| 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): October 1, 2016 |
| 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 or organization) | Number) | Identification Number) | ||
| 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 |
| Not applicable |
| (Former name, former address and former fiscal year, if changed since last report) |
| 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: |
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2 (b)) |
o 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.
Appointment of Chief Financial Officer
Effective October 1, 2016, the Board of Directors (the “Board”) of Clayton Williams Energy, Inc. (the “Company”) appointed Jaime R. Casas, age 46, to the position of Senior Vice President and Chief Financial Officer of the Company. Prior to joining the Company, Mr. Casas served as Vice President and Chief Financial Officer of the general partner of LRR Energy, L.P., a publicly traded exploration and production master limited partnership, from June 2011 to October 2015. From 2009 to 2011, Mr. Casas served as Vice President and Chief Financial Officer of Laredo Energy, a privately held oil and gas company.
In connection with his appointment, Mr. Casas and the Company entered into an employment agreement (the “Employment Agreement”) effective October 1, 2016. The Employment Agreement provides for a minimum base salary of $450,000 and provides Mr. Casas with certain other compensation and benefits, including participation in the Company’s Long Term Incentive Plan. The Employment Agreement is effective for an initial term of three years and will be automatically extended for an additional one year period on the third anniversary date of the effective date of the agreement (and on the fourth and fifth anniversary dates of the effective date), unless, at least 90 days prior to any such anniversary date, either party gives notice of non-renewal.
Pursuant to the Employment Agreement, the Company is required to provide compensation to Mr. Casas in the event Mr. Casas’s employment is terminated under certain circumstances. If Mr. Casas becomes disabled or dies, the agreement provides for a lump sum payment of 18 months of base salary, payable within 90 days of termination or by March 15 of the year following termination, if earlier, and 12 months of continued health benefits. If Mr. Casas’s employment is terminated by the Company without cause or by Mr. Casas for good reason, or if the Company gives a notice of non-renewal to Mr. Casas, Mr. Casas will receive a lump sum payment equal to (i) two times his annualized base salary in effect on the date of termination, (ii) two times the average of the bonus amount or amounts actually paid to Mr. Casas for the three years ending prior to the date of termination or, if such period is shorter, the number of full calendar years preceding the date of termination during which Mr. Casas was employed by the Company, (iii) the car allowance Mr. Casas would have received under the Employment Agreement had his employment continued for an additional two years and (iv) the matching contributions that would have been made on behalf of Mr. Casas pursuant to the Company’s 401(k) plan if Mr. Casas had continued participating in such 401(k) plan for an additional two years, payable within 90 days of termination or by March 15 of the year following termination, if earlier, plus 18 months of continued health benefits. If Mr. Casas’s employment is terminated by the Company without cause or by Mr. Casas for good reason, or if the Company gives notice of non-renewal to Mr. Casas, in each case, within 24 months following a change in control of the Company, Mr. Casas will receive a lump sum payment equal to (i) three times his annualized base salary in effect on the date of termination, (ii) three times the average of the bonus amount or amounts actually paid to Mr. Casas for the three years ending prior to the date of termination or, if such period is shorter, the number of full calendar years preceding the date of termination during which Mr. Casas was employed by the Company, (iii) the car allowance Mr. Casas would have received under the Employment Agreement had his employment continued for an additional three years and (iv) the matching contributions that would have been made on behalf of Mr. Casas pursuant to the Company’s 401(k) plan if Mr. Casas had continued participating in such 401(k) plan for an additional three years, payable within 90 days of termination or by March 15 of the year following termination, if earlier, plus 18 months of continued health benefits. Mr. Casas is also entitled to accelerated vesting of equity and non-equity incentive awards (except that certain forfeiture conditions may continue to apply) if his employment is terminated due to death or disability, and partial acceleration in the event his employment is terminated by the Company without cause, by Mr. Casas for good reason, or pursuant to a non-renewal notice given by the Company (including such a termination occurring within 24 months following a change in control of the Company).
For purposes of the Employment Agreement, the terms listed below have been given the following meanings:
(a) “cause” means Mr. Casas (1) has been convicted of a misdemeanor involving intentionally dishonest behavior or that the Company determines will have a material adverse effect on the Company’s reputation or any felony, (2) has engaged in conduct that is materially injurious to the Company or its affiliates, (3) has engaged in gross
negligence or willful misconduct in performing his duties, (4) has willfully refused without proper legal reason to perform his duties, (5) has intentionally breached a material provision of the Employment Agreement or another material agreement with the Company or (6) has intentionally breached a material corporate policy of the Company. If any act described in clause (4), (5) or (6) could be cured, the Company will give Mr. Casas written notice of such act and will give Mr. Casas 30 days to cure.
(b) “change in control” means (1) a third party, including a group of third parties acting together other than Ares Management, L.P., Clayton Williams, Jr., The Williams Children’s Partnership, Ltd. or any related party thereof, is or becomes the beneficial owner of more than 35% of the total voting power, aggregate economic interests or total common stock of the Company; (2) a change in the majority of the directors serving on the Board as of March 8, 2016 unless such change was authorized by a majority of the directors in place on that date (or approved by the majority of the directors in place on that date); (3) a disposition by the Company or a restricted subsidiary of the Company pursuant to which the Company or any restricted subsidiary sells, leases, licenses, transfers, assigns or otherwise disposes, in one or a series of related transactions, more than 50% of the properties or assets of Company and its restricted subsidiaries or (4) the adoption of a plan or a proposal for the liquidation or dissolution of the Company.
(c) “disability” means disability (as defined in a long-term disability plan sponsored by the Company) for purposes of determining a participant’s eligibility for benefits and, if multiple definitions exist, will refer to the definition of disability that would, if the participant so qualified, provide coverage for the longest period of time. If Mr. Casas is not covered by a long-term disability plan sponsored by the Company, “disability” will mean a “permanent and total disability” as defined in section 22(e)(3) of the Internal Revenue Code, as certified by a physician acceptable to both the Company and Mr. Casas.
(d) “good reason” means, without the express written consent of Mr. Casas, (1) a material breach by the Company of the Employment Agreement, (2) a material reduction in Mr. Casas’s base salary, (3) a material diminution in Mr. Casas’s authority, duties or responsibilities or the assignment of duties to Mr. Casas that are not materially commensurate with Mr. Casas’s position or (4) a material change in the geographic location of Mr. Casas’s principal place of employment from Houston, Texas. Mr. Casas must give the Company notice of any alleged good reason event within 60 days, and the Company shall have 30 days to remedy such event.
The Employment Agreement contains confidentiality provisions, as well as covenants not to compete, during the employment term and continuing until the first anniversary of the date of termination, and not to solicit the employment of other employees of the Company, during the employment term and continuing until the second anniversary of the date of termination, subject to limited exceptions. The non-compete covenant does not apply if Mr. Casas is terminated for cause by the Company or voluntarily without good reason by Mr. Casas, unless the Company continues to pay Mr. Casas his base salary for a period of 12 months. In addition, the Employment Agreement also conditions payment of severance payments and health care continuation coverage upon Mr. Casas’s execution of a release.
This description of the Employment Agreement is only a summary of, and is qualified in its entirety by reference to, the full text of the Employment Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated into this Item 5.02 by reference.
Departure of Chief Financial Officer
Effective October 1, 2016, Michael L. Pollard, age 66, resigned from his position as Senior Vice President and Chief Financial Officer of the Company, having served in that capacity since January 2011. Mr. Pollard joined the Company in July 1993 and served as Vice President - Accounting from 2003 until his appointment to Chief Financial Officer.
In connection with Mr. Pollard’s resignation, the Company and Mr. Pollard entered into a Separation, Consulting and General Release Agreement (the “Separation Agreement”). Pursuant to the Separation Agreement, Mr. Pollard will receive the amounts and benefits to which he would be entitled upon resignation for “Good Reason” under the Employment Agreement by and between Mr. Pollard and the Company effective as of June 1, 2015 (the “Pollard Employment Agreement”). The aggregate amount of Mr. Pollard’s lump sum severance benefit is $1,300,977 and
includes: (i) two times his annualized base salary in effect on the date of termination, (ii) two times the average of the bonus amount or amounts actually paid to Mr. Pollard for the three years ending prior to the date of termination, (iii) the car allowance Mr. Pollard would have received under the Pollard Employment Agreement had his employment continued for an additional two years and (iv) the matching contributions that would have been made on behalf of Mr. Pollard pursuant to the Company’s 401(k) plan if Mr. Pollard had continued participating in such 401(k) plan for an additional two years. In addition, Mr. Pollard will be entitled to 18 months of continued health benefits at active employee rates. Mr. Pollard will also receive accelerated vesting of the restricted stock awards granted to him pursuant to the Company’s Long Term Incentive Plan.
In addition, Mr. Pollard has agreed to make himself available to provide consulting services to the Company for the six month period beginning October 1, 2016, on the terms set forth in the Separation Agreement. Mr. Pollard will continue to be subject to the restrictive covenants of the Pollard Employment Agreement which include (1) confidentiality provisions, (2) a covenant not to compete continuing until the first anniversary of the date of termination, and (3) a covenant not to solicit the employment of other employees of the Company continuing until the second anniversary of the date of termination, subject to limited exceptions.
This description of the Separation Agreement is only a summary of, and is qualified in its entirety by reference to, the full text of the Separation Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated into this Item 5.02 by reference.
Item 9.01 - Financial Statements and Exhibits.
| Exhibit No. | Description | |
| 10.1 | Employment Agreement by and between the Company and Jaime R. Casas, dated as of October 1, 2016. | |
| 10.2 | Separation Agreement by and between the Company and Michael L. Pollard, dated as of October 1, 2016. | |
| 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 thereto duly authorized.
| CLAYTON WILLIAMS ENERGY, INC. | ||
| Date: | October 4, 2016 | By: | /s/ Mel G. Riggs |
| Mel G. Riggs | |||
| President | |||
| Date: | October 4, 2016 | By: | /s/ Jaime R. Casas |
| Jaime R. Casas | |||
| Senior Vice President and Chief Financial | |||
| Officer | |||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 10.1 | Employment Agreement by and between the Company and Jaime R. Casas, dated as of October 1, 2016. | |
| 10.2 | Separation Agreement by and between the Company and Michael L. Pollard, dated as of October 1, 2016. | |