Kimball Electronics, Inc.KE
Kimball Electronics, Inc. Stock Compensation Disclosure
Stock Compensation Plans
A stock compensation plan was created and adopted by the Company’s Board of Directors (the “Board”) on September 20, 2023 and approved by our Share Owners at our 2023 Annual Meeting on November 17, 2023. The 2023 Plan allows for the issuance of up to 2 million shares and replaced our former 2014 plan. The shares under the 2023 Plan may be granted in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, performance share awards, cash awards, and other equity awards. The Plan is a ten-year plan that terminates automatically on November 17, 2033. No award shall be granted pursuant to the Plan after such date, but awards theretofore granted may extend beyond that date.
On October 20, 2016, the Board approved a nonqualified deferred stock compensation plan, the Kimball Electronics, Inc. Non-Employee Directors Stock Compensation Deferral Plan (the “Deferral Plan”), which allows Non-Employee Directors to elect to defer all, or a portion of, their retainer fees in stock until retirement or termination from the Board or death. The Deferral Plan allows for issuance of up to 1.0 million shares of the Company’s common stock.
Pre-tax stock compensation charged against income in fiscal years 2025, 2024, and 2023 was $6.5 million, $7.2 million, and $6.9 million, respectively. These costs are included in Selling and Administrative Expenses.
Performance Shares:
We made long-term performance share grants to leadership team members and other key employees. The Talent, Culture, and Compensation Committee of the Board approved these annual performance share grants. Grants cliff vest at the third anniversary of the award date.
Under the awards granted to leadership team members, a number of shares will be issued to each participant based on the Company’s economic profit for fiscal years 2026 and 2027 as compared to the Board approved plan. The number of shares issued could be zero if minimum thresholds are not met up to a maximum of 200%.
Under the awards granted to key employees, a number of shares will be awarded to each participant based upon a combination of the Company’s profitability based on its operating income over the performance period as defined in the Company’s operating business plans for the applicable fiscal years and the Company’s growth based on a comparison of its -year revenue compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year revenue CAGR. The number of shares issued will be less than the targeted shares issuable if the Company does not reach 100% of one or both of the above-mentioned performance metrics, and could be zero if the Company does not reach the required minimum thresholds of both metrics. The number of shares issued will exceed the number of targeted issuable shares granted (up to a maximum of 125%) if the Company exceeds 100% of one or both of the above-mentioned incentive metrics. The Company recognizes expense, for both leadership team and key employee awards, based on management’s expectation of achievement of the specific performance metrics monitored throughout the service period of the awards.
If a participant is not employed on the date shares are issued, the performance share award is forfeited, except in the case of a Qualifying Termination (a termination of service due to death, Disability, or Retirement), as defined by the Plan.
A summary of the Company’s performance share activity during fiscal year 2025 is presented below:
| Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Performance shares outstanding at July 1, 2024 | 499,274 | $ | 25.83 | ||||||||
| Granted | 170,476 | $ | 19.55 | ||||||||
| Vested | (93,870) | $ | 23.46 | ||||||||
| Forfeited | (31,817) | $ | 24.46 | ||||||||
| Performance shares outstanding at June 30, 2025 | 544,063 | $ | 24.33 | ||||||||
As of June 30, 2025, there was approximately $3.2 million of unrecognized compensation cost related to performance shares, based on the latest estimated attainment of performance goals. That cost is expected to be recognized over performance periods ending August 2025 through August 2028, with a weighted average vesting period of 1.2 years. The fair value of performance shares is based on the stock price at the date of grant. During fiscal years 2025, 2024, and 2023, respectively, 93,870, 82,744, and 225,142 performance shares vested at a fair value of $2.2 million, $1.6 million, and $4.3 million. The performance shares vested represent the total number of shares vested prior to the reduction of shares withheld to satisfy tax withholding obligations.
Total Shareholder Return Performance Shares:
The Talent, Culture, and Compensation Committee of the Board approved total shareholder return awards granted to leadership team members during fiscal year 2025 based on the Company’s relative total shareholder return (rTSR) for the performance period as compared to a group of peer companies selected by the Talent, Culture, and Compensation Committee of the Board. The number of shares issued could be zero if minimum thresholds are not met up to a maximum of 200%. No TSR performance shares were awarded during fiscal year 2024.
A summary of the Company’s total shareholder return performance share activity during fiscal year 2025 is presented below:
| Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Total shareholder return performance shares outstanding at July 1, 2024 | 42,626 | $ | 16.88 | ||||||||
| Granted | 62,203 | $ | 27.36 | ||||||||
| Vested | — | $ | — | ||||||||
| Forfeited | (3,412) | $ | 27.36 | ||||||||
| Total shareholder return performance shares outstanding at June 30, 2025 | 101,417 | $ | 22.96 | ||||||||
As of June 30, 2025, there was approximately $1.4 million of unrecognized compensation cost related to total shareholder return performance shares. That cost is expected to be recognized over performance periods ending March 2026 through August 2027, with a weighted average vesting period of 1.5 years. The fair value of total shareholder return performance shares is based on the grant date fair value calculated using a Monte Carlo simulation, with the assistance of a third-party valuation specialist. No shares vested during fiscal years 2025, 2024, and 2023.
Unrestricted Share Grants:
Unrestricted shares were granted to non-employee members of the Board as consideration for services rendered. Unrestricted share grants do not have vesting periods, holding periods, restrictions on sale, or other restrictions. The fair value of unrestricted shares is based on the stock price at the date of the award. During fiscal years 2025, 2024, and 2023, respectively, the Company granted a total of 26,192, 18,128, and 13,950 unrestricted shares at an average grant date fair value of $19.09, $25.24, and $23.30 for a total fair value of $0.5 million, $0.5 million, and $0.3 million. Unrestricted shares are awarded to non-employee members of the Board as compensation for director’s fees, including fees that directors elected to receive as unrestricted shares in lieu of cash payment. Directors’ fees are expensed over the period that directors earn the compensation. Unrestricted shares that are awarded to key employees are expensed immediately.
Restricted Shares:
Restricted shares were granted to employees as consideration for services rendered. The contractual life of the restricted shares is three years, with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two of the grant, and the final one-third after year three of the grant.
Restricted shares are expensed over the contractual vesting period as earned. If a participant is not employed on the date shares are issued, the restricted share award is forfeited, except in the case of a Qualifying Termination (a termination of service due to death, Disability, or Retirement), as defined by the Plan. During fiscal years 2025, 2024, 2023 the Company granted restricted shares to officers and other key employees for a total fair value of $2.9 million, $2.8 million, and $1.9 million.
| Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Restricted shares outstanding at July 1, 2024 | 137,283 | $ | 26.91 | ||||||||
| Granted | 154,792 | $ | 18.43 | ||||||||
| Vested | (46,497) | $ | 26.84 | ||||||||
| Forfeited | (12,961) | $ | 22.58 | ||||||||
| Restricted shares outstanding at June 30, 2025 | 232,617 | $ | 21.63 | ||||||||
As of June 30, 2025, there was approximately $2.0 million of unrecognized compensation cost related to restricted shares. The cost is expected to be recognized over vesting periods ending August 2025 through August 2028, with a weighted average vesting period of 1.1 years. The fair value of the restricted shares is based on the stock price at the date of grant. During fiscal years 2025, 2024, and 2023 respectively, 46,497, 20,768, and 6,458 restricted shares vested. The restricted shares vested represent the total number of shares vested prior to the reduction of shares withheld to satisfy tax withholding obligations.
Deferred Share Units:
Deferred share units may be granted to non-employee members of the Board under the Deferral Plan as compensation for the portion of their annual retainer fees resulting from their election to receive deferred share units in lieu of cash payment or unrestricted shares. Directors’ fees are expensed over the period that directors earn the compensation. Deferred share units are participating securities and are payable in common stock in a lump sum or installments in accordance with deferral elections upon a director’s death, retirement, or termination of service with the Board. During fiscal years 2025, 2024, and 2023, respectively, 28,288, 26,347, and 39,032 deferred share units were granted to non-employee members of the Board at an average grant date fair value of $19.09, $25.24, and $23.07 for a total fair value of $0.5 million, $0.7 million, and $0.9 million. During fiscal year 2025, no shares of common stock were issued under the Deferral Plan.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 22, 2025 | Showing above |
| 2024 | Aug 23, 2024 | |
| 2023 | Aug 24, 2023 | |
| 2022 | Aug 30, 2022 | |
| 2021 | Aug 27, 2021 | |
| 2020 | Aug 27, 2020 | |
| 2019 | Aug 27, 2019 | |
| 2018 | Aug 28, 2018 | |
| 2017 | Aug 29, 2017 | |
| 2016 | Aug 25, 2016 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.