STEPAN (SCL)
Sector: Materials
2026 Annual Meeting Analysis
STEPAN · Meeting: April 28, 2026
Directors FOR
1
Directors AGAINST
2
Say on Pay
FOR
Auditor
FOR
Director Elections
Election of Directors
Against Analysis
Mr. Delgado has served since 2011, giving him full accountability for Stepan's stock losing 45% over the past three years while the company's own peer group was essentially flat — a gap of 44 percentage points that far exceeds the 20-point threshold our policy applies when a company's stock has fallen; the 5-year record is even worse (-57.7% vs. peers at -6.2%), so the longer track record provides no mitigating relief.
Mr. Stepan has served since 1999 and was CEO until April 2022, giving him direct accountability for the company's severe stock underperformance — shares have fallen 45% over three years while peers were flat, a 44-percentage-point gap well above the 20-point trigger; additionally, his brother Richard Stepan serves as a named executive officer, raising a familial-relationship governance concern under our policy, and the 5-year record (-57.7% vs. -6.2% for peers) confirms this is not a short-term blip.
For Analysis
Mr. Painter joined the board in June 2025, less than 24 months ago, so he is exempt from the TSR underperformance trigger under our policy; he does not appear to hold 2 or more outside public board seats as a sitting CEO (his only disclosed outside public board seat is Stepan), so no overboarding concern applies, and he brings relevant chemicals industry CEO experience.
Of the three nominees, only Mr. Painter is new enough to the board (joined June 2025) to be exempt from the TSR trigger; both Mr. Delgado (director since 2011) and Mr. Stepan (director since 1999, former CEO, familial tie to an executive officer) are subject to AGAINST votes because Stepan's stock has lost 45% over three years against a peer group that was nearly flat, a gap of 44 percentage points — more than double the 20-point policy threshold that applies when a company's absolute 3-year return is negative.
Say on Pay
✓ FORCEO
Luis E. Rojo
Total Comp
$4,327,042
Prior Support
96%%
CEO total compensation of $4.33 million is modest for a $1.1 billion specialty chemicals company and does not appear excessive relative to the role and market; the pay mix is appropriate — base salary ($940,000) represents roughly 22% of total compensation, well under the 40% fixed-pay ceiling, with the majority in equity and performance-based incentives; critically, the short-term bonus paid out at only 25% of the CEO's target because the company missed its most important financial goal (net income came in below the minimum threshold), demonstrating that the pay-for-performance link is actually working — executives received far less than they could have in a strong year, which is exactly what a well-designed incentive plan should produce.
Auditor Ratification
✓ FORAuditor
Deloitte & Touche LLP
Tenure
N/A
Audit Fees
$2,655,300
Non-Audit Fees
$705,200
Non-audit fees (audit-related fees of $52,600 plus tax fees of $652,600 = $705,200) are approximately 27% of audit fees ($2,655,300), well below the 50% threshold that would raise independence concerns; auditor tenure is not disclosed in the proxy so the tenure trigger cannot fire; Deloitte is a Big 4 firm appropriate for a $1.1 billion market-cap company, and no material restatements were disclosed.
Overall Assessment
The 2026 Stepan annual meeting ballot has three proposals; we vote FOR on Say on Pay (the incentive plan paid out at just 25% of CEO target due to missed financial goals, showing the pay-for-performance link is working) and FOR on Deloitte's ratification (non-audit fees well within policy limits), but vote AGAINST two of the three director nominees — Mr. Delgado and Mr. Stepan — because Stepan's stock has lost 45% over three years against a peer group that was essentially flat, a 44-percentage-point gap that triggers our underperformance policy, with the 5-year record providing no relief; only newly appointed Mr. Painter is exempt as a director who joined within the past 24 months.
Compensation Peer Group
15 companies disclosed in 2026 proxy filing