Equity Incentive Program (Notes)

3 Months Ended

Mar. 31, 2026

Share-Based Payment Arrangement, Noncash Expense [Abstract]

12. Equity Incentive Program

The following table summarizes the stock-based compensation expense recognized by the Company for the periods presented:


	Three Months Ended March 31,
(in millions)	2026		2025
Total pre-tax stock-based compensation expense	$	10.4	$	10.2
Tax benefit	6.9		3.1
Total stock-based compensation expense, net of tax	$	3.5	$	7.1

Stock Options

No stock options were granted during the three months ended March 31, 2026 and 2025.

The following table summarizes the Company's stock option activity for the three months ended March 31, 2026:


	Number of Shares	Weighted-Average Exercise Price		Aggregate Intrinsic Value (in millions)		Weighted-Average Remaining Contractual Term (Years)
Outstanding at December 31, 2025	413,659	$	18.20


Exercised (1)	(186,317)	19.36

Expired	(1)	16.07
Outstanding at March 31, 2026	227,341	$	17.25	$	1.9	1.0

Exercisable at March 31, 2026	227,341	$	17.25	$	1.9	1.0

(1) The number of stock options exercised includes shares that the Company withheld on behalf of employees to satisfy the option exercise price (in the instances of net exercises) as well as statutory tax withholding requirements.

There was no unrecognized compensation expense related to stock options at March 31, 2026.

Restricted Stock Units

The following table summarizes the Company's restricted stock unit ("RSU") activity for the three months ended March 31, 2026:


	Share units	Weighted-average grant date fair value
Unvested at December 31, 2025	1,911,526	$	17.76
Granted	640,383	27.14

Vested (1)	(798,192)	17.94
Forfeited	(10,250)	21.14
Unvested at March 31, 2026	1,743,467	$	21.11

(1) The number of RSUs vested includes shares that the Company withheld on behalf of employees to satisfy statutory tax withholding requirements.

At March 31, 2026, $26.5 million of unrecognized compensation expense related to its RSUs is expected to be recognized over a weighted-average period of 1.9 years.

Performance Share Units

Awards with market conditions

The Company grants performance share units (“PSUs”) to senior management for which the number of PSUs that may be earned and vest is based on total shareholder return (“TSR”) relative to the component companies of the Russell 2000 Index over a three-year performance period. These awards will cliff vest three years following the grant date. PSUs will be settled in shares of the Company's common stock. Depending on the Company's overall performance relative to the applicable measures, the size of the PSU awards are subject to adjustment, up or down, resulting in awards at the end of the performance period that can range from 0% to 225% of target. The Company ratably recognizes the expense over the applicable service period for each PSU grant. During the three months ended March 31, 2026 and 2025, respectively, the Company granted 259,580 and 365,051 of PSUs with market conditions.

The fair value of PSUs with market conditions was determined by using a Monte Carlo simulation with the following assumptions:


	Three Months Ended March 31,
	2026			2025
Risk-free interest rate	3.44		%	4.28		%
Dividend yield	n/a			n/a
Expected life (years)	3			3
Volatility	32.90		%	33.43		%
Knowles share price on grant date	$	27.14		$	18.34
Fair value per share on grant date	$	44.00		$	25.50

Awards with performance conditions

The Company also grants PSUs to certain employees for which the number of PSUs that may be earned and vest is based on achievement of internal company targets. The fair value of each PSU with a performance condition is equal to the share price on the date of grant. The Company ratably recognizes the expense for these awards over the applicable service period and adjusts the expense for the expected achievement of performance conditions as necessary.

During the three months ended March 31, 2026, the Company granted 26,713 PSUs with performance conditions that had a grant date fair value of $0.7 million. During the three months ended March 31, 2025, the Company granted 89,967 of PSUs with performance conditions that had a grant date fair value of $1.7 million. The 2025 grant included a special PSU award for the Chief Executive Officer of 81,788 target PSUs with a grant date fair value of $1.5 million. This award is eligible to vest based on the achievement of a minimum non-GAAP diluted earnings per share amount and specified revenue goals over a potential five-year performance period. If the goals are not met during the initial three-year performance period, it may be extended an additional two years at a reduced payout level. Achievement of this award could range from 0% to 400% of the target number of PSUs.

The following table summarizes the Company's PSU activity for the three months ended March 31, 2026:


	Share units (1)	Weighted-average grant date fair value
Unvested at December 31, 2025	1,076,268	$	25.36
Granted	286,293	42.43

Vested (2)	(256,415)	29.75

Unvested at March 31, 2026	1,106,146	$	28.76

(1) The number of PSUs shown reflects 100% of the target award; actual payouts may differ based on performance.

(2) The number of PSUs vested includes shares that the Company withheld on behalf of employees to satisfy statutory tax withholding requirements.

At March 31, 2026, $16.7 million of unrecognized compensation expense related to PSUs is expected to be recognized over a weighted-average period of 1.7 years.