CTBI Form 10-K as of December 31, 2006 Exhibit 10.7


    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.

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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:
      ____________________


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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: