8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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): January 17, 2007

____________________

ICO, INC.

(Exact name of registrant as specified in its charter)

Texas (State or other jurisdiction of incorporation) 0-10068 (Commission File Number) 76-0566682 (I.R.S. Employer Identification No.)

1811 Bering Drive, Suite 200

Houston, Texas 77057

(Address of principal executive offices and zip code)

(713) 351-4100

(Registrant’s telephone number, including area code)

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):

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

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

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

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

Item 1.01 Entry into a Material Definitive Agreement

On January 17, 2007, the Compensation Committee (“Compensation Committee”) of the Board of Directors (“Board”) of ICO, Inc. (the “Company”) approved the fiscal year 2007 Incentive Plans applicable to the Company’s Group Presidents (Stephen E. Barkmann, President-Bayshore Industrial, Derek R. Bristow, President-ICO Europe, Donald Eric Parsons, President-ICO Polymers North America, and Dario E. Masutti, President-ICO Courtenay-Australasia), attached hereto as Exhibit 10.1, and applicable to the Company’s Chief Financial Officer and Treasurer (Jon C. Biro) attached hereto as Exhibit 10.2.

Item 9.01Financial Statements and Exhibits.

(c)Exhibits

Exhibit	Description
10.1	ICO, Inc. Fiscal Year 2007 Incentive Plan Matrix - Group Presidents
10.2	ICO, Inc. Fiscal Year 2007 Incentive Plan Matrix - Chief Financial Officer

SIGNATURES

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

	ICO, INC.
Date: January 23, 2007	By:	/s/ Jon C. Biro
	Name:	Jon C. Biro
	Title:	Chief Financial Officer and
		Treasurer

EX-10.1

Exhibit 10.1

ICO, Inc. Fiscal Year 2007 Incentive Plan Matrix- Business Unit Group Presidents
		Pay-out as a percentage of base salary *
Measurement	Weighting	0%	50%	100%
Operating Income
Business Unit ROIC
Business Unit Investment Turnover
ICO, Inc. consolidated ROE
Subjective/Qualitative Factors

ICO, Inc.

FY 2007 Incentive Plan Matrix -Group Presidents

Explanation of Measurement Definitions and additional Explanatory Notes

Measurement definitions

*“Operating Income”: Earnings before interest and taxes and excluding non-recurring charges. Note that Operating Income shall include expenses for bonuses payable under this plan. Non-recurring charges excluded from the calculation of Operating Income shall consist of impairment, restructuring and other charges included in ICO's audited financial statements. Additionally, Operating Income shall exclude, on a proforma basis, the effect of discontinued operations (including plants that are shut-down, if any).

*“ROIC”: Annual Operating Income divided by Invested Capital Base. Invested Capital Base is defined as average total assets minus all intercompany loans (including intercompany accounts receivables and payables), investment in affiliates, and goodwill, minus current liabilities, excluding funded debt (i.e. interest bearing debt). The average Invested Capital base shall be calculated using the previous thirteen points of month-end data.

*“Investment Turnover”: Trailing twelve months revenue divided by the average Invested Capital Base for the previous thirteen month-end periods. Note that Investment turnover calculation will include intercompany revenues, receivables and payables.

*“ROE”: Net income from continuing operations, excluding effect of preferred buy back, minus preferred dividends (whether paid or accrued towards Convertible Preferred Stock liquidation preference), divided by Stockholders' equity, less the liquidation preference of Convertible Preferred Stock. For purposes of this calculation, Stockholders' equity and liquidation preference balances shall be averaged using the previous four (4) quarter-end balances, plus the year-end balance (i.e. the previous year end balance plus the four quarter-end balances of fiscal year 2007).

Computational Note

* For each measurement the bonus amount payable is calculated as the result achieved for each measurement (i.e. the 0%, 50% or 100% pay-out) times the weighting and multiplied by the relevant Group President’s base salary. Results for each measurement falling between the targeted amounts adjust the pay-out targets by interpolating the percentage of: (i) the resulted achieved minus the lower threshold divided by, (ii) the difference between the higher and lower target, multiplied by (iii) the higher pay-out target percentage.

Additional Explanatory Notes

*At the option of the Group President, and subject to the approval of the Compensation Committee, and subject to shareholder approval of amendments to the 1998 employee stock option plan to permit restricted stock grants, the Group President may be awarded up to 25% of the incentive compensation award in the form of restricted stock with a vesting schedule as approved by the Compensation Committee.

*A Business Unit President will not be entitled to a bonus under this Plan, or otherwise with respect to FY 2007, if, prior October 1, 2007, (a) he resigns from employment with the Company, or (b) he is terminated from employment for “Cause.” Termination for “Cause” shall mean termination for “Cause” as defined in the employment agreement (if any) between the Company or its subsidiary and the Business Unit President, and also shall mean termination of the Business Unit President as a result of the Business Unit President’s violation of any provision of the Company’s Code of Business Ethics.

EX-10.2

Exhibit 10.2

ICO, Inc. Fiscal Year 2007 Incentive Plan Matrix- Chief Financial Officer
		Pay-out as a percentage of Base Salary *
Measurement	Weighting	0%	32%	64%
Corporate Expenses
[redacted/specific operation performance]
ICO, Inc. Consolidated ROE
Subjective/Qualitative Factors

ICO, Inc.

FY 2007 Incentive Plan Matrix - CFO

Explanation of Measurement Definitions and additional Explanatory Notes

Measurement definitions

* “Corporate Expenses”: Defined as Corporate general and administrative expenses, excluding stock option expenses and excluding business unit expenses paid for by Corporate and included in Corporate expenses. These expenses include but are not limited to: banking fees formerly paid by ICO Polymers North America and Bayshore, fees related to global tax planning, expenses for two employees transferred from Europe, Executive Leadership Team conference fees, and consulting and legal fees to establish restricted stock/deferred compensation plans.

* “ROE”: Net income from continuing operations, excluding effect of preferred stock buy back, minus preferred dividends (whether paid or accrued towards preferred stock liquidation preference), divided by Stockholders' equity, less the liquidation preference of the preferred stock. For purposes of this calculation, Stockholders' equity and liquidation preference balances shall be averaged using the previous four (4) quarter-end balances, plus the year-end balance (i.e. the previous year end balance plus the four quarter-end balances of fiscal year 2007).

Computational Note

* For each measurement the bonus amount payable is calculated as the result achieved for each measurement (i.e. the 0%, 32% or 64% pay-out) times the weighting and multiplied by the CFO’s base salary. Results for each measurement falling between the targeted amounts adjust the pay-out targets by interpolating the percentage of: (i) the result achieved minus the lower threshold divided by, (ii) the difference between the higher and lower target, multiplied by (iii) the higher pay-out target percentage.

Additional Explanatory Notes

* At the option of the CFO, subject to the approval of the Compensation Committee, and subject to shareholder approval of amendments to the 1998 employee stock option plan to permit restricted stock grants, the CFO may be awarded up to 25% of the incentive compensation award in the form of restricted stock with a vesting schedule approved by the Compensation Committee.

* Mr. Biro agrees that this Plan constitutes his “Annual Incentive Bonus” calculation (as defined in and in accordance with his employment agreement with the Company) for the Company’s fiscal year 2007, and that his employment agreement is effectively amended to reflect this.