W.R. Grace asbestos claimants object to promoting Festa to CEO

By Ellen Chang

Houston, March 4 - W.R. Grace & Co.'s official committee of asbestos property damage claimants said it objects to the company's proposal to promote its current chief operating officer, Alfred Festa, to chief executive officer, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee said the company is giving Festa an "overly generous compensation package that dis-incentivizes Festa to work diligently to get the debtors to a confirmed plan of reorganization."

The proposal calls for Festa to receive an annual salary of $760,000, a 2005 incentive equal to 100% of his salary, 2006 incentive equal to a minimum of 100% and up to 200% of his salary, awards of up to $1.69 million, severance pay equal to two times 175% of his current base salary and an emergence bonus of $1.75 million even if the company fails to emerge from Chapter 11 under his tenure.

Structuring the terms of the emergence bonus so that Festa receives nearly $2 million even if the company fails to confirm the plan is "simply outrageous," the committee said.

The compensation structure "eliminates any sense of urgency to move these cases along," the committee claimed in the filing.

The company's disclosure statement has not been approved because the property damage committee, the official committee of asbestos personal injury claimants and the representative of future claimants each object to the terms of the plan for various reasons, including that the plan "impermissibly classifies all asbestos claimants as unimpaired," according to the filing.

W.R. Grace, the Columbia, Md.-based specialty chemicals company, filed for bankruptcy over asbestos litigation on April 2, 2001. Its Chapter 11 case number is 01-01139.

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