Assuming the entire sentence is (The snow and ice that arrived last night elated kids and adults alike when they awoke to a winter wonderland.), the correct answer is they.
A simple subject consists only of one noun or pronoun, without any adjectives, or added nouns. So even though this sentence has two subjects (one is snow and ice, and the other one they), the first subject is not simple because it consists of two nouns (snow and ice), which makes it a compound rather than a simple subject. The pronoun they, however, is a simple subject because there is only one word.
