Exhibit 97
CLAWBACK POLICY
As required pursuant to the listing standards of the New York Stock Exchange (the “Stock Exchange”), Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10D-1 under the Exchange Act, the Human Capital and Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Stepan Company (the “Company”) has adopted this Clawback Policy (the “Policy”) to empower the Company to recover Covered Compensation (as defined below) erroneously awarded to a Covered Officer (as defined below) in the event of an Accounting Restatement (as defined below).
For purposes of this Policy, “Covered Officer” is defined as any current or former “Section 16 officer” of the Company within the meaning of Rule 16a-1(f) under the Exchange Act, as determined by the Board. Covered Officers include, at a minimum, “executive officers” as defined in Rule 3b-7 under the Exchange Act and identified under Item 401(b) of Regulation S-K.
A. Compensation Recovery
Unless a Clawback Exception (as defined below) applies, the Company will recover reasonably promptly from each Covered Officer the Covered Compensation Received (as defined below) by such Covered Officer in the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under U.S. securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (each, an “Accounting Restatement”). If a Clawback Exception applies with respect to a Covered Officer, the Company may forgo such recovery under this Policy from any such Covered Officer.
B. Prohibitions
The Company is prohibited from paying or reimbursing the cost of insurance for, or indemnifying, any Covered Officer against the loss of erroneously awarded Covered Compensation.
C. Administration and Interpretation
The Committee will administer this Policy in accordance with the Final Guidance (as defined below), and will have full and exclusive authority and discretion to supplement, amend, repeal, interpret, terminate, construe, modify, replace and/or enforce (in whole or in part) this Policy, including the authority to correct any defect, supply any omission or reconcile any ambiguity, inconsistency or conflict in the Policy, subject to the Final Guidance. This Policy is in addition to and is not intended to change or interpret any federal or state law or regulation, including the General Corporation Law of the State of Delaware, the Restated Certificate of Incorporation of the Company, or the Amended and Restated By-Laws of the Company. The Committee will
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Exhibit 97
CLAWBACK POLICY
review the Policy from time to time and will have full and exclusive authority to take any action it deems appropriate.
The Committee will have the authority to offset any compensation or benefit amounts that become due to the applicable Covered Officers to the extent permissible under Section 409A of the Internal Revenue Code of 1986, as amended, and as it deems necessary or desirable to recover any Covered Compensation.
Each Covered Officer, upon being so designated or assuming such position, is required to execute and deliver to the Company’s Chief Human Resources Officer an acknowledgment of and consent to this Policy, in a form reasonably acceptable to and provided by the Company from time to time, (1) acknowledging and consenting to be bound by the terms of this Policy, (2) agreeing to fully cooperate with the Company in connection with any of such Covered Officer’s obligations to the Company pursuant to this Policy, and (3) agreeing that the Company may enforce its rights under this Policy through any and all reasonable means permitted under applicable law as it deems necessary or desirable under this Policy.
Notwithstanding anything in this Policy to the contrary, at all times, this Policy remains subject to interpretation and operation in accordance with the final rules and regulations promulgated by the U.S. Securities and Exchange Commission (the “SEC”), the final listing standards adopted by the Stock Exchange, and any applicable SEC or Stock Exchange guidance or interpretations issued from time to time regarding such Covered Compensation recovery requirements (collectively, the “Final Guidance”).
IV. EXCEPTIONS
The Company is required to recover all Covered Compensation Received by a Covered Officer in the event of an Accounting Restatement unless (A) one of the following conditions is met and (B) the Committee has made a determination that recovery would be impracticable in accordance with Rule 10D-1 under the Exchange Act (under such circumstances, a “Clawback Exception” applies):
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Exhibit 97
CLAWBACK POLICY
V. REQUESTS FOR ADDITIONAL INFORMATION/INTERPRETATION
Questions regarding this Policy should be directed to the Company’s Legal Department.
VI. DEFINITIONS
For purposes of this Policy:
Incentive-Based Compensation Received by a Covered Officer will only qualify as Covered Compensation if: (A) it is Received on or after October 2, 2023; (B) it is Received after such Covered Officer begins service as a Covered Officer; (C) such Covered Officer served as a Covered Officer at any time during the performance period for such Incentive-Based Compensation; and (D) it is Received while the Company has a class of securities listed on a national securities exchange or a national securities association. Compensation received prior to October 2, 2023, will continue to be subject to the version of this Policy that was effective prior to October 16, 2023.
For Incentive-Based Compensation based on stock price or total stockholder return, where the amount of erroneously awarded Covered Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement, the amount of such Incentive-Based Compensation that is deemed to be Covered Compensation will be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total stockholder return upon which the Incentive-Based Compensation was Received, and the Company will maintain and provide to the Stock Exchange documentation of the determination of such reasonable estimate.
©2023 Stepan Company. All Rights Reserved.
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Exhibit 97
CLAWBACK POLICY
VII. DISCLOSURE
This Policy, and any recovery of Covered Compensation by the Company pursuant to this Policy that is required to be disclosed in the Company’s filings with the SEC, will be disclosed as required by the Securities Act of 1933, as amended, the Exchange Act, and related rules and regulations, including the Final Guidance.
©2023 Stepan Company. All Rights Reserved.
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