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Stepan Company (NYSE:SCL) announced that its board of directors approved and adopted a Key Executive Severance Benefit Plan, effective Wednesday, as detailed in a press release statement and disclosed in a recent SEC filing. The specialty chemical manufacturer, currently valued at $1.02 billion, has seen its shares decline 38.75% over the past year, trading at $45.33. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment, potentially offering an opportunity for investors interested in companies with strong dividend histories.
The plan, recommended by the board’s Human Capital and Compensation Committee, provides severance compensation and benefits to selected employees, including current named executive officers, in the event of certain involuntary terminations. These include both terminations without cause and those occurring within 24 months after a change in control of the company.
Under the plan, executives designated as Tier 1 will receive cash severance equal to 18 months of base salary plus target annual bonus for involuntary termination without cause. In the case of a qualifying termination following a change in control, Tier 1 executives are eligible for 36 months of such compensation. Tier 2 executives will receive 12 months of severance for involuntary termination without cause, or 24 months if the termination follows a change in control.
The severance payments are structured as a lump sum, paid 60 days after separation from service. The plan also includes provisions for continued health insurance coverage, with the company paying the difference between its and the executive’s monthly premium for the duration of the severance period, subject to certain eligibility requirements and limitations.
Equity awards held by participants will be governed by the terms of the company’s 2022 Equity Incentive Compensation Plan or other applicable arrangements. To receive the severance benefits, executives must execute a release and waiver of claims and comply with restrictive covenants outlined in the plan.
The company stated that the full text of the plan is included as an exhibit to the current report on Form 8-K filed with the Securities and Exchange Commission.
In other recent news, Stepan Company reported its third-quarter 2025 earnings, which fell short of analysts’ expectations. The company announced an earnings per share of $0.48, compared to the forecasted $0.62, resulting in a 22.58% negative surprise. Revenue also missed projections, coming in at $590.28 million versus the expected $593.65 million. In a separate development, Stepan Company completed the sale of its subsidiary, Stepan Philippines Quaternaries, Inc., to Masurf, Inc., a subsidiary of Musim Mas Holdings Pte. Ltd. The sale included manufacturing assets in Bauan, Batangas, Philippines. Although financial terms were not disclosed, a tolling agreement was established for continued service to customers in Southeast Asia. These recent developments reflect significant changes for Stepan Company.
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