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PROXY STATEMENT TABLE OF CONTENTS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

 

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April 6, 2012

Dear Stockholder:

        I am pleased to invite you to attend the 2012 Annual Meeting of Stockholders of First Midwest Bancorp, Inc. which will be held on Wednesday, May 16, 2012 at 9:00 a.m., Central time, at the Westin Chicago Northwest Hotel, 400 Park Boulevard, Itasca, Illinois 60143. Attached and enclosed you will find a Notice setting forth the business expected to come before the meeting, a Proxy Statement, a Proxy Card and a copy of our 2011 Annual Report.

        We are pleased to once again offer multiple options for voting your shares. As detailed in the "Questions and Answers" section of the Proxy Statement, you can vote your shares via the Internet, by telephone, by mail or by written ballot at the Annual Meeting.

        Your vote is very important to us. Whether or not you plan to attend the meeting in person, your shares should be represented and voted. Please cast your vote either by mail, telephone, or the Internet as instructed on the enclosed Proxy Card. Voting in any of these ways will not prevent you from attending the Annual Meeting. The Proxy Statement further explains how you can attend the Annual Meeting.

        On behalf of our Board of Directors, I would like to express our appreciation for your continued interest in the affairs of First Midwest Bancorp, Inc. I hope you will be able to attend the Annual Meeting.

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First Midwest Bancorp, Inc.
One Pierce Place, Suite 1500
Itasca, Illinois 60143

NOTICE OF ANNUAL MEETING

By order of the Board of Directors,

Cynthia A. Lance
Executive Vice President and
Corporate Secretary
First Midwest Bancorp, Inc.
April 6, 2012

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PROXY STATEMENT
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First Midwest Bancorp, Inc.
One Pierce Place, Suite 1500
Itasca, Illinois 60143

PROXY STATEMENT

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INTRODUCTION AND SUMMARY

        This Proxy Statement is furnished in connection with a solicitation of proxies by the Board of Directors (Board) of First Midwest Bancorp, Inc., a Delaware corporation (FMBI, First Midwest, the Company or we), to be used at our 2012 Annual Meeting of Stockholders (Annual Meeting). The approximate date on which this Proxy Statement and the accompanying Proxy Card are first being sent to stockholders is April 6, 2012. The following is a summary of certain key disclosures in this Proxy Statement.

Annual Meeting

 

 

Auditors

        We are asking our stockholders to ratify the selection of Ernst & Young LLP as our independent auditors for 2012. We paid Ernst & Young $1,324,230 in 2011, and $1,210,756 in 2010 for audit and related services.

Executive Compensation

        We are asking for stockholder approval of the compensation of our named executive officers as disclosed in this Proxy Statement. We also are asking for stockholder approval of the Company holding an annual stockholder advisory vote on executive compensation. Key elements of our executive compensation programs include:

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Rewarding executives for long-term strategic management and stockholder value enhancement.



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Reasonable equity compensation plans taking into account results, overall burn rate, vesting practices and dividend payments.



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Reasonable severance benefits related to change-in-control including the elimination of gross-ups on excise taxes in employment agreements.



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Features that mitigate the risk associated with compensation.

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QUESTIONS AND ANSWERS

Who can vote at the Annual Meeting?

        You are entitled to vote or direct the voting of your shares of FMBI common stock (Common Stock) at the Annual Meeting if you were a stockholder of record at the close of business on March 23, 2012, the record date (Record Date) for the Annual Meeting. On that date, there were approximately 74,974,000 shares of Common Stock outstanding, each of which is entitled to one vote for each matter to be voted on at the Annual Meeting, held by approximately 2,290 registered stockholders of record.

        A proxy is your direction to another person to vote your shares. When you sign the enclosed Proxy Card, you will appoint certain members of our management to vote your shares at the Annual Meeting in the manner you instruct. Even if you plan to attend the Annual Meeting, you should complete, sign and return your Proxy Card in advance.

Who is entitled to receive this mailing?

        If you hold Common Stock that is registered in your name through our transfer agent (BNY Mellon Shareowner Services) as of the Record Date, you are a "stockholder of record". However, if you hold shares of our Common Stock indirectly through a broker, bank or similar institution, you are not a stockholder of record, rather, you are a stockholder whose shares are held in "street name" and your broker, bank, or other nominee is considered the stockholder of record and you are considered the "beneficial owner" of the shares. We sent copies of our proxy materials directly to all stockholders of record. If you are a beneficial owner whose shares are held in "street name", these materials were sent to you by the bank, broker or similar institution through which you hold your shares. As the beneficial owner, you can direct this entity on how to vote your shares at the Annual Meeting, and it is obligated to provide you with a voting instruction form for you to use for this purpose.

What does it mean if I receive more than one Proxy Card?

        If you receive multiple Proxy Cards, this means you hold your shares in more than one account. To ensure that all your shares are voted, sign and return each Proxy Card. If you vote on the Internet or by telephone, you will need to vote for each Proxy Card you receive.

How are shares voted and counted?

        If you are a "stockholder of record" and you properly submit your Proxy by the Internet, telephone or mail, your shares will be voted in accordance with your instructions. If you sign, date and return your Proxy Card, but do not give voting instructions, your shares will be voted in the manner recommended by the Board for each director nominee and each Item, and otherwise in accordance with the judgment of the persons voting the Proxy on any other matter properly brought before the Annual Meeting.

        If your shares are held in "street name", they may be voted by the institution through which you hold your shares on non-routine matters only if you have provided the institution with voting instructions, and on routine matters with or without voting instructions from you. If you do not give your institution voting instructions for non-routine items, your shares will be treated as "broker non-votes". This means your shares will be counted for the purpose of determining if a quorum is present, but will not be included as votes cast with respect to the

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non-routine item. The determination of whether a matter is non-routine or routine is made under the rules of the Nasdaq Stock Market. The following chart explains which Items are routine and non-routine.

What is the required vote for each Item?

        A quorum is required to transact business at the Annual Meeting. The holders of a majority of the outstanding shares of Common Stock on the Record Date, present in person or represented by proxy and entitled to vote, will constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes are treated as present for quorum purposes.

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Item 1—Election of Directors.  You may vote FOR or AGAINST any or all director nominees, or you may ABSTAIN as to one or more directors. A majority of the votes cast with respect to the election of a director must be voted FOR the director in order for the director to be elected. A director who fails to receive a majority FOR vote will tender his or her resignation to the Board for consideration, and our Nominating and Corporate Governance Committee will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board will consider the recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results.



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Item 2—Vote Ratifying the Appointment of Independent Auditors.  You may vote FOR or AGAINST this Item or you may ABSTAIN. A majority of the votes cast must be voted FOR ratification in order for the Item to pass.



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Item 3—Vote Approving Executive Compensation.  You may vote FOR or AGAINST this Item or you may ABSTAIN. A majority of the votes cast must be voted FOR the Item in order for it to pass.



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Item 4—Vote Approving Frequency of the Vote on Executive Compensation.  You may vote that we have this advisory vote EVERY YEAR, EVERY TWO YEARS or EVERY THREE YEARS or you may ABSTAIN.

How do I vote?

        If you are a stockholder of record you may cast your vote in one of four ways:

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By Internet.  The web address for Internet voting can be found on the enclosed Proxy Card. Internet voting is available 24 hours a day. To be valid, your vote by Internet must be received by the deadline specified on the card.

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By Telephone.  The number for telephone voting can be found on the enclosed Proxy Card. Telephone voting is available 24 hours a day. To be valid, your vote by telephone must be received by the deadline specified on the card.



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By Mail.  Mark the enclosed Proxy Card, sign and date it, and return it in the pre-paid envelope we have provided. To be valid, your vote by mail must be received by the deadline specified on the card.



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At the Annual Meeting.  You can vote your shares in person at the Annual Meeting. If you are a stockholder of record, you must present an acceptable form of identification (such as a valid driver's license) in order to vote at the meeting.

        If you hold your shares in "street name" you may vote by following your broker's instructions or, in order to vote at the meeting, you must obtain from your account representative at the institution through which you hold your shares, both an account statement showing you owned shares of Common Stock as of March 23, 2012 and a legal proxy form, and bring them to the meeting.

How can I revoke my proxy, substitute a new proxy or change my vote?

        You can revoke your Proxy or substitute a new Proxy at any time before your Proxy is voted at the Annual Meeting by:

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submitting a new Proxy through the Internet or by telephone; or



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executing and mailing a Proxy Card that is received on a later date; or



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giving written notice of revocation to our Corporate Secretary at One Pierce Place, Suite 1500, Itasca, Illinois 60143; or



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voting in person at the Annual Meeting.

        If your shares are held in "street name", you may change your vote by submitting new voting instructions to your broker, bank, or similar institution.

How can I obtain an additional Proxy Card?

        If you lose, misplace or otherwise need to obtain a Proxy Card, and:

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you are a stockholder of record, contact our Corporate Secretary's office at 630-875-7463; or



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you hold Common Stock indirectly through a bank, broker or similar institution, contact your account representative at that organization.

How will current FMBI employees who participate in the FMBI benefit plans receive a proxy mailing?

        Employees who participate in the First Midwest Bancorp, Inc. Savings and Profit Sharing Plan (Savings and Profit Sharing Plan), First Midwest Bancorp, Inc. Non-qualified Retirement Plan (Retirement Plan), First Midwest Bancorp, Inc. Stock Option Gain Deferral Plan (Gain Deferral Plan) and/or the First Midwest Bancorp, Inc. Dividend Reinvestment Plan, and have a Company e-mail address, will receive an e-mail from Broadridge Financial Solutions, Inc. describing how to access proxy materials and vote via the Internet or telephone. One e-mail will be sent for all accounts registered in the same employee name. If the employee's accounts are registered in different names, he or she will receive a separate e-mail for each account. This e-mail will be titled: FIRST MIDWEST BANCORP, INC. 2012 ANNUAL MEETING OF STOCKHOLDERS AND PROXY VOTE.

        The trustees under these plans are the stockholders of record of all shares of Common Stock held in the plans, and the trustees will vote the shares held for the account of each employee in accordance with the instructions received from the employee. Employees should instruct the trustees how to vote their shares by using the instructions provided in the e-mail and vote via the Internet or by telephone. If the trustees do not receive voting instructions by the specified deadline, the trustees will vote the shares proportionally in the same manner as those shares for which instructions were received. Because the employees are not the record owners of the related shares, the employees may not vote these shares in person at the Annual Meeting.

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Who pays for the expenses of this proxy solicitation?

        We will pay the expenses of the preparation of proxy materials and the solicitation of proxies for the Annual Meeting. In addition to the solicitation of proxies by mail, solicitations may be made by certain of our directors, officers or employees or affiliates telephonically, electronically or by other means of communication. Directors, officers and employees will receive no additional compensation for any such solicitation. We will reimburse brokers and other similar institutions for costs incurred by them in mailing proxy materials to beneficial owners in accordance with applicable rules.

What do I need to do to attend the Annual Meeting?

        All stockholders must bring an acceptable form of identification, such as a driver's license, in order to attend the Annual Meeting in person. In addition, if you hold shares in "street name" and would like to attend our Annual Meeting, you will need to bring an account statement or other acceptable evidence of ownership of Common Stock as of the close of business on March 23, 2012, the Record Date for voting.

Additional Information

        A copy of our Annual Report for the fiscal year ended December 31, 2011 is enclosed with this Proxy Statement. You also may obtain additional information regarding First Midwest Bancorp, Inc., including our corporate governance policies and practices, by visiting our website at www.firstmidwest.com/investorrelations, or by a written request to our Corporate Secretary at First Midwest Bancorp, Inc., One Pierce Place, Suite 1500, Itasca, Illinois 60143. A complete copy of this Proxy Statement and our Annual Report for the fiscal year ended December 31, 2011 are also available at www.firstmidwest.com/proxymaterials.

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ITEM 1—ELECTION OF DIRECTORS

Nominees for Election

        Our Board currently consists of 14 directors. However, both Bruce S. Chelberg (director since 1989) and Joseph W. England (director since 1986) have determined that they will retire from service to our Board when their current term expires at the Annual Meeting on May 16, 2012. Both Messrs. Chelberg and England will continue to serve as a director until the Annual Meeting. We would like to thank them for their many years of exemplary service and contributions to First Midwest.

        After the Annual Meeting, our Board will be set at 12 members. Our Board is divided into three classes, with each class serving for staggered three-year terms. As a result, each year, only one class of directors stands for election at our Annual Meeting. This year, upon the recommendation of our Nominating and Corporate Governance Committee, our Board nominated Barbara A. Boigegrain and Robert P. O'Meara to stand for election, both of whom are currently directors of FMBI and have previously been elected as directors by our stockholders.

        If elected, each nominee will hold office for a three-year term ending in 2015 and until his or her successor has been elected and qualified, or until his or her earlier resignation or removal. Each nominee has informed us that he or she is willing to serve as a director. Each nominee will tender his or her resignation as a director in accordance with our By-Laws and Corporate Governance Guidelines if the director fails to receive the required vote for election, and the Board will determine whether it is in the best interest of the Company to accept any tendered resignation.

Nomination Process

        In evaluating, identifying and recommending nominees for the Board, our Nominating and Corporate Governance Committee places primary emphasis on the criteria set forth in our Corporate Governance Guidelines which includes:

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the individual's judgment, expertise, character, skills, background, knowledge of matters useful to the oversight of the Company and other relevant experience;



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the individual's ability and willingness to commit adequate time to Board and committee matters; and



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the extent to which the interplay of the individual's expertise, skills, knowledge and personality with that of other Board members will build a Board that is effective, collegial and responsive to the needs of the Company.

        We do not set specific, minimum qualifications that nominees must meet in order to be recommended to the Board. Each nominee is evaluated based on his or her individual merits, taking into account the needs of the Company and the composition of the Board. The Nominating and Corporate Governance Committee discusses and evaluates possible candidates in detail and outside consultants are sometimes employed to help identify potential candidates. When determining whether to recommend a director for re-election, the Nominating and Corporate Governance Committee considers the director's past participation in and contributions to Board activities. The Board has not adopted a formal diversity policy for nominees. When making recommendations for nominees to the Board, however, the Nominating and Corporate Governance Committee attempts to include directors who, when taken together with the other nominees and continuing directors, will create a group that offers a diversity of education, professional experience, background, age, perspective, viewpoints and skill. The Nominating and Corporate Governance Committee will consider and evaluate director candidates recommended by stockholders in the same manner as other candidates identified by the Committee. A stockholder wanting to formally nominate a candidate must do so by following the procedures described in the Company's Restated Certificate of Incorporation and By-Laws, as amended from time to time.

Independence of Nominees and Non-Employee Directors

        Our Board determines the independence of all non-employee directors in accordance with the "independence" requirements of the Nasdaq Stock Market listing standards (Nasdaq Rules). Accordingly, each year the Board affirmatively determines whether each non-employee director has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Annually, each non-employee director is required to complete a questionnaire that provides information about relationships that might affect the determination of independence. Management then provides the Nominating

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and Corporate Governance Committee and Board with relevant facts and circumstances of any relationship bearing on the independence of a director or nominee that are outside the categories permitted under Nasdaq Rules.

        Based on the review and recommendation by the Nominating and Corporate Governance Committee, the Board analyzed the independence of each of the Company's nominees and other current directors, and determined that the following directors meet the standards of "independence" under our Corporate Governance Guidelines and Nasdaq Rules: Barbara A. Boigegrain, Bruce S. Chelberg, John F. Chlebowski, Jr., Joseph W. England, Brother James Gaffney, Phupinder S. Gill, Peter J. Henseler, Patrick J. McDonnell, Robert P. O'Meara, Ellen A. Rudnick, Michael J. Small, John L. Sterling and J. Stephen Vanderwoude. Our Board also determined that Michael L. Scudder, the Company's current President and Chief Executive Officer is not "independent" under the standards of our Corporate Governance Guidelines and Nasdaq Rules. In addition, our Board determined that:

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Each member of the Audit Committee is financially literate and has accounting or related financial management expertise (as such qualifications are defined under Nasdaq Rules),



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Mr. McDonnell is an "audit committee financial expert" within the meaning of the rules and regulations of the Securities and Exchange Commission (SEC).



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Each member of the Compensation Committee is a "non-employee director" within the meaning of SEC Rule 16b-3, and an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code.

        As discussed under the section entitled Nomination Process, the evaluation and selection of each member of the Board is based on a variety of factors including professional experience, recognized achievements and community leadership. Included in the table below is the name of each member of the Board, along with his or her principal occupation for at least the previous five years and other professional experience and achievements. Each director has been identified as possessing the requisite skills, experience and attributes that qualify him or her to serve as a member of the Company's Board.

Nominees Standing for Election at the Annual Meeting with a Term Expiring in 2015

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Continuing Directors Serving For a Term Expiring in 2013

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Continuing Directors Serving a Term Expiring in 2014

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        For more information regarding our Board, its members, its committees and our corporate governance practices, please see the section of this Proxy Statement entitled Corporate Governance at First Midwest Bancorp, Inc. beginning on page 16, or visit the Investor Relations section of our website at www.firstmidwest.com/officersdirectors.

Directors' Recommendation

        The Board unanimously recommends a vote "FOR" the election of each of Barbara A. Boigegrain and Robert P. O'Meara for service on the Board.

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ITEM 2—ADVISORY VOTE RATIFYING INDEPENDENT AUDITORS

Independent Auditors

        The Audit Committee of the Board has selected Ernst & Young LLP as our independent auditors for our fiscal year ending December 31, 2012 and we are submitting the selection for stockholder ratification at the Annual Meeting. We expect a representative of Ernst & Young LLP to be present at the Annual Meeting and will have the opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions from stockholders. Ernst & Young LLP also served as our independent auditors for our fiscal year ended December 31, 2011.

        Our organizational documents do not require that our stockholders ratify the selection of our independent auditors. If our stockholders do not ratify the selection, the Audit Committee will reconsider whether to retain Ernst & Young LLP, but may retain them nonetheless. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of FMBI.

Fees Paid to Independent Auditors

        The Audit Committee, or a designated member thereof, approves in advance all audit and any non-audit services rendered by Ernst & Young LLP on behalf of the Company. The following table shows information about fees paid by the Company to Ernst & Young LLP for services related to the respective fiscal years.

        For audit related services, tax services and all other services, our Audit Committee has determined specific services and dollar thresholds under which such services would be considered pre-approved. To the extent management requests services other than these pre-approved services, or beyond the dollar thresholds, our Audit Committee must specifically approve the services. Further, under our fee policy, the independent auditors may not perform the non-audit services identified by the SEC as prohibited. Our fee policy requires management to provide to our Audit Committee on a quarterly basis a summary of all services performed by the independent auditors.

Directors' Recommendation

        The Board unanimously recommends a vote "FOR" ratification of the appointment of Ernst & Young LLP as our independent auditors for our fiscal year ending December 31, 2012.

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ITEM 3—ADVISORY APPROVAL OF THE COMPANY'S EXECUTIVE COMPENSATION

        Beginning on page 24, we describe our executive compensation programs, including their objectives, policies and components. Our programs seek to align the compensation of our executives with the objectives of our strategic plan which include:

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Quality Resources.  Attract and retain executives whose abilities are considered essential to our long-term success.



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Pay-for-Performance.  Support a performance-oriented environment that rewards achievement of our financial and non-financial goals.



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Long-Term Success.  Reward executives for long-term strategic management and stockholder value enhancement.



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Stockholder Alignment.  Align the financial interest of our executives with those of our stockholders.

        For a more detailed discussion of how our executive compensation programs reflect these objectives, including information about the fiscal year 2011 compensation of our named executive officers, please see the section entitled Compensation Discussion and Analysis and the accompanying compensation tables and narrative disclosures.

        We are asking our stockholders to indicate their support for our executive compensation as described in this Proxy Statement. This proposal, commonly known as a "say-on-pay" proposal, gives our stockholders the opportunity to express their views on executive compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our executives described in this Proxy Statement. Accordingly, we will ask our stockholders to vote on the following resolution at the Annual Meeting:

"RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved by the Company's stockholders on an advisory basis."

        The say-on-pay vote is advisory and is therefore not binding on the Company, the Compensation Committee or our Board. The Compensation Committee and our Board value the opinions of our stockholders and, to the extent there is any significant vote against the executive compensation as disclosed in this Proxy Statement, we will consider our stockholders' concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. Our executive compensation program for 2011 remains largely unchanged from the 2010 compensation program which over 90% of our stockholders supported at our 2011 Annual Meeting.

Directors' Recommendation

        The Board unanimously recommends stockholders vote "FOR" this Item.

ITEM 4—ADVISORY VOTE REGARDING THE FREQUENCY OF THE ADVISORY APPROVAL OF THE COMPANY'S EXECUTIVE COMPENSATION

        In addition to the advisory vote on executive compensation described above, and in accordance with SEC rules, you have an opportunity to vote on the frequency of the advisory vote on the Company's executive compensation going forward. You may vote that we have this advisory vote every year, every two years or every three years or you may abstain.

        After due consideration, our Board has decided to recommend that this advisory vote on executive compensation should occur annually (every year). While there are also valid arguments for a biennial or triennial vote, we believe that an annual vote is consistent with current industry practices and stockholder preferences.

        As this is an advisory vote, the result will not be binding, although our Compensation Committee will consider the outcome of the vote and disclose its decision as to frequency by filing a Current Report on Form 8-K no later than 150 days after our Annual Meeting.

        We encourage you to cast your vote on the following resolution accordingly:

"RESOLVED, that the holders of Common Stock indicate, by their vote on this resolution, whether the advisory vote on executive compensation should be every year, every two years or every three years."

Directors' Recommendation

        The Board unanimously recommends stockholders vote "EVERY YEAR" for this Item.

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CORPORATE GOVERNANCE AT FIRST MIDWEST BANCORP, INC.

        Our Board is committed to maintaining strong corporate governance principles and practices. If you would like additional information about our corporate governance practices, you may view the following documents on our website at www.firstmidwest.com/corporategovernance or request them in print by sending a written request to the Corporate Secretary at First Midwest Bancorp, Inc., One Pierce Place, Suite 1500, Itasca, Illinois 60143:

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Corporate Governance Guidelines



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Code of Ethics and Standards of Conduct and Code of Ethics for Senior Financial Officers



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Audit Committee Charter



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Compensation Committee Charter



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Nominating and Corporate Governance Committee Charter



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Related Person Transaction Policies and Procedures

Corporate Governance Guidelines and Committee Charters

        The Corporate Governance Guidelines and the charters of the three standing committees of our Board describe our corporate governance practices. The Corporate Governance Guidelines and charters are intended to ensure that our Board has practices in place to review and evaluate our business operations and to make decisions that are independent of management.

Code of Ethics and Standards of Conduct and Code of Ethics for Senior Financial Officers

        We have adopted a Code of Ethics and Standards of Conduct, which applies to all of our directors, officers and employees, as well as a Code of Ethics for Senior Financial Officers which applies to our senior financial officers. Our Code of Ethics and Standards of Conduct meets the requirements of a "code of ethics" as defined by Item 406 of Regulation S-K, and also meets the requirements of a "code of business conduct and ethics" under Nasdaq Rules. Annually, all employees are required to certify that they have reviewed and are familiar with the Code of Ethics and Standards of Conduct, and all officers are required to certify compliance with the code. Waivers of the Code of Ethics and Standards of Conduct for executive officers are required to be disclosed to the Chair of the Nominating and Corporate Governance Committee of the Board.

Board Leadership and Structure

        As provided in the Corporate Governance Guidelines, the Board does not have a fixed policy regarding the separation of the offices of Chairman and Chief Executive Officer and believes that it should maintain the flexibility to select the Chairman and its Board leadership structure, from time to time, based on the criteria that it deems to be in the best interests of the Company and its stockholders.

        At this time, the position of Chairman of the Board is held by Robert P. O'Meara and the position of President and Chief Executive Officer is held by Michael L. Scudder. The Board of Directors has determined that, under current circumstances the separation of the offices of Chairman of the Board and President and Chief Executive Officer will enhance Board oversight. This separation allows Mr. Scudder to focus on his responsibilities of running the Company, enhancing shareholder value and expanding and strengthening the Company's business. Concurrently, Mr. O'Meara, as Chairman of the Board, can focus on leadership for the Board as it provides advice to and independent oversight of management.

Risk Oversight

        Risk is inherent with every business and we face a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputation risk. Management is responsible for the day-to-day management of the risks the Company faces, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board of Directors has the responsibility to satisfy itself that the risk management processes, policies and levels designed and implemented by management are adequate and functioning as designed.

        The Board performs its risk oversight function primarily through its committees and the operation of the Bank's board of directors, as well as reports directly from the President and Chief Executive Officer or other

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members of management regarding the Company's risk management functions. In addition, the Chairman of the Board meets regularly with the President and Chief Executive Officer to discuss strategy and risks facing the Company. Key members of senior management attend Board meetings and are available to address any questions or concerns raised by the Board.

Meetings

        Our Board holds regularly scheduled quarterly meetings and special meetings as needed. The Board meets in executive session during all regularly scheduled quarterly Board meetings. Once a year, the Board devotes additional time to presentations and discussions with senior management about the Company's long-term strategy, which is then supplemented, updated and discussed further at the Board's quarterly meetings. See the next section entitled Board Committees for the total number of Board and committee meetings held during 2011.

        We expect our directors to attend all Board and committee meetings for those committees on which they serve. Directors are also expected to attend each annual stockholders' meeting. All of our current directors, including the current nominees for director, attended last year's annual stockholders meeting. Each director attended at least 75% of the total number of meetings of the Board and committees on which he or she served during 2011.

Board Committees

        Our Board has three standing committees, our Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee. Each standing committee has a written charter and the Board has determined that each of the members of our standing committees is "independent" under the provisions of our Corporate Governance Guidelines and Nasdaq Rules. The Board has also established an Advisory Committee for the purpose of providing general advice to management with respect to general business matters as needed between regular meetings of the Board.

        Under our Corporate Governance Guidelines, the members of each Board committee (including each committee chair) are appointed by the Board upon the recommendation of the Nominating and Corporate Governance Committee, and a member may only serve as the chair of one committee of the Board at any given time. The table below provides membership and meeting information for each Board committee for the 2011 fiscal year.

        Below is a description of each standing committee of our Board as well as our Advisory Committee. Each standing committee has the authority to engage legal counsel or other advisors or consultants as it deems appropriate to carry out its responsibilities. The charter of each standing committee describes the specific responsibilities and functions of such committee, and you may view each charter by visiting our website at www.firstmidwest.com/corporategovernance.

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        Audit Committee.    The responsibilities of the Audit Committee include:

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Retain and terminate independent auditors and pre-approve all services performed by the independent auditors.



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Oversight of the external reporting process and the adequacy of the Company's internal controls.



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Oversight of the scope of the audit activities of the independent auditors and the Company's internal auditors.



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Oversight of the process for determining the independence of the independent auditors.



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Oversight of the procedures for the receipt, retention and resolution of complaints regarding accounting, internal controls or auditing matters.

        Compensation Committee.    The Compensation Committee reviews and evaluates our general compensation philosophy and oversees the development, implementation and any revision to our compensation policies and programs. The responsibilities of the Compensation Committee include:

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Recommend to our Board goals and objectives relating to the compensation of our Chief Executive Officer.



•

Assist our Board in evaluating our Chief Executive Officer and recommending to our Board the Chief Executive Officer's compensation.



•

Review and recommend to our Board the annual compensation of senior management.



•

Oversee the Company's health and welfare programs.



•

Review and monitor the Company's incentive and other compensation programs to insure that they:



•

appropriately balance risk and reward and do not encourage imprudent risk taking,



•

are compatible with effective controls and risk management, and



•

are supported by strong corporate governance and effective oversight.

        Nominating and Corporate Governance Committee.    The responsibilities of the Nominating and Corporate Governance Committee include:

•

Recommend to the Board nominees for election to the Board and to oversee director recruitment.



•

Oversee matters of corporate governance including reviewing the Company's principles, policies and procedures.



•

Advise the Board on Board organization, membership, function, performance and effectiveness.



•

Review director independence standards and qualifications and make recommendations to the Board with respect to the determination of the independence and qualifications of directors.



•

Review stockholder proposals and consider responses or actions regarding such proposals.

        Advisory Committee.    The primary responsibility of the Advisory Committee is to advise and consult with management with respect to general business matters as needed between regular meetings of the Board.

Related Person Transactions

        We maintain a policy for reviewing, approving and monitoring transactions involving the Company and "related persons" (generally, directors and executive officers or their immediate family members, or stockholders owning 5% or more of our Common Stock). Our policy covers any transaction that meets the minimum threshold for disclosure in a proxy statement under SEC rules and regulations (generally, transactions involving amounts exceeding $120,000 in which a related person has a direct or indirect interest).

        Our Nominating and Corporate Governance Committee is responsible for reviewing and approving (or ratifying) all transactions with related persons. The Nominating and Corporate Governance Committee will take into account all relevant factors in its analysis, including whether the transaction is on terms comparable to those available to third-parties. The Nominating and Corporate Governance Committee will also determine whether any transaction with a related person impairs the independence of a director, or presents a conflict of interest on

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the part of a director or executive officer. The Chair of the Nominating and Corporate Governance Committee may pre-approve or ratify any transaction with a related person involving an amount up to $500,000. The policy also provides that transactions involving competitive bids, the rendering of services by a regulated entity and certain ordinary course of business banking transactions shall be deemed to be pre-approved by the Nominating and Corporate Governance Committee.

        During 2011, the Company and our banking subsidiary, engaged in transactions in the ordinary course of business with some of our executive officers, directors and entities with which they are associated. All loans, loan commitments and other banking services in connection with these transactions were in the ordinary course of business, on substantially the same terms, including current interest rates and collateral, as those prevailing at the time for comparable transactions with others not related to the Company and did not involve more than the normal risk of collectibility or present other unfavorable features.

Compensation Committee Interlocks and Insider Participation

        None of our executive officers during the 2011 fiscal year served, or currently serves, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or our Compensation Committee.

Stockholder Communication with Directors

        Stockholders may contact an individual director, the Board as a group, or a specified Board committee or group, including our independent directors as a group, by submitting written correspondence to First Midwest Bancorp, Inc., Attn: Board of Directors, One Pierce Place, Suite 1500, Itasca, Illinois 60143. Each communication should specify the applicable addressee(s) to be contacted as well as the general topic of the communication. The Company will initially receive and process communications before forwarding them to the addressee(s). Communications also may be referred to other departments within the Company. The Company generally will not forward to the directors a stockholder communication that it determines to be primarily commercial in nature or related to an improper or irrelevant topic, or that requests general information about the Company. Concerns about questionable accounting or auditing matters should be reported in writing to the Board's Audit Committee Chair or the Company's Chief Risk Officer or Audit Services Manager at First Midwest Bancorp, Inc., One Pierce Place, Suite 1500, Itasca, Illinois 60143.

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INFORMATION REGARDING BENEFICIAL OWNERSHIP OF PRINCIPAL
STOCKHOLDERS, DIRECTORS, AND MANAGEMENT

        The following table sets forth, as of March 1, 2012, information about the beneficial ownership of our Common Stock by all directors, our named executive officers (defined on page 24), and our directors and all executive officers as a group. Unless indicated in the notes, each stockholder has sole voting and investment power for all shares shown, subject to applicable community property laws that may apply to create shared voting and investment power. Unless indicated in the notes, the address of each beneficial owner is c/o First Midwest Bancorp, Inc., One Pierce Place, Suite 1500, Itasca, Illinois 60143.

        We calculated the "Percent of Class" based on approximately 74,447,000 shares of Common Stock outstanding on March 1, 2012. In accordance with SEC regulations, we also include shares subject to options that are currently exercisable or will become exercisable within 60 days of March 1, 2012. Those shares are deemed to be outstanding and beneficially owned by the person holding such options for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

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Other Security Ownership

        The following table identifies each person or group known to us as of March 1, 2012 to beneficially own more than 5% of our outstanding Common Stock.

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DIRECTOR COMPENSATION

        We use a combination of cash and equity-based compensation to attract and retain qualified candidates to serve on our Board. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties and comparative data regarding director compensation of our peers. Michael L. Scudder (our President and Chief Executive Officer) does not receive compensation for serving as a member of the Board. The following summarizes our annual compensation for non-employee directors for the 2011 fiscal year:

2011 Cash Component⁽¹⁾

2011 Equity Compensation

        Barbara A. Boigegrain, Bruce S. Chelberg, John F. Chlebowski, Jr., Joseph W. England, Brother James Gaffney, Phupinder S. Gill, Patrick J. McDonnell, Robert P. O'Meara, Ellen A. Rudnick, Michael J. Small, John L. Sterling and J. Stephen Vanderwoude each received a full equity award in 2011 of 3,480 shares. Peter J. Henseler, who joined the Board in March 2011, received a full equity award of 3,430 restricted shares. Restricted stock awards have a vesting period of one year from the date of grant, and generally are nontransferable prior to vesting. In the event of a change-in-control, as defined in the Amended and Restated First Midwest Bancorp, Inc. Directors Stock Plan (Directors Plan), all unvested shares of restricted stock will vest in full, the restrictions will lapse and the shares will be freely transferable. In 2012, in light of the significant ownership of Common Stock by Robert P. O'Meara, the Board on the recommendation of the Compensation Committee determined it would pay Mr. O'Meara's equity component in cash.

Director Stock Ownership Guidelines

        We believe that each director should have an important personal investment in the Company. Directors are encouraged to own Common Stock equal in value to five times their annual cash fixed retainer. Directors are recommended to acquire and maintain this share ownership threshold within five years of joining the Board.

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Robert P. O'Meara currently owns Common Stock equal in value to approximately 177 times the annual cash fixed retainer for non-employee directors.

Deferred Compensation Plan for Non-Employee Directors

        The First Midwest Bancorp, Inc. Deferred Compensation Plan for Non-employee Directors (Directors Deferred Plan) allows non-employee directors to defer receipt of either 50% or 100% of any director fees and retainers. Deferral elections are made in December of each year for amounts to be earned in the following year. Accounts are deemed to be invested in separate investment accounts under the plan, with the same investment alternatives as those available under our Retirement Plan, including an investment account for shares of our Common Stock.

        The accounts of directors participating in the Directors Deferred Plan are adjusted to reflect the investment return related to such deemed investments, and they are able to modify their investment elections at any time. Deferred director fees and retainers are payable at the director's election, either as a lump sum or in installments over a period not to exceed fifteen years. Payments under the Directors Deferred Plan begin at the date specified by the director or upon cessation of service as a director.

        The following table and explanatory footnotes provide information with regard to the cash and restricted stock grants issued to each non-employee director during 2011.

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COMPENSATION DISCUSSION AND ANALYSIS

        This section provides information and perspective regarding our compensation programs for our Chief Executive Officer, Chief Financial Officer and the three most highly compensated of our other executive officers during 2011. The executive officers who were our "named executive officers" for 2011, as defined under SEC rules, were:

Executive Summary

        We believe it is important to reward employees for their efforts in producing and carrying out sustainable growth strategies and creating value for the Company's stockholders. Therefore, we link our qualitative and quantitative business strategies with our compensation program design, while also implementing internal controls designed to limit the risks attendant to compensation arrangements. To this end, when reviewing the Company's overall performance for 2011, the Compensation Committee recognized that, against a backdrop of economic challenge and regulatory uncertainty, First Midwest achieved the following qualitative and quantitative business strategies and results:

•

Returned to profitability as net earnings increased by $46 million from December 31, 2010.



•

Realized continued solid pre-tax, pre-provision earnings of approximately $129.9 million.



•

Reduced non-accrual loans by 12% from December 31, 2010.



•

Reduced exposure to residential and commercial construction lending segments by 26% from December 31, 2010.



•

Completed an organizational realignment and enhanced sales and operating platforms, adding resources in the form of new employees, products and lines of distribution.



•

Redeemed $193.0 million of the Company's TARP preferred shares and the related Common Stock warrant issued to the United States Department of the Treasury.



•

Received public acclaim for both a superior level of retail client satisfaction, as well as recognition as one of Chicago's Top 100 places to work.

        The Compensation Committee believed these activities greatly advanced the Company's financial and non-financial goals and created long term stockholder value. Other elements that influenced our compensation programs during 2011 included our participation, until November 23, 2011, in the TARP Capital Purchase Program, and the recruitment of our Senior Executive Vice President and Chief Operating Officer.

        TARP Limitations:    We were subject to the executive compensation limitations of the TARP Capital Purchase Program until November 23, 2011. These limitations included:

•

A prohibition on accruing or paying any bonus, retention award or incentive compensation to the Company's five most highly compensated employees. With respect to the named executive officers, this included Messrs. Scudder, Clemens and Carapella during 2011.



•

A prohibition on making "golden parachute payments" (incremental pay or benefits due as a result of termination of employment or a change-in-control) to our named executive officers and our next five

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most highly compensated employees. With respect to the named executive officers, this included Messrs. Scudder, Clemens, Carapella and Belasco during 2011.

•

A prohibition on the payment of any "tax gross-up" to our named executive officers and our next 20 most highly compensated employees. With respect to the named executive officers, this included Messrs. Scudder, Clemens, Carapella and Belasco during 2011.



•

The recovery of any bonus or incentive compensation paid to our named executive officers and our next 20 most highly compensated employees if the financial criteria it was based on was later proven to be materially inaccurate. With respect to the named executive officers, this included Mr. Belasco during 2011.



•

A prohibition on compensation that encourages our named executive officers or employees to take unnecessary and excessive risks that could threaten the value of the Company or to manipulate earnings.

        These regulations also limited our tax deduction for compensation paid to our named executive officers to $500,000 annually and eliminated the exclusion of certain performance based compensation paid under shareholder approved plans from this limit.

        Executive Recruitment:    In June 2011, we recruited Mark G. Sander to the position of Senior Executive Vice President and Chief Operating Officer of the Company, and President and Chief Operating Officer of First Midwest Bank. In connection with retaining Mr. Sander, we entered into an employment agreement. Because we were a TARP participant during most of 2011, under the terms of his employment agreement, Mr. Sander was entitled to receive an annual base salary of $775,000 (consisting of $500,000 of cash and $275,000 of salary stock) and he was not entitled to participate in our STIC and PARS programs (described later in this section). As an inducement to Mr. Sander to join the Company, and in recognition of compensation he would forego as a result of joining the Company, we also agreed to pay or provide him with:

•

A sign-on bonus consisting of a cash payment of $150,000 and a stock option with a value of approximately $200,000.



•

A one-time, fully vested $95,000 contribution to the Company's non-qualified retirement plan.



•

A restricted stock award with a grant date value of $400,000.



•

Supplemental monthly salary of $15,500, payable in the form of salary stock until December 2013.

General Information

What is the Company's Compensation Philosophy?

        Our Compensation Committee believes that our ability to attract and retain qualified, high-performing employees is vital to our success and growth as a Company. To help achieve that, the Compensation Committee strives to design compensation programs that provide appropriate rewards and incentives to our employees and that employ proper features that mitigate the risk associated with the compensation, but that do not diminish its ability to motivate employees. We believe it is important to reward employees for their efforts in producing and carrying out sustainable growth strategies and creating value for the Company's shareholders, therefore, we link our business strategy with our compensation program design while also implementing internal controls designed to limit the risks attendant to compensation arrangements.

        In carrying out this philosophy, the Compensation Committee regularly reviews the risks and rewards associated with each element of our compensation programs, and annually reviews our business strategy and compensation elements in aggregate to assess employees' total direct compensation opportunity. For more information regarding the Compensation Committee's risk review process see our Compensation Committee Report (page 43).

How do we measure corporate performance?

        We expect our executive officers to initiate and carry out sustainable growth strategies and create long-term value for the Company's stockholders, therefore, we link various aspects of our business strategies with our compensation program design. Corporate performance is a factor in most elements of our incentive compensation program design. When measuring corporate performance, we may consider both qualitative and quantitative factors and achievements relating to our business strategies and objectives. The manner in which we

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measure quantitative corporate performance for a particular compensation element depends upon the nature of the element, the business strategy or objective it is intended to support, as well as its relation to the overall mix of all the other elements of compensation.

        For example, our Short Term Incentive Program (STIC) is intended to incent and motivate employees to carry out shorter-term business objectives that support Company performance for the fiscal year that in turn will drive long-term strategic objectives. Consequently, under this program we measure quantitative corporate performance by the Company's pre-tax, pre provision earnings (which reflects performance of the Company's core operating segments before the effects of credit-related charges and unusual items) and asset quality (which measures the overall credit quality of the Company's loan portfolio) for the year.

        However, our Performance-Awarded Restricted Stock Award Program (PARS) is intended to provide above average long-term compensation for above average long-term Company performance. Accordingly, under this program we measure quantitative corporate performance against a peer group of fourteen banking companies whose size and business lines are similar to ours, and who operate primarily in larger, urban centers like ours. For 2011, this peer group consisted of the following companies:

        Our relative performance is measured on multiple factors focusing heavily on three indicators frequently used to assess a banking company's results: return on assets, earnings per share and loan portfolio quality. These programs are discussed in greater detail later in this section.

How do we measure individual performance?

        In assessing individual performance, the Compensation Committee considers the recommendation of the Chief Executive Officer for senior officers, and the Compensation Committee makes the determination with respect to the Chief Executive Officer. Each officer's accomplishments of priorities set at the beginning of the year, contributions to the Company's strategic initiatives, support of the Company's mission, execution of leadership objectives and initiatives in addressing business and financial issues arising as a result of the general economic environment and developments within our markets are considered during this review.

Who advises our Compensation Committee?

        In formulating our approach to compensation over the past decade, our Compensation Committee has been advised by several compensation consulting firms. Over the most recent years, the Compensation Committee has retained Deloitte Consulting (Deloitte) to provide analysis and advice on various matters relating to the compensation of our executive officers and directors.

        Deloitte has in-depth knowledge of our business and the competitive environment for executive talent. The scope of Deloitte's work has included peer group analysis, program design and ongoing review of our compensation programs. Deloitte does not perform any other services for the Company and is directly accountable to the Compensation Committee. The Compensation Committee must approve all services performed by Deloitte, and the Committee believes that the advice of Deloitte has been fully independent during its service to the Compensation Committee.

        The Compensation Committee and management also receive legal advice regarding executive and employee compensation and benefit plan matters from Vedder Price P.C., a law firm with extensive experience advising financial institutions with respect to such matters.

What are the elements of our Executive Compensation Program?

        The Compensation Committee evaluates the compensation for our named executive officers each year. In evaluating the compensation of senior officers, the Compensation Committee considers the Chief Executive Officer's recommendations to the Committee. This includes the compensation of the other named executive officers based on his review of their performance, job responsibilities, importance to our overall business strategy, our compensation philosophy (including market practice) and his subjective evaluation of performance

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relative to strategic, financial and leadership objectives. Our Chief Executive Officer does not make a recommendation to the Compensation Committee regarding his own compensation. Our named executive officer compensation program is made up of:

•

Base Salary and Salary Stock



•

Short-Term Incentive Compensation (STIC)



•

Discretionary Cash Bonus



•

Long Term Incentive Compensation (LTIC)



•

Performance-Awarded Restricted Stock Awards (PARS)

        When setting the total direct compensation opportunity for named executive officers through the programs listed above, we use data available to us through compensation surveys prepared by consultants and obtained from SEC filings, as well as general advice and counsel with respect to market practices. In conducting our review and setting compensation levels, we consider the median salary paid for positions of similar responsibility by select local and national institutions that are similar to our size and business, and which operate in markets similar to ours, as well as by competitors. We also consider other relevant factors, including internal pay bands and performance. All information is used as a market reference point for the evaluation of the competitiveness of our compensation and a guide to setting compensation, rather than a formal benchmark.

        We generally review compensation elements in aggregate to assess each named executive officer's total direct compensation opportunity. Our approach results in some pay differences in overall compensation among our named executive officers (including our Chief Executive Officer and other named executive officers), which is consistent with the survey data and the scope and the level of job responsibilities for each office. Final decisions concerning compensation reflect a named executive officer's annual achievements, Company performance, and our views regarding a named executive officer's scope of responsibilities, demonstrated leadership abilities, and management experience and effectiveness. The Compensation Committee considers these factors collectively, along with recommendations from our Chief Executive Officer, and ultimately uses its judgment in making final decisions concerning compensation.

Base Salary and Salary Stock

        General Structure:    We pay our named executive officers and other employees a base salary as part of a competitive compensation package. We typically consider salary levels as part of our annual compensation review process or in some cases upon a promotion. Base salary is set based upon the responsibilities of the executive taking into account competitive market compensation paid by other companies for positions of similar responsibility. Median salary levels are targeted for each position. Our Chief Executive Officer recommends changes in base salary for the Company's senior officers to the Compensation Committee. Chief Executive Officer pay is set directly by the Compensation Committee and recommended to the Board for its approval. Annual base salary changes generally become effective January 1 except for certain interim-year promotions.

        Due to TARP regulations, for 2011 we entered into TARP related Salary Stock Agreements with Messrs. Scudder, Sander, Clemens and Carapella in addition to their base salaries. Since we are no longer subject to the TARP executive compensation limitations, we did not enter into TARP related Salary Stock Agreements with any executive officer for 2012.

Short-Term Incentive Compensation

        General Structure:    Due to TARP related restrictions Messrs. Scudder, Sander, Clemens and Carapella could not participate in our STIC Program for the 2011 fiscal year. Mr. Belasco did participate in this program in 2011 and his STIC target award level was set at 40% of his base salary. Because we exited the TARP program in 2011, all of our named executive officers will participate in our STIC program for the 2012 fiscal year.

        Our STIC Program is an incentive compensation vehicle under which we award performance-based cash compensation to employees. STIC target award levels are determined by the officer's grade level. Under our STIC program, determination of the payout level (if any) for each participant's target award is based upon the achievement of a combination of company performance and individual performance metrics and objectives.

•

Company Performance:  Annually the Compensation Committee determines the company performance metrics for the fiscal year, including the number of performance metrics and allocation or weighting

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among multiple metrics. STIC awards for our named executive officers have a heavier weighting placed upon company performance based upon the grade of the participant.

•

Individual Performance:  Individual Performance is based on achievement of a combination of qualitative and quantitative objectives during the performance period, which are specific to the individual's responsibilities and position within the Company. Individual performance is based upon the participant's annual performance evaluation rating.

Notwithstanding the performance factors listed above, the Compensation Committee has discretion to modify any payouts (upwards or downwards) under the STIC plan as appropriate to ensure plan objectives are met, taking into consideration a variety of company specific or environmental factors.

        STIC Awards Reflecting 2011 Performance:    The specifications for our STIC program for the 2011 fiscal year included two company performance metrics to determine the level (if any) of awards to be paid to participants, specifically pre-tax, pre-provision earnings (weighted at 75%) and asset quality (weighted at 25%). Payout amounts were set for each metric based on a graduated scale, which included "Minimum", "Target" and "Maximum" performance levels and corresponding bonus payment levels based on the Company's business plan strategies and other environmental factors. Target performance is the level at which a participant will earn 100% of his or her target award. Depending upon the relationship of actual financial performance, loan portfolio quality and the individual's annual evaluation, final payouts under our STIC program may be as little as zero and as high as 175% of target with respect to company performance, and 150% with respect to individual performance. The STIC award scale and results for 2011 company performance were as follows:

Pre-Tax, Pre-Provision Earnings ("PPE") (75% weighting)

        This metric is defined as pre-tax income, excluding provisions for loan losses, securities gains/losses and other unusual items.

Asset Quality (25% weighting)

        This metric is defined as the ratio of non-performing assets plus loans past due, by over 90 days to total loans.

 

        This resulted in an overall payout for the company performance factor at 80% of Target. Mr. Belasco was the only named executive officer who was eligible to participate in the 2011 STIC program. 60% of his award was based on company performance and 40% of his award was based on individual performance. Based on the company's performance factor and his individual performance (which is described in greater detail below in the section entitled Long Term Incentive Compensation), the Compensation Committee approved an award to Mr. Belasco in an amount of $96,497.

Discretionary Bonus

        General Structure:    Discretionary cash or equity bonuses may be paid from time to time to executive level officers, including named executive officers. When awarded, these bonuses result from unusual or nonrecurring activity, such as a significant corporate acquisition or extraordianry circumstances. As applicable, awards are based upon the recommendation of our Chief Executive Officer for senior officers, and at the recommendation of the Compensation Committee for our Chief Executive Officer. Unlike the other elements of our

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compensation programs that are based on either a combination of company and individual performance or peer group data, discretionary cash bonuses are based solely on individual performance.

        Discretionary Awards Reflecting 2011 Performance:    The Compensation Committee approved a discretionary cash bonus in the amount of $12,000 for Mr. Belasco for the 2011 performance year due to his assumption of responsibilities relating to the Company's Operations Division during the year.

Long Term Incentive Compensation

        General Structure:    All of our executive officers, including our named executive officers, are eligible to receive long-term incentive compensation (LTIC) in the form of equity awards. We intend our equity awards to provide a vehicle for equity ownership in alignment with the interest of our stockholders, retain key executives through the vesting periods, and maintain market competitive compensation. In 2008, our Compensation Committee decided to award restricted stock or restricted stock unit awards, rather than non-qualified stock options to employees (including our named executive officers) under our LTIC program.

        Generally, restricted stock awards vest in equal installments on the second and third anniversaries of the date of grant and are based on the average of the high and low trading prices as quoted on the Nasdaq Stock Market on the date of grant. Shares of restricted stock are issued to non-retirement eligible employees as their restricted stock awards. Employees who have reached their "normal retirement age" receive restricted stock units that are settled on the vesting date as their restricted stock awards. We have eliminated cash dividends paid on unvested LTIC awards and all dividends on the unvested shares are not payable unless and until the underlying shares vest (effective with grants issued after May 2009).

        In 2008 we implemented stock ownership guidelines in order to encourage employees to retain the shares of Common Stock earned through the LTIC program. Under these guidelines senior officers (including our named executive officers) are encouraged to own Common Stock equal in value to one to three times their annual base salary. These officers are recommended to acquire and maintain this share ownership threshold within five years of joining the Company.

        Target award levels are determined by the officer's grade and are adjusted upward or downward depending upon the individual's performance for the prior fiscal year. For the 2011 fiscal year, the LTIC awards for our named executive officers were set at the following percentages of base pay: Messrs. Scudder and Sander—75%, Messrs. Clemens, Carapella and Belasco—40%. We grant equity awards annually at the discretion of the Compensation Committee and Board based upon the recommendation of our Chief Executive Officer for senior officers, and at the recommendation of the Compensation Committee for our Chief Executive Officer. For 2011, Individual LTIC awards could vary from zero to 125% of the target award level based upon assessment of the executive's personal performance. This amount has been increased to 150% for 2012.

        No executive officer, including the Chief Executive Officer nor any other named executive officer, has a role in the timing of equity awards. We do not choose the time for making equity awards based in any way on any pending release to the public of material information, rather we adhere to a policy established over 20 years ago. Under this policy, awards generally are granted on the day of our Board meeting in February. The February Board meeting generally occurs approximately four to five weeks after we have announced year-end financial results.

        In 2011, the TARP regulations limited our ability to issue equity awards to our five most highly compensated employees to long term restricted stock awards if, among other things, the value of the award did not exceed one-third of the employee's total annual compensation, and the shares did not become transferable before the TARP funds are repaid in accordance with a sliding schedule. The employees receiving TARP compliant LTIC awards were required to forfeit the award if he or she terminates employment within two years of the grant date, except in certain circumstances such as death or disability or after a change-in-control. As a result of these rules, the LTIC awards made to the named executive officers for the 2010 fiscal year, that were issued in February 2011 complied with these requirements.

        The following table contains a summary of the LTIC awards for the 2011 fiscal year for the named executive officers which were approved by the Compensation Committee and the Board in February of 2012 based upon his target award and the assessment of the executive's personal performance factors and his execution of the

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Company's strategic plans, satisfaction of job specific competencies and execution of job related duties during the year in consideration of the operating environment.

        Special CEO Promotion Award:    In December 2008, upon the promotion of Michael L. Scudder to his current position of President and Chief Executive Officer, our Compensation Committee approved a special one-time performance equity grant to Mr. Scudder in the amount of 30,920 shares of our Common Stock. The award was to vest over a three-year performance period and be payable on March 15, 2012, provided that the Company achieved an average annual core return on average assets (ROAA) during the period equal to or exceeding the average annual core ROAA achieved by our peer group for the same period. Since these performance criteria were not met, the award did not vest and expired.

Performance-Awarded Restricted Stock Awards

        General Structure:    The PARS Program was adopted in 2006 with the assistance of Deloitte as a compensation vehicle to deliver above-median compensation for above-median performance.

        The total award cycle for our PARS program is five years, consisting of a three year measurement period followed by a two-year vesting period (50% on the first and second anniversaries of the grant date). The

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"measurement period" is set at three years to reflect a realistic time period for achieving long-term Company performance goals, and the "vesting period" is set at two years to enhance the retentive power of the award. PARS awards may be made annually at the discretion of the Compensation Committee, but only if our performance, as measured by annual core return on average assets (ROAA) for the fiscal year plus the prior two years (the performance period), exceeds the seventy-fifth percentile of our peer group's performance as measured by annual core ROAA during the same performance period. If we exceed this threshold, the participants will be eligible to receive an award, based on the extent our average change in core earnings per share (EPS)⁽¹⁾ over the measurement period is above median peer levels based on the following table:

        Targeted percentages for awards are based on a percentage of base pay. The resultant dollar amount is converted to restricted share awards or units on the day of the grant based on the average of the high and low trading prices of Our PARS awards have been subject to a TARP compliant compensation recovery agreement that requires repayment of the award if and to the extent it is based on statements of earnings, revenues, gains, or other criteria that are later found to be materially inaccurate, regardless of whether or not a formal restatement of earnings is required and regardless of whether or not the Company or the executive is "at fault".

        PARS Awards Reflecting Three-year Period of 2008-2010:    The PARS awards cycle reviewed in May 2011 took into consideration the Company's core ROAA for the 2008, 2009 and 2010 fiscal years, and the Company's change in core EPS for the three-year period ended December 31, 2010. Based on the Company's core ROAA and change in core EPS during these periods when compared to peers using the framework discussed above, we determined that the Company's performance did not earn a PARS award for the period. The Compensation Committee will next consider the grant of PARS awards at its May 2012 meeting. These grants will be based on the Company's core ROAA for the 2009, 2010 and 2011 fiscal years, and the Company's change in core EPS for the same periods.

How do we determine retirement and other welfare benefits?

        There is no material difference in the welfare benefit plans we provide to executive officers compared to the welfare benefit plans we provide to other salaried employees. Years of service and pay level of our executives drive the value of their retirement benefits. These programs, which are available to all employees, include group insurance, vacation, tuition reimbursement and contribution matching gift plans.

        Retirement benefits are delivered through tax-qualified defined benefit and defined contribution plans and non-qualified defined contribution plans. Executive officers are beneficiaries of these qualified programs on the same basis as other employees, and in the non-qualified programs, on the same basis as other officers in accordance with the plans. Upon the recommendation of management, in November 2006, the Compensation Committee authorized amendments to the long-standing pension plan of the Company which is described in further detail beginning on page 37. The amendments were adopted in February 2007 and included a so-called "soft freeze" eliminating any new enrollments of employees into the plan and a reduction in the growth of benefits effective April 1, 2007. These changes will assist us in controlling what had become an unacceptably high and rapidly increasing cost, while continuing to provide appropriate, competitive retirement benefits for our employees.

   

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⁽¹⁾

For purposes of calculating core return on average assets and core earnings per share, a core net income component is used and defined as net income before unusual items less the after-tax portion of gains or losses on the sale of investment securities and nonrecurring items, applying a tax rate of 35%.

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Do we have formal equity ownership guidelines for our executive officers?

        The Company grants stock awards to employees with the intent of closely aligning the interests of the Company's management and stockholders. Accordingly, the Company would like senior officers to retain a portion of the Common Stock they obtain through the Company's equity programs. In this spirit, the Company's Board of Directors has established minimum stock ownership guidelines that apply to all non-employee directors and members of senior management of the Company.

        Under these guidelines, non-employee directors are encouraged to own Common Stock equal in value to five times their annual retainer. Our President and Chief Executive Officer is encouraged to own Common Stock equal in value to three times his annual salary, and senior officers are encouraged to own Common Stock equal in values ranging from one to two times their annual salary, depending upon their salary grade. Ownership levels will be determined by considering stock acquired through open market purchases, employee benefit plans and the Company's equity compensation plans.

Do we have employment contracts with our executive officers?

        Employment contracts are extended to executive level employees in exchange for loyal service, and agreements not to solicit or compete in the event of a termination of employment. The Compensation Committee has determined that the terms of the agreements are consistent with competitive practice and are important to attracting and retaining executive talent. The agreements provide for the executive's position, compensation and benefits, including severance payments in the event of loss of position for other than cause. The agreements also impose confidentiality and non-solicitation obligations on the executive. In the event of a loss of position following a change-in-control of the Company, significant separation benefits are triggered, including lump sum payments, equity award vesting acceleration and similar benefits. These agreements are detailed in the tables and narrative following this Compensation Discussion and Analysis.

Do we provide perquisites to our executive officers?

        The Company provides perquisites to executives, including the named executive officers, which the Compensation Committee believes are reasonable and within market practice.

        We have a Company vehicle policy that provides a car allowance to senior management, including our executive officers. We also reimburse certain officers for a portion of country club dues. We provide these benefits because we believe they are consistent with competitive practices. We also provide relocation assistance to our newly hired or relocated salaried executive employees, including our named executive officers. We provide the relocation assistance to offer a competitive compensation package to our current and prospective executive employees because we believe that potential new hires and our current executive employees view relocation assistance as a valuable benefit.

What tax considerations do we evaluate in making compensation decisions?

        We consider the tax effects of various forms of compensation and the potential for excise taxes to be imposed on our named executive officers, which might have the effect of frustrating the purpose(s) of such compensation. In conducting this assessment we consider several provisions of the Internal Revenue Code (Code) including:

        Section 162(m).    Section 162(m) limits the ability of public companies like ours to deduct certain compensation in excess of $1 million paid to our Chief Executive Officer or other named executive officers. However, this limitation does not apply to compensation that qualifies as "performance-based." In administering the "performance-based" portion of our executive compensation program (the STIC, stock options and PARS), the Compensation Committee historically has satisfied the requirements for deductibility under Section 162(m) and believes, based on current tax laws, that substantially all the payments under those awards will be deductible. Because we were a TARP participant during most of 2011, this deduction limit was reduced to $500,000 during 2011 and the performance-based exception was not applicable.

        Sections 280G and 4999.    In employment contracts issued to our named executive officers prior to May 2009, we included certain change-in-control (CIC) tax provisions. These provisions provide for tax protection in the form of a reimbursement to the executive for any excise tax under Section 4999 as well as any additional income and employment taxes resulting from such reimbursement. Section 4999 imposes a 20% nondeductible excise tax on our named executive officers who receive an "excess parachute payment" and Section 280G

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disallows the tax deduction to the payer (our successor) for any excess parachute payment. An excess parachute payment is the aggregate amount of cash and other benefits payable upon a change-in-control that exceeds 2.99 times the executive's base amount (average W-2 compensation for 5 calendar years preceding the change in control). The IRS imposes the excise tax on the amount that exceeds the executive's base amount. The intent of the reimbursement is to provide a benefit without a tax penalty to our executives who are displaced in the event of a change-in-control. At the time of issuance, providing tax protection for excess parachute payments for our executive officers was consistent with market practice. However, these CIC tax provisions were eliminated from the Company's standard employment agreements in May of 2009 and are not included in newly issued employment agreements, including our recent employment agreement with Mr. Sander.

2011 SUMMARY COMPENSATION TABLE

        The table and explanatory footnotes below summarize the total compensation for the years 2011, 2010 and 2009 paid to or earned by our named executive officers.

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2011 GRANTS OF PLAN-BASED AWARDS TABLE

        The following table and explanatory footnotes provide information with regard to the potential cash award opportunity for 2011 and with respect to stock awards granted during 2011 and reported as Stock Awards in the Summary Compensation Table.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2011 TABLE

        The following table and explanatory footnotes provide information regarding unexercised stock options and unvested stock awards held by our named executive officers as of December 31, 2011. All values in the table are based on a market value for our Common Stock of $10.13, the closing price on December 30, 2011, the last trading day of 2011, as reported by the Nasdaq Stock Market. Information regarding when unvested awards are scheduled to vest, subject to continued employment and acceleration in the event of death, disability or change-in-control, is set forth in the footnotes below.

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2011 OPTION EXERCISES AND STOCK VESTED TABLE

        The following table provides information with respect to amounts paid to or received by our named executive officers during 2011 as a result of the exercise of non-qualified stock options and the vesting of restricted stock awards or units.

PENSION BENEFITS

        We sponsor a noncontributory tax-qualified defined benefit retirement plan (Pension Plan). The amount of the monthly pension benefit is based on the average monthly pension-eligible compensation and credited service of the participant. Average monthly compensation is the average of the highest eighty-four consecutive months of pay within the last 120 months of service and credited service is based on the period of employment with First Midwest, subject to limitations on services prior to 1980.

        Pension-eligible compensation consists of base salary, bonuses, incentive compensation, overtime and vacation pay, but excludes severance, and amounts realized from exercise of non-qualified stock options and the release of restricted stock/unit awards. Pension-eligible compensation is capped by tax laws applicable to tax-qualified pension plans. For 2011, this limit was $245,000. Any amounts that become ineligible due to the Code limits are used to compute the pension restoration contribution to the non-qualified retirement plan as discussed further under the section entitled Non-qualified Deferred Compensation.

        Our Pension Plan provides for pension benefits under normal retirement (the attainment of age 65), early retirement (the attainment of age 55 with fifteen or more years of service), termination after five years of service, disability retirement after ten years of service and death before retirement with five or more years of service. A participant may elect to have his/her benefit paid each month in the form of a single life annuity or one of several actuarially equivalent forms of payment, including a lump sum.

        Early retirement pension benefits are reduced by 6% for each of the first five years (ages 60-65) and by 4% for each of the next five years (ages 55-60) that the pension commencement date precedes the normal retirement age of 65. Of the named executive officers, only Messrs. Belasco and Carapella are eligible for early retirement.

        The Pension Plan is designed to provide an annual pension benefit at normal retirement of 27% of final average pension-eligible compensation for a participant with thirty years of credited service.

2011 PENSION BENEFITS TABLE

        The following table shows the present value of the accumulated benefit as of December 31, 2011 payable to each of the named executive officers, including the number of years of service credited to each named executive officer under our Pension Plan determined using interest rate and mortality rate assumptions consistent with those used in our 2011 audited financial statements.

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NON-QUALIFIED DEFERRED COMPENSATION

        We maintain two non-qualified deferred compensation plans in which our named executive officers may participate, the First Midwest Bancorp, Inc. Non-qualified Retirement Plan (Retirement Plan) and the First Midwest Bancorp, Inc. Stock Option Gain Deferral Plan (Gain Deferral Plan).

Non-qualified Retirement Plan

        The Retirement Plan is a defined contribution deferred compensation plan under which participants are credited with deferred compensation equal to contributions and benefits based on amounts that would have accrued under our tax-qualified plans but for limitations under the Code, and up to 75% of base salary and up to 100% of annual bonus that the participant has elected to defer. Deferral elections are made by eligible participants in December of each year for amounts to be earned in the following year. Participant accounts are deemed to be invested in separate investment accounts in an irrevocable rabbi trust under the plan, with similar investment alternatives as those available under our Savings and Profit Sharing Plan (our tax-qualified 401(k) savings and profit sharing plan), including an investment account deemed invested in shares of our Common Stock. Participants are able to modify their investment elections at any time. Participant accounts are adjusted to reflect the investment return of the deemed investments. The following table shows the investment funds available under the Retirement Plan and their annual rate of return for the calendar year ended December 31, 2011, as reported by the trustee of the Retirement Plan.

Non-qualified Stock Option Gain Deferral Plan

        In 1998, our Board adopted the Gain Deferral Plan with the purpose to encourage stock ownership of certain key executives. This plan combines traditional deferred compensation arrangements with stock option exercise transactions by allowing eligible stock option participants to defer to a future date the receipt of shares representing the value realized upon exercise of the underlying stock options. In response to the addition of Section 409A of the Code, the Gain Deferral Plan is only available on a limited basis. Currently, 20 stock option participants are eligible to participate, including the named executive officers. Deferrals are held for each participant in separate individual accounts in an irrevocable rabbi trust. Amounts deferred under the Gain Deferral Plan are denominated and paid in shares of Common Stock and are adjusted for dividends as if the dividends were reinvested in shares of Common Stock.

Distributions

        Under both the Retirement Plan and the Gain Deferral Plan, payments begin after termination and are payable at the participant's election, either as a lump sum or in installments over a period not to exceed fifteen years. Earlier payment may be made upon showing of financial hardship to the satisfaction of the Compensation Committee. Distributions are paid in cash under the Retirement Plan, and are paid as in-kind stock distributions under the Gain Deferral Plan. Payments to executive officers and others will be delayed as necessary to comply with Code Section 409A.

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2011 NON-QUALIFIED DEFERRED COMPENSATION TABLE

        The following table summarizes the activity in each of the named executive officer's deferred compensation accounts during 2011.

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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL

        We have entered into agreements and maintain plans covering our executive officers that will require the Company to provide incremental compensation in the event of involuntary termination of employment or a change-in-control. We describe these obligations below.

Overview

        We have entered into employment agreements with each of our named executive officers. These agreements have been in place for many years, in most instances since 1997, and provide for automatic annual renewal. The agreements set forth the executive's title and responsibilities and the executive's pay, confidentiality and non-solicitation commitments by the executive and payments, if any, to be made to the executive upon termination of employment. Termination of employment also impacts stock option and restricted stock awards we have made, as well as benefits payable under our employee benefit plans.

        The following discussion takes each termination of employment situation—voluntary resignation, discharge for cause, discharge without cause, resignation due to constructive discharge, death and disability—and a change-in-control of the Company, and describes the additional amounts that the Company would pay or provide to the executive officer or the officer's beneficiaries as a result. The discussion below and the amounts shown reflect certain assumptions we have made in accordance with SEC rules. These assumptions are that the termination of employment or change-in-control occurred on December 31, 2011 and that the value of a share of our Common Stock on that day was $10.13, the closing price as reported by the Nasdaq Stock Market on December 30, 2011.

        In addition, the following discussion and amounts do not include the payments and benefits which are not enhanced by the termination of employment or change-in-control. These payments and benefits include:

•

Benefits accrued under our Savings and Profit Sharing Plan and Pension Plan in which all employees participate;



•

Accrued vacation pay, health plan continuation and other similar amounts payable when employment terminates under programs applicable to our salaried employees generally;



•

Balances accrued under the non-qualified Retirement Plan and Gain Deferral Plan as more fully described on page 38; and



•

Stock options that have vested and become exercisable prior to the employment termination or change-in-control.

        For convenience, the payments and benefits described above are referred to in the following discussion as the executive officer's "vested benefits."

Voluntary Resignation

        We are not obligated to pay amounts over and above vested benefits in the event of employment termination due to voluntary resignation, unless the executive's age and years of service qualify for special provisions applicable for retirement. None of our executives have qualified for any retirement provisions as of December 31, 2011.

        Under the confidentiality commitments in the employment agreement, the executive is required to not disclose our confidential information or use it for another's benefit. In addition, the executive may not solicit any of our clients or customers to not do business with us or solicit any of our employees to leave us. These non-solicitation provisions apply for two years after termination of employment for Mr. Scudder; eighteen months after termination of employment for Mr. Sander; and one year after termination for all other named executive officers.

Discharge for Cause

        We are not obligated to pay any amounts over and above vested benefits if an executive officer's employment terminates because of discharge for cause and the executive is bound by the confidentiality and non-solicitation commitments. The executive officer's right to exercise vested options expires upon discharge for cause, and, if the cause is fraud or embezzlement of funds, benefits under the Gain Deferral Plan are subject to forfeiture. In general, a discharge will be for cause if the executive has intentionally failed to perform his or her

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duties, engaged in illegal or gross misconduct that harms the Company or has been convicted of a felony involving moral wrongdoing.

Death or Disability

        We provide our employees, including our executive officers, with group life and disability insurance coverage. The group life insurance benefit is a multiple of base salary ranging from two times to four times base salary and is subject to limits contained in the policy. The disability benefit is a monthly benefit, paid until age 65, equal to two-thirds of base salary at the time of disability. These benefits would be paid to the named executives or beneficiary, in addition to the vested benefits, in the event of death or disability. The amount of the payments assuming death or disability on December 31, 2011 are set forth in the following table.

        We have provided that all unvested stock options and restricted stock awards become vested in the event of the death or disability of the employee. The following table summarizes the unvested stock options and restricted stock awards that would have vested on December 31, 2011 if the executive's employment terminated that day due to death or disability. All values in the table are based on a market value for our Common Stock of $10.13, the closing price on December 30, 2011 as reported by the Nasdaq Stock Market.

Discharge Not For Cause; Resignation Due to Constructive Discharge

        Our employment agreements obligate us to pay severance benefits if an executive officer's employment is involuntarily terminated other than for cause and the confidentiality and non-solicitation commitments bind the executive. The executive is also required to execute a general release of claims as a condition to receiving severance benefits. This scenario includes the resignation by the executive under circumstances that constitute constructive discharge, except in this case; the non-solicitation commitments do not apply. Constructive discharge will generally arise if the executive determines we have breached the employment agreement by not maintaining his or her appointed positions, power and authority, failed to pay or provide the agreed-upon compensation, given notice that the agreement will not automatically renew, or required the executive to move to an office location more than eighty miles from his or her current location. Our primary obligation in these circumstances is to continue the executive's salary and participation in medical plans for a defined severance period and to pay a pro-rata annual bonus for the year employment terminates. We will also provide outplacement assistance. The severance period is nine months for Mr. Scudder and Mr. Sander and six months

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for the other executive officers. The severance period may be extended for up to an additional six-month severance period in the Company's sole discretion.

SEVERANCE

        The following table summarizes the severance benefits that would be payable to the named executive officers had employment terminated involuntarily on December 31, 2011.

CHANGE-IN-CONTROL

        We have special provisions in our employment agreements and plans in the event of a change-in-control of our Company. In general, a change-in-control will occur if a person or group acquires more than 25% of our voting stock, there is an unwelcome change in a majority of the members of our Board, or, if after we merge with another organization, our stockholders do not continue to own more than half of the voting stock of the merged company and more than half of the members of the board of the merged company were not members of our Board.

        The severance benefits under our employment agreements are enhanced in the event of involuntary termination (including constructive discharge) upon a change-in-control, and the confidentiality commitments apply. For this purpose, resignation by the executive for any reason after completion of a one-year post-change-in-control transition period will qualify as constructive discharge. The enhanced benefits consist of a lump sum payment of approximately two and one-half years' pay in the case of Mr. Scudder and Mr. Sander and two years' pay for the other named executive officers. The employment agreements for Messrs. Scudder, Belasco, Clemens and Carapella also provide for a gross-up payment should the executive be subject to the excise tax on golden parachute payments under the Code. In addition, all unvested stock options and restricted stock awards vest in full upon a change-in-control, whether or not the executive's employment terminates.

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        The table below summarizes the additional payments we would be obligated to make if a change-in-control occurred and the executive's employment terminated on December 31, 2011. All equity values in the table are based on a market value for our Common Stock of $10.13, the closing price on December 30, 2011 as reported by the Nasdaq Stock Market.

COMPENSATION COMMITTEE REPORT

        The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis that precedes this report. Based on this review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2011.

Risk Review Discussion

        As participants until November 23, 2011 in the TARP Capital Purchase Program established under the Troubled Asset Relief Program of the Emergency Economic Stabilization Act of 2008, as subsequently amended by the American Recovery and Reinvestment Act of 2009, the Compensation Committee was required to conduct a risk assessment twice a year under which it must evaluate and review the following with the Company's senior risk officers:

•

The compensation plans for senior executive officers or "SEOs" to ensure that the plans do not encourage SEOs to take unnecessary and excessive risks that may threaten the value of the company.



•

All employee compensation plans "in light of the risks posed to the company by such plans and how to limit such risks", and to ensure they do not encourage the manipulation of reported earnings to enhance the compensation of any of the company's employees.

        The Compensation Committee conducted such reviews of the compensation programs discussed in the section entitled Compensation Discussion and Analysis on February 21, 2011 and on August 18, 2011, and as a result of these reviews, the Compensation Committee has determined that the Company's compensation programs and practices employ adequate features that adequately balance appropriate risk taking with risk mitigation strategies. Below are some of the compensation program features which are used to achieve this balance:

•

Compensation practices are intended to provide market-responsive, total direct compensation opportunities that include equity-based incentives that align employee interests with stockholders.



•

Median compensation is targeted at the median percentile paid by competitors for positions of similar responsibility. We believe this strategy is neither overly aggressive nor modest.



•

The weighting of base salary vs. incentive and performance based compensation is balanced so that base salaries are sufficient to support the employee's reasonable day-to-day needs.



•

The total award cycle for equity compensation is intended to subject employee compensation to long-term market exposure and the Company's long-term performance.

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•

The full range of risks associated with employee activities, as well as the time horizon over which those risks may be realized, are considered in an effort to insure that no individual employee activity could manipulate the various elements of employee compensation, or that could place the organization at risk.



•

With respect to performance based compensation, we use multiple performance factors that encourage executives to focus on the overall health of the business rather than a single financial measure and we cap awards at appropriate levels.



•

The Company has substantial stock ownership requirements for senior executives.

        As a result, the Compensation Committee is able to certify that:

1.

The Compensation Committee has reviewed with the Company's senior risk officers the SEO compensation plans and the Compensation Committee has made all reasonable efforts to ensure that these plans do not encourage SEOs to take unnecessary and excessive risks that threaten the value of the Company;



2.

The Compensation Committee has reviewed with the Company's senior risk officers the employee compensation plans and has made all reasonable efforts to limit any unnecessary risks these plans pose to the Company; and



3.

The Compensation Committee has reviewed the employee compensation plans to eliminate any features of these plans that would encourage the manipulation of reported earnings of the Company to enhance the compensation of any employee.

Submitted by the Compensation Committee of the Board of Directors.

J. Stephen Vanderwoude (Chair)
Barbara A. Boigegrain (Vice-Chair)
Brother James Gaffney
Phupinder S. Gill
Peter J. Henesler
John L. Sterling
Members, Compensation Committee

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AUDIT COMMITTEE REPORT

        The primary responsibilities of the Audit Committee (we, us) are to: (1) assist the Board in its oversight of the integrity of the Company's financial statements and systems of internal control over financial reporting; (2) oversee the Company's compliance with legal and regulatory requirements relating to financial reporting and disclosure; (3) evaluate the independence and qualifications of the Company's independent auditors; and (4) oversee the performance of the Company's independent auditors and its internal audit function. We also are solely responsible for the appointment, compensation, and retention of the Company's independent auditors. The Board has adopted an Audit Committee Charter, which sets forth the specific duties of the Audit Committee, a copy of which is available on the Company's website.

        In carrying out our oversight responsibilities, we rely on the expertise and knowledge of management, the independent auditors and the internal auditors. Management is responsible for determining that its financial statements are complete, accurate and in accordance with U.S. generally accepted accounting principles. Management is responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The independent auditors are responsible for planning and carrying out a proper audit of the Company's financial statements and internal control over financial reporting. The internal auditors are responsible for evaluating the adequacy and effectiveness of the Company's processes and system of internal controls to achieve the Company's stated goals and objectives. It is not the duty of the Audit Committee to plan or conduct audits, to determine that the Company's financial statements are complete and accurate and are in accordance with U.S. generally accepted accounting principles, or to conduct investigations or other types of auditing or accounting reviews or procedures.

        We have reviewed and had discussions with management and Ernst & Young LLP regarding the Company's audited financial statements for the fiscal year ended December 31, 2011. We also have discussed with Ernst & Young LLP the matters required under Statement on Auditing Standards No. 114, The Auditor's Communication With Those Charged With Governance (previously Statement on Auditing Standards No. 61, Communication with Audit Committees), as currently in effect. We have received the required disclosures from Ernst & Young LLP under applicable Public Company Accounting Oversight Board standards regarding auditor independence, and have discussed the auditors' independence with Ernst & Young LLP. We have established policies and procedures regarding the pre-approval of all services provided by the independent auditors. We have reviewed the audit and non-audit services provided by Ernst & Young LLP for the fiscal year ended December 31, 2011 and considered whether such services are compatible with maintaining the auditors' independence, and determined to engage Ernst & Young LLP as the independent registered public accounting firm of First Midwest Bancorp, Inc. for the fiscal year ending December 31, 2011.

        Based upon our review of the Company's audited financial statements and the discussions noted above, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in our charter, we have, pursuant to authority delegated by the Board, approved the inclusion of the audited financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 for filing with the SEC.

Joseph W. England (Chair)
Bruce S. Chelberg
John F. Chlebowski, Jr.
Patrick J. McDonnell
Ellen A. Rudnick
Michael J. Small
Members, Audit Committee

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OTHER MATTERS

Section 16(a) Beneficial Ownership Reporting Compliance

        Section 16(a) of the Securities Exchange Act of 1934, as amended (Exchange Act) requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership of, and transactions in, our equity securities with the SEC. Such directors, executive officers and stockholders are also required to furnish us with copies of all Section 16(a) reports they file. Purchases and sales of our equity securities by such persons are published on our website at www.firstmidwest.com/secfilings. Based on a review of the copies of such reports, and on written representations from our reporting persons, we believe that all Section 16(a) filing requirements applicable to our directors, executive officers and stockholders were complied with during the fiscal year ended December 31, 2011.

Incorporation by Reference

        To the extent that this Proxy Statement is incorporated by reference into any other filing by FMBI under the Securities Act or the Exchange Act, the sections of this Proxy Statement entitled Audit Committee Report and Compensation Committee Report (to the extent permitted by the rules of the SEC) will not be deemed incorporated, unless specifically provided otherwise in such filing. We also include several website addresses in this Proxy Statement for your reference. The information on these websites is not part of this Proxy Statement.

Other Business

        At the date hereof, there are no other matters that the Board intends to present, or has reason to believe others will present, at the Annual Meeting. If other matters come before the Annual Meeting, the persons named in the accompanying form of proxy will vote in accordance with their best judgment with respect to such matters.

Stockholder Proposals for 2013 Annual Meeting of Stockholders

        Stockholders who, in accordance with the SEC's Rule 14a-8, wish to present proposals for inclusion in the proxy materials to be distributed by us in connection with our 2013 Annual Meeting of Stockholders must submit their proposals to our Corporate Secretary on or before December 7, 2012. As the rules of the SEC make clear, simply submitting a proposal does not guarantee its inclusion.

        In accordance with our Restated Certificate of Incorporation, for a matter to be properly brought before the 2013 Annual Meeting of Stockholders (but not necessarily contained in our proxy statement), a stockholder's notice of the matter must be timely delivered to First Midwest Bancorp, Inc. ATTN: Corporate Secretary, One Pierce Place, Suite 1500, Itasca, Illinois 60143, not less than 120 nor more than 180 days prior to the date of the meeting, which currently is scheduled for May 15, 2013. As a result, any notice given by or on behalf of a stockholder pursuant to these provisions of our Restated Certificate of Incorporation (and not pursuant to the SEC's Rule 14a-8) must be received no earlier than November 16, 2012 and no later than January 15, 2013.

Stockholder Recommendations for Director Candidates

        The Nominating and Corporate Governance Committee will consider candidates recommended by stockholders. The policy of the Nominating and Corporate Governance Committee is to consider candidates recommended by stockholders in the same manner as other candidates. Stockholders who wish to submit director candidates for consideration by the Nominating and Corporate Governance Committee for election at our 2013 Annual Meeting of Stockholders may do so by submitting in writing such candidates' names, in compliance with the procedures and along with the other information required by our Articles of Incorporation, to First Midwest Bancorp, Inc. ATTN: Corporate Secretary, One Pierce Place, Suite 1500, Itasca, Illinois 60143 between November 16, 2012 and January 15, 2013.

Important Notice Regarding Delivery of Stockholder Documents

        SEC rules allow us to deliver a single copy of our proxy materials to multiple stockholders of record sharing the same address and last name, or who we reasonably believe are members of the same family and who consent to receive a single copy of these materials in a manner provided by these rules. This practice is referred to as "householding" and can result in significant savings of paper and mailing costs. We have been notified that certain brokers and banks holding our Common Stock for their customers will household proxy materials.

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Stockholders sharing an address whose shares of our Common Stock are held by a broker or bank, who now receive multiple copies of our proxy materials and who wish to receive only one copy of these materials per household, should contact their broker or bank to request that only one set of these materials be delivered in the future.

        If you are a registered holder receiving multiple copies of our annual report and proxy statement, you may request householding in the future by contacting our Corporate Secretary.

Policies on Reporting of Concerns Regarding Accounting and Other Matters and on Communicating with Independent Directors

        We have adopted policies on reporting of concerns regarding accounting and other matters and on communicating with our independent Directors.

        Any person, whether or not an employee, who has a concern about the conduct of FMBI or its subsidiaries or affiliates, or any of our people, including with respect to our accounting, internal accounting controls or auditing issues, may, in a confidential or anonymous manner, communicate that concern via regular mail to the Company's Audit Services Manager, Chief Risk Officer, or to the Chairman of the Audit Committee, in either case, at First Midwest Bancorp, Inc., One Pierce Place, Suite 1500, Itasca, Illinois 60143.

        Any interested party, whether or not an employee, may contact an individual director, the Board as a group, or a specified Board committee or group, including our independent directors as a group, by submitting written correspondence to First Midwest Bancorp, Inc., Attn: Board of Directors, One Pierce Place, Suite 1500, Itasca, Illinois 60143. Each communication should specify the applicable addressee or addressees to be contacted as well as the general topic of the communication. The Company will initially receive and process communications before forwarding them to the addressee. Communications also may be referred to other departments within the Company.

Voting Via the Internet or by Telephone

        Provisions have been made for you to vote your shares of Common Stock via the Internet or by telephone. You may also vote your shares by mail. Please see the section entitled How do I vote? beginning on page 3 and the Proxy Card accompanying this Proxy Statement for specific instructions on how to cast your vote by any of these methods.

        The Internet and telephone voting procedures are designed to authenticate stockholders' identities, to allow stockholders to give their voting instructions and to confirm that stockholders' instructions have been recorded properly. We have been advised that the Internet and telephone voting procedures that have been made available to you are consistent with the requirements of applicable law. Stockholders voting via the Internet and by telephone should understand that there may be costs associated with voting in these manners, such as usage charges from Internet access providers and telephone companies that must be borne by the stockholder.

By order of the Board of Directors,

Cynthia A. Lance
Executive Vice President and Corporate Secretary,
First Midwest Bancorp, Inc.

April 6, 2012

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