8-K

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) February 24, 2011

W. R. GRACE & CO.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

1-13953	65-0773649
(Commission File Number)	(IRS Employer Identification No.)

7500 Grace Drive
Columbia, Maryland	21044
(Address of Principal Executive Offices)	(Zip Code)

(410) 531-4000

(Registrant’s Telephone Number, Including Area Code)

(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 (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

W. R. GRACE & CO.

FORM 8-K

CURRENT REPORT

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

Annual Incentive Compensation Program

On February 24, 2011, the Compensation Committee (the “Committee”) of the Board of Directors of W. R. Grace & Co. (“Grace”) approved the Grace Annual Incentive Compensation Program (the “AICP”) applicable to all executive officers.

The amount of an individual’s payment under the AICP is discretionary and is based upon:  the individual’s AICP target amount; the size of the AICP incentive pool; and the individual’s performance during the one-year performance period.  The size of the AICP incentive pool is determined based on two Grace performance measures as follows:

·50% of the aggregate AICP incentive pool (the “Adjusted EBIT Pool”) funding is based on the amount of Grace Adjusted EBIT for the one-year performance period, calculated as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Analysis of Operations” in the Grace 2010 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 25, 2011 (the “Grace 2010 Form 10-K”).

·50% of the aggregate AICP incentive pool (the “Adjusted Operating Cash Flow Pool”) funding is based on the amount of Grace Adjusted Operating Cash Flow for the one-year performance period calculated as described in the Grace 2010 Form 10-K.

The Compensation Committee has discretion to adjust the performance objectives or establish or increase the size of the AICP incentive pool even if performance objectives are not achieved.

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The amount of the AICP incentive pool will be the sum of the amounts funded in the Adjusted EBIT Pool and the Adjusted Operating Cash Flow Pool (each, a “Partial Pool”).  The funding of each Partial Pool is determined independently by reference to the Adjusted EBIT and Adjusted Operating Cash Flow performance targets set forth in the Grace Annual Operating Plan for the one-year performance period (each a “Relevant Target”) as follows:

Percentage of 50% of Aggregate Target Award Amounts Funded in Partial Pool* (%)	Actual Grace Performance as a Percentage of Relevant Target (%)
-0-	less than 80
25	80
100	100
200	135 or above

*  Actual amounts funded to Partial Pools are separately prorated on a straight line basis for performance that falls between 80% and 100% of the Relevant Target or between 100% and 135% of the Relevant Target.

The AICP Targets of Grace’s principal executive officer, Grace’s principal financial officer and the other Grace executive officers named in the Summary Compensation Table in the Grace 2010 Form 10-K are as follows:

Named Executive Officer	AICP Target as Percent of Base Salary Actually Paid During Performance Period (%)	Annual Base Salary Rate as of March 1, 2011 ($)
A. E. Festa	100	975,000
H. La Force III	80	430,000
G. E. Poling	80	450,000
D. A. Bonham	80	410,000
M. A. Shelnitz	70	375,000

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Item 9.01.Financial Statements and Exhibits

(d)             Exhibits

Exhibit No.	Description
10.1	Form of Annual Incentive Compensation Program Award Letter

SIGNATURES

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

W. R. GRACE & CO.
(Registrant)
By	/s/ Mark A. Shelnitz
	Mark A. Shelnitz
	Secretary

Dated:  February 28, 2011

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EXHIBIT INDEX

Exhibit No.	Description
10.1	Form of 2011 Annual Incentive Compensation Program Award Letter

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EX-10.1

Exhibit 10.1

W. R. Grace & Co.	T 410.531.4574
7500 Grace Drive	F 410.531.4414
Columbia, MD 21044	Fred.Festa@grace.com
	www.grace.com

Fred Festa

Chairman, President and Chief Executive Officer

Personal and Confidential

Congratulations!  The Grace Board of Directors has approved the Annual Incentive Compensation Program (AICP) for the 20[    ] calendar year, and you will be eligible to participate at a target of       % of your annual base salary.

We have aligned the AICP performance metrics with our Annual Operating Plan (AOP) targets for Adjusted EBIT and Adjusted Operating Cash Flow. This means that the overall AICP incentive pool will be derived from our achievement regarding these targets: 50% of the AICP incentive pool will be established based on our performance with respect to our Adjusted EBIT target and 50% with respect to our Adjusted Operating Cash Flow target.  The table below describes the funding levels of the AICP incentive pool based on the achievement of those targets.

Actual Grace Performance as a Percentage of Relevant Target (%)	Percentage of 50% of Aggregate Target Award Amounts Funded in Partial Pool* (%)
less than 80	-0-
80	25
100	100
135 or above	200

*  Actual amounts funded to the AICP incentive pool will be separately prorated on a straight line basis regarding performance between 80% and 100%, and between 100% and 135%, of the Relevant Target.

In addition to our performance in respect of the AOP targets described above, your individual payout will also be based on your individual performance and your operating segment’s  performance.  After considering these factors, your actual payout could range from 0 - 2 times your target.

Also note that the Compensation Committee of the Grace Board has the discretion to adjust the performance objectives or establish or increase the size of the AICP incentive pool even if performance objectives are not achieved.  Grace reserves the right to change, modify, or terminate this, and its other, compensation (and benefits) programs at any time.  In addition, you should remember that, in order to receive any AICP payment, you must be actively employed by Grace at the time that these amounts are actually paid.  Finally, please keep this matter confidential.

Your contribution, hard work and leadership in living the GRACE Vision and Values are vital to the overall success of the company.

Thank you for continuing to help build a better and safer Grace.

Alfred E. Festa

Chairman, President and CEO