5
COMMUNITY TRUST BANCORP, INC.
346 North Mayo Trail
Pikeville, Kentucky 41501
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2000
The Annual Meeting of Shareholders of Community Trust Bancorp, Inc. will
be held at the Community Trust Bank, 346 North Mayo Trail, Pikeville,
Kentucky, on Tuesday, April 25, 2000 at 10:00 a.m., local time, for the
following purposes:
1. To elect a Board of eight 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 Deloitte & Touche
LLP as the Company's Independent Certified Public Accountants for the
fiscal year ending December 31, 2000.
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
29, 2000 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
/s/Burlin Coleman /s/Jean R. Hale
Burlin Coleman Jean R. Hale
Chairman of the Board President & CEO
Pikeville, Kentucky
March 20, 2000
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.
346 North Mayo Trail
Pikeville, Kentucky 41501
PROXY STATEMENT
Annual Meeting of Shareholders
to be held April 25, 2000
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 25,
2000, at 10:00 a.m. (EDT), at Community Trust Bank, 346 North Mayo Trail,
Pikeville, Kentucky, and any adjournments thereof. A copy of the Company's
1999 Annual Report to Shareholders accompanies this Proxy Statement.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mail, 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 30, 2000.
RECORD DATE AND VOTING SECURITIES
The Common Stock of the Company ("Common Stock") is the only class of
outstanding voting securities. Only holders of Common Stock of record at
the close of business on February 29, 2000 (the "Record Date") are entitled
to notice of and to vote at the Annual Meeting. At the Record Date, there
were 11,028,823 shares of Common Stock outstanding. With respect to 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 eight nominees for director named herein
and in favor of the ratification of Deloitte & Touche LLP as the Company's
independent auditors for the 2000 fiscal year. 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.
2
<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, NA 1,214,487(1) 11.0%
as Fiduciary
100 East Vine St., Suite 400
Lexington, Kentucky 40507
(1) The shares indicated are held by Trust Company of Kentucky, NA, 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 395,340 shares and no voting rights with respect to
819,147 shares. Trust Company has shared investment power with respect to
89,527 shares and sole investment power with respect to 1,124,960 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 2001 Annual Meeting of
Shareholders. The following table sets forth certain information
respecting the persons nominated to be directors of the Company:
<TABLE>
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; 50 Director 1987 Baird, Baird, Baird 44,000 (4)
& Jones, P.S.C.,
Attorneys
Burlin Coleman; 70 Chairman of 1980 Chairman of Board 493,491 (5) 4.5%
Board of of Directors
Directors
Nick A. Cooley; 66 Director 1980 President - Unit 38,289 (4)
Coal Corporation
William A. Graham, Jr.; 63 Director 1990 Chairman of the 119,950 (6) 1.1%
Advisory Board -
Fleming County
Region - Community
Trust Bank, NA
Jean R. Hale; 53 President, 1993 President & CEO - 67,658 (7) (4)
CEO & Community Trust
Director Bancorp, Inc.
3
<PAGE>
Steven L. Lawson; 35 Director 1998 President - Mountain 220 (4)
Enterprises, Inc.
M. Lynn Parrish; 50 Director 1993 President - Knott Floyd 66,660 (4)
Land Co., Inc.
Ernest M. Rogers; 72 Director 1980 President and General 64,268 (8) (4)
Manager - Rogers Petroleum
Services, Inc.
All directors and executive officers as a group 921,642 (9) 8.4%
(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, NA. Jean Hale is
also a director of Community Trust Bank, NA, Community Trust Funding
Corporation and Trust Company of Kentucky, NA.
(1) The ages listed are as of February 29, 2000.
(2) Each of the nominees has been engaged in the principal occupation
specified above for five years or more.
(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.
(4) Less than 1 percent.
(5) Includes the following shares beneficially owned by Burlin
Coleman: 383,234 shares held in trust over which Mr. Coleman has sole
voting and investment power; 492 shares held directly by Mr. Coleman;
and 109,765 shares held in KSOP which Mr. Coleman has the power to
vote. Excludes 10,611 shares held by Mr. Coleman's wife, over which
Mr. Coleman has no voting or investment power.
(6) Includes 9,035 shares that Mr. Graham may acquire pursuant
to options exercisable within sixty days of the Record Date.
(7) Includes 17,362 shares which Mrs. Hale may acquire pursuant
to options exercisable within sixty days of the Record Date and 20,236
shares held in the KSOP, which Mrs. Hale has the power to vote.
Excludes 6,172 shares held by Mrs. Hale's husband, over which Mrs.
Hale has no voting or investment power.
(8) Excludes 11,237 shares held by Mr. Rogers' wife, over which
Mr. Rogers has no voting or investment power.
(9) Includes 27,796 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.
</TABLE>
Unless authority to do so is withheld, it is the intention of the
persons named in the proxy 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.
4
<PAGE>
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:
<TABLE>
Amount & Nature of Percent
Name Position Beneficial Ownership of Class
<S> <C> <C> <C>
Mark Gooch Executive Vice President 6,446 (2) (1)
John Shropshire Executive Vice President 7,814 (3) (1)
Ronald M. Holt Executive Vice President 8,495 (4) (1)
William Hickman Executive Vice President 852 (5) (1)
James W. Richardson Executive Vice President 3,499 (6) (1)
(1) Less than 1 percent.
(2) Includes 2,333 shares which Mr. Gooch may acquire pursuant to
options exercisable within sixty days of the Record Date and
3,869 shares held in KSOP, which Mr. Gooch has the power to vote.
(3) Includes 2,000 shares which Mr. Shropshire may acquire pursuant
to options exercisable within sixty days of the Record Date,
3,930 shares held in IRA and 1,763 shares held in KSOP, which
Mr. Shropshire has the power to vote. Mr. Shropshire resigned
from the Company on February 18, 2000.
(4) Includes 3,738 shares which Mr. Holt may acquire pursuant to
options exercisable within sixty days of the Record Date and
3,547 shares held in KSOP, which Mr. Holt has the power to vote.
(5) Includes 685 shares held in KSOP, which Mr. Hickman has the power
to vote.
(6) Includes 1,183 shares which Mr. Richardson may acquire pursuant to
options exercisable within sixty days of Record Date and 2,316
shares held in KSOP which Mr. Richardson has the power to vote.
</TABLE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Directors of the Company, who are not also officers of the Company,
were paid $3,000 per quarter for 1999. Directors who are also officers of
the Company did not receive additional compensation for serving as a
director.
The Board of Directors had five meetings during the 1999 fiscal year.
The Board has among other committees, Audit and Asset Quality, Compensation
and Directors Nominating Committees. All board members were present at
every meeting.
The Audit and Asset Quality Committee consists of Charles Baird, Nick
Cooley, Ernest M. Rogers, Steven L. Lawson and William A. Graham, Jr. The
Audit and Asset Quality Committee met four times during 1999. 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 Ernest M. Rogers, Charles Baird
and Nick Cooley. The Compensation Committee, which met one time during
1999, reviews the compensation practices of the Company and its
subsidiaries.
The Directors Nominating Committee consists of Burlin Coleman, Ernest
M. Rogers, M. Lynn Parrish and Charles Baird. This committee met once in
1999.
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
In the ordinary course of business, the Company, through its
commercial bank and savings bank, both of which are wholly-owned
subsidiaries, 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, Baird, & Jones, P.S.C., a law firm which provided services to the
Company and its affiliates during 1999 and will be retained by the Company
and its affiliates during the current fiscal year 2000. Approximately
$683,000 in legal fees were paid to Baird, Baird, Baird, & Jones during
1999.
5
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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. M. Lynn Parrish had one late filing of SEC Form 4 (statement
of changes in beneficial ownership) covering one transaction during 1999.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
As of December 31, 1999, the Company had executed certain termination
of employment and change-in-control agreements ("Severance Agreements")
with Jean R. Hale, Ronald M. Holt, Mark Gooch, John Shropshire, Jim
Richardson and William Hickman. Ms. Hale and Mr. Holt's Severance
Agreements were executed on January 23, 1999, Mr. Gooch's was executed on
January 1, 1997, Mr. Shropshire's was executed on January 21, 1997, Mr.
Richardson's was executed on April 15, 1997, and Mr. Hickman's was executed
on December 12, 1997. The Severance Agreements were 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. A new Severance Agreement was executed on January 1, 2000 for Mark
Gooch and John S. Shropshire. Mr. Shropshire has since voluntarily
terminated employment with the Company.
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
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 (ii) 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;
or (iv) the Company transfers substantially all of its assets to another
corporation that is not a wholly-owned subsidiary of the Company.
6
<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, 1999 exceeded $100,000.
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
Name and Salary Bonus (1) Options (2) All Other
Principal Position Year ($) ($) (#) Compensation (3) ($)
<S> <C> <C> <C> <C> <C>
Jean R. Hale (4) 1999 201,154 21,000 20,000 12,571
President, Chief Executive 1998 191,538 0 0 12,158
Officer, and Director 1997 179,231 0 11,172 8,666
Ronald M. Holt 1999 146,962 14,750 10,000 9,919
Executive Vice President 1998 145,289 0 0 9,845
1997 136,000 0 9,422 8,404
William Hickman, III (5) 1999 134,615 13,500 20,000 8,277
Executive Vice President 1998 135,000 0 0 10,400
and Secretary 1997 13,000 0 0 0
Mark Gooch (6) 1999 135,231 15,000 10,000 10,409
Executive Vice President 1998 111,808 0 0 9,169
and Treasurer 1997 103,654 0 27,028 13,768
John Shropshire 1999 114,462 11,500 0 9,028
Executive Vice President 1998 111,808 0 0 13,623
1997 100,385 0 26,866 6,805
Jim Richardson (7) 1999 114,242 11,500 21,471 9,485
Executive Vice President 1998 111,946 4,326 0 8,955
1997 108,421 0 1,333 8,674
(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 and return on assets of the Company for executive
officers. (See report of the Compensation Committee)
(2) The options granted for 1997 were granted under the 1989 Stock Option
Plan. The options for 1998 and 1999 were granted under the 1998 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 .
(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 1999, all amounts listed are KSOP Plan
contributions. For 1998, all amounts listed are KSOP Plan contributions
except for Mr. Mark Gooch ($8,961 KSOP Plan) and Mr. John Shropshire
($9,291 KSOP Plan, $4,332 relocation). For 1997, all amounts listed are
KSOP Plan contributions except for Mr. Mark Gooch ($8,698 KSOP Plan,
$5,070 relocation). Participation in the KSOP Plan is available to any
employee of the Company or its subsidiaries who has been employed
for one year, completed 1,000 hours of service and has attained
the age of 21 ("Participant"). Participants may contribute 1% to
15% of their annual salary and the Company will contribute 50% of
the Participant's first 8% of contributions. The Company also
contributes a base percentage of each Participant's salary as
determined annually by the Board of Directors. For 1997, 1998 and
1999, the Company made a base contribution of 4% of each
Participant's annual salary.
(4) Jean R. Hale became President and Chief Executive Officer on July 1, 1999.
Prior to that date, Ms. Hale was President and Chief Executive Officer
of Community Trust Bank, NA and Executive Vice President of the Company.
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<PAGE>
(5) William Hickman was employed by the Company on December 12, 1997.
(6) Mark Gooch was employed by the Company on May 18, 1981 and served as
President and CEO of First Security Bank & Trust Co., Whitesburg, KY
prior to becoming an executive officer of the Company.
(7) Jim Richardson was employed by the Company on June 25, 1994 and currently
serves as President and CEO of Community Trust Bank, FSB.
</TABLE>
The following table sets forth the information regarding options granted
to the named executive officers in 1999.
<TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Individual Grants Price Appreciation
for Option Term (2)
Number of
Securities Percent
Underlying of Total
Options/ Options/SARs Exercise
SARs Granted to or Base
Granted (1) Employees Price Expiration
Name (#) in Fiscal Year ($/SH) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Jean R. Hale 20,000 19.17% 22.50 7/27/2009 733,003 1,167,184
Ronald M. Holt 10,000 9.59% 22.50 7/27/2009 366,501 583,592
William Hickman, III 20,000 19.17% 22.50 7/27/2009 733,003 1,167,184
Mark Gooch 10,000 9.59% 22.50 7/27/2009 366,501 583,592
John Shropshire 0 0.00% 0.00 N/A N/A N/A
Jim Richardson 1,471 20.58% 22.05 2/1/2009 52,834 84,129
20,000 22.50 7/27/2009 733,003 1,167,184
(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.
(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.
</TABLE>
8
<PAGE>
The following table sets forth the number and value of unexercised
options held by the named executive officers of the Company at December
31, 1999. No SARs were held by the named executive officers at December
31, 1999.
<TABLE>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
Number of
Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options/SARs at In-the-Money Options/SARs
Exercise (#) Realized ($) Fiscal Year-End (#) at Fiscal Year-End ($) (1)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Jean R. Hale 2,723 29,490 15,425 53,464 70,139 76,077
Ronald M. Holt - - 2,593 42,238 3,149 74,860
Jim Richardson - - 1,574 22,440 3,149 1,050
Mark Gooch - - 1,414 35,614 - -
John Shropshire - - 1,333 25,533 - -
William Hickman - - - 20,000 - -
(1) Based on the closing price of the Common Stock at December 31, 1999.
</TABLE>
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, including base salaries, is set at
levels the Compensation Committee believes are sufficient to attract and
retain qualified executives. It is the goal of the Compensation Committee
to retain quality executives, 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 and return on assets of the Company for the
executive officers. This is different from the incentive plan available to
other employees which is based on individual performance goals set at the
beginning of each year.
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 of Jean R. Hale, the Chief Executive Officer, was not tied
to stock performance. The Compensation Committee believes the compensation
of the chief executive officer is in line with other companies in its peer
group.
9
<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 Charles Baird Nick Cooley
During 1999 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.
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<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's National Market and the NASDAQ Bank Index. The graph
assumes the investment of $100 on December 31, 1994 in the Company's Common
Stock and each index and the reinvestment of all dividends paid during the
five year period.
<TABLE>
Comparison of 5 Year Cumulative Total Return
among Community Trust Bancorp, Inc., NASDAQ Stock Market (U.S.),
and NASDAQ Bank Stocks
Fiscal Year Ending December 31 ($)
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Community Trust Bancorp, Inc. 100 76 99 142 111 108
NASDAQ Stock Market (U.S.) 100 142 174 213 301 543
NASDAQ Bank Stocks 100 149 197 329 327 314
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The Board of Directors will request shareholders to ratify its
selection of Deloitte & Touche LLP ("Deloitte & Touche"), independent
auditors, to examine the consolidated financial statements of the Company
for the fiscal year ending December 31, 2000. If shareholders ratify the
selection of Deloitte & Touche, the engagement of Deloitte & Touche is
expected to begin April 26, 2000. Ernst & Young audited the Company's
financial statements from 1996 through 1999. Neither Deloitte & Touche nor
Ernst & Young are expected to have a representative present at the meeting.
The affirmative vote of a majority of the shares represented at the meeting
is required for the ratification of the Board's selection of Deloitte &
Touche as the Company's independent auditors. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE SELECTION OF DELOITTE &
TOUCHE LLP AS INDEPENDENT AUDITORS OF THE COMPANY.
11
<PAGE>
SHAREHOLDER PROPOSALS
It is currently contemplated that the Company's 2001 Annual Meeting of
Shareholders will be held on or about April 24, 2001. In the event that a
shareholder desires to have a proposal considered for presentation at the
Company's 2001 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
21, 2000. Any such proposal must comply with the requirements of Rule
14(a)-8 promulgated under the Act. If a shareholder intends to present a
proposal at the 2001 Annual Meeting of Shareholders, but has not sought the
inclusion of such proposal in the Company's proxy, notice of meeting and
proxy statement, such proposal must be received by the Secretary of the
Company prior to February 12, 2001 or the Company's management proxies for
the 2001 Annual Meeting will be entitled to use their discretionary voting
authority should such proposal then be raised, without any discussion of
the matter in the Company's proxy, notice of meeting or proxy statement.
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
/s/Burlin Coleman
Burlin Coleman
Chairman of the Board
/s/Jean R. Hale
Jean R. Hale
President & Chief Executive Officer
Pikeville, Kentucky
March 20, 2000
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