12
COMMUNITY TRUST BANCORP, INC.
208 North Mayo Trail
Pikeville, Kentucky 41501
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1997
The Annual Meeting of Shareholders of Community Trust Bancorp, Inc. will
be held at the Pikeville High School Auditorium, North Mayo Trail,
Pikeville, Kentucky, on Tuesday, April 22, 1997 at 5:30 p.m., local time,
for the following purposes:
1. To elect a Board of nine Directors to hold office until the
next Annual Meeting of Shareholders and until their
successors are elected and qualify.
2. To ratify and approve the appointment of Ernst & Young
LLP as the Corporation's Independent Certified Public
Accountants for the fiscal year ending December 31, 1997.
3. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only those holders of stock of record at the close of business on February
28, 1997 are entitled to notice of and to vote at the Annual Meeting and
any adjournment thereof.
The Proxy Statement describing matters to be considered at the Annual
Meeting is attached to this notice.
We hope you will attend the meeting and vote your shares in person.
By Order of the Board of Directors
Burlin Coleman Jean R. Hale
Burlin Coleman Jean R. Hale
President and Executive Vice President
Chairman of the Board
Pikeville, Kentucky
March 21, 1997
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE U.S. IN THE EVENT YOU ATTEND
THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON AT
ANY TIME BEFORE YOUR PROXY IS EXERCISED.
<PAGE>
Community Trust Bancorp, Inc.
208 North Mayo Trail
Pikeville, Kentucky 41501
PROXY STATEMENT
Annual Meeting of Shareholders
to be held April 22, 1997
INTRODUCTION
This Proxy Statement and accompanying proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of
Community Trust Bancorp, Inc. (the "Company") for use at the Annual Meeting
of Shareholders (the "Annual Meeting") to be held on Tuesday, April 22,
1997, at 5:30 p.m. (EDT), at the Pikeville High School Auditorium, North
Mayo Trail, Pikeville, Kentucky, and any adjournments thereof. A copy of
the Company's 1996 Annual Report to Shareholders and form 10-K accompanies
this Proxy Statement.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited in person, by
telephone and other means of communication by directors, officers, and
other employees of the Company, none of whom will receive additional
compensation for such services. The Company will also request brokerage
houses, custodians and nominees to forward soliciting materials to the
beneficial owners of stock held of record by them, and will pay the
reasonable expenses of such persons for forwarding such materials. This
Proxy Statement and the accompanying proxy are first being mailed or given
to shareholders of the Company on or about March 21, 1997.
RECORD DATE AND VOTING SECURITIES
The Common Stock of Community Trust Bancorp, Inc. ("Common Stock") is
the only class of outstanding voting securities. Only holders of Common
Stock of record at the close of business on February 28, 1997 (the "Record
Date") are entitled to notice of and to vote at the Annual Meeting. At the
Record Date, there were 9,144,950 shares of Common Stock outstanding. In
the election of directors, shareholders have cumulative voting rights.
Accordingly, each shareholder will have the right to cast as many votes in
the aggregate as equals the number of shares of Common Stock held by the
shareholder multiplied by the number of directors to be elected at the
Annual Meeting. Each shareholder may cast all of his or her votes for one
candidate, or distribute such votes among two or more candidates.
Shareholders will be entitled to one vote for each share of Common Stock
held of record on the Record Date with regard to any other matters that
properly come before the Annual Meeting or any adjournment thereof.
Each proxy, unless the shareholder otherwise specifies, will be voted
in favor of the election of the nine nominees for director named herein.
Where a shareholder has appropriately specified how the proxy is to be
voted, it will be voted accordingly. As to any other matter which may
properly be brought before the Annual Meeting or any adjournment thereof, a
vote may be cast pursuant to the accompanying proxy in accordance with the
judgment of the person or persons voting the proxy. A shareholder may
revoke his or her proxy at any time prior to its exercise. Revocation may
be effected by written notice to the Company, by a subsequently dated proxy
received by the Company, or by oral revocation in person at the Annual
Meeting or any adjournment thereof, or by voting in person at the Annual
Meeting or any adjournment thereof.
A majority of the outstanding shares present in person or by proxy is
required to constitute a quorum to transact business at the Annual Meeting.
Abstentions will be treated as present for purposes of determining a
quorum, but as unvoted shares for purposes of determining the approval of
any matter submitted to the shareholders for a vote. If a broker indicates
that it does not have discretionary authority as to certain shares to vote
on a particular matter, such shares will not be considered as present and
entitled to vote with respect to such matter.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information as to each shareholder
known by the Company to beneficially own more than five percent of the
Common Stock as of the Record Date.
Beneficial Owners Amount and Nature Percent
Name and Address of Beneficial Ownership of Class
----------------- ----------------------- --------
Trust Company of Kentucky, 913,319 (1) 10.0%
as Fiduciary
P. O. Box 2560
Ashland, Kentucky 41105
(1) The shares indicated are held by Trust Company of Kentucky. a
subsidiary of the Company, in fiduciary capacities as trustee, executor,
agent or otherwise. Of the shares indicated, Trust Company has sole voting
rights with respect to 172,323 shares, shared voting rights with respect to
27,500 shares and no voting rights with respect to 713,496 shares. Trust
Company has shared investment power with respect to 49,088 shares and sole
investment power with respect to 864,231 shares.
ELECTION OF DIRECTORS
The Company's directors are elected at each annual meeting of the
shareholders and hold office until the next election of directors or until
their successors are duly elected and qualify. The persons named below,
all of whom currently serve as directors of the Company, have been
nominated for election to serve until the 1998 Annual Meeting of
Shareholders. The following table sets forth certain information
respecting the persons nominated to be directors of the Company:
<TABLE>
<CAPTION>
Amount and
Positions Nature of
and Director Principal Beneficial Percent
Name and Age (1) Offices* Since Occupation (2) Ownership (3) of Class
<S> <C> <C> <C> <C> <C>
Charles J. Baird; 47 Director 1988 Baird, Baird, Baird 71,593 (5) (4)
& Jones, P.S.C.,
Attorneys
Burlin Coleman; 67 Chairman of 1980 Chairman of Board 389,483 (6) 4.3%
Board of of Directors,
Directors, President & CEO -
President & Community Trust
CEO Bancorp, Inc.
Nick A. Cooley; 63 Director 1980 President - Unit 31,645 (4)
Coal Corporation
William A. Graham, Jr.; 60 Director 1990 Chairman of the 100,970 (7) 1.1%
Advisory Board -
Fleming County
Region - Community
Trust Bank, NA
Jean R. Hale; 50 Executive VP, 1993 President & CEO - 26,548 (8) (4)
Secretary & Community Trust
Director Bank, NA
2
<PAGE>
Brandt Mullins; 69 Vice Chairman 1980 Retired President - 71,069 (9) (4)
& Director Community Trust
Bank, NA
M. Lynn Parrish; 47 Director 1993 President - Knott Floyd 55,091 (10) (4)
Land Co., Inc.
Ernest M. Rogers; 69 Director 1980 President and General 54,067 (11) (4)
Manager - Rogers Petroleum
Services, Inc.
Porter Welch; 71 Director 1995 Chairman of the 40,635 (12) (4)
Advisory Board -
Woodford County
Region - Community
Trust Bank, NA
All directors and executive officers as a group 866,191 (13) 9.5%
(13 in number, including the above named individuals)
* Burlin Coleman is also a director of Community Trust Bank, NA,
Community Trust Bank, FSB and Trust Company of Kentucky. Jean Hale is also
a director of Community Trust Bank, NA and Trust Company of Kentucky.
Brandt Mullins is also a director of Commercial Bank, West Liberty.
<FN>
<fn1>
(1) The ages listed are as of February 28, 1997.
<fn2>
(2) Each of the nominees has been engaged in the principal occupation
specified above for five years of more.
<fn3>
(3) Under the rules of the Securities and Exchange Commission, a person
is deemed to beneficially own a security if the person has or shares
the power to vote or direct the voting of such security, or the power
to dispose or to direct the disposition of such security. A person
is also deemed to beneficially own any shares which that person has
the right to acquire beneficial ownership within sixty days. Shares
of Common Stock subject to options exercisable within sixty days are
deemed outstanding for computing the percentage of class of the person
holding such options but are not deemed outstanding for computing the
percentage of class for any other person. Unless otherwise indicated,
the named persons have sole voting and investment power with respect
to shares held by them.
<fn4>
(4) Less than 1 percent.
<fn5>
(5) Includes 35,093 shares in trust for W. J. Baird's grandchildren over
which Mr. Baird is trustee with the power to vote and invest such
shares.
<fn6>
(6) Includes the following shares beneficially owned by Burlin Coleman:
253,671 shares held in trust over which Mr. Coleman has sole voting
and investment power; 53,999 shares in which Mr. Coleman shares
voting power pursuant to a power of attorney; 395 shares held directly
by Mr. Coleman; and 81,418 shares held in IRA over which Mr. Coleman
has sole voting and investment power. Excludes 8,770 shares held by
Mr. Coleman's wife, over which Mr. Coleman has no voting or investment
power.
<fn7>
(7) Includes 5,709 shares that Mr. Graham may acquire pursuant to options
exercisable within sixty days of the Record Date and 868 shares held
in the ESOP, which Mr. Graham has the power to vote.
<fn8>
(8) Includes 8,995 shares which Mrs. Hale may acquire pursuant to options
exercisable within sixty days of the Record Date and 2,214 shares held
in the ESOP, which Mrs. Hale has the power to vote. Excludes 4,625
shares held by Mrs. Hale's husband, over which Mrs. Hale has no
voting or investment power.
<fn9>
(9) Includes 68,444 shares held in trust, which Mr. Mullins has the power
to vote. Excludes 21,375 shares held by Mr. Mullins' wife, over which
Mr. Mullins has no voting or investment power.
3
<PAGE>
<fn10>
(10) Excludes 600 shares held by Mr. Parrish's wife as custodian
for their minor child, over which Mr. Parrish has no voting or
investment power.
<fn11>
(11) Excludes 15,674 shares held by Mr. Rogers' wife, over which
Mr. Rogers has no voting or investment power.
<fn12>
(12) Excludes 40,000 held by Mr. Welch's wife, over which Mr.
Welch has no voting or investment power.
<fn13>
(13) Includes 18,849 shares which may be acquired by all
directors and executive officers as a group pursuant to options
exercisable within sixty days of the Record Date.
</FN>
</TABLE>
Unless authority to do so is withheld, it is the intention of the
persons named in the proxy card to vote for the election of each of the
nominees listed above. All nominees have indicated a willingness to serve
and the Company does not anticipate that any of the above nominees will
decline or be unable to serve if elected as a director. However, in the
event that one or more of such nominees is unable, unwilling or unavailable
to serve, the persons named in the proxy shall have authority, according to
their judgment, to vote for such substitute nominees as they, after
consultation with the Company's Board of Directors, shall determine. If
considered desirable, cumulative voting will be exercised by the persons
named in the proxy to elect as many of such nominees as possible.
The following persons are executive officers of Community Trust
Bancorp, Inc. They are not nominated to serve as directors. Their
security ownership is as follows:
Amount & Nature of Percent
Name Position Beneficial Ownership of Class
Terry N. Coleman President and Chief
Executive Officer 19,858 (2) (1)
Richard M. Levy Executive Vice President, 1,448 (3) (1)
Chief Financial Officer and Treasurer
William Vermillion Executive Vice President 3,286 (4) (1)
Ronald M. Holt Executive Vice President 498 (5) (1)
(1) Less than 1 percent.
(2) Includes 1,178 shares held in trust, 734 shares that Mr. Coleman may
acquire pursuant to options exercisable within sixty days of the Record
Date and 6,900 shares held in the KSOP, which Mr. Coleman has the power
to vote. Terry N. Coleman resigned as President and Chief Executive
Officer November 1, 1996.
(3) Includes 375 shares which Mr. Levy may acquire pursuant to options
exercisable within sixty days of the Record Date and 48 shares held
in the KSOP, which Mr. Levy has the power to vote.
(4) Includes 2,786 shares which Mr. Vermillion may acquire pursuant to
options exercisable within sixty days of the record date.
(5) Includes 250 shares which Mr. Holt may acquire pursuant to options
exercisable within sixty days of the Record Date and 48 shares held
in the KSOP, which Mr. Holt has the power to vote.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Directors of the Company, who are not also officers of the Company
were paid $1,000 per meeting of the Board if in attendance or $500 if not
in attendance for 1996. Directors who are also officers of the Company did
not receive additional compensation for serving as a director.
The Board of Directors had seven meetings during the 1996 fiscal year.
The Board has among other committees, Audit and Asset Quality, Compensation
and Directors Nominating Committees.
The Audit and Asset Quality Committee consists of Charles Baird, Nick
Cooley, Porter Welch, Ernest M. Rogers and William A. Graham, Jr. The
Audit and Asset Quality Committee met three times during 1996. The
committee reviews and reports to the Board with respect to various auditing
and accounting matters, including the appointment and performance of the
independent auditors, the scope of audit procedures, general auditing
policy matters and adequacy of internal controls.
The Compensation Committee consists of Brandt Mullins, Ernest M.
Rogers and Nick Cooley. The Compensation Committee, which held two
meetings during 1996, reviews the compensation practices of the Company and
its subsidiaries.
4
<PAGE>
The Directors Nominating Committee consists of Burlin Coleman, Brandt
Mullins, Charles Baird and Porter Welch. This committee met one time in
1996.
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
In the ordinary course of business, the Company, through its wholly-
owned subsidiary commercial banks and savings bank, has in the past and
expects to have in the future, banking transactions, including lending to
its directors, officers, principal shareholders and their associates. When
these banking transactions are credit transactions they are made in the
ordinary course of business, on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with others. In the opinion of the Company's Board
of Directors, such transactions do not involve more than the normal risk of
collectibility or present any other unfavorable features.
Mr. Charles Baird, a director of the Company, is a partner in Baird,
Baird, & Jones, P.S.C., a law firm which provided services to Community
Trust Bancorp, Inc. and its affiliates during 1996 and will be retained by
Community Trust Bancorp, Inc. and its affiliates during the current fiscal
year 1997. Approximately $400,000 in legal fees were paid to Baird, Baird,
Baird, & Jones during 1996.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Act")
requires the Company's executive officers and directors and persons who own
more than ten percent (10%) of the Common Stock, to file initial reports of
ownership and changes in ownership with the Securities and Exchange
Commission ("SEC") as well as to furnish the Company with a copy of such
report (the Company is not aware of any beneficial owner of more than 10%
of its Common Stock). Additionally, SEC regulations require the Company to
identify in its Proxy Statement those individuals for whom one of the
referenced reports was not filed on a timely basis during the most recent
fiscal year. Brandt Mullins, Porter Welch, and William Vermillion were
late filing SEC Form 4 (statement of changes in beneficial ownership)
during 1996.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
As of December 31, 1996, the Company had executed certain termination
of employment and change-in-control agreements ("Severance Agreements")
with Jean R. Hale, Richard M. Levy, Ronald M. Holt and William Vermillion,
the Company's named executive officers. The Severance Agreements were
executed on January 23, 1996 and are effective for a term equal to the
longer of three years or the covered period should a change-in-control of
the Company occur during such three year period. The covered period during
which the terms and conditions of the Severance Agreements are effective is
the period of time following a change-in-control equal to (i) two years
following the occurrence of the change-in-control in the event of an
involuntary termination or a voluntary termination following a change in
duties, or (ii) the thirteenth month following the change-in-control in the
event of a voluntary termination not preceded by a change in duties.
The Severance Agreements require the payment to the applicable named
executive officer of a severance amount in the event of an involuntary or
voluntary termination of employment after a change-in-control of the
company during the covered period. The severance amount payable under the
Severance Agreement is equal to (i) 2.99 times the named executive
officer's base annual salary in the event of involuntary termination, or
(ii) 2.99 times the named executive officer's base annual salary in the
event of a voluntary termination of employment preceded by a change in
duties subsequent to a change-in-control of the Company or 2.00 times the
named executive officer's annual base salary in the event of a voluntary
termination of employment not preceded by a change in duties subsequent to
a change-in-control of the Company.
A change-in-control has occurred when (i) any person, including a
group under Section 13(d)(3) of the Securities Exchange Act of 1934, is or
becomes the owner of 30% or more of combined voting power of the Company's
outstanding securities; (ii) as a result of, or in connection with, any
tender offer, exchange offer, merger or other combination, sale of assets
or contested election, the persons who were directors of the Company before
such transaction(s) shall cease to constitute a majority of the Board of
Directors of the Company or successor of the Company; (iii) a tender or
exchange offer is made and consummated for the ownership of 30% or more of
the combined voting power of the Company's outstanding voting securities;
(iv) the Company transfers substantially all of its assets to another
corporation that is not a wholly-owned subsidiary of the Company.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total annual compensation paid or
accrued by the Company to or for the account of the Chief Executive Officer
and each of the executive officers of the Company whose total cash
compensation for the fiscal year ended December 31, 1996 exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
Name and Salary Bonus (1) Options (2) All Other
Principal Position Year ($) ($) (#) Compensation (3)($)
<S> <C> <C> <C> <C> <C>
Terry N. Coleman (4) 1996 540,000 94,500 55,143 10,750
President, Chief Executive 1995 180,000 24,032 1,545 12,590
Officer, and Director 1994 165,000 35,021 1,467 13,746
Jean R. Hale 1996 170,000 68,136 29,233 10,233
Executive Vice President, 1995 170,000 24,032 1,545 12,132
Secretary, and Director 1994 165,000 35,021 1,467 16,359
Richard M. Levy (5) 1996 129,038 45,500 27,786 6,175
Executive Vice President 1995 104,807 8,312 1,500 21,357
Chief Financial Officer
William Vermillion (6) 1996 121,538 45,500 22,786 0
Executive Vice President 1995 0 0 0 0
Ronald M. Holt (7) 1996 120,769 45,500 27,786 36,009
Executive Vice President 1995 80,385 13,341 1,000 6,726
Burlin Coleman (8) 1996 24,231 0 0 0
Chairman, President 1995 0 0 0 0
Chief Executive Officer
and Director 1994 174,000 7,830 0 12,969
<FN>
<fn1>
(1) Bonuses are paid under the senior management incentive
plan, which is open to executive officers and affiliate CEO's.
Bonuses are based on earnings per share of the Company, with
modifying factors which are different for each officer. (See
report of the Compensation Committee)
<fn2>
(2) These options were granted under the 1989 Stock Option
Plan (the "Option Plan"). The Option Plan permits the grant of
options to employees of the Company and its subsidiaries whose
efforts contribute, or may be expected to contribute materially to
the successful performance of the Company .
<fn3>
(3) Amounts in this column include contributions made by
the Company under the Savings and Employee Stock Ownership Plan
(the "KSOP Plan") and relocation expenses. For 1996, all amounts
listed are KSOP Plan contributions except for Mr. Ronald Holt
($6,060 KSOP Plan, $29,949 relocation). Participation in the KSOP
Plan is available to any employee of the Company or its
subsidiaries who has been employed for one year, completed 1,000
hours of service and has attained the age of 21 ("Participant").
Participants may contribute 1% to 15% of their annual salary and
the Company will contribute 50% of the Participant's first 8% of
contributions. The Company also contributes a base percentage of
each Participants salary as determined annually by the Board of
Directors. For 1994, 1995 and 1996, the Company made a base
contribution of 4% of the Participant's annual salaries.
<fn4>
(4) Terry N. Coleman resigned as President and Chief
executive officer November 1, 1996. Mr. Coleman was paid a
severance amount of $360,000 included in Salary for 1996.
6
<PAGE>
<fn5>
(5) Richard M. Levy was employed by the Company on February
27, 1995.
<fn6>
(6) William Vermillion resigned his position on January 13,
1997.
<fn7>
(7) Ronald M. Holt was employed by the Company on April 3,
1995.
<fn8>
(8) Burlin Coleman became Chairman, President and Chief
Executive Officer on November 1,1996. Prior to that date, Mr.
Coleman was the Chairman of the Board. For the entire year of
1994, Mr. Coleman served as Chairman and Chief Executive Officer.
</FN>
</TABLE>
The following table sets forth the information regarding options granted
to the named executive officers for fiscal year 1996.
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Individual Grants Price Appreciation
for Option Term (2)
Number of
Securities Percent
Underlying of Total
Options/ Options/SARs Exercise
SARs Granted to or Base
Granted (1) Employees Price Expiration
Name (#) in Fiscal Year ($/SH) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Terry N. Coleman 50,000 21.58% 20.50 4/25/2006 644,500 1,633,500
5,143 24.50 1/21/2007 79,254 200,834
Jean R. Hale 20,000 11.44% 20.50 4/25/2006 257,800 653,400
9,233 24.50 1/21/2007 142,281 360,549
Richard M. Levy 20,000 10.88% 20.50 4/25/2006 257,800 653,400
7,786 24.50 1/21/2007 119,982 304,043
William Vermillion 20,000 8.92% 20.50 4/25/2006 257,800 653,400
2,786 24.50 1/21/2007 42,932 108,793
Ronald M. Holt 20,000 10.88% 20.50 4/25/2006 257,800 653,400
7,786 24.50 1/21/2007 119,982 304,043
Burlin Coleman 0 0.00% 0.00 N/A N/A N/A
<FN>
<fn1>
(1) Options granted under the Senior Management Incentive
Plan become exercisable in equal 25% installments beginning one
year after the date of the grant and become fully exercisable upon
a change in control of the Company. Options granted under
Management Retention become exercisable after five years and
become fully exercisable upon a change in control of the Company.
Options expire if not exercised ten years after the date of the
grant.
<fn2>
(2) These amounts, based on assumed appreciation rates of
5% and 10% rates prescribed by the Securities and Exchange
Commission rules, are not intended to forecast possible future
appreciation, if any, of the Common Stock price. Moreover, these
values do not take into consideration the provisions of the
options providing for nontransferability, vesting over a period of
four years or termination of the options following termination of
employment. The amounts shown are pre-tax and assume the options
will be held throughout the entire ten year term. Actual gains,
if any, are dependent upon the future performance of the Common
Stock, as well as the continued employment of the option holder
through the vesting periods.
</FN>
</TABLE>
7
<PAGE>
The following table sets forth the number and value of unexercised
options held by the named executive officers at December 31, 1996. No
options or SARs were exercised by the named executive officers during the
1996 fiscal year. No SARs were held by the named executive officers at
December 31, 1996.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
Number of
Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs
Fiscal Year-End (#) at Fiscal Year-End ($) (1)
Name Exercisable Unexercisable Exercisable Unexercisable
Terry N. Coleman 8,995 54,427 83,740 205,039
Jean R. Hale 8,995 24,427 83,740 85,039
Richard M. Levy 0 21,500 0 86,750
William Vermillion 0 20,000 0 80,000
Ronald M. Holt 0 21,000 0 84,500
Burlin Coleman 0 0 0 0
(1) Based on the closing price of the Common Stock at December 31, 1996.
REPORT OF THE COMPENSATION COMMITTEE
The principal duties of the Compensation Committee are to review the
compensation of executive officers of the Company and make recommendations
to the Board for approval. Compensation for executive officers consists of
base salary, bonus and stock options under the Option Plan.
The total compensation package is set at levels the Compensation
Committee believes are sufficient to attract and retain qualified
executives. It is the goal of the Compensation to hire executives to long-
term relationships which will mutually benefit the executive and the
Company. The Compensation Committee believes its total compensation
package is in line with compensation packages offered by other companies
within the Company's peer group of bank holding companies with total
consolidated assets of one to three billion dollars. This is not the peer
group used to construct the performance graph contained in this proxy
statement.
Bonuses to executive officers are computed under the senior management
incentive plan, which is open to all senior executives. The bonuses are
based on earnings per share of the Corporation adjusted for modifying
factors which are different for each senior executive. This is different
from the incentive plan available to other employees which is also based on
earnings per share, but without modifying factors.
Stock options are also computed under the senior management incentive
plan, and issued under the Option Plan. Stock options are based on
earnings per share adjusted for modifying factors which are different for
each senior executive. Stock options are not available to other employees.
Stock options may also be issued to senior executives for management
retention purposes, which must be approved by the Compensation Committee.
The salary, bonus and stock options of Terry Coleman, the Chief
Executive Officer until November 1, 1996, were computed under the senior
management incentive plan and were not tied to stock performance. The
salary of Burlin Coleman, the Chief Executive Officer from November 1, 1996
was not tied to stock performance. Burlin Coleman received no bonus or
stock options for 1996. The Compensation Committee believes the
compensation of the chief executive officer is in line with other companies
in its peer group.
8
<PAGE>
OBRA Deductibility Limitation. The Omnibus Budget Reconciliation Act
of 1994 ("OBRA") prohibits the deduction by public companies of
compensation of certain executive officers in excess of $1 million, unless
certain criteria are met. The Company has determined not to take any
action at this time with respect to its compensation plans to seek to meet
these criteria.
Ernest M. Rogers Brandt Mullins Nick Cooley
During 1996 there were no interlocking relationships between any
executive officers of the Company and any entity whose directors or
executive officers serve on the Board of Directors' Compensation
Committee. Brandt Mullins, who serves on the Compensation Committee,
was the President and Chief Operating Officer until his retirement in
1992.
9
<PAGE>
COMMON STOCK PERFORMANCE
The following graph shows the cumulative return experienced by the
Company's shareholders during the last five years compared to the NASDAQ
Stock Market and the NASDAQ Bank Index. The graph assumes the investment
of $100 on December 31, 1991 in the Company's Common Stock and each index
and the reinvestment of all dividends paid during the five year period.
Comparison of 5 Year Cumulative Total Return
among Community Trust Bancorp, Inc., NASDAQ Stock Market (U.S.),
and NASDAQ Bank Stocks
Fiscal Year Ending December 31
1991 1992 1993 1994 1995 1996
Community Trust
Bancorp, Inc. 100 198 281 257 195 256
NASDAQ Stock
Market (U.S.) 100 116 134 131 185 227
NASDAQ Bank Stocks 100 146 166 165 246 326
INDEPENDENT AUDITORS
Ernst & Young LLP ("Ernst & Young") has been selected as independent
certified public accountants for 1997 by the Audit and Asset Quality
Committee, subject to approval of the full Board of Directors .
Crowe Chizek & Company LLP of South Bend, Indiana ("Crowe Chizek")
were the independent certified public accountants for the years ended
December 31, 1995, 1994 and 1993. The services rendered to the Company by
Crowe Chizek during these years included the audit of annual financial
statements, review of the Annual Report and reports filed with the
Securities & Exchange Commission, consultation on IRS examinations and
consultation with the internal audit staff concerning documentation and
testing of internal accounting controls.
Ernst & Young replaced Crowe Chizek on January 23, 1996. During the
two most recent fiscal years and interim period prior to January 23, 1996,
there have been no disagreements with Crowe Chizek on any matter of
accounting principles or practices, financial statement disclosure or
auditing scope or procedure or any reportable events.
Crowe Chizek's report on the financial statements for the final two
years contained no adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting
principles.
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The decision to change independent certified public accountants was
recommended by the Audit and Asset Quality Committee and is subject to
approval of the full Board of Directors.
Neither Crowe Chizek nor Ernst & Young is expected to have a
representative present at the meeting.
SHAREHOLDER PROPOSALS
It is currently contemplated that the Company's 1998 Annual Meeting of
Shareholders will be held on or about April 28, 1998. In the event that a
shareholder desires to have a proposal considered for presentation at the
Company's 1998 Annual Meeting of Shareholders and inclusion in the Proxy
Statement for such meeting, the proposal must be forwarded in writing to
the Secretary of the Company so that it is received no later than November
19, 1997. Any such proposal must comply with the requirements of Rule
14(a)-8 promulgated under the Act.
MISCELLANEOUS
The Board of Directors of the Company knows of no other business to be
presented to the Annual Meeting. If other matters should properly come
before the Annual Meeting or any adjournment thereof, a vote may be cast
pursuant to the accompanying proxy in accordance with the judgment of the
person or persons voting the proxy. The Board of Directors urges each
shareholder who does not intend to be present and to vote at the Annual
Meeting to complete, sign and return the enclosed proxy as promptly as
possible.
By Order of the Board of Directors
Burlin Coleman
Burlin Coleman
President and Chairman of the Board
Jean R. Hale
Jean R. Hale
Executive Vice President
Pikeville, Kentucky
March 21, 1997
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