Postretirement Benefit Plans

12 Months Ended

Dec. 31, 2025

Retirement Benefits [Abstract]

Postretirement Benefit Plans

13. Postretirement Benefit Plans

Defined Benefit Plans

The Company sponsors various funded qualified and unfunded non-qualified defined benefit pension plans, the most significant of which cover employees in the U.S. and U.K. locations. The various U.S. defined benefit pension plans were amended during the years 2005-2008 to freeze the plans by stopping the accrual of service benefits. The U.K. defined benefit pension plan was frozen in 2006. Benefits earned through the freeze dates are available to participants when they retire, in accordance with the terms of the plans. The Company established defined contribution plans to replace the frozen defined benefit pension plans.

Obligations and Funded Status at December 31

	United States						United Kingdom
(In thousands)	2025			2024			2025			2024
Change in benefit obligation
Benefit obligation at beginning of year	$	126,335		$	131,783		$	12,400		$	13,750
Interest cost		6,800			6,605			700			647
Actuarial (income) loss		1,332			(2,251	)		(170	)		(1,071	)
Benefits paid		(9,798	)		(9,802	)		(755	)		(714	)
Foreign exchange impact		—			—			947			(212	)
Benefit obligation at end of year	$	124,669		$	126,335		$	13,122		$	12,400

	United States						United Kingdom
(In thousands)	2025			2024			2025			2024
Change in plan assets
Fair value of plan assets at beginning of year	$	126,888		$	137,985		$	14,175		$	16,091
Actual return on plan assets		7,956			(1,520	)		763			(961	)
Employer contributions		170			225			—			—
Benefits paid		(9,798	)		(9,802	)		(755	)		(714	)
Foreign exchange impact		—			—			1,089			(241	)
Fair value of plan assets at end of year	$	125,216		$	126,888		$	15,272		$	14,175
Over funded status at end of year	$	547		$	553		$	2,150		$	1,775

The amounts recognized in the consolidated balance sheets at December 31 consisted of:

	United States						United Kingdom
(In thousands)	2025			2024			2025		2024
Non-current assets	$	1,945		$	5,924		$	2,150	$	1,775
Current liability		(145	)		(167	)		—		—
Non-current liability		(1,253	)		(5,204	)		—		—
Net amount recognized	$	547		$	553		$	2,150	$	1,775

The amounts recognized in accumulated other comprehensive income at December 31 consisted of:

	United States				United Kingdom
(In thousands)	2025		2024		2025		2024
Net actuarial loss	$	29,976	$	28,515	$	5,778	$	6,283

Below is information for pension plan with projected benefit obligations in excess of plan assets at December 31, 2025 and December 31, 2024.

	United States
(In thousands)	2025		2024
Projected benefit obligation	$	—	$	101,379
Accumulated benefit obligation	$	—		101,379
Fair value of plan assets	$	—		97,595

Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income

Net periodic benefit costs for the years ended December 31, 2025, 2024 and 2023, were as follows:

	United States									United Kingdom
(In thousands)	2025			2024			2023			2025			2024			2023
Interest cost	$	6,800		$	6,605		$	6,949		$	700		$	647		$	669
Expected return on plan assets		(8,009	)		(8,479	)		(8,533	)		(811	)		(735	)		(695	)
Amortization of net actuarial (gain) loss		(76	)		(12	)		(23	)		383			324			334
Net periodic benefit cost	$	(1,285	)	$	(1,886	)	$	(1,607	)	$	272		$	236		$	308

Other changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31, 2025, 2024 and 2023, were as follows:

	United States						United Kingdom
(In thousands)	2025		2024		2023		2025			2024			2023
Net actuarial (gain) loss	$	1,385	$	7,748	$	1,930	$	(122	)	$	618		$	135
Amortization of net actuarial gain (loss)		76		12		23		(383	)		(324	)		(334	)
Total recognized in other comprehensive    income	$	1,461	$	7,760	$	1,953	$	(505	)	$	294		$	(199	)
Total recognized in net periodic benefit    cost and other comprehensive income	$	176	$	5,874	$	346	$	(233	)	$	530		$	109

Estimated Future Benefit Payments

(In thousands)	United States		United Kingdom
2026	$	10,020	$	710
2027		10,089		738
2028		10,137		776
2029		10,169		798
2030		10,169		826
2031-2035		48,930		4,719

Assumptions

The weighted-average assumptions used to determine benefit obligations at December 31 were as follows:

	United States						United Kingdom
	2025			2024			2025			2024
Discount rate		5.60	%		5.60	%		5.60	%		5.50	%

The weighted-average assumptions used to determine net periodic benefit costs for years ended December 31 were as follows:

	United States									United Kingdom
	2025			2024			2023			2025			2024			2023
Discount rate		5.50	%		5.20	%		5.50	%		5.50	%		4.80	%		5.00	%
Expected long-term return on plan assets		5.50	%		5.50	%		5.50	%		5.55	%		4.64	%		4.47	%

In addition to the above assumptions, the Company uses a market-related value of assets approach to calculate the expected return on the plan assets component of U.S. net periodic benefit cost. The market-related value equals the fair value of plan assets with five-year smoothing of asset gains or losses. Asset gains are subtracted or losses added in the following way: 80 percent of the prior year’s gain or loss; 60 percent of the second preceding year’s gain or loss; 40 percent of the third preceding year’s gain or loss; and 20 percent of the fourth preceding year’s gain or loss. Gains or losses for the year are calculated as the difference between the expected fair value of assets and the actual fair value of assets.

Investment Strategies and Policies

U.S. Plans

During 2025, the plan maintained an asset allocation structure of approximately 81 percent duration-matching bonds, 16 percent equity and three percent money market funds. Plan equity assets (other than Stepan Company stock) are invested using domestic and foreign exchange traded funds (ETFs) to achieve diversification amongst a relatively small asset pool. An investment management firm monitors the ETFs and also monitors and manages the overall asset allocation and compliance with the Investment Policy Statement. The fixed income manager seeks to reduce the volatility of the plan’s funded status by matching the duration with the plan’s liability while seeking to improve returns through security selection, sector allocation and yield curve management.

Risk is diversified among multiple asset categories. The investment management firm recommends asset allocations based on the time horizon available for investment, funded status, the nature of the plan cash flows and liabilities and other factors. The asset allocation targets are approved by the Company’s Plan Committee.

Available investment categories include:

Equities: Common stocks of large, medium, and small companies, including both U.S. and non-U.S. based companies. The allocation for equities, excluding Company stock, is approximately 13 percent and the total equity target is 20 percent, including allocation to the Company’s common stock.

Fixed Income (Debt): Bonds or notes issued or guaranteed by the U.S. government, and to a lesser extent, by non-U.S. governments, or by their agencies or branches, mortgage-backed securities, including collateralized mortgage obligations, corporate bonds, municipal bonds and dollar-denominated debt securities issued in the U.S. by non-U.S. banks and corporations. A small percentage of the fixed income assets may be in debt securities that are below investment grade. The pension allocation for fixed income is 78 percent. The fixed income portfolio has a duration similar to the plan’s liability stream and is designed to perform consistent with the movement of the plan’s liabilities.

Employer Securities: The retirement plans also hold shares of the Company’s common stock, which are purchased or sold by the trustee from time to time, as directed by the Plan Committee. At the direction of the Plan Committee, the plans sold 25,577 shares of the Company’s common stock to the Company’s employee stock ownership plan (ESOP) trust in 2025. In 2024, the plans sold 14,439 shares to the Company’s ESOP trust on February 22, 2024. In 2023, the plans sold 38,542 shares to the Company’s ESOP trust on February 15, 2023.

The target allocation for cash is two percent of plan assets.

U.K. Plan

The objective of the U.K. defined benefit pension fund investment strategy is to maximize the long-term rate of return on plan assets within a medium level of risk in order to minimize the cost of providing pension benefits. To that end, the plan assets are invested in an actively managed pooled fund of funds that diversifies its holdings among equity securities, debt securities, property and cash. Although there are no formal target allocations for the plan assets, the overall strategy is to achieve a mix of investments for long-term growth and near-term benefit payments with a wide diversification of asset types. Equity securities are selected from U.K., European, U.S. and emerging market companies. Bonds include U.K. and other countries’ government notes and corporate debt of U.K and non-U.K. companies. There are no specific prohibited investments. Plan trustees meet regularly with the fund manager to assess the fund’s performance and to reassess investment strategy. At December 31, 2025, the actual pension asset allocation was 13 percent equities, one percent real estate, 75 percent bonds, four percent insurance contracts, and seven percent cash.

Included in plan assets are insurance contracts purchased by the plan trustees to provide pension payments for specific retirees. In past years, at the time a plan participant retired, the plan trustee would periodically purchase insurance contracts to cover the future payments due the retiree. This practice is no longer followed. The contracts are revocable, and the related plan obligations are not considered settled. Therefore, the plan assets and obligations include the insured amounts.

Plan Assets

U.S. Plans

The Company’s asset allocations for its U.S. pension plans at December 31, 2025 and 2024, by asset category, were as follows:

	December 31, 2025
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and Cash Equivalents	$	12,735	$	—	$	—	$	12,735
Equity Securities
U.S. Equities		16,256		—		—		16,256
Non-U.S. Equities		—		—		—		—
Employer Securities		4,274		—		—		4,274
Total Equities		20,530		—		—		20,530
Fixed Income Securities
U.S. Corporate Bonds		—		62,029		—		62,029
U.S. Government and Agency Bonds		23,975		938		—		24,913
Other Bonds		—		5,009		—		5,009
Total Fixed Income		23,975		67,976		—		91,951
Total	$	57,240	$	67,976	$	—	$	125,216

	December 31, 2024
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and Cash Equivalents	$	8,416	$	—	$	—	$	8,416
Equity Securities
U.S. Equities		16,010		—		—		16,010
Non-U.S. Equities		—		—		—		—
Employer Securities		7,493		—		—		7,493
Total Equities		23,503		—		—		23,503
Fixed Income Securities
U.S. Corporate Bonds		—		46,114		—		46,114
U.S. Government and Agency Bonds		38,789		3,218		—		42,007
Other Bonds		—		6,848		—		6,848
Total Fixed Income		38,789		56,180		—		94,969
Total	$	70,708	$	56,180	$	—	$	126,888

Plan Asset Valuation Methodology

Following is a description of the valuation methodologies used for plan assets measured at fair value.

Individual equity securities, including employer securities, are valued by Standard & Poor’s Securities Evaluations as determined by quoted market prices on the New York Stock Exchange or other active trading markets. Both market pricing and future cash flow analysis may be used in the pricing process as follows:

Level 1 – Equities are valued according to the exchange-quoted market prices of the underlying investments. Level 1 fixed income securities are U.S. government securities and are valued according to quoted prices from active markets.

Level 2 – Fixed income investments without equivalent trading exchanges are valued primarily through a technique known as “future cash flow approach” which is based on what bondholders can reasonably expect to receive based upon an issuer’s current financial condition. Pricing analysts prepare cash flow forecasts and utilize one or two pricing models to arrive at an evaluated price. These models include factors such as the interest rate on the coupon, maturity, rating, cash flow projections and other factors.

Level 3 – no investments held during 2025 or 2024 were categorized as Level 3.

U.K. Plan

The Company’s asset allocations for its U.K. pension plans at December 31, 2025 and 2024, by asset category, were as follows:

	December 31, 2025
(In thousands)	Level 1		Level 2		Level 3		Total
Cash		—	$	1,145	$	—	$	1,145
Equity Securities
Pooled Pension Funds		—		1,958		—		1,958
Fixed Income
Pooled Pension Funds		—		11,505		—		11,505
Real Estate
Pooled Pension Funds		—		82		—		82
Insurance Contracts		—		—		582		582
Total	$	—	$	14,690	$	582	$	15,272

	December 31, 2024
(In thousands)	Level 1		Level 2		Level 3		Total
Cash		—	$	941	$	—	$	941
Equity Securities
Pooled Pension Funds		—		1,691		—		1,691
Fixed Income
Pooled Pension Funds		—		10,825		—		10,825
Real Estate
Pooled Pension Funds		—		85		—		85
Insurance Contracts		—		—		633		633
Total	$	—	$	13,542	$	633	$	14,175

Units of each of the pooled funds are valued by the trustee based on quoted market prices of the underlying investments (the underlying assets are either exchange traded or have readily available markets).

Fair value changes within asset categories for which fair value measurements use significant unobservable inputs (Level 3) were as follows during 2025 and 2024:

(In thousands)	Insurance Contracts
Fair value, December 31, 2023	$	760
Sale proceeds (benefit payments)		(129	)
Change in unrealized gain		13
Foreign exchange impact		(11	)
Fair value, December 31, 2024	$	633
Sale proceeds (benefit payments)		(137	)
Change in unrealized gain		40
Foreign exchange impact		46
Fair value, December 31, 2025	$	582

Long-term Rate of Return for Plan Assets

U.S. Plans

The overall expected long-term rate of return on assets of 5.50 percent that was used to develop the 2025 pension expense is based on plan asset allocation, capital markets forecasts and expected benefits of active investment management. For fixed income, the expected return is 5.24 percent. This assumption includes the yield on the five-year zero-coupon U.S. Treasury bond as the base rate along with historical data from the U.S. Treasury yield curve. For equities, the expected return is 8.86 percent for U.S. and international equities. This return is based on a blended average of three different statistical models that each incorporates multiple factors, including forecasts relating to inflation, Gross Domestic Product, and the Fed Funds Target Rate.

The overall investment return forecast reflects the target allocations and the capital markets forecasts for each asset category, plus a premium for active asset management expected over the long term.

U.K. Plan

The overall expected long-term return on plan assets is a weighted average of the expected long-term returns for equity securities, debt securities and other assets. The redemption yield at the measurement date on U.K. government fixed interest bonds and the yield on corporate bonds are used as proxies for the return on the debt portfolio. The returns for equities and property are estimated as a premium of 1.8 percent added to the risk-free rate. Cash is assumed to have a long-term return of 3.8 percent.

Other Defined Benefit Plans

The Company maintains funded and unfunded defined benefit plans in other foreign locations. The liabilities and expenses associated with these plans, individually and collectively, are not material to the Company’s consolidated financial statements. Discount rates for these plans are determined based on local interest rates and plan participant data.

Cash Flows

As a result of pension funding relief included in the Highway and Transportation Funding Act of 2014, the Company did not make any 2025 contributions to the funded U.S. qualified defined benefit plans and made $170,000 contribution to the unfunded non-qualified U.S pension plans. In 2026, the Company expects to contribute $910,000 to the U.S. qualified defined benefit plans and $145,000 to the U.S. unfunded non-qualified pension plans. The Company does not expect to make any contributions to the U.K. defined benefit plan in 2026.

Defined Contribution Plans

The Company sponsors retirement savings defined contribution retirement plans that cover eligible U.S. and U.K. employees. The Company’s U.S. retirement plans include two qualified plans, one of which is a 401(k) plan and one of which is an employee stock ownership plan (ESOP), and one non-qualified supplemental executive plan. Prior to 2018, the Company made profit sharing contributions into the qualified retirement plans for its U.S. employees and starting in 2018 made profit sharing contributions into the qualified retirement plans for U.S. employees and for certain non-U.S. employees. Profit sharing contributions were determined using a formula applied to Company earnings. In 2023, 2024 and 2025, profit sharing contributions for U.S. employees were made to the ESOP trust. Profit sharing contributions are allocated to participant accounts on the basis of participant base earnings.

Defined contribution expenses for the Company’s qualified defined contribution plans and statutory profit sharing contributions were as follows:

(In thousands)	2025		2024		2023
Retirement contributions	$	9,014	$	8,633	$	8,930
Profit sharing contributions		2,426		1,720		2,019
Total	$	11,440	$	10,353	$	10,949

The Company has a rabbi trust to fund the obligations of its non-qualified supplemental executive defined contribution plans (supplemental plans). The trust comprises various mutual fund investments selected by the participants of the supplemental plans. In accordance with the accounting guidance for rabbi trust arrangements, the assets of the trust and the obligations of the supplemental plans are reported on the Company’s consolidated balance sheet. The Company elected the fair value option for the mutual fund investment assets so that offsetting changes in the mutual fund values and defined contribution plan obligations would be recorded in earnings in the same period. Therefore, the mutual funds are reported at fair value with any subsequent changes in fair value recorded in the income statement. The supplemental plan liabilities increase (i.e., supplemental plan expense is recognized) when the value of the trust assets appreciate and decrease (i.e., supplemental plan income is recognized) when the value of the trust assets decline. At December 31, 2025, and December 31, 2024, the trust asset balances and the supplemental plan liability balances were $276,000 and $472,000, respectively.

Certain foreign locations are required by law to make profit sharing contributions to employees based on statutory formulas. For the years ended December 31, 2025, 2024 and 2023, the Company recognized $138,000, $298,000 and $480,000, respectively, of statutory profit sharing expense that is included in the table above.

In all Company locations, approximately 85 percent of union and non-union employees are eligible for either the Company’s sponsored or statutory profit sharing contributions and 100 percent of U.S. based union and non-union employees are eligible for the Company’s sponsored profit sharing contribution.