UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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): April 7, 2016

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 (see General Instruction A.2. below):

☐ 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))

(a)          2016 Annual Incentive Plan.

On April 7, 2016, the Board of Directors (the “Board”) of Carbon Natural Gas Company (“Carbon” or the “Company”) finalized Carbon’s 2016 Annual Incentive Plan (the “2016 AIP”), including the performance criteria and specific measures and goals for Carbon’s executive officers and all other participants.  Under the 2016 AIP, any incentive awards will be tied to three performance criteria: (i) Lease Operating Expenses per Unit of Production, (ii) General and Administrative Expenses incurred and (iii) Year-end bank debt.  Each of the performance criteria included in the 2016 AIP is tied to a percentage of the participant’s target bonus, which is expressed as a percentage of a participant’s base salary or earned salary during 2016 if the participant was a new hire during the year, took a leave of absence or was absent due to a workers’ compensation matter.  In addition to the target level, the 2016 AIP includes completion percentages for a range of performance levels, from a threshold level up to an outstanding level. Thirty percent of the incentive award is tied directly to the level of performance with respect to the three performance criteria and seventy percent of the award is at the discretion of the Board.

The 2016 AIP is administered by the Compensation, Nominating and Governance Committee of the Board and the Chief Executive Officer (for all participant awards other than awards to officers).  Participation of officers in the 2016 AIP is determined by the Board and the participation of other employees of Carbon and its subsidiaries in the 2016 AIP is determined by the Chief Executive Officer.  The Chief Financial Officer is responsible for verifying the performance calculation for the financial and operating performance measures.  The Compensation, Nominating and Governance Committee of the Board must certify the levels of performance achieved. No awards will be made under the 2016 AIP unless a minimum 30% completion threshold is achieved for the total plan.  Any modifications to the 2016 AIP must be approved by the Board.

(e)          Compensatory Plans and Arrangements.

The information set forth under Item 1.01 of this Current Report on Form 8-K is hereby incorporated in Item 5.02 by reference.

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.