In The Matter Of W. R. Grace & Co. Exchange Act Release No.

39,157 (Sept. 30, 1997)

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Nature of the Case

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Facts

WRG's securities were registered with the Commission pursuant to Section 12(b). J. Peter Grace, Jr. was the chief executive officer of WRG from 1945 until 1992 when he retired from that position. In retirement Grace, Jr. would continue to receive substantial perquisites which he had received while a chief executive officer. On December 7, 1992, WRG's board of directors approved Grace, Jr.'s proposed retirement benefits. This included: (a) continued use of a Company-owned and maintained apartment with a market value estimated by WRG to be in excess of $3 million, with services of a cook, who was a WRG employee; (b) use of a company limousine and driver on a 24-hour basis; (c) the services of full-time secretaries and administrative assistants; (d) the use of corporate aircraft for personal and business travel; (e) home nursing services; and (f) security services. Only non-management directors were involved in the negotiation or approval of Grace, Jr.'s retirement benefits. The Company provided Grace, Jr. with directors' and officers' questionnaires, and Grace, Jr. lied about the benefits he received. The final version of WRG's 1993 proxy statement contained language discussing Grace, Jr.'s Retirement Agreement, including a statement that Grace, Jr. would receive 'certain other benefits.' In February 1993, WRG decided to dispose of GHSC because GHSC's restaurant operations were not one of WRG's 'core' businesses and GHSC had failed to meet certain financial targets. Grace III, sought to acquire GHSC, a wholly-owned subsidiary of WRG. P charged WRG was charged with violating 15 U.S.C. § 78a, for failing to disclose: (1) the substantial benefits given to Grace, Jr. and (2) the sale of GHSC. P issued a cease-and-desist order against WRG to not commit future violations.