DEF 14A of Kimball Electronics, Inc., Sep 28, 2023

DEF 14A of Kimball Electronics, Inc.

Filed Sep 28, 2023 · FY20230001606757-23-000055

Open on EDGAR

  1. Nominees For Election as Directors by Holders of Common Stock

    Nominees For Election as Directors by Holders of Common Stock Our Board of Directors (the “Board”) is divided into three classes with approximately one-third of the directors up for election each year. We have noted the class of each director and the date of their election in their qualification descriptions below. At the 2023 Annual Meeting of Share Owners, the Share Owners will elect three (3) directors to serve a term of three years, or until their respective successors have been duly elected and qualified. A director selected by the Board to fill a vacancy holds office until the end of the predecessor’s original term, or if the vacancy arises because of an increase in the size of the Board, at the end of the term specified at the time of such director’s election or selection, and until that director’s successor has been elected and qualified, until the Board accepts their earlier resignation, or until the director’s disqualification, disability, or removal. Each nominee will begin service as a director of Kimball Electronics if elected. Each nominee has consented to serve as a director. If for any reason any such nominee shall become unable or unwilling to serve, the proxies will be voted to fill any vacancy so arising in accordance with the discretionary authority of the persons named in the accompanying proxy. The Board is confident that each such nominee will be able to serve. The Class III nominees to be elected, serving a three-year term and then up for re-election in 2026, are: Robert J. Phillippy Richard D. Phillips Gregory A. Thaxton Below, we describe the unique individual qualifications and skills of our nominees that led our Board to the conclusion that each should serve as a director and have included information each director has given us about their age, positions held, principal occupation, business experience for at least the past five years, and the names of other publicly-held companies of which they currently serve (or during the past five years has served) as a director. The nominees are:

  2. Nominees For Election as Directors by Holders of Common Stock

    | | Robert J. Phillippy | Chairperson of the Board | | Director since 2018 Class III- re-election in 2023 | Mr. Phillippy is an independent consultant, advising technology companies on a range of strategic, operational, and organizational issues. He retired in 2016 from his position as President, Chief Executive Officer, and a Director of Newport Corporation, a publicly traded lasers, optics, and photonics technology company with 15 manufacturing locations in seven countries. He joined Newport in 1996 and served in various executive management roles prior to his appointment as Chief Executive Officer in 2007. Previously, he served for 12 years in various management roles for Square D Company, a division of Schneider Electric. He currently serves on the boards of directors of ESCO Technologies (NYSE: ESE), where he is Chairperson, and Materion Corporation (NYSE: MTRN). Mr. Phillippy received a Bachelor of Science degree in electrical engineering from the University of Texas at Austin in 1983 and a Master of Science degree in management from Northwestern University in 1993. Mr. Phillippy’s experience as a chief executive officer of a publicly traded technology and manufacturing company adds significant leadership, strategy, and operational experience to the Board. | |

  3. Nominees For Election as Directors by Holders of Common Stock

    | | Richard D. Phillips | Director, Chief Executive Officer | | Director since 2023 Class III - election in 2023 | Mr. Phillips was appointed a Director and as Kimball Electronics’ Chief Executive Officer effective March 1, 2023. With more than 20 years of experience in operations and advisory roles, Mr. Phillips was most recently the President and Chief Executive Officer from 2019 until 2022 for Elkay Manufacturing Company, a global manufacturer and distributor of commercial and residential plumbing products and designer and installer of commercial interiors for the foodservice and hospitality sectors. He was also a member of the Board of Directors for Elkay. Mr. Phillips also served as the President, Chief Executive Officer, and Board member from 2017 through 2019, for Essendant, Inc. (formerly United Stationers, Inc.), a Fortune 500 wholesale distributor of workplace-related products. Before joining Essendant, where he held positions of increasing responsibility from 2013 through 2017, Mr. Phillips held several leadership roles with McKinsey & Company, including co-leading the Pharmaceuticals and Medical Products operations practice. He was elected Partner in 2005. Mr. Phillips is an independent Director of the Greenheck Group, a leader in the HVAC space, and previously served as an independent Director of Follett Corporation. Mr. Phillips holds a Bachelor of Science in Finance from Indiana University and a Master of Management from Northwestern University Kellogg Graduate School of Management. Mr. Phillips brings a wealth of strategic development and executive business leadership in the manufacturing and medical industries to his role. | |

  4. Nominees For Election as Directors by Holders of Common Stock

    | | Gregory A. Thaxton | Director | | Director since 2017 Class III - re-election in 2023 | Mr. Thaxton is the former Executive Vice President and Chief Financial Officer of Nordson Corporation (Nasdaq: NDSN), a publicly traded industrial technology company focused on precision dispensing, fluid management, and related processes with operations in nearly 40 countries. Mr. Thaxton retired from Nordson in 2020. He had more than thirty years of experience with Nordson, serving in various domestic and international financial management and leadership roles after beginning his career with a Big Four public accounting firm. Mr. Thaxton also serves on the board of the non-profit Lorain County Community College Foundation, serving as Treasurer of the Executive Committee, and is a member of the Finance, Audit, and Compliance Committees. Mr. Thaxton is a Certified Public Accountant (inactive). Mr. Thaxton received his Bachelor of Science degree in accounting from Miami University in 1983 and his MBA in international management from Baldwin Wallace University in 1995. Mr. Thaxton’s experience adds significant financial, accounting, capital structure, and SEC reporting expertise to the Board. | |

  5. Nominees For Election as Directors by Holders of Common Stock

    | Other Directors Not Standing for Re-election in 2023 |

  6. Nominees For Election as Directors by Holders of Common Stock

    | | Gregory J. Lampert | Director | | Director since 2014 Class I - re-election in 2024 | Mr. Lampert is the former Chief Executive Officer and President of Omni Cable Corporation, a distributor of specialty wire and cable, where he served from 2017 through his retirement in June 2023. Prior to his executive position at Omni Cable Corporation, he was Chief Executive Officer of the Americas region of General Cable beginning in January 2013 and held the same position for the North America region beginning in 2008. Prior to that, he held various management positions at General Cable after joining the company in 1998. Prior to joining General Cable, he held engineering and commercial management positions with The Dow Chemical Company and Cintas Corporation. Mr. Lampert was also a director of Omni Cable Corporation until his retirement and continues to serve as a director at Xtek Corporation, a for-profit private company. Mr. Lampert has a Bachelor of Science degree in chemical engineering from the University of Cincinnati and an MBA from the University of Chicago with a concentration in Finance and Strategy. Mr. Lampert’s previous board experience and financial background, as well as experience in managing sales organizations provide broad insights into capital planning and sales operations. | |

  7. Nominees For Election as Directors by Holders of Common Stock

    | | Colleen C. Repplier | Director | | Director since 2014 Class I - re-election in 2024 | Ms. Repplier is a strong and respected leader in the industrial, energy, and commercial building industries, with more than three decades of operational and P&L experience in diversified manufacturing companies. Ms. Repplier began her career in the energy industry, holding roles in engineering and marketing with Westinghouse Electric Company, construction design with Bechtel Corporation, and progressing roles in engineering, process improvement, product management, sales, and general management at General Electric. She also held senior leadership positions and was a company officer at Home Depot and HD Supply before joining Tyco in 2007. At Tyco, she served as President of the Tyco Fire Protection business until the company was acquired by Johnson Controls (JCI). She retired from JCI in her role as the Vice President and General Manager of a $4.5 billion global portfolio of HVAC product businesses with 20,000 employees in June 2018. Ms. Repplier received her Bachelor of Science degree in electrical engineering at the University of Pittsburgh. She later received her MBA from the University of Central Florida, where she also taught as an adjunct professor in the school of business. She is a certified Six Sigma Master Black Belt. Ms. Repplier serves as director and finance committee chair for Triumph Group (NYSE: TGI) and as director and compensation committee chair for privately held PGH KKSP Acquisition Holdings. Ms. Repplier’s engineering background and extensive experience in operations, supply chain management, and six-sigma methodologies provide broad insights into operational planning and improvement opportunities. | |

  8. Nominees For Election as Directors by Holders of Common Stock

    | | Michele A. M. Holcomb, PhD | Director | | Director since 2019 Class II - re-election in 2025 | Dr. Holcomb is the former Executive Vice President, Chief Strategy and Business Development Officer at Cardinal Health, a global, integrated healthcare services and products company, from 2017 through September 2022. From 2012 to 2017, she held positions as Chief Operating Officer of Global R&D and Senior Vice President of Strategy, Portfolio, Search and Partnerships at Teva Pharmaceuticals, a global manufacturer of generic and innovative medicines. Prior to that, Dr. Holcomb served as a partner in the Global Pharmaceutical Practice at consulting firm McKinsey & Company. Dr. Holcomb received her Bachelor of Science degree in chemistry from Stanford University and a Doctorate in Chemistry from the University of California at Berkeley. Dr. Holcomb’s experience and background provide the Board with valuable insights in the areas of strategy, product development, and operations. | |

  9. Nominees For Election as Directors by Holders of Common Stock

    | | Tom G. Vadaketh | Director | | Director since 2022 Class II - re-election in 2025 | Mr. Vadaketh was appointed Chief Financial Officer at Enviri Corporation (NYSE: NVRI) effective October 2023. Enviri offers a broad range of environmental services and related innovative solutions, including critical recycle and reuse solutions for waste streams. From January 2022 through October 2023, Mr. Vadaketh served as Chief Financial Officer of Bausch Health (NYSE, TSX: BHC), which develops, manufactures, and markets pharmaceuticals, over-the-counter products, and medical devices globally. Prior to joining Bausch Health, Mr. Vadaketh served as Executive Vice President and Chief Financial Officer of eResearch Technology, Inc. from September 2018 to December 2021 where he was responsible for leading the Finance function including controllership, treasury, taxation, and financial planning. Mr. Vadaketh spent over 20 years at Procter & Gamble and Tyco International, where he held several roles at both companies of increasing responsibility. Mr. Vadaketh received his degree from the Institute of Chartered Accountants in England and Wales (ACA) and an MBA from Manchester Business School. He is a Certified Public Accountant. Mr. Vadaketh brings more than 30 years of financial experience to the Board, having led large, highly complex financial organizations and developed expertise in driving growth and transformation. | |

  10. Nominees For Election as Directors by Holders of Common Stock

    | | Holly A. Van Deursen | Director | | Director since 2019 Class II - re-election in 2025 | Ms. Van Deursen currently serves as an independent director on the boards of two other public companies, Albemarle Corporation (NYSE: ALB) and Synthomer, plc (LON: SYNT). She has also served as an independent director on the boards of Capstone Green Energy (formerly Capstone Turbine Corporation) (Nasdaq: CGRN) from 2007 to August 2021; Actuant Corporation, now Enerpac Tool Group Corporation (NYSE: EPAC), from 2008 to 2020; Bemis Company from 2008 to 2019; and Petroleum Geo-Services ASA from 2006 to 2018. Beginning in 1989, she served in various senior executive management roles for BP p.l.c., a $250 billion oil, gas, and energy company operating in North America, Asia, and Europe, before retiring in 2005 as a member of the top-forty executive management team. Prior to 1989, she served in various engineering, manufacturing and product development roles for Dow Corning Corporation. Ms. Van Deursen received her Bachelor of Science degree in chemical engineering from the University of Kansas and her MBA from the University of Michigan. Ms. Van Deursen’s experience in executive roles and as a public company director provides the Board significant insights into board operations and governance, leadership, and international business. | |

  11. Nominees For Election as Directors by Holders of Common Stock

    | The Board of Directors recommends that you vote “FOR” the election of each of the Class III director nominees. |

  12. Qualifications and Composition

    Qualifications and Composition

  13. Qualifications and Composition

    | Director/Director Nominee | Bob Phillippy | Ric Phillips | Greg Thaxton | Michele Holcomb | Greg Lampert | Colleen Repplier | Tom Vadaketh | Holly Van Deursen | | Age | 63 | 53 | 62 | 55 | 56 | 62 | 61 | 64 | | Director Since | 2018 | 2023 | 2017 | 2019 | 2014 | 2014 | 2022 | 2019 | | Independent | ☑ | | ☑ | ☑ | ☑ | ☑ | ☑ | ☑ | | Board Committees | • | | • • | • | • | • • | • | • | | Board & Committee Chairs | • | | • | • | | | | • | | Number of Other Public Boards | 2 | 0 | 0 | 0 | 0 | 1 | 0 | 2 | | Qualifications | | | | | | | | | | Public Company Executive / CEO | | | | | | | | | | Manufacturing & Industry | | | | | | | | | | Strategy Development | | | | | | | | | | Financial & Accounting | | | | | | | | | | Cybersecurity / Information Security | | | | | | | | | | Environmental & Facility | | | | | | | | | | Social / Talent / Culture | | | | | | | | | | Corporate Governance | | | | | | | | |

  14. Qualifications and Composition

    • Board • Audit • Nominating and ESG (NESG) • Talent, Culture, & Compensation (TCC)

  15. Director Compensation

    Director Compensation

  16. Non-Employee Director Compensation in Fiscal Year 2023

    Non-Employee Director Compensation in Fiscal Year 2023

  17. Non-Employee Director Compensation in Fiscal Year 2023

    | Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | Total ($) | | (a) | (b) | (c) | (h) | | Michele A. M. Holcomb | $80,000 | $125,000 | $205,000 | | Gregory J. Lampert | $75,026 | $125,005 | $200,031 | | Robert J. Phillippy | $104,167 | $125,000 | $229,167 | | Colleen C. Repplier | $80,000 | $125,000 | $205,000 | | Gregory A. Thaxton | $92,500 | $125,000 | $217,500 | | Tom G. Vadaketh | $75,000 | $125,000 | $200,000 | | Holly A. Van Deursen | $80,000 | $125,005 | $205,005 |

  18. Non-Employee Director Compensation in Fiscal Year 2023

    (1)Represents fees paid during fiscal year 2023 and includes the following number of shares for which the director elected to receive Common Stock in lieu of cash: Mr. Lampert 3,220, Mr. Phillippy 3,755, Ms. Repplier 3,433, and Mr. Vadaketh 3,219. These shares were valued using the per share price of $23.30, the market value for such shares on November 18, 2022. Mr. Phillippy, Ms. Repplier, and Mr. Vadaketh each elected to defer receipt of all these shares under the Deferral Plan. Mr. Lampert’s fiscal year 2023 annual retainer fee award was issued to him under the 2014 Plan. (2)Represents the value of the equity retainer awards granted during the year of 5,365 shares for each non-employee director using the per share price of $23.30, the market value for such shares on November 18, 2022. Ms. Holcomb, Mr. Phillippy, Ms. Repplier, Mr. Thaxton, and Mr. Vadaketh each elected to have all their fiscal year 2023 equity retainer awards deferred under the Deferral Plan. Mr. Lampert’s and Ms. Van Deursen’s fiscal year 2023 equity retainer awards were issued to them under the 2014 Plan.

  19. Non-Employee Director Compensation in Fiscal Year 2023

    | CORPORATE GOVERNANCE AT KIMBALL ELECTRONICS |

  20. Leadership Transitions

    Leadership Transitions On March 1, 2023, Bob Phillippy was appointed Chairperson of the Board and Ric Phillips was appointed Chief Executive Officer. They succeeded Don Charron, Chairman and Chief Executive Officer, who retired from the company effective February 28, 2023. As we disclosed in January 2023, Mr. Phillips joined the Company on the following compensation terms and conditions: •a base salary of $850,000 (prorated for his start date in fiscal year 2023); •participation in our profit sharing incentive bonus plan, at the category 0 participant level (subject to a minimum in fiscal year 2023 only equal to the greater of (i) 100% of his base salary or (ii) the Profit Sharing Bonus Plan Category 0 bonus, in either case prorated for his start date); and •the following share awards under our 2014 Stock Option and Incentive Plan: ◦a $2.7 million share award, consisting of 80% of Performance Shares measured on the fiscal year 2023 to fiscal year 2025 performance cycle, with attainment determined as described in our proxy statement for the 2022 Annual Meeting of Share Owners, vesting after fiscal year 2025; and 20% Restricted Shares, incrementally vesting 1/3 each year after the grant date; ◦a $1 million equity sign-on inducement in Performance Shares, measured from Mr. Phillips’s start date for a period of three years, with attainment determined based on our total shareholder return during the performance cycle as compared to a group of peer companies determined by our Board of Directors, with a potential range of 0% - 100%. On June 16, 2023, Steve Korn, who was serving as President, Global Electronics Manufacturing Services Operations, was appointed Chief Operating Officer; Kathy Thomson, who was serving as Vice President, Global Business Development and Design Services, was appointed Chief Commercial Officer; and Adam Baumann, who was serving as Corporate Controller, was appointed Chief Accounting Officer. All three appointments were effective July 1, 2023.

  21. Annual Cash Incentive Plans

    Annual Cash Incentive Plans NEOs have the opportunity to earn two different types of annual cash incentives. First, like all full-time salaried employees at Kimball Electronics, our NEOs participate in our Profit Sharing Incentive Bonus Plan, which provides participants with an opportunity to receive a cash payment if we achieve certain profitability levels (tiers) for the fiscal year. The goal of the Profit Sharing Incentive Bonus Plan is to link compensation with the short-term financial success of the Company and Share Owner return. For executives, the economic profit is calculated at the Worldwide level. The Committee has set the target cash incentive for NEOs at 40% (100% for our CEO), which corresponds to profit tier 4 in the Profit Sharing Incentive Bonus Plan. We describe the profit tiers in detail in the Fiscal Year 2023 Annual (Cash) Incentives section below. Second, the Committee reviewed individual personal performance bonus plan goals for each NEO for fiscal year 2023 based on their attainment of certain individual goals reviewed by the Committee (for the CEO) and in consultation with the CEO (for the other NEOs). Our Worldwide economic profit in fiscal year 2023 was $18,254,000, which fell between profit tiers 3 and 4. Based on our Plan’s Cash Incentive Payout Matrix, our NEOs received an above-target payout of 50% (125% for our CEO, 50%+10% for our former CEO) of their fiscal year 2023 base salaries out of a maximum opportunity of 100% (200% for our CEO, 110% for our former CEO) of those base salaries. For fiscal year 2023 only, the Committee’s offer of employment to Mr. Phillips provided him the opportunity to earn the greater of (i) 100% of his base salary or (ii) the Profit Sharing Bonus Plan Category 0 bonus, in either case prorated for his March 1, 2023 start date. Mr. Phillips earned 125%.

  22. FY 2023 Long-Term Incentives

    FY 2023 Long-Term Incentives The Committee granted a combination of restricted shares and performance shares under the 2014 Stock Option and Incentive Plan (the “2014 Plan”) during fiscal year 2023, with 80% of the grants made in the form of performance shares. The Committee believes performance shares represent one of the most effective forms of stock incentive compensation available under the 2014 Plan because such shares tie compensation directly to our profitability and our performance relative to our industry. The Plan award formula, described in detail below, is a combination of the Company’s operating income for the applicable fiscal years and the Company’s revenue growth based on a comparison of its three-year annualized average rate of revenue growth (“Revenue CAGR”) to the Electronics Manufacturing Services (“EMS”) Industry’s Revenue CAGR. The restricted shares vest (if at all) in annual installments over the succeeding three-year period. The performance share unit awards cliff vest (if at all) in three years, after fiscal year 2025. The Committee changed Plan performance share awards to a three-year cliff vesting period starting with fiscal year 2022 grants to reinforce the focus of our NEOs on our long-term success, and the resulting value it delivers to our Share Owners, by further aligning their personal financial success with that long-term success. To avoid a gap in vesting periods due to this change, in fiscal year 2022, the Committee also made bridge grants vesting after the fiscal year 2022 and fiscal year 2022-2023 performance periods. For the fiscal year 2023-2025 performance period grant, our NEOs are eligible to earn the following from performance share awards:

  23. FY 2023 - FY 2025 Performance Share Opportunity (as % of Applicable Base Salary)

    FY 2023 - FY 2025 Performance Share Opportunity (as % of Applicable Base Salary)

  24. FY 2023 - FY 2025 Performance Share Opportunity (as % of Applicable Base Salary)

    | Named Executive Officer | FY 2023 Grant Threshold Level (1) | FY 2023 Grant Target Opportunity | FY 2023 Grant Maximum Opportunity | | Richard D. Phillips | 83% | 276% | 345% | | Jana T. Croom | 34% | 112% | 140% | | Steven T. Korn | 31% | 104% | 130% | | Kathy R. Thomson | 24% | 80% | 100% | | Christopher J. Thyen | 22% | 74% | 92% | | Donald D. Charron | 59% | 198% | 247% |

  25. FY 2023 - FY 2025 Performance Share Opportunity (as % of Applicable Base Salary)

    (1) The threshold is not a minimum amount payable or awardable. If the specified performance objectives are not met for the applicable performance period, no amount would be payable or awardable for that performance period.

  26. Compensation Program Governance: How We Make Compensation Decisions

    | | What We Do | | What We Don’t Do | | ✓ | Promote a long-term focus through multi-year vesting and performance requirements. | ✗ | Apply rigid categorical methodologies or formulas in setting the components, level, and mix of executive compensation. | | ✓ | Provide a long-term incentive program for executive officers comprised primarily of performance-based equity. | ✗ | Offer uncapped cash or equity incentive plans. | | ✓ | Include minimum and maximum thresholds for long-term incentive payouts, so executive officers have both upside and downside opportunities. | ✗ | Enter into long-term employment agreements with executives. | | ✓ | Maintain a robust director and executive stock ownership policy that helps align the interests of our Share Owners with our directors and executive officers. | ✗ | Provide “single trigger” change-in-control provisions. | | ✓ | Require executives to retain 100% of all net shares (post-tax) that vest until achieving their stock ownership requirements. | ✗ | Offer tax gross ups on perquisites or severance for executives. | | ✓ | Review the metrics for our cash and equity awards annually. | ✗ | Guarantee cash or equity bonuses or salary increases. | | ✓ | Include a metric in our performance-based equity awards based on performance relative to our industry to reward significant positive outperformance. | ✗ | Allow any short sales, pledging, hedging, and trading in derivatives of our securities. | | ✓ | Deliver short and long-term awards based on clear formulas. | ✗ | Maintain evergreen equity plans. | | ✓ | Utilize a third-party compensation consultant to advise on market, peer, and best practices for executive compensation. | ✗ | Reprice or replace underwater equity awards. | | ✓ | Maintain a strong clawback policy to ensure accountability. | ✗ | Issue equity awards at below-market exercise rates. | | ✓ | Require a minimum one-year vesting period for performance shares and restricted stock granted under our stock plan. | ✗ | Pay dividends on unvested stock awards. |

  27. Role of the Independent Compensation Consultant

    Role of the Independent Compensation Consultant During fiscal year 2023, the Committee used data from Aon, its third-party compensation consulting firm, in setting executive compensation. Aon was engaged directly by the Committee to advise on levels and components of executive compensation and peer incentive pay practices, and to consult on our peer group composition. The Committee also uses full market compensation studies provided by Aon. The data from Aon included information on base pay, stock awards, and other forms of compensation awarded at comparable companies. The Committee used this data and recommendations from management as a reference point when making compensation decisions during fiscal year 2023 to ensure that the types and amounts of executive compensation were reasonable and competitive.

  28. Compensation Peer Groups and Peer Selection Process

    Compensation Peer Groups and Peer Selection Process For compensation planning purposes, the Committee, with input from management and Aon, has constructed a peer group to compare the compensation of our executive officers with that paid by other companies that are similar to us and that we believe compete with us for executive talent. For fiscal year 2023, we chose companies for the peer group using filtering criteria such as: •Company size and performance (revenue, operating income, market capitalization, performance criteria); •Companies identified as specific competitors for executive and critical talent; •Geographic footprint; •Industries served, primarily those in the electronic components and electronics manufacturing services industries; •Organizational structure; and •Companies identified by others as our competitors for executive talent. The Committee conducts reviews of the peer group and selection criteria annually to ensure that both are appropriate.

  29. Peer Group Used in Compensation Planning for Fiscal Year 2023

    Peer Group Used in Compensation Planning for Fiscal Year 2023

  30. Peer Group Used in Compensation Planning for Fiscal Year 2023

    | Company | Stock Symbol | | Bel Fuse | BELFB | | Benchmark Electronics, Inc. | BHE | | Celestica | CLS | | CTS Corporation | CTS | | Daktronics | DAKT | | Itron, Inc. | ITRI | | Key Tronic | KTCC | | Knowles Corp. | KN | | Methode Electronics, Inc. | MEI | | OSI Systems, Inc. | OSIS | | Plexus Corp. | PLXS | | Powell Industries | POWL | | Preformed Line Products Company | PLPC | | Triumph Group | TGI | | TTM Technologies, Inc. | TTMI | | Universal Electronics | UEIC |

  31. Peer Group Used in Compensation Planning for Fiscal Year 2023

    | FY 2023 Peers (1) | | | | ($ Amounts in Millions) | Market Cap | Trailing 12 months Revenue | | 25th percentile | $326.5 | $520.2 | | Median | $1,081.0 | $1,171.9 | | 75th percentile | $150.0 | $2,021.1 | | Kimball Electronics | $492.9 | $1,247.4 | | Rank | 41% | 65% |

  32. Peer Group Used in Compensation Planning for Fiscal Year 2023

    (1) Reflects financial data used by the Committee in March 2022 when selecting the FY23 Peer Group

  33. Annual (Cash) Incentive Design

    Annual (Cash) Incentive Design We provide annual incentive awards to our NEOs based on both financial performance and individual performance. Our annual incentive awards balance company financial performance with the individual performance of each of our NEOs. The Committee sets a target annual incentive value for each NEO, which is their base salary multiplied by a percentage that can range from 0% to 110% (210% for our CEO). We pay annual incentive awards based on these two factors: 1.Profit Sharing Incentive Bonus Plan. Our performance measured against pre-established financial goals, which can range from 0% to 100% (200% for our CEO) of base salary based on the achievement of Plan goals established by the Committee at the beginning of each fiscal year. 2.Personal Performance Incentive. The performance of the operations or functions under each NEO’s responsibility, which can range from 0% to 10% of base salary. The Committee applies a narrow range to the Personal Performance Incentive, which makes its impact on the total annual incentive payout significantly smaller than the Profit Sharing Incentive Bonus Plan. For our CEO, the Personal Performance Incentive includes the role that the CEO plays in achieving ESG objectives embedded in their fiscal year 2023 priorities.

  34. Factor 1: Profit Sharing Incentive Bonus Plan

    Factor 1: Profit Sharing Incentive Bonus Plan Our NEOs, like all full-time salaried employees at Kimball Electronics, are eligible to participate in the Profit Sharing Incentive Bonus Plan, which provides participants with an opportunity to receive a cash payment if we achieve certain profitability levels (tiers) for the fiscal year. The goal of the Profit Sharing Incentive Bonus Plan is to link compensation with the long-term financial success of the Company and Share Owner return. A key aspect of the Plan to accomplish this goal includes the fact that substantially all full-time salaried employees participate in the same bonus plan, which puts all management employees in the same position to encourage growth of economic profit. Substantially all full-time salaried employees have some portion of their compensation “at-risk,” and the variable incentive portion of pay is linked to financial results. The variable incentive can represent a significant part of a Plan participant’s total compensation, thus putting more compensation at-risk and giving them greater incentive to improve economic profit and increase Share Owner value. The higher our economic profits, the more we share with Plan participants. This links directly to our corporate goal of providing exceptional long-term returns to our Share Owners and our Guiding Principle that we want employees to share in our success. For each fiscal year, the Committee assigns a specific amount of economic profit to each tier. Economic profit is a non-GAAP financial measure equal to the amount of net income less the cost of capital. The cost of capital represents the economic cost of a reasonable return on capital that is used in the business. New capital expenditures are excluded in computing the cost of capital for an appropriate period of time (generally 3 years for major facility expansions and 12 months for all other) to encourage needed capital investments. We believe that economic profit provides additional perspective to stakeholders about our performance, and in particular the profits we generate over and above the cost of capital we use to do so. The Profit Sharing Incentive Bonus Plan measures economic profit at two levels within the Company, with each level representing 50% of the bonus opportunity: (1) worldwide for Company-wide performance (“Worldwide”); and (2) at a business unit level for the performance of designated operations within the Company. For our NEOs, 100% of their Profit Sharing Incentive Bonus Plan opportunity is based on our economic profit at the Worldwide level to emphasize the importance of our leaders working together as a team to deliver profitable growth on an enterprise level. The Profit Sharing Incentive Bonus Plan establishes potential cash incentive amounts as a range of percentages of the participant’s salary, with the payout percentage increasing with higher levels of profitability. The Plan also establishes different payout percentage ranges across nine participant categories, setting higher payout percentage ranges for participants who, by virtue of their responsibilities, are expected to have a greater effect on the Company’s profitability. Category 0 (for our CEO) and category 1 participants, which include all of our other NEOs, have the greatest amount at risk; category 8 the lowest. As the achieved economic profit tier and a participant’s category move closer to 1, the participant’s bonus potential increases along with the amount of their total take-home pay that is variable or “at risk” based on our profitability. The Plan is designed to share significantly more bonus at world-class (tier 1) performance levels, though its economic profit thresholds also ensure that the amount of each dollar of profit that we share with participants is appropriately limited. The Committee sets the economic profit tiers at the beginning of each year after considering many factors, including comparisons to the economic performance of the cumulative TSR reference group that we identify in our Form 10-K. For participants to earn target annual incentive compensation, we must earn not only net income but also an economic profit. This provides an important link to Share Owner value: our employees share in a portion of the value we create for Share Owners only when we create such value. Accordingly, the Committee sets the economic profit threshold for tier 4 so that economic profit is at or just above $0, the threshold for tier 6 so that net income is at or just above $0. The threshold for tier 3 is designed so that economic profit attainment between the tier 4 and tier 3 levels (our target for NEOs) approximates the median economic profitability performance of the cumulative TSR reference group.

  35. Profit Sharing Incentive Bonus Plan Framework: Target Opportunities for NEOs

    Profit Sharing Incentive Bonus Plan Framework: Target Opportunities for NEOs The following tables summarize the Profit Sharing Incentive Bonus Plan’s cash incentive payout percentages at each economic profit tier for the two relevant participant categories and the threshold, target, and maximum opportunities for each NEO:

  36. Profit Sharing Incentive Bonus Plan Framework: Target Opportunities for NEOs

    | Economic Profit | CEO | All other NEOs | | Tiers | Category 0 | Category 1 | | 1 | 200% | 100% | | 2 | 175% | 80% | | 3 | 150% | 60% | | 4 | 100% | 40% | | 5 | 50% | 20% | | 6 | 0% | 0% |

  37. Profit Sharing Incentive Bonus Plan Framework: Target Opportunities for NEOs

    | Named Executive Officer | FY 2023 Threshold Opportunity | FY 2023 Target Opportunity (as % of Applicable Base Salary) | FY 2023 Maximum Opportunity (as % of Applicable Base Salary) | | Richard D. Phillips | 0% | 100% | 200% | | Jana T. Croom | 0% | 40% | 100% | | Steven T. Korn | 0% | 40% | 100% | | Kathy R. Thomson | 0% | 40% | 100% | | Christopher J. Thyen | 0% | 40% | 100% | | Donald D. Charron | 0% | 50% | 110% |

  38. Profit Sharing Incentive Bonus Plan Framework: Target Opportunities for NEOs

    Achievement of a tier 1 incentive payout for NEOs is very difficult because the Profit Sharing Incentive Bonus Plan is designed to pay maximum cash incentives only if we achieve economic profitability near the top decile of the public companies in the cumulative TSR reference group that we identify in our Form 10-K. The Committee approves the economic profit tiers shortly after the commencement of each fiscal year, usually in late July or early August. The Committee does not have the authority to increase, but can decrease, the amount of any cash incentive for NEOs under the Profit Sharing Incentive Bonus Plan. For fiscal year 2023, the Committee also established the following Worldwide economic profit thresholds for each tier for our NEOs (and all Plan participants):

  39. Profit Sharing Incentive Bonus Plan Framework: Target Opportunities for NEOs

    | Worldwide Economic Profit Tiers | Economic Profit Threshold (in thousands) | NEO (CEO) Bonus Payout as % of Base Salary | | 1 | 73,178 | 100% (200%) | | 2 | 53,724 | 80% (175%) | | 3 | 31,782 | 60% (150%) | | 4 | 4,856 | 40% (100%) | | 5 | (10,763) | 20% (50%) | | 6 | (48,417) | 0% |

  40. Profit Sharing Incentive Bonus Plan Framework: Target Opportunities for NEOs

    Cash incentives earned under the Profit Sharing Incentive Bonus Plan for a particular fiscal year are accrued throughout the fiscal year, and earned and paid after the end of the fiscal year, unless local country requirements dictate otherwise. In the United States, annual incentives are earned and payable in August after the end of the fiscal year. This schedule varies in our global locations based on local pay practices and regulations. Except for provisions relating to retirement, death, permanent disability, and certain other circumstances described in a benefit plan, participants must be actively employed on each payment date to be eligible to earn and receive any unpaid installments. If a participant’s termination of employment is caused by retirement, death, disability, or certain other circumstances described in a participant’s employment agreement or benefit plan, the participant (or beneficiary, in the event of the participant’s death) will be entitled to receive all cash incentive payments for the previous fiscal year and a pro rata share for the current fiscal year, all to be paid in full within 2½ months after the end of our fiscal year.

  41. FY2023 Annual (Cash) Incentive Outcomes

    FY2023 Annual (Cash) Incentive Outcomes As discussed above, for fiscal year 2023, the maximum annual cash incentive opportunities were 200% of base salary for our CEO, with a target of 100%, and 100% for our other NEOs, with a target of 40%. Target performance for the Profit Sharing Incentive Bonus Plan falls between Worldwide economic profit tiers 3 and 4. The Personal Performance Incentive, which is up to 10% of base salary for each NEO, is additive to the annual cash incentive. As part of our employment offer to him, for fiscal year 2023 only, Mr. Phillips’s minimum annual cash incentive opportunity was equal to the greater of (i) 100% of his base salary or (ii) the Profit Sharing Bonus Plan Category 0 bonus, in either case prorated for his start date. This minimum payment was part of the inducement for Mr. Phillips to accept employment with us and applied only to fiscal year 2023, not any future years. In July 2023, after the end of the fiscal year, the Committee certified the economic profit that we achieved in fiscal year 2023 and approved the payment of the annual cash incentive. Our Worldwide economic profit in fiscal year 2023 was $18,254,000, which fell between profit tiers 3 and 4, resulting in a sliding scale, above target payout to our CEO of 125% and to our other NEOs of 50% or 60%. Each NEO also earned a Personal Performance Incentive payment. Final results were as follows:

  42. FY2023 Annual (Cash) Incentive Outcomes

    | | Phillips (1) | Croom | Korn | Thomson | Thyen | Charron (2) | | Maximum FY2023 cash incentive (% of base salary) | 200% (3) | 110% | 110% | 110% | 110% | 120% (3) | | Target FY2023 cash incentive (%) | 100% | 40% | 40% | 40% | 40% | 55% | | Awarded FY2023 Profit Sharing incentive (%) | 125% | 50% | 50% | 50% | 50% | 60% | | Awarded FY2023 Personal Performance incentive (%) | 0% (3) | 7% | 7% | 7% | 3% | 0% (3) | | Total Awarded FY2023 cash incentive (%) | 125% | 57% | 57% | 57% | 53% | 60% | | Total Awarded FY2023 cash incentive ($) | $339,183 | $236,068 | $268,580 | $177,007 | $184,195 | $— |

  43. Fiscal Year 2023 Long-Term (Equity) Incentives

    Fiscal Year 2023 Long-Term (Equity) Incentives

  44. Long-Term (Equity) Incentive Design

    Long-Term (Equity) Incentive Design The Company’s 2014 Stock Option and Incentive Plan (the “2014 Plan”) permits a variety of stock incentive benefits consisting of restricted stock, restricted share units, unrestricted share grants, incentive stock options, non-qualified stock options, stock appreciation rights, performance shares, and performance units. Under the 2014 Plan, no option or stock appreciation rights may be repriced, replaced, regranted through cancellation, repurchased for cash or other consideration, or modified without Share Owner approval (except in connection with a change in our capitalization) if the effect would be to reduce the exercise price for the shares underlying the award.

  45. Long-Term (Equity) Incentive Framework: Target Opportunities for NEOs

    Long-Term (Equity) Incentive Framework: Target Opportunities for NEOs The Committee calculates each grant value as a percentage of base salary for the NEOs and uses comparisons to pay levels of peer companies as a reference point to inform this equation. NEOs have no voting or dividend rights with respect to the shares granted until earned and awarded. We use the term “grant” to mean the number of shares that we have provided an employee the opportunity to earn if we attain our goals in a future performance period. We use the term “award” to mean the number of shares out of each grant that an employee earns based on our attainment of our goals in a prior performance period. When it awards performance shares, the Committee uses a formula to determine the number of shares from each grant the NEO would be eligible to earn after the three-year performance (vesting) period. The formula is a combination of our profitability based on our operating income over the performance period as defined in our operating business plans for the applicable fiscal years ended June 30 (“Operating Income Goal”) and our growth based on a comparison of our three-year Revenue CAGR to the EMS Industry’s three-year Revenue CAGR. The Profitability Attainment represents 60% of the total cliff-vested award, and the Growth Attainment represents 40% of the total cliff-vested award. The final percentages above are multiplied by those weights to reach the percentage of the total award that an NEO would be eligible to earn. The Committee approves the Company’s three-year strategic plan each year that contains the Operating Income Goal that serves as the denominator in the Profitability Attainment Percentage. The Committee applies the following formulas:

  46. Long-Term (Equity) Incentive Framework: Target Opportunities for NEOs

    | Profitability Attainment Percentage = | Operating income for the applicable fiscal years | | | Operating Income Plan |

  47. Long-Term (Equity) Incentive Framework: Target Opportunities for NEOs

    | Growth Attainment Percentage = | Company’s 3-year CY Revenue CAGR | | | EMS 3-year CY Revenue CAGR |

  48. FY2023 Long-Term (Equity) Incentives

    FY2023 Long-Term (Equity) Incentives For fiscal year 2023, the Committee granted to NEO’s 80% of the long-term incentives in performance share units and 20% in restricted shares, all issued under the 2014 Plan. The performance share unit awards vest, if at all, on the third anniversary of the grant date (after fiscal year 2025). The restricted shares vest (if at all) in annual installments over the succeeding three-year period. We have summarized these long-term incentives below:

  49. FY2023 Long-Term (Equity) Incentives

    | Type of Long-Term Incentive Vehicle | Proportion of Long-Term Incentive Grant | Vesting Schedules | Metrics (Weighting) | Rationale for Use of Incentive Vehicle | | Performance Share Units | 80% | Three-year cliff vesting | 1) Profitability Attainment (60%) 2) Growth Attainment (40%) | Ties a portion of long- term compensation directly to our profitability and our performance relative to our industry. | | Restricted Shares | 20% | 1/3 in three equal, annual installments | Continuous Service by the NEO (100%) | Aligns the interests of our NEOs with those of our Share Owners because the value of RSUs increases or decreases as the price of our stock changes. |

  50. FY2023 Long-Term (Equity) Incentives

    The Committee determined the number of shares to grant to each of our NEOs based on each NEO’s relative level of responsibilities within an overall projected total cost of the awards based on anticipated financial performance for the upcoming fiscal year, as well as on other subjective factors noted above in this section. The Committee also reviewed and approved the Company’s three-year operating plan for fiscal years 2023 through 2025, including our three-year Operating Income Goal that serves as the denominator in the Profitability Attainment measure for performance shares. The Committee emphasizes profitability on an absolute basis in the Profitability Attainment Goal for performance shares and vests restricted shares over a long-term horizon to remain consistent with our Guiding Principle that Profits are the ultimate measure and to ensure that long-term incentive compensation retains a strong link to Share Owner value: our employees share in a portion of the value we create for Share Owners only when we create such value. The Committee selected a relative measure for the performance shares’ Growth Attainment Goal to require us to outperform our industry for our NEOs to earn incentives above target. To avoid a gap in the vesting of equity awards due to the transition for fiscal year 2022 from performance share grants that vested annually in three equal installments to ones that vest after three years (after fiscal year 2024), the Committee also granted a bridge award for the fiscal year 2022-2023 performance periods. The bridge award for the fiscal year 2022-2023 performance period cliff vests (if earned) at the second anniversary of the grant.

  51. FY2023 Long-Term (Equity) Incentives

    | Long Term Incentive Performance Periods (vesting events in blue) | | | | | | | | | | FY21 | FY22 | FY23 | FY24 | FY25 | | | FY21-23 PSUs | Year 1 | Year 2 | Year 3 | | | | | FY22-23 Bridge | | Year 1 | Year 2 | | | | | FY22-24 PSUs | | Year 1 | Year 2 | Year 3 | | | | FY23-25 PSUs | | | Year 1 | Year 2 | Year 3 |

  52. FY2023 Long-Term (Equity) Incentives

    The change to a three-year cliff vesting period for performance shares reinforced the focus of our NEOs on our long-term success, and the resulting value it delivers to our Share Owners, by further aligning their personal financial success with that long-term success. In each case, the performance share grants set forth the number of shares of our stock that the participant was eligible to receive if we achieved the applicable profitability levels and sales growth goals for the fiscal years covered by the grant. Open Share Grant Periods: FY2023-2025 Performance and Restricted Shares, FY2022-2024 Performance Shares, FY2023-2026 CEO Equity Sign-On Inducement Grant The target number of Restricted Shares and Performance Shares granted to our NEOs under the 2014 Plan for the fiscal year 2022-2024 and 2023-2025 performance periods are listed below. The Committee first awarded both Restricted Shares and Performance Shares for the FY2023-2025 period. The Restricted Shares will vest, if at all, subject to the NEO’s continued service, in annual installments over the three-year period, beginning one year after grant. The Performance Shares will vest, if at all, following the end of the applicable performance period with the number of shares earned determined based on our performance against the profitability and growth goals set for the applicable performance period, subject to minimums as described in the section “Fiscal Year 2023 Executive Compensation Framework and Design” in this Proxy Statement.

  53. FY2022-2024 Performance Period Grants

    | Named Executive Officer | Target Opportunity (% of Base Salary) | Target Opportunity ($) | Performance Shares Granted (Target Number of Shares) (1) | | Richard D. Phillips (2) | | | | | Jana T. Croom | 75% | $276,000 | 11,789 | | Steven T. Korn | 93% | $391,530 | 16,724 | | Kathy R. Thomson | 67% | $183,580 | 7,841 | | Christopher J. Thyen | 60% | $195,600 | 8,355 | | Donald D. Charron | 194% | $1,404,560 | 59,998 |

  54. FY2023-2025 Performance Period Grants

    | Named Executive Officer | Target Opportunity (% of Base Salary) | Target Opportunity ($) | Performance Shares Granted (Target Number of Shares) (1) | Restricted Shares Granted (Number of Shares) (2) | | Richard D. Phillips (3) | 345% | $2,935,921 | 92,072 | 23,017 | | Jana T. Croom | 140% | $558,970 | 19,159 | 4,790 | | Steven T. Korn | 131% | $593,770 | 20,352 | 5,088 | | Kathy R. Thomson | 101% | $301,413 | 10,331 | 2,583 | | Christopher J. Thyen | 92% | $309,512 | 10,609 | 2,652 | | Donald D. Charron | 247% | $1,853,569 | 63,533 | 15,883 |

  55. FY2023-2026 CEO Equity Sign-On Inducement Grant

    | Company | % of PSUs | | TSR Percentile Rank | Awarded | | 75th or greater | 100% | | 50th | 50% | | 35th | 13% | | Below 35th | 0% |

  56. FY2023-2026 CEO Equity Sign-On Inducement Grant

    Performance results between percentile rank levels will be interpolated. The peer group companies identified in the CEO’s Equity Sign-On Inducement Grant agreement are Benchmark Electronics, Inc.; Celestica Inc.; CTS Corporation; Daktronics, Inc.; Flex Ltd.; Itron, Inc.; Jabil Inc.; Key Tronic Corporation; Methode Electronics, Inc.; OSI Systems, Inc.; Plexus Corp.; Powell Industries, Inc.; Preformed Line Products Company; Sanmina Corporation; and TTM Technologies, Inc.

  57. Completed Share Grant Periods: FY2023-25 1/3 Restricted Share Vesting Awards, FY2021-2023 1/3 Annual Vesting Awards, FY2022-2023 Bridge Award

    Completed Share Grant Periods: FY2023-25 1/3 Restricted Share Vesting Awards, FY2021-2023 1/3 Annual Vesting Awards, FY2022-2023 Bridge Award The Committee granted Restricted Shares in fiscal year 2023 for fiscal years 2023 through 2025 that consist of a long-term grant with one-third (1/3) of the award vesting (if at all) in annual installments over the succeeding three-year period. The first installment of these fiscal year 2023-2025 Restricted Share grants vested in August 2023. The Committee granted Performance Shares in fiscal year 2021 that pay out based on specific, pre-established performance goals tied to the creation of long-term value for our Share Owners. These Performance Shares consisted of a long-term grant with one-third (1/3) of the award vesting (if at all) in annual installments over the succeeding three-year period. The final third of these fiscal year 2021-2023 Performance Share grants vested in August 2023. For this Performance Share award, the Committee determined the number of shares of each annual installment the NEO would be eligible to earn by a combination of the three (3) year average Worldwide Category 1 bonus percentage (target of 40%) computed under our Profit Sharing Incentive Bonus Plan (“Bonus Plan”) for fiscal ended June 30, 2023 (“Bonus Percent”) and our growth based on a comparison of our three-year Revenue CAGR to the EMS Industry’s three-year Revenue CAGR. Our three-year Revenue CAGR for our calendar years 2020 through 2022 was 8.14%. The EMS Industry’s three-year Revenue CAGR for calendar years 2020 through 2022 was 7.50%. Accordingly, the Committee applied the following formula:

  58. FY2021-2023 1/3 Annual Vesting Awards

    | Profitability Attainment Percentage = | 50.3% (FY2021-23 Average Worldwide Category 1 bonus) | > = 40.0%, thus 100% | x 60.0% (weighting) = 60.0% |

  59. FY2021-2023 1/3 Annual Vesting Awards

    | Growth Attainment Percentage = | 8.14% (Company’s CY20-22 Revenue CAGR) | ‘= 108.5% | > 100%, thus 100% x 40.0% (weighting) = 40.0% payout | | | 7.50% (EMS CY20-22 Revenue CAGR) | | |

  60. FY2021-2023 1/3 Annual Vesting Awards

    As discussed above, to avoid a gap in the vesting of equity awards due to the transition from grants that vested annually in three equal installments to ones that vest after three years, in August 2021 we awarded our NEOs a bridge award for the fiscal year 2022-2023 performance period. This bridge award vested in August 2023. Our three-year Revenue CAGR for our calendar years 2020 through 2022 was 8.14%. The EMS Industry’s three-year Revenue CAGR for calendar years 2020 through 2022 was 7.50%. Accordingly, the Committee applied the following formula to this tranche:

  61. FY2022-2023 Bridge Award

    | Growth Attainment Percentage = | 8.14% (Company’s CY20-22 Revenue CAGR) | ‘= 108.5% | > 100%, thus 100% x 40.0% (weighting) = 40.0% payout | | | 7.50% (EMS CY20-22 Revenue CAGR) | | |

  62. FY2022-2023 Bridge Award

    | | Weight | FY21-23 Period Payout | FY22-23 Bridge Award Payout | | Profitability Attainment | 60.0% | 60.0% | 53.0% | | Growth Attainment | 40.0% | 40.0% | 43.4% | | Total Attainment in FY23 | 100.0% | 100.0% | 96.4% |

  63. FY2022-2023 Bridge Award

    | Named Executive Officer | Performance Shares Awarded for FY21-23 Period | Performance Shares Awarded for FY22 Bridge Period | Restricted Shares Awarded for FY23 Period | Aggregate Award Value (number of shares) | Aggregate Award Value ($) (1) | | Richard D. Phillips (2) | — | — | — | — | $— | | Jana T. Croom (3) | — | 7,576 | 1,597 | 9,173 | $267,806 | | Steven T. Korn | 8,915 | 10,747 | 1,696 | 21,358 | $623,547 | | Kathy R. Thomson | 4,046 | 5,038 | 861 | 9,945 | $290,344 | | Christopher J. Thyen | 4,752 | 5,369 | 884 | 11,005 | $321,291 | | Donald D. Charron (4) | 23,433 | 32,147 | 3,524 | 59,104 | $1,725,541 |

  64. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation Because the IRC limits the benefit value that may be contributed to and paid from a tax-qualified retirement plan, we also provide our NEOs, and other key employees deemed to be highly compensated under the IRC with additional retirement benefits intended to restore amounts that would otherwise be payable under our tax-qualified retirement plans if the IRC did not have limits on includable compensation and maximum benefits. These employees are eligible to participate in a fully funded, nonqualified, Supplemental Employee Retirement Plan (“SERP”) under which we contribute to the account of each participant an amount equal to the required reduction in their Company contribution under the 401(k) Retirement Plan. The object of the SERP is to restore total executive retirement benefits to the same percentage level provided to our salaried employees who are not limited by the IRC restrictions. In addition to Company contributions, participants may voluntarily defer up to 50% of their eligible compensation under the SERP. A participant’s deferrals are fully vested. Company contributions vest immediately and are made within 2½ months after the end of the fiscal year.

  65. Employment and Severance Arrangements

    Employment and Severance Arrangements We do not have employment agreements with our NEOs; each of them is employed at will. However, we believe that it is appropriate to provide severance pay to an NEO when we involuntarily terminate the executive’s employment without “cause,” and in some cases when the executive voluntarily terminates their employment for “good reason” (each as defined in the Plan), to provide income replacement that will allow the executive to focus on our long-term strategic priorities throughout their employment. Accordingly, all of our NEOs, participate in the Kimball Electronics, Inc. Executive Severance and Change in Control Plan (the “Severance Plan”). The Plan contains a “double trigger” arrangement for change in control benefits – i.e., severance benefits under these arrangements are only triggered by a qualifying event that also results in the executive’s termination of employment under certain specific circumstances within 24 months following the event. Likewise, unless the Board decides otherwise, upon a change in control, the vesting of otherwise unvested equity awards will accelerate only upon the occurrence of a termination of employment in connection with the change in control. The Plan does not provide for any excise tax gross ups imposed as a result of severance or other payments deemed made in connection with a change of control. See the section “Employment Agreements with NEOs and Potential Payments upon a Termination or Change in Control” of this Proxy Statement, which describes the payments to which our NEOs may be entitled under the Severance Plan.

  66. Timing of Equity Award Grants

    Timing of Equity Award Grants The Talent, Culture, and Compensation Committee does not grant or otherwise authorize equity compensation in anticipation of the release of material nonpublic information. We make the grants and awards of our common stock after each fiscal year described above only after (1) a public announcement of our earnings release for that fiscal year and (2) enough time has elapsed for the market to respond to that public announcement. Similarly, we do not time the release of material nonpublic information based on equity award grant dates.

  67. Clawback Policy

    The Board believes that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company. In addition, the TCC Committee believes that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks. With the assistance of the Company’s internal audit team, for fiscal year 2023, the Committee extensively reviewed the elements of executive compensation to determine whether any portion of executive compensation encouraged excessive risk taking and concluded that the compensation program does not incentivize unnecessary or excessive risk taking. The base salary component of compensation does not encourage risk-taking because it is a fixed amount. The short-term and long-term incentive plan awards have these risk-limiting characteristics: •Our compensation programs rely primarily on pre-established Company-wide operational and market-relative metrics that apply equally to all executive officers to minimize the incentive to produce any particular outcome, to encourage a unified and responsible approach to achieving our goals, and to diversify the risk associated with any single aspect of Company or executive performance; •Overlapping performance periods for incentive plan awards limit the impact of short-term business performance or share price fluctuations on final plan outcomes; •We do not grant stock options, which may provide an asymmetrical incentive to take unnecessary or excessive risks to increase the price of our common stock; •Members of our independent Talent, Culture, and Compensation Committee approve all compensation targets, certification of target achievement, and authorization of payments to executive officers, and no executive officer participates in deliberations about or approvals of their own compensation. •Cash and stock incentive awards are capped at a percentage of the target incentive award; •Equity awards are delivered in shares of Company common stock with multi-year vesting schedules or performance periods, which aligned the interests of our executive officers to long-term Share Owner interests; •Incentive awards are subject to our clawback policy; and •Our robust equity ownership guidelines discourage excessive risk taking. Furthermore, as described under “Compensation Discussion and Analysis — Compensation Philosophy and Governance,” compensation decisions are not purely formulaic and include subjective analysis by the Committee, which mitigates the influence of purely objective calculations on excessive risk taking. The TCC Committee reviews the Company’s compensation policies and practices on an annual basis to consider how effectively the policies and practices are providing incentives at an appropriate level of risk to executive employees.

  68. Summary Compensation Table

    Summary Compensation Table The Summary Compensation Table appearing below sets forth information regarding the compensation paid and/or awarded to our Chief Executive Officer, Chief Financial Officer, and the three other most highly compensated executive officers for or during the years ended June 30, 2023, 2022, and 2021. These officers are referred to herein as our “named executive officers,” or “NEOs.” The Summary Compensation Table contains values calculated and disclosed according to SEC reporting requirements. The “Stock Awards” column reflects awards with a grant date during each fiscal year.

  69. Summary Compensation Table

    | | | Salary | Stock Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | Name and Principal Position | Year | ($) | ($) (1) | ($) (2) | ($) (3) | ($) | | Richard D. Phillips (4) | 2023 | $271,346 | $3,655,447 | $339,183 | $27,799 | $4,293,775 | | Chief Executive Officer | | | | | | | | Jana T. Croom (5) | 2023 | $414,154 | $558,970 | $236,068 | $26,807 | $1,235,999 | | Chief Financial Officer | 2022 | $366,731 | $551,938 | $124,688 | $75,608 | $1,118,965 | | Steven T. Korn | 2023 | $471,192 | $593,770 | $268,580 | $34,396 | $1,367,938 | | Chief Operating Officer | 2022 | $419,231 | $782,994 | $142,538 | $28,553 | $1,373,316 | | | 2021 | $373,007 | $365,604 | $249,915 | $25,878 | $1,014,404 | | Kathy R. Thomson (5) | 2023 | $310,539 | $301,413 | $177,007 | $21,298 | $810,257 | | Chief Commercial Officer | 2022 | $272,548 | $367,092 | $92,666 | $21,149 | $753,455 | | Christopher J. Thyen | 2023 | $347,539 | $309,512 | $184,195 | $24,913 | $866,159 | | Vice President, New Platforms | 2022 | $325,378 | $391,181 | $110,629 | $24,287 | $851,475 | | | 2021 | $309,538 | $194,880 | $207,390 | $56,579 | $768,387 | | Donald D. Charron (6) | 2023 | $538,423 | $— | $— | $837,023 | $1,375,446 | | Former Chairman of the Board and Chief Executive Officer | 2022 | $723,452 | $2,809,083 | $318,319 | $55,405 | $3,906,259 | | | 2021 | $709,752 | $1,443,443 | $546,509 | $39,850 | $2,739,554 |

  70. Summary Compensation Table

    (1) Stock awards consist of restricted shares and performance shares, including the Equity Sign-On Inducement Grant for Mr. Phillips. The compensation reported in the table above represents targeted performance share compensation for each of our NEOs, which does not reflect compensation received or earned by the NEOs in the respective years. The amounts included above represent the value at the respective grant dates. The assumptions used to calculate the grant date fair values are set forth in Note 9 - Stock Compensation Plans to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023. (2) Amounts consist of cash incentive compensation earned for services rendered in the applicable fiscal year. The amounts are earned and payable in August after the end of the fiscal year. (3) Includes benefits received by the NEOs from Company contributions earned for the 401(k) Retirement Plans and SERP plans. SERP and 401(k) Retirement Plan Company contribution amounts earned for fiscal year 2023 for Mr. Phillips, Ms. Croom, Mr. Korn, Ms. Thomson, Mr. Thyen, and Mr. Charron were $27,799, $26,807, $34,396, $21,298, $24,913, and $34,459, respectively. (4) Mr. Phillips began his employment with the Company on March 1, 2023. (5) Ms. Croom and Ms. Thomson first became NEOs in fiscal year 2022. (6) Mr. Charron retired from his position effective February 28, 2023. Upon his retirement, the Talent, Culture, and Compensation Committee approved a benefits package to prorate his stock awards and non-equity incentive plan compensation for his time of service during the fiscal year consistent with the definitions of “Retirement” in the Company’s 2023 Profit Sharing Bonus Plan and the 2023 Equity Incentive Plan. The benefits package is included in the All Other Compensation column above. See the “Compensation Discussion and Analysis” section in this Proxy Statement for further information about the material terms of the NEOs’ compensation plans.

  71. Grants of Plan-Based Awards in Fiscal Year 2023

    Grants of Plan-Based Awards in Fiscal Year 2023

  72. Grants of Plan-Based Awards in Fiscal Year 2023

    | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: Number of Shares of Stock or Units (3) | Grant Date Fair Value of Stock and Option Awards (4) | | | Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Name | Date | ($) | ($) | ($) | (#) | (#) | (#) | | ($) | | Richard D. Phillips | | | | | | | | | | | Profit Sharing Incentive Bonus Plan | | $— | $271,346 | $542,692 | | | | | | | Long-Term Performance Shares (5) | 03/01/23 | | | | 27,622 | 92,072 | 115,090 | | $2,348,757 | | Equity Sign-On Inducement Shares | 03/01/23 | | | | 5,328 | 42,626 | 42,626 | | $719,527 | | Restricted Shares | 03/01/23 | | | | | | | 23,017 | $587,164 | | Jana T. Croom | | | | | | | | | | | Profit Sharing Incentive Bonus Plan | | $— | $165,662 | $414,154 | | | | | | | Long-Term Performance Shares | 08/19/22 | | | | 5,748 | 19,159 | 23,949 | | $447,171 | | Restricted Shares | 08/19/22 | | | | | | | 4,790 | $111,799 | | Steven T. Korn | | | | | | | | | | | Profit Sharing Incentive Bonus Plan | | $— | $188,477 | $471,192 | | | | | | | Long-Term Performance Shares | 08/19/22 | | | | 6,106 | 20,352 | 25,440 | | $475,016 | | Restricted Shares | 08/19/22 | | | | | | | 5,088 | $118,754 | | Kathy R. Thomson | | | | | | | | | | | Profit Sharing Incentive Bonus Plan | | $— | $124,215 | $310,539 | | | | | | | Long-Term Performance Shares | 08/19/22 | | | | 3,099 | 10,331 | 12,914 | | $241,126 | | Restricted Shares | 08/19/22 | | | | | | | 2,583 | $60,287 | | Christopher J. Thyen | | | | | | | | | | | Profit Sharing Incentive Bonus Plan | | $— | $139,015 | $347,539 | | | | | | | Long-Term Performance Shares | 08/19/22 | | | | 3,183 | 10,609 | 13,261 | | $247,614 | | Restricted Shares | 08/19/22 | | | | | | | 2,652 | $61,898 | | Donald D. Charron | | | | | | | | | | | Profit Sharing Incentive Bonus Plan | | $— | $269,212 | $592,266 | | | | | | | Long-Term Performance Shares | 08/19/22 | | | | 19,060 | 63,533 | 79,416 | | $1,482,860 | | Restricted Shares | 08/19/22 | | | | | | | 15,883 | $370,709 |

  73. Grants of Plan-Based Awards in Fiscal Year 2023

    (1) Represents potential cash incentive payments under the Profit Sharing Incentive Bonus Plan with respect to fiscal year 2023 performance. The awards do not contain minimum thresholds. The target amount is determined based on a payout at the Tier 4 level (100% for Mr. Phillips, 50% for Mr. Charron, 40% for other NEOs) of base salary. See the column captioned “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table for the actual payout amounts under the profit sharing incentive bonus plan for fiscal year 2023 performance. See “Compensation Discussion and Analysis — Compensation Philosophy, Governance, and Framework — Compensation Framework — Annual (Cash) Incentive Framework” for additional information regarding the terms of the Plan. (2) Represents equity incentive plan awards to be issued (if at all, for performance shares) pursuant to the 2014 Stock Option and Incentive Plan. These equity incentive plan awards consist of performance shares and restricted shares. The threshold is not a minimum amount payable or awardable. If the specified performance objectives are not met for the applicable performance period, no amount would be payable or awardable for that performance period. See “Compensation Discussion and Analysis — Compensation Philosophy, Governance, and Framework — Compensation Framework — Long-Term (Equity) Incentive Framework” for additional information regarding the terms of performance share and restricted share awards. (3) Amounts represent the number of restricted shares granted to our NEOs on August 19, 2022. The restricted shares granted will vest in three equal annual installments. (4) Amounts represent the grant date fair value of the target number of performance shares granted as well as the grant date fair value of the restricted shares calculated using the closing price of the Company’s Common Stock of $23.34 (with the exception of Mr. Phillips discussed below) as reported by Nasdaq on the grant date of August 19, 2022. The assumptions used to calculate the grant date fair values are set forth in Note 9 - Stock Compensation Plans to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023. (5) Mr. Phillips began his employment with the Company on March 1, 2023. Therefore, the awards were granted to him on March 1, 2023. The grant date fair value of the performance and restricted shares is derived using the closing price of the Company’s Common Stock of $25.51 at that date as reported by Nasdaq. Additionally, the Equity Sign-On Inducement Grant to Mr. Phillips is based on market conditions and had a grant date fair value of $16.88. Mr. Phillips will earn from 0% to 100% of the target award based on the total shareholder return ranking of the Company compared to the performance peer group at the end of the three year performance period.

  74. Outstanding Equity Awards at Fiscal Year End 2023

    Outstanding Equity Awards at Fiscal Year End 2023 The following table presents information about outstanding share awards held by our NEOs as of June 30, 2023. The table shows information about: (i) Restricted Share Awards and (ii) Performance Share Awards.

  75. Outstanding Equity Awards at Fiscal Year End 2023

    | | Stock Awards | | | | | | (i) Number of Shares or Units of Stock That Have Not Vested | (i) Market Value of Shares or Units of Stock That Have Not Vested | (ii) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | (ii) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | Name | (#) (1) | ($) (2) | (#) (3) | ($) (4) | | Richard D. Phillips | 23,017 | $635,960 | 134,698 | $3,721,706 | | Jana T. Croom | 4,790 | $132,348 | 38,807 | $1,072,237 | | Steven T. Korn | 5,088 | $140,581 | 57,140 | $1,578,778 | | Kathy R. Thomson | 2,583 | $71,368 | 27,445 | $758,305 | | Christopher J. Thyen | 2,652 | $73,275 | 29,286 | $809,172 | | Donald D. Charron (5) | 15,883 | $438,847 | 198,727 | $5,490,827 |

  76. Outstanding Equity Awards at Fiscal Year End 2023

    (1) Vests in equal installments over three years from the date of the grant (January 4, 2023 for Mr. Phillips and August 19, 2022 for our other NEOs). (2) The market value is the number of shares shown in the table multiplied by $27.63, the closing market price of our common stock on June 30, 2023. (3) Unearned and unvested equity incentive plan awards consist of the following:

  77. Outstanding Equity Awards at Fiscal Year End 2023

    | | Stock Award and Initial Award Date | | | | | Name | LTPS 3/1/2023 | LTPS 8/19/2022 | LTPS 8/24/2021 | LTPS 8/24/2020 | | Richard D. Phillips | | | | | | Shares (#) | 134,698 | — | — | — | | Vesting Date(s) | (a) | | | | | Jana T. Croom | | | | | | Shares (#) | | 19,159 | 19,648 | — | | Vesting Date(s) | | (b) | (c) | | | Steven T. Korn | | | | | | Shares (#) | | 20,352 | 27,873 | 8,915 | | Vesting Date(s) | | (b) | (c) | 8/24/2023 | | Kathy R. Thomson | | | | | | Shares (#) | | 10,331 | 13,068 | 4,046 | | Vesting Date(s) | | (b) | (c) | 8/24/2023 | | Christopher J. Thyen | | | | | | Shares (#) | | 10,609 | 13,925 | 4,752 | | Vesting Date(s) | | (b) | (c) | 8/24/2023 | | Donald D. Charron | | | | | | Shares (#) | | 63,533 | 99,996 | 35,198 | | Vesting Date(s) | | (b) | (c) | 8/24/2023 |

  78. Outstanding Equity Awards at Fiscal Year End 2023

    (a)Mr. Phillips began his employment with the Company on March 1, 2023. His outstanding performance shares reported in the table above are comprised of 92,072 performance shares expected to cliff vest three years from the grant date and 42,626 shares of his Equity Sign-On Inducement Grant expected to vest, if at all, three years from the grant date. (b)Awards are expected to cliff vest three years from the grant date. (c)These awards include two remaining annual vesting dates beginning, with the 2022-2023 performance period bridge awards vesting on or about 8/24/2023 and the three-year cliff awards vesting 8/24/2024. (4) Calculated using the $27.63 closing price of KE Common Stock as reported by Nasdaq on June 30, 2023. (5) Mr. Charron retired from his position effective February 28, 2023. Upon his retirement, the TCC Committee approved a benefits package to prorate his stock awards and non-equity incentive plan compensation for his time of service during the fiscal year consistent with the definitions of “Retirement” in the Company’s 2023 Profit Sharing Bonus Plan and the 2023 Equity Incentive Plan. Accordingly, his unvested shares will vest, if at all, and be prorated for his time of service during the vesting period following the end of the applicable performance periods.

  79. Option Exercises and Stock Vested in Fiscal Year 2023

    Option Exercises and Stock Vested in Fiscal Year 2023 This table provides information on an aggregate basis about stock awards that vested during the fiscal year ended June 30, 2023 for each of our NEOs. Kimball Electronics has not granted stock options since becoming a public company in 2014. No NEOs held any Kimball Electronics stock options during the fiscal year.

  80. Option Exercises and Stock Vested in Fiscal Year 2023

    | | Stock Awards | | | | Number of Shares Acquired on Vesting (#) (1) | Value Realized on Vesting ($) (2) | | Name | | | | Richard D. Phillips (3) | — | $— | | Jana T. Croom | 1,881 | $44,100 | | Steven T. Korn | 13,217 | $309,873 | | Kathy R. Thomson | 6,866 | $160,973 | | Christopher J. Thyen | 8,313 | $194,898 | | Donald D. Charron | 54,514 | $1,278,081 |

  81. Option Exercises and Stock Vested in Fiscal Year 2023

    (1)Shares acquired upon vesting during fiscal year 2023 include tranches of prior years’ LTPS awarded on August 24, 2021 and issued on August 19, 2022. Shares have not been reduced by the following shares withheld to satisfy tax withholding obligations for Mr. Charron, Ms. Croom, Mr. Korn, Ms. Thomson, and Mr. Thyen of 23,867 shares, 822 shares, 5,782 shares, 3,219 shares, 3,633 shares, respectively. (2)The value realized is calculated by multiplying the average of the high and low price of our Common Stock as reported by Nasdaq on the August 19, 2022 vesting date of $23.45 by the number of shares that vested. (3)Mr. Phillips began his employment with the Company on March 1, 2023. He was not employed on the dates when performance shares were granted.

  82. Nonqualified Deferred Compensation in Fiscal Year 2023

    Nonqualified Deferred Compensation in Fiscal Year 2023

  83. Nonqualified Deferred Compensation in Fiscal Year 2023

    | | Executive Contributions in Last FY | Registrant Contributions in Last FY | Aggregate Earnings in Last FY | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE | | Name | ($) (1) | ($) (2) | ($) (3) | ($) | ($) (4) | | Richard D. Phillips | $— | $— | $— | $— | $— | | Jana T. Croom | $— | $8,762 | $833 | $— | $9,595 | | Steven T. Korn | $30,687 | $14,566 | $152,459 | $— | $1,134,992 | | Kathy R. Thomson | $— | $4,959 | $513 | $— | $6,285 | | Christopher J. Thyen | $— | $9,111 | $231,910 | $— | $2,044,955 | | Donald D. Charron | $— | $38,598 | $145,181 | $— | $3,828,387 |

  84. Nonqualified Deferred Compensation in Fiscal Year 2023

    (1)These amounts are included in the fiscal year 2023 amounts in the “Salary” column of the Summary Compensation Table. (2)Represents Company contributions paid in September 2022, which are included in the fiscal year 2022 amounts in the “All Other Compensation” column of the Summary Compensation Table. (3)Earnings do not represent above-market or preferential rates and are not included in the Summary Compensation Table for fiscal year 2023 or prior years. (4)The Aggregate Balance is the balance in the NEO’s SERP account as of June 30, 2023. The balance includes executive contributions in fiscal year 2023 and prior fiscal years, which are included in the “Salary” column of the Summary Compensation Table. The balance also includes Company contributions in fiscal year 2023 and prior fiscal years, which are included in the “All Other Compensation” column of the Summary Compensation Table. As of June 30, 2023, all of our NEO’s are fully vested in the SERP plan. Activity disclosed in the table above relates solely to the SERP which is our only nonqualified deferred compensation arrangement for NEOs. Payments of a participant’s elective deferrals and Company contributions are made as elected by the participant in lump sum or in installment payments over a period of 5 or 10 years commencing upon retirement or termination of employment, whichever occurs first. These amounts may be paid earlier in the event of death of the participant or an unforeseen emergency affecting the participant as determined by the committee appointed to administer the SERP. The SERP is intended to promote retention by providing a long-term savings opportunity on a tax-efficient basis. The assets of the SERP are held in a grantor trust, commonly referred to as a “rabbi trust” arrangement. This means that the assets of the SERP are subject to the claims of our general creditors in the event of our insolvency.

  85. Employment Agreements with NEOs and Potential Payments Upon Termination or Change-In-Control

    Employment Agreements with NEOs and Potential Payments Upon Termination or Change-In-Control Our NEOs do not have employment agreements. However, we believe that it is appropriate to provide severance pay to an NEO when we involuntarily terminate their employment without “cause,” and, in some cases, when the executive voluntarily terminates their employment for “good reason” (each as defined in the Kimball Electronics, Inc. Executive Severance and Change in Control Plan (the “Severance Plan”)), to provide income replacement that will allow the executive to focus on our long-term strategic priorities throughout their employment. We believe the level of severance provided by the Plan is consistent with the practices of our compensation peer group and is necessary to attract and retain our key executives. Each of our NEOs are participants in the Severance Plan, which provides for severance upon a Qualifying Termination that consists of salary continuation, health coverage, a cash bonus payout, outstanding equity vesting, and outplacement benefits. The amount of the benefits varies by the executive’s position and whether the severance is a result of a termination due to a change in control, as that event is defined by the Severance Plan. Benefits under the Severance Plan are subject to the NEO’s timely execution and non-revocation of a waiver and release of claims. Severance Plan participants are required to comply with certain restrictive covenants and intellectual property assignment provisions, including obligations to uphold confidentiality, refrain from unfair and unlawful competition, and to abstain from soliciting our employees, customers, and clients for twelve months following a Qualifying Termination. Executives are also generally bound by any similar agreement they previously executed. The Severance Plan does not provide for any gross ups for excise taxes imposed as a result of severance or other payments deemed made in connection with a change of control and contains a double trigger for such payments. The Severance Plan’s double-trigger ensures the Company will become obligated to make change in control payments only if the executive is actually or constructively discharged as a result of the change in control. The Severance Plan is an unfunded employee welfare plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and is not a qualified plan under the IRC. As an unfunded plan, all benefits are paid out of the general assets of the Company and no participant will have any greater claim to any asset than other general creditors. We have not set aside or held any funds in trust to secure the benefits offered to participants under the Severance Plan. The following table and accompanying notes show the estimated payments and benefits that would have been provided to each NEO pursuant to our Severance Plan. For eligible Participants, including each of our NEOs, the Severance Plan generally provides for severance benefits in the event of a “Qualifying Termination” of the NEO’s employment (as defined in the Severance Plan to include a termination without “Cause” or a resignation for “Good Reason,” or a termination in connection with the consummation of a Change in Control). Pursuant to the Severance Plan, an NEO who incurs a Qualifying Termination would be entitled to receive severance payments equal to between 6 months (for a Tier III Executive) and 12 months of their Base Salary (for our CEO, a Tier 1 Executive), a Bonus Amount equal to a percentage of the higher of their target cash incentive in the termination year or the average annual cash incentive for the previous three years prior to the termination year, reimbursement of up to $25,000 of outplacement services, and, for eligible U.S. employees, a COBRA subsidy for a period of up to 12 months following a qualifying separation. The amounts are doubled in the event of a Qualifying Termination during a Change in Control Protection Period, as those terms are defined in the Severance Plan. The amounts shown below assume that such termination would have been effective as of June 30, 2023, and thus includes amounts earned through such time and estimates of the amounts that would have been paid to the NEOs upon their termination. The actual amounts to be paid under the Severance Plan can only be determined at the time of such NEO’s separation from the Company and could therefore be more or less than the amounts set forth below. Mr. Charron retired from his position as Chairman and Chief Executive Officer effective February 28, 2023. Therefore, under the terms of the Severance Plan, he was not eligible for Severance Plan benefits.

  86. Employment Agreements with NEOs and Potential Payments Upon Termination or Change-In-Control

    | Name | Change in Control and Qualifying Termination | Qualifying Termination | Other Termination (3) | | Richard D. Phillips | | | | | Cash Payments (1) | $4,795,902 | $1,789,320 | $— | | Equity Awards (2) | $4,357,665 | $1,166,155 | $— | | TOTAL | $9,153,567 | $2,955,475 | $— | | Jana T. Croom | | | | | Cash Payments (1) | $1,793,717 | $712,000 | $— | | Equity Awards (2) | $1,204,585 | $1,113,099 | $— | | TOTAL | $2,998,302 | $1,825,099 | $— | | Steven T. Korn | | | | | Cash Payments (1) | $1,994,053 | $763,555 | $— | | Equity Awards (2) | $1,719,360 | $1,143,534 | $— | | TOTAL | $3,713,413 | $1,907,089 | $— | | Kathy R. Thomson | | | | | Cash Payments (1) | $1,518,535 | $621,000 | $— | | Equity Awards (2) | $829,674 | $543,464 | $— | | TOTAL | $2,348,209 | $1,164,464 | $— | | Christopher J. Thyen | | | | | Cash Payments (1) | $1,430,705 | $588,760 | $— | | Equity Awards (2) | $882,447 | $585,694 | $— | | TOTAL | $2,313,152 | $1,174,454 | $— | | Donald D. Charron (4) | | | | | Lump Sum | $— | $— | $— | | Equity Awards | $— | $— | $— | | TOTAL | $— | $— | $— |

  87. Employment Agreements with NEOs and Potential Payments Upon Termination or Change-In-Control

    (1)Payment is calculated based on executive’s annual base salary as of June 30, 2023 plus cash incentive compensation at the target level. The amounts include severance, benefits allowance, and outplacement reimbursement. The Severance Plan does not gross up benefits or reimburse participants for federal excise taxes on change-in-control payments or for tax liabilities due under Section 409A of the IRC, if any. (2)Represents the value of unvested equity awards. In a change in control, the vesting would accelerate as a result of the specified event of termination. Under a qualifying termination other than a change in control, vesting will be based on actual performance pursuant to the terms of the equity awards and prorated based on the number of days worked during such performance period. Equity awards are valued by multiplying $27.63, the closing price of the Company’s Common Stock as reported by Nasdaq on June 30, 2023, by the number of unvested shares that would vest upon the specified event of termination. (3)An “Other Termination” is a termination of employment for any reason other than a Qualifying Termination under the Severance Plan, including, without limitation, termination of employment for Cause, retirement, death, or disability; or a voluntary resignation by the NEO. (4)Mr. Charron retired from his position effective February 28, 2023. Upon his retirement, the TCC Committee approved a benefits package to prorate his stock awards and non-equity incentive plan compensation for his time of service during the fiscal year consistent with the definitions of “Retirement” in the Company’s 2023 Profit Sharing Bonus Plan and the 2023 Equity Incentive Plan. The terms of the package are included in the Summary Compensation Table section of this Proxy Statement. The amounts shown in the table above do not include payments and benefits to the extent they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include accrued salary, health benefits, and distribution of account balances under the Retirement Plan. Also excluded from the table above are amounts for payments of fully vested SERP contributions and balances which can be found in the table in the “Executive Compensation — Nonqualified Deferred Compensation” section in this Proxy Statement. As of June 30, 2023, all of our NEOs were fully vested in the SERP plan.

  88. CEO Pay Ratio

    CEO Pay Ratio In accordance with Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and Item 402(u) of Regulation S-K (“Item 402(u)”), we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee. This pay ratio is a reasonable estimate calculated based on the SEC rules and our payroll and employment records using the methodology described below. In calculating the pay ratio, SEC rules allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations. Therefore, our reported pay ratio may not be comparable to that reported by other companies due to differences in industries, scope of international operations, business models and scale, as well as the different estimates, assumptions, and methodologies applied by other companies in calculating their respective pay ratios. As of June 30, 2023, we employed approximately 7,900 employees worldwide that meet the definition of employee under Item 402(u), other than our CEO. We determined our median employee by reviewing the annualized base salaries as of June 30, 2023 of our considered population, which excludes our CEO, plus their target incentive compensation for the fiscal year ended June 30, 2023. For employees located outside the U.S., their compensation was converted to U.S. dollars using the spot exchange rate as of June 30, 2023. The median employee was determined to be a production operator employee located outside the U.S. The total compensation of the median employee for fiscal year 2023 was $11,538. The average foreign exchange rate for fiscal year 2023 was used to convert the median employee’s actual fiscal year 2023 compensation into U.S. dollars. We have selected the option to calculate the total compensation of our CEO at June 30, 2023, the date we use to identify the median employee. The total compensation of our CEO was $5,651,344 for fiscal year 2023, as set forth in the Summary Compensation Table for Mr. Phillips and annualized for a full year of service. The ratio of our CEO’s total compensation to our median employee’s total compensation for fiscal year 2023 was 490:1. The CEO Pay Ratio was based on the fiscal year 2023 total compensation of our median employee, determined in the same manner and using the same methodology used to determine the “Total Compensation” shown for our CEO in the Summary Compensation Table. The elements included in the CEO’s total compensation are fully discussed above in the footnotes to the Summary Compensation Table. To set some context for the above CEO pay ratio, as a large global manufacturing company, the nature of our operations relies significantly on employees outside the United States. Of the 7,900 employees included in our analysis, approximately 80% are located outside the United States. The compensation elements and pay levels of our employees differ from country to country based on market trends as well as fluctuations in currency exchange rates. We regularly conduct competitive market pay analysis in all of the countries in which we operate in to ensure we are competitive with local market practices.

  89. Pay versus Performance of our NEOs

    Pay versus Performance of our NEOs

  90. Compensation Actually Paid

    Compensation Actually Paid As outlined in the CD&A above, the TCC Committee has implemented an executive compensation program that prioritizes performance and aims to align employee and Share Owner interests. The Pay vs. Performance disclosure below provides a snapshot of pay and performance alignment by evaluating the link between Compensation Actually Paid, as defined by the SEC (“CAP”), and measures of market and financial performance. The following table sets forth additional compensation information for our principal executive officer (PEO) and our non-PEO named executive officers (Non-PEO NEOs), calculated in accordance with Item 402(v) of Regulation S-K, for fiscal years 2023, 2022, and 2021.

  91. Pay versus Performance Table

    Pay versus Performance Table

  92. Pay versus Performance Table

    | | Summary Compensation Table Total | | Compensation Actually Paid | | | | Value of Initial Fixed $100 | | | | | | for First PEO | for Second PEO | to First PEO | to Second PEO | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | Total Shareholder Return | Peer Group Total Shareholder Return | Net Income | Operating Income Margin | | Year | ($) (1) | ($) (2) | ($) (1) | ($) (2) | ($) (3) | ($) (3) | ($) (4) | ($) (4) | ($) (5) | (6) | | 2023 | $4,293,775 | $1,375,446 | $4,697,655 | $1,415,198 | $1,070,088 | $1,333,526 | $204.06 | $161.02 | $55,831,000 | 4.8% | | 2022 | $— | $3,906,259 | $— | $3,020,432 | $991,889 | $879,149 | $148.45 | $142.71 | $31,253,000 | 3.9% | | 2021 | $— | $2,739,554 | $— | $3,952,035 | $869,216 | $1,075,397 | $160.56 | $165.48 | $56,791,000 | 5.1% |

  93. Pay versus Performance Table

    (1) On March 1, 2023, Mr. Phillips (the “First PEO”) began his employment as our Chief Executive Officer. (2) On February 28, 2023, Mr. Charron (the “Second PEO”) retired from his position as our Chief Executive Officer. (3) During 2023, our remaining NEOs consisted of the following: Ms. Croom, Mr. Korn, Ms. Thomson, and Mr. Thyen. During 2022, our remaining NEOs consisted of the following: Ms. Croom, Mr. Korn, Ms. Thomson, Mr. Thyen, and Mr. John Kahle. During 2021, our remaining NEOs consisted of the following: Mr. Michael Sergesketter, Mr. Kahle, Mr. Korn, and Mr. Thyen. (4) Total shareholder return (TSR) in the table above is calculated based on the assumption that $100 is invested in the Company’s stock and the Russell 2000 Electronic Components Subindex at the closing market prices on June 30, 2020 and that dividends, if any, are reinvested. The Russell 2000 Electronic Components Subindex is the same peer group we use in reporting the performance graph in our Annual Report on Form 10-K. (5) Reflects the net income reported in the Company’s Consolidated Statements of Income from the Annual Report on Form 10-K for each year ended June 30, 2023, 2022, and 2021. (6) Operating Income Margin is considered the Company’s most important financial performance measure and is reflected in the table above as the Company-Selected Measure.

  94. Pay versus Performance Table

    | | Richard D. Phillips | | | 2023 | | Total Compensation as reported in the Summary Compensation Table | $4,293,775 | | Less: Reported Value of Equity Awards | $(3,655,447) | | Plus: Total Value of Unvested Awards Granted during the Fiscal Year | $4,059,327 | | Compensation Actually Paid | $4,697,655 |

  95. Pay versus Performance Table

    The equity awards reportable for Mr. Phillips above consisted of performance shares, restricted shares, and an Equity Sign-On Inducement Grant, all of which are reported in the Summary Compensation Table at grant date fair value. In order to calculate the Compensation Actually Paid, the equity awards must be revalued at each fiscal year end. The performance shares were revalued based on updated performance metrics and the Company’s stock price as of each reportable fiscal year end. The restricted shares were revalued based on the Company’s stock price as of each reportable fiscal year end. The Equity Sign-On Inducement Grant was revalued using a Monte Carlo simulation as of each reportable fiscal year end.

  96. Pay versus Performance Table

    | | Donald D. Charron | Donald D. Charron | Donald D. Charron | | | 2023 | 2022 | 2021 | | Total Compensation as reported in the Summary Compensation Table | $1,375,446 | $3,906,259 | $2,739,554 | | Less: Reported Value of Equity Awards | $(513,969) | $(2,809,083) | $(1,443,443) | | Plus: Total Value of Unvested Awards Granted during the Fiscal Year | $617,716 | $2,278,268 | $2,300,322 | | Total Change in Value of Unvested Awards Granted in Prior Fiscal Years | $(270,086) | $(402,603) | $346,277 | | Total Change in Value from Prior Fiscal Year-End of Awards that Vested during the Fiscal Year | $206,091 | $47,591 | $9,325 | | Compensation Actually Paid | $1,415,198 | $3,020,432 | $3,952,035 |

  97. Pay versus Performance Table

    The equity awards reportable for Mr. Charron above consisted of performance shares and restricted shares, all of which are reported in the Summary Compensation Table at grant date fair value. In order to calculate the Compensation Actually Paid, the equity awards must be revalued at each fiscal year end. The performance shares were revalued based on updated performance metrics and the Company’s stock price as of each reportable fiscal year end. The restricted shares were revalued based on the Company’s stock price as of each reportable fiscal year end.

  98. Pay versus Performance Table

    | | Average Non-PEO NEOs | Average Non-PEO NEOs | Average Non-PEO NEOs | | | 2023 | 2022 | 2021 | | Total Compensation as reported in the Summary Compensation Table | $1,070,088 | $991,889 | $869,216 | | Less: Reported Value of Equity Awards | $(440,916) | $(418,641) | $(233,484) | | Plus: Total Value of Unvested Awards Granted during the Fiscal Year | $549,035 | $339,533 | $372,088 | | Total Change in Value of Unvested Awards Granted in Prior Fiscal Years | $125,943 | $(41,762) | $65,806 | | Total Change in Value from Prior Fiscal Year-End of Awards that Vested during the Fiscal Year | $29,376 | $8,130 | $1,771 | | Compensation Actually Paid | $1,333,526 | $879,149 | $1,075,397 |

  99. Pay versus Performance Table

    The equity awards reflected in the table above for the Company’s average Non-PEO NEOs consisted of performance shares and restricted shares which were reported in the Summary Compensation Table at grant date fair value. In order to calculate the Compensation Actually Paid, the equity awards must be revalued at each fiscal year end. The performance shares were revalued based on updated performance metrics and the Company’s stock price as of each reportable fiscal year end. The restricted shares were revalued based on the Company’s stock price as of each reportable fiscal year end.

  100. Pay versus Performance Tabular List

    Pay versus Performance Tabular List The tabular list below reflects our other important performance measures used to link compensation actually paid for our NEOs to company performance, over the fiscal year ending June 30, 2023. The performance measures included in this table are ranked alphabetically, not by relative importance.

  101. Pay versus Performance Tabular List

    | Performance Measures | | •Economic Profit | | •Environmental, Social, and Governance (ESG) | | •Relative Growth | | •Relative Total Shareholder Return (rTSR) |

  102. Pay versus Performance Tabular List

    | EQUITY COMPENSATION PLANS INFORMATION |

  103. Pay versus Performance Tabular List

    The following table provides certain information with respect to our equity compensation plans in effect as of June 30, 2023.

  104. Pay versus Performance Tabular List

    | Name | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants, and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights (3) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | | Equity Compensation Plans | | | | | Approved by Share Owners (1) | 478,492 | — | 2,509,042 | | Not approved by Share Owners (2) | 199,457 | — | 792,282 | | Total | 677,949 | — | 3,301,324 |

  105. Pay versus Performance Tabular List

    (1)Consists of 60,312 restricted share awards, 375,554 performance share awards, and 42,626 total shareholder return share awards under the Kimball Electronics, Inc. 2014 Stock Option and Incentive Plan. The number of performance shares and total shareholder return shares assumes the maximum number of shares that the participant is eligible to receive if applicable performance levels are achieved. (2)Consists of phantom stock units granted to non-employee directors under the Kimball Electronics, Inc. Non-Employee Directors Stock Compensation Deferral Plan (the “Deferral Plan”), which are participating securities and are payable in Common Stock upon a director’s retirement or termination from the Board or death. The Deferral Plan is a nonqualified plan approved by the Board of Directors on October 20, 2016 that allows non-employee directors 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 our Common Stock. (3)There is no exercise price for performance share awards, restricted share awards, total shareholder return share awards, or phantom stock units.

  106. Pay versus Performance Tabular List

    | PROPOSAL 4: TO APPROVE, IN A NON-BINDING, ADVISORY VOTE, THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS |

  107. Pay versus Performance Tabular List

    As required by Section 14A of the Exchange Act, we are asking the owners of our Common Stock to approve the compensation paid to our NEOs, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion in this Proxy Statement. This proposal, commonly known as a say on pay proposal, gives our Share Owners the opportunity to express their views on our executive compensation. The goals of our compensation programs are to create long-term Share Owner value by rewarding executive performance, to retain our executives by using key elements of compensation that provide substantial opportunity for financial rewards in comparison to other professional opportunities, and to align the interests of our executives with our Share Owners by linking compensation to financial performance. We compensate our NEOs using a combination of salary, performance-based cash incentive compensation, and performance share awards. Our compensation programs are designed to align our executives’ contributions to ultimately achieve our goal of maximizing Share Owner value. We believe that our executive compensation programs accomplish this goal. The Compensation Discussion and Analysis in this Proxy Statement describes our executive compensation program and the decisions made by the Talent, Culture, and Compensation Committee for fiscal year 2023 in more detail. We are asking our Share Owners to indicate their support for our NEOs’ compensation as described in this Proxy Statement. This vote is not intended to address any specific item of compensation but rather the overall compensation of our NEOs and the philosophy, policies, and practices described in this Proxy Statement. Accordingly, we recommend that our Share Owners vote “FOR” the following resolution at the Annual Meeting: “RESOLVED, that Share Owners of the Company’s Common Stock approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2023 Annual Meeting of Share Owners, pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and disclosure.” As an advisory vote, this proposal will not be binding on us or our Board of Directors or Talent, Culture, and Compensation Committee. However, we expect that the Talent, Culture, and Compensation Committee, which is responsible for designing and administering our executive compensation program, will consider the outcome of the vote when making future compensation decisions for our NEOs.

  108. Pay versus Performance Tabular List

    | The Board of Directors recommends that you vote “FOR” the advisory proposal approving the compensation paid to our NEOs as disclosed in this Proxy Statement. |

  109. Pay versus Performance Tabular List

    | SHARE OWNERSHIP INFORMATION |

  110. Pay versus Performance Tabular List

    Under the regulations of the SEC, persons who have power to vote or invest in or dispose of shares of the Company, either alone or jointly with others, are deemed to be beneficial holders of such shares. The total number of our shares listed in the table for all executive officers and directors as a group is 579,014 shares of Common Stock (2.3% of the outstanding), as of the date noted below. Set forth in the following table are the beneficial holdings, as of September 11, 2023, of the Company’s Common Stock on the basis described above for: (i) each person known to us who may be deemed to beneficially own more than 5% of our outstanding shares; (ii) each director; (iii) each “Named Executive Officer” (NEO) as listed in the Summary Compensation Table appearing elsewhere in this Proxy Statement; and (iv) all directors and executive officers as a group:

  111. Pay versus Performance Tabular List

    | Name | Shares Beneficially Owned(a)(b) | Percent of Outstanding Shares | | Holders of more than 5% of the Outstanding Shares | | | | Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, Texas 78746 | 2,005,335(d) | 8.1% | | BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | 1,842,203(e) | 7.4% | | Directors and Named Executive Officers: | | | | Richard D. Phillips | — | (c) | | Michele A. M. Holcomb | 18,383(f) | (c) | | Gregory J. Lampert | 68,208(f) | (c) | | Robert J. Phillippy | 42,924(f) | (c) | | Colleen C. Repplier | 68,393(f) | (c) | | Gregory A. Thaxton | 25,531(f) | (c) | | Tom G. Vadaketh | 10,384(f) | (c) | | Holly A. Van Deursen | 18,385 | (c) | | Jana T. Croom | 7,224 | (c) | | Steven T. Korn | 106,069 | (c) | | Kathy R. Thomson | 20,082 | (c) | | Christopher J. Thyen | 161,662 | (c) | | All executive officers and directors as a Group (16 persons) | 579,014(g) | 2.3% |

  112. Pay versus Performance Tabular List

    (a)Based on information obtained from the executive officers, directors, and beneficial owners (according to the definition of “beneficial ownership” under the regulations of the SEC). On September 11, 2023, there were 24,845,148 outstanding shares of Common Stock. (b)The individuals listed are deemed to have sole voting and investment power over the shares owned by their respective spouses living in their household. Beneficial ownership is disclaimed as to such shares and as to all other shares over which the named person does not have full beneficial rights. (c)Totals are less than one percent of the outstanding shares. (d)This information is derived from the Schedule 13G/A filed by such Share Owner with the SEC on February 10, 2023, indicating beneficial ownership as of December 30, 2022. The Share Owner reports that it has the sole power to vote or direct the vote of 1,969,759 shares and the sole power to dispose or direct the disposition of 2,005,335 shares but also notes that it is an investment advisor registered under the Investment Advisors Act of 1940 and furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-advisor to certain other commingled funds, group trusts, and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an advisor or sub-advisor to certain Funds. In its role as investment advisor, sub-advisor and/or manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities of the Company that are owned by the Funds and may be deemed to be the beneficial owner of the Company’s shares held by the Funds. However, all of the Company’s shares reported in this schedule are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. (e)This information is derived from the Schedule 13G/A filed by such Share Owner with the SEC on January 31, 2023, indicating beneficial ownership as of December 31, 2022. The Share Owner reports that it has the sole power to vote or direct the vote of 1,794,562 shares and the sole power to dispose or direct the disposition of 1,842,203 shares but also notes that various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Company’s shares and that no one person’s interest in the Company’s shares is more than 5% of the total outstanding shares of the Company. BlackRock, Inc. reports that the following of its subsidiaries acquired the shares: BlackRock Life Limited, Aperio Group, LLC, BlackRock Advisors, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Fund Advisors, BlackRock Asset Management Ireland Limited, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc., BlackRock Fund Managers Ltd, BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC. (f)For directors, includes shares credited under the Kimball Electronics, Inc. Non-Employee Directors Stock Compensation Deferral Plan that may be distributable within 60 days following termination of Board service. (g)Shares that Mr. Charron held are not included in this total, as he was deceased and not an executive officer or director of the Company as of September 11, 2023.