FY05 Exec. Leadership Team Incentive Compensation Plan




Exhibit
10.1




Fiscal
Year 2005 Executive Leadership Team Incentive Compensation Plan





This
Fiscal Year 2005 Executive Leadership Team Incentive Compensation Plan (the
“Plan”) has been adopted by the Compensation Committee of the Board of Directors
of ICO, Inc. (“ICO” or the “Company”) to provide a method to reward members of
the Executive Leadership Team (“ELT”) for their contribution to achieving the
Company’s performance goals, and to ensure that the ELT members have a financial
stake in the success of the Company’s overall performance. The Plan supersedes
any short-term annual bonus program sponsored by the Company or its Affiliates
with respect to any ELT member.

 


	
      1.
	
      Participants
      - ELT members, namely:




                

W. Robert
Parkey, Jr., ICO, Inc., President and Chief Executive Officer 

Jon C.
Biro, ICO, Inc. CFO and Treasurer 

Steve
Barkmann, President, Bayshore Industrial 

Derek
Bristow, President, ICO Europe

Dario
Masutti, President, ICO-Courtenay Australasia

David
Phillips, President, ICO Americas

 


	
      2.
	
      Compensation
      philosophy - The intent of this Plan is to motivate the ELT to meet or
      exceed internal budgets, and drive the appropriate team behavior while, at
      the same time, putting in place an annual cash bonus plan that is as
      simple as possible. 







3. High
level drivers: 

·  FY 2005
EBITDA1 and FY
2005 Return on Invested Capital2
(“ROIC”)

·  Business
Unit Performance and “Overall Company Performance”3





	
      4.
	
      FY
      2005 bonus payout amounts will be calculated as a percentage of the ELT
      member’s annual base salary, as follows:




 


	 	 	
      Threshold
      -

      80%
      Target
	 	
      Target
	 	
      Max
      - 120% Target

	
      CEO
      and Business Unit Presidents
	 	
      0%
	 	
      30%
      of base
	 	
      60%
      of base

	
      CFO
	 	
      0%
	 	
      24%
      of base
	 	
      48%
      of base




 




	
      5.
	
      FY
      2005 EBITDA shall be used to calculate “Initial Bonus Amounts.” The CEO
      and CFO’s FY 2005 bonus payout percentage in #3 above will be based upon
      Overall Company Performance. Each Business Unit President’s bonus payout
      percentage will be based upon the performance of the business unit he
      manages.










	 	 	
      EBITDA
      − Overall Company
	 	
      EBITDA
      − Business Units

	
      Threshold
	 	
      80%
      of EBITDA target - $XXX
	 	
      80%
      of EBITDA target

	 	 	 	 	 
	
      Target
	 	
      $XXX
	 	
      EBITDA
      Targets:

      XXXXXXXXXXXX

	 	 	 	 	 
	
      Max
	 	
      120%
      of EBITDA Target = $XXX
	 	
      120%
      of EBITDA Target








	
      
	
      Note:
      EBITDA Targets included above include bonus expenses payable under this
      Plan.








	
      6.
	
      The
      Initial Bonus Amount calculated as set out above shall be reduced by 20%
      if the applicable ROIC targets set forth below are not met. The ROIC
      targets below are per the ROIC targets included in the strategic plan
      rounded to the nearest 1⁄2% for XXX and XXX. XXX and XXX ROIC targets have
      been capped at 25%. Overall Company targets shall be calculated as the
      ICO, Inc. consolidated ROIC forecast included in the strategic plan
      (XXX%), adjusted down to XXX% to reflect the 25% cap for XXX and
      XXX.








	
      ROIC
      target:
	 	 
	 	
      XXX
	 	
      XXX%

	 	
      XXX
	 	
      XXX%

	 	
      XXX
	 	
      XXX%

	 	
      XXX
	 	
      XXX%

	 	
      XXX
	 	
      XXX%







For the
CEO and CFO only, the overall Company target shall apply for purposes of this
adjustment. For the Business Unit Presidents, only the ROIC for their regions
shall apply. 





	
      7.
	
      The
      CEO and CFO bonus amounts shall be determined based upon the overall
      Company results. Business Unit President Initial Bonus Amounts calculated
      pursuant to paragraphs 4 and 5 above shall be reduced by an additional 20%
      if the overall company EBITDA Target of $XXX is not
    achieved.








	
      8.
	
      CEO
      shall have the discretion to adjust bonus amounts provided for under this
      Plan upward by up to 20%, subject to the review and approval of
      Compensation Committee of ICO, Inc.’s Board of Directors in regard to any
      such adjustment. The purpose of this provision is to allow other
      qualitative and quantitative objectives to be taken into account for
      purposes of determining FY 2005 bonuses. 








	
      9.
	
      A
      Business Unit President will not be entitled to a bonus under this Plan,
      or otherwise with respect to FY 2005, if, prior January 1, 2006, (a) he
      resigns from employment with the Company, or (b) he is terminated from
      employment for “Cause.”4 








	
      10.
	
      For
      the purpose of this paragraph, the Company shall be deemed to have
      received a “Qualified Opinion” if, in connection with its FY 2005 annual
      audit (relative to Sarbanes-Oxley 404 compliance), the Company (a) does
      not receive an unqualified opinion from PwC regarding Management’s
      Assessment of the Internal Control System of the Company, or
      (b) does not receive an unqualified opinion from PwC regarding their
      assessment of the Company’s Internal Control System. If the Company
      receives a Qualified Opinion, then the CEO and CFO shall not be entitled
      to receive any FY 2005 incentive bonus under this Plan. If the business
      unit that a Business Unit President oversees, upon audit by PwC, has a
      material weakness or significant deficiency that leads to PwC to provide
      the Qualified Opinion, then that Business Unit President shall not be
      entitled to receive any FY 2005 incentive bonus under this Plan.
      Additionally, note that all third party expenses incurred in connection
      with the implementation of Sarbanes-Oxley 404 and relating to a given
      Business Unit, shall be included in the expenses of such Business
      Unit.










1 Defined
as Operating Income from continuing operations as defined by U.S. GAAP plus
impairment, restructuring and other costs, stock option expenses, and
depreciation and amortization.



2 ROIC
calculated as Operating Income from continuing operations as defined by
U.S.GAAP, excluding impairment, restructuring and other costs and stock option
expenses, divided by total assets excluding goodwill, less current liabilities,
plus funded debt (i.e., interest bearing debt) included in current liabilities.
Intercompany loans will be considered long-term debt for purposes of calculating
ROIC.



3 “Overall
Company Performance” is defined as consolidated performance of ICO, Inc. and its
subsidiaries.



4
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.