INNOSPEC INC. Stock Compensation Disclosure

Note 18. Share-Based Compensation Plans

Stock option plans

The Company has two stock option plans, the Omnibus Long-Term Incentive Plan and the ShareSave Plan 2008 under which it currently grants awards. Innospec's ShareSave plan is an employee stock purchase plan, or ESPP.

The stock options have vesting periods ranging from 2 to 5 years and in all cases stock options granted expire within 10 years of the date of grant. All grants are at the sole discretion of the Compensation Committee of the Board of Directors. Grants may be priced at market value or at a premium or discount. The aggregate number of shares of common stock reserved for issuance which can be granted under the plans is 2,550,000.

The fair value of stock options is measured on the grant date using either a fair market value methodology, or in cases where performance criteria are dependent upon external factors such as the Company’s stock price, using a Monte Carlo model.

The Company’s policy is to issue shares from treasury stock to holders of stock options who exercise those options, but if sufficient treasury stock is not available, the Company will issue previously unissued shares of stock to holders of stock options who exercise options.

Stock equivalent units

The Company awards Stock Equivalent Units (“SEUs”) from time to time as a long-term performance incentive. SEUs are cash settled equity instruments conditional on certain performance criteria and the fair value is linked to the Innospec Inc. share price. SEUs have vesting periods ranging from six months to 5 years and in all cases SEUs granted expire within 10 years of the date of grant. Grants may be priced at market value or at a premium or discount. There is no limit to the number of SEUs that can be granted. As at December 31, 2025 the liability for SEUs of $12.5 million is included in accrued liabilities in the consolidated balance sheet, where they will remain until they are cash settled.

The fair value of SEUs is re-measured at each balance sheet reporting date using either a fair market value methodology, or in cases where performance criteria are dependent upon external factors such as the Company’s stock price, using a Monte Carlo model.

Compensation cost

The compensation cost recorded for stock options was $8.1 million, $8.5 million and $8.0 million for 2025, 2024 and 2023, respectively. The compensation cost for stock options is based on the grant-date fair value and spread evenly over the vesting period.

The compensation cost recorded for SEUs was $1.8 million, $6.5 million and $13.5 million for 2025, 2024 and 2023, respectively. The compensation cost for SEUs is spread over the life of the award subject to a revaluation to the fair value at each quarter end. The revaluation may result in a charge or a credit to the income statement in each quarter dependent upon our share price movements and other performance criteria.

Forfeits are accounted for as an adjustment to the charge in the period in which the forfeits occur.

Transactions in the period

The dividend yield was based on our recent history of dividend payouts. The expected life was determined based upon historical exercise experience. The volatility was determined based upon the historical daily stock price volatilities. The risk free interest rate was based on the U.S. Federal Reserve 3 year interest rate at the grant dates, which approximates to the expected term of the options.

For the awards granted with market conditions, a Monte Carlo model has been used to calculate the grant-date fair value. For all other awards granted, a fair market value methodology has been used to calculate the grant-date fair value.

The awards granted with market and non-market conditions include performance measures that can result

in a maximum 200% vesting for the number of stock options granted. The predicted vesting has been reflected in the grant-date fair value calculation, but has not been reflected for the number of awards granted, as shown in the table above.

Other disclosures

As at December 31, 2025, there was $17.7 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 1.8 years.

The total intrinsic value of share-based compensation plans outstanding at December 31, 2025 was $34.4 million. The total intrinsic value of share-based compensation plans exercisable at December 31, 2025 was $3.0 million. The total intrinsic value of share-based compensation plans exercised, was approximately $13.5 million in 2025 and $22.4 million in 2024.

The total cash paid for SEUs exercised was approximately $6.2 million in 2025 and $12.8 million in 2024. The total fair value of share-based compensation that vested was $16.4 million in 2025 and $16.4 million in 2024.

The weighted-average grant-date fair value of share-based compensation plans granted during 2025, 2024, and 2023 was $107.1, $130.3, and $94.4, respectively.

The Company recorded a current tax charge of $1.0 million in 2025, a current tax charge of $0.1 million in 2024 and a current tax charge of $0.3 million in 2023, in relation to stock option compensation. This amount is inclusive of excess tax benefits.