GOVERNANCE AND SOCIAL MATTERS: What Matters at Premier?

We view ourselves as a high-performing, community-focused financial institution dedicated to focusing on our customers, our employees and outstanding. the communities we have served since the 1890s. We are built on a foundation of focusing on the fundamentals of sound banking practices and are strengthened by our Mission & Vision and Core Values initiatives described below.

Our Vision Statement encompasses our desire to be the partner of choice for all our stakeholders, be they customers, investors, employees, or the communities we serve. Our Core Values further address our commitment to our various stakeholders. Together these define our culture and the emphasis we place on building a work environment supportive of our commitment to many of the social and governance matters described below.

“Winning” for us rests on our ability to provide our products and services consistently and in compliance with all regulations and standards applicable to financial institutions of our size and the products and services we offer. To do this, we invest in our people, systems, and risk management program to create strong governance in all our dealings: from a simple deposit transaction to the functioning of our Board of Directors.

While environmental, social and governance matters have been of high importance to Premier for several years, in January 2022 we specifically tasked our Governance and Nominating Committee to oversee the management of our efforts in these areas, including our efforts toward promoting diversity, equity, and inclusion.

SOCIAL

Supporting Local Communities

In 2022, through Premier Bank, our wholly-owned banking subsidiary, and the Premier Bank Foundation, we donated $1.4 million to over 500 non-profit organizations in the communities we serve. Our employees have also participated in numerous volunteer service efforts providing their time and talents to their local communities. All employees receive paid volunteer time specifically for the purpose of volunteering their time in their respective communities. In 2022, our employees recorded over 6,900 hours of volunteer time, and we believe the actual time dedicated to such efforts to be even greater than such recorded amount.

Human Capital Management

Our tagline of “Powered by People” also serves as an indication of our commitment to our employees recognizing the value and importance they each play towards our success.

Diversity, Equity and Inclusion

We are committed to employing and retaining a highly diverse workforce. We are an Equal Employment Opportunity Employer that understands the importance of employing individuals with varied backgrounds. Beginning with the “tone from the top” and cascading throughout our organization, we expect our employees to understand the importance of diversity, equity and inclusion and how these considerations impact our ability to achieve a highly efficient and dynamic work environment. Our “tone from the top” starts with the diversity of our executive team depicted below.

We have no other classimplemented multiple programs and initiatives designed to increase diversity, equity and inclusion awareness, to build diverse teams, to encourage connections amongst all of our employees, and to support our commitment to recruiting and retaining a diverse workforce. We have also seen significant year over year improvements in the percent of minorities in our applicant pools and in our new employee ranks. Gender equity securities outstandingefforts have also encouraged year-over-year higher promotion rates for women compared to men and we actively manage gender pay gap disparities.

Environmental

We believe that the protection of the environment is an important part of our responsibility as a banking institution, and we are entitledcommitted to votedoing our part to ensure a sustainable future. In 2022, we decided to use renewable electricity and carbon-neutral natural gas to power all of our locations. Additionally, we use LED bulbs for all lighting replacement in our facilities.

CORPORATE GOVERNANCE

Governance Highlights

We believe that sound principles of corporate governance are the hallmark of long-term growth and profitability. Our governance policies are designed to promote independent and diverse consideration of our business and risk management strategies, with the goal of achieving robust returns for our shareholders. More information about our corporate governance programs is available on our website at http://www.premierfincorp.com under the Annual Meeting.link “Governance Documents” where you can find copies of our Corporate Governance Guidelines, Code of Ethics, and the charters for our Board committees.

The presence, either in person or by proxy,

Director Independence

Our Corporate Governance Guidelines require that at least a majority of the members of the Board qualify as independent directors under applicable rules, including the independence standards of The Nasdaq Stock Market LLC (“Nasdaq”). Each year the Board, with the assistance of the Governance and Nominating Committee, assesses the independence of all directors and nominees with these standards and also in terms of whether these individuals have any relationships with the Company or others that could impact the exercise of their independent judgment. The Board has determined that the following directors, constituting a majority (12 of 14 directors) of the Board, are independent directors:

Directors Hileman and Small are not considered independent due to their current employment status with the Company.

Board Leadership Structure

In accordance with our outstanding shares entitledCode of Regulations, the Board elects both our Chair of the Board (sometimes referred to as the “Chair”) and our Chief Executive Officer (sometimes referred to as the “CEO”), and these positions are to be separate and held by different individuals. In the event the Chair is not an independent director, our Corporate Governance Guidelines require that a “Lead Independent Director” be designated.

Mr. Hileman was appointed Executive Chair of the Board effective April 1, 2021. Mr. Schiraldi currently serves as Vice Chair of the Board and Lead Independent Director, and is an ex-officio member of every Board committee of which he is not assigned as a member. In this ex-officio capacity, Mr. Schiraldi is eligible to vote on matters at the committee meetings he attends, although he is necessary to constitutenot included for purposes of determining whether a quorum of the committee members is present.

Board Diversity

The Board believes its effectiveness is enhanced by being comprised of individuals with diverse backgrounds, skills and experience that are relevant to the role of the Board and the needs of our business, as well as diversity with respect to gender and ethnicity. Although the Governance and Nominating Committee does not have a formal diversity policy in place, it seeks to promote a diverse set of viewpoints and business experience in the Board’s membership.

On August 6, 2021, the SEC approved amendments to the Nasdaq listing rules related to board diversity. New Listing Rule 5605(f) (the “Diverse Board Representation Rule”) requires each Nasdaq-listed company, subject to certain exceptions, to (1) have at least one director who self-identifies as female, and (2) have at least one director who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaskan Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities, or as LGBTQ+, or (3) explain why the Annual Meeting. Abstentionscompany does not have at least two directors on its board who self-identify in the categories listed above. While full compliance with the Diverse Board Representation Rule does not take effect until 2025, we currently satisfy this rule with three female directors, one director who self-identifies as Asian, and broker non-votesone director who self-identifies as Black or African American. Information concerning each director’s self-identified gender, race, and self-identification as LGBTQ+ is provided in the section entitled “Our Director Nominees and Continuing Directors” on page 19.

Assessing our Board and Director Effectiveness

Our Board and its committees regularly evaluate and discuss the performance and effectiveness of the Board and each committee. In addition, our Board performs individual and peer evaluations from time to time to delineate the skills of each director and provide directors with a confidential forum to assess and provide candid feedback regarding their own performance and the performance of fellow directors. The Board and its committees use the results of these evaluations to identify opportunities to enhance performance. These assessments and evaluations are countedalso considered by the Governance and Nominating Committee when considering the qualifications of nominees, including incumbent nominees. 

Qualifications of Director Nominees and Nominating Procedures

The Governance and Nominating Committee is tasked with evaluating nominees for election, including incumbent directors seeking reelection, and recommending nominees to the Board which in determiningturn recommends the presencenominees for approval by our shareholders or appoints the nominee to the Board when a vacancy exists. In conducting its evaluation, the Governance and Nominating Committee reviews the composition of the Board to assure that the appropriate knowledge, skills and experience are represented. The Committee considers whether a nominee meets applicable independence standards, possesses high personal and professional ethics and integrity, has the ability to devote sufficient time to fulfilling the duties of a quorum.director, is able to read and understand basic financial statements, and will contribute diverse viewpoints and experience to the Board. Additional factors considered may include the individual’s overall experience in business and education and the individual’s particular skills, attributes or other factors considered relevant to the Company’s business or necessary or appropriate for our corporate governance needs (e.g., the need for a “financial expert” for service on the Audit Committee). In evaluating an incumbent director whose term of office is set to expire, the Committee also reviews the individual’s overall service to the Company, their attendance and participation at Board meetings, and the quality of their performance may also be considered. No one individual criteria or factor is given particular weight or precedence in evaluating nominees. The Committee retains the right to modify these minimum qualifications from time to time as circumstances dictate. The Committee will comply with all applicable rules, including Nasdaq listing rules and the rules of the U.S. Securities and Exchange Commission (“SEC”), when considering nominations for the Board. Nominees proposed by our shareholders are evaluated in the same manner as nominees proposed by the Board and the same as incumbent directors seeking reelection.

In addition to the stated process and criteria for evaluating nominees for director positions, there are certain obligations resulting from the merger of United Community Financial Corp. (“UCFC”) into Premier in January 2020 (the “Merger”) that will continue until April 1, 2023. Pursuant to the Merger Agreement, Premier’s Code of Regulations was amended and restated to provide that the Board would consist of 13 directors: (1) Mr. Hileman, Mr. Bookmyer, and five other persons who served as directors of Premier or Premier Bank immediately prior to the Merger (the “Premier related directors”) and (2) Mr. Small, Mr. Schiraldi, and four other persons who served as directors of UCFC or Home Savings Bank immediately prior to the Merger (the “UCFC related directors”). If, prior to April 1, 2023, any of the initial Premier related directors or UCFC related directors ceases to serve as a director for any reason or does not stand for reelection, the vacancy will be filled by the Board with an individual selected by the UCFC related directors (if such director was a UCFC related director) or the Premier related directors (if such director was a Premier related director) in good faith in a manner intended to preserve the principles of representation agreed upon in the Merger, provided that such individual is reasonably agreeable to the Governance and Nominating Committee in accordance with the good faith execution of its duties.

Our Governance and Nominating Committee engages in searches for new directors to fill vacancies or to round out the experience and viewpoints on the Board. Our shareholders may also make nominations for candidates for director to the Governance and Nominating Committee, provided that notice of such nomination is given in writing to our Secretary not less than 60 days prior to the anniversary date of the immediately preceding annual meeting of shareholders. The shareholder making the nomination must promptly provide any information reasonably requested by the Governance and Nominating Committee.

REQUIRED VOTE

You are entitled to cast one voteNo director nominations were received from shareholders for each share owned. Below are specifics regarding the vote requirement for each proposal:

For Proposal 1, the election of directors at the Annual Meeting, director nominees may be elected by aMeeting.

Majority Vote Policy

A plurality of the votes cast. Our Articles of Incorporation do not permit shareholders to cumulate votes incast is required for the election of directors. Abstentions and broker non-votesHowever, under revisions to our Corporate Governance Guidelines adopted by the Board in July 2022, any nominee for director in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election, will not affecttender his or her resignation to the plurality vote required to elect directors.

Proposal 2 to approve our executive compensation and Proposal 8 to ratifyBoard promptly following the appointmentcertification of Crowe Horwath each require thatthe election results. An election will be deemed “uncontested” if the number of votes cast in favor of the proposalnominees for director does not exceed the number of votes cast against it. Because abstentionsdirectors to be elected.

The Board, acting on the recommendation of the Governance and Nominating Committee, will decide whether to accept or reject the tendered resignation within 90 days of the certification of the election results. The Governance and Nominating Committee in making its recommendation, and the Board in making its decision, may each consider any factors or other information that it considers relevant. The Board will promptly, publicly disclose its decision whether to accept or reject the tendered resignation and, if rejected, will include an explanation of the Board’s reasons for its rejection of the resignation.

Any director who tenders his or her resignation pursuant to this policy will not participate in the Governance and Nominating Committee’s recommendation or in the Board action regarding the resignation. However, if a majority of the members of the Governance and Nominating Committee are required to tender resignations in accordance with the majority vote policy, then the independent directors on the Governance and Nominating Committee who are not required to tender resignations will consider the resignations. If a director’s tendered resignation is rejected by the Board, the director will continue to serve for the remainder of his or her term and until his or her successor is duly elected and qualified.

Board’s Role of Risk Oversight

The Board’s function of overseeing risk is handled primarily by the Board’s Risk Committee. The Chief Risk Officer works with management as well as internal and external auditors to determine and evaluate significant risks that we may be countedtaking and communicates those findings directly to the Risk Committee. The Risk Committee provides oversight related to identifying, quantifying, minimizing and managing our risks. The Risk Committee believes that by involving both management and auditors in this important process, it is best able to perform its oversight function. The Company, typically in conjunction with Premier Bank, also has the following standing management-level committees: Enterprise Risk Management, Operational Risk, Compliance, Information Security, Asset Liability, Loan, Special Assets, CRA & Fair Lending, and Change Advisory that meet regularly to provide governance structure and input into our risk management process. These committees provide information and support to the Risk Committee.

Board’s Role in Strategic Planning

Our Board has the legal responsibility for overseeing our affairs and, thus, an obligation to keep informed about our business and strategies. This involvement enables the Board to provide guidance to management in formulating and developing plans and to exercise independently its decision-making authority on matters of importance to us. Acting as votes cast ata full Board and through its standing committees, the Annual Meeting, they will not affect either of these proposals. Similarly, broker non-votes will not affect the proposal regarding executive compensation.Board is fully involved in our strategic planning process.

Proposal 3 to approve the First Defiance Financial Corp. 2018 Equity Incentive Plan requires that the number of votes cast in favor of this proposal exceed the number of votes cast against it. Abstentions will not be counted as votes cast at the Annual Meeting and, therefore, will not affect this proposal. Broker non-votes will also not affect this proposal.

Proposals 4, 6Each year, typically in September, senior management and 7the Board hold an extended meeting to amendfocus on corporate strategy. This session involves presentations from management and input from the Company’s Articlesdirectors regarding the assumptions, priorities and strategies that will form the basis for management’s operating plan and strategy for the coming year. At subsequent meetings, the Board continues to review our progress against the strategic plan and to exercise oversight and decision-making authority regarding strategic areas of Incorporationimportance and revise the strategic plan, as necessary. The role the Board plays is inextricably linked to remove the supermajority voting standards for, respectively, amendmentsdevelopment and review of our strategic plan. Through these procedures, the Board, consistent with good corporate governance practices, encourages our long-term success by exercising sound and independent business judgment on the strategic issues that are important to our Codebusiness.

Board Meetings

Our Board holds regular meetings each quarter, while Premier Bank’s Board of Regulations, amendmentsDirectors meets twice each quarter. Special meetings of the boards are held from time to time, as needed. There were nine meetings of the Board held during 2022. The independent directors of Premier also met twice in 2022, in addition to the full Board meetings and regular executive sessions of the Board. All of our Articles of Incorporation and approval of certain business combinations must be approved bydirectors attended at least 75% of the votes entitled to be cast at the Annual Meeting. Abstentions and broker non-votes will be counted as votes “AGAINST” eachtotal number of these proposals. In addition, Proposal 4 may only be approved if the corresponding amendment in Proposal 5 also receives shareholder approval.

Proposal 5 to amend the Company’s Code of Regulations to remove the supermajority voting standard for amendments to our Code of Regulations must be approved by at least two-thirdsmeetings of the votes entitled to be cast at the Annual Meeting. Abstentions and broker non-votes will be counted as votes “AGAINST” this proposal. In addition, Proposal 5 may only be approved if the corresponding amendment in Proposal 4 also receives shareholder approval.

Because the proposals to approve our executive compensation and ratify the appointment of Crowe Horwath as our independent registered public accounting firm are advisory, they will not be binding upon thefull Board. However, the Compensation Committee will take into account the outcome of the executive compensation vote when considering future executive compensation arrangements. Further, if the appointment of Crowe Horwath is not ratified by the shareholders, the Audit Committee may re-consider its selection of Crowe Horwath as our independent registered public accounting firm for the fiscal year ending December 31, 2018.

Proposals 1-7 are not “discretionary” items. If your shares are held in “street name,”you must provide instructions to your brokerage firm in order to castAll directors that serve on a vote on these proposals. The ratification of the appointment of Crowe Horwath is considered a “discretionary” item, so your brokerage firm may vote in its discretion on your behalf if you do not furnish voting instructions.

PROPOSAL 1

Election of Directors

Composition of the Board

Currently, the Board consists of 13 directors and is divided into three classes, with two of the classes having four members and one class having five members. The directors are elected by class to serve a three-year term. The terms of the three classes expire at successive annual meetings so that the shareholders elect one class of directors at each annual meeting.

Effective as of January 4, 2018, Ms. Bettinger, Mr. Herman and Mr. Robison were appointed to the First Defiance Board of Directors by a unanimous votecommittee of the Board attended at least 75% of the total number of meetings of each such committee.

Neither the Board nor the Corporate Governance Committee has implemented a formal policy regarding director attendance at our annual shareholder meetings.

Non-management directors met eight times in executive session in 2022 in addition to fill the vacancies created bytwo independent director meetings described above.

Director Onboarding and Board Education Guidelines

Premier provides robust onboarding for new directors and ongoing education and training opportunities for all Board members on matters to support the retirementeffectiveness of Stephen L. Boomerour directors in their responsibilities. Training topics have included director fiduciary duties, analyst perspectives on December 31, 2017 and an increasethe financial industry, cybersecurity, digital product developments in the size of theindustry, and regulatory compliance items. Additionally, all Board members are expected to 13 directors. The Board appointed Ms. Bettinger and Mr. Hermanparticipate in relevant external director education opportunities at least once every three years.

Communication with Directors

Any shareholder wishing to fill the vacancies in the class of directors with a term expiring at the 2019 annual meeting and Mr. Robison to fill a vacancy in the class of directors with a term expiring at the 2020 annual meeting.

We will elect four directors at the Annual Meeting. The director nominees standing for election at the Annual Meeting are Mr. Beach, Mr. Burgei, Mr. Hileman and Mr. Strausbaugh. Those nominees electeddo so may write to the Board at our principal business address—601 Clinton St., Defiance, Ohio 43512. Any shareholder communication so addressed will be delivered unopened to the Annual Meeting will serve until our annual meeting in 2021, and until each such person’s successor is duly elected and qualified. If anydirector or a member of the four nominees should become unablegroup of directors to whom it is addressed, or unwilling to stand for election at the Annual Meeting,Chair if addressed to the persons named on“Board.”

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines as a framework to assist the proxy cardBoard in exercising its responsibilities. These Guidelines address expectations of the Board in performing its duties and reflect its ongoing efforts to enhance its effectiveness and corporate governance. These Guidelines will be periodically reviewed and modified as proxies may vote for other person(s) selecteddeemed appropriate by the Board. We have no reason to believe that any ofThe Guidelines can be found on the director nominees for election named in this Proposal 1 will be unable or unwilling to serve. Each director nominee has consented to act as a director if elected.Company’s website at www.premierfincorp.com.

The Board has determined that eachCompensation-Related Governance

Information concerning additional governance policies and procedures relating to our compensation of Terri A. Bettinger, John L. Bookmyer, Douglas A. Burgei, Thomas K. Herman, Jean A. Hubbard, Barbara A. Mitzel, Charles D. Niehaus, Thomas A. Reineke, Mark A. Robisonexecutive officers, including our share ownership guidelines, anti-hedging policy and Samuel S. Strausbaugh is “independent” underclawback policy, may be found in the rules of The NASDAQ Stock Market LLC (“NASDAQ”). In assessing the independence of directorssection titled “Compensation Related Governance and the director nominees, the Board considered the business relationships between First Defiance and its directors or their affiliated businesses, other than ordinary banking relationships. Where business relationships other than ordinary banking relationships existed, including those disclosed under “Related Person Transactions” below, the Board determined that none of the relationships between First Defiance and their affiliated businesses impaired the directors’ or director nominees’ independence because the amounts involved were immaterial to the directors or to those businesses when compared to their annual income or gross revenues. Although William J. Small and Robert E. Beach are each “independent” under the rules of NASDAQ, the Board has determined Mr. Beach is not “independent” due to his prior position as President and CEO of Commercial Bancshares, Inc., which was acquired by the CompanyPolicies” beginning on February 24, 2017, and Mr. Small is not “independent” due to his prior position with the Company and First Federal.page 41.

Nominees for Election at this Annual Meeting:

Board Leadership Structure

Since his appointment as President and CEO in 1999, William J. Small has served as Chairman of the Board of Directors. Upon Mr. Small’s retirement in 2013, he retained the position of Chairman and Donald P. Hileman became our President and CEO. This marked the first time in over a decade that these positions had been split. The Board decided it was time to divide these roles because, by doing so, they could continue to benefit from Mr. Small’s experience in a leadership role, and his in-depth familiarity with our hiring and operations.

The Board is aware that one of its responsibilities is to oversee our management and make performance, risk and compensation-related decisions regarding management. In order to appropriately balance the Board’s focus on strategic development with its management oversight responsibilities, the Board created the position of Lead Independent Director. On January 4, 2018, John L. Bookmyer was appointed by the Board as Lead Independent Director following Stephen L. Boomer’s retirement from this position on December 31, 2017. As Lead Independent Director, Mr. Bookmyer is a permanent member of the Board’s Executive Committee and presides over executive sessions of the Board, which are attended only by non-management directors. In addition, Mr. Bookmyer is an active liaison between management and our non-management directors and with individual non-management directors concerning recent developments affecting us. Through the role of an active, engaged Lead Independent Director, the Board believes that its leadership structure is appropriately balanced between promoting our strategic development with the Board’s management oversight function. The Board also believes that its leadership structure has created an environment of open, efficient communication between the Board and management, enabling the Board to maintain an active, informed role in risk management by being able to monitor and oversee those matters that may present significant risks to us. The Board intends to maintain the Lead Independent Director position until such time as Mr. Small would qualify as an independent director or an Independent Chairman is appointed.

Board Committees

The Board has five standing committees: Audit, CorporateCompensation, Governance Compensation,and Nominating, Risk, and Executive. Charters for each of these committees, with the exception of the Executive Committee, are posted on our website at www.premierfincorp.com. Each committee reviews and Risk. The current membersassesses its charter each year, with the Governance and Nominating Committee reviewing all committee charters before recommending them to the full Board for approval. Each of our standingboard committees are named below:functions as a joint committee on behalf of both Premier and Premier Bank.

AuditName	Independent	Audit	Compensation	Executive	Governance and & Nominating		Compensation		Executive		Risk Committee
J.L. Bookmyer#**Director Nominees		T.A. Reineke#		S.S. Strausbaugh#		W.J. Small#		J.A. Hubbard#
M.A. RobisonLee Burdman		B.A. Mitzel		D.A. Burgei		D.A. Burgei***		D.P. Hileman
J.A.Jean A. Hubbard		D.A. Burgei##		J.L. Bookmyer		T.K. Herman***		S.S. Strausbaugh
S.S. Strausbaugh##Charles D. Niehaus		C.D. Niehaus		J.A. Hubbard##		S.S. Strausbaugh***		C.D. Niehaus## Chair
C.D. NiehausMark A. Robison		T.K. Herman		T.A. Bettinger		J.L. Bookmyer**		W.J. Small
T.A. BettingerRichard J. Schiraldi		M.A. Robison			Chair	J.A. Hubbard***		T.K. Herman
Continuing Directors						B.A. Mitzel***		R.E. Beach
Marty E. Adams			Chair			C.D. Niehaus***		T.A. Bettinger
Donald P. Hileman				Chair		D.P. Hileman
Nikki R. Lanier						T.A. Reineke***
Gary M. Small						T.A. Bettinger ***
Samuel S. Strausbaugh		Chair				M.A. Robison***
Zahid Afzal						R.E. Beach***
Louis M. Altman
Terri A. Bettinger
John L. Bookmyer

# - Chairperson

## Vice Chairperson

** - Lead Independent Director

*** -Denotes Rotating Service

TheAudit Committee

The Audit Committee is responsible for: (i) the appointment of our independent registered public accounting firm; (ii) reviewestablished to oversee all material aspects of the external audit plan and the results of the auditing engagement; (iii) review of the internal audit plan and results of the internal audits; (iv) review of reports issued by our Compliance Officer; (v) review of the effectiveness of our system of internal control, including review ofthe process used by management to evaluate the effectiveness of the system of internal control; and (vi) oversight of ourCompany’s accounting and financial reporting practices.processes and the audits of the financial statements of the Company. The Committee focuses on the qualitative aspects of financial reporting to shareholders and on the Company processes for the management of business/financial risk and for compliance with applicable legal, ethical, and regulatory requirements. The Audit Committee has adopted a written charter setting forth these responsibilities, a copy of which is posted on our website athttp://www.fdef.com under the link “Governance Documents.” responsible for:

The Board has determined that John L.Directors Bookmyer, Robison, Schiraldi, and Samuel S. Strausbaugh each have the attributes listed in the definition of “audit committee financial expert” set forth in Item 407(d)(5)(ii) of Regulation S-K and in the NASDAQNasdaq listing requirements. Allrules. The Board has further determined that all members of the Audit Committee are “independent” for purposes of Nasdaq listing rules and meet Nasdaq standards for financial sophistication.

Compensation Committee

The Compensation Committee is responsible for approving the compensation to our executive officers and overseeing our compensation programs and benefit plans. The Committee is also responsible for:

The Board has determined that all of the Compensation Committee members are considered “independent” for purposes of NASDAQthe Nasdaq listing requirementsrules, are “non-employee directors” for purposes of Rule 16b-3 of the Exchange Act, and meetare “outside directors” under of Section 162(m) of the NASDAQ standardsInternal Revenue Code. The Committee regularly uses the services of an independent executive compensation consulting firm to fulfill its responsibilities for financial sophistication. The Audit Committee met five times in 2017.evaluating and establishing the compensation program for the Company’s executive officers and directors.

TheGovernance and Nominating Committeewas established by the Board to ensure

The Governance and Nominating Committee is responsible for ensuring that the Board is appropriately constituted and conducts its affairs in a manner that will best servefor developing and overseeing the Company’s interestscorporate governance policies and those of our shareholders. Specific duties of the Committee include administering our conflict of interest policy/code of ethics, monitoring the Board’s continuing education and self-assessment process, nominating directors to the Board, and conducting an annual assessment of the Board as a whole, including an assessment of Board composition and committee assignments. The Governance and Nominating Committee develops, with management, the materials discussed and presented at the board strategic planning meeting. The Governance and Nominating Committee maintains a robust process for succession planning for the CEO as well as for other executive-level positions. The Governance and Nominating Committee maintains both an emergency plan and a long-range succession plan. The plans are reviewed at least annually by the Governance Committee. The Governance and Nominating Committee has adopted a written charter setting forth its responsibilities, a copy of which is posted on our website athttp://www.fdef.com under the link “Governance Documents.” The Governance and Nominating Committee met four times in 2017.

The Governance and Nominating Committee believes that candidates for director should have certain minimum qualifications, including being able to read and understand basic financial statements, having business experience, and exhibiting high moral character. Although the Committee does not have a formal diversity policy in place, the Committee seeks to promote a diverse set of viewpoints and business experience in the Board’s membership.guidelines. The Committee retains the right to modify these minimum qualifications from time to time as circumstances dictate. The Committee has a general process for choosing nominees, which process considers both incumbent directors and new candidates. In evaluating an incumbent director whose term of office is set to expire, the Committee reviews such director’s overall service to us during his or her term, including attendance at meetings, participation and quality of performance. If the Committee chooses to evaluate new director candidates, the Committee uses its network of contacts to compile a list of potential candidates. Then, the Committee determines whether such candidates are independent, which determination is based upon applicable securities laws. Finally, the Committee meets to discuss and consider all candidates’ qualifications and then chooses those candidates who will be proposed as director nominees to the full Board. The Governance and Nominating Committee considers the following criteria in proposing director nominees to the full Board: (1) independence; (2) high personal and professional ethics and integrity; (3) ability to devote sufficient time to fulfilling duties as a director; (4) impact on diversity of the Board, including skills and other factors relevant to our business; and (5) overall experience in business, education, and other factors relevant to our business.responsible for:

Our shareholders may also make nominations for candidates for director toAll of the Governance and Nominating Committee, provided that notice of such nomination is given in writing to our Secretary not less than 60 days prior to the anniversary date of the immediately preceding annual meeting of shareholders. The notice must set forth the name, age, business address and residence address (if available) of the nominee and the number of shares that are beneficially owned by the nominee. Also, the shareholder making the nomination must promptly provide any other information reasonably requested by the Governance and Nominating Committee. This Committee does not alter the manner in which it evaluates candidates, including the minimum criteria set forth above, when evaluating a candidate who was recommended by a shareholder. No director nominations were received from shareholders for the election of directors at the Annual Meeting.

TheCompensation Committee is responsible for overseeing our compensation programs, including base salaries, long-term incentive compensation, equity-based compensation, perquisites and benefit plans. The Committee also administers the process for evaluating our Chief Executive Officer and recommends to the Board the compensation for directors (including committee member and committee chair’s fees, equity-based awards and other similar items, as appropriate). The Committee uses the services of an independent executive compensation consulting firm, Pay Governance, to fulfill its responsibilities for evaluating and establishing the compensation program for the Company’s executive officers. In 2017, the Committee engaged Pay Governance to review and analyze our executive compensation program, including salaries for our directors, CEO, CFO, Chief Risk Officer and Community Banking President/Chief Lending Officer of First Federal, to provide a study of comparative compensation data derived from the Company’s peer group and to advise the Committee on developing governance trends among such peer group. Pay Governance reports directly to the Compensation Committee and serves at the discretion of the Committee, although the CEO has consulted directly with Pay Governance regarding the compensation of executives among our peer group in recommending 2017 salaries for our remaining executive officers. The Committee has the sole authority to appoint, compensate and oversee Pay Governance, including responsibility for evaluating Pay Governance’s independence and establishing its fees and retention terms. In retaining Pay Governance for fiscal year 2017, the Committee assessed Pay Governance’s independence pursuant to the applicable rules of the Securities and Exchange Commission and determined that Pay Governance’s services for the Compensation Committee did not raise any conflict of interest. In addition, Pay Governance did not provide any additional services to the Company other than the services to the Compensation Committee in fiscal year 2017. Further description of the Compensation Committee’s responsibilities and the role of Pay Governance in determining executive compensation is set forth under “Compensation Discussion and Analysis” below. The Compensation Committee has adopted a written charter setting forth its responsibilities, a copy of which is posted athttp://www.fdef.com under the link “Governance Documents.” All of the Compensation Committee members are considered “independent” for purposes of NASDAQthe Nasdaq listing requirements. The Compensation Committee met three times in 2017.rules.

Risk Committee

The Risk Committee establishes the risk appetite of the Company in consideration of the levels and types of risk the Company is able and willing to assume in its exposures and material business activities. The Committee considers the Company’s strategic and business objectives and responsibilities to its shareholders and other key stakeholders, including but not limited the communities in which the Company operates, its customers and its employees. The Committee also considers the Company’s obligations to operate in compliance with applicable law and safe and sound banking practices. The Committee’s responsibilities also include:

A majority of the members of the Risk Committee are considered “independent” for purposes of the Nasdaq listing rules.

Executive Committee

The Executive Committee generally has the power and authority to act on behalf of the Board between scheduled meetings unless specific Board action is required or unless otherwise restricted by our Articles of Incorporation or Code of Regulations or by action of the Board. As ChairmanThere is no specific charter document for the Executive Committee.

Related Person Transactions

The Board and the Governance and Nominating Committee review and approve all transactions and payments involving the directors and executive officers, or involving their related persons or immediate family members, that occur in a given fiscal year. No related person transactions were identified in 2022 that require disclosure in this Proxy Statement.  Transactions with related persons of certain independent directors were identified and reviewed by the Governance and Nominating Committee, but none of these transactions were determined to affect the ability of such directors to exercise their independent judgment while serving on the Board or any Board committees due to the minimal values involved.

Premier Bank has, and expects to have in the future, banking relationships in the ordinary course of business with directors, executive officers, and their affiliates on the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with

others.  Similarly, First Insurance Group of the Board, Mr. Small serves as ChairmanMidwest, Inc. (“First Insurance Group“) has, and expects to have in the future, insurance agent relationships in the ordinary course of business with directors, executive officers, and their affiliates on terms comparable to transactions with third parties. Normal, arms-length banking or insurance relationships entered into in the ordinary course of business and consistent with applicable federal banking or other regulations are not considered to interfere with a director’s independence.  Service specialization, rate concessions, fee concessions, or other services or product modifications may similarly be offered to directors and executive officers and their affiliates if the same would be offered to other similarly situated clients on a non-discriminatory basis in the ordinary course of business.  All loans or extensions of credit to a director or officer, or their related interests (as defined by Regulation O of the Executive Committee. Mr. Small, Mr. BookmyerFederal Reserve), (1) were made in compliance with Regulation O of the Federal Reserve, (2) were made in the ordinary course of business, (3) were made on substantially the same terms, including interest rates and Mr. Hileman servenature of collateral, as permanent members. The remaining directors serve onthose prevailing at the Executive Committee on a rotating basis during the year. The Executive Committee didtime for comparable transactions with other persons not meet during 2017.

TheRisk Committeewas established by the Board of Directorsrelated to assist the Board in fulfilling its oversight responsibilities with regard to the risk appetite of the Company, and (4) did not involve more than the normal risk managementof collectability or present other unfavorable features. 

PROPOSAL 1 –ELECTION OF DIRECTORS

COMPOSITION OF THE BOARD

Premier’s Board consists of 14 directors and compliance frameworkis divided into three classes, with two classes having five members and one class having four members. The directors are elected by class to serve a three-year term. The terms of the governance structurethree classes expire at successive annual meetings so that support the Company. The Risk Committee has adoptedshareholders elect one class of directors at each annual meeting. Each of the directors of Premier is also a written charter setting forth these responsibilities, a copydirector of which is posted on the Company’s website athttp://www.fdef.com under the link “Governance Documents.” The Risk Committee met four times during 2017.Premier Bank.

Compensation Committee Interlocks and Insider ParticipationNOMINATION OF DIRECTOR CANDIDATES

We will elect five directors at the Annual Meeting. The director nominees standing for election at the Annual Meeting are Mr. Bookmyer,Burdman, Ms. Hubbard, Mr. BoomerNiehaus, Mr. Robison, and Mr. Strausbaugh servedSchiraldi. The nominees elected to the Board at the Annual Meeting will serve until our annual meeting in 2026 and until each such person’s successor is duly elected and qualified. If any of the five nominees should become unable or unwilling to stand for election at the Annual Meeting, the persons named on the Compensation Committee during 2017. There wereproxy card as proxies may vote for other person(s) selected by the Board. We have no Compensation Committee interlocks or insider (employee) participation during 2017.

Board and Board Committee Meetings

Our Board holds regular meetings each quarter. First Federal’s Board of Directors meets twice each quarter. Special meetingsreason to believe that any of the Boards are held from timedirector nominees for election named in this Proposal 1 will be unable or unwilling to timeserve in such capacity. Each director nominee has consented to act as needed. There were five meetingsa director if elected.

The Board has determined that each of the Board of Directors of First Defiance and eight meetings of the Board of Directors of First Federal held during 2017.Allnominees is “independent” under Nasdaq listing rules.

The varying individual skills and experience of our directors allow the Board to apply different knowledge-bases and consider diverse perspectives in the performance of the total number of meetings of the Board of Directors of First Defiance or First Federal, as applicable,Board’s oversight responsibilities. Specific skills and meetings held by all committees of the Board on which the director served during 2017.experience identified include:

Neither the Board nor the Corporate Governance Committee has implemented a formal policy regarding director attendance at our annual shareholder meetings. In 2017, all eleven of our then incumbent directors attended the annual meeting.

Nominees for Election at this Annual Meeting:

Lee Burdman Director Since: 2020 Age: 59 Committees: Compensation Risk

Mr. Burdman is Co-Founder and Managing Partner of Redstone Investments, a development, management and acquisitions company focused on shopping center development, headquartered in Youngstown, OH since 1991. He also serves on the board of directors of SIMCO Management Corp., a residential apartment management firm operating in northeast Ohio and northwest Pennsylvania, since 2003. He served on the boards of United Community Financial Corp. and Home Savings Bank from April 2011 through January 2020. Mr. Burdman contributes to the Board through his more than 30 years of experience and expertise in owning, managing and developing real estate, commercial real estate lending, financial literacy and executive management.

Non-management directors met two times in executive session in 2017.

Director Compensation

The table below provides information concerning our non-employee director compensation for the fiscal year ended December 31, 2017.2022. Employee directors are not paid any additional amounts for Board service. Compensation information for Mr. Small and Mr. Hileman, both current employees of the Company, is included in the Executive Compensation section beginning on page 30.

Each non-employee director received an annual retainer of $31,000$70,000 in 2017, except that the non-employee Chairman2022. Mr. Schiraldi, as Vice Chair, received aan additional retainer of $56,000 and the Lead Independent Director received a retainer of $34,000.$11,250. The Company pays directors $10,000$35,000 of the annual retainer in Premier shares. Directors receive additional retainers in connection with their service on Board committees, the Trust Committee of Premier Bank, or on the Board of First Defiance stock andInsurance Group. While all our directors serve on the remainderBoard of Premier Bank, the directors do not receive separate compensation in cash. The Company uses a 20 day average stock price when calculatingconnection with this service.

In 2022, the number of shares to be issued. Committee chairs received an additional annual retainer as follows: (1) Audit Committee – $5,000; (2) Compensation Committee – $5,000; (3) Riskengaged Pearl Meyer & Partners, LLC (“Pearl Meyer”) to review director compensation to ensure this compensation aligns with the director compensation practices of the Company’s peers and is commensurate with the skill and commitment required of our directors. Following this review and effective July 1, 2022, the additional retainers for service on Board committees, the Trust Committee – $5,000;of Premier Bank, and (4) Corporate Governance Committee – $3,500. In addition, each non-employee director received $750 for each board meeting attended for either First Defiance or First Federal. Mr. Small and Mr. Burgei are also directorson the Board of First Insurance Group were adjusted. No changes were made to the annual retainer amount of $70,000 for all directors. The following table provides information on these additional retainer amounts, reflecting both the amounts paid in 2022 and the amounts to be paid in 2023:

Besides the portion of the Midwest, Inc., and they received $500 for each First Insurance board meeting attended. Non-employeeretainer paid in Premier shares, the Company allows individual directors also receivedto elect to receive the balance of their director compensation for each committee meeting attended as follows: (1) Audit Committee – $500; (2) Compensation Committee – $500; (3) Executivein either cash or First Federal Executive Loan Committee meetings – $200; and (4) other First Defiance and First Federal Board committees – $500.stock.

Our directors may defer all or any part of their cash retainer and/or meeting fees payable to them under the First DefiancePremier Financial Corp. Deferred Compensation Plan.Plan further described on page 46. The returns on the amounts deferred are dependent on the investment elections made by the director. The directors’ choices include a number of mutual funds and an account of our common shares. Returns under the plan are calculated to mirror these elections. Because these earnings are denominated in our shares or mutual fund equivalents, such earnings are not considered to be preferential or above market and are not reported in the table below. Also, no

No non-employee director received perquisites or personal benefits with an aggregate value exceeding $10,000.

The Board has set ownership guidelines for the Board and executive management. The guideline for each Board member is ownership equal to a value of 5five times the annual retainer of $31,000payable in shares of First Defiance. The Company allows for the payment of directors fees in either cash or stock at the election of the individual director.

2017 Director Compensation

Communication with Directors

Premier shares. The Board has adopted a process byprohibits directors from engaging in transactions that could reduce the extent to which shareholders may communicatetheir investment in Premier’s shares is aligned with the directors. Any shareholder wishing to do so may write to the Board atinterests of shareholders. As a result, our principal business address – 601 Clinton St., Defiance, Ohio 43512. Any shareholder communication so addressed will be delivered unopened to the director or a member of the group of directors to whom it is addressed, or to the Chairman if addressed to the Board.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines as a framework to assist the Board in exercising its responsibilities. These Guidelines address expectations of the Board in performing its duties and reflect its ongoing efforts to enhance its effectiveness and corporate governance. These Guidelines will be periodically reviewed and modified as deemed appropriate by the Board. The Guidelines can be found on the Company’s website athttp://www.fdef.comunder the link “Governance Documents.”prohibit directors from entering into speculative transactions involving our shares, including any hedging, short sales, puts, calls, swaps, forward contracts, or other derivative securities.

Board’s Role in Strategic Planning

Our Board has the legal responsibility for overseeing our affairs and, thus, an obligation to keep informed about our business and strategies. This involvement enables the Board to provide guidance to management in formulating and developing plans and to exercise independently its decision-making authority on matters of importance to us. Acting as a full Board and through its standing committees, the Board is fully involved in our strategic planning process.

Each year, typically in September, senior management and the Board hold an extended meeting to focus on corporate strategy. This session involves presentations from management and input from the directors regarding the assumptions, priorities and strategies that will form the basis for management’s operating plan and strategy for the coming year. At subsequent meetings, the Board continues to review our progress against the strategic plan and to exercise oversight and decision-making authority regarding strategic areas of importance and revise the strategic plan as necessary. The role the Board plays is inextricably linked to the development and review of our strategic plan. Through these procedures, the Board, consistent with good corporate governance practices, encourages our long-term success by exercising sound and independent business judgment on the strategic issues that are important to our business.

Board’s Role in Risk Oversight

The Board’s function of overseeing risk is handled primarily by the Risk Committee. The Chief Risk Officer works with management as well as internal and external auditors to determine and evaluate significant risks that we may be taking and communicates those findings directly to the Risk Committee. The Risk Committee is focused on identifying, quantifying, and minimizing our risks. The Risk Committee believes that by involving both management and auditors in this important process, it is best able to perform its function. First Federal also has a standing Officer Risk Management Committee, Compliance Committee, Information Technology Steering Committee and Asset Review Committee that meet regularly to provide structure and input into our Risk Management Process. The minutes and findings of these committees are presented to the Risk Committee.

EXECUTIVE OFFICERS

The following table sets forthindividuals serve as the name of each current executive officer,officers of Premier, other than Mr. Hileman and Mr. Small whose information is set forth above, and the principal position and offices he or she holds with First Defiance or First Federal.above.

PROPOSAL 2 - NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS

The following Compensation DiscussionPursuant to Section 14A and Analysis describes the material elements of compensation of our executive officers identified in the Summary Compensation Table (“Named Executive Officers”). Our goal is to become a high performing community bank, meeting or exceeding the 75^th percentile of our peers in key financial measures.

In 2017, we reported our fifth consecutive year of record diluted earnings per common share and completed two strategic acquisitions. The acquisition of Commercial Bancshares, Inc. added approximately $350 million in assets, expanded our footprint, and provided enhanced efficiency opportunities. The acquisition of Corporate One Benefits Agency, Inc. enhanced our employee benefit offerings and expanded our insurance presence into adjacent markets. Diluted earnings per share for 2017 were $3.22, up only 1% from 2016 primarily due to the impact of acquisition and merger related expenses, which reduced earnings by $0.28 per diluted share. Even with the acquisition and merger related costs, we posted a strong return on average assets at 1.13% and improved efficiency ratio to 61.81%. Growth in loans and deposits was 21% and 23%, respectively, including the acquisitions, and 6.4% and 7.5%, respectively, excluding the acquisitions.

For the three year period ending December 31, 2017, our three year cumulative growth in earnings per share was 32%, even with the impact of acquisition and merger related costs in 2017. This performance was mainly due to a strong three year average return on assets of 1.17%. Over this same period, First Defiance shares posted a total return to shareholders of 62.5%.

Compensation Philosophy and Objectives

The Board believes the most effective executive compensation program is one that rewards the achievement of specific annual, long-term and strategic goals that are established in conjunction with strategic planning initiatives and the long-term objective of maximizing shareholder value. Consistent with that philosophy, our executive compensation packages include both cash and stock-based compensation that reward performance as measured against predetermined goals. The Compensation Committee (the “Committee”) evaluates our executive compensation to ensure that it is sufficiently competitive to enable us to attract and retain qualified employees in key positions. Total compensation commensurate with the median compensation paid to similarly situated executives of peer companies is generally what the Committee considers competitive.

The Board encourages ownership of FDEF shares by its executive management, which is why a significant part of each Named Executive Officer’s compensation package is paid in equity. As a result, the Committee has established share ownership guidelines for executives as follows:

Advisory Vote on Executive Compensation

At the 2013 annual meeting, our shareholders approved holding annual votes on our executive compensation. In addition, the Board receives investor feedback through the Company’s participation at investor conferences periodically throughout the year. In 2017, executive management participated in the KBW Community Bank Investor Conference in New York, New York; the Raymond James U.S. Bank Conference in Chicago, Illinois; and the Hovde Group Fast Forward Bank Conference in Scottsdale, Arizona, with no concerns on executive compensation raised by investors. At our 2017 annual meeting, our shareholders approved our executive compensation with 96.1%Section 14a-21 of the votes cast, indicating that shareholders are strongly supportive ofExchange Act, our executive compensation program. The resolution to approve First Defiance’s executive compensation is advisory, so it is not binding upon the Board of Directors. However, the Committee took the shareholder vote into account when reviewing executive compensation for 2017 and will continue to monitor shareholder approval levels going forward.

CEO Pay Ratio

Beginning with the proxy statement for the Annual Meeting and for each annual meeting thereafter, we are required to disclose the median of the total compensation of the Company’s employees, excluding the Company’s CEO, for the last completed fiscal year, the annual total compensation of the Company’s CEO for the last completed fiscal year and the ratio between the foregoing compensation amounts. We identified the median employee by examining the 2017 total federal taxable compensation through December 1, 2017 for all individuals, excluding our CEO, who were employed by us on November 27, 2017 (whether employed on a full-time, part-time, or seasonal basis). For such employees, we did not make any assumptions, adjustments, or estimates with respect to total federal taxable compensation, and we did not annualize the compensation for any full-time employees that were not employed by us for all of 2017. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for our Named Executive Officers as set forth in the Summary Compensation Table on page 30 of this Proxy Statement.

For fiscal year 2017, the annual total compensation of our CEO was $981,605 and the annual total compensation for the median employee was $39,897, resulting in a ratio of 24.6:1.0.

Roles of the Committee and Chief Executive Officer in Compensation Decisions

The Committee makes all compensation decisions for the Company’s executive officers. The CEO makes compensation recommendations to the Committee for all Named Executive Officers except himself.

2017 Executive Compensation Components

For the fiscal year ended December 31, 2017, the principal components of compensation for our Named Executive Officers were:

In the latter part of 2016, the Committee engaged Pay Governance to perform an analysis of compensation for our directors, CEO, CFO, Chief Risk Officer and Community Banking President/Chief Lending Officer of First Federal. In conducting this analysis, Pay Governance independently developed competitive data for base salaries, short-term incentives, total cash compensation (sum of salary and bonus), long-term incentives, equity compensation and total direct compensation (sum of cash compensation and long-term incentives) from: (1) proxies and SEC filings of select peer banks ranging in asset size from $1.3 billion to $5.4 billion, with a median asset size of $2.9 billion compared to $2.8 billion proforma for First Defiance, with its pending acquisition of Commercial Bancshares, Inc., (2) surveys of other banks and (3) the consulting experience of Pay Governance.

For 2017, the Committee determined to use the peer group recommended by Pay Governance to evaluate the appropriateness of the compensation package for each of First Defiance and First Federal’s officers, including the Named Executive Officers, and to evaluate the relative performance measures for the long-term incentive compensation payable under the First Defiance Financial Corp. and Affiliates Incentive Compensation Plan (the “Incentive Compensation Plan”). That peer group is:

Compared to the 2016 peer group, Canandaiga National Corp., HopFed Bancorp, Inc., LCNB Corp., and S&T Bancorp Inc. were removed and City Holding Co., Financial Institutions Inc., MBT Financial Corp, Mercantile Bank Corporation, MVB Financial Corp., Republic Bancorp, Inc., 1^st Source Corporation, First Financial Corporation, and United Community Financial Corp. were added as a result of the criteria for peers outlined above.

Base Salary

We provide our Named Executive Officers and other employees with a base salary to compensate them for services rendered during the fiscal year. The base salary for each of the Named Executive Officers is generally determined at the beginning of the year.

Based upon Pay Governance’s 2014 analysis of peer group compensation practices and resulting recommendations, the Committee determined in 2015 to gradually increase Mr. Hileman’s compensation over a three-year transition period to the market median salary level among First Defiance’s peer companies. In 2017, the Committee considered Pay Governance’s recommendation, the CEO’s performance review, the 2016 performance of the Company and the Pay Governance salary comparison data for CEOs in our peer group in deciding to increase Mr. Hileman’s salary from $430,000 to $450,000 for 2017.

Base salaries for Named Executive Officers other than the CEO are determined based upon recommendations made by the CEO. In making a recommendation for 2017 salaries, the CEO compared the base salary levels of the other Named Executive Officers with data from the ABA Compensation & Benefits Survey, the OBL Bank Compensation and Benefits Survey, the Crowe Horwath LLP Compensation Survey and internal pay grades, and consulted with Pay Governance regarding the median levels of the peer group above. As a result of Mr. Hileman’s review of this benchmarking compensation data, Mr. Hileman recommended salary increases for 2017 ranging from 2.6% to 4% for Mr. Thompson, Mr. Reisner, Mr. Allen and Mr. Rose. After evaluating a number of factors, including performance evaluations, the Committee decided to approve all of Mr. Hileman’s recommendations.

Performance-Based Incentive Compensation

The Board believes that a significant amount of executive officer compensation should be performance-based. Under the Incentive Compensation Plan, we have created opportunities for employees to earn short-term and long-term incentive compensation in the form of both cash and equity awards based on the level of achievement of performance targets that are established each year by the Committee. The Board believes this incentive compensation aligns with shareholder interests, enables attraction and retention of executive talent, balances risk with rewards and supports the long-term performance goals of the Company. In general, the Committee establishes threshold, target and maximum bonus payout goals. If the threshold performance level is not achieved, the payout percentage for that component of the bonus calculation is zero. If the performance level for a component is between the threshold and target or between the target and the maximum performance goal, the payout percentage is prorated.

In 2016, the Committee, with consultation from Pay Governance, established incentive targets and granted awards for 2017 under the Incentive Compensation Plan to permit employees who are selected as participants to earn a specified “target” percentage of their base salary, which is split between a short-term award paid in cash and based on the Company’s 2017 performance, and a long-term award paid in equity and based on the Company’s performance from 2017 to 2019. Both the short-term award and the long-term award can be earned at between 0% and 150% of the specified “target” depending on the level of attainment of the performance objectives. Specific payout amounts for these incentive-based awards are discussed below.

2017 Short-Term Executive Incentive Compensation.As authorized under the Incentive Compensation Plan, the Company may grant short-term incentive compensation to key officers, including the Named Executive Officers. At the end of the performance period, these short-term incentive compensation awards are payable in cash based upon the level of achievement with respect to the specified annual performance goals. The goals for each Named Executive Officer are established in conjunction with the Board’s and management’s expectations for the year and weighted for each officer based on the officer’s role within the Company.

For 2017, the performance goals for the short-term incentive compensation award for the Named Executive Officers anticipated the Company’s completion of the acquisition of Commercial Bancshares, Inc. in February 2017 and included three common goals: Earnings Per Share, Efficiency Ratio, and Deposit Growth. The Board believes that Earnings Per Share measures the Company’s profitability consistent with shareholder interests, Efficiency accentuates controlling expenses, and Deposit Growth reflects the organic expansion of our business.

The related payout percentages of the bonus potential for the common goals are described below:

In addition, for 2017, the performance goals for Mr. Reisner and Mr. Allen included an individual performance goal component based on their respective roles and responsibilities in the Company. The criteria for Mr. Reisner’s performance were focused on the performance of the Risk Management Group and for Mr. Allen the criteria focused on the performance of the Community Banking Group. The performance goals for Mr. Rose were aligned consistent with the 2017 objectives for his role as Director of Strategy Management.

The relative weighting of the goals for each Named Executive Officer is described below:

In 2017, the Named Executive Officers exceeded the Threshold level of performance in all award components. The Committee reviewed the components and earned payouts and certified the cash payouts at the earned level for the short-term incentive compensation. The short-term incentive payouts for the Named Executive Officers ranged between 28% and 50% of base salary.

The 2017 target short-term incentive compensation component and actual bonus payout as approved by the Committee for the Named Executive Officers are set forth below:

2017 Long-Term Executive Incentive Compensation.In addition to the short-term incentive compensation awards, the Committee may also grant long-term incentive compensation awards under the Incentive Compensation Plan. These long-term awards are intended to reward certain executives, including the Named Executive Officers, for increasing the value of the Company through sustained future growth and profitability. Awards are made in restricted stock units (“RSUs”) issued under our 2010 Equity Incentive Plan at the beginning of a three-year performance period. At the end of such three-year performance period, First Defiance’s performance is evaluated and each whole or fractional RSU entitles the officer to receive one FDEF share on the date the RSU is settled. In the first quarter of 2017, the Committee established long-term incentive compensation awards for certain executives, including the Named Executive Officers, with a three-year performance period. With respect to these awards, we entered into a 2017 Long-Term Restricted Stock Unit Award Agreement with each of the Named Executive Officers, pursuant to which, each officer was awarded an amount of RSUs equal to 100% of the Maximum payout under the long-term incentive compensation component of the Incentive Compensation Plan. The number of RSUs granted under the Plan was calculated by taking the maximum incentive payout dollar value divided by the 20-day average share closing price as of December 31, 2016. Under the 2017 Long-Term Restricted Stock Unit Award Agreements, if the officer’s employment terminates for any reason (except for certain circumstances as described in the Award Agreement that has special vesting schedules for death, disability, retirement and change in control) prior to the end of the applicable performance period, the officer forfeits all of the RSUs subject to the target award for that and any subsequent performance period.

The 2017-2019 long-term incentive compensation award target for each of the Named Executive Officers is set forth below:

The long-term incentive compensation awards granted in 2017 have the same payout percentages and components as the long-term incentive compensation awards granted in 2016, and utilize the same peer group established by the Committee as set forth above under the heading “2017 Executive Compensation Components” above. The applicable performance criteria and weighting for the 2017-2019 performance period are as described below:

Achievement of the performance levels are determined by the Committee, in its sole discretion, using financial information filed with the Securities and Exchange Commission and other sources as available. The Committee reserves the right, in its sole discretion, to make such periodic adjustments as it determines appropriate to the peer group.

For the 2015 long-term incentive compensation awards with a performance period ending on December 31, 2017, the relative weighting of each target and the related payout percentage of the bonus potential are described below:

In 2015, the Committee established an additional performance goal or “kicker” goal applicable to the long-term incentive compensation awards based upon the achievement of growth in total assets, consistent with the Company’s strategic growth objectives. Upon the achievement of this additional goal, the Committee may grant, within its sole discretion, to each Named Executive Officer an additional payout of from 10% to 25% of the target bonus potential under the long-term incentive compensation awards as set forth below:

No additional payout may be granted by the Committee for achievement of this additional performance goal if the Named Executive Officer has achieved the maximum potential payout under such individual’s long-term incentive compensation award based upon the primary performance criteria. The Committee, thus, may not award a payout for achievement of the additional performance goal if such payout would result in an overall payout above the maximum bonus potential. In addition, the Named Executive Officer must achieve the threshold level of performance under the primary performance criteria before being eligible to earn any payout based upon the additional performance goal.

The Committee continued the “kicker” goal as a component under the 2017 long-term incentive compensation awards. The levels established for this goal for the 2017-2019 performance period are described below:

Achievement of the performance levels are determined by the Committee, in its sole discretion.

For the 2015 long-term incentive compensation awards with a performance period ending on December 31, 2017, the payout percentage of the bonus potential under the additional performance goal, subject to achievement of threshold levels under the primary performance criteria and limited to the maximum bonus potential under the 2015 long-term incentive compensation awards, is described below:

Clawback Policy

In addition, the Board has adopted an incentive compensation clawback policy providing for a three-year review period of reported results of the Company to ensure that incentive compensation for all executive officers (including the Named Executive Officers) is paid based on accurate financial and operating data and the correct calculation of performance against incentive targets. The policy provisions allow the Company to recover incentive awards previously paid or awarded. A copy of this policy is posted on the Company’s website athttp://www.fdef.com under the link “Governance Documents.”

Retirement Benefits

All of our employees, including the Named Executive Officers, are eligible to participate in the First Defiance Financial Corp. 401(k) Employee Savings Plan (the “Savings Plan”). The Savings Plan is a tax-qualified retirement savings plan pursuant to which all employees are able to contribute up to the limit prescribed by the Internal Revenue Service to the Savings Plan on a before-tax basis. We maintain a safe harbor plan that matches 100% of the first 3% of pay that is contributed to the Savings Plan plus 50% of the salary deferrals between 3% and 5% of compensation. All employee contributions to the Savings Plan are fully vested upon contribution, and our matching contribution is vested upon completion of a minimum service requirement. A restoration plan is maintained for Mr. Hileman and Mr. Thompson which provides for elective deferrals and matching contributions in excess of the Savings Plan caps. The matching contributions under the restoration plan in fiscal year 2017 are included in the All Other Compensation column of the Summary Compensation Table and reported under “Company Deferred Compensation Plan Contribution” in footnote 3 to the Summary Compensation Table.

The Named Executive Officers are entitled to participate in the First Defiance Deferred Compensation Plan, which enables the Named Executive Officers to defer up to 80% of their base salary and up to 100% of bonus payments. The First Defiance Deferred Compensation Plan is discussed in further detail under the heading “Executive Compensation — Nonqualified Deferred Compensation” below.

Perquisites and Other Personal Benefits

We provide our Named Executive Officers with perquisites and other personal benefits that the Committee believes are reasonable and consistent with our overall compensation program to better enable us to attract and retain employees for key positions. The Committee periodically reviews the levels of perquisites and other personal benefits provided to Named Executive Officers.

In 2017, we provided each of the Named Executive Officers, other than Mr. Allen, with the option to receive a $600 monthly automobile allowance, only Mr. Rose exercised the option. We provide Mr. Allen the use of a Company-owned vehicle. Each Named Executive Officer is eligible, upon relocation, to receive reimbursement for certain reasonable expenses associated with the costs of such relocation. The Company considers reimbursement requests for country club and other social organization membership for its senior officers, including the Named Executive Officers, for certain business purposes.

We offer an Executive Group Life Post-Separation Plan, which provides death benefits equal to two times the executive’s base salary. All of the Named Executive Officers participate in the Executive Group Life Post-Separation Plan, except Mr. Thompson and Mr. Reisner.

The value of these perquisites is included in column (g) of the Summary Compensation Table.

Employment and Change in Control Agreements

We have employment or change of control agreements with certain key employees, including the Named Executive Officers. These agreements include provisions for severance payments upon a change of control and are designed to promote stability and continuity of senior management. Information regarding applicable payments under such agreements for the Named Executive Officers is provided under the heading “Executive Compensation — Potential Payments Upon Termination or Change in Control” below.

Section 162(m)

Prior to December 22, 2017, when the Tax Cuts and Jobs Act of 2017 (“TCJA”) was signed into law, Section 162(m) of the Internal Revenue Code generally disallowed a tax deduction to publicly held companies for compensation paid to certain “covered employees” in excess of $1 million per covered employee in any year, except to the extent that the compensation in excess of the limit qualified as performance-based. In connection with fiscal 2017 compensation decisions, the Compensation Committee and the Board of Directors considered the potential tax deductibility of executive compensation under Section 162(m) of the Internal Revenue Code and sought to qualify certain elements of these applicable executives’ compensation as performance-based while also providing amounts and types of compensation that would best fulfill the objectives of the Company’s compensation program.

Under the TCJA, the performance-based exception has been repealed and the $1 million deduction limit now applies to (1) anyone serving as the chief executive officer or the chief financial officer at any time during the taxable year, (2) the top three other highest compensated executive officers serving at the end of the taxable year, and (3) any individual who had been a covered employee for any taxable year of the company that started after December 31, 2016. However, the new rules do not apply to remuneration provided pursuant to a written binding contract in effect on November 2, 2017 that is not modified in any material respect after that date. Because of ambiguities and uncertainties as to the application and interpretation of this transition relief, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) will avoid the deduction limit. We believe that the amount of compensation paid to our executive officers that can be deducted will decrease compared to prior years.

The Board of Directors has not adopted a formal policy regarding tax deductibility of compensation paid to our executive officers. The Board of Directors may authorize compensation that might not be deductible, and may modify compensation that was initially intended to be exempt from Section 162(m), if it determines that such compensation decisions are in the best interests of the Company and its shareholders.

COMPENSATION COMMITTEE REPORT

First Defiance’s Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and our annual report on Form 10-K.

Samuel S. Strausbaugh, Chairman

Terri A. Bettinger

John L. Bookmyer

Jean A. Hubbard

February 20, 2018

EXECUTIVE COMPENSATION

Summary Compensation Table

The table below summarizes the total compensation paid or earned by each of the Named Executive Officers for the fiscal years ended December 31, 2017, 2016 and 2015. The Named Executive Officers include those persons serving as our CEO and CFO during 2017 and our three other most highly compensated executive officers.