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NOTICE & PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant    x

Filed by a Party other than the Registrant    ¨

Check the appropriate box:

x    Definitive Proxy Statement

¨    Definitive Additional Materials

¨    Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

NORTHERN TRUST CORPORATION

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

OF NORTHERN TRUST CORPORATION

March 14, 2011

ROSE A. ELLIS

Corporate Secretary

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NORTHERN TRUST CORPORATION

50 South LaSalle Street

Chicago, Illinois 60603

March 14, 2011

PROXY STATEMENT

INTRODUCTION

Our 2011 annual meeting of stockholders will be held on Tuesday, April 19, 2011 at 10:30 a.m., Chicago time, at the office of Northern Trust Corporation (the “Corporation”) located at 50 South LaSalle Street (Northwest corner of LaSalle Street and Monroe Street) in Chicago, Illinois. We invite you to attend the annual meeting and vote your shares directly.

You do not need to attend the annual meeting to vote your shares. Instead, you may vote your shares by telephone or through the Internet or you may complete, sign, date, and return the enclosed proxy card in the postage-paid envelope provided. Instructions for voting by telephone or through the Internet can be found on the enclosed proxy card.

The Corporation’s board of directors is soliciting your proxy to encourage your participation in the voting at the annual meeting. This proxy statement provides you with information about each proposal and other matters that you may find useful in voting your shares.

On March 14, 2011, we began mailing this proxy statement and the enclosed proxy card to all stockholders entitled to vote at the annual meeting. We have enclosed with this proxy statement our 2010 annual report to stockholders, which contains detailed information about the Corporation’s activities and financial performance in 2010.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON APRIL 19, 2011

This proxy statement and the 2010 annual report to stockholders are available at https://materials.proxyvote.com/665859.

VOTING

Who May Vote

Record holders of the Corporation’s common stock at the close of business on February 28, 2011 may vote at the annual meeting. On that date, the Corporation had 242,114,991 shares of common stock outstanding. The shares of common stock held in the Corporation’s treasury will not be voted.

You are entitled to one vote for each share of common stock that you owned of record at the close of business on February 28, 2011. The enclosed proxy card indicates the number of shares you are entitled to vote at the annual meeting.

Voting Your Proxy

Whether or not you plan to attend the annual meeting, we urge you to vote your shares promptly.

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If you are a “stockholder of record” (that is, you hold your shares of the Corporation’s common stock in your own name), you may vote your shares by proxy using any of the following methods:

The telephone and Internet voting procedures set forth on the proxy card are designed to authenticate stockholders’ identities, to allow stockholders to provide their voting instructions, and to confirm that their instructions have been properly recorded. If you vote by telephone or through the Internet, you should not return your proxy card.

If you are a “beneficial owner,” also known as a “street name” holder (that is, you hold your shares of the Corporation’s common stock through a broker, bank, or other nominee), you will receive from the record holder voting instructions (including instructions, if any, on how to vote by telephone or through the Internet) that you must follow in order to have your shares voted at the annual meeting. Please note that the rules that guide how brokers vote your stock have changed. Brokers may no longer vote your shares on the election of directors or certain executive compensation matters without your specific instructions. Please return your proxy card so your vote can be counted.

If you own shares of common stock as a participant in The Northern Trust Company Thrift-Incentive Plan (“TIP”), or shares in any other employee benefit plan of the Corporation, you will receive a voting instruction card that covers the shares credited to each of your plan accounts.

Whether you vote by mail, telephone or Internet, your shares will be voted in accordance with your instructions. If you sign, date, and return your proxy card without indicating how you want to vote your shares, the proxy holders will vote your shares in accordance with the following recommendations of the board of directors:

The proxy holders are authorized to vote as they shall determine in their sole discretion on any other business that may properly come before the annual meeting.

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Revoking Your Proxy

You may revoke your proxy at any time before it is voted at the annual meeting by:

Voting in Person

You may come to the annual meeting and vote your shares in person by obtaining and submitting a ballot that will be provided at the meeting. However, if your shares are held by a broker, bank, or other nominee in street name, to be able to vote at the meeting you must obtain a proxy, executed in your favor, from the record holder of your shares, indicating that you were the beneficial owner of the shares on February 28, 2011, the record date for voting. If you need directions to the annual meeting, please call 312-444-7030.

Householding Information

We are delivering only one annual report and proxy statement to record stockholders who share the same address unless they have notified us that they wish to continue receiving multiple copies. This practice, known as “householding,” reduces duplicate mailings, saves printing and postage costs as well as natural resources and will not affect dividend check mailings. If you wish to receive a separate copy of the annual report or proxy statement, or if you wish to receive separate copies of future annual reports or proxy statements, please call 312-444-7030 or mail a request to the Corporation’s Corporate Secretary at the address indicated on the first page of this proxy statement. We will deliver the requested documents promptly upon your request.

If you and other stockholders of record with whom you share an address currently receive multiple copies of annual reports or proxy statements, or if you hold stock in the Corporation in more than one account and, in either case, you wish to receive only a single copy of the annual report or proxy statement, please contact the Corporation’s transfer agent (Wells Fargo Bank, N.A., Attn: Householding, P.O. Box 64854, St. Paul, MN 55164-0854; Telephone: 877-602-7615) with the names in which all accounts are registered and the name of the account for which you wish to receive mailings.

Quorum and Vote Required for Approval

A quorum of stockholders is necessary to hold a valid meeting. A quorum will exist if a majority of the outstanding shares is present in person or by proxy at the annual meeting. Abstentions and broker non-votes, if any, will be counted as present for purposes of establishing a quorum. A “broker non-vote” will occur when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner. Please note that the rules that

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guide how brokers vote your stock have changed. Brokers may no longer vote your shares on the election of directors or certain executive compensation matters without your specific instructions. Please return your proxy card or vote by telephone or through the Internet so your vote can be counted. Inspectors of election appointed for the annual meeting will tabulate all votes cast in person or by proxy at the annual meeting. In the event a quorum is not present at the annual meeting, we expect that the annual meeting will be adjourned or postponed to solicit additional proxies.

The following table indicates the vote required for approval of each item to be presented to the stockholders at the annual meeting and the effect of “withhold” votes, abstentions, and broker non-votes.

Solicitation of Proxies

The Corporation will pay all costs of soliciting proxies. The Corporation has retained Georgeson Inc. to assist with the solicitation of proxies for a fee not to exceed $13,500, plus reimbursement of reasonable out-of-pocket expenses. In addition, we may also use our officers and employees, at no additional compensation, to solicit proxies either personally or by telephone, Internet, letter, or facsimile.

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ADMITTANCE TO THE ANNUAL MEETING

Stockholders as of the record date, or their duly appointed proxies, may attend our annual meeting on April 19, 2011, and each may be accompanied by one guest. Registration will begin at 9:30 a.m., and seating will begin at 10:00 a.m. If you attend, please note that you will need an admission ticket or proof of ownership of the Corporation’s common stock to enter the meeting. If you arrive at the meeting without an admission ticket, we will admit you only if we are able to verify that you are a stockholder of the Corporation. Also, you may be asked to present valid picture identification, such as a driver’s license or passport. For safety and security reasons, cameras and recording devices will not be permitted in the meeting.

For stockholders of record, an admission ticket is enclosed. Please bring the admission ticket with you to the meeting.

If your shares of common stock are held by a broker, bank, or other nominee in street name, your admission ticket is the left side of your voting instruction form. If you do not bring the left side of your voting instruction card, you will need proof of ownership to be admitted to the meeting. A recent brokerage statement or letter from a bank or broker is an example of proof of ownership.

ITEM 1—ELECTION OF DIRECTORS

Stockholders will be asked to elect 13 directors at this year’s annual meeting. Set forth below is detailed information with respect to the 13 nominees, 12 of whom are currently serving as directors of the Corporation and its principal subsidiary, The Northern Trust Company (the “Bank”). William D. Smithburg, a director of the Corporation since 1981, will not stand for re-election as a director at the annual meeting. Martin P. Slark, a new director nominee, will stand for election to the vacated seat. Mr. Slark was recommended for consideration as a candidate for director by the Corporation’s Chairman and CEO.

Each of the 13 director nominees has consented to serve as a director if elected at this year’s annual meeting. Each nominee elected as a director will serve until the next annual meeting and until his or her successor has been elected and qualified. If any nominee is unable to serve as a director at the time of the annual meeting, your proxy may be voted for the election of another nominee proposed by the board or the board may reduce the number of directors to be elected at the annual meeting.

The enclosed proxy card provides instructions on how to vote for all nominees or to withhold authority to vote for all or one or more nominees. Under the majority voting policy as set forth in the Corporation’s by-laws, a nominee for director in an uncontested election (such as this year’s election where the only nominees are those recommended by the board of directors) must receive the affirmative vote of a majority of the votes present and voting at a meeting of stockholders. In contested elections, the affirmative vote of a plurality of the votes present and voting will be required to elect a director. The Corporate Governance Guidelines require an incumbent director who fails to receive the affirmative vote of a majority of the votes present and voting in an uncontested election at a meeting of stockholders to submit his or her resignation, with such resignation to be considered by the members of the Corporate Governance Committee and the board other than such incumbent director. In such event, the board of directors will act to accept or reject the incumbent director’s resignation no later than 90 days following the date of the stockholders’ meeting.

The board of directors unanimously recommends that you vote FOR the election of each nominee.

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INFORMATION ABOUT THE NOMINEES FOR DIRECTOR

The following information about the nominees for election to the board of directors of the Corporation at the 2011 annual meeting of stockholders is as of December 31, 2010, unless otherwise indicated.

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		EDWARD J. MOONEY, Director since 1996, Age 69   Retired Délégué General-North America since March 2001, Suez Lyonnaise des Eaux (Worldwide provider of energy, water, waste and communications services); Retired Chairman and Chief Executive Officer, Nalco Chemical Company since March 2000 (Manufacturer of specialized service chemicals acquired by Suez Lyonnaise des Eaux in November 1999).   Mr. Mooney is a director of Cabot Microelectronics Corporation, Commonwealth Edison Company (a subsidiary of Exelon Corporation), FMC Corporation, FMC Technologies, Inc., and PolyOne Corporation.   The board of directors concluded that Mr. Mooney should serve as a director based on his global management and risk oversight experience as Chairman and Chief Executive Officer of Nalco Chemical Company and his experience as a director of other complex global corporations.
		JOHN W. ROWE, Director since 2002, Lead Director since April 2010, Age 65   Chairman and Chief Executive Officer, Exelon Corporation since April 2002, and President at various times since 2000 (Energy company formed through the merger of Unicom Corporation and PECO Energy Company in October 2000).   Mr. Rowe is a director of Exelon Corporation and Sunoco Corporation. Mr. Rowe also is a director of PECO Energy Company and Commonwealth Edison Company, subsidiaries of Exelon Corporation.   The board of directors concluded that Mr. Rowe should serve as a director based on his global management, regulatory, and risk oversight experience as Chief Executive Officer at Exelon Corporation and prior to that, at New England Electric System and Central Maine Power Company, and his experience as a director of financial services and other complex global corporations.
		MARTIN P. SLARK, Age 56   Vice Chairman and Chief Executive Officer, Molex Incorporated since 2005 and President and Chief Operating Officer from 2001 to 2005 (A manufacturer of electronic, electrical, and fiber optic interconnection products and systems).   Mr. Slark is a director of Molex Incorporated, Hub Group, Inc., and Liberty Mutual Insurance Company (not a public company).   The board of directors concluded that Mr. Slark should serve as a director based on his experience leading a complex global corporation and risk oversight experience as Vice Chairman and Chief Executive Officer of Molex Incorporated and as a director of other complex global corporations, including his global management experience in market segments where the Corporation has international locations.

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		DAVID H. B. SMITH, JR., Director since April 2010, Age 44   Executive Vice President, Policy & Legal Affairs and General Counsel, Mutual Fund Directors Forum since November 2005 (nonprofit membership organization for investment company directors). Previously, Mr. Smith held several positions at the U.S. Securities and Exchange Commission from 1996 to 2005, including Associate Director in the Division of Investment Management.   Mr. Smith is a director of Illinois Tool Works Inc. and a trustee of Carleton College.   The board of directors concluded that Mr. Smith should serve as a director based on his regulatory and leadership experience in the finance industry gained from his roles at the SEC and the Mutual Fund Directors Forum. The board also considered that Mr. Smith’s interest as a beneficiary of a trust that holds a significant amount of the Corporation’s common stock further aligns his interests with the interests of the Corporation’s stockholders.
		ENRIQUE J. SOSA, Director since 2007, Age 70   Retired President, BP Amoco Chemicals since April 1999 (Worldwide chemical division of BP p.l.c.).   Mr. Sosa is a director of FMC Corporation and MEDNAX, Inc. (formerly Pediatrix Medical Group, Inc.).   The board of directors concluded that Mr. Sosa should serve as a director based on his global management and risk oversight experience as President of BP Amoco and as a director of other complex global corporations.
		CHARLES A. TRIBBETT III, Director since 2005, Age 55   Managing Director, Russell Reynolds Associates since December 1989, Chairman of the firm’s Leadership Assessment and Promotions Board since 2006, and Co-Leader of the firm’s CEO/Succession Planning and Board Services Practice since December 1995 (Major executive recruiting firm that advises and consults with Fortune 500 corporations on matters relating to succession planning, compensation, corporate governance, and recruiting).   The board of directors concluded that Mr. Tribbett should serve as a director based on his global leadership consulting experience evaluating and identifying senior management professionals and his leadership experience as a Managing Director of Russell Reynolds Associates.

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		FREDERICK H. WADDELL, Director since 2006, Age 57   Chairman of the Board since November 2009, Chief Executive Officer since January 2008, and President since February 2006 of the Corporation and the Bank, Chief Operating Officer of the Corporation and the Bank from February 2006 to January 2008, and Executive Vice President of the Bank from September 1997 to February 2006 and of the Corporation from March 2003 to February 2006.   Mr. Waddell is a Class A Director of the Federal Reserve Bank of Chicago.   Since joining Northern Trust in 1975, Mr. Waddell has held leadership positions in a variety of the Corporation’s business units. The board concluded that Mr. Waddell should serve as a director based on his experience with the Corporation’s businesses.

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BOARD AND BOARD COMMITTEE INFORMATION

Audit Committee

Current Members: Directors Mooney (Chair), Bynoe, Chabraja, Lane, McCormack, and Smith Number of Meetings in 2010: Six

Oversight Activities:

The board of directors has determined that, in its opinion, all current members of the Corporation’s Audit Committee are “independent” directors, as defined by The NASDAQ Stock Market (“NASDAQ”), and “audit committee financial experts,” as defined by the applicable SEC regulations.

The board of directors of the Corporation has adopted a formal charter, most recently revised in October 2009, that governs the duties and responsibilities of the Audit Committee. The Audit Committee charter is available on the Corporation’s website at www.northerntrust.com and available in print to any stockholder who requests it in writing from the Corporation’s Corporate Secretary at the address indicated on the first page of this proxy statement.

Business Risk Committee

Current Members: Directors Bynoe (Chair), Mooney, Smith, Sosa, and Tribbett

Number of Meetings in 2010: Five

Oversight Activities:

The board of directors has determined that, in its opinion, all current members of the Corporation’s Business Risk Committee are “independent” directors as defined by NASDAQ. The board of directors of the Corporation has adopted a formal charter, most recently revised in January 2010, that governs the duties and responsibilities of the Business Risk Committee. The Business Risk Committee charter is available on the Corporation’s website at www.northerntrust.com and available in print to any stockholder who requests it in writing from the Corporation’s Corporate Secretary at the address indicated on the first page of this proxy statement.

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Business Strategy Committee

Current Members: Directors Jain (Chair), Lane, Rowe, and Tribbett

Number of Meetings in 2010: Four

Oversight Activities:

The board of directors has determined that, in its opinion, all current members of the Corporation’s Business Strategy Committee are “independent” directors as defined by NASDAQ.

The board of directors of the Corporation has adopted a formal charter, most recently revised in October 2010, that governs the duties and responsibilities of the Business Strategy Committee. The Business Strategy Committee charter is available on the Corporation’s website at www.northerntrust.com and available in print to any stockholder who requests it in writing from the Corporation’s Corporate Secretary at the address indicated on the first page of this proxy statement.

Compensation and Benefits Committee

Current Members: Directors Smithburg (Chair), Chabraja, Crown, Jain, McCormack, and Sosa

Number of Meetings in 2010: Five

Oversight Activities:

The board of directors has determined that, in its opinion, all current members of the Corporation’s Compensation and Benefits Committee are “independent” directors as defined by NASDAQ.

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The board of directors of the Corporation has adopted a formal charter, most recently revised in January 2011, that governs the duties and responsibilities of the Compensation and Benefits Committee. The Compensation and Benefits Committee charter is available on the Corporation’s website at www.northerntrust.com and available in print to any stockholder who requests it in writing from the Corporation’s Corporate Secretary at the address indicated on the first page of this proxy statement.

For information about the role of the Committee and management in the consideration and determination of executive and director compensation, please refer to the section entitled “Compensation Discussion and Analysis—Other Issues Relevant to Executive Compensation—Roles of the Committee, Management and Consultants” presented elsewhere in this proxy statement.

The Committee retained Aon Hewitt (formerly Hewitt Associates, LLC) (“Aon Hewitt”), a nationally recognized compensation and benefits consulting firm, to provide compensation and benefits advice, including information regarding competitive market data, relevant legal and regulatory requirements, and corporate best practices in the compensation and benefits area. Representatives of Aon Hewitt attended all meetings of the Committee at which 2010 executive compensation decisions were made.

Corporate Governance Committee

Current Members: Directors Rowe (Chair), Crown, Mooney, and Smithburg

Number of Meetings in 2010: Four

Oversight Activities:

The board of directors has determined that, in its opinion, all current members of the Corporation’s Corporate Governance Committee are “independent” directors as defined by NASDAQ.

The board of directors of the Corporation has adopted a formal charter, most recently revised in February 2010, that governs the duties and responsibilities of the Corporate Governance Committee. The Corporate Governance Committee charter is available on the Corporation’s website at www.northerntrust.com and available in print to any stockholder who requests it in writing from the Corporation’s Corporate Secretary at the address indicated on the first page of this proxy statement.

Executive Committee

Current Members: Directors Waddell (Chair), Bynoe, Jain, Mooney, Rowe, and Smithburg

Number of Meetings in 2010: None

Oversight Activities:

The board of directors has determined that, in its opinion, all current members of the Corporation’s Executive Committee, other than Mr. Waddell, are “independent” directors as defined by NASDAQ.

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The board of directors of the Corporation adopted a formal charter in November 2006 that governs the duties and responsibilities of the Executive Committee. The Executive Committee charter is available on the Corporation’s website at www.northerntrust.com and available in print to any stockholder who requests it in writing from the Corporation’s Corporate Secretary at the address indicated on the first page of this proxy statement.

Meetings

The Corporation’s board of directors held six meetings during 2010. All persons who were directors during 2010 attended at least 75% of these meetings and meetings of committees on which they served. The Corporation has a Corporate Governance Guideline that states that all directors are expected to attend the annual meeting of the Corporation’s stockholders. All of the directors attended the 2010 annual meeting of stockholders.

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CORPORATE GOVERNANCE

Director Independence

The board of directors has determined that, in its opinion, each person who served as a director of the Corporation in 2010 (including Arthur L. Kelly and Harold B. Smith, who retired from the board of directors on April 20, 2010) and each director nominee for 2011 (other than Frederick H. Waddell, the Chairman, President, and Chief Executive Officer of the Corporation and the Bank) is an “independent” director as defined under applicable NASDAQ rules. The board of directors has adopted categorical standards to assist it in making the annual determinations of independence. These categorical standards are attached as Exhibit A to this proxy statement, and a copy of the categorical standards is available on the Corporation’s website at www.northerntrust.com. In making its determinations of independence, the board considered the criteria for independence set forth in stock exchange corporate governance rules, the categorical standards of independence described above, and all relevant facts and circumstances to ascertain whether there was any relationship between a director or director nominee and the Corporation that, in the opinion of the board, would interfere with the exercise of independent judgment in carrying out the responsibilities of the director, or any material relationship with the Corporation (either directly or as a partner, stockholder, or officer of an organization that has a relationship with the Corporation). The board also considered any transactions, relationships, or arrangements between the Corporation and each director of the Corporation in 2010 (including Mr. Kelly and Mr. H. B. Smith) or director nominee for 2011 that constitute related party transactions under the RPT Policy described below under “—Related Person Transaction Policy.” For 2010, the board considered the following categories and types of transactions, relationships, and arrangements:

The board of directors also considered the following types of services provided by the Corporation or its subsidiaries in the ordinary course of business (as identified by the name of the applicable current director, or director nominee):

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Board Leadership Structure

The current leadership structure of the board of directors includes the Chairman and CEO and a Lead Director appointed annually by the Corporation’s independent directors.

The board of directors believes that combining the positions of Chairman and CEO is the most appropriate for the Corporation at this time. Having one person as Chairman and CEO provides unified leadership and direction to the Corporation and strengthens the ability of the CEO to develop and implement strategic initiatives and respond efficiently in crisis situations. The board also believes the combination of the Chairman and CEO positions is appropriate in light of the substantial independent oversight provided by the board of directors.

The board of directors believes that leadership of the independent directors is important. Accordingly, the Corporation’s independent directors designate annually a Lead Director. Mr. Rowe currently serves as the Corporation’s Lead Director.

The Lead Director’s duties are described in the Corporation’s Corporate Governance Guidelines and include, among other things, (a) the authority to call at any time a special meeting of the board or a special executive session of the independent directors and (b) presiding at all regular and any special meetings of the board at which the Chairman is not present, including all regular and any special executive sessions of the independent directors. A copy of the Corporate Governance Guidelines is available on the Corporation’s website at www.northerntrust.com and available in print to any stockholder who requests it in writing from the Corporation’s Corporate Secretary at the address indicated on the first page of this proxy statement.

In addition to the Lead Director, the board of directors has a substantial majority of independent directors. Twelve out of thirteen director nominees are “independent” directors as defined under applicable NASDAQ rules. The Audit Committee, Business Risk Committee, Business Strategy Committee, Compensation and Benefits Committee, and Corporate Governance Committee are composed solely of independent directors, and the Executive Committee, with the exception of Mr. Waddell, is composed of independent directors. Consequently, independent directors directly oversee critical matters and appropriately monitor the Chairman and CEO.

Risk Oversight

The board of directors conducts its risk oversight function through the Audit, Business Risk, Business Strategy, and Compensation and Benefits Committees.

The Audit Committee conducts the Corporation’s management of risks relating to financial reporting and legal component of compliance risk. The Business Strategy Committee oversees the Corporation’s management of strategic risk for the Corporation and its subsidiaries.

The Business Risk Committee conducts the Corporation’s management of risks relating to the business of the Corporation and its subsidiaries in the following categories: credit risk, market and liquidity risk, fiduciary risk, operational risk, and the regulatory component of compliance risk. The Business Risk Committee has approved a corporate risk appetite statement articulating the Corporation’s expectation that risk is consciously considered as part of strategic decisions and in day-to-day activities. The Corporation’s business units are expected to manage business activities consistent with the corporate risk appetite statement. The Business Risk Committee also reviews and

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approves the framework by which risk based capital requirements are determined, including the capital adequacy assessment process for the Corporation and its subsidiaries. The entire board of directors reviews the level and adequacy of capital of the Corporation and its subsidiaries. For a further description of the risk management policies and practices of the Corporation’s management, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management” in the Corporation’s 2010 Annual Report to Stockholders.

The Compensation and Benefits Committee, at least annually, conducts a review, with appropriate input of risk management personnel, of management’s assessment of the effectiveness of the Corporation’s incentive compensation arrangements and practices to assess the extent to which such arrangements and practices discourage inappropriate risk-taking behavior by participants and are consistent with the Corporation’s safety and soundness.

The charters for the Audit, Business Risk, Business Strategy, and Compensation and Benefits Committees provide that the committees may meet with the individuals who supervise day-to-day risk management responsibilities of the Corporation and other members of management, consultants or advisors, as each committee deems appropriate.

The Audit, Business Risk, Business Strategy, and Compensation and Benefits Committees consist solely of independent directors.

Executive Sessions

The independent directors of the Corporation met in executive sessions separate from management six times during 2010. The Lead Director or, in his or her absence, another independent director designated by the Lead Director presides at executive sessions of the independent directors.

Corporate Governance Guidelines

The Corporation has had Corporate Governance Guidelines in place since May 2000. These guidelines were most recently revised in February 2010. The Corporate Governance Committee is responsible for reviewing and reassessing, at least annually, the adequacy of the Corporate Governance Guidelines and recommending any changes to the board of directors for its approval. The Corporate Governance Guidelines embody many of the Corporation’s long-standing practices and incorporate new policies and procedures that strengthen its commitment to corporate governance best practices. A copy of the Corporate Governance Guidelines is available on the Corporation’s website at www.northerntrust.com and available in print to any stockholder who requests it in writing from the Corporation’s Corporate Secretary at the address indicated on the first page of this proxy statement.

Management Development and Succession Planning

The Compensation and Benefits Committee oversees executive management and succession planning. Pursuant to the Corporate Governance Guidelines and the charter for the Compensation and Benefits Committee, the Compensation and Benefits Committee conducts an annual management development and succession planning review. All of the Corporation’s directors are invited to participate in this review. Following the review, the Compensation and Benefits Committee makes recommendations concerning management development and succession planning.

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In connection with setting the compensation of the Corporation’s Chairman and CEO, as more fully described below in “Compensation Discussion and Analysis,” the Compensation and Benefits Committee and the board of directors review the performance of the Chairman and CEO in light of the Chairman and CEO’s responsibilities to the Corporation, including the development of short-term and long-term strategic plans, goals and objectives, the development of an effective senior management team, positioning of the Corporation for current and future success, and effective communications with all of the Corporation’s constituencies. These criteria, among others, would also be considered by the board of directors in evaluating any successor Chairman and CEO candidates. This management review process also includes a review of other senior employees of the Corporation, with a focus on developing internal candidates for advancement within the Corporation.

In the event of the unexpected death, incapacity, or resignation of the Chairman and CEO, the charter for the Corporate Governance Committee provides that the Corporate Governance Committee will discuss and make a recommendation to the board of directors, after consultation with the Chairman of the Compensation and Benefits Committee, for an appropriate successor. The board of directors also has adopted a Business Continuity Plan that, among other things, delineates a process for appointing an interim Chairman and CEO in the event the Chairman and CEO becomes incapacitated.

Director Nominations and Qualifications

The Corporate Governance Committee is responsible for considering, evaluating, and recommending candidates for director. The Committee will consider persons nominated by stockholders in accordance with the nomination procedures specified in the Corporation’s by-laws or otherwise recommended by stockholders. The Corporation’s by-laws provide that stockholders may propose director nominations only if they give timely written notice, directed to the attention of the Corporation’s Corporate Secretary at the address indicated on the first page of this proxy statement, not less than 120 days prior to the anniversary date of the prior year’s annual meeting. The notice must contain the information required by the by-laws. Stockholders may recommend candidates for director by following the procedures for communicating with directors described below under “Communications with the Board and Independent Directors.”

In its evaluation of director candidates, including persons recommended by stockholders, the Committee considers the factors specified in the Corporation’s Corporate Governance Guidelines to ensure the board has a diversity of perspectives and backgrounds, including the nature of the expertise and experience required for the performance of the duties of a director of a corporation engaged in the Corporation’s business and such matters as: relevant business and industry experience, professional background, age, current employment, community service, and other board service. The Committee also considers the racial, ethnic, and gender diversity of the board in assessing candidates. The Committee seeks to identify, as candidates for director, persons with a reputation for and record of integrity and good business judgment who (i) have experience in positions with a high degree of responsibility and are leaders in the organizations with which they are affiliated, (ii) are free from conflicts of interest that could interfere with a director’s duties to the Corporation and its stockholders, and (iii) are willing and able to make the necessary commitment of time and attention required for effective board service. The Committee also takes into account a candidate’s level of financial literacy, and monitors the mix of skills and experience of the directors in order to assess whether the board has the necessary tools to perform its oversight function effectively. A full listing of the characteristics and qualifications of director candidates considered by the Committee is set forth in the Corporate Governance Guidelines on the Corporation’s website at www.northerntrust.com. Following its

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evaluation process, the Committee recommends its director nominees to the full board of directors, and the board makes the final determination of director nominees based on its consideration of the Committee’s recommendation and report.

Communications with the Board and Independent Directors

Stockholders and other interested persons may communicate any concerns they may have regarding the Corporation, including recommendations of candidates for director, to the board of directors or to any member of the board of directors by writing to them at the following address:

Northern Trust Corporation

Attention: [Board of Directors]/[Board Member]

c/o Corporate Secretary

Northern Trust Corporation

50 South LaSalle Street, M-9

Chicago, Illinois 60603

Communications directed to the independent directors should be sent to the attention of the Lead Director, c/o the Corporate Secretary, at the address indicated above.

Any stockholder or other interested person who has a particular concern regarding accounting, internal accounting controls, or other audit matters that he or she wishes to bring to the attention of the Audit Committee of the board of directors may communicate those concerns to the Audit Committee or its Chairman, using the address indicated above.

A majority of the independent directors of the Corporation has approved procedures with respect to the receipt, review and processing of, and any response to, written communications sent by stockholders and other interested persons to the board of directors. Any written communication regarding accounting, internal accounting controls, or other matters are processed in accordance with procedures adopted by the Audit Committee.

Code of Business Conduct and Ethics

The board of directors of the Corporation has adopted a Code of Business Conduct and Ethics, most recently revised in November 2010, to:

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The code satisfies applicable SEC and NASDAQ requirements and applies to all directors, officers (including the Corporation’s principal executive officer, principal financial officer, principal accounting officer and controller), and employees of the Corporation and its subsidiaries. A copy of the code is available on the Corporation’s website at www.northerntrust.com. The Corporation intends to disclose any amendments to the code, and all waivers from the code for directors and executive officers, by posting such information on its website.

Related Person Transaction Policy

The board of directors of the Corporation, through its Audit Committee, has adopted the “Northern Trust Corporation Policy and Procedures with Respect to Related Person Transactions” (the “RPT Policy”), which was most recently revised in February 2008. The RPT Policy governs the review, approval, or ratification of transactions between the Corporation or its subsidiaries and any related persons. “Related persons” means the Corporation’s directors, nominees for director, executive officers, greater than five percent beneficial owners, members of their immediate family, and any firm, corporation, or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person and all other related persons has a 10% or greater beneficial interest.

The RPT Policy provides that the Corporation may undertake certain pre-approved related person transactions in the ordinary course of business without specific review, approval or ratification, including the following pre-approved transactions:

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Any other related person transaction involving amounts in excess of $120,000 must be approved or ratified by the Audit Committee or the Audit Committee Chair. In considering related person transactions, the Audit Committee or the Audit Committee Chair shall consider all relevant facts and circumstances and shall approve only those related person transactions that are in, or otherwise not inconsistent with, the best interests of the Corporation and its subsidiaries. The RPT Policy also provides that (a) the Corporation shall not hire an immediate family member of an executive officer or director unless the employment arrangement is reviewed and approved by the Compensation and Benefits Committee and (b) no child, stepchild, or parent of an executive officer shall be hired by the Corporation.

In 2010, certain related persons were clients of, and engaged in the types of transactions identified in the bullet points above with, the Corporation and its subsidiaries. These transactions were undertaken in the ordinary course of business and on terms no less favorable to the Corporation and its subsidiaries as those prevailing at the time for comparable transactions with non-related persons. None of these transactions or any transactions in which the Corporation or its subsidiaries sold or purchased products and services were material to the Corporation or the other entity involved. Any extensions of credit to directors and executive officers of the Corporation were permitted under the provisions of the Sarbanes-Oxley Act of 2002.

Compensation and Benefits Committee Interlocks and Insider Participation

The Compensation and Benefits Committee of the board of directors consists of Directors Smithburg (Chair), Chabraja, Crown, Jain, McCormack, and Sosa. None of the members of the Compensation and Benefits Committee is or ever was an officer or employee of the Corporation or any of its subsidiaries. In addition, none of our executive officers served on any compensation committee or any board of directors of another company, of which any of our directors was also an executive officer. For information relating to any transactions between members of the Compensation and Benefits Committee and the Corporation, please refer to “—Related Person Transaction Policy” above.

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SECURITY OWNERSHIP OF THE BOARD AND MANAGEMENT

The following table shows the beneficial ownership of the Corporation’s common stock for each director and director nominee, each executive officer named in the Summary Compensation Table included elsewhere in this proxy statement, and all directors and executive officers of the Corporation as a group, as of January 1, 2011, unless otherwise indicated.

(1) The information contained in this table was furnished to the Corporation by the individuals named in the table and reflects the SEC’s definition of beneficial ownership. Except as noted below, the nature of beneficial ownership for shares shown in this table is sole voting and/or investment power (including shares as to which spouses and minor children of the individuals covered by this table have such power).

(2) All stock units shown in the table are vested, except for (i) 1,625 unvested stock units held by each non-employee director and (ii) the following unvested stock units held by the executive officers named in the Summary Compensation Table on page 52 of this proxy statement (the “named executive officers”): Ms. Barrat, 34,657 unvested stock units; Mr. Fradkin, 34,657 unvested stock units;

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Mr. Morrison, 34,657 unvested stock units; Ms. Schreuder, 34,657 unvested stock units; Mr. Waddell, 113,776 unvested stock units; and all directors and executive officers as a group, 407,466 unvested stock units. Stock units and performance stock units held by directors and executive officers do not have voting rights. Stock units held by the non-employee directors include stock units representing (i) deferred cash compensation which, when paid, will be paid out in cash based upon the then current value of the common stock and/or (ii) deferred stock units which will be distributed in stock. See “Director Compensation—Deferral of Compensation” for additional information.

(3) The performance stock units reflected in the table as held by the named executive officers as of January 1, 2011 are unvested and subject to attainment of an established three-year performance goal. The performance stock units shown in the table reflect unvested performance stock units granted in 2008 that were cancelled as of January 18, 2011 as a result of failure to meet the minimum threshold three-year performance goal. No unvested performance stock units remain following cancellation of the 2008 awards.

(4) The number of shares shown includes shares issuable pursuant to stock options exercisable within 60 days after January 1, 2011, as follows: Ms. Barrat, 341,990 shares; Mr. Fradkin, 357,047 shares; Mr. Morrison, 454,162 shares; Ms. Schreuder, 238,628 shares; Mr. Waddell, 682,563 shares; and all directors and executive officers as a group, 3,247,597 shares.

(5) Robert C. McCormack, as co-trustee with the Bank and certain other individuals, shares voting and investment power for 3,632,763 shares or 1.50% of the outstanding common stock. As co-trustee with the Bank, Mr. McCormack shares voting and investment power for 936,400 shares or 0.39% of the outstanding common stock. With respect to 1,221,176 shares or 0.50% of the outstanding common stock, he serves as co-trustee with the Bank and has sole voting and investment power. In addition, Mr. McCormack, as co-trustee with the Bank, has sole voting and investment power and is a beneficiary with respect to 318,117 shares or 0.13% of the outstanding common stock that are held in a trust.

(6) Martin P. Slark, a director nominee, purchased 1,000 shares of common stock of the Corporation on January 27, 2011.

(7) With respect to two trusts, David H. B. Smith, Jr., as co-trustee with another individual, shares voting and investment power for 3,500 shares.

(8) Mr. Smith is a beneficiary of a trust that holds 1,362,880 shares, but he has no investment or voting power with respect to the shares held in the trust. These shares are not reflected in the table.

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation’s directors and executive officers, and beneficial owners of more than 10% of the Corporation’s stock, if any, to file with the SEC initial reports of ownership and reports of changes in ownership of any securities of the Corporation. Copies of these reports must also be provided to the Corporation.

To the Corporation’s knowledge, all the Corporation’s directors, executive officers, and beneficial owners of more than 10% of the Corporation’s stock made on a timely basis all filings required during 2010 except that (i) Ms. Aileen B. Blake, an executive officer of the Corporation, filed a late Form 4 to report a net shares for taxes transaction in connection with a stock unit award, which had previously been reported and (ii) Mr. William L. Morrison reported one late filing, reflecting four acquisitions of an aggregate of 2.22 shares of the Corporation’s common stock by an immediate family member that occurred as a result of a brokerage account automated dividend reinvestment election. In making these disclosures, the Corporation relied on copies of the reports provided to the Corporation and written representations from reporting persons that no other reports were required.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table includes information concerning common stock ownership of stockholders who were the beneficial owners of more than 5% of the outstanding shares of the Corporation’s common stock as of January 1, 2011, unless otherwise indicated. The beneficial ownership information for the Bank relates to shares held by trusts and other fiduciary accounts for which the Bank and its affiliates individually acted as sole or co-fiduciary.

(1) As of January 1, 2011, the Bank and its affiliates individually acted as sole or co-fiduciary with respect to trusts and other fiduciary accounts which owned, held or controlled through intermediaries in the aggregate 24,009,365 shares over which the Bank and its affiliates had, directly or indirectly, sole or shared voting power and/or sole or shared investment power, or 9.91% of the outstanding common stock. This aggregate number of shares includes 5,932,043 shares held by certain trusts described in footnote 5 and the trust described in footnote 8 to the “Security Ownership of the Board and Management” table presented elsewhere in this proxy statement, or 2.45% of the outstanding common stock. No single trust or other fiduciary account held a beneficial ownership interest in excess of 5.00%. Of these shares, the Bank and its affiliates had sole voting power with respect to 10,580,926 shares or 4.37% of the outstanding common stock, and they shared voting power with respect to 11,596,698 shares or 4.79% of the outstanding common stock. They had sole investment power with respect to 3,283,379 shares or 1.36% of the outstanding common stock, and they shared investment power with respect to 12,891,277 shares or 5.32% of the outstanding common stock.

The Corporation’s directors and employees as a group beneficially owned over 6.76% of the Corporation’s outstanding common stock as of January 1, 2011. In addition, the Corporation estimates that at least 1.93% of the Corporation’s outstanding common stock was beneficially owned by the Corporation’s retirees as of January 1, 2011.

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EXECUTIVE COMPENSATION

Compensation and Benefits Committee Report

The Compensation and Benefits Committee of the board of directors hereby furnishes the following report to the stockholders of the Corporation in accordance with rules adopted by the SEC.

The Compensation and Benefits Committee states that it has reviewed and discussed with management the Corporation’s Compensation Discussion and Analysis contained in this proxy statement.

Based upon this review and discussion, the Compensation and Benefits Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement.

This report is submitted on behalf of the members of the Compensation and Benefits Committee:

William D. Smithburg, Chair

Nicholas D. Chabraja

Susan Crown

Dipak C. Jain

Robert C. McCormack

Enrique J. Sosa

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COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

The Corporation’s executive compensation philosophy is designed to attract, motivate, and retain individuals who will contribute to the Corporation’s success and the creation of stockholder value. The Corporation’s philosophy emphasizes incentive compensation with typically 80% to 90% of the named executive officers’ total compensation focused on variable, incentive compensation. Incentive compensation depends, in part, on meeting various financial and non-financial performance criteria determined by the Compensation and Benefits Committee (as used in this section, the “Committee”), which it believes will result in the achievement of solid financial performance and long-term stockholder value. The Committee also evaluates incentive compensation in light of economic and industry conditions and designs incentive compensation to discourage inappropriate risk-taking behavior by participants.

The Corporation’s executive compensation program also emphasizes equity incentive compensation to align the interests of executives with those of the Corporation’s stockholders. The Corporation believes equity incentive compensation motivates executives to achieve strategic, operational, and financial goals. Accordingly, equity compensation with multi-year vesting provides more than 50% of the named executive officers’ total compensation.

Business Results

The Corporation’s record of strategic and financial achievements is the direct result of its seasoned executive team, with its named executive officers having an average of 25 years of service with the Corporation, its ability to attract and retain key personnel and the active engagement of the Board and the Committee.

Despite the prolonged weakness in economic conditions, the Corporation’s conservatively managed executive compensation philosophy, coupled with its sound balance sheet and prudent business model, have contributed to the Corporation’s strong strategic and financial positioning, including the following achievements:

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Other Highlights

Additional highlights of the Corporation’s executive compensation program include:

Executive Compensation Philosophy

The Corporation’s executive compensation program is designed to attract, motivate, and retain individuals who will contribute to the Corporation’s success and the creation of stockholder value.

The Corporation emphasizes “total compensation” in establishing its executive compensation levels, with each element of total compensation serving a specific purpose. Total compensation consists principally of base salary, annual cash incentive, and equity compensation (stock options, restricted stock units, and/or performance stock units). Base salary provides a fixed annual level of cash compensation reflecting the executive’s position, experience, and tenure. Annual cash incentive rewards short-term performance, typically reflecting the annual financial performance of the Corporation or its business units plus individual non-financial accomplishments. The Corporation uses equity compensation to ensure that a significant portion of the executive’s total compensation is tied to the longer-term performance of the Corporation’s common stock. In the case of cash compensation and equity compensation alike, the Corporation retains the flexibility to recognize and reward superior corporate, business unit, and individual performance by differentiating the awards made to individual executives. In addition to these elements of annual compensation, the retirement program provides post-employment financial security based on length of service by executives and other employees with the Corporation.

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The Corporation seeks to further the following core values in the design of its executive compensation program:

Peer Group

The Committee regularly reviews the composition of the Corporation’s peer group and, as appropriate, updates the peer group to reflect changes among peer companies, industry consolidation and its own evolving global presence. During 2008 and 2009, the Corporation engaged the services of Towers Watson, a globally recognized consulting firm specializing in executive compensation, to conduct a review of its peer group, the current competitive status of its compensation program, and the effectiveness of its compensation policies. As a part of that review, the Corporation established the peer group for 2010 as reflected below.

The peer group includes select companies that are representative of a wide array of potentially competitive organizations that generally fall into the following two categories:

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The Corporation’s peer group companies are as follows:

All of the U.S. banks, trust and custody banks, and large bank competitors reflected in Tier 1 and Tier 2 are included in the Keefe, Bruyette & Woods, Inc. Bank Index (“KBW Index”), a market-capitalization-weighted bank stock index used by the Corporation in the performance graph presented in the Corporation’s 2010 Annual Report to Stockholders.

Use of Peer Group Data

The Corporation is a leading provider of asset servicing, fund administration, asset management, fiduciary and banking solutions for corporations, institutions, families, and individuals worldwide. In addition, the Corporation has a significant global presence with an increasing portion of its client base and employee population located abroad.

The character and relative size of the Corporation’s businesses make it challenging to identify any definitive, single group of companies as peers for compensation purposes. The global scope and prominence of our primary business lines means that few regional banks of our size are direct or consistent business or talent competitors. Instead, most direct competitors are either significantly larger institutions, smaller standalone entities that compete with one or more of our business lines, or global financial firms located outside of the U.S. Nevertheless, the Corporation believes that the companies listed in the above peer group fairly represent its principal competition for executive talent and are an appropriate group of companies against which to gauge the competitiveness of the Corporation’s executive compensation program.

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The companies in the peer group reflect a wide range of absolute pay levels and pay practices. Because of this, it is impractical to establish a single targeted market position or to utilize peer-based financial measures in compensation. Rather, the Corporation targets total compensation at points in this range that are appropriate based on the Corporation’s size, scope, and business model, and that are consistent with the Corporation’s financial business plan. Using information from this group, the Corporation targets a mix of base salary, cash incentives, and long-term equity compensation that balances competitive practices with the Corporation’s overall philosophy and strategy. To accomplish these objectives, the Corporation has established Total Compensation Guidelines (“Committee Guidelines”) for members of its Management Group, including the named executive officers, and for other senior level officers. The Committee Guidelines reflect the Corporation’s strategy for the level and relative mix of base salaries, cash incentives, and equity-based compensation. However, the Committee Guidelines also are structured to afford the Committee flexibility in meeting evolving talent requirements in a global marketplace. The Committee Guidelines are considered, along with various other financial and non-financial factors, when determining individual pay actions.

In addition to the Committee Guidelines, competitive compensation data for specific positions or groups of positions may be considered from time to time. For purposes of comparing pay levels of the CEO or other named executive officers, the Committee relies on data from the Tier 1 companies only.

Use of Discretion and Other Factors in Pay Decisions

The exercise of discretion by the Committee in determining the various elements of compensation also is an important feature of the Corporation’s compensation philosophy. The Corporation believes it is important that the Committee has sufficient flexibility to respond to (i) the Corporation’s unique circumstances; (ii) prevailing market trends; (iii) the rapidly evolving financial and regulatory environment in which the Corporation operates; (iv) the Corporation’s use of cross-functioning with respect to executive assignments and cross-training as a matter of executive development and succession planning; and (v) risk management objectives. The Corporation also believes it is in the best interest of the Corporation and its stockholders that the Committee have sufficient discretion to recognize and reward extraordinary individual performance in non-financial areas that may or may not directly affect the Corporation’s achievement of specific financial metrics for a particular year, but are nevertheless important to long-range growth and the enhancement of stockholder value.

The Committee determines total compensation and each element of cash and equity compensation for all named executive officers of the Corporation. In determining the compensation of each named executive officer, the Committee relies upon the following types of information:

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The Committee does not evaluate or set each element of compensation independently of the other elements. Rather, the Committee adopts a holistic approach to establishing the total compensation package of each executive. Applying the Corporation’s core values and drawing upon the sources of information discussed above, the Committee utilizes the various elements of

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compensation as building blocks to construct a complete compensation package for each executive that appropriately reflects the three core design criteria of rewarding performance, ensuring alignment with stockholders, and remaining responsive to competitive factors in the marketplace for executive talent. Additionally, the Committee seeks to achieve a desired level of consistency in the character of pay among its executive officers.

In reviewing measures of corporate financial performance in 2010, the Committee adjusted for the impact of an after-tax benefit totaling $20.9 million ($.09 per share) realized by the Corporation in connection with an indemnification liability related to Visa, Inc. (“Visa”). The fourth quarter of 2007 included an after-tax charge of $94.2 million ($.42 per share) reflecting the previously reported initial $150.0 million pre-tax charge for accruals related to indemnifications of Visa. In 2008, the Corporation realized an after-tax benefit of $153.5 million ($.68 per share) that is reflected in a pre-tax gain of $167.9 million on the partial redemption of the Corporation’s Visa shares in the initial public offering and a $76.1 million offset to previously established Visa indemnification accruals and related charges. The after-tax benefit realized in 2009 reflects a third quarter 2009 pre-tax benefit of $17.8 million from a further offset to previously established Visa indemnification accruals and related charges. Given the nature of the Visa-related adjustments, the Committee chose to focus upon operating earnings, a non-GAAP financial measure which excludes Visa related adjustments, exclusive of the Visa benefit as opposed to reported earnings in its review of the Corporation’s annual financial performance. In particular, the use of operating earnings impacts the Corporation’s earnings growth per share for 2010 (negative 14.8% excluding Visa versus negative 13.3% including Visa) and the Corporation’s return on average common equity for 2010 (9.9% excluding Visa versus 10.1% including Visa).

The following table provides the Corporation’s reported earnings prepared in accordance with generally accepted accounting principles in addition to its results reflecting operating earnings, a non-GAAP financial measure, in order to provide investors and others with a clearer indication of the results and trends in the Corporation’s core businesses, absent Visa adjustments:

Principal Elements of the Corporation’s Executive Compensation Program

The principal elements of the Corporation’s executive compensation program are designed to reflect the overall philosophy outlined above including a focus on total compensation with appropriate levels of variable pay compared to fixed salary and a strong emphasis on long-term, equity-based compensation for the Corporation’s most senior officers. The Corporation has historically enjoyed a stable, effective leadership team by identifying, retaining, and developing its key executive talent. The named executive officers in this proxy statement have been employed by the Corporation for an average of 25 years. Each of the principal elements of the Corporation’s executive compensation program, as discussed below, contributed to this success.

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Cash Compensation

The Corporation typically pays two types of cash compensation to its named executive officers: base salaries and annual cash incentives.

Base Salaries

The Corporation believes that base salaries should provide a fixed level of annual income consistent with an executive officer’s position and responsibilities, competitive pay practices, and internal equity of pay among the executive officers. Target base salary levels for the Corporation’s executive officers included in the Committee Guidelines described above broadly reflect median salary levels for similar positions at the Tier 1 peer group companies listed on page 31. However, the Committee does not take a formulaic approach to setting target base salary levels at a market median level. Instead, where appropriate, the Committee also considers internal pay equity for comparable key executive officer positions and establishes base salary targets that balance market pay practice with internal equity. In the case of each named executive officer, the Committee utilizes its discretion in setting the actual base salary and the annual adjustment of the salary relative to the target level set forth in the Committee Guidelines by evaluating each officer with respect to factors such as the following: (i) experience and qualifications of the individual executive, (ii) the executive’s tenure in the position or a position of similar level, (iii) significant changes in assignment or scope of responsibility, (iv) individual performance and contributions over the prior year relative to established goals and expectations for the position, and (v) internal pay equity.

With respect to executives new to the Management Group, the Committee seeks to increase actual base salary gradually to the appropriate target pay level as the executive officer gains experience and tenure in the new position. The Committee also monitors the Committee Guidelines to ensure that the target base pay level remains appropriate. Annual base salary adjustments are generally effective April 1. Salary adjustments, if any, for promoted executives typically take effect upon the executives’ promotion date and assumption of new responsibilities.

Base Salary Determinations. The base salaries of all named executive officers remained unchanged in 2010.

Annual Cash Incentives

The Committee determines and approves annual cash incentives for the Corporation’s executive officers under the provisions of the stockholder-approved Management Performance Plan (the “MPP”). Awards under the MPP are intended to qualify as performance based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) because, among other things, they are tied to the Corporation’s net income results for the prior year and may not exceed the following maximum funding opportunity as fixed by the MPP: (i) the award for the Chairman, the CEO, or a combined Chairman and CEO position may not exceed 0.6% of consolidated net income (or approximately $4,017,000 for 2010); (ii) the award for the President, any Vice Chairman, the COO, or a combined President and COO position may not exceed 0.4% of consolidated net income (or approximately $2,678,000 for 2010); and (iii) the award for each of the other MPP participants may not exceed 0.3% of consolidated net income (or approximately $2,008,500 for 2010).

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In its design of the award limitations under the MPP, the Corporation sought to reflect the core values of its compensation philosophy. By establishing the maximum funding opportunity as a percentage of the Corporation’s net income results for the prior year, the Corporation directly ties this element of compensation to a key measure of the Corporation’s performance. It also aligns the executive’s incentives with those of its stockholders. The upper limit of the executive’s potential award opportunity rises in direct proportion to the extent the Corporation (and the executive) produces positive operating results for the Corporation’s stockholders. In establishing these opportunities, the Committee also took into account prevailing financial industry practices, as advised by its compensation consultant, in order to ensure that the award opportunities were competitive. But to emphasize the need to avoid excessive awards, the Corporation placed an upper cap on potential MPP awards. In the same vein, the MPP requires achievement of net income in order for any awards to be granted under the MPP. If positive net income is not achieved by the Corporation, the MPP prohibits the granting of incentive awards for that year.

Within the general construct of the MPP award limitations, the Corporation also retains its discretion to consider a variety of financial and non-financial measures and individual performance factors as well as the guideline reference ranges set forth in the Committee Guidelines. The guideline reference ranges are not performance targets. Rather, they provide a reference range that generally reflects a balance between competitive pay practices relative to the peer group as well as consideration of internal pay equity among comparable executive officer positions.

As is the case with base salaries, annual cash incentives actually awarded to the named executive officers are not tied to any specific formula. Instead, working within the limits established by the MPP and in consideration of the reference range in the Committee Guidelines, the Committee exercises its discretion in setting the particular award within this range based upon such factors as the Corporation’s performance for the prior year, and the particular executive’s tenure, historical compensation, and individual performance factors. For 2010, because net income was positive for the year, the MPP would have allowed the Chairman and CEO to receive an incentive cash award of up to $4,017,000 (0.6% of $669.5 million). However, based on the considerations discussed below and in consideration of target incentive level for the Chairman and CEO under the Committee Guidelines, the Committee exercised its discretion to set the actual award to the Chairman and CEO below the maximum funding opportunity prescribed by the MPP.

Named executive officers may elect to have all or any portion of an annual cash incentive award deferred under the Northern Trust Corporation Deferred Compensation Plan (“DCP”) for a fixed term of years or until retirement. If the executive’s employment terminates before the scheduled distribution date due to death, disability, or the occurrence of some other distribution event consistent with the requirements of the Code, deferred amounts will be distributed pursuant to the terms of the DCP. Upon election, amounts deferred may be invested in various funds, generally consistent with those available to all employees who participate in TIP, which is a 401(k) plan.

Annual Cash Incentive Determinations. Based on reported earnings of $669.5 million for fiscal 2010, the maximum funding opportunity for cash incentives under the MPP was $4,017,000 for the Chairman and CEO and $2,008,500 for each of the other named executive officers. In addition to the maximum individual cash incentive limit under the MPP, the Committee Guidelines set forth a cash incentive target for the Chairman and CEO of approximately 250% of base salary and approximately 150% of base salary for all other named executive officers.

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Discussion and Analysis. Within the context of the maximum MPP limits and the Committee Guidelines, actual cash incentive awards are determined by the Committee, in its sole discretion, after taking into consideration a variety of performance measures and other factors. These typically include the following:

The Chairman and CEO provided recommendations to the Committee with respect to MPP awards for 2010 for named executives other than himself. In making these recommendations, the Chairman and CEO considered, among other factors, the following corporate financial measures:

The Corporation did not achieve these long-term, across cycle, strategic objectives in 2010. We recognize these targets as difficult to achieve in the current economic environment, but continue to believe they currently reflect our long-term, across cycle, strategic objectives. Performance in relation to these long-term goals is one of a variety of financial and non-financial factors the Committee considered in determining 2010 compensation and such goals are considered primarily as long-term strategic objectives rather than annual targets.

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Recommended 2010 MPP awards for named executive officers other than the Chairman and CEO ranged from $700,000 to $725,000, ranging from 85% to 88% of the target level award and from 35% to 36% of the maximum award of $2,008,500 under the MPP. Variances in individual bonus amounts primarily reflect individual results with regard to business unit financial or operating goals. The Committee concurred in these recommendations and approved payment of annual bonuses under the MPP in the amounts set forth in the column entitled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table found on page 52.

In determining the 2010 MPP award for the Chairman and CEO, the Committee considered these overall corporate financial measures as well as performance of the Chairman and CEO against various other financial and non-financial goals including overall leadership, revenue growth, client retention, operational efficiency, succession planning, and overall strategic guidance during a difficult economic cycle. The Committee approved payment of an annual bonus of $2,000,000 under the MPP as set forth in the column entitled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table found on page 52. The approved MPP award compares to a target award of $2,500,000 under the Committee Guidelines and a maximum individual amount under the MPP of $4,017,000.

The Corporation expects that the performance measures, as well as the additional factors noted above, will be the same measures evaluated in setting annual cash incentives awards for 2011, subject to any revisions in the Corporation’s long-term strategic goals.

Equity Compensation

The Corporation uses equity compensation to provide long-term incentives for its named executive officers. The use of equity compensation serves to align the interests of the named executive officers with those of the Corporation’s stockholders. Long-term, equity-based compensation is the most significant component of overall compensation. The Corporation believes that an emphasis on long-term, equity based pay with meaningful time periods for vesting, along with stock ownership guidelines, contributes to continuity and stability within the Corporation’s executive leadership.

Forms of Equity Compensation Utilized. Equity compensation typically takes the form of non-qualified stock options, restricted stock units, or performance stock units settled only in common stock of the Corporation. The Corporation also grants a limited number of cash-settled restricted stock units in certain non-U.S. locations where legal, regulatory, and administrative issues make impractical the settlement of awards in shares. The Amended and Restated Northern Trust Corporation 2002 Stock Plan also provides for the issuance of other types of equity-based awards, including stock awards, stock appreciation rights, and performance shares. For a further description of significant features of stock options, restricted stock units, and performance stock units, see the footnotes to the table entitled “Outstanding Equity Awards at Fiscal Year-End” beginning on page 57 of this proxy statement.

Equity Compensation Determinations. For 2010, under the Committee Guidelines referred to above, the guideline dollar value of equity compensation was approximately seven times base salary for the Chairman and CEO and approximately three to four times base salary for the other named executive officers. For purposes of the Committee Guidelines and for communicating compensation decisions, the dollar value of equity compensation is defined as 100% of the fair market value at grant for all restricted or performance stock units and one-third of the fair market value at grant for all stock options. Equity value using these assumptions will be somewhat different than equity compensation

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reported under accounting rules as required elsewhere in the proxy statement. The Committee Guidelines provide the Committee with a reference for an appropriate and competitive equity award value. In addition, the Committee considers a variety of individual factors as well as internal equity to determine the actual dollar value of equity compensation for each named executive officer.

Stock Options. Stock option grants made in 2010 to the named executive officers are shown in the Grants of Plan-Based Awards table presented elsewhere in this proxy statement. Stock options granted in 2010 vest in equal installments over a four-year vesting period.

Restricted Stock Units. Restricted stock unit awards made in 2010 to the named executive officers are shown in the Grants of Plan-Based Awards table presented elsewhere in this proxy statement. Restricted stock units awarded in 2010 vest with respect to 50% of the award on each of the third and fourth anniversaries of grant, subject to the executive’s continued employment with the Corporation.

Discussion and Analysis. The Corporation’s equity compensation component of total compensation supports all three of the key criteria established by the Committee in designing the executive compensation program. Stock options and other forms of equity compensation align the interests of executives with the Corporation’s stockholders by encouraging and motivating executive officers to act as owners with an equity stake in the Corporation. Additionally, consistent with the Corporation’s objective of providing total compensation that is competitive for comparable positions at the Corporation’s peer group companies, the Corporation reviews and considers the size, type, and mix of equity awards granted to named executive officers at its peer-group companies.

The Corporation’s equity compensation element is performance based in two important respects. First, the level of the equity compensation award takes account, as described below, of an executive’s particular performance, the Corporation’s performance, and the contributions made by the executive to the Corporation’s performance. Second, the Corporation views stock options as inherently performance based in that the award will not provide any financial benefit to an executive unless the stock price increases following the grant of the award. Additionally, the Corporation occasionally makes other types of awards which attain value only to the extent that the associated performance goals are satisfied.

The Committee Guidelines provide a reference point against which the Committee determines the annual equity award of each named executive officer. Committee Guidelines generally reflect a balance between competitive pay practices relative to the peer group as well as consideration of internal pay equity among comparable executive officer positions and the Corporation’s philosophy regarding the relative mix of cash and equity compensation desired. The Committee sets the actual amount of total equity compensation for each executive as an adjustment against this reference guideline based on its discretionary assessment of specific objective and subjective factors relating to the following:

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The Committee undertakes this exercise of discretion in the context of the Committee’s focus on total compensation and, accordingly, takes into consideration the base salary adjustment, the annual cash incentive, and the other equity awards granted to the named executive officer. There is no formula that assigns specific weight to these factors, and the relative importance of these factors may vary year to year. In most years, as in 2010, the Chairman and CEO’s recommendation is a very significant factor in the setting of equity compensation for named executive officers other than the Chairman and CEO.

The following are the specific objective and subjective factors considered by the Committee in the setting of the total equity compensation of each named executive officer for 2010 at its February 15, 2010 meeting:

The Committee believes that a mix of stock options and either restricted stock units or performance stock is generally consistent with prevailing practices among its peer group and provides the most effective incentive to encourage stock price appreciation and ownership by its named executives.

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Retirement Benefits

Description of Principal Retirement Benefits. The named executive officers participate in The Northern Trust Company Pension Plan (the “Pension Plan”) and TIP on the same terms as all other United States-based eligible employees. The named executive officers also participate in the Northern Trust Corporation Supplemental Pension Plan (“Supplemental Pension Plan”) and the Northern Trust Corporation Supplemental Thrift-Incentive Plan (“Supplemental TIP”), which provide eligible employees, including the named executive officers, with the portion of their retirement benefits that cannot be paid under the Pension Plan and TIP due to applicable Code and Pension Plan limits.

Pension Plan and Supplemental Pension Plan. The Pension Plan and the Supplemental Pension Plan together provide named executive officers with an annual benefit paid at age 65 equal to the executive’s average compensation for his or her highest 60 consecutive calendar months prior to retirement, multiplied by 1.8% and then further multiplied by years of credited service up to a maximum of 35 years. This amount is then reduced by an amount based on the executive’s Social Security covered compensation and credited service. The portion of this benefit not in excess of various limits imposed by the Code and the Pension Plan is paid under the Pension Plan, and the portion of the executive’s benefit in excess of these amounts, if any, is paid under the Supplemental Pension Plan. This benefit is reduced if the executive retires and begins receiving benefit payments before age 62 (or age 60 under certain circumstances). All named executive officers have completed three years of vesting service and thus are fully vested in their pension benefits.

TIP and Supplemental TIP. Under TIP, named executive officers can defer a portion of their base salary and receive employer matching contributions equal to 50% of the first 6% of deferred salary. If the Corporation meets an annual earnings goal, the Corporation will make a contingent matching contribution of 50% of the first 3% of deferred salary to TIP, for a maximum matching contribution of 4.5% of salary. No contingent matching contribution was made to TIP for 2010, since the Corporation did not reach its earnings goal for that year.

Under Supplemental TIP, named executive officers can contribute a portion of their base salary that exceeds the annual Code compensation limit ($245,000 in 2010). The Corporation makes a matching contribution under Supplemental TIP using the formula in TIP, provided, however that Supplemental TIP matching contributions are limited to 50% of the first 6% of deferred salary. The named executive officers are fully vested in their retirement benefits under TIP and Supplemental TIP.

2010 Retirement Benefits. The aggregate change during 2010 in the actuarial present value of each named executive officer’s accumulated retirement benefit under the Pension Plan and Supplemental Pension Plan appears in the column “Change in Pension Value and Nonqualified Deferred Compensation Earnings” in the Summary Compensation Table presented elsewhere in this proxy statement. The actuarial present value of each named executive officer’s accumulated retirement benefit under the Pension Plan and Supplemental Pension Plan and the number of years of his or her credited service appear in the Pension Benefits table presented elsewhere in this proxy statement.

The employer’s matching contributions made under TIP and Supplemental TIP on behalf of each named executive officer are included in the “All Other Compensation” column of the Summary Compensation Table presented elsewhere in this proxy statement.

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Discussion and Analysis. The purpose of the Corporation’s retirement program is to provide financial security in retirement in two ways: (i) an employer-provided basic benefit under the Pension Plan and Supplemental Pension Plan and (ii) employee contributions, together with matching contributions from the employer, under TIP and Supplemental TIP. Retirement benefits are designed with respect to employees as a group and thus are not specifically structured for the named executive officers. The design of the Corporation’s retirement program for employees, including the named executive officers, reflects the following considerations:

The above peer group utilized in assessing the design and competitive posture of the overall employee benefit program of the Corporation, including retirement benefit practices affecting named executive officers, is a broad sample of companies in the financial industry that operate in the same geographic areas as the Corporation. This information is used to assess the Corporation’s competitive position relative to other broad-based, “all employee” benefit plans and practices affecting all employees, including executives, such as medical insurance, life insurance, qualified pension and profit sharing plans, and vacation policies and practices. The focus of this peer group is competitive labor market practices affecting the total employee population and broadly reflecting the Corporation’s general labor market. In contrast, the peer group referenced on page 31 is a more focused group of financial institutions with which we compete for executive and management talent. Comparative information from this peer group is used to assess the competitiveness of total compensation for individual executive officers including the named executive officers and to develop the Committee Guidelines.

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Additional Elements of Compensation

Perquisites and Other Benefits

2010 Perquisites and Other Benefits. The Corporation provided the following perquisites to its executive officers in 2010:

The Corporation also reimburses the named executive officers for the payment of personal income taxes in connection with the use of company automobiles for business-related purposes where such use is considered a taxable benefit to the named executive officer. The named executive officers also participate in the employer’s medical, retiree medical, dental, disability, and life insurance programs on the same terms as other employees.

Disclosure of the dollar value of each perquisite provided to the named executive officers in 2008, 2009, and 2010 is set forth in the table set forth in footnote 6 to the Summary Compensation Table presented elsewhere in this proxy statement.

Discussion and Analysis. Perquisites are not a principal element of the Corporation’s executive compensation, and unlike the Corporation’s cash and equity compensation, perquisites are not analyzed and evaluated under the “performance based,” “stockholder-aligned,” and “competitive” criteria which are central to the Corporation’s executive compensation philosophy. The Corporation’s perquisites are limited in number and modest in dollar value in comparison to its principal elements of compensation. They are intended to assist executive officers in the performance of their duties on behalf of the Corporation, to help them manage some forms of compensation to realize their intended value, or otherwise to provide benefits that have a combined personal and business purpose. The Committee annually reviews the types and costs of perquisites provided by the Corporation to its executive officers to be sure that the perquisites are in line with this philosophy.

Change in Control Benefits

The Corporation believes it is in the interests of the Corporation and its stockholders in the event of a change in control to provide employment security arrangements for certain key executive officers of the Corporation. As a part of its executive compensation program, therefore, the Corporation has entered into employment security agreements with each of its named executive officers and certain other executives.

Disclosure of potential change in control benefits payable to each named executive offer, assuming a change in control of the Corporation and termination of employment on December 31, 2010, is set forth below under “Potential Payments Upon Termination of Employment or a Change in Control of the Corporation.”

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Description of Change in Control Benefits. Payments under the employment security agreements are subject to a “double-trigger”: first, a change in control must occur and second, within two years following the change in control, the executive must terminate employment for “good reason” (e.g., a material reduction in job duties or responsibility, materially reduced or adverse changes in employment compensation or benefit programs, requirements for travel or relocation) or the executive’s employment must be terminated involuntarily without “good cause” (e.g., criminal conviction involving dishonesty, fraud or breach of trust, willful and substantial non-performance). The employment security agreements also protect an executive if the executive’s employment terminates for “good reason” or without “good cause,” as described above, during the period pending a change in control, defined generally as the period after the acquisition of 15% or more of the Corporation’s common stock or entry into an agreement with respect to, or public announcement of the intention to take, an action constituting a change in control event and prior to the effective time of the change in control event. Change in control is generally defined in the employment security agreements to include the acquisition of 20% or more of the Corporation’s common stock, certain mergers, consolidations and asset transfers, or the election, without the consent of two-thirds of the incumbent board of directors, of the lesser of three directors or a majority of the directors then in office.

Change in control benefits under the employment security agreements generally include a lump sum cash payment equivalent to three years’ base salary and bonus and a prorated bonus for the year of termination, continuation of medical, dental, life insurance, and other similar benefits for three years, and full vesting of stock options, restricted stock units, and performance stock units. Terminated executives also receive a post-termination exercise period equal to the lesser of five years or the original expiration date for all outstanding non-qualified stock options and incentive stock options granted on or after September 25, 2001, a three-year age and service credit for benefits under the Corporation’s Supplemental Pension Plan, and up to an additional three years of age and/or service credit to determine eligibility and subsidy for participation in the Corporation’s retiree medical program. The employment security agreements also provide that the Corporation will reimburse the executives for any excise tax imposed on payments under the agreements as well as taxes imposed on such reimbursement amounts.

Discussion and Analysis. The purpose of these agreements is to provide an executive with sufficient security so that the executive is not distracted from job duties, financially threatened by potential job loss, or motivated to act contrary to the best interests of the Corporation and its stockholders prior to, during, or after a change in control. The Corporation further believes the employment security agreements are critical to its ability to attract and retain key executives for the following reasons: the Corporation does not have employment agreements with its named executive officers; the protection afforded by the employment security agreements provides appropriate motivation for the Corporation’s executives when considering whether any change in control is in the best interests of the Corporation; and change in control protection for executives is prevalent in the competitive environment in which the Corporation operates.

Severance Benefits

The Corporation maintains a broad-based severance plan for substantially all full-time U.S. employees. The named executive officers participate in this plan on the same terms as all other eligible employees.

Description of Severance Benefits. The named executive officers, like all other eligible employees participating in the severance plan, receive severance benefits that include a lump sum

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payment of two weeks of base salary for each year of completed service up to but less than 25 years, or 52 weeks of base salary for 25 years or more of completed service to the Corporation, provided, that benefits may not exceed two times the lesser of (i) the named executive officer’s annualized base salary for the year preceding the year in which the named executive officer’s termination of employment occurs or (ii) the annual Code compensation limit for retirement plans ($245,000 in 2010). Under the plan, eligible employees (including the named executive officers) also would be entitled to a Consolidated Omnibus Budget Reconciliation Act (“COBRA”) subsidy based on their length of service to help cover the costs of continuation coverage under the employer’s medical and dental plans, full vesting under TIP and Supplemental TIP, one additional year of vesting service under the Pension Plan and the Supplemental Pension Plan, enhanced early retirement eligibility under the Pension Plan for employees who have reached age 54 with 14 years of credited service, and outplacement assistance. These severance benefits are contingent upon execution of a release, waiver and settlement agreement with the Corporation. Severance payments will be reduced by any severance payments made under employment security agreements or any other benefit plan, program, or individual contract.

Discussion and Analysis. The purpose of the severance plan is to provide reasonable severance benefits to employees who are involuntarily terminated without cause due to a reduction in force, job elimination, or similar reasons specified in the severance plan. The Corporation believes that the availability of severance benefits allows the Corporation to compete with its peer group companies in attracting and retaining key executives.

Other Issues Relevant to Executive Compensation

Timing of Equity Compensation Awards

The Committee generally meets in February of each year to consider and act with respect to stock option and stock unit awards (including performance stock units) for the Corporation’s executive officers for the then current fiscal year. This is the same meeting at which annual salary adjustment decisions are made, and cash incentive awards under the MPP are determined based on performance during the recently completed year. The Committee’s February meeting follows the Corporation’s public release of its earnings results for the recently completed fiscal year.

The Committee, on occasion, may grant additional equity awards at other times during the year to newly hired or newly promoted executive officers or, in isolated cases, for special retention purposes. For each grant approved by the Committee, the date of grant is the date on which the Committee acts to approve the award. The Committee acts in strict compliance with the requirements of the Amended and Restated Northern Trust Corporation 2002 Stock Plan, including the requirement that stock options may not be granted at less than 100% of the fair market value of the Corporation’s common stock on the date of grant. The Corporation does not time the grants of its equity compensation awards for the purpose of affecting the value of such executive compensation, nor does it time grants to precede or follow disclosures of material nonpublic information.

The Committee has authorized the Chairman and CEO and the Executive Vice President, Human Resources and Administration to grant non-qualified stock options and restricted stock units to certain employees (but not including any named executive officer or other executive officers subject to Section 16 of the Securities Exchange Act of 1934), subject to certain conditions and limitations. These grants are effective as of the date of the next regularly scheduled meeting of the Committee following such grant, with the exercise price of the stock options equal to 100% of the fair market value on the effective date. This delegated authority is designed for limited use in connection with new hires or

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newly promoted executive officers, or for special retention purposes. This delegated authority was exercised once during 2010 in order to address a critical turnover and retention situation affecting two employees.

Stock Ownership Guidelines

Long-term, equity-based compensation is a principal element of the Corporation’s executive pay program and, for its most senior executives, it is the largest component of direct compensation. In addition to emphasizing equity-based compensation, the Corporation has a long-standing practice of emphasizing stock ownership and retention by its senior executives. The Corporation maintains formal Stock Ownership Guidelines which stipulate expected levels of individual ownership and policies regarding long-term retention. The current guidelines establish a minimum expected level of ownership based on the executive’s position and defined as either a specific number of shares or a multiple of base salary (or, in the case of non-employee directors, a multiple of annual cash retainer). The guidelines apply to the Chairman and CEO, all other named executives, all other Executive Vice Presidents of the Corporation and all non-employee directors of the Corporation.

Ownership guidelines for the Chairman and CEO and other named executive officers have been established at or above typical industry practices. Under the current guidelines, the Chairman and CEO is expected to maintain minimum share ownership levels equal to the lesser of the number of shares having a value equal to ten times base salary or 150,000 shares. For all other named executive officers, the minimum ownership guideline is the lesser of the number of shares having a value equal to five times base salary or 45,000 shares. The calculation of shares of common stock includes shares purchased on the open market, shares owned jointly with or separately by spouses and children, shares held through TIP, shares obtained through stock option exercises (but not including unexercised stock options) and stock award distributions, and 50% of unvested restricted stock units, stock awards and deferred stock units.

For non-employee directors, the minimum ownership guideline is the lesser of the number of shares having a value equal to five times the annual cash retainer or 10,000 shares. In addition, non-employee directors are expected to meet a minimum share ownership level of 1,000 shares within one year from the date they are initially elected to the board, and the remainder is expected to be owned within five years of joining the board. The calculation of shares for non-employee directors is similar to that of executive officers except that non-employee director deferred units are counted at 100% toward both (a) the minimum stock ownership level set forth in the guidelines and (b) the minimum 1,000 shares required for new non-employee directors.

The Chairman and CEO and each named executive officer currently meet or exceed established guidelines and all non-employee directors who have served at least five years currently meet or exceed the stock ownership guidelines.

Roles of the Committee, Management and Consultants

Role of the Committee. At its February meeting each year, the Committee reviews the total compensation of each named executive officer of the Corporation. The Committee has adopted the Committee Guidelines referenced above, which are used to set base salaries, determine annual cash incentives for the year just concluded, and approve equity incentive awards for the current year. The Committee and the Chairman and CEO use the guidelines to align the components of individual compensation with respect to the named executive officer’s individual responsibilities, contributions,

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and the overall success of the Corporation’s business. Total compensation is determined within the context of providing an appropriate mix of base salary, cash and equity incentives, and retirement benefits. During the course of the year, the Committee also reviews the Corporation’s retirement benefit program and other forms of benefits and compensation, including perquisites, that may be paid to the named executive officers.

The Committee makes executive compensation decisions after careful review and analysis of information deemed relevant. In doing so, it considers all components of the Corporation’s executive compensation program in total rather than looking at any one component in isolation. In its review, the Committee recognizes and considers the impact that certain compensation actions may have on the potential values of other pay and benefit programs. In making compensation decisions, the Committee reviews summary sheets showing the dollar value of the following components of compensation and benefits for each named executive officer during their recent history with the Corporation, including:

As provided in the Committee charter, the Committee has sole authority to select, retain, and terminate the engagement of any consultant in connection with any compensation and benefits matter, and has authority to obtain advice and assistance from internal or external legal, accounting, or other advisors. As discussed in more detail below under the caption “Role of Aon Hewitt,” the Committee has retained Aon Hewitt as its human resources consulting firm to advise the Committee on matters pertaining to executive compensation.

Role of the Human Resources Department. The Corporation’s Human Resources Department assists the Committee in its compensation and benefits related determinations by collecting and providing to the Committee current Committee Guidelines, current as well as historical compensation paid to named executive officers, and any data that may be received from Aon Hewitt, the human resources consulting firm retained by the Committee in connection with matters pertaining to executive compensation. Such information is compiled and presented to the Committee in advance of the February meeting. The Head of Human Resources and Administration attends and participates in all Committee meetings.

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With respect to the compensation of the Chairman and CEO, the Human Resources Department provides current Committee Guidelines and current and historical compensation information for the Chairman and CEO. The Committee utilizes this data in undertaking its responsibility, consistent with its charter, to determine and approve the compensation (including each specific component comprising the total compensation package) to be paid or provided to the Chairman and CEO based on its evaluation of their respective performance against the Corporation’s goals and objectives. In determining any long-term incentive component of such compensation, the Committee’s evaluation takes into specific account the Corporation’s performance and relative stockholder return, the value of similar incentive awards given to the CEOs of peer group and other comparable companies, including companies in the financial services industry, the value of long-term incentive awards granted in recent years, and the retention of those awards.

With respect to the compensation of all other executive officers other than the Chairman and CEO, the Human Resources Department assists the Chairman and CEO in his formulation of compensation recommendations by providing historical and current market data and specific information concerning the historical and current compensation of executive officers for which the Chairman and CEO is establishing recommendations. This includes information comparing such executive officers’ stock ownership measured against stock ownership guidelines approved by the Committee. Once the Chairman and CEO has established compensation recommendations for executive officers, those recommendations are presented by the Human Resources Department in a report to the Committee delivered in advance of the February meeting. This report includes the summary sheets referenced on page 47 of this proxy statement and provides the Committee with guidance comparing the recommendations against historical and current data and market trends, on a comprehensive basis, by individual position and by the specific compensation components listed on page 47 of this proxy statement.

Role of the Chairman and CEO. The Committee, consistent with its charter, retains ultimate oversight and responsibility for review and approval of the compensation of executive officers. In fulfilling these obligations, the Committee benefits from the review and evaluation of executive officer compensation undertaken by the Chairman and CEO with assistance from the Corporation’s Human Resources Department.

The Chairman and CEO provides to the Committee his recommendations for total compensation (including the specific elements and mix of such compensation) to be paid to each of the Corporation’s executive officers other than the Chairman and CEO. In establishing such recommendations, the Chairman and CEO evaluates the performance of executive officers during the prior year against performance expectations established by the Chairman and CEO. These performance expectations are not weighted or scored and are comprised of a mix of objective and subjective factors. As noted previously, some performance expectations may relate to quantitative aspects of the Corporation’s financial results, while others may be more qualitative aspects, such as the achievement of acquisition integration, risk management, client development, or diversity goals. In formulating his recommendations, the Chairman and CEO is assisted by the Human Resources Department which supplies current Committee Guidelines and current as well as historical compensation data for each executive officer.

The recommendations of the Chairman and CEO are reviewed by the Committee in advance of its meeting. The recommendations are presented to the Committee by the Corporation’s Human Resources Department in a summary report that provides recommended and historical compensation

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levels for each named executive. The recommendations and this comparative data are reviewed and evaluated by the Committee in the context of any additional information on broader industry compensation trends and market practices as may be provided by Aon Hewitt. The Committee gives substantial weight to the recommendations of the Chairman and CEO, but retains the ultimate oversight and responsibility to make modifications to the total compensation or the levels of particular compensation elements recommended by the Chairman and CEO.

Role of Aon Hewitt. The Committee has retained Aon Hewitt as its human resources consulting firm to advise the Committee on matters pertaining to executive compensation. Aon Hewitt’s engagement encompasses the following consulting services:

Aon Hewitt’s representative generally attends all meetings of the Committee throughout the year and undertakes such specific projects as assigned by the Committee from time to time. In 2010, Aon Hewitt’s representative attended all meetings of the Committee at which compensation was reviewed and approved, provided Aon Hewitt’s general insights into compensation trends and prevailing market practices, presented its views on the compensation proposed for approval by the Committee (taking into account its market research and insights into prevailing trends), and participated in Committee meeting discussions.

In 2010, the Corporation paid Aon Hewitt and its affiliates $48,496 of fees in connection with executive compensation advisory services provided to the Committee. Aon Hewitt and its affiliates have also provided services unrelated to executive compensation to the Corporation and the trust for the Pension Plan in 2010 and prior years. In 2010, the Corporation paid Aon Hewitt and its affiliates $1,991,201 in fees for other services, which included the administration of the DCP, TIP and Supplemental TIP and certain other retiree benefit plans, as well as valuation, budgeting and other general communication and consulting services relating to retirement plans. In 2010, the trust for the Pension Plan paid Aon Hewitt and its affiliates $1,008,840 of fees for other services, which included administration, actuarial and tax services related to the Pension Plan.

The fees paid to Aon Hewitt and its affiliates for other services by the Corporation and the Pension Plan trust were not approved in advance by the board of directors or the Committee; however, the board of directors and the Committee were aware of the other services being provided by Aon Hewitt and its affiliates.

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Deductibility of Executive Compensation

The Corporation views the tax deductibility of executive compensation under Section 162(m) of the Code as an important factor to be considered in determining the forms and amounts of executive compensation. The Corporation, through the Committee, reviews each material element of compensation on a continuing basis and takes steps to assure deductibility if that can be accomplished without sacrificing flexibility and other important elements of the overall executive compensation program.

Base salary and the amounts set forth in the “All Other Compensation” column of the Summary Compensation Table do not, by their nature, qualify as “performance based compensation” under Section 162(m). The Corporation has taken appropriate steps, including obtaining stockholder approval, to qualify the MPP and the Amended and Restated 2002 Stock Plan as “performance based compensation” so that cash awards under the MPP and awards of stock options and performance stock units under the Amended and Restated 2002 Stock Plan are or will be fully tax deductible. Prior to 2010, the Corporation also provided in its restricted stock unit agreements under the Amended and Restated 2002 Stock Plan that the payment of the stock units is mandatorily deferred until the earlier of (a) the year in which the Committee reasonably anticipates that, if the payment is made during that year, the deduction of the payment will not be barred by Code Section 162(m), or (b) the period beginning with the date of the participant’s separation from service (as defined in the Amended and Restated 2002 Stock Plan) and ending on the later of the last day of the Corporation’s taxable year in which the participant incurs a separation from service or the 15th day of the third month following such separation from service. The mandatory deferral provision was originally expected to apply to the Corporation’s CEO; it has not been included in the restricted stock units granted by the Corporation in 2010 and later due to the fact that the mandatory deferrals were applying to additional executive officers and were causing the incentive compensation of those officers to be paid in a manner that the Committee determined to be inequitable, depending on whether or not the executive was subject to the Section 162(m) deduction limitation.

The Corporation’s deductions under Section 162(m) are further restricted with respect to payments attributable to the period that the U.S. Treasury held equity or debt securities of the Corporation under TARP. The impact of these additional restrictions on deductibility is expected to be limited.

Relationship of Compensation Practices to Risk Management

In determining the compensation of the Corporation’s named executive officers, the Committee is cognizant of the fact that incentive compensation practices can, in certain circumstances, provide incentives for executives (and other employees) to take inappropriate risks. The Committee is mindful that it does not wish to create inappropriate incentives through its compensation arrangements. During the Corporation’s participation in TARP, the Committee and the Corporation’s senior risk officers reviewed the incentive and bonus compensation arrangements with the Corporation’s senior executive officers to ensure that those compensation arrangements did not encourage those executives to take such unnecessary and excessive risks. More recently, the Corporation conducted an assessment of its incentive compensation arrangements in connection with the Federal Reserve’s horizontal review of incentive compensation arrangements at large, complex banking organizations.

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In each case, the reviews resulted in a conclusion that the Corporation’s compensation arrangements did not inappropriately encourage risk taking by employees. Among the reasons for these conclusions were:

The Committee intends to continue to monitor the Corporation’s incentive compensation arrangements for executives and others with a view towards ensuring that the arrangements do not encourage inappropriate levels of risk taking among participants.

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SUMMARY COMPENSATION TABLE

The following table sets forth compensation information for the Corporation’s Chairman and CEO, current and former chief financial officer, and the three other most highly compensated executive officers for the year ended December 31, 2010.

(1) Salary. None of the named executive officers received a salary increase during 2010.

(2) Stock Awards. This column shows the grant date fair value of dollar of the restricted stock unit and performance stock unit awards computed in accordance with FASB ASC Topic 718. See footnote 22 to the Consolidated Financial Statements contained in the Corporation’s 2010 Annual Report to Stockholders for a discussion of the assumptions made by the Corporation in the valuation of these stock unit awards, including that dividend equivalents will be paid on these stock unit awards. The footnotes to the “Outstanding Equity Awards at Fiscal Year-End” table beginning on page 57 of this proxy statement contain vesting and other additional information about the performance stock unit awards made in 2008.

Dividend equivalents on restricted stock units and performance stock units held or deferred by a named executive officer are paid on a current basis. Dividend equivalents paid on restricted stock units and performance stock units of each named executive officer in 2008 were: Mr. Waddell: $158,672; Mr. Morrison: $91,036; Ms. Barrat: $65,644; Mr. Fradkin: $73,602; and Ms. Schreuder: $54,543. Dividend equivalents paid on restricted stock units and performance stock units of each named executive officer in 2009 were: Mr. Waddell: $175,674; Mr. Morrison: $86,238; Ms. Barrat: $60,956; Mr. Fradkin: $68,853; and Ms. Schreuder: $52,399. Dividend equivalents paid on restricted stock units and performance stock units of each named executive officer in 2010 were: Mr. Waddell: $243,720; Mr. Morrison: $72,012; Ms. Barrat: $64,805; Mr. Fradkin: $72,593; and Ms. Schreuder: $58,535.

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(3) Option Awards. This column shows the grant date fair value of the option awards computed in accordance with FASB ASC Topic 718. See footnote 22 to the Consolidated Financial Statements contained in the Corporation’s 2010 Annual Report to Stockholders for a discussion of the assumptions made by the Corporation in the valuation of these option awards, including that dividend equivalent payments are factored into the option valuation. The footnotes to the “Outstanding Equity Awards at Fiscal Year-End” table beginning on page 57 of this proxy statement contain vesting and other additional information about the stock option awards made in 2008, 2009 and 2010.

(4) Non-Equity Incentive Plan Compensation. This column shows the annual cash incentives earned by the named executive officers in 2008, 2009 and 2010 under the MPP. As described in the “Compensation Discussion and Analysis—Principal Elements of the Corporation’s Executive Compensation Program—Cash Compensation—Annual Cash Incentives” section of this proxy statement, these annual cash incentives are fully deductible as performance based compensation under Section 162(m) of the Code.

(5) Change in Pension Value and Nonqualified Deferred Compensation Earnings. This column shows the increase from September 30, 2007 to December 31, 2008 (the measurement date used for reporting purposes in the Corporation’s 2008 Annual Report to Stockholders), the increase from December 31, 2008 to December 31, 2009 (the measurement date used for reporting purposes in the Corporation’s 2009 Annual Report to Stockholders), and the increase from December 31, 2009 to December 31, 2010 (the measurement date used for reporting purposes in the Corporation’s 2010 Annual Report to Stockholders) in the actuarial present value of accumulated benefits for each named executive officer under the Pension Plan and the Supplemental Pension Plan. It does not include any above-market or preferential earnings on deferred compensation as the Corporation does not pay above-market or preferential interest on the deferred compensation of its named executive officers.

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(6) All Other Compensation. The table below provides a breakdown of the amounts shown in the “All Other Compensation” column for each named executive officer in 2008, 2009 and 2010.

(a) Perquisites. All perquisites are valued based on the aggregate incremental cost to the Corporation, as required by the SEC’s rules. The “Compensation Discussion and Analysis—Additional Elements of Compensation—Perquisites and Other Benefits” section of this proxy statement contains additional information about the perquisites provided by the Corporation to its named executive officers.

(b) Relocation. The amounts in this column represent the payment of or reimbursement to Mr. Morrison for temporary living, travel, household goods transportation, and other expenses under the Corporation’s relocation program in connection with his relocation from Florida to Illinois.

(c) Tax Reimbursements. This column shows the amount of tax reimbursement associated with the use of the Corporation’s automobiles for business-related purposes and, in Mr. Morrison’s case, his relocation expenses.

(d) TIP/Supplemental TIP Contributions. This column reflects matching contributions made on behalf of the named executive officers to TIP and Supplemental TIP, both of which are defined contribution plans, as described above under “Compensation Discussion and Analysis—Principal Elements of the Corporation’s Executive Compensation Program—Retirement Benefits—Description of Principal Retirement Benefits—TIP and Supplemental TIP.”

(7) During 2010, Ms. Barrat served as the Corporation’s President—PFS. Effective March 1, 2011, Ms. Barrat became Vice Chairman of the Corporation.

(8) During 2010, Ms. Schreuder served as the President—O&T. Effective March 1, 2011, Ms. Schreuder became President—PFS of the Corporation.

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GRANTS OF PLAN-BASED AWARDS

The following table sets forth information for each named executive officer with respect to: