DEF 14A 1 proxystatement2015.htm DEF 14A DEF 14A



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )     
 
 
 
 
 
 
 
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under Section 240.14a-12
 
 
 
 
 
 
 
MB Financial, Inc. 
(Name of Registrant as Specified in Its Charter)
 
 
 
 
 
 
 
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800 West Madison Street
Chicago, Illinois 60607
(888) 422-6562



April 12, 2016

Dear Fellow Stockholder:

On behalf of the Board of Directors and management of MB Financial, Inc. (the “Company”), I cordially invite you to attend the Company’s Annual Meeting of Stockholders.  The meeting will be held at 8:30 a.m., local time, on Wednesday, May 25, 2016 at MB Financial Center, located at 6111 North River Road, Rosemont, Illinois.

At the meeting, stockholders will vote on (i) the election of eleven directors of the Company, (ii) an advisory (non-binding) vote on executive compensation and (iii) the ratification of the appointment of RSM US LLP as the Company's independent registered public accounting firm for the year ending December 31, 2016.  The Board of Directors recommends that you vote FOR the election of each of the director nominees named in the accompanying proxy statement, FOR the advisory vote on executive compensation and FOR the ratification of the appointment of RSM US LLP.

This year we are again using a Securities and Exchange Commission rule to furnish our proxy statement, 2015 Annual Report on Form 10-K and proxy card over the internet to stockholders.  This means that most stockholders will not receive paper copies of these documents.  Instead, these stockholders will receive only a notice containing instructions on how to access the proxy materials over the internet.  This rule allows us to lower the costs of delivering the annual meeting materials and reduce the environmental impact of the meeting.  If you received only the notice and would like to receive a copy of the printed materials, the notice contains instructions on how you can request copies of these documents.

I encourage you to attend the meeting in person.  Whether or not you plan to attend, however, please read the enclosed proxy statement and then vote by submitting your proxy as promptly as possible.  Voting as early as possible will save the Company additional expense in soliciting proxies and will ensure that your shares are represented at the meeting.

Thank you for your attention to this important matter.
 

Very truly yours,
 Mitchell Feiger
President and Chief Executive Officer





800 West Madison Street
Chicago, Illinois 60607
(888) 422-6562


NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on May 25, 2016
 

Notice is hereby given that the Annual Meeting of Stockholders (the “Meeting”) of MB Financial, Inc. (the “Company”) will be held at MB Financial Center, located at 6111 North River Road, Rosemont, Illinois at 8:30 a.m., local time, on Wednesday, May 25, 2016.

The Meeting is for the purpose of considering and acting upon:

1.
the election of eleven directors of the Company;
2.
an advisory (non-binding) vote on executive compensation;
3.
the ratification of the appointment of RSM US LLP as the Company's independent registered public accounting firm for the year ending December 31, 2016; and
4.
such other matters as may properly come before the Meeting, or any adjournments or postponements of the Meeting.

The Board of Directors is not aware of any other business to properly come before the Meeting.  The Board of Directors recommends a vote FOR the election of each of the director nominees named in the accompanying proxy statement, FOR the advisory vote on executive compensation and FOR the ratification of the appointment of RSM US LLP.

Stockholders of record at the close of business on March 28, 2016 are the stockholders entitled to vote at the Meeting and any adjournments or postponements of the Meeting.  Stockholders may vote in person at the Meeting or by proxy.  Note, however, that if you hold your shares in street name through a bank, broker or other nominee and wish to vote your shares in person at the Meeting, then you must obtain a legal proxy from the holder of record authorizing you to do so by contacting your bank, broker or other nominee.  The Company reserves the right to limit admission to the Meeting to stockholders of record and persons holding shares in street name who provide appropriate documentation of beneficial ownership, such as a recent brokerage account statement.

By Order of the Board of Directors
 
Mitchell Feiger
President and Chief Executive Officer

Chicago, Illinois
April 12, 2016
 
 
 
 
 
 IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING.
 
 
 
 





PROXY STATEMENT

MB Financial, Inc.
800 West Madison Street
Chicago, Illinois 60607
(888) 422-6562
_____________________

ANNUAL MEETING OF STOCKHOLDERS
May 25, 2016


This Proxy Statement is furnished in connection with the solicitation on behalf of the Board of Directors of MB Financial, Inc., a Maryland corporation (the “Company,” “MB Financial,” “we,” “us,” “our”), of proxies to be used at our Annual Meeting of Stockholders (the “Meeting”), to be held at MB Financial Center, located at 6111 North River Road, Rosemont, Illinois at 8:30 a.m., local time, on Wednesday, May 25, 2016, and all adjournments and postponements of the Meeting.

The accompanying Notice of Annual Meeting and proxy and this Proxy Statement are first being made available to stockholders on or about April 12, 2016.

At the Meeting, our stockholders will be asked to consider and vote upon (i) the election of eleven directors of the Company, each for a one-year term, (ii) an advisory (non-binding) vote on executive compensation and (iii) the ratification of the appointment of RSM US LLP as the Company's independent registered public accounting firm for the year ending December 31, 2016.

Certain information in this Proxy Statement relates to our bank subsidiary, MB Financial Bank, National Association (the “Bank”).

We have decided again to use the Notice and Access rule adopted by the Securities and Exchange Commission (which we sometimes refer to in this Proxy Statement as the “SEC”) to provide access to our proxy materials over the internet instead of mailing a printed copy of the proxy materials to each stockholder. As a result, on or about April 12, 2016, we will mail to most stockholders only a “Notice of Internet Availability of Proxy Materials” (the “Notice”) that tells them how to access and review the information contained in the proxy materials and how to vote their proxies over the internet.  If you received only this Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request the materials by following the instructions included in the Notice.

Vote Required and Proxy Information

All shares of the Company's common stock, par value $0.01 per share (“Common Stock”) represented at the Meeting by properly executed proxies received prior to or at the Meeting, and not revoked, will be voted at the Meeting in accordance with the instructions on such proxies.  If no instructions are indicated, properly executed proxies will be voted for the election of the nominees named in this Proxy Statement, for the advisory vote on executive compensation and for the ratification of the appointment of RSM US LLP.  If any other matters properly come before the Meeting for action, the persons named in the enclosed proxy and acting thereunder will have the discretion to vote on such matters in accordance with their best judgment.  We are not aware of any other matters to properly come before the Meeting.

The Company’s by-laws provide that in an uncontested election of directors, directors will be elected by a majority of the votes cast with respect to each director.  This means that the number of votes cast “FOR” the election of a nominee must exceed the number of votes cast “AGAINST” that nominee in order for that nominee to be elected.  Only “FOR” or “AGAINST” votes are counted as votes cast with respect to a director nominee.  Abstentions and shares held by a broker, as nominee, that are not voted (so-called “broker non-votes”) in the election of directors will not be included in determining the number of votes cast.  In a contested election, which is one where the number of nominees exceeds the number of directors to be elected, directors are elected by a plurality of the votes cast.  The election of directors at the Meeting will not be a contested election.  Therefore, directors will be elected at the Meeting under the majority voting standard described above.

Our corporate governance principles provide that in order for an incumbent director to be nominated for re-election at an annual meeting of stockholders, he or she must, prior to the filing with the Securities and Exchange Commission of the Company’s definitive proxy statement for that meeting, tender his or her irrevocable resignation to the Chairman of the Nominating and




Corporate Governance Committee of the Company’s Board of Directors, which resignation will take effect only upon (i) his or her failure to receive the required vote in an uncontested election at the meeting and (ii) the Board’s acceptance of such resignation.  Our corporate governance principles further provide that if a nominee for re-election fails to receive the required vote, the Nominating and Corporate Governance Committee must consider the director’s previously submitted irrevocable resignation and make a recommendation to the Board of Directors on whether to accept or reject such resignation.  The Board of Directors must act on the resignation within 90 days following the date of the final certification of the stockholder vote pertaining to the election, and the Company will promptly thereafter disclose the Board’s decision on whether to accept or reject the resignation and the reasons for the Board’s decision.

The advisory vote on executive compensation and the ratification of the appointment of RSM US LLP each requires the affirmative vote of a majority of the votes cast on the matter. Abstentions and broker non-votes will not be counted as votes cast on these matters.

The holders of a majority of the outstanding shares of the Common Stock, present in person or represented by proxy, will constitute a quorum for purposes of the Meeting.  Abstentions and broker non-votes will be treated as shares present for quorum purposes.

A proxy given pursuant to this solicitation may be revoked at any time before it is voted. Proxies may be revoked by: (i) filing with the Secretary of the Company at or before the Meeting a written notice of revocation bearing a later date than the proxy; (ii) duly executing a subsequent proxy relating to the same shares and delivering it to the Secretary of the Company at or before the Meeting; or (iii) attending the Meeting and voting in person (although attendance at the Meeting will not in and of itself constitute revocation of a proxy).  Any written notice revoking a proxy should be delivered to Doria Koros, Vice President and Corporate Secretary, MB Financial, Inc., 6111 North River Road, Rosemont, Illinois 60018.  If your shares are held in “street name” through a bank, broker or other nominee, you must follow the instructions on the form you receive from your bank, broker or other nominee with respect to revoking your proxy.  Your bank, broker or other nominee is prohibited from voting your shares on any matter unless you provide instructions to the bank, broker or nominee on how to vote your shares.  You are encouraged to provide such instructions so that your shares will be voted on the other matters. If you hold Common Stock through the Company's 401(k) profit sharing plan, you are entitled to instruct the plan trustee on how to vote the shares allocated to your plan account. Plan shares for which voting instructions are not received, or are not timely received, by the plan trustee will be voted in the same proportion as the shares for which timely voting instructions are received by the plan trustee. Refer to the voting instructions form for your plan shares for additional information, including the deadline for submitting your voting instructions.

Voting Securities and Certain Holders Thereof

Only stockholders of record as of the close of business on March 28, 2016 will be entitled to notice of and to vote at the Meeting.  Each stockholder is entitled to one vote for each share of Common Stock held as of the record date, provided, however, that pursuant to Section F of Article 5 of the Company’s charter, no stockholder who beneficially owns more than 14.9% of the shares of Common Stock outstanding as of that date may vote shares in excess of this limit.  As of that date, 73,871,631 shares of Common Stock were issued and outstanding.  We have no other securities outstanding whose holders are entitled to vote at the Meeting.

The following table sets forth, as of March 28, 2016, certain information as to the beneficial ownership of Common Stock by:  (i) those persons or entities known by us to beneficially own more than 5% of the outstanding shares of Common Stock; (ii) each director and nominee for election as director; (iii) each named executive officer, as defined below under “Executive Compensation – Compensation Discussion and Analysis;” and (iv) all directors and executive officers as a group.  Except as indicated otherwise, the address for each person listed below is: c/o MB Financial, Inc., 6111 North River Road, Rosemont, Illinois 60018.  An asterisk denotes beneficial ownership of less than one percent.



2



Name of Beneficial Owner
 
Amount and Nature of Beneficial Ownership (1)
 
 
 
Percent of Class
BlackRock, Inc.
 
6,814,631

 
(2)
 
9.22
55 East 52nd Street
 
 
 
 
 
 
New York, NY 10055
 
 
 
 
 
 
 
 
 
 
 
 
 
Dimensional Fund Advisors LP
 
4,823,111

 
(3)
 
6.53
Building One
 
 
 
 
 
 
6300 Bee Cave Road
 
 
 
 
 
 
Austin, TX 78746
 
 
 
 
 
 
 
 
 
 
 
 
 
The Vanguard Group
 
5,133,692

 
(4)
 
6.95
100 Vanguard Blvd.
 
 
 
 
 
 
Malvern, PA  19355
 
 
 
 
 
 
 
 
 
 
 
 
 
David P. Bolger
 
107,214

 
 
 
*
Director
 
 
 
 
 
 
 
 
 
 
 
 
 
Randall T. Conte
 
60,025

 
 
 
*
Executive Vice President, Chief Operating Officer of the Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
C. Bryan Daniels
 
1,531,308

 
(5)
 
2.07
Director
 
 
 
 
 
 
 
 
 
 
 
 
 
Mitchell Feiger
 
731,683

 
 
 
*
Director and President and Chief Executive Officer of the Company and the Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
Charles J. Gries
 
67,444

 
 
 
*
Director
 
 
 
 
 
 
 
 
 
 
 
 
 
James N. Hallene
 
65,722

 
 
 
*
Vice Chairman
 
 
 
 
 
 
 
 
 
 
 
 
 
Thomas H. Harvey
 
230,891

 
(6)
 
*
Chairman of the Board
 
 
 
 
 
 

3



Name of Beneficial Owner
 
Amount and Nature of Beneficial Ownership (1)
 
 
 
Percent of Class
Richard J. Holmstrom
 
310,720

 
 
 
*
Director
 
 
 
 
 
 
 
 
 
 
 
 
 
Mark A. Hoppe
 
292,837

 
 
 
*
President and Chief Executive Officer of the Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
Karen J. May
 
48,222

 
 
 
*
Director
 
 
 
 
 
 
 
 
 
 
 
 
 
Ronald D. Santo
 
73,019

 
 
 
*
Director of the Company; Chairman of the Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael D. Sharkey
 
132,450

 
 
 
*
Executive Vice President of the Bank and President, MB Business Capital
 
 
 
 
 
 
 
 
 
 
 
 
 
Jennifer W. Steans
 
888,001

 
(7)
 
1.20
Director
 
 
 
 
 
 
 
 
 
 
 
 
 
Renee Togher
 
20,631

 
 
 
*
Director
 
 
 
 
 
 
 
 
 
 
 
 
 
Jill E. York
 
198,873

 
 
 
*
Vice President and Chief Financial Officer of the Company; Executive Vice President
 
 
 
 
 
 
and Chief Financial Officer of the Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
Directors and executive officers as a group (21 persons)
 
5,259,063

 
 
 
7.05

________
(1)
With respect to the directors and executive officers, includes shares held directly, in retirement accounts, in a fiduciary capacity or by certain affiliated entities or members of the named individuals’ families, with respect to which shares the named individuals and group may be deemed to have sole or shared voting and/or dispositive powers.  Also reflects the holdings of shares by certain of the executive officers through their accounts under our 401(k) profit sharing plan and the holdings by directors and executive officers through our stock deferred compensation plan.  In addition, includes shares subject to options which are currently exercisable or which will become exercisable within 60 days of March 28, 2016, as follows:  Mr. Bolger – 79,429 shares; Mr. Conte – 870 shares; Mr. Feiger – 294,330 shares; Mr. Hallene – 44,055 shares; Mr. Holmstrom – 44,875 shares; Ms. May – 20,991 shares; Mr. Sharkey – 881 shares; Ms. York – 118,425 shares; and all directors and executive officers as a group – 756,185 shares.  Also includes 7,075 shares underlying director stock units held by Mr. Gries.

(2)
As reported by BlackRock, Inc. (“BlackRock”) in a Schedule 13G amendment filed with the SEC on January 26, 2016.  BlackRock reported having sole voting power over 6,653,488 shares and sole dispositive power over all 6,814,631 shares.

(3)
 As reported by Dimensional Fund Advisors LP (“Dimensional”) in a Schedule 13G amendment filed with the SEC on February 9, 2016.  Dimensional reported having sole voting power over 4,755,927 shares and sole dispositive power over all 4,823,111 shares.

(4)
As reported by The Vanguard Group (“Vanguard”) in a Schedule 13G amendment filed with the SEC on February 10, 2016.  Vanguard reported having sole voting power over 92,372 shares, shared voting power over 3,300 shares, sole dispositive power over 5,042,521 shares and shared dispositive power over 91,171 shares.

4




(5)
Prairie Capital IV, L.P. and Prairie Capital IV QP, L.P. each has shared voting and dispositive power with respect to 765,654 shares. Daniels & King Capital IV, L.L.C., Stephen V. King and Mr. Daniels each have shared voting and dispositive power with respect to 1,531,308 shares. Mr. King and Mr. Daniels are the managing members of Daniels & King Capital IV, L.L.C., which is the sole general partner of Prairie Capital IV, L.P. and Prairie Capital IV QP, L.P. Therefore, Mr. King, Mr. Daniels and Daniels & King Capital IV, L.L.C. may be deemed to beneficially own shares of stock owned by Prairie Capital IV, L.P. and Prairie Capital IV QP, L.P. The 1,531,308 shares beneficially owned by Mr. Daniels include: (i) 765,654 shares held by Prairie Capital IV, L.P; and (ii) 765,654 shares held by Prairie Capital IV QP, L.P.

(6)
Includes 153,404 shares held with the Bank’s trust department which are pledged to secure a line of credit.

(7)
Includes: (i) 28,162 shares beneficially owned by James P. Kastenholz (the spouse of Jennifer W. Steans) as a trustee of the Jennifer Steans 1999 Descendants Trust (28,162 of such shares are pledged as security pursuant to certain loan arrangements with customary terms and conditions); (ii) 57,752 shares beneficially owned by Mr. Kastenholz individually (57,752 of such shares are pledged as security pursuant to certain loan arrangements with customary terms and conditions); (iii) 253,346 shares held by PCB Limited Partnership of which Ms. Steans is one of three general partners (253,346 of such shares are pledged as security pursuant to certain loan arrangements with customary terms and conditions); (iv) 17,233 shares beneficially owned by Ms. Steans, as custodian for Nicholas J. Kastenholz (the son of Mr. Kastenholz and Ms. Steans); (v) 235,188 shares beneficially owned by Ms. Steans individually (234,044 of such shares are pledged as security pursuant to certain loan arrangements with customary terms and conditions); (vi) 120,917 shares beneficially owned by Trilogy Investment Group, LLC, of which Ms. Steans is one of three managing members and shares investment and voting power with respect to these shares (120,917 of such shares are pledged as security pursuant to certain loan arrangements with customary terms and conditions); and (vii) 172,126 shares held by the Steans 1996 Family Trust, over which Ms. Steans is one of three co-trustees (172,126 of such shares are pledged as security pursuant to certain loan arrangements with customary terms and conditions). In accordance with Rule 13d-4 under the Securities Exchange Act of 1934, as amended, Ms. Steans disclaims beneficial ownership of the shares described in clauses (i), (ii), (iii), (iv), (vi) and (vii), and Mr. Kastenholz disclaims beneficial ownership of the shares described in clauses (i), (iii), (iv), (v), (vi) and (vii).




5



PROPOSAL I.  ELECTION OF DIRECTORS

The Company’s Board of Directors currently consists of eleven members. The Board of Directors, acting on the recommendation of the Board's Nominating and Corporate Governance Committee, has approved the director nominees identified in the table below, each for a one-year term.  If a nominee is unable to serve, the shares represented by all properly executed proxies will be voted for the election of such substitute nominee as the Board of Directors, acting on the recommendation of the Nominating and Corporate Governance Committee, may approve.  At this time, the Board of Directors knows of no reason why any nominee named in this Proxy Statement may be unable to serve, if elected.
 
Name
 
Age
 
Position(s) Held in the Company
 
Director Since (1)
David P. Bolger
 
59
 
Director
 
2004
C. Bryan Daniels
 
57
 
Director
 
2014
Mitchell Feiger
 
57
 
Director and President and Chief Executive Officer of  the Company
 
1992
Charles J. Gries
 
70
 
Director
 
2006
James N. Hallene
 
55
 
Vice Chairman
 
2000
Thomas H. Harvey
 
55
 
Chairman of the Board
 
1995
Richard J. Holmstrom
 
58
 
Director
 
1998
Karen J. May
 
58
 
Director
 
2004
Ronald D. Santo
 
73
 
Director and Chairman of the Bank
 
1990
Jennifer W. Steans
 
52
 
Director
 
2014
Renee Togher
 
53
 
Director
 
2011
__________
(1) 
Includes service with the Company’s predecessors prior to the November 6, 2001 merger of equals (the “MB-MidCity Merger”) between MB Financial, Inc., a Delaware corporation ("Old MB Financial") and MidCity Financial Corporation, a Delaware corporation (“MidCity Financial”), which resulted in the Company in its present legal form.

The business experience for at least the past five years of each nominee and standing member of the Board of Directors is set forth below.

David P. Bolger. Mr. Bolger was most recently the Chief Operating Officer of Chicago 2016, the effort to bring the 2016 Olympic and Paralympic Games to Chicago.  Prior to assuming that role, he was Executive Vice President and Chief Financial Officer of Aon Corporation, the world’s largest insurance and reinsurance intermediary, a position held since early 2003.  Prior to joining Aon, Mr. Bolger worked for 21 years at Bank One Corporation and its predecessor companies, serving in various roles including President of American National Bank & Trust Company of Chicago.  Mr. Bolger served as a director of MF Global Holdings, Ltd. from January 2010 to November 2011.  Since January 2012, Mr. Bolger has served as a director and chairman of the audit committee of Chicago-based Ryan Specialty Group, LLC, a global organization which seeks to provide wholesale brokerage, underwriting managers and other specialty insurance services.  Mr. Bolger serves as a director of the Lincoln Park Zoo, the Chicago History Museum, World Sport Chicago, and Merit School of Music, all non-profit entities based in Chicago.  Mr. Bolger has extensive experience in commercial banking and financial reporting.  In addition, his experience as Chief Operating Officer of Chicago 2016 enhanced his organizational and leadership skills and strengthened his many ties to the Chicago community.  Mr. Bolger is Chair of the Board’s Enterprise Risk Committee.
    
C. Bryan Daniels. Mr. Daniels is the co-founder and principal of Prairie Capital Mezzanine Funds, L.P., Prairie Capital II, L.P., Prairie Capital III, L.P., Prairie Capital III QP, L.P., Prairie Capital IV, L.P., Prairie Capital IV QP, L.P., Prairie Capital V, L.P. and Prairie Capital V QP, L.P. Prairie Capital is a Chicago-based private equity firm focused on the lower-end of the middle market. Mr. Daniels also serves as a director on the boards of the Chicago Deferred Exchange Company, ProVest Holdings, LLC, R3 Education, Inc., Northfield LLC, Riverchase Dermatology and Cosmetic Surgery LLC, DRB Systems, LLC and Tower Engineering Professionals, LLC. Mr. Daniels is a member of the board of advisors of Siena Capital Partners, Creation Investments and Acceleration Academies, LLC. He sits on the Investment Committee Advisory Board of Community BanCorp and is a member of the visiting committee of the Physical Science Department of the University of Chicago. From March 2009 until its acquisition by the Company on August 18, 2014, Mr. Daniels served as a director of Taylor Capital Group, Inc. (“Taylor Capital”) and its subsidiary bank, Cole Taylor Bank. Mr. Daniels became a director of the Company upon completion of the Company's acquisition of Taylor Capital. Mr. Daniels brings to the Board a strong investment background and extensive business experience across a variety of industries.

6




Mitchell Feiger. Mr. Feiger is President and Chief Executive Officer of the Company, positions he held with Old MB Financial from February 1999 until completion of the MB-MidCity Merger.  Mr. Feiger also serves as a director of the Bank and became President and Chief Executive Officer of the Bank in September 2010.  Mr. Feiger began his career with Touche Ross & Company in 1982, and in 1984 joined Affiliated Banc Group, a bank holding company which was sold in 1987, where he worked in various capacities until eventually becoming Executive Vice President.  Mr. Feiger served as President and a director of Coal City Corporation from 1992 until the completion of the merger of Coal City Corporation into Avondale Financial Corp. (renamed MB Financial, Inc.) in February 1999.  He also served as Chief Executive Officer of Coal City Corporation from October 1998 until completion of that merger.  Mr. Feiger served as a director of Calamos Asset Management, Inc. from 2007 to 2012.  He also serves as a director of the Lurie Children’s Memorial Medical Center/Lurie Children’s Memorial Hospital Board and Community Investment Corporation Board.  Mr. Feiger has more than 30 years of experience in the banking industry, and has served as Chief Executive Officer of the Company or one of its predecessors for more than 15 years.  Mr. Feiger brings to the Board extensive industry experience, invaluable knowledge of all aspects of the Company’s business and operations, strong leadership and organizational skills and deep ties to the Chicago area and its local business community.

Charles J. Gries.  Mr. Gries founded Charles J. Gries & Company, LLP, the predecessor firm to CJG Partners LLP, a public accounting firm, in 1983 and recently retired from his equity position with the firm. He continues to work with the firm in assisting clients in mergers, acquisitions and consulting.  From 1968 to 1983, Mr. Gries served in various capacities in a regional and national CPA firm through the partner level.  Prior to its acquisition by the Company on August 25, 2006, Mr. Gries served as a director of Oak Brook Bank since 1981, and as a director of First Oak Brook Bancshares, Inc. (“First Oak Brook”) since 2002. Mr. Gries became a director of the Company upon completion of the Company’s acquisition of First Oak Brook.  With more than 40 years of experience in public accounting and more than 35 years of experience serving as a bank director, Mr. Gries has in-depth knowledge of accounting and auditing matters affecting financial institutions and is a particularly valuable resource to the Company’s financial management.  Mr. Gries is Chairman of the Board’s Audit Committee.

James N. Hallene.  Mr. Hallene founded Capital Concepts, LLC, a Chicago-based private equity investment firm, in 1998 and currently serves as its principal.  He is also a founding partner with CapX Partners, an equipment leasing fund and a licensee of the Small Business Administration’s Small Business Investment Company Program.  Before Capital Concepts, Mr. Hallene co-founded and later sold the data-consolidation company, MaxMiles.  For 15 years, Mr. Hallene was employed at American National Bank, a subsidiary of Bank One Corporation, where he oversaw credit, cash management and technology-business units during his tenure.  Mr. Hallene serves on the boards of KeHE Distributors, HallStar Company, VSA Partners, and Resource Land Fund.  Through his prior work in the banking industry and current investment firm positions, Mr. Hallene brings to the Board a diverse array of business experiences and extensive knowledge of corporate governance matters.  Mr. Hallene is Chairman of the Board’s Nominating and Corporate Governance Committee.

Thomas H. Harvey.  Mr. Harvey was appointed Chairman of the Board of Directors of the Company effective December 31, 2006. Mr. Harvey is the Chief Executive Officer of Energy Innovation: Policy and Technology LLC, an energy and environmental policy firm located in San Francisco. He is also owner and principal of Ajax LLC, a firm focused on energy technology. From 2007 through 2011, Mr. Harvey was the Founder and CEO of the ClimateWorks Foundation, the world’s largest philanthropic program dedicated to achieving low-carbon economic prosperity. From January 2002 to April 2008, Mr. Harvey served as the Environment Program Director of the William and Flora Hewlett Foundation. From January 1991 to January 2002, Mr. Harvey served as President of Energy Foundation. Mr. Harvey’s executive positions with multiple foundations and other organizations provide him with strong organizational and leadership skills, which make him particularly well-suited to serve as Chairman of the Board and as Chairman of the Board’s Executive Committee. Mr. Harvey also has extensive investment experience through his management of the investment portfolio for a foundation and as the manager of multiple financial trusts.  

Richard J. Holmstrom.  Mr. Holmstrom is Vice Chairman of Menlo Equities LLC, a real estate investment and development company headquartered in Palo Alto, California. Prior to co-founding Menlo Equities, Mr. Holmstrom was a partner at the Shidler Group, a private real estate investment company with offices across the United States. Mr. Holmstrom is a member and past president of the Silicon Valley Chapter of the National Association of Industrial and Office Properties. He was a co-founder of New Resource Bank based in San Francisco, California. Mr. Holmstrom is a member of the Advisory Board of the UC Berkeley Haas School of Business of the UC Berkeley Foundation. Other outside board experience includes serving as a trustee of the Stanford Alumni Association. Mr. Holmstrom brings to the Board extensive knowledge and experience in commercial real estate matters, which is one of the Company’s primary lending areas. The diversity of his other board experiences provides him with a unique perspective in addressing matters before the Board.


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Karen J. May.  Ms. May is Executive Vice President, Global Human Resources of Mondelez International, Inc. (formerly part of Kraft Foods, Inc.).  She joined Kraft Foods in October 2005 as the Executive Vice President, Global Human Resources of Kraft Foods, Inc.  Prior to that, Ms. May was Corporate Vice President, Human Resources, of Baxter International, Inc. and served in that capacity beginning in February 2001.  Ms. May joined Baxter in 1990 as Director, Corporate Audit.  Ms. May held various positions including Vice President/Controller of the U.S. Distribution Business and Vice President of International Finance.  In 1998, Ms. May was named Vice President of Global Planning and Staffing.  In 2000, Ms. May’s responsibilities expanded to include all global human resource functions including compensation, benefits, employee relations, development and employee services.  Prior to joining Baxter, Ms. May worked at PriceWaterhouseCoopers in the Atlanta, Chicago and New York offices.  With her initial career background in financial and accounting-related matters and more recent positions as a senior executive in charge of human resources for two large, publicly held companies, Ms. May brings a wealth of knowledge and experience in multiple areas of critical importance to the Board, especially with regard to compensation matters.  Ms. May is Chair of the Board’s Organization and Compensation Committee.

Ronald D. Santo.  Mr. Santo is Chairman of the Bank, and, prior to his retirement in September 2008, also served as Group President of the Bank and Vice President of the Company.  Prior to the MB-MidCity Merger, Mr. Santo served as Executive Vice President and Secretary of MidCity Financial since 1998 and 1981, respectively, and as President and a director of The Mid-City National Bank of Chicago, a subsidiary of MidCity Financial, since 1998 and 1988, respectively.  In addition, prior to the MB-MidCity Merger, Mr. Santo served as Chief Executive Officer and a director of First National Bank of Elmhurst, a subsidiary of MidCity Financial, since 1986, and Vice Chairman of the Board of First National Bank of Elmhurst since 1993.  Mr. Santo’s career in the banking industry and his prior executive positions with the Company and its predecessors give him a thorough understanding of the Company’s business and invaluable institutional knowledge.

Article II, Section 10 of the Company’s bylaws provides generally that no person 72 years of age or older may be elected, re-elected, appointed or re-appointed to the Board of Directors, and that no director who has attained age 72 may continue to serve as a director beyond the annual meeting of stockholders at which his term as a director expires. Article II, Section 10 gives the Board of Directors discretion to exempt any person under age 75 from mandatory retirement as a director if the Board of Directors determines that such exemption would be in the best interests of the Company. The Board of Directors determined that it would be in the best interests of the Company to exempt Mr. Santo, who is currently age 73, from mandatory retirement as a director of the Company to permit him to stand for election at the Meeting. In making this determination, the Board of Directors considered Mr. Santo’s extensive knowledge and experience described above as well as his continuance in the important role as Chairman of the Board of Directors of the Bank.

Jennifer W. Steans. Ms. Steans is the President and CEO of Financial Investments Corporation (“FIC”), a private asset management firm. Prior to founding FIC in 1994, Ms. Steans served as Treasurer of Prime Graphics, Inc. and as a Senior Consultant then as Manager for the management consulting arm of Deloitte & Touche. Ms. Steans is the current Chairman of USAmeriBancorp, Inc., a privately held Tampa Bay area middle-market bank. Her other current business affiliations include service as a director of MCS Holdings, LLC, Chicago Deferred Exchange Corp., Catastrophe Solutions International and ProVest Holdings, LLC. In addition, she serves as an advisory board member of Resource Land Fund, Carlyle Asia Growth Partners III, LP, Laramar Multi-Family Value Fund and Siena Capital Partners. Ms. Steans also actively helps lead a number of nonprofit entities, including serving as past Chair of Leadership Greater Chicago. She currently serves as Vice Chairman and Treasurer of Ravinia Festival and Trustee of the Chicago Foundation for Women, The Steans Family Foundation, The Phoenix Pact, Navy Pier, RUSH University Medical Center, and YWCA of Evanston/North Shore. From September 2008 until the Company's acquisition of Taylor Capital on August 18, 2014, Ms. Steans served as a director of Taylor Capital and Cole Taylor Bank. Ms. Steans became a director of the Company upon completion of the Company's acquisition of Taylor Capital. Ms. Steans brings to the Board a strong financial background, diverse business experience and deep ties to the Chicago community.

Renee Togher.  Ms. Togher was appointed as a director of the Company in August 2011.  Ms. Togher is President and a director of Chicago-based Azteca Foods, Inc., a family-owned, leading manufacturer of tortilla products.  Ms. Togher also serves on the boards of Illinois Manufacturer’s Association, ADL, Inc. and Mercy Hospital. She serves on the advisory board of Home Run Inn, Inc.  She is a past director of Greater Chicago Food Depository and Access Living, Chicago and National Museum of Mexican Art.  Ms. Togher earned her Bachelor’s degree in Business Administration from the University of Illinois, Urbana-Champaign. She completed the Loyola University Family Business Next Generation Leadership Institute Program.  As President of a middle market company in the Chicago area and her strong ties to the Chicago community, Ms. Togher brings to the Board business operating experience and first-hand knowledge of local market conditions, which make her a valuable member of the Company’s board.


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Executive Officers Who Are Not Also Directors

Set forth below is a description of the business experience for at least the past five years of each executive officer who is not also a director of the Company.

Rosemarie Bouman.  Ms. Bouman, age 59, is Vice President of the Company and Executive Vice President, Administration and a director of the Bank.  Ms. Bouman served in a variety of capacities for First Oak Brook and its subsidiary bank, Oak Brook Bank, from 1983 until our acquisition of First Oak Brook and Oak Brook Bank on August 25, 2006.  Her most recent positions were as Executive Vice President, Chief Operating Officer and Chief Financial Officer of First Oak Brook and as Senior Executive Vice President of Oak Brook Bank. Ms. Bouman previously served as an auditor with Arthur Andersen & Co. from 1979 to 1983.

Randall T. Conte.  Mr. Conte, age 55, is Executive Vice President, Chief Operating Officer of the Bank, and effective April 30, 2016, will become Chief Financial Officer of the Company and of the Bank and will remain Chief Operating Officer of the Bank. Prior to the MB-Taylor Capital Merger, Mr. Conte was Chief Financial Officer of Taylor Capital and Chief Financial Officer and Chief Operating Officer of Cole Taylor Bank. In addition, he oversaw the Retail Banking Group at Cole Taylor Bank.  Mr. Conte joined Cole Taylor Bank in 2008 from LaSalle Bank Corporation, where he last served as Executive Vice President and head of operations for LaSalle Bank’s retail, consumer and business banking businesses.  Prior to that, he served as Chief Operations Officer for ABN Amro’s Mortgage Group and as Corporate Controller for LaSalle Bank Corporation.  He was also a line of business Chief Financial Officer for ABN Amro Services Company.  Before his tenure at ABN Amro / LaSalle, Mr. Conte held senior management positions at SBC Warburg (now UBS) and Arthur Andersen. 

Mark A. Heckler.  Mr. Heckler, age 52, who had been serving as Executive Vice President, Commercial Banking and Wealth Management of the Bank since April 2013, became Executive Vice President, Commercial Banking of the Bank in March 2016. In his new role, Mr. Heckler leads all of the Bank’s commercial banking activities. Mr. Heckler is also a director of the Bank. Prior to April 2013, Mr. Heckler was responsible for the Risk Management area of the Bank. Prior to joining the Company in 2002, he was First Vice President of Bank One and served in various management positions with its predecessor organization, American National Bank and Trust Company of Chicago, since 1985. Mr. Heckler also served as Chairman of the Board of Norwood Life Care, a not-for-profit senior living facility in Chicago. He is also a Board member of Delta Dental of Illinois Foundation (DDILF), and Chairman of its Finance Committee.  DDILF is the 501(c)(3) charitable arm of Delta Dental of Illinois and works to support and improve the oral health of people in Illinois, with a specific focus on children.

Mark A. Hoppe. Mr. Hoppe, age 62, is President and Chief Executive Officer of MB Financial Bank, N.A. From March 2010 until the MB-Taylor Capital Merger, Mr. Hoppe was Chief Executive Officer of Taylor Capital  He also served as President and a director of Taylor Capital and as President, Chief Executive Officer and a director of Cole Taylor Bank from February 2008 until the MB-Taylor Capital Merger.  Prior to joining Taylor Capital, Mr. Hoppe served in a variety of management positions with LaSalle Bank, N.A., a bank headquartered in Chicago, Illinois, including Executive Vice President from 1994 to 2001.  He also served as an Executive Vice President of LaSalle Bank Midwest, N.A., a wholly-owned subsidiary bank of LaSalle Bank headquartered in Troy, Michigan, from 2001 to 2005, and as its Chief Executive Officer from 2005 to 2007.  Mr. Hoppe serves on the Board of Directors for Ann & Robert H. Lurie Children’s Hospital of Chicago and on the Board of Advisors and Executive Committee for Catholic Charities of the Archdiocese of Chicago. He is a member of the Board of Trustees and Finance Committee of Window to the World Communications, Inc. (“WTTW/WFMT”), the President’s Council for Heartland Alliance, Executive Committee Member of DePaul University’s Center for Financial Services, and the American Cancer Society’s CEOs Against Cancer.   

Edward F. Milefchik.  Mr. Milefchik, age 51, is Executive Vice President, Commercial Banking and a director of the Bank.  Prior to joining the Company in 2008, Mr. Milefchik served as Senior Vice President at Fifth Third Bank’s Chicago affiliate and oversaw the company’s commercial banking operations in the western suburbs of Chicago.  Mr. Milefchik has 26 years of banking experience and previously served 16 years in various capacities for Bank One and its predecessor organization, American National Bank of Chicago.

Michael J. Morton. Mr. Morton, age 53, is Executive Vice President and Chief Credit Officer of the Bank. From March 2008 until the MB-Taylor Capital merger, Mr. Morton was Executive Vice President, Chief Credit Officer of Cole Taylor Bank and chairman of the credit committee. A 16-year veteran of LaSalle Bank and its predecessor Comerica Bank Illinois, Mr. Morton held management positions in business development, commercial lending and credit approval. While at LaSalle, Mr. Morton was a voting member of the bank’s Senior Credit Committee. Immediately prior to joining the Cole Taylor Bank, he served as a senior risk officer at Bank of America, which acquired LaSalle. 


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Lawrence G. Ryan. Mr. Ryan, age 57, is Executive Vice President, Commercial Banking of the Bank. Prior to the MB-Taylor Capital Merger, Mr. Ryan served as Executive Vice President, Commercial Lending of Taylor Capital and Executive Vice President and Chief Lending Officer of Cole Taylor Bank. From early 2008 until joining Cole Taylor Bank, Mr. Ryan served as business banking market executive in Chicago for Bank of America, which acquired LaSalle Bank, N.A, where Mr. Ryan had served as a Group Senior Vice President.  Mr. Ryan serves as a Director of the Western Golf Association / Evans Scholarship Foundation and is a member of the Board of Advisors for Catholic Charities of the Archdiocese of Chicago. 

Michael D. Sharkey. Mr. Sharkey, age 62, is Executive Vice President of the Bank and President, MB Business Capital, the Bank's asset-based lending division. Prior to the MB-Taylor Capital Merger, he was responsible for Taylor Capital’s asset based lending group.  Mr. Sharkey’s previous experience includes 15 years at LaSalle Bank’s asset based lending group LaSalle Business Credit where he was President and Chief Executive Officer. Mr. Sharkey's previous positions include field examiner and loan officer at GE Capital, senior loan officer at Manufacturers Hanover Commercial Corporation and president of StanChart Business Credit, which was ultimately acquired by LaSalle Bank.  Mr. Sharkey is a permanent member of the Executive Committee of the Commercial Finance Association, as well as past president and chairman of that organization.  He is also past president of the American Brain Tumor Association. 

Brian J. Wildman.  Mr. Wildman, age 53, who had been serving as Executive Vice President, Risk Management and Chief Risk Officer of the Bank since April 2013, became Executive Vice President, Consumer Banking and Risk Management and Chief Risk Officer of the Bank in March 2016. It is expected that Mr. Wildman will relinquish his risk management responsibilities upon the hiring of a new chief risk officer. Mr. Wildman is also a director of the Bank. Prior to April 2013, Mr. Wildman was responsible for the Bank's Wealth Management and Commercial Services groups.  Prior to joining the Company in 2003, he was First Vice President of Bank One and served in various management positions with its predecessor organization, American National Bank and Trust Company of Chicago, since 1988.  Mr. Wildman is a member of the Board of Trustees of Missionary Furlough Homes, Inc.

Jill E. York.  Ms. York, age 52, is Vice President and Chief Financial Officer of the Company and Executive Vice President, Chief Financial Officer of the Bank, and effective April 30, 2016, will become Executive Vice President responsible for a portfolio of businesses and will retain responsibility for mergers and acquisitions. Ms. York is also a director of the Bank.  Prior to the MB-MidCity Merger, she served as Vice President and Chief Financial Officer of Old MB Financial since joining the Company in August 2000 and also served as Senior Vice President, Chief Financial Officer and a director of Manufacturers Bank, Old MB Financial's subsidiary bank.  Ms. York previously served as a partner with the public accounting firm of McGladrey and Pullen LLP.  She was in public accounting for 15 years and is a member of the Illinois CPA Society. Ms. York is a member of the Board of Trustees of Illinois Wesleyan University.
 
Director Independence

Our Board of Directors has determined that Directors Bolger, Daniels, Gries, Hallene, Harvey, Holmstrom, May, Santo, Steans and Togher are “independent directors,” as that term is defined in Rule 5605 of the Listing Rules of the NASDAQ Stock Market. In making this determination, the Board considered the transactions disclosed with respect to Messrs. Daniels and Santo and Ms. Steans under “Certain Transactions.” The Board also considered various ordinary course lending or leasing relationships that exist between the Company and each of Directors Daniels, Gries, Hallene, Harvey and Steans or entities with which they are affiliated.

Board Leadership Structure and Board’s Role in Risk Oversight

Leadership Structure. The positions of Chairman of the Board and Chief Executive Officer of the Company are currently held by two persons, with Mr. Harvey serving as Chairman and Mr. Feiger serving as Chief Executive Officer.  The Board has determined that the separation of these two positions enhances Board independence and oversight.  Moreover, the separation of these positions allows Mr. Feiger to better focus on his primary responsibilities of overseeing the implementation of the Company’s strategic plans and daily consolidated operations, while allowing Mr. Harvey, who is an independent director, to lead the Board in its fundamental role of oversight of management.

Role in Risk Oversight.  Risk is inherent with the operation of every financial institution, and how well an institution manages risk can ultimately determine its success.  We face a number of risks, including but not limited to credit risk, interest rate risk, liquidity risk, operational risk, strategic risk, compliance/legal risk and reputation risk.  Management is responsible for the day-to-day management of the risks the Company faces, while the Board has ultimate responsibility for the oversight of risk management.  The Board believes that risk management, including setting appropriate risk appetites, risk limits and monitoring mechanisms, is an integral component and cannot be separated from strategic planning, annual operating planning, and daily management of the Company.  Consequently, the Board reviews and monitors risks while overseeing and assessing the Company’s

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various business units.  Consistent with this approach as well as based on the belief that certain risks require an oversight focus that a Board committee can better provide, the Board integrated the oversight of certain risk areas with the Board’s Enterprise Risk, Audit, Organization and Compensation and Technology Committees.  The Board’s Enterprise Risk Committee works with management in connection with its efforts to manage the Company’s overall risk profile, including credit, interest rate, liquidity, operational, reputation, strategic and compliance/legal risks.  This Committee also advises management on optimizing the risk/return profile of the Company’s consolidated loan portfolio (including other real estate owned).  In addition, the Audit Committee oversees the Company’s internal control, financial reporting and compliance, the Organization and Compensation Committee oversees the compensation and incentive programs and the Technology Committee assists the Board and the other committees of the Board with information technology risk-related issues.  These committees regularly provide reports of their activities and recommendations to the full Board.

Meetings and Committees of the Board of Directors

The Company’s Board of Directors has standing Executive, Audit, Organization and Compensation, Enterprise Risk, Nominating and Corporate Governance, and Technology Committees.  During the year ended December 31, 2015, the Company’s Board of Directors met eleven times.  During 2015, no director of the Company attended fewer than 75% of the total number of meetings of the Board of Directors and committees of which he or she was a member held during the period in which he or she served.

The table below shows current membership for each of the standing Board committees:

Executive Committee
 
Audit Committee
 
Organization and Compensation Committee
 
 
 
 
 
 
 
Thomas H. Harvey(1)
 
   Charles J. Gries(1)
 
   Karen J. May(1)
 
Mitchell Feiger
 
David P. Bolger
 
James N. Hallene
 
James N. Hallene
 
Richard J. Holmstrom
 
Richard J. Holmstrom
 
Richard J. Holmstrom
 
Jennifer W. Steans
 
Renee Togher
 
 
 
Renee Togher
 
 
 
 
 
 
 
 
 
Enterprise Risk Committee
 
Nominating and Corporate Governance Committee
 
Technology Committee
 
   David P. Bolger(1)
 
   James N. Hallene(1)
 
C. Bryan Daniels (1)
 
C. Bryan Daniels
 
Thomas H. Harvey
 
James N. Hallene
 
James N. Hallene
 
David P. Bolger
 
   Thomas H. Harvey
 
Ronald D. Santo
 
 
 
Richard J. Holmstrom (2)
 
Charles J. Gries
 
 
 
Jennifer W. Steans (2)
 
 
 
 
 
 
 
(1) Committee Chair
(2) Became a member of the committee in December 2015.

Executive Committee

The Company’s Executive Committee generally may exercise the powers of the full Board of Directors between Board meetings.  During 2015, the Executive Committee did not hold any meetings.


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Audit Committee

The Audit Committee is appointed by the Company’s Board of Directors to provide assistance to the Board in fulfilling its oversight responsibility relating to:

the integrity of our financial statements and the accounting and financial reporting processes,

the systems of internal control including accounting and financial controls,

compliance with legal and regulatory requirements and our policies,

the annual independent audits of our financial statements and internal control over financial reporting;

the independent auditor’s qualifications and independence,

the performance of our internal audit function and independent auditors, and

any other areas of potential risk to us as may be specified by the Board.

The Audit Committee operates under a formal written charter, a copy of which may be viewed on our website, www.mbfinancial.com, by clicking “Investor Relations,” “Corporate Governance” and then “Governance Documents.”  The current members of the Audit Committee are “independent” as independence for audit committee members is defined in the NASDAQ Listing Rules.  Our Board of Directors has designated Directors Gries and Bolger as “audit committee financial experts,” as defined in the rules of the Securities and Exchange Commission.  The Audit Committee held eleven meetings during fiscal 2015.

Organization and Compensation Committee

In accordance with its charter, the Organization and Compensation Committee is responsible for discharge of certain of the responsibilities of the Board of Directors relating to the compensation of our executive officers. The Committee:

Reviews the goals and objectives of our compensation plans and, when deemed appropriate, recommends that the Board amend these plans or adopt new plans;

Oversees the evaluation of our senior management, including our Chief Executive Officer and other executive officers, establishes the target level and actual compensation for our executive officers other than our Chief Executive Officer, and recommends to the Board the target level and actual compensation for our Chief Executive Officer;

Periodically reviews and recommends to the Board the appropriate level of compensation and the appropriate mix of cash and equity compensation for directors;

Administers our Amended and Restated Omnibus Incentive Plan and any other plans which the Board has determined should be administered by the Committee;

Approves individual plan awards for our executive officers (after considering the Chief Executive Officer’s recommendations for awards to executive officers other than himself), and submits to the Board for its ratification individual awards for our Chief Executive Officer;

Approves the amounts of our contributions under the 401(k) profit sharing plan and non-qualified deferred compensation plans;

Reviews the Company’s management succession plan;

Conducts such reviews of our incentive and other compensation programs, and provides such reports, certifications and disclosures and discharges any other obligations that the Committee may have as a result of our participation in any government program or as may be required by applicable rules or regulations; and

Reviews and discusses with management and approves the Compensation Discussion and Analysis and issues the Committee’s report which appears in this Proxy Statement.

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The charter authorizes the Organization and Compensation Committee to select and retain a compensation consultant and other advisors to assist the Committee in carrying out its responsibilities. The Committee reviews and pre-approves all fees for services related to executive and director compensation performed by its consultant. The Chairman of the Committee reviews and approves of any other compensation-related services which the consultant may provide.

In anticipation that the Company would become significantly larger and more complex following the closing of our then-pending acquisition of Taylor Capital, during the second half of 2013 the Organization and Compensation Committee retained Meridian Compensation Partners LLC (“Meridian”) to serve as its independent compensation consultant. The Committee chose Meridian based upon the firm’s strong experience and reputation in working with larger banking organizations. We completed our acquisition of Taylor Capital on August 18, 2014. Meridian conducted a complete review of our executive compensation and board compensation programs, and it developed an updated peer group based on the fact that, following the acquisition of Taylor Capital, we expected to grow to approximately $15 billion in total consolidated assets from just below $10 billion in total consolidated assets and over $725 million of annual revenues from just below $425 million in annual revenues.

The Organization and Compensation Committee initially reviewed, and at least once each year reviews, information provided by Meridian addressing factors relevant under NASDAQ Listing Rules in assessing whether Meridian’s work for the Committee raised any conflicts of interest. The factors addressed include the extent of business or personal relationships of Meridian or individuals employed by Meridian with any member of the Organization and Compensation Committee or any of our executive officers; the level of fees received from the Company relative to the consulting firm’s total revenues; the policies and procedures employed by the firm to address conflicts of interest; and any Company stock owned by the individuals employed by the firm to advise the Company. Based on this information, no conflicts of interest with respect to Meridian’s advice have been identified by the Committee.

Under its engagement letter, Meridian acknowledged that the firm was retained by and performs its services for the Organization and Compensation Committee. In performing work for the Committee, Meridian interacts with Company management as part of the process for developing information and data required by the Committee.

Pursuant to our Amended and Restated Omnibus Incentive Plan, in 2014, the Organization and Compensation Committee has delegated authority, within prescribed limits, to grant equity awards to individuals below the executive officer level who are being recruited from other employers, or who are existing employees, as a means of recruiting, encouraging retention and/or rewarding employees for exceptional performance. See “Executive-Compensation-Compensation Discussion and Analysis-Long-Term Incentive.”

The Organization and Compensation Committee meets as necessary. During 2015, the Organization and Compensation Committee met seven times. Meetings are held in the first quarter to determine the extent to which annual incentive bonuses have been earned for the prior year, to review executive base salaries and short-term variable incentive award targets, and to consider the amount of the annual 401(k) employer match, the amount of the annual profit sharing contribution and the amount of Company contribution to the non-qualified deferred compensation plan. Beginning in 2014, the Committee moved approval of annual long-term incentive awards to the first quarter; long-term incentive awards were previously approved in July or August. The Committee moved the grants to the first quarter to better coordinate the elements of each executive officer’s total compensation in relation to benchmarking and performance.

At least once per year, the Organization and Compensation Committee reviews a tally sheet for each executive officer, which provides a breakdown of each component of compensation being paid to the executive (i.e., base salary, annual bonus incentive, long-term equity incentives, retirement benefits, perquisites, etc.), and reviews other historical data relating to the compensation of our executive officers. The Committee also meets to review our incentive compensation plans at least annually to determine if such plans encourage excessive risk taking or manipulation of reported earnings and to take steps to mitigate or eliminate such risks. In setting the compensation of executive officers other than the Chief Executive Officer, the Committee considers the recommendations of the Chief Executive Officer. For additional information, see “Executive Compensation-Compensation Discussion and Analysis.”

The Organization and Compensation Committee operates under a formal written charter, a copy of which is available on our website, at www.mbfinancial.com, by clicking “Investor Relations,” “Corporate Governance” and then “Governance Documents.” The members of the Organization and Compensation Committee are “independent,” as independence for compensation committee members is defined in the NASDAQ Listing Rules.


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Enterprise Risk Committee

The Enterprise Risk Committee addresses the challenges and risks the Company faces.  The Enterprise Risk Committee is appointed by the Company’s Board of Directors for the purpose of assisting and advising management in connection with its efforts to manage the overall risk profile of the Company and its subsidiaries, including capital, compliance/legal, credit, interest rate, liquidity, operational and reputation/strategic risk.  The responsibilities of the Enterprise Risk Committee include the following:

Assist the Board and its other committees that oversee specific risk-related issues and serve as a resource to management by providing advice and counsel on risk matters and represent the Board’s view to management on risk matters during the periods between Board meetings;

Ensure that the Company has in place an appropriate enterprise-wide process to identify, prioritize, measure and monitor, compliance/legal, credit, interest rate, liquidity, operational and reputation/strategic risk;

Review, approve and oversee the operation of the Company’s enterprise wide risk management framework, including processes, documentation, reporting and mitigation efforts;

Provide oversight and strategic direction to management for developing and maintaining risk appetite guidelines aligned with the enterprise risk management framework, and approve such guidelines, and receive reports from management personnel on the Company’s adherence to risk appetite guidelines and associated risk measures;

Provide oversight as it relates to the Company’s capital plan and monitoring of management’s capital planning efforts, including capital adequacy and stress testing in accordance with regulatory expectations;

Review reporting and provide oversight on credit risk management matters, including, but not limited to, exercising oversight and approval of credit policies, and analyzing OREO analysis, non-performing loans, credit portfolio metrics, criticized/classified assets, portfolio concentrations (e.g., limits and tolerances) and charge-offs;

Advise management on optimizing the risk/return profile of the Company’s consolidated loan portfolio (including other real estate owned);

Assist management in communicating proposed loan portfolio actions and approaches to the Board;

Monitor and review reporting on the credit review program and process;

Provide oversight on liquidity and interest rate risk management;

Monitor and review significant operational risk matters, including policy reviews and specific reporting on operational risk areas such as disaster recovery/business continuity planning, third party risk management, information security and Financial Crimes Risk Management (BSA/AML/OFAC/Fraud);

Monitor management’s oversight of the Company’s compliance program, including reviewing compliance monitoring efforts and updates on management’s efforts to address significant regulatory compliance issues. Monitor management’s oversight of legal risks and the Company’s litigation reporting; and

Review results of regulatory examination reports and monitor management’s actions to resolve identified examination issues.

The Enterprise Risk Committee operates under a formal written charter, a copy of which may be viewed on our website, www.mbfinancial.com, by clicking “Investor Relations,” “Corporate Governance” and then “Governance Documents.”   The Enterprise Risk Committee held five meetings during 2015.


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Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is responsible for identifying and recommending to the Company’s Board of Directors nominees for election to the Board.  The Nominating and Corporate Governance Committee is also responsible for:

Recommending to the Board the appropriate size of the Board and assist in identifying, interviewing and recruiting candidates for the Board;

Recommending candidates (including incumbents) for election and appointment to the Board of Directors, subject to the provisions set forth in our charter and by-laws relating to the nomination or appointment of directors, based on the following criteria: business and occupational experience, education, integrity and reputation, independence, conflicts of interest, age, number of other directorships and commitments (including charitable obligations), tenure on the Board, attendance at Board and committee meetings, stock ownership, specialized knowledge (such as an understanding of banking, accounting, marketing, finance, regulation and public policy) and a commitment to our communities and shared values, as well as overall experience in the context of the needs of the Board as a whole.  Although the Company does not have a formal policy with regard to the consideration of diversity in identifying director nominees, the Board seeks candidates who further its objective of having a Board that encompasses a broad range of talents and expertise and reflects a diversity of background, experience and viewpoints;

Reviewing nominations submitted by stockholders that have been addressed to the Corporate Secretary and that comply with the requirements of our charter and by-laws.  Nominations from stockholders will be considered and evaluated using the same criteria as all other nominations;

Review proposals submitted by stockholders for business to be conducted at annual meetings of stockholders;

Annually recommending to the Board committee assignments and committee chairs on all committees of the Board, and recommending committee members to fill vacancies on committees as necessary;

Considering and making recommendations to the Board regarding matters related to our director retirement policy;

Periodically evaluating emerging best practices, including the Board’s leadership structure, with respect to corporate governance matters and making recommendations for Board approval;

Conducting, at least annually, a performance assessment of the Board and report its findings to the Board;

Reviewing, at least annually, our Code of Business Conduct and, if appropriate, recommending modifications to the code for Board approval and considering any requested waivers of code provisions for directors and executive officers;

Establishing procedures for the regular ongoing reporting by Board members of any developments that may affect his or her qualifications or independence as a director and making recommendations as deemed appropriate;

Reviewing and approving related party transactions pursuant to the policy for such transactions set forth in our Code of Business Conduct (described under “Certain Transactions”);

Recommending to the Board a set of corporate governance principles, and review those principles at least annually.  A copy of our Corporate Governance Principles adopted by the Board is available on the Company’s website, at www.mbfinancial.com, by clicking “Investor Relations,” “Corporate Governance” and then “Governance Documents,” and

Performing any other duties or responsibilities delegated to the Committee by the Board.

Pursuant to Article I, Section 6 of our by-laws, nominations for election as directors by stockholders must be made in writing and delivered to the Corporate Secretary of the Company not less than 90 days or more than 120 days prior to the date of the stockholders’ meeting.  If, however, less than 100 days’ notice or public announcement of the date of the meeting is given or made to stockholders, nominations must be received by us no later than the close of business on the tenth day after the day on which notice of the date of the meeting is mailed or the day on which public announcement of the date of the meeting is first made, whichever occurs first.  In addition to meeting the applicable deadline, nominations must be accompanied by certain information specified in our by-laws.

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The Nominating and Corporate Governance Committee operates under a formal written charter, a copy of which is available on the Company’s website, at www.mbfinancial.com, by clicking “Investor Relations,” “Corporate Governance” and then “Governance Documents.”  The members of the Nominating and Corporate Governance Committee are “independent directors,” as that term is defined in the NASDAQ Listing Rules.  During 2015, the Nominating and Corporate Governance Committee met two times.

Technology Committee

The Technology Committee is appointed by the Company’s Board of Directors for the purpose of overseeing and advising management in connection with its efforts to manage the information technology (“IT”) assets of the Company and its subsidiaries, including IT investments and projects, IT and IT-based product innovation, and IT strategic and tactical planning. The Technology Committee also has oversight responsibility with respect to the Company’s information security. In addition, the responsibilities of the Technology Committee include the following:

Assist the Board and its other committees that oversee specific IT-related issues, including IT-risk related issues, and serve as a resource to management by providing advice and counsel on IT matters. The Committee also represents the Board’s view to management during the periods between Board meetings;
Oversee the Company’s IT strategy and review IT trends that may affect the Company’s strategic plans, including monitoring overall industry IT developments;
Provide oversight and strategic direction to management regarding making IT investments aligned with the Company’s strategy and provide approval of significant investments, and receive reports from management on the progress and effectiveness of significant IT projects;
Review, approve and oversee the operation of the Company’s IT security program, including relevant policies, program updates and reporting, and receive reports from management on the program and its effectiveness; and
Review results of regulatory IT examination reports and monitor management’s actions to resolve identified examination issues.
The Technology Committee operates under a formal written charter, a copy of which may be viewed on our website, www.mbfinancial.com, by clicking “Investor Relations,” “Corporate Governance” and then “Governance Documents.” The Technology Committee held four meetings during 2015.

Stockholder Communications with Directors

It is our policy that stockholders have the opportunity to communicate directly with members of the Company’s Board of Directors on appropriate matters.  The Board will respond, or cause us to respond, in writing to communications from stockholders concerning appropriate matters addressed to one or more members of the Board.  Stockholders may communicate with our Board of Directors by writing to:  MB Financial, Inc., Attn: (Name of Director), c/o Corporate Secretary, 6111 North River Road, Rosemont, Illinois 60018.

Board Member Attendance at Annual Stockholder Meetings

Although we do not have a formal policy regarding director attendance at annual stockholder meetings, directors are requested to attend these meetings absent extenuating circumstances.  Last year’s annual meeting of stockholders was attended by all but one of the directors then serving on the Company’s Board.


16



EXECUTIVE COMPENSATION
 
Compensation Discussion and Analysis
 
In this section, we provide an overview and analysis of our compensation programs, the compensation policy decisions we have made under those programs, and the material factors that we considered in making those decisions. Following this section, you will find a series of tables containing specific information about the compensation earned or paid for 2015 to the following individuals (our “named executive officers”):

Mitchell Feiger, President and Chief Executive Officer (“CEO”) of the Company;

Jill E. York, Vice President and Chief Financial Officer (“CFO”) of the Company and Executive Vice President and Chief Financial Officer of the Bank;

Mark A. Hoppe, President and Chief Executive Officer of the Bank;

Randall T. Conte, Executive Vice President, Chief Operating Officer of the Bank; and

Michael D. Sharkey, Executive Vice President of the Bank and President, MB Business Capital.

Effective April 30, 2016, Mr. Conte will become Chief Financial Officer of the Company and of the Bank and will remain Chief Operating Officer of the Bank. Concurrently, Ms. York will become Executive Vice President responsible for a portfolio of businesses and will retain responsibility for mergers and acquisitions.

Executive Summary

2015: A Transformative Year

2015 was a busy and excellent year. We entered 2015 as a larger, more complex financial institution with over $14.6 billion in assets and approximately 2,800 employees as a result of our merger with Taylor Capital in the third quarter of 2014 (sometimes referred to as simply the “merger”). We capitalized on that acquisition, executed our business plan, delivered strong results and solidified our position as a leader in the Chicago banking market. In November 2015, we agreed to acquire American Chartered Bancorp, Inc., the holding company for American Chartered Bank, a Chicago-based commercial bank with approximately $2.8 billion in total assets (“American Chartered”), and in December 2015, we completed our acquisition of MSA Holdings, LLC (“MSA”), the parent company of investment advisory services firms MainStreet Investment Advisors, LLC and Cambium Asset Management, LLC. These strategic actions position us for continued success.
Excellent Business Performance. We intensified our effort to grow a financial institution with lower risk and consistently better returns than peers over the long term. Our success is reflected by the following results:
Continued operating earnings growth and a healthy return on average assets:
Increased operating earnings* 34.5% to $161.9 million in 2015 compared to 2014 operating earnings of $120.3 million, reflecting a full year's effect of the merger;
Expanded net interest margin (fully taxable equivalent)* to 3.84% in 2015 from 3.77% in 2014, representing top quartile performance relative to our local peers in 2015; and
Achieved operating return on average assets* of 1.09% in 2015, up from 1.05% in 2014 and better than 12 of our 15 local peers for 2015.
Focus on key fee initiatives produced significant core non-interest income growth:
Lease banking, mortgage banking, treasury management, trust and asset management, cards and capital markets and international banking service initiatives, together with a full year of post-merger business efforts, generated more than $100 million of additional core non-interest income compared to 2014;
Total core non-interest income* of $322.3 million represented a 48.1 % increase over 2014, reflecting a full year of combined operations; and

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Core non-interest income to revenues* increased to 39.68% in 2015 from 36.96% in 2014, reflecting a full year's effect of the merger.
Achieved loan growth in the midst of a highly competitive environment:
Total loans, excluding purchased credit-impaired loans and loans held for sale, grew 9.3% to $9.65 billion at year-end 2015 compared to $8.83 billion at year-end 2014; and
Increased loan-to-deposit ratio to 85.13% at year-end 2015 from 82.64% at year-end 2014.
Increased deposits and improved deposit mix:
Low-cost deposits increased to $9.75 billion at year-end 2015, up 8.6% from year-end 2014;
Low-cost deposits were 84% of deposits at year-end 2015, up from 82% at year-end 2014; and
Non-interest bearing deposits increased to 40% of total deposits, while average cost of funds improved to 0.23% during 2015, in each case representing strong performance relative to our local peers.
Delivered returns for our stockholders:
10.8% increase in diluted operating earnings per common share* to $2.06 for 2015 from $1.86 for 2014;
25% increase in annual cash dividends to $0.65 per common share; and
Three-year average total shareholder return of 20.01%.
* Please see our Current Report on Form 8-K, furnished to the SEC on January 25, 2016, for reconciliation of these non-GAAP financial measures: operating earnings, net interest margin (fully taxable equivalent), operating return on average assets, core non-interest income, core non-interest income to revenues and diluted operating earnings per common share.

2015 Compensation Decisions

As noted, 2015 was a successful year for our Company. We benefited from the strong contributions of our CEO and other executive officers. Throughout the year, our leadership team successfully managed a much larger organization, while also negotiating the pending acquisition of American Chartered and negotiating and closing the acquisition of the investment advisory business of MSA. Our leadership team delivered financial and operating results above our business plan.
A key guiding principle of our executive compensation program is to pay for performance. We strive to accomplish this through our program designs, our pay policies and our long-term goal to provide value to our stockholders. We reinforced this approach with our 2015 compensation decisions:
We provided rewards commensurate with performance.
We measured performance against challenging, Board-approved financial goals designed to create value for our stockholders. The performance metrics focused management on generating expected returns from our 2014 merger with Taylor Capital and on executing our strategic plan;
We tied a substantial portion of the pay realized by our executive officers (approximately 70% for our CEO) to our financial and business results, as well as individual contributions and performance;
We earned a Company-wide score of 104% under the balanced scorecard we used to measure our annual performance based on our strong business and operating performance; and
We rewarded our CEO and other executive officers for these results with approximately target-level awards under our annual incentive plan.

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Our program is designed to align the interests of our executive officers and stockholders.
Our long-term incentive links 60% of the awards to price performance of our common stock, with 50% of the award based on how our total stockholder return (“TSR”) compares to the TSR of an industry index and 10% based solely on how much our stock price appreciates, and
We continued to deliver the portion of the annual incentive earned above target in restricted stock units to reinforce the importance of long-term stockholder value creation.
Best Practice Compensation Approaches
To encourage long-term value creation, we align our executive officers’ interests with the interests of our stockholders and follow good governance practices. We continue to feature many “best practices” in our executive compensation program, including:
Pay-for-performance. A substantial percentage of each of our named executive officers’ target total direct compensation is variable, performance-based compensation. Approximately 70% of the target total direct compensation of our CEO is based on annual and long-term performance.
Performance measures support strategic objectives. The performance measures we use for our annual (short-term) incentive plan reflect strategic and operating objectives we believe will create long-term value for our stockholders. The stockholder value created from meeting our objectives rewards executives through our long-term incentive plan.
Appropriate risk-taking. We set achievable performance goals that are centered around our internal financial plan, which we believe will not encourage risk taking outside the range of risk inherent in our business plan. Our short-term and long-term incentive plans have a cap on maximum payouts.
Clawback provisions. Incentive compensation under our short-term and long-term (equity) incentive plans is subject to clawback.
No new golden-parachute excise tax gross-ups. Since 2009, we have not entered into any agreements which provide a golden parachute excise tax gross-up in the event of a change in control.
“Double-trigger” benefits in the event of a change in control. In the event of a change in control, the payment of the severance benefits and the acceleration of vesting of long-term incentive awards are “double trigger”; that is, severance payments and accelerated vesting of continuing equity incentive awards will not occur unless there is also a qualifying termination of employment upon or after the change in control.
No repricing or exchanges of underwater stock options. Our long-term incentive plan prohibits repricing or exchange of underwater stock options without stockholder approval.
Significant stock ownership requirement. Our executive officers and directors are required to accumulate and hold our common stock equal to a multiple of base salary or cash directors’ fees. During 2015, we increased the stock ownership requirement for directors. A director or executive officer who fails to comply with the guidelines may receive fewer equity awards in the future or may be required to retain shares received upon vesting of long-term incentive awards.
Protective covenants. In order to receive long-term and other incentive compensation, senior officers must enter into a protective covenants agreement obligating the officer to comply with confidentiality and restrictive covenants. Failure to comply with the agreement may subject the executive to cancellation of awards and a requirement to repay amounts received from awards.

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Strong Stockholder Support for Our Say-on-Pay Vote
At last year’s annual meeting, our stockholders overwhelmingly supported our “say-on-pay” resolution, with approximately 96% of the votes cast voting to approve the executive compensation disclosed in last year’s proxy statement. We believe this vote reflects strong stockholder recognition of the strengths of our executive compensation program, including our pay practices and pay-for-performance results. Accordingly, we continued our program during 2015 without significant change.
Compensation Philosophy and Objectives

The Organization and Compensation Committee (the “Committee” referred to in this Compensation Discussion and Analysis) establishes, implements and monitors adherence to our compensation philosophy. Our compensation program is designed to attract and retain high-caliber people and to motivate and reward key employees for outstanding performance that should result in building and maintaining stockholder value. The Committee has adopted and continues to apply the following executive compensation program policy and underlying philosophy. Specifically, our executive compensation program:
Allows us to attract, retain and motivate talented individuals who are critical to our success;

Adjusts pay based on the achievement of our annual and long-term performance goals;

Encourages achievement of strategic objectives, creation of stockholder value, and alignment of employee and stockholder interests;

Recognizes and rewards individual initiative and achievement;

Maintains an appropriate balance between base compensation and short-and long-term incentive opportunities and between cash and stock-based compensation; and

Properly incorporates risk mitigation features.

Base salaries are reviewed during the first quarter of each year. Merit increases and market adjustments, if warranted, are considered at that time. These adjustments help ensure that we recognize performance and remain competitive in seeking to attract and retain talent.
Target annual incentive opportunities are established at levels intended to provide competitive total cash compensation at target for meeting our performance goals. Actual total cash compensation earned may be above or below target based on achievements against our Company and individual performance assessments. Annual incentives earned in excess of target amounts are generally paid in the form of restricted stock.
Target long-term incentive (“LTI”) opportunities are also intended to provide competitive total compensation for achieving our performance goals. The LTI program consists of stock-based awards with multi-year vesting periods which serve to reward performance, motivate long-term perspective, align our executives with stockholder interests and retain our key executives and high performers. Award grants are determined based on competitive market practice and individual performance, and provide the opportunity to realize increased rewards when stockholder value increases.
Meridian, the independent consultant retained by the Committee, conducts competitive reviews to provide market reference to the Committee when setting pay opportunities and making pay decisions. The reviews are conducted on a bi-annual basis. Most recently, Meridian reviewed the total direct compensation of our executive officers in the context of our acquisition of Taylor Capital in the third quarter of 2014. We used that review to make decisions for 2015 compensation, and will continue to use it, along with appropriate current input from Meridian, until our next full review occurs later in 2016.

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The most recent review by Meridian took into account the increase in the size and complexity of our organization and the melding of our management teams which occurred as a result of the merger. Meridian compared (benchmarked) the levels of base salary, target total cash compensation and target total direct compensation for the newly defined roles (including retained Taylor Capital executives) against the peer group levels. The peer group, which we sometimes refer to as our “benchmarking peer group,” recommended by Meridian and approved by the Committee, included the following financial institution holding companies:

Associated Banc Corp
BOK Financial Corporation
City National Corporation
Commerce Bancshares, Inc.
Cullen/Frost Bankers, Inc.
F.N.B. Corp.
First Horizon National Corporation
First Midwest Bancorp, Inc.
FirstMerit Corporation
Fulton Financial Corporation
Hancock Holding Corporation
IBERIABANK Corp.
National Penn Bancshares, Inc.
Old National Bancorp
PrivateBancorp, Inc.
Signature Bank
TCF Financial Corporation
Texas Capital Bancshares, Inc.
Trustmark Corporation
UMB Financial Corporation
Umpqua Holdings Corp.
Valley National Bancorp
Webster Financial Corporation
Wintrust Financial Corporation

Meridian and the Committee believe these 24 companies are a good cross-section of financial institutions which, like us, operate in metropolitan areas and have similar business lines and loan portfolio composition. These companies are also comparable to our asset size after the merger. At the time the peer group was constructed, these institutions ranged in asset size from $8.1 billion to $28.6 billion, with a median asset size of $16.2 billion, compared to our then estimated post-merger combined assets of approximately $15 billion. At December 31, 2015, our assets stood at approximately $15.6 billion.
In keeping with our compensation philosophy, the Committee has adopted the following market benchmark and competitive positioning of the elements of our executive compensation program (“Target” refers to pay that would be provided for on-plan, budgeted or median performance levels, as applicable, and “Max” refers to pay that would be provided at outstanding performance levels relative to those metrics):

Base Salary
 
Total Cash Compensation
 
Total Direct Compensation
 
(Salary and Bonus)
 
(Salary, Bonus and Long-Term)
 
 
Target
 
Max
 
Target
 
Max
50th percentile
 
50th percentile
 
75th - 90th percentile
 
50th - 60th percentile
 
75th - 90th percentile

The amount of pay ultimately received by our executive officers will depend upon performance. If our financial and strategic performance is strong relative to our goals and our stock price appreciates, executive officers may earn significant rewards from annual and long-term incentives. If performance falls below our goals, annual incentives will be lower or will not be earned at all. If our stock price performance lags that of our peers, amounts received under our long-term incentives may be reduced or eliminated.
 
Base Salary

Over time, an executive officer’s base salary will reflect a combination of factors, including competitive pay levels relative to the benchmarking peer group, the position’s role, level of authority and responsibility, internal pay equity, the individual’s expertise, experience and skill level and the officer’s overall contribution to the business and performance in managing his/her area of responsibility. Although the decision-making process does not use a quantifiable formula or weighting of the above-mentioned factors, as noted above we generally seek to maintain an executive officer’s base salary level within the competitive range around the 50th percentile of our benchmarking peer group.
In February 2015, the Committee reviewed the base salaries of our named executive officers against those of the benchmarking peer group and within the context of the senior leadership team as a whole. Based on this review and internal pay equity considerations, the Committee increased the base salaries of Mr. Feiger and Ms. York to maintain their positioning relative to the higher median base salaries within the benchmarking peer group and those of the Taylor Capital executives who joined us in the merger. Based upon similar considerations, the salaries of Messrs. Hoppe, Conte and Sharkey were unchanged. Mr. Hoppe’s

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base salary reflects the amount provided in his employment agreement which became effective at the time of the merger with Taylor Capital; the base salaries of Messrs. Conte and Sharkey are a continuation of their base salaries at the time of the merger.

Named Executive Officer
 
2014 Base Salary
 
2015 Base Salary
 
Increase
Mitchell Feiger
 
$
814,000

 
$
879,000

 
8
%
Jill E. York
 
458,000

 
476,000

 
4
%
Mark A. Hoppe
 
700,000

 
700,000

 

Randall T. Conte
 
435,000

 
435,000

 

Michael D. Sharkey
 
440,000

 
440,000

 


Short-Term Variable Incentive (Annual Bonus)

The short-term variable incentive (annual bonus) opportunity for named executive officers is targeted as a percentage of base salary. As noted above, we generally seek to maintain an executive officer’s target total cash compensation (base salary plus annual bonus target) within the competitive range around the 50th percentile of our benchmarking peer group. As part of the overall review of individual compensation levels, the Committee reviews the target total cash compensation of our executive officers, taking into account any change in base salary. The Committee maintained the 2014 target bonus amounts of 90% of base salary for Mr. Feiger and 50% of base salary for each of the other executive officers, except Mr. Hoppe. Pursuant to his employment agreement, Mr. Hoppe’s annual bonus target is 75% of his base salary.
Bonuses, if any, are paid during the first quarter following assessment of the prior calendar year’s performance. Amounts earned in excess of the target level have generally been paid in the form of restricted stock ratably vesting over two years. These shares are granted under our Amended and Restated Omnibus Incentive Plan, with shares valued on the date the bonus is awarded. This plan component has been used to retain high performing employees, enhance our focus on long-term perspective and serve as a risk mitigating feature that recognizes our short term results have an impact on our long-term stockholder value.
We again used a scorecard approach for determining the amount of annual bonus earned by our named executive officers. An executive officer’s bonus will be a function of the officer’s target bonus, the Company score and the officer’s individual performance score. Prior to 2015, executive officers with business unit or department responsibility (executive officers other than Messrs. Feiger and Hoppe) would also have a business unit or department score included in the calculation. However, to focus the senior leadership team on the performance of the entire organization, management recommended, and the Committee agreed, to eliminate separate business unit or department scores for our executive officers. As a result, the amount of bonus earned by each of our executive officers is determined by taking the Company score (which may range from 0% to 200%) and multiplying it by his or her target bonus and individual performance score.
For example, if an executive officer’s target bonus is $200,000, the Company performance score is 105%, and the executive officer’s individual performance score is 110%, the officer would earn a bonus of $231,000 ($200,000 x 105% x 110%). The final bonus amount is determined by the Committee and may reflect an adjustment from the formula result. The threshold, target and maximum amounts that could have been payable to the named executive officers as annual bonuses for 2015 are set forth in the Grants of Plan-Based Awards table under “Estimated Possible Payouts under Non-Equity Incentive Plan Awards.”
Following the close of the year, the Committee determines the Company score based upon the Company scorecard and input from Mr. Feiger, subject to approval by the Board. Mr. Feiger also provides the Committee with a recommended individual performance assessment and score for each of the other executive officers ranging from 0% to 200%. The Committee itself assigns a score to Mr. Feiger’s individual performance, also ranging from 0% to 200%, based on its qualitative assessment of his contribution to the Company’s performance. The Committee considers management’s assessment, Mr. Feiger’s recommendations and its own assessment in determining the final performance scores. Final annual incentive amounts are determined and approved by the Committee, with Mr. Feiger’s bonus amount subject to approval by the Board.

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Company Performance Assessment - 2015. The Company scorecard for 2015 was similar to the scorecard used in 2014. However, the target weightings were shifted to reflect changes in the areas important to 2015 performance. For 2014, the weighting for key strategic initiatives was 35%, with almost all of the 35% (30%) based on merger-related initiatives reflecting the strategic importance of the merger. With the merger completed, the key areas of emphasis for 2015 centered on managing a larger organization and reaping the expected benefits of the merger. As the Company scorecard set forth in the table below reflects, the performance metrics and goals selected to assess 2015 Company performance centered on, and our results achieved were as follows:
Revenue growth drivers (35% weighting, up from 28% in 2014):
Metrics - Core non-interest income, loan and low-cost deposit growth measured against our 2015 financial plan.

Results - Total weighted score of 37%, as we beat our goals for core non-interest income and low cost deposit growth, but fell short on loan growth.

Bottom-line performance (40% weighting, up from 27% in 2014):
Metrics - Net income from operations measured against our 2015 financial plan and operating return on average assets relative to local peers.

Results - Total weighted score of 45.7%, as we delivered income slightly above plan and top quartile operating return on average assets against local peers.

Balance sheet quality (10% weighting, no change from 2014):
Metrics - Non-performing loans to total loans relative to the 2015 financial plan.

Results - Weighted score of 7.4% as non-performing loans were higher than our financial plan.

Execution of key strategic initiatives (15% weighting, down from 35% in 2014):
Metrics - Growth in relationships, development and implementation of technology strategy and management of key regulatory risks.

Results - Total weighted score of 13.5%, as strong regulatory risk efforts were offset by misses in relationship growth and technology strategy as discussed below.


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The table below displays the Company scorecard performance and Company score calculation.
2015 Company Scorecard
(Dollars in millions)
Financial Measures
 
Target Weight
 
Target Performance
 
2015 Performance
 
Score
 
Weighted Score
Financial Measures:
 
 
 
 
 
 
 
 
 
 
Core Non-Interest Income (1)
 
15.0
%
 
$191 to $203
 
$204.8  (104.0% of plan)
 
129
%
 
19.3
%
Loans (2)
 
15.0

 
$9,451 to $9,835
 
$9,457 (98.1% of plan)
 
82

 
12.2

Low Cost Deposits (3)
 
5.0

 
$9,598 to $9,989
 
$9,873 (100.8% of plan)
 
109

 
5.5

Net Income (4)
 
30.0

 
$149 to $171
 
$161.8 (101.0% of plan)
 
103

 
31.0

Operating Return on Assets (peer ranking)
 
10.0

 
40th to 69.9th percentile
 
80th percentile
 
147

 
14.7

Non-Performing Loans/Total Loans
 
10.0

 
1.04% to 0.81%
 
1.07%
 
74

 
7.4

Total Financial Measure
 
85.0

 
 
 
 
 
 

 
90.1

Key Strategic Initiatives:
 
 
 
 
 
 
 
 
 
 
Grow Relationships
 
5.0

 
 
 
 
 
50

 
2.5

Development and implementation of technology strategy
 
5.0

 
 
 
 
 
70

 
3.5

Improve key regulatory risk issues
 
5.0

 
 
 
 
 
150

 
7.5

Total Key Strategic Initiatives
 
15.0

 
 
 
 
 
 
 
13.5

Total Company-Wide Score
 
100.0
%
 
 
 
 
 
 
 
103.6
%

(1) Core non-interest income, excluding the mortgage banking segment.
(2) Total gross loans outstanding excluding loans held for sale and purchased credit-impaired loans, based on December 2015 average balances.
(3) Total non-interest bearing, money market, savings and NOW accounts, based on December 2015 average balances.
(4) Net income as reported, excluding merger related expenses.

As described above, the Company scorecard was designed to focus management on realizing the benefits of the merger and maintaining the appropriate emphasis on net income and risk management. The Committee included relative performance for scoring the Operating Return on Average Assets (OROAA) metric to assess performance within the context of the local market operating environment. The peer group for purposes of the OROAA metric included Chicago-area banks with assets ranging from $1.5 to $25 billion, including the three local entities in our benchmarking peer group noted above (First Midwest Bancorp, Inc., PrivateBancorp, Inc. and Wintrust Financial Corporation), along with 12 other Chicago-area banking institutions with which we compete for business.

The first of the Company’s key strategic initiatives was to continue to grow both the services we provide to existing customers and the number of customers we serve. We focused on adding new relationships in commercial and business banking as well as wealth management. We met some goals, but we fell short in others in each of our business units. As a result, Mr. Feiger recommended, and the Committee agreed, to assign a score of 50% with respect to this strategic initiative. Based on the 5% weighting, this key strategic initiative contributed 2.5% to the Company performance score.
The second of the Company’s key strategic initiatives was related to the development and implementation of our technology strategy. With the growing emphasis on financial technology (so-called “fintech”) products or services and competition from non-traditional financial institutions, we are making investments in the technology used to attract, retain and provide service to our commercial and retail customers. We made good progress in a number of technology initiatives and identified areas where expanded efforts and additional progress are necessary. As a result, Mr. Feiger recommended, and the Committee agreed, to assign a 70% score with respect to this strategic initiative. Based on the 5% weighting, this performance contributed 3.5% to the Company score.
The third of the Company’s key strategic initiatives related to enhancing our management of key regulatory risk issues in light of the increased size and complexity of our business as a result of the merger. By crossing $10 billion in assets, we became subject to additional regulatory oversight and requirements. For 2015, this necessitated a concerted effort to effectively and efficiently grow and manage our compliance, regulatory and risk management functions. We exceeded our goals in these areas. As a result, Mr. Feiger recommended, and the Committee agreed, to award a 150% score with respect to this strategic initiative. Based on the 5% weighting, this performance contributed 7.5% to the Company score.

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Based upon the Company performance score of 103.6%, the Committee decided to round the final score to 104%, which it recommended to and was approved by the Board. The Committee believes that this final score appropriately recognizes slightly-above financial performance together with the mixed-level of performance against our strategic initiatives.
Individual Performance Assessments - 2015. Individual performance is a significant factor in the bonus earned by an executive officer.
The Committee makes its determination of the individual performance score for executive officers (other than Mr. Feiger) based on a qualitative assessment provided by Mr. Feiger. The assessment includes the individual contributions of each executive officer to the Company’s performance and the performance of the officer’s business unit or department. For 2015, Mr. Feiger’s assessment also took into account each executive officer’s contributions and achievements with respect to the Company’s overall performance relative to our financial and strategic plans. Mr. Feiger scored each officer’s performance on a scale ranging from 0% to 200%. As with Company performance, the Committee, after considering Mr. Feiger’s assessment, either accepts or modifies the scoring of each executive officer’s individual performance. The Committee itself reviews Mr. Feiger’s performance and assigns a score for individual performance, also ranging from 0% to 200%, based on its assessment of the Mr. Feiger’s contributions to the Company.
For Mr. Feiger, the Committee’s evaluation again centered on his leadership and recognition that as Chief Executive Officer, he is ultimately responsible for the Company’s financial performance and for the execution of its business plan and strategic initiatives. The Committee noted Mr. Feiger’s contributions to the execution of our business and strategic plans evidenced by our financial performance during 2015, realization of the benefits of the merger and our ability to attract desirable merger partners such as American Chartered and MSA. As a result, the Committee recommended, and the Board assigned, a 105% individual performance score to Mr. Feiger for 2015.
For the other named executive officers, the Committee considered and accepted Mr. Feiger’s recommendations for individual performance scoring reflecting the effort, leadership, contribution and value delivered to the Company, as evidenced by the performance of the Company and their respective areas of responsibility. Ms. York received an individual performance score of 110%, reflecting her contributions to the above-target financial performance of the Company, her continued leadership and effective management of the impact of the merger on the accounting and financial functions and leadership in the negotiation of the American Chartered and MSA acquisition agreements. Mr. Hoppe, President of MB Financial Bank, received an individual performance score of 95%, reflecting the overall performance of the Bank, partially offset by shortfalls in achieving targeted growth in loans and new business relationships. Mr. Conte received an individual performance score of 100%, recognizing his leadership in the integration of the Taylor Capital mortgage business and managing our IT and other key operating functions. Mr. Sharkey received an individual performance score of 100% reflecting his contributions to the disciplined management of MB Business Capital, maintaining market presence and credit quality amid difficult market conditions for asset-based lending.
Final Short-Term Variable Incentive Amounts - 2015

The resulting incentive amounts earned by the named executive officers are set forth in the table below. As described above, these amounts were based upon the combination of the Company score, individual performance and target bonus percentage. The amounts set forth in the table below reflect the total amount determined pursuant to the formula, the final cash bonus amounts paid, which are shown in the Non-Equity Incentive Plan column in the Summary Compensation Table and the above-target portion awarded as restricted stock units in February 2016.

Name
 
Target Bonus
 
Company Score
 
Individual Performance Score
 
Combined Score
 
Total 2015 Annual Incentive
 
Paid in Cash
 
Awarded in RSUs (1)
Mitchell Feiger
 
$
791,100

 
104
%
 
105
%
 
109
%
 
$
864,000

 
$
791,100

 
$
72,900

Jill E. York
 
238,000

 
104

 
110

 
114

 
272,000

 
238,000

 
34,000

Mark A. Hoppe
 
525,000

 
104

 
95

 
99

 
519,000

 
519,000

 

Randall T. Conte
 
217,500

 
104

 
100

 
104

 
226,000

 
217,500

 
8,500

Michael D. Sharkey
 
220,000

 
104

 
100

 
104

 
229,000

 
220,000

 
9,000

(1) The restricted stock units awarded in February 2016 will be reflected in the Summary Compensation Table in next year's annual meeting proxy statement.

25




Long-Term Incentive

Long-term incentive, or LTI, in the form of stock-based awards are granted to retain key employees and reward them based upon the market value of our Common Stock, thereby directly aligning their interests with the long-term interests of stockholders. Awards are granted under our stockholder-approved Amended and Restated Omnibus Incentive Plan.

Since 2014, the Committee has considered and approved annual long-term incentive awards during the first quarter. Making grants in the first quarter enables the Committee to coordinate the elements of each executive officer’s total compensation in relation to benchmarking and performance. Any restricted stock unit awards attributable to above-target, prior-year bonus amounts are also made during the first quarter.
Long-term incentive awards are also awarded during the year as appropriate for promotions and new hires. Recruitment grants made to individuals below the executive officer level are generally made on the date of hire and are approved by the Chief Executive Officer. Recruitment grants to an individual at the executive officer level are approved by the Committee. Our Chief Executive Officer also has the authority to grant awards to existing employees below the executive officer level for recognition and retention purposes. As with recruitment grants, these grants must be within prescribed limits and are reported to the Committee at its next scheduled meeting after the grant.
We generally seek to maintain an executive officer’s total direct compensation (base salary, annual bonus target and value of long-term incentive) within a competitive range around the 50th-60th percentile of our benchmarking peer group. As part of the overall review of our compensation program in 2014, the Committee reviewed the total direct compensation of our executive officers after taking into account any changes made to the base salary and target bonus amounts. The total direct compensation for each of the named executive officers was within the competitive range. Based upon its review, the Committee continued the target value of long-term incentives for Mr. Feiger and Ms. York of 140% and 80% of base salary, respectively, and, increased the target value of long-term incentives to 65% of base salary from 60% for Messrs. Conte and Sharkey in recognition of the fact that neither officer received a base salary increase. Under Mr. Hoppe’s employment agreement, the target value for his annual long-term incentive awards was set at 125%. The Committee increased his target to 130%, as he did not receive a 2015 base salary increase. The Committee established 100% of the target amount as the starting point when making the 2015 LTI awards and approved awards at that level for each of the named executive officers.
The Committee uses a mix of performance share units (“PSUs”), restricted stock and stock options for the annual LTI awards to our executive officers. In keeping with the pay-for-performance philosophy, PSUs represented 50% of the aggregate value of the LTI awards, and restricted stock and stock options represented 40% and 10% of the aggregate value, respectively.
The 2015 PSU grant vests based on the Company’s relative Total Stockholder Return (TSR) for the three-year performance period commencing in January 2015 and ending in December 2017. Our TSR performance is compared to an industry index consisting of 63 financial institutions in the SNL Midcap Bank Index over the same period. Subject to continued employment, the recipients will earn 25% of the number of PSUs granted if the Company’s TSR is at the 25th percentile of the group, 100% of the number of PSUs granted if the Company’s TSR is at the 50th percentile, and 175% of the number of PSUs granted if the Company’s TSR is at or above the 75th percentile. The actual number of shares earned will be interpolated between these points. The restricted stock and stock option awards vest in 25% increments on each of the first four anniversaries of the date of grant, subject to continued employment. Stock options provide a longer perspective and reward sustained stock price appreciation. Restricted stock has a strong retention feature, aligns our executive officers’ interests with stockholder interests and supports stock ownership objectives.
Each of the 2015 LTI awards will continue to vest or, in some circumstances, vest in full in the event of a qualifying termination of employment, including retirement as defined in the applicable award agreement. The awards will not automatically vest upon a change in control, but provisions for vesting are included in the event the awards are not continued or upon certain qualifying terminations of employment after the change in control (so-called “double-trigger” vesting).
The LTI awards made to the named executive officers in February 2015 are set forth in the Grants of Plan-Based Awards table under the “Estimated Future Payouts under Equity Incentive Plan Awards” and “All Other Stock Awards” and “All Other Option Awards” columns, for the PSU, restricted stock and stock option grants, respectively. In addition, the aggregate grant date fair value of these awards is set forth in the Stock Awards (for the PSU and restricted stock grants) and Option Awards (for the stock option grants) columns in the Summary Compensation Table.

26



Retirement and Other Benefits

Each named executive officer participates in our 401(k) profit sharing plan, a tax-qualified plan in which all employees of the Company and its subsidiaries who work at least 20 hours per week are eligible to participate following three months of service. Participants are able to contribute up to the lesser of 75% of their eligible earnings or the limit prescribed by the Internal Revenue Service on a before-tax basis. We make annual matching contributions to the plan in such amount as is determined by our Board of Directors, and we may also make profit-sharing contributions. All employee contributions are fully vested, and employer matching contributions vest after two years of service. Profit-sharing contributions made by the Company vest fully after six years of service.

The named executive officers, and certain other executives, are entitled to defer compensation under one of our two deferred compensation plans: the Stock Deferred Compensation Plan and the Non-Stock Deferred Compensation Plan. For deferrals under the stock plan, the executive’s account balance is credited or debited based on the performance of the assets of the stock plan trust, which are invested solely in Company Common Stock purchased by the plan trustee on the open market, except for such amounts of cash as the trustee deems necessary for the proper operation of the plan trust. For deferrals under the non-stock plan, the executive’s account balance is credited or debited based on the performance of one or more measurement funds selected by the executive, which in turn are based on certain mutual funds selected from time to time by our trustee to act as investment measurement devices. We may make discretionary contributions to the deferred compensation plans.
In addition, pursuant to his employment agreement, Mr. Feiger is entitled to a supplemental retirement benefit in the form of an annual credit to his Non-Stock Deferred Compensation Plan account equal to 20% of his base salary. For additional information, see “Non-qualified Deferred Compensation.”
The named executive officers participate in other employee benefit plans generally available to all employees, including group medical, dental, life and disability plans, in addition to any benefits to which they may be entitled by contract.
Perquisites and Other Personal Benefits

We provide the named executive officers with perquisites and other personal benefits that we and the Committee believe are reasonable and consistent with our overall compensation program to better enable us to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites and other personal benefits provided to the named executive officers. The incremental costs to us of providing these perquisites and other personal benefits to the named executive officers for the fiscal year ended December 31, 2015 are included in the Summary Compensation Table under the “All Other Compensation” column. Perquisites are generally limited to cars and country club memberships for select officers primarily for use with customers.

Employment Agreements and Change in Control Severance

We have entered into employment or change-in-control severance agreements with our named and other executive officers.
    
Mr. Feiger has been party to an employment agreement with us (or our predecessors) since 1999. We entered into an employment agreement with Mr. Hoppe which became effective upon the Merger. Ms. York has been party to a change in control severance agreement since 2000. We entered into these agreements to be consistent with competitive practice, as the use of agreements such as these is commonplace among financial institutions, in light of industry consolidations. In addition, we believe these agreements are consistent with our goal to attract and retain talented executives, as they help minimize uncertainty that may affect the executive’s performance in circumstances associated with changes in strategic direction and the possibility of change in control of the Company. For similar reasons, Taylor Capital established a Taylor Capital Group, Inc. Senior Officer Change in Control Severance Plan covering its executive officers, including Messrs. Conte and Sharkey, for a two-year period following a change in control transaction, such as the merger (the “Taylor Capital Change in Control Plan”). We assumed this plan in connection with the Merger. Messrs. Conte and Sharkey are covered by this plan until its expiration on August 18, 2016, after which they will be covered by a change in control severance agreement. See “Employment and Other Agreements with Named Executive Officers.”

In the event of a change in control, our executive officers may become subject to the excise tax on golden-parachute payments. The applicability and effect of the excise tax can vary significantly from executive officer to executive officer based on the executive’s personal compensation history. To provide an equal level of benefit across individuals without regard to the effects of the excise tax, and keeping with historical competitive practice in the banking industry, each of Mr. Feiger and Ms. York is a party to a pre-2010 tax gross-up agreement which provides that he or she will be paid an additional amount (referred to as a “gross-up payment”) that will offset, on an after-tax basis, the effect of any excise tax. See “Employment and Other Agreements

27



with Named Executive Officers-Tax Gross-Up Agreements.” The Company’s obligation to pay a tax gross-up payment will arise only if the compensation and benefits giving rise to the excise tax exceed the amount at which the excise tax is triggered by more than ten percent. If the excise tax is triggered, but the amount is not greater than the threshold for a gross-up payment, then the compensation and benefits otherwise owed to the executive officer are reduced to a level below which the excise tax is triggered. This approach avoids obligating the Company to pay a large gross-up payment in circumstances in which the adverse impact of the excise tax is not significant.

As noted above, the only employment and change-in-control agreements which may obligate us to pay an excise tax gross-up have been in place since prior to 2010. We do not intend to enter into any new agreements which could obligate us to pay an excise tax gross-up.

Neither Mr. Hoppe’s employment agreement, nor the Taylor Capital Change in Control Severance Plan provide for an excise tax gross-up. Change-in-control payments to Mr. Hoppe, Mr. Conte or Mr. Sharkey will be reduced in circumstances in which doing so will provide a greater amount on an after-tax basis than receiving all payments and paying the golden-parachute excise tax.

For information on the potential payments due to the named executive officers in the event of a termination of employment or a change in control, see “Employment and Other Agreements with Named Executive Officers” and “Potential Payments on Termination of Employment and Change in Control.”

Protective Covenants Agreements

We have made and continue to make significant financial commitments and investments in our business units and people to support our growth. To protect these investments, we have, since the first quarter of 2010, required officers to enter into protective covenants agreements with us in return for eligibility to receive incentive compensation. Under the agreement, the individual is obligated to safeguard and not disclose or misuse our confidential information and, for a period of one year after termination of employment, to not solicit, do business with or employ our customers or employees or disparage the Company, or its officers, directors or employees. Because our existing employment agreement with Mr. Feiger and the employment agreement we entered into with Mr. Hoppe already contained these protections for the Company, as well as a non-competition covenant in Mr. Feiger’s case, neither officer was required to enter into a separate protective covenants agreement.
Other Tax Considerations and Accounting Considerations

Section 162(m) of the Internal Revenue Code generally eliminates the deductibility of compensation over $1 million paid to certain highly compensated executive officers of publicly held corporations, excluding certain qualified performance-based compensation. While stock options will, as a general matter automatically constitute qualified performance-based compensation (provided that certain plan content and grant procedure requirements are met), cash and other stock-based awards must be subject to stockholder-approved performance criteria in order to so qualify. In this regard, our stockholder-approved Amended and Restated Omnibus Incentive Plan enables the Committee to structure our annual incentive plan as a cash award and certain of our stock-based performance awards as performance-based compensation intended to be exempt from the $1 million deductibility limit of Section 162(m).
Role of Executive Officers in Determining Compensation

Our Chief Executive Officer, Mr. Feiger, recommends to the Committee base salary, target bonus levels, actual bonus payments and long-term incentive grants for our executive officers (other than himself). Mr. Feiger makes these recommendations to the Committee based on the data and analysis provided by our independent compensation consultant and on qualitative judgments regarding individual performance. Mr. Feiger is not involved with any aspect of determining his own compensation.
Compensation Clawback Provisions

Bonus, stock-based or other incentive compensation paid to our executive and other officers is subject to clawback to the extent required by the Dodd-Frank Wall Street Reform and Consumer Protection Act as well as any related rules and regulations which may be issued from time to time. In general, incentive compensation based on financial statements or performance metrics which are restated or proven to have been materially inaccurate will be subject to forfeiture or repayment.

28



Stock Ownership Guidelines

Since March 2011, we have had in place Board-approved stock ownership guidelines applicable to our executive officers, including our named executive officers, as well as our non-employee directors. These guidelines were established to further reinforce the alignment of the financial interests of these executives and non-employee directors with those of our long-term stockholders.
Named Executive Officer
 
Guideline
Mitchell Feiger
 
6 times base salary
Jill E. York
 
3 times base salary
Mark A. Hoppe
 
4 times base salary
Randall T. Conte
 
2 times base salary
Michael D. Sharkey
 
2 times base salary

Our other executive officers are required to own shares having a value of two times their respective base salaries. Prior to 2015, each non-employee director was required to own shares having a value of at least $150,000. During 2015, the Committee recommended and the Board approved an increase in this amount to $200,000. The applicable ownership level must be attained by the fifth anniversary of the date of the appointment as an executive officer or a non-employee director.

An executive officer’s stock ownership requirement is based upon the officer's salary as of the date the guidelines were adopted or, if later, as of the date the officer first became subject to the guidelines. As of any date, the share value for shares owned will be the greater of the fair market value of the shares as of that date or the executive officer’s or non-employee director’s cost basis in those shares (as determined by the purchase price paid for the shares if purchased other than through awards under the Company’s incentive plans or fair market at the time of vesting or exercise for shares issued under the incentive plans).

The ownership requirement is based on actual ownership, which includes shares held directly, through trusts or through our 401(k) plan or non-qualified deferred compensation plan. Unvested share-based awards and all stock options or stock appreciation rights are not considered “owned” for this purpose.

The Committee and the Board will review compliance with the guidelines annually. If a director or executive officer fails to comply with the guidelines, the Committee and the Board may (i) limit future equity awards, (ii) require retention of portions of future equity exercises or shares that have vested or (iii) pay future bonus amounts or Board retainers in stock.

As of March 2016, each of our directors and named executive officers had met their respective stock ownership requirements.

Organization and Compensation Committee Report
The Organization and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained above with management and, based on such review and discussion, the Organization and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by the Organization and Compensation Committee of the Company’s Board of Directors:
 
 
Karen J. May, Chairperson
 
 
James N. Hallene
 
 
Richard J. Holmstrom
 
 
Renee Togher


29



Summary Compensation Table
(2015)

The following table and explanatory footnotes provide certain information concerning the compensation paid to or earned by the named executive officers for 2015, 2014 and 2013:

Name and Principal Position
 
Year
 
Salary ($)
 
Bonus
($)
 
Stock Awards
($) (1)
 
Option Awards
($) (2)
 
Non-Equity Incentive Plan Compensation
($) (3)
 
Change in Pension Value and Non-qualified Deferred Compensation  Earnings
($)
 
All Other Compensation
($)
 
Total Compensation ($)
Mitchell Feiger
 
2015
 
$
895,308

(4)
 
$

 
$
1,580,143

 
$
113,939

 
$
791,100

 
$

 
$
423,091

(5)
 
$
3,803,581

President and Chief Executive Officer of the Company
 
2014
 
788,500

 
 

 
1,249,882

 
124,765

 
1,100,100

 

 
342,360

 
 
3,605,607

 
2013
 
775,000

 
 

 
1,106,389

 
119,624

 
581,250

 

 
324,640

 
 
2,906,903

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jill E. York
 
2015
 
$
489,461

(4)
 
$

 
$
504,669

 
$
36,632

 
$
238,000

 
$

 
$
106,170

(6)
 
$
1,374,932

Vice President and Chief Financial Officer of the Company and Executive Vice President and Chief Financial Officer of the Bank
 
2014
 
441,000

 
 

 
455,906

 
39,745

 
341,500

 

 
88,334

 
 
1,366,485

 
2013
 
430,461

 
 

 
426,975

 
41,731

 
216,000

 

 
84,711

 
 
1,199,878

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mark A. Hoppe (7)
 
2015
 
$
726,923

(4)
 
$

 
$
1,157,031

 
$
90,987

 
$
519,000

 
$

 
$
170,516

(8)
 
$
2,664,457

President and Chief Executive Officer of the Bank
 
2014
 
242,308

 
 

 
1,250,012

 

 
725,000

 

 
27,214

 
 
2,244,534

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Randall T. Conte (9)
 
2015
 
$
451,731

(4)
 
$

 
$
423,437

 
$
28,270

 
$
217,500

 
$

 
$
77,459

(10)
 
$
1,198,397

Executive Vice President, Chief Operating Officer of the Bank
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael D. Sharkey (11)
 
2015
 
$
456,923

(4)
 
$

 
$
381,627

 
$
28,594

 
$
220,000

 
$

 
$
102,764

(12)
 
$
1,189,908

Executive Vice President,of the Bank and President, MB Business Capital
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 


 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
The amounts in this column are calculated using the grant date fair value of the award under Accounting Standards Codification Topic No. 718, Compensation-Stock Compensation (“ASC Topic 718”), based, in the case of restricted shares, on the number of restricted shares awarded and the fair market value of the Company’s common stock on the date the award was made and, in the case of market based performance share units (“PSUs”), on the assumptions set forth in Note 19 of the Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 19, 2016.  The number and grant date fair value of the restricted shares and PSUs awarded to each named executive officer during 2015 are shown in the Grants of Plan-Based Awards table.  The PSUs entitle recipients to shares of common stock and accrued dividends at the end of a three year vesting period.  Recipients will earn shares, totaling between 0% and 175% of the number of units issued, based on the Company's total stockholder return relative to a specified peer group of financial institutions over the three year period. The value of the PSUs included in the table is the grant date fair value based on probable outcomes at the date of grant.  The value of each of the PSU awards at grant date for each of the named executive officers assuming the highest level of performance (175%) and based on the closing price of $31.26 for our Common Stock on the February 25, 2015 grant date, would be as follows:
Name
 
Fair Value at Grant Date
 
Maximum Value at Grant Date
Mitchell Feiger
 
$
619,023

 
$
997,163

Jill E. York
 
199,040

 
320,634

Mark A. Hoppe
 
494,288

 
796,223

Randall T. Conte
 
153,601

 
247,423

Michael D. Sharkey
 
155,367

 
250,268

 

30




(2)
The amounts in this column present the grant date fair value of stock options awarded to the named executive officers in 2015 and do not reflect the value of shares received or which may be received in the future with respect to such stock options. The assumptions used to determine the value of these awards are set forth in Note 19 of the Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 19, 2016. The number and grant date fair value of stock options awarded to each named executive officer during 2015 are shown in the Grants of Plan-Based Awards table.

(3)
Represents short-term variable cash incentive (annual bonus) awards earned.  Not included in the 2015 amounts in the table are the portions of their incentive awarded in the form of restricted stock units granted under our Amended and Restated Omnibus Incentive Plan.  The amounts of these awards for Mr. Feiger, Ms. York, Mr. Conte, and Mr. Sharkey were $72,900, $34,000, $8,500, and $9,000 respectively, resulting in grants of 2,404, 1,121, 280, and 297 restricted stock units, respectively, on February 24, 2016, which are scheduled to vest ratably over two years (50% per year) from the grant date.  

(4)
Amount is higher than base due to the extra pay period in 2015.

(5)
Includes non-qualified supplemental retirement contributions under our non-stock deferred compensation plan of $348,841, supplemental disability insurance premiums paid on Mr. Feiger’s behalf of $4,153 and 401(k) matching and profit sharing contributions of $22,649.  Also includes the value of a leased automobile provided to Mr. Feiger of $23,054 and club dues paid on behalf of Mr. Feiger of $24,394.

(6)
Includes non-qualified supplemental retirement contributions under our non-stock deferred compensation plan of $56,596 and 401(k) matching and profit sharing contributions of $22,649.  Also includes the value of a leased automobile provided to Ms. York of $15,469 and club dues paid on behalf of Ms. York of $11,456.

(7)
No compensation information is provided for Mr. Hoppe for 2013 because he was not a named executive officer for such year.

(8)
Includes non-qualified supplemental retirement contributions under our non-stock deferred compensation plan of $120,038 and 401(k) matching and profit sharing contributions of $22,649.  Also includes the value of a leased automobile provided to Mr. Hoppe of $12,000 and club dues paid on behalf of Mr. Hoppe of $15,829.

(9)
No compensation information is provided for Mr. Conte for 2013 and 2014 because he was not a named executive officer for such years.

(10)
Includes non-qualified supplemental retirement contributions under our stock deferred compensation plan of $52,510 and 401(k) matching and profit sharing contributions of $22,649.  Also includes the value of a leased automobile provided to Mr. Conte of $2,300.

(11)
No compensation information is provided for Mr. Sharkey for 2013 and 2014 because he was not a named executive officer for such years.

(12)
Includes non-qualified supplemental retirement contributions under our non-stock deferred compensation plan of $47,038 and 401(k) matching and profit sharing contributions of $22,649.  Also includes the value of a leased automobile provided to Mr. Sharkey of $12,000 and club dues paid on behalf of Mr. Sharkey of $21,077.

Each of Messrs. Feiger and Hoppe has an employment agreement with the Company.  Each of Ms. York and Messrs. Conte and Sharkey has a change-in-control severance agreement with the Bank, although no amounts may become payable under the agreement to Messrs. Conte and Sharkey if amounts are payable to them under the Taylor Capital Change in Control Plan.  For descriptions of these agreements, see “Employment and Other Agreements with Named Executive Officers.”  Explanations of the amounts of salary and bonus in proportion to total compensation are provided under “Compensation Discussion and Analysis.”

31




Grants of Plan-Based Awards
(2015)

The following table and explanatory footnotes provide certain information with respect to grants of plan-based awards to the named executive officers during 2015.

 
 
 
 
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1)
 
Estimated Future Payouts Under Equity Incentive Plan Awards (2)
 
All Other: Stock Awards: Number of Shares of Stock or Units (#)
 
All Other Option Awards: Number of Securities Underlying Options
(#) (3)
 
Exercise Price of Option Awards ($/Sh)
 
Grant Date Fair Value of Stock and Options Awards (4)
Name
 
Grant Date
 
Threshold
($)
 
Target
($)
 
Maximum
($)
 
Threshold
(#)
 
Target
(#)
 
Maximum
(#)
 
 
 
Mitchell Feiger
 
2/25/2015
 
$

 
$
791,100

 
$
3,164,400

 

 

 

 

 

 

 
$

 
 
2/25/2015
 

 

 

 

 

 

 
14,582

(5)

 

 
455,833

 
 
2/25/2015
 

 

 

 

 

 

 
16,164

(6)

 

 
505,287

 
 
2/25/2015
 

 

 

 
4,557

 
18,228

 
31,899

 

 

 

 
619,023

 
 
2/25/2015
 

 

 

 

 

 

 

 
14,034

 
$
31.26

 
113,939

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jill E. York
 
2/25/2015
 
$

 
$
238,000

 
$
952,000

 

 

 

 

 

 

 
$

 
 
2/25/2015
 

 

 

 

 

 

 
4,688

(5)

 

 
146,547

 
 
2/25/2015
 

 

 

 

 

 

 
5,089

(6)

 

 
159,082

 
 
2/25/2015
 

 

 

 
1,465

 
5,861

 
10,257

 

 

 

 
199,040

 
 
2/25/2015
 

 

 

 

 

 

 

 
4,512

 
$
31.26

 
36,632

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mark A. Hoppe
 
2/25/2015
 
$

 
$
525,000

 
$
2,100,000

 

 

 

 

 

 

 
$

 
 
2/25/2015
 

 

 

 

 

 

 
11,644

(5)

 

 
363,991

 
 
2/25/2015
 

 

 

 

 

 

 
9,557

(6)

 

 
298,752

 
 
2/25/2015
 

 

 

 
3,639

 
14,555

 
25,471

 

 

 

 
494,288

 
 
2/25/2015
 

 

 

 

 

 

 

 
11,207

 
$
31.26

 
90,987

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Randall T. Conte
 
2/25/2015
 
$

 
$
217,500

 
$
870,000

 

 

 

 

 

 

 
$

 
 
2/25/2015
 

 

 

 

 

 

 
3,618

(5)

 

 
113,098

 
 
2/25/2015
 

 

 

 

 

 

 
5,014

(6)

 

 
156,738

 
 
2/25/2015
 

 

 

 
1,131

 
4,523

 
7,915

 

 

 

 
153,601

 
 
2/25/2015
 

 

 

 

 

 

 

 
3,482

 
$
31.26

 
28,270

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael D. Sharkey
 
2/25/2015
 
$

 
$
220,000

 
$
880,000

 

 

 

 

 

 

 
$

 
 
2/25/2015
 

 

 

 

 

 

 
3,660

(5)

 

 
114,412

 
 
2/25/2015
 

 

 

 

 

 

 
3,578

(6)

 

 
111,848

 
 
2/25/2015
 

 

 

 
1,144

 
4,575

 
8,006

 

 

 

 
155,367

 
 
2/25/2015
 

 

 

 

 

 

 

 
3,522

 
$
31.26

 
28,594

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

32




(1)
Represents threshold, target and maximum amount potentially payable under 2015 annual incentive awards.  The threshold amount is the amount that would have been payable if the minimum scores had been achieved. Target is the amount payable if Company-wide and individual scores had been 100%. The maximum amount reflects the highest amount payable for maximum scoring (200%) for each of the Company-wide and individual scores.  The actual amounts earned for 2015 are reflected in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column and footnote (3) to that column.  For additional information, see “Compensation Discussion and Analysis-Short-Term Variable Incentive (Annual Bonus).”

(2)
Represents PSUs granted under our Amended and Restated Omnibus Incentive Plan. Each PSU represents the right to receive one share of our Common Stock and accumulated dividends.  Recipients will earn performance shares, totaling between 0% and 175% of the number of PSUs granted, based on the Company's total stockholder return relative to a specified peer group of financial institutions over a three-year period. The threshold number of the PSUs is the number of shares payable for achievement at the 25th percentile, the target number of 100% of the PSUs is payable for achievement at the 50th percentile and the maximum number of 175% of the PSUs is payable for achievement at or above the 75th percentile. More information regarding the PSUs and 2015 awards can be found in the Compensation Discussion and Analysis and Outstanding Equity Awards table.

(3)
Represents a stock option under our Amended and Restated Omnibus Incentive Plan that is scheduled to vest ratably over four years (25% per year, beginning February 25, 2016), subject to continued employment. For additional information regarding the terms of this award, see “Compensation Discussion and Analysis—Long-Term Incentives.”

(4)
Represents the grant date fair value of the award determined in accordance with ASC Topic 718.  The assumptions used in calculating the grant date fair value of these awards are included in Note 19 of the Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 19, 2016.

(5)
Represents restricted stock and restricted stock unit awards (and accumulated dividends) under our Amended and Restated Omnibus Incentive Plan that is scheduled to vest ratably over four years (25% per year, beginning February 25, 2016), subject to continued employment. For additional information regarding the terms of this award, see “Compensation Discussion and Analysis—Long-Term Incentive.”

(6)
Represents restricted stock award (and accumulated dividends) under our Amended and Restated Omnibus Incentive Plan that is scheduled to vest ratably over two years (50% per year) from the grant date. For additional information regarding the terms of this award, see "Compensation Discussion and Analysis - Long-Term Incentives."


Outstanding Equity Awards at Fiscal Year-End
(2015)

The following table and explanatory footnotes provide information with respect to all stock options and unvested stock awards held at December 31, 2015 by the named executive officers.  Vesting and other information relating to these awards set forth in the footnotes below assumes continued employment through the vesting date and is subject to acceleration of vesting in certain circumstances.  See “Potential Payments on Termination of Employment or Change in Control.” 




33



Outstanding Equity Awards at Fiscal Year-End
 
 
Option Awards
 
Stock Awards
Name
 
Number of Securities Underlying Unexercised Options Exercisable (#) (1)
 
Number of Securities Underlying Unexercised Options Unexercisable
(#) (1)
 
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
 
Option Exercise Price ($)
 
Option Expiration Date
 
Number of Shares or Units of Stock That Have Not Vested (#)
 
Market Value of Shares or Units of Stock That Have Not Vested
($) (2)
 
Equity Incentive 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
($) (2)
Mitchell Feiger
 
33,522

 

 
 
$
35.77

 
7/26/2016

 

 
$

 

 
$

 
 
24,451

 

 
 
40.00

 
7/26/2016

 

 

 

 

 
 
41,714

 

 
 
32.89

 
7/25/2017

 

 

 

 

 
 
34,091

 

 
 
40.00

 
7/25/2017

 

 

 

 

 
 
54,108

 

 
 
29.00

 
6/25/2018

 

 

 

 

 
 
66,275

 

 
 
24.65

 
6/25/2018

 

 

 

 

 
 
17,343

 
5,781

 
 
20.40

 
8/29/2022

 

 

 

 

 
 
9,494

 
9,494

 
 
27.09

 
8/28/2023

 

 

 

 

 
 
4,912


14,736

 
 
29.80

 
2/26/2024

 

 

 

 

 
 

 
14,034

 
 
31.26

 
2/25/2025

 

 

 

 

 
 

 

 
 

 

 
5,318

(3)
172,144

 

 

 
 

 

 
 

 

 
8,831

(4)
285,859

 

 

 
 

 

 
 

 

 

 

 
38,637

(5)
1,250,680

 
 

 

 
 

 

 
12,561

(6)
406,600

 

 

 
 

 

 
 

 

 
682

(7)
22,076

 

 

 
 

 

 
 

 

 

 

 
36,636

(8)
1,185,907

 
 

 

 
 

 

 
14,582

(9)
472,019

 

 

 
 

 

 
 

 

 
16,164

(10)
523,229

 

 

 
 

 

 
 

 

 

 

 
31,899

(11)
1,032,571

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jill E. York
 
12,037

 

 
 
$
35.77

 
7/26/2016

 

 
$

 

 
$

 
 
8,780

 

 
 
40.00

 
7/26/2016