Exhibit 10-4


    Exhibit
      10.4

    
 

    
      	
              ICO,
                Inc. Fiscal Year 2006 Incentive Plan Matrix- Business Unit Group
                Presidents

            
	 
	
               

            	
               

            	
              Pay-out
                as a percentage of base salary *

            
	
              Measurement

            	
              Weighting

            	
              0%

            	
              40%

            	
              80%

            
	
              Operating
                Income

            	
               

            	
               

            	
               

            	
               

            
	
              Business
                Unit ROIC

            	
            	
            	
            	
            
	
              Business
                Unit Investment Turnover

            	
               

            	
               

            	
               

            	
               

            
	
              ICO,
                Inc. consolidated ROE

            	
               

            	
               

            	
               

            	
               

            
	
              Subjective/Qualitative
                Factors

            	
               

            	
               

            	
               

            	
               

            


    

    

      Upon
        achievement of certain operating income targets, payouts ranging from 0%
        to 80%
        of Base Salary will be made.



    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    

      ICO,
        Inc.

      FY
        2006 Incentive Plan Matrix -Group Presidents

      Explanation
        of Measurement Definitions and additional Explanatory
        Notes

      


      Measurement
        definitions

      * “Operating
        Income”:
        Earnings before interest and taxes, excluding non-recurring charges. Note
        that
        Operating Income shall include expenses for bonuses payable under this Plan.
        Non-recurring charges that are 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
        pro-forma basis, the effect of discontinued operations (including plants
        that
        are shut down or sold).

      


      * “ROIC”:
        Annual
        Operating Income divided by the Invested Capital Base. “Invested Capital Base”
is defined as the total assets, minus all intercompany loans that are included
        in total assets (consisting of intercompany accounts receivables, loans,
        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.

      


      * “ROE”:
        Net
        income from continuing operations, 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 prior year-end balance (e.g. for FY 2006 bonus calculation
        the FY 2005 previous year end-balance plus the four quarter-end balances
        of
        fiscal year 2006).

      


      Computational
        Note

      For
        each
        measurement the bonus amount payable is calculated as the result achieved
        for
        each measurement (i.e. the 0%, 40% or 80% pay-out) times the weighting and
        multiplied by the relevant employee’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, times (iii)
        the
        higher pay-out target percentage.

      


      Additional
        Explanatory Notes

      * Subject
        to Compensation Committee approval of all terms of grant, and subject to
        options
        being available under an existing ICO, Inc. employee stock option plan, for
        bonus amounts achieved in any measurement category based on exceeding any
        applicable 40% target, at the Committee’s discretion the Committee may, if
        requested by the Group President, award stock options in place of a portion
        of
        incentive cash compensation, priced, with such options vesting immediately
        and
        using the Company’s option pricing model in accordance with SFAS
        123R.

      


      * A
        Business Unit President will not be entitled to a bonus under this Plan,
        or
        otherwise with respect to FY 2006, if, prior January 1, 2006, (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.