COMMUNITY TRUST BANCORP INC /KY/ Stock Compensation Disclosure

16.  Employee Benefits

CTBI maintains two separate retirement savings plans, a 401(k) Plan and an Employee Stock Ownership Plan (“ESOP”).

The 401(k) Plan is available for participant contributions to all employees (age 21 and over) who are credited with 90 days of service and for employer matching as described below at one year of service (12 consecutive month period with at least 1,000 hours). Participants in the plan have the option to contribute a percentage of their annual compensation up to the maximum permitted by law.  CTBI matches 100% on the first 3% and 50% on the next 2% of participant contributions, not to exceed 4% of compensation. CTBI may, at our discretion, contribute an additional percentage of covered employees’ compensation.  CTBI’s matching contributions were $1.7 million, $1.4 million, and $1.2 million for the three years ended December 31, 2025, 2024, and 2023, respectively.  The 401(k) Plan owned 304,335, 304,554, and 367,106 shares of CTBI’s common stock at December 31, 2025, 2024, and 2023, respectively.  Substantially all shares owned by the 401(k) Plan were allocated to employee accounts on those dates.  The market price of the shares at the date of allocation is essentially the same as the market price at the date of purchase.

The ESOP is available to all employees (age 21 and over) who are credited with one year of service (12 consecutive month period with at least 1,000 hours).  CTBI currently contributes 4% of covered employees’ compensation to the ESOP.  The ESOP uses the contributions to acquire shares of CTBI’s common stock.  CTBI’s contributions to the ESOP were $2.1 million, $2.0 million, and $1.8 million for the three years ended December 31, 2025, 2024, and 2023, respectively.  The ESOP owned 766,780, 760,396, and 772,351 shares of CTBI’s common stock at December 31, 2025, 2024, and 2023, respectively.  Substantially all shares owned by the ESOP were allocated to employee accounts on those dates.  The market price of the shares at the date of allocation is essentially the same as the market price at the date of purchase.

 

CTBI provides split-dollar life insurance arrangements to qualifying members of senior management.  CTBI’s accrued liabilities for these agreements as of December 31, 2025 and 2024, which are included in other liabilities in the accompanying consolidated balance sheets, were $9.9 million and $8.8 million, respectively.  The costs of this benefit are recorded in the accompanying consolidated statements of income and comprehensive income as a component of officer salaries and employee benefits of $1.1 million, $0.3 million, and $0.6 million in 2025, 2024, and 2023, respectively.

Stock-Based Compensation:

The 2025 Plan became effective on February 1, 2025.  As of December 31, 2025, no shares had been issued under the Plan; therefore, there were 550,000 shares available for future issuance.  The 2015 Plan was rendered inactive as of February 1, 2025; therefore, there were no shares available for future issuance as of December 31, 2025.

There were no stock options granted in 2025, 2024, or 2023.

The 2015 Plan:

There was no stock option activity for the 2015 Plan for the years ended December 31, 2025, 2024, and 2023.

The following table shows restricted stock activity for the 2015 Plan for the years ended December 31, 2025, 2024, and 2023:

The restricted stock grants were issued pursuant to the terms of the 2015 Plan.  The restrictions on these shares of restricted stock lapse ratably over four years, subject to such employee’s continued employment, except for 32,500 shares granted pursuant to management retention restricted stock awards which cliff vest five years from the grant date.  However, in the event of certain participant employee termination events occurring within 24 months of a change in control of CTBI or the death of the participant, the restrictions lapse, and in the event of the participant’s disability, the restrictions lapse on a pro rata basis.  The Compensation Committee has discretion to review and revise restrictions applicable to a participant’s restricted stock in the event of the participant’s retirement.

The 2006 Plan:

There was no restricted stock activity for the 2006 Plan.  All outstanding options had been exercised under the 2006 Plan as of December 31, 2024; therefore, there was no stock option activity for the year 2025.  Stock option activity for the 2006 Plan for the years ended December 31, 2024 and 2023 is summarized as follows:

The following table shows the intrinsic values of options exercised, exercisable, and outstanding for the 2006 Plan for the years ended December 31, 2024 and 2023:

Stock options were issued with a contractual term of 10 years.  The weighted-average remaining contractual term for all options outstanding and exercisable at December 31, 2023 was one year.  There were no outstanding stock options at December 31, 2025 or 2024.

Restricted stock expense for the years ended December 31, 2025, 2024, and 2023 was $1.8 million, $1.4 million, and $1.6 million, respectively, including $0.2 million in dividends paid for each of those periods.  There was no stock option expense recognized during any of the years 2025, 2024, or 2023, as there were no unvested stock option awards.

The following table shows the unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans at December 31, 2025, 2024, and 2023 and the total grant-date fair value of shares vested, cash received from option exercises under all share-based payment arrangements, and the actual tax benefit realized for the tax deductions from option exercises of the share-based payment arrangements for the years ended December 31, 2025, 2024, and 2023.

The unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plan at December 31, 2025 is expected to be recognized over a weighted-average period of 2.6 years.