8-K

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)  May 22, 2008

Cephalon, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	0-19119	23-2484489
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)
41 Moores Road
Frazer, Pennsylvania		19355
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code  (610) 344-0200

Not Applicable

(Former Name or Former Address, 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:

¨ 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 1.01               Entry into a Material Definitive Agreement.

On May 22, 2008, the Board of Directors (the “Board”) of Cephalon, Inc., upon the recommendation of the Stock Option and Compensation Committee of the Board, approved changes to certain fees and annual retainers paid to members of the Board.  The following table details those changes:

Cash Compensation Component	Prior Compensation Structure		New Compensation Structure Approved May 22, 2008
Annual Cash Retainer	$	35,000	$	50,000
Board Meeting Fee	$	3,000	$	5,000
Telephonic Meeting Fee	$	2,000	No change
Lead/Presiding Director	$	20,000	No change
Committee Member Retainer	$	10,000	$	15,000
Audit Committee Chairman Retainer	$	12,000	$	20,000
Corporate Governance and Nominating Committee Chairman Retainer	$	12,000	$	17,000
Stock Option and Compensation Committee Chairman Retainer	$	12,000	$	17,000

A Summary of Oral Agreement for Payment of Services between Cephalon, Inc. and its Board of Directors dated May 22, 2008 reflecting the Annual Retainer Increase is attached hereto as Exhibit 10.1 and incorporated herein by reference.

Item 9.01               Financial Statements and Exhibits.

(d)Exhibits.

Exhibit No.	Description of Document
10.1	Summary of Oral Agreement for Payment of Services between Cephalon, Inc. and its Board of Directors dated May 22, 2008

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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.

	CEPHALON, INC.
Date: May 28, 2008	By:	/s/ Gerald J. Pappert
		Gerald J. Pappert
		Executive Vice President, General Counsel

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EXHIBIT INDEX

Exhibit
Number	Description
10.1	Summary of Oral Agreement for Payment of Services between Cephalon, Inc. and its Board of Directors dated May 22, 2008

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EX-10.1

EXHIBIT 10.1

Summary of Oral Agreement for Payment of Services

between Cephalon, Inc.

and

its Board of Directors

dated May 22, 2008

Cephalon, Inc. (“Cephalon”) compensates its non-employee directors through a mix of base cash compensation and stock option grants, summarized as follows:

Cash Compensation:
·  Board Service Annual Retainer	$	50,000
·  Per Meeting Fees
·  Attendance in person	$	5,000/mtg.
·  Attendance by telephone	$	2,000/mtg.
·  Committee Service Fees
·  Audit Committee Chair Annual Retainer	$	20,000
·  Stock Option and Compensation Committee Chair Annual Retainer	$	17,000
·  Corporate Governance and Nominating Committee Chair Annual Retainer	$	17,000
·  Committee Member Annual Retainer	$	15,000
·  Presiding Director Annual Retainer	$	20,000
Options:
·  Initial Grant (upon first election or appointment to Board)	15,000 shares
·  Annual Grant (dated as of the date of the Annual Meeting)	10,000 shares

Under the Cephalon 2004 Equity Compensation Plan (the “2004 Plan”), the initial grant of 15,000 stock options to a non-employee director is made at the time of the earlier to occur of such director’s appointment as a director by the Board or first election to the Board by stockholders. This initial award generally vests over a four-year period, with 25% becoming exercisable on each anniversary of the grant date. Upon the date of re-election to the Board at the Annual Meeting, a non-employee director will receive an annual grant of 10,000 stock options that are fully exercisable on the date of grant. The Board of Directors also may grant options to non-employee directors in addition to the automatic grants described above. Stock options granted to non-employee directors have a ten-year term and are granted with an exercise price equal to the fair market value of our common stock on the date of grant.

Dr. Frank Baldino, Jr., the Chairman and Chief Executive Officer of Cephalon, receives no additional remuneration for his service as a director. Cephalon also reimburses directors for travel expenses incurred in connection with attending Board, committee and stockholder meetings and for other Cephalon business-related expenses. Cephalon does not provide retirement benefits or other perquisites to non-employee directors under any current program.