<PAGE>
SCHEDULE 14A INFORMATION
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ICO, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
<PAGE>
[LOGO OF ICO APPEARS HERE]
11490 WESTHEIMER, SUITE 1000
HOUSTON, TEXAS 77077
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 6, 1998
The Annual Meeting of Shareholders of ICO, Inc. (the "Company") will be held
at the Westchase Hilton, located at 9999 Westheimer, Houston, Texas, on
Friday, March 6, 1998 at 9:00 a.m. Central Daylight Savings Time, for the
following purposes:
1) To elect three Class I Directors to serve until the 2001 Annual
Meeting of Shareholders and until their respective successors are
elected and qualified;
2) To approve the ICO, Inc. 1998 Stock Option Plan;
3) To ratify and approve the selection of Price Waterhouse LLP as the
Company's independent accountants for the ensuing fiscal year; and
4) To consider and act upon any matters incidental to the foregoing
purposes and transact such other business as may properly come
before the meeting or any adjournment thereof.
Only holders of shares of Common Stock of record on the books of the Company
at the close of business on January 16, 1998 will be entitled to vote at the
meeting or any adjournment thereof.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY AT YOUR EARLIEST
CONVENIENCE. A REPLY ENVELOPE IS PROVIDED FOR THIS PURPOSE, WHICH NEEDS NO
POSTAGE IF MAILED IN THE UNITED STATES. YOUR IMMEDIATE ATTENTION IS REQUESTED
IN ORDER TO SAVE YOUR COMPANY ADDITIONAL SOLICITATION EXPENSE.
By Order of the Board of Directors
Asher O. Pacholder Sylvia A. Pacholder
Chairman of the Board and Chief Executive Officer,
Chief Financial Officer President & Secretary
Houston, Texas
January 23, 1998
<PAGE>
ICO, INC.
11490 WESTHEIMER, SUITE 1000
HOUSTON, TEXAS 77077
(281) 721-4200
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 6, 1998
The enclosed proxy is solicited by and on behalf of the Board of Directors
(the "Board of Directors" or the "Directors") of ICO, Inc. (the "Company") for
use at the 1998 Annual Meeting of Shareholders (the "Annual Meeting") to be
held on Friday, March 6, 1998 at 9:00 a.m., local time, at the Westchase
Hilton, 9999 Westheimer Road, Houston, Texas, or at any adjournment(s) or
postponement(s) thereof. The solicitation of proxies by the Board of Directors
will be conducted primarily by mail. In addition, officers, directors and
employees of the Company may solicit proxies personally or by telephone,
telegram or other forms of wire or facsimile communication. Upon request, the
Company will reimburse brokers, custodians, nominees and fiduciaries for
reasonable expenses incurred by them in forwarding proxy material to
beneficial owners of Common Stock, without par value, of the Company (the
"Common Stock"). A copy of the Company's Annual Report is being sent to
shareholders with this Proxy Statement. It is not to be regarded as proxy
soliciting material. The approximate date on which this Proxy Statement and
the enclosed form of proxy (the "Proxy") are first being sent to Shareholders
is January 23, 1998.
INFORMATION CONCERNING PROXY
The enclosed Proxy, even though executed and returned, may be revoked at any
time prior to voting of the Proxy (a) by the execution and submission of a
revised Proxy, (b) by written notice to the Secretary of the Company or (c) by
voting in person at the Annual Meeting. In the absence of such revocation,
shares represented by the Proxy will be voted at the Annual Meeting.
Unless contrary instructions are indicated on the enclosed Proxy, all shares
represented by valid proxies received pursuant to this solicitation (and which
have not been revoked or suspended before they are voted) will be voted (1)
FOR the selection of three nominees for Class I Directors named below, (2) FOR
the approval of the ICO, Inc. 1998 Stock Option Plan, and (3) FOR confirmation
of the appointment of Price Waterhouse LLP to serve as independent accountants
for the Company for the fiscal year ending September 30, 1998. In the event a
Shareholder specifies a different choice by means of the enclosed Proxy, the
shares of Common Stock of such Shareholder will be voted in accordance with
the specification so made.
VOTING SECURITIES
The only securities of the Company entitled to vote at the Annual Meeting
consist, as of January 16, 1998, of 21,814,294 shares of Common Stock. Only
Shareholders of record on the books of the Company on that date will be
entitled to vote at the meeting. All matters to be voted upon will be decided
by the affirmative vote of the holders of a majority of the shares of Common
Stock present or represented at the meeting. In voting on such matters, each
Shareholder is entitled to one vote for each of said shares. Under Texas law,
an abstention should have the same legal effect as a vote against a proposal
(except with regard to election of directors, as described below), but broker
non-votes will not be counted for purposes of determining whether a majority
has been achieved. A broker non-vote occurs if a broker or other nominee
present in person or by proxy does not have discretionary authority and has
not received instructions with respect to a particular item or does not cast a
vote on that item for other reasons.
<PAGE>
ELECTION OF DIRECTORS
Three directors are to be elected at the Annual Meeting. The Company's
Bylaws provide for a classified Board of Directors. Thus, the Board of
Directors is divided into Classes I, II and III, the terms of office of which
are currently scheduled to expire, respectively, on the dates of the Company's
Annual Meetings of Shareholders in 1998, 1999 and 2000, respectively. William
E. Cornelius, Robin E. Pacholder and George S. Sirusas have been nominated to
serve in Class I and, if elected, will serve until the Company's Annual
Meeting of Shareholders in 2001 and until their respective successors shall
have been elected and qualified. Each of the nominees currently serves as a
Director of the Company. The remaining seven Directors named below will not be
required to stand for election at the Annual Meeting because their present
terms expire in either 1999 or 2000. A plurality of votes cast in person or by
proxy by the holders of Common Stock is required under Texas law to elect a
Director. Accordingly, under Texas law and the Company's Articles of
Incorporation and Bylaws, abstentions and broker non-votes (as described
above) would have no effect on the election of Directors.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted FOR the election of the nominees listed below.
Although the Board of Directors does not contemplate that any of the nominees
will be unable to serve, if such a situation arises prior to the Annual
Meeting, the persons named in the enclosed proxy will vote FOR the election of
such other persons as may be nominated by the Board of Directors.
2
<PAGE>
THE BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY
The following is information concerning the director nominees, as well as
Class II and Class III Directors, whose terms are not expiring at the 1998
Annual Meeting, and Executive Officers as of January 15, 1998:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(/1/)
---------------------------------------
PERCENT
PRINCIPAL POSITION WITH DIRECTOR OF
NAME THE COMPANY AGE SINCE SHARES CLASS
- ---------------------------------------------------------------------------------------------------------------
Class I Directors Whose Terms (if re-elected) Will Expire in 2001
<S> <C> <C> <C> <C> <C> <C>
William E. Cornelius(/2/)(/3/) Director 48 1992 18,000 (/6/) *
Robin E. Pacholder Senior Vice President, 31 1993 36,822 (/6/)(/9/)(/1//3/) *
General Counsel &
Director
George S. Sirusas(/2/) Director 58 1996 23,219 (/6/)(/1//2/) *
- ---------------------------------------------------------------------------------------------------------------
Class II Directors Nominees Whose Terms Will Expire in 1999
William J. Morgan(/2/)(/3/)(/4/) Director 43 1992 824,403 (/5/)(/6/)(/1//3/) 3.7%
Sylvia A. Pacholder(/4/) Chief Executive Officer, 55 1993 2,378,663 (/5/)(/6/)(/7/) 10.7%
President, Secretary & (/8/)(/1//1/)(/1//3/)
Director
William E. Willoughby Director 77 1996 1,807,223 (/6/)(/1//2/)(/1//3/) 8.3%
- ---------------------------------------------------------------------------------------------------------------
Class III Directors Whose Terms Will Expire in 2000
Asher O. Pacholder(/4/) Chairman of the Board, 60 1990 2,357,141 (/5/)(/6/)(/7/) 10.6%
Chief Financial Officer (/8/)(/1//1/)(/1//3/)
& Director
John F. Williamson(/3/) Director 59 1995 16,608 (/6/) *
Walter L. Leib(/2/) Director 69 1996 49,017 (/6/)(/9/) *
James E. Gibson(/2/) Director 33 1996 12,000 (/6/) *
- ---------------------------------------------------------------------------------------------------------------
Executive Officers Who Are Not Directors
Theo J.M.L. Verhoeff President-ICO Europe 48 n/a 131,709 (/6/)(/1//2/)(/1//3/) *
B.V.
Isaac H. Joseph Executive Vice 42 n/a 34,863 (/6/)(/1//1/) *
President-Oilfield
Services
Gregory J. Shemanski Executive Vice 38 n/a 51,575 (/6/) *
President-Wedco-U.S.
Edward A. Bourbonais President-Bayshore 36 n/a 31,403 (/6/) *
Industrial, Inc.
Jon C. Biro Senior Vice President & 31 n/a 54,406 (/6/)(/1//1/) *
Treasurer
All Executive Officers and Directors as a Group 4,811,754 (/1//0/) 21.2%
(15 persons)
</TABLE>
- --------
(1) Except as otherwise indicated, the beneficial owner listed below has sole
voting and investment powers with respect thereto.
(2) Audit Committee Member
3
<PAGE>
(3) Compensation Committee Member
(4) Executive Committee Member
(5) Share amounts include 180,000 shares of Common Stock and 63,058 shares of
Common Stock which may be acquired upon conversion of Convertible
Exchangeable Preferred Stock each held by a limited partnership, of which
Dr. Pacholder and Mr. Morgan are beneficial owners of the general partner.
Pursuant to certain Investment Advisory Agreements, Pacholder Associates,
Inc. has sole voting and investment power over such securities. Share
amounts also include 415,461 shares of Common Stock, 100,000 shares of
Common Stock which may be acquired through the exercise of warrants and
45,884 shares of Common Stock which may be acquired upon conversion of
Convertible Exchangeable Preferred Stock, in each case owned by a wholly-
owned subsidiary of Pacholder Associates, Inc.
(6) Share amounts for Dr. Pacholder, Ms. S. Pacholder, Mr. Verhoeff, Mr.
Joseph, Mr. Shemanski, Mr. Bourbonais, Mr. Biro and Ms. R. Pacholder
include 140,000, 165,000, 50,000, 34,500, 50,000, 30,000, 52,500 and
25,000 shares of Common Stock, respectively, which are issuable upon
exercise of stock options under the Company's employee stock option
plans. Share amounts for Dr. Pacholder, Ms. S. Pacholder, Mr. Morgan, Mr.
Cornelius, Ms. R. Pacholder, Mr. Sirusas, Mr. Willoughby, Mr. Leib, Mr.
Gibson and Mr. Williamson include 6,000, 2,000, 18,000, 18,000, 11,000,
12,000, 12,000, 12,000, 12,000, and 14,000 shares of Common Stock,
respectively, that are issuable upon exercise of stock options granted
under the 1993 Stock Option Plan for Non-Employee Directors.
(7) Share amounts include 1,395,092 shares of Common Stock issued in
connection with acquisitions over which Ms. S. Pacholder and Dr.
Pacholder share voting power. Ms. S. Pacholder and Dr. Pacholder disclaim
beneficial ownership of these shares.
(8) Includes 11,400 shares of Common Stock owned by Dr. Pacholder.
(9) Share amounts for Ms. R. Pacholder and Mr. Leib include 822 and 1,096
shares of Common Stock, respectively, which may be acquired upon
conversion of Convertible Exchangeable Preferred Stock.
(10) Share amounts include 664,000 shares of Common Stock issuable upon exercise
of stock options granted to certain officers and Directors under the
Company's various stock option plans. 282,879 shares of Common Stock
issuable upon exercise of warrants and 54,421 shares of Preferred Stock
that are deemed to be beneficially owned by certain Directors as indicated
in (5) and (9) above. Share amounts also include 1,395,092 shares of Common
Stock over which certain Directors and officers share voting power as
indicated in (7) above. (11) Share amounts for Dr. Pacholder, Ms. S.
Pacholder, Mr. Joseph, and Mr. Biro include 246, 768, 363, and 406 shares
held in the Company's 401(k) plan. (12) Share amounts for Mr. Willoughby
include 149,139 shares of common stock held jointly with his wife and
395,665 shares held by his wife. Shares for Mr. Verhoeff include 75,149
common stock held by his wife. Shares for Mr. Sirusas include 2,379 held by
his wife. (13) Director or Executive Officer is a Party to the
Shareholders' Agreement described in note (1) of "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS OF MORE THAN 5% OF OUTSTANDING STOCK". Except as
set forth above and in "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF
MORE THAN 5% OF OUTSTANDING COMMON STOCK", share amounts do not include the
shares of Common Stock beneficially owned by other parties to the
Shareholders' Agreement.
* Less than 1% of outstanding shares.
Asher O. Pacholder has been Chairman of the Board of Directors and Chief
Financial Officer of the Company since February 1995 and Chief Operating
Officer and a Director of Wedco Technology, Inc. since May of 1996. Dr.
Pacholder has been Chairman of the Board and a Managing Director of Pacholder
Associates, Inc. since 1983. He is Chairman of the Board of Directors of USF&G
Pacholder Fund, Inc., a closed-end investment company, and he serves on the
boards of Southland Corporation, which owns and operates convenience stores,
and Trump's Castle Associates, which owns and operates the Trump's Castle
Casino Resort in Atlantic City, New Jersey.
Sylvia A. Pacholder has been Chief Executive Officer of the Company since
February 1995, President since November 1994, and Chief Executive Officer,
President, and a Director of Wedco Technology, Inc. since May
4
<PAGE>
of 1996. From July 1994 to November 1994, Ms. Pacholder served as Executive
Vice President-Operations, and from January 1994 to July 1994 she served as
Vice President-Corporate Development of the Company. During 1993, Ms. S.
Pacholder was Senior Vice President of Pacholder Associates, Inc.
William E. Cornelius has been an independent manufacturing consultant since
1991. For more than five years prior to 1991, Mr. Cornelius was Vice
President/Partner of Young & Klein Technicraft, Inc, a printing company.
Robin E. Pacholder has been Senior Vice President and General Counsel of the
Company since October 1996. From 1994 to October 1996, Ms. Pacholder was
Senior Vice President and Associate General Counsel of Pacholder Associates,
Inc. Ms. Pacholder was an Associate with the law firm of Pachulski, Stang,
Ziehl & Young from 1992 to 1994.
George S. Sirusas has been continuously employed by New Jersey Savings Bank,
Somerville, New Jersey from 1983 and until the bank's merger with United
Jersey Bank on September 22, 1995. He served as senior lending officer of the
merged bank since 1986 and presently holds the position of Vice President and
Commercial Lending Officer with the United Jersey Bank, now known as Summit
Bank. Mr. Sirusas was a Wedco Technology, Inc. Director from 1984 until the
April 1996 acquisition by ICO.
William J. Morgan has been President and a Managing Director of Pacholder
Associates, Inc., an investment advisory firm, for more than five years. He
serves on the Board of Directors of USF&G Pacholder Fund, Inc., a closed-end
mutual fund, Duckwall-Alco Stores, Inc., a midwestern retailer, Kaiser
Ventures, Inc., an environmental resources company, and Smith Corona
Corporation, an office supply company.
William E. Willoughby founded Wedco and was employed by Wedco as its
Chairman of the Board and President from 1960 through April 1996.
John F. Williamson has been Chairman and President of Williamson Associates,
Inc., an investment management company, since January 1997. From May of 1995
to January 1997, Mr. Williamson was Executive Vice President and Chief
Financial Officer of Asset Allocation Concepts, Inc., an investment management
company. From 1993 to 1994, Mr. Williamson was Vice President/Manager of
Investments for American Life and Casualty Insurance Company. From 1990 to
1993, he was a financial consultant. Mr. Williamson serves on the Board of
Directors of USF&G Pacholder Fund.
Walter L. Leib has been Senior Partner in the law firm of Leib, Kraus,
Grispin & Roth, in Scotch Plains, New Jersey since its inception in 1971. Mr.
Leib served as a Director of Wedco from 1970 and General Counsel to Wedco from
its inception in 1960, until the acquisition of Wedco by ICO in April 1996.
James E. Gibson has been employed as Executive Vice President of Pacholder
Associates, Inc. since 1988.
Theo J.M.L. Verhoeff is President of ICO Europe B.V. For more than 5 years
prior to that time, he served as Vice President of European Operations of
Wedco.
Isaac H. Joseph has been principally employed as Executive Vice President-
Oilfield Services of ICO since November 1996. From July 1996 to November 1996
Mr. Joseph served as Senior Vice President-Corporate Administration and Sales.
From March 1995 to June 1996, Mr. Joseph was employed as Senior Vice
President-Sales. From November 1994 to March 1995, he was ICO's Louisiana
Division Manager. Mr. Joseph was ICO's Division Sales Manager for Louisiana
from June 1994 to November 1994. From March 1992 to June 1994, Mr. Joseph was
the Louisiana Sales Manager for Tuboscope Vetco International.
Gregory J. Shemanski is Executive Vice President of Wedco-U.S. From 1986 to
1997, he was General Manager of the Fluid Energy Processing and Equipment
Company. From 1982 to 1986, he was employed as Operations Manager at the
Bradley Pulverizer Company, a manufacturer of high capacity ore and minerals
pulverizers.
5
<PAGE>
Edward A. Bourbonais has been employed with Bayshore Industrial since 1992.
In October, 1997, Mr. Bourbonais was promoted to President of Bayshore. Prior
to this assignment, he was Vice President of Marketing & Technical Development
and before that, Marketing Manager for Bayshore.
Jon C. Biro, a certified public accountant, has been principally employed as
Controller of ICO since October 1994, as Controller and Treasurer of ICO since
April 1995, and as Senior Vice President and Treasurer since September 1996.
Prior to that time, Mr. Biro was a certified public accountant with Price
Waterhouse LLP.
The Board of Directors held eight meetings during the year ended September
30, 1997. Each meeting was attended by all Directors. Each Director who is not
an employee of the Company received an annual retainer of $15,000, and a
Director's fee in the amount of $1,000 for each meeting of the Board or
Committee of the Board actually attended and reimbursement of actual expenses
incurred. The Chairmen of the Audit and Compensation Committees also receive
an annual stipend of $2,000. In addition, each Director who is not an employee
is a participant in the 1993 Non-Employee Director Stock Option Plan. Under
the current terms of the plan, each non-employee Director is granted options
to purchase 5,000 shares of Common Stock upon appointment to the Board of
Directors and options to purchase 5,000 shares of Common Stock on the first
business day after the date of each subsequent Annual Meeting of Shareholders.
The Audit and Executive Committees of the Board of Directors each met one
time during the past fiscal year. The Compensation Committee met five times
during the past fiscal year. All committee members were present for each
meeting. The functions of the Audit Committee include reviewing the engagement
of the independent accountants, the scope and timing of the audit and certain
non-audit services to be rendered by the independent accountants, examining
the report of the independent accountants upon completion of their audit, and
reviewing with the independent accountants and management the Company's
policies and procedures with respect to accounting and financial controls. The
Compensation Committee reviews and establishes compensation arrangements for
Directors, officers and other employees and takes whatever action that may be
required in connection with the Company's stock option plans. The functions of
the Executive Committee include reviewing capital expenditure projects,
assisting management in implementing consolidation plans relating to the
acquisitions, and assisting management in developing and implementing
strategic plans. The Company does not have a Nominating Committee.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
OF MORE THAN 5% OF OUTSTANDING STOCK
The following table contains information concerning the security ownership
of certain beneficial owners known to the management of the Company, based
upon filings with the Securities and Exchange Commission, which beneficially
own more than five percent of the Company's Common Stock at the close of
business on January 15, 1998. Shareholders who are a party to the Shareholders
Agreement described below, who individually are not record holders of more
than five percent of the Company's Common Stock have not been set forth in the
following table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------ -------------------- ----------------
<S> <C> <C> <C>
Sylvia A. Pacholder
11490 Westheimer, Suite 1000
Houston, Texas 77077.................... 2,378,663(/1/)(/2/) 10.7%(/1/)(/2/)
Asher O. Pacholder
11490 Westheimer, Suite 1000
Houston, Texas 77077.................... 2,357,141(/1/)(/2/) 10.6%(/1/)(/2/)
William E. Willoughby
607 U.S. Highway 202
Far Hills, New Jersey 07931............. 1,807,223(/1/)(/2/) 8.3%(/1/)(/2/)
</TABLE>
- --------
(1) ICO, Inc., Dr. Asher O. Pacholder, Sylvia A. Pacholder, Robin E.
Pacholder, William J. Morgan, Pacholder Associates, Inc., PM Delaware,
Inc. (these shareholders are collectively the "ICO Shareholders"), and
William E. Willoughby, Peggy S. Willoughby, William C. Willoughby, Regina
S. Willoughby, Fred R. Feder, Theo J.M.L. Verhoeff and Catherine
Willoughby Stevens (these shareholders are collectively the "Wedco
Shareholders") (the ICO Shareholders and the Wedco Shareholders are
collectively the "Shareholders") are parties to a Shareholders' Agreement
(covering in the aggregate 5,004,051 shares of Common Stock), pursuant to
which the Shareholders agree to take all actions necessary or appropriate
to cause the election of William E. Willoughby, Walter Leib and George S.
Sirusas to the Board of Directors of the Company and to cause their
reelection to the Board of Directors of the Company until the earlier of
the time the Wedco Shareholders who are parties to the Shareholders'
Agreement, taken as a whole, beneficially own less than 1,500,000 shares
of Common Stock or there is a "change in control" of the Company, when the
ICO Shareholders who are parties to the Shareholders' Agreement shall no
longer be obligated to cause the reelection of such persons to the
Company's Board of Directors ("Termination Date"). In addition, if Messrs.
Willoughby, Leib or Sirusas shall cease to serve as a Director of the
Company at any time prior to the Termination Date, the Shareholders will
agree to take all actions necessary and appropriate to ensure that the
vacancy created shall be filled by a person nominated by the other Wedco
Shareholders who are parties to the Shareholders Agreement, subject to the
consent of a majority of the full Board of Directors of the Company.
In addition to the foregoing, all the ICO Shareholders who are parties to
the Shareholders' Agreement have granted irrevocable proxies coupled with
an interest to Mr. Leib to vote their shares of Common Stock in favor to
the slate of nominees for the Company's Board of Directors selected by the
then incumbent members of the Board of Directors of the Company (the
"Nominated Slate") and the Wedco Shareholders who are parties to the
Shareholders' Agreement granted substantially identical proxies to Ms. S.
Pacholder and Dr. Pacholder to vote their shares of Common Stock of the
Company also in favor of the Nominated Slate.
7
<PAGE>
The Shareholders' Agreement also provides that if one or more of the ICO
Shareholders or Wedco Shareholders who are parties to the agreement desire
to sell 500,000 or more shares of Common Stock (other than in connection
with an underwritten public offering that would not result in a transfer or
transfers of 500,000 or more shares of Common Stock to any person or group
of persons) such proposed sale shall not be effective unless the proposed
transferee agrees to be bound as the successor to the transferor under the
agreement.
(2) See footnotes (5), (6), (7), (8) and (11) to the table under the Board of
Directors and Officers of the Company for information regarding the
security ownership of Dr. Pacholder and Ms. S. Pacholder.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the Company to
each of the four most highly compensated executive officers and directors
(other than the Company's Chief Executive Officer) and the Company's Chief
Executive Officer during the fiscal year ended September 30, 1997.
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(/1/)
- ------------------ ---- -------- ------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
Sylvia A.
Pacholder(/2/)(/3/) 1997 $293,750 $30,000 80,000 $ 2,921
President and 1996 175,000 400,000(/3/) 35,000 2,015
Chief Executive Officer 1995 156,193 125,000 50,000 2,300
Asher O.
Pacholder(/2/)(/3/) 1997 $275,962 $30,000 80,000 $ 2,843
Chairman of the Board 1996 150,000 375,000(/3/) 30,000 1,875
& Chief Financial 1995 94,327 100,000 30,000 --
Officer
Isaac H. Joseph(/5/) 1997 $142,789 $38,000 20,000 $ 1,366
Executive Vice President 1996 95,188 35,000 12,000 952
Oilfield Services 1995 78,126 37,500 10,000 781
Theo J.M.L.
Verhoeff(/5/) 1997 $150,571 $30,000 40,000 $41,635
President, ICO Europe 1996 61,508(/4/) 35,000 10,000 10,344(/4/)
B.V. 1995 -- -- -- --
Jon C. Biro(/3/)(/5/) 1997 $111,381 $30,000 30,000 $ 2,191
Senior Vice President 1996 78,038 55,000(/3/) 22,000 3,009
and Treasurer 1995 58,958 20,000 500 --
</TABLE>
(1) Includes the Company's matching contributions to the Employee Stock
Ownership Plan (the 401(k) Plan) except for Mr. Verhoeff whose "other
compensation" consists of pension plan contributions paid by a wholly-
owned subsidiary of the Company.
Mr. Verhoeff's annual retirement benefits accrue at a rate of 2% of his
current base salary less Dutch social security entitlements, times credited
service years. Yearly benefits may not exceed 60% of current base salary
less Dutch social security. Mr. Verhoeff currently has 13 years of credited
service. The following table indicates the estimated annual benefits
payable, to Mr. Verhoeff, by the insurance company, upon retirement for
specified compensation and years of service under the pension plan.
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------------
REMUNERATION 10 15 20 25 30
------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
$130,000 26,000 39,000 52,000 65,000 78,000
$140,000 28,000 42,000 56,000 70,000 84,000
$150,000 30,000 45,000 60,000 75,000 90,000
$160,000 32,000 48,000 64,000 80,000 96,000
</TABLE>
(2) During June, 1996, the Company's Employment Agreements with Ms. S.
Pacholder and Dr. Pacholder were amended. The termination date of both
agreements was changed to December 31, 2001 from December 31, 1998. The
term of the Employment Agreements is extended automatically from day to
day until such time as either party gives written notice to the other that
no further such automatic extensions shall occur, in which event
employment terminates on a date five years after such notice has been
given.
9
<PAGE>
(3) Includes a special bonus in the amount of $250,000, $250,000 and $25,000
paid to Ms. S. Pacholder, Dr. Pacholder and Mr. Biro, respectively,
relating to the acquisition of Wedco Technology, Inc.
(4) 1996 compensation includes payments made between May 1, 1996 and September
30, 1996 after the acquisition of Wedco Technology, Inc. by the Company on
April 30, 1996.
(5) The Company or one of its subsidiaries has Employment Agreements with Mr.
Biro, Mr. Joseph, Ms. R. Pacholder, Mr. Bourbonais, Mr. Shemanski and Mr.
Verhoeff. The term of the Agreements with Mr. Biro, Mr. Joseph and Ms. R.
Pacholder is one (1) year and for Mr. Bourbonais and Mr. Shemanski is two
(2) years, with automatic extensions of each Agreement from day to day
until such time as either party gives written notice to the other that no
further such automatic extension shall occur or the Agreement is
terminated for cause. Mr. Verhoeff has an Employment Agreement with the
Company's Wedco Holland B.V. subsidiary which provides for severance
payments for a period of three (3) to five (5) years, based on the length
of employment at the time of termination if termination is other than for
cause.
10
<PAGE>
OPTIONS GRANTED DURING FISCAL 1997
The following table sets forth stock options granted to the individuals
named in the Summary Compensation Table during the fiscal year ending
September 30, 1997 under the Company's Stock Option Plans. Under the
Securities and Exchange Commission ("SEC") regulations, companies are required
to project an estimate of appreciation of the underlying shares of Common
Stock during the option term. The Company has chosen the 5%, 10% formula
approved by the SEC; however, the ultimate value will depend on the market
value of the Company's Common Stock at a future date, which may or may not
correspond to the projections below.
<TABLE>
<CAPTION>
Potential realizable value at
assumed annual rates of
stock price appreciation for
INDIVIDUAL GRANTS option term
- -------------------------------------------------------------------------- ------------------------------
% of total Options
Options granted to Exercise price Expiration
Name Granted employees in 1997 Per Share (1) Date 5% 10%
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sylvia A. Pacholder 80,000 11% $6.5625 10/21/2006 $ 330,170 $ 836,715
Asher O. Pacholder 80,000 11% 6.5625 10/21/2006 330,170 836,715
Isaac H. Joseph 20,000 3% 6.5625 10/21/2006 82,542 209,179
Theo J.M.L. Verhoeff 40,000 6% 6.5625 10/21/2006 165,085 418,357
Jon C. Biro 30,000 4% 6.5625 10/21/2006 123,814 313,768
</TABLE>
(1) Exercise price is the fair market value on the date of grant.
FISCAL YEAR 1997 OPTION EXERCISES AND FISCAL YEAR-END VALUE
The following table sets forth stock options exercised by the individuals
named in the Summary Compensation Table during fiscal year 1997, and the
number and value of all unexercised options at fiscal year end. The value of
"in-the-money" options refers to options having an exercise price which is
less than the market price of the Company's Common Stock on September 30,
1997.
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised Options In-the-Money Options at
Acquired on Value at September 30, 1997 September 30, 1997(/2/)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sylvia A. Pacholder -0- n/a 167,000/0 $348,438/0
Asher O. Pacholder -0- n/a 146,000/0 279,125/0
Isaac H. Joseph 13,500 16,125 34,500/0 62,031/0
Theo J.M.L. Verhoeff -0- n/a 50,000/0 59,375/0
Jon C. Biro -0- n/a 52,500/0 96,156/0
</TABLE>
(2) Represents market value of the Company's Common Stock at September 30,
1997 less the exercise price.
11
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
To: The Board of Directors:
The Company's policies with respect to compensation of executive officers
are outlined as follows:
Cash Compensation
Base Salary - It is believed to be requisite that the Company pay
base salaries to executive officers that are reflective of: (1) the
individual's skills, business experience, and judgment; (2) the
responsibilities and duties of the position; and (3) the interests
of the Shareholders by assuring that well-qualified persons are
attracted, motivated, and retained to manage the Company. In this
respect, the salary levels established reflect the subjective
judgment of the Committee on these matters.
Bonus - Depending upon the operating results of the Company as a
whole and taking into account the responsibilities and performance
of the individual executive in the achievement of specific
performance goals, discretionary bonuses may be paid to executive
officers. However, bonuses are not awarded based upon any
quantifiable goals or standards, but rather reflect the Committee's
general, subjective view of the contribution of the particular
individuals to the Company's operations.
Long-Term Compensation
Stock Options - Stock options to purchase Company stock, at the
market price in effect at date of grant, may be granted by the
Compensation Committee to executive officers to link their interests
directly with those of other Shareholders while increasing their
personal investment in the Company. Specific stock option targets
have not been established for participants, but rather the Committee
views the awards of stock options as an incentive for future
performance and grants participants ownership positions through
options which it believes are consistent with each participant's
current and expected future responsibilities.
With respect to the base salary granted to the Chief Executive Officer in
1997, the Compensation Committee took into account the overall individual
skill, business experience and judgment of the Chief Executive Officer as well
as an assessment by the Compensation Committee of the Chief Executive
Officer's individual performance including the areas of corporate
acquisitions, increased sales volume of the Company, and overall increases in
market share in the Company's various lines of business. The Compensation
Committee also compared the compensation levels of chief executive officers of
companies of similar size. The companies with which these comparisons were
made are not necessarily the same as the index of 14 oil service companies or
the companies included in the market capitalization group which are utilized
in the performance graph.
COMPENSATION COMMITTEE
William E. Cornelius
William J. Morgan
John F. Williamson
12
<PAGE>
STOCK PERFORMANCE CHART (/1/)
The following chart compares the yearly percentage change in the cumulative
total Shareholder return of the Company's common stock during the five years
ended September 30, 1997 with: (1) the cumulative total return of the NASDAQ
Composite Stock Index (U.S.); (2) an index of 14 oil service companies (Value
Line's Oilfield Services and Equipment Industry Index); (3) a market
capitalization group; and (4) the Company's only publicly-held, domestic
competitor within the Company's oilfield service business, Tuboscope Vetco
International Corporation (Tuboscope). The Company has included the market
capitalization group because the services provided within the Company's
petrochemical processing business are unique and to the best of the Company's
knowledge there is no other public company providing similar services. The
market capitalization group is comprised of the following companies: Acclaim
Entertainment, Inc., Apogee Enterprises, Inc., Collagen Corporation, Cygnus
Inc., Fonar Corporation, Haverity Furniture Companies, Ingles Markets A',
Inc., Nash Finch Company, Plexus Corporation and Ryans Family Steakhouse, Inc.
STOCK PERFORMANCE CHART
OILFIELD MARKET
SERVICE CAPITALIZATION
ICO NASDAQ INDEX TUBOSCOPE GROUP
1992 100.00 100.00 100.00 100.00 100.00
1993 296.00 130.98 106.77 117.86 158.81
1994 160.00 132.06 91.91 89.29 120.80
1995 156.00 182.41 113.81 83.93 162.93
1996 191.00 216.45 159.69 223.22 136.40
1997 269.04 297.14 303.50 448.22 179.92
(1) Assumes $100 invested on September 30, 1992 and all dividends reinvested.
Data supplied by NASDAQ and Value Line Institutional Services.
13
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors of the Company
currently consists of Messrs. William J. Morgan, William E. Cornelius, and
John F. Williamson.
Dr. Pacholder and Mr. Morgan are each Directors of the Company and are
executive officers of Pacholder Associates, Inc.
CERTAIN TRANSACTIONS
In connection with the April 30, 1996 merger of Wedco Technology, Inc. into
a wholly-owned subsidiary of the Company, Wedco and William E. Willoughby
entered into a ten-year non-compete agreement and a five-year consulting
agreement. As consideration, Mr. Willoughby will receive $300,000 payable in
60 equal monthly installments for the non-compete agreement and $240,000 per
year, payable monthly, for consulting services. Mr. Willoughby and Wedco are
also parties to a salary continuation agreement which provides that Mr.
Willoughby's spouse will be paid a survivorship benefit of $150,000 for five
years if Mr. Willoughby predeceases his spouse at a time when he is serving as
a consultant to Wedco or ICO, provided, however, such payment shall terminate
upon the earlier to occur of the death of his spouse or April 30, 2001.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (as amended, the
"Exchange Act") requires the Company's officers and Directors, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and NASDAQ and to furnish the Company with copies of all
reports filed. Based solely on the review of the reports furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that, during fiscal 1997, all Section 16(a) filing requirements
applicable to its Directors, officers and greater than 10% beneficial owners
were met, except for Mr. William E. Willoughby's untimely reporting of sales
of 159,100 common shares during October through September of 1997. The sale of
these common shares consisted of twenty-four transactions which required four
Form 4 filings. Additionally, a transaction by Mr. Sirusas consisting of a
sale of 4,066 common shares during March, 1997 required a Form 4 filing and
was untimely reported. Upon learning of the failure to report the transactions
on a timely basis, Mr. Willoughby and Mr. Sirusas reported the transactions.
APPROVAL OF THE ICO, INC. 1998 STOCK OPTION PLAN
The Board of Directors on January 12, 1998 adopted the ICO, Inc. 1998 Stock
Option Plan (the "1998 Stock Option Plan"), subject to approval of the ICO
shareholders at the Annual Meeting. The 1998 Stock Option Plan is generally
similar to the 1996 Stock Option Plan previously approved by the Company's
shareholders. As of January 15, 1998, options to purchase 1,321,000 and 72,000
shares of Common Stock were outstanding under the employee and non-employee
director stock option plans, respectively, of the Company and only 64,000 and
41,000 shares were available for grant of additional options under the
employee and non-employee director plans, respectively . The Board of
Directors of the Company has determined that it would be in the best interest
of the Company to continue the stock option program for employees through the
adoption of the ICO, Inc. 1998 Stock Option Plan. The 1998 Stock Option Plan
provides for the issuance of both incentive stock options and nonqualified
stock options to all individuals who perform services for the Company and who
are treated as employees for federal income tax purposes ("Eligible
Employees"). There are approximately 1,600 employees currently eligible to
participate in the 1998 Stock Option Plan, including the executives named in
the Summary Compensation Table. The Company intends to file a registration
statement on Form S-8 covering the Common Stock issuable under the 1998 Stock
Option Plan promptly after approval by the shareholders of the 1998 Stock
Option Plan.
The following description is qualified in its entirety by reference to the
text of the 1998 Stock Option Plan, which is set forth in Exhibit "A" to this
Proxy Statement.
14
<PAGE>
PURPOSE OF THE PLAN
The purpose of the 1998 Stock Option Plan is to promote the interests of the
Company and its shareholders by providing a means for Eligible Employees of
the Company and its subsidiaries to acquire a proprietary interest in the
Company, thereby strengthening the Company's ability to attract capable
management personnel and provide an inducement for Eligible Employees to
remain employed by the Company or its subsidiaries and to perform at their
maximum levels.
ELIGIBILITY
Options under the 1998 Stock Option Plan may be granted to Eligible
Employees of the Company and its subsidiaries.
SECURITIES TO BE UTILIZED
The maximum number of shares of Common Stock for which options may be
granted under the 1998 Stock Option Plan is 600,000 (subject to antidilution
provisions.) Shares delivered by the Company pursuant to the exercise of
options may be authorized but unissued shares of Common Stock, previously
acquired treasury shares, or a combination thereof. Shares subject to options
which expire or are terminated shall again be available for the granting of
other options under the 1998 Stock Option Plan.
PLAN ADMINISTRATION AND TERMINATION
The 1998 Stock Option Plan will be administered by a committee (the
"Committee") designated by the Board of Directors. The Committee shall be
comprised of not less than two "outside directors" as such term is defined in
the Income Tax Regulations. The Board of Directors has designated its
Compensation Committee to administer the 1998 Stock Option Plan.
The Board of Directors may at any time amend, suspend, or discontinue the
Plan; provided, however, that except as otherwise permitted by Rule 16b-3
under the Exchange Act or, Section 162(m) or Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), no amendments by the Board of
Directors shall, without further approval of the shareholders of the Company:
(1) change the class of Eligible Employees; (2) increase the number of Shares
which may be subject to Options granted under the Plan except as provided upon
lapse or termination of Options without being completely exercised; or (3)
cause the Plan or any Option granted under the Plan to fail to (i) qualify for
exemption from Section 16(b) of the Exchange Act, (ii) be excluded from the $1
million deduction limitation imposed by Section 162(m) of the Code, or (iii)
qualify as an "Incentive Stock Option" as defined by Section 422 of the Code.
Unless earlier terminated, the 1998 Stock Option Plan will continue in effect
until January 12, 2008.
PRICE, EXERCISE PERIOD AND VESTING OF OPTIONS
The Committee will determine the exercise price and exercise schedule for
options granted under the 1998 Stock Option Plan. If the Company grants an
incentive stock option to an Eligible Employee who owns, directly or
indirectly, Common Stock representing more than 10% of the total combined
voting power of all classes of stock of the Company, the option price must
equal at least 110% of the fair market value on the date of grant and the term
of such option shall not be greater than five years from the date of grant.
The fair market value of the Common Stock will be the last sale price reported
of Common Stock on the NASDAQ/National Market System on a specified date. The
last sales price of the Common Stock of the Company on the NASDAQ National
Market on January 15, 1998 was $5.4375 per share.
The maximum number of shares of Common Stock with respect to which options
may be granted to any employee during each fiscal year is 60,000.
Payment for shares purchased upon exercise of an option shall be made in
cash or securities or in such other form as may be determined by the
Committee.
15
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
Deductibility. Provisions of the Code limit the Company's income tax
deduction for non-performance based compensation paid to the five highest paid
executive officers to $1 million per year. The taxable portion of a non-
qualified option ordinarily constitutes compensation which may be deducted by
the Company. The Plan has been designed to allow this compensation element to
be classified as performance based so as to ensure the Company the full income
tax deduction otherwise available.
Incentive Stock Options. The Company intends that certain of the options
granted under the Plan will qualify as incentive stock options under Section
422 of the Code. Assuming that the options are so qualified, the tax
consequences of the Plan will vary depending on whether certain holding period
requirements are met.
An optionee who has been granted an incentive stock option will not realize
taxable income at the time of the grant or exercise of such option, and the
Company will not be entitled to a deduction at either such time, if the
optionee makes no disposition of shares acquired pursuant to such incentive
stock option (a) within two years from the option's date of the grant or (b)
within one year after exercising such option (collectively, the "Holding
Periods"). However, the optionee must include the difference between the
exercise price and the fair market value of the Common Stock on the date of
exercise in alternative minimum taxable income. If the employee exercises an
incentive stock option and disposes of the stock in the same year and the
amount realized is less than the fair market value on the exercise date, only
the difference between the amount realized and the adjusted basis of the stock
will be included in alternative minimum taxable income. Upon disposition of
the shares of Common Stock received upon exercise of an incentive stock option
after the Holding Periods, the difference between the amount realized and the
exercise price should constitute a mid-term or long-term capital gain or loss.
Under such circumstances, however, the Company will not be entitled to any
deduction for federal income tax purposes.
If an optionee disposes of shares acquired pursuant to the exercise of an
incentive stock option prior to the end of the Holding Periods, the
disposition would be treated as a disqualifying disposition. The optionee will
be treated as having received, at the time of disposition, compensation
taxable as ordinary income equal to the excess of the fair market value of the
shares at the time of exercise (or in the case of a sale in which a loss would
be recognized, the amount realized on the sale, if less) over the exercise
price and any amount realized in excess of the fair market value of the shares
at the time of exercise would be treated as a short-term, mid-term or long-
term capital gain, depending on the holding period of the shares of Common
Stock. In the event of a disqualifying disposition, the Company may claim a
deduction for compensation paid at the same time and in the same amount as
taxable compensation is treated as received by the optionee. However, the
Company will not be entitled to any deduction in connection with any loss to
the optionee or a portion of any gain that is taxable to the optionee as
short-term, mid-term or long-term capital gain.
Nonqualified Stock Options. The Company may also grant nonqualified stock
options under the Plan. Nonqualified stock options (options that are not
incentive stock options within the meaning of Section 422 of the Code) will
not qualify for special federal income tax treatment. As a general rule, no
federal income tax is imposed on the optionee upon the grant of a nonqualified
stock option and the Company is not entitled to a tax deduction by reason of
such grant. Upon exercise of a nonqualified stock option, the optionee will
realize ordinary income in an amount equal to the excess, if any, of the fair
market value of the shares on the date of exercise over the option exercise
price, with the Company entitled to a corresponding deduction. Ordinary income
realized upon the exercise of a nonqualified stock option is not an adjustment
for alternative minimum tax purposes. In the case of an option holder subject
to Section 16(b) of the Exchange Act, subject to certain exceptions, ordinary
income will be recognized by the optionee (and a deduction by the Company)
upon the exercise of the nonqualified stock option if the exercise occurs more
than six months after the date of grant of the nonqualified stock option. Upon
a subsequent disposition of shares received upon exercise of a nonqualified
stock option, the optionee will realize a short-term, mid-term or long-term
capital gain or loss to the extent of any intervening appreciation or
depreciation. However, the Company will not be entitled to any further
deduction at that time.
16
<PAGE>
The foregoing is only a summary of the federal income tax rules applicable to
options granted under the Plan and is not intended to be complete. In addition,
this summary does not discuss the effect of the income or other tax laws of any
state or foreign country in which a participant may reside.
The Board of Directors recommends that shareholders vote FOR the proposal to
approve the ICO, Inc. 1998 Stock Option Plan.
APPROVAL
The proposal to adopt ICO's 1998 Stock Option Plan adopted by the Board of
Directors requires approval by the holders of a majority of the outstanding
shares of Common Stock represented at the 1998 Annual Meeting in person or by
Proxy. Proxies will be voted for or against such proposal in accordance with
the specification marked thereon, and, if no specification is made, will be
voted in favor of such proposal.
SELECTION OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, independent accountants, examined the Company's
consolidated financial statements for the fiscal year ended September 30, 1997,
and, in connection with their audit function, reviewed the Company's Annual
Report to Shareholders and certain of its filings with the Securities and
Exchange Commission. The Board of Directors has re-employed the firm of Price
Waterhouse LLP as independent accountants for the Company for fiscal 1998,
subject to Shareholders' ratification at the Annual Meeting. If ratification is
not obtained, the Board intends to continue the employment of Price Waterhouse
LLP at least through fiscal 1998. Representatives of Price Waterhouse LLP will
be present at the Annual Shareholders' Meeting, with the opportunity to make a
statement if they desire to do so, and such representatives are expected to be
available to respond to appropriate questions at the Annual Shareholders'
Meeting.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
A Shareholder intending to submit a proposal to be presented at the 1999
Annual Meeting of Shareholders must deliver such proposal in writing to the
Company's executive officers no later than June 2, 1998.
OTHER MATTERS WHICH MAY COME BEFORE THE ANNUAL MEETING
The Company knows of no matters other than those above stated which are to be
brought before the Annual Meeting. It is intended that the persons named in the
Proxy will vote your stock according to their best judgment if any other
matters do properly come before the Meeting.
Whether or not you intend to be present at this meeting, you are urged to
return this Proxy promptly. If you are present at the meeting and wish to vote
your stock in person, this Proxy shall, at your request, be returned to you at
the meeting.
By Order of the Board of Directors
<TABLE>
<S> <C>
Asher O. Pacholder Sylvia A. Pacholder
Chairman of the Board and Chief Executive Officer,
Chief Financial Officer President & Secretary
</TABLE>
Dated: January 23, 1998
17
<PAGE>
EXHIBIT "A"
ICO, INC.
1998 STOCK OPTION PLAN
ARTICLE 1
Objectives
ICO, Inc. ("ICO" or the "Company") has established this Stock Option Plan
effective January 12, 1998 as an incentive to the attraction and retention of
dedicated and loyal employees of outstanding ability, to stimulate the efforts
of such persons in meeting the Company's objectives and to encourage ownership
of the Company's common stock by employees.
ARTICLE 2
Definitions
2.1 For purposes of the Plan the following terms shall have the definition
which is attributed to them, unless another definition is clearly
indicated by a particular usage and context.
A. "Code" means the Internal Revenue Code of 1986, as amended.
B. The "Company" means ICO and any subsidiary of ICO as the term
"subsidiary" is defined in Section 424(f) of the Code.
C. "Date of Exercise" means the date on which the Company has received a
written notice of exercise of an Option, in such form as is
acceptable to the Committee, and full payment of the purchase price.
D. "Date of Grant" means the date on which the Committee makes an award
of an Option.
E. "Eligible Employee" means any individual who performs services for
the Company and is treated as an employee for federal income tax
purposes.
F. "Fair Market Value" means the last sale price reported on any stock
exchange or over-the-counter trading system on which Shares are
trading on a specified date or, if no last sale price is reported,
the average of the closing bid and asked prices for a Share on the
last trading day prior to any specified date. If no sale has been
made on such prior trading day, then prices on the last preceding day
on which any such sale shall have been made shall be used in
determining Fair Market Value prescribed in the previous sentence.
G. "Incentive Stock Option" shall have the same meaning as given to that
term by Section 422 of the Code.
H. "Nonqualified Stock Option" means any Option granted under the Plan
which is not considered an Incentive Stock Option.
I. "Option" means the right to purchase a stated number of Shares at a
specified price. The option may be granted to an Eligible Employee
subject to the terms of this Plan, and such other conditions and
restrictions as the Committee deems appropriate. Each Option shall be
designated by the Committee to be either an Incentive Stock Option or
a Nonqualified Stock Option.
J. "Option Price" means the purchase price per Share subject to an
Option and shall be fixed by the Committee, but shall not be less
than 100% of the Fair Market Value of a Share on the Date of Grant.
A-1
<PAGE>
K. "Permanent and Total Disability" means any medically determinable
physical or mental impairment rendering an individual unable to
engage in any substantial gainful activity, which disability can be
expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months.
L. "Plan" means this 1998 Stock Option Plan as it may be amended from
time to time.
M. "Share" means one share of the common stock, no par value, of the
Company.
ARTICLE 3
Administration
3.1 The Plan shall be administered by a committee (the "Committee")
designated by the Board of Directors. The Committee shall be comprised
solely of two (2) or more outside directors (within the meaning of the
term "outside directors" as used in Section 162(m) of the Code and
applicable interpretive authority thereunder ("Section 162(m)") and
within the meaning of "Nonemployee Director" as defined in Rule 16b-3,
as currently in effect or as hereinafter modified or amended ("Rule 16b-
3"), promulgated under the Securities Exchange Act of 1934, as amended
(the "Act").
Actions shall be taken by a majority of the Committee.
3.2 Except as specifically limited by the provisions of the Plan, the
Committee in its discretion shall have the authority to:
A. determine which Eligible Employees shall be granted Options;
B. determine the number of Shares which may be subject to each Option;
C. determine the Option Price;
D. determine the term of each Option;
E. determine whether each Option is an Incentive Stock Option or
Nonqualified Stock Option;
F. interpret the provisions of the Plan and decide all questions of fact
arising in its application; and
G. prescribe such rules and procedures for Plan administration as from
time to time it may deem advisable.
3.3 Any action, decision, interpretation or determination by the Committee
with respect to the application or administration of this Plan shall be
final and binding upon all persons, and need not be uniform with respect
to its determination of recipients, amount, timing, form, terms or
provisions of Options.
3.4 No member of the Committee shall be liable for any action or
determination taken or made in good faith with respect to the Plan or
any Option granted hereunder, and to the extent permitted by law, all
members shall be indemnified by the Company for any liability and
expenses which may occur through any claim or cause of action.
ARTICLE 4
Shares Subject to Plan
4.1 The Shares that may be made subject to Options granted under the Plan
shall not exceed 600,000 Shares in the aggregate. Except as provided in
Section 4.2 and to the extent permitted under Rule 16b-3, upon lapse or
termination of any Option for any reason without being completely
exercised, the Shares which were subject to such Option may again be
subject to other Options. The aggregate number of Shares which may be
issued under the Plan shall be subject to adjustment in the same manner
as provided in
A-2
<PAGE>
Article 12 hereof with respect to Shares subject to Options then
outstanding. Exercise of an Option in any manner, shall result in a
decrease in the number of Shares which may thereafter be available, both
for purposes of the Plan and for sale to any one individual, by the
number of shares as to which the Option is exercised. Separate stock
certificates shall be issued by the Company for those Shares acquired
pursuant to the exercise of an Incentive Stock Option and for those
Shares acquired to the exercise of a Nonqualified Stock Option.
4.2 The maximum number of Shares with respect to which options may be granted
to any employee during each fiscal year of the Company is 60,000 (subject
to adjustment in the same manner as provided in Article 12 hereof with
respect to Shares subject to Options then outstanding). The limitation
set forth in the preceding sentence shall be applied in a manner which
will permit compensation generated under the Plan to constitute
"performance-based" compensation for purposes of Section 162(m),
including, without limitation, counting against such maximum number of
Shares, to the extent required under Section 162(m), any Shares subject
to Options that are canceled or repriced.
ARTICLE 5
Granting of Options
Subject to the terms and conditions of the Plan, the Committee may, from
time to time prior to January 12, 2008, grant Options to Eligible Employees on
such terms and conditions as the Committee may determine. More than one Option
may be granted to the same Eligible Employee.
ARTICLE 6
Terms of Options
6.1 Subject to specific provisions relating to Incentive Stock Options set
forth in Article 9, each Option shall be for a term of from one to ten
years from the Date of Grant. The Committee in its sole discretion may
establish different exercise schedules and impose other conditions upon
exercise and vesting for any particular Option or groups of Options on
the Date of Grant.
6.2 Nothing contained in this Plan or in any Option granted pursuant to it
shall confer upon any employee any right to continue in the employ of the
Company or to interfere in any way with the right of the Company to
terminate employment at any time. So long as a holder of an Option shall
continue to be an employee of the Company, the Option shall not be
affected by any change of the employee's duties or position.
6.3 In the event that the Company shall, pursuant to action by its Board of
Directors, at any time propose to merge into, consolidate with, or sell
or otherwise transfer all or substantially all of its assets to another
corporation and provision is not made pursuant to the terms of such
transaction for the assumption by the surviving, resulting or acquiring
corporation of outstanding Options under the Plan, or for the
substitution of new options therefor, the Committee shall cause written
notice of the proposed transaction to be given to each Optionee not less
than 40 days prior to the anticipated effective date of the proposed
transaction, and his or her Option shall become fully (100%) vested and,
prior to a date specified in such notice, which shall not be more than
ten days prior to the anticipated effective date of the proposed
transaction, each Optionee shall have the right to exercise his or her
Option to purchase any or all Shares then subject to such Option,
including those, if any, which by reason of other provisions of the Plan
have not then become available for purchase. Each Optionee, by so
notifying the Company in writing, may, in exercising his or her Option,
condition such exercise upon, and provide that such exercise shall become
effective at the time of, but immediately prior to, the consummation of
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the transaction, in which event such Optionee need not make payment for
the Shares to be purchased upon exercise of such Option until five days
after written notice by the Company to such Optionee that the transaction
has been consummated. If the transaction is consummated, each Option, to
the extent not previously exercised prior to the date specified in the
foregoing notice, shall terminate on the effective date of such
consummation. If the transaction is abandoned, (i) any Shares not
purchased upon exercise of such Option shall continue to be available for
purchase in accordance with the other provisions of the Plan and (ii) to
the extent that any Option not exercised prior to such abandonment shall
have vested solely by operation of this paragraph, such vesting shall be
deemed annulled, and the original vesting schedule set forth shall be
reinstituted, as of the date of such abandonment.
ARTICLE 7
Exercise of Options
Any person entitled to exercise an Option in whole or in part, may do so by
delivering a written notice of exercise to the Company, attention Corporate
Secretary, at its principal office. The written notice shall specify the
number of Shares for which an Option is being exercised and the grant date of
the option being exercised and shall be accompanied by full payment of the
Option Price for the Shares being purchased. Notwithstanding any provision in
this Plan or in any Option, no Option shall be exercisable prior to the date
the Plan is approved by the shareholders of the Company.
ARTICLE 8
Payment of Option Price
8.1 Payment of the Option price may be made in cash, by the tender of Shares,
or both, or in such other form as may be determined by the Committee.
Shares tendered shall be valued at their Fair Market Value on the Date of
Exercise.
8.2 Payment through tender of Shares may be made by instruction from the
Optionee to the Company to withhold from the Shares issuable upon
exercise that number which have a Fair Market Value equal to the exercise
price for the Option or portion thereof being exercised.
ARTICLE 9
Incentive Stock Options and Nonqualified Stock Options
9.1 The Committee in its discretion may designate whether an Option is to be
considered an Incentive Stock Option or a Nonqualified Stock Option. The
Committee may grant both an Incentive Stock Option and a Nonqualified
Stock Option to the same individual. However, where both an Incentive
Stock Option and a Nonqualified Stock Option are awarded at one time,
such Options shall be deemed to have been awarded in separate grants,
shall be clearly identified, and in no event will the exercise of one
such Option affect the right to exercise the other such Option.
9.2 Any option designated by the Committee as an Incentive Stock Option will
be subject to the general provisions applicable to all Options granted
under the Plan. In addition, the Incentive Stock Option shall be subject
to the following specific provisions:
A. At the time the Incentive Stock Option is granted, if the Eligible
Employee owns, directly or indirectly, stock representing more than
10% of (i) the total combined voting power of all classes of stock of
the Company, or (ii) a corporation that owns 50% or more of the total
combined voting power of all classes of stock of the Company, then:
(i) the Option Price must equal at least 110% of the Fair Market
value on the Date of Grant, and
(ii) the term of the Option shall not be greater than five years from
Date of Grant.
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B. The aggregate Fair Market Value of Shares (determined at the Date of
Grant) with respect to which Incentive Stock Options are exercisable
by an Eligible Employee for the first time during any calendar year
under this Plan or any other plan maintained by the Company shall not
exceed $100,000.
9.3 If any Option is not granted, exercised, or held pursuant to the
provisions noted immediately above, it will be considered to be a
Nonqualified Stock Option to the extent that the grant is in conflict
with these restrictions.
ARTICLE 10
Transferability of Option
During the lifetime of an Eligible Employee to whom an Option has been
granted, such Option is not transferable voluntarily or by operation of law
and may be exercised only by such individual. Upon the death of an Eligible
Employee to whom an Option has been granted, the Option may be transferred to
the beneficiaries or heirs of the holder of the Option by will or by the laws
of descent and distribution. In addition, the Committee may allow for the
transferability of any Nonqualified Stock Options granted pursuant to this
Plan.
ARTICLE 11
Termination of Options
11.1 An Option may be terminated as follows:
A. During the period of continuous employment with the Company, an
Option will be terminated only if it has been fully exercised or it
has expired by its terms.
B. Upon termination of employment for any reason, the then exercisable
portion of any Option will terminate upon the earlier of (i) the
first business day following expiration of the three month period
after the date of termination, or (ii) the option expiration date set
forth in the Option Agreement. The portion not exercisable will
terminate on the date of termination of employment. For purposes of
the Plan, a leave of absence approved by the Company shall not be
deemed to be termination of employment.
C. If an Eligible Employee holding an Option dies or becomes subject to
a Permanent and Total Disability while employed or within three
months after termination of employment, such Option may be exercised,
to the extent exercisable on the date of the occurrence of the event
which triggers the operation of this paragraph, at any time by the
estate or guardian of such person or by those persons to whom the
Option may have been transferred by will or by the laws of descent
and distribution until the earlier of (i) the date which in one year
after the date of such death or occurrence of Permanent and Total
Disability, or (ii) the option expiration date set forth in the
Option Agreement.
11.2 The Committee may at any time prior to three months after the date of
termination of employment provide that particular options not be
affected by such termination and continue in force whether or not
exercisable at the date of such termination of employment until the
option expiration date set forth in the Option Agreement or any date
prior thereto.
11.3 Except as provided in Article 12 hereof, in no event will the
continuation of the term of an Option beyond the date of termination of
employment allow the eligible Employee, or his beneficiaries or heirs,
to accrue additional rights under the Plan, or to purchase more Shares
through the exercise of an Option that could have been purchased on the
day that employment was terminated. In addition, notwithstanding
anything contained herein, no option may be exercised in any event after
the expiration of ten years from the date of grant of such option.
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<PAGE>
ARTICLE 12
Adjustments to Shares and Option Price
12.1 In the event of changes in the outstanding common stock of the Company
as a result of stock dividends, splitups, recapitalizations,
combinations of Shares, exchanges of Shares or such other transaction,
the number and class of Shares and price per share for each outstanding
Option shall be correspondingly adjusted by the Committee.
12.2 The Committee shall make appropriate adjustments in the Option price to
reflect any spin-off of assets, extraordinary dividends or other
distributions to shareholders.
12.3 In the event of the dissolution or liquidation of the company or any
merger, consolidation, exchange or other transaction in which the
company is not the surviving corporation or in which the outstanding
Shares of the Company are converted into cash, other securities or other
property, each outstanding Option shall terminate as of a date fixed by
the Committee provided that not less than 20 days written notice of the
date of expiration shall be given to each holder of an Option and each
such holder shall have the right during such period following notice to
exercise the Option as to all or any part of the Shares for which it is
exercisable at the time of such notice. The Committee, in its sole
discretion, may provide that Options in such circumstances may be
exercised to an extent greater than the number of shares for which they
were exercisable at the time of such a notice.
ARTICLE 13
Option Agreements
13.1 All Options granted under the Plan shall be evidenced by a written
agreement in such form or forms as the Committee in its sole discretion
may determine.
13.2 Each optionee, by acceptance of an Option under this Plan, shall be
deemed to have consented to be bound, on the optionee's own behalf and
on behalf of the optionee's heirs, assigns and legal representatives, by
all terms and conditions of this Plan.
ARTICLE 14
Amendment or Discontinuance of Plan
14.1 The Board of Directors may at any time amend, suspend, or discontinue
the Plan; provided, however, that except as otherwise permitted by Rule
16b-3, Section 162(m) or Section 422 of the Code, no amendments by the
Board of Directors shall, without further approval of the shareholders
of the Company:
A. change the class of Eligible employees;
B. except as provided in Articles 4 and 12 hereof, increase the number
of Shares which may be subject to Options granted under the Plan; or
C. cause the Plan or any Option granted under the Plan to fail to (i)
qualify for exemption from Section 16(b) of the Act, (ii) be excluded
from the $1 million deduction limitation imposed by Section 162(m),
or (iii) qualify as an "Incentive Stock Option" as defined by Section
422 of the Internal Revenue Code.
14.2 No amendment or discontinuance of the Plan shall alter or impair any
Option granted under the Plan without the consent of the holder thereof.
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ARTICLE 15
Effective Date
The Plan shall become effective on January 12, 1998, having been adopted by
the Board of Directors on that date, provided the Plan is approved by the
shareholders of the Company within twelve (12) months thereafter.
ARTICLE 16
Miscellaneous
16.1 Nothing contained in this Plan or in any action taken by the Board of
Directors or shareholders of the Company shall constitute the granting
of an Option. An Option shall be granted only at such time as a written
Option shall have been executed and delivered to the respective employee
and the employee shall have executed an agreement respecting the Option
in conformance with the provisions of the Plan.
16.2 Certificates for Shares purchased through exercise of Options will be
issued in regular course after exercise of the Option and payment
therefor as called for by the terms of the Option, but in no event shall
the Company be obligated to issue certificates more often than once each
quarter in each fiscal year. No persons holding an Option or entitled to
exercise an Option granted under this Plan shall have any rights or
privileges of a shareholder of the Company with respect to any Shares
issuable upon exercise of such Option until certificates representing
such Shares shall have been issued and delivered. No Shares shall be
issued and delivered upon exercise of an Option unless and until the
Company, in the opinion of its counsel, has complied with all applicable
registration requirements of the Securities Act of 1933 and any
applicable state securities laws and with any applicable listing
requirements of any national securities exchange on which the Company
securities may then be listed as well as any other requirements of law.
16.3 This Plan shall continue in effect until the expiration of all Options
granted under the Plan unless terminated earlier in accordance with
Article 14; provided, however, that it shall otherwise terminate ten
years after the Effective Date.
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ICO, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING MARCH 6, 1998
The undersigned hereby appoints Asher O. Pacholder and Sylvia A. Pacholder, or
any one of them, proxies of the undersigned, each with the power of
substitution, to vote all shares of common stock which the undersigned would be
entitled to vote at the Annual Meeting of Shareholders of ICO, Inc. to be held
in Houston, Texas on Friday, March 6, 1998, and any adjournment of such meeting
on the matters specified and in their discretion with respect to such other
business as may properly come before the meeting or any adjournment thereof.
Election of three Class I directors to serve
until the 2001 Annual Meeting of Shareholders:
William E. Cornelius, Robin E. Pacholder and
George S. Sirusas.
(change of address)
You are encouraged to specify your choices by
marking the appropriate boxes SEE REVERSE SIDE, --------------------------------
but you need not mark any boxes if you wish to
vote in accordance with the Board of Directors' --------------------------------
recommendations. The proxies cannot vote your
shares unless you sign and return this Card. --------------------------------
(If you have written in the
above space, please mark the
corresponding box on the reverse
side of this card.)
----------------
SEE REVERSE
SIDE
----------------
<PAGE>
ICO, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
The Board of Directors recommends a vote FOR proposals 1, 2 and 3.
1. Election of Directors
Nominees: William E. Cornelius, Robin E. Pacholder and George S. Sirusas
FOR WITHHELD FOR, except vote withheld
from the following nominee(s):
[ ] [ ] [ ]
-----------------------
Nominee Exceptions
2. The approval of the ICO, Inc. 1998 Stock Option
FOR WITHHELD ABSTAIN
[ ] [ ] [ ]
3. The ratification of the appointment of Price Waterhouse L.L.P. as independent
accountants.
FOR WITHHELD ABSTAIN
[ ] [ ] [ ]
SIGNATURE(S) _________________________________________ DATE ___________________
SIGNATURE(S) _________________________________________ DATE ___________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title as such.
