<PAGE> 1
SCHEDULE 14A
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:
[X] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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)(1) 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> 2
[ICO, INC. LOGO APPEARS HERE]
11490 WESTHEIMER, SUITE 1000
HOUSTON, TEXAS 77077
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD _________ __, 2001
The Annual Meeting of Shareholders of ICO, Inc. ("ICO") will be held at
________________, located at ___________________, Houston, Texas, on __________,
__________ __, 2001 at 10:00 a.m. Central Daylight Savings Time, for the
following purposes:
o to elect three Class I Directors to serve until the 2004
Annual Meeting of Shareholders and until their respective
successors are elected and qualified;
o to ratify and approve the selection of PricewaterhouseCoopers
LLP as ICO's independent accountants for 2001; and
o to consider and act upon any matters incidental to the
foregoing purposes and transact any other business that
properly comes before the meeting or any adjournment or
postponement thereof.
Only holders of shares of Common Stock of record on the books of ICO at
the close of business on January 18, 2001 will be entitled to vote at the
meeting or any adjournment thereof.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, WE URGE YOU 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
/s/ ASHER O. PACHOLDER /s/ SYLVIA A. PACHOLDER
Asher O. Pacholder Sylvia A. Pacholder
Chairman of the Board and Chief Executive Officer,
Chief Financial Officer President and Secretary
Houston, Texas
January ___, 2001
<PAGE> 3
ICO, INC.
11490 WESTHEIMER, SUITE 1000
HOUSTON, TEXAS 77077
(281) 721-4200
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD __________ __, 2001
The enclosed proxy is solicited by and on behalf of the Board of
Directors (the "Board of Directors" or the "Directors") of ICO, Inc. ("ICO") for
use at the 2001 Annual Meeting of Shareholders (the "Annual Meeting") to be held
on [________] _________ __, 2001 at 10:00 a.m., local time, at _____________
___________________________, Houston, Texas, or at any adjournment(s) or
postponement(s) thereof. A copy of ICO's Annual Report to Shareholders 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 holders
("Shareholders") of Common Stock without par value of ICO ("Common Stock") is
January __, 2001.
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 ICO 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
FOR the selection of three ICO nominees for Class I Directors named below. 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 ICO entitled to vote at the Annual Meeting
consist, as of December 29, 2000, of 22,686,982 shares of Common Stock. The
holders of a majority of the shares entitled to vote represented in person or by
proxy, constitutes a quorum for transaction of business at the Annual Meeting.
Only Shareholders of record on the books of ICO on January 18, 2001 will be
entitled to vote at the meeting. In voting on such matters, each Shareholder is
entitled to one vote for each of said shares. Abstention votes and votes
withheld by brokers on non-routine proposals in the absence of instructions from
beneficial owners ("broker non-votes") will be counted as "present" at the
Annual Meeting to determine whether a quorum exists.
Nominees receiving a plurality of the votes cast at the Annual Meeting
in person or by proxy will be elected as directors. "Plurality" means that the
nominees who receive the largest number of votes cast will be elected as
directors. Shares not voted (whether by abstention, broker non-votes or
otherwise) will have no effect on the election. Any other matters that come
before the Annual Meeting will be decided by the affirmative vote of the holders
of a majority of the shares of Common Stock entitled to vote, and voted for or
against, the matter. Shares not voted (whether by abstention, broker non-votes
or otherwise) will have no effect on such other matters.
If you have any questions, or need any assistance in voting your
shares, please call Innisfree M&A Incorporated, which is assisting us with this
solicitation of proxies, toll-free, at 1-888-750-5834.
<PAGE> 4
BENEFICIAL OWNERS OF MORE
THAN 5% OF OUTSTANDING COMMON STOCK
The following table contains information concerning the security
ownership of certain beneficial owners known to the management of ICO, based
upon filings with the Securities and Exchange Commission (the "SEC"), which
beneficially own more than five percent of ICO's Common Stock at the close of
business on December 29, 2000. Shareholders who are a party to the Wedco
Shareholders Agreement described below, who individually are not otherwise known
to be beneficial record holders of more than five percent of ICO'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>
Asher O. Pacholder
11490 Westheimer, Suite 1000 4,385,761(1) 19.2%(1)
Houston, Texas 77077
Sylvia A. Pacholder
11490 Westheimer, Suite 1000 4,295,497(1) 18.8%(1)
Houston, Texas 77077
William E. Willoughby
607 U.S. Highway 202
Far Hills, New Jersey 07931 1,689,929(1) 7.4%(1)
Dimensional Fund Advisors
1299 Ocean Avenue, 11th Floor 5.9%
Santa Monica, California 90401-1005 1,329,732(2)
Travis Street Partners, L.L.C.
910 Travis Street, Suite 2150 5.0%
Houston, Texas 77002 1,138,300(3)
Kornitzer Capital Management
5420 West 61st Place 13.8%
Shawnee Mission, Kansas 66205 3,507,696(4)
Great Plains Trust Company
4705 Mission Road 8.5%
Westwood, Kansas 66205 2,033,411(5)
</TABLE>
(1) This individual is a party to the Wedco Shareholders Agreement described
below in the section entitled "Shareholder Agreements." Share amounts shown
do not include, for purposes of clarity, the shares of Common Stock
beneficially owned by other parties to the Wedco Shareholders Agreement
because multiple parties listed in the table are party to the Wedco
Shareholders Agreement and could be deemed to have beneficial ownership of
the same shares. To the extent the parties to the Wedco Shareholders
Agreement constitute a group, such group and its members could be deemed to
be the beneficial owner of 4,666,805 shares of Common Stock or
approximately 20.0% of ICO's Common Stock deemed outstanding.
(2) This information is based on the Schedule 13G filed with the SEC by the
beneficial owner on February 3, 2000.
(3) This information is based on the Schedule 13D filed with the SEC by the
beneficial owner on December 29, 2000.
(4) This information is based on the Schedule 13G filed with the SEC by the
beneficial owner on March 29, 2000. Holdings include 743,750 shares of
Common Stock and 2,763,946 shares of Common Stock it is deemed to own
beneficially through holdings of 1,008,850 shares of Preferred Stock.
(5) This information is based on the Schedule 13G filed with the SEC by the
beneficial owner on March 29, 2000. Holdings include 703,150 shares of
Common Stock and 1,330,261 shares of Common Stock deemed to be owned
beneficially through holdings of 485,550 shares of Preferred Stock.
2
<PAGE> 5
ELECTION OF DIRECTORS
Three directors are to be elected at the Annual Meeting. ICO's Charter and
Bylaws provide for a classified Board of Directors. Under these provisions, the
Board of Directors is divided into Classes I, II and III, the terms of office of
which are currently scheduled to expire on the dates of ICO's Annual Meetings of
Shareholders in 2001, 2002 and 2003, respectively. Each director elected at an
annual meeting serves for a term ending on the date of the third annual meeting
following the meeting at which such director was elected or until his successor
shall have been duly elected and qualified or until his earlier death,
resignation or removal. William E. Cornelius, Howard P. Tuckman and George S.
Sirusas have been nominated to serve as Class I Directors until ICO's Annual
Meeting of Shareholders in 2004. Two of the nominees currently serve as
directors of ICO. Robin E. Pacholder, a current director, is not standing for
reelection at the Annual Meeting. 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 2002 or 2003. A plurality of votes cast in person
or by proxy by the holders of Common Stock is required to elect a director.
Abstentions and broker non-votes (as described above) will 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 Class I nominees listed
below. Although the Board of Directors does not contemplate that any of the
nominees will not be a candidate or will be unable to serve, if such a situation
arises, the persons named in the enclosed proxy, in the absence of contrary
instructions, will in their discretion vote FOR the election of such other
persons as may be nominated by the Board of Directors.
The following table sets forth for each nominee listed in the Proxy and
each other person whose term of office as a director will continue after the
Annual Meeting:
o the name and age of such person;
o the year during which that person first became a director; and
o the principal position with ICO, if any.
The table has been prepared from information obtained from these persons.
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE POSITION WITH THE COMPANY
--------------------------------------------------------------------------------------------------------------------
Class I Directors whose terms will expire 2004 (if elected or reelected)
<S> <C> <C> <C>
William E. Cornelius (1)(2) 52 1992 Director
Howard P. Tuckman 57 -- Director nominee
George S. Sirusas (3) 61 1996 Director
Class II Directors whose terms will expire 2002
William J. Morgan (3)(4) 46 1992 Director
Sylvia A. Pacholder (4) 58 1993 Chief Executive Officer, President and Director
William E. Willoughby 80 1996 Director
Class III Directors whose terms will expire 2003
Asher O. Pacholder (4) 63 1990 Chairman of the Board and Chief Financial Officer
John F. Williamson (1)(2)(3) 62 1995 Director
Walter L. Leib (1)(2) 71 1996 Director
James E. Gibson 36 1996 Director
</TABLE>
--------------------
(1) Compensation Committee member.
(2) Audit Committee member.
3
<PAGE> 6
(3) Nominating Committee member.
(4) Executive Committee member.
NOMINEES
William E. Cornelius has been an independent manufacturing consultant since
1991.
Howard P. Tuckman has been Dean of the Faculty of Management and Professor
of Finance and Economics at Rutgers University since January 1999. From 1993
until December 1998, Dr. Tuckman was the Dean of Business School and Professor
at Virginia Commonwealth University. Dr. Tuckman has also served as interim dean
and professor at Fogelman College of Business and Economics at the University of
Memphis, as a professor at Florida State University and in the Office of
Management and Budget for the Executive Office of the U.S. President. Dr.
Tuckman is a graduate of Cornell University and has a masters degree and a
Ph.D., both in economics, from the University of Wisconsin. Dr. Tuckman does not
currently own any securities of ICO.
Dr. Tuckman is on the boards of the New Jersey Symphony, the New Jersey
Chamber of Commerce, University Affiliates, R-Ventures, the Sales and Marketing
Executives Foundation, and the Biotechnology Council of New Jersey.
George S. Sirusas has been Senior Vice President of Sebastian Realtors
since July 1998. Mr. Sirusas is retired from New Jersey Savings Bank,
Somerville, New Jersey where he was employed from 1984 until the bank's merger
with Summit Bank in 1995. He held the position of Vice President and Commercial
Lending Officer with Summit Bank from 1995 until 1998. Mr. Sirusas was a Wedco
Technology, Inc. ("Wedco") director from 1984 until its April 1996 acquisition
by ICO.
As described below under "Background," Travis Street Partners, L.L.C. has
announced its intention to nominate three directors for election at the Annual
Meeting.
DIRECTORS WITH TERMS EXPIRING IN 2002 AND 2003
William J. Morgan has been President and a Managing Director of Pacholder
Associates, Inc., an investment advisory firm, for more than five years. He is
Chairman of the Board of Directors of Pacholder High Yield Fund, Inc., a
closed-end investment company, and Smith Corona Corporation, an office supply
company.
Sylvia A. Pacholder has been Chief Executive Officer of ICO since February
1995, and President since November 1994. From July 1994 to November 1994, Ms.
Pacholder served as Executive Vice President, and from January 1994 to July 1994
she served as Vice President - Corporate Development of ICO. Sylvia Pacholder is
the spouse of Asher O. Pacholder.
William E. Willoughby founded Wedco and was employed by Wedco as its
Chairman of the Board and President from 1960 through April 1996. Mr. Willoughby
now retired.
Asher O. Pacholder has been Chairman of the Board of Directors and Chief
Financial Officer of ICO since February 1995. Dr. Pacholder has been Chairman of
the Board and a Managing Director of Pacholder Associates, Inc. since 1983. 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. Dr. Pacholder is the
spouse of Sylvia A. Pacholder, father of Robin E. Pacholder and father-in-law of
David M. Gerst.
John F. Williamson has been Chairman and President of Williamson
Associates, Inc., an investment management company, since January 1996. From May
of 1995 to January 1996, Mr. Williamson was Executive Vice President and Chief
Financial Officer of Asset Allocation Concepts, Inc., an investment management
company. Mr. Williamson serves on the Board of Directors of Pacholder High Yield
Fund, Inc.
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 as outside General Counsel to
Wedco from its inception in 1960, until the acquisition of Wedco by ICO in April
1996.
4
<PAGE> 7
James E. Gibson has been employed at Pacholder Associates, Inc., first as
Senior Vice President since 1992 and as Executive Vice President since 1997.
BACKGROUND
On August 16, 2000, representatives of NetworkOil, Inc. ("NetworkOil"), a
privately held company that is attempting to develop an "internet market place
for petroleum equipment and services," arranged to meet with representatives of
ICO. ICO had been told the meeting was to discuss the possibility of ICO selling
some of its products and services through NetworkOil's Internet marketplace. At
the meeting, however, Christopher N. O'Sullivan, NetworkOil's chairman and
founder, indicated that NetworkOil in fact was interested in purchasing ICO's
oilfield services business. The ICO representatives told NetworkOil they would
bring any credible offer to the attention of ICO's Board of Directors. At no
time thereafter did ICO receive any additional information from NetworkOil about
a transaction.
On December 8, 2000, Travis Street Partners, L.L.C. ("TSP"), several of
whose members are affiliated with NetworkOil, delivered to ICO a notice
purporting to nominate three candidates for election as directors of ICO at the
2001 Annual Meeting in accordance with ICO's Bylaws. TSP is managed by
Christopher O'Sullivan, NetworkOil's chairman and founder, and Timothy Gollin.
The notice states that TSP intends to nominate James D. Calaway, a director of
NetworkOil ("Calaway"), A. John Knapp, an investor in NetworkOil ("Knapp"), and
Charles T. McCord, III ("McCord") for election as directors at the upcoming
Annual Meeting. According to the notice, Knapp, Calaway and McCord are members
of TSP.
On December 13, 2000, ICO representatives informed TSP representatives that
ICO had reviewed the TSP notice and that ICO senior officers would be willing to
meet with TSP representatives to learn about TSP and the intended nominees. At a
subsequent December 19 meeting, TSP's managers explained that TSP was
considering an offer to buy either the entire company or ICO's oilfield services
business. ICO's representatives responded that it would refer such an offer to
the ICO Board if TSP had a proposal in mind. TSP
stated at the meeting that in the event of such a purchase by TSP, the eventual
owner of the oilfield services was anticipated to be NetworkOil.
On December 20, 2000, ICO received a letter from TSP stating that TSP was
prepared to make a fully-financed offer to acquire ICO at a price of $2.85 per
share of Common Stock, or, in the alternative, to acquire ICO's oilfield
services business at a price "in the range of 5x TTM EBITDA." The letter did not
disclose how such a purchase would be financed. TSP conditioned its willingness
to conduct a friendly offer upon (1) receipt of ICO's written consent to pursue
a transaction in accordance with the terms of such letter no later than 12:00
noon on Friday, December 22, 2000--two days after the date of the letter--and
(2) the negotiation and execution of a sale agreement with TSP for ICO or its
oilfield services business no later than December 31, 2000. As an additional
condition, TSP required ICO to make no disclosure of the TSP proposal.
At a December 22, 2000 meeting, ICO's Board of Directors considered the TSP
letter and unanimously determined that the process suggested by TSP was
inconsistent with ICO's goal of building value for all ICO shareholders. To
effectively build such shareholder value, the Board also authorized the hiring
of an investment banking firm to assist ICO in exploring strategic alternatives
so as to benefit all ICO shareholders. On December 22, 2000, Asher O. Pacholder,
Chairman of the Board of ICO, sent the following correspondence to TSP:
We have received your letter dated December 20, 2000, in which
you threaten a costly and disruptive proxy contest unless we
consent in writing, within 48 hours, to pursue a transaction
with you in accordance with the terms of your highly
conditional expression of interest, and also execute an
agreement by December 31 for a sale to you.
ICO's board of directors and management are committed to
building value for all ICO shareholders. The directors of ICO
have unanimously determined that the process your suggest in
your letter would be inconsistent with that goal.
Thank you for your interest in ICO.
On December 29, 2000, TSP filed a Schedule 13D with the Securities and
Exchange Commission indicating that TSP beneficially owned approximately 5.02%
of ICO Common Stock.
5
<PAGE> 8
The board will engage in a process of exploring strategic alternatives
available to ICO. These alternatives could include a sale of one or more of
ICO's business units. ICO believes the current Board of Directors is, and upon
the election of ICO's new nominee, Howard P. Tuckman, will be, better positioned
than TSP's nominees to explore strategic alternatives for the benefit of all
shareholders. In light of TSP's desire to acquire ICO or its oilfield services
business, TSP's nominees have a conflict of interest that puts them in direct
conflict with building shareholder value for all shareholders.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names, ages and titles of the
executive officers of ICO, other than the executive officers who are also
directors of ICO, as of January 8, 2001.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Isaac H. Joseph 45 President - ICO Worldwide, Inc.
Jon C. Biro 34 Senior Vice President, Chief Accounting Officer
and Treasurer
David M. Gerst 42 Senior Vice President and General Counsel
</TABLE>
Isaac H. Joseph has been principally employed as President of ICO
Worldwide, Inc. since April, 1998. Mr. Joseph was Executive Vice President -
Oilfield Services of ICO from November 1996 to April 1998. 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.
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, Chief Accounting Officer and
Treasurer since September 1996. Prior to that time, Mr. Biro was with a
predecessor of PricewaterhouseCoopers LLP.
David M. Gerst, a graduate of Stanford University and the UCLA School of
Law, has been Senior Vice President and General Counsel of ICO since September
1998. Mr. Gerst was Senior Vice President and General Counsel of Bayshore
Industrial, Inc., a subsidiary of ICO, from February 1997 to August 1998; was a
plant manager for Wedco, Inc., a subsidiary of ICO, from October 1996 to January
1997; was a general business consultant to ICO, among others from 1995 to
October 1996; and has been licensed to practice law since 1983.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held four meetings during the fiscal year ended
September 30, 2000. Each meeting was attended by all directors, except that Mr.
Willoughby attended two of the four meetings. Each director who is not an ICO
employee received a stipend of $16,250 in fiscal year 2000. The annual
non-employee director stipend was increased from $15,000 to $20,000 per year
effective on July 1, 2000. In addition, each non-employee director receives a
director's fee of $1,000 for each meeting of the Board of Directors or committee
of the Board of Directors actually attended and reimbursement of actual expenses
incurred. The Chairmen of the Audit and Compensation Committees also received an
annual stipend of $2,000 for fiscal year 2000; this stipend has been increased
to $5,000 per year effective on November 29, 2000 and will be paid to the
Chairman of the Nominating Committee as well. In addition, each director who is
not an employee is a participant in the Second Amended and Restated 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. In fiscal 2000, options to purchase
5,000 shares at an exercise price of $1-13/16 per share were granted to each of
Messrs. Morgan, Cornelius, Williamson, Leib, Willoughby, Sirusas and Gibson.
The Executive Committee is composed of Dr. Pacholder, Ms. Sylvia A.
Pacholder and Mr. Morgan. The functions of the Executive Committee include
reviewing capital expenditure projects, assisting management in implementing
consolidation plans relating to acquisitions and assisting management in
developing and implementing strategic plans. The Executive Committee did not
meet in fiscal year 2000.
6
<PAGE> 9
The Compensation Committee is composed of Mr. Cornelius, Chairman, and
Messrs. Leib and Williamson. Mr. Leib replaced Mr. Morgan subsequent to the end
of the 2000 fiscal year. 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 ICO's stock option
plans. Please see the report of the Compensation Committee below. The
Compensation Committee met twice in fiscal year 2000 with all members attending
each meeting.
The Board of Directors designated a standing Nominating Committee on
November 29, 2000. It is composed of Mr. Morgan, Chairman, Mr. Williamson and
Mr. Sirusas. Mr. Williamson replaced Ms. Robin E. Pacholer subsequent to the
committee's meeting to select nominees for the 2001 Annual Meeting. The
Nominating Committee is responsible for identifying qualified candidates to
serve as nominee for directors pursuant to the direction of the Board of
Directors. The Nominating Committee was not in existence during fiscal
year 2000.
AUDIT COMMITTEE REPORT
The Audit Committee consisted of Messrs. Cornelius, Williamson,
Leib and Gibson for its review of the fiscal year ended September 30, 2000. Mr.
Gibson, Mr. Sirusas and Mr. Morgan have resigned from the Audit Committee prior
to the meeting with the accountants; Mr. Gibson resigned after the meeting. Each
of Mr. Cornelius, Mr. Williamson and Mr. Leib is independent, as defined in the
applicable listing standards of the National Association of Securities Dealers,
as required by such listing standards prior to June 14, 2001. The Audit
Committee reviews the professional services provided by ICO's independent
accountants, the independence of such accountants from ICO's management, ICO's
annual and quarterly financial statements, ICO's financial reporting process and
internal control system and ICO's significant accounting and financial reporting
principles, practices and procedures. The Audit Committee also reviews such
other matters with respect to ICO's accounting, auditing and financial reporting
practices and procedures as it may find appropriate or may be brought to its
attention.
ICO's Board of Directors has adopted a written charter for its Audit
Committee, a copy of which is attached as Appendix A to this Proxy Statement.
During fiscal 2000, the Audit Committee held one meeting. In connection with the
preparation and filing of ICO's Annual Report on Form 10-K for the fiscal year
ended September 30, 2000, the Audit Committee
o reviewed and discussed the audited financial statements with
ICO's management,
o discussed with PricewaterhouseCoopers LLP, ICO's independent
auditors, the matters required to be disclosed by Statement of
Auditing Standards 61 (as modified or supplemented),
o received the written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independence Standards
Board Standard No. 1 (as modified or supplemented) and
o discussed with PricewaterhouseCoopers LLP its independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board that the audited financial statements be included in
ICO's Annual Report on Form 10-K for the year ended September 30, 2000.
AUDIT COMMITTEE
John F. Williamson
William E. Cornelius
James E. Gibson
7
<PAGE> 10
SECURITY OWNERSHIP OF
THE BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth, as of December 29, 2000, the shares of
Common Stock beneficially owned by:
o each director and ICO nominee for director of ICO;
o each current executive officer of ICO listed in the Summary
Compensation Table set forth below; and
o all current officers and current directors of ICO as a group.
Except as otherwise set forth, such persons have sole voting power and sole
dispositive power with respect to the shares beneficially owned by them.
Beneficial ownership with respect to shares held in ICO's 401(k) plans are
attributed to that participant. The 401(k) plans have previously provided for
voting of such shares at the direction of ICO; however, these plans are being
amended to provide for voting of such shares at the direction of the plan
participants.
<TABLE>
<CAPTION>
Number of shares Percent
Name beneficially owned of Class
---------------------------------------------------------------------------------------------
<S> <C> <C>
Class I Directors and Nominee
William E. Cornelius 34,000 (1) *
Robin E. Pacholder 86,336 (2)(3) *
George S. Sirusas 47,959 (4) *
Howard P. Tuckman 0 --
Class II Directors
William J. Morgan 884,270 (2)(5)(6) 3.9%
Sylvia A. Pacholder 4,295,497 (2)(6)(7) 18.8%
William E. Willoughby 1,689,929 (2)(8) 7.4%
Class III Directors
Asher O. Pacholder 4,385,761 (2)(7)(9) 19.2%
John F. Williamson 37,631 (10) *
Walter L. Leib 898,212 (11) *
James E. Gibson 28,000 (12) *
Executive Officers Who Are Not Directors
Isaac H. Joseph 53,332 (13) *
Jon C. Biro 65,844 (14) *
David M. Gerst 53,350 (15) *
Named Officers, Directors and Nominees
as a group (14 persons) 5,086,608 (2)(16) 20.5%
</TABLE>
* Less than 1% of outstanding shares.
(1) Share amounts consist of 1,000 shares of Common Stock and 33,000 shares
of Common Stock that are issuable upon exercise of stock options granted
under the 1993 Stock Option Plan for Non-Employee Directors.
(2) This director or executive officer is a party to the Wedco Shareholders
Agreement described below in the Section entitled "Shareholder
Agreements." Except as set forth in the notes, share amounts do not
include, for purposes of clarity, the shares of Common Stock beneficially
owned by other parties to the Wedco Shareholders Agreement because
multiple parties listed in the table are party to such agreement and
could be deemed to have beneficial ownership of the same shares. To the
extent the parties to the Wedco Shareholders Agreement constitute a
group, such group and its members could be deemed to be the beneficial
owner of 4,666,805 shares of Common Stock or
8
<PAGE> 11
approximately 20.0% of the shares of Common Stock of ICO deemed
outstanding (of which 4,078,643 shares of these beneficially owned shares
of Common Stock were outstanding as of December 29, 2000).
(3) Share amounts include 14,700 shares of Common Stock, 1,644 Shares of
Common Stock that may be acquired upon conversion of Convertible
Exchangeable Preferred Stock, and 50,000 shares of Common Stock that are
issuable upon exercise of stock options granted under ICO's various
employee stock option plans, 11,000 shares of Common Stock issuable upon
exercise of stock options granted under the 1993 Stock Option Plan for
Non-Employee Directors, and 8,992 shares of Common Stock held in ICO's
401(k) plans. In fiscal 2000, Ms. Pacholder received $218,000 in
compensation.
(4) Share amounts include 18,219 shares of Common Stock, 2,740 shares of
Common Stock that may be acquired upon conversion of Convertible
Exchangeable Preferred Stock and 27,000 shares of Common Stock that are
issuable upon exercise of stock options granted under the 1993 Stock
Option Plan for Non-Employee Directors. Common stock holdings for Mr.
Sirusas include 2,379 shares held by his wife.
(5) Share amounts include 44,000 shares of Common Stock and 33,000 shares of
Common Stock that are issuable upon exercise of stock options granted
under the 1993 Stock Option Plan for Non-Employee Directors.
(6) Share amounts include 180,000 shares of Common Stock and 63,051 shares of
Common Stock that may be acquired upon conversion of Convertible
Exchangeable Preferred Stock 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. Dr.
Pacholder, Ms. Sylvia Pacholder and Mr. Morgan are majority owners of
Pacholder Associates, Inc. Share amounts also include 415,461 shares of
Common Stock, 102,879 shares of Common Stock that may be acquired through
the exercise of warrants and 45,879 shares of Common Stock that may be
acquired upon conversion of Convertible Exchangeable Preferred Stock
owned by Pacholder Associates, Inc.
(7) Share amounts include 31,400 shares of Common Stock, 125,000 shares of
Common Stock that are issuable upon exercise of stock options granted
under ICO's various employee stock option plans, 2,000 shares of Common
Stock issuable upon exercise of stock options granted under the 1993
Stock Option Plan for Non-Employee Directors, 4,291 shares of Common
Stock held in ICO's 401(k) plan and (i) 374,873 shares of Common Stock
issued in connection with acquisitions by ICO over which Ms. Sylvia
Pacholder and Dr. Pacholder share voting power and (ii) 2,950,663 shares
of Common Stock of ICO subject to the Wedco Shareholders Agreement over
which Ms. Sylvia Pacholder and Dr. Pacholder have the power to vote on
certain matters as described below in the section entitled "Shareholder
Agreements". Ms. Sylvia Pacholder disclaims beneficial ownership of the
2,950,663 shares related to the Wedco Shareholders Agreement and the
374,873 shares related to the acquisitions.
(8) Share amounts include 1,662,929 shares of Common Stock, 27,000 shares of
Common Stock that are issuable upon exercise of stock options granted
under the 1993 Stock Option Plan for Non-Employee Directors. Common Stock
owned by Mr. Willoughby includes 149,139 shares owned jointly with his
wife and 395,665 shares owned by his wife.
(9) Share amounts include 118,200 shares of Common Stock, 125,000 shares of
Common Stock that are issuable upon exercise of stock options granted
under ICO's various employee stock option plans, 6,000 shares of Common
Stock issuable upon exercise of stock options granted under the 1993
Stock Option Plan for Non-Employee Directors, 3,755 shares of Common
Stock held in ICO's 401(k) plan and (i) 374,873 shares of Common Stock
issued in connection with acquisitions by ICO over which Ms. Sylvia
Pacholder and Dr. Pacholder share voting power and (ii) 2,950,663 shares
of Common Stock of ICO subject to the Wedco Shareholders Agreement over
which Ms. Sylvia Pacholder and Dr. Pacholder have the power to vote on
certain matters as described below in the section entitled "Shareholder
Agreements". Dr. Pacholder disclaims beneficial ownership of the
2,950,663 share related to the Wedco Shareholders Agreement and the
374,873 shares related to the acquisitions.
(10) Share amounts include 8,631 shares of Common Stock, and 29,000 shares of
Common Stock that are issuable upon exercise of stock options granted
under the 1993 Stock Option Plan for Non-Employee Directors. Common Stock
holdings for Mr. Williamson includes 437 shares owned by his wife.
(11) Share amounts include 55,021 shares of Common Stock, 4,384 shares of
Common Stock that may be acquired upon conversion of Convertible
Exchangeable Preferred Stock, and 27,000 shares of Common Stock that are
issuable upon exercise of stock options granted under the 1993 Stock
Option Plan for Non-Employee Directors and 811,807 shares of Common Stock
of ICO subject to the Wedco Shareholders Agreement over which Mr. Leib
has the power to vote on certain matters as described below in the
Section entitled "Shareholder Agreements."
(12) Share amounts include 1,000 shares of Common Stock owned jointly by Mr.
Gibson and his wife and 27,000 shares of Common Stock that are issuable
upon exercise of stock options granted under the 1993 Stock Option Plan
for Non-Employee Directors.
9
<PAGE> 12
(13) Share amounts include 50,000 shares of Common Stock that are issuable
upon exercise of stock options granted under ICO's various employee stock
option plans and 3,322 shares of Common Stock held in ICO's 401(k) plan.
(14) Share amounts include 12,000 shares of Common Stock that are jointly
owned by Mr. Biro and his wife, 50,000 shares of Common Stock that are
issuable upon exercise of stock options granted under ICO's various
employee stock option plans and 3,844 shares of Common Stock held in
ICO's 401(k) plan.
(15) Share amounts include 50,000 shares of Common Stock that are issuable
upon exercise of stock options granted under ICO's various employee stock
option plans and 3,350 shares of Common Stock held in ICO's 401(k) plan.
(16) Share amounts include 2,562,361 shares of Common Stock, 117,697 shares of
Common Stock that may be acquired upon conversion of Convertible
Exchangeable Preferred Stock, 450,000 shares of Common Stock that are
issuable upon exercise of stock options granted under ICO's various
employee stock option plans, 222,000 shares of Common Stock issuable upon
exercise of stock options granted under the 1993 Stock Option Plan for
Non-Employee Directors, 27,564 shares of Common Stock held in ICO's
401(k) plans, and 374,873 shares of Common Stock issued in connection
with acquisitions over which Ms. Sylvia Pacholder and Dr. Pacholder share
voting power.
10
<PAGE> 13
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by ICO to each
of the four most highly compensated executive officers and directors (other than
ICO's Chief Executive Officer) and ICO's Chief Executive Officer during the
fiscal years ended September 30, 2000, 1999 and 1998.
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------- ------------
SECURITIES
NAME AND FISCAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY (1) BONUS OPTIONS (#) COMPENSATION (3)
------------------ ------ ---------- ----- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Sylvia A. Pacholder 2000 363,000 150,000 125,000 2,600
President and 1999 308,000 0 0 1,200(4)
Chief Executive Officer 1998 325,000 220,000(2) 0 2,500
Asher O. Pacholder 2000 335,000 75,000 125,000 2,600
Chairman of the Board 1999 294,000 0 0 1,200(4)
and Chief Financial Officer 1998 310,000 180,000(2) 0 2,500
Isaac H. Joseph 2000 211,000 50,000 50,000 2,500
President - Oilfield Services 1999 189,000 15,000 0 1,200(4)
1998 161,000 40,000(2) 0 1,800
Jon C. Biro 2000 205,000 33,000 50,000 2,600
Senior Vice President, Chief 1999 173,000 15,000 0 1,200(4)
Accounting Officer and 1998 131,000 40,000(2) 0 2,500
Treasurer
David M. Gerst 2000 172,000 25,000 50,000 2,900
Senior Vice President and 1999 114,000 15,000 0 1,600(4)
General Counsel 1998 85,000 15,000(2) 0 1,000
</TABLE>
(1) Rounded to nearest thousand.
(2) Consists of a special bonus paid to these officers following a sale of an
equity investment by ICO resulting in ICO recognizing a pre-tax gain of
$11,773,000. The recognition of the gain and the distribution of the
special bonuses occurred during the first quarter of fiscal 1998. In
addition to these executive officers, over 800 other employees also
received special bonuses.
(3) Includes ICO's matching contributions to one of ICO's Employee Stock
Ownership Plans (401(k) Plans).
(4) This amount has been adjusted to reflect refunds made after the date of
the January 26, 2000 proxy statement as a result of overcontributions to
the Plan.
CERTAIN INFORMATION REGARDING PARTICIPANTS
ICO, each of its current directors, each ICO nominee and each of ICO's
executive officers could be deemed participants in any solicitation by ICO in
opposition to TSP (collectively, the "Participants"). Certain information
relating to the Participants is set forth below.
TRANSACTIONS BY PARTICIPANTS IN THE SECURITIES OF ICO IN THE PAST TWO YEARS
11
<PAGE> 14
The dates within the past two years on which any of the Participants
purchased or sold securities of ICO and the amount purchased or sold on each
date are set forth below. Except as indicated below, all transactions were in
the Common Stock of ICO and were effected on the stock market. Except as
indicated below, no Participant has purchased or sold any securities of ICO
within the past two years.
12
<PAGE> 15
COMMON SHARES DECEMBER 30, 1998 TO DECEMBER 29, 2000
(ROUNDED TO WHOLE SHARES)
<TABLE>
<CAPTION>
Number of Number of
Date of Shares Shares
Participant Transaction Purchased Sold
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
William E. Cornelius 1/22/1999 1,000
Walter L. Leib
4/5/1999 2,000
6/3/1999 2,000
11/8/1999 1,000
9/29/2000 1,100
William J. Morgan 3/8/1999 20,000
5/12/2000 1,400
5/15/2000 8,600
12/6/2000 10,000
Asher C. Pacholder 3/8/1999 20,000
2/22/2000 20,000
4/11/2000 20,000
Robin E. Pacholder 9/27/1999 6,200
George S. Sirusas 9/29/1999 5,000
John F. Williamson 3/11/1999 4,000
7/1/1999 9,945
1/7/2000 5,500
William E. Willoughby 5/25/1999 10,000
5/26/1999 7,500
5/27/1999 7,500
7/15/1999 9,000
Jon Biro 3/8/1999 3,000
7/14/1999 3,000
12/27/1999 3,000
5/25/2000 1,500
</TABLE>
PREFERRED SHARES DECEMBER 30, 1998 TO DECEMBER 29, 2000
<TABLE>
<CAPTION>
Number of Number of
Date of Shares Shares
Participant Transaction Purchased Sold
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Walter L. Leib 12/28/1999 200
12/14/1999 500
10/25/2000 500
George S. Sirusas 10/20/2000 1,000
</TABLE>
13
<PAGE> 16
BUSINESS ADDRESSES
The business address for each Participant is 11490 Westheimer, Suite
1100, Houston, Texas 77077.
ADDITIONAL AGREEMENTS AND UNDERSTANDINGS
Except as otherwise stated herein, none of the Participants is, or was
within the past year, a party to any contract, arrangements or understandings
with any person with respect to any securities of ICO, including, but not
limited to joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profit, division or losses or profits,
or the giving or withholding of proxies. Except as otherwise stated herein, none
of the Participants has any arrangement or understanding with any person (a)
with respect to any future employment by ICO or its affiliates or (b) with
respect to any future transactions to which ICO or any of its affiliates will or
may be a party.
EMPLOYMENT AGREEMENTS
ICO has employment agreements with Ms. Sylvia A. Pacholder, Dr. Asher O.
Pacholder, Mr. Isaac H. Joseph, Ms. Robin E. Pacholder, Mr. Jon C. Biro and Mr.
David M. Gerst. The base salary of each executive is reviewed at least annually
and is increased from time to time to reflect, at a minimum, increases in the
cost of living. The current base salaries are as follows:
Sylvia A. Pacholder $380,000
Asher O. Pacholder $340,000
Isaac H. Joseph $235,000
Robin E. Pacholder $210,000
Jon C. Biro $210,000
David M. Gerst $210,000
Salary increases for each executive are to be consistent with the increases
given to other key executives. Once increased, executive salaries cannot be
reduced. Each executive may receive an annual cash bonus in such amount as is
determined by the Board. Each executive is also eligible for other benefits
offered by ICO.
The employment agreements, as amended, for Ms. Sylvia A. Pacholder and Dr.
Asher O. Pacholder provide for a term of employment through December 31, 2001,
that is extended automatically from day to day until such time as the executive
or ICO gives written notice that automatic extensions shall cease, in which
event employment terminates on a date five years after such notice has been
given. The employment agreements for Mr. Isaac H. Joseph, Ms. Robin E. Pacholder
and Mr. Jon C. Biro provide for a term of employment through September 3, 2000,
that is extended automatically from day to day until such times as the executive
or ICO gives written notice that automatic extensions shall cease, in which
event employment terminates on a date two years after such notice has been
given. The employment agreement for Mr. David M. Gerst provides for a term of
employment through August 4, 2001, that is extended automatically from day to
day until such times as the executive or ICO gives written notice that automatic
extensions shall cease, in which event employment terminates on a date two years
after such notice has been given.
If an executive is terminated by ICO for Cause (as defined), ICO shall pay
the executive the full salary through the Date of Termination (as defined). If
the employment of the executive is terminated by ICO other than for Cause or
Disability (as defined) or by the executive for Good Reason (as defined below),
the executive will be entitled to receive a lump sum equal to the sum of the
following items: (1) the executive's annual base salary through the Date of
Termination; (2) the product of (x) the number of days worked in the year of
termination divided by 365, and (y) the greater of half of the executive's
annual base salary in the year of termination or the executive's highest annual
bonus paid during the employment period; and (3) five times (two times for Mr.
Isaac H. Joseph, Ms. Robin E. Pacholder, Mr. Jon C. Biro and Mr. David M. Gerst)
the sum of (x) the executive's annual base salary as of the Termination Date and
(y) the greater of half of the executive's annual base salary in the year of
termination or the executive's highest annual bonus paid during the employment
period.
Good Reason means:
14
<PAGE> 17
o the executive ceasing for any reason to be a named executive
officer, other than by death, disability or termination by
the executive of employment with ICO other than for Good
Reason;
- the assignment to the executive of any duties
inconsistent in any respect with the executive's
position (including status, offices, titles and
reporting requirements), authority, duties or
responsibilities as contemplated by the employment
agreement or
- any other action by ICO that results in a diminishment
in such position, authority, duties or
responsibilities, other than an insubstantial and
inadvertent action which is remedied by ICO promptly
after receipt of notice thereof given by the executive;
o any failure by ICO to comply with any of the provisions of
the compensation section of the agreement, other than an
insubstantial and inadvertent failure which is remedied by
ICO promptly after receipt of notice thereof given by the
executive;
o ICO's requiring the executive to be based at any office or
location outside the greater Houston metropolitan area,
except for travel reasonably required in the performance of
the executive's responsibilities;
o any purported termination by ICO of the executive's
employment otherwise than as permitted by the employment
agreement, it being understood that any such purported
termination shall not be effective for any purpose of the
agreement;
o any failure by ICO to comply with and satisfy the section of
the employment agreement requiring any parent company or
successor, in the event of a change in control, by an
agreement acceptable in form and substance satisfactory to
the executive, guarantee and cause the performance of the
employment agreement; or
o if executive shall no longer be employed by ICO for any
reason within two years after the occurrence of a change of
control (as defined below).
A change of control is defined in the employment agreements to mean a
change of control of ICO during the period of an executive's employment of a
nature that would be required to be reported in response to Item 1(a) of the
Current Report on Form 8-K, as in effect on the date of the employment
agreement, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934. A change of control shall be deemed to have occurred if, without
limitation:
o ICO shall not be the surviving entity in any merger,
consolidation or other transaction (or survives only as a
subsidiary of an entity other than a previously wholly-owned
subsidiary of ICO) or
- the shareholders of ICO prior to any such merger,
consolidation or other transaction do not continue to
own at least 60% of the surviving entity;
o ICO sells, leases or exchanges all or substantially all of
its assets to any other person or entity (other than a
wholly-owned subsidiary of ICO);
o ICO is materially or completely liquidated; (4) a third
person, including a "group" as such term is used in Section
13(d)(3) of the Exchange Act, becomes the beneficial owner,
directly or indirectly, of (a) 50% or more of the combined
voting power of ICO's outstanding voting securities
ordinarily having the right to vote for the election of
directors of ICO or (b) 20% or more of the combined voting
power of ICO's outstanding voting securities ordinarily
having the right to vote for the election of directors of ICO
if such acquisition is not approved by the Board of Directors
then in office immediately prior to the acquisition;
o any person (other than ICO) purchases any voting securities
of ICO in a tender or exchange offer with the intent, express
or implied, of purchasing or otherwise acquiring voting
control of ICO; or
15
<PAGE> 18
o during any consecutive two-year period, individuals who
constituted the Board of Directors of ICO (together with any
new directors whose election by the Board of Directors or
whose nomination for election by the shareholders of ICO was
approved by a vote of at least three-quarters of the
directors still in office who were either directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in
office.
If it is determined that any payment made under the employment agreement,
or another plan or agreement of ICO, in the event of a change of control, would
be considered a payment as defined in Section 280G of the Internal Revenue Code
and is subject to excise tax under Section 4999 of the Internal Revenue Code,
then the executive will be entitled to an additional "gross-up payment" that
will place the executive in the same after-tax economic position as if such
payment had not been considered an excess parachute payment.
In addition to the agreements described above with the named executive
officers, other ICO employees are parties to employment agreements with ICO with
terms and conditions that vary by each individual employee.
OPTIONS GRANTED DURING FISCAL 2000
Shown below is information on grants of stock options during 2000 to the
named executive officers.
<TABLE>
<CAPTION>
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR OPTION TERM(2)
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED Year(1) ($/SHARE) DATE 5% 10%
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sylvia A. Pacholder 125,000 20.4% $1.75 03/15/2010 $137,571 $348,631
Asher O. Pacholder 125,000 20.4% $1.75 03/15/2010 137,571 348,631
Isaac H. Joseph 50,000 8.1% $1.75 03/15/2010 55,028 139,452
Jon C. Biro 50,000 8.1% $1.75 03/15/2010 55,028 139,452
David M. Gerst 50,000 8.1% $1.75 03/15/2010 55,028 139,452
</TABLE>
(1) Based on a total of 614,000 options granted to all employees in fiscal year
2000.
(2) Calculated utilizing the assumed rate of appreciation compounded
annually over the ten-year term.
FISCAL YEAR 2000 OPTION EXERCISES AND FISCAL YEAR-END VALUE
The following table sets forth stock options exercised by the individuals
named in the Summary Compensation Table during fiscal year 2000, and the number
and value of all unexercised options at fiscal year end. The value of
"in-the-money" options refers to options having an exercise price which is less
than the market price of ICO's Common Stock on September 30, 2000.
16
<PAGE> 19
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-
NAME UNEXERCISED OPTIONS AT THE-MONEY OPTIONS AT
SHARES SEPTEMBER 30, 2000 (#)(1) SEPTEMBER 30, 2000 ($)(2)
ACQUIRED ON VALUE -------------------------------------------------------------
EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sylvia A. Pacholder 0 N/A 127,000 / 0 $31,750 / 0
Asher O. Pacholder 0 N/A 131,000 / 0 31,750 / 0
Isaac H. Joseph 0 N/A 50,000 / 0 12,500 / 0
Jon C. Biro 0 N/A 50,000 / 0 12,500 / 0
David M. Gerst 0 N/A 50,000 / 0 12,500 / 0
</TABLE>
(1) On June 30, 2000, the individuals listed below waived a stock option
exercisable for an aggregate of 414,500 shares of the Common Stock of ICO.
Sylvia A. Pacholder 165,000
Asher O. Pacholder 140,000
Isaac H. Joseph 42,000
Jon C. Biro 52,500
David M. Gerst 15,000
(2) Based upon the $2.00 closing market value price of ICO's Common Stock at
September 29, 2000 as reported on the NASDAQ Stock Market.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee"),
composed of three members, is responsible for ICO's compensation programs. The
Committee reviews, evaluates and establishes compensation levels of corporate
officers and administers ICO's employee stock option plans. ICO's executive
compensation programs are designed to help ICO attract, motivate and retain
executive talent. In making compensation decisions, the Committee also takes
into account the cyclicality of ICO's business lines and progress toward the
achievement of strategic Company objectives. In addition, in fiscal year 2000,
the Committee retained an independent compensation consultant (one of the "Big
Five" national accounting firms) to conduct a comprehensive survey of executive
compensation. The compensation consultant reviewed two sources of compensation
data. The first source was published independent compensation surveys, such as
the Mercer Executive Compensation Survey, the ECS Industry Report on Top
Management Compensation and the William M. Mercer Energy Compensation Survey.
These surveys, as a whole, analyzed executive compensation in the chemicals,
plastics and energy industries, as well as the non-durable goods manufacturing
sector. The second source of compensation data was proxy statements filed by
oilfield services and specialty chemical companies in ICO's peer group based on
annual sales levels.
The following summarizes the Committee's compensation programs and policies
and describes the bases for compensation of ICO's executive officers and its
chief executive officer.
CASH COMPENSATION
Base Salary Program. ICO believes that offering competitive rates of base
pay plays an important role in its ability to attract and retain executive
talent. Discretionary base salary adjustments are also made based upon each
individual employee's performance over time. Generally, executive salaries are
reviewed annually based on a variety of factors including individual
performance, market comparisons and ICO's overall financial condition. During
fiscal 1999, ICO's Chief Executive Officer, as well as ICO's Chairman/Chief
Financial Officer, voluntarily waived 10% of their salary due to the very low
levels of oilfield service activity and the resulting effect on ICO's
profitability. Due to improving conditions, the Compensation Committee rescinded
the waiver in December 1999. Base salaries were generally increased for
executive officers in fiscal 2000, both as
17
<PAGE> 20
result of improvements over fiscal 1999 results and findings in the consultant's
survey that ICO executives' base salaries were generally below medians for
executives at companies in ICO's business sectors.
Annual Performance Compensation. ICO has historically provided annual
performance compensation in the form of cash bonuses. The Committee's decisions
are typically based upon the performance and financial condition of ICO and
subjective factors including the executive officer's job performance and
achievements during ICO's fiscal year. At times, special bonuses may be awarded
related to specific material events which required extraordinary effort on the
part of the executive officer. Cash bonuses were increased for executive
officers in the 2000 fiscal year, in part because of improvements over fiscal
1999 results, (with emphasis on operational and administrative results,
depending on the executive in question). Bonuses were also increased as a result
of findings in the consultant's survey that total cash compensation were
generally below medians for executives at companies in ICO's business segments.
During fiscal year 2000, bonuses were paid to ICO's executive officers for the
reasons described above.
LONG-TERM COMPENSATION
Stock Options. Longer-term incentives, in the form of stock options,
are designed to directly link a significant portion of the executive's
compensation to the enhancement of Shareholder value. Additionally, stock
options encourage management to focus on longer-term objectives along with
annual operating performance and encourage retention of valued employees. The
Committee believes that stock incentives are appropriate, not only for senior
management, but also for other employees of ICO and its subsidiaries. All
options provide for purchases of shares at an exercise price equal to fair
market value on the date of grant. Accordingly, the Committee, from time to
time, grants stock options to ICO's executive officers. The number of options is
determined based upon the level and contribution of a given employee and may
take into account the number of options previously granted to the employee. In
the past, the Committee has generally granted incentive stock options under
ICO's plans. ICO had made no option grants to the named executive officers since
fiscal 1997. Additionally, the Committee took into account the consultant's
survey findings that ICO's non-cash benefits were below medians for executives
at companies in ICO's business sectors. As a result, the Committee determined
that grants of options were appropriate in fiscal 2000.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In determining the fiscal year 2000 compensation paid to ICO's Chief
Executive Officer, the Committee took into account the executive's abilities,
business experience and performance during the past fiscal year. The Committee's
assessment of the Chief Executive Officer's performance included the areas of
continued integration of acquired businesses, personnel development, cost
control and the financial performance of ICO compared to fiscal 1999 results.
The Committee, using the information provided by the independent compensation
consultant, also compared the compensation levels of ICO's Chief Executive
Officer to the compensation levels of chief executive officers of companies of
similar size as well as companies operating in the specialty chemical and
oilfield service industries. The Chief Executive's total cash compensation
during fiscal 2000 was less than the median total cash compensation for the
Chief Executive Officers of the companies included in the survey provided by the
independent compensation consultants. The companies with which these comparisons
were made were not necessarily the same as the companies included in the
oilfield service and specialty chemical indices utilized in the performance
graph. As with ICO's other executive officers, the Committee recommended an
option grant in fiscal 2000 for the Chief Executive Officer based upon the
absence of recent grants and the survey's findings with respect to non-cash
compensation practices at companies in ICO's business sectors.
COMPENSATION DEDUCTION LIMITATION
Section 162(m) of the Internal Revenue Code imposes a limitation on the
deductibility of nonperformance-based compensation in excess of $1 million paid
to Named Executive Officers. The Committee currently believes that ICO should be
able to continue to manage its executive compensation program for Named
Executive Officers so as to preserve the related federal income tax deductions.
SUMMARY
The Committee believes that ICO's executive compensation policies and
programs serve the interests of the stockholders and ICO effectively. The
various compensation programs are believed appropriately balanced to provide
motivation for
18
<PAGE> 21
executives to contribute to ICO's overall success and enhance the value of ICO
for the stockholders' benefit. The Committee will continue to monitor the
effectiveness of ICO's compensation programs and will make changes, when
appropriate, to meet the current and future needs of ICO.
COMPENSATION COMMITTEE
William E. Cornelius
William J. Morgan
John F. Williamson
19
<PAGE> 22
STOCK PERFORMANCE CHART (1)
The following chart compares the yearly percentage change in the cumulative
total Shareholder return of ICO's common stock during the five years ended
September 30, 2000 with: (1) the cumulative total return of the NASDAQ Composite
Stock Index (U.S.); (2)an index of 33 specialty chemical companies (Value Line's
Specialty Chemical Industry Index); and (3)an index of 21 oil service companies
(Value Line's Oilfield Services and Equipment Industry Index).
STOCK PERFORMANCE CHART
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
ICO............................ 100.00 122.43 172.46 59.49 41.74 48.50
Oilfield Services Index........ 100.00 152.75 332.46 220.83 307.48 346.42
NASDAQ......................... 100.00 118.68 162.92 165.50 270.38 358.89
Specialty Chemicals Index...... 100.00 118.01 156.30 146.57 186.59 209.82
</TABLE>
(1) Assumes $100 invested on September 30, 1995 and all dividends reinvested.
Data supplied by NASDAQ and Value Line Institutional Services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors of ICO currently
consists of Messrs. William J. Morgan, William E. Cornelius and John F.
Williamson. Subsequent to the end of fiscal year 2000, William J. Morgan, a
previous Compensation Committee member, was replaced by Mr. Walter L. Leib.
Dr. Asher O. Pacholder and Mr. William J. Morgan are each directors of ICO
and are directors and executive officers of Pacholder Associates, Inc. and are
parties to the Wedco Shareholders Agreement.
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<PAGE> 23
CERTAIN RELATIONSHIPS, TRANSACTIONS AND AGREEMENTS
In connection with the April 30, 1996 merger of Wedco Technology, Inc.
("Wedco") into a wholly-owned subsidiary of ICO, 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 that 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.
Robin E. Pacholder, daughter of Ms. Sylvia Pacholder and Dr. Asher
Pacholder and spouse of Mr. David Gerst, is the President of Wedco - North
America and is a director of ICO. As described above in the section entitled
"Employment Agreements", Ms. Pacholder is party to an employment agreement with
ICO. Ms. Robin Pacholder's fiscal year 2000 salary and bonus was $218,000. She
was granted 25,000 options under the various ICO employee stock option plans in
fiscal year 2000, at a grant price of $1.75. These options expire on March 15,
2010 and are fully vested upon grant. In addition, Ms. Robin Pacholder is
entitled to certain other ICO benefits, including participation in ICO's various
401(k) plans.
Tom D. Pacholder, son of Ms. Sylvia Pacholder and Dr. Asher Pacholder, is
Senior Vice President-Corporate Development of Wedco. Mr. Pacholder, who has a
Master's Degree from the University of Dayton, received $119,000 in compensation
during fiscal 2000.
SHAREHOLDER AGREEMENTS
Dr. Asher O. Pacholder, Sylvia A. Pacholder, Robin E. Pacholder, William J.
Morgan, Pacholder Associates, Inc. (these shareholders are collectively the "ICO
Shareholders"), and William E. Willoughby, Peggy S. Willoughby, William C.
Willoughby (individually and as custodian for William B. Willoughby), Regina S.
Willoughby (individually and as custodian for William B. 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 "ICO/Wedco Shareholders") and ICO are parties
to a shareholders agreement (the "Wedco Shareholders Agreement") covering, in
the aggregate, 4,078,643 outstanding shares of ICO's Common Stock (as of
December 29, 2000). Pursuant to the agreement, the ICO/Wedco Shareholders agree
to take all actions necessary or appropriate to cause the election of William E.
Willoughby, Walter L. Leib and George S. Sirusas (the "Initial Wedco Directors")
to the Board of Directors of ICO and to cause their re-election to the Board of
Directors of ICO until the earlier of: (1) the time the Wedco Shareholders,
taken a whole, beneficially own less than 1,500,000 shares of Common Stock or
(2) there is a change in control (as defined below) of ICO (the "Termination
Date").
Also under the Wedco Shareholders Agreement, all the ICO Shareholders have
granted irrevocable proxies coupled with an interest to Mr. Leib to vote their
shares of Common Stock in favor of the slate of nominees for ICO's Board of
Directors selected by the then incumbent members of the Board of Directors of
ICO (the "Nominated Slate") effective until the Termination Date. The Wedco
Shareholders have granted irrevocable proxies coupled with an interest to Ms.
Sylvia A. Pacholder and Dr. Asher O. Pacholder to vote their shares of Common
Stock of ICO also in favor of the Nominated Slate. The Wedco Shareholders'
proxies are effective while any Wedco Shareholder owns any Company stock or
until a change of control (as defined in the next paragraph).
A change of control occurs under the Wedco Shareholders Agreement when (1)
any person or group becomes the beneficial owner of shares of stock or other
securities of ICO either (a) constituting in excess of 50% of the shares of
voting stock of ICO or (b) entitling such person or group, either immediately or
with the passage of time or the occurrence of a stated event, to exercise a
majority of the voting power in the election of the directors, (2) a majority of
the Board of Directors of ICO ceases to be composed of the nominees of the
ICO/Wedco Shareholders (the "Continuing Directors") or of persons nominated by
and elected to the Board of Directors with the consent or approval of a majority
of the Continuing Directors, or (3) a sale, transfer, conveyance, assignment or
other disposition of all o substantially all of ICO's assets, whether in
liquidation, dissolution or otherwise.
In addition, if any one of Messrs. Willoughby, Leib or Sirusas shall cease
to serve as a director of ICO at any time prior to the Termination Date, the
ICO/Wedco Shareholders are required to take all actions necessary and
appropriate to ensure that the vacancy created shall be filled by a person
nominated by the remaining Initial Wedco Directors or, if there are no
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<PAGE> 24
remaining Initial Wedco Directors, by the Wedco Shareholders acting by a
majority in interest, subject to the consent of a majority of the full Board of
Directors of ICO.
The Wedco Shareholders Agreement also provides that if one or more of the
ICO/Wedco Shareholders desire to sell 500,000 or more shares of Common Stock in
a single or series of related transactions (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. The Wedco
Shareholders Agreement is filed as Exhibit 10.9 to ICO's Form S-4 dated March
15, 1996.
In connection with several acquisitions by ICO in which the sellers
received shares of the Common Stock of ICO, such sellers granted certain rights
to vote those shares to members of ICO's management.
Pursuant to ICO's acquisition of R.J. Dixon, Inc. in June, 1995, Raymond J
Dixon, Jr. granted an irrevocable proxy appointing the Chairman of the Board and
the President of ICO, or either of them, to vote all shares of ICO he received
in connection with the acquisition. The proxy expires upon the earliest of:
termination of employment of Mr. Dixon, transfer of the shares to a person not
affiliated with or an immediate family member or ten years. Mr. Dixon is an
employee of ICO and currently holds 94,884 shares of the Common Stock of ICO
that he received in the acquisition.
Pursuant to ICO's acquisition of Polymer Service of Indiana, Inc. in July
1996, each recipient of shares of the Common Stock of ICO granted an irrevocable
proxy appointing the Chairman of the Board and the President of ICO, or either
of them, to vote all shares of ICO that the recipient is entitled to vote. The
proxy expires upon the earliest of transfer of the shares to a non-affiliated
person or entity or ten years. One of the recipients, Joe Moore, currently owns
23,942 shares of the Common Stock of ICO.
Pursuant to ICO's acquisition of Bayshore Industrial, Inc. in December
1996, each recipient of shares of the Common Stock of ICO granted an irrevocable
proxy appointing the Chairman of the Board and the President of ICO, or either
of them, to vote all shares of ICO the recipient is entitled to vote. The proxy
expires upon the earliest of: (1) transfer of the shares to a non-affiliated
person or entity, (2) termination of employment of the recipient, (3) if either
one or both of Asher Pacholder and Sylvia Pacholder cease to serve as Chairman
of the Board and President and Chief Executive Officer, respectively of ICO, or
(4) ten years.
Three of the recipients, Eddie Johnson, Max Kloesel and Carol C. Munn, currently
own shares of the Common Stock of ICO and are employees of ICO. They hold
60,283, 116,361 and 1,403 shares of the Common Stock of ICO, respectively.
CERTAIN CHANGE OF CONTROL MATTERS
10-3/8% Senior Notes Due 2007
Pacholder Associates, Inc., ("PAI") which is majority-owned by Dr.
Asher O. Pacholder, Sylvia A. Pacholder and William J. Morgan, may be deemed to
beneficially own the following 10-3/8% Senior Notes due 2007 of ICO (the "Senior
Notes"):
o $1,725,000 in face value owned by Pacholder High Yield
Fund, Inc. for which PAI may be deemed to possess
dispositive authority; and
o $2,275,000 in face value owned by three PAI clients for
which PAI may be deemed to possess dispositive
authority.
The indenture pursuant to which ICO's Senior Notes were issued contains a
number of covenants, including a change of control provision that requires ICO
to repurchase all of the Senior Notes at a repurchase price in cash equal to
101% of the principal amount of the Senior Notes upon the occurrence of a change
of control. A change of control is defined under the indenture as:
o the sale, lease or other disposition of all or substantially all of
the assets of ICO and its restricted subsidiaries;
o the adoption of a plan relating to the liquidation or dissolution of
ICO;
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<PAGE> 25
o any person or group becoming the beneficial owner of more than 50%
of the total voting power of the voting stock of ICO; or
o a majority of the members of the Board of Directors no longer being
continuing directors.
The indenture defines continuing directors as the members of the Board of
Directors on the date of the indenture and members that were nominated for
election or elected to the Board of Directors with the affirmative vote of a
majority of the continuing directors who were members of the Board at the time
of such nomination or election. The indenture also restricts certain mergers,
consolidations or dispositions of all or substantially all of ICO's assets.
$6.75 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
Pursuant to the Statement of Designation ("Statement of Designation")
Establishing $6.75 Convertible Preferred Exchangeable Stock (the "Preferred
Stock"), holders of Preferred Stock are entitled to special conversion rights
upon a change of control or a Fundamental Change (both of which are defined
below).
Upon a change of control, a holder of Preferred Stock is entitled to
convert all, but not less than all, of the holder's Preferred Stock into Common
Stock of ICO at the special conversion price, which is defined as the greater of
$5.17 and market value (as defined in the Statement of Designation). ICO may, at
its option, provide cash equal to the market value of the Common Stock
multiplied by the number of shares of Common Stock into which such shares of
Preferred Stock would have been convertible prior to the change of control in
lieu of providing Common Stock.
A change of control is deemed to have occurred under the Statement of
Designation in the event that any person or group of persons (within the meaning
of Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) acquires beneficial ownership (as defined in the Exchange Act)
of 50% of the Common Stock of ICO. A change of control will not be deemed to
have occurred with respect to any transaction that constitutes a Fundamental
Change.
Upon the occurrence of a Fundamental Change, each holder of Preferred
Stock is entitled to convert all, but not less than all, of the holder's
Preferred Stock into the kind and amount of cash, securities, property or other
assets receivable upon such a Fundamental Change by a holder of the number of
shares of Common Stock into which such shares of Preferred Stock would have been
convertible immediately prior to such Fundamental Change at the special
conversion price. ICO or a successor corporation, as the case may be, may, at
its option, provide cash equal to the market value of the Common Stock
multiplied by the number of shares of Common Stock into which such shares of
Preferred Stock would have been convertible prior to the change of control in
lieu of providing the consideration required above. Unless converted, Preferred
Stock which becomes convertible pursuant to a Fundamental Change will remain
convertible into the kind and amount of cash, securities, property or other
assets that the holder of the Preferred Stock would have owned immediately after
the Fundamental Change if the holders had converted the Preferred Stock
immediately before the effective date of the Fundamental Change.
A Fundamental Change means:
o the occurrence of any transaction or event in connection with which
all or substantially all of the Common Stock of ICO is exchanged
for, converted into, acquired for cash, securities, or other
property (whether by means of an exchange offer, liquidation, tender
offer, merger or otherwise); or
o the conveyance, sale, lease, assignment, transfer or other disposal
of all or substantially all of ICO's property, business or assets.
A Fundamental Change will not be deemed to have occurred with respect to either
of the following transactions or events:
o any transaction or event in which more than 50% of the consideration
received by holders of Common Stock consists of Marketable Stock (as
defined below), or
o any consolidation or merger of ICO in which the holders of Common
Stock of ICO immediately prior to such transaction own, directly or
indirectly,
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<PAGE> 26
o 50% or more of the common stock of the sole surviving corporation
(or of the ultimate parent of such sole surviving corporation)
outstanding at the time immediately after such consolidation or
merger, and
o securities representing 50% or more of the combined voting power of
the surviving corporation's voting stock (or of voting stock of the
ultimate parent of such surviving corporation) outstanding at such
time.
All or substantially all means 66-2/3% or more of the aggregate outstanding
amount.
Marketable Stock means common stock of any corporation that is the
successor to all or substantially all of the business or assets of ICO as a
result of a Fundamental Change (or of the ultimate parent of such successor),
which is listed or quoted on a national securities exchange, the NASDAQ NMS or
any similar system of automated dissemination of quotations or securities prices
in the United States.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires ICO's officers and directors,
and persons who own more than 10% of a registered class of ICO's equity
securities, to file reports of ownership and changes in ownership with the SEC
and NASDAQ and to furnish ICO with copies of all reports filed. Based solely on
the review of the reports furnished to ICO, ICO believes that, during fiscal
2000, all Section 16(a) filing requirements applicable to its directors,
officers and greater than 10% beneficial owners were met, except for the
following transactions that required a Form 4 filing: Mr. Walter L. Leib's
untimely reporting of three purchase transactions in December of 1999 and
September of 2000 regarding 1,100 shares of Common Stock and 700 shares of
Preferred Stock and Mr. George S. Sirusas' untimely reporting of one purchase
transaction in October of 2000 regarding 1,000 shares of Preferred Stock.
Messrs. Leib and Sirusas have now reported these transactions.
SOLICITATION OF PROXIES
The solicitation of proxies on behalf of the Board of Directors will be
conducted by mail, personally or by telephone, telegram or other forms of wire
or facsimile communication. Officers and employees of ICO may solicit proxies
and will not receive additional compensation for this. ICO has retained
Innisfree M&A Incorporated ("Innisfree") to assist in the solicitation of
proxies for a fee of $50,000 plus out-of-pocket expenses. Innisfree will employ
approximately 50 people to solicit ICO's Shareholders. In addition to
solicitation of proxies, Innisfree will provide advisory services as requested
pertaining to the solicitation of proxies. ICO will also indemnify Innisfree
against certain liabilities and expenses relating to the proxy solicitation,
including liabilities under the federal securities laws.
ICO estimates the aggregate amount to be spent in connection with the
solicitation of proxies to be $_____ (including professional fees and expenses,
but excluding costs represented by salaries and wages of regular employee of ICO
and excluding the normal expenses of an uncontested election at an annual
meeting). ICO will pay the cost of soliciting proxies. Upon request, ICO will
reimburse brokers, custodians, nominees and fiduciaries for reasonable expenses
incurred by them in forwarding proxy material to beneficial owners of Common
Stock. Total expenditures to date have been approximately $_____.
SELECTION OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, independent accountants, examined ICO's
consolidated financial statements for the fiscal year ended September 30, 2000,
and, in connection with their audit function, reviewed ICO's Annual Report to
Shareholders and certain of its filings with the SEC. The Board of Directors has
re-employed the firm of PricewaterhouseCoopers LLP as independent accountants
for ICO for fiscal 2001, subject to Shareholders' ratification at the Annual
Meeting. If ratification is not obtained, the Board intends to continue the
employment of PricewaterhouseCoopers LLP at least through fiscal 2001.
Representatives of PricewaterhouseCoopers 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 Meeting.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Rule 14a-8 under the Securities Exchange Act of 1934, as amended,
addresses when a company must include a Shareholder's proposal in its proxy
statement and identify the proposal in its form of proxy when ICO holds an
annual or
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<PAGE> 27
special meeting of Shareholders. Under Rule 14a-8, proposals that Shareholders
intend to have included in ICO's proxy statement and form of proxy for the 2002
Annual Meeting of Shareholders must be received by ICO no later than
___________, 2001. However, if the date of the 2002 Annual Meeting of
Shareholders changes by more than 30 days from the date of the 2001 Annual
Meeting of Shareholders, the deadline is a reasonable time before ICO begins to
print and mail its proxy materials, which deadline will be set forth in a
Quarterly Report on Form 10-Q or will otherwise be communicated to Shareholders.
Shareholder proposals must also be otherwise eligible for inclusion.
If a Shareholder desires to bring a matter before an annual meeting and
the proposal is submitted outside the process of Rule 14a-8, the Shareholder
must follow the procedures set forth in ICO's Bylaws. ICO's Bylaws provide
generally that Shareholders who wish to nominate directors or to bring business
before an annual meeting must notify ICO and provide certain pertinent
information at least 90 days prior to the anniversary date of the immediately
preceding Annual Meeting of Shareholders. Therefore, Shareholders who wish to
nominate directors or to bring business before the 2002 Annual Meeting of
Shareholders must notify ICO no later than _______ __, 2001.
OTHER MATTERS WHICH MAY COME BEFORE THE ANNUAL MEETING
ICO knows of no matters other than those stated above which are to be
brought before the Annual Meeting. It is intended that the persons named in the
proxy will vote your stock pursuant to discretionary authority granted in the
proxy 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 the enclosed proxy card 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,
/s/ ASHER O. PACHOLDER /s/ SYLVIA A. PACHOLDER
Asher O. Pacholder Sylvia A. Pacholder
Chairman of the Board and Chief Executive Officer,
Chief Financial Officer President & Secretary
Dated: January __, 2001
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<PAGE> 28
APPENDIX A
AUDIT COMMITTEE CHARTER
OF ICO, INC.,
A TEXAS CORPORATION (THE "CORPORATION")
AS AMENDED
DECEMBER 5, 2000
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
system.
o Review and appraise the audit efforts and independence of the
Corporation's independent accountants.
o Provide an open avenue of communication among the independent
accountants, financial and senior management, and the Board of
Directors.
o Review the financial reports and other financial information
provided by the Corporation to the public; the Corporation's
systems of internal controls regarding finance, accounting, legal
compliance and ethics that management and the Board have
established; and the Corporation's significant accounting and
financial reporting principles, practices and procedures.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV. of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee.
Effective June 14, 2001, for purposes of determining whether a committee member
is independent, NASD rule 4200 (and any amendment or replacement of this rule),
which provides a definition of an "independent director," shall be used.
Notwithstanding the above, one director who is not independent as defined in
NASD Rule 4200, and is not a current employee or an immediate family member of
such employee, may be appointed to the audit committee, if the Board of
Directors determines that membership on the committee by the individual is
required by the best interests of the Corporation and its shareholders, in
accordance with NASD Rule 4310. All members of the Committee shall be able to
read and understand fundamental financial statements, including the
Corporation's balance sheet, income statement, statement of comprehensive
income, and cash flow statement, and at least one member of the Committee shall
have accounting or related financial management expertise.
Page 1 of 3
<PAGE> 29
The members of the Committee, including the Chairman of the Committee,
shall be elected by the Board annually or until their successors shall be duly
elected and qualified.
III. MEETINGS
The Committee shall meet at least two times annually, or more
frequently as circumstances dictate or as required by the Board. As part of its
job to foster open communication, the Committee should meet at least annually
with management and the independent accountants in separate executive sessions
to discuss any matters that the Committee or each of these groups believes
should be discussed privately.
IV. AUTHORITY, RESPONSIBILITIES AND DUTIES
The Committee shall have the full authority to act on behalf of the
Board with respect to the Purpose, Responsibilities and Duties of the committee
as set forth in this Charter. The Committee has the authority to conduct or
authorize investigations into any matters within the Committee's scope of
Purpose, Responsibilities and Duties as set forth in this Charter. The Committee
is empowered to retain, at the Corporation's expense, independent counsel and
other professionals to assist in the conduct of any such investigation.
The Committee shall have the following responsibilities and duties:
Documents/Reports Review
--------------------------------------------------------------------------------
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to the Securities and
Exchange Commission, or the public, including any certification,
report, opinion, or review rendered by the independent accountants.
3. Prepare a letter for inclusion in the annual report that describes
the Committee's composition and responsibilities, and how such
responsibilities were discharged.
4. Report Committee activities to the Board at regular intervals.
Independent Accountants
--------------------------------------------------------------------------------
5. The independent accountants are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall
review the independence and performance of the accountants annually
and, when circumstances warrant, approve any proposed discharge of
accountants.
6. Recommend to the Board of Directors the selection of the independent
accountants, considering the independence and performance of the
independent accountants. The Committee shall ensure its receipt from
the independent accountants of a formal written statement delineating
all relationships between the accountants and the Corporation and
shall review and discuss with the accountants all significant
relationships with the Corporation to determine the accountants'
independence, consistent with Independence Standards Board Standard
No. 1.
7. Meet annually in private with the Corporation's independent
accountants to discuss any matters which the Committee or the
independent accountants wish to discuss.
Page 2 of 3
<PAGE> 30
Financial Reporting Processes
--------------------------------------------------------------------------------
8. Discuss with the accountants the matters required to be discussed by
the Statement of Auditing Standards No. 61 (Communication with Audit
Committees) and any matters brought to the Committee's attention as a
result of the application of the Statement of Auditing Standards No.
71 (Interim Financial Information).
9. In consultation with the independent accountants, review the
integrity of the Corporation's financial reporting processes, both
internal and external.
10. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied
in its financial reporting.
11. Consider and approve, if appropriate, major changes to the
Corporation's accounting principles and practices as suggested by the
independent accountants or management.
Process Improvement
--------------------------------------------------------------------------------
12. Following completion of the annual audit, review separately with each
of management and the independent accountants any significant
difficulties, if any, encountered during the course of the audit,
including any restrictions on the scope of work or access to required
information.
13. Review significant disagreements, if any, among management and the
independent accountants in connection with the preparation of the
financial statements.
14. Review with the independent accountants and management the extent to
which changes or improvements in financial or accounting practices
have been implemented.
Ethical and Legal Compliance
--------------------------------------------------------------------------------
15. Establish, review, and update periodically a Code of Ethical Conduct
and ensure that management has established a system to enforce this
Code.
16. Review management's monitoring of the Corporation's compliance with
the Code of Ethical Conduct, and management's review system which
enables the corporation's financial statements, reports and other
financial information to be disseminated to governmental
organizations, and the public in compliance with legal requirements.
17. Review, with the Corporation's counsel, legal compliance matters
including corporate securities trading policies.
18. Review, with the Corporation's counsel, any legal matter that could
have a significant impact on the Corporation's financial statements.
19. Perform any other activities consistent with this Charter, the
Corporation's By-laws, governing law, and NASD rules as the Committee
or the Board deems necessary or appropriate.
Page 3 of 3
<PAGE> 31
P ICO, INC.
R
O PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X OF THE COMPANY FOR ANNUAL MEETING ___________, 2001
Y
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 ___________ ___, 2001, 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, hereby revoking any proxy heretofore given. The undersigned hereby
acknowledges receipt of the Notice of, and a Proxy Statement for such Annual
Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IN THE ABSENCE OF SPECIFIC DIRECTIONS TO THE CONTRARY (INDICATED BY MARKING THE
APPROPRIATE BOXES BELOW), THIS PROXY WILL BE VOTED FOR THE ELECTION OF EACH OF
THE DIRECTOR NOMINEES AND FOR THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
The Board of Directors recommends a vote FOR proposals 1 and 2
FOR WITHHOLD FOR except vote
ALL ALL withheld from
the following
nominees
1. Election of Directors
Nominees: 01 William E. Cornelius,
02 Howard P. Tuckman, 03 George S. Sirusas [ ] [ ] [ ]
(terms to expire at 2004 Annual
Meeting of Shareholders)
Nominee Exceptions
--------------------------------------------
FOR AGAINST ABSTAIN
2. The ratification of the appointment of
PricewaterhouseCoopers LLP
as independent accountants. [ ] [ ] [ ]
3. WITH DISCRETIONARY AUTHORITY AS TO SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
--------------------------------------------
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.
Please sign, date and return the Proxy Card promptly, using the enclosed
envelope.
