ctbi10q0608ex10-7.htm


    Exhibit
10.7

    


    


    


    


    


    COMMUNITY
TRUST BANCORP, INC.

    SENIOR
MANAGEMENT INCENTIVE

    COMPENSATION
PLAN

    


    


    EFFECTIVE
JANUARY 1, 2008, AS AMENDED ON JULY __, 2008

    


    


     

     

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    SENIOR MANAGEMENT INCENTIVE
COMPENSATION PLAN

     

    TABLE OF
CONTENTS

     

    


     

    
      	 
      	
              ARTICLE

            
	 	 
	 
      	
              I.      Objectives

            
	 	 
	 
      	
              II.     Definitions

            


    

     

    
      	 
      	
              III.    Administration
      of the Plan

            


    

     

    
      	 
      	
              IV.    Participant
      Eligibility

            


    

     

    
      	 
      	
              V.     Payment
      to Participants

            


    

     

    
      	 
      	
              VI.    Determination
      of Annual Award Fund

            


    

     

    
      	 
      	
              VII.   Calculation
      of Award

            


    

    


     

    
      	 
      	
                  Table
      I - 2008 Annual Cash Incentive Compensation

                           Award
      - Group I

            
	 
      	
                  Table
      II - 2008 Annual Cash Incentive Compensation

                           Award
      - Group II

            
	 
      	
                  Table
      III - 2008 Annual Cash Incentive Compensation

                           Award
      - Group III

            
	 
      	
                  Table
      VI - 2008 Senior Management Incentive

                           Compensation
      Plan - Stock Option Awards

            
	 	 
	 
      	
              VIII.  Miscellaneous
      Provisions

            
	 
      	
              Attachment
      A - Notice of Participation

              Attachment
      B - Designation of Beneficiary

            
	 
      	 
      


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    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. 2006
      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
  Company.

            
	 
      	
              (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 Amended and Restated 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         per
      schedule          =

            	
              $____________

            
	 
      	 
      	 
      	 
      
	
              II

            	
              $____________

            	
                X         per
      schedule          =

            	
              $____________

            
	 
      	 
      	 
      	 
      
	
              III

            	
              $____________

            	
                X         per
      schedule          =

            	
              $____________

            


    

    


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

    TABLE
I

    


    2008 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

            
	
              Base
      1.25%

            	
              100%

            	
              10%

            
	
              1.27%

            	
              150%

            	
              15%

            
	
              1.29%

            	
              200%

            	
              20%

            
	
              1.31%

            	
              250%

            	
              25%

            
	
              1.33%

            	
              300%

            	
              30%

            
	
              1.35%

            	
              350%

            	
              35%

            
	
              1.37%

            	
              400%

            	
              40%

            
	
              1.39%

            	
              450%

            	
              45%

            
	
              1.41%

            	
              600%

            	
              60%

            


    

    


    
      	
              ·  

            	
              For
      2008, 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
Company’s (Group II) will earn an award determined by Earnings Per Share, as
shown below:

     

    TABLE
II

    


    2008 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

            
	
              Base
      1.25%

            	
              100%

            	
              9.00%

            
	
              1.27%

            	
              116.50%

            	
              10.50%

            
	
              1.29%

            	
              133%

            	
              13.50%

            
	
              1.31%

            	
              166.50%

            	
              16.50%

            
	
              1.33%

            	
              200%

            	
              18.00%

            
	
              1.35%

            	
              237.50%

            	
              21.50%

            
	
              1.37%

            	
              275%

            	
              25.00%

            
	
              1.39%

            	
              304%

            	
              27.50%

            
	
              1.41%

            	
              333%

            	
              30.00%

            


    

    


    
      	
              ·  

            	
              For
      2008, 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

    


    2008 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
      III

            
	
              Base 1.25%

            	
              100%

            	
              8.50%

            
	
              1.27%

            	
              109%

            	
              9.25%

            
	
              1.29%

            	
              118%

            	
              10.00%

            
	
              1.31%

            	
              147%

            	
              12.50%

            
	
              1.33%

            	
              176%

            	
              15.00%

            
	
              1.35%

            	
              205.50%

            	
              17.50%

            
	
              1.37%

            	
              235%

            	
              20.00%

            
	
              1.39%

            	
              264%

            	
              22.50%

            
	
              1.41%

            	
              294%

            	
              25.00%

            
	 
      	 
      


    

    
      	
              ·  

            	
              For
      2008, 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

    


    2008 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

            
	
              Base 1.25%

            	
              100.00%

            	
              50%

            	
              25.00%

            
	
              1.27%

            	
              112.00%

            	
              55%

            	
              27.50%

            
	
              1.29%

            	
              125.00%

            	
              60%

            	
              30.00%

            
	
              1.31%

            	
              137.50%

            	
              65%

            	
              32.50%

            
	
              1.33%

            	
              150.00%

            	
              70%

            	
              35.00%

            
	
              1.35%

            	
              162.50%

            	
              75%

            	
              37.50%

            
	
              1.37%

            	
              175.00%

            	
              80%

            	
              40.00%

            
	
              1.39%

            	
              187.50%

            	
              90%

            	
              45.00%

            
	
              1.41%

            	
              200.00%

            	
              100%

            	
              50.00%

            
	 
      	 
      


    

    
      	
              ·  

            	
              For
      2008, 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 2008 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 or Amended and Restated
Voluntary Deferred Compensation Plan shall be governed by the Beneficiary
Designation applicable to such Plan.

     

    _______________           
____________________________

    Date                                      
Signature of Participant