SCHEDULE 14A

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington D.C. 20549

 Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
                                     1934
                               (Amendment No. )

Filed by the Registrant  [X]
Filed by a Party other than the Registrant  [  ]

Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential,  for  Use  of the  Commission  Only  (as  permitted  by  Rule
    14a-6(e)(2)) 
[X] Definitive Proxy Statement 
[ ] Definitive  Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

                         CHURCHILL DOWNS INCORPORATED

               (Name of Registrant as Specified In Its Charter)

    Alexander M. Waldrop, Senior Vice President, General Counsel & Secretary

                  (Name of Person(s) Filing Proxy Statement)


Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii),  14a-6(i)(1), 14a-6(j)(2) or
    Item 22(a)(2) of Schedule 14A.
[ ] $500 per  each  party  to the  controversy  pursuant  to  Exchange  Act Rule
    14a-6(i)(3).  
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
    and 0-11.

      1)  Title of each class of securities to which transaction applies:


      2)  Aggregate number of securities to which transaction applies:


      3)  Per unit  price or  other  underlying  value of  transaction  computed
          pursuant to Exchange Act Rule 0-11:


      4)  Proposed maximum aggregate value of transaction:


      5)  Total fee paid:


[  ]  Fee paid previously with preliminary materials

[  ]  Check  box  if any part of the fee is offset as provided  by Exchange  Act
      Rule  0-11(a)(2)  and identify the filing for which the offsetting fee was
      paid  previously.  Identify the previous filing by registration  statement
      number, or the Form or Schedule and the date of its filing.

      1)  Amount Previously Paid:



      2)  Form, Schedule or Registration Statement No.:


      3)  Filing Party:


      4)  Date Filed







                         CHURCHILL DOWNS INCORPORATED
                              700 Central Avenue
                          Louisville, Kentucky 40208


                   NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                         TO BE HELD ON JUNE 15, 1995





To the Shareholders of Churchill Downs Incorporated:


            Notice is hereby given that the Annual  Meeting of  Shareholders  of
Churchill Downs Incorporated (the "Company"),  a Kentucky  corporation,  will be
held at Churchill  Downs Sports  Spectrum,  4520 Poplar Level Road,  Louisville,
Kentucky,  on Thursday,  June 15, 1995 at 10:00 a.m.  E.D.T.  for the  following
purposes:

      I.    To elect  five (5)  Class II  Directors  for a term of three
(3) years, one (1) Class I Director  for a term of two (2) years and one
(1) Class III Director for a term of one (1) year (Proposal No. 1);

      II.   To  approve or  disapprove  the  minutes of the 1994  Annual
Meeting of Shareholders,   approval   of  which   does  not   amount  to
ratification of actions taken at such meeting (Proposal No. 2); and

      III.  To transact such other  business as may properly come before
the meeting or any adjournment  thereof,  including  matters incident to
its conduct.

            The close of  business  on April  20,  1995,  has been  fixed as the
record date for the determination of the shareholders  entitled to notice of and
to vote at the  meeting,  and only  shareholders  of record at that time will be
entitled  to  notice  of and to  vote  at the  meeting  and at any  adjournments
thereof.

            Shareholders  who do not expect to attend the  meeting in person are
urged to sign, date and promptly return the Proxy that is enclosed herewith.

            By Order of the Board of Directors.



                              ALEXANDER M. WALDROP
                              Senior Vice President, Secretary
                              and General Counsel

May 12, 1995









                      CHURCHILL DOWNS INCORPORATED
                           700 Central Avenue
                       Louisville, Kentucky 40208


                            PROXY STATEMENT


                     Annual Meeting of Shareholders
                      To Be Held on June 15, 1995


            The enclosed  Proxy is being  solicited by the Board of Directors of
Churchill  Downs  Incorporated  (the  "Company")  to be voted at the 1995 Annual
Meeting of  Shareholders  to be held on Thursday,  June 15, 1995, at 10:00 a.m.,
E.D.T.  (the "Annual  Meeting"),  at the Churchill Downs Sports  Spectrum,  4520
Poplar Level Road, Louisville,  Kentucky and any adjournments thereof. The Proxy
and this  Proxy  Statement  are being sent to  shareholders  on or about May 12,
1995.

VOTING RIGHTS AND VOTE REQUIRED

            Only holders of record of the Company's  Common Stock,  No Par Value
("Common  Stock"),  on April 20, 1995,  are entitled to notice of and to vote at
the  Annual  Meeting.  On that  date,  3,783,318  shares  of Common  Stock  were
outstanding and entitled to vote. Each shareholder has one vote per share on all
matters coming before the Annual Meeting,  other than the election of directors.
In the election of directors,  a shareholder is entitled by Kentucky  statute to
exercise  "cumulative"  voting rights;  that is, the  shareholder is entitled to
cast as many  votes as equals  the  number of  shares  owned by the  shareholder
multiplied  by the number of directors to be elected and may cast all such votes
for a single  nominee or  distribute  them among the nominees in any manner that
the shareholder  desires.  Shares  represented by proxies  received may be voted
cumulatively  (see  "Election of  Directors").  Under the Company's  Articles of
Incorporation  and  Bylaws and the  Kentucky  statutes,  abstentions  and broker
non-votes  on any matter  are not  counted  in  determining  the number of votes

required  for  election of a director or passage of any matter  submitted to the
shareholders.  Abstentions  and broker  non-votes  are counted  for  purposes of
determining whether a quorum exists.
            If the enclosed Proxy is properly executed and returned prior to the
Annual  Meeting,  the  shares  represented  thereby  will be voted as  specified
therein. IF A SHAREHOLDER DOES NOT SPECIFY OTHERWISE,  THE SHARES REPRESENTED BY
THE  SHAREHOLDER'S  PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES  LISTED
BELOW UNDER  "ELECTION  OF  DIRECTORS,"  FOR APPROVAL OF THE MINUTES OF THE 1994
ANNUAL MEETING OF  SHAREHOLDERS  AND ON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.

REVOCATION OF PROXY

            A proxy may be revoked at any time  before the shares it  represents
are voted by written  notice  received  by the  Secretary  of the  Company and a
revocation shall be effective for all votes after receipt.

                 COMMON STOCK OWNED BY CERTAIN PERSONS

            The following table sets forth information concerning the beneficial
ownership  of the  Common  Stock  as of  April  1,  1995  (except  as  otherwise
indicated),  by [i] the only  persons  known by the  Board of  Directors  to own
beneficially  more  than  five  percent  (5%) of the  Common  Stock and [ii] the
Company's  directors,  nominees for election as directors and executive officers
as a group. Except as otherwise  indicated,  the persons named in the table have
sole  voting and  investment  power with  respect to all shares of Common  Stock
shown as beneficially owned by them.
                                                 SHARES
        NAME AND ADDRESS                     BENEFICIALLY            PERCENT
        OF BENEFICIAL OWNER                      OWNED              OF CLASS

28 parties to a Third Supplemental
Stockholder Agreement
c/o Thomas H. Meeker, Stockholder 
Representative
700 Central Avenue
Louisville, Kentucky  40208                   1,196,146(1)(5)          31.5%

National City Corporation
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114                           196,485(2)              5.2%

Darrell R. Wells
4350 Brownsboro Road
Suite 310
Louisville, Kentucky  40207                     232,930(3)(4)(5)        6.2%

Charles W. Bidwill, Jr.
911 Sunset Road
Winnetka, Illinois  60093                       221,259(3)(4)(5)        5.8%

23 Directors, Nominees for Director
and Executive Officers as a Group             1,206,782(3)(4)(5)(6)    31.7%



(1)   Information  provided as of April 18,  1995.  Pursuant to certain  federal
      securities  laws,  the  parties  to  the  Third  Supplemental  Stockholder
      Agreement (the  "Stockholder  Agreement") may collectively be considered a
      "group" and therefore may be deemed a "person"  known by management of the
      Company to own beneficially  more than 5% of the shares of Common Stock of
      the Company.  The names and  addresses  of the parties to the  Stockholder
      Agreement are set forth in the Schedule 13D filed by such parties with the
      Securities and Exchange Commission ("SEC") on April 25, 1995, which filing
      is incorporated  herein by reference.  Each  shareholder who is a party to
      the  Stockholder  Agreement  has agreed  that until April 15,  1997,  such
      shareholder will not sell, transfer, assign or otherwise dispose of shares
      of Common Stock beneficially owned or acquired by such shareholder without
      first  offering to sell such Common  Stock to the Company and to all other
      signatories to the Stockholder  Agreement on the same terms and conditions
      as in an  offer  received  from a third  party  by such  shareholder.  The
      Stockholder  Agreement provides for proration of the shares offered by the
      selling  shareholder in the event that more than one of the signatories to
      the Stockholder  Agreement  desires to purchase the shares offered by such
      selling shareholder.  The Stockholder Agreement provides that Common Stock
      may be  transferred by the parties to the  Agreement,  without  compliance
      with the  Agreement [i] pursuant to an offer to purchase not less than all
      of the outstanding  shares of the Common Stock that the Board of Directors
      has recommended and that an independent  financial advisor retained by the
      Company  has  determined  is fair  to the  Company's  shareholders  from a
      financial  point of view;  [ii] by gift,  will or  pursuant to the laws of
      descent and distribution; [iii] by pledge to a financial institution; [iv]
      if the  transfer is by  operation  of law;  or [v] in a small  transaction
      which is defined to be a transfer  in any single  calendar  month of 3,000
      shares or less of the Common Stock.  The  Stockholder  Agreement  does not
      restrict the rights of any  shareholder who is a party thereto to vote the

      Common Stock,  to receive cash or stock  dividends,  to receive  shares of
      Common Stock in a stock  split,  or to sell or dispose of shares of Common
      Stock, except as specifically set forth in such Stockholder Agreement. The
      Company  has  approved  and  become  a  third  party  beneficiary  of  the
      Stockholder Agreement.


(2)   National City Corporation and its wholly-owned  subsidiary,  National City
      Bank,  Kentucky  ("National  City"),  have  informed  the Company  that on
      February  10,  1995,  National  City  held a total of  196,485  shares  in
      fiduciary  accounts  for others.  National  City has further  informed the
      Company  that it has sole  power to vote or  direct  the  voting of 53,610
      shares;  sole power to dispose  or to direct  the  disposition  of 173,120
      shares; shared power to vote or direct the voting of no shares; and shared
      power to dispose or direct the disposition of 22,215 shares.

(3)   Of the total shares listed above, Mr. Wells disclaims beneficial ownership
      of 22,400  shares  held by The Wells  Foundation,  Inc.  of  which he is a
      trustee and of 135,791.90  shares held by The Wells Family  Partnership of
      which he is the Managing  General  Partner.  Mr.  Wells shares  voting and
      investment power with respect to all shares attributed to him in the above
      table.  Mr.  Bidwill  shares voting and  investment  power with respect to
      2,919 shares beneficially owned by him.

(4)   See  "Election  of   Directors,"   "Continuing   Directors,"   and
      "Executive Officers of the Company," below.

(5)   The 232,930 shares  beneficially owned by Mr. Wells and 222,259 (including
      shares  acquired  after April 1, 1995)  shares  beneficially  owned by Mr.
      Bidwill are subject to the Stockholder  Agreement.  An additional  588,727
      shares  owned  by  certain  other  directors,  nominees  for  election  as
      directors  and  executive  officers  of the  Company  are  subject  to the
      Stockholder Agreement.

(6)   Includes 1,169 shares issuable under the Company's Incentive  Compensation
      Plan and 28,400 shares issuable under currently exercisable options.


            Section 16(a) of the  Securities  Exchange Act of 1934 requires that
the Company's  executive  officers,  directors and persons who  beneficially own
more than ten percent (10%) of the Company's  Common Stock file certain  reports
with the  Securities  and  Exchange  Commission  ("SEC")  with  regard  to their
beneficial   ownership  of  such  Common  Stock.   Pursuant  to  applicable  SEC
regulations,   the  signatories  to  the  Stockholder  Agreement  (and  a  prior
stockholder agreement) are (or were) also required to file such reports with the
SEC. The Company is required to disclose in this Proxy  Statement any failure to
file or late filings of such reports. See Footnote (1) above for a discussion of
the terms of the Stockholder Agreement.  During the Company's prior fiscal year,
James W.  Phillips  and the Wells  Family  Partnership  each made a single  late
filing of one (1) report, covering one (1) transaction.  The Estate of Warner L.
Jones,  Jr. and Edna  Veeneman  Lewis each made late filings of two (2) reports,
each covering one (1) transaction.  These persons were obligated to make filings

with the SEC solely  because  they  were  signatories  to  a  prior  stockholder
agreement  which was similar to the  Stockholder  Agreement;  none of them is an
officer or director nor are they  individually a beneficial owner of ten percent
(10%) or more of the Company's  Common Stock.  In addition,  one (1) late filing
covering  one (1)  transaction  was made by Seth W.  Hancock,  a director of the
Company,  and by Kevin Marie Nuss, an officer of the Company who  previously was
subject to the filing  requirements of Section 16(a).  The required reports were
subsequently  filed for each  person.  Based  solely on its  review of the forms
filed with the SEC,  the Company  believes  that all other  filing  requirements
applicable to its directors, executive officers and ten percent (10%) beneficial
owners were satisfied.

                         ELECTION OF DIRECTORS
                            (PROPOSAL NO. 1)

            At the Annual Meeting,  shareholders will vote to elect [i] five (5)
persons to serve in Class II of the Board of Directors to hold office for a term
of three (3) years  expiring  at the 1998  Annual  Meeting of  Shareholders  and
thereafter  until  their  respective   successors  shall  be  duly  elected  and
qualified,  [ii] one (1) person to serve in Class I of the Board of Directors to
hold office for a term of two (2) years  expiring at the 1997 Annual  Meeting of
Shareholders  and  thereafter  until his  successor  shall be duly  elected  and
qualified,  and  [iii]  one (1)  person  to serve in Class  III of the  Board of
Directors to hold office for a term of one (1) year  expiring at the 1996 Annual
Meeting of Shareholders and thereafter until his successor shall be duly elected
and qualified.
            The Articles of  Incorporation of the Company provide that the Board
of  Directors  shall be  composed  of not  less  than  nine  (9) nor  more  than
twenty-five  (25) members,  the exact number to be  established  by the Board of
Directors,  and further  provide for the division of the Board of Directors into
three  (3)  approximately  equal  classes,  of which  one (1)  class is  elected

annually.  At its meeting on March 16, 1995, the Board of Directors  amended the
Company's  Bylaws to  establish  the number of directors  at thirteen  (13),  an
increase of three (3) directors,  with four (4) directors in each of Class I and
Class III and five (5) directors in Class II.
            At the Annual Meeting,  the seven (7) persons named in the following
table will be  nominated  on behalf of the Board of  Directors  for  election as
directors in Class II, Class I and Class III, as indicated.  All of the nominees
(other than Messrs.  Humphrey,  Lunsford and Meeker) currently serve as Class II
directors  of the  Company  and all of the  nominees  have  agreed  to  serve if
reelected or elected, as applicable.

                      NOMINEES FOR ELECTION AS DIRECTORS

                                                            COMMON STOCK OF
  NAME, AGE AND                                               THE COMPANY
 POSITIONS WITH          PRINCIPAL OCCUPATION (1) AND          BENEFICIALLY
     COMPANY             CERTAIN DIRECTORSHIPS (2)            OWNED AS OF
                                                            APRIL 1, 1995(3)

                                                          AMOUNT    % OF CLASS

                        CLASS II - TERMS EXPIRING IN 1998

Catesby W. Clay         Chairman, Kentucky River Coal    46,630(4)    1.2%
71                      Corporation (Coal land lessor);
Director since 1953     President, Runnymede Farm, Inc.
                        (Thoroughbred breeding);
                        Director, National Council of
                        Coal Lessors (Executive
                        Committee), Kentucky Coal
                        Association, University of
                        Kentucky Mining Engineering
                        Foundation; Director and
                        President, Foundation for
                        Drug-Free Youth

J. David Grissom        Chairman, Mayfair Capital        10,050(4)     .3%
56                      (Private investment firm);
Director since 1979     Chairman and Chief Executive
                        Officer, PNC Bank, Kentucky,
                        Inc. and Vice Chairman, PNC
                        Financial Corp. (until April,
                        1989); Director, Transco Energy
                        Company, Providian Corporation,
                        Columbia/HCA Healthcare
                        Corporation, LG&E Energy
                        Corporation, Regal Cinemas,
                        Inc. and Sphere Drake Holdings
                        Limited; Chairman, Centre
                        College Board of Trustees


Seth W. Hancock         Partner and Manager, Claiborne  142,825(4)    3.8%
45                      Farm and President, Hancock
Director since 1973     Farms, Inc. (Thoroughbred
                        breeding and farming); Vice
                        President and Director, Clay
                        Ward Agency, Inc. (Equine
                        insurance); Director, Hopewell
                        Company and Keeneland
                        Association, Incorporated and
                        Breeder's Cup Limited
                        (Executive Committee)

Frank B. Hower, Jr.     Retired; Former Chairman,         1,040(4)      *
66                      Liberty National Bancorp, Inc.
Director since 1979     (Bank holding company) and
                        Liberty  National  Bank & Trust
                        Company  of  Louisville
                        (until  February,  1990);  
                        Director,   Liberty  National
                        Bancorp,  Inc.,  American  
                        Life and  Accident  Insurance
                        Company,   The  Associated   
                        Group,   Regional   Airport
                        Authority of Louisville and  
                        Jefferson   County  and
                        Kentucky Historical Society;  
                        Member, Board of Trustees,
                        Centre   College,  J. Graham  
                        Brown   Foundation   and
                        University of Louisville

W. Bruce Lunsford       Chairman, President and Chief   100,030(4)    2.6%
47                      Executive Officer, Vencor, Inc.
Nominee for Director    (Intensive care hospitals and
                        nursing homes); Director,
                        ResCare, Inc., National City
                        Bank, Kentucky (Executive
                        Committee), Kentucky Economic
                        Development Corporation and
                        Kentucky Country Day School;
                        Member, Board of Trustees,
                        Bellarmine College and Centre
                        College

                        CLASS I - TERM EXPIRING IN 1997

G. Watts Humphrey, Jr.  President, GWH Holdings            -0-         *
50                      (Private investment company);
Nominee for Director    Chief Executive Officer, The
                        Conair Group, Inc., Metaltech,
                        Nextech and Smith-Steelite;
                        Deputy Chairman - Fourth
                        District, Federal Reserve Bank
                        of Cleveland; Chairman,
                        The Society of Plastics
                        Industry, Inc. and The
                        Blood-Horse, Inc.; Director,
                        Keeneland Association,
                        Incorporated






                         CLASS III - TERM EXPIRING IN 1996

Thomas H. Meeker        President and Chief Executive    29,437(4)(5)   .8%
51                      Officer of the Company;
Nominee for Director;   Director, Thoroughbred Racing
President and Chief     Association of North America,
Executive Officer       Inc. (Executive Committee),
since 1984              Equibase Company, PNC Bank,
                        Kentucky, Inc. (Chairman, Audit
                        Committee), Bell South
                        Telecommunications, Inc. (Vice
                        Chairman, Executive Committee)
                        and Alliant Health Systems,
                        Inc. (Executive Committee)


*Less than 0.1%

(1)   Except as  otherwise  indicated,  there  has been no  change in  principal
      occupation or employment during the past five years.

(2)   Directorships in companies  registered pursuant to the Securities Exchange
      Act of 1934 or the  Investment  Company  Act of 1940  and,  in the case of
      certain nominees, other directorships considered significant by them.

(3)   No nominee  shares voting or investment  power of his  beneficially  owned
      shares,  except that Mr. Clay and Mr. Hancock share with others the voting
      and  investment  power with respect to 43,630  shares and 106,325  shares,
      respectively,  and Mr.  Lunsford shares  investment  power with respect to
      10,000 shares. Of the total shares listed, Mr. Clay specifically disclaims
      beneficial  ownership  of 10,950  shares  owned by the Agnes Clay  Pringle
      Trust of which he is the trustee, and Mr. Hancock  specifically  disclaims
      beneficial  ownership  of  79,200  shares  owned by the A.B.  Hancock  Jr.
      Marital  Trust of which he is the  trustee,  of 9,030  shares owned by the
      Waddell Walker Hancock II Trust of which he is a trustee,  of 9,030 shares
      owned by the Nancy  Clay  Hancock  Trust of which he is a  trustee  and of
      6,043.33  shares  held by the ABC  Partnership  of which  he is a  general
      partner.

(4)   Messrs. Clay, Grissom, Hancock, Hower, Lunsford and Meeker are signatories
      to the  Stockholder  Agreement  with respect to 46,630,  10,050,  142,825,
      1,040, 100,030 and 29,437 shares, respectively.
      See "Common Stock Owned by Certain Persons."

(5)   Includes 717 shares  issuable under the Company's  Incentive  Compensation
      Plan and 16,900 shares issuable under currently exercisable options.


The Board of Directors has no reason to believe that any of the nominees will be
unavailable  to serve as a director.  If any nominee  should become  unavailable
before the Annual  Meeting,  the persons named in the enclosed  Proxy,  or their
substitutes,  reserve the right to vote for substitute  nominees selected by the
Board of  Directors.  In  addition,  if any  shareholder(s)  shall  vote  shares

cumulatively or otherwise for the election of a director or directors other than
the nominees named above, or substitute nominees,  or for less than all of them,
the persons named in the enclosed Proxy or their  substitutes,  or a majority of
them,  reserve the right to vote  cumulatively  for some number less than all of
the nominees named above or any substitute nominees, and for such of the persons
nominated as they may choose.


CONTINUING DIRECTORS

The following table sets forth information relating to the Class I and Class III
directors  of the Company  who will  continue  to serve as  directors  until the
expiration of their respective terms of office, and the Directors  Emeriti,  and
the beneficial ownership of Common Stock by such directors.


                                                           COMMON STOCK OF 
                                                            THE COMPANY 
                                                        BENEFICIALLY OWNED AS OF
                                                          APRIL 1, 1995(3)

     NAME, AGE AND        PRINCIPAL OCCUPATION(1)
 POSITIONS WITH COMPANY              AND                 AMOUNT   % OF CLASS
                          CERTAIN DIRECTORSHIPS(2)  
                          
                         CLASS I - TERMS EXPIRING IN 1997
                                   
William S. Farish        President, W.S. Farish &       25,280(4)     .7%
56                       Company (Trust management
Director since 1985;     company) and Owner, Lane's
Chairman                 End Farm; Director,
since 1992               Breeder's Cup Limited and
                         Keeneland Association,
                         Incorporated; Vice
                         Chairman and Steward of
                         Jockey Club; Advisory
                         Director,
                         Galveston-Houston Company,
                         Inc. and Post Oak Bank;
                         President, Ephraim
                         McDowell Cancer Research
                         Foundation

Daniel M. Galbreath      Chairman and Chief            122,150     3.2%
66                       Executive Officer, The
Director since 1979      Galbreath Company (Realtor
                         and builder); Director,
                         Breeder's Cup Limited,
                         Keeneland Association,
                         Incorporated and BCP
                         Management, Inc.; General
                         Partner of Borden
                         Chemicals & Plastics,
                         Limited Partnership;
                         Owner, Darby Dan Farms

Arthur B. Modell         President and Director,         1,000      *
69                       Cleveland Browns Football
Director since 1985      Company, Inc.
                         (Professional football
                         team); Board of Trustees
                         and President, Cleveland
                         Clinic Foundation;
                         Director, Lake Erie Radio
                         Co.


                         CLASS III - TERMS EXPIRING IN 1996

Charles W. Bidwill, Jr.  President and General         221,259(4)     5.8%
66                       Manager, National Jockey
Director since 1982      Club (Operator of
                         Sportsman's Park
                         Racetrack); Director,
                         Orange Park Kennel Club,
                         Associated Outdoors Clubs
                         (Tampa Greyhound Track),
                         Bayard Raceways and
                         Caterers of North Florida,
                         Jacksonville Kennel Club,
                         Big Shoulders Fund,
                         Archdiocese of Chicago,
                         Link Unlimited

Carl F. Pollard          Owner, Hermitage Farm          73,040(4)     1.9%
56                       beginning in 1994
Director since 1985      (Thoroughbred breeding);
                         Director and Chairman of
                         the Executive Committee,
                         Columbia/HCA Healthcare
                         Corporation; Former
                         Chairman of the Board,
                         Columbia Healthcare
                         Corporation; President and
                         Chief Operating Officer
                         (1991-March 1993) and
                         Senior Executive Vice
                         President (1984-1991),
                         Humana Inc. (Hospitals and
                         health services);
                         Director, National City
                         Bank, Kentucky and Vestar,
                         Inc.; President and
                         Director, Kentucky Derby
                         Museum Corporation

Darrell R. Wells (5)     General Partner, Security     232,930(4)     6.2%
51                       Management Company
Director since 1985      (Investments); Director,
                         First Security Trust
                         Company, Shelby County
                         Trust Bank, Commonwealth
                         Bancshares, Citizens
                         Financial Corporation,
                         Commonwealth Bank & Trust
                         Company and Jundt Growth
                         Fund


                            DIRECTORS EMERITI (6)

John W. Barr, III        Retired; Former Chairman,       2,000(4)     .1%
74                       National City Bank,
Director from 1979 to    Kentucky (Bank holding
1993; Director Emeritus  company); Director,
since 1993               Kitchen Kompact Company;
                         Director, Speed Museum,
                         Cave Hill Cemetery, Boy
                         Scouts and American
                         Printing House for the
                         Blind

Louis J. Herrmann, Jr.   Owner, Louis Herrmann Auto     50,265(4)     1.3%
75                       Consultant Incorporated
Director since 1968;     (Automobile sales)
Secretary-               Director, Kentucky Mutual 
Treasurer from 1985 to   Life Insurance Company 
1986; Director Emeritus
since 1994

Stanley F. Hugenberg,    President, Jackantom Sales      3,670(4)      .1%
Jr.                      Company
77                       (Manufacturers'
Director from 1982 to    representative); Member,
1992;                    Board of Trustees, J.
Director Emeritus since  Graham Brown Foundation;
1992                     Director, Kentucky Derby
                         Museum Corporation

Y. Peyton Wells, Jr.(5)  Retired; Former President      17,650         .5%
84                       and Director, Shelby
Director from 1967 to    County Trust Bank
1985;
Vice President from
1980 to 1985;
Director Emeritus since
1985

William T. Young         Chairman, W.T. Young, Inc.    114,660(4)     3.0%
77                       (Warehousing and
Director from 1985 to    thoroughbred horses);
1992;                    Director, Columbia/HCA
Director Emeritus since  Healthcare Corporation
1992

*Less than 0.1%


(1)   Except as  otherwise  indicated,  there  has been no  change in  principal
      occupation or employment during the past five years.

(2)   Directorships in companies  registered pursuant to the Securities Exchange
      Act of 1934 or the  Investment  Company  Act of 1940  and,  in the case of
      certain directors, other directorships considered significant by them.

(3)   No director shares voting or investment  power of his  beneficially  owned
      shares, except that Messrs. Bidwill,  Galbreath,  Herrmann and Wells share
      with others the voting and investment power with respect to 2,919, 27,377,
      10,200 and 232,930 shares, respectively. Of the total shares listed above,
      Mr. Wells  disclaims  beneficial  ownership  of 22,400  shares held by The
      Wells  Foundation,  Inc. of which he is a trustee and of 135,791.90 shares
      held by The Wells Family  Partnership of which he is the Managing  General
      Partner.

(4)   Messrs. Farish, Bidwill, Pollard, Darrell Wells, Herrmann, Barr, Hugenberg
      and Young are  signatories  to the  Stockholder  Agreement with respect to
      25,280,  222,259 (including shares acquired after April 1, 1995),  73,040,
      232,930, 40,065, 2,000, 3,670 and 114,660 shares, respectively.

(5)   Darrell R. Wells is the nephew of Y. Peyton Wells, Jr.

(6)   Directors  Emeriti  are  entitled  to  attend  meetings  of the  Board  of
      Directors  but do not have a vote on matters  presented to the Board.  The
      Bylaws  provide  that once a director is 72 years of age, he may not stand
      for re-election but shall assume Director  Emeriti status as of the annual
      meeting following his current term of service as a director.  The Chairman
      of the Board may  continue  to serve as a  director  notwithstanding  this
      provision.



         COMPENSATION AND COMMITTEES OF THE BOARD OF DIRECTORS

            Four (4)  meetings  of the Board of  Directors  were held during the
last fiscal year.  Directors other than Directors Emeriti are paid $750 for each
meeting  of the Board  that they  attend,  and  directors  who do not  reside in
Louisville are reimbursed for their travel expenses. In addition, all directors,
other than Directors Emeriti,  receive an annual retainer of $3,000 per year and
directors who serve as committee  chairmen  receive an  additional  $1,000 for a
total  retainer  of $4,000  per year.  The  Chairman  of the Board  receives  an
additional $1,000 for a total retainer of $5,000. Directors Emeriti are not paid
any  compensation  for  attending  meetings.  They are  entitled  to have  their
expenses reimbursed.
            The Company has four (4) standing Committees: the Executive,  Audit,
Compensation  and Racing  Committees.  No Director  Emeritus serves on any Board
committee. The Executive Committee is authorized, subject to certain limitations
set forth in the  Company's  Bylaws,  to exercise the  authority of the Board of
Directors  between  Board  meetings.  Thirteen  (13)  meetings of the  Executive
Committee (of which Messrs. Bidwill, Farish, Galbreath,  Grissom and Pollard are
members) were held during the fiscal year.  The Audit  Committee is  responsible
for  annually  examining  the  financial  affairs  of  the  Company,   including
consulting with the Company's  auditors.  One (1) meeting of the Audit Committee
(of which Messrs.  Pollard and Darrell R. Wells are members) was held during the
fiscal year. The Compensation  Committee administers the Company's  Supplemental
Benefit  Plan,  Incentive  Compensation  Plan and 1993 Stock  Option  Plan,  and
reviews and  recommends  actions  regarding  executive  compensation.  Three (3)
meetings of the Compensation  Committee (of which Messrs.  Clay, Farish,  Hower,
Modell and Darrell R. Wells are members)  were held during the fiscal year.  The
Racing  Committee is responsible for the Company's  contracts and relations with
horsemen, jockeys and others providing horse racing related services. The Racing

Committee  (of which  Messrs.  Farish,  Hancock and Pollard are members) held no
meetings  during the fiscal  year.  Directors  are paid $500 for each  committee
meeting they attend other than meetings held by telephone.  The Company does not
have a standing  nominating  committee.  All directors serving as Class I, II or
III directors,  except Mr. Modell,  attended at least seventy-five percent (75%)
of the meetings of the Board of Directors and the meetings of the  committees on
which they served.

                   EXECUTIVE OFFICERS OF THE COMPANY

            The  Company's  executive  officers,  as listed  below,  are
elected annually to their  executive  offices and serve at the  pleasure
of the Board of Directors.
                                                               COMMON STOCK OF
                                                                 THE COMPANY
                                                              BENEFICIALLY OWNED
                                                       AS OF APRIL 1, 1995(1)(2)
                                      
  NAME AND AGE           POSITION(S) WITH                           % OF
AND TERM OF OFFICE           COMPANY                   AMOUNT       CLASS

William S. Farish (3)  Director since 1985;           25,280(4)       .7%
56                     Chairman of the Board
                       since 1992

Thomas H. Meeker       President and Chief Executive  29,437(4)(5)    .8%
51                     Officer since 1984

Vicki L. Baumgardner   Vice President of Finance and   1,653(6)        *
43                     Treasurer since February 1993;
                       Controller from 1989 to 
                       February 1993

David E. Carrico       Senior Vice President of        2,310(7)       .1%
44                     Administration since June 
                       1994; Vice President of
                       Marketing from 1990 to June 
                       1994; Director of Marketing 
                       from 1984 to 1990

Dan L. Parkerson       Senior Vice President of        2,450(8)       .1%
52                     Operations since February 1991 
                       and General Manager since June 
                       1991; Vice President of 
                       Operations from 1990 to 1991; 
                       Director of Operations from 
                       1986 to 1990


Jeffrey M. Smith       Senior Vice President of        3,349(9)       .1%
42                     Planning and Development 
                       since February 1993;
                       Senior  Vice  President 
                       of Finance from 1991 to 1993;
                       Treasurer from 1986 to 1993;  
                       Vice President of Finance
                       from 1990 to 1991; Secretary 
                       from 1986 to 1990

Alexander M. Waldrop   Senior Vice President since     3,104(10)      .1%
38                     June 1994; General Counsel and 
                       Secretary since August 1992

* Less than 0.1%


(1)       See the  Table on Option Grants in Last Fiscal Year  under  "Executive
          Compensation"  below  for a  discussion  of stock  options  granted by
          the Board of Directors to  executive  officers  during 1994  and 1995.

(2)       No executive officer shares voting or investment power with respect to
          his or her beneficially owned shares.

(3)       Mr. Farish does not serve  full-time as an executive  officer  of  the
          Company  and  is not  compensated  as an  officer  of the Company.

(4)       All shares  owned  by  Mr.  Farish  and  Mr. Meeker are subject to the
          Stockholder  Agreement.  See "Common  Stock Owned by Certain Persons."

(5)       Includes   717  shares   issuable   under  the   Company's   Incentive
          Compensation   Plan  and  16,900  shares   issuable  under   currently
          exercisable options.

(6)       Includes 27 shares issuable under the Company's Incentive Compensation
          Plan and 1,500 shares issuable under currently exercisable options.

(7)       Includes   104  shares   issuable   under  the   Company's   Incentive
          Compensation   Plan  and  2,000  shares   issuable   under   currently
          exercisable options.

(8)       Includes   109  shares   issuable   under  the   Company's   Incentive
          Compensation   Plan  and  2,000  shares   issuable   under   currently
          exercisable options.

(9)       Includes   108  shares   issuable   under  the   Company's   Incentive
          Compensation   Plan  and  3,000  shares   issuable   under   currently
          exercisable options.

(10)      Includes   104  shares   issuable   under  the   Company's   Incentive
          Compensation   Plan  and  3,000  shares   issuable   under   currently
          exercisable options.




       Mr.  Waldrop was employed as an attorney with the  Louisville law firm of
Wyatt,  Tarrant & Combs,  which firm  serves as primary  outside  counsel to the
Company, from August 1985 until his employment by the Company.

        COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

       Under rules  established by the SEC, the  Compensation  Committee
of the Board of Directors  (the  "Committee")  is required to disclose:  (1) the
Committee's   compensation   policies  applicable  to  the  Company's  executive
officers; (2) the relationship of executive compensation to Company performance;
and (3) the Committee's  bases for determining the compensation of the Company's
Chief  Executive  Officer  ("CEO"),  Thomas  H.  Meeker,  for the most  recently
completed  fiscal  year.  Pursuant  to these  requirements,  the  Committee  has
prepared this report for inclusion in the Proxy Statement.
       The Committee  consists of five (5) independent  Directors,  none of whom
has ever been employed by the Company.  The Committee annually reviews executive
officer compensation and makes  recommendations to the Board of Directors on all
matters  related  to  executive  compensation.  The  Committee's  authority  and
oversight extend to total compensation,  including base salary, annual incentive
compensation and stock options for the Company's  executive  officers as well as
the Company's Profit Sharing Plan. The Committee also administers the employment
contract and  Supplemental  Benefit Plan of the Company's CEO, Thomas H. Meeker.
The Committee makes its compensation  recommendations  to the Board of Directors
after considering the  recommendations  of the CEO (on all but CEO compensation)
and  other  qualified  compensation  consultants.  The  Committee  also  reviews
compensation  data from comparable  companies  including those found in the peer
group performance graph (the "Peer Graph") which follows this report.

       The  fundamental  philosophy  of the  Committee  is to  assure  that  the
Company's  compensation  program for  executive  officers  links pay to business
strategy  and  performance  in  a  manner  which  is  effective  in  attracting,
motivating  and  retaining  key  executives  while  also  providing  performance
incentives   which  will  inure  to  the  benefit  of  executive   officers  and
shareholders alike. The objective is to provide total compensation  commensurate
with Company  performance  by combining  salaries  that are  competitive  in the
marketplace with incentive pay opportunities  established by the Committee which
are competitive with median levels of competitors' incentive compensation.
       There  are  three  (3)  basic   elements  of  the   Company's   executive
compensation program,  each determined by individual and corporate  performance:
(i)  base  salary  compensation,  (ii)  annual  variable  performance  incentive
compensation earned under the Company's Incentive  Compensation Plan ("ICP") and
(iii) stock option grants made under the  Company's  1993 Stock Option Plan (the
"Option Plan").
       Base salaries are targeted to be competitive with comparable positions in
comparable  companies.  In determining  base salaries,  the Committee also takes
into  account   individual   experience  and  performance  and  specific  issues
particular to the Company.
       The ICP provides a direct financial  incentive in the form of annual cash
and/or stock  bonuses.  The amount of each bonus is  determined by the Company's
achievement  of certain  target  earnings per share  (computed  before taxes but
after  recognition  of awards  made  under the ICP)  ("EPS")  goals  established
annually by the Committee.  The ICP provides for the award of a bonus based upon
the  Company's  achievement  of  EPS  goals  and  the  5-year  total  return  to
shareholders  in the form of  dividends  and  increases in the  Company's  stock
price,  compared to the Wilshire 5000 stock index. These goals are weighted with
achievement  of EPS goals having a factor of two-thirds  and  comparative  total
return to shareholders having a factor of one-third.

       The  Committee  has   determined   that  as  an   executive's   level  of
responsibility  increases,  a greater  portion of his or her total  compensation
should be performance  based.  Not only do awards increase as an executive rises
in the Company but also his or her ICP award is composed of a higher  percentage
of stock  which  means the  compensation  shifts to reliance on the value of the
Company's stock.
       For the Company's year ended December 31, 1994, the Committee set the ICP
minimum  performance  goal at EPS equal to the Company's budget and total return
to shareholders equal to the Wilshire 5000 and the Company met both the EPS goal
and total return to shareholders  goal. As a result,  bonuses were awarded under
the ICP for the  Company's  year ended  December  31,  1994.  These  bonuses are
reflected in the Summary Compensation Table. For fiscal year 1995, the Committee
once again set the ICP minimum  performance  goal at EPS equal to the  Company's
budget and total return to shareholders equal to the Wilshire 5000.
       At the  Annual  Meeting  of  Shareholders  held on  June  16,  1994,  the
shareholders of the Company approved the Churchill Downs Incorporated 1993 Stock
Option Plan. The Committee believes that the granting of options pursuant to the
Option Plan to officers of the Company,  including Mr. Meeker,  will further the
Company's  goals of attracting,  motivating and retaining  employees  while also
providing compensation which links pay to performance. During 1994, awards under
the Option Plan were as follows:  (1) Mr. Meeker was granted 5,376  nonqualified
stock  options and 4,624  incentive  stock  options  ("ISOs")  and (2) all other
officers  were granted  4,800  nonqualified  stock  options and 5,750 ISOs.  The
options are exercisable in 1997. The Option Plan provides for cashless exercises
through broker's transactions.
       The Committee  believes that the Option Plan is integral to a performance
based  compensation  package.  Although  the  ICP  reflects  certain  levels  of
increases in stock price,  the ICP is also heavily  weighted toward earnings per

share goals established by the Committee.  The Option Plan allows the Company to
further tie  compensation  to  performance  of the Company with a possibility of
greatly increasing the total  compensation  package of its executives without an
equivalent cash outlay by the Company.
       Mr. Meeker was employed as President and Chief  Executive  Officer of the
Company in October 1984 under an annually  renewing  three-year  contract.  Each
year, Mr.  Meeker's base salary is set by the Committee  after  considering  the
Company's  overall  financial  performance  in light of the Company's  strategic
development  initiatives.  In April of 1994, Mr. Meeker's annual base salary was
increased to $245,000.  This  relatively  small increase in base salary reflects
the fact  that the  Committee  has  decided  to shift a greater  portion  of Mr.
Meeker's overall  compensation to performance  based sources such as the ICP and
the Option Plan.
                                                          COMPENSATION COMMITTEE
                                                             Frank B. Hower, Jr.
                                                               William S. Farish
                                                                 Catesby W. Clay
                                                                Arthur B. Modell
                                                                Darrell R. Wells







      COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

       The  Company is  unaware  of any  relationships  among its  officers  and
directors which would require disclosure under this caption.

                           PERFORMANCE GRAPH

       Set forth below is a line graph comparing the yearly percentage change in
the cumulative  total  shareholder  return on the Company's Common Stock against
the cumulative  total return of each of a peer group index and the Wilshire 5000
index for the period of approximately  five (5) fiscal years commencing  January
31, 1990,  and ending  December 31, 1994.  The period  ending  December 31, 1993
represents an eleven (11) month period due to the change in the Company's fiscal
year.  The  companies  used in the  peer  group  index  consist  of Bay  Meadows
Operating Co., Fair Grounds Corp.,  Hollywood Park Operating Co.,  International
Thoroughbred Breeders,  Inc. and Santa Anita Operating Co., which are all of the
publicly  traded  companies  known to the  Company  to be engaged  primarily  in
thoroughbred  racing in the continental United States.  Turf Paradise,  Inc. was
previously  included in the peer group index but was acquired by Hollywood  Park
Operating Co. in 1994. The Wilshire 5000 equity index  measures the  performance
of all United States  headquartered  equity  securities  with readily  available
price  data.  The  graph  depicts  the  result of an  investment  of $100 in the
Company, the Wilshire 5000 index and the peer group companies. Since the Company
has  historically  paid  dividends on an annual  basis,  the  performance  graph
assumes that dividends were reinvested annually.


                  1/31/90 1/31/91   1/31/92  1/31/93  12/31/93 12/31/94

Churchill Downs    $100     $111     $174      $219     $261     $213
Wilshire 5000      $100     $106     $136      $150     $165     $165
Peer Group         $100     $104     $ 89      $ 89     $139     $ 81



                             EXECUTIVE COMPENSATION

       The  following  table sets forth the  remuneration  paid  during the last
three (3) fiscal years by the Company to [i] Mr.  Meeker,  the President and CEO
of the Company,  and [ii] each of the Company's four (4) most highly compensated
executive  officers  whose total annual  salary and bonus  exceeded  $100,000 in
fiscal year 1994 (collectively the "named executive officers").

                           SUMMARY COMPENSATION TABLE
                              
                                    ANNUAL COMPENSATION
                                                             LONG         ALL
                NAME &                                       TERM        OTHER
               PRINCIPAL                                     COMPEN-   COMPENSA-
               POSITION      YEAR                            SATION     TION(4)

                                                    OTHER    SECURITIES
                                   SALARY BONUS     ANNUAL   UNDERLYING
                                     (1)(2)         COMPENSA- OPTIONS/SARs
                                                    TION(3)    (#)
                                                    
           Thomas H. Meeker, 1994 $245,000 $73,868  $49,463    10,000    $12,711
           President and CEO 1993  217,250 101,673   43,645    50,700     20,088
                             1992  230,000    -0-    52,456      -0-      17,672

           David E. Carrico  1994   86,607  21,574     -0-      1,750      7,867
           Senior, Vice      1993   68,000  18,471     -0-      6,000      6,304
           President of      1992   60,000    -0-      -0-       -0-       5,516
           Administration
                             
                             

           Dan L. Parkerson, 1994   94,108  22,512     -0-      1,750      9,188
           Senior Vice       1993   78,883  28,695     -0-      6,000      7,061
           President of      1992   76,000    -0-      -0-       -0-       7,586
           Operations and
           General Manager
                            
                             

           Jeffrey M. Smith, 1994   93,581  22,278     -0-      2,000      9,171
           Senior Vice       1993   76,083  27,694     -0-      9,000      8,133
           President of      1992  100,000    -0-      -0-       -0-       7,009
           Planning and
           Development
                             
                             

           Alexander M.      1994   88,821  21,574     -0-      2,000      8,113
           Waldrop, Senior   1993   75,167  19,543     -0-      9,000        132
           Vice President,   1992   34,375    -0-      -0-       -0-          44
           General Counsel
           and Secretary(5)
                             
                             

- ------------------

(1)  On November 18, 1993, the Company amended its Articles of  Incorporation to
     change its fiscal year from January 31 to December 31. Annual  compensation
     for 1993 is based upon actual compensation paid by the Company to the named
     executive  officers  for the eleven  months  ended  December  1993.  Annual
     compensation figures for 1992 and 1994 include a twelve month period.

(2)  Bonus  awards were paid in cash and/or  stock  pursuant  to the  Company's
     Incentive  Compensation  Plan or  otherwise.  See  "Compensation  Committee
     Report on Executive Compensation."

(3)  Includes above-market earnings on compensation deferred under the Company's
     Incentive  Compensation Plan and the expense of a Supplemental Benefit Plan
     of which Mr. Meeker is currently the only  participant.  See the discussion
     regarding the Supplemental Benefit Plan below.


(4)  Consists of life  insurance  premiums  paid by the Company  with respect to
     certain term life insurance payable on the officer's death to beneficiaries
     designated by him and further,  includes amounts contributed by the Company
     to the officer's  account under the Company's Profit Sharing Plan.  Amounts
     attributable to such term life insurance are as follows:


               MR. MEEKER  MR. CARRICO  MR.PARKERSON   MR. SMITH   MR. WALDROP
                                         
    1994         $2,864        $247         $791         $278         $167
    1993          2,909         247          812          288          132
    1992          2,047         175          588          135           44


     Pursuant  to  the  Company's  Profit  Sharing  Plan,  the  Company  matches
     employees'  contributions  (which are limited to 10% of annual compensation
     up to $9,240 for calendar  year 1994) up to 2% of  quarterly  contributions
     and also makes  discretionary  contributions.  Amounts  contributed  by the
     Company on behalf of the named executive officers are as follows:


               MR. MEEKER  MR. CARRICO  MR.PARKERSON  MR. SMITH   MR. WALDROP
                                   
    1994        $ 9,847       $7,620       $8,397       $8,893       $7,946
    1993         17,179        6,057        6,249        7,845          0
    1992         15,935        5,341        6,998        6,874          0


(5)  Mr.  Waldrop  was  employed  by  the  Company  in  August,   1992  and  his
     compensation for 1992 reflects less than six months of service.




      The  following  table  provides  information  with  respect  to the  named
executive officers concerning options granted during 1994:
OPTION GRANTS IN LAST FISCAL YEAR INDIVIDUAL GRANTS GRANT DATE VALUE(3) NUMBER OF % OF TOTAL SECURITIES OPTIONS UNDERLYING GRANTED EXERCISE MARKET GRANT DATE OPTIONS TO OR BASE PRICE PRESENT GRANTED EMPLOYEES PRICE ON EXPIRATION VALUE Name (1) IN FISCAL ($/SH)(2) DATE DATE ($) YEAR OF GRANT Thomas H. Meeker 2,272 11% $44 $44 3/15/2004 $58,686 2,728 13% 44 44 3/15/2004 70,464 2,352 11% 42.50 42.50 12/15/2004 57,412 2,648 13% 42.50 42.50 12/15/2004 64,638 David E. Carrico 750 4% 44 44 3/15/2004 19,373 1,000 5% 42.50 42.50 12/15/2004 24,410 Dan L. Parkerson 750 4% 44 44 3/15/2004 19,373 1,000 5% 42.50 42.50 12/15/2004 24,410 Jeffrey M. Smith 1,000 5% 44 44 3/15/2004 25,830 1,000 5% 42.50 42.50 12/15/2004 24,410 Alexander M. 1,000 5% 44 44 3/15/2004 25,830 Waldrop 1,000 5% 42.50 42.50 12/15/2004 24,410 - --------------------------- (1) 8,500 options are exercisable beginning 3/15/97. 9,000 options are exercisable beginning 12/15/97. (2) The 2,272 options and 2,352 options granted to Mr. Meeker are intended to qualify as incentive stock options under the Internal Revenue Code of 1986, as amended, and accordingly, the exercise price of these options is the fair market value of the shares as of the date of their grant. The 1,000 options granted to each of Messrs. Carrico, Parkerson, Smith and Waldrop on December 15, 1994 are also intended to qualify as incentive stock options under the Internal Revenue Code of 1986, as amended. All other options are non-qualified stock options. 8,500 options and 9,000 options, respectively, have been granted at an exercise price equal to the closing high bid price of the Company's Common Stock as of March 15, 1994 and December 15, 1994, respectively. (3) The options are valued using the Cox-Ross-Rubinstein Binomial option pricing model, which is a variation of the Black-Scholes option pricing model. This calculation is based on the following assumptions: (i) an expected option term of eight years, (ii) an interest rate of 6.27% and 7.81% (March 15, 1994 and December 15, 1994, respectively) based on the quoted yield of U.S. Treasury Bonds on the date of grant maturing in eight years, (iii) a dividend yield of .92% and 1.04% (March 15, 1994 and December 15, 1994, respectively) per share, and (iv) a stock price volatility of 26.49% and 21.25% (March 15, 1994 and December 15, 1994, respectively) based upon the average closing price of the 250-day period preceding the grant date. Based on these assumptions, the value of the nonqualifying options was determined to be $25.83 and $24.41 (March 15, 1994 and December 15, 1994, respectively) per share and the value of the incentive stock options was determined to be $25.83 and $24.41 (March 15, 1994 and December 15, 1994, respectively) per share.
The following table provides information with respect to the named executive officers concerning unexercised options held as of December 31, 1994: AGGREGATE YEAR-END OPTION VALUES VALUE OF UNEXERCISED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT NAME OPTIONS AT YEAR END YEAR END (1)EXERCISABLE/ EXERCISABLE/UNEXERCISABLE UNEXERCISABLE Thomas H. Meeker 16,900/43,800 $0/7,500 David E. Carrico 2,000/5,750 0/1,500 Dan L. Parkerson 2,000/5,750 0/1,500 Jeffrey M. Smith 3,000/8,000 0/1,500 Alexander M. Waldrop 3,000/8,000 0/1,500 - ------------------- (1) Closing high bid as of the last trading day of 1994 (December 30, 1994) minus the exercise price. The Company maintains a Supplemental Benefit Plan (the "Plan") in which Mr. Meeker is currently the only participant. The Plan provides that if a participant remains in the employ of the Company until age 55 or becomes totally and permanently disabled, the participant will be paid a monthly benefit equal to 45% of the "highest average monthly earnings," as defined in the Plan, prior to the time of disability or age 55, reduced by certain other benefits as set forth in the Plan, commencing on retirement (or attainment of age 55 if disability occurs prior to said age) and continuing for life. The benefit payable under the Plan is increased by 1% for each year the participant remains employed by the Company after age 55, to a maximum of 55% of the highest average monthly earnings at age 65. The Plan further provides that the monthly benefit will be reduced by [i] 100% of the primary insurance amount under social security payable to a participant determined as of the later of the participant's retirement date or attainment of age 62; [ii] 100% of the participant's monthly benefit calculated in the form of a life annuity under the terminated Churchill Downs Pension Plan; [iii] 100% of the monthly income option calculated as a life annuity from the cash surrender value of all life insurance policies listed on a schedule attached to the participant's plan agreement; and [iv] 100% of the employer contributions and any employee contributions up to a maximum of $2,000 per year allocated to the participant's accounts under the Churchill Downs Incorporated Profit Sharing Plan, calculated in the form of a life annuity payable on his retirement date. Due to these reductions, the estimated annual benefit payable upon retirement at age 65 to Mr. Meeker under the Plan is $50,486. EMPLOYMENT AGREEMENT AND CHANGE IN CONTROL AGREEMENT Mr. Meeker was employed as President and Chief Executive Officer of the Company in October 1984 under an annually renewing three-year contract. Mr. Meeker's compensation for 1995 includes a base salary of $245,000 per year, reimbursement for travel and entertainment expenses (including his wife's travel expenses on Company business), provision of an automobile, payment of dues for one (1) country club and any other professional or business associations, and a $250,000 life insurance policy. Mr. Meeker's employment may be terminated by the Company prior to the expiration of his employment agreement only if he willfully fails to perform his duties under his employment agreement or otherwise engages in misconduct that injures the Company. Pursuant to Mr. Meeker's employment agreement, in the event of both a "change in control" of the Company and, within one (1) year of such "change in control," either termination of Mr. Meeker's employment by the Company without "just cause" or his resignation, the Company will pay to Mr. Meeker an amount equal to three (3) times his average annual base salary over the prior five (5) years. A "change in control" is defined generally to include the sale by the Company of all or substantially all of its assets, a consolidation or merger involving the Company, the acquisition of over 30% of the Common Stock in a tender offer or any other change in control of the type which would be required to be reported under the Federal securities laws; however, a "change in control" will not be deemed to have occurred in the case of a tender offer or change reportable under the Federal securities laws, unless it is coupled with or followed by the election of at least one-half of the directors of the Company to be elected at any one (1) election and the election of such directors has not been previously approved by at least two-thirds of the directors in office prior to such change in control. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During the past fiscal year, the Company did not engage in any transactions in which any director or officer of the Company had any material interest, except as described below. Directors of the Company may from time to time own or have interests in horses racing at the Company's tracks. All such races are conducted, as applicable, under the regulations of the Kentucky Racing Commission or the Indiana Horse Racing Commission, and no director receives any extra or special benefit with regard to having their horses selected to run in races or in connection with the actual running of races. One or more directors of the Company have an interest in business entities which contract with the Company for the purpose of simulcasting the Kentucky Derby and other races and the acceptance of interstate wagers on such races. In such case, no extra or special benefit not shared by all others so contracting with the Company is received by any director or entity owned or controlled by a director. Mr. Charles W. Bidwill, Jr., a director and five percent (5%) owner of the Company, is the President and General Manager and part owner of National Jockey Club. In 1994, National Jockey Club and the Company were parties to a simulcasting contract whereby National Jockey Club was granted the right to simulcast the Company's Derby Trial - Grade III race, The Kentucky Oaks - Grade I race and the Kentucky Derby - Grade I race. In consideration for these rights, National Jockey Club paid to the Company 5.6% of its gross handle on the simulcast races. For purposes of this and other simulcast contracts, gross handle is defined as the total amount wagered by patrons on the races at the National Jockey Club facility less any money returned to the patrons by cancels and refunds. This simulcast contract is uniform throughout the industry and the rates charged were substantially the same as rates charged to other parties who contracted to simulcast the same races. In 1994, the Company simulcast the Kentucky Derby to 576 locations in the United States and selected international sites. National Jockey Club received no extra or special benefit as a result of the Company's relationship with Mr. Bidwill. Thomas H. Meeker, President and Chief Executive Officer of the Company, is currently indebted to the Company in the principal amount of $65,000, represented by his demand note bearing interest at 8% per annum (payable quarterly) and payable in full upon termination of Mr. Meeker's employment with the Company for any reason. This indebtedness arose in connection with Mr. Meeker's initial employment, pursuant to the terms of which he was granted a loan by the Company for the purpose of purchasing the Company's stock. INDEPENDENT PUBLIC ACCOUNTANTS At its meeting held on March 16, 1995, the Board of Directors adopted the recommendation of the Audit Committee and selected Coopers & Lybrand, LLP to serve as the Company's independent public accountants and auditors for the fiscal year ending December 31, 1995. Coopers & Lybrand, LLP has served as the Company's independent public accountants and auditors since the Company's 1990 fiscal year. Representatives of Coopers & Lybrand, LLP are expected to be present at the Annual Meeting and will be available to respond to appropriate questions and will have the opportunity to make a statement if they desire to do so. APPROVAL OF MINUTES OF 1994 SHAREHOLDERS' MEETING AND OTHER MATTERS (PROPOSAL NO. 2) The Board of Directors of the Company does not know of any matters to be presented to the Annual Meeting other than those specified above, except matters incident to the conduct of the Annual Meeting and the approval by a majority of the shares represented at the Annual Meeting of minutes of the 1994 Annual Meeting which does not amount to ratification of actions taken thereat. If, however, any other matters should come before the Annual Meeting, it is intended that the persons named in the enclosed Proxy, or their substitutes, will vote such Proxy in accordance with their best judgment on such matters. PROPOSALS BY SHAREHOLDERS Any shareholder proposal that may be included in the Board of Directors' Proxy Statement and Proxy for presentation at the Annual Meeting of Shareholders to be held in 1996 must be received by the Company at 700 Central Avenue, Louisville, Kentucky 40208, Attention of the Secretary, no later than January 12, 1996. This solicitation is being made primarily by mail and at the expense of the Company. Certain officers and directors of the Company and persons acting under their instruction may also solicit Proxies on behalf of the Board of Directors by means of telephone calls, personal interviews and mail at no additional expense to the Company. INCORPORATION OF DOCUMENT BY REFERENCE Information concerning the signatories to the Stockholder Agreement is contained in the filing on Schedule 13D made by such signatories with the SEC on April 25, 1995, which Schedule 13D filing (including all exhibits) is incorporated herein by reference. The Company will provide a copy of such Schedule 13D, without charge, to a shareholder requesting such a copy, by written or oral request. Requests for copies of the Schedule 13D should be directed to Alexander M. Waldrop, Senior Vice President, Secretary and General Counsel, Churchill Downs Incorporated, 700 Central Avenue, Louisville, Kentucky 40208, telephone number (502) 636-4400. By Order of the Board of Directors. Thomas H. Meeker, President and Chief Executive Officer Alexander M. Waldrop Senior Vice President, Secretary and General Counsel Louisville, Kentucky May 12, 1995 PLEASE SIGN AND RETURN THE ENCLOSED PROXY IF YOU CANNOT BE PRESENT IN PERSON PROXY CHURCHILL DOWNS INCORPORATED 700 Central Avenue Louisville, Kentucky 40208 ANNUAL MEETING OF SHAREHOLDERS - JUNE 15, 1995 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned hereby appoints Frank B. Hower, Jr. and Darrell R. Wells as Proxies with full power to appoint a substitute and hereby authorizes them to represent and to vote, as designated below, all shares of the undersigned at the Annual Meeting of Shareholders to be held on Thursday, June 15, 1995 or any adjournment thereof, hereby revoking any Proxy heretofore given. The Board of Directors unanimously recommends a vote FOR the following proposals: 1. Election of Class II Directors, one (1) Class I Director and one (1) Class III Director (Proposal No. 1): ____ FOR all nominees listed ____ WITHHOLD AUTHORITY to below (Except as marked to vote for all nominees listed the contrary below) below Class II Directors: Catesby W. Clay, J. David Grissom, Seth W. Hancock, Frank B. Hower, Jr. and W. Bruce Lunsford Class I Director: G. Watts Humphrey, Jr. Class III Director: Thomas H. Meeker (INSTRUCTION: To withhold authority to vote for any individual nominee write that nominee's name on the space provided below). - ---------------------------------------------------------------- 2. ____ FOR ____ AGAINST ____ ABSTAIN Proposal to approve minutes of the 1994 Annual Meeting of Shareholders, approval of which does not amount to ratification of action taken thereat (Proposal No. 2); 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting including matters incident to its conduct. UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL NO. 2 AND FOR THE ELECTION OF ALL CLASS I, II and III DIRECTORS DESIGNATED UNDER PROPOSAL NO. 1. Please sign, date and return this Proxy promptly in the enclosed envelope. Dated ________________________________, 1995 ________________________________________________________ _____________________ (Please sign this Proxy exactly as name(s) appears. Joint owners should each sign. When signing as attorney, executor, administrator, trustee, guardian or other fiduciary, please give full title.)