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 25, 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On January 25, 2007, the Board of Directors of the Company approved and the Company entered into an agreement amending the performance-related vesting provisions of a stock option award agreement previously made with the Chairman of the Company’s Board of Directors, Gregory T. Barmore. Pursuant to the original option award agreement, dated November 18, 2005 (filed as Exhibit 10.2 to Form 8-K dated March 15, 2006), the Company awarded options (“Options”) to purchase 40,000 shares of ICO, Inc. common stock (“Shares”) to Mr. Barmore, with vesting based on service and/or performance conditions. The vesting of 15,000 of these Options is conditioned upon the Company’s actual performance vs. target on three performance measurements during the fiscal year ending September 30, 2007 (“Fiscal Year 2007”). The amendment to the referenced stock option award agreement, filed as Exhibit 10.1 hereto, amends the performance measurements for the vesting of 10,000 of the 15,000 Options granted to Mr. Barmore that vest based on Fiscal Year 2007 actual performance. The performance measurements applicable to the vesting of the 10,000 referenced Options are more challenging than the performance measurements set forth in the original stock option award agreement.

On January 25, 2007, the Board of Directors of the Company approved and the Company entered into an agreement amending the performance-related vesting provisions of a stock option award agreement previously made with the Company’s Chief Executive Officer and President, A John Knapp, Jr.  Pursuant to the original option award agreement, dated November 18, 2005 (filed as Exhibit 10.16 to Form 10-K dated December 8, 2005), the Company awarded Options to purchase 240,000 Shares to Mr. Knapp, with vesting based on service and/or performance conditions. The vesting of 90,000 of these Options is conditioned upon the Company’s actual performance vs. target on three performance measurements during Fiscal Year 2007. The amendment to the referenced stock option award agreement, filed as Exhibit 10.2 hereto, amends the performance measurements for the vesting of 60,000 of the 90,000 Options awarded to Mr. Knapp that vest based on Fiscal Year 2007 actual performance. The performance measurements applicable to the vesting of the 60,000 referenced Options are more challenging than the performance measurements set forth in the original stock option award agreement.

On January 25, 2007, the Company entered into the Third Amendment to Second Amended and Restated Employment Agreement (“Amendment”) with Jon C. Biro, the Company’s Chief Financial Officer and Treasurer. The Amendment includes provisions for an increase in Mr. Biro’s annual base salary to $250,480 (from $235,000) and eliminates Mr. Biro’s vehicle allowance (previously a $15,480 annual benefit), effective as of January 1, 2007. The Amendment also and sets forth the performance-related incentive compensation (cash bonus) plan for fiscal year 2007 for Mr. Biro.

Item 9.01Financial Statements and Exhibits.

(c)Exhibits

Exhibit	Description
10.1	First Amendment to Stock Option Agreement, between ICO, Inc. and Gregory T. Barmore,
	dated January 25, 2007
10.2	First Amendment to Stock Option Agreement, between ICO, Inc. and A. John Knapp, Jr.,
	dated January 25, 2007
10.3	Third Amendment to Second Amended and Restated Employment Agreement between
	ICO, Inc. and Jon C. Biro, dated January 25, 2007

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 31, 2007	By:	/s/ Jon C. Biro
	Name:	Jon C. Biro
	Title:	Chief Financial Officer and
		Treasurer

EX-10.1

Exhibit 10.1

Summary Information

Director: Gregory T. Barmore

Date of Grant: November 18, 2005

Stock Option Plan: 1993 Non-Employee Director Plan

Exercise Price: $2.40/Share (FMV on date of grant)

Expiration: November 18, 2012, 12:00 a.m.

Total # Shares subject to grant: 40,000

Conditions: Grant is subject to and conditioned upon shareholder approval of the First Amendment to the Third Amended and Restated 1993 Stock Option Plan for Non-Employee Directors of ICO, Inc. within one year after the Date of Grant.

Vesting (provided that above Conditions are satisfied):

* 20,000 Shares vest on December 15, 2006 (provided that Barmore continues to serve as Chairman of the Board on September 30, 2006 and all of the conditions for vesting described in Exhibit A are satisfied. In the event that only a portion of the conditions described in Exhibit A are satisfied, a corresponding portion of the 20,000 Shares will vest in accordance with Exhibit A.)

* 20,000 Shares vest on December 15, 2007 (provided that Barmore continues to serve as Chairman of the Board on September 30, 2007 and all of the conditions for vesting described in Exhibit B are satisfied. In the event that only a portion of the conditions described in Exhibit B are satisfied, a corresponding portion of the 20,000 Shares will vest in accordance with Exhibit B.)

FIRST AMENDMENT TO

STOCK OPTION AGREEMENT

WHEREAS, on November 18, 2005, ICO, Inc., a Texas corporation (the “Company”), and Gregory T. Barmore (“Director”), Chairman of the Company’s Board of Directors, entered in to a Stock Option Agreement pursuant to which Director was granted Options to purchase Shares of Common Stock of the Company (the “Stock Option Agreement”).

WHEREAS, the parties desire to amend the Stock Option Agreement as set forth herein.

NOW, THEREFORE, the parties agree as follows:

1.  All capitalized terms used herein and not otherwise defined herein have the meaning ascribed to such terms in the Stock Option Agreement.

2.Exhibit B to the Stock Option Agreement, entitled “Matrix for Vesting of 2007 Stock Options”, is amended as follows:

a. ICO, Inc. consolidated Operating Income: (i) FY ‘07 Minimum shall be [redacted]; and (ii) FY ’07 Target shall be [redacted].

b. ICO, Inc. consolidated ROE: (i) FY ’07 Minimum shall be [redacted]; and (ii) FY ’07 Target shall be [redacted].

3. There are no amendments to the Stock Option Agreement or Exhibit B, except as described above. Exhibit B, amended and restated to reflect the amendments described above, is attached hereto.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its officer thereunto and duly authorized, and Director has executed this Agreement, to be effective as of the Date of Grant set forth above.

ICO, INC.
By:	/s/ A. John Knapp, Jr.
	A. John Knapp, Jr.
	President and Chief Executive Officer

DIRECTOR

/s/ Gregory T. Barmore

Gregory T. Barmore

First Amendment to Stock Option Agreement / Page 2 of 3

Exhibit B to Stock Option Agreement [portions redacted]

Matrix for Vesting of FY 2007 Options

Measurement	Weighting	FY '07 Minimum	FY '07 Target	CEO pay-out at target
ICO, Inc. consolidated Operating Income
ICO, Inc. consolidated Investment turnover
ICO, Inc. consolidated ROE
Vesting over time
Total	100%			Vesting of 20,000 options

 See Exhibit C for explanation of measurement definitions, vesting calculation information, and additional provisions regarding vesting.

First Amendment to Stock Option Agreement / Page 3 of 3

EX-10.2

Exhibit 10.2

Summary Information

Employee: A. John Knapp, Jr.

Location: Corporate

Date of Grant: November 18, 2005

ESOP: 1998

Exercise Price: $2.40/Share

Expiration: November 18, 2012, 12:00 a.m.

Total # Shares subject to grant: 240,000

Vesting:

* 120,000 Shares vest on December 15, 2006 (provided that Knapp is employed on September 30, 2006 and all of the conditions for vesting described in Exhibit A are satisfied. In the event that only a portion of the conditions described in Exhibit A are satisfied, a corresponding portion of the 120,000 Shares will vest in accordance with Exhibit A.)

* 120,000 Shares vest on December 15, 2007 (provided that Knapp is employed on September 30, 2007 and all of the conditions for vesting described in Exhibit B are satisfied. In the event that only a portion of the conditions described in Exhibit B are satisfied, a corresponding portion of the 120,000 Shares will vest in accordance with Exhibit B.)

FIRST AMENDMENT TO

STOCK OPTION AGREEMENT

WHEREAS, on November 18, 2005, ICO, Inc., a Texas corporation (the “Company”), and A. John Knapp, Jr. (“Employee”), an employee of the Company or one of its subsidiaries entered in to a Stock Option Agreement pursuant to which the Employee was granted 240,000 Options to purchase Shares of Common Stock of the Company (the “Stock Option Agreement”).

WHEREAS, the parties desire to amend the Stock Option Agreement as set forth herein.

NOW, THEREFORE, the parties agree as follows:

1.All capitalized terms used herein and not otherwise defined herein have the meaning ascribed to such terms in the Stock Option Agreement.

2.Exhibit B to the Stock Option Agreement, entitled “Matrix for Vesting of 2007 Stock Options”, is amended as follows:

a. ICO, Inc. consolidated Operating Income: (i) FY ‘07 Minimum shall be [redacted]; and (ii) FY ’07 Target shall be [redacted].

b. ICO, Inc. consolidated ROE: (i) FY ’07 Minimum shall be [redacted]; and (ii) FY ’07 Target shall be [redacted].

3.There are no amendments to the Stock Option Agreement or Exhibit B, except as described above. Exhibit B, amended and restated to reflect the amendments described above, is attached hereto.

IN WITNESS WHEREOF, the Company has caused this First Amendment to Stock Option Agreement to be duly executed by its officer thereunto and duly authorized, and the Employee has executed this Agreement, to be effective on January 25, 2007.

ICO, INC.
By:	/s/ Jon C. Biro
	Jon C. Biro
	Chief Financial Officer

EMPLOYEE

/s/ A. John Knapp, Jr.

A. John Knapp, Jr.

First Amendment to Stock Option Agreement / Page 2 of 3

Exhibit B to Stock Option Agreement [portions redacted]

Matrix for Vesting of FY 2007 Options

Measurement	Weighting	FY '07 Minimum	FY '07 Target	CEO pay-out at target
ICO, Inc. consolidated Operating Income
ICO, Inc. consolidated Investment turnover
ICO, Inc. consolidated ROE
Vesting over time
Total	100%			Vesting of 120,000 options

  See Exhibit C for explanation of measurement definitions, vesting calculation information, and additional provisions regarding vesting.

EX-10.3

Exhibit 10.3

THIRD AMENDMENT TO

SECOND AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

This Third Amendment to Second Amended and Restated Employment Agreement (“Third Amendment”) is entered into by and between ICO, Inc. (the “Company”) and Jon C. Biro (“Employee”), to be effective January 25, 2007 (the “Effective Date”).

WHEREAS, Employee and the Company entered into an Employment Agreement (the “Agreement”), being effective as of January 28, 2004, which Agreement has been amended by amendments effective February 11, 2005 and January 20, 2006; and

WHEREAS, the parties desire to further amend the Agreement, as set forth herein.

NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and obligations contained herein, the Company and Employee agree as follows:

1. It is the parties’ agreement that Employee’s Annual Incentive Bonus (as defined in Section 2.2 of the Agreement) for the Company’s fiscal year 2007 (commencing October 1, 2006) shall be calculated pursuant to Exhibit A hereto.

2. Effective January 1, 2007, Employee’s Base Salary (as defined in Section 2.1 of the Agreement) is increased to Two Hundred and Fifty Thousand and Four Hundred and Eighty Dollars ($250,480) per annum.

3. Effective January 1, 2007, the Employee shall no longer be entitled to the Vehicle Allowance described in Section 2.5(a) of the Agreement.

IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement in multiple originals to be effective on the Effective Date.

ICO, Inc.		Employee
/s/ A. John Knapp, Jr.		/s/ Jon C. Biro
A. John Knapp, Jr.		Jon C. Biro
President & Chief Executive Officer
Date:	January 31, 2007	Date:	January 31, 2007

Page 1 of 2

Exhibit A (portions redacted)

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

**Also subject to Compensation Committee approval.

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.

*Base Salary used for calculation shall be Base Salary effective as of January 1, 2007.

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