
|
|
208,846
|
|
|
|
—
|
|
|
|
2,500,011
|
|
|
|
—
|
|
|
|
724,328
|
|
|
|
—
|
|
|
|
25,665
|
|
|
|
3,458,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes wages paid by TCF
to Messrs. Dahl and Maass from the start of their employment with TCF on the Merger Date. Total wages paid by TCF and by Legacy
TCF for 2019 are $1,019,615 to Mr. Dahl and $482,885 to Mr. Maass.
|
|
|
(2)
|
The values of all stock awards reported
in this column were computed in accordance with ASC 718. Represents the following amounts: Mr. Provost – $1,145,151
of PRSUs and $1,710,003 of TRSUs; Mr. Klaeser – $361,615 of PRSUs and $240,014 of TRSUs; Mr. Torgow –
$1,145,151 of PRSUs and $1,710,003 of TRSUs; Mr. Shafer – $572,597 of PRSUs and $4,564,599 of TRSUs; and Mr. Maass
– $2,500,011 of TRSUs. Amounts reported for Messrs. Provost and Torgow include the value of the TRSUs granted in 2019
pursuant to the 2017 Stock Plan in lieu of a cash incentive under our annual incentive plan, which had a grant date fair value
of $949,981; excluding this award, total stock compensation based on performance at target to each of Messrs. Provost and
Torgow would have been $1,905,173. The PRSUs were determined to have a value at the grant date based on management’s
assessment that it was probable that the PRSUs would vest in 2021 at the target payout, or 1.0x the number of units granted.
Because of the Merger, performance under PRSUs granted in 2019 was fixed at the target performance level before the Merger
Date (the “earned PRSUs”), and the earned PRSUs are now only subject to time-based vesting requirements. None
of the restricted stock unit awards are entitled to accrued dividends unless and until the awards vest. Amounts reported for
Messrs. Dahl and Maass do not include the value of equity awards granted by Legacy TCF in January 2019 that were converted
into TCF TRSUs or earned PRSUs in connection with the Merger; such grants were in the following amounts: Mr. Dahl - $1,839,840
split evenly between time-based restricted stock awards and PRSUs, and Mr. Maass - $546,212 split evenly between time-based
restricted stock awards and PRSUs, valued at a grant date fair value as of the Merger Date. Including these awards, Mr. Dahl’s
total stock awards would be $1,839,840 and Mr. Maass’ would be $3,046,223. TCF’s accounting policy and assumptions
for stock-based compensation are described in Notes 3 and 20 of the Notes to Consolidated Financial Statements included in
our Annual Report on Form 10-K for the year ended December 31, 2019.
|
|
|
(3)
|
This amount represents the grant date
fair value, computed in accordance with ASC 718, of the stock options granted for each NEO. For a discussion of our valuation
assumptions, see Note 20 to our 2019 Consolidated Financial Statements included in our Annual Report on Form 10-K for the
year ended December 31, 2019. The per share exercise price of each option award was equal to the market value of our common
stock on the date each option was granted.
|
|
|
(4)
|
For a further description of how the
Compensation Committee determined incentive payments awarded in 2019, see “Compensation of Named Executive Officers
– NEO Pay Determinations – 2019 Annual Cash Incentive Plan” in the CD&A of this Proxy Statement.
|
|
|
(5)
|
Amounts shown reflect the change in
pension value measured against Legacy TCF’s pension value as of December 31, 2018. There were no above-market or preferential
earnings on our nonqualified deferred compensation plans. We assumed the obligations of the Legacy TCF Pension Cash Balance
Pension Plan in connection with the Merger, which was terminated, effective November 1, 2019. Mr. Dahl is the only NEO
participating in the Legacy TCF Pension Plan.
|
2020 Proxy
Statement
|
|
42
|
(6)
|
Amounts shown in the “All
Other Compensation” column for 2019 consist of the following:
|
|
(a)
|
Mr. Dahl: $21,154 of
employer contributions to the Supplemental Plan; $3,546 consisting of the taxable portion of employer paid premiums for life
insurance; $3,325 in car allowances; $3,500 in executive tax service; and $3,990 in personal use of the corporate aircraft.
Amounts for Mr. Dahl’s personal use of the corporate aircraft are the aggregate incremental cost of non-business
travel use, as determined based on the average weighted cost of fuel and maintenance, crew travel expense, on board catering
expense, landing fees, trip-related hangar/parking costs, and smaller variable costs. In the event that a family member or
guest accompanied Mr. Dahl on a flight, the above amount also includes any incremental costs, such as on-board catering
costs that may be associated with such travel.
|
|
|
|
|
(b)
|
Mr. Provost: $16,800 of employer
contributions to the Chemical 401(k) Plan; $6,858 consisting of the taxable portion of employer paid premiums for life insurance;
$75,776 in dividend equivalents earned on TRSUs; $10,800 in car allowances; $3,970 consisting of the taxable portion
of employer paid premiums for disability insurance; and $3,000 in company-paid club dues.
|
|
|
|
|
(c)
|
Mr. Klaeser: $16,800 of employer
contributions to the Chemical 401(k) Plan; $3,564 consisting of the taxable portion of employer paid premiums for life insurance;
$25,173 in dividend equivalents earned on TRSUs; $6,222 consisting of the taxable portion of employer paid premiums for
disability insurance; $12,000 in moving expenses; and $12,025 in company-paid club dues.
|
|
|
|
|
(d)
|
Mr. Torgow: $16,800 of employer
contributions to the Chemical 401(k) Plan; $3,564 consisting of the taxable portion of employer paid premiums for life insurance;
$75,776 in dividend equivalents earned on TRSUs; $10,800 in car allowances; $5,761 consisting of the taxable portion
of employer paid premiums for disability insurance; and $5,032 in company-paid club dues.
|
|
|
|
|
(e)
|
Mr. Shafer: $16,800 of employer
contributions to the Chemical 401(k) Plan; $3,564 consisting of the taxable portion of employer paid premiums for life insurance;
$96,993 in dividend equivalents earned on TRSUs; $10,800 in car allowances; $6,139 consisting of the taxable portion
of employer paid premiums for disability insurance; $1,000 in contractual consideration to make employment agreement binding,
and $17,635 in company-paid club dues.
|
|
|
|
|
(f)
|
Mr. Maass: $10,442 of employer
contributions to the Supplemental Plan; $324 consisting of the taxable portion of employer paid premiums for life insurance;
$11,399 in car allowances; and $3,500 in executive tax service.
|
(7)
|
Amounts shown for Messrs. Provost and Torgow for 2019 include the value of the TRSUs granted in 2019 pursuant to the 2017 Stock Plan, which approximated the target amount each executive would have been eligible to receive in 2018 under the annual incentive plan that the Compensation Committee determined not to award; excluding these TRSUs, total compensation would have been $4,295,888 to Mr. Provost and $4,296,417 to Mr. Torgow.
|
|
|
(8)
|
Messrs. Dahl and Maass joined TCF on the Merger Date.
|
Employment, Retention
and Equity Award Agreements
Provisions of the employment
and retention agreements for Messrs. Dahl, Provost, Klaeser, Torgow, Shafer and Maass and certain provisions in their respective
equity award agreements are described below under “Executive Compensation – Employment, Retention and Equity Award
Agreements.”
Amount of Salary and Bonus
in Proportion to Total Compensation
The relationship of salary
to the NEOs’ total compensation will vary from year to year primarily depending on the amount of non-equity incentive compensation
(annual cash incentive) and grant date fair value of long-term awards, as discussed in the CD&A.
2020 Proxy
Statement
|
|
43
|
Grants of Plan-Based Awards in 2019
|
|
|
The following table shows plan-based awards granted
to the NEOs in 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock Awards:
|
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
|
|
|
Estimated Future Payouts Under
Equity Incentive Plan Award
|
|
|
Number of
Shares of
|
|
|
Fair Value of
Stock
|
|
Name
|
|
Grant
Date
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Max
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Max
(#)
|
|
|
Stock
(#)
|
|
|
Awards
($)(7)
|
|
Dahl
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,039,230
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Provost
|
|
|
|
|
$
|
475,000
|
|
|
$
|
950,000
|
|
|
$
|
1,425,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
02/25
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,559
|
|
|
|
27,117
|
|
|
|
40,676
|
|
|
|
—
|
|
|
$
|
1,145,151
|
|
|
|
02/25
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,292
|
|
|
$
|
760,022
|
|
|
|
02/25
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,364
|
|
|
$
|
949,981
|
|
Klaeser
|
|
|
|
|
$
|
300,000
|
|
|
$
|
600,000
|
|
|
$
|
900,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
02/25
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,282
|
|
|
|
8,563
|
|
|
|
12,845
|
|
|
|
—
|
|
|
$
|
361,615
|
|
|
|
02/25
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,145
|
|
|
$
|
240,014
|
|
Torgow
|
|
|
|
|
$
|
475,000
|
|
|
$
|
950,000
|
|
|
$
|
1,425,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
02/25
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,559
|
|
|
|
27,117
|
|
|
|
40,676
|
|
|
|
—
|
|
|
$
|
1,145,151
|
|
|
|
02/25
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,292
|
|
|
$
|
760,022
|
|
|
|
02/25
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,364
|
|
|
$
|
949,981
|
|
Shafer
|
|
|
|
|
$
|
475,000
|
|
|
$
|
950,000
|
|
|
$
|
1,425,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
02/25
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,780
|
|
|
|
13,559
|
|
|
|
20,339
|
|
|
|
—
|
|
|
$
|
572,597
|
|
|
|
02/25
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,146
|
|
|
$
|
380,011
|
|
|
|
08/01
|
(5)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
101,617
|
|
|
$
|
4,184,588
|
|
Maass
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
724,328
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12/13
|
(6)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
54,657
|
|
|
$
|
2,500,011
|
|
(1)
|
For each NEO, except Messrs. Dahl
and Maass, amounts reported represent the potential payout range pursuant to our annual incentive plan, with all payments
subject to achievement of corporate and individual performance objectives and the discretion of the Compensation Committee.
The annual incentive plan is further explained in “Compensation of Named Executive Officers – NEO Pay Determinations
– 2019 Annual Cash Incentive Plan” in the CD&A of this Proxy Statement. Actual amounts earned under the annual
incentive plan in 2019 are included in the column entitled “Non-Equity Incentive Plan Compensation” of the Summary
Compensation Table above. Messrs. Dahl and Maass began their employment on August 1, 2019 and did not participate in our annual
incentive plan for 2019. Each of their cash incentive payments was awarded by Legacy TCF pursuant to Legacy TCF’s 2019
MIP and assumed by us in connection with the Merger.
|
|
|
(2)
|
Represents the award of PRSUs granted in 2019
under the 2017 Stock Plan, with a performance period that ends on December 31, 2021. The vesting was subject to the achievement
of pre-established performance targets and the NEO’s continued service through the vesting date. Because of the Merger,
achievement of performance targets was fixed at the target performance level before the Merger Date, and the earned PRSUs
are now only subject to time-based vesting requirements. See “Compensation of Named Executive Officers – NEO Pay
Determinations – 2019 Long-Term Equity Compensation” in the CD&A of this Proxy Statement for a description
of the terms of these awards. Any vested units will convert to shares of our common stock on a one-for-one basis. Earned PRSUs
that do not vest will be forfeited.
|
|
|
(3)
|
Represents the award of TRSUs granted in 2019
under the 2017 Stock Plan. The TRSUs vest in equal 20% increments on each of the first five anniversaries of the February 25,
2019 grant date. See “Compensation of Named Executive Officers – NEO Pay Determinations – 2019 Long-Term
Equity Compensation” in the CD&A of this Proxy Statement for a description of the terms of these awards. Any vested
units will convert to shares of our common stock on a one-for-one basis. TRSUs that do not vest will be forfeited.
|
|
|
(4)
|
In February 2019, the Compensation Committee
determined that to more closely align the interests of Messrs. Provost and Torgow with those of our shareholders, it would
exercise its discretion under the annual incentive plan not to award a cash incentive payment for 2018 to either Messrs. Provost
or Torgow. At that time, the Compensation Committee awarded each of Messrs. Provost and Torgow TRSUs under the 2017 Stock
Plan with a grant date fair value equal to $949,981, which approximated the target amount each executive would have been eligible
to receive in 2018 under the annual incentive plan. The TRSUs will vest in equal annual installments on each of the first
three anniversaries of the February 25, 2019 grant date.
|
|
|
(5)
|
Amounts represent an equity retention award
of TRSUs which will vest in equal amounts the first and second anniversary of the Merger Date. The material terms of the award
are described under the heading “Compensation Highlights – Equity Retention Awards” in the CD&A of this
Proxy Statement.
|
|
|
(6)
|
Amounts represent an equity retention award
of TRSUs which will vest in equal amounts on December 1, 2020 and the second anniversary of the Merger Date. The material
terms of the award are described under the heading “Executive – Compensation Highlights – Equity Retention
Awards” in the CD&A of this Proxy Statement.
|
|
|
(7)
|
The values shown are the aggregate grant date
fair value for initial awards computed in accordance with ASC 718.
|
2020 Proxy
Statement
|
|
44
|
Outstanding Equity Awards at December 31, 2019
|
|
|
The following table shows all equity awards that
were outstanding at December 31, 2019 for each NEO:
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Year of
|
|
|
Number of Securities
Underlying Unexercised
Options
(#)
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
|
|
|
Number of
Shares or
Units of Stock
That Have Not
Vested
|
|
|
Market Value
of Shares or
Units of Stock
That Have
Not Vested
|
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested
|
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units or
Other Rights
That Have Not
Vested
|
|
Name
|
|
Award
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)(1)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(2)
|
|
|
(#)
|
|
|
($)
|
|
Dahl
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,443
|
(3)
|
|
|
301,532
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28,991
|
(4)(5)
|
|
|
1,356,779
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,998
|
(6)
|
|
|
561,506
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
26,996
|
(4)(7)
|
|
|
1,263,413
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,737
|
(4)
|
|
|
923,692
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,339
|
(9)
|
|
|
1,045,465
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,339
|
(4)(10)
|
|
|
1,045,465
|
|
|
|
—
|
|
|
|
—
|
|
Provost
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
39,025
|
(12)(14)
|
|
|
1,826,370
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,172
|
(13)(22)
|
|
|
850,450
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27,117
|
(12)(16)
|
|
|
1,269,076
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,853
|
(13)(23)
|
|
|
788,720
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
21,065
|
(13)(21)
|
|
|
985,842
|
|
|
|
—
|
|
|
|
—
|
|
Klaeser
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,588
|
(13)(15)
|
|
|
121,118
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,549
|
(13)(17)
|
|
|
166,093
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,008
|
(12)(14)
|
|
|
608,774
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,093
|
(13)(22)
|
|
|
285,152
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,563
|
(12)(16)
|
|
|
400,748
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,322
|
(13)(23)
|
|
|
249,070
|
|
|
|
—
|
|
|
|
—
|
|
Torgow
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
39,025
|
(12)(14)
|
|
|
1,826,370
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,172
|
(13)(22)
|
|
|
850,450
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27,117
|
(12)(16)
|
|
|
1,269,076
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,853
|
(13)(23)
|
|
|
788,720
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
21,065
|
(13)(21)
|
|
|
985,842
|
|
|
|
—
|
|
|
|
—
|
|
Shafer
|
|
|
2017
|
|
|
|
3,553
|
|
|
|
5,328
|
(24)
|
|
|
53.72
|
|
|
|
2/22/2027
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2017
|
|
|
|
2,290
|
|
|
|
3,433
|
(25)
|
|
|
46.95
|
|
|
|
8/10/2027
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,487
|
(13)(15)
|
|
|
163,192
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
600
|
(13)(17)
|
|
|
28,080
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
326
|
(13)(18)
|
|
|
15,257
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,008
|
(12)(14)
|
|
|
608,774
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,057
|
(13)(22)
|
|
|
283,468
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,559
|
(12)(16)
|
|
|
634,561
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,426
|
(13)(23)
|
|
|
394,337
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
103,416
|
(13)(19)
|
|
|
4,839,869
|
|
|
|
—
|
|
|
|
—
|
|
Maass
|
|
|
2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,162
|
(11)
|
|
|
475,582
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,044
|
(3)
|
|
|
95,659
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,196
|
(4)(5)
|
|
|
430,373
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,854
|
(6)
|
|
|
180,367
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,614
|
(8)
|
|
|
356,335
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,673
|
(4)(7)
|
|
|
405,896
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,079
|
(4)
|
|
|
284,497
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,632
|
(9)
|
|
|
310,378
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,632
|
(4)(10)
|
|
|
310,378
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
54,657
|
(13)(20)
|
|
|
2,557,948
|
|
|
|
—
|
|
|
|
—
|
|
(1)
|
Represents the closing market
price of our common stock on the date of the stock option award.
|
|
|
(2)
|
Market value was determined using the
2019 year-end closing stock price of $46.80 per share as reported on Nasdaq.
|
|
|
(3)
|
Represents service-based restricted
stock awards granted by Legacy TCF that we assumed in the Merger (as adjusted for the Exchange Ratio) that vested on January
1, 2020.
|
|
|
(4)
|
Represents PRSUs or performance-based
restricted stock awards granted by Legacy TCF and assumed by us in the Merger (as adjusted for the Exchange Ratio) and converted
to earned PRSUs or restricted stock awards on the Merger Date, which are now only subject to time-based vesting requirements.
PRSUs granted in 2017 and 2018 were converted to earned PRSUs at the maximum level of performance (or at a single level of
performance, as applicable for the restricted stock awards) and awards granted in 2019 were converted to earned PRSUs at the
target level of performance based on Legacy TCF’s performance as measured at June 30, 2019, under the terms of the Merger
Agreement.
|
|
|
(5)
|
Vested on January 1, 2020.
|
2020 Proxy
Statement
|
|
45
|
(6)
|
Represents service-based
restricted stock awards granted by Legacy TCF that we assumed in the Merger (as adjusted for the Exchange Ratio) that vest(ed)
pro rata on January 1, 2019, 2020, and 2021.
|
|
|
(7)
|
Vests on January 1, 2021.
|
|
|
(8)
|
Amounts represent a one-time award of
time-based restricted stock made to Mr. Maass under the Legacy TCF Omnibus Plan in connection with his performance in
2017 and to encourage his retention. The award vests pro rata on January 1, 2019, 2020, and 2021.
|
|
|
(9)
|
Represents service-based restricted
stock awards granted by Legacy TCF that we assumed in the Merger (as adjusted for the Exchange Ratio) that vest pro-rata on
April 1, 2020, January 1, 2021 and 2022.
|
|
|
(10)
|
Vests on January 1, 2022.
|
|
|
(11)
|
Represents service-based restricted
stock awards granted by Legacy TCF that we assumed in the Merger (as adjusted for the Exchange Ratio) that vest on April 1,
2020.
|
|
|
(12)
|
Represents PRSUs granted by us that
were converted to earned PRSUs in the Merger, which are now subject only to time-based vesting requirements, at rates equal
to the target level of performance for awards granted in 2017 and 2019 and at 112.5% of the target level of performance for
awards granted in 2018, based on our performance as measured at June 30, 2019, under the terms of the PRSU agreements.
|
|
|
(13)
|
TRSU award that earns dividend equivalent
units from grant date.
|
|
|
(14)
|
Vests on December 31, 2020. For Mr. Klaeser,
whose employment as Chief Financial Officer will terminate on October 1, 2020, vests on October 1, 2020.
|
|
|
(15)
|
Vests on August 31, 2021. For Mr. Klaeser,
whose employment as Chief Financial Officer will terminate October 1, 2020, vests on October 1, 2020.
|
|
|
(16)
|
Vests on December 31, 2021. For Mr. Klaeser,
whose employment as Chief Financial Officer will terminate on October 1, 2020, vests on October 1, 2020.
|
|
|
(17)
|
Vests on February 21, 2022, and October
1, 2020. For Mr. Klaeser, whose employment as Chief Financial Officer will terminate on October 1, 2020, vests on October
1, 2020.
|
|
|
(18)
|
Vests on August 9, 2022.
|
|
|
(19)
|
Vests in equal 50% increments on August
1, 2020 and 2021.
|
|
|
(20)
|
Vests in equal 50% increments on December
1, 2020 and August 1, 2021.
|
|
|
(21)
|
Vests in equal one-third increments
on February 25, 2020, 2021, and 2022.
|
|
|
(22)
|
Vest(ed) in equal 20% increments on
February 27, 2019, 2020, 2021, 2022, and 2023. For Mr. Klaeser, whose employment as Chief Financial Officer will terminate
on October 1, 2020, vested in 20% increments on February 27, 2019 and 2020, with the remainder to vest on October 1,
2020.
|
|
|
(23)
|
Vests in equal 20% increments on February
25, 2020, 2021, 2022, 2023, and 2024. For Mr. Klaeser, whose employment as Chief Financial Officer will terminate on
October 1, 2020, 20% vested on February 25, 2020, with the remainder to vest on October 1, 2020.
|
|
|
(24)
|
Represents stock options that vest ratably
on the anniversary date of the February 21, 2017 grant date over a period of five years.
|
|
|
(25)
|
Represents stock options that vest ratably
on the anniversary date of the August 9, 2017 grant date over a period of five years.
|
Option Exercises and Stock Vested in 2019
|
|
|
The following table shows information for option
exercises and vesting of stock awards in 2019:
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of Shares
Acquired on
Exercise
(#)
|
|
|
Value Realized
on Exercise
($)
|
|
|
Number of Shares
Acquired on Vesting
(#)(2)
|
|
|
Value Realized
on Vesting
($)(3)
|
|
Dahl(1)
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
Provost
|
|
|
—
|
|
|
|
—
|
|
|
|
13,026
|
|
|
|
611,422
|
|
Klaeser
|
|
|
—
|
|
|
|
—
|
|
|
|
18,755
|
|
|
|
860,831
|
|
Torgow
|
|
|
—
|
|
|
|
—
|
|
|
|
13,026
|
|
|
|
611,422
|
|
Shafer
|
|
|
—
|
|
|
|
—
|
|
|
|
15,117
|
|
|
|
706,167
|
|
Maass(1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(1)
|
No awards vested for Messrs.
Dahl or Maass following the commencement of their employment on the Merger Date.
|
|
|
(2)
|
The number of shares shown reflects
the gross number of shares covered by awards that vested in 2019. Shares for the required tax withholding were deducted from
the gross number of shares vested, resulting in a smaller number of shares acquired upon vesting.
|
|
|
(3)
|
Amounts were calculated using the closing
stock price as reported on Nasdaq on the vesting dates of the stock awards.
|
2020 Proxy
Statement
|
|
46
|
The following table shows information on the
defined benefit pension plan benefits of the NEOs:
Name
|
Plan Name
|
Number of Years
Credited Service
(#)(2)
|
Present Value of
Accumulated
Benefit
($)(3)
|
Payments
During Last
Fiscal Year
($)
|
Dahl(3)
|
Legacy TCF Cash Balance Pension Plan(1)
|
5.75
|
$
|
85,198
|
$
|
—
|
Provost
|
—
|
—
|
|
—
|
|
—
|
Klaeser
|
—
|
—
|
|
—
|
|
—
|
Torgow
|
—
|
—
|
|
—
|
|
—
|
Shafer
|
—
|
—
|
|
—
|
|
—
|
Maass
|
—
|
—
|
|
—
|
|
—
|
(1)
|
We assumed the obligations under the Legacy TCF Cash Balance Pension
Plan in connection with the Merger.
|
(2)
|
The number of years of credited service is less than actual years of service with Legacy
TCF or its subsidiaries because the plan was frozen during the NEO’s tenure with Legacy TCF or its subsidiaries. Mr. Dahl
was not given credit for service other than for his actual years of service with Legacy TCF or its subsidiaries through April
1, 2006, the date the plan was frozen.
|
(3)
|
All values shown are determined using interest rate and mortality assumptions consistent
with those used in the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December
31, 2019. The accumulated benefit is measured against Legacy TCF’s December 31, 2018 value.
|
Material Information Regarding Pension Benefits
Legacy TCF Pension Plan
As of the Merger Date, we assumed Legacy TCF’s
obligations under the TCF Cash Balance Pension Plan (the “Legacy TCF Pension Plan”). The Legacy TCF Pension Plan was
terminated effective November 1, 2019.
Benefits for the Legacy TCF Pension Plan have
been provided under a cash balance formula since September 1, 1990. Compensation credits equal to the Applicable Percentage (based
on the sum of age and years of service) multiplied by Certified Earnings (as defined below) were credited to the retirement accounts
periodically. Compensation credits were discontinued effective April 1, 2006.
The following table reflects the compensation
credits that were in effect for the periods indicated above each column:
|
Applicable
Percentage
|
|
Sept. 1, 1990
|
Jan. 1, 2002
|
Jan. 1, 2004
|
Jan. 1, 2005
|
Jan. 1, 2006
|
Beginning on
|
Sum of the Participant’s age plus years
|
prior to
|
prior to
|
prior to
|
prior to
|
prior to
|
or after
|
of service on the last day of the month
|
Jan. 1, 2002
|
Jan. 1, 2004
|
Jan. 1, 2005
|
Jan. 1, 2006
|
April 1, 2006
|
April 1, 2006
|
Under 30
|
2.5%
|
2.5%
|
2.5%
|
2.5%
|
2.5%
|
—
|
Under 34
|
2.5%
|
2.5%
|
—
|
2.5%
|
2.5%
|
—
|
Under 36
|
2.5%
|
2.5%
|
—
|
—
|
2.5%
|
0.0%
|
Under 38
|
2.5%
|
2.5%
|
—
|
—
|
—
|
—
|
Under 40
|
2.5%
|
—
|
—
|
—
|
—
|
—
|
30 but less than 32
|
—
|
—
|
2.6%
|
—
|
—
|
—
|
32 but less than 34
|
—
|
—
|
2.7%
|
—
|
—
|
—
|
34 but less than 36
|
—
|
—
|
2.8%
|
2.6%
|
—
|
—
|
36 but less than 38
|
—
|
—
|
2.9%
|
2.7%
|
2.6%
|
0.0%
|
38 but less than 40
|
—
|
2.6%
|
3.0%
|
2.8%
|
2.7%
|
0.0%
|
40 but less than 50
|
3.5%
|
3.5%
|
3.5%
|
3.5%
|
3.5%
|
0.0%
|
50 but less than 60
|
4.5%
|
4.5%
|
4.5%
|
4.5%
|
4.5%
|
0.0%
|
60 but less than 70
|
5.5%
|
5.5%
|
5.5%
|
5.5%
|
5.5%
|
0.0%
|
70 but less than 80
|
6.5%
|
6.5%
|
6.5%
|
6.5%
|
6.5%
|
0.0%
|
80 or more
|
7.5%
|
7.5%
|
7.5%
|
7.5%
|
7.5%
|
0.0%
|
Interest credits are credited to the retirement
accounts using the one-year average of the 5-year Treasury Constant Maturity Rate plus 0.25%, rounded to the nearest quarter point,
capped at 12% and determined at the beginning of each calendar year.
Certified Earnings generally include earned income,
wages, salaries, and fees (or other amounts) for services rendered in the course of employment. Also included are annual cash
incentives, commissions paid to salespersons, compensation for services on the basis of profits, commissions on insurance premiums,
tips and bonuses (but not including payments for referrals), and any pre-tax contributions to the TCF 401K Plan. Restricted stock
awards are not included in Certified Earnings.
2020 Proxy
Statement
|
|
47
|
Before freezing the plan on April 1, 2006, cash
balance benefits became vested after five years of vesting service, being 0% vested beforehand.
The normal retirement date is age 65. A participant
is eligible for early retirement if termination occurs after attainment of age 55 with at least five years of vesting service.
A participant is eligible for vested terminated benefits if termination occurs after attainment of at least five years of vesting
service. In either case, distribution of the cash balance account balance can occur immediately upon termination. The amount of
the distribution depends upon the payment form elected and is actuarially equivalent to the account balance earned as of the date
of distribution. The normal payment form is the life-only annuity. A variety of other payment forms are available (including the
lump sum option), all equivalent in value if paid over an average lifetime. Mr. Dahl is currently eligible for early retirement
under the Legacy TCF pension plan. Additionally, an active employee is eligible for distributions beginning at age 62.
The present value of the accumulated benefit
displayed in the Pension Benefits table is the discounted value of the projected account balance at age 65 (projected with interest
credits only). The value of the accumulated benefit was determined using assumptions consistent with those used for 2019 financial
reporting purposes under FASB ASC Topic 715, “Compensation – Retirement Benefits” (“Topic 715”)
unless otherwise directed by Regulation S-K. Some of those assumptions are as follows:
•
|
Benefits were assumed to commence at age 65;
|
•
|
The assumed form of payment at distribution was the lump sum option;
|
•
|
All benefits and present values are determined as of December 31, 2019, the Topic 715
measurement date;
|
•
|
The discount rate used to determine present values was 1.95% at December 31, 2019;
|
•
|
The rate of future interest credits used to determine present values as of December 31, 2019
is 2.05% per annum, and the rate of future interest credits used at December 31, 2018 was a select and ultimate assumption
starting at 3.00% per annum for 2019 through 2021 and phasing to 3.25% for 2022 and beyond; and
|
•
|
No pre-retirement mortality, termination, retirement, or disability was assumed.
|
See Note 21 of the Notes to Consolidated Financial
Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for additional information regarding
our accounting policy and assumptions for employee benefit plans.
Nonqualified Deferred Compensation in 2019
|
|
The following table
shows certain information for TCF’s nonqualified account-type plans for the NEOs. In September 2006, the Legacy TCF
board approved the TCF Financial Corporation Deferred Compensation Plan (the “DC Plan”, formerly the Chemical
Financial Corporation Deferred Compensation Plan), a voluntary nonqualified supplemental retirement program for a select
group of management personnel.
The TCF 401K Supplemental Plan (the “Supplemental
Plan”) shown below is a Legacy TCF nonqualified supplemental program for the TCF 401K Plan, a qualified tax or deferred
plan under Section 401(k) of the Code which we assumed in connection with the Merger.
The TCF contributions shown in the table for
the Supplemental Plan are matching contributions which are made at the same rate as under the TCF 401K Plan. For further information
about this plan, refer to the CD&A under “Compensation of Named Executive Officers – Other Forms of Compensation.”
The Deferred Stock Plan is also a Legacy TCF plan that we assumed in connection with the Merger which consists solely of previously-deferred
vested TCF common stock. The Supplemental Plan was amended October 23, 2019 to discontinue future deferrals by participants effective
as of January 1, 2020.
|
|
Executive
|
Registrant
|
Aggregate
|
|
Aggregate
|
|
|
Contributions
|
Contributions
|
Earnings
|
Aggregate
|
Balance at
|
|
|
in Last Fiscal
|
in Last Fiscal
|
in Last Fiscal
|
Withdrawals/
|
December 31,
|
|
|
Year
|
Year
|
Year
|
Distributions
|
2019
|
Name
|
Plan
|
($)(1)
|
($)(2)
|
($)(3)
|
($)(4)
|
($)(5)
|
Dahl
|
Supplemental Plan
|
257,564
|
116,666
|
449,852
|
(70,133)
|
2,695,014
|
|
Deferred Stock Plan
|
—
|
—
|
556,284
|
(73,762)
|
2,675,147
|
Provost
|
DC Plan
|
—
|
—
|
89,881
|
—
|
516,145
|
Klaeser
|
DC Plan
|
—
|
—
|
954,412
|
—
|
4,667,137
|
Torgow
|
DC Plan
|
—
|
—
|
26,222
|
—
|
1,295,395
|
Shafer
|
DC Plan
|
587,600
|
—
|
187,606
|
—
|
1,564,519
|
Maass
|
Supplemental Plan
|
207,702
|
37,932
|
44,859
|
(8,917)
|
400,013
|
(1)
|
Amounts included in this column are included in the “Salary”
column in the Summary Compensation Table. Amounts included in the Summary Compensation Table for Messrs. Dahl and Maass reflect
contributions from the Merger Date.
|
(2)
|
The amounts shown in this column are reported as compensation in the Summary Compensation
Table. Amounts included in the Summary Compensation Table for Messrs. Dahl and Maass reflect contributions from the Merger
Date.
|
(3)
|
Amounts consist of dividend equivalents and unrealized appreciation or depreciation on
the deemed account investments, primarily TCF common stock. There were no above-market or preferential earnings or appreciation
in 2019 or previous years. Amounts included in this column are not included in the Summary Compensation Table.
|
(4)
|
Amounts consist of dividend equivalents on deemed investments in TCF common stock and
distributions of vested shares from the Deferred Stock Plan which were included for each participant in the Summary Compensation
Table in the years granted. The dividend equivalents are also included in the Aggregate Earnings in Last Fiscal Year column
of this table.
|
(5)
|
The aggregate balance at last fiscal year-end shown in this column includes contributions
in prior years which were reported as “Salary” and “All Other Compensation” on the Summary Compensation
Table for the applicable year.
|
2020 Proxy
Statement
|
|
48
|
Material Information Regarding the DC Plan
•
|
The NEOs in this Proxy Statement are eligible to participate in the DC
Plan. Participants may elect to defer up to 85% of their compensation 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 NEO who is a participant in the DC Plan, are included in the table
above, 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, 2019, participants could change their
investment designation on a daily basis.
|
•
|
Participants elect, in advance of the deferral of their compensation, when the funds will
be distributable. The aggregate balances of the participants are distributable, as designated by each participant, during
January of the calendar year following the calendar year in which any of the following occur: the participant’s termination
of employment; a change in control; the participant’s death or disability; an unforeseeable emergency; or at a specified
time, as determined by the participant. In addition, distributions may be made from the DC Plan in the event of an unforeseeable
emergency. The DC Plan allows distributions to be made in a lump sum or up to 15 annual installments. Participants may change
their current distribution election as long as the change is made at least 12 months prior to their first payment and is delayed
by at least 5 years. The DC Plan is unfunded for tax purposes and for purposes of ERISA.
|
Material Information Regarding the Supplemental
Plan
•
|
Covered compensation and contributions under a 401(k) plan are subject
to certain limits imposed by the IRS. Legacy TCF maintained the Supplemental Plan to allow Legacy TCF NEOs to make pre-tax
contributions from their salary and annual cash incentives at the same rate as under the TCF 401K Plan up to a total of 50%
of covered pay and to receive an employer matching contribution at the same rate as under the TCF 401K Plan on their contributions
up to 5% of pay.
|
•
|
Employee contributions to the Supplemental Plan were invested, at the employee’s election,
in the same investment choices that were available in the TCF 401K Plan. Employer matching contributions to the Supplemental
Plan were invested 100% in TCF common stock.
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The amounts allocated to the accounts of each of the NEOs that participated primarily consisted
of deemed TCF common stock. Earnings on deemed TCF common stock investments in the plan during the period of January 1, 2019
through July 31, 2019 consisted of $.30 per share in dividend equivalents and appreciation of $1.89 per share. Earnings
on deemed TCF common stock investments in the plan during the period of the Merger Date through December 31, 2019 consisted
of $.70 per share in dividend equivalents and appreciation of $4.15 per share. Dividend-equivalent distributions are made
from the Supplemental Plan at the same time and at the same rate as to holders of TCF common stock generally.
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Distributions from the Supplemental Plan occur in a lump sum in the event of death, disability.
Participants may also elect to receive a lump sum distribution either six months after termination, on a date certain or in
the event of a change in control, or may receive a series of no more than ten annual payments following termination.
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Deemed investments in TCF common stock selected by the NEOs generally cannot be changed during
employment (except in certain change in control situations) and such investments are distributed in-kind upon termination
of employment, either in a lump sum six months thereafter or in annual installments, as elected by the participant.
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Material Information Regarding the Deferred
Stock Plan
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There were no contributions to the Deferred Stock Plan in 2019.
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The accounts of the NEOs are deemed to be invested in shares of TCF common stock. Distributions
are made in-kind in the form of TCF common stock.
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Distributions are made in accordance with the terms of the restricted stock agreements applicable
to the shares that have been deferred into the Deferred Stock Plan.
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TCF’s cost of the Deferred Stock Plan in 2019 was $15,696 for recordkeeper and trustee
expenses.
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Shares of restricted stock contributed to the Deferred Stock Plan are not entitled to dividends
until they vest.
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TCF has established a trust fund to hold assets for the payment of benefits as they come
due.
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At December 31, 2019, the total investment in TCF common stock under the Deferred Stock Plan
was 289,510 shares valued at $13,549,062.
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2020 Proxy
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The following pay ratio and supporting information
compares the annual total compensation of our employees other than our CEO (including full-time, part-time, seasonal and temporary
employees) and the annual total compensation of Craig Dahl, our CEO as of December 31, 2019, as required by regulations promulgated
pursuant to Section 953(b) of the Dodd-Frank Act. The pay ratio is a reasonable estimate calculated in a manner consistent with
Item 402(u) of Regulation S-K.
Due to the substantial change in our employee
population resulting from the Merger, we calculated a new median employee as of December 31, 2019 (as discussed in more detail
below) and calculated the pay ratio of our CEO against our 2019 median employee.
For 2019, our last completed fiscal year:
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The median of the annual total compensation of all employees of our company
(other than our CEO) was $45,637; and
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The annual total compensation of Mr. Dahl, our CEO was $5,078,116 as determined by annualizing
his compensation using the method discussed below.
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Based on this information, the ratio of the total
compensation of our CEO to the median of the annual total compensation of all other employees was 111 to 1. Because Mr. Dahl
became our CEO on the Merger Date, his total compensation as reported in the Summary Compensation Table included in this Proxy
Statement is calculated based on payments from TCF from the Merger Date through December 31, 2019. Therefore, we annualized his
compensation to provide a more complete approximation of his total compensation for the full year. To determine the pay ratio,
we took the following steps:
We determined that as of December 31, 2019, the determination date, our employee population consisted
of approximately 8,022 individuals, primarily located in the United States, but including our Canadian employees. This population
consists of full-time, part-time, temporary and seasonal employees of TCF and each of its direct and indirect subsidiaries. However,
it does not include independent contractors who were employed by and had their compensation determined by unaffiliated third parties.
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 2019. 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.
We annualized the compensation of employees that
we hired in 2019, who were not employed for the full year (including the employees we assumed in connection with our Merger),
by dividing their 2019 W-2 Box 5, Medicare Wages, by (a) the number of regular hours they worked in 2019, plus (b) the number
of overtime hours they worked in 2019 times 1.5, and then multiplied the result by their full-time or part-time standard annual
hours. We annualized compensation for part-time employees without making a full-time equivalent adjustment for part-time employees.
Amounts paid in Canadian dollars were converted to U.S. dollars using the 2019 12-month average exchange rate. We used first quarter
wages to annualize the compensation for three Legacy TCF employees that were on leave after the Merger Date.
Once we identified our median employee, we calculated
such employee’s annual total compensation for 2019 in accordance with the requirements of Item 402(c)(2)(x) of Regulation
S-K, resulting in annual total compensation of $45,637.
To annualize Mr. Dahl’s compensation
due to his partial year tenure as our CEO, we calculated the sum of Mr. Dahl’s: (i) base salary, (ii) full annual cash
incentive for 2019, (iii) long-term equity awards granted by Legacy TCF in January 2019 which were converted to TRSUs of TCF at
the Merger Date, (iv) any actual change in pension value for all of 2019, and (v) all other compensation reportable pursuant to
Item 402(c)(2) (ix) paid by us and Legacy TCF for the full year. We believe that annualizing Mr. Dahl’s post-Merger
base salary, and adding his equity compensation granted by Legacy TCF (since he did not receive any additional equity in connection
with the Merger) reflects the truest depiction of both his total compensation and the ratio of that compensation to that of our
median employee.
Employment, Retention and Equity Award Agreements
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Below is a summary of employment and other arrangements
with our NEOs. Cause, Good Reason, and Change in Control for each individual are defined below. Other capitalized terms not defined
below have the meaning assigned to them in such individual’s agreement. For more information on termination and other severance
payment rights of each NEO, see “Potential Payments Upon Termination or Change in Control” herein.
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Craig Dahl Employment and Equity Award Agreements
On November 6, 2019, we entered into an amended
and restated employment agreement with Mr. Dahl, effective November 6, 2019, which will continue through November 6, 2022,
pursuant to which he is entitled to receive:
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An annual salary of at least $1,050,000, subject to annual review and
increase;
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Annual target bonus opportunity that is no less than 100% of base salary;
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Annual equity-based award with a target value equal to 200% of base salary; and
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Perquisites including but not limited to an auto allowance and payment of certain membership
fees.
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In addition, if Mr. Dahl’s employment
is terminated by TCF without Cause or by Mr. Dahl for Good Reason, subject to Mr. Dahl’s execution and non-revocation
of a release of claims, Mr. Dahl will be eligible to receive:
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A lump sum equal to 2.5 times the sum of (i) his Annual Base Salary and
(ii) the average of his annual bonus for the three most recently completed fiscal years;
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Any earned but unpaid annual bonus;
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The acceleration and vesting of all outstanding equity awards; and
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Payment of monthly COBRA insurance premiums for up to twenty-four months.
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In addition, the definition of Change in Control
was changed by increasing the percentage of securities of TCF that any person would have to become the beneficial owner of in
order to qualify as a Change in Control from 30% to 40% and the definition was expanded to include an “Active Change in
Control Proposal Period” as defined in the Employment Agreement consistent with employment agreements executed by our other
executives in connection with the Merger. For more details on termination payments paid to each NEO, see “Potential Payments
Upon Termination or Change in Control” herein.
Equity Award Agreements
Restricted Stock Award Agreements dated January
25, 2017, January 24, 2018, March 6, 2018, and February 8, 2019
As described above, Mr. Dahl’s employment
agreement will govern the treatment of restricted stock awards (which were converted into TRSUs as of the Merger Date) granted
under the Restricted Stock Award Agreements dated January 25, 2017, January 24, 2018, March 6, 2018, and February 8, 2019 in the
event he (a) is terminated by us without Cause, (b) terminates his employment for Good Reason, (c) dies, (d) is terminated due
to a Disability, or (e) Retires with one year’s advance notice.
Performance-Based Restricted Stock Unit Agreements
dated January 25, 2017, January 24, 2018, and February 8, 2019
As described above, Mr. Dahl’s employment
agreement will govern the treatment of performance-based restricted stock units (which were converted into TRSUs as of the Merger
Date) granted under the Performance-Based Restricted Stock Unit Agreements dated January 25, 2017, January 24, 2018, and February
8, 2019 in the event he (a) is terminated by us without Cause, (b) terminates his employment for Good Reason, (c) dies, (d) is
terminated due to a Disability, or (e) Retires with one year’s advance notice.
David Provost and Gary Torgow Retention and
Equity Award Agreements
Retention Agreements
On January 27, 2019, TCF entered into retention
agreements with Messrs. Provost and Torgow, effective August 1, 2019 and amended and restated on March 10, 2020, which will continue
through August 1, 2022 (except in the event of a Change in Control, in which case the agreement will expire on the later of August
1, 2022 or two years following the date on which such Change in Control occurred) and provide for the following:
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An annual salary of $950,000, subject to annual review and increase;
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Annual target bonus opportunity that is equal to 100% of base salary;
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Annual equity-based award with a target value equal to 200% of base salary;
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Perquisites including but not limited to an auto allowance and payment of certain membership
fees; and
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Participation in the same benefit plans as apply to TCF Senior Executives generally, and
on the same terms and conditions.
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Upon any termination of executive’s employment
during or following expiration of the term of the retention agreement, TCF will continue to provide each executive with the Office
of the Chair Benefits while the executive continues to serve on the Board, including an office suite, use of a driver, certain
technological equipment, and access to the company aircraft, in each case with respect to business activities on behalf of TCF.
If Messrs. Provost or Torgow’s employment
is terminated by TCF without Cause or by the executive for Good Reason, subject to the executive’s execution and non-revocation
of a release of claims, he is eligible to receive:
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Two times the sum of (a) the executive’s then current Base Salary
and (b) the average of the executive’s annual bonus for the three most recently completed calendar years (with each
bonus calculated as the higher of the actual bonus, including amounts deferred or paid in the form of equity, or $1.5 million
per year (such highest bonus, the “Recent Bonus”)), payable in equal installments over 104 weeks; and
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A lump sum payment equal to 24 times the executive’s monthly contribution towards coverage
under COBRA.
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As of December 31, 2019, if either Messrs. Provost
or Torgow retired on or after 18 months following the Merger Date, upon 30 days’ notice and subject to a release of claims
and 24-month non-competition and non-solicitation agreement, he was eligible to receive base salary and bonus payments for the
remainder of the time from such retirement until the end of the term.
Following the entry into amended and restated
retention agreements with Messrs. Provost and Torgow on March 10, 2020 which eliminated the provisions of the retention agreements
related to cash severance payments and accelerated equity benefits upon retirement after 18 months following the Merger Date,
all equity-based awards granted to Messrs. Provost and Torgow are governed by the terms of the specific awards as described below.
Equity Award Agreements
TRSU Agreements dated February 27, 2018
As described above, Messrs. Provost’s and
Torgow’s retention agreements will govern the treatment of TRSUs granted under the TRSU agreements dated February 27, 2018
in the event the executive (a) is terminated by us without Cause, (b) terminates his employment for Good Reason, (c) dies, or
(d) is terminated due to a Disability.
If the executive retires on one year’s
advance notice after reaching age 55 following at least ten years of service, under the TRSU agreements, unvested TRSUs will vest
on a pro rata basis based on the number of months that have passed since the last annual vesting date, or if no vesting date has
occurred, the grant date, and the effective date of his termination.
TRSU and PRSU Agreements dated February
25, 2019
We entered into TRSU and PRSU agreements with
Messrs. Provost and Torgow on February 25, 2019. Under such 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, or if the executive
retires on one year’s advance notice after reaching age 55 following at least ten years of service or on or following 18
months following the Merger without one year’s notice, all TRSUs granted to the executive, including TRSUs issued under
prior agreements and plans, will 100% vest.
Under the terms of such PRSUs, because the Merger
resulted in a Change in Control, the performance metrics of all PRSUs, including PRSUs issued under prior agreements and plans,
were measured as of the latest practicable date before the Merger Date, and the number of PRSUs was fixed at the greater of the
target (100%) performance level or actual performance, the “earned PRSUs,” and such earned PRSUs are now subject only
to time-based vesting requirements based on the executive’s continued service through the applicable performance period.
If, following the Merger, the executive’s employment is terminated without Cause or he terminates his employment for Good
Reason, the earned PRSUs will vest as of his employment termination date. Following the Merger, each executive’s earned
PRSUs will fully vest on his Retirement (on one year’s advance notice), on his death, or his Disability, whether granted
hereunder or granted before February 25, 2019.
In the event of any conflict between the terms
of the TRSU or PRSU agreement (as applicable), and his retention agreement and/or the terms of the 2017 Stock Plan, the provisions
of the TRSU or PRSU agreement (as applicable), or, to the extent more favorable, the retention agreement will control; provided,
however, that any provisions of the TRSU or PRSU agreement (as applicable) relating to the timing of settlement or payment in
respect of the TRSUs or PRSUs (as applicable) will control in the event of any conflict between the TRSU or PRSU agreement (as
applicable), the 2017 Stock Plan, any prior plan and the award agreements thereunder, and his retention agreement.
Dennis Klaeser Employment and Equity Award
Agreements
Employment and Letter Agreement
On July 1, 2018, TCF entered into an employment
agreement with Mr. Klaeser, effective July 1, 2018, which was supplemented by his letter agreement dated December 13, 2019.
The employment agreement, as supplemented by the letter agreement, will continue through October 1, 2020, when he will incur a
Termination without Cause and he will be entitled to receive the Change in Control Severance Pay as defined in his employment
agreement. Under Mr. Klaeser’s employment agreement, as supplemented, he is entitled to receive:
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An annual salary of $750,000, subject to annual review and adjustment;
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Annual target bonus opportunity that is no less than 80% of base salary;
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Annual equity-based award with a target value equal to 80% of base salary;
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Perquisites including but not limited to an auto allowance and payment of certain membership
fees; and
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Participation in the same benefit plans as apply to TCF Senior Executives generally, and
on the same terms and conditions.
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When Mr. Klaeser’s employment terminates
on October 1, 2020, he will be eligible to receive the following Change in Control Severance Pay:
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A lump sum payment equal to two times the sum of (a) his then current
Base Salary and (b) the average of his annual bonus for the three most recently completed calendar years;
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His pro rata bonus for 2020;
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The acceleration and vesting of all outstanding equity awards;
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12 months of outplacement services through an external firm following termination; and
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A lump sum health care stipend of $10,000.
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Under his employment agreement, if Mr. Klaeser
experiences a qualifying termination within two years following a Change in Control, or within six months before the date of a
Change in Control, we will pay him the above-described severance payment in a lump sum cash payment and he will be entitled to
the above-referenced benefits.
2020 Proxy
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Under Mr. Kleaser’s employment agreement,
he is not entitled to any additional severance payments in the event of his termination due to death, Disability or Retirement
with one year’s advance notice.
In addition, under his employment agreement,
in the event he (a) is terminated by us without Cause, (b) terminates his employment for Good Reason, (c) dies, (d) is terminated
due to a Disability, or (e) Retires on one year’s advance notice after December 31, 2019, all equity-based awards will be
treated as follows: all unvested stock options will immediately vest, the restrictions on all time-vesting restricted stock will
lapse, all TRSUs will immediately vest and be convertible into shares of our common stock, and all PRSUs will be settled at 100%
of target; provided, that, any PRSUs granted before November 2, 2017, will continue to be subject to their terms on such
date.
Equity Award Agreements
TRSU Agreements dated February 27, 2018
As described above, Mr. Klaeser’s
employment agreement will govern the treatment of TRSUs granted under the TRSU Agreements dated February 27, 2018 in the event
he (a) is terminated by us without Cause, (b) terminates his employment for Good Reason, (c) dies, (d) is Disabled, or (e) his
Retirement after December 31, 2019 (on one year’s advance notice).
TRSU and PRSU Agreements dated February
25, 2019
We entered into TRSU and PRSU agreements with
Mr. Klaeser on February 25, 2019. Under such TRSU agreements, if he is terminated without Cause by us or he terminates his
employment for Good Reason, in either case following a Change in Control, all TRSUs granted to him, including TRSUs issued under
prior agreements and plans, will 100% vest.
Under the terms of such PRSUs, because the Merger
resulted in a Change in Control, the performance metrics of all PRSUs, including PRSUs issued under prior agreements and plans
(including PRSUs granted before November 2, 2017), were measured as of the latest practicable date before the Merger Date, and
the number of PRSUs was fixed at the greater of the target (100%) performance level or actual performance, which we refer to as
the “earned PRSUs,” and such earned PRSUs are now subject only to time-based vesting requirements based on the executive’s
continued service through the applicable performance period. If, following the Merger, Mr. Klaeser’s employment is
terminated without Cause or he terminates his employment for Good Reason, the earned PRSUs will vest as of his employment termination
date. Following the Merger, his earned PRSUs will fully vest on his Retirement (on one year’s advance notice), death or
Disability, whether granted hereunder or granted before February 25, 2019.
In the event of any conflict between the terms
of the TRSU or PRSU agreement (as applicable), and his employment agreement and/or the terms of the 2017 Stock Plan, the provisions
of the TRSU or PRSU agreement (as applicable), or, to the extent more favorable, the employment agreement will control; provided,
however, that any provisions of the TRSU or PRSU agreement (as applicable) relating to the timing of settlement or payment in
respect of the TRSUs or PRSUs (as applicable) will control in the event of any conflict between the TRSU or PRSU agreement (as
applicable), the 2017 Stock Plan, any prior plan and the award agreements thereunder, and the employment agreement.
Thomas Shafer Employment and Equity Award
Agreements
Employment Agreement
On July 31, 2019, TCF entered into an amended
employment agreement with Mr. Shafer which will continue through August 1, 2021 and automatically renews for successive
periods unless either party provides the other party with notice of intention to terminate at least 30 days before an anniversary
of the effective date, in which case the agreement will terminate at the end of the then-current two-year term. Under Mr. Shafer’s
employment agreement, he is entitled to receive:
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An annual salary of $950,000, subject to annual review and adjustment;
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Annual target bonus opportunity that is no less than 100% of base salary;
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Annual equity-based award with a target value equal to 100% of base salary;
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Perquisites including but not limited to an auto allowance and payment of certain membership
fees; and
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Participation in the same benefit plans as apply to TCF Senior Executives generally, and
on the same terms and conditions.
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If Mr. Shafer’s employment is terminated
by TCF without Cause or by him for Good Reason, each a qualifying termination, not within six months before or two years after
a Change in Control, subject to his execution and non-revocation of a release of claims, Mr. Shafer will be eligible to receive:
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two times the sum of (a) his then current Base Salary and (b) the average
of his annual bonus for the three most recently completed fiscal years, payable in equal installments over 104 weeks; provided,
that, Mr. Shafer will not be entitled to such severance payment if he experiences a qualifying termination within two
years of the Merger Date;
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12 months of outplacement services through an external firm following termination; and
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A lump sum health care stipend of $10,000.
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Under his employment agreement, if Mr. Shafer
experiences a qualifying termination within two years following a Change in Control, or within six months before the date of a
Change in Control, we will pay him the above-described severance payment in a lump sum cash payment and he will be entitled to
the above-referenced benefits; provided, that, the Merger will not constitute a Change in Control. In addition, if he experiences
a qualifying termination after the Change in Control, his outstanding equity awards will vest as described below, except that
PRSUs will vest at the greater of target or actual performance.
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Under Mr. Shafer’s employment agreement,
he is not entitled to any additional severance payments in the event of his termination due to death, Disability or Retirement
with one year’s advance notice.
In addition, under his employment agreement,
in the event he (a) is terminated by us without Cause, (b) terminates his employment for Good Reason, (c) dies, (d) is terminated
due to a Disability, or (e) his Retirement on one year’s advance notice, all equity-based awards will be treated as follows:
all unvested stock options will immediately vest, the restrictions on all time-vesting restricted stock will lapse, all TRSUs
will immediately vest and be convertible into shares of our common stock, and all PRSUs will be settled at 100% of target; provided,
that, any PRSUs granted before November 2, 2017, will continue to be subject to their terms on such date.
Equity Award Agreements
TRSU Agreements dated February 27, 2018
As described above, Mr. Shafer’s employment
agreement will govern the treatment of TRSUs granted under the TRSU agreements dated February 27, 2018 in the event he (a) is
terminated by us without Cause, (b) terminates his employment for Good Reason, (c) dies, (d) is Disabled, or (e) his Retirement
(on one year’s advance notice).
TRSU and PRSU Agreements dated February
25, 2019
Mr. Shafer entered into the same form of
TRSU and PRSU Agreements dated February 25, 2019 that are described above for Mr. Klaeser under the heading “Dennis
Klaeser Employment and Equity Award Agreements—Equity Award Agreements—TRSU and PRSU Agreements date February 25,
2019.”
2019 Equity Retention Award
As described under the heading “Compensation
Highlights—Equity Retention Awards” in the CD&A of this proxy statement, in connection with the Merger, we granted
equity retention awards consisting of TRSUs to induce Mr. Shafer to remain employed with us following the Merger Date. The
retention award agreement provides that, in the event of his termination without Cause by us, or if he terminates his employment
for a Modified Good Reason, or if he dies, is terminated due to Disability, or he terminate due to his Retirement (on one year’s
advance notice), then all remaining restrictions will lapse, and such award will 100% vest. A Modified Good Reason means (a) any
material reduction in his Base Salary, as it may be adjusted from time to time, without a corresponding reduction in the base
salaries of the other executives of TCF, or (b) any requirement by TCF (without the his consent) that he be principally based
at any office or location more than 60 miles from his principal work location as of the grant date. In addition, under the retention
award agreement, if he is terminated without Cause by us or he terminates his employment for Good Reason, in either case following
a Change in Control (other than the Merger), all TRSUs granted to him under the agreement will 100% vest.
Brian Maass Employment and Equity Award Agreements
Employment Agreement
On December 13, 2019, TCF entered into an amended
employment agreement with Mr. Maass, effective December 13, 2019, which will continue through December 13, 2021, and automatically
renews for successive one-year periods unless either party provides the other party with notice of intention to terminate at least
30 days before an anniversary of the effective date. Under Mr. Maass’ employment agreement, he is entitled to receive:
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An annual salary of at least $575,000, subject to annual review and adjustment;
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Annual cash incentive opportunity and long-term incentive awards, at levels commensurate
with his position; and
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Participation in the same benefit plans as apply to TCF salaried employees generally, and
on the same terms and conditions
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If Mr. Maass’ employment is terminated
by TCF without Cause or by him for Good Reason, each a qualifying termination, not within six months before or two years after
a Change in Control, subject to his execution and non-revocation of a release of claims, Mr. Maass will be eligible to receive:
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1.5 times the sum of (i) his then current Base Salary and (ii) the average
of his annual bonus for the three most recently completed calendar years, payable in equal installments over 78 weeks; provided,
that, Mr. Maass will not be entitled to such severance payment if he experiences a qualifying termination within two
years of the Merger Date;
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12 months of outplacement services through an external firm following termination; and
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A lump sum health care stipend of $10,000.
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Under his employment agreement, if Mr. Maass
experiences a qualifying termination within two years following a Change in Control, or within six months before the date of a
Change in Control, we will pay him the above-described severance payment in a lump sum cash payment; provided, that, the Merger
will not constitute a Change in Control. In addition, if he experiences a qualifying termination after the Change in Control,
his outstanding equity awards will vest as described below, except that PRSUs will vest at the greater of target or actual performance.
Under Mr. Maass’ employment agreement,
he is not entitled to any additional severance payments in the event of his termination due to death, Disability or Retirement
with one year’s advance notice.
In addition, under his employment agreement,
in the event he (a) is terminated by us without Cause, (b) terminates his employment for Good Reason, (c) dies, (d) is terminated
due to a Disability, or (e) his Retirement on one year’s advance notice, all equity-based awards will be treated as follows:
all unvested stock options will immediately vest, the restrictions on all time-vesting restricted stock will lapse, all TRSUs
will immediately vest and be convertible into shares of our common stock, and all PRSUs will be settled at 100% of target.
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Equity Award Agreements
Restricted Stock Award Agreements dated
April 22, 2015, January 25, 2017, January 24, 2018, March 6, 2018, and February 8, 2019
As described above, Mr. Maass’s employment
agreement will govern the treatment of restricted stock awards granted under the Restricted Stock Award Agreements dated January
25, 2017, January 24, 2018, and February 8, 2019 in the event he (a) is terminated by us without Cause, (b) terminates his employment
for Good Reason, (c) dies, (d) is terminated due to a Disability, or (e) Retires with one year’s advance notice.
Performance-Based Restricted Stock Unit
Agreements dated January 25, 2017, January 24, 2018, and February 8, 2019
As described above, Mr. Maass’s employment
agreement will govern the treatment of performance-based restricted stock granted under the Performance-Based Restricted Stock
Unit Agreements dated January 25, 2017, January 24, 2018, and February 8, 2019 in the event he (a) is terminated by us without
Cause, (b) terminates his employment for Good Reason, (c) dies, (d) is terminated due to a Disability, or (e) Retires with one
year’s advance notice.
2019 Equity Retention Award
As described under the heading “Compensation
Highlights—Equity Retention Awards” in the CD&A of this proxy statement, in connection with the Merger, we granted
equity retention awards consisting of TRSUs to induce Mr. Maass to remain employed with us following the Merger Date. The
form of award agreement is described above under the heading “Thomas Shafer Employment and Equity Award Agreements—Equity
Award Agreements—2019 Equity Retention Award.”
Definitions under Employment, Retention and
Equity Award Agreements
Definitions of “Change in Control”
For purposes of all employment agreement with
our NEOs and all TRSU and PRSU agreements entered into with any NEO in 2019, a Change in Control is deemed to occur upon: (a)
the acquisition by a party of 40% or more of the voting stock of TCF’s then-outstanding securities; (b) a change in a majority
of TCF’s Board of Directors over a two-year period (other than if such Directors were nominated by at least two-thirds of
the Directors who were Directors at the beginning of the period, or whose nomination was so approved); or (c) holders of TCF common
stock approving a merger or acquisition that results in TCF’s voting stock representing less than 60% of the shares outstanding
immediately prior to such merger or acquisition, (but, a change of control will not be deemed to have occurred if the merger,
consolidation, sale or disposition of assets is not subsequently consummated).
For purposes of Mr. Dahl’s employment
agreement only, a Change in Control is also deemed to occur upon holders of TCF common stock approving (a) a plan of complete
liquidation of TCF, or (b) an agreement for the sale of all or substantially all of TCF’s assets.
The employment agreements of Messrs. Shafer,
Klaeser, and Maass also define a Change in Control to include the acquisition, by a party or parties acting as a group, of TCF’s
assets that have a total gross fair market value equal to or exceeding forty percent (40%) of the total gross fair market value
of TCF’s assets in a single transaction or within a 12-month period ending with the most recent acquisition.
For purposes of any TRSU or PRSU agreements entered
into with any NEO in 2019, a Change in Control also includes the acquisition, by a party or parties acting as a group, of TCF’s
assets that have a total gross fair market value equal to or exceeding 40% of the total gross fair market value of TCF’s
assets in a single transaction or within a 12-month period ending with the most recent acquisition.
Definitions of “Cause” and “Good
Reason”
For purposes of Mr. Dahl’s employment
agreement and equity awards, “Cause” generally includes: (a) the deliberate and continued failure to devote substantially
all business time and best efforts to the performance of duties after 30 days’ written notice from the Board; (b) a deliberate
and material violation of reasonable and lawful instructions of the Board; (c) gross misconduct; (d) conviction of a felony or
any criminal charge involving moral turpitude and all appeals from such conviction have been exhausted; or (e) failure or refusal
to comply with a reasonable and lawful policy, standard or regulation of Company in any material respect, relating to sexual harassment,
other unlawful harassment or workplace discrimination.
For purposes of Messrs. Provost’s and Torgow’s
retention agreements and equity awards, “Cause” generally means: (a) executive’s material breach of any provision
in the employment agreement, which continues uncured after 20 days’ written notice from the Board; (b) executive’s
failure or refusal to materially perform all lawful services required of executive by his employment position, which continues
after 20 days’ notice from the Board; (c) executive’s commission of fraud, embezzlement, theft, or a crime constituting
moral turpitude, which, in the reasonable good-faith judgment of the Board, renders continued employment harmful to TCF; (d) executive’s
misappropriation of TCF’s assets or property; (e) executive’s conviction with respect to any felony or other crime
which, in the reasonable good-faith judgment of the Board, adversely affects TCF or its reputation.
For purposes of Messrs. Klaeser’s, Shafer’s,
and Maass’ employment agreements and TCF equity awards, “Cause” generally means: (a) removal by order of a regulatory
agency having jurisdiction over TCF; (b) executive’s material breach of any provision in the employment agreement, which
continues uncured after 20 days’ written notice from TCF; (c) executive’s failure or refusal to materially perform
all lawful services required
2020 Proxy
Statement
|
|
55
|
of executive by his employment position, which
failure continues after 20 days’ written notice from TCF; (d) executive’s commission of fraud, embezzlement, theft,
or a crime constituting moral turpitude, which, in the reasonable good-faith judgment of the Board, renders continued employment
harmful to TCF; (e) executive’s misappropriation of TCF assets or property; or (f) executive’s conviction with respect
to any felony or other crime which, in the reasonable good faith judgment of TCF’s Board, adversely affects TCF and its
reputation.
For purposes of Mr. Dahl’s employment
agreement, “Good Reason” generally means: (a) any material diminution in the scope of his authority and responsibility;
(b) a material diminution in his base compensation, including bonus opportunity, benefits or perquisites; (c) a material change
in geographic location at which he must perform the services; (d) requiring Mr. Dahl to report to a supervisor other than
TCF’s Board; or (e) any other action or inaction that constitutes a material breach by TCF of the agreement. Additionally,
under Mr. Dahl’s employment agreement, “Good Reason” also includes the failure of any acquirer of or successor
to TCF to assume the obligations of TCF under Mr. Dahl’s employment agreement in connection with a change in control.
For purposes of Messrs. Provost’s and Torgow’s
retention agreements and equity awards, “Good Reason” generally means: (a) any material reduction in his base salary,
as it may be adjusted; (b) any material reduction in executive’s status, position or responsibilities; (c) any requirement
(without executive’s consent) that he be principally based at any office or location more than 50 miles from executive’s
principal work location immediately before the effective date of the agreement or (d) any material breach of the agreement by
TCF.
For purposes of Messrs. Klaeser’s, Shafer’s,
and Maass’ employment agreements and TCF equity awards (other than the retention equity awards), “Good Reason”
generally means: (a) any material reduction in executive’s Base Salary, as it may be adjusted, without a corresponding reduction
to the base salaries of other TCF executives; (b) any material reduction in executive’s status, position or responsibilities,
including service on the Board; (c) any requirement (without executive’s consent) that he be principally based at any office
or location more than 60 miles from executive’s principal work location as of the effective date of the agreement or (d)
any material breach of the agreement by TCF. Additionally, under Mr. Maass’ employment agreement, “Good Reason”
also includes the failure of TCF to promote Mr. Maass to the position of Chief Financial Officer by October 1, 2020.
Potential
Payments Upon Termination or Change in Control
|
|
Each of our employment agreements with Messrs.
Dahl, Provost, Klaeser, Torgow, Shafer and Maass provide for certain severance payments upon termination of employment, including
with respect to Messrs. Dahl, Shafer and Maass, upon a qualifying termination following a change in control of TCF, but not including
our Merger, each subject to the executive’s execution of a general release and waiver of claims against us or our affiliates.
2020 Proxy
Statement
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56
|
Potential Post-Employment Payments Due to Our
Named Executive Officers
The following table shows potential
post-employment payments due to each NEO upon termination from TCF under various circumstances, including a change in control
of the Company, assuming that those events occurred on December 31, 2019. For purposes of the table, a “Qualifying
Termination upon a Change in Control” means the executive’s termination without Cause by us or executive’s
termination of his employment for Good Reason, each within six months before or two years after a Change in Control. We
report amounts in the table without any reduction for possible delay in the commencement or timing of payments.
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Vesting
|
|
|
|
|
|
|
|
Termination Scenario
|
|
Cash
Payments(1)
($)
|
|
|
Benefits(2)
($)
|
|
|
Stock
Options(3)
($)
|
|
|
TRSUs(4)
($)
|
|
|
PRSUs(5)
($)
|
|
|
Legacy TCF
Restricted
Stock
Awards(6)
($)
|
|
|
Total
($)
|
|
Craig Dahl
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination For Cause or Retirement without Notice
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Retirement with Notice
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,665,657
|
|
|
2,832,196
|
|
|
$
|
6,497,853
|
|
Death or Disability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,665,657
|
|
|
2,832,196
|
|
|
$
|
6,497,853
|
|
Without Cause
|
|
6,131,562
|
|
|
26,809
|
|
|
—
|
|
|
—
|
|
|
3,665,657
|
|
|
2,832,196
|
|
|
|
12,656,225
|
|
Good Reason
|
|
6,131,562
|
|
|
26,809
|
|
|
—
|
|
|
—
|
|
|
3,665,657
|
|
|
2,832,196
|
|
|
|
12,656,225
|
|
Qualifying Termination Upon a Change in Control
|
|
—
|
(7)
|
|
—
|
(7)
|
|
—
|
|
|
—
|
|
|
3,665,657
|
|
|
2,832,196
|
|
|
$
|
6,497,853
|
|
David Provost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination For Cause or Retirement without Notice
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Retirement with Notice(8)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,951,739
|
(9)
|
|
3,095,446
|
(10)
|
|
—
|
|
|
|
5,047,185
|
|
Death or Disability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,625,012
|
(11)
|
|
3,095,446
|
(10)
|
|
—
|
|
|
|
5,720,458
|
|
Without Cause
|
|
4,900,000
|
|
|
26,809
|
|
|
—
|
|
|
2,625,012
|
(11)
|
|
3,095,446
|
(10)
|
|
—
|
|
|
|
10,647,266
|
|
Good Reason
|
|
4,900,000
|
|
|
26,809
|
|
|
—
|
|
|
2,625,012
|
(11)
|
|
3,095,446
|
(10)
|
|
—
|
|
|
|
10,647,266
|
|
Qualifying Termination Upon a Change in Control
|
|
—
|
(7)
|
|
—
|
(7)
|
|
—
|
|
|
2,625,012
|
(12)
|
|
3,095,446
|
(10)
|
|
—
|
|
|
|
5,720,458
|
|
Dennis Klaeser
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination For Cause or Retirement without Notice
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Retirement with Notice
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
(13)
|
|
—
|
(13)
|
|
—
|
|
|
|
—
|
|
Death or Disability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
821,434
|
(11)
|
|
1,009,523
|
(10)
|
|
—
|
|
|
|
1,830,957
|
|
Without Cause
|
|
2,650,016
|
|
|
35,000
|
|
|
—
|
|
|
821,434
|
(11)
|
|
1,009,523
|
(10)
|
|
—
|
|
|
|
4,515,973
|
|
Good Reason
|
|
2,650,016
|
|
|
35,000
|
|
|
—
|
|
|
821,434
|
(11)
|
|
1,009,523
|
(10)
|
|
—
|
|
|
|
4,515,973
|
|
Qualifying Termination Upon a Change in Control
|
|
2,650,016
|
|
|
35,000
|
|
|
—
|
|
|
821,434
|
(11)
|
|
1,009,523
|
(10)
|
|
—
|
|
|
|
4,515,973
|
|
Gary
Torgow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination For Cause or Retirement without Notice
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Retirement with Notice(8)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
(14)
|
|
—
|
(14)
|
|
—
|
|
|
|
|
|
Death or Disability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,625,012
|
(11)
|
|
3,095,446
|
(10)
|
|
—
|
|
|
|
5,720,458
|
|
Without Cause
|
|
4,900,000
|
|
|
26,809
|
|
|
—
|
|
|
2,625,012
|
(11)
|
|
3,095,446
|
(10)
|
|
—
|
|
|
|
10,674,076
|
|
Good Reason
|
|
4,900,000
|
|
|
26,809
|
|
|
—
|
|
|
2,625,012
|
(11)
|
|
3,095,446
|
(10)
|
|
—
|
|
|
|
10,674,076
|
|
Qualifying Termination Upon a Change in Control
|
|
—
|
(7)
|
|
—
|
(7)
|
|
—
|
|
|
2,625,012
|
(12)
|
|
3,095,446
|
(10)
|
|
—
|
|
|
|
5,720,458
|
|
Thomas Shafer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination For Cause or Retirement without Notice
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Retirement with Notice
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
(16)
|
|
—
|
(16)
|
|
—
|
|
|
|
—
|
|
Death or Disability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,724,202
|
(11)
|
|
1,243,336
|
(10)
|
|
—
|
|
|
|
6,967,538
|
|
Without Cause
|
|
—
|
(15)
|
|
35,000
|
|
|
—
|
|
|
5,724,202
|
(11)
|
|
1,243,336
|
(10)
|
|
—
|
|
|
|
7,002,538
|
|
Good Reason
|
|
—
|
(15)
|
|
35,000
|
|
|
—
|
|
|
884,333
|
(17)
|
|
1,243,336
|
(10)
|
|
—
|
|
|
|
2,162,669
|
|
Modified Good Reason
|
|
—
|
(15)
|
|
35,000
|
|
|
—
|
|
|
5,724,202
|
(18)
|
|
1,243,336
|
(18)
|
|
—
|
|
|
|
7,002,538
|
|
Qualifying Termination Upon a Change in Control
|
|
3,102,500
|
|
|
35,000
|
|
|
—
|
|
|
5,724,202
|
(11)
|
|
1,243,336
|
(10)
|
|
—
|
|
|
|
10,105,038
|
|
2020 Proxy
Statement
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Vesting
|
|
|
|
|
|
|
|
|
Termination Scenario
|
|
Cash
Payments(1)
($)
|
|
|
Benefits(2)
($)
|
|
|
Stock
Options(3)
($)
|
|
|
TRSUs(4)
($)
|
|
|
PRSUs(5)
($)
|
|
|
Legacy TCF
Restricted
Stock
Awards(6)
($)
|
|
|
|
Total
($)
|
|
Brian Maass
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination For Cause or Retirement without Notice
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Retirement with Notice
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
(19)
|
|
—
|
(19)
|
|
—
|
(19)
|
|
|
—
|
|
Death or Disability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,557,948
|
(11)
|
|
1,146,647
|
(20)
|
|
1,702,818
|
|
|
|
5,407,413
|
|
Without Cause
|
|
—
|
(15)
|
|
35,000
|
|
|
—
|
|
|
2,557,948
|
(11)
|
|
1,146,647
|
(20)
|
|
1,702,818
|
|
|
|
5,442,413
|
|
Good Reason
|
|
—
|
(15)
|
|
35,000
|
|
|
—
|
|
|
—
|
(17)
|
|
1,146,647
|
(20)
|
|
1,702,818
|
|
|
|
2,884,465
|
|
Modified Good Reason
|
|
—
|
(15)
|
|
35,000
|
|
|
—
|
|
|
2,557,948
|
(18)
|
|
1,146,647
|
(20)
|
|
1,702,818
|
|
|
|
5,442,413
|
|
Qualifying Termination Upon a Change in Control
|
|
1,517,764
|
|
|
35,000
|
|
|
—
|
|
|
2,557,948
|
(11)
|
|
1,146,647
|
(20)
|
|
1,702,818
|
|
|
|
6,960,177
|
|
(1)
|
Represents cash payments pursuant to the executive employment
agreements or retention agreements, as applicable, described above, as follows:
|
|
•
|
Mr. Dahl: 2.5 times the executive’s base salary, plus
2.5 times his average bonus of $1.4 million. Mr. Dahl’s average bonus includes his cash bonuses received in 2016
and 2018 pursuant to the Legacy TCF MIP applicable for each year, and the cash value of the equity award he received in 2017
in lieu of the cash bonus he earned pursuant to the Legacy TCF 2017 MIP. For purposes of this calculation, we have not included
annual cash incentive payments for the year-ended 2019.
|
|
•
|
Messrs. Provost and Torgow: two times the executive’s base
salary, plus two times his average bonus of $1.5 million. For purposes of this calculation, we have not included annual cash
incentive payments for the year-ended 2019.
|
|
•
|
Messrs. Klaeser and Shafer: two times the executive’s base
salary plus the average of the executive’s cash bonuses under our annual cash incentive plan for each of the most recent
three complete calendar years (or such lesser number of completed calendar years that executive has been employed by us).
For purposes of this calculation, we have not included annual cash incentive payments for the year-ended 2019.
|
|
•
|
Mr. Maass: one and a half times the executive’s base
salary plus the average of the executive’s cash bonuses under our annual cash incentive plan for each of the most recent
three complete calendar years (or such lesser number of completed calendar years that executive has been employed by us).
For purposes of this calculation, we have not included annual cash incentive payments for the year-ended 2019.
|
(2)
|
Pursuant to executive employment or retention agreements,
amounts reported for each executive are as follows:
|
|
•
|
Messrs. Dahl, Provost and Torgow: a lump sum amount equal to 24 times
the executive’s monthly contribution towards COBRA for employee dependent health, prescription drug and dental coverage
elections under our employee benefit plans providing such benefits, minus the COBRA administrative cost.
|
|
•
|
Messrs. Klaeser, Shafer and Maass: a lump sum health care stipend in the amount of $10,000
and the value of executive-level outplacement services for a period not to exceed 12 months, estimated at $25,000.
|
(3)
|
Mr. Shafer is the only named executive officer with unvested
stock options; however, none were in-the-money at December 31, 2019.
|
(4)
|
Amount represents the market value, including dividend equivalents, of unvested
TRSUs. The valuation of these awards is based on the closing price of our common stock as reported on Nasdaq of $46.80 per
share on December 31, 2019.
|
(5)
|
Amount represents the market value, excluding dividend equivalents, of unvested
PRSUs that were converted into earned PRSUs as of the Merger Date. The market value of these awards is based on the closing
price of our common stock as reported on Nasdaq of $46.80 per share on December 31, 2019. The PRSUs granted to Messrs. Provost,
Klaeser, Torgow and Shafer in 2017, 2018 and 2019, as applicable, were converted into earned PRSUs at rates equal to 100%,
112.5% and 100%, respectively, of the target number of shares on the Merger Date. The Legacy TCF PRSUs granted to Messrs.
Dahl and Maass in 2017, 2018 and 2019 were converted into earned PRSUs at rates equal to 150%, 150% and 100%, respectively,
of the target number of shares on the Merger Date.
|
(6)
|
Amount represents the market value of unvested Legacy TCF restricted stock awards
that were converted as of the Merger Date. The awards did not include dividend rights for unvested shares. The market value
of these awards is based on the closing price of our common stock as reported on Nasdaq of $46.80 per share on December 31,
2019. Represents full vesting of the Legacy TCF restricted stock awards under the executive’s employment agreement or
award agreement, as applicable.
|
(7)
|
With respect to Messrs. Dahl, Provost and Torgow, neither their employment agreements
nor retention agreements, as applicable, contain any severance provisions that are based on or otherwise relate to a Change
in Control; however, each executive would receive a cash severance payment of $6,131,562 (with respect to Mr. Dahl) and
$4,900,000 (with respect to Messrs. Provost and Torgow) if the executive is terminated by us without Cause or if he terminates
his employment for Good Reason, whether or not such termination follows a Change in Control, assuming such qualifying termination
occurred on December 31, 2019. Messrs. Provost and Torgow are also entitled to the benefits disclosed in footnote two on a
termination without Cause or if he terminates his employment for Good Reason, whether or not such termination follows a Change
in Control.
|
(8)
|
Under the retention agreements, Messrs. Provost and Torgow were only entitled to
cash severance and benefits if they retired 18 months after the Merger Date, which date had not passed as of December 31,
2019. On March 10, 2020, Messrs. Provost and Torgow entered into amended and restated retention agreements with us eliminating
the provisions of the retention agreements related to cash severance payments and accelerated equity benefits upon retirement
after 18 months.
|
(9)
|
Represents pro rata vesting under the executive’s February 27, 2018 TRSU agreement
and full vesting under the executive’s February 25, 2019 TRSU agreement.
|
(10)
|
Represents full vesting of earned PRSUs under the February 25, 2019 PRSU
agreement.
|
(11)
|
Represents full vesting of TRSUs under the executive’s retention agreement
or employment agreement, as applicable.
|
(12)
|
Represents full vesting of TRSUs under the 2018 and 2019 TRSU agreements.
|
(13)
|
Under Mr. Klaeser’s employment agreement, he is not eligible for Retirement
with one year’s advance notice until after December 31, 2019. Similarly, under his applicable TRSU and PRSU agreements,
he does not meet the definition of Retirement because he has not attained ten years of service.
|
(14)
|
Under Mr. Torgow’s equity agreements, he is not eligible for Retirement
with one year’s advance notice because he has not attained ten years of service.
|
(15)
|
Under Messrs. Shafer’s and Maass’ employment agreements, for the first
two years after the Merger Date, he will not be entitled to receive the cash severance payment described in footnote one,
above, if he is terminated without “Cause” by us or if he terminates his employment for “Good Reason,”
but he will be entitled to the benefits described in footnote two, above.
|
(16)
|
Under Mr. Shafer’s employment agreement and equity agreements, he is
not eligible for Retirement with one year’s advance notice because he has not attained ten years of service.
|
(17)
|
Represents full vesting of TRSUs (except for the 2019 retention equity awards granted
to Messrs. Shafer and Maass) under the executive’s employment agreement.
|
(18)
|
Represents full vesting of TRSUs under the executive’s employment agreement
and the 2019 retention equity awards.
|
(19)
|
Under Mr. Maass’ employment agreement and equity agreements, he is not
eligible for Retirement with one year’s advance notice because he has not reached age 55 or attained ten years of service.
|
(20)
|
Represents full vesting of PRSUs under the executive’s employment agreement.
|
2020 Proxy
Statement
|
|
58
|
|
Equity Compensation Plans
Approved by Shareholders
|
The following table provides
information as of December 31, 2019 regarding TCF’s equity compensation plans, which consist of the Chemical Financial Corporation
Stock Incentive Plan of 2019 (the “2019 Stock Plan”), Chemical Financial Corporation Stock Incentive Plan of 2017 (the
“2017 Stock Plan”), the Chemical Financial Corporation Stock Incentive Plan of 2015 (the “2015 Stock Plan”),
the Chemical Financial Corporation Stock Incentive Plan of 2012 (the “2012 Stock Plan”), and the Chemical Financial
Corporation Stock Incentive Plan of 2006 (the “2006 Stock Plan”), each of which was approved by TCF’s shareholders,
as well as the Amended and Restated Legacy TCF Financial 2015 Omnibus Incentive Plan (the “Legacy TCF Omnibus Plan”),
which was approved by Legacy TCF’s shareholders and assumed by us in the Merger:
Plan Category
|
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
|
|
Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
column (a))
(c)
|
|
Equity compensation plans approved by security holders(1)
|
|
556,613
|
|
$34.05
|
|
1,808,804
|
(2)
|
Equity compensation plans not approved by security holders(3)
|
|
—
|
|
—
|
|
2,271,524
|
(4)
|
TOTAL
|
|
556,613
|
|
$34.05
|
|
4,080,328
|
|
(1)
|
Plans approved by security holders include the 2019 Stock Plan,
2017 Stock Plan, the 2015 Stock Plan, the 2012 Stock Plan, and the 2006 Stock Plan.
|
(2)
|
Represents shares available for issuance under the 2019 Stock Plan.
|
(3)
|
Represents shares reserved for issuance under the Legacy TCF Omnibus Plan, which
share reserve we assumed in the Merger. The Legacy TCF Omnibus Plan was approved by Legacy TCF shareholders before the Merger.
|
(4)
|
Represents shares available for issuance under the Legacy TCF Omnibus Plan to employees
who (a) were employees of Legacy TCF before the closing of the Merger or (b) are hired by TCF or any of its subsidiaries after
the closing of the Merger. The Legacy TCF Omnibus Plan authorizes the grant of awards, including stock options, stock appreciation
rights, restricted stock, restricted stock units, other stock-based awards, performance-based restricted stock, and performance-based
restricted stock units.
|
In addition, at December 31, 2019, we also had
59,360 shares issuable upon exercise of outstanding options, warrants and rights under plans assumed by us in various other merger
transactions, with a weighted average exercise price of outstanding options, warrants and rights of $13.88 per share. No further
grants will be made under these assumed plans. These assumed plans consisted of the Talmer Bancorp, Inc. 2009 Equity Incentive
Plan (“TLMR Equity Incentive Plan”), the Lake Michigan Financial Corporation Stock Incentive Plan of 2003 and the Lake
Michigan Financial Corporation Stock Incentive Plan of 2012 (collectively referred to as the “LMFC Stock Incentive Plans”).
The TLMR Equity Incentive Plan granted non-statutory stock options that were awarded at the fair value of Talmer Bancorp, Inc.
common stock on the date of grant. Effective as of our merger with Talmer Bancorp, Inc. on August 31, 2016, each option outstanding
under the TLMR Equity Incentive Plan ceased to represent a stock option for TLMR common stock and was converted into a stock option
for common stock of TCF. The LMFC Stock Incentive Plans granted non-statutory stock options that were awarded at the fair value
of Lake Michigan Financial Corporation common stock on the date of grant. Effective as of our acquisition of Lake Michigan Financial
Corporation on May 31, 2015, each option outstanding under the LMFC Stock Incentive Plans ceased to represent a stock option for
LMFC common stock and was converted into a stock option for common stock of TCF. Payment for the exercise of an option at the time
of exercise may be made in the form of shares of TCF’s common stock having a market value equal to the exercise price of
the option at the time of exercise, or in cash. There are no further stock options or other awards available for grant under the
TLMR Equity Incentive Plan or the LMFC Stock Incentive Plans. As of December 31, 2019, there were 43,132 options to purchase TCF’s
common stock under the TLMR Equity Incentive Plan with a weighted average exercise price of $13.42 per share and 16,228 options
to purchase TCF’s common stock outstanding under the LMFC Stock Incentive Plans with a weighted average exercise price of
$15.10 per share.
2020 Proxy
Statement
|
|
59
|
Proposal 2
|
Advisory (Non-Binding) Vote to Approve Executive Compensation (“Say on Pay”)
|
In accordance with Section 14A of the Securities
Exchange Act of 1934 (the “Exchange Act”), TCF is asking shareholders on an advisory (non-binding) basis to approve
the executive compensation of TCF’s NEOs as described in the CD&A and tabular disclosure and accompanying narrative discussions
of NEO compensation in this Proxy Statement and related material (“Say on Pay”). TCF conducts annual Say on Pay votes
and expects to conduct the next Say on Pay vote at the 2021 Annual Meeting.
We believe that our executive compensation programs
and policies appropriately align named executive officers’ incentives with shareholder interests and are designed to attract
and retain high quality executive talent. We believe that our executive compensation programs and policies are and have been competitive
within the industry and in comparison with the compensation programs and policies of competitors in the markets that we serve.
We also believe that both TCF and our shareholders benefit from responsive corporate governance policies and dialogue.
We believe that shareholders have responded positively
to the changes made over the last several years to our compensation program, with TCF receiving approximately 96% of votes cast
“FOR” TCF’s compensation last year. The changes made by TCF in recent years include ensuring our equity awards
have a “double trigger,” such that the award will not vest in connection with a change in control unless the executive’s
employment is terminated without cause by us, or for good reason by the executive, within two years thereof, and that annual cash
incentives are based on performance metrics that are widely used and tracked in the industry and demonstrate efficient use of capital.
In March 2020, after further review by the Compensation
Committee, consideration of shareholder input and to continue our philosophy of best practices in corporate governance, the Compensation
Committee determined that it was in the best interests of TCF and our shareholders to eliminate Messrs. Provost and Torgow’s
right to voluntarily resign without Good Reason after 18 months following the Merger Date and receive full compensation for the
remaining contract term. As a result, on March 10, 2020, we amended and restated Messrs Provost’s and Torgow’s retention
agreements to eliminate the provisions of the retention agreements related to cash severance payments and accelerated equity benefits
upon retirement after 18 months following the Merger Date.
Because the Compensation Committee believes that
the program continues to appropriately reward executives for performance while not encouraging excessive risk taking, the Compensation
Committee again approved our compensation program.
See “Compensation of Named Executive Officers”
in the CD&A for a more complete discussion of TCF’s executive compensation program.
Shareholders are asked to approve the following
resolution:
“RESOLVED, that the compensation paid to
our named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis,
compensation tables and narrative discussion, is hereby APPROVED.”
Although this is an advisory vote, the Compensation Committee
values the views of our shareholders and will consider the outcome of the vote when determining future executive compensation arrangements.
Recommendation of the Board
|
|
|
The Board unanimously recommends that shareholders
vote “FOR” this Proposal.
2020 Proxy
Statement
|
|
60
|
Proposal 3
|
Advisory (Non-Binding) Vote to Ratify the Appointment of KPMG LLP as Independent Registered Public Accountants
|
The Audit Committee has appointed the firm of
KPMG LLP (“KPMG”), independent registered public accountants, to audit the financial statements of TCF Financial and
its subsidiaries for the fiscal year ending December 31, 2020.
TCF is providing shareholders at the Annual Meeting
with the opportunity to vote on an advisory (non-binding) vote on the appointment of KPMG. Such a vote is not required but is being
solicited by TCF in order to determine if the shareholders approve of TCF’s appointment of KPMG as our independent registered
public accountants. The Audit Committee’s appointment of KPMG is not contingent upon obtaining shareholder approval. In the
event of a negative vote by shareholders, the Audit Committee will take such vote into consideration in determining whether to
continue to retain KPMG. Representatives of KPMG are expected to be present at the Annual Meeting and to be available to respond
to appropriate questions. The representatives will also be provided an opportunity to make a statement, if they so desire.
Recommendation of the Board
|
|
|
The Board unanimously recommends that shareholders
vote “FOR” this Proposal.
|
Audit Committee Report
|
The Audit Committee has reviewed and discussed
the audited financial statements with management; received written disclosures and the letter from the independent registered public
accountants, KPMG, required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG’s
communications with the Audit Committee concerning independence; and discussed the independence of KPMG with representatives of
such accounting firm. The Audit Committee also discussed with KPMG the matters required by Statement on Auditing Standards No.
1301, Communications With Audit Committees.
Based on the review and discussions above, the
Audit Committee has recommended to the Board of Directors that the audited financial statements be included in the TCF Financial
Corporation Annual Report on Form 10-K for the year ended December 31, 2019, for filing with the SEC.
By the Audit Committee:
Julie H. Sullivan, Chair
Karen L. Grandstrand
Barbara J. Mahone
Roger J. Sit
Jeffrey L. Tate
Franklin C. Wheatlake
2020 Proxy
Statement
|
|
61
|
|
Independent Registered Public Accountants
|
Fees paid to KPMG for the years ended December
31, 2018 and 2019 are as follows:
|
2018
|
2019
|
Audit Fees(1)
|
$
|
1,879,077
|
$
|
5,461,093(2)
|
Audit-Related Fees(3)
|
|
80,000
|
|
504,600(4)
|
Tax Fees(5)
|
|
751,465
|
|
1,429,652(6)
|
All Other Fees
|
|
—
|
|
—
|
TOTAL
|
$
|
2,710,542
|
$
|
7,395,345
|
(1)
|
Amounts include fees for annual audit, quarterly reviews, separate
opinions, consents and comfort letters.
|
(2)
|
Amount includes fees paid by Legacy Chemical through the Merger Date, and then by
TCF as a combined enterprise. For the period from January 1, 2019 through the Merger Date, Legacy TCF paid $1,152,678 in fees
to KPMG for audit fees.
|
(3)
|
Audit-Related Fees in 2018 and 2019 are related to employee benefit plan audits,
servicing reports, agreed-upon procedures, and other audit-related work.
|
(4)
|
Amount includes fees paid by Legacy Chemical through the Merger Date, and then by
TCF as a combined enterprise. For the period from January 1, 2019 through the Merger Date, Legacy TCF paid $41,250 in fees
to KPMG for audit-related fees.
|
(5)
|
Tax Fees are primarily related to tax consulting and acquisition-related tax matters
and also includes tax compliance services.
|
(6)
|
Amount includes fees paid by Legacy Chemical through the Merger Date, and then by
TCF as a combined enterprise. For the period from January 1, 2019 through the Merger Date, Legacy TCF paid $257,500 in fees
to KPMG for tax fees.
|
The Audit Committee has considered all fees for
non-audit services to be compatible with maintaining the registered public accountants’ independence.
The Audit Committee has a Pre-Approval Policy
to pre-approve the audit and non-audit services performed by our independent registered public accounting firm. All services provided
by the independent registered public accounting firm are either within general pre-approved limits or specifically approved by
the Audit Committee. Subject to certain limitations, the authority to grant pre-approvals may be delegated to one or more members
of the Audit Committee.
In the event that approval is required prior to
a regularly scheduled Audit Committee meeting, the Audit Committee Chair is authorized to pre-approve audit and non-audit services,
provided the aggregate fees for the services approved by the Chair since the prior Committee approvals shall not exceed $500,000.
Any services pre-approved by the Chair will be reported to and considered by the full Audit Committee at its next scheduled meeting.
During 2019, all services provided by KPMG (including all of the services related to the fees described in the foregoing table)
were pre-approved by the Audit Committee or by the Audit Committee Chair.
Each member of the Audit Committee is independent,
as independence is defined in Section 5605(a)(2) of the Nasdaq listing rules.
2020 Proxy
Statement
|
|
62
|
|
Background of Executive Officers who are not Directors
|
The following describes the business experience
of executive officers of TCF Financial, or its principal wholly-owned subsidiary TCF Bank, who are not Directors of TCF Financial.
Thomas J. Butterfield (age 55) became Executive
Vice President, Chief Technology and Operations Officer of TCF on August 1, 2019 in connection with the Merger. Before the
Merger, Mr. Butterfield was Chief Information Officer of Legacy TCF since March 2015. Before joining Legacy TCF, from January
2014 to August 2014, Mr. Butterfield was the Senior Vice President, Technology Strategy & Business Solutions at Target
Corp., an upscale discount retail company. Beginning in January 2006, Mr. Butterfield served in various leadership positions
at Target, including acting Chief Information Officer of Target Canada, from January 2011 to December 2013.
James M. Costa (age 51) became Executive
Vice President, Chief Risk Officer and Chief Credit Officer of TCF on August 1, 2019 in connection with the Merger. Before the
Merger, Mr. Costa was the Chief Risk Officer since August 2013 and Chief Credit Officer since January 2017 for Legacy TCF
and Legacy TCF Bank. He has over 30 years of financial services experience. Before joining Legacy TCF, from 2010 to 2013, Mr. Costa
served as Executive Vice President of Risk and Head of Enterprise Portfolio Management at PNC Financial Services Group, Inc., a
financial services institution, and before that, from 2004 to 2010, he led enterprise credit strategy for Wachovia Corporation,
a financial services institution.
Joseph T. Green (age 65) became Executive
Vice President, General Counsel, and Assistant Secretary of TCF on August 1, 2019 in connection with the Merger. Before the
Merger, Mr. Green was Secretary of Legacy TCF since 2011 and General Counsel of Legacy TCF since 2009. He was also a Senior
Vice President of Legacy TCF since 2008. Mr. Green served as General Counsel of Legacy TCF Bank since 1993, as Secretary of
Legacy TCF Bank since 2001, and was an Executive Vice President of Legacy TCF Bank since 2010.
William S. Henak (age 61) became Executive
Vice President, National Banking on August 1, 2019, in connection with the Merger. Before the Merger, Mr. Henak was Executive
Vice President, Wholesale Banking of Legacy TCF since January 1, 2016 with oversight over the equipment finance and leasing, inventory
finance and commercial banking business units. Mr. Henak had been President and Chief Executive Officer at TCF Equipment Finance,
a division of Legacy TCF Bank, since December 2012, and had also served in various leadership roles with TCF Equipment Finance,
Inc., a wholly owned subsidiary of Legacy TCF Bank, since 2000 when Legacy TCF acquired First Commercial Capital Corporation, a
general equipment leasing company that Mr. Henak founded in 1995. Before that, Mr. Henak had been an Executive Vice President
for Computer Leasing, Inc., a computer leasing company, since 1985. Before entering the equipment finance industry, Mr. Henak
was a Certified Public Accountant with KPMG Peat Marwick.
Andrew J. Jackson (age 61) became Chief
Audit Executive Officer on August 1, 2019 in connection with the Merger. Before the Merger, Mr. Jackson was the Chief Audit
Executive Officer of Legacy TCF since August 2012. Before joining Legacy TCF, from July 2006 to August 2012, Mr. Jackson was
Executive Vice President and Corporate Auditor, in charge of the Internal Audit function, of First Tennessee Bank, a financial
services institution.
Michael S. Jones (age 51) became Executive
Vice President, Regional Banking on August 1, 2019, in connection with the Merger. Before the Merger, Mr. Jones was Executive
Vice President, Consumer Banking of Legacy TCF since January 1, 2016. Before that, Mr. Jones had been Executive Vice President
and Chief Financial Officer of Legacy TCF since January 1, 2012. He also has served in various leadership positions with certain
of Legacy TCF’s wholly-owned subsidiaries since 2008. Mr. Jones has nearly 20 years of financial experience in various
functions including finance and operations. Before joining Legacy TCF, Mr. Jones held financial leadership positions with
a subsidiary of PACCAR, Inc., a manufacturer of premium commercial vehicles, and various subsidiaries of General Electric Company,
a large diversified technology and financial services company.
Dennis L. Klaeser (age 62) is Executive
Vice President and Chief Financial Officer of TCF, a position he has held since August 2016. Before the Merger, Mr. Klaeser
was also our Treasurer since August `2016. Before that, Mr. Klaeser served as Chief Financial Officer and Executive Managing
Director of Talmer Bancorp, Inc. from May 2010 until Talmer Bancorp’s merger with TCF on August 31, 2016. Mr. Klaeser
also was Chief Financial Officer and a Director of First Place Bank following its acquisition by Talmer Bancorp, Inc. from January
2013 until it was merged into Talmer Bank in February 2014. Mr. Klaeser served on the Board of Managers of InSite Capital,
LLC, a wholly owned subsidiary of the Company, since December 2016. Before joining Talmer, Mr. Klaeser was a Senior Midwest
Bank Analyst with Raymond James from April 2009 to May 2010. From 2003 until 2009, Mr. Klaeser was Chief Financial Officer
of PrivateBancorp, Inc., where he was responsible for financial and accounting functions as well as strategic planning, capital
markets, SEC, regulatory and board reporting, Sarbanes-Oxley, and investor relations. He served as Managing Director and head of
the financial institutions group for Anderson Corporate Finance from 2000 to 2002, a division of Arthur Andersen. Mr. Klaeser
also spent seven years as an investment banker and was head of the Financial Institutions Group at EVEREN Securities, which was
acquired by First Union Securities. Mr. Klaeser has served as Treasurer of the Chemical Bank Foundation’s Board of Trustees
since May 2017. Mr. Klaeser also has served as a member of the Board of Trustees for Lawrence University of Wisconsin since
November 2018.
2020 Proxy
Statement
|
|
63
|
Sandra D. Kuohn (age 55) became Executive
Vice President and Chief Human Capital Management Officer of TCF on August 1, 2019 in connection with the Merger. Before that,
Ms. Kuohn was our Chief Human Resource Officer since August 2016. Before that, she served as the Chief Human Resource Officer for
Talmer Bank beginning in July 2011. Before joining Talmer Bank, Ms. Kuohn spent 11 years as the Global Vice President of Human
Resources for Urban Science, Inc. headquartered in Detroit, Michigan where she was responsible for recruiting, compensation and
benefits, career development, and performance management across ten different countries around the world. Before her role at Urban
Science, Ms. Kuohn owned her own consulting business for five years and started her career with Anderson Consulting in Detroit.
Ms. Kuohn is a member of the Executive Board of Trustees for the CATCH charity and chairs their annual Detroit News/CATCH Outstanding
Graduates program.
Brian W. Maass (age
46) became Deputy Chief Financial Officer and Treasurer of TCF on August 1, 2019 in connection with the Merger. Before the
Merger, Mr. Maass was Executive Vice President and Chief Financial Officer of Legacy TCF and Legacy TCF Bank since
January 1, 2016. Before that, Mr. Maass had been Chief Investment Officer and Treasurer of Legacy TCF since 2012. Before
joining Legacy TCF, Mr. Maass was Senior Vice President, Corporate Treasury with Wells Fargo Bank, NA, a national
banking association, since 2005. Mr. Maass held other senior leadership, treasury, finance and accounting positions at
Wells Fargo since 2000. Before that, Mr. Maass was a Manager at Crowe Horwath LLP, a public accounting and consulting
firm, within its Banking and Financial Services Group.
Thomas C. Shafer (age 61) became Chief
Operating Officer of TCF and President and Chief Operating Officer of TCF Bank on August 1, 2019 in connection with the Merger,
with responsibility for National Banking, Regional Banking, IT and Operations. He previously served as Vice Chairman and Director
of TCF and President and Chief Executive Officer of Legacy Chemical Bank since June 2017. Before that, Mr. Shafer was Executive
Vice President and Director of Regional and Community Banking of Legacy Chemical Bank from November 2016 until June 2017. Mr. Shafer
served as Vice Chairman of Talmer Bancorp, Inc. from 2011 until September 2014, and subsequently served as Chief Operating Officer
of Talmer Bancorp, Inc. and President of Talmer Bank from September 2014 to November 2016. He also served as Chief Executive Officer
and President and Director of First Place Bank, a wholly owned subsidiary of Talmer Bancorp, Inc., from January 2013 until it was
merged into Talmer Bank in February 2014. Before joining Talmer, Mr. Shafer served Citizens Republic Bancorp for a 16-year
period in various executive-level positions, including as Executive Vice President of Regional Banking, Executive Vice President
of Commercial Banking, Chief Credit Officer and Executive Vice President of Specialty Banking.
Kathleen S. Wendt (age 46) is Chief Accounting
Officer of TCF, a position she has held since October 2017. She also became an Executive Vice President in connection with the
Merger. Before that, Ms. Wendt served as our Deputy Chief Financial Officer since July 2018. Before joining TCF, Ms. Wendt served
as Chief Accounting Officer and an Executive Managing Director of Talmer Bancorp, Inc. from June 2011 until its merger with TCF
on August 31, 2016. She served as First Senior Vice President and Chief Accounting Officer of Legacy Chemical Bank following the
merger with Talmer Bancorp, Inc. until March 2017. Ms. Wendt is a certified public accountant with experience in financial reporting,
accounting policy and the management of controls over financial reporting. Ms. Wendt served in several positions with Comerica
Incorporated from May 2003 until June 2011, including Senior Vice President, Director of External Reporting and Senior Vice President,
Director of Accounting Policy and Financial Procedures and Controls. Before that, Ms. Wendt served as an Assurance Manager at PricewaterhouseCoopers
located in Chicago, Illinois and Zurich, Switzerland.
Donnell R. White (age 43) is currently
our Chief Diversity Officer and Director of Strategic Partnerships of TCF Bank. He previously served in the same role at Chemical
Bank since June 2018 until the Merger. Prior to joining Chemical Bank, Mr. White served as Executive Director of the Detroit
Branch National Association for the Advancement of Colored People (NAACP) from 2001 until joining Chemical Bank in 2018. While
there, he was responsible for the strategic, financial and operational oversight of the organization and also served as the spokesperson
and community liaison for the organization. Mr. White is a founding member of New York University’s Brennan Center for
Justice Law Enforcement Signatory Group. He also serves as a board member of ClearCorps Detroit, Arab American and Chaldean Council,
and Crime Stoppers of Michigan. In addition, he serves on the Federal Bureau of Investigations Multicultural Advisory Committee,
Wayne State University President’s Community Advisory Group, and Focus Hope Advisory Group. He is Board Trustee for Michigan
Children’s Foundation, the Detroit Symphony Orchestra and Detroit Public Safety Foundation.
2020 Proxy
Statement
|
|
64
|
|
Ownership of TCF Stock
|
TCF
Stock Ownership of Directors and Executive Officers
|
|
|
COMMON STOCK
The following table shows ownership as of February
28, 2020, of TCF common stock by those indicated.
Name of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership(1)(2)
|
|
Percent
of Class(3)
|
Directors who are not
NEOs:
|
|
|
|
|
Peter Bell
|
|
30,137
|
|
*
|
Karen L. Grandstrand
|
|
42,636
|
|
*
|
Richard H. King
|
|
14,743
|
|
*
|
Ronald A. Klein
|
|
43,084
|
|
*
|
Barbara J. Mahone
|
|
22,633
|
|
*
|
Barbara L. McQuade
|
|
7,556
|
|
*
|
Vance K. Opperman
|
|
77,217
|
|
*
|
Roger J. Sit
|
|
124,022
|
|
*
|
Julie H. Sullivan
|
|
5,362
|
|
*
|
Jeffrey L. Tate
|
|
10,066
|
|
*
|
Arthur A. Weiss
|
|
32,857
|
|
*
|
Franklin C. Wheatlake
|
|
93,461
|
|
*
|
Theresa M. H. Wise
|
|
3,506
|
|
*
|
NEOs:
|
|
|
|
|
Craig R. Dahl
|
|
379,114
|
|
*
|
David T. Provost
|
|
113,200
|
|
*
|
Dennis A. Klaeser
|
|
65,398
|
|
*
|
Gary H. Torgow
|
|
113,200
|
|
*
|
Thomas C. Shafer
|
|
44,809
|
|
*
|
Brian W. Maass
|
|
69,784
|
|
*
|
All Directors and Executive Officers combined (28 persons)
|
|
1,815,659
|
|
1.19%
|
*
|
Represents 1.0%
or less of the outstanding TCF common stock.
|
(1)
|
All shares are directly owned
and the person indicated has sole voting and dispositive power, except as indicated in this footnote and footnote (2) below.
Includes shares beneficially owned by affiliated trusts or family members who share the person’s household, with respect
to which shares the indicated person disclaims any beneficial ownership, as follows: Mr. Bell, 16,925 shares; Mr. Klein, 14,205
shares; Mr. Sit, 45,505 shares; Mr. Wheatlake, 3,799 shares; Mr. Provost, 283 shares; Mr. Torgow, 1,339 shares; and all Directors
and Executive Officers combined, 123,798 shares. Includes the following shares indirectly owned through related entities:
Mr. Sit, 50,810 shares; Mr. Wheatlake, 78,495 shares; and all Directors and Executive Officers, 129,305 shares. Mr. Sit and
Mr. Wheatlake disclaim any beneficial ownership in the shares owned by a related entity. Includes stock options exercisable
within 60 days, as follows: Mr. Klein, 17,698 shares; Mr. Shafer, 7,619 shares; and all Directors and Executive Officers combined,
26,652 shares.
|
(2)
|
Includes whole shares of TCF
common stock allocated to accounts in the 401(k) Plan for which certain NEOs have shared voting power as follows: Mr. Dahl,
14,576 shares; Mr. Maass, 5,252 shares; and all Executive Officers combined, 90,957 shares. Also includes whole shares of
TCF common stock in the trust for the Supplemental Plan for which certain NEOs do not have voting power, as follows: Mr. Dahl,
66,204 shares; Mr. Maass, 9,119 shares; and all Legacy TCF Executive Officers combined, 175,467 shares. Also includes whole
shares of TCF common stock (all of which have vested) in the trust for the TCF Employees Omnibus Deferred Stock Compensation
Plan for which the NEOs do not have voting power, as follows: Mr. Dahl, 25,405 shares; and all Legacy TCF Executive Officers
combined, 30,486 shares. Also includes whole shares of TCF common stock (vested) in the trust for the Directors Deferred Compensation
Plan for which the holder does not have voting power, as follows: Mr. Bell, 6,019 shares; Ms. Grandstrand, 42,636 shares;
Mr. King, 14,535 shares; Mr. Opperman, 51,929 shares; Mr. Sit, 21,035 shares; Dr. Sullivan, 5,362 shares; Dr. Wise, 3,506
shares; and all Legacy TCF Directors combined, 145,022 shares.
|
(3)
|
As of February 28, 2020, there
were 152,698,770 shares of TCF common stock outstanding. The percentage for each Director and Executive Officer has been calculated
by treating as outstanding the shares which could be purchased upon the exercise of outstanding options by such
Director or Executive Officer within 60 days after February 28, 2020.
|
2020 Proxy
Statement
|
|
65
|
PREFERRED STOCK
None of our directors or executive
officers own any of our depositary shares, each representing a 1/1000th interest in a share of our 5.70% Series C Non-Cumulative
Perpetual Preferred Stock.
TCF Common Stock Ownership of Certain Beneficial
Owners
|
|
|
The following table shows ownership as of December
31, 2019 of each person known by us to beneficially own more than five percent of our common stock.
Name of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership of TCF
Common
Stock
|
|
Percent
of
Class(3)
|
The
Vanguard Group(1)
|
|
14,596,858
|
|
9.51%
|
BlackRock, Inc.(2)
|
|
14,138,873
|
|
9.20%
|
(1)
|
The information that follows
is based upon the Schedule 13G/A filed with the SEC on behalf of The Vanguard Group on February 12, 2020. Information is as
of December 31, 2019. Beneficial ownership of shares by The Vanguard Group is in the following manner: sole voting power,
78,520 shares; shared voting power, 22,118 shares; sole dispositive power, 14,515,735 shares; and shared dispositive power,
81,123 shares. The address of The Vanguard Group is 100 Vanguard Blvd, Malvern, PA 19355.
|
(2)
|
The information that follows
is based upon the Schedule 13G/A filed with the SEC on behalf of BlackRock, Inc. on February 6, 2020. Information is as of
December 31, 2019. Beneficial ownership of shares by BlackRock, Inc. is in the following manner: sole voting power, 13,504,765
shares; shared voting power, 0 shares; sole dispositive power, 14,138,873 shares; and shared dispositive power, 0 shares.
The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.
|
(3)
|
As of December 31, 2019, there
were 152,965,571 shares of TCF common stock outstanding.
|
|
Delinquent Section 16(a) Reports
|
Section 16(a) of the Exchange
Act requires our directors and certain officers and persons who beneficially own more than 10% of our outstanding common stock
to file reports of beneficial ownership and changes in beneficial ownership of shares of our common stock with the SEC. SEC regulations
require such persons to furnish us with copies of all Section 16(a) reports they file. Based solely on our review of the copies
of such reports furnished to us or written representations from certain reporting persons that no Forms 5 were required for those
persons, we believe that all applicable Section 16(a) reporting and filing requirements were satisfied on a timely basis by such
persons from January 1, 2019 through December 31, 2019, other than a Form 4 that was not timely filed for Mr. Jackson reporting
the purchase of 12 shares executed on September 16, 2019 in an account which Mr. Jackson beneficially owns, but which is managed
by an investment advisor. This omission occurred due to the failure of the investment advisor to continue the purchase restrictions
requested by Mr. Jackson following the Merger.
2020 Proxy
Statement
|
|
66
|
|
Additional Information
|
Who is Permitted to Vote at the Annual Meeting?
|
|
|
You are entitled to vote at the
Annual Meeting if you owned shares of TCF’s common stock at the close of business on March 9, 2020. Each share of TCF common
stock you owned as of the Record Date entitles you to one vote on each proposal at the Annual Meeting.
You may vote “FOR”
or “WITHHOLD” with respect to each nominee for Proposal 1. With respect to all other proposals, you may vote “FOR,”
“AGAINST,” or “ABSTAIN.”
Shareholders of Record
If your shares of TCF common
stock are registered directly in your name, then you are considered the shareholder of record with respect to those shares and
you may grant your proxy directly to the individuals listed on the proxy card or vote in person at the Annual Meeting.
“Street Name” Holders
If your shares are held in a
stock brokerage account or by any other nominee, then you are considered the beneficial owner of those shares, which are said to
be held in “street name.” As the beneficial owner, you may direct your broker or other nominee how to vote your shares
using the voting instructions provided to you by that broker or other nominee. You may not vote your shares in person at the Annual
Meeting unless you obtain a legal proxy from your broker or other nominee.
How is a Quorum Determined?
|
|
|
A majority of the shares of TCF
common stock outstanding as of the Record Date must be present in person or by proxy at the Annual Meeting in order to have a quorum.
Broker non-votes (described below) are counted as present for purposes of establishing a quorum. If you vote by proxy before the
Annual Meeting but decide to withhold
authority or abstain on one or more proposals, you are counted as being present at the Annual Meeting and your shares count for
purposes of establishing a quorum but will not be deemed to have been voted in favor of such proposal(s).
Shareholders of Record
In addition to voting your shares
in person at the Annual Meeting, you can also vote your shares of TCF common stock in advance of the Annual Meeting by submitting
a proxy to TCF using one of the following options:
•
|
online using the instructions for Internet
voting shown on the Notice or proxy card(s);
|
•
|
by telephone using the instructions for
telephone voting shown on the proxy card(s); or
|
•
|
by mail by marking the proxy card(s)
with your instructions and then signing, dating and returning the proxy card(s) in the enclosed return addressed envelope.
|
The individuals designated as
proxies on a proxy submitted to TCF will vote your shares based on your instructions. If you submit your proxy card(s) to TCF,
but do not give instructions as to any or all of the proposals, your proxies will vote in accordance with the Directors’
recommendations for each proposal for which you do not provide instructions. If any other business comes before the Annual Meeting,
your proxies will vote your proxy according to their own judgment.
2020 Proxy
Statement
|
|
67
|
“Street Name” Holders
You must follow the voting instructions provided by
your broker or other nominee. Brokers who hold your shares in “street name” have the authority to vote shares for which
they do not receive instructions on all routine matters submitted for approval at the Annual Meeting. In the absence of your
specific instructions as to how to vote, your broker will not have authority to vote on the matters considered non-routine, which
includes all actions other than Proposal 3, the Advisory (Non-Binding) Vote to Ratify the Appointment of KPMG LLP as independent
Registered Public Accountants for the Fiscal Year Ending December 31, 2020. Investors who hold their stock in “street
name” are invited to attend the Annual Meeting; however, you must obtain a legal proxy from the shareholder of record (your
broker or other nominee) in order to vote your shares in person at the Annual Meeting.
Annual Meeting Webcast
Only shareholders who attend in person may vote during
the Annual Meeting. Shareholders listening to the Annual Meeting via webcast are not able to vote during the Annual Meeting. Regardless
of whether you plan to attend the Annual Meeting in person or listen to the Annual Meeting via webcast, please vote in advance
by proxy by following the instructions set forth on the Notice or proxy card(s).
Notice
You may not vote by filling out and returning the
Notice. The Notice identifies the items to be voted on at the Annual Meeting and provides instructions on how to access TCF’s
proxy materials and submit your vote, but you cannot vote by marking the Notice and returning it.
I Have Already Submitted my Proxy, May I Revoke it
and Vote at the Annual Meeting?
|
|
|
Yes, your proxy is revocable and is automatically
revoked if you submit a valid proxy with a later date or vote at the meeting. You can vote your shares at the Annual Meeting by
written ballots available at the Annual Meeting, even if you voted them in advance by proxy. However, if your shares are held in
“street name” by a broker or other nominee, you must
bring with you to the Annual Meeting a legal proxy from them showing you as the owner. Shareholders who listen to the Annual Meeting
via the webcast will not be able to revoke proxies or vote at the Annual Meeting via the webcast.
What is the Vote Required for Approval?
|
|
|
Assuming a quorum is present, for Proposal 1, the
election of Directors, the 16 candidates who receive the most “FOR” votes (a “plurality”) will be elected;
provided, however, that any Director nominee who receives a greater number of “WITHHOLD” votes from his or her election
than votes “FOR” such election shall immediately offer his or her resignation to the Board,
which will then decide whether to accept the resignation.
Assuming a quorum is present, both Proposal 2 and
Proposal 3 requires the affirmative vote of a majority of the votes cast at the Annual Meeting and entitled to vote.
What is a “Broker Non-Vote” and What
is the Effect of Broker Non-Votes and Abstentions?
|
|
|
A “broker non-vote” occurs when your broker
or other institution holding title to your shares as your nominee (in “street name”) does not vote on a particular
proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions
from you. Generally, if a broker returns a “non-vote” proxy with respect to a proposal, then the shares covered by
such a “non-vote” proxy will be counted as present for purposes of determining a quorum, but will not be counted in
determining the outcome of the vote on that matter at the Annual Meeting. In the absence of specific instructions from you, your
broker or other institution holding title to your shares as nominee will not have discretion to vote on any matters at the Annual Meeting other than Proposal
3, the Advisory (Non-Binding) Vote to Ratify the Appointment of KPMG LLP as Independent Registered Public Accountants for the Fiscal
Year Ending December 31, 2020.
A properly executed proxy marked “ABSTAIN”
with respect to a proposal will be counted as present for purposes of determining a quorum. Shares voted “ABSTAIN”
will not constitute a vote “for” or “against” any matter being voted on at the Annual Meeting and will
not be counted as a “votes cast” on any matter. As a result, abstentions will have no effect on the outcome of such
matters.
2020 Proxy
Statement
|
|
68
|
Who Pays for the Expenses Related to Proxy Solicitation?
|
|
|
TCF is paying all costs of solicitation. Proxies may
be solicited on TCF’s behalf by Directors, officers or employees in person or by telephone, electronic transmission, mail,
or facsimile. Directors, officers, and employees will not receive any additional compensation for such services. TCF will, upon request,
reimburse brokerage firms and other nominees for their reasonable expenses incurred for forwarding solicitation materials to beneficial
owners of TCF common stock.
Who will Count the Votes?
|
|
|
A representative of Broadridge Financial Solutions,
Inc., TCF’s tabulation agent, will tabulate the votes and act as the independent inspector of election.
How do I Attend the Annual Meeting?*
|
|
|
Registered Shareholders:
•
|
Your Notice of Internet Availability
of Proxy Materials; or
|
•
|
The admission ticket attached to the
top half of your proxy card if you received a paper copy of the proxy materials; or
|
•
|
A printout of the email you received
to vote your shares if you received your proxy materials via email.
|
Street Name Shareholders:
•
|
Brokerage statement or letter from your bank or broker showing your holdings of TCF common stock.
|
*
|
As part of our precautions
regarding the coronavirus, or COVID-19, we are planning for the possibility that the Annual Meeting may be held solely by
means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how
to participate will be available at http://ir.tcfbank.com. Annual Meeting attendance is limited to TCF shareholders as of
the Record Date. To attend the Annual Meeting, you will be required to present a valid form of photo identification as well
as proof that you own TCF common stock, which can include the following:
|