Exhibit 10.1

 [gracelogoa01.jpg]

Fred Festa
Chairman and Chief Executive Officer

T +1 410.531.4574
M +1 410.531.4414
E fred.festa@grace.com

 

W. R. Grace & Co.-Conn.
7500 Grace Drive
Columbia, MD 21044

[ ], 20XX

Dear AICP Participant:

I am pleased to announce Grace's Annual Incentive Compensation Plan (AICP) for
20XX. The Annual Incentive Plans at Grace are designed to reward employees for
achieving shorter term (annual) objectives, taking into account individual
performance.

To determine the aggregate AICP incentive pool, we again will use the same
target metrics of Adjusted EBIT and Working Capital Days in the following
percentages:
  
•
75 percent 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 period1 

•
25 percent of the aggregate AICP incentive pool (the “Working Capital Pool”)
funding is based on the change in Grace's average Working Capital Days for the
three months ending December 31, 20XX from the average Working Capital Days for
the three months ending December 31, 20XX2 

 
Metric (weighting)
20XX Plan Target
 
Adjusted EBIT
(75%)
XXX
  
Net Working Capital 4th Quarter Average (25%)
XXX
 

This is an important opportunity for us to work across the enterprise and
improve our performance on both measures. Each leader has been holding meetings
to help employees understand better how they can impact these objectives. Please
be sure to attend a meeting or ask so that you can contribute in the most
meaningful way.

To that end, we are making an important change to how performance is recognized
in the AICP payout. In prior years, in order to generate the maximum payout-200
percent of your targeted award-the company would have to achieve 135 percent of
the plan target. The number has been reduced to 120 percent. The possible
company payout percent levels are shown below:
Actual Grace Performance vs. 20XX Plan Target3
less than 80%
80%
100% (target)
120% or above
Company Payout Percent
-0-
25%
100%
200%

  
Consistent with our pay for performance philosophy, we try to differentiate
higher performance with higher AICP payments. As a result, individual payment
amounts may range from 0-3 times the AICP Payout. Your individual payment will
be determined based on Grace's overall performance and your individual
performance.

As in the past, to be eligible for an award:
•
You must be actively employed at the time AICP payments are delivered in March
20XX;

•
You must have completed your three web-based ethics compliance courses and your
online ethics certification by December 31, 20XX. If web-based ethics training
is not offered in your region, you must have participated in your scheduled
ethics classroom training.

Let's take the time to have the conversations we need throughout the year to
beat our goals. We have the talent. We now have the integrated operating
structure. Let's work across the enterprise to focus on our goals as one
company.

I personally look forward to meeting, speaking and working together with you
throughout 20XX, as we strive to achieve these objectives.

Sincerely,

Fred Festa
Chairman and Chief Executive Officer

____________________________________________________________________________________

Aside from the changes listed in this letter, all other features and definitions
in the plan remain the same in 20XX. Each metric continues to independently
calculated and then combined according to the 75%/25% weighting. The
Compensation Committee retains ultimate discretion to adjust the performance
objectives or establish or increase the size of the AICP incentive pool. No AICP
payments are guaranteed and we do not have a formula for determining actual AICP
payments. All payments are subject to approval of the Compensation Committee of
the Board of Directors. Grace reserves the right to change or terminate
compensation and benefits plans at any time.

1 Calculated as described in Item 7 “MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-Analysis of Operations” in the
Grace 20XX Annual Report on Form 10-K as filed with the Securities and Exchange
Commission on XXX.

2 Calculated as described in Item 11 “EXECUTIVE COMPENSATION-Compensation
Discussion and Analysis-Compensation Elements-Annual Incentive Compensation” in
the Grace 20XX Annual Report on Form 10-K as filed with the Securities and
Exchange Commission on XXX.

3 Actual amounts funded to Partial Pools are separately prorated on a straight
line basis for performance that falls between 80 percent and 100 percent of the
Relevant Target or between 100 percent and 120 percent of the relevant target.