Knowles Corporation 8-K Summary
Business Context and Reporting Period
This Form 8-K was filed by Knowles Corporation on February 18, 2025. The report details a special equity award granted to the Company's Chief Executive Officer, Jeffrey S. Niew, pursuant to the 2018 Equity and Cash Incentive Plan.
Key Financial Metrics
The filing does not report current period revenue, profit, cash flow, margins, debt, or liquidity figures. The only financial values disclosed relate to the valuation and performance targets of the executive compensation package:
- Grant Date Fair Value: $1.5 million
- Target PSU Count: 81,788 units
- Performance Period: January 1, 2025, to December 31, 2027 (with potential extension)
Material Changes and Performance Targets
The filing outlines specific non-GAAP financial thresholds required for the CEO to vest in the performance share units (PSUs):
- Target Vesting (100%): Requires Adjusted EPS of $1.50 and Revenue of $800 million.
- Maximum Vesting (400%): Requires Revenue of at least $1 billion and Adjusted EPS of at least $2.00.
- Change of Control Provisions: If a Change of Control occurs, 90% of target shares vest if Adjusted EPS is $1.35 and trailing 12-month revenue is 90% of the target ($720 million).
- Acquisition Adjustment: 50% of any acquired company's revenue at the time of acquisition is added to revenue goals, with all future revenue from the target counted fully.
Outlook, Risks, and Unusual Items
Management Commentary and Structure: The award is designed to support strategic plans with a vesting structure that includes an interim payout mechanism. If metrics are met by December 31, 2026, the CEO earns "Interim Earned PSUs" which are protected from reduction even if final performance declines.
Risks and Contingencies:
- Forfeiture Risk: The award automatically terminates and all PSUs are forfeited if the CEO's employment ends or he ceases to hold the position prior to the end of the Performance Period.
- Extended Period Penalty: If no PSUs are earned during the initial three-year period, an extended period of up to eight quarters applies, with a 10% reduction in payout for each quarter elapsed.
Key Facts for Investor Verification
- Verify the definition of "Adjusted EPS" in the attached Exhibit 10.1 to understand the specific non-GAAP adjustments used for the $1.50 and $2.00 targets.
- Confirm the Company's current revenue trajectory relative to the $800 million target to assess the feasibility of the 100% vesting threshold.
- Review the "Change of Control" clause details to understand the payout acceleration mechanics if the company is acquired.
- Note that the filing contains no operational or financial results for the period; it is strictly a disclosure of executive compensation terms.