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):  December 2, 2009

____________________

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 Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Approval of Fiscal Year 2010 Annual Incentive Bonus Plans of Certain Executive Officers

On December 2, 2009, the Compensation Committee (the “Committee”) of the Board of Directors (“Board”) of ICO, Inc. (the “Company”) approved the Fiscal Year 2010 Annual Incentive Bonus Plans, filed herewith as exhibits, for the current Presidents of the Company’s major business units, namely: Stephen E. Barkmann, President of the Company’s Bayshore Industrial division; Derek R. Bristow, President of the Company’s European and Asia Pacific divisions; and Donald Eric Parsons, President of the Company’s ICO Polymers North America division (Exhibit 10.1), and for the Company’s Chief Financial Officer and Treasurer, Bradley T. Leuschner (Exhibit 10.2).  On December 2, 2009, the Board approved the Fiscal Year 2010 Annual Incentive Bonus Plan for the Company’s President and Chief Executive Officer, A. John Knapp, Jr. (filed herewith as Exhibit 10.3).

Base Salary Increases

On December 2, 2009, increases in the annual base salaries of the five individuals referenced in the preceding paragraph were approved by the Committee (and by the Board with respect to Mr. Knapp). Effective November 1, 2009, annual base salaries of the referenced individuals are as follows:

A. John Knapp, Jr.:	$280,000
Stephen E. Barkmann:	$280,000
Derek R. Bristow:	$280,000
Donald Eric Parsons:	$230,000
Bradley T. Leuschner:	$230,000

Retention Agreement

On December 8, 2009, Bradley T. Leuschner entered into a Retention Agreement with the Company,  pursuant to which Mr. Leuschner may become entitled to a payment of $55,000 upon the occurrence of the Closing (as defined in the Agreement and Plan of Merger, dated as of December 2, 2009, by and among A. Schulman, Inc., Wildcat Spider LLC and ICO, Inc., filed as Exhibit 2.1 to the Company’s Form 8-K dated December 7, 2009 and having a file date of December 8, 2009), provided that the Closing actually occurs and that Mr. Leuschner remains employed by the Company until and including the Closing Date.  The Retention Agreement is filed herewith as Exhibit 10.4, and the foregoing description of the Retention Agreement is subject to and qualified in its entirety by Exhibit 10.4.

Item 9.01                      Financial Statements and Exhibits.

(d)           Exhibits
Exhibit #	Description
10.1	Fiscal Year 2010 Annual Incentive Bonus Plan Matrix – Business Unit Presidents
10.2	Fiscal Year 2010 Annual Incentive Bonus Plan Matrix – Chief Financial Officer
10.3	Fiscal Year 2010 Annual Incentive Bonus Plan Matrix – President & CEO
10.4	Retention Agreement between Bradley T. Leuschner, ICO, Inc. and ICO Technology, Inc., dated December 8, 2009.

- 2 -

SIGNATURES

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

	ICO, INC.
Date: December 8, 2009	By:	/s/ Bradley T. Leuschner
	Name:	Bradley T. Leuschner
	Title:	Chief Financial Officer and Treasurer

- 3 - -

EX-10.1

ICO, Inc.  FY 2010 Annual Incentive Bonus Plan Matrix- Business Unit Presidents
These four pages constitute the FY 2010 Annual Incentive Bonus Plans for the following three individuals: (1) Donald Eric Parsons, President – ICO Polymers North America (“IPNA”); (2) Stephen E. Barkmann, President – Bayshore Industrial (“Bayshore”); (3) Derek R. Bristow – President, ICO Europe and Asia Pacific.
		Pay-out as a percentage of base salary
Measurement	Weighting	0%	50%	100%
Operating Income	20%	See Operating Income Targets attached	See Operating Income Targets attached	See Operating Income Targets attached
Business Unit ROIC	15%	See ROIC Targets attached	See ROIC Targets attached	See ROIC Targets attached
Business Unit Investment turnover	10%	*	*	*
Cash Flow from Operations	10%	See Cash Flow Targets attached	See Cash Flow Targets attached	See Cash Flow Targets attached
ICO, Inc. Consolidated ROE	25%	*	*	*
Subjective/Qualitative Factors	20%	As recommended by CEO, and determined & approved by the Compensation Committee	As recommended by CEO, and determined & approved by the Compensation Committee	As recommended by CEO, and determined & approved by the Compensation Committee

Measurement definitions

Operating Income - Earnings before interest and taxes.  [*]

ROIC - - Annual Operating Income dividend by Invested Capital Base.  Invested Capital Base 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 dividend 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.

Cash Flow from Operations – Cash flow from operating activities less capital expenditures excluding: intercompany interest income/expense tax effected and changes in intercompany payables/receivables.  Cash Flow From Operations will be computed by taking a weighted average of each quarter’s cash flow and then calculating the annual cash flow amount as follows:  Cash flow from operations will be equal to the sum of the first quarter cash flow times four, the second quarter cash flow times three, the third quarter cash flow times two and the fourth quarter cash flow times one.  That sum will then be divided by 2.5.

ROE – Net income from continuing operations, excluding merger related costs, divided by Stockholders’ equity.  For purposes of this calculation, Stockholders’ equity 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, plus the year-end balance (i.e. the previous year-end balance plus the four quarter-end balances of fiscal year 2010).  If ICO, Inc. ceases to be an independent Company during the year, the computation of ROE will include only the period of time that ICO, Inc. was independent.

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 Business Unit 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 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 Provisions

For the purpose of this paragraph termination for “Cause” and “Good Reason” have the meanings ascribed to those terms in the ICO, Inc. Change in Control Severance Plan and the Business Unit President’s Participation Agreement in relation thereto.  A Business Unit President will not be entitled to a bonus under this Plan, or otherwise with respect to FY 2010, if, prior to October 1, 2010, (a) he resigns from employment with the Company (except in the case of resignation or termination for Good Reason), or (b) he is terminated from employment for “Cause.” If a Business Unit President is terminated without cause a pro rata bonus will be paid to him  following the conclusion of fiscal year 2010, in no event later than December 15, 2010.

*Indicates redacted.

ICO, Inc.

FY 2010 Annual Incentive Bonus Plan Matrix- Business Unit Presidents

FY 2010 Operating Income Targets

	Pay-out as a percentage of base salary
Business Unit	0%	50%	100%
IPNA	*	*	*
Bayshore	*	*	*
Europe/Asia Pacific	*	*	*

*Indicated redacted.

ICO, Inc.

FY 2010 Annual Incentive Bonus Plan Matrix- Business Unit Presidents

FY 2010 Cash Flow From Operations

	Pay-out as a percentage of base salary *
Business Unit	0%	50%	100%
IPNA	*	*	*
Bayshore	*	*	*
Europe/Asia Pacific	*	*	*
Total of above	*	*	*

*Indicated redacted.

ICO, Inc.

FY 2010 Annual Incentive Bonus Plan Matrix- Business Unit Presidents

FY 2010 ROIC Targets

	Pay-out as a percentage of base salary
Business Unit	0%	50%	100%
IPNA	*	*	*
Bayshore	*	*	*
Europe/Asia Pacific	*	*	*

Approximate ROE achieved at ROIC Targets above * * *

*Indicates redacted.

EX-10.2

ICO, Inc.  FY 2010 Annual Incentive Bonus Plan Matrix- CFO
This page constitutes the FY 2010 Annual Incentive Bonus Plan for Bradley T. Leuschner, Chief Financial Officer.
		Pay-out as a percentage of base salary
Measurement	Weighting	0%	30%	60%
Corporate Expenses (1)	25%	*	*	*
ICO, Inc. consolidated ROE	25%	*	*	*
ICO, Inc. consolidated Cash Flow from operations	25%	*	*	*
Subjective/Qualitative Factors	25%	As recommended by CEO, and determined and approved by the Compensation Committee	As recommended by CEO, and determined and approved by the Compensation Committee	As recommended by CEO, and determined and approved by the Compensation Committee

Measurement definitions

(1) Corporate Expenses- Defined as Corporate general and administrative expenses. [*]

ROE- Net income from continuing operations, excluding merger related costs, divided by Stockholders’ equity.  For purposes of this calculation, Stockholders equity 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 2010).  If ICO, Inc. ceases to be an independent Company during the year, the computation of ROE will include only the period of time that ICO, Inc. was independent.

Cash Flow from Operations – Cash flow from operating activities (on a consolidated basis) less capital expenditures excluding: intercompany interest income/expense tax effected and changes in intercompany payables/receivables.  Cash Flow From Operations will be computed by taking a weighted average of each quarter’s cash flow (on a consolidated basis) and then calculating the annual cash flow amount as follows:  Cash flow from operations will be equal to the sum of the first quarter cash flow times four, the second quarter cash flow times three, the third quarter cash flow times two and the fourth quarter cash flow times one.  That sum will then be divided by 2.5.

Computational Note

For each measurement the bonus amount payable is calculated as the result achieved for each measurement (i.e. the 0%, 30% or 60% 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 Provisions

For the purpose of this paragraph termination for “Cause” and “Good Reason” have the meanings ascribed to those terms in the ICO, Inc. Change in Control Severance Plan and the CFO’s Participation Agreement in relation thereto.  The CFO will not be entitled to a bonus under this Plan, or otherwise with respect to FY 2010, if, prior to October 1, 2010, (a) he resigns from employment with the Company (except in the case of resignation or termination for Good Reason), or (b) he is terminated from employment for “Cause.” If the CFO is terminated without cause, a pro rata bonus will be paid to him following the conclusion of fiscal year 2010, in no event later than December 15, 2010.

*Indicates redacted.

EX-10.3

ICO, Inc.

FY 2010 Annual Incentive Bonus Plan - CEO

     The following is the formula for calculating the FY 2010 Annual Incentive Bonus for the Chief Executive Officer, A. John Knapp, Jr.:

The sum of the Annual Incentive Bonuses paid to the Company’s other five ELT members based on FY 2010 performance, in accordance with their respective FY 2010 Annual Incentive Bonus Plans

divided by:

The sum of the FY 2010 Base Salaries of the Company’s other five ELT members

multiplied by:

Mr. Knapp’s FY 2010 Annual Base Salary

For the purpose of the above formula, “the other five ELT members” are (1) Donald Eric Parsons, President – ICO Polymers North America; (2) Stephen E. Barkmann, President – Bayshore Industrial; (3) Derek R. Bristow – President, ICO Europe and Asia Pacific; (4) Bradley T. Leuschner – Chief Financial Officer; and (5) Charlotte Fischer Ewart, General Counsel.

Additional Provisions

For the purpose of this paragraph, termination for “Cause” and “Good Reason” have the meanings ascribed to those terms in the ICO, Inc. Change in Control Severance Plan and the Business Unit President’s Participation Agreement in relation thereto.  The CEO will not be entitled to a bonus under this Plan, or otherwise with respect to FY 2010, if, prior to October 1, 2010 (a) he resigns from employment with the Company (except in the case of resignation or termination for Good Reason), or (b) he is terminated from employment for “Cause.” If the CEO is terminated without cause, a pro rata bonus will be paid to him following the conclusion of fiscal year 2010, in no event later than December 15, 2010.

EX-10.4

Retention Agreement

This Retention Agreement (this “Retention Agreement”) is made and effective on the 8th day of December, 2009 (the “Effective Date”), by and among ICO Technology, Inc. a Delaware corporation (“the Company”), ICO, Inc. (“ICO”) and Bradley T. Leuschner, a resident of the State of Texas (the “Employee”).

RECITALS

WHEREAS, Employee is presently employed by the Company, and works at the Company’s corporate offices in Houston Texas.

WHEREAS, ICO entered into an Agreement and Plan of Merger with A. Schulman, Inc. (“ASI”) and Wildcat Spider, LLC, a wholly-owned subsidiary of ASI, dated as of December 2, 2009 (the “Merger Agreement”), pursuant to which ICO will be merged with and into Merger Sub, with Merger Sub surviving as a wholly-owned subsidiary of ASI (the “Transaction”).

WHEREAS, the Company would like to provide Employee with a retention bonus upon the occurrence of the Closing (as defined in the Merger Agreement) provided that such a Closing occurs and that Employee remains employed by the Company (or is terminated without cause, as defined below) and faithfully performs all duties and responsibilities related to such employment from the Effective Date until and including the Closing Date (as in the Merger Agreement), and subject to the terms and conditions set forth in this Retention Agreement.

NOW, THEREFORE, the Company and Employee agree as follows:

1.           Definitions

In addition to the definitions set forth above in the Recitals, as used herein, the following terms shall have the meanings set forth below:

a)           “Retention Bonus” means the sum of Fifty-five Thousand Dollars ($55,000.00), payable pursuant to the terms and conditions set forth in Section 2 below.  The Retention Bonus shall be subject to reduction for any and all applicable federal, state, and/or local withholding obligations or any other withholdings required to be made by law.

b)           “Cause” has the meaning ascribed to such term in the CIC Plan.

c) “CIC Plan” means the ICO, Inc. Change in Control Severance Plan (“CIC Plan”).

d)           “Participation Agreement” means Employee’s executed Participation Agreement pursuant to which Employee is entitled to receive benefits under the CIC Plan.

e)           “Pre-Closing Period” means the time period from and after the Effective Date, until and including the Closing Date, provided that the Closing occurs.

2.           Payment of Retention Bonus

a)           Employee shall be paid the Retention Bonus within ten (10) business days after the Closing occurs, provided that:

1) during the Pre-Closing Period Employee (i) faithfully performs all duties and responsibilities related to Employee’s employment with the Company, (ii) does not resign from employment with the Company, and (iii) is not terminated by the Company for Cause; and

2) Employee complies with all the Company policies and any agreements Employee may have with the Company, including all duties regarding conflict of interest, fiduciary duties, and all non-disclosure, non-solicitation and non-competition obligations for the benefit of the Company.

b)           In the event that Employee’s employment is terminated by the Company without Cause during the Pre-Closing Period, the Company shall pay Employee the Retention Bonus within ten (10) business days after the Closing (provided that the Closing actually occurs).

c)           Notwithstanding any other provision of this Agreement, or any provision to the contrary in ICO’s Severance Policy, the CIC Plan, the Participation Agreement or any other agreement, plan or arrangement, the Retention Bonus shall be in addition to, and not in lieu of, any other bonus, incentive or severance payments, and shall not reduce the amount payable by ICO, the Company or any affiliate pursuant to any other plan or arrangement of any kind.  ICO and the Company agree that in the event of any conflict between this provision and any other plan or arrangement of the Company or any affiliate, the terms of this provision shall control.

3.           Failure of Closing to Occur

In the event that (a) the Merger Agreement is terminated by the parties thereto, and/or (b) the Closing does not occur for any reason: (i) Employee shall not be entitled to payment of the Retention Bonus, and (ii) this Retention Agreement shall terminate.  ICO’s issuance of a press release announcing that the Merger Agreement has been terminated shall be conclusive evidence that the Closing and Closing Date have not occurred and shall not occur, and that no Retention Bonus shall be due and payable to Employee under any circumstances.

AGREED AND ACCEPTED:

ICO Technology, Inc.		Bradley T. Leuschner
By:	/s/ A. John Knapp, Jr.	/s/ Bradley T. Leuschner
	A. John Knapp, Jr.
	President
ICO, Inc.
By:	/s/ A. John Knapp, Jr.
	A. John Knapp, Jr.
	President & CEO