Stepan Company (SCL, NYSE)
Industry: Basic Materials / Specialty Chemicals
Annual report, fiscal year 2017



## COLLABORATIVE
CHEMISTRY

2017 ANNUAL REPORT



## FINANCIAL HIGHLIGHTS

<table><tr><td>(In thousands, except per share and stockholder amounts)</td><td>2017</td><td>2016</td><td>% Change (2017 vs. 2016)</td><td>2015</td><td>% Change (2016 vs. 2015)</td></tr><tr><td>Net Sales</td><td>$1,925,007</td><td>$1,766,166</td><td>+9</td><td>$1,776,167</td><td>-1</td></tr><tr><td>Net Income Attributable to Stepan Company</td><td>91,578</td><td>86,191</td><td>+6</td><td>75,968</td><td>+13</td></tr><tr><td>Per Diluted Share</td><td>3.92</td><td>3.73</td><td>+5</td><td>3.32</td><td>+12</td></tr><tr><td>Percent of Net Sales</td><td>4.8%</td><td>4.9%</td><td>-2</td><td>4.3%</td><td>+14</td></tr><tr><td>Percent Return on Average Equity</td><td>13.3%</td><td>14.5%</td><td>-8</td><td>13.9</td><td>+4</td></tr><tr><td>Depreciation and Amortization</td><td>79,022</td><td>74,967</td><td>+5</td><td>66,985</td><td>+12</td></tr><tr><td>Capital Expenditures</td><td>78,613</td><td>103,076</td><td>-24</td><td>119,349</td><td>-14</td></tr><tr><td>Dividends Per Common Share</td><td>$0.86</td><td>$0.78</td><td>+10</td><td>$0.73</td><td>+7</td></tr><tr><td>Working Capital</td><td>468,483</td><td>388,276</td><td>+21</td><td>376,329</td><td>+3</td></tr><tr><td>Current Ratio</td><td>2.5</td><td>2.3</td><td>+9</td><td>2.5</td><td>-8</td></tr><tr><td>Long-Term Debt, Less Current Maturities</td><td>268,299</td><td>288,859</td><td>-7</td><td>313,817</td><td>-8</td></tr><tr><td>Total Stepan Company</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Stockholders&#x27; Equity</td><td>740,096</td><td>634,604</td><td>+17</td><td>556,984</td><td>+14</td></tr><tr><td>Total Stepan Company</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Stockholders&#x27; Equity Per Share</td><td>32.88</td><td>28.30</td><td>+16</td><td>25.00</td><td>+13</td></tr><tr><td>Average Common Shares</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Outstanding (Diluted)</td><td>23,377</td><td>23,094</td><td>+1</td><td>22,858</td><td>+1</td></tr><tr><td>Number of Stockholders</td><td>1,691</td><td>1,662</td><td>+2</td><td>1,675</td><td>-</td></tr></table>

## STOCK INFORMATION

<table><tr><td>New York Stock Exchange, symbol SCL</td><td>2017</td><td>2016</td></tr><tr><td>Stock Price Range</td><td>$68.51-92.97</td><td>$41.42-87.00</td></tr><tr><td>Dividend (Common)</td><td>$0.86</td><td>$0.78</td></tr><tr><td>Earnings Per Diluted Share</td><td>$3.92</td><td>$3.73</td></tr><tr><td>Return on Equity</td><td>13.3%</td><td>14.5%</td></tr><tr><td>Book Value</td><td>$32.88</td><td>$28.30</td></tr><tr><td>Shares Outstanding</td><td>22,509,278</td><td>22,424,698</td></tr></table>

Information in this annual report consists of forward-looking statements which are not historical facts. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including without limitation, those described in the Company's Form 10-K, Form 8-K and Form 10-Q reports filed with the Securities and Exchange Commission, which risks and uncertainties related to disruptions in production or accidents at manufacturing facilities, global competition, volatility of raw material and energy costs, disruptions in transportation or significant changes in transportation costs, reduced demand due to customer product reformulations or new technologies, the probability of future acquisitions and the uncertainties related to the integration of acquired businesses, maintaining and protecting intellectual property rights, international business risks, including currency exchange rate fluctuations, legal restrictions and taxes, the impact of changes in the tax code as a result of recent federal tax legislation and uncertainty as to how some of these changes may be applied, our ability to estimate and maintain appropriate levels of recorded liabilities, our debt covenants, our ability to access capital markets, downturns in certain industries and general economic downturns, global political, military, security or other instability, costs related to expansion or other capital projects, interruption or breaches of information technology systems, the costs and other effects of governmental regulation and legal and administrative proceedings and our ability to retain executive management and key personnel.



## COLLABORATIVE CHEMISTRY DEFINES STEPAN

For 85 years, since 23-year-old Alfred C. Stepan, Jr. founded Stepan Company, we have served and collaborated with customers to deliver solutions to their problems and help them to capture growth opportunities. Over the years, we have become the go-to-company for solutions within our markets. We use our chemistry expertise and experience, backed up by a willingness to dedicate resources, to help our customers throughout the world to prosper.

We pride ourselves on this teamwork. Our employees work to create a competitive advantage in the marketplace and deliver value together with our customers.

In 2017, we accelerated our collaboration efforts on several fronts. In Brazil, for example, we are conducting virtual lab help sessions with customers located deep in the Amazon basin to help them improve products from shampoo and liquid hand soaps to fabric softeners. At our Northfield, Illinois, facility and our Brzeg Dolny, Poland, plant, new testing machinery and formulating capabilities enable us to team up with customers to develop better rigid insulation foam boards, including the ability to model their production lines.

Internally, our R&D and commercial teams began collaborating in 2017 to diversify our nonionic surfactant product line and customer base. For our polyol customers, we are developing and delivering energy-conservation solutions. We offer technologies that allow customers to reduce their environmental footprint in end markets ranging from consumer products and crop protection to fracking for oilfields.

Bolstered by such cooperative initiatives and with our 17 manufacturing locations in 11 countries and more than 2,100 employees, we are a leading global manufacturer of surfactants and polymers used in household, agriculture and oilfield as well as insulation and coatings products.

Throughout this annual report, we share how, through collaborative chemistry, Stepan makes a difference to our customers, our industry and consumers worldwide.






2017 was another good year for Stepan Company. The company delivered record net income of $91.6 million and record adjusted net income \(^{1} $  of $108.7 million. Surfactants, our largest business, grew its income by 20 percent through the addition of new customers and products and increased efficiency of its operations. Our Polymer business had its second best income year on slightly higher volumes and lower margins. We believe we’re on the right track and the collaboration and chemistry we have with our customers will enable us to grow in 2018 and beyond.

Net income increased 6 percent despite a net $14.9 million after-tax charge resulting from the new U.S. tax reform legislation. Most of the net after-tax charge related to tax was incurred on unrepatriated earnings of foreign subsidiaries. Adjusted net income rose 11 percent to a record $108.7 million, or $4.65 per diluted share. Volume declined 1 percent, primarily due to decreased commodity surfactant volumes globally and rigid polyol volumes in North America. Global Functional Surfactant and C.A.S.E. Polyols, as well as European Rigid Polyol sales grew. Unit gross profit margins increased by 1 percent. Net sales were up 9 percent to $1.92 billion, reflecting an improved product mix.

NET INCOME ATTRIBUTABLE TO STEPAN COMPANY
(dollars in thousands)



In 2017, the company also increased its quarterly cash dividend by 10 percent, marking the 50 \( ^{th} \)  consecutive year that Stepan has boosted its cash dividend to stockholders. (See the sidebar at end of this letter.)

Surfactants made $120.0 million in operating income, up 20 percent on $1.30 billion in sales. The increase in operating income reflected an improved product mix, lower manufacturing costs and positive contributions from our October 2016 acquisition in Brazil. Sales benefited from our diversification efforts into functional products; higher sales within the household, industrial and institutional end market; and continued growth in more specialized applications. In 2018 and beyond, we expect our Surfactant business to continue to grow as it benefits from expanded applications in the personal care, agriculture and oilfield markets as well as new product sales to our smaller customers sold directly and through our distribution partners. Benefits from new commercial capabilities are expanding our nonionic surfactant position in the agricultural and oilfield sectors.

Polymer operating income was $82.8 million, down 14 percent from 2016, driven by lost market share and lower margins for Rigid Polyols in North America. Global volumes were flat as European volumes grew. We are adding capabilities to our Wesseling, Germany, and Millsdale, Illinois, facilities to support forecasted market growth driven by energy conservation efforts. Diversification of our polyol business will be supported by new investments in Poland and Columbus, Georgia, targeted for the C.A.S.E. market.

Operating income for Specialty Products decreased modestly in 2017 to $10.0 million, down $700,000 from 2016, but benefitted from lower costs and higher volumes in our NEOBEE \( ^{\circledR} \)  Medium Chain Triglycerides. Actions taken in 2017 should improve profitability in 2018.

OPERATING INCOME BY SEGMENT 2013–2017
(dollars in thousands)






In 2017, capital spending was $78.6 million, down 24 percent from $103.1 million in 2016. In 2017, we invested to bring science to the oilfield market through improved efficiency in the fracking and oil stimulation markets, aided by our new Houston research and development center.

We continue to focus on operating every day in a safe, responsible and compliant manner, and in 2017 we fully applied behavior-based safety programs in 12 of our plants and completed training at our Northfield, Illinois, R&D center.

Our balance sheet is strong and we finished the year with no net debt. We generated $101.0 million free cash flow. \( ^{2} \)  We plan to use our strong financial plan and make investments to accelerate our growth, including closing on the previously announced purchase of a Mexican surfactant plant and its associated business from BASF in 2018.

“To our shareholders, we are committed to delivering value to you. We are confident that our path to further increased shareholder value will stem from our ability to work in collaboration with our customers and enable them to be successful in their markets.”

On the personnel front, Art Mergner was named Vice President, Supply Chain, replacing Scott Mason, who retired. Art previously served as Vice President and General Manager, Polymers. Sean Moriarty, who had been Vice President and General Manager — North American Surfactants, succeeded Art in Polymers.

To our shareholders, we are committed to delivering value to you. We are confident that our path to further increased shareholder value will stem from our ability to work in collaboration with our customers and enable them to be successful in their markets. We will help our polyol customers deliver greater energy conservation solutions to the market. We will offer technologies that allow customers to reduce their environmental footprint in end markets.

## DIVIDENDS PER COMMON SHARE
(dollars)



ranging from consumer products and crop protection to fracking for oilfields. We also will assist our customers and deliver value to our shareholders by introducing new innovative and diversified products, entering into new markets, expanding geographically, delivering cost-out and internal efficiency with our DRIVE program and improving asset utilization.

As always, we appreciate your support.





F. Quinn Stepan, Jr.
Chairman, President and CEO

On Oct. 24, 2017, the Board of Directors approved an increased quarterly dividend of 2 cents per share, or 10 percent, to 22.5 cents a share, marking the 50th consecutive year in which the common stock dividend increased. The dividend was paid on Dec. 15.

Stepan joins a select roster of nearly two dozen companies that have increased their dividend for at least 50 years in a row, putting Stepan in elite company.

Besides Stepan, other companies that have increased their dividend for 50 or more years include 3M Company, The Coca-Cola Company, Colgate-Palmolive Company, Emerson Electric Co., Johnson & Johnson, Lowe's Companies Inc., Nordson Corporation, Parker-Hannifin Corporation, The Procter & Gamble Company, Stanley Black & Decker, Inc. and Tootsie Roll Industries, Inc.



## PARTNERING
FOR GROWTH



COLLABORATION IS WOVEN
THROUGHOUT OUR CULTURE
AND IS ESSENTIAL TO OUR
GROWTH. WORKING WITH
OUR CUSTOMERS, WE DELIVER
CREATIVE SOLUTIONS TO
DIFFICULT CHALLENGES.

## STRENGTHENING OUR TEAMWORK IN BRAZIL

Customer relationships in Brazil are expanding and diversifying, aided by new R&D and technical support capabilities in Sao Paulo. These capabilities especially assist our smaller customers using Stepan surfactant formulations for consumer products and agricultural uses. We even conduct virtual lab sessions with customers, some located deep within the Amazon River basin. Pictured here (from left to right) are Stepan employees Eduardo Couto, Camila Caetano, Marcos Malta, Thiago Borges and Jamil Junior, from our Brazilian team.
Our efforts in 2017 led to a 9 percent increase in net sales and an 11 percent increase in adjusted net income, primarily due to an improved mix of products. Also contributing were business from new customers, additional sales from existing customers, especially in Brazil, and improved efficiencies. Adjusted net income was $91.6 million and net sales were $1.92 billion.



## RECORD SURFACTANT INCOME

Surfactants produced a record $120.0 million in operating income, rising a strong 20 percent on $1.30 billion in sales, as a better product mix, reduced production costs and contributions from our 2016 acquisition benefitted operating income.

## 2 \( ^{ND} \)  BEST POLYMER INCOME EVER

Although Polymer operating income declined 14 percent from 2016 to $82.8 million, that income performance was our second best ever. The decrease was due primarily to lower margins and lost share in North America. Globally, Polymer volume was flat.

Operating income for Specialty Products declined 7 percent to $10.0 million from $10.7 million, although lower costs and stronger volumes of our NEOBEE \( ^{\circledR} \)  Medium Chain Triglycerides ingredient proved beneficial.

Capital expenditures declined in 2017 to $78.6 million from $103.1 million.

## 50 \( ^{TH} \)  ANNUAL DIVIDEND BOOST

Our performance generated strong free cash flow and helped us reach a milestone. For the 50 \( ^{th} \)  year in a row, we increased the quarterly cash dividend to stockholders, placing Stepan among just 23 companies with that distinction, according to Sure Dividend.

## 20-40%

IMPROVEMENT IN GLOBAL FOOD PRODUCTION IS NEEDED TO FEED A GROWING POPULATION AND WILL BE ENABLED BY NEW, MORE EFFICIENT CROP PROTECTION PRODUCTS, MANY OF WHICH WILL CONTAIN STEPAN INGREDIENTS




# BRINGING VALUE
TO THE SURFACE

## WE VIEW OURSELVES AS PARTNERS IN THE PROCESS OF SOLVING PROBLEMS AND MOVING OUR CUSTOMERS FORWARD TO HIGHER PERFORMANCE AND WINNING IN THEIR MARKETS.

Our aim is to broaden Stepan’s presence globally and further expand within our primary markets. In the process, we build trust and collaboration as we seek solutions for customers in the Personal Care, Agriculture and Oilfield markets, among others, by offering a high-technology touch and formulation expertise. In brief, rather than simply selling a chemical, we seek to sell a solution.

Our balanced innovation program includes diversification in Surfactants and Polymers to assist customers who benefit from our technical service and allow us to leverage our asset base to develop inventive new products and applications. Our technical service capabilities have been bolstered with key investments made in our Polymers R&D facilities in Northfield, Illinois, and in Brzeg Dolny, Poland, as well as new capabilities in our Houston Oilfield laboratory.

## PARTNERSHIPS INCREASING

SURFACTANTS: 2017 was a busy year for collaborative efforts. Our longstanding development partnerships in Agriculture enabled the introduction of several new green surfactants and solvents. We also resourced heavily to bring science to the Oilfield market that relates to improving efficiencies for the fracturing and stimulating markets. Our acquisition in Brazil is exceeding expectations with new customers and increased sales.




## 50%

REDUCTION IN FRESH WATER USED TO
STIMULATE OILFIELD OUTPUT IS AN OIL
AND GAS INDUSTRY GOAL SUPPORTED
BY STEPAN SOLUTIONS

POLYMERS: We continue to expect global polyol demand to grow in the years ahead. We are benefitting from the recent capacity addition for specialty polyols in Poland and Columbus, Georgia, as well as improved European volume and margins. We are supporting our rigid polyol business with next-generation insulation products and adding capabilities and capacity to our global manufacturing network, at Millsdale, Illinois, and Wesseling, Germany, plants. Our China facility provides valuable manufacturing flexibility as we drive growth for our customers and for Stepan.
DELIVERING PROGRESS



Stepan solutions are helping the oilfield industry improve production efficiencies, including reducing the use of fresh water to stimulate oilfield output. Pictured here are Ginger Ren, Functional Chemist and Dr. Aaron Sanders, Oilfield Solutions R&D Manager.

New reactors in Poland and Columbus, Georgia, are helping maintain the pace of growth for our business in the C.A.S.E. and P.U.S.H. (Polyurethane Systems House) markets.

## EXPERTISE, STRONG BRANDS
BENEFIT SPECIALTY PRODUCTS

SPECIALTY PRODUCTS: Strong supply chain relationships and an experienced core team have made our branded nutraceutical product portfolio globally recognized with a reputation for quality and purity. Brands include Clarinol \( ^{®} \) , conjugated linoleic acid derived from natural safflower oil; Marinol \( ^{®} \) , naturally concentrated fish oil; and PinnoThin \( ^{®} \) , an appetite suppressant produced from vegetable pine nut oil.



INVESTING FOR GROWTH
WE HAVE MADE SIGNIFICANT
INVESTMENTS GLOBALLY
OVER THE PAST YEAR TO
UNLOCK NEW LEVELS OF
PERFORMANCE FOR OUR
POLYMERS PRODUCTS.
FROM SYNTHESIS TO
CHARACTERIZATION AND
PROCESS CHEMISTRY.

## CREATING VALUE

We create value for Stepan’s customers through every stage of product development. Paulina Karasińska is pictured here in the Warsaw R&D laboratory.



Teams are working on expanding our presence in nonionic surfactants and other product lines; on employing new supply chain efficiencies; on delivering novel technical support applications; and on continuing to suggest ways to improve efficiencies and cut costs through our DRIVE initiative.

Cost savings from the DRIVE program and other efforts to improve efficiency exceeded our 2017 target of $15.0 million in pre-tax, bottom-line profit. These savings were realized through mostly internal, highly collaborative work from every function and region across Stepan.

## STRONG SUSTAINABILITY EFFORTS

Stepan continues to align with industry-wide sustainability trends. We demonstrate to our customers a commitment to responsible sourcing practices, to ingredients that bring sustainability benefits to the market and to management practices that ensure long-term, sustainable success for our operations.

Seventy-four percent of Stepan’s product portfolio now offers sustainability advantages related to biorenewability, energy efficiency, or reduced environmental impact. In response to customer interest in responsibly sourced palm-based ingredients, Stepan has achieved Roundtable for Sustainable Palm Oil (RSPO) certification for 78 percent of our sites handling palm kernel oil in 2017.

## SILVER SUSTAINABILITY LEVEL ATTAINED

For the second year, Stepan is ranked at the Silver level by the Ecovadis Corporate Social Responsibility comprehensive sustainability assessment program. According to our most recent Ecovadis assessment, Stepan ranked in the top 27 percent of our industry group across all areas measured, and in the top 7 percent for our procurement practices. We look forward to continued improvement in our corporate sustainability efforts for 2018 as we continue to bring sustained value to our customers.

## 1 BILLION

BARRELS OF OIL CONSERVED
ANNUALLY USING POLYISO INSULATION
WITH STEPAN INGREDIENTS

## COLLABORATING AT CUSTOMER SITES

Assisted by new high-pressure machines and testing equipment at our Northfield, Illinois, and Poland facilities, Stepan R&D teams simulate customers' processing of rigid polyol insulation foam in the lab, then go on site to collaborate and help customers solve any issues. Pictured here (from left to right) are Mirosław Kocur, Magdalena Piętka-Ottlik and Mikołaj Gmyr from our Poland team.




















## RECONCILIATION OF NON-GAAP ADJUSTED NET INCOME \( ^{*} \) 
(dollars in thousands, except per share amounts)

<table><tr><td></td><td>2017</td><td>EPS</td><td>2016</td><td>EPS</td></tr><tr><td>Net Income Reported</td><td>$91,578</td><td>$3.92</td><td>$86,191</td><td>$3.73</td></tr><tr><td>Deferred Compensation (Income) Expense</td><td>(40)</td><td>(0.00)</td><td>9,977</td><td>0.43</td></tr><tr><td>Business Restructuring</td><td>2,216</td><td>0.09</td><td>4,824</td><td>0.21</td></tr><tr><td>Contract Termination Settlement</td><td>—</td><td>—</td><td>(2,805)</td><td>(0.12)</td></tr><tr><td>US Tax Reform Impact</td><td>14,937</td><td>0.64</td><td>—</td><td>—</td></tr><tr><td>Adjusted Net Income</td><td>$108,691</td><td>$4.65</td><td>$98,187</td><td>$4.25</td></tr></table>

 \( ^{*} \) Adjusted net income is a non-GAAP measure. A reconciliation of adjusted net income to reported net income is set forth in the table above. All amounts are presented after-tax.



## FIVE YEAR SUMMARY 2013–2017

(in thousands, except per share and employee data)

<table><tr><td>For the Year</td><td>2017</td><td>2016</td><td>2015</td><td>2014</td><td>2013</td></tr><tr><td>Net Sales</td><td>$1,925,007</td><td>$1,766,166</td><td>$1,776,167</td><td>$1,927,213</td><td>$1,880,786</td></tr><tr><td>Operating Income</td><td>146,160</td><td>126,193</td><td>122,790</td><td>90,694</td><td>109,153</td></tr><tr><td>Percent of Net Sales</td><td>7.6%</td><td>7.1%</td><td>6.9%</td><td>4.7%</td><td>5.8%</td></tr><tr><td>Income Before Provision for Income Taxes</td><td>139,237</td><td>113,816</td><td>102,856</td><td>75,535</td><td>95,630</td></tr><tr><td>Percent of Net Sales</td><td>7.2%</td><td>6.4%</td><td>5.8%</td><td>3.9%</td><td>5.1%</td></tr><tr><td>Provision for Income Taxes</td><td>47,690</td><td>27,618</td><td>26,819</td><td>18,454</td><td>23,293</td></tr><tr><td>Net Income Attributable to Stepan Company</td><td>91,578</td><td>86,191</td><td>75,968</td><td>57,101</td><td>72,828</td></tr><tr><td>Per Diluted Share(a)</td><td>3.92</td><td>3.73</td><td>3.32</td><td>2.49</td><td>3.18</td></tr><tr><td>Percent of Net Sales</td><td>4.8%</td><td>4.9%</td><td>4.3%</td><td>3.0%</td><td>3.9%</td></tr><tr><td>Percent to Total Stepan Company Stockholders&#x27; Equity(b)</td><td>13.3%</td><td>14.5%</td><td>13.9%</td><td>10.5%</td><td>14.1%</td></tr><tr><td>Cash Dividends Paid</td><td>18,907</td><td>17,329</td><td>16,300</td><td>15,387</td><td>14,474</td></tr><tr><td>Per Common Share</td><td>0.86</td><td>0.78</td><td>0.73</td><td>0.69</td><td>0.65</td></tr><tr><td>Depreciation and Amortization</td><td>79,022</td><td>74,967</td><td>66,985</td><td>63,804</td><td>56,400</td></tr><tr><td>Capital Expenditures</td><td>78,613</td><td>103,076</td><td>119,349</td><td>101,819</td><td>92,865</td></tr><tr><td>Weighted-average Common Shares Outstanding (Diluted)</td><td>23,377</td><td>23,094</td><td>22,858</td><td>22,917</td><td>22,924</td></tr></table>

As of Year End

<table><tr><td>Working Capital</td><td>$468,483</td><td>$388,276</td><td>$376,329</td><td>$326,043</td><td>$339,557</td></tr><tr><td>Current Ratio</td><td>2.5</td><td>2.3</td><td>2.5</td><td>2.3</td><td>2.3</td></tr><tr><td>Property, Plant and Equipment, net</td><td>598,443</td><td>582,714</td><td>555,463</td><td>524,195</td><td>494,042</td></tr><tr><td>Total Assets</td><td>1,470,861</td><td>1,353,890</td><td>1,239,661</td><td>1,162,014</td><td>1,167,202</td></tr><tr><td>Long-term Debt Obligations, Less Current Maturities</td><td>268,299</td><td>288,859</td><td>312,548</td><td>245,880</td><td>234,092</td></tr><tr><td>Total Stepan Company Stockholders&#x27; Equity</td><td>740,096</td><td>634,604</td><td>556,984</td><td>535,546</td><td>552,286</td></tr></table>

a. Based on weighted-average number of diluted common shares outstanding during the year.

b. Based on average equity.

The selected financial data included herein has not been audited. The information was derived from the Company’s audited financial statements for the respective years, which were presented in accordance with accounting principles generally accepted in the United States of America and which were audited in accordance with the standards of the United States Public Company Accounting Oversight Board. Copies of the full consolidated financial statements and of the independent registered public accountants’ report that expressed an unqualified opinion (dated February 27, 2018) are included in the Company’s 2017 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission, which is available on request or via our website at www.stepan.com.



## CORPORATE DIRECTORS & OFFICERS

## BOARD OF DIRECTORS



F. Quinn Stepan, Jr.
Chairman, President and
Chief Executive Officer



F. Quinn Stepan
Former Chairman



Michael R. Boyce
Former Chairman, PQ
Corporation, a global specialty
chemical and catalyst
company, Malvern, Pennsylvania



Randall S. Dearth
Chairman, President and
Chief Executive Officer, Calgon
Carbon Corporation, a global
manufacturer of activated carbon
and innovative treatment systems,
Pittsburgh, Pennsylvania



Joaquin Delgado, Ph.D.
Executive Vice President,
Consumer Business Group,
3M Company, a global diversified
technology company,
St. Paul, Minnesota



Gregory E. Lawton
Former President and Chief
Executive Officer, Johnson
Diversey, Inc., a global provider
of cleaning and hygiene solutions
to the institutional and industrial
marketplace, Sturtevant, Wisconsin



Jan Stern Reed
Former Senior Vice President,
General Counsel and Corporate
Secretary, Walgreens Boots
Alliance, Inc., a global pharmacy-
led, health and wellbeing
enterprise, Deerfield, Illinois



Edward J. Wehmer
President and Chief Executive
Officer, Wintrust Financial
Corporation, a financial services
company, Rosemont, Illinois

## OFFICERS

F. Quinn Stepan, Jr.
Chairman, President and Chief Executive Officer

Scott R. Behrens
Vice President and
General Manager, Surfactants

Matthew J. Eaken
Vice President, Corporate Controller and
Interim Chief Financial Officer

Jennifer Ansbro Hale
Vice President, General Counsel,
Chief Compliance Officer and Secretary
Arthur W. Mergner
Vice President, Supply Chain

Sean T. Moriarty
Vice President and
General Manager, Polymers

Frank Pacholec, Ph.D.
Vice President, Strategy and
Corporate Development

Gregory Servatius
Vice President, Human Resources

Robert V. Slone, Ph.D.
Vice President, Chief Technology and
Sustainability Officer

Debra A. Stefaniak
Vice President, Business Transformation



## CORPORATE INFORMATION

## DEPARTMENTAL VICE PRESIDENTS

Strategy and Corporate Development
Todd A. Nelmark
Vice President, Commercial Development

## Legal

David B. Mattingly
Vice President, Ethics and Compliance

## Supply Chain

Thomas G. Meyer
Vice President, North American Supply Chain

## Gary M. Traverso

Vice President, Corporate Engineering and Asia Supply Chain

## Polymers

Michael A. McCurrie
Vice President, Americas

Roger Stubbs
Vice President, Europe

## Procurement

Kyle Montgomery
Vice President, Procurement

Richard H. Wehman, Jr.
Vice President, Strategic Purchasing

## Research and Development

Matthew I. Levinson, Ph.D.
Vice President, Global Process Development

## Paul Neill, Ph.D.

Vice President, Polymers Research and Development

## Specialty Products

Robert J. Peacock
Vice President and General Manager

## Surfactants

Adriano Galimberti
Vice President and General Manager, North America

Mark F. Mydlach
Vice President, Sales

Didier Ray
Vice President, Europe

## Independent Registered Public Accounting Firm

Deloitte & Touche LLP, Chicago, Illinois

## Transfer Agent and Registrar

Computershare
P.O. Box 30170
College Station, TX 77842-3170
800.446.2617

Contact the Transfer Agent and Registrar concerning stock certificates, dividend checks, transfer of ownership or other matters pertaining to your stock account.

## Stock Listing

New York Stock Exchange: SCL

## Investor Relations

Matthew J. Eaken
847.446.7500

## Form 10-K

Copies of the Company’s annual report on Form 10-K, filed with the Securities and Exchange Commission, will be available without charge to stockholders and interested parties upon written request to the Secretary of the Company or may be obtained on our website at www.stepan.com

## Annual Meeting

The 2018 Annual Meeting for the Stockholders of the Company will be held at 9:00 a.m., Tuesday, April 24, 2018, at the Company's headquarters in Northfield, Illinois.

## Corporate Governance

The Company’s Corporate Governance Guidelines and Code of Conduct are provided on our website at www.stepan.com within the Investor Relations section of the site. The same website location provides contact information for the Company’s Ethics Hotline, which allows employees, stockholders and other interested parties to communicate with Company’s management or Audit Committee (on an anonymous basis, if desired) through an independent third-party hotline by telephone or online.

Design: Edelman Chicago










## Stepan

Northfield, IL 60093

847.446.7500

www.stepan.com