Knowles Corp CEO awarded performance-based stock units

In a recent SEC filing, Knowles Corporation (NYSE:KN), a company specializing in household audio and video equipment with a market capitalization of $1.54 billion, disclosed a significant equity award to its Chief Executive Officer, Jeffrey S. Niew. According to InvestingPro data, the company has demonstrated strong performance with 21.17% revenue growth in the last twelve months, though current analysis suggests the stock is trading slightly above its Fair Value. The award, consisting of performance share units (PSUs), was granted on February 18, 2025, under the company’s 2018 Equity and Cash Incentive Plan.

The PSU award comes with both time- and performance-based vesting conditions, aligning with Knowles’ strategic objectives. The target number of PSUs is 81,788, with a grant date fair value of $1.5 million. Depending on the company’s achievements, the actual payout could vary between 0% to 400% of the target. This aggressive incentive structure comes as InvestingPro analysis shows the company is currently profitable with a basic EPS of $0.26, and analysts expect net income growth in the coming year.

The PSUs are contingent upon reaching certain non-GAAP diluted earnings per share (Adjusted EPS) and revenue milestones. To earn 100% of the target shares, Knowles must achieve an Adjusted EPS of $1.50 and revenue of $800 million by the end of the performance period, which spans from January 1, 2025, to December 31, 2027. These targets represent significant growth from the company’s current revenue of $553.5 million. For deeper insights into Knowles’ financial health and growth potential, investors can access comprehensive analysis through InvestingPro’s detailed research reports, which cover over 1,400 US stocks. If revenue hits at least $1 billion, the payout could double, with intermediate achievements calculated on a straight-line basis.

Should Knowles acquire another company during this period, half of the acquired company’s revenue at acquisition will be factored into Knowles’ revenue goals, with subsequent earnings also contributing.

An Adjusted EPS of at least $2.00 could double the payout, with a sliding scale applied for EPS results between the target and this maximum multiplier. However, the maximum payout is capped at 400% of the target PSU amount.

If Knowles meets or exceeds the target levels by December 31, 2026, Niew is guaranteed a minimum number of shares based on the interim results, regardless of the final performance at the end of 2027.

In case of a change in company control, Niew is entitled to 90% of the target shares if the Adjusted EPS is $1.35 and the revenue is at least 90% of the target, with interpolation used to determine the final payout.

If Niew’s employment with Knowles terminates before the end of the performance period, or if he ceases to be CEO, the PSU award will be forfeited.

This announcement is based on the SEC filing by Knowles Corporation and aims to provide shareholders with a transparent view of the executive compensation arrangements tied to the company’s performance. Analysts maintain a positive outlook on the stock, with price targets reaching as high as $25, suggesting potential upside from the current trading price of $17.51.

In other recent news, Knowles Corporation reported its fourth-quarter 2024 earnings, which did not meet analysts’ expectations for both earnings per share (EPS) and revenue. The company posted an EPS of $0.27, slightly below the forecasted $0.28, while revenue was $142.5 million, falling short of the expected $146 million. Despite these misses, Knowles achieved a 21% increase in full-year revenue from continuing operations and a 32% rise in non-GAAP EPS. Additionally, the company completed the sale of its consumer MEMS microphone business and secured a substantial $75 million order in the energy sector. Looking ahead, Knowles provided guidance for the first quarter of 2025, anticipating revenue between $124 million and $134 million, with an EPS range of $0.16 to $0.20. Analysts noted ongoing production challenges in the specialty film capacitor line, which are expected to resolve by the second quarter of 2025. The company continues to focus on growth in niche applications, particularly in the medtech, defense, and industrial sectors.

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