Knowles Corp
For the period ended Mar 11, 2026. Filed Mar 11, 2026.
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Mar 11, 2026 · Filed Mar 11, 2026
Contents
Executive Compensation Program Overview
Philosophy and Objectives
Knowles' executive compensation program is designed to achieve the following key objectives:
| Long-Term Focus | Our compensation structure emphasizes long-term stock-based components, reinforcing a commitment to strategic, long-term goals and shareholder value creation. Short-term incentives are designed within the context of multi-year business plans, driving a sustained focus on growth. |
|---|---|
| Pay for Performance | Variable compensation for senior leaders closely links to both individual and company performance metrics, including operational and financial outcomes. Payout is rooted in pre-defined objectives that reflect our overarching business strategies and priorities. |
| Attract and Retain Key Talent | We provide competitive compensation programs that attract and retain talented executives with a strong track record of success, assuring a high performing and stable leadership team. We continue to monitor market trends and align compensation programs with market where relevant. |
| Risk Mitigation | Compensation programs are carefully crafted, balancing fixed and variable elements. Implementing caps on short-term and long-term incentives ensures a balanced approach to risk and reward. Our approach to prudent risk management is also supported by robust governance processes and policies. |
Executive Compensation Program Structure
Our executive total direct compensation ("TDC") is composed of base salary, annual cash incentives and annual long-term incentives. The table below describes the structure of our 2025 annual compensation program and key element features:
| Pay Element | Purpose | Characteristics |
|---|---|---|
| Base Salary(See page 27) | Rewards day-to-day performance and standard job duties. | Cash•Determined based on the executive's responsibilities, performance, skills, and experience relative to market data |
| Annual Incentive Plan ("AIP")(See page 27) | Designed to motivate and reward executives for achieving specific, pre-established financial and individual strategic goals. | Cash•Comprised of a company financial performance component, and an individual strategic objective component |
| Annual Long-Term Incentives Plan ("Annual LTIP")(See page 31) | Designed to motivate and reward executives' contributions to enhancing long-term shareholder value and the achievement of long-term business objectives. | Performance Share Units ("PSUs")•3-year relative total shareholder return ("r-TSR") against component companies in Russell 2000 Index•A holding period of one year following settlement of the PSUsRestricted Stock Units (RSUs)•Value realized depends on long-term stock price performance•Delivered in shares over three-year vesting period subject to continued employment |
Pay-for-Performance Emphasis
Pay-for-Performance is a core tenet of Knowles' executive compensation program. Knowles' focus on pay-for-performance is best demonstrated through the structure of our executive compensation program, where the majority of executive pay is at-risk and variable, based on a combination of annual and long-term performance factors and Knowles' stock price performance.
As shown below for 2025, 88% of Mr. Niew's TDC and, on average, 74% of the TDC for the other NEOs was at-risk and variable. In addition, 73% of Mr. Niew's TDC and, on average, 55% of the TDC for the other NEOs was equity-based and, therefore, aligned with interests of shareholders.
(1)The CEO Financial PSU Award is not included in the chart above because it was granted outside the regular annual compensation program. Additional information is provided under “Executive Compensation — Compensation Discussion & Analysis — 2025 CEO Financial Performance Share Unit Award,” beginning on page 32.
Our Annual LTIP is delivered through a mixture of PSUs and RSUs as shown below.
Our Compensation programs are designed so that strong Company performance results in total compensation above target, while performance below expectations results in total compensation below target by taking into consideration short-term financial targets and long-term shareholder value creation.
The chart below compares the CEO’s target and realizable TDC over the last three fiscal years and illustrates the strong alignment between pay outcomes and Company performance. Because a substantial portion of the CEO’s compensation is delivered in long‑term, equity‑based awards, realizable pay varies meaningfully from target based on stock‑price performance. The appreciation in Knowles’ share price from each grant date to December 31, 2025 is approximately 12%, 28%, and 17% for awards granted in 2023, 2024, and 2025 respectively. This represents a significant increase in the realizable value for equity awards relative to grant date target values.
Short‑term incentive outcomes also demonstrate the responsiveness of the program to annual performance results. Annual incentive payouts exceed target only when financial performance surpasses expectations, as was the case in 2025. In years where financial performance was below target, payouts were also below target, such as in 2023 and 2024.
In addition, the completion of the three‑year performance period for the 2023 PSUs contributed to higher realizable pay in 2023. These units, which vest based on Knowles’ total shareholder return performance versus companies in the Russell 2000 Index, paid out at 189.4% based on a 68th percentile ranking, reflecting the Company’s strong r-TSR performance over the period.
The 2025 target and realizable pay shown in the first chart below includes the value of the CEO Financial PSU Award, which was granted outside the regular annual long‑term incentive program and is subject to ambitious financial performance conditions. To provide a clearer view of year‑over‑year trends, the second chart below excludes the value of the CEO Financial PSU Award from 2025 target and realizable pay.
(1)Target compensation is comprised of base salary, target AIP value, and the grant date value (calculated based on the grant date closing stock price) of LTIP awards in each year. The grant date closing stock price was $19.09 in 2023, $16.75 in 2024 and $18.34 in 2025.
(2)Realizable compensation is comprised of base salary, actual AIP value earned, and the value of all LTIP awards in the respective year. The value for LTIP awards is calculated based on Knowles' December 31, 2025 closing stock price of $21.43. The realizable value for PSUs granted in 2023 was adjusted to reflect the recent payout at 189.4%. The realizable value shown for PSUs granted in 2024 and 2025 (for which the performance period has not ended) assumes payout at 100%. Note, the realizable compensation amounts shown above may differ from the amounts required to be reported by SEC rules in the Summary Compensation Table or in the Pay Versus Performance section of this Proxy Statement.
(1)Target compensation is comprised of base salary, target AIP value, and the grant date value (calculated based on the grant date closing stock price) of LTIP awards in each year. The grant date closing stock price was $19.09 in 2023, $16.75 in 2024 and $18.34 in 2025. To provide a more consistent year-over-year comparison, the 2025 target values exclude the CEO Financial PSU Award which was granted at 81,788 target units and had a grant date fair value of $1.5 million.
(2)Realizable compensation is comprised of base salary, actual AIP value earned, and the value of Annual LTIP awards granted in the respective year. The value for Annual LTIP awards is calculated based on Knowles' December 31, 2025 closing stock price of $21.43. The realizable value for PSUs granted in 2023 was adjusted to reflect the recent payout at 189.4%. The realizable value shown for PSUs granted in 2024 and 2025 (for which the performance period has not ended) assumes payout at 100%. To provide a more consistent year-over-year comparison, the 2025 realizable values exclude the CEO Financial PSU Award, which would contribute approximately $1.8 million to the 2025 realizable pay. Note, the realizable compensation amounts shown above may differ from the amounts required to be reported by SEC rules in the Summary Compensation Table or in the Pay Versus Performance section of this Proxy Statement.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.