KN DEF 14A Report ended April 28, 2020

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1.	to elect five directors named in the attached Proxy Statement for a one-year term or until their respective successors have been duly elected and qualified;

2.	to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2020;

3.	to approve, on a non-binding, advisory basis compensation of named executive officers;

4.	to vote, on a non-binding, advisory basis on the frequency of future advisory votes to approve our named executive officer compensation;

5.	to approve the Amended and Restated 2018 Equity and Cash Incentive Plan; and

6.	to transact any other business that may properly come before the 2020 Annual Meeting.

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•	Motivate executives to enhance long-term shareholder value;

•	Reinforce Knowles' pay-for-performance culture by aligning executive compensation with Knowles' business objectives and financial performance;

•	Provide a total compensation opportunity that allows Knowles to attract and retain talented executives; and

•	Use incentive compensation to promote desired behavior without encouraging unnecessary or excessive risk-taking.

•	We adopted an equal weighting of revenue and adjusted EBIT for the Knowles consolidated financial component of the 2019 annual bonus to provide a balanced focus on sales and earnings in our short-term incentive plan.

•	We replaced the stock price modifier in our performance share unit plan with a relative total shareholder return modifier comparing our performance to the component companies of the S&P Semiconductor Select Industry Index.

•	We approved Compensia as our new independent compensation consultant; replacing Semler Brossy, who had supported us since our spin-off from Dover Corporation.

•	The base salaries, bonus target and LTIP award values for our CEO and the other NEOs remained unchanged from 2018;

•	Our CEO's 2019 annual bonus was paid at 49% of target; and

•	2019 annual bonuses for each of the other NEOs ranged from 69% to 82% of target.

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1.	Who can vote at the 2020 Annual Meeting?

2.	How many votes do I have?

3.	What is the difference between holding shares as a "shareholder of record" and as a "beneficial owner"?

4.	What is a proxy?

5.	How can I vote my shares?

•	By Internet — You may submit your proxy online via the Internet by following the instructions provided on the enclosed proxy card.

•	By Telephone — You may submit your proxy by touch-tone telephone by calling the toll-free number on the enclosed proxy card.

•	By Mail — You may submit your proxy by signing, dating and returning your proxy card in the postage-paid envelope included.

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In Person — You may attend the 2020 Annual Meeting and vote in person by completing a ballot. Attending the 2020 Annual Meeting without completing a ballot will not count as a vote. If you choose to vote in person, you must bring proof of identification to the 2020 Annual Meeting. You are encouraged to sign, date and return the proxy card in the postage-paid envelope provided regardless of whether or not you plan to attend the 2020 Annual Meeting.

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6.	If I have already voted by proxy on one or more proposals, can I change my vote?

7.	How do I attend the 2020 Annual Meeting?

8.	Will my shares be voted if I do nothing?

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9.	What constitutes a quorum?

10.	What is the effect of abstentions and broker non-votes?

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11.	What vote is required to approve each matter and how are the voting results determined?

12.	How do I find out the results of the vote?

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•	Conserving energy by using low-energy light bulbs throughout facilities and ensuring computers are shut down after work.

•	Recycling waste material.

•	Providing environmental, health and safety training and instruction at all levels.

•	Operating an environmental, health and safety management system that is aligned to the requirements of ISO 14001.

•	Informing our suppliers, including contractors, of our environmental, health and safety principles and requiring them to adopt practices aligned with these expectations.

•	We adopted an equal weighting of revenue and adjusted EBIT for the financial component of the 2019 annual bonus to provide a balanced focus on sales and earnings in our short-term incentive plan.

•	We replaced the stock price modifier in our performance share unit plan with a relative total shareholder return modifier.

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•

Two Class I directors and three Class III directors are standing for election at the 2020 Annual Meeting for one-year terms. (Mr. Lochridge is also a Class I Director whose term expires at the 2020 Annual Meeting, but he is retiring from the Board and will not stand for re-election.) If re-elected at the 2020 Annual Meeting, the terms of each of the five director nominees will expire at the 2021 Annual Meeting of Shareholders (the "2021 Annual Meeting") and they or their successors will stand for election at the 2021 Annual Meeting for one-year terms.

•	Class II directors, whose term will end in 2021, will serve out the reminder of their current term in full and they or their successors will stand for election at the 2021 Annual Meeting for one-year terms.

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•	Selecting and engaging our independent registered public accounting firm ("independent auditors");

•	Overseeing the work of our independent auditors and our internal audit function;

•	Overseeing our compliance with legal and regulatory requirements;

•	Approving in advance all services to be provided by, and all fees to be paid to, our independent auditors, who report directly to the committee;

•	Reviewing with management and the independent auditors the audit plan and results of the auditing engagement;

•	Reviewing with management and our independent auditors the quality and adequacy of our internal control over financial reporting; and

•	Reviewing at least annually the Company cybersecurity and other information technology risks, control and procedures.

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•	Approves compensation for non-CEO executive officers;

•	Grants awards and approves payouts under our equity plans and our Annual Executive Incentive Plan;

•	Approves changes to our compensation plans;

•	Reviews and recommends compensation for the Board; and

•	Supervises the administration of the compensation plans.

•	Identifies and recommends to our Board candidates for election as directors and any changes it believes desirable in the size and composition of our Board;

•	Makes recommendations to our Board concerning the structure and membership of the committees of the Board;

•	Reviews emergency CEO succession protocols, developed by management, to ensure effective communications with the Board and other stakeholders in the event that the CEO is unable to perform the powers and duties of the office either temporarily or permanently due to resignation, dismissal, death, illness, incapacitation or other disability; and

•	Advises the Board on the whole as to corporate social responsibility, environmental and governance matters.

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•	An annual retainer of $235,000, payable $65,000 in cash and $170,000 in stock;

•	Chairman of the Board — additional retainer of $50,000, payable in cash; and

•	Committee Chairs — additional retainer of $15,000 for the Audit Committee Chair and $12,500 for the Compensation Committee and Governance and Nominating Committee Chairs, payable in cash.

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(1)

In accordance with SEC rules, the amounts shown reflect the aggregate grant date fair value of RSUs granted to non-employee directors during 2019, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation ("FASB ASC 718"). The grant date fair value is measured based on the closing price of our common stock on the date of grant.

(2)	Mr. Mayer joined the Board on May 9, 2019 and he received, in addition to the annual director equity grant at the Company's 2019 Annual Meeting, a new director RSU grant (6,358 RSUs) with a grant date fair value of $100,000 scheduled to vest on April 28, 2020. Mr. Mayer resigned from the Board on October 16, 2019. As a result of his resignation, his equity grants were canceled.

(1)

Pursuant to a Nonemployee Director Deferral Program adopted by the Compensation Committee on February 28, 2014, each non-employee director may elect to defer the receipt of all (but not less than all) of the shares earned in a calendar year until termination of service as a non-employee director or, if earlier, until a specified date elected by the non-employee director that is at least one year and not more than 15 years after the date of grant. Under this deferral program, Mr. Barnes has deferred receipt of 33,945 shares; Mr. Lochridge has deferred receipt of 37,701 shares; and Mr. Macleod has deferred receipt of 10,356 shares.

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(1)	Audit fees include fees for audit or review services in accordance with generally accepted auditing standards and fees for services that generally only independent auditors provide, such as statutory audits and review of documents filed with the SEC. Audit fees also include fees paid in connection with audit procedures related to residual impact of tax reform and implementation of ASC 842.

(2)	Other fees include fees for advisory services related to licensing accounting research tools.

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(1)	Thomas G. Jackson separated from Knowles on May 31, 2019. Effective May 13, 2019, Robert J. Perna replaced Mr. Jackson as Senior Vice President, General Counsel and Secretary.

•	Within our Audio segment:

•	We were able to grow revenue over the prior year driven by increased sales of microphones into the Ear and IoT markets and increased sales in our Hearing Health Technology business, despite the softness in the global smartphone market;

•	Strong demand from the Ear and IoT markets enabled our MEMS microphone business to grow in 2019, with sales into these end markets up almost 50% from the prior year.  The Ear market served as the primary growth driver driven by true wireless headsets; and

•	Despite lower handset sales worldwide, revenue from our largest North America customer grew with strong increases in microphone sales to non-mobile products.

•	Within our Precision Devices segment:

•	We delivered record sales, up approximately 19% year over year driven by strong demand for our high performance capacitors and mmWave RF solutions for a diverse set of end markets;

•	Demand for high performance capacitors remained robust in the Defense and Medtech end markets throughout 2019, and was partially offset by softer demand in the Industrial market; and

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•	We were also pleased to see new customers for Electric Vehicles utilizing our high voltage and high temperature capacitor solutions for next generation power architectures.

(1)	For additional information regarding and reconciliation of this non-GAAP financial measure, see Appendix B .

•	We adopted an equal weighting of revenue and adjusted EBIT for the Knowles consolidated financial component of the 2019 annual bonus to provide a balanced focus on sales and earnings in our short-term incentive plan;

•	We replaced the stock price modifier in our performance share unit plan with a relative total shareholder return modifier comparing our performance to the component companies of the S&P Semiconductor Select Industry Index; and

•	We approved Compensia as our new independent compensation consultant; replacing Semler Brossy, who had supported us since our spin-off from Dover Corporation.

•	The base salaries, bonus target and LTIP award values for Mr. Niew and the other NEOs remained unchanged from 2018;

•	Mr. Niew's 2019 annual bonus was paid at 49% of target; and

•	2019 annual bonuses for each of the other NEOs ranged from 69% to 82% of target.

•	We adopted a weighting of 50% adjusted EBIT and 30% revenue for the financial component of the 2020 annual bonus to align with our business strategy and an increased focus on profitability in our short-term incentive plan;

•	We adopted relative total shareholder return as the sole measure for our performance share units to place a greater focus on performance relative to the component companies of the S&P Semiconductor Select Industry Index and removed the previous duplication of the revenue measure between our long-term and short-term incentive plans;

•	We implemented a new deferred compensation program to enhance our total rewards program and provide a valuable tax planning benefit for eligible employees; and

•	We adopted a new executive compensation peer group to expand the number of peers to provide more robust and consistent data.

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•	Motivate executives to enhance long-term shareholder value;

•	Reinforce Knowles' pay-for-performance culture by aligning executive compensation with Knowles' business objectives and financial performance;

•	Provide a total compensation opportunity that allows Knowles to attract and retain talented executives; and

•	Use incentive compensation to promote desired behavior without encouraging unnecessary or excessive risk-taking.

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(1)	Realizable base salary and AIP values are the actual amounts paid for each year.

(2)	Realizable LTI value for each year is based on Knowles 12/31/2019 closing stock price of $21.15. The realizable value for PSUs granted in 2017 was adjusted to reflect the recent payout at 50.5%. The realizable value shown for PSUs granted in 2018 and 2019 (for which the performance period has not ended) assumes payout at 100%.

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(1)	Thomas G. Jackson separated from Knowles on May 31, 2019. Effective May 13, 2019, Robert J. Perna replaced Mr. Jackson as Senior Vice President, General Counsel and Secretary. 2019 Total Target Compensation by Element is shown at annualized rates for each of Mr. Perna and Mr. Jackson.

(1)	Thomas G. Jackson separated from Knowles on May 31, 2019. Effective May 13, 2019, Robert J. Perna replaced Mr. Jackson as Senior Vice President, General Counsel and Secretary. 2019 Base Salary is shown at annualized rates for each of Mr. Perna and Mr. Jackson.

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(1)	For 2019, Mr. Perna's annual incentive target is prorated to reflect his employment start date of May 13, 2019.

(2)	For 2019, Mr. Jackson's annual incentive target is prorated to reflect his employment end date of May 31, 2019.

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(1)	For additional information regarding and reconciliation of this non-GAAP financial measure, see Appendix B .

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•	CEO pay analysis;

•	NEO pay analysis and review of CEO recommendations regarding NEO compensation;

•	Peer group review;

•	Independent director compensation review;

•	Incentive program design; and

•	Collaboration with management on behalf of the Compensation Committee in developing management's recommendations to the Compensation Committee regarding executive pay matters.

•	Companies that are publicly-traded in the U.S.;

•	Companies in the same or similar lines of business;

•	Companies that serve similar customers; and

•	Companies with revenue of approximately 0.5x to 2.0x Knowles' revenue and within a reasonable size range of Knowles with respect to other financial and operating metrics, such as market capitalization and earnings before interest and taxes.

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•	Stock ownership guidelines for executive officers that align the interests of the executive officers with those of our shareholders;

•	Mix of base salary, cash incentive opportunities, and long-term equity compensation, that provide a balance of short-term and long-term incentives with fixed and variable components;

•	Capped payout levels for cash incentives;

•	Inclusion of non-financial metrics, such as qualitative performance factors, in determining actual compensation payouts; and

•	Use of stock options, RSUs and PSUs, that typically vest over a multi-year period, with stock options being exercisable for a seven-year period to encourage executives to take actions that promote the long-term sustainability of our business.

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(1)

The amounts reported in this column represent the aggregate grant date fair value of restricted stock units and performance share units, each calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation (“FASB ASC Topic 718”) and do not correspond to the actual value that might be realized by the NEOs. See Note 14 to the Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the relevant assumptions used in calculating the amounts reported. The amounts included for the PSUs granted are calculated based on the probable satisfaction of the performance conditions for such awards as of the grant date. Assuming the highest level of performance is achieved for the PSUs, the maximum value of the 2019 PSUs would be as follows: Mr. Niew $3,825,000; Mr. Anderson: $1,125,000; Mr. Scherp: $843,750; Mr. Giesecke: $843,750; and Mr. Perna: $787,500. On May 13, 2019, Mr. Perna received RSUs, which vest ratably over a period of three years, with a grant date fair value of $174,996 and PSUs which vest over a three year performance period and have a grant date fair value of $350,001 (and a maximum value of $787,500), each in connection with his joining the Company. Mr. Jackson’s 2019 annual LTIP award was canceled upon his separation from Knowles. On May 13, 2019, Mr. Jackson received RSUs, which vest in full on May 31, 2020, with a grant date fair value of $150,000 in connection with his separation from the Company.

(2)

The amounts reported in this column represent the aggregate grant date fair value of stock option awards calculated in accordance with FASB ASC Topic 718 and do not correspond to the actual value that might be realized by the NEOs. See Note 14 to the Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the relevant assumptions used in calculating the amounts reported. On May 13, 2019, Mr. Perna received stock options, which vest ratably over a period of three years, with a grant date fair value of $175,003.

(3)

The 2019 amounts represent the annual incentive bonus received by each NEO under the Knowles Annual Incentive Plan based on performance in 2019 as determined by the Compensation Committee. The annual incentive plan is discussed in our CD&A beginning on page 40 of this Proxy Statement and the estimated possible threshold, target and maximum amounts for the incentive awards are reflected in the table “Grants of Plan Based Awards in 2019” on page 52 of the Proxy Statement. In February 2020, the Compensation Committee determined that Mr. Scherp and Mr. Giesecke were not in compliance with the stock ownership guidelines, due to fluctuations in the Company's stock price. As a result, Mr. Scherp received $118,168 of his annual incentive bonus in the form of 7,110 shares of Knowles common stock issued on February 28, 2020, and Mr. Giesecke received $16,770 of his annual incentive bonus in the form of 1,009 shares of Knowles common stock issued on February 28, 2020.

(4)	Amounts represent changes in the present value of accumulated benefits under the Knowles Pension Replacement Plan, a legacy Dover Corporation plan. On February 28, 2014, Dover Corporation spun the Company off as an independent, publicly-traded company.

(5)	Amounts included in this column for 2019 are set forth by category in the “2019 All Other Compensation Table” below.

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(6)	Mr. Perna was not an employee of the Company in 2017 and 2018.

(7)	Mr. Jackson was not an NEO in 2017 and 2018.

(1)	Amount represents trailing tax equalization payments related to Mr. Scherp's previous expatriate assignment.

(2)	Amount represents relocation reimbursement in the amount of $54,286, related tax reimbursements in the amount of $53,414, an executive physical examination in the amount of $4,295, and sports tickets in the amount of $400.

(3)	Amount represents severance pay of $385,000 or 12 months base salary and approximately $25,000 in COBRA continuation benefits for 12 months.

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(1)	The 2019 annual long-term incentive grants were approved by the Compensation Committee on February 19, 2019 .

(2)	This stock option grant was made as part of the annual long-term incentive grant process, and has a grant date fair value which was calculated using a Black-Scholes value of $6.22 per stock option (except with respect to Mr. Perna, where the Black-Scholes value was $6.55). These stock options become exercisable at a rate of 33% a year on the annual anniversary

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(3)	This RSU grant was made as part of the annual long-term incentive grant process. These RSUs vest at a rate of 33% a year on the annual anniversary of the grant date, subject to the NEO's continued employment through the applicable vesting date.

(4)

This PSU grant was made as part of the annual long-term incentive grant process. The PSUs will be paid out in shares of Knowles common stock at the end of the three year performance period based on Knowles performance against revenue goal and ranking of total shareholder return against SPSISC index companies during the 2019 to 2021 performance period. The threshold, target and maximum amounts assume 25%, 100% and 225%, respectively, satisfaction of the PSU goals.

(5)	The amounts shown in this row reflect the potential payout at target for 2019 performance under the Knowles Annual Incentive Plan. The bonus amount paid in February 2020 is disclosed in the 2019 Summary Compensation Table in the column “Non-Equity Incentive Compensation” for 2019 for each NEO.

(6)	This RSU grant was made in lieu of 2018 cash bonus to meet Mr. Jackson's stock ownership guideline.

(7)	In addition to his 2019 annual LTIP awards, Mr. Jackson received a one-time RSU grant of $150,000 on May 13, 2019 as a condition of his separation from Knowles. These RSUs will vest on May 31, 2020, subject to Mr. Jackson’s compliance with the vesting provisions of his award. Please note that Mr. Jackson’s 2019 annual LTIP awards were forfeited as a result of his separation from Knowles.

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(1)	Grants prior to March 7, 2014 were granted under the Dover Corporation equity compensation plans and were converted into Knowles stock-settled stock appreciation rights at the time of the spin-off in 2014.

(2)	Based on a December 31, 2019 closing Knowles stock price of $21.15 per share.

(3)	2017 annual grant which vests on February 16, 2020.

(4)	2018 annual grant which vests ratably on February 15, 2020 and February 15, 2021.

(5)	2019 annual grant which vests ratably over a three-year period beginning on February 19, 2020.

(6)

Because performance is determined on a cumulative basis over the performance period, the 2017 PSUs are being reported at target for purposes of this table. Based on the Company’s revenue performance, as modified by the Company’s TSR performance, the 2017 PSUs vested on February 1, 2020 and were paid out at 50.5% of target. Mr. Niew received 34, 387 shares, Mr. Anderson received 7,675 shares, Mr. Scherp received 6,141 shares and Mr. Giesecke received 6,141 shares.

(7)	2018 annual grant of PSUs that vests on February 1, 2021 based on the Company’s revenue performance over the 2018-2020 performance period, as modified by the Company’s TSR performance. Because performance is determined on a cumulative basis over the performance period, the 2018 PSUs are being reported at target for purposes of this table.

(8)

2019 annual grant of PSUs that vests on February 1, 2022 based on the Company’s revenue performance and TSR performance ranking against the S&P Semiconductor Select Index companies over the February 1, 2019 to February 1, 2022 performance period. Because performance is determined on a cumulative basis over the performance period, the 2019 PSUs are being reported at target for purposes of this table.

(9)	2019 annual grant which vests ratably over a three-year period beginning on May 13, 2020.

(1)	Amount represents gross number of shares of common stock vested and is not reduced by shares withheld by the Company for tax purposes.

(2)	Aggregate dollar value realized on vesting of the stock awards is calculated by multiplying the closing price of the common stock on the vesting date by the number of vested shares.

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(1)	Employees are no longer eligible to contribute to the plan.

(2)	Calculated using the 12/31/2018 Aggregate Balance disclosed in the Knowles 2018 Proxy Statement as a starting balance.

(3)	Not eligible for the Deferred Compensation Plan.

(1)	Years of service are only credited through the December 31, 2013 plan freeze.

(2)	Not eligible for the Knowles Pension Replacement Plan ("PRP").

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•	12 months of salary continuation;

•	12 months of company-provided healthcare benefit continuation;

•	A prorated annual incentive bonus for time worked during the year based on actual performance;

•	Under the PRP, each participant will become entitled to receive the actuarial value of the participant's benefit accrued through the date of the termination; and

•	Under the Deferred Compensation Plan, amounts deferred under the plan will continue to accrue any earnings and will be payable in accordance with the elections made by the executive officer.

•	Stock options or SSARs unvested at the date of termination would become vested and exercisable;

•	Restricted stock or RSUs unvested at the date of termination would become vested (in the event of death or disability), or would continue to vest according to their original schedule (in the event of retirement); and

•	Performance shares or PSUs unvested as the date of termination would become vested (on a pro-rata basis in the event of death or disability), or would continue to vest according to their original schedule (in the event of retirement).

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(1)	An executive whose employment is terminated by Knowles for cause will forfeit all outstanding cash and equity awards, whether or not vested or exercisable. The executive will receive a payment of amounts deferred and accrued in the Deferred Compensation Plan but will forfeit benefits under the PRP in accordance with the PRP terms.

(2)	This amount represents 12 months' salary continuation plus an amount equal to the pro rata portion of the target annual incentive payable for the year in which the termination occurs (reflects a full year's target bonus for a termination December 31, 2019).

(3)	Restricted stock / RSUs would vest in the event of death or disability. In the event of retirement, the restricted stock or RSUs would continue to vest according to their original schedule. The amounts are based on the December 31, 2019 closing stock price of $21.15 per share.

(4)	The officers hold vested but unexercised options and/or SSARs as of December 31, 2019. The amounts reflect the intrinsic (in-the-money) value of vested stock options and SSARs as of December 31, 2019 based on the December 31, 2019 closing stock price of $21.15 per share.

(5)	Stock options / SSARs would vest and become exercisable in the event of retirement, death or disability. The officers hold unvested options and/or SSARs as of December 31, 2019. The amounts reflect the intrinsic (in-the-money) value of unvested stock options and SSARs as of December 31, 2019 based on the December 31, 2019 closing stock price of $21.15 per share.

(6)	Performance shares / PSUs would vest on a pro-rata basis in the event of death or disability. In the event of retirement, the performance shares or PSUs would continue to vest according to their original schedule. The amounts are based on the December 31, 2019 closing stock price of $21.15 per share.

(7)	Reflects benefits accrued under the PRP as of December 31, 2019. Benefits accrued under the PRP are forfeited in the event of a termination for cause, as defined in the PRP.

(8)	These amounts reflect compensation deferred by the executive and earnings accrued thereon under the Deferred Compensation Plan as of December 31, 2019. No increase in such benefits would result from the termination event.

(9)	Under the Severance Plan, an executive is entitled to a monthly amount equal to the then cost of COBRA health continuation coverage based on the level of health care coverage in effect on the termination date, if any, for the lesser of 12 months or the period that the executive receives COBRA benefits.

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•	Under the PRP, each participant will become entitled to receive the actuarial value of the participant's benefit accrued through the date of the change-in-control; and

•	Under the Deferred Compensation Plan, amounts deferred under the plan will continue to accrue any earnings and will be payable in accordance with the elections made by the executive officer.

•	A lump sum payment equal to 2.0 multiplied by the sum of (i) the executive's annual salary on the termination date or the change-in-control date, whichever is higher, and (ii) his target annual incentive bonus for the year in which the termination or the date of the change-in-control occurs, whichever is higher;

•	A lump sum payment equal to the then cost of COBRA health continuation coverage, based on the level of health care coverage in effect on the termination date, if any, for one year;

•	All outstanding stock options and SSARs will immediately become exercisable in accordance with the terms of the appropriate stock option or SSAR agreement under the Equity and Cash Incentive Plan;

•	All unvested restricted stock or RSUs will immediately become vested in accordance with the terms of the appropriate restricted stock or RSU agreement under the Equity and Cash Incentive Plan; and

•	Performance shares or PSUs unvested as the date of termination would become vested in accordance with the terms of the appropriate performance share or PSU agreement under the Equity and Cash Incentive Plan.

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(1)	Represents a lump sum payment equal to 2.0 multiplied by the sum of (i) the executive's annual salary on the termination date or the change-in-control date, whichever is higher, and (ii) his target annual incentive bonus for the year in which the termination or the date of the change-in-control occurs, whichever is higher.

(2)	All unvested restricted stock or RSUs will immediately become vested in accordance with the terms of the appropriate restricted stock or RSU agreement under the Equity and Cash Incentive Plan. The amounts are based on the December 31, 2019 closing stock price of $21.15 per share.

(3)	The officers hold vested options and/or SSARs as of December 31, 2019 and the amounts are based on the December 31, 2019 closing stock price of $21.15 per share.

(4)	All outstanding stock options and SSARs will immediately become exercisable in accordance with the terms of the appropriate stock option or SSAR agreement under the Equity and Cash Incentive Plan. The officers hold unvested options and/or SSARs as of December 31, 2019 and the amounts are based on the December 31, 2019 closing stock price of $21.15 per share.

(5)	All unvested performance shares or PSUs will immediately become vested in accordance with the terms of the appropriate performance share or PSU agreement under the Equity and Cash Incentive Plan. The amounts are based on the December 31, 2019 closing stock price of $21.15 per share.

(6)	Includes benefits accrued under the PRP as of December 31, 2019. Benefits accrued under the PRP are forfeited in the event of a termination following a change-in-control as defined in the PRP.

(7)	These amounts reflect compensation deferred by the executive and earnings accrued thereon under the Deferred Compensation Plan as of December 31, 2019. No increase in such benefits would result from the termination event.

(8)	Includes a lump sum payment equal to the then cost of COBRA health continuation coverage, based on the level of health care coverage in effect on the termination date, if any, for one year.

•	The median of the annual total compensation of all of our employees, other than Mr. Niew, was $8,338;

•	Mr. Niew's annual total compensation, as reported in the Total column of the 2019 Summary Compensation Table, was $ 4,575,747 ; and

•	Based on this information, the ratio of the annual total compensation of Mr. Niew to the median of the annual total compensation of all employees is estimated to be 549 to 1.

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•	align the interests of our stockholders and recipients of awards under the Plan by increasing the proprietary interest of such recipients in the Company’s growth and success;

•	advance the interests of the Company by attracting and retaining officers, other employees, and non-employee directors of the Company and affiliates; and

•	motivate award recipients to act in the long-term best interests of the Company and its stockholders.

•	nonqualified stock options;

•	incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986. as amended (the “Code”)) (collectively, with nonqualified stock options. “Options”);

•	stock appreciation rights (“SARs”), in the form of free-standing SARs or SARs granted in tandem with an Option (“Tandem SARs”):

•	stock awards in the form of restricted stock, restricted stock units. or unrestricted stock awards (“Stock Awards”);

•	performance awards (“Performance Award”); and

•	deferred stock units (“Deferred Stock Unit Awards”).

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•	The Plan will be administered by a committee of the Board (the Compensation Committee) or a subcommittee thereof, comprised entirely of independent directors:

•	Options and SARs may not be repriced without stockholder approval;

•	We do not have a liberal definition of change of control meaning that an actual event must occur before a change of control occurs for purposes of the Plan (rather than just the signing of an agreement);

•	Outstanding Options, SARs, Stock Awards and Performance Awards are subject to double trigger vesting upon a change in control (when such awards are not assumed by the acquirer), meaning that both a qualifying termination of service and a change of control must occur prior to the accelerated vesting of such awards;

•	No award under the Plan may vest less than one year from the date of grant, provided that this requirement will not apply for up to 5% of the shares authorized for issuance under the Plan, and provided further that the Committee may provide for accelerated vesting in its discretion, including upon a change of control or termination of employment;

•	Dividend equivalent rights with respect to Options and SARs are prohibited and any dividend or dividend equivalent rights granted with respect to any other award under the Plan will be subject to the same vesting conditions as the underlying award;

•

“Liberal share recycling” is prohibited meaning that the Plan does not recycle shares that were not issued or delivered upon the net settlement or net exercise of an Option or SAR, shares delivered to or withheld by the Company to pay the purchase price or withholding taxes relating to an outstanding award or shares repurchased by the Company on the open market with the proceeds of an Option exercise;

•	Under the Plan, the maximum number shares of Common Stock available for awards is 16,100,000 subject to adjustment in connection with certain capitalization events in accordance with the Plan;

•	Except with respect to substitute awards granted in connection with a corporate transaction, the purchase price of Options and the base price for SARs may not be less than the fair market value of a share of Common Stock on the date of grant; and

•

To the extent the Company grants a Stock Award or settles a Performance Award in shares of Common Stock or grants a Deferred Stock Unit Award (on a stand-alone basis and not in connection with the vesting of an award), the number of shares of Common Stock that remain available for future grants under the Plan will be reduced by an amount equal to 1.75 times the number of shares subject to such Stock Award, Deferred. Stock Unit Award, or Performance Award.

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•	Each of our directors, director nominees, and NEOs named in the 2019 Summary Compensation Table;

•	All of our directors and executive officers as a group; and

•	Each person known to us to own beneficially more than 5% of our outstanding common stock.

*	Less than one percent.

(1)

Includes the number of shares of Company common stock subject to the stock options held by that person that are currently exercisable or will become exercisable within 60 days of March 2, 2020 as follows: Mr. Niew – 1,620,299 shares; Mr. Anderson – 337,775 shares; Mr. Scherp – 271,251 shares; and Mr. Giesecke – 253,707 shares. Also included are the number of shares of Company common stock subject to restricted stock awards held by that person that will vest within 60 days of March 2, 2020 as follows: Mr. Macleod – 10,808 shares; Mr. Barnes – 10,808 shares; Mr. Eul – 10,808 shares; Mr. Hirsch – 10,808 shares; Mr. Jankov – 10,808 shares; Ms. Li – 10,808 shares; Mr. Lochridge – 10,808 shares; and Ms. Shavers – 10,808 shares.

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(2)	Includes 10,356 shares, the receipt of which has been deferred until after the termination of Mr. Macleod's service as a director.

(3)	Includes 9,687 shares, the receipt of which has been deferred until May 2, 2020; 13,450 shares, the receipt of which has been deferred to April 30, 2021; and 10,808 shares, the receipt of which has been deferred to April 28, 2022.

(4)	Includes 5,718 shares held by a trust of which Mr. Lochridge is the trustee, 7,283 shares held in a ROTH IRA held by a trust owned by Mr. Lochridge and 37,701 shares, the receipt of which has been deferred until Mr. Lochridge retires as a director.

(5)	Includes 194,057 shares in respect of SSARs and 4,415 shares held under Knowles' 401(k) plan.

(6)	Includes 63,185 shares in respect of SSARs and 93 shares held under Knowles' 401(k) plan.

(7)	Includes 20,068 shares in respect of SSARs and 46 shares held under Knowles' 401(k) plan.

(8)	Includes 38,811 shares in respect of SSARs.

(9)

In addition to the beneficial ownership reported for our directors and NEOs, the number of shares reported in the table above as beneficially owned by our directors and all executive officers as a group includes the following shares owned by our executive officers that are not NEOs: 136,179 shares held directly, 70,101 shares in respect of SSARs and 310,659 shares of Company common stock subject to the stock options held that are currently exercisable or will become exercisable within 60 days of March 2, 2020.

(10)	As reported in a Schedule 13G filed with the SEC on February 3, 2020, BlackRock Inc., with offices located at 55 East 52nd Street, New York, NY 10055, beneficially owned 12,838,619 shares with sole dispositive power and 12,626,014 shares with sole voting power as of December 31, 2019.

(11)

As reported in a Schedule 13G/A filed with the SEC on February 12, 2020 by The Vanguard Group, Inc. with offices located at 100 Vanguard Blvd., Malvern, PA 19355. According to the Schedule 13G/A, as of December 31, 2019, The Vanguard Group, Inc. reported that it beneficially owned 82,376 shares with sole voting power, 9,379,381 shares with sole dispositive power, 91,723 shares with shared dispositive power and 22,427 shares with shared voting power.

(12)

As reported in a Schedule 13G/A filed with the SEC on February 12, 2020 by Dimensional Fund Advisors LP with offices located at Building One, 6300 Bee Cave Road, Austin, TX 78746. According to the Schedule 13G, as of December 31, 2019, Dimensional Fund Advisors LP reported that it beneficially owned 7,374,326 shares with sole dispositive power and 7,151,247 shares with sole voting power. Dimensional Fund Advisors LP furnishes investment advice to four investment companies, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (collectively referred to as the "Funds"). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-advisor and/or manager, Dimensional Fund Advisors LP or its subsidiaries may possess voting and/or investment power over the shares that are owned by the Funds, and may be deemed to be the beneficial owner of the shares held by the Funds. However, all shares are owned by the Funds. Dimensional Fund Advisors LP disclaims beneficial ownership of such shares.

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(2)	In 2019, Other expenses of $4.4 million represent expenses related to shareholder activism and the remaining Other expenses relate to the acquisition of the ASIC Design Business by the Audio segment and the acquisition of DITF Interconnect Technology, Inc. by the Precision Device segment.

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