Luis E. Rojo
STEPANAbout Luis E. Rojo
Luis E. Rojo, age 52, is President and Chief Executive Officer of Stepan Company and a director since October 29, 2024; he previously served as Vice President and Chief Financial Officer from April 2018 to October 2024 and spent 2014–2018 in senior finance roles at Procter & Gamble (P&G) . Under the company’s recent performance context, FY2024 GAAP net income was $50.4M vs $40.2M in FY2023 (+25%), while the company’s TSR value of a fixed $100 investment was $68 in 2024 vs $97 in 2023 (peer group $138) . FY2024 revenue was $2,180M vs $2,326M in FY2023 and EBITDA was $183.3M vs $178.0M (values retrieved from S&P Global)*.
| Performance Context | FY 2023 | FY 2024 |
|---|---|---|
| Revenues ($USD) | $2,325,768,000 | $2,180,274,000 |
| EBITDA ($USD) | $177,985,000* | $183,287,000* |
| Net Income ($USD) | $40,204,000 | $50,370,000 |
| TSR – Value of $100 (year-end) | $97 | $68 |
*Values retrieved from S&P Global.
Past Roles
| Organization | Role | Years | Strategic Impact / Notes |
|---|---|---|---|
| Stepan Company | President & Chief Executive Officer; Director | 2024–present | Promoted to CEO and appointed to Board effective Oct 29, 2024 . |
| Stepan Company | Vice President & Chief Financial Officer | 2018–2024 | Served as CFO from Apr 2018 until promotion to CEO . |
| Procter & Gamble | Global Hair Care Finance Director | Feb–Apr 2018 | Senior finance leadership role at P&G . |
| Procter & Gamble | NA Hair Care Finance Director | 2014–2018 | Senior finance leadership role at P&G . |
External Roles
No current external public company directorships disclosed for Rojo in the proxy or 8-K materials .
Fixed Compensation
| Element | Detail |
|---|---|
| Base Salary (CEO) | $940,000 effective immediately upon CEO appointment (Oct 29, 2024) . |
| Base Salary progression | 2023 base salary $546,000; 2024 base salary $940,000; prior to promotion, Rojo’s base salary as CFO was $560,742 . |
| Target Bonus % (STI) | 100% of salary as CEO (maximum 200%); as CFO prior to promotion: 75% (max 150%) . |
| 2024 Actual Bonus | Not paid; Rojo opted out of a discretionary bonus to increase the pool for other executive officers . |
| Perquisites | Company-leased vehicle, limited travel/perqs; details reflected in “All Other Compensation” . |
Performance Compensation
Short-Term Incentive Plan (STI) – 2024 Framework and Outcome
| Metric | Threshold | Target | Maximum | 2024 Result | Payout Impact |
|---|---|---|---|---|---|
| Corporate Net Income | $56.0M | $70.2M | $98.0M | $50.5M | 0% |
| Corporate EBITDA | $198.0M | $248.0M | — | $187.0M | 0% |
| Corporate Growth Goal (profit on strategic categories) | $704.0M | $750.0M | — | $692.3M | 0% |
Notes:
- STI structure blends Corporate Financial Performance Objectives with Individual Performance Objectives; CEO target 100% and max 200% of salary (pro-rated for CEO service period in 2024) .
- Despite corporate misses, the committee used discretion to award uniform bonuses to current employees; Rojo opted out of any discretionary award .
Long-Term Incentives (LTI) – 2024 Annual Grants (March 4, 2024)
| LTI Component | Grant Value | Units/Terms |
|---|---|---|
| Stock Appreciation Rights (SARs) | $225,000 | 7,027 SARs; 10-year term; exercise price = $87.50; vest ratably over 3 years . |
| Restricted Stock Units (RSUs) | $225,000 | 2,572 RSUs; vest ratably over 3 years . |
| Performance Shares (PSUs) | $450,000 (target) | Target 5,143; initial shares tied to 2024 Net Income vs threshold/target/maximum, then ROIC modifier; 2024 PSUs forfeited (below threshold) . |
Promotion Awards (October/November 2024) – Upon CEO Appointment
| Award | Grant Value | Units/Triggers | Vesting |
|---|---|---|---|
| RSUs | $1,000,000 | 12,609 RSUs | 3 equal installments on 12/31/2025, 12/31/2026, 12/31/2027, stock-settled . |
| PSUs (stock-price hurdles) | $1,000,000 (target, two tranches) | 12,608 total: 6,304 earned if 20 consecutive trading days ≥ $100 by 12/31/2027; additional 6,304 if ≥ $150 by 12/31/2027 | Earn/vest on 12/31/2027 if triggers met . |
Vested 2022 PSUs (3-year cycle ended 12/31/2024)
| Name | Shares Vested | Value at Vest |
|---|---|---|
| Luis E. Rojo | 2,583 | $159,565 (at $61.78 on 2/18/2025) . |
Equity Ownership & Alignment
Beneficial Ownership (as of March 3, 2025)
| Holder | Shares Beneficially Owned | % of Outstanding |
|---|---|---|
| Luis E. Rojo | 26,704 | <1% . |
Footnote breakdown for Rojo includes: 512 ESOP II shares; rights to acquire 11,861 shares via options/SARs within 60 days; 857 RSUs scheduled to vest; and 2,329 shares credited under the Management Incentive Plan stock account .
- Stock Ownership Guidelines: CEO must hold shares equal to 5x base salary; all executive officers were in compliance as of Feb 2025 .
- Hedging/Pledging: Hedging and short-selling are prohibited by policy . The ownership table notes pledged shares are included if applicable; no specific pledge is disclosed for Rojo .
Upcoming Vesting and Exercise Schedules (selected)
| Instrument | Quantity | Key Terms |
|---|---|---|
| RSUs | 682 (2/14/2025), 857 (3/4/2025), 4,203 (12/31/2025), then 2026–2027 per schedule | Time-based vesting; stock-settled . |
| SARs | 1,898 (2/14/2025), 2,342 (3/4/2025), then 2026–2027 per schedule | 10-year term; three-year ratable vest; grant prices per award (e.g., $87.50 on 3/4/2024) . |
| PSUs (price hurdles) | Up to 12,608 | Earn 6,304 at $100 and additional 6,304 at $150 for 20 consecutive trading days by 12/31/2027; vest 12/31/2027 if earned . |
Deferred Compensation (balances as of FY2024)
| Plan | Exec Contributions (2024) | Aggregate 2024 Earnings | Aggregate Balance |
|---|---|---|---|
| Management Incentive Plan (deferred bonus/stock) | — | $(155,352) | $1,392,685 |
| Performance Award Deferred Compensation Plan | — | $(116,906) | $255,882 |
Employment Terms
- Appointment and Salary: Appointed CEO and director effective Oct 29, 2024. Annual salary $940,000 and CEO STI target 100% of salary for 2024 (pro-rated); plus LTIP eligibility and standard executive benefits .
- Severance: Company has no standing severance/change-in-control cash agreements for NEOs; severance may be addressed ad hoc via separation agreements (as with prior CEO) .
- Change-of-Control Equity Treatment: Under the 2022 Equity Incentive Plan, if no replacement award on change in control, RSUs/SARs vest in full and PSUs vest at target; if replacement award is granted, full vesting occurs upon qualifying termination within two years post-CIC (double trigger) .
- Equity Acceleration on Death/Disability/Retirement: RSUs/SARs vest fully on death/disability (pro rata on retirement); PSUs remain eligible based on actual performance (pro rata on retirement; full on death/disability) .
- Clawback: SEC/NYSE-compliant policy recovers incentive compensation upon financial restatement (regardless of fault) for the three completed fiscal years preceding the restatement; prior policy covered willful misconduct/fraud for 12 months .
- Insider Trading Policy: Pre-clearance and trading windows required; hedging and short-selling prohibited .
Board Governance
- Board Service: Director since 2024; nominated for stockholder election to serve until 2028 .
- Independence: Not independent as current CEO; all standing committees (Audit, Compliance, Human Capital & Compensation, Nominating & Corporate Governance) are composed entirely of independent directors .
- Roles/Committees: No committee memberships disclosed for Rojo (committees are independent-only) .
- Board Structure: Chairman (F. Quinn Stepan, Jr.) separate from CEO; Lead Independent Director role in place to enhance independent oversight .
- Attendance: All directors attended >75% of Board and committee meetings in 2024; six executive sessions of independent directors were held .
- Director Compensation: Employee directors (including the CEO) receive no director fees .
Director Compensation (for completeness on board service context)
- Non-Employee Director annual retainer $100,000; Chair/Lead/Committee chair fees as disclosed; annual director stock award (1,396 shares in 2024; $125,000 value) .
Compensation Structure Analysis
- Mix shift/upside alignment: 2024 promotion awards materially increased equity weighting (RSUs and stock-price-hurdled PSUs), reinforcing multi-year alignment and creating price-based upside triggers ($100/$150) through 2027 .
- Performance stringency: 2024 corporate metrics (Net Income, EBITDA, Growth Goal) all fell below threshold; annual PSUs granted in 2024 were forfeited, indicating strict pay-for-performance design .
- Governance positives: No standing cash severance/CIC agreements; SEC/NYSE clawback; no option/SAR repricing without stockholder approval; hedging ban; CEO opted out of discretionary bonus pool .
- Peer benchmarking: Compensation set with reference to a chemicals peer group and Mercer data; generally references median compensation levels, with Exequity as independent consultant; 2024 Say-on-Pay approval 96% .
Compensation Peer Group (used for 2024 decisions)
AdvanSix, Ashland, Avient, Cabot, Chemours, H.B. Fuller, Innospec, Koppers Holdings, NewMarket, Quaker Chemical, RPM International, Sensient Technologies .
Say-on-Pay & Shareholder Feedback
- Say-on-Pay support: 96% approval at 2024 Annual Meeting; 14 consecutive years with >96% approval; no changes made directly due to the vote .
Performance & Track Record (context for incentives and value creation)
- FY2024 results: Net income $50.4M ($2.20/diluted share) vs $40.2M in 2023; Surfactants OI +18% YoY; Polymers OI −33%; Specialty Products OI +82% .
- Capital return: $34.0M dividends paid in 2024; 57th consecutive annual dividend increase .
- TSR vs peers: Value of $100 investment in 2024: SCL $68 vs Dow Jones U.S. Chemicals Index $138 .
- Strategy tone: On assuming CEO role, Rojo emphasized continuity with surgical changes and focus on near- and mid-term priorities to drive profitable growth .
Detailed Incentive Mechanics Table
| Component | Weighting | Target Setting | Modifier | Outcome |
|---|---|---|---|---|
| STI Corporate Net Income | Largest corporate weight | Threshold $56.0M; Target $70.2M; Max $98.0M | Above-target NI could double prorated corporate payout; below threshold reduces | 2024: $50.5M; 0% corporate payout . |
| STI Corporate EBITDA | Mid weight | Threshold $198.0M; Target $248.0M | — | 2024: $187.0M; 0% . |
| STI Corporate Growth Goal | Smallest corporate weight | Profit goals on strategic categories: Threshold $704.0M; Target $750.0M | — | 2024: $692.3M; 0% . |
| PSUs (annual, 2024 grant) | ~50% of LTI value | Initial shares vs Corporate Net Income | 1-year ROIC modifier for 2026; prior grants used 3-year average ROIC | 2024 PSUs forfeited (below threshold NI) . |
| PSUs (price-hurdle, promo) | Promotion awards | Price hurdles: $100/$150 for 20 consecutive days by 12/31/2027 | — | Earn/vest 12/31/2027 if triggers met . |
Risk Indicators & Red Flags
- Hedging/short selling prohibited; no options/SAR repricing without stockholder approval; no excise tax gross-ups; no standing severance or CIC cash agreements .
- Related-party transactions: Policy in place; no Rojo-specific related party transactions disclosed .
- Section 16 compliance: Company believes all required filings timely, except certain forms for another insider due to administrative error (not Rojo) .
Compensation Committee Analysis
- Committee composition (independent): Jan Stern Reed (Chair), Lorinda Burgess, Randall Dearth, Joaquin Delgado, Susan Lewis, Edward Wehmer .
- Independent consultant: Exequity; annual independence assessment concluded no conflicts .
- Human capital oversight and succession planning included in remit .
Investment Implications
- Alignment and incentive stringency: 2024 corporate misses zeroed formulaic payouts and forfeited annual PSUs; CEO’s opt-out of discretionary STI enhances alignment. 2027 price-hurdle PSUs (> $100/$150) introduce clear upside milestones that can serve as trading catalysts if approached or achieved .
- Supply/demand from vesting: Scheduled RSU/SAR vesting through 2027 and potential 2027 PSU vest could introduce periodic selling pressure; mitigants include 5x salary ownership requirement and compliance status as of Feb 2025 .
- Governance risk moderate: CEO is a director but not Chair; independent committees and a Lead Independent Director structure, no standing severance/CIC cash arrangements, and robust clawback reduce governance and payout risk .
- Performance pivot: Despite FY2024 net income improvement and dividend increases, TSR and corporate metrics underperformed thresholds; execution on “surgical” strategic focus and EBITDA improvement path will be key to unlocking the 2027 price-hurdle PSU value .
Citations: All facts above are sourced from SCL’s 2025 DEF 14A proxy [1:x], 2024 CEO-appointment 8-K [10:x], 2024 earnings call excerpt **[94049_SCL_3404652_15]**, and S&P Global for EBITDA noted with asterisks.