Exhibit 10-5


    Exhibit
      10.5

    
 

    
      	
              ICO,
                Inc. Fiscal Year 2006 Incentive Plan Matrix- Chief Financial
                Officer

            
	 
	 	 	
              Pay-out
                as a percentage of Base Salary *

            
	
              Measurement

            	
              Weighting

            	
              0%

            	
              24%

            	
              48%

            
	
              Corporate
                Expenses

            	
               

            	
            	
               

            	
               

            
	
              ICO,
                Inc. consolidated ROE

            	
            	
            	
            	
            
	
              Subjective/Qualitative
                Factors

            	
               

            	
               

            	
               

            	
               

            


    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    ICO,
      Inc.

    FY
      2006 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 Sarbanes-Oxley 404 implementation expenses. These targets
      assume the SEC and/or PCAOB will provide relief to small companies (including
      ICO) to reduce the burden of SOX 404. If this relief is not granted then the
      targets shall be adjusted to factor in SOX 404 expenses for FY 2006 (i.e.
      exclude such expenses from Corporate expenses for the purpose of the incentive
      calculation expenses for unbudgeted third-party-404 related audit and other
      fees
      necessary to comply).

    


    * “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%, 24% or 48% 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 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 24% target, at the Committee’s discretion the Committee may, if
      requested by the CFO, 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.

    


    * 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 2006, and that his Employment Agreement is effectively
      amended to reflect this.