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Section 1: 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.     )

 

Filed by the Registrant  x

 

Filed by a Party other than the Registrant  o

 

Check the appropriate box:

o

Preliminary Proxy Statement

o

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x

Definitive Proxy Statement

o

Definitive Additional Materials

o

Soliciting Material Pursuant to §240.14a-12

 

TCF Financial Corporation

(Name of Registrant as Specified In Its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

x

No fee required.

o

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

 

(5)

Total fee paid:

 

 

 

o

Fee paid previously with preliminary materials.

o

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

(3)

Filing Party:

 

 

 

 

(4)

Date Filed:

 

 

 

 



 

 

TCF FINANCIAL CORPORATION

200 Lake Street East, Mail Code EX0-03-A

Wayzata, MN 55391-1693

(952) 745-2760

 

 

March 10, 2011

 

Dear Stockholder:

 

You are invited to attend TCF Financial Corporation’s Annual Meeting of Stockholders which will be held at the Marriott Minneapolis West, 9960 Wayzata Boulevard, St. Louis Park, Minnesota, on April 27, 2011, at 10:00 a.m. local time.

 

At the Annual Meeting you will be asked to elect fifteen Directors, to approve an increase in the number of authorized shares reserved for issuance under the TCF Employees Stock Purchase Plan – Supplemental Plan, to approve revised and additional performance criteria under each of the TCF Performance-Based Compensation Policy and the TCF Financial Incentive Stock Program, and to approve an Amended and Restated Certificate of Incorporation to eliminate supermajority voting requirements.  You will also be asked to give advisory (non-binding) votes on executive compensation, the frequency of future stockholder advisory votes on executive compensation, and on the Audit Committee’s appointment of KPMG, LLP as the Company’s independent registered public accountants for 2011.  The Board of Directors recommends a vote of “Annual” on the frequency of the stockholder advisory vote on executive compensation and that you vote “FOR” all of the other proposals to be presented at the meeting.

 

Your vote is important, regardless of the number of shares you own.  I urge you to vote now, even if you plan to attend the Annual Meeting.  Today we are also mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to the majority of stockholders who are eligible to vote at the Annual Meeting, as opposed to the traditional hard copy proxy materials.  The Notice instructs stockholders how to access TCF’s proxy materials and vote their TCF shares online.  If you were sent this Notice but would prefer to receive the traditional hard copy proxy materials, follow the instructions on the Notice to request the printed materials via mail.  If you received the traditional hard copy proxy materials in lieu of the Notice, you may vote your TCF shares online, via telephone, or via mail by following the instructions on the enclosed proxy card.  If you received more than one proxy card, please vote each card.

 

If you plan to attend the Annual Meeting, please bring a valid photo identification.

 

 

Sincerely,

 

 

 

 

 

 

William A. Cooper

 

Chairman and Chief Executive Officer

 


 


 

 

TCF FINANCIAL CORPORATION
200 LAKE STREET EAST, MAIL CODE EX0-03-A
WAYZATA, MN 55391-1693
(952) 745-2760


NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 27, 2011


 

The Annual Meeting of Stockholders of TCF Financial Corporation is scheduled as shown below:

 

Date:

 

April 27, 2011

Time:

 

10:00 a.m. local time

Place:

 

Marriott Minneapolis West

 

 

9960 Wayzata Boulevard

 

 

St. Louis Park, MN 55426

 

Meeting Agenda

 

1.      Elect fifteen Directors, each to serve a one-year term;

2.      Approve an increase in the number of authorized shares reserved for issuance under the TCF Employees Stock Purchase Plan – Supplemental Plan;

3.      Approve revised and additional performance criteria under the TCF Performance-Based Compensation Policy;

4.      Approve revised and additional performance criteria under the TCF Financial Incentive Stock Program;

5.      Approve an Amended and Restated Certificate of Incorporation to eliminate supermajority voting requirements;

6.      Advisory (non-binding) vote on executive compensation as disclosed in the proxy statement;

7.      Advisory (non-binding) vote on the frequency of the stockholder advisory vote on executive compensation as disclosed in the proxy statement;

8.      Advisory (non-binding) vote on the appointment of KPMG LLP as independent registered public accountants for the fiscal year ending December 31, 2011; and

9.      Other business properly brought before the Annual Meeting, if any.

 

You are entitled to vote at the Annual Meeting if you owned TCF Financial common stock at the close of business on February 28, 2011.  If you plan to attend the Annual Meeting, please bring a valid photo identification.

 

Whether or not you plan to attend the Annual Meeting of Stockholders, we urge you to vote now to make sure there will be a quorum for the Annual Meeting.  You may vote your shares by Internet, telephone or mail by following the instructions on your Notice or proxy card.  You may revoke your proxy by submitting another timely proxy, by notifying the Secretary of TCF in writing before your shares are voted at the Annual Meeting or by voting your shares in person at the Annual Meeting.  If you hold shares through a broker or other nominee, please follow the voting instructions provided to you by that broker or other nominee.

 

TCF is making its Proxy Statement for the 2011 Annual Meeting of Stockholders and its 2010 Annual Report to Stockholders available via the Investor Relations section of TCF’s website at ir.tcfbank.com.  A free webcast of the Annual Meeting also will be available at ir.tcfbank.com on Wednesday, April 27, 2011, at 10:00 a.m. local time.

 

 

By Order of the Board of Directors

 

 

William A. Cooper

 

Chairman and Chief Executive Officer

 

Wayzata, Minnesota

March 10, 2011

 


 


 

TABLE OF CONTENTS

 

 

Page

 

 

About the Meeting

1

Proposal 1: Election of Directors

4

Background of the Nominees

5

Corporate Governance

8

Director Attendance

10

Board Committees, Committee Memberships, and Meetings in 2010

10

Director Independence and Related Party Transactions

14

Compensation of Directors

17

TCF Stock Ownership of Directors, Officers and 5% Owners

20

Section 16(a) Beneficial Ownership Reporting Compliance

22

Background of Executive Officers Who Are Not Directors

22

Compensation Discussion and Analysis

23

Compensation Committee Report

34

Summary Compensation Table

35

Grants of Plan-Based Awards in 2010

37

Outstanding Equity Awards at December 31, 2010

38

Option Exercises and Stock Vested in 2010

39

Pension Benefits in 2010

39

Nonqualified Deferred Compensation in 2010

41

Potential Payments Upon Termination or Change in Control

43

Equity Compensation Plans Approved by Stockholders

46

Proposal 2:  Approve an Increase in the Number of Authorized Shares Reserved for Issuance Under the TCF Employees Stock Purchase Plan Supplemental Plan

47

Proposal 3:  Approve Revised and Additional Performance Criteria Under the TCF Performance-Based Compensation Policy

50

Proposal 4:  Approve Revised and Additional Performance Criteria Under the TCF Financial Incentive Stock Program

53

Proposal 5:  Approve an Amended and Restated Certificate of Incorporation to Eliminate Supermajority Voting Requirements

59

Proposal 6:  Advisory (Non-Binding) Vote on Executive Compensation

61

Proposal 7:  Advisory (Non-Binding) Vote on the Frequency of the Stockholder Advisory Vote on Executive Compensation

62

Proposal 8:  Advisory (Non-Binding) Vote on the Appointment of KPMG LLP as Independent Registered Public Accountants

63

Audit Committee Report

64

Independent Registered Public Accountants

64

Additional Information

65

Appendix I – Proposed TCF Employees Stock Purchase Plan – Supplemental Plan

66

Appendix II – Proposed TCF Performance-Based Compensation Policy

76

Appendix III – Proposed TCF Financial Incentive Stock Program

79

Appendix IV – Proposed Amended and Restated Certificate of Incorporation

87

 



 

 

 

TCF FINANCIAL CORPORATION

200 LAKE STREET EAST, MAIL CODE EX0-03-A

WAYZATA, MN 55391-1693

(952) 745-2760

 


PROXY STATEMENT


 

The Board of Directors (the “Board”) of TCF Financial Corporation (“TCF Financial,” “TCF,” or the “Company”) requests your proxy for the 2011 Annual Meeting of Stockholders (the “Annual Meeting” or “Meeting”).  The proxy is being solicited on behalf of the Board and TCF Financial.  The Annual Meeting is scheduled as shown below:

 

 

Date:

April 27, 2011

 

Time:

10:00 a.m. local time

 

Place:

Marriott Minneapolis West

 

 

9960 Wayzata Boulevard

 

 

St. Louis Park, MN  55426

 

The mailing address and telephone number of the principal executive offices of TCF Financial appear at the top of this page.

 

The Notice of Internet Availability of Proxy Materials (the “Notice”) or, in some cases, this proxy statement and the accompanying form of proxy, were mailed on or about March 10, 2011.

 

ABOUT THE MEETING

 

What Proposals are on the Agenda for the Annual Meeting?  Assuming a quorum is present, the following proposals will be voted on at the Annual Meeting:

 

1.     Elect fifteen Directors, each to serve a one-year term.

2.              Approve an increase in the number of authorized shares reserved for issuance under the TCF Employees Stock Purchase Plan — Supplemental Plan (the “ESPP — Supplemental Plan Increase”).

3.              Approve revised and additional performance criteria under the TCF Performance-Based Compensation Policy.

4.              Approve revised and additional performance criteria under the TCF Financial Incentive Stock Program.

5.              Approve an Amended and Restated Certificate of Incorporation to eliminate supermajority voting.

6.              Advisory (non-binding) vote on executive compensation as disclosed herein (“Say on Pay”).

7.              Advisory (non-binding) vote on the frequency of the stockholder advisory vote on executive compensation as disclosed in the proxy statement (“Say on Frequency”).

8.              Advisory (non-binding) vote on the appointment of KPMG LLP as independent registered public accountants for the fiscal year ending December 31, 2011.

 

Who is Permitted to Vote at the Annual Meeting?  You are entitled to vote at the Annual Meeting if you owned shares of TCF Financial’s common stock (“TCF Stock”) at the close of business on February 28, 2011 (the “Record Date”).  There were 143,884,753 shares of TCF Stock outstanding on the Record Date.  Each share of TCF Stock you owned as of the Record Date entitles you to one vote on each proposal at the Annual Meeting.

 

Stockholders of Record.  If your shares of TCF Stock are registered directly in your name, then you are considered the stockholder of record with respect to those shares and you may grant your proxy directly to the individuals listed on the proxy card or vote in person at the Annual Meeting.

 



 

“Street Name” Holders.  If your shares are held in a stock brokerage account or by any other nominee, then you are considered the beneficial owner of those shares, which are said to be held in “street name.”  As the beneficial owner, you may direct your broker or other nominee how to vote your shares using the voting instructions provided to you by that broker or nominee.  You may not vote your shares in person at the Annual Meeting unless you obtain a legal proxy from your broker or other nominee.

 

How is a Quorum Determined?   A majority of the shares of TCF Stock  outstanding  as  of  the  Record  Date must be present in person or by proxy at the Annual Meeting in order to have a quorum.  Broker non-votes (described below) of your shares are counted toward the quorum requirement.  If you vote by proxy before the Meeting but decide to withhold authority or abstain on one or more proposals, you are counted as being present at the Meeting and your shares count toward the quorum requirement but will not be deemed to have been voted in favor of the proposal(s).

 

How do I Vote?

 

Stockholders of Record.  You can vote your shares of TCF Stock by proxy (in advance of the Meeting) by using one of these three options:

 

(1)   online by following the instructions for Internet voting shown on the Notice or proxy card;

 

(2)   by telephone by following the instructions for telephone voting shown on the proxy card; or

 

(3)         by mail by marking the proxy card(s) with your instructions and then signing, dating and returning the card(s) in the enclosed return addressed envelope.

 

The individuals designated as proxies (see page 4) will vote your shares, based on your instructions.  If you submit your proxy card, but do not give instructions as to a proposal, they will vote “FOR” all proposals except the advisory vote on the frequency of the advisory (non-binding) stockholder vote on executive compensation, for which the proxies will vote “Annual.”  If any other business comes before the Meeting, they will vote your proxy according to their own judgment.  You can also vote in person at the Meeting.

 

“Street Name” Holders.  You must follow the voting instructions provided by your broker or other nominee.  Under the rules of the New York Stock Exchange (“NYSE”), brokers who hold your shares in “street name” have the authority to vote shares for which they do not receive instructions on all routine matters submitted for approval at the Annual Meeting.  In the absence of your specific instructions as to how to vote, your broker will not have authority to vote on the election of directors, the ESPP — Supplemental Plan Increase, approval of revised and additional performance criteria under the TCF Performance-Based Compensation Policy and the TCF Financial Incentive Stock Program, Say on Pay, or Say on Frequency.  “Street name” holders are invited to attend the Meeting; however, you may not vote your shares in person at the Meeting unless you obtain a legal proxy from the stockholder of record (your broker or other nominee).

 

You May Not Vote via the Annual Meeting Webcast.  Stockholders listening to the Meeting via webcast will not have any voting rights at the Meeting via such webcast.  If you plan to listen to the Meeting via webcast, please vote by proxy following the instructions set forth above.

 

You May Not Vote by Filling Out and Returning the Notice.  The Notice identifies the items to be voted on at the Meeting, but you cannot vote by marking the Notice and returning it.  The Notice provides instructions on how to vote by Internet, by requesting and returning a paper proxy card or voting instruction card provided by your broker, or by submitting a ballot in person at the Meeting.

 

Once I Have Voted My Proxy, May I Revoke It and Vote at The Meeting?  Yes.  Your proxy is revocable and is automatically revoked if you submit a new vote.  You can vote your shares at the Meeting by written ballots available at the Meeting, even if you voted them in advance by proxy.  However, if your shares are held in street name by a broker or other nominee, you must bring with you to the Meeting a proxy from them in your name.  Stockholders who listen to the Meeting via the webcast will not be able to revoke proxies at the Meeting via the webcast.

 

2



 

What is the Vote Required for Approval?  For Proposal 1, the election of Directors, the fifteen candidates who receive the most votes (a plurality) will be elected.  Withholding authority to vote for a Director will have no effect on the election of the Director.  Proposal 2, the ESPP — Supplemental Plan Increase, requires the affirmative vote of the holders of a majority of the shares cast on such proposal, provided the total votes cast on the proposal represent more than fifty percent (50%) of the outstanding shares of TCF Stock entitled to vote on such matter.  Proposal 5, Approval of an Amended and Restated Certificate of Incorporation of TCF to Eliminate Supermajority Voting, requires the affirmative vote of at least eighty percent (80%) of the total votes eligible to be cast.  For Proposal 7, Say on Frequency, the frequency (annual, biennial or triennial) that receives the most votes will be deemed the preference of the stockholders.  All other proposals must be approved by a majority of the shares present in person or by proxy and entitled to vote at the Annual Meeting.

 

What is a “Broker Non-Vote” and What is the Effect of Broker Non-Votes and Abstentions?  A “broker non-vote” occurs when your broker or other institution holding title to your shares as your nominee (in street name) does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from you.  Generally, if a broker returns a “non-vote” proxy, then the shares covered by such a “non-vote” proxy will be counted as present for purposes of determining a quorum but will not be counted in determining the outcome of the vote on that matter at the Annual Meeting.

 

A properly executed proxy marked “ABSTAIN” with respect to a proposal will be counted for purposes of determining a quorum, but will not be deemed to have voted in favor of such proposal.  Abstentions will not have an effect on the outcome of the vote on Proposal 7, Say on Frequency.  For all other proposals, abstentions will have the same effect as a vote against the proposal.

 

Who Pays for the Expenses  Related to Proxy  Solicitation?  TCF Financial is paying all costs of solicitation.  Proxies may be solicited on our behalf by Directors, officers or employees in person or by telephone, electronic transmission, mail or facsimile.  Directors, officers and employees will not receive any additional compensation for such services.  In addition, TCF has hired a professional solicitor, MacKenzie Partners, Inc. (“MacKenzie Partners”).  TCF expects total solicitation fees paid to MacKenzie Partners to be approximately $15,000 plus reasonable expenses.  TCF will, upon request, reimburse brokerage firms and other nominees for their reasonable expenses incurred for forwarding solicitation materials to beneficial owners of TCF Stock.

 

Who Will Count The Votes?  A representative of Broadridge Financial Solutions, Inc., TCF’s tabulation agent, will tabulate the votes and act as independent inspector of election.

 

Attending the Annual Meeting.  If you plan to attend the Meeting, please bring a valid photo identification.

 

May Stockholders Submit Proposals or Nominate Directors for This Meeting?  The deadline for submitting proposals or nominations was February 26, 2011, sixty days before the Annual Meeting date.  No stockholder proposals or nominations were submitted by that date.

 

What is TCF’s Policy on Stockholder Nominations?  Please refer to “Director Nominations” on page 8 for a description of TCF’s policy on stockholder nominations.

 

3



 

PROPOSAL 1:  ELECTION OF DIRECTORS

 

All Directors are being nominated for election to a one-year term.  Unless instructed otherwise by the person submitting the proxy, all proxies received will be voted in favor of the Nominees listed in the following chart.  All Nominees agree they will serve if elected.  If any Nominee becomes unable to serve prior to the Annual Meeting, the person to whom your proxy gives the voting rights (Thomas F. Jasper and/or Neil W. Brown) will vote for a replacement nominee recommended by the Nominating Committee of the Compensation/Nominating/Corporate Governance Committee of the Board of Directors of TCF.

 

Name

 

 

Position(s) with TCF Financial:

 

 

Age

 

Director Since *

 

Raymond L. Barton

 

Director

 

62

 

2011

 

Peter Bell

 

Director

 

59

 

2009

 

William F. Bieber

 

Director

 

68

 

1997

 

Theodore J. Bigos

 

Director

 

58

 

2008

 

William A. Cooper

 

Director, Chairman, Chief Executive Officer

 

67

 

1987

 

Thomas A. Cusick

 

Director

 

66

 

1988

 

Luella G. Goldberg

 

Director

 

74

 

1988

 

Karen L. Grandstrand

 

Director

 

56

 

2010

 

George G. Johnson

 

Director

 

68

 

1998

 

Vance K. Opperman

 

Director

 

68

 

2009

 

Gregory J. Pulles

 

Director, Vice Chairman

 

62

 

2006

 

Gerald A. Schwalbach

 

Director

 

66

 

1999

 

Ralph Strangis

 

Director

 

74

 

1991

 

Barry N. Winslow

 

Director, Vice Chairman, Chief Risk Officer

 

63

 

2008

 

Richard A. Zona

 

Director

 

66

 

2011

 

 

*  Excludes Director service with subsidiaries, predecessor companies or companies merged with TCF Financial.

 

 

 

 

 

 

 

What Is The Board’s Recommendation On Voting For Directors?  The Board unanimously recommends that TCF Financial stockholders vote “For” all the Nominees listed above.

 

4



 

BACKGROUND OF THE NOMINEES

 

The following describes at least the last five years of business experience of each Nominee proposed for election as a Director as well as the specific experience, qualifications, attributes or skills that led to the conclusion that the Nominee should serve as a Director in light of TCF’s business and structure.  The descriptions also include any other directorships at public companies held during the past five years by the Nominees.  There is no family relationship between any of the Nominees or executive officers of TCF Financial.

 

RAYMOND L. BARTON was elected to the Board of TCF Financial on January 18, 2011.  He has been the Chairman of the Board of Great Clips, Inc., an operator and franchiser of hair salons, since 1998 and also served as its Chief Executive Officer from 1998 until January 2011.  Mr. Barton was President of Great Clips, Inc. from 1983 to 1998.  Previously, he served as a vice president at Questex Energy from 1982 to 1983 and Treasurer at Century 21 Real Estate North Central States from 1978 to 1982.  He was a member of the accounting firm Alexander Grant & Co. (now Grant Thornton) from 1972 to 1978.  He currently is Chairman of the Board of Directors of Children’s Hospitals and Clinics of Minnesota.  Upon his election, Mr. Barton was appointed to the Asset Liability Management, Bank Secrecy Act Compliance (“BSA Compliance”), and Shareholder Relations/Capital and Expansion Committees.  Mr. Barton’s insight into retail services businesses and demonstrated success as an entrepreneur led to his appointment as a Director.

 

PETER BELL has been a Director of TCF Financial since November 2009 and is currently a member of the Asset Liability Management, BSA Compliance, Compensation/Nominating/Corporate Governance, and Shareholder Relations/Capital and Expansion Committees.  From 2003 until December 2010, he was the chair of the Metropolitan Council, a regional agency serving the Minneapolis/St. Paul metropolitan area, that operates the bus, wastewater, and parks systems, and administers funds for affordable housing opportunities, and he was responsible for strategic long-range growth planning for the Minneapolis/St. Paul metropolitan area.  Formerly, he was executive vice president at Hazelden Publishing and Educational Services from 1999 to 2002 and Executive Vice President of Corporate Community Relations at TCF National Bank, a wholly-owned national bank subsidiary of TCF Financial (“TCF Bank”) from 1994 to 1999.  He was the co-founding and executive director of the Institute on Black Chemical Abuse and has written numerous books on chemical dependence.  He is a former member of the Board of Regents of the University of Minnesota and has served on the board of directors for many local and national social and civic organizations.  In addition to unique management experience in the public and private sectors, Mr. Bell contributes his extensive experience in government affairs to the Board.  As a bank holding company regulated by several federal agencies, TCF has numerous dealings with regulatory bodies, and Mr. Bell’s acquired expertise in dealing with a wide variety of state and federal regulators is very helpful in Board deliberations that involve TCF’s regulatory relationships.  Mr. Bell also contributes to the diversity of the Board.

 

WILLIAM F. BIEBER has been a Director of TCF Financial since 1997 and is currently a member of the Asset Liability Management, BSA Compliance, Compensation/Nominating/Corporate Governance, and Shareholder Relations/Capital and Expansion Committees.  He is currently Chairman of the Board of ATEK Companies, Inc., a Minnesota-based organization supplying various products to the commercial, medical, and industrial marketplace, a position he has held since 1984.  In addition, he is the chairman and owner of ATEK Plastics, Inc., a Texas-based operation supplying various products to the medical and industrial marketplace.  As the Chief Executive Officer and owner of Acrometal Products, a position he first held in 1973, Mr. Bieber acquired numerous manufacturing and production entities, expanding the business that would become the ATEK family of companies.  He previously served as President of the Board of Hammer Residences Inc. and as a cabinet member to the Minneapolis United Way.  In these roles, Mr. Bieber obtained years of management experience and financial expertise.  The Board especially values his extensive experience in starting, acquiring and growing businesses.  TCF attempts to run its business lines with an entrepreneurial spirit, and Mr. Bieber’s knowledge of how to turn a product concept into a profitable business venture benefits Board discussions regarding products and strategic initiatives.

 

THEODORE J. BIGOS has been a Director of TCF Financial since October 2008 and is currently a member of the Asset Liability Management, BSA Compliance, Compensation/Nominating/Corporate Governance, and Shareholder Relations/Capital and Expansion Committees.  He is the owner of Bigos Management, Inc., an apartment ownership and management firm located in Minnesota, and he has been involved in the ownership or operation of apartment complexes for the past 37 years.  As TCF’s primary businesses include both residential and commercial lending, Mr. Bigos’ unique experience in long-term management of an apartment conglomerate and corresponding knowledge of the real estate markets make him a valuable contributor to the Board.

 

5



 

WILLIAM A. COOPER (Principal Executive Officer) has been a Director and the Chairman of the Board of TCF Financial since its formation in 1987.  He has served as the Chief Executive Officer of TCF Financial since July 2008 and also served as Chief Executive Officer from 1987 until his retirement on December 31, 2005.  Mr. Cooper continued to serve as non-executive Chairman of TCF Financial during his brief retirement.  He was also the Chief Executive Officer of TCF Bank from 1985 to 1993.  He is a director and controlling shareholder of Cooper State Bank, a state bank organized under the laws of the State of Ohio.  Mr. Cooper’s key attributes are his leadership skills and the experience gained through his long career in the banking industry and 25-year tenure at TCF.  Mr. Cooper’s demonstrated ability to lead Company management in deliberations on a wide variety of topics is critical to the successful functioning of the Board.

 

THOMAS A. CUSICK has been a Director of TCF Financial since 1988 and is currently a member of the Asset Liability Management, BSA Compliance, and Shareholder Relations/Capital and Expansion Committees.  He was Chief Operating Officer of TCF Financial from 1997 to 2002 and Vice Chairman from 1993 to 2002.  Mr. Cusick served as President of TCF Financial from its formation in 1987 until 1993.  He also served as Chief Executive Officer of TCF Bank from 1993 to 1996.  Mr. Cusick retired as an executive of TCF Financial in 2002.   Mr. Cusick contributes unique knowledge to the Board obtained during his 40-year career in banking with a special focus on retail banking and technology.  Mr. Cusick’s retail and information technology (“IT”) experience is invaluable when the Board takes up issues involving TCF Bank’s extensive IT service requirements.  In the current environment of rapidly-changing IT, Mr. Cusick’s experience with the Company and familiarity with addressing challenges in retail banking areas is important to Board deliberations.

 

LUELLA G. GOLDBERG has been a Director of TCF Financial since 1988 and is currently the chair of the BSA Compliance Committee, and a member of the Asset Liability Management, Audit, Compensation/ Nominating/Corporate Governance, and Shareholder Relations/Capital and Expansion Committees.  She served as a director of Hormel Foods Corporation from 1993 through November 2009, serving as lead director in 2009.  She served as a director of ReliaStar Financial Corp. from 1976 to 2000.  From 2001 to 2008, she served on the Supervisory Board of ING Group, Amsterdam, the Netherlands, which acquired ReliaStar Financial Corporation in 2001.  She became a director of Communications Systems, Inc. in 1997, and served on the board of Hector Communications Corporation from 2002 to 2006.  She was chair of the University of Minnesota Foundation from 1996 to 1998, and acting president of Wellesley College from July to October 1993.  Ms. Goldberg obtained banking experience as a director of an international financial services organization.  In addition, her problem-solving and leadership skills, which she obtained through her experience as a director of a myriad of public and civic organizations, are invaluable during Board deliberations.  Ms. Goldberg has been extensively involved with civic organizations in Minneapolis and St. Paul, Minnesota, which are principal markets of TCF.  Ms. Goldberg also contributes to the diversity of the Board.

 

KAREN L. GRANDSTRAND was elected a Director of TCF Financial in October 2010.  She was appointed to the Asset Liability Management, Audit, BSA Compliance, and Shareholder Relations/Capital and Expansion Committees in 2011.  She is a shareholder in the Minneapolis law firm of Fredrikson & Byron, P.A. and chair of the firm’s Bank and Finance Group.  Prior to joining the firm in 1999, Ms. Grandstrand was Senior Vice President of the Banking Supervision and Risk Management Departments at the Federal Reserve Bank of Minneapolis, where she worked from 1985 to 1999.  She served as a director of Thrivent Financial Bank from 2006 to 2010 and has also served as a director for various Minnesota civic and educational entities.  Ms. Grandstrand’s unique contribution as a Director is her insight into the regulatory environment in which TCF operates and expertise in regulatory compliance.  As the banking industry is increasingly highly regulated, her knowledge and skills will contribute to the Board’s decision making.  Ms. Grandstrand also contributes to the diversity of the Board.

 

GEORGE G. JOHNSON has been a Director of TCF Financial since 1998 and is currently a member of the Asset Liability Management, Audit, BSA Compliance, and Shareholder Relations/Capital and Expansion Committees.  Mr. Johnson is a certified public accountant and Managing Director of George Johnson & Company, a certified public accounting firm which he founded in 1971, and George Johnson Consultants, a consulting firm which he founded in 1995.  He serves as a director for various civic and educational organizations in the Detroit, Michigan area.  In addition to management and entrepreneurial experience, Mr. Johnson contributes accounting expertise to the Board grounded in his 40-year career as a certified public accountant.  The Board is focused on the integrity of TCF’s financial statements, as a public financial services company, and Mr. Johnson’s financial acumen is invaluable in the Board’s reviews.  Mr. Johnson also contributes to the diversity of the Board.

 

VANCE K. OPPERMAN has been a Director of TCF Financial since June 2009 and is currently the chair of the Compensation/Nominating/Corporate Governance Committee and a member of the Asset Liability Management,

 

6



 

Audit, BSA Compliance, and Shareholder Relations/Capital and Expansion Committees.  He is President and Chief Executive Officer of Key Investment, a private investment company involved in publishing and other activities, a position he has held since 1996.  From 1993 to 1996, he was President of West Publishing Company, a provider of legal and business information research now owned by Thomson Reuters.  He has served on the board of directors for Thomson Reuters since 1996 and is currently the chair of the audit committee for that board.  He also serves on the board of Blue Cross Blue Shield of Minnesota and currently serves as chair of the business development and audit committees for that board.  Mr. Opperman’s background in executive management and expertise in finance make him a valuable member of the Board.  The legal skills he acquired as an attorney and as the president of a large public company in the legal publishing business are useful in the Board’s discussions of legal risk and regulatory issues.  As president of West Publishing, Mr. Opperman acquired managerial and analytical skills which enable him to contribute to numerous Board discussions.  In addition, Mr. Opperman’s experience in the healthcare industry is unique to the Board, and it allows him to provide special insights with respect to TCF’s healthcare and medical benefits issues.

 

GREGORY J. PULLES has been a Director of TCF Financial since 2006 and Vice Chairman of TCF Financial since 1993.  He was Secretary of TCF Financial from 1989 until January 2011.  He served as General Counsel of TCF Financial from 1987 until April 2009.  He has been an Executive Vice President of TCF Bank since 1989 and also served as Secretary (1989 to 1995) and General Counsel (1985 to 1993).  Mr. Pulles’ special contribution to the Board is his expertise in legal issues applicable to TCF which he obtained during his 40-year legal career in the financial services industry and in private practice representing clients in financial services businesses.  In addition, Mr. Pulles’ extensive experience as an employee of TCF enables him to provide insight that strengthens Board decision-making and management.

 

GERALD A. SCHWALBACH has been a Director of TCF Financial since 1999 and is currently the chair of the Audit Committee and a member of the Asset Liability Management, BSA Compliance, and Shareholder Relations/Capital and Expansion Committees.  He is the Chairman of the Board of Spensa Development Group, LLC, a position he has held since the company’s formation in 2003, and manages related companies that are engaged in the real estate business.  From 1997 to 2009, he was a director of C.H. Robinson Worldwide, Inc., a logistics and transportation company.  In these positions and others, Mr. Schwalbach developed extensive experience in finance and tax matters relating to real estate.  Mr. Schwalbach’s special contribution to the Board comes from his financial acumen acquired in his career as a financial advisor/entrepreneur and also his experience as an audit committee chair acquired outside and inside TCF.  Mr. Schwalbach’s insights and leadership skills are valuable in achieving the strong control environment that is critical to TCF’s success.  In addition, Mr. Schwalbach’s experience in tax matters enables him to provide significant guidance to the Board in this area.

 

RALPH STRANGIS has been a Director of TCF Financial since 1991 and is currently the chair of the Shareholder Relations/Capital and Expansion Committee, and a member of the Asset Liability Management and BSA Compliance Committees.  He is a founder of the Minneapolis law firm of Kaplan, Strangis and Kaplan, P.A., of which he has been a member since 1978.  He has also been a director of OptumHealthBank, Inc., an affiliate of UnitedHealth Group since 2002; Sit Investments Associates, Inc. since 2005; and Cooper State Bank since 2005.  Mr. Strangis is uniquely qualified as a Director because of the legal and executive management skills he acquired through his over-40-year legal career as an advisor to numerous public and private companies.  During his nearly 20 years as a Director of TCF Financial, Mr. Strangis has been a leader at Board meetings and in strategic Board decision-making in countless complex business transactions.

 

BARRY N. WINSLOW has been a Director of TCF Financial since 2008 and the Chief Risk Officer of TCF Financial since 2010.  Mr. Winslow has also been a Vice Chairman of TCF Financial since July 2008.  From 2009 to 2010, he was responsible for TCF’s Wholesale Banking business.  From January 2008 to July 2008, Mr. Winslow was a financial consultant for several banks, including TCF.  In this role, his primary focus was advice, analysis, and strategic plan input related to mergers and acquisitions, as well as strategies for non-performing asset dispositions.  He previously held the positions of Chief Operating Officer of TCF Financial Corporation (2006 to 2007), Chief Executive Officer of TCF Bank (2001 to 2005) and President of TCF Bank (1998 to 2005).  He held additional positions with TCF affiliates including President of TCF Bank Michigan (1995 to 1998) and President and Chief Executive Officer of TCF Bank Illinois (1993 to 1995).  Prior to joining TCF, Mr. Winslow was a senior vice president with Huntington National Bank.  He has served as a director of Cooper State Bank since 2005 and is a director of Sit Mutual Funds, a position to which he was elected in 2010.  Additionally, Mr. Winslow has served as an adjunct professor of finance at several universities, including Ohio State, Cincinnati, Xavier, and North Texas.  Mr. Winslow has extensive knowledge of the banking industry, with an emphasis in commercial lending, which he obtained through his 35-year career.  This knowledge and his experience as an advisor and employee of TCF make

 

7



 

him a valuable member of the Board.  In addition, Mr. Winslow’s insight in the areas of commercial lending and leasing, as well as his other financial experience, inform his risk management determinations as Chief Risk Officer.

 

RICHARD A. ZONA was elected to the Board of TCF Financial on January 18, 2011.  Mr. Zona held the position of Vice Chairman of Wholesale Banking and Wealth Management for U.S. Bancorp from 1996 until his retirement in 2000.  He joined U.S. Bancorp in 1989 as Executive Vice President and Chief Financial Officer, and from 1991 to 1996 served as Vice Chairman and Chief Financial Officer of U.S. Bancorp.  Mr. Zona practiced as a certified public accountant with Ernst & Young from 1970 to 1989 and was admitted to partnership in 1979.  While at Ernst & Young, Mr. Zona served as National Director of the firm’s financial institutions practice.  He has served on the boards of ING Direct Bank fsb (USA), New Century Financial Corporation (2000 to 2007), Piper Jaffray Companies (2004 to 2005), Polaris Industries Inc. (2000 to 2007), and ShopKo Stores Inc. (2003 to 2006).  Upon his election, Mr. Zona was appointed to the Asset Liability Management, BSA Compliance, and Shareholder Relations/Capital and Expansion Committees.  Mr. Zona contributes extensive management, finance, and accounting experience from his lengthy career in the financial services industry.  In addition, his knowledge of the regulatory and economic challenges facing financial institutions is particularly useful to the Board given the current economic and regulatory climate.

 

CORPORATE GOVERNANCE

 

TCF has established and operates within a comprehensive plan for Board of Directors membership/director independence, committee membership, and ethical conduct.  TCF’s Corporate Governance Guidelines may be accessed through the TCF website at www.tcfbank.com (click on “About TCF,” then click on “Corporate Governance”).  Included in the Corporate Governance Guidelines are the criteria used to determine whether a Director is independent.

 

TCF’s corporate governance policies recognize the importance of sound governance practices in the financial services industry.  The Board currently consists of fifteen members.  The number of Directors is determined by the Board from time to time and may range in size from seven to twenty-five members.  The Board of Directors typically meets at least quarterly in January, April, July, and October.  TCF’s Board has six committees:  Asset Liability Management, Audit, Bank Secrecy Act (“BSA”) Compliance, Compensation/Nominating/Corporate Governance, Shareholder Relations/Capital and Expansion, and Executive.  Directors are elected by a plurality vote of the stockholders, but nominees typically obtain substantially more than a majority of the votes cast.

 

Director Nominations.  The Nominating Committee of the Compensation/Nominating/Corporate Governance Committee is responsible for Director nominations.  The Nominating Committee consists entirely of independent Directors as determined by the Board under applicable rules, all of whom are also members of the full Compensation/Nominating/Corporate Governance Committee.  The Nominating Committee operates under the Compensation/Nominating/Corporate Governance Committee Charter which may be accessed through TCF’s website at www.tcfbank.com (click on “About TCF,” then click on “Corporate Governance”).

 

The Board and management regularly make recommendations to the Nominating Committee of potential Director candidates they have identified through business and professional contacts.  The Nominating Committee will consider nominees for new Directors as vacancies become available using the following criteria:  A majority of the Directors must be independent, as determined by the Board under applicable rules; nominees shall possess expertise in general business matters and in such other areas as are relevant to Committees on which they are expected to serve (such as financial expertise for Directors expected to serve on the Audit Committee); and nominees shall be individuals with the background, character, skills and expertise such that they will meaningfully contribute to the success of the Company and its operations.

 

Messrs. Barton and Zona and Ms. Grandstrand were each nominated by the Nominating Committee, which is comprised of independent (non-management) Directors.

 

The Board does not have a formal policy of considering diversity in identifying potential Director nominees, but believes that its membership should broadly reflect the banking community served by the Company and therefore has an informal practice of considering a nominee’s age, race, ethnicity, national origin, gender, and geographic location in addition to such nominee’s qualifications for Board service.

 

8



 

Stockholders may submit nominations to the Nominating Committee for consideration at next year’s Annual Meeting prior to the deadlines set forth on page 65 .  Any such nomination should include the information specified in Article II, Section 13 of the Bylaws, a copy of which may be obtained from the Company’s Corporate Secretary at the TCF address on page 1.  Nominations should be mailed to the attention of the Compensation/ Nominating/Corporate Governance Committee, c/o TCF’s Corporate Secretary at the TCF address on page 1.  The Nominating Committee will evaluate all recommended nominees, including those submitted by stockholders, based on the criteria set forth above, with particular emphasis on whether they will meaningfully contribute to the success of the Company and its operations.  TCF has not, to date, paid any fees to any firm in connection with locating or evaluating any Director candidates.

 

Communications with Directors.  The Board of Directors provides a process for stockholders and other interested parties to communicate directly with any Director, the presiding Director, the Board of Directors, or with non-management or independent Directors as a group.  The process for doing so is disclosed on TCF’s website at www.tcfbank.com (click on “About TCF,” then click on “Corporate Governance”).

 

Board Leadership Structure and the Board’s Role in Risk Oversight.  The same person serves as both the Principal Executive Officer of the Company and Chairman of the Board.  The Board does not have a lead Director.  A presiding Director is selected when the Board holds non-management meetings.

 

The Board believes that this leadership structure is appropriate given TCF’s characteristics and present circumstances.  It has enabled TCF to attract and retain a strong Chief Executive Officer, and the Company has achieved extraordinary success under his leadership.  It avoids any lack of clarity over who runs the Company and results in a Board leader with greater substantive knowledge of the Company and the industry in which it operates than would otherwise be the case.  The Board believes all of these considerations provide value for the Company’s stockholders.

 

Furthermore, the current leadership structure has been in place most of the time since the Company’s inception and, while it is not to say that the Board would not change it in the future under appropriate circumstances (e.g., in connection with a management succession), the Board does not believe that splitting the roles of Chairman and Chief Executive Officer in the present circumstances would result in any improvement in Company performance.

 

The Board believes that the current arrangement also provides for adequate independent oversight of the Company.  The Company places a significant emphasis on Board independence.  Currently, twelve of the Board’s fifteen members (eighty percent (80%)) meet the independence requirements under NYSE rules and the Company’s own independence requirements; these independent Directors regularly meet in executive session without management.  The members of the Board’s Compensation/Nominating/Corporate Governance Committee and the Audit Committee, including their respective chairs, are all independent and, in addition to the Chairman, serve in oversight roles.  Through these committees, the Board is actively involved in oversight of risk, compliance, possible conflicts of interest and related party transactions, and business results.  The Compensation/Nominating/Corporate Governance Committee is also specifically responsible for an annual review of the Chief Executive Officer’s performance and compensation.  Board members have complete access to management and outside advisors; thus, the Chairman is not the sole source of information for the Board.  Pursuant to the Board’s Communications with Directors Policy, stockholders and other interested parties have access to any Director individually and to the independent Directors as a group.

 

Regular Separate Non-Management Director Meetings.  The non-management Directors, all of whom are independent under NYSE rules as of the date of this proxy statement, meet independently in executive sessions on the same days as and immediately after the regularly scheduled meetings of the Board.  At each executive session a presiding Director is selected to serve as such.

 

Code of Ethics.  TCF has adopted a Code of Ethics applicable to the Principal Executive Officer (“PEO”), Principal Financial Officer (“PFO”), and Principal Accounting Officer (“PAO”) (the “Senior Financial Management Code of Ethics”) as well as a code of ethics generally applicable to all officers (including the PEO, PFO, and PAO), Directors, and employees of TCF (the “Code of Ethics”).  The Code of Ethics and Senior Financial Management Code of Ethics are both available for review at TCF’s website www.tcfbank.com (click on “About TCF,” then click on “Corporate Governance”).  Any changes to either code will be posted on the website, and any waivers of the Code of Ethics or Senior Financial Management Code of Ethics for Directors or executive officers also will be posted on the website.   To date, TCF has not issued any waivers of either code.

 

9



 

DIRECTOR ATTENDANCE

 

The business, property and affairs of TCF Financial are managed by or under the direction of the Board.  The Board met eight times in 2010.  All Board members are expected to attend all Committee meetings of which they are a member; but also are invited to attend meetings of committees of which they are not members.  During 2010, all Directors attended at least seventy-five percent (75%) of the meetings of the Board and of the committees on which they serve.  TCF requests Directors to attend the Annual Meeting of Stockholders if their schedules permit.  Nine Directors attended the 2010 Annual Meeting.

 

Beginning in 2011, Directors are additionally expected to attend quarterly functional management meetings.  Three directors have been assigned to attend quarterly meetings for each functional area, including retail banking, wholesale banking, and treasury and support services.

 

BOARD COMMITTEES, COMMITTEE MEMBERSHIPS, AND MEETINGS IN 2010

 

The following chart identifies the principal responsibilities, number of meetings held in 2010, and the members for each of the standing Board Committees (those which meet regularly) including those with audit, compensation, and nominating responsibilities.  Messrs. Cooper, Pulles, and Winslow are executive officers of TCF and do not serve on any of the standing Board Committees.  In addition to the committees reflected on the next page, there was a duly-elected Executive Committee of the Board consisting of William Cooper, Ralph Strangis, and Luella Goldberg.  The Executive Committee did not meet during 2010.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

intentional blank space

 

10


 


 

Committee /
Number of Meetings
in 2010

 

Principal Responsibilities

 

Outside Director Members
(* Denotes Committee Chair)

Asset Liability Management
  (established April 2010)

 

3 meetings in 2010

 

·        Review trends in the economy in general and interest rates in particular

·        Discuss the impact of various interest rate scenarios upon the Company’s earnings

·        Monitor management’s action to adjust corporate interest rate sensitivity and its effectiveness

·        Monitor management’s action related to the relative level of asset/liability sensitivity of the Company’s balance sheet

 

Raymond L. Barton(1)

Peter Bell

William F. Bieber

Theodore J. Bigos

Thomas A. Cusick

Luella G. Goldberg

Karen L. Grandstrand(2)

George G. Johnson

Vance K. Opperman*

Douglas A. Scovanner(5)

Gerald A. Schwalbach

Ralph Strangis

Richard A. Zona(1)

Audit

 

10 meetings in 2010

 

·   Relations with internal and external auditors

·   Review enterprise risk management functions and controls

·   Review financial reporting

·   Review asset quality and underwriting standards

·   Oversee compliance

 

Luella G. Goldberg

Karen L. Grandstrand(2)

George G. Johnson(3)

Vance K. Opperman(3)

Douglas A. Scovanner(3) (5)

Gerald A. Schwalbach*(3)

Bank Secrecy Act
(“BSA”) Compliance
  (established July 2010)

 

2 meetings in 2010

 

·   Monitor adherence to the provisions of the BSA Consent Order dated July 20, 2010 between TCF and the Office of the Comptroller of the Currency

·   Ensure that TCF is in compliance with the BSA and the rules and regulations of the Office of Foreign Assets Control

·   Review reports on BSA issues, trends, policies, processes, identification of risks, or any other matter brought to the Committee’s attention

 

Raymond L. Barton(1)

Peter Bell

William F. Bieber

Theodore J. Bigos

Thomas A. Cusick

Luella G. Goldberg*

Karen L. Grandstrand(2)

George G. Johnson

Vance K. Opperman

Douglas A. Scovanner(5)

Gerald A. Schwalbach

Ralph Strangis

Richard A. Zona(1)

Compensation/
Nominating/
Corporate Governance

 

4 meetings in 2010

 

·   Recommend and approve personnel-related items

·   Award stock options and stock grants

·   Executive compensation

·   Director nominations

·   Corporate Governance supervision

 

Peter Bell

William F. Bieber

Theodore J. Bigos

Luella G. Goldberg

Vance K. Opperman*(4)

Gerald A. Schwalbach

Ralph Strangis*(4)

Shareholder
Relations/Capital and
Expansion

 

4 meetings in 2010

 

·   Review capital planning

·   Review dividend recommendations

·   Review liquidity levels

·   Review stock buyback program

·   Review merger and acquisition  activity

·   Increase stockholder value

·   Review corporate strategies

·   Review criteria to select branch sites

·   Review branch profitability

 

Raymond L. Barton(1)

Peter Bell

William F. Bieber

Theodore J. Bigos

Thomas A. Cusick

Luella G. Goldberg

Karen L. Grandstrand(2)

George G. Johnson

Vance K. Opperman

Douglas A. Scovanner*(5) (6)

Gerald A. Schwalbach

Ralph Strangis*(6)

Richard A. Zona(1)

 

 

11



 

 

(1) 

Messrs. Barton and Zona were elected to the Board and to this committee effective January 18, 2011.

 

(2) 

Ms. Grandstrand was elected to this committee effective January 18, 2011.

 

(3) 

Messrs. Johnson, Opperman, Schwalbach, and Scovanner have been designated as Audit Committee financial experts.

 

(4) 

Effective October 19, 2010, Mr. Opperman was appointed chair of this committee following the resignation of Mr. Strangis as chair and member of this committee.

 

(5) 

Mr. Scovanner resigned from the Board and the committees on which he served in September 2010.

 

(6) 

Mr. Strangis was appointed chair of this committee in October 2010 following Mr. Scovanner’s resignation from the Board.

 

Compensation/Nominating/Corporate Governance Committee.  All members of the Compensation/Nominating/Corporate Governance Committee are listed above and are independent under the standards outlined beginning on page 14.  The Committee operates under a formal charter that may be accessed through the TCF website at www.tcfbank.com (click on “About TCF,” then click on “Corporate Governance”).

 

Scope of Authority of Compensation Committee.  The Compensation Committee is one of the three component committees of the Compensation/Nominating/Corporate Governance Committee; all of the members of the Compensation Committee are also members of the full Compensation/Nominating/Corporate Governance Committee.  Full authority is delegated from the Board to the Compensation Committee to act on the following matters without Board approval:

 

 

·

Review of the Compensation Discussion and Analysis section of the proxy statement and recommend its approval by the Board

 

·

Review of the overall adequacy, effectiveness and compliance of benefit programs

 

·

Review of pay plans to ensure that they are consistent with the Company’s stated compensation philosophy

 

¡

Review of the performance of executive officers

 

¡

Approval of long-term and short-term incentive plans and goals for TCF Financial executive officers

 

¡

Approval of incentive awards and salary for TCF Financial executive officers

 

¡

Approval of severance agreements and employment contracts (including change in control provisions) for TCF Financial executive officers, except that any employment contract or severance agreement for the Chief Executive Officer (“CEO”) shall be approved by the full Board

 

¡

Approval of an annual summary of CEO perquisites and review of an annual summary of other executive perquisites

 

·

Supervision of the administration of the Pension Plan and TCF Employees Stock Purchase Plan

 

¡

Approve amendments as needed (except where the plan requires full Board approval)

 

¡

Selection of the trustee, funding agents, investment managers and other similar asset managers for the trust funds

 

¡

Serve as the Advisory Committee for the TCF Employees Stock Purchase Plan, directing the vote of shares for which participants in the plan do not provide direction

 

¡

Exercise of all other responsibilities as provided in the plans

 

·

Supervision of the administration of the Incentive Stock Program, TCF Employees Stock Purchase Plan - Supplemental Plan, and the deferred compensation plans

 

¡

Approval of amendments as needed

 

¡

Issuance of awards (generally restricted stock grants)

 

¡

Exercise of all other administrative and interpretive authority under the plans

 

¡

Exercise of all other responsibilities as provided in the plans

 

·

Supervision of the administration of the Directors’ Plans

 

¡

Approval of amendments as needed

 

¡

Issuance of awards under the Directors Stock Program

 

¡

Exercise of all other responsibilities as provided in the plans

 

Authority is delegated to the Compensation Committee to review the following matters and to recommend proposals for action by the full Board:

 

12



 

 

·

Election of officers for TCF Financial

 

·

Compensation and employment contracts for the TCF Financial CEO, including change in control arrangements

 

·

Management succession plans for TCF Financial

 

Delegation of Authority by Compensation Committee.  The Compensation Committee may from time to time delegate duties and authority to a subcommittee (the “Independent Subcommittee”) consisting of members who meet the independence requirements under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “IRC”) and Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Whenever the following discussion concerns performance-based compensation or awards of restricted stock or stock options, references to the Compensation Committee shall mean the Independent Subcommittee.

 

Compensation Committee Use of Consultants.  The Compensation Committee has authority to retain consulting firms for the purpose of evaluating Director, Chief Executive Officer, executive compensation and other compensation-related matters.  The Compensation Committee has retained Towers Watson, principally to provide advice and peer group information, which the Compensation Committee considers when developing the terms of restricted stock and stock option awards, incentive compensation plans, and overall compensation amounts for the Named Executives.  (See “Analysis of Tools the Committee Uses” beginning on page 30 in the Compensation Discussion and Analysis.)  During 2010, the Compensation Committee paid Towers Watson approximately $26,000 for these services.  Towers Watson (and its affiliates) did not provide additional services to the Company (and its affiliates) in an amount in excess of $120,000 during 2010.

 

Compensation Committee’s Process For Determining Executive and Director Compensation.  The Compensation Committee has regular meetings four times per year in January, April, July, and October, and occasionally has additional special meetings as needed.  Each year in either December or January, the Compensation Committee considers whether any executive salaries should be adjusted and the terms of any executive bonus programs for the year.  The Compensation Committee also considers at that time whether any restricted stock or stock options should be awarded.  The Compensation Committee may delegate decisions concerning compensation matters to the Independent Subcommittee and will delegate any decisions concerning performance-based compensation under IRC Section 162(m) to the Independent Subcommittee.  After the year is completed, the Compensation Committee or Independent Subcommittee certifies the performance achieved and any compensation earned for performance-based compensation awards, if applicable.  The Chief Executive Officer makes recommendations to the Compensation Committee or Independent Subcommittee concerning compensation and discretionary bonuses for other (non-CEO) executives.  The Compensation Committee, in conjunction with the Board, determines the amount of the Chief Executive Officer’s compensation and bonus, if any.  Director compensation is reviewed from time to time on an informal basis by the Chief Executive Officer and Chair of the Compensation Committee.  Their recommendations concerning any change in Director compensation are referred to the Compensation Committee and the Board.

 

Compensation Committee Interlocks and Insider Participation.  Directors who served on the Compensation Committee in 2010 were Messrs. Bell, Bieber, Bigos, Opperman, Schwalbach, and Strangis (until his resignation from this committee on October 19, 2010), and Ms. Goldberg.  None of these Directors has ever served as an officer or employee of TCF or any of its subsidiaries, with the exception of Mr. Bell, who was an officer of TCF from 1994 to 1999.  The Board has determined that all members of the Compensation Committee were independent for 2010 under standards outlined below.  Certain transactions between TCF and Directors Bell, Bieber, Bigos, Goldberg, Schwalbach, and Strangis are disclosed on page 14 under the heading, “Director Independence and Related Party Transactions - What Transactions Were Considered Non-Material?”

 

Audit Committee.  All members of the Audit Committee are listed on page 11 and are independent under the standards outlined below.  The Board has determined that there is at least one Audit Committee financial expert serving on the Audit Committee.  Members determined to be Audit Committee financial experts are listed on page 12.  The Audit Committee operates under a formal charter that may be accessed through the TCF website at www.tcfbank.com (click on “About TCF,” then click on “Corporate Governance”).

 

13



 

DIRECTOR INDEPENDENCE AND RELATED PARTY TRANSACTIONS

 

How Does the Board Determine Which Directors Are Independent?  As an NYSE-listed company, TCF must have a majority of independent Directors.  For a Director to be considered independent, the Board of TCF must make an affirmative determination that the Director has “no material relationship” with TCF.  The NYSE independence standards, as incorporated into the regulations of the SEC, identify certain transactions or relationships which automatically disqualify a Director from being independent.  In the case of transactions or relationships with a Director’s business, annual payments of more than the greater of $1,000,000, or two percent (2%) of the gross revenues of the Director’s business, are automatically disqualifying.

 

In addition, the Board of Directors has adopted the categorical standards listed below to assist it in determinations of independence.  The additional categorical independence standards are included in TCF’s Corporate Governance Guidelines, which may be accessed through the TCF website at www.tcfbank.com (click on “About TCF,” then click on “Corporate Governance”).  Transactions or relationships falling within a categorical standard adopted by the Board are deemed automatically to be non-material.

 

·

Commercial Loans from TCF Bank Subject to Approval Under Federal Reserve Board Regulation O (“Regulation O”) (or Below Threshold Amounts) to a Director’s Business. Loans, leases, and other extensions of credit from TCF Bank or a subsidiary to a Director’s company are not material if they are not automatically disqualifying under the NYSE independence standards, are subject to approval under Regulation O (or are for an amount less than that requiring approval under Regulation O), and TCF has not classified them as being in default.

 

 

·

Transactions or Relationships Which Are Beneath Certain Thresholds and Are Not Automatically Disqualifying. Transactions or relationships between TCF and a Director and/or the Director’s related business or immediate family members of the Director are not material if they are not automatically disqualifying under the NYSE independence standards, and the transaction (including employment) amounts are not in excess of $120,000 in a calendar year.

 

 

·

Retail Banking Relationships: Home Mortgages, Consumer Loans and Retail Deposit Accounts. Home mortgages, consumer loans and retail deposit accounts at TCF for a Director or immediate family members of the Director are not material if they are not automatically disqualifying under the NYSE independence standards and are on ordinary retail consumer terms and conditions.

 

 

·

Stockholder Ownership under Ten Percent (10%); Limited Partnerships; Service as Executive Officer. A Director’s ownership of less than a 10% equity interest in a company, or a limited partnership interest in a company, is not sufficient to cause the company to be considered as an indirect interest of the Director for purposes of determining material business relationships between the Director and TCF. However, a Director’s service as an executive officer of a company is sufficient to cause the company to be considered as an indirect interest of the Director for purposes of determining material business relationships between the Director and TCF, even if the Director has ownership of less than a 10% equity interest in such a company.

 

What Transactions Were Considered Non-Material?  During 2008 through 2010, TCF was a party to the following relationships with certain Directors or their related companies or immediate family members, all of which were determined by the Board to be not material for purposes of Director independence:

 

Commercial Loans, Consumer Loans, and Retail Banking Accounts.  The following transactions and relationships were reviewed by the Board and determined to not constitute a material relationship for purposes of Director independence, based on the categorical standards described above.  All commercial loans and leases, and all home mortgages and consumer loans, were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to TCF and do not contain more than the normal risk of collectability nor do they present other unfavorable features.  All such loans and leases are approved by the Board of Directors when required by Regulation O.

 

·

Messrs. Bieber and Bigos or their related companies have, or during 2008 through 2010 had, commercial loans or leases with TCF.

 

14



 

·

Messrs. Bigos and Strangis or their related companies have, or had during 2008 through 2010, commercial deposit accounts with TCF.

 

 

·

The following Directors have, or had during 2008 through 2010, retail deposit accounts and/or consumer loans with TCF, all of which are on ordinary retail consumer terms and conditions: Messrs. Bell, Bigos, Cooper, Cusick, Johnson, Pulles, Scovanner (who resigned from the Board in September 2010), Strangis, Winslow, and Ms. Goldberg.

 

Other Business Relationships Involving Independent Directors.  The following additional transactions and business relationships were reviewed and determined by the Board to be not material, either individually or in the aggregate, for purposes of Director independence.

 

·

During 2008 through 2010, the law firm of Kaplan, Strangis and Kaplan, P.A. (“KSK”) provided legal services to TCF. Mr. Strangis is a member of the firm of KSK. Total fees paid by TCF to KSK in 2008, 2009, and 2010 were approximately $582,000, $845,887, and $703,565, respectively. During 2008 through 2010, CTS Corporate Travel Solutions (“CTS”) provided certain travel-related services to TCF. Mr. Strangis is a director and his spouse is an officer and minority stockholder of CTS. Total payments by TCF to CTS in 2008, 2009, and 2010 were approximately $118,500, $125,000, and $161,900, respectively. The Board of Directors has reviewed these relationships and affirmatively determined (with Mr. Strangis abstaining) that they do not constitute a material relationship between Mr. Strangis and the Company for purposes of Director independence because: the extent to which Mr. Strangis is expected to benefit from the payments is not so significant as to compromise his exercise of independent judgment as a Director, especially in light of his background as an experienced lawyer and corporate director; the payments were consistent with the range of payments in previous years; the payments and the transactions for which they were made were negotiated on an arm’s length basis and the payments are reasonable for the services provided; the payments are not material to the Company, KSK, or CTS; in the case of CTS, the Director’s interest is indirect and insignificant; and in the case of KSK, the Company deals with many law firms in addition to KSK. Therefore, the Board determined that the relationships did not affect Mr. Strangis’ status as an independent Director. The Board of Directors periodically reviews those longstanding and ongoing relationships and considers the amounts and terms of the arrangements to be reasonable and appropriate for the services provided.

 

 

·

During 2008 through 2010, the law firm of Fredrikson and Byron, P.A. (“Fredrikson and Byron”) had a business relationship with TCF. Ms. Grandstrand is a shareholder in the firm of Fredrikson and Byron. Total fees paid by TCF to Fredrikson and Byron in 2008, 2009, and 2010 were approximately $29,968, $16,889, and $23,381, respectively. However, as of the date of Ms. Grandstrand’s appointment to the Audit Committee, TCF has discontinued its business relationship with Fredrikson and Byron. The Board has reviewed this relationship and affirmatively determined (with Ms. Grandstrand abstaining) that it does not constitute a material relationship between Ms. Grandstrand and the Company for purposes of Director independence because the fees paid during any twelve-month period within the last three years are significantly below $120,000, the payments and transactions were negotiated on an arm’s length basis and the payments are reasonable for the services provided, and the Company deals with many law firms in addition to Fredrikson and Byron.

 

 

·

Several Directors are investors in Cooper State Bank, a state bank organized under the laws of Ohio, of which Mr. Cooper is controlling shareholder and Mr. Strangis was an organizer. In addition to Mr. Cooper, Messrs. Bigos, Pulles, Schwalbach, Strangis, Winslow, Ms. Goldberg, and certain members of TCF’s management are shareholders in the bank. Three current members of TCF’s management are also directors of Cooper State Bank. The Board of Directors has reviewed these relationships and affirmatively determined (with each affected Director abstaining from his or her own determination) that they do not constitute material relationships between Messrs. Bigos, Schwalbach, Strangis, or Ms. Goldberg, and the Company for purposes of Director independence because: these transactions are not so significant as to compromise their exercise of independent judgment as Directors; the transactions are not with the Company or Company management; there are no material transactions between the Company and Cooper State Bank (Cooper State Bank owns shares of trust preferred capital of TCF Financial); Cooper State Bank is not a competitor of TCF (its market area does not overlap TCF’s); and the investments are not otherwise so significant as to compromise the Director’s exercise of independent judgment as a Director.

 

15



 

·

Ms. Goldberg’s son is employed by the Company in a non-executive capacity. The Board has reviewed this relationship and affirmatively determined (with Ms. Goldberg abstaining) that it does not constitute a material relationship between Ms. Goldberg and the Company for purposes of Director independence because he is employed in a non-executive position and has not received during any twelve-month period within the last three years more than $120,000 in direct compensation from the Company.  Ms. Goldberg and her son do not reside at the same residence.

 

 

·

The Board has also reviewed Director ownership of shares of TCF common stock and/or trust preferred capital and affirmatively determined (with affected Directors abstaining) that such ownership does not constitute a material relationship between any of those Directors and the Company for purposes of Director independence because no such Director owns ten percent (10%) or more of any voting class of outstanding TCF securities.

 

Which Directors are Independent?  The evaluation of director independence under the NYSE standards is based on a three-year look-back period.  On the basis of the foregoing categorical standards and review of the transactions and relationships between Directors and TCF over the years 2008 through 2010, the Compensation/ Nominating/Corporate Governance Committee and the Board of Directors affirmatively determined in January 2011 that the following Directors have no material relationship with TCF and are considered to be independent:  Messrs. Barton, Bell, Bieber, Bigos, Cusick, Johnson, Opperman, Schwalbach, Strangis, Zona, Ms. Goldberg, and Ms. Grandstrand.  The Compensation/Nominating/ Corporate Governance Committee and Board also determined that Mr. Scovanner, prior to his resignation in September 2010, was independent.  The Board of Directors determined that the following Directors are not independent:  Mr. Cooper (TCF’s Chief Executive Officer), Mr. Pulles (TCF’s Vice Chairman), and Mr. Winslow (TCF’s Vice Chairman and Chief Risk Officer), because current executives, and former executives receiving compensation for prior services within the three-year look-back period, are deemed to be non-independent under the NYSE standards.

 

Related Party Transaction Approval Process.  By written policy and regulation, loans to Directors, executive officers or their immediate family members are submitted for review to the Board of Directors of TCF Bank as and to the extent required by Regulation O.  Transactions with Directors, executive officers or their immediate family members that present a possible conflict of interest under TCF’s written Code of Ethics are reviewed by TCF’s General Counsel and submitted to the TCF Financial Board of Directors where appropriate or required under the Code of Ethics.  In practice, all other transactions in which TCF is a participant with Directors, Director nominees, executive officers and their immediate family members or related companies that are reportable in the proxy statement are reported to the Audit Committee and, for transactions involving independent Directors, the Compensation/Nominating/Corporate Governance Committee and the Board.  All such reports are in writing and maintained with the records of the applicable committee or Board meetings.  The Board of Directors and the respective committees are responsible for reviewing and evaluating any transactions submitted to them and, where appropriate or otherwise required under applicable regulations, for approving, denying, ratifying, or terminating such transactions.  Any such action is reflected in the minutes of the Board or the respective committees.

 

Related Party Transactions Not Involving Independent Directors.  During 2010, CTS provided certain travel-related services to TCF, and TCF contemplates it will continue to use CTS in 2011.  A person deemed to be an immediate family member of Earl Stratton, an executive officer of TCF, is an officer of and has an ownership interest in CTS.  Total payments by TCF to CTS in 2010 were approximately $161,900.  Except as otherwise described above, there were no other transactions during 2010 and 2011 to date, nor are there currently any proposed transactions, in which TCF was or is to be a participant and the amount involved exceeds $120,000 and in which any “related person” had or will have a direct or indirect material interest.

 

16



 

COMPENSATION OF DIRECTORS

 

TCF’s  compensation of  outside Directors in 2010, including cash and other non-cash compensation, is shown in the following table.  Messrs. Barton and Zona were elected to the Board in 2011 and did not receive any compensation in 2010.  Messrs. Cooper, Pulles, and Winslow are executive officers of TCF Financial and do not receive any compensation for their service as Directors.  Accordingly, Messrs. Barton, Cooper, Pulles, Winslow, and Zona are excluded from the table below and from the “Outstanding Equity Awards of Outside Directors at December 31, 2010” table on page 19.

 

Director Compensation

 

Name

 

 

Fees Earned
or Paid in
Cash
($)

 

 

Stock
Awards
($)
(1)

 

 

Change in Pension Value
and Nonqualified Deferred
Compensation Earnings
($)
(2)

 

 

All Other
Compensation
($)
(3)

 

 

Total
($)

 

Peter Bell

 

 

$32,000

 

 

$59,996

 

 

-

 

 

-

 

 

$  91,996

 

William F. Bieber

 

 

$32,000

 

 

$59,996

 

 

$20,000

 

 

$10,000

 

 

$121,996

 

Theodore J. Bigos

 

 

$32,000

 

 

$59,996

 

 

-

 

 

-

 

 

$  91,996

 

Thomas A. Cusick

 

 

$29,500

 

 

$59,996

 

 

$16,000

 

 

$  5,000

 

 

$110,496

 

Luella G. Goldberg

 

 

$52,500

 

 

$59,996

 

 

$20,000

 

 

$10,000

 

 

$142,496

 

Karen L. Grandstrand (4)

 

 

$  7,500

 

 

$49,999

 

 

-

 

 

-

 

 

$  57,499

 

George G. Johnson

 

 

$37,500

 

 

$59,996

 

 

$20,000

 

 

$10,000

 

 

$127,496

 

Vance K. Opperman

 

 

$57,000

 

 

$59,996

 

 

-

 

 

-

 

 

$116,996

 

Gerald A. Schwalbach

 

 

$59,500

 

 

$59,996

 

 

$20,000

 

 

$10,000

 

 

$149,496

 

Douglas A. Scovanner

 

 

$41,000

 

 

(5)

 

 

$12,000

 

 

-

 

 

$  53,000

 

Ralph Strangis

 

 

$55,000

 

 

$59,996

 

 

$20,000

 

 

$10,000

 

 

$144,996

 

 

(1)   Consists of a three-year restricted stock award of 3,723 shares made to the Board, excluding Ms. Grandstrand, in April 2010.  The grant date fair value of these awards is $16.115 per share.  Ms. Grandstrand received a pro-rata restricted stock award of 3,253 shares upon her election to the Board.  The grant date fair value of this award is $15.37.  The grant date fair value for all awards is computed in accordance with Financial Accounting Standard Codification (“ASC”) 718.  TCF’s accounting policy for stock-based compensation is described in Notes 1 and 15 to TCF Financial’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2010.  Dividends are paid on the shares at the regular rate paid to stockholders generally.  The annual goal is TCF’s Return on Average Equity (“ROE”) exceeding the median of TCF’s peer group.  One-third of the award will vest as soon as possible after the results are known in the fiscal year following the fiscal year in which the annual goal is achieved.  If the annual goal is not achieved, the award will vest in full ten (10) years after the grant date.

(2)   Consists of retirement benefits earned during 2010.  Messrs. Bell, Bigos, and Opperman, and Ms. Grandstrand have not completed five years of service and therefore are not eligible for a pension benefit.  Mr. Cusick’s annual benefit reflects the number of years of Board service as a non-management director and vesting of eighty percent (80%).  Mr. Scovanner, who resigned from the Board on September 7, 2010, will receive an annual pension benefit of $12,000.

(3)   Consists of matching charitable gift contributions by TCF Foundation on behalf of Directors.  For Mr. Bell, this amount does not include distributions of $231,037 and $3,211 from non-Director TCF deferred compensation and benefit plans.  This does not include distributions from the Directors Deferred Compensation Plan to Mr. Scovanner which totaled $353,267, consisting of fees deferred and invested in TCF Stock.

(4)   Ms. Grandstrand was elected to the Board on October 18, 2010.

(5)   Upon his resignation in September 2010, Mr. Scovanner forfeited the unvested 2010 restricted stock award.

 

 

17



Material Information Regarding Directors’ Compensation

 

·

Cash compensation for outside Directors (which may be deferred and invested in TCF Stock):

 

·

Annual Retainer – $20,000; Committee Chairs receive an additional $20,000 annual fee

 

·

Board Meetings – $1,000/meeting

 

·

Committee Meetings – $500/meeting ($1,000/meeting for Audit Committee members)

·

Inside Directors (Messrs. Cooper, Pulles, and Winslow) do not receive any compensation for their service as Directors.

·

Stock Grant Program:

 

·

Periodically, but not more often than every three years, outside Directors receive TCF Stock grants equal to three times their annual base retainer: (excludes higher retainer for Committee Chairs) ($20,000 x 3 = $60,000). For Directors elected after a stock grant has been awarded, a pro-rata stock grant is awarded.

 

·

The number of shares granted is determined by dividing three times the annual retainer fee by the price of TCF Stock on the grant date.

 

·

The stock grant vests over a minimum of three years. Pro-rata grants may vest in a shorter period.

 

·

One-third of the shares will vest in each year that TCF Financial’s ROE exceeds the median for TCF’s peer group. (See “Analysis of Tools the Committee Uses” on page 30 in the Compensation Discussion and Analysis.) If the annual goal is not achieved, the award will vest in full ten (10) years after the grant date.

 

·

Dividends are paid on unvested shares at the same rate as regular dividends to TCF stockholders generally.

 

·

Once all shares vest or expire, new grants are made.

 

·

Unvested shares will vest if a change in control occurs.

·

Directors’ Retirement Plan:

 

·

Directors with five or more years of service as an outside Director receive a retirement benefit.

 

·

After five years, outside Directors are 50% vested with an additional 10% vesting each year thereafter until the tenth year when they are 100% vested. The amount of the annual benefit is the vested percentage times the annual Board retainer (currently $20,000) in effect at retirement.

 

·

Benefits become 100% vested if a change in control occurs.

 

·

The benefit is paid for a number of years equal to the outside Director’s length of service on the Board.

·

Directors’ Deferred Plan (for outside Directors):

 

·

Fees and stock grants may be deferred until service on the Board ends.

 

·

All deferred fees are invested in TCF Stock.

 

·

Dividends (market rate) are accumulated and invested in TCF Stock.

 

·

Distributions for pre-2005 accounts are in installments or lump sum, as elected by the Director. For accounts accumulated in 2005 and after, all distributions are in a lump sum.

·

TCF Matching Gift Program:

 

·

TCF offers a matching gift program to supplement donations made by employees and Directors to charitable organizations of their choice up to a maximum gift of $10,000 annually.

·

Indemnification rights are provided to Directors under TCF Financial’s Certificate of Incorporation and Bylaws, to the extent authorized under Delaware General Corporation Law and TCF maintains Directors and Officers Insurance.

·

TCF pays for travel and other expenses of TCF Directors to attend Board meetings as a business expense.

·

TCF typically holds one Board meeting per year (the “Annual Board Retreat”) at a remote location within or outside the United States and pays Directors’ travel and lodging expenses incurred in connection with the meeting, as well as those of the Directors’ spouses.

 

18



 

Outstanding Equity Awards of Outside Directors at December 31, 2010

 

Name

 

 

# of Shares
Unvested
Restricted Stock 
(1)

 

 

Market Value of
Unvested Shares
    ($)
(2) (3)

 

Peter Bell

 

 

3,723

 

 

$55,138

 

William F. Bieber

 

 

3,723

 

 

$55,138

 

Theodore J. Bigos

 

 

3,723

 

 

$55,138

 

Thomas A. Cusick

 

 

3,723

 

 

$55,138

 

Luella G. Goldberg

 

 

3,723

 

 

$55,138

 

Karen L. Grandstrand

 

 

3,253

 

 

$48,177

 

George G. Johnson

 

 

3,723

 

 

$55,138

 

Vance K. Opperman

 

 

3,723

 

 

$55,138

 

Gerald A. Schwalbach

 

 

3,723

 

 

$55,138

 

Ralph Strangis

 

 

3,723

 

 

$55,138

 

 

(1)   Consists of the unvested portion of the April 19, 2010 restricted stock awards made to Ms. Goldberg and Messrs. Bell, Bieber, Bigos, Cusick, Johnson, Opperman, Schwalbach, and Strangis, and the unvested portion of the pro-rata award made to Ms. Grandstrand upon her election to the Board on October 18, 2010.  Dividends are paid on the shares at the regular rate paid to stockholders generally.  One-third of the shares will vest as soon as possible after the results are known in the fiscal year following the fiscal year in which TCF achieves an ROE that exceeds the median of its peer group for the applicable fiscal year or, if not sooner, the award will vest in full ten (10) years after the award date.

(2)   Consists of the number of unvested shares shown in the previous column, multiplied by the closing stock price on December 31, 2010, the last business day of 2010, of $14.81 per share.

(3)   Grant date fair value of the stock awards is shown on the Director Compensation table on page 17.

 

19


 


 

TCF STOCK OWNERSHIP OF DIRECTORS, OFFICERS AND 5% OWNERS

 

The following chart shows ownership as of January 31, 2011 (except as indicated in footnotes (5) and (6)) of TCF Stock by those indicated.

 

Name of Beneficial Owner

 

 

Amount and Nature of
 Beneficial Ownership 

(1)(3)

% of TCF Stock
 Outstanding 
(4)

 

Directors who are not Named Executives:

 

 

 

 

 

Raymond L. Barton

 

7,828

 

*

 

Peter Bell

 

78,944

(6)

*

 

William F. Bieber

 

932,117

(6)

*

 

Theodore J. Bigos

 

14,882

(6)

*

 

Thomas A. Cusick

 

272,639

(7)

*

 

Luella G. Goldberg

 

250,465

(6)

*

 

Karen L. Grandstrand

 

3,763

 

*

 

George G. Johnson

 

81,859

 

*

 

Vance K. Opperman

 

29,624

(6)

*

 

Gregory J. Pulles

 

330,221

(2)

*

 

Gerald A. Schwalbach

 

163,285

(6)(7)

*

 

Ralph Strangis

 

140,739

 

*

 

Richard A. Zona

 

2,828

 

*

 

Named Executives:

 

 

 

 

 

William A. Cooper

 

2,145,890

(2)(7)

1.500%

 

Thomas F. Jasper

 

144,015

(2)

*

 

Neil W. Brown

 

307,349

(2)

*

 

Barry N. Winslow

 

576,312

(2)(7)

*

 

Craig R. Dahl

 

273,846

(2)(7)

*

 

James J. Urbanek

 

50,103

 

*

 

 

 

 

 

 

 

All Directors and Executive Officers combined

 

 

 

 

 

(28 persons, including those named above)

 

7,067,047

(2)(6)(7)

4.910%

 

 

 

 

 

 

 

5% or more beneficial owners:

 

 

 

 

 

 

 

 

 

 

 

T. Rowe Price Associates, Inc.

 

12,084,720

(5)

8.400%

 

100 E. Pratt Street

 

 

 

 

 

Baltimore, MD 21202

 

 

 

 

 

 

 

 

 

 

 

FMR LLC  

 

10,986,651

(5)

7.702%

 

82 Devonshire Street

 

 

 

 

 

Boston, MA 02109

 

 

 

 

 

 

 

 

 

 

 

Janus Capital Management, LLC  

 

8,204,370

(5)

5.800%

 

151 Detroit Street

 

 

 

 

 

Denver, CO 80206

 

 

 

 

 

 

 

 

 

 

 

Advisory Committee of   

 

 

 

 

 

TCF Employees Stock Purchase Plan

 

7,834,155

(6)

5.500%

 

c/o General Counsel

 

 

 

 

 

TCF Financial Corporation

 

 

 

 

 

200 Lake Street East, Mail Code EX0-03-A

 

 

 

 

 

Wayzata, MN 55391-1693

 

 

 

 

 

 

 

 

 

 

 

BlackRock, Inc. 

 

7,662,313

(5)

5.370%

 

40 East 52nd Street

 

 

 

 

 

New York, NY 10022

 

 

 

 

 


* Represents 1.0% or less of the outstanding TCF Stock.

 

20



 

(1)    All shares are directly owned and the person indicated has sole voting and dispositive power, except as indicated in this footnote and footnote (3) below.  Includes shares beneficially owned by family members who share the person’s household, with respect to which shares the indicated person disclaims any beneficial ownership, as follows: Mr. Bell, 71 shares; Mr. Bieber, 20,920 shares; Mr. Brown, 14,000 shares; Mr. Cooper, 27,551 shares; Ms. Goldberg, 10,000 shares; Mr. Pulles, 57,955 shares; and all Directors and executive officers combined, 161,355 shares.

(2)    Includes shares which could be purchased by the indicated person upon the exercise of vested options within 60 days after January 31, 2011:  Mr. Brown, 141,000 shares; Mr. Cooper, 400,000 shares; Mr. Dahl, 112,500 shares; Mr. Jasper, 70,500 shares; Mr. Pulles, 79,000 shares; Mr. Winslow, 100,000 shares; and all executive officers combined, 1,043,500 shares.

(3)    Includes whole shares of TCF Stock allocated to accounts in the TCF Employees Stock Purchase Plan, for which the Named Executives and certain Directors have shared voting power as follows:  Mr. Bell, 6,822 shares; Mr. Brown, 7,803 shares; Mr. Cooper, 5,346 shares; Mr. Dahl, 5,917 shares; Mr. Jasper, 7,593 shares; Mr. Pulles, 121 shares; Mr. Urbanek, 103 shares; Mr. Winslow, 57,513 shares; and all Directors and executive officers combined, 334,920 shares.  Also includes whole shares of TCF Stock in the trust for the ESPP-Supplemental Plan for which the Named Executives and certain Directors do not have voting power, as follows:  Mr. Brown, 28,556 shares; Mr. Cooper, 7,484 shares; Mr. Dahl, 18,011 shares; Mr. Jasper, 3,150 shares; Mr. Pulles, 54,857 shares; Mr. Winslow, 9,424 shares; and all Directors and executive officers combined, 225,957 shares.  Also includes whole shares of TCF Stock (vested and unvested) in the trust for the TCF Financial Executive Deferred Compensation Plan or the TCF Financial Directors Deferred Compensation Plan for which the Directors or Named Executives do not have voting power, as follows: Mr. Barton, 2,828 shares; Mr. Bell, 48,741 shares; Mr. Bieber, 69,397 shares; Mr. Bigos, 10,185 shares; Mr. Cooper, 8,788 shares; Mr. Cusick, 17,130 shares; Ms. Goldberg, 169,801 shares; Ms. Grandstrand, 3,763 shares; Mr. Johnson, 69,718 shares; Mr. Opperman, 9,535 shares; Mr. Schwalbach, 21,439 shares; Mr. Strangis, 72,739 shares; Mr. Zona, 2,828 shares; and all Directors combined, 506,892 shares.

(4)    Each amount showing the percentage of outstanding shares owned beneficially has been calculated by treating as outstanding the shares which could be purchased upon the exercise of existing options within 60 days after January 31, 2011.  As of January 31, 2011, there were outstanding options with respect to 1,043,500 shares that were exercisable within 60 days for all executive officers combined.  There were no outstanding options for non-employee Directors.

(5)    Beneficial  ownership  of  shares  by  T.  Rowe  Price  Associates,  Inc.  is  in  the  following  manner:  sole voting power 2,430,320 shares;  shared voting power 0 shares;  sole dispositive power 12,084,720 shares; shared dispositive power 0 shares.  The foregoing information is based upon the Schedule 13G filed with the SEC by T. Rowe Price Associates, Inc. on February 10, 2011.  Information is as of December 31, 2010.  Beneficial ownership of shares by FMR LLC is in the following manner:  sole voting power 20 shares; shared voting power 0 shares; sole dispositive power 10,986,651 shares; shared dispositive power 0 shares.  The foregoing information is based upon the Schedule 13G filed with the SEC by FMR LLC on February 14, 2011.  Information is as of December 31, 2010.  Beneficial ownership of shares by Janus Capital Management, LLC is in the following manner:  sole voting power 0 shares; shared voting power 8,204,370 shares; sole dispositive power 0 shares; shared dispositive power 8,204,370 shares.  The foregoing information is based upon the Schedule 13G filed with the SEC by Janus Capital Management, LLC on February 14, 2011.  Information is as of December 31, 2010.  Beneficial ownership of shares by BlackRock, Inc. is in the following manner:  sole voting power 7,662,313 shares; shared voting power 0 shares; sole dispositive power 7,662,313 shares; shared dispositive power 0 shares.  The foregoing information is based upon the Schedule 13G filed with the SEC by BlackRock, Inc. on February 8, 2011.  Information is as of December 31, 2010.

(6)    The Advisory Committee for the TCF Employees Stock Purchase Plan has shared voting power with participants of all allocated shares in such plan.   Advisory Committee members disclaim ownership of these shares.  Beneficial ownership of shares by the Advisory Committee for the TCF Employees Stock Purchase Plan is in the following manner:  shared voting power, 7,834,155 shares.  The foregoing information is based upon the Schedule 13G filed with the SEC by TCF Financial Corporation on January 20, 2011.  Information is as of December 31, 2010.  Information on the table as to shares beneficially owned by Ms. Goldberg, and Messrs. Bell, Bieber, Bigos, Opperman, and Schwalbach, the members of such committee, does not include any shares beneficially owned by the Advisory Committee.

(7)    Includes shares pledged as collateral for loans undertaken by Directors or Named Executives as follows:  Mr. Cooper, 1,544,541 shares; Mr. Cusick, 125,600 shares; Mr. Dahl, 89,579 shares; Mr. Schwalbach, 138,123 shares; Mr. Winslow, 110,000 shares; and all Directors and executive officers combined, 2,403,824 shares.

 

21



 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires TCF Financial’s Directors, executive officers, and persons who beneficially own more than ten percent (10%) of the outstanding shares of TCF Stock to file stock ownership reports with the SEC.  Based upon representations signed by officers and Directors, TCF Financial believes that all reports required by officers and Directors were filed on a timely basis during 2010, except that TCF failed to timely file a Form 4 to report (i) a restricted stock award to Mr. Joseph Green on October 18, 2010, (ii) the sale of TCF common stock by Mr. Gregory Pulles’ spouse on October 25, 2010, and (iii) a gift of TCF common stock by Mr. William Cooper on December 29, 2010.

 

BACKGROUND OF EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

 

The following describes at least the last five years of business experience of executive officers of TCF Financial, or its principal wholly-owned subsidiary TCF Bank, who are not Directors of TCF Financial.  The descriptions include any other directorships at public companies held during the past five years.  In these descriptions, TCF Bank – Lakeshore is the Illinois-Wisconsin division of TCF Bank.  TCF Bank – Michigan, TCF Bank – Minnesota, and TCF Bank – Colorado are the Michigan, Minnesota, and Colorado divisions, respectively, of TCF Bank.  TCF Bank Wisconsin, TCF Bank Michigan, TCF Bank Minnesota, and TCF Bank Colorado are former subsidiary banks that were merged into TCF Bank.

 

TIMOTHY P. BAILEY (age 55) was elected Vice Chairman of TCF Bank in 2008 and Chief Credit Officer of TCF Bank in 2009.  Prior to that, he served as President and CEO of TCF Bank from 2006 to 2008.  From 2001 to 2005, he was President of TCF Bank – Lakeshore.  He has also held various other positions with TCF Bank: Chief Operating Officer/Lending of TCF Bank – Lakeshore from 2000 to 2001; President and Chief Executive Officer of TCF Bank Wisconsin from 1993 to 2001, and, prior to that, Vice President of Commercial Lending/Loan Workouts with TCF Bank.  In his current capacity, he oversees Credit Administration which includes credit underwriting, monitoring of the loan and lease portfolio performance, and commercial lending collection and work-out areas.

 

PAUL B. BRAWNER (age 62), has been the Senior Credit Officer of TCF Bank since 2005 and was elected Executive Vice President of TCF Bank in 2001.  Prior to that, he was a Senior Vice President of TCF Bank from 1998 to 2000.  Mr. Brawner serves as Chairman of TCF Bank’s Credit Committees.  He currently is responsible for TCF Bank’s credit policies and procedures and consumer and commercial loan review departments.

 

JAMES S. BROUCEK (age 47) was elected Treasurer of TCF Financial and TCF Bank in 2005 and Senior Vice President of TCF Financial in 2002.  He has also held the positions of Chief Investment Officer since 2001 and Executive Vice President since 2007 for TCF Bank.  From 1995 to 2001, he was Senior Vice President and Controller of TCF Bank – Michigan.

 

NEIL W. BROWN (age 52) was elected Chief Operating Officer of TCF Financial in 2007 and also has been President of TCF Financial since 2006.  Since the 2009 reorganization, Mr. Brown has maintained responsibility for TCF’s Retail Banking business.  In addition, he has responsibilities for Human Resources and Employee Benefits.  He was Chief Financial Officer of TCF Financial from 1998 through December 2006, and an Executive Vice President and Treasurer of TCF Financial from 1998 to 2005.

 

CRAIG R. DAHL (age 56) is the Executive Vice President of TCF Wholesale Banking business, which includes commercial banking, leasing and equipment finance, and inventory finance since 2010.  He also has been the Chairman of TCF Inventory Finance, Inc. since 2008, Chairman and Chief Executive Officer of Winthrop Resources Corporation since 2003, and President of TCF Equipment Finance, Inc. since 1999 all of which are wholly-owned subsidiaries of TCF Bank.  Since 1999, he has also been an Executive Vice President of TCF Financial.

 

JOSEPH T. GREEN (age 56) was elected Secretary of TCF Financial in 2011 and has been General Counsel of TCF Financial since 2009, and a Senior Vice President of TCF Financial since 2008.  Since 2001, Mr. Green has also served as General Counsel and Secretary of TCF Bank, and has been an Executive Vice President of TCF Bank since 2010.

 

THOMAS F. JASPER (age 42) (Principal Financial Officer) was elected Executive Vice President and Chief Financial Officer of TCF Financial in January 2007.  From 2001 until January 2007, he was Executive Vice President and Chief Financial Officer of TCF Equipment Finance, Inc., and Executive Vice President of Winthrop Resources Corporation, both of which are wholly-owned subsidiaries of TCF Bank.  Prior to joining TCF Equipment Finance, Inc. in 2001, he

 

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held various other positions, including Senior Manager at KPMG LLP.  In his current position, Mr. Jasper oversees Finance, Bank Operations, Information Technology, Legal, ATM, Card Services, and Corporate Communications.

 

MARK L. JETER (age 54) assumed the title of Managing Director of Branch Banking in 2009 following the reorganization of TCF Bank.  He was President of TCF Bank – Minnesota from 2000 until the reorganization in 2009.  Prior to that, he held various positions with TCF affiliates:  President of TCF Bank Michigan (1998 to 2000), Executive Vice President of Retail Banking of TCF Bank – Minnesota (1996 to 1998), and Senior Vice President of Retail Banking of TCF Bank – Minnesota (1994 to 1996).  Mr. Jeter maintains responsibility for all TCF branches and electronic banking channels.

 

MARK W. ROHDE (age 49) became the Managing Director of Retail Lending in 2009 following the reorganization of TCF Bank.  He was President of TCF Bank – Lakeshore from 2006 until the reorganization in 2009.  Prior to that, he was Executive Vice President of Consumer Lending of TCF Bank – Lakeshore from 1997 to 2006.  Mr. Rohde currently manages TCF’s Retail Lending Division, which includes loan origination, loan servicing and collections.

 

BARBARA E. SHAW (age 55) was elected to the position of Senior Vice President-Director of Corporate Human Resources of TCF Financial in December 1999 and Executive Vice President of Corporate Human Resources for TCF Bank.  From 1998 to her election in 1999, she was Vice President – Human Resources TCF Financial.  She was previously a Senior Vice President of TCF Mortgage Corporation, a wholly-owned subsidiary of TCF Bank, from 1992 to 1996.  As Director of Corporate Human Resources, Ms. Shaw oversees human resources, payroll, benefits, compensation, and training.

 

DAVID M. STAUTZ (age 54) (Principal Accounting Officer) has been a Senior Vice President, Controller and Assistant Treasurer of TCF Financial since 1999.  He was elected Executive Vice President of TCF Bank in 2007.  Mr. Stautz has been Controller of TCF Bank since 2000 and Assistant Treasurer of TCF Bank since 1999.  Mr. Stautz is a member of the American Institute of Certified Public Accountants.

 

EARL D. STRATTON (age 63) was elected Executive Vice President and Chief Information Officer of TCF Financial in 1995 and TCF Bank in 2001.  Prior to that, he was a Senior Vice President of TCF Financial from 1985 to 1995 and a Senior Vice President of TCF Bank from 1985 to 2001.  Mr. Stratton is a member of the boards of directors of Cooper State Bank and Medica, a non-profit health care holding company operating in Minnesota, Wisconsin, North Dakota, and South Dakota.  In his current position, Mr. Stratton is responsible for information technology, bank operations, facilities, ATMs, and card services.

 

JAMES J. URBANEK (age 55) joined TCF in 2010 as Managing Director of Commercial Banking.  Previously he held positions with Wells Fargo as Senior Director of Banking/Wealth Management Group for the Great Lakes Region in 2009, and as Wealth Management Group Regional Manager for Iowa from 1999 to 2009.  In his positions with Wells Fargo, Mr. Urbanek provided oversight for all aspects of private banking, including financial planning and investment portfolio management.  He currently is responsible for TCF’s Commercial Banking business which includes loan origination, loan servicing, commercial cash management and private banking.

 

COMPENSATION DISCUSSION AND ANALYSIS

 

The banking industry faced another year of economic and regulatory challenges in 2010, including the continued decline in real estate values and enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  In spite of these unprecedented challenges, TCF remained profitable throughout 2010.

 

In this ever-changing and highly-regulated business environment, the role of TCF’s executive team is becoming increasingly more complex and challenging as TCF competes to meet stockholders’ expectations year after year.  The  purpose  of  this  discussion  and  analysis  is  to  summarize  the  objectives  of  executive  compensation  and the  overall  compensation  philosophy  as  it  relates to each element of compensation paid to TCF’s executive officers (the “Named Executives”) included in the Summary Compensation Table on page 35.  This year, the Summary Compensation Table covers six Named Executives due to a grant of restricted stock awarded to James J. Urbanek, the Managing Director of Commercial Banking upon his employment with TCF in January 2010.  In lieu of omitting another executive, the Committee decided to include six Named Executives.

 

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In evaluating management and its performance, the Committee has carefully considered the enormous challenges faced by TCF over the past few years and the importance of rewarding and retaining talented managers to deal with these difficult operating conditions.   As  used  in  this  Compensation  Discussion  and  Analysis,  the  term “Committee” refers to the Compensation Committee of the Board of Directors or, as appropriate, a subcommittee thereof consisting of members who meet the independence requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “IRC”) and Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

Objectives of TCF’s Executive Compensation Program

 

TCF’s executive compensation program is designed to:

 

 

1.

Attract and retain experienced, highly qualified executives critical to the Company’s long-term success and enhancement of stockholder value.

 

 

 

 

2.

Link pay to individual and Company performance in a way that does not encourage unnecessary or excessive risk to the Company.

 

 

 

 

3.

Provide for the majority of total compensation in the form of an annual cash incentive and long-term incentives, which are based on Company and individual performance.

 

 

 

 

4.

Align executives’ interests with those of stockholders through long-term ownership of TCF Stock.

 

Key Decisions Made by the Committee in 2010 and Early 2011

 

The Committee is responsible for all aspects of executive compensation, including evaluating management and its performance and oversight of the Company’s compensation plans.  This section details key decisions made by the Committee in 2010 and early 2011 concerning the compensation for Named Executives other than Mr. Urbanek.  The Committee was involved in the new hire restricted stock grant to Mr. Urbanek, but decisions regarding the rest of Mr. Urbanek’s compensation were made by Mr. Urbanek’s supervisor, Craig Dahl, Executive Vice President of Wholesale Banking, in consultation with William A. Cooper, Chairman and Chief Executive Officer, and Barry N. Winslow, Vice Chairman and Chief Risk Officer.  A discussion regarding the compensation program objectives achieved with each of the following elements of compensation and how amounts are actually determined follows on page 27 under the heading, “Elements of Executive Compensation.”

 

 

·

Base Salary. The annual salary of Thomas F. Jasper, Executive Vice President and Chief Financial Officer, was increased from $250,000 to $350,000, effective January 1, 2010, to reflect his assumption of responsibility for the Information Technology Department, Bank Operations and Card Services, and was increased to $450,000, effective January 1, 2011, to reflect his assumption of executive responsibility for the Legal Department. Mr. Winslow received a salary increase effective January 1, 2010 from $300,000 to $400,000 to reflect his assumption of responsibility for Wholesale Banking and an increase to $450,000, effective January 1, 2011, to reflect his assumption of responsibility as Chief Risk Officer. Mr. Dahl’s salary was increased effective January 1, 2010 from $350,000 to $400,000 to reflect his increased responsibility within the Wholesale Banking division reporting to Mr. Winslow, and was increased effective January 1, 2011 to $450,000 to reflect his new role as head of Wholesale Banking, Mr. Winslow’s former role. The increases in base salaries in 2010 and 2011 also provide for more internal pay equity among the four Named Executives who report directly to the CEO. Mr. Winslow and Mr. Urbanek were not Named Executives prior to 2010. The base salary levels for Mr. Cooper and Neil W. Brown, President and Chief Operating Officer, remained unchanged in both 2010 and early 2011.

 

 

 

 

 

The decision to increase base salaries for Messrs. Jasper, Winslow, and Dahl is consistent with the Committee’s practice of adjusting base salary infrequently and only to reflect the assumption of new duties or when the Committee determines that an adjustment is appropriate based on its subjective evaluation of market practices (through peer group analysis and an annual compensation analysis prepared by its consultant, Towers Watson) and internal pay equity.

 

 

 

 

·

2010 and 2011 Performance Goals and Peer Groups. The Committee approved the 2010 Management Incentive Plan (“MIP”) on December 14, 2009, effective for services beginning on January 1, 2010. The

 

24



 

 

 

2010 MIP goal was based on TCF exceeding the mean Return on Average Equity (“ROE”) of its 2010 Peer Group.  The ROE performance metric is defined in the Performance-Based Compensation Policy.  In contrast to Return on Average Common Equity, as included in “Item 6. Selected Financial Data” of TCF’s 2010 Annual Report on Form 10-K, ROE excludes the impact of unrealized gains on investments accounted for in accordance with FASB ASC 320, Investments – Debt and Equity Securities.  In 2011, the Committee decided to slightly modify the performance metric from ROE to Return on Average Common Equity (“ROCE”).  The change removed from the calculation of ROE the need to adjust average total common equity to eliminate net unrealized gains or losses on assets available for sale, making peer group analysis more easily ascertainable.  The Committee chose the ROE/ROCE performance metric because it believes in the importance of measuring management’s efficiency in utilizing the Company’s equity base and its ability to earn a market return on stockholder capital.  Relative ROE/ROCE (that is, ROE/ROCE compared to similar financial institutions) provides an assessment of management’s ability to earn a return on stockholder capital as compared with its peers which are operating under the same regulatory constraints and economic environment. 

 

The Committee also approved a change to the peer group for 2011.  The peer group for the 2010 MIP consisted of 30 publicly-traded banking and thrift institutions, 15 of which were immediately larger and 15 of which were immediately smaller than TCF in total assets.  For 2011, the peer group used for the MIP will include all publicly-traded banking and thrift institutions ranging in asset size from $10 billion to $100 billion as of December 31, 2010 that report at least one quarter of 2011 fiscal year results by January 31, 2012.  The Committee selected this peer group to align TCF with financial institutions that are similarly situated based on recent regulatory and legislative changes.  The peer group companies are identified on page 31 under the headings, “2010 Peer Group” and “2011 Peer Group.

 

 

 

 

·

2010 Annual Cash Incentives and Bonuses. Named Executives (except for Mr. Urbanek) were eligible to receive a cash incentive under the 2010 MIP up to 100% of base salary if TCF exceeded the mean ROE of its 2010 Peer Group (as defined below), subject to downward adjustment at the discretion of the Committee. The maximum bonus potential of 100% is a change from years prior to 2009, when Named Executives were eligible to earn an annual incentive of up to 200% of base salary. The Committee took this action believing that stockholders would respond favorably to an overall compensation mix that leaned more heavily towards long-term incentive awards over short-term compensation. In February 2011, the Committee determined that TCF exceeded the mean ROE of its 2010 Peer Group and paid awards under the 2010 MIP ranging from 87% to 100% of base salary. The following chart reflects the cash incentives awarded to each of the Named Executive participants in the 2010 MIP:

 

2010 MIP Annual Cash Incentives

 

Named Executive

 

 

Cash

 

William A. Cooper

 

 

$950,000

 

Thomas F. Jasper

 

 

$350,000

 

Neil W. Brown

 

 

$400,000

 

Barry N. Winslow

 

 

$400,000

 

Craig R. Dahl

 

 

$400,000

 

 

 

 

The Committee can award discretionary bonuses to Named Executives outside of the MIP.  The Committee did not award any such bonuses to the Named Executives for 2010 performance.

 

Mr. Urbanek’s cash bonus for 2010 was determined by his immediate supervisor, Mr. Dahl, in consultation with Messrs. Cooper and Winslow.  Mr. Urbanek received a cash bonus in the amount of $240,000.  His bonus was based on attainment of subjective goals including factors relating to TCF’s credit processes, sales initiatives, and strategic planning.

 

 

 

 

·

2011 MIP. In January 2011, the Committee approved the 2011 MIP for all the Named Executives (except Mr. Urbanek). Named Executive participants are eligible to receive a cash incentive under the 2011 MIP equal to 100% of base salary if TCF exceeds the mean ROCE of its 2011 Peer Group (as defined below). The Committee has the ability to reduce or eliminate the size of the cash bonus for each executive in its discretion, which may include its subjective evaluation of TCF’s performance relative to its 2011 Peer Group and individual performance. If TCF does not achieve the target performance, no cash incentives will be paid under the 2011 MIP.

 

25



 

 

 

Mr. Urbanek is not eligible to participate in the MIP, but is eligible to receive a discretionary bonus approved by Mr. Dahl in consultation with Messrs. Cooper and Winslow.

 

 

 

 

·

2010 and 2011 Long-Term Incentives. The Company did not grant any restricted stock awards in 2010 to Named Executives, except for a restricted stock grant of 50,000 shares to Mr. Urbanek upon his employment at TCF. The Committee awarded Mr. Urbanek these shares as an incentive to join TCF after a 30-year career with a competitor. Mr. Urbanek’s restricted stock grant vests in five equal installments on January 25 of each of the years 2011 through 2015. Dividends will be paid on 20,000 of the restricted shares prior to vesting at the same rate as paid to stockholders generally. No dividends will be paid on the remaining 30,000 restricted shares prior to vesting.

 

 

 

 

 

In February 2011, the Committee approved the TCF Employees Deferred Stock Compensation Plan and awarded 750,000 shares of deferred restricted stock to the Named Executives (except Mr. Urbanek).  The restricted stock award will vest on January 1, 2014 if the Named Executive continues in an executive role (or as CEO in the case of Mr. Cooper).  The restricted stock will vest prior to January 1, 2014 upon a change in control or pro-rata if the Named Executive dies or becomes disabled (as defined under IRC Section 409A).  No dividends will be paid on the shares of restricted stock until vested.  Generally, receipt of the vested shares will be deferred for a minimum of three additional years from the date of vesting.  Permissible distribution events prior to or after January 1, 2017 are limited to change in control, death or disability.  Executives also can receive a distribution from the plan on or after January 1, 2017, if they have a separation from service (as defined under IRC Section 409A).  The Committee believes that this deferred restricted stock compensation program will reinforce the alignment of interests between executives and the long-term best interests of the Company and its stockholders and will act as an additional disincentive for executives to engage in unnecessary or excessive risk taking.  In February 2011, the Committee awarded the following deferred shares of restricted stock:

 

 

Named Executive Deferred Restricted Stock Awards

 

Named Executive

 

 

Restricted Stock
Awards (shares)

 

William A. Cooper

 

 

500,000

 

Thomas F. Jasper

 

 

100,000

 

Neil W. Brown

 

 

  50,000

 

Barry N. Winslow

 

 

  50,000

 

Craig R. Dahl

 

 

  50,000

 

 

 

 

The Committee awarded Mr. Cooper 500,000 shares of deferred restricted stock to retain his services as CEO and to focus on the Company’s long-term interests.  The Committee believes that it is important for the CEO to have unearned and unvested shares outstanding at all times.  The Committee considered several factors in determining the size of the award, including the fact that Mr. Cooper only has 150,000 unvested restricted shares and 400,000 unvested options outstanding with an exercise price of $12.85.  Both these grants are expected to vest on January 1, 2012.

 

The Committee awarded shares to the other Named Executives (except Mr. Urbanek) based on several factors including level of base salary, length of service with the Company, position, time period established for vesting, number and size of prior grants, and amount of stock previously earned.  The Committee believes that it is important that executives hold enough TCF Stock to create a strong focus on long-term financial goals and to discourage unnecessary risk taking.  The following chart shows the number of shares of unvested restricted stock outstanding for the Named Executives as of January 31, 2011 (prior to the award):

 

26



 

Outstanding Restricted Stock Awards

 

Named Executive

 

 

Restricted Stock
Awards (shares)

 

William A. Cooper

 

 

150,000

 

Thomas F. Jasper

 

 

  43,769

 

Neil W. Brown

 

 

  29,882

 

Barry N. Winslow

 

 

  30,102

 

Craig R. Dahl

 

 

  41,322

 

James J. Urbanek

 

 

  40,000

 

 

Elements of Executive Compensation

 

Overview

 

The Committee uses a variety of compensation elements to achieve its overall compensation philosophy, including base salary, annual cash incentives, and long-term incentives (restricted stock and stock options).  This balanced use of the various elements not only rewards executives for performance, but discourages unnecessary or excessive risk-taking within the organization.  The Committee believes above average Company financial performance should generally be rewarded with the variable elements of compensation, such as the annual cash incentive, restricted stock and stock option awards.  The Committee generally seeks to have a majority of a Named Executive’s compensation contingent on achievement of corporate and/or individual goals and consideration of whether the executive engaged in taking excessive or unnecessary risk.  While the amount of the annual cash incentive and long-term incentive are not formally tied to base salary, it is expected that increases in base salary for a Named Executive would generally result in an increase in the executive’s annual cash incentive and long-term incentive potential.  If a Named Executive does not earn an annual cash incentive or long-term incentive for a given year, there is no impact on the executive’s base salary or other incentives.

 

At its July meeting each year, the Committee reviews Named Executive compensation in light of the Committee’s compensation objectives.  The Committee compares TCF’s levels of base salary, total direct compensation (defined as base salary plus annual cash incentive), long-term incentive, and aggregate total compensation with that of the relevant peer group.  A discussion of the tools that aid the Committee in making compensation decisions, including tally sheets, peer group comparative analysis and the Towers Watson analysis begins on page 30 under the heading, “Analysis of Tools the Committee Uses.” The peer groups used by the Committee are identified on page 31 under the headings, “2010 Peer Group” and “2011 Peer Group.”

 

Objective of Each Element of Compensation and How Each Element is Determined

 

1.

Base Salary

 

 

 

Objective of Base SalaryBase salary is a fixed component that is intended to provide a minimum level of compensation necessary to attract and retain highly qualified executives.

 

Determination of Base SalaryThe Committee reviews base salary market practices in July of each year, through the use of a peer group survey and an analysis prepared by its compensation consultant, Towers Watson.  The Committee does not benchmark the salaries of the Named Executives against, nor does it tie the amount of such salaries to a specific percentile of, a peer group.  Although it has not established a target, the Committee would generally like base salaries to be at or near the peer group median, which it believes is necessary to attract and retain highly qualified executives.  The Committee reviews the base salaries of the Named Executives both in the aggregate, as compared to the aggregate amounts paid to named executive officers at each peer group company, and individually, as compared to the named executive officer at each peer group company of the same rank (in terms of relative pay as compared with the other named executive officers at that peer group company).  The Committee infrequently adjusts base salaries, generally doing so only when it subjectively determines that adjustments are appropriate in light of market practices, to foster internal pay equity, or to reflect the assumption of increased duties by a Named Executive.

 

27



 

2.

Annual Cash Incentive and Discretionary Bonus

 

 

 

Objective of Annual Cash IncentivesThe annual cash incentive award program is designed to reward Named Executives for achieving short-term financial objectives that generally have a long-term financial impact on stockholder value.  The Committee has the authority to award discretionary bonuses or performance-based annual cash incentives under the TCF Performance-Based Compensation Policy for Covered Executives (the “Policy”), a stockholder approved plan providing an overall limit on annual incentive payments, and the accompanying MIP.  Cash incentives awarded under the Policy and accompanying MIP are designed to meet the requirements for tax deductibility under IRC Section 162(m).

 

Determination of Annual Cash Incentives.  Annual cash incentive awards under the Policy and accompanying MIP are contingent upon the Company achieving predetermined performance goals.  Awards under the 2010 MIP were based on the Company exceeding the mean ROE of the 2010 Peer Group and awards under the 2011 MIP are based on the Company exceeding the mean ROCE of its 2011 Peer Group.  If the performance goals are achieved, the Named Executive participants are eligible to receive an award in an amount equal to 100% of base salary, subject to reduction in the Committee’s discretion, including its subjective evaluation of Company and individual performance.  In 2009, the Committee reduced the maximum bonus potential from 200% to 100% of base salary and shifted that potential to long-term incentives.  The Committee reduced the maximum potential believing that stockholders would respond favorably to an overall compensation mix that favors long-term incentive awards over short-term compensation.

 

Discretionary Bonuses.  The Committee may award discretionary bonuses to the Named Executives when it determines that such awards are appropriate based on factors that it deems relevant at the time of such an award.  The Committee did not award any discretionary bonuses to Named Executives, with the exception of Mr. Urbanek, in 2010.  Mr. Urbanek’s discretionary bonus was determined by Mr. Dahl, in consultation with Messrs. Cooper and Winslow.

 

3.

Long-Term Incentives

 

 

 

Objective of Long-Term Incentives.  Long-term incentives are designed to reward executives for achievement of long-term financial goals and objectives, and to retain and motivate talented executives in this challenging regulatory and economic environment.  The Committee believes that having in place unearned or unvested stock or stock option awards aligns management’s interests with stockholder value and discourages executives from sacrificing long-term objectives for short-term compensation.  The long-term incentives are equity-based and are provided under the TCF Financial Incentive Stock Program (the “Incentive Stock Program”), a stockholder-approved plan.  The Incentive Stock Program provides for a number of different equity-based awards, including restricted stock and stock options.  Performance-based stock awards are intended to qualify as performance-based compensation for purposes of IRC Section 162(m).

 

Determination of Long-Term Incentives.  The Committee approves periodic discretionary awards of restricted stock and stock options upon recommendation of the CEO, except in the case of the CEO’s own awards, which are determined by the Committee and the Board.  The timing of these awards is based largely on the status of existing unvested awards, which usually vest over a three-year period.  The Committee will consider making a new award when a previously unvested award is about to vest or be forfeited.  The size of these awards has been subjectively determined by the Committee based on a number of factors, including its evaluation of market practice (through use of the annual peer group survey and the Towers Watson analysis), level of base salary, length of service with the Company, position, time period established for vesting, number and size of prior grants, and cumulative ownership of TCF Stock.  The Committee has the authority to grant service-based and performance-based restricted stock and does so in order to achieve its objectives and desired overall compensation mix.

 

Other Forms of Compensation

 

1.

Retirement and Other Benefits. TCF believes benefits are an important aspect of its ability to hire and retain qualified employees and therefore, the Committee designs the program to be consistent with what it believes are market practices (based on its review of peer group surveys and the Towers Watson analysis). Benefits, such as the 401(k) Plan service-weighted match formula, are also designed to reward longevity with the Company. There is no target level of income for participation in benefits programs for either executive or non-executive employees. Named Executives generally have the same benefits

 

 

 

 

28



 

 

as those provided to full-time employees.  The amount of benefits awarded to a Named Executive has no impact on the amount of other elements of compensation awarded to the Named Executive.

 

Insurance Benefits.  Named Executives are eligible for the same group medical, dental, life insurance and other similar benefits that are available to TCF full-time employees generally.

 

Employees Stock Purchase Plan (“ESPP”) and ESPP-Supplemental Plan. TCF offers the ESPP to which employees may elect to contribute from 0% to 50% of their pay, with matching contributions made by the Company on the first 6% of pay contributed.  The match is 50%, 75%, or 100% of each dollar contributed, depending on length of service with TCF.  The plan qualifies as an employee stock ownership plan and a qualified tax or deferred compensation plan (“401(k) Plan”) under the IRC.  Named Executives may contribute the same percentage of pay as non-executives and receive the same match percentage based on length of service with TCF.  A Named Executive’s length of service for this purpose includes only actual time of service with TCF and is calculated in the same way as for employees generally.  Covered pay consists generally of salary and bonus; it does not include stock grants made to Named Executives or other special items of executive pay.

 

Most of the Named Executive contributions and Company matching contributions under the ESPP are limited by the IRC.  All amounts contributed over the statutory limit are credited to the ESPP-Supplemental Plan, a nonqualified supplemental plan, which generally mirrors the operation of the ESPP.  This ESPP-Supplemental Plan, which was approved by stockholders in 2006, covers a total of approximately 250 employees and also helps the ESPP to pass certain nondiscrimination tests.  The Committee approves and maintains the ESPP-Supplemental Plan as a matter of fairness for highly compensated employees so they can contribute the same percentage of pay as other employees and receive the corresponding employer matching contributions.

 

The chart below illustrates the operation of the ESPP and the related ESPP-Supplemental Plan for an executive with $600,000 in salary and bonus who contributes 6% to the two plans combined and whose contributions are matched at the 100% rate.  Additional factors will affect the exact calculations.

 

Illustration of Operation of ESPP and ESPP-Supplemental Plan

 

 

ESPP

ESPP-Supplemental
Plan

Total Contributions

Employee Contribution

   $14,700(1) 

   $21,300(2)

$36,000

Employer Match (100%)

$14,700 

$21,300

$36,000

Total

$29,400 

$42,600

$72,000

 

 

 

 

(1)    Limited to 6% of covered pay ($245,000) in 2011 and 5% in 2010.

(2)    Equals 6% of total salary and bonus ($600,000) less Employee Contribution to ESPP ($36,000 - $14,700 = $21,300).

 

 

Pension Plan.  TCF discontinued pay credits to its pension plan in 2006 in connection with enhancements to the ESPP.    Pension benefits are disclosed in the table on page 39 and described in the information following the table.

 

 

2.

Payments in the Event of Termination. In December 2009 and January 2010, employment and/or change in control agreements previously entered into with certain executives (except for Mr. Cooper) were terminated. Mr. Cooper’s July 31, 2009 employment agreement, as amended, continues to provide for payment of his base salary for the term of the agreement if Mr. Cooper is terminated by TCF without “cause” or he terminates his employment for “good reason” as defined on page 43 of this proxy statement. The benefits payable to Mr. Cooper under his employment agreement, including benefits in the event of termination, were negotiated in connection with and as a condition of his return to TCF as CEO. A quantification and description of the benefits payable to Mr. Cooper and the other Named Executives under various change in control and termination scenarios begins on page 44 of this proxy statement. The Committee does not intend to enter into employment or change in control agreements with any other Named Executives, except as may be necessary in a unique situation. However, the Committee plans to continue its practice of providing for the immediate vesting of restricted stock and stock options granted to Named Executives (other than Mr. Urbanek) in the event

 

29



 

 

of a change in control and pro-rata vesting upon death or disability.  The Committee believes that immediate vesting of such awards upon a change in control is appropriate because it allows the Named Executive to realize the value of such a transaction.  Mr. Urbanek’s restricted stock will vest in the event of a change in control in which he is subsequently terminated without cause (defined as willful neglect) within one year of the change in control.

 

 

3.

Perquisites. Current Named Executives receive perquisites in the form of use of Company-owned automobiles, club memberships, executive physicals, and tax return preparation. Mr. Cooper and Mr. Brown also receive personal use of the Company airplane, limited in the case of Mr. Brown to 50 hours per year. Mr. Cooper may approve personal use of the Company airplane by other Named Executives on a case-by-case basis. The purpose of these perquisites is to provide additional benefits to the executives, reduce security risks, and enhance scheduling and efficient use of the executives’ time. In 2010, Mr. Urbanek received a relocation payment of $55,000 for relocating to Minnesota.

 

Roles and Responsibilities of the Committee and Management in Establishing Executive Compensation

 

The Committee is responsible for discharging the Board of Directors’ responsibilities with respect to compensation of Named Executives.  Any employment contract or severance agreement for the CEO must be approved by the full Board.  At the end of the calendar year, or when applicable, the Committee reviews the Company’s financial results for the previous year to determine if performance targets have been achieved for purposes of performance-based compensation for Named Executives.  The Committee also determines discretionary compensation awards to Named Executives (including awards based on a subjective evaluation of individual qualitative performance), if any, generally at the end of the calendar year.

 

The CEO makes recommendations to the Committee concerning all elements of compensation for the other Named Executives.  The CEO reviews the performance of the Named Executives, future management changes, and other matters relating to compensation with the Chair of the Committee on an informal and regular basis.  The Named Executives (other than the CEO) generally do not make recommendations to the Committee concerning their own compensation, although they may provide the CEO with information used to support a recommendation to the Committee (such as an individual’s proposed goals and information concerning the structure of their compensation).  Mr. Dahl, in consultation with Messrs. Cooper and Winslow, determined Mr. Urbanek’s overall compensation mix for 2010, including his base salary, and bonus goals.  Messrs. Cooper, Dahl and Winslow also made recommendations to the Committee regarding the size of the new hire restricted stock grant made to Mr. Urbanek.

 

Compensation decisions are by nature subjective.  A subjective determination is one based upon evaluation of an individual’s overall performance and does not rely on a statistical or formulaic analysis of particular results or criteria.  Instead it seeks to consider overall performance in areas of responsibility, management and communication skills, leadership qualities, innovation and creative abilities, risk controls, and difficulties encountered in achieving results in light of industry conditions.  Because of his long history with the management team, the CEO reaches his subjective recommendations on compensation for the other Named Executives and discusses these with the Committee.  Taking the CEO’s recommended compensation into consideration, the Committee then establishes the compensation levels, bonus amounts and stock awards for the Named Executives.  The Board, which has members who have been TCF Directors for many years and have experience in evaluating the performance of the CEO, uses a similar process in awarding compensation to the CEO.

 

Analysis of Tools the Committee Uses

 

The Committee uses (1) tally sheets, (2) an annual peer group comparative analysis prepared by SNL Financial, (3) an annual analysis prepared by the firm of Towers Watson, (4) a perquisite report, and (5) total TCF Stock ownership data to determine whether the objectives of the Company’s executive compensation policies are being met.  The Committee used the following tools in making the compensation decisions described earlier on page 24 under “Key Decisions Made by the Committee in 2010 and Early 2011”:

 

1.

Tally Sheets. The tally sheets show total compensation payable to each Named Executive (except Mr. Urbanek) in the event of various termination and change in control scenarios. The tally sheets, together with the total compensation data from the peer group comparative analysis, provide a complete picture of all principal elements of executive compensation. The Committee considers the tally sheet information, together with the

 

30



 

 

peer group comparative analysis and Towers Watson analysis described below, when subjectively determining the amount and components of the compensation and benefits awarded to the Named Executives.

 

 

2.

Peer Group Comparative Analysis. TCF’s peer group for the 2010 MIP and other incentive awards that vest based on 2010 results consists of 30 publicly-traded banking and thrift institutions, 15 of which are immediately larger and 15 of which are immediately smaller than TCF in total assets as of a September 30th measurement date (the “2010 Peer Group”). This group was selected because it is large enough to include a broad group of institutions with business operations similar to those of TCF, but small enough to factor out institutions much different than TCF in size.

 

 

 

For purposes of incentive compensation awarded in 2011 and other incentive awards that vest based on 2011 results, TCF’s peer group will consist of those financial institutions with assets ranging from $10 billion to $100 billion, as of December 31, 2010, that report at least one quarter of fiscal year 2011 results by January 31, 2012 (the “2011 Peer Group”).  TCF changed its peer group in 2011 to align itself with banks and financial institutions that are similarly impacted by recent regulatory and legislative changes.

 

The peer group comparative analysis measures both compensation and financial performance.  Historically, the Committee measured the relevant performance goal (ROE in 2010) for the first, second, third, and fifth years before the year in which the analysis was performed; however, the Committee currently uses only the current year to avoid unusual variations due to the factors affecting the performance of financial institutions.  The peer group institutions are then ranked by the results.  The annual cash incentive of the Named Executives under the 2010 and the 2011 MIPs is dependent upon TCF’s performance relative to the relevant peer group.  The Committee considers the peer group comparative analysis when making subjective determinations regarding the amount and components of compensation and benefits paid to the Named Executives.  In addition, while the Committee does not benchmark the compensation of its Named Executives against, nor does it attempt to tie such compensation to a specific percentile of the peer group, it does believe that there should be a relationship between the compensation paid to the Named Executives and TCF’s financial performance.  The Committee reviews the peer group analysis to monitor that relationship and makes adjustments to compensation as it deems appropriate.

 

2010 Peer GroupThe 2010 Peer Group consisted of:  Zions Bancorporation; Huntington Bancshares Incorporated; Popular, Inc.; Synovus Financial Corp.; New York Community Bancorp, Inc.; First Horizon National Corporation; BOK Financial Corporation; Associated Banc-Corp; People’s United Financial, Inc.; Astoria Financial Corporation; First BanCorp; First Citizens BancShares, Inc.; City National Corporation; Commerce Bancshares, Inc.; Webster Financial Corporation; Fulton Financial Corporation; Cullen/Frost Bankers, Inc.; Flagstar Bancorp, Inc.; CapitalSource Inc.; Valley National Bancorp; First Niagara Financial Group, Inc.; MB Financial, Inc.; Susquehanna Bancshares, Inc.; W Holding Company; BancorpSouth, Inc.; Washington Federal, Inc.; SVB Financial Group; East West Bancorp, Inc.; South Financial Group, Inc.; and Bank of Hawaii Corporation.  W Holding Company was originally part of the peer group; however, it became financially insolvent in April 2010.  Wintrust Financial Corporation then became a member of the Peer Group for comparison purposes.  South Financial Group, Inc. was acquired by TD Bank Financial Group on September 30, 2010, at which point Citizens Republic Bancorp, Inc. became a member of the Peer Group.

 

2011 Peer Group.  The 2011 Peer Group will consist of: KeyCorp; Northern Trust Corporation; M&T Bank Corporation; Hudson City Bancorp, Inc.; Huntington Bancshares Incorporated; Comerica Incorporated; Zions Bancorporation; Marshall & Ilsley Corporation; New York Community Bancorp, Inc.; Popular, Inc.; Synovus Financial Corp; People’s United Financial, Inc.; First Horizon National Corporation; BOK Financial Corporation; First Republic Bank; Associated Banc-Corp; City National Corporation; First Niagara Financial Group, Inc.; First Citizens BancShares, Inc.; East West Bancorp, Inc.; Commerce Bancshares, Inc.; Astoria Financial Corporation; Webster Financial Corporation; Cullen/Frost Bankers, Inc.; SVB Financial Group; Fulton Financial Corporation; First BanCorp.; Valley National Bancorp; FirstMerit Corporation; Wintrust Financial Corporation; Susquehanna Bancshares, Inc.; Flagstar Bancorp, Inc.; BancorpSouth, Inc.; Washington Federal, Inc.; Bank of Hawaii Corporation; PrivateBancorp, Inc.; UMB Financial Corporation; International Bancshares Corporation; Whitney Holding Corporation; Signature Bank; Umpqua Holdings Corporation;  TFS Financial Corporation (MHC); Wilmington Trust Corporation; Cathay General Bancorp; MB Financial, Inc.; and IBERIABANK Corporation.

 

31



 

3.

Towers Watson Analysis. The firm of Towers Watson has been engaged annually by the Committee since 1991 to review TCF’s performance and compensation data as compared with the peer group to determine: (1) whether and to what extent the overall level of total compensation for the Named Executives was aligned with financial performance, and (2) whether, in its view, TCF’s compensation levels were appropriately aligned with financial performance based on the peer group data. The analysis first measures base salary (which includes other compensation, such as 401(k) match, the cost of life insurance, and certain perquisites), annual cash incentives, bonuses, and long-term incentives for the five highest-paid executives for each peer group institution, and for TCF, based on information obtained from proxy statements. The peer group institutions are then ranked by total compensation, defined as the sum of base salary, annual cash incentive, and long-term incentive.

 

 

 

Review of Compensation for Named Executives as a Group.  The July 2010 review was based on executive compensation and peer group data for calendar year 2009.  Mr. Urbanek and Mr. Winslow were not included in the analysis because neither was a named executive officer in 2009.  TCF ranked 7th in the 2010 Peer Group in financial performance based on Return on Average Assets (“ROA”) (25% weighting), ROE (25% weighting), and Earnings Per Share (“EPS”) growth (50% weighting), which covered performance during 2009. The three factor weighting system has historically been used by TCF, but for purposes of incentive compensation, TCF used ROE as the sole performance metric.  As such, TCF’s ROE ranked 2nd during the same performance period relative to its peer group.

 

The base salaries for the named executive officers as a group ranked 15th in the 2010 Peer Group.  The total direct compensation (base salary plus annual cash incentive) for the named executive officers as a group ranked 6th in the 2010 Peer Group.  For comparison purposes, Mr. Cooper’s salary, which began on August 1, 2009, was annualized.

 

The Committee also reviewed aggregate total compensation for the named executive officers as a group, defined as the total of base salary, annual cash incentive, and long-term incentive (for TCF the value of restricted stock and stock options).  The aggregate total compensation for the named executive officers as a group ranked 7th in the 2010 Peer Group.

 

Review of Data for Each Named Executive.  In addition to the review conducted for the Named Executives as a group,  the  Committee  reviewed  the  peer group data for each Named Executive (except Mr. Urbanek and Mr. Winslow who were not named executive officers at the time the analysis was conducted) as compared with the named executive officer at each peer group company of the same rank (in terms of relative pay as compared with the other named executive officers at that peer group company).  The chart below shows the comparative rankings of the Named Executives.

 

 

 

 

 

 

 

 

Name

 

 

Base Salary

 

 

Aggregate Total
Compensation
as defined above

William A. Cooper

 

 

  8th

 

 

  4th

Thomas F. Jasper

 

 

28th

 

 

  9th

Neil W. Brown

 

 

16th

 

 

10th

Craig R. Dahl

 

 

23rd

 

 

  8th

 

 

One factor impacting the comparative rankings of the aggregate total compensation of the Named Executives was the restricted stock awards made in December 2009 in consideration of terminating their employment and/or change in control agreements.  These were one-time awards, but they were included in the calculations to determine the aggregate total compensation ranking.  The Towers Watson report reviewed by the Committee at its July 2010 meeting concluded that the overall levels of aggregate total compensation were directionally aligned with relative performance ranking.

 

Review of Internal Pay Equity.  The relationship of pay between Named Executives in 2010 is based on comparisons made in July 2010 using data for fiscal year 2009.  Accordingly, the review conducted by the Committee in July 2010 did not include Mr. Urbanek or Mr. Winslow, because neither was a named executive officer of the Company in 2009.  For the purposes of this comparison, it is assumed that Mr. Cooper’s current salary of $950,000 was in effect for all of 2009.

 

32



 

 

The Committee reviewed the relationship between base salaries among the Named Executives (including Mr. Cooper) and found it to be reasonable compared to the 2010 Peer Group.  For 2010, the peer group data on base salary is:

 

 

 

Average Highest Paid as a percentage of Average Second-Highest Paid:   172%

Average Highest Paid as a percentage of Average Second- through Fifth-Highest Paid*:   210%

Average Second-Highest Paid as a percentage of Average of Third- through Fifth-Highest Paid*:   132%

 

 

 

TCF’s 2009 base salary data is:

 

 

 

Highest Paid as a percentage of Second-Highest Paid:   207%

Highest Paid as a percentage of Average of Second- through Fifth-Highest Paid*:   270%

Second-Highest Paid as a percentage of Average of Third- through Fifth-Highest Paid*:   145%

 

 

 

* The analysis included Mr. Pulles, who was a named executive officer in 2009. 

 

Although the first two of these percentages are somewhat elevated for TCF compared with the 2010 Peer Group, the Committee believes that the salary level of Mr. Cooper is warranted in view of his value to the Company, long tenure with the Company, and leadership skills.  The Committee believes that TCF’s pay scale is reasonable in light of this market data.

 

4.

Annual Perquisite Report. The Committee annually reviews a report of executive perquisites prepared by TCF’s Director of Corporate Human Resources. The Committee uses the report to determine, in its own judgment, whether perquisites for TCF’s executives are reasonable and not excessive. The Committee would reduce or eliminate any perquisite if it determined that the perquisite, or total perquisites, were excessive based on its judgment of industry norms.

 

 

5.

Stock Ownership Data. The Committee periodically reviews the amount of TCF Stock owned by each Named Executive, but does not believe that the level of accumulation should be a factor in setting the level of base salary or annual cash incentive. The Committee may take such accumulation into account in making new restricted stock or stock option awards. The Committee has not established a minimum level of required TCF Stock ownership for Named Executives or a requirement that shares be owned for a specified period of time because the current level of such ownership already meets the Committee’s expectations. However, in February 2011 the Committee implemented a deferred stock plan, to which the February 2011 restricted stock awards granted to the Named Executives (except Mr. Urbanek who did not receive an award) are subject. The Committee believes that the mandatory deferral of such awards until the later of January 1, 2017 or six months following a separation from service (absent an earlier change in control, death, or disability) will further increase executive ownership of TCF Stock, reinforce the alignment of interests between the Named Executives and the long-term best interests of the Company and its stockholders and will act as an additional disincentive for executives to engage in unnecessary or excessive risk taking.

 

 

 

As a group, executive officers of TCF owned 4,320,047 shares TCF Stock as of December 31, 2010.  The following chart shows the stock ownership of the Named Executives and the other executives as a group at December 31, 2010.

 

 

 

 

 

Name

 

 

Number of

Shares Owned

William A. Cooper

 

 

 

1,902,891

 

Thomas F. Jasper

 

 

 

     78,403

 

Neil W. Brown

 

 

 

   221,369

 

Barry N. Winslow

 

 

 

   477,305

 

Craig R. Dahl

 

 

 

   164,692

 

James J. Urbanek

 

 

 

     50,000

 

 

 

 

 

 

 

Named Executives as a group

 

 

 

2,894,660

 

Other executives as a group

 

 

 

1,425,387

 

 

 

 

 

 

 

Total – All executives

 

 

 

4,320,047

 

 

 

 

 

 

 

 

33



 

Tax Considerations

 

Although the Committee historically intended that compensation either qualified as performance-based or was deferred, as necessary, such that compensation would not exceed the tax deduction limits of the IRC, the Committee has awarded and may award compensation that is not deductible for income tax purposes.  Deductibility of compensation may be ultimately affected by factors outside the Committee’s control, such as legislation relating to deferred compensation distributions or other aspects of compensation.

 

Recovery of Performance-Based Compensation

 

The Sarbanes-Oxley Act requires recovery of certain incentive and equity compensation from the Principal Executive Officer and Principal Financial Officer in the event of a restatement of financial results due to misconduct.  The Audit Committee is responsible for determining if bonus or stock compensation paid to the Principal Executive Officer or Principal Financial Officer should be recovered in the event of a restatement.  Mr. Cooper’s July 2009 Amended and Restated Employment Agreement sets forth his obligation to comply with these provisions of the Sarbanes-Oxley Act.

 

Compensation Policies and Practices as They Relate to Risk Management

 

Annually, the Compensation Committee performs a comprehensive review of TCF’s compensation policies and practices for its senior executive officers and other individuals and job groups (in particular, those subject to the same or similar incentive compensation arrangements that, in the aggregate, may have the potential to expose the Company to material levels of risk).  The Committee bases its review in part on any analysis of such compensation arrangements prepared by TCF’s Chief Risk Officer.  The analysis and the Committee’s review consider the balance between short-term and long-term components of compensation, the factors used to determine eligibility for an award (in the case of the cash bonus), the factors used to determine vesting of an award (in the case of an equity award), and how these elements coincide with the time horizon of TCF’s most significant risks.  The Committee also places significance on its ability to reduce or withhold an award if it determines that the executive engaged in excessive risk.  Based on these reviews, the Committee determined that the risks arising from TCF’s incentive compensation arrangements, and its compensation policies and practices generally, are not reasonably likely to have a material adverse effect on TCF.

 

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee has reviewed the preceding Compensation Discussion and Analysis and discussed it with management.  Based on its review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in TCF’s proxy statement.

 

BY THE COMMITTEE:

 

Vance K. Opperman, Chair

 

 

 

 

Peter Bell

 

William F. Bieber

 

Theodore J. Bigos

Luella G. Goldberg

 

Gerald A. Schwalbach

 

 

 

34



 

SUMMARY COMPENSATION TABLE

 

The following summary compensation table (the “Summary Compensation Table”) identifies the cash and non-cash compensation awarded to or earned by the Named Executives in 2008, 2009, and 2010.

 

Summary Compensation Table

 

Name and
Principal Position
at December 31, 2010

 

 

Year

 

 

Salary
($)

 

 

Bonus
($)(1)

 

 

Stock
Awards
($)(2)

 

 

Option
Awards
($)(3)

 

 

Non-
Equity
Incentive Plan
Compen-
sation
($)(4)

 

 

Change in
Pension Value
and Nonquali-
fied Deferred
Compensation
Earnings
($)(5)

 

 

All
Other
Compen-
sation
($)(7)

 

 

Total
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

 

(b)

 

 

(c)

 

 

(d)

 

 

(e)

 

 

(f)

 

 

(g)

 

 

(h)

 

 

(i)

 

 

(j)

 

William A. Cooper

 

 

2010

 

 

$950,000

 

 

-

 

 

-

 

 

-

 

 

$950,000

 

 

$37,077

 

 

$236,999

 

 

$2,174,076

 

Director, Chairman

 

 

2009

 

 

$401,923

 

 

$975,000

 

 

-

 

 

-

 

 

-

 

 

$31,546

 

 

$258,229

 

 

$1,666,698

 

and CEO (Principal

 

 

2008

 

 

-

 

 

-

 

 

$4,673,927

 

 

$2,508,000

 

 

-

 

 

$13,800

 

 

$171,575

 

 

$7,367,302

 

Executive Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thomas F. Jasper

 

 

2010

 

 

$350,007

 

 

-

 

 

-

 

 

-

 

 

$350,000

 

 

$  4,220

 

 

$  36,654

 

 

$   740,881

 

Executive Vice

 

 

2009

 

 

$259,615

 

 

$150,000

 

 

$   510,440

 

 

-

 

 

-

 

 

$  2,954

 

 

$  22,927

 

 

$   945,936

 

President and

 

 

2008

 

 

$250,000

 

 

-

 

 

-

 

 

$   523,815

 

 

-

 

 

$     146

 

 

$  45,810

 

 

$   819,771

 

Chief Financial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Officer (Principal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Neil W. Brown

 

 

2010

 

 

$460,010

 

 

-

 

 

-

 

 

-

 

 

$400,000

 

 

$  8,718

 

 

$128,613

 

 

$   997,341

 

President, Chief

 

 

2009

 

 

$477,711

 

 

$150,000

 

 

$   512,593

 

 

-

 

 

-

 

 

$  5,733

 

 

$  93,769

 

 

$1,239,806

 

Operating Officer

 

 

2008

 

 

$460,018

 

 

-

 

 

-

 

 

$1,047,630

 

 

-

 

 

$  8,558

 

 

$172,758

 

 

$1,688,964

 

Barry N. Winslow (6)

 

 

2010

 

 

$400,006

 

 

-

 

 

-

 

 

-

 

 

$400,000

 

 

$  9,224

 

 

$  53,170

 

 

$   862,400

 

Director, Vice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chairman, and Chief

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Craig R. Dahl (6)

 

 

2010

 

 

$400,006

 

 

-

 

 

-

 

 

-

 

 

$400,000

 

 

$  6,358

 

 

$  51,194

 

 

$   857,558

 

Executive

 

 

2009

 

 

$359,628

 

 

$250,000

 

 

$   610,441

 

 

-

 

 

-

 

 

$  4,859

 

 

$  40,739

 

 

$1,265,667

 

Vice President,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale Division

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

James J. Urbanek (6)

 

 

2010

 

 

$259,136

 

 

$240,000

 

 

$   640,955

 

 

-

 

 

-

 

 

-

 

 

$  63,939

 

 

$1,204,030

 

Managing Director,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Banking

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)   Represents the amount of 2009 discretionary bonuses.   There were no 2008 discretionary bonuses.  Only Mr. Urbanek was awarded a discretionary bonus for 2010 which was determined by his immediate supervisor Mr. Dahl, in consultation with Messrs. Cooper and Winslow.

(2)   Consists of restricted stock awards at grant date fair value computed in accordance with ASC 718, as further discussed in the narrative below.  There were no stock awards made in 2010 except to Mr. Urbanek.  His award has two components:  one for 20,000 shares, which pays dividends, and one for 30,000 shares, which does not pay dividends.  For stock awards made in 2008 and in January 2009, as well as the awards made in consideration for termination of employment and/or change in control agreements in December 2009, no dividends are paid until the awards vest.  Dividends are paid on all other awards of restricted stock at the same rate as paid to stockholders generally.  TCF’s accounting policy and assumptions for stock-based compensation are described in Notes 1 and 15 to TCF Financial’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2010.

(3)  Consists of stock option awards at grant date fair value computed in accordance with ASC 718.  TCF’s accounting policy and assumptions for stock-based compensation are described in Notes 1 and 15 to TCF Financial’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2010.

(4)  Represents the amount of annual cash incentive performance-based awards earned by Named Executives in 2010 under the 2010 Management Incentive Plan.  No annual cash incentive performance-based awards were earned by Named Executives in 2009 or 2008.

 

35



 

(5)  Consists of change in pension value as reported by the actuaries of the pension plan.  Pay credits to the pension plan were discontinued effective April 1, 2006; however, interest credits continue to be credited.  Amounts shown reflect only the change in pension value.  There were no above-market or preferential earnings on TCF’s nonqualified deferred compensation plans.  Mr. Urbanek is not eligible to participate in the pension plan since he was hired after July 1, 2004, the date on which eligibility was frozen.

(6)  Neither Mr. Winslow nor Mr. Urbanek was a Named Executive in 2008 and 2009.  Mr. Dahl was not a Named Executive in 2008.

(7)   Amounts shown in the “All Other Compensation” column for 2010 consist of the following:

 

Detail of “All Other Compensation” Column

 

 

 

 

 

 

 

Employer
Matching Contributions

 

 

 

 

 

 

 

Name

 

 

Perquisites(a)

 

 

ESPP Plan(b)

 

 

ESPP-
Supplemental
Plan

 

 

Other(c)

 

 

Total

 

William A. Cooper

 

 

$165,299

 

 

$14,700

 

 

$57,000

 

 

-

 

 

$236,999

 

Thomas F. Jasper

 

 

$  14,156

 

 

$  9,187

 

 

$13,311

 

 

-

 

 

$  36,654

 

Neil W. Brown

 

 

$  92,015

 

 

$12,250

 

 

$24,348

 

 

-

 

 

$128,613

 

Barry N. Winslow

 

 

$  17,170

 

 

$12,250

 

 

$23,750

 

 

-

 

 

$  53,170

 

Craig R. Dahl

 

 

$  14,694

 

 

$12,250

 

 

$24,250

 

 

-

 

 

$  51,194

 

James J. Urbanek

 

 

$    8,939

 

 

-

 

 

-

 

 

$55,000

 

 

$  63,939

 

 

(a)   All of the Named Executives, except for Mr. Urbanek, were eligible to receive the following perquisites, none of which individually exceeded $25,000 in 2010: imputed life insurance, executive tax service, personal use of club memberships, personal use of company car, and executive physical.  Mr. Urbanek is eligible for imputed life insurance, personal use of club membership, and personal use of a company car.  In addition, two executives received personal use of company aircraft in the following amounts (calculated on a pre-tax basis): Mr. Cooper, $122,253 and Mr. Brown, $82,555.  These amounts are the aggregate incremental cost of non-business travel use, as determined based on the average weighted cost of fuel and maintenance, crew travel expenses, on-board catering expenses, landing fees, trip-related hangar/parking costs, and smaller variable costs.  In the event that an executive’s spouse, family member, or guest accompanied the executive on a flight, the above amounts also include any incremental costs, such as on-board catering costs, that may be associated with such travel.

(b)    Employer matching contributions to the Employees Stock Purchase Plan (“ESPP”) were limited in 2010 to 100% of 5% of covered compensation up to the IRC limit of $245,000 for employees eligible to participate in the ESPP-Supplemental Plan.  The balance of the employer matching contributions in 2010 was made to the ESPP-Supplemental Plan.  Because Mr. Cooper was not eligible to participate in the ESPP-Supplemental Plan in 2009, his 2009 bonus, which was paid in 2010, had its employer matching contribution paid to the ESPP at the limit of 6% which applies to all highly compensated employees not eligible to participate in the ESPP-Supplemental Plan.

(c)     A payment to Mr. Urbanek due to his relocation from Iowa to Minnesota.

 

36



 

GRANTS OF PLAN-BASED AWARDS IN 2010

(Includes Cash and Equity Awards)

 

The following table shows awards made to the Named Executives that were made or became effective in 2010:

 

 

 

 

 

 

 

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
(1)

 

 

Estimated
Future
Payouts
Under
Equity
Incentive
Plan Awards

 

 

All Other
Stock
Awards:
Number of
Shares of

 

 

Grant Date
Fair Value
of Stock

 

Name

 

 

Grant Date

 

 

Threshold
($)

 

 

Target
($)

 

 

Maximum
($)

 

 

Target
(#)

 

 

Stock
(#)(2)

 

 

Awards
($)(3)

 

William A. Cooper

 

 

12/14/09 (4)

 

 

-

 

 

$950,000

 

 

$950,000

 

 

 

 

 

 

 

 

 

 

Thomas F. Jasper

 

 

12/14/09 (4)

 

 

-

 

 

$350,000

 

 

$350,000

 

 

 

 

 

 

 

 

 

 

Neil W. Brown

 

 

12/14/09 (4)

 

 

-

 

 

$460,000

 

 

$460,000

 

 

 

 

 

 

 

 

 

 

Barry N. Winslow

 

 

12/14/09 (4)

 

 

-

 

 

$400,000

 

 

$400,000

 

 

 

 

 

 

 

 

 

 

Craig R. Dahl

 

 

12/14/09 (4)

 

 

-

 

 

$400,000

 

 

$400,000

 

 

 

 

 

 

 

 

 

 

James J. Urbanek

 

 

01/25/10   

 

 

-

 

 

-

 

 

-

 

 

 

 

 

50,000

 

 

$640,955

 

 

(1)    Amounts represent estimated future payments which were effective January 1, 2010 under the 2010 MIP as described on page 28 of the Compensation Discussion and Analysis under the heading, “Annual Cash Incentive and Discretionary Bonus.”  The target and maximum amounts are based on TCF exceeding the mean ROE of its 2010 Peer Group for fiscal 2010.  Mr. Urbanek did not participate in the 2010 MIP.  See column (g) of the Summary Compensation Table on page 35 for the 2010 annual cash incentive payments earned by the Named Executives.

(2)    Award represents the grant of non-performance-based restricted stock made under the TCF Financial Incentive Stock Program.  The award is described on page 26 of the Compensation Discussion and Analysis under the heading, “2010 and 2011 Long-Term Incentives.  One-fifth of the shares subject to the award vest on January 25 of each of the years 2011, 2012, 2013, 2014, and 2015.  Dividends are paid on 20,000 unvested shares at the same rate as paid to stockholders generally.  Dividends are not paid on the remaining shares until they vest.

(3)    The grant date fair value for the 20,000 shares paying dividends is $14.20 and the grant date fair value for the remaining 30,000 shares, upon which dividends are paid when vested, is $11.8985.

(4)    Awards were granted on December 14, 2009, but were effective January 1, 2010.

 

Salary – Mr. Cooper did not receive a salary in 2008.  TCF pays its salaried employees on a bi-weekly schedule.  In 2009 there were 27 pay dates as opposed to 26 in both 2010 and 2008.

 

Stock Awards and Option Awards – Mr. Urbanek’s award is discussed on page 26 under the heading, “2010 and 2011 Long-Term Incentives.”

 

Non-Equity Incentive Plan Compensation and Bonuses – Performance-based annual cash incentives are reported in column (g), “Non-Equity Incentive Plan Compensation” of the Summary Compensation Table.  Named Executives earned performance-based incentive plan compensation ranging from 87% to 100% of base compensation in 2010, as discussed on page 25 of the Compensation Discussion and Analysis under the heading, “2010 Annual Cash Incentives and Bonuses.”  None of the Named Executives earned annual cash incentives under performance-based plans in 2009 or 2008; however, the Committee did grant a discretionary bonus to certain Named Executives in 2009.  The amounts of the 2009 discretionary bonuses are reported in column (d) of the Summary Compensation Table.

 

Employment Agreements - Provisions of the Employment Agreement of the Principal Executive Officer are described on page 45.  None of the other Named Executives has an employment agreement with TCF.

 

Amount of Salary and Bonus in Proportion to Total Compensation - The relationship of salary to the Named Executives’ total compensation will vary from year to year primarily depending on the amount of non-equity incentive compensation (annual cash incentive) and stock awards expense, as discussed on page 27 of the Compensation Discussion and Analysis.

 

37


 


OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2010

 

The following table shows all equity awards that were outstanding at December 31, 2010 for each Named Executive:

 

Outstanding Equity Awards at 2010 Fiscal Year-End

 

 

 

 

 

 

 

Option Awards

 

 

Stock Awards

Name

 

 

Year
of
Award

 

 

Number of
Securities
Underlying
Unexercised
Options
(#)
Unexer-
cisable
(1)

 

 

Option
Exercise
Price
($)

 

 

Option
Expiration
Date

 

 

 

Number
of
Shares

or Units
of Stock
That
Have
Not
Vested
(#)(2)

 

 

Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)(3)

 

 

Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have
Not Vested
(#)(4)

 

 

Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
($)(3)

William A.

 

 

2008

 

 

800,000

 

 

$12.85

 

 

8/1/2018

 

 

 

 

 

 

 

 

Cooper

 

 

2008

 

 

 

 

 

 

 

 

300,000

 

 

$4,443,000

 

 

 

 

Thomas F.

 

 

2006

 

 

 

 

 

 

 

 

   6,000

 

 

$     88,860