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W. R. GRACE & CO.
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W. R. GRACE & CO.
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GRACE Thomas A. Holmes
Acting President and
Chief Executive Officer
W. R. Grace & Co.
One Town Center Road
Boca Raton, FL 33486-1010
April 21, 1995
Dear Fellow Shareholders:
J. Peter Grace, who served as chief executive officer of W. R. Grace & Co.
for 47 years (1945-92) -- longer than any other head of a major U.S. industrial
company -- and as chairman of the Company since 1992, passed away on April 19
after a long battle with cancer. He was 81.
Mr. Grace served the Company and the nation with distinction. His death
marks the end of an era in the history of W. R. Grace & Co., which was founded
by Mr. Grace's grandfather, William Russell Grace, in 1854. It is only fitting
that we reflect on the long and distinguished career of the Company's chairman.
At the same time, it is also appropriate to his memory that we look briefly at
where the Company is today and at its future direction.
When Mr. Grace became president of W. R. Grace & Co. in 1945, at the age of
32, the Company's primary business was shipping, largely involving South
American trade. Soon after taking office, Mr. Grace determined that W. R. Grace
needed a radical change of strategic direction. He then personally led the
Company's transformation from an ailing steamship line into a multibillion-
dollar specialty chemicals company and a leader in specialized health care. He
is widely and justly credited with one of the most sweeping and successful
turnarounds in American corporate history.
Today, Grace is the market leader in five of its six core businesses --
packaging, catalysts, specialty construction products, container sealants and
kidney dialysis -- and is among the top three in water treatment.
In public life, Mr. Grace served three U.S. administrations. He first
served President Eisenhower as a member of the International Development
Advisory Board, and as author of a widely circulated report entitled "An
Economic Program for the Americas." In 1962, President Kennedy appointed Mr.
Grace chairman of the Commerce Committee for the Alliance for Progress. In
1982, Mr. Grace served, at the behest of President Reagan, as chairman of the
President's Private Sector Survey on Cost Control in the Federal Government,
generally known as the Grace Commission.
Deeply religious throughout his life, Mr. Grace was a leading layman of the
Catholic Church, an advisor to cardinals and a frequent visitor to the Vatican.
Throughout his career, Mr. Grace was highly active in numerous business
organizations and public service groups. He also gave freely of his time to
charitable and educational institutions. He will be missed.
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Today, the Company J. Peter Grace headed for five decades is a strong
company in many ways. It is a fitting tribute to him -- and to his 38,000
colleagues around the globe -- that 1994 was another year of solid performance;
in fact, it was the Company's best year in more than a decade. More important,
it was a year of profitable, balanced growth for all of Grace's businesses.
And, I might add, we expect that momentum to continue through 1995. We soon
will report strong first quarter operating performance in all of our businesses.
Unfortunately, the Company's fundamental strength, solid progress and
strong performance have been overshadowed by recent events. Those events have
been widely reported, and this is obviously not an appropriate moment to discuss
them in detail. I do, however, want to emphasize a few points that are
important to W. R. Grace & Co., its thousands of customers and employees, and to
you, our shareholders.
First, I want to assure you that the Board of Directors of W. R. Grace &
Co. is committed to performing its fiduciary duty in a manner consistent with
the highest principles of corporate governance, and to ensuring that all
employees of the Company, including its senior executives, adhere to the highest
professional and ethical standards.
Second, I want to assure you that we welcome the interest in the Company
shown by certain major shareholders, and that we share their determination to
see the Company continue to build long-term value for all shareholders.
Third, as previously announced, the Company's Board will be reduced to 12
members. This reduction will be accomplished by the previously announced
resignation of certain directors and by certain other directors not standing for
re-election.
Fourth, a Search Committee, consisting of myself, Harold A. Eckmann,
Edward W. Duffy, George C. Dacey and James W. Frick, is actively pursuing a
search to select as quickly as possible the best-qualified candidate as the
Company's new chief executive officer. To that end, we have engaged the
services of a leading executive search firm, Spencer Stuart.
After a new CEO is chosen, at least six new independent directors will be
selected to replace six of the twelve directors in office following the 1995
Annual Meeting of Shareholders. We also have adopted corporate governance
principles based on those of General Motors.
As we mourn the loss of J. Peter Grace and recall his accomplishments, let
us remember that the Company he led for so long is today a strong one, with
solid operating units led by highly capable managers, and with a growing
momentum of positive financial performance. We remain committed to the long-
term, profitable growth of W. R. Grace and to operating the Company at all
times, and at all levels, in a manner of which you and we can be proud.
On behalf of the Board of Directors and the Company's 38,000 employees
worldwide, thank you for your support.
Very truly yours,
Thomas A. Holmes
Acting President and
Chief Executive Officer
