EXHIBIT 10.7

 

COMMUNITY TRUST BANCORP, INC.

SENIOR MANAGEMENT INCENTIVE
COMPENSATION PLAN

EFFECTIVE JANUARY 1, 2007

ARTICLE I
OBJECTIVES

Section 1.01
This plan is designed to reward senior management for meeting or exceeding
industry standards for profitability and adopted to achieve the following
objectives:

(a) Increase the profitability and growth of Community Trust Bancorp, Inc. in a
manner which is consistent with other goals of the Company, its stockholders and
its employees,

(b) Provide executive compensation which is competitive with other financial
institutions,

(c) Attract and retain personnel of outstanding ability and encourage excellence
in the performance of individual responsibilities,

(d) Motivate and reward those members of management who contribute to the
success of the Company,

(e) Distinguish among the performance contributions of some individuals by
providing financial recognition for individual performance, as well as group
performance, and

(f) Allow the flexibility which permits revision and strengthening from time to
time to reflect changing organizational goals and objectives.

ARTICLE II

DEFINITIONS

Section 2.01
As used herein, the following words and phrases shall have the meanings below
unless the context clearly indicates otherwise:

(a) “Annual Incentive Plan” or “Annual Plan” shall mean the Senior Management
Incentive Compensation Plan set forth in this document and all amendments
thereto.

(b) “Award Period” means one Fiscal Year.

(c) “Board” means the Board of Directors of Community Trust Bancorp, Inc.

(d) “Company” means Community Trust Bancorp, Inc., and its subsidiaries.

(e) “Compensation Committee” means the Compensation Committee of the Board.

(f) “Disability” means the total and permanent disability of a participant as
defined by any Long-Term Disability Plans in effect for the Company and as
thereafter may be amended.

(g) “Effective Date” means the date upon which the Plan shall become effective.

(h) “Fiscal Year” means the accounting period adopted by the Company for federal
income tax purposes.

(i) “Participant” means a person designated by the Company to participate in the
Plan.

(j) “Plan” shall mean the Company’s Senior Management Incentive Compensation
Plan.

(k) “Salary” or “Salaries” shall mean the base salary in effect for each
participant as of the last pay period in December of the Award Period.

(l) “Stock Option” shall mean Stock Options granted under the Community Trust
Bancorp, Inc. 1998 Stock Option Plan as hereinafter may be amended including
substitutions or replacements of the Plan. Such options shall be Incentive Stock
Options to the extent possible under tax laws in effect at the time the option
is awarded.

 
ARTICLE III
 
ADMINISTRATION OF THE PLAN

Section 3.01
The Compensation Committee shall administer the Plan and employ such other
agents as may reasonably be required to administer the Plan.

Section 3.02
The Compensation Committee shall adopt such rules and regulations of general
application as are beneficial for the administration of the Plan and shall make
all discretionary decisions involving a participant of the Plan. Said committee
shall also have the right to interpret the Plan, to determine the Effective
Date, and to approve all employees who are to participate in the Plan.

Section 3.03
A majority of the Compensation Committee shall constitute a quorum. The acts of
a majority of the members present at any meeting at which there is a quorum
shall be valid acts. Acts reduced to and approved in writing by a majority of
said committee shall also be valid acts.

Section 3.04
All incentive compensation payable under the Plan shall be paid from the general
assets of the Company. To the extent that any person acquires a right to receive
payments under the Plan, such right shall be no greater than the right of any
unsecured creditor of the Company.

Section 3.05
The Compensation Committee may authorize the Chairman, President and CEO of the
Company to send a written notice of such Plan to each selected Participant. No
person shall have the right to be included in the Plan until receiving said
notice in the form of Attachment "A" hereto.

Section 3.06
All costs and expenses involved in the administration of this Plan shall be paid
by the Company.

Section 3.07
Any determination or action of the Compensation Committee or the Board shall be
final, conclusive and binding on all participants and their beneficiaries,
heirs, personal representatives, executors and administrators.

Section 3.08
The Board of Directors, in its sole discretion, may amend, modify or terminate
the Plan at any time. The Board shall also annually review the pre-determined
performance standards and may amend such schedules in its sole discretion.

 
ARTICLE IV
 
PARTICIPANT ELIGIBILITY

Section 4.01
The following groups shall participate in the Plan:

(a) Group I shall consist of the Executive Committee of the Corporation.

(b) Group II shall consist of the (1)CTB officers responsible for the divisions
of Commercial Lending, Consumer Lending, Residential Real Estate Lending,
Finance, Sales and Marketing, Human Resources, Compliance, Facilities Management
and (2) the Presidents of each market
 
(c)  Group III shall consist of Senior Vice Presidents of consolidated functions
who are selected for participation by the Compensation Committee.

(d) Individuals below SVP level may be recommended and approved by the
Compensation Committee for special awards of options for extraordinary
performance.
 
Section 4.02
Voluntary or involuntary termination of full-time employment of a Participant
prior to the payment of incentive awards for an Award Period will result in such
Participant forfeiting any incentive compensation for the Award Period (except
as provided in Section 4.03 herein).

Section 4.03
If a Participant dies, retires, becomes disabled, or is granted a leave of
absence during an Award Period, the Compensation Committee may, at its
discretion or under such rules as it may have prescribed, award partial
incentive compensation based on the level of achievement in relation to goals
established for the Award Period.

Section 4.04
Directors who are also employees of the Company shall be eligible to participate
in the Plan. However, a director who is compensated on the basis of a fee or
retainer, as distinguished from a salary, shall not be eligible.

Section 4.05
New employees of the Company and persons promoted during the Award Period who
were not eligible to participate in the Plan at the beginning of the Award
Period, but have become a member of Group I, II, or III shall participate in the
Plan so long as such eligibility came into existence no later than six (6)
months after the beginning of said Award Period. If a person becomes eligible at
a date later than six (6) months into an Award Period, such person shall not be
a Participant under this Plan until the first day of the next Award Period.

 
ARTICLE V
 
PAYMENT TO PARTICIPANTS

Section 5.01
Incentive compensation to be awarded under the Plan shall be paid to
Participants within thirty days after the close of the Award Period. Awards are
not earned until paid to Participants.

Section 5.02
A Participant may elect to defer payment of all or part of his or her incentive
compensation so long as the Participant requests such deferred payment under the
terms of the Company’s Voluntary Deferred Compensation Plan.

 
ARTICLE VI
 
DETERMINATION OF ANNUAL AWARD FUND

Section 6.01
The Annual Incentive Plan fund for each group shall be generated by a percent of
the aggregate salaries for the individuals in each group. The target award fund
shall be computed as shown in Table I below:
 
TABLE I
 
TARGET ANNUAL AWARD FUND

GROUP
AGGREGATE SALARIES
TARGET AWARD EXPRESSED
AS A % OF SALARIES
TARGET ANNUAL AWARD FUND
       
I
$____________
X 10% =
$____________
       
II
$____________
X 9% =
$____________
       
III
$____________
X 8.5% =
$____________
               

Section 6.02
The actual amount of the Senior Management Incentive Compensation Plan award
fund shall be calculated according to a schedule comparing Earnings Per Share
and ROAA for the Award Period to a pre-determined performance standard. When
performance is at or above the performance standard, the actual award fund is
adjusted upward from the target award fund.

Section 6.03
There shall be a minimum acceptable performance beneath which no incentive
awards are paid (sometimes referred to as the “threshold”) and a maximum above
which there is no additional award paid to avoid excessive payout in the event
of windfall profits. Said minimum and maximum shall be reviewed annually and
amended when necessary in the sole discretion of the Compensation Committee.

Section 6.04
A Participant who is rated a "4" or "5" on the most recent Performance Appraisal
and Development Plan shall not be eligible to receive an award under the Plan.
 
 
ARTICLE VII
 
CALCULATION OF AWARD

Section 7.01
The Corporation’s (Group I) will earn an award determined by Earnings Per Share,
as shown below:

TABLE I

2007 ANNUAL CASH INCENTIVE COMPENSATION AWARD
INITIAL CALCULATION

Group I - Executive Committee of Community Trust Bancorp, Inc.

 
* Target/ROAA
Award As A % of Target Award
Award As A % of Salary
   
Group I
ROAA
         
Base 1.27%
100%
10%
     
1.31%
200%
20%
     
1.35%
300%
30%
     
1.39%
400%
40%
     
1.43%+
600%
60%
     

·  
For 2007, 100% of Targeted (Base) ROAA and $ 2.45 earnings per share is required
for an incentive to be earned.

·  
These results are after accrual of the incentive.

Section 7.02
The Corporation’s (Group II) will earn an award determined by Earnings Per
Share, as shown below:

TABLE II

2007 ANNUAL CASH INCENTIVE COMPENSATION AWARD
INITIAL CALCULATION

Group II - Consolidated Division Officers of CTBI and Market Presidents

EPS as A % of
* Target/ROAA
Award As A % of
Target Award
Award As A % of Salary
   
Group II
ROAA
         
Base 1.27%
100%
9%
1.31%
133%
12%
1.35%
200%
18%
1.39%
275%
25%
 
 1.43%+
 
333%
 
30%

 

·  
For 2007, 100% of the targeted (Base) ROAA and $ 2.45 earnings per share is
required for an incentive to be earned.

·  
These results are after accrual of the incentive.

 
Section 7.03
Senior Vice Presidents of consolidated functions designated by the Compensation
Committee will earn an award primarily determined by earnings per share, as
shown below:

TABLE III

2007 ANNUAL CASH INCENTIVE COMPENSATION AWARD
INITIAL CALCULATION

Group III - Senior Vice Presidents of Consolidated Functions

EPS as A % of
* Target/ROAA
Award As A % of
Target Award
Award As A % of Salary
   
Group V
ROAA
         
Base 1.27%
100%
8.5%
1.31%
118%
10%
1.35%
176%
15%
1.39%
235%
20%
1.43%+
294%
25%

·  
For 2007, 100% of the targeted (Base) ROAA and $2.45 earnings per share is
required to earn an incentive.

·  
These results are after accrual of the incentive.

Section 7.04
Participants in Groups I, II, and III shall be eligible to receive Stock Options
awards on the same day that cash awards are paid under the terms of this Plan.
Such Stock Options shall have a face value equal to the percentage of salary
shown on Table IV below, adjusted in the same manner and in the same proportion
as cash awards are adjusted under the terms of Sections 7.01, 7.02, and 7.03,
and rounded down as necessary to grant an option for whole shares.

TABLE IV

2007 SENIOR MANAGEMENT INCENTIVE COMPENSATION PLAN
STOCK OPTION AWARDS

EPS as A % of
* Target/ROAA
Stock Option Award
As A % of Salary
 
Group I
Group II
Group III
ROAA
             
Base 1.27%
100%
50%
25%
       
1.31%
125%
60%
30%
       
1.35%
150%
70%
35%
       
1.39%
175%
80%
40%
       
1.43%+
200%
100%
50%

 

·  
For 2007, 100% of Targeted (Base) ROAA and $2.45 earnings per share is required
for an incentive to be earned.

·  
These results are after accrual of the incentive.

 
ARTICLE VIII
 
MISCELLANEOUS PROVISIONS

 
Section 8.01
If the financial performance of the Company for any Fiscal Year taken into
account for determination of an award is found to be incorrect by the Company's
independent certified public accountants and was more than the correct amount,
there shall be no recourse by the Company against any person or estate. However,
the Company shall have the right to correct such error by reducing by the excess
amount any subsequent payments yet to be made under the Plan.

Section 8.02
The Compensation Committee may elect to remove unusual, extraordinary or
non-recurring items from the calculation of the Earnings Per Share.

Section 8.03
The Company shall not merge into or consolidate with another entity or sell all
or substantially all of its assets to another entity unless such other entity
shall become obligated to perform the terms and conditions hereof relating to
any awards already earned but not yet paid to the participant on his/her behalf.

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ATTACHMENT A

NOTICE OF PARTICIPATION

is eligible for participation in the 2007 Plan Year for Community Trust Bancorp,
Inc. Senior Management Incentive Compensation Plan, such participant being
subject to all of the terms and conditions of said Plan.

Compensation Committee of the Board of Directors
 
BY: ___________________________________
 
Dated: ____________________

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ATTACHMENT B
 
DESIGNATION OF BENEFICIARY

I,                         , a participant in the Community Trust Bancorp, Inc.
Senior Management Incentive Compensation Plan, name the following as my primary
beneficiary under said Plan in the event of my death prior to receiving an award
payable to me under said Plan.
 
Name:
 
Relationship:
 
Address:

If the primary beneficiary predeceases me, I designate the following persons as
a contingent beneficiary, in the order shown, to receive an award payable to me
under the Plan:
 
Name:
 
Relationship:
 
Address:

Name:
 
Relationship:
 
Address:
 
Name:
 
Relationship:
 
Address:

This supersedes any previous beneficiary designation made by me with respect to
this Plan. However, any compensation covered by the Community Trust Bancorp,
Inc. Voluntary Deferred Compensation Plan shall be governed by the Beneficiary
Designation applicable to that Plan.

Date:
 
Signature of Participant: