UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):   November 19, 2008


CLAYTON WILLIAMS ENERGY, INC.
(Exact name of Registrant as specified in its charter)


Delaware
 
001-10924
 
75-2396863
(State or other jurisdiction of
 
(Commission File
 
(I.R.S. Employer
incorporation)
 
Number)
 
Identification No.)


6 Desta Drive, Suite 6500, Midland, Texas
 
79705-5510
(Address of principal executive offices)
 
(Zip code)


Registrant's Telephone Number, including area code:    (432) 682-6324


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))
¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))


 
 
 

Item 5.02                        Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)           The Compensation Committee of the Board of Directors of Clayton Williams Energy, Inc. (the “Company”) has previously adopted an after-payout incentive plan, as amended (the “APO Incentive Plan”) for officers, key employees and consultants who promote the Company’s drilling and acquisition programs.  Management’s objective in adopting this plan is to further align the interests of the participants with those of the Company by granting the participants after-payout working interests in the production developed, directly or indirectly, by the participants.  The plan provides for the creation of a series of limited partnerships or participation agreements creating tax partnerships to which the Company contributes a portion of its working interest in wells drilled within certain areas.  The Company pays all costs and receives all revenues until payout of its costs, plus interest.  After payout, the participants receive at least 99% of the partnership’s subsequent revenues and pay at least 99% of its subsequent expenses.
 
On November 5, 2008, the Compensation Committee of the Board of Directors of the Company approved the formation of a participation agreement created pursuant to the APO Incentive Plan and approved participation awards to certain officers (including our principal executive officer, principal financial officer and certain other named executive officers), key employees and consultants.  The Company entered into a participation agreement with the participants on November 19, 2008, to be effective as of November 5, 2008.  The participation agreement is summarized as follows:
 
·  
Participation Agreement relating to East Texas Bossier-Sunny, to which the Company will contribute 7% of its working interest in Bossier wells to be drilled on certain acreage in Burleson County, Texas.
 

Participation awards under the participation agreement were granted to the Company’s principal executive officer, principal financial officer and named executive officers as follows:
 
   
Bonus Percentages Awarded to Named Officers
   
Clayton W.
 
L. Paul
 
Mel G.
 
Patrick C.
 
T. Mark
Participation Agreement
 
Williams, Jr.
 
Latham
 
Riggs
 
Reesby
 
Tisdale
East Texas Bossier-Sunny
 
28.57%
 
5.54%
 
5.54%
 
-
 
2.14%

Amounts payable under the participation agreement to the Company’s principal executive officer, principal financial officer and named executive officers are not determinable at this time.  Each participation award represents a working interest in one or more wells in a limited geographic area.  Potentially, a participation award may never become payable, or it may become payable at an indeterminable future date.
 
The foregoing description is only a summary of, and is qualified in its entirety by reference to, the participation agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
 



 
 
 

Item 9.01                        Financial Statements and Exhibits.

 
(d)         Exhibits

The following exhibit is provided as part of the information furnished under Item 5.02(e) of this report.

Exhibit
   
Number
 
Description
     
10.1
 
Participation Agreement relating to East Texas Bossier-Sunny dated November 19, 2008.
     

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


   
CLAYTON WILLIAMS ENERGY, INC.



Date:
November 20, 2008
By:
/s/ L. Paul Latham
     
L. Paul Latham
     
Executive Vice President and Chief
     
  Operating Officer



Date:
November 20, 2008
By:
/s/ Mel G. Riggs
     
Mel G. Riggs
     
Senior Vice President and Chief
     
  Financial Officer


 
 
 

CLAYTON WILLIAMS ENERGY, INC.

EXHIBIT INDEX


Exhibit
   
Number
 
Description
     
10.1
 
Participation Agreement relating to East Texas Bossier-Sunny dated November 19, 2008.
     

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