STEPAN COMPANY MANAGEMENT INCENTIVE PLAN

EXHIBIT 10.1

STEPAN COMPANY

MANAGEMENT INCENTIVE PLAN

(As Amended and Restated

Effective as of January 1, 2005)

SECTION 1

General

1.1 History and Effective Date . STEPAN COMPANY, a Delaware corporation (known as Stepan Chemical Company prior to January 1, 1984, and referred to herein as the “Company”), has previously established an incentive compensation plan known as the STEPAN COMPANY MANAGEMENT INCENTIVE PLAN (known as Stepan Chemical Company Management Incentive Plan prior to January 1, 1984) (the “Plan”). The Plan was previously amended and restated effective as of January 1, 1992. The following provisions constitute an amendment and restatement and continuation of the Plan as amended from time to time and as in effect immediately prior to January 1, 2005, the Effective Date of the Plan as set forth herein.

The Plan is intended to comply with the requirements of Sections 409A(a)(2) through (4) of the Internal Revenue Code of 1986, as amended (the “Code”), and any applicable regulations or other generally applicable official guidance issued thereunder, and shall be interpreted for all purposes in accordance with this intent.

1.2 Purpose . The Plan is designed to assist the Company in attracting and retaining qualified persons in executive and other managerial positions and to provide them an additional incentive to contribute to the success of the Company.

1.3 Administration . The authority to control and manage the operation and administration of the Plan shall be vested in the Compensation and Development Committee (the “Committee”) of the Board of Directors of the Company (the “Board of Directors”). Except as otherwise expressly provided herein, the Committee shall have the full authority to interpret and construe the provisions of the Plan, to remedy ambiguities, inconsistencies or omissions of whatever kind, to prescribe, amend and rescind such rules and regulations as, in its opinion, may be necessary or appropriate for the proper and efficient administration of the Plan, and to determine conclusively all questions arising under the Plan. It is intended that the Committee shall have the maximum authority and discretion allowed by law with respect to any and all of its duties and responsibilities relating to the Plan. Any interpretation of the Plan, and any decision on any matter within the discretion of the Committee affecting the Plan that is made by the Committee in good faith, shall be final and binding on all persons.

1.4 Applicable Law . The Plan shall be construed and administered in accordance with the laws of the State of Illinois to the extent that they are not preempted by the laws of the United States of America.

1.5 Gender and Number . Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural, and words in the plural shall include the singular.

1.6 Notices . Any notice or document required to be given to or filed with the Committee under the Plan will be properly filed if delivered or mailed by registered mail, postage prepaid, to the Committee, in care of the Company at its principal executive offices.

SECTION 2

Participation and Awards

2.1 Participation . The individuals who shall be eligible to receive an Award (as described in Section 2.2) for any calendar year shall be those persons selected by the Committee at any time during such year. Notwithstanding the foregoing, an individual must be in the employ of the Company on December 31 of a calendar year to receive an Award for such year, except that this provision shall not prevent a Participant whose employment with the Company terminates during a calendar year because of his death, disability, or retirement from being eligible, within the discretion of the Committee, for a pro-rata Award based on his actual period of employment during such year. An individual shall be considered a Participant in the Plan upon his designation by the Committee.

2.2 Awards . The amount of an incentive award (the “Award”) for any calendar year shall be determined by the Committee and shall be based upon the performance of the Company, the performance of the Participant’s department (if relevant), and the performance of the Participant; provided, however, that the amount of an Award to any Participant for any calendar year shall not exceed 75 percent of the amount of the actual base salary payable to the Participant by the Company for the calendar year for which the Award is made, exclusive of the Award or any other form of executive compensation, stock option or other fringe benefit. An Award to a Participant for any calendar year shall be paid to or on behalf of the Participant, in cash, as soon as practicable (and in any event by no later than March 15) after the close of the calendar year for which the Award is made except to the extent that a Deferral Request (as described in Section 3.1) is in effect with respect to such year.

SECTION 3

Deferred Awards: Elections

3.1 Deferral Requests .

(a) Generally . Subject to the terms and conditions of the Plan, a Participant may elect to defer the payment of all or any portion of an Award granted to him under the Plan for any calendar year by filing a written request (a “Deferral Request”) with the Committee in such form as it may require. Unless the Participant is a Newly Eligible Participant as provided in subsection (b) below, such Deferral Request must be filed with and accepted by the Committee or its designee by no later than December 31 of the year immediately prior to the year for which such Award is made. A Participant’s Deferral Request for any calendar year shall designate

2

the amount of the Award that shall be deferred and shall become irrevocable as of midnight on the December 31 of the year immediately prior to the year for which the Award is made.

(b) Newly Eligible Participants . A Participant who is selected by the Committee to be a Participant during a calendar year (and who is not already a participant or eligible to participate in any other nonqualified deferred compensation plan that would be aggregated with the Plan pursuant to Code Section 409A) (a “Newly Eligible Participant”) shall be entitled to file a Deferral Request with respect to a pro-rata portion of the Award.

(i) Such a Deferral Request must be submitted to and accepted by the Committee or its designee within 30 days after the date on which the Newly Eligible Participant is initially selected by the Committee to be a Participant during such year. If the Deferral Request is not submitted and accepted within 30 days, the Newly Eligible Participant shall not be permitted to make a Deferral Request with respect to any portion of the Award for such year. A Deferral Request submitted by a Newly Eligible Participant shall designate the amount of the Award that shall be deferred and shall become irrevocable as of midnight on the 30 ^th day following the date on which the Newly Eligible Participant is initially selected by the Committee to be a Participant.

(ii) The amount of the Award that may be deferred pursuant to the Deferral Request by a Newly Eligible Participant shall not be greater than the amount of the Newly Eligible Participant’s Award that is earned after the date on which the Newly Eligible Participant files his or her Deferral Request. The amount of the Newly Eligible Participant’s Award that may be deferred shall be equal to the total amount of the Award for the year multiplied by a fraction, the numerator of which shall equal the number of days from the time the Newly Eligible Participant files the Deferral Request until December 31 of such year, and the denominator of which shall equal the total number of days during such year that the Newly Eligible Participant was an employee of the Company.

3.2 Allocation of Deferred Awards. A Participant shall designate, on his or her Deferral Request for a calendar year, the allocation of his or her Award between the Participant’s Company Stock Account and the General Investment Account.

3.3 Distribution Elections. A Participant shall designate, in accordance with Section 5, the manner in which the Participant’s Award that has been deferred in accordance with Section 3.1, as adjusted for subsequent earnings, losses and other charges and credits, shall be distributed to or for the benefit of the Participant.

3

SECTION 4

Deferred Awards: Accounts

4.1 Deferred Accounts . Subject to the terms and conditions of the Plan, an Award for any calendar year that is deferred in accordance with Section 3.1 shall be credited, as elected by the Participant in the Deferral Request applicable to such Award, to the Company Stock Account or to the General Investment Account maintained on the Company’s books for the Participant as described in subsections (a) and (b) below. Effective for deferrals of Awards earned in calendar year 2007 and thereafter, a Participant’s election to allocate all or a portion of his or her Award to the Company Stock Account shall be irrevocable and shall be credited to the Participant’s Special Company Stock Account described in Section 4.3 in accordance with the method for crediting Share Units and Dividend Equivalents to the Company Stock Account described in Section 4.1(a).

(a) Company Stock Account . As of the date the Award is declared by the Committee, the Participant shall be credited with the number of share units (and fractions thereof) (“Share Units”) equal to the number of shares (and fractional shares calculated to the nearest one-thousandth (.001) of a share) (“Shares”) of the Company’s common stock that the amount of the Award would purchase based on the average of the opening and closing market prices of such stock on the New York Stock Exchange for the calendar day on which the Award is declared. No less frequently than once in every calendar year the Committee shall, for each dividend payment date declared with respect to the Company’s common stock since the last such determination:

(i) determine the amount of the dividends that would have been paid by the Company on the number of Shares of the Company’s common stock equal to the number of Share Units credited to the Participant on the record date for such dividend (“Dividend Equivalents”); and

(ii) credit the Participant’s Company Stock Account with the number of Share Units equal to the number of Shares of the Company’s common stock that the Dividend Equivalents attributable to such dividend payment date would have purchased based on the closing price of the Company’s common stock on the New York Stock Exchange on such dividend payment date.

Notwithstanding the foregoing provisions of this paragraph (a), in no event shall Shares of the Company’s common stock be earmarked for a Participant’s Account or set aside for the benefit of the Participant by reason of the crediting of Share Units under this paragraph (a).

(b) General Investment Account .

(i) The amount of each Award deferred to the Participant’s General Investment Account shall be deemed to be invested in an investment fund(s) (which may include contracts of insurance) selected by the Participant with the consent of the Committee

4

in the Deferral Request applicable to such Award. The earnings and losses deemed to be attributable to the investment of a Participant’s General Investment Account for any calendar year shall be the earnings and losses that would have been yielded if the Participant’s General Investment Account had been invested in the investment selected by the Participant for the year.

(ii) Effective as of the last day of any calendar quarter (a “GIA Transfer Date”), a Participant may elect to change the selection of his or her General Investment Account investment fund selections. Any change by a Participant in his or her investment fund selections shall apply prospectively as of the GIA Transfer Date to all amounts credited to the Participant’s General Investment Account. Notwithstanding the foregoing provisions of this paragraph (b), nothing in the Plan shall be construed to require the Company to segregate or invest any assets to reflect the Participant’s investment fund selections.

(c) Effective Date Credited Amounts . The amounts credited to a Participant’s Company Stock Account and General Investment Account, if any, on the Effective Date shall be equal to the amount credited to such accounts, respectively, as of December 31, 2004 under the terms of the Plan as in effect on that date.

4.2 Transfers from the Company Stock Account to the General Investment Account for Pre-2007 Deferrals.

(a) Application . This Section 4.2 shall only apply to the portion of a Participant’s Company Stock Account that is attributable to deferrals of Awards earned prior to the 2007 calendar year, including Dividend Equivalents thereon (“Pre-2007 Balance”) reduced by the portion of the Participant’s Company Stock Account Pre-2007 Balance that the Participant has elected to t