DEF 14A of Community Trust Bancorp Inc /Ky/
Filed Mar 18, 2024 · FY20230001140361-24-013936
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS CTBI’s directors are elected at each Annual Meeting of Shareholders and hold office until the next election of directors or until their successors are duly elected and qualify. The persons named below have been nominated for election to serve until the next Annual Meeting of Shareholders. All of these individuals currently serve as directors of CTBI. Charles J. Baird Franklin H. Farris, Jr. Mark A. Gooch Eugenia Crittenden “Crit” Luallen Ina Michelle Matthews James E. McGhee II Franky Minnifield Jefferson F. Sandlin Anthony W. St. Charles Chad C. Street, DMD, MD Lillian (Kay) Webb, PhD 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 CTBI 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 Board, 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 Nominating and Corporate Governance Committee assists the Board in identifying qualified persons to serve as directors of CTBI. The Nominating and Corporate Governance Committee will evaluate proposed director nominees, including incumbent directors, prior to recommending re-nomination. The Nominating and Corporate Governance Committee selects as candidates for nomination individuals of high personal and professional integrity and ability who can contribute to the Board’s collective effectiveness in serving the interests of CTBI’s shareholders. Maturity of judgment and community leadership are considered strengths for Board members. Although the Nominating and Corporate Governance Committee does not utilize a specific or formulaic diversity policy or requirement, it does consider the make-up of the Board as a whole and favorably views Board diversity with respect to the following attributes: professional and life experience, education, skills, age, race, and gender. Each of the above-listed nominees has been identified as possessing good judgment, strength of character, and an independent mind, as well as a reputation for integrity and the highest personal and professional ethics. Each nominee also brings a strong and varied background and set of skills to the Board, giving the Board, as a whole, competence and experience in a range of areas. Below is the information concerning each of the director nominees, including each nominee’s particular and specific qualifications, attributes, and skills which led the Board to conclude that he/she should serve as a director. As more fully described below, the nominees for director collectively have skills in areas considered by the Nominating and Corporate Governance Committee to be valuable to CTBI, including experience in finance, accounting, legal matters, management, operations, and business development and growth, within the financial institutions, energy, and other business sectors. Charles J. Baird, age 74, was appointed to the Board in 1987. He currently serves as Chairman of the Board’s Corporate Retirement and Employee Benefit Committee, as Vice Chairman of the Board’s Executive Committee, and as a member of the Risk and Compliance Committee. He is also a director of CTBI’s trust subsidiary, CTIC. Mr. Baird has been an attorney with Baird and Baird, PSC since 1975. He became President of Baird and Baird, PSC in 2009. In addition to his more than forty-eight years of legal and management experience, he has attended seminars on banking law, corporate finance, and numerous legal matters, has been involved in numerous significant acquisitions during his legal career, and has been a director of many organizations over the years. Mr. Baird has extensive legal experience in the businesses of coal, natural gas, and other natural resources, including the origination and management of such enterprises. Mr. Baird is currently Chairman of Eastern Kentucky Exposition Center Corporation and Coal Operators and Associates, Inc. He was a member of the Workers’ Compensation Board Nominating Commission of Kentucky from 1987 until 2010, serving as Chairman for ten years, and resumed service as a member from 2013 to 2016. During his extensive professional career, Mr. Baird has developed relationships with many of our shareholders, customers, and employees. Franklin H. Farris, Jr., age 73, was appointed to the Board on February 26, 2019. Mr. Farris serves as Chairman of the Board’s Audit and Asset Quality Committee and as a member of the Board’s Risk and Compliance Committee and Nominating and Corporate Governance Committee. He is also a director of CTIC and of CTBI’s banking subsidiary, Community Trust Bank, Inc. (“CTB”) and a member of CTB’s Loan Committee. Mr. Farris served as managing partner of the Louisville office of KPMG LLP (“KPMG”), an international public accounting firm, from 2004 to 2009. Mr. Farris, a certified public accountant, was an audit partner with KPMG from 1984 until his retirement, after thirty-seven years of service, in September 2009. In addition to his managing partner role, Mr. Farris maintained a client partner role on a number of accounting and auditing matters, including significant experience with public companies, as well as those with international operations. Upon his retirement from KPMG, he joined Mountjoy Chilton Medley, a Kentucky-based audit and advisory firm, where he served as an audit partner until 2015. In 2015, he formed Farris Advisory Services, LLC, where he continues to provide chief financial officer type services to small and medium size businesses. In addition, in 2015, he joined the Bluegrass International Fund, an EB-5 Regional Center, as its Chief Financial Officer. Mr. Farris is a member of the American Institute of Certified Public Accountants and the Kentucky Society of Certified Public Accountants. Mark A. Gooch, age 65, was appointed as Chairman of the Board effective with the retirement of M. Lynn Parrish on March 17, 2024. Mr. Gooch was appointed to the Board in January 2022 and as Vice Chairman, President, and Chief Executive Officer of CTBI effective February 7, 2022. He currently serves as Chairman of the Board’s Executive Committee and as a member of the Corporate Retirement and Employee Benefit Committee, in addition to being Chairman of CTB’s Loan Committee. Mr. Gooch also serves as Chairman of the Board and Chief Executive Officer of CTB and Chairman of the Board of CTIC. Mr. Gooch has been employed by CTBI since 1981 and has held various positions within the company including branch manager, cashier, retail and commercial lender, Vice President, compliance officer, and President/CEO and Director of First Security Bank & Trust from 1993 until January 1997. He was then named Executive Vice President/Operations of CTB and served in that role until July 1999 when he was named President and CEO of CTB. Mr. Gooch is a director of the City of Pikeville’s Economic and Industrial Development Authority Corporation, the Big Sandy Area Development District, CEDAR, Inc., the National Advisory Council for the Christian Appalachian Project, the Kentucky Pro Football Hall of Fame Board, and the National Advisory Council for the National Community Investment Fund. Mr. Gooch has served on several other boards of directors over the years, including the Kentucky Bankers Association, the Kentucky Department of Financial Institutions, and the Kentucky Chamber of Commerce, and he is a Past Chairman of the Pike County Chamber of Commerce and One East Kentucky.
ELECTION OF DIRECTORS
Eugenia Crittenden “Crit” Luallen, age 71, was appointed to the Board in 2020. Ms. Luallen was appointed Vice Chairman of the Board and lead independent director effective with the retirement of Mr. Parrish on March 17, 2024. Ms. Luallen was appointed to the Board of Directors of CTB in 2012 and served in that capacity until 2014, at which time she was appointed Lieutenant Governor of Kentucky by Governor Steve Beshear. Ms. Luallen was reappointed to CTB’s Board in 2016, and she served as a director of CTB until 2021. She currently serves as Chairman of the Board’s Compensation Committee, Vice Chairman of the Board’s Audit and Asset Quality Committee, and as a member of the Board’s Executive Committee and Risk and Compliance Committee. She is also a director of CTIC. Ms. Luallen has served seven Kentucky Governors and been elected twice to statewide office. During her long career in state government, Ms. Luallen served in a variety of positions with responsibility for financial management and oversight. Ms. Luallen was elected the state’s Auditor of Public Accounts in 2003 and reelected in 2007, serving a total of eight years. In that position, her office was responsible for auditing all state agencies and county governments. Prior to that position, Ms. Luallen served seven years as Secretary of the Governor’s Executive Cabinet, a position equivalent to chief operating officer for the Commonwealth of Kentucky. During her tenure as Secretary of the Governor’s Cabinet, she served concurrently for thirteen months as State Budget Director. Other gubernatorial appointments included Secretary of the State’s Finance and Administration Cabinet, which manages the financial resources of the Commonwealth and provides the central coordination for administrative services. Ms. Luallen was appointed by Governor Andy Beshear in November 2019 to head the State Budget Transition Team as part of the gubernatorial transition. Ms. Luallen is a member of the Board of Trustees of Centre College where she serves as Vice Chair and Chair of the Governance Committee. She also serves as Vice Chair of the Board of the James Graham Brown Foundation and is involved in numerous other civic and charitable activities. Ina Michelle Matthews, age 53, was elected to the Board in 2021. She has served as a director of CTB since 2019. She currently serves on the Board’s Corporate Retirement and Employee Benefit Committee, Audit and Asset Quality Committee, Risk and Compliance Committee, and Compensation Committee, as well as CTB’s Loan Committee. Mrs. Matthews has served as the President of Childers Oil Company and Double Kwik Convenience Stores since 2012. Childers Oil Company was founded in 1966 and distributes petroleum products and operates convenience stores throughout Eastern Kentucky and Southwest Virginia. Mrs. Matthews serves on the boards of the National Association of Convenience Stores (NACS) and Georgetown College. She also serves as the Chairman of Letcher County Tourism and is the founder of the EKY Heritage Foundation with the sole purpose to help tourism and economic development in the Eastern Kentucky region. James E. McGhee II, age 66, was appointed to the Board in 2005. He currently serves as Chairman of the Board’s Nominating and Corporate Governance Committee and as a member of the Executive Committee, the Audit and Asset Quality Committee, and the Compensation Committee. He is also a director of CTB and CTIC and serves on CTB’s Loan Committee. Mr. McGhee was an executive officer of Dyno East Kentucky (dba Mountain Valley Explosives) from 1995 until 2006 at which time he sold the company and formed Three JC Investments, LLC. As President of Three JC Investments, LLC, he is involved in explosives consulting, natural gas development, and commercial property. Over the years, Mr. McGhee has started several small businesses involving property and energy. He also served as Executive Director of Dyno Explosives Distributors Association. During his career, Mr. McGhee was responsible for sales, acquisition, distribution, personnel, and financial reporting for several locations with Coal-Mac, Sandy Valley Explosives, and Mountain Valley Explosives. In addition to Mr. McGhee’s business management experience, he has attended several business related safety, sales, and management seminars, an accounting for non-accountants seminar, and continuing education classes for directors. Franky Minnifield, age 64, was appointed to the Board in 2020. He served as a director of CTB from 1998 until 2021. He currently serves as Vice Chairman of the Board’s Corporate Retirement and Employee Benefit Committee and the Risk and Compliance Committee and as a member of the Audit and Asset Quality Committee. Mr. Minnifield is the President and founder of Minnifield Enterprize, Inc., a general contracting company, and has a long-standing contract with Toyota Motor Manufacturing providing goods and services (non-auto parts related) within the operations of North America, Canada, and Mexico. Mr. Minnifield brings over thirty years of finance, accounting, and management experience with extensive knowledge in small business startups. In 1996, he started the Kentucky Pro Football Hall of Fame organization where he currently serves as the Executive Director. Mr. Minnifield was formerly Chairman of the University of Louisville Board of Trustees and a member of the University of Louisville Foundation’s board. He is also a former member of the Lexington Chamber of Commerce’s board. Jefferson F. Sandlin, age 60, was appointed to the Board in January 2024. He currently serves as a member of the Board’s Audit and Asset Quality Committee and the Risk and Compliance Committee. Mr. Sandlin worked in the mining industry from 1980 to 1994. He joined Perry Distributors, Inc., in 1994 and worked his way through every area of the business, including warehouse, delivery, marketing, human resources, and sales and administration. He was appointed General Manager of Perry Distributors, Inc. in 1999 and is currently the Chief Operating Officer. Mr. Sandlin also led the acquisition efforts of two additional companies, one in Ashland, Kentucky and another in Ironton, Ohio in 2016. In addition, he is President and Co-owner of Mountain Community Pharmacy, located in Hazard, Kentucky. Mr. Sandlin is a former member of the CTB Hazard Market Advisory Board. Anthony W. St. Charles, age 65, was appointed to the Board in 2010. He currently serves as Chairman of the Board’s Risk and Compliance Committee and a member of the Corporate Retirement and Employee Benefit Committee, the Audit and Asset Quality Committee, and the Compensation Committee. Mr. St. Charles is the President and Chief Executive Officer of The St. Charles Group, LLC of Cincinnati, Ohio. Mr. St. Charles has provided consulting services and subject matter expertise to financial institutions and technology companies in the United States and Europe for more than thirty years. His company specializes in control environment reviews, finance related remedial activities, electronic banking, retail delivery channel analysis, and operations reengineering for all back office processes. This broad spectrum of financial industry expertise allows Mr. St. Charles to provide valuable insight to the Board. Prior to the formation of his own company, Mr. St. Charles was involved in sales and consulting with the Unisys Corporation for five years and held officer level positions with U.S. Bank for fourteen years.
ELECTION OF DIRECTORS
Chad C. Street, DMD, MD, age 52, was elected to the Board in 2021. He has served as a director of CTB since 2017. He currently serves on the Board’s Executive Committee, Audit and Asset Quality Committee, Risk and Compliance Committee, and Nominating and Corporate Governance Committee, as well as CTB’s Loan Committee. Dr. Street received his undergraduate degree from Pikeville College (now the University of Pikeville) (“UPIKE”) in 1992. He received his Doctor of Dental Medicine (DMD) degree from the University of Kentucky College of Dentistry in May 1996, and then enrolled in the combined DMD, MD Oral & Maxillofacial Surgical residency program at the University of Kentucky Chandler Medical Center, where he completed his training in June 2003. Since then, he has been in private practice as an oral and maxillofacial surgeon in Pikeville, Kentucky. In June 2006, he opened his own practice after a three-year associateship with another practice. He is the sole owner and surgeon of the East Kentucky Oral & Maxillofacial Surgery, PSC practice, and owns his own real estate management company, Street Investments, LLC. Dr. Street has staff privileges for both inpatient and outpatient surgical procedures and consultations at the University of Kentucky Medical Center in Lexington, Kentucky and Pikeville Medical Center in Pikeville, Kentucky. He is a voluntary faculty member at the University of Kentucky Medical School and surgical departments, as well as a voluntary faculty preceptor at the University of Pikeville Osteopathic School of Medicine. Dr. Street has more than eighteen years of business management experience, with extensive financial experience and is competent in practice management. He has many years of business/financial experience and is well invested in the local medical and dental communities, serving as Past President three different terms for the Kentucky Mountain Dental Society. Lillian (Kay) Webb, PhD, age 60, was appointed to the Board in November 2023. She currently serves as a member of the Board’s Audit and Asset Quality Committee, Risk and Compliance Committee, and Corporate Retirement and Employee Benefit Committee. Dr. Webb completed master’s degrees in music and counseling and a doctorate in counseling psychology from Ball State University in Muncie, Indiana. She has served as faculty at Indiana Wesleyan University and Northwest Nazarene University, and she is currently the Director of the Center for Career, Vocation, and Leadership at UPIKE in Pikeville, Kentucky. At UPIKE, Dr. Webb assists and advises students as they explore career paths through college and beyond. Additionally, she works with departmental teams to identify individual strengths, increase team productivity, and improve employee satisfaction. Dr. Webb volunteers as co-director of Eastern Kentucky STRONG, a Pike County organization affiliated with Belfry High School, which seeks to transform the self-image of young women from Eastern Kentucky. The Nominating and Corporate Governance Committee will consider candidates nominated by shareholders. The Nominating and Corporate Governance Committee will evaluate candidates recommended by shareholders on the same basis as it evaluates any other properly recommended nominee. Shareholders who desire to recommend a candidate for election at the next Annual Meeting of Shareholders should submit the name of the candidate and information concerning the qualifications of the candidate by mail to the Nominating and Corporate Governance Committee at CTBI’s address on or before February 15, 2025.
Directors
Directors The following persons are the directors of Community Trust Bancorp, Inc. as of the Record Date. Their security ownership as of the Record Date is as follows:
Directors
| Name | Amount and Nature of Beneficial Ownership(1) | Percent of Class | | Charles J. Baird | 188,969(3) | 1.0% | | Franklin H. Farris, Jr. | 2,500 | (2) | | Mark A. Gooch | 81,900(4) | (2) | | Eugenia Crittenden “Crit” Luallen | 0 | (2) | | Ina Michelle Matthews | 0 | (2) | | James E. McGhee II | 33,718 | (2) | | Franky Minnifield | 18,655 | (2) | | M. Lynn Parrish | 189,242(5) | 1.1% | | Jefferson F. Sandlin | 510 | (2) | | Anthony W. St. Charles | 10,061 | (2) | | Chad C. Street | 6,100(6) | (2) | | Lillian (Kay) Webb | 0 | (2) | | All directors and executive officers as a group (22 in number including the above named individuals) | 780,786(7) | 4.3% |
Directors
| (1) Under the rules of the SEC, 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 of 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. Beneficial ownership of CTBI Common Stock is shown as of the Record Date. |
Directors
| (2) Less than 1 percent. |
Directors
| (3) Includes 6,213 shares held as trustee under various trust agreements established by Mr. Baird’s mother, Florane J. Baird, for her grandchildren, 30,800 shares held as trustee of the Carolyn A. Baird Family Trust, 220 shares held as trustee under various trust agreements established for Mr. Baird’s grandchildren, 276 shares held by Mr. Baird’s wife over which Mr. Baird has no voting or investment power, and 4,760 shares held in an individual retirement account which Mr. Baird has the power to vote, as well as 118,000 shares held as trustee of the Bryan M. Johnson Testamentary Trust FBO Rosemary Dean and 21,000 shares held as trustee of the Bryan M. Johnson Trust for which Mr. Baird has no pecuniary interest. |
Directors
| (4) Includes 3,766 restricted shares awarded under CTBI’s stock ownership plans, 25,430 shares held in the 401(k) Plan, and 22,132 shares held in the ESOP which Mr. Gooch has the power to vote. |
Directors
| (5) Includes 113,796 shares held by Mr. Parrish’s wife, Jessica J. Parrish, as trustee of the Trust under the M. Lynn Parrish 2006 GRAT and 10,000 shares held by Mrs. Parrish as trustee of the 2006 GRAT R Trust, over which Mr. Parrish has no voting or investment power. Mr. Parrish retired from the Board on March 17, 2024. |
Directors
| (6) Includes 1,100 shares held by Dr. Street’s wife over which he has no voting or investment power. |
Directors
| (7) Includes 20,000 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. |
Executive Summary
| ● | Balance the cash incentive opportunity under the Senior Management Incentive Compensation Plan (the “Incentive Plan”) with the stock-based incentive opportunity of the Incentive Plan to control the potential dilution to shareholders. |
Executive Summary
| ● | Continue to manage the performance-based long-term incentive plan to ensure a significant percentage of total rewards to executives is aligned accordingly with performance of the bank. |
Role of the Compensation Committee
| ● | Total Compensation Review – The Committee annually reviews each executive’s base salary, annual incentive compensation, and stock-based incentives. In addition to these primary compensation elements, the Committee reviews other executive compensation arrangements, including, for example, payments that could be required under various severance and change in control scenarios. This “holistic” review process ensures that the Committee considers the executive’s total compensation prior to changing any single component. |
Role of the Compensation Committee
| ● | Risk Management – The Committee reviews all incentive plans and compensation programs to insure the plans do not create any risks that are reasonably likely to have a material adverse impact on CTBI. |
Role of the Compensation Committee
The Committee meets in executive session without management or guests present when making decisions about the compensation arrangements for NEOs and at other times as needed. In addition to its responsibilities for executive compensation, the Committee periodically reviews the compensation provided to the CTBI Board of Directors to ensure that the compensation provided for service on the Board and its committees is commensurate to the amount of work required from the individual directors as well as from the Board in aggregate. The Committee periodically compares the pay arrangements for the Board and the actual amounts earned by individual directors to amounts paid to outside directors of banking companies in a custom peer group and to survey data for director compensation. In 2022, the Committee engaged Pearl Meyer Partners, LLC (“Pearl Meyer” or “Consultant”), the Committee’s independent compensation consultant, to review the compensation paid to the CTBI Board of Directors compared to the custom peer group described below. The 2022 director compensation analysis prepared by Pearl Meyer revealed that CTBI’s director compensation was significantly below the market median pay for outside directors of its peers. To maintain competitive compensation of our outside directors, in January of 2023, CTBI increased the Board of Director annual compensation by $15,000 over the next two years (2023 and 2024), with an increase of $7,500 per year for each director, and set the following levels of pay for the Board Chair and Committee chairs:
Compensation Consultant
Compensation Consultant The Committee has authority to engage outside advisors as necessary to assist with its oversight of executive compensation. In 2023, Pearl Meyer was retained to review CTBI’s executive compensation plans. The role of the Consultant is to provide analyses, information, and advice to assist the Committee in making decisions related to compensation of executive officers. The Committee believes that the Consultant is independent, and no conflicts of interest are raised by the work of the Consultant under the criteria specified in SEC rules. During December 2023, Pearl Meyer performed a total executive compensation assessment which included: (i) evaluating the competitiveness of pay for each of the NEOs and (ii) developing recommendations for managing executive pay in 2024. Pearl Meyer’s analysis determined CTBI’s executive total compensation in 2023 was competitively positioned relative to the peer median market value and was consistent with CTBI’s compensation philosophy targeting the median of peers. The analysis revealed an appropriate mix of base salary and incentive compensation in 2023, with more weight on variable pay than practices of peer community banks, consistent with CTBI’s compensation philosophy. While it may be necessary to occasionally provide certain executives with larger than average salary increases to position their salaries closer to the market median, the Committee’s actions in recent years have consistently shifted the executive pay mix toward variable, performance-based pay.
Peer Group
Peer Group CTBI periodically compares its executive pay and business performance, as well as the compensation of the Board of Directors, to a group of comparable, publicly traded financial institutions (“Peer Group”). In establishing a Peer Group, CTBI seeks to include regional bank holding companies that are similar to CTBI in terms of assets, business lines, and geographic markets. During 2023, the Committee worked with Pearl Meyer to review the Peer Group to ensure it continued to include organizations that were comparable to CTBI. Based on this review, the Committee determined that it would be appropriate to add Wilson Bank Holding Company to the Peer Group and remove the following peers: American National Bankshares, Inc. and First Bancorp. These changes resulted in the Peer Group of twenty companies listed below. The Committee believes the Peer Group provides a reasonable basis of comparison for CTBI due to their similar business lines and geographic locations, as well as their comparable size, reflected by total assets. Following the Committee’s review and adjustment of the Peer Group, the median assets of the Peer Group were $5.88 billion, compared to CTBI’s assets of approximately $5.52 billion. The companies included in the Peer Group ranged in asset size from $3.1 billion to $8.1 billion at the time of the review.
Peer Group
| Bank | Ticker | Bank | Ticker | | CapStar Financial, Inc. | CSTR | Lakeland Financial Corporation | LKFN | | Carter Bancshares, Inc. | CARE | Mercantile Bank Corporation | MBWM | | City Holding Company | CHCO | Nicolet Bankshares, Inc. | NIC | | Farmers National Banc Corp | FMNB | Peoples Bancorp | PEBO | | First Community Bancshares, Inc. | FCBC | QCR Holdings, Inc. | QCRH | | First Financial Corp | THFF | Republic Bancorp, Inc. | RBCAA | | German American Bancorp, Inc. | GABC | SmartFinancial, Inc. | SMBK | | Great Southern Bancorp, Inc. | GSBC | Stock Yards Bancorp, Inc. | SYBT | | Home Trust Bancshares, Inc. | HTBI | Univest Financial Corporation | UVSP | | Horizon Bancorp, Inc. | HBNC | Wilson Bank Holding Company | WBHC |
Executive Compensation Components
| ● | Annual Incentive Plan |
Executive Compensation Components
| ● | Long-Term Incentive Plan |
Executive Compensation Components
| ● | Employment Contracts, Termination of Employment, and Change in Control Arrangements |
Base Salaries
Base Salaries Salaries for CTBI’s executives are established based upon the scope of their responsibilities, considering competitive market compensation paid by other similarly situated companies for comparable positions. The Committee sets the CEO’s base salary, subject to approval of the Board of Directors. Any salary increase for the CEO is determined based on the Committee’s review of the CEO’s leadership and contributions to the achievement of performance objectives for CTBI, which for 2023 included asset and revenue growth, asset quality, core earnings performance, identification of strategic opportunities, and execution of the current business strategy and operating plan. The Committee also considers how the CEO’s salary compares to salaries of CEOs within the Peer Group. Base salaries for other executive officers, including the other NEOs, are approved by the Committee after considering recommendations from the CEO. In approving any salary increases for NEOs, the Committee considers performance for the prior year, responsibilities for the upcoming year, how the current salaries compare to those paid by peer companies to executives with similar responsibilities, and CTBI’s budget for salary increases for employees other than executive officers. The Committee’s objective is to pay base salaries which will be sufficient to attract, retain, motivate, and reward management for successful performance while maintaining affordability within CTBI’s business plan. The Committee has established a policy of managing executive officer salaries to the market median, recognizing that a series of increases over several years may be required to adjust salaries to the desired level for any executive whose current salary is significantly below the market (contingent upon the executive sustaining the required level of performance). After considering the performance of both CTBI and each executive, as well as how individual officer salaries compared to the market median, the Committee determined that it was appropriate to increase executive salaries for 2024. The salary increases for 2024 reflect the Committee’s desire to balance (i) the need to compensate our NEOs at levels that are competitive with the market and recognize their performance and value to CTBI with (ii) the need to control expenses in an economic and regulatory environment that continues to be challenging for CTBI and other financial institutions. The salary increases approved for the NEOs for 2024 ranged from 3.85% to 4.58%. The following table shows the 2023 and 2024 base salary for each Named Executive Officer and the percentage increase over 2023.
Annual Incentive Plan
Annual Incentive Plan The NEOs, other executive officers, and other members of senior management may earn annual cash incentive bonuses as well as stock-based awards under the Senior Management Incentive Compensation Plan. Bonuses and stock awards are earned for achieving targets set for earnings per share (“EPS”) and return on average assets (“ROAA”) of CTBI. The Incentive Plan is designed to reward participants for meeting or exceeding annual profit goals, and it is intended to achieve the following objectives:
Annual Incentive Plan
| ● | Increase the profitability and growth of CTBI in a manner which is consistent with other goals of the company |
Annual Incentive Plan
| ● | Align executive pay with CTBI performance |
Annual Incentive Plan
| ● | Provide an incentive opportunity which is competitive with other financial institutions in the Peer Group |
Annual Incentive Plan
| ● | Attract and retain executive officers and other key employees and encourage excellence in the performance of individual responsibilities |
Annual Incentive Plan
| ● | Motivate and appropriately reward those members of senior management who contribute to the success of CTBI |
Annual Incentive Plan
At the beginning of each year, the Committee establishes a target (base) level of performance for EPS and ROAA. The Committee also establishes a performance range relative to the base level and an associated payment scale which defines the percentage of salary that participants may earn as a cash bonus for a given level of performance. In addition, the Committee establishes a separate payment scale which defines the percentage of salary that participants may receive as a stock award for a given level of performance. Stock awards under the Incentive Plan may be granted as either restricted shares or stock options.
2023 Annual Cash Incentive Plan
2023 Annual Cash Incentive Plan Prior to setting the terms of the Incentive Plan for 2023, the Committee considered the outcomes for 2022 and the executive compensation strategy and philosophy previously adopted by the Compensation Committee. As a result of these discussions, the Committee recommended, and the Board approved, the Annual Cash Incentive Plan for 2023. The key features of the 2023 Incentive Plan are listed below:
2023 Annual Cash Incentive Plan
| ● | Maintain the cash incentives payable at the same levels as 2022 if results are within the performance ranges established by the Committee for ROAA and EPS. |
2023 Annual Cash Incentive Plan
| ● | Maintain the stock-based incentives payable to NEOs at the same levels of the 2022 plan if results are within the performance ranges established by the Committee for ROAA and EPS. |
2023 Annual Cash Incentive Plan
| ● | Maintain the continued service period of four years for executive officers to fully vest in stock awards made under the Incentive Plan, which vest in 25% increments each year. |
2023 Annual Cash Incentive Plan
| ● | Continue to allow executives to earn modest cash and stock incentives if results are slightly below the target (base) level, so long as performance meets or exceeds minimum levels of performance approved by the Committee; the minimum required level of ROAA performance was set at 97% of the target (base) level, and the minimum required level of EPS performance was also set at 97% of the target (base) level; the portion of the cash and stock incentives earned for minimum levels of performance were set at 25% of the target (base) incentive award for the executive officers of CTBI and 50% of the target (base) incentive for other executive participants. |
2023 Annual Cash Incentive Plan
| ● | Continue to allow executives to earn target (base) level incentives if the goal for net income ($79.2 million) is achieved. |
2023 Annual Cash Incentive Plan
| ● | Establish a maximum incentive potential provided by the plan at 100% of the target (base) award. |
2023 Annual Cash Incentive Plan
This approach is consistent with the Committee’s strategy of shifting the mix of executive compensation so that a larger portion of executive pay is contingent upon performance while controlling the cost of the plan. The following table shows the target (base) level of ROAA performance and the cash incentive awards that could be earned by the CTBI CEO and the other Group I – Named Executive Officers (“Other NEOs”) for various levels of performance in 2023:
2023 Annual Cash Incentive Plan
| | Target | | Award as a % of Target Award | Award as a % of Salary | | | | ROAA | EPS | | CTBI CEO | Group I | | | 1.48% | $4.52 | 25% | 25% | 15% | | Base | 1.53% | $4.66 | 50% | 50% | 30% | | | 1.58% | $4.80 | 75% | 75% | 45% | | | 1.62% | $4.94 | 100% | 100% | 60% |
2023 Annual Cash Incentive Plan
*These results are after accrual of the incentive. The CTB officers responsible for various consolidated functions, the market presidents, and the CTIC officers responsible for various departments as selected by the CTIC CEO (“Group II Participants”), as well as Group III Participants, consisting of senior vice presidents of consolidated functions and others selected for participation by the Compensation Committee, could receive awards for the year ended December 31, 2023 based on the same performance measures and targets applicable to the NEOs. Potential cash incentive awards for Group II Participants expressed as a percentage of salary ranged from a minimum award of 3.5% of salary to a maximum award of 8.75% of salary and awards for Group III Participants ranged from a minimum award of 2.75% of salary to a maximum award of 6.71% of salary. As shown in the table above, executives would earn no incentives for performance below the minimum required levels of ROAA and EPS. To ensure that executive pay varies with company performance, executives earn less than target for results above the minimum required level but below the target (base) level, and they could earn larger incentives if results exceeded the target (base) level. Payments were “capped” at a maximum level to preclude overpayment and control the cost of the plan. The maximum payment provided under the 2023 plan was 100% of the target (base) opportunity.
2023 Annual Cash Incentive Plan
| ● | Cash Incentive Compensation Awards for the Year(s) Ended December 31, 2023. CTBI’s NEOs were participants in CTBI’s Senior Management Incentive Compensation Plan for the year ended December 31, 2023. The Committee previously established the performance measures under the 2023 Plan and the required minimum level of performance was not achieved by CTBI under the Plan. However, the Committee authorized a discretionary payment to our executive officers and other members of senior management. Accordingly, the NEOs received payments (paid in January 2024) as follows: |
2023 Annual Cash Incentive Plan
| | 2023 Cash Payments Awarded Under the Senior Management Incentive Compensation Plan ($) | | Mark A. Gooch – Vice Chairman, President, and Chief Executive Officer | 81,398 | | Kevin J. Stumbo – Executive Vice President, Chief Financial Officer, and Treasurer | 26,513 | | James B. Draughn – Executive Vice President | 25,725 | | Richard W. Newsom – Executive Vice President | 27,300 | | Ricky D. Sparkman – Executive Vice President | 23,775 |
2023 Annual Cash Incentive Plan
The Committee may adjust the cash and stock incentive percentages of salary in future years as it continues to implement CTBI’s executive compensation strategy. During the last several years, by gradually increasing the cash portion of the Incentive Plan and the total annual incentive opportunity, the Committee has brought CTBI’s Incentive Plan more in line with typical market practices and increased the portion of total pay that is earned for performance.
2024 Annual Incentive Plan
2024 Annual Incentive Plan Prior to setting the terms of the Incentive Plan for 2024, the Committee considered the outcomes for 2023, and the executive compensation strategy previously adopted by the Committee. The Committee recommended and the Board of Directors approved the Senior Management Incentive Compensation Plan for the year ending December 31, 2024. The participation groups under the Plan are: (i) Group I, consisting of the CEO of CTBI and other members of the Executive Committee (“Other Executive Officers”); (ii) Group II, consisting of CTB officers responsible for the various consolidated functions as selected by the CEO, the presidents of each market, and the CTIC officers responsible for various departments as selected by the CTIC CEO; and (iii) Group III, consisting of Senior Vice Presidents of consolidated functions selected for participation by the Compensation Committee. Individuals below the Senior Vice President level may be selected by the Compensation Committee for special option awards for extraordinary performance. This Plan may be amended, modified, or terminated by the Board of Directors at any time at its sole discretion, except that after the 90th day of the year the performance standards may not be changed in a manner that would increase the amount of incentive compensation payable for such year.
2024 Annual Incentive Plan
| ● | Participants will be eligible for a cash award determined by EPS and ROAA. The minimum and maximum awards as a percentage of salary for each group will be: (i) Group I – CTBI CEO minimum award of 25% of salary and maximum award of 100% of salary; (ii) Group I – Other Executive Officers minimum award of 15% of salary and maximum award of 60% of salary; (iii) Group II – minimum award of 3.5% of salary and maximum award of 8.75% of salary; and (iv) Group III – minimum award of 2.75% of salary and maximum award of 6.71% of salary. If the ROAA or EPS are not attained but the target net income is attained, then the amount of the award under the 2024 Plan shall be paid at the base level of target performance payment. There shall be a minimum acceptable performance beneath which no incentive awards are paid and a maximum above which there is no additional award paid to avoid excessive payout in the event of windfall profits. |
2024 Annual Incentive Plan
| ● | Participants will be eligible to receive stock options (pursuant to CTBI’s 2015 Stock Ownership Incentive Plan) with a face value equal to certain percentages of salary or restricted stock (or a combination of options and restricted stock) of an amount recommended by the Compensation Committee and approved by the Board of Directors of CTBI subject to any limitations of the 2015 Stock Ownership Incentive Plan. The minimum and maximum stock option awards as a percentage of salary for each group will be: (i) Group I – CTBI CEO minimum award of 10% of salary and maximum award of 23% of salary; (ii) Group I – Other Executive Officers minimum award of 7.5% of salary and maximum award of 17.25% of salary; (iii) Group II – minimum award of 5% of salary and maximum award of 11.5% of salary; and (iv) Group III – minimum award of 2.25% of salary and maximum award of 5% of salary. If the ROAA or EPS are not attained but the target net income is attained, then the amount of stock options and/or restricted stock awarded under the 2024 Plan shall be granted at the base level of target performance. There shall be a minimum acceptable performance beneath which awards will not be granted and a maximum above which there is no additional award in the event of windfall profits. |
2024 Annual Incentive Plan
The following tables show the target (base) level of ROAA and EPS performance required to earn the cash incentive awards and stock equity awards by the CTBI CEO and Other NEOs for various levels of performance in 2024:
2024 ANNUAL CASH INCENTIVE COMPENSATION AWARD
2024 ANNUAL CASH INCENTIVE COMPENSATION AWARD
TABLE IV
| | Target | | Stock Option Award as a % of Salary | | | | | | ROAA | EPS | CTBI CEO | Group I | Group II | Group III | | | 1.32% | $4.27 | 10.00% | 7.50% | 5.00% | 2.25% | | Base | 1.36% | $4.40 | 20.00% | 15.00% | 10.00% | 4.50% | | | 1.40% | $4.53 | 21.00% | 15.75% | 10.50% | 4.75% | | | 1.44% | $4.66 | 23.00% | 17.25% | 11.50% | 5.00% |
Long-Term Incentive Plan
Long-Term Incentive Plan A significant component of the executive compensation strategy is the use of a forward-looking, performance-based long-term incentive compensation plan. The long-term incentive plan is intended to balance the other, more short-term components of pay (such as base salaries and annual cash incentives), and increase the portion of total pay that is contingent upon performance. Performance units are long-term incentives which are earned for achieving one or more financial performance goals over a multi-year period and paid in cash rather than shares. Awards of performance units are permitted under CTBI’s shareholder-approved 2015 Stock Ownership Incentive Plan. Only executive officers of CTBI (including the CEO and Other NEOs) participate in the performance unit plan, as they are the individuals held accountable for creating shareholder value. In early 2024, the Committee approved long-term awards to the CEO and Other NEOs, as further described below. The Committee believes that earnings growth, when sustained over a period of time, will create value for CTBI shareholders. For this reason, the Committee approved awards of performance units that require executives to achieve a target for cumulative net income over a three-year period. In early 2024, the Committee approved grants for a three-year period covering 2024, 2025, and 2026. The Committee believes the cumulative net income performance requirement is achievable but challenging, given the current growth rate in the U.S. economy, the regulatory environment of the banking industry and the challenges to the local economy in some of the markets served by CTBI. Targets for cumulative net income growth were set after considering CTBI’s results in prior years, CTBI’s forecasts of future results within its strategic plan, local economic conditions, and industry performance. The Committee believes the performance units will focus the executive officers on creating shareholder value through sustained growth in earnings, improve the alignment of pay with performance for all executive officers, and create a more balanced incentive compensation program. The use of cash-based performance units avoids any potential dilution to existing shareholders (as might occur if awards were stock-based). The table below shows the percentage of salary that may be earned by the CTBI CEO and Other NEOs, based on achievement of the cumulative net income goal for 2024 through 2026. Any earned performance units will be paid in early 2027, after the Committee evaluates actual results for 2024 through 2026 versus the cumulative net income goal.
2024 PERFORMANCE GOALS
2024 PERFORMANCE GOALS
2024 PERFORMANCE GOALS
| Cumulative Net Income | Award as a % of Target Award | Award as a % of CTBI Chief Executive Officer Salary | Award as a % of Salary of All Other NEOs | | 90% of Target Cumulative Net Income (Minimum) | 25% | 10.0% | 5.0% | | 93% of Target Cumulative Net Income | 50% | 20.0% | 10.0% | | 96% of Target Cumulative Net Income | 75% | 30.0% | 15.0% | | Target Cumulative Net Income (Per Schedule 1) | 100% | 40.0% | 20.0% | | 103% of Target Cumulative Net Income | 120% | 48.0% | 24.0% | | 107% of Target Cumulative Net Income | 135% | 54.0% | 27.0% | | 110.0% of Target Cumulative Net Income (Maximum) | 150% | 60.0% | 30.0% |
2024 PERFORMANCE GOALS
The cumulative net income target for the 2024 Long-Term Incentive Plan is $250 million. Voluntary or involuntary termination of employment prior to the end of the performance period and/or prior to the payment of any earned performance units will result in forfeiture of any outstanding performance units, except as noted below. In the case of termination of employment by reason of death, disability, or retirement prior to the expiration of the performance period, any outstanding performance units will be deemed to have been earned in an amount equal to the amount payable at the maximum amount payable under the performance unit at the target (base) level multiplied by the percentage that would have been earned, assuming that the rate at which the performance goal has been achieved as of the date of such termination of employment would have continued until the end of the performance period. Upon the occurrence of certain termination events within the 24-month period beginning on the date of a change in control, any outstanding performance units granted under the 2015 Stock Ownership Incentive Plan will become fully vested and payable in an amount which is equal to the greater of (a) the maximum amount payable under the performance unit at the target level multiplied by the percentage that would have been earned, assuming that the rate at which the performance goal has been achieved as of the date of such change in control termination event would have continued until the end of the performance period or (b) the maximum amount payable under the performance unit at target level multiplied by the percentage of the performance period completed at the time of the change in control termination event.
Long-Term Incentive Plan – Incentives Earned for 2021-2023 Performance Period
Long-Term Incentive Plan – Incentives Earned for 2021-2023 Performance Period In early 2024, the Committee reviewed performance for the three-year period ended December 31, 2023. The cumulative net income goal for 2021-2023 of $216 million, was exceeded; the actual cumulative net income was $247.7 million. The Committee previously established the performance measures under the 2021 Plan and the required level of performance was achieved by CTBI under the Plan. Accordingly, the NEOs were entitled to the following maximum plan cash incentive awards (paid in January 2024), which are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
Long-Term Incentive Plan – Incentives Earned for 2021-2023 Performance Period
| | 2023 Cash Incentive Awarded Under the Long-Term Incentive Compensation Plan ($) | | Mark A. Gooch – Vice Chairman, President, and Chief Executive Officer | 220,500 | | Kevin J. Stumbo – Executive Vice President, Chief Financial Officer, and Treasurer | 97,500 | | James B. Draughn – Executive Vice President | 93,600 | | Richard W. Newsom – Executive Vice President | 87,150 | | Ricky D. Sparkman – Executive Vice President | 87,150 |
Employment Contracts, Termination of Employment, and Change in Control Arrangements
Employment Contracts, Termination of Employment, and Change in Control Arrangements CTBI does not provide employment agreements to executives. Due to ongoing industry consolidation, CTBI has established termination of employment and change in control agreements (“Severance Agreements”) with each of its NEOs, other executive officers, and certain other senior officers. Severance Agreements are provided in order to attract and retain key executives by protecting them in the event of a change in control. The Severance Agreements are effective for a term equal to the longer of three years or the covered period should a change in control of CTBI occur during such three-year period. These agreements are automatically renewable for additional one-year periods. 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 a Named Executive Officer, other executive officer, or senior officer of a severance amount in the event of an involuntary or voluntary termination of employment after a change in control of CTBI during the covered period. The severance amount payable under the Severance Agreements is equal to: (i) 2.99 times the Named Executive Officer’s or other executive officer’s base annual salary in the event of involuntary termination or in the event of a voluntary termination of employment preceded by a change in duties subsequent to a change in control of CTBI, or (ii) 2.00 times the Named Executive Officer’s or other 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 CTBI. For purposes of the Severance Agreements, a change in control occurs 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 the combined voting power of CTBI’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 CTBI before such transaction(s) cease to constitute a majority of the Board of Directors of CTBI or successor of CTBI; (iii) a tender or exchange offer is made and consummated for the ownership of 30% or more of the combined voting power of CTBI’s outstanding voting securities; or (iv) CTBI transfers substantially all of its assets to another corporation that is not a wholly-owned subsidiary of CTBI. The Committee believes the use and structure of the Severance Agreements are consistent with CTBI’s compensation objectives to attract, motivate, and retain highly qualified executives. The Committee also believes that the Severance Agreements promote job stability, provide a measure of financial security, preserve morale and productivity, and encourage retention during the period of uncertainty that accompanies an actual or potential change in control. The Committee periodically reviews the terms of the Severance Agreements in the context of CTBI’s other executive compensation arrangements, changes in government regulations and trends in competitive practices. No termination of employment or change in control payments were made under the Severance Agreements in 2023, and there were no changes made to the terms of the Severance Agreements during 2023 or to date in 2024.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Stock Awards (1) ($) | Non-Equity Incentive Plan Compensation (2) ($) | All Other Compensation (3) ($) | Total Compensation (4) ($) | | Mark A. Gooch, | 2023 | 653,538 | 144,912 | 302,438 | 36,120 | 1,137,008 | | Vice Chairman, President, | 2022 | 619,231 | 98,622 | 843,750 | 30,143 | 1,591,746 | | and Chief Executive Officer | 2021 | 489,423 | 17,454 | 599,000 | 27,343 | 1,133,220 | | Kevin J. Stumbo, | 2023 | 352,461 | 58,642 | 124,012 | 30,436 | 565,551 | | Executive Vice President, | 2022 | 338,846 | 56,043 | 298,500 | 26,328 | 719,717 | | Chief Financial Officer, | 2021 | 324,615 | 9,598 | 283,500 | 23,670 | 641,383 | | and Treasurer | | | | | | | | James B. Draughn, | 2023 | 342,000 | 56,907 | 119,325 | 36,540 | 554,772 | | Executive Vice President | 2022 | 328,615 | 53,815 | 288,600 | 33,862 | 704,892 | | | 2021 | 312,244 | 9,443 | 274,200 | 36,418 | 632,305 | | Richard W. Newsom | 2023 | 362,923 | 60,376 | 114,450 | 34,683 | 572,432 | | Executive Vice President | 2022 | 345,423 | 50,130 | 294,600 | 26,373 | 716,526 | | Ricky D. Sparkman | 2023 | 316,077 | 52,634 | 110,925 | 31,822 | 511,458 | | Executive Vice President | 2022 | 303,885 | 50,130 | 267,600 | 22,069 | 643,684 |
SUMMARY COMPENSATION TABLE
| (1) The amounts in this column reflect the grant date fair value of all restricted stock awards granted during the years ended December 31, 2023, 2022, and 2021, under CTBI’s stock ownership plan and in accordance with ASC Topic 718. |
SUMMARY COMPENSATION TABLE
| (2) Non-Equity Incentive Plan Compensation includes amounts paid under the Senior Management Incentive Compensation Plan, which is open to all executive officers, market presidents, and senior vice presidents of consolidated functions and the Executive Long-Term Incentive Plan, which is open to all executive officers. Individuals below senior vice president level may be recommended and approved by the Compensation Committee for special awards of options for extraordinary performance under the Incentive Plan. Non-Equity Incentive Plan Compensation for executive officers is earned based on CTBI reaching certain earnings per share and return on assets goals after accruing for the cost of the incentive compensation. The Committee previously established the performance measures under the 2023 Plan, and the required minimum level of performance was not achieved by CTBI under the Plan. However, the Committee authorized a discretionary payment to our Executive Committee, included in the table above as Non-Equity Incentive Plan Compensation, and other members of senior management and staff as more fully described in the Compensation Discussion and Analysis above. |
SUMMARY COMPENSATION TABLE
| (3) The compensation represented by the amounts for 2023, 2022, and 2021 set forth in the All Other Compensation column for NEOs is detailed in the following table. |
SUMMARY COMPENSATION TABLE
| Name | Year | Company Contributions to ESOP ($) | Company Contributions to 401(k) ($) | Perquisites ($) | Company Paid Life Insurance Premiums ($) | Dividends Received on Restricted Stock ($) | Total All Other Compensation ($) | | | | (a) | (a) | | (b) | | | | Mark A. Gooch | 2023 | 13,200 | 11,250 | - | 2,786 | 8,884 | 36,120 | | | 2022 | 12,200 | 10,250 | - | 2,531 | 5,162 | 30,143 | | | 2021 | 11,600 | 9,750 | - | 2,198 | 3,795 | 27,343 | | Kevin J. Stumbo | 2023 | 13,200 | 11,250 | - | 1,713 | 4,273 | 30,436 | | | 2022 | 12,200 | 9,745 | - | 1,508 | 2,875 | 26,328 | | | 2021 | 11,600 | 8,673 | - | 1,348 | 2,049 | 23,670 | | James B. Draughn | 2023 | 13,200 | 12,933 | - | 1,818 | 8,589 | 36,540 | | | 2022 | 12,200 | 11,179 | - | 1,586 | 8,897 | 33,862 | | | 2021 | 11,600 | 9,750 | - | 1,371 | 13,697 | 36,418 | | Richard W. Newsom | 2023 | 13,200 | 13,760 | - | 3,637 | 4,086 | 34,683 | | | 2022 | 12,200 | 8,432 | - | 3,142 | 2,599 | 26,373 | | Ricky D. Sparkman | 2023 | 13,200 | 13,269 | - | 1,510 | 3,843 | 31,822 | | | 2022 | 12,200 | 5,930 | - | 1,340 | 2,599 | 22,069 |
SUMMARY COMPENSATION TABLE
| (a) For further information regarding the ESOP and 401(k) Plans, see the Compensation Discussion and Analysis. |
SUMMARY COMPENSATION TABLE
| (b) This column includes excess premiums reported as taxable compensation on the NEO’s W-2 for life insurance at three times salary. A similar insurance benefit, at three times salary, is provided to all full-time employees on a non-discriminatory basis. |
SUMMARY COMPENSATION TABLE
The following table sets forth the information regarding plan based awards granted to NEOs in 2023.
GRANTS OF PLAN BASED AWARDS
GRANTS OF PLAN BASED AWARDS
GRANTS OF PLAN BASED AWARDS
| Name | Grant Date | Payouts Under Non-Equity Incentive Plan Awards (1) ($) | All Other Awards: Number of Securities Underlying Options Granted (2) (#) | Exercise or Base Price ($/share) | Grant Date Fair Value of Equity Awards (3) ($) | | Mark A. Gooch | | | | | | | 2021 Long-Term Incentive Plan | - | 220,500 | - | - | - | | Restricted Stock Grant | 01/24/2023 | - | 3,425 | 42.31 | 144,912 | | Kevin J. Stumbo | | | | | | | 2021 Long-Term Incentive Plan | - | 97,500 | - | - | - | | Restricted Stock Grant | 01/24/2023 | - | 1,386 | 42.31 | 58,642 | | James B. Draughn | | | | | | | 2021 Long-Term Incentive Plan | - | 93,600 | - | - | - | | Restricted Stock Grant | 01/24/2023 | - | 1,345 | 42.31 | 56,907 | | Richard W. Newsom | | | | | | | 2021 Long-Term Incentive Plan | - | 87,150 | - | - | - | | Restricted Stock Grant | 01/24/2023 | - | 1,427 | 42.31 | 60,376 | | Ricky D. Sparkman | | | | | | | 2021 Long-Term Incentive Plan | - | 87,150 | - | - | - | | Restricted Stock Grant | 01/24/2023 | - | 1,244 | 42.31 | 52,634 |
GRANTS OF PLAN BASED AWARDS
| (1) This column shows the payouts for performance during the years 2021, 2022, and 2023 under the 2021 Long-Term Incentive Plan, paid in January 2023, as described in the Compensation Discussion and Analysis. The cumulative net income goal for 2021-2023, under the 2021 Long-Term Incentive Plan, was $216 million, and actual cumulative net income for the period was $248.8 million. The cumulative 2021-2023 results were above the amount required to earn a payment at the maximum tier bonus level. As a result, the current CEO and other NEOs earned incentives equal to 150% of their target incentive potentials under the 2021 Long-Term Incentive Plan. |
GRANTS OF PLAN BASED AWARDS
| (2) Restricted stock was granted to the NEOs as a result of achieving the required level of performance under the 2022 Senior Management Incentive Compensation Plan. The restricted stock was granted pursuant to the terms of CTBI’s 2015 Stock Ownership Incentive Plan. The restrictions on the restricted stock lapse ratably over four years or upon a change in control of CTBI followed by certain employment termination events. |
GRANTS OF PLAN BASED AWARDS
| (3) The grant-date fair value of restricted stock grants was $42.31 per share, measured in accordance with ASC 718. |
GRANTS OF PLAN BASED AWARDS
The following table sets forth the estimated payouts of non-equity incentive plan awards that may result from the performance units granted to the NEOs in 2023 and 2022, outstanding as of December 31, 2023:
OPTION EXERCISES AND RESTRICTED STOCK VESTED
OPTION EXERCISES AND RESTRICTED STOCK VESTED
OPTION EXERCISES AND RESTRICTED STOCK VESTED
| Name | Shares Acquired on Exercise (#) | Value Realized (1) ($) | Shares Acquired on Vesting (#) | Value Realized (1) ($) | | Mark A. Gooch | 0 | -- | 1,354 | 56,570 | | Kevin J. Stumbo | 0 | -- | 750 | 31,335 | | James B. Draughn | 0 | -- | 731 | 30,541 | | Richard W. Newsom | 0 | -- | 678 | 28,327 | | Ricky D. Sparkman | 0 | -- | 678 | 28,327 |
OPTION EXERCISES AND RESTRICTED STOCK VESTED
| (1) The value realized is calculated based on the closing market price on the date of vesting of restricted stock. |
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023
| Name | Number of Securities Underlying Unexercised Options and Restricted Stock Grants at Fiscal Year-End (1) (#) | | Option Exercise Price ($) | Expiration Date (2) | Value of Unexercised In- the-Money Options and Restricted Stock Grants at Fiscal Year-End (3) ($) | | | | Exercisable | Unexercisable | | | Exercisable | Unexercisable | | Mark A. Gooch | | | | | | | | Restricted Stock Grants: | | | | | | | | Granted 01/28/20 | 0 | 226 | - | 01/28/24 | - | 9,912 | | Granted 01/26/21 | 0 | 226 | - | 01/26/25 | - | 9,912 | | Granted 01/25/22 | 0 | 1,626 | - | 01/25/26 | - | 71,316 | | Granted 01/24/23 | 0 | 3,425 | - | 01/24/27 | - | 150,221 | | Kevin J. Stumbo | | | | | | | | Restricted Stock Grants: | | | | | | | | Granted 01/28/20 | 0 | 124 | - | 01/28/24 | - | 5,439 | | Granted 01/26/21 | 0 | 124 | - | 01/26/25 | - | 5,439 | | Granted 01/25/22 | 0 | 924 | - | 01/25/26 | - | 40,527 | | Granted 01/24/23 | 0 | 1,386 | - | 01/24/27 | - | 60,790 | | James B. Draughn | | | | | | | | Restricted Stock Grants: | | | | | | | | Granted 01/28/20 | 0 | 122 | - | 01/28/24 | - | 5,351 | | Granted 01/28/20 | 0 | 2,500 | - | 01/28/25 | - | 109,650 | | Granted 01/26/21 | 0 | 122 | - | 01/26/25 | - | 5,351 | | Granted 01/25/22 | 0 | 888 | - | 01/25/26 | - | 38,948 | | Granted 01/24/23 | 0 | 1,345 | - | 01/24/27 | - | 58,992 | | Richard W. Newsom | | | | | | | | Restricted Stock Grants: | | | | | | | | Granted 01/28/20 | 0 | 114 | - | 01/28/24 | - | 5,000 | | Granted 01/26/21 | 0 | 114 | - | 01/26/25 | - | 5,000 | | Granted 01/25/22 | 0 | 827 | - | 01/25/26 | - | 36,272 | | Granted 01/24/23 | 0 | 1,427 | - | 01/24/27 | - | 62,588 | | Ricky D. Sparkman | | | | | | | | Restricted Stock Grants: | | | | | | | | Granted 01/28/20 | 0 | 114 | - | 01/28/24 | - | 5,000 | | Granted 01/26/21 | 0 | 114 | - | 01/26/25 | - | 5,000 | | Granted 01/25/22 | 0 | 827 | - | 01/25/26 | - | 36,272 | | Granted 01/24/23 | 0 | 1,244 | - | 01/24/27 | - | 54,562 |
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023
| (1) The restrictions on the restricted stock granted to NEOs will lapse ratably over four years, except for 2,500 shares issued to Mr. Draughn on January 28, 2020 that were issued as a management retention grant and will cliff vest in five years. The restrictions on restricted stock lapse upon a change in control of CTBI followed by certain employment termination events. |
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023
| (2) This column represents the date restrictions lapse on restricted stock grants. |
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023
| (3) Based on the per share closing price of $43.86 of our common stock at December 31, 2023. |
PAY RATIO DISCLOSURE RULE
PAY RATIO DISCLOSURE RULE The annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (“PEO”) is provided below. CTBI’s PEO is Mark A. Gooch. The purpose of the required disclosure is to provide a measure of the equitability of pay within the organization. CTBI believes its compensation philosophy and process yield an equitable result and is presenting such information as follows:
PAY RATIO DISCLOSURE RULE
| Median employee total annual compensation | $42,247 | | Mr. Gooch (PEO) total annual compensation | $1,137,008 | | Ratio of PEO to median employee compensation | 26.9:1.0 |
PAY RATIO DISCLOSURE RULE
In determining the median employee, a listing was prepared of all employees (other than the PEO) as of December 31, 2023, ordered based on total compensation. Wages and salaries were annualized for those employees who were not employed for the full year of 2023, other than temporary or seasonal employees. The median employee was selected from the annualized list. Included in the calculation of total compensation were the employee earnings paid by CTBI, cash bonuses received, the grant date fair value of any equity grants by the employer, employer paid ESOP contributions, employer matching of 401(k) contributions, employer paid life insurance premiums, and dividends paid on restricted stock held by the employee.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The table below shows the following information for the past three fiscal years: (i) total compensation for our NEOs as set forth in the Summary Compensation Table (“SCT”), (ii) the “compensation actually paid” (“CAP”) to our PEOs and, on an average basis, our non-PEO NEOs (in each case, as determined under SEC rules), (iii) our total shareholder return (“TSR”), (iv) the TSR of our peer group (as set forth in our Compensation Discussion and Analysis), (v) our net income, and (vi) our financial performance measure for compensatory purposes, earnings per share (“EPS”).
Pay Versus Performance Table
Pay Versus Performance Table
Pay Versus Performance Table
| Year | SCT Total for PEO 1 ($) | SCT Total for PEO 2 ($) | CAP to PEO 1 ($) | CAP to PEO 2 ($) | Average SCT Total for Non- PEO NEOs ($) | Average CAP to Non-PEO NEOs ($) | Year-End Value of $100 Invested on 12/31/2020: | | Net Income ($) | EPS ($) | | | | | | | | | TSR ($) | Peer Group TSR ($) | | | | | (a) | (b) | (c) | (c) | (d) | (c)(d) | | (e) | | (f) | | 2023 | 0 | 1,137,008 | 0 | 1,132,396 | 551,053 | 568,935 | 135.13 | 141.16 | 78,004 | 4.36 | | 2022 | 1,083,896 | 1,591,746 | 1,088,746 | 1,601,451 | 732,813 | 742,633 | 111.37 | 111.31 | 81,814 | 4.59 | | 2021 | 1,853,539 | - | 1,895,857 | - | 756,261 | 783,671 | 101.72 | 152.38 | 87,939 | 4.94 | | 2020 | 1,076,169 | - | 1,037,132 | - | 529,376 | 499,399 | 83.32 | 103.30 | 59,504 | 3.35 |
Pay Versus Performance Table
| a) | Jean R. Hale, who served as Chairman and Chief Executive Officer until her retirement on February 7, 2022, is listed as PEO 1. |
Pay Versus Performance Table
| b) | Following Ms. Hale’s retirement, Mark A. Gooch became Vice Chairman, President, and Chief Executive Officer, and as such, is listed as PEO 2 for years 2022 and 2023. |
Pay Versus Performance Table
| c) | SEC rules require certain adjustments be made to the SCT totals to determine CAP as reported in the Pay Versus Performance table. CAP does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. In general, CAP is calculated as SCT total compensation adjusted to include the fair market value of equity awards as of December 31 of the applicable year or, if earlier, the vesting date (rather than the grant date). NEOs do not participate in a defined benefit plan so no adjustment for pension benefits is included in the table below. Similarly, we had no awards that failed to meet vesting conditions. The following table details these adjustments: |
Pay Versus Performance Table
| Year | Executives | SCT Total ($) | Subtract Stock Awards ($) | Add Year- End Equity Value ($) | Change in Value of Prior Equity Awards ($) | Add Change in Value of Vested Equity Awards ($) | Add Dividends Paid on Unvested Shares ($) | CAP ($) | | 2023 | PEO 2 | 1,137,008 | 153,796 | 150,221 | (4,302) | (5,619) | 8,884 | 1,132,396 | | | Other NEOs | 551,053 | 40,028 | 59,233 | (3,579) | (2,942) | 5,198 | 568,935 | | 2022 | PEO 1 | 1,083,896 | 160,989 | 162,546 | - | 1,834 | 1,458 | 1,088,746 | | | PEO 2 | 1,591,746 | 98,622 | 99,576 | 2,932 | 655 | 5,162 | 1,601,451 | | | Other NEOs | 732,813 | 52,687 | 53,196 | 2,557 | 2,802 | 3,952 | 742,633 | | 2021 | PEO 1 | 1,853,539 | 28,174 | 31,748 | 19,136 | 13,509 | 6,099 | 1,895,857 | | | Other NEOs | 756,261 | 11,485 | 12,941 | 20,088 | 467 | 5,398 | 783,671 | | 2020 | PEO 1 | 1,076,169 | 64,996 | 53,945 | (31,714) | (3,701) | 7,429 | 1,037,132 | | | Other NEOs | 529,376 | 54,372 | 45,127 | (24,872) | (1,502) | 5,641 | 499,399 |
Pay Versus Performance Table
| d) | For 2020 and 2021, the non-PEO NEOs included Mark A. Gooch, Kevin J. Stumbo, James B. Draughn, and Larry W. Jones. For 2022, Mr. Gooch was excluded from the non-PEO NEOs and Richard W. Newsom and Ricky D. Sparkman were added. In 2023, Mr. Jones was excluded from the non-PEO NEOs due to his retirement in December 2022. |
Pay Versus Performance Table
| e) | CTBI periodically compares its executive pay and business performance, as well as the compensation of the Board of Directors, to a group of comparable, publicly traded financial institutions. In establishing a Peer Group, CTBI seeks to include regional bank holding companies that are similar to CTBI in terms of assets, business lines, and geographic markets. During 2022, the Committee worked with Pearl Meyer to review the Peer Group to ensure it continued to include organizations that were comparable to CTBI based on their similar business lines and geographic locations, as well as their comparable size, reflected by total assets. Based on this review, the Committee determined that it would be appropriate to add the following new peers to the Peer Group: American National Bankshares, Inc., CapStar Financial Holdings, Inc., Republic Bancorp Inc., and SmartFinancial, Inc. The addition of these peers resulted in the Peer Group of twenty-one companies listed below. Following the Committee’s review and adjustment of the Peer Group, the median assets of the Peer Group were $6.12 billion, compared to CTBI’s assets at that time of approximately $5.38 billion. The companies included in the Peer Group ranged in asset size from $3.1 billion to $10.5 billion at the time of the review. This Peer Group was used to establish executive compensation for the year 2023. |
Pay Versus Performance Table
| Bank | Ticker | Bank | Ticker | | American National Bankshares, Inc. | AMNB | Horizon Bancorp, Inc. | HBNC | | CapStar Financial Holdings, Inc. | CSTR | Lakeland Financial Corporation | LKFN | | Carter Bancshares, Inc. | CARE | Mercantile Bank Corporation | MBWM | | City Holding Company | CHCO | Nicolet Bankshares, Inc. | NIC | | Farmers National Banc Corp. | FMNB | Peoples Bancorp, Inc. | PEBO | | First Bancorp | FBNC | QCR Holdings, Inc. | QCRH | | First Community Bancshares, Inc. | FCBC | Republic Bancorp, Inc. | RBCAA | | First Financial Corporation | THFF | SmartFinancial, Inc. | SMBK | | German American Bancorp, Inc. | GABC | Stock Yards Bancorp, Inc. | SYBT | | Great Southern Bancorp, Inc. | GSBC | Univest Financial Corporation | UVSP | | Home Trust Bancshares, Inc. | HTBI | | |
Pay Versus Performance Table
The Peer Group used to establish executive compensation for 2022 consisted of seventeen companies with median assets of $5.35 billion, compared to CTBI’s then assets of approximately $5.4 billion. The companies included in the Peer Group ranged in asset size from $3.2 billion to $8.2 billion and are listed below:
Pay Versus Performance Table
| Bank | Ticker | Bank | Ticker | | Carter Bancshares, Inc. | CARE | Horizon Bancorp Inc. | HBNC | | City Holding Company | CHCO | Lakeland Financial Corporation | LKFN | | Farmers National Banc Corp | FMNB | Mercantile Bank Corporation | MBWM | | First Bancorp | FBNC | Nicolet Bankshares, Inc. | NCBS | | First Community Bancshares, Inc. | FCBC | Peoples Bancorp, Inc. | PEBO | | First Financial Corporation | THFF | QCR Holdings, Inc. | QCRH | | German American Bancorp, Inc. | GABC | Stock Yards Bancorp, Inc. | SYBT | | Great Southern Bancorp Inc. | GSBC | Univest Financial Corporation | UVSP | | Home Trust Bancshares | HTBI | | |
Pay Versus Performance Table
Below is a comparison of our TSR for 2023 to the current Peer Group as well as the prior Peer Group for 2022 :
Pay Versus Performance Table
| | Year-End Value of $100 Invested on 12/31/2020: | | | | Year | TSR ($) | Current Peer Group TSR ($) | Prior Peer Group TSR ($) | | 2023 | 135.13 | 141.16 | 137.72 |
Pay Versus Performance Table
| (f) CTBI has selected GAAP basic earnings per share as the most important financial performance measure (that is not otherwise disclosed in the Pay Versus Performance Table above) used by CTBI to link compensation actually paid to CTBI’s NEOs for 2023 to CTBI’s performance. |