UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.   )

 

Check the appropriate box:

Stoneridge, Inc.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

STONERIDGE, INC.
39675 MacKenzie Drive, Suite 400
Novi, Michigan 48377

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

Dear Shareholder:

We invite you to attend our 2018 Annual Meeting of Shareholders (the “Annual Meeting”) on Tuesday, May 15, 2018, at 11:00 a.m. Eastern Time, at our new corporate headquarters, 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377.

The purpose of the Annual Meeting is to consider and take action on the following matters:

Only shareholders of record at the close of business on March 28, 2018, the record date, are entitled to notice of and to vote at the Annual Meeting. We urge you to vote your shares on the Internet, by toll-free telephone call or, if you have requested a paper copy of our proxy materials, by signing, dating and returning the proxy card in the envelope provided.

By order of the Board of Directors,

THOMAS M. DONO, Jr.,
Secretary

Dated: April 5, 2018

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 15, 2018:

This Proxy Statement and the Company’s 2017 Annual Report to Shareholders are also available at www.envisionreports.com/sri.

YOUR VOTE IS IMPORTANT.
PLEASE VOTE YOUR SHARES PROMPTLY ON THE INTERNET, BY TOLL-FREE TELEPHONE
CALL OR, IF YOU HAVE REQUESTED A PAPER COPY OF OUR PROXY MATERIALS, BY SIGNING,
DATING AND RETURNING THE PROXY CARD IN THE ENVELOPE PROVIDED.

2018 Proxy Statement

Table of Contents

						Page
2018 Proxy Statement Summary							i
Information About Annual Meeting and Voting							1
Beneficial Ownership							4
Proposal 1			Election of Directors				6
Proposal 2			Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2018				10
Audit Committee Report							12
Proposal 3			Approve, on an advisory basis, the compensation of named executives				13
Proposal 4			Approval of the 2018 Amended and Restated Directors’ Restricted Shares Plan				14
Corporate Governance							16
Compensation Discussion and Analysis							21
Compensation Committee Report							32
Executive Compensation Tables							33
Other Information							41

STONERIDGE, INC.
2018 Proxy Statement Summary

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.

We are furnishing to our shareholders these proxy materials, which include this Proxy Statement and our 2017 Annual Report to Shareholders, by providing access to them on the Internet at www.envisionreports.com/sri. On or about April 5, 2018 we began mailing shareholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing important information, including instructions on how to access the proxy materials online and how to vote your shares over the Internet. If you receive a Notice, you will not receive a paper or e-mail copy of the proxy materials unless you request one in the manner set forth in the Notice.

The Board of Directors is soliciting proxies in connection with the 2018 Annual Meeting of Shareholders and encourages you to read the Proxy Statement and vote your shares by Internet, by telephone or by mailing your proxy card or voting instruction form.

Stoneridge, Inc. 2018 Annual Meeting Information

Date and Time:		Tuesday, May 15, 2018, at 11:00 a.m. Eastern Time
Location:		Stoneridge, Inc., 39675 MacKenzie Drive, Suite 400, Novi, MI 48377
Record Date:		March 28, 2018
Voting:		Shareholders as of the record date are entitled to vote. Each common share is entitled to one vote for each Director nominee and one vote for each of the other proposals presented for a vote.

Matters to be Considered:

Management Proposals		Board Vote Recommendation		Page (for more information)
1. Elect eight directors named in this Proxy Statement		FOR ALL		6
2. Ratify the appointment of Ernst & Young LLP		FOR		10
3. Provide advisory vote on executive compensation		FOR		13
4. Approval of the 2018 Amended and Restated Directors’ Restricted Shares Plan		FOR		14

Company Performance

We delivered a strong financial performance in 2017. The Company continues to drive strong financial performance through top-line growth that exceeded our underlying markets and continued operating efficiency improvement which contributed to higher, sustainable long-term margins. The Company continues to benefit from its focus on a product portfolio with smart products and those that focus on industry mega trends including intelligence, safety and security, fuel efficiency and emissions. The Company believes that focusing on smart products that address industry megatrends will have a positive impact on both our top-line growth and underlying margins. Our PST segment performance continued to improve as a result of cost reductions and operational improvements despite the continued challenging economic environment in Brazil during the first half of 2017.

Net sales increased by 18.5% due to higher sales in each of our segments. Our Control Devices segment net sales increased primarily as a result of new product sales and increased sales volume in the North American automotive market. Our Electronics segment benefited from higher European and

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North American off-highway vehicle product sales substantially related to the acquired Orlaco business, as well as an increase in sales volume of European and North American commercial vehicle products.

Our PST segment net sales increased primarily due to an increase in monitoring product and service revenues as well as a favorable foreign currency translation.

Income from continuing operations increased by $30.5 million compared to the prior year, which was primarily due to higher sales in all of our operating segments, including the acquisition of the Orlaco business, a gross margin expansion and improved operational efficiency.

(in thousands, except earnings per share and share price)		2017				2016
Net sales		$	824,444			$	695,977
Operating income			57,370				44,082
Income from continuing operations			45,049				75,574
Net income			45,049				75,574
Net loss attributable to noncontrolling interest			(130	)			(1,887	)
Net income attributable to Stoneridge, Inc.			45,179				77,461
Diluted earnings per share from continuing operations attributable to Stoneridge, Inc.		$	1.57			$	2.74
Diluted earnings per share attributable to Stoneridge, Inc.		$	1.57			$	2.74
Share Price at December 31		$	22.86			$	17.69

Director Nominees

Below is a summary of the director nominees, who are elected for one-year terms. Additional information about each director nominee and his or her qualifications may be found beginning on page 7.

Name

Age

Director Since

Primary Occupation

Independent

Committee Memberships

AC

CC

NCGC

CEC

Jonathan B. DeGaynor

51

2015

President and CEO of Stoneridge, Inc.

Jeffrey P. Draime

51

2005

Self-employed business consultant

ü

ü

ü

Douglas C. Jacobs

78

2004

Chief Financial Officer and Treasurer, Brownstone Services LLC

ü

C

ü

Ira C. Kaplan

64

2009

Executive Chairman of Benesch, Friedlander, Coplan & Aronoff LLP

ü

ü

ü

ü

Kim Korth

63

2006

President and CEO 6th Avenue Group

ü

C

ü

ü

William M. Lasky

70

2004

Retired, Former President and CEO of Accuride Corporation

L

ü

ü

C

George S. Mayes, Jr.

59

2012

Self-employed business consultant

ü

ü

C

Paul J. Schlather

65

2009

Self-employed business consultant

ü

ü

AC		Audit Committee		C		Committee Chairperson
CC		Compensation Committee		L		Lead Independent Director
NCGC		Nominating and Corporate Governance Committee
CEC		Compliance and Ethics Committee

Ratification of the appointment of Ernst & Young LLP

We are asking our shareholders to ratify the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for the year ending December 31, 2018. For more information, see page 10.

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Executive Compensation Highlights

Our executive compensation program is designed to attract, retain, motivate and reward talented executives who advance our strategic, operational and financial objectives and, thereby, enhance shareholder value. The primary objectives of our compensation programs for executive officers are to:

Key elements of our 2017 compensation program were as follows:

For more information related to our executive compensation program, see page 21.

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STONERIDGE, INC.
 
PROXY STATEMENT

 

The Board of Directors (the “Board”) of Stoneridge, Inc. (the “Company”) is sending you this Proxy Statement to ask for your vote as a Stoneridge shareholder on certain matters to be voted on at our Annual Meeting of Shareholders (“Annual Meeting”) to be held on Tuesday, May 15, 2018, at 11:00 a.m. Eastern Time, at Stoneridge Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377. We are mailing shareholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access the proxy materials and how to vote online on or about April 5, 2018.

Annual Report; Internet Availability

As permitted by U.S. Securities and Exchange Commission (“SEC”) rules, we are furnishing our proxy materials, which include this Proxy Statement and our 2017 Annual Report to Shareholders, to shareholders by providing access to the proxy materials on the Internet at www.envisionreports.com/sri.

Solicitation of Proxies

The Board is making this solicitation of proxies and we will pay the cost of the solicitation. We have retained Georgeson Inc., at an estimated cost of $9,300, to assist in the solicitation of proxies from brokers, nominees, institutions and individuals. In addition to the solicitation of proxies by mail by Georgeson Inc., our employees may solicit proxies by telephone, facsimile or electronic mail.

Proxies

The common shares represented by your proxy will be voted in accordance with the instructions as indicated on your proxy. In the absence of any such instructions, they will be voted to (i) elect the director nominees set forth under “Election of Directors”; (ii) ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2018; (iii) approve the compensation of our Named Executive Officers; and (iv) approve the 2018 Directors’ Restricted Shares Plan.

Revocation of Proxies

Your presence at the Annual Meeting, without further action, will not revoke your proxy. However, if you are a registered shareholder you may revoke your proxy at any time before it has been exercised by:

If you hold your common shares in “street name”, in order to change or revoke your voting instructions you must follow the specific voting directions provided to you by your bank, broker or other holder of record.

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Voting Eligibility

Only shareholders of record at the close of business on the record date, March 28, 2018, are entitled to receive notice of the Annual Meeting and to vote the common shares held on the record date at the meeting. On the record date, our outstanding voting securities consisted of 28,209,641 common shares, without par value, each of which is entitled to one vote on each matter properly brought before the meeting.

Voting

The Board is asking for your proxy in advance of the Annual Meeting. Giving your proxy means you authorize the individuals designated as proxies to vote your common shares at the Annual Meeting in the manner you direct. You may give your proxy or otherwise vote your common shares in one of several ways, depending on how you hold your shares.

Shareholders of Record

If your common shares are registered directly in your name with the Company’s transfer agent, you are considered the “shareholder of record” of those shares and you may:

Street Name Holders

2

If you do not instruct your broker, bank or other nominee on how to vote your shares, it will have discretionary authority, under New York Stock Exchange (“NYSE”) rules, to vote your shares on the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2018 (“Proposal 2”). However, your broker, bank or other nominee will not be permitted to vote your shares (a “broker non-vote”) on the election of directors (“Proposal 1”), the advisory vote to approve our executive compensation (“Proposal 3”), or the proposal to approve the 2018 Amended and Restated Directors’ Restricted Shares Plan (“Proposal 4”).

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of our common shares as of February 28, 2018, by: (a) our directors and nominees for election as directors; (b) each other person who is known by us to own beneficially more than 5% of our outstanding common shares; (c) the executive officers named in the Summary Compensation Table; and (d) all of our executive officers and directors as a group.

Name of Beneficial Owner		Number of Shares Beneficially Owned(1)				Percent of Class
BlackRock, Inc.(2)			2,033,351				7.2	%
Dimensional Fund Advisors(3)			1,930,387				6.9
NWQ Investment Management Company, LLC(4)			1,683,412				6.0
The Goldman Sachs Group, Inc.(5)			1,407,330				5.0
Jeffrey P. Draime(6)			432,401				1.5
Jonathan B. DeGaynor(7)			173,157				*
William M. Lasky(8)			119,767				*
Paul J. Schlather(9)			108,728				*
Thomas A. Beaver(10)			93,960				*
Michael D. Sloan(11)			71,124				*
Ira C. Kaplan(12)			54,739				*
Douglas C. Jacobs(13)			54,047				*
Kim Korth(14)			48,787				*
George S. Mayes, Jr.(15)			37,807				*
Robert R. Krakowiak			—				*
Anthony Moore			—				*
Alisa Nagle			—				*
All Executive Officers and Directors as a Group (17 persons)			1,241,845				4.4	%

4

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PROPOSAL ONE:  ELECTION OF DIRECTORS

In accordance with the Company’s Amended and Restated Code of Regulations, the number of directors has been fixed at eight. At the Annual Meeting, shareholders will elect eight directors to hold office until our next Annual Meeting of Shareholders and until their successors are elected and qualified. The Board proposes that the nominees identified below be elected to the Board. Jonathan B. DeGaynor has an employment agreement with the Company which provides that during the term of the agreement he shall be entitled to be nominated for election to the Board. At our Annual Meeting, the common shares represented by proxies, unless otherwise specified, will be voted for the election of the eight nominees hereinafter named.

Directors are elected by a plurality of the votes cast at the Annual Meeting. Broker non-votes and abstaining votes will be counted as “present” for purposes of determining whether a quorum has been achieved at the Annual Meeting, but will not be counted as “For” or “Withheld” from any nominee. “Plurality” means that the director nominees who receive the greatest number of votes cast are elected, up to the maximum number of directors to be elected at the meeting. The maximum number to be elected is eight. Shares not voted will have no impact on the election of directors. Unless proper voting instructions are to “Withhold” authority for any or all nominees, the proxy given will be voted “For” each of the nominees for director.

Majority Voting Principle.  Under our Corporate Governance Guidelines, any nominee for director in an uncontested election who receives a greater number of votes “Withheld” from his or her election than votes “For” his or her election must promptly offer his or her resignation. The Board’s Nominating and Corporate Governance Committee will then consider the resignation and recommend to the Board whether to accept or reject it. The Board will act on the Committee’s recommendation within 90 days after the Annual Meeting, and the Board’s decision will be publicly disclosed on Form 8-K. Any director who offers his or her resignation may not participate in the Board’s discussion or vote.

The director nominees are identified below. If for any reason any of the nominees is not a candidate when the election occurs (which is not expected), the Board expects that proxies will be voted for the election of a substitute nominee designated by the Board. The following information is furnished with respect to each person nominated for election as a director.

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The Board of Directors recommends that you vote FOR the following nominees.

Nominees to Serve for a One-Year Term Expiring in 2019

Jonathan B. DeGaynor		Mr. DeGaynor, 51, is the President and Chief Executive Officer (“CEO”) of the Company and has served in this role since March 2015. Mr. DeGaynor served as the Vice President-Strategic Planning and Innovation of Guardian Industries Corp. (“Guardian”), a manufacturer of industrial glass and other building products for commercial, residential and automotive applications, from October 2014 until March 2015. Prior to that, Mr. DeGaynor served as Vice President-Business Development, Managing Director Asia for SRG Global, Inc., a Guardian company and manufacturer of chrome plated plastic parts for the automotive, commercial truck and consumer goods industries, from August 2008.
		The Company believes that Mr. DeGaynor should serve as a director because he provides services as the Company’s President and Chief Executive Officer and because his extensive career in the automotive industry has spanned all phases of engineering, operations leadership, corporate strategy and business leadership. He brings expertise related to development and production of products and technologies. He provides valuable insight to the Board and strengthens the Board’s collective qualifications, skills and experience.
Jeffrey P. Draime		Mr. Draime, 51, has served as a director since 2005. Since 2005 Mr. Draime has been a self-employed business consultant. Mr. Draime is a partner and the President of AeroMax Aviation Holdings LLC, a charter aircraft corporation. From 1999 to 2011 he was the owner of QSL Columbus/QSL Dayton, a restaurant franchise. Mr. Draime is the Chairman of the Board of Directors of Aeromics, Inc., a biotech company.
		Mr. Draime served in various roles with the Company from 1988 through 2001, including operations, sales, quality control, product costing, and marketing. From 2012 through October 2016, Mr. Draime has served as a director of Servantage Dixie Sales, Inc., an independent, full service, value added distributor serving consumer products markets. The Company believes Mr. Draime should serve as a director because he provides an historical as well as an internal perspective of our business to the Board and strengthens the Board’s collective qualifications, skills and experience.

7

8

9

George S. Mayes, Jr.		Mr. Mayes, 59, has served as a director since 2012. Mr. Mayes currently provides independent business consulting services. Previously, Mr. Mayes served as Executive Vice President and Chief Operating Officer of Diebold, Inc., a provider of integrated self-service delivery and security systems and services, from 2013 to 2015. Prior to that, he served as Executive Vice President of Operations from 2008, as Senior Vice President, Supply Chain Management from 2006 to 2008, and as Vice President, Global Manufacturing upon joining Diebold, Inc. in 2005.
		Mr. Mayes has extensive experience in lean manufacturing and Six Sigma processes and has managed manufacturing facilities in Canada, Mexico, France, Hungary, Brazil, China, Poland, Italy and the United States.
		The Company believes that Mr. Mayes should serve as a director because he provides in-depth knowledge of manufacturing theories and operations, business acumen and leadership to the Board, which strengthens the Board’s collective qualifications, skills and experience.
Paul J. Schlather		Mr. Schlather, 65, has served as a director since 2009. Mr. Schlather currently provides independent business consulting services. Mr. Schlather was a partner at PricewaterhouseCoopers LLP, serving as co-head to the Private Client Service group from August 2002 until his retirement in 2008. Mr. Schlather also serves on the boards of four closely held businesses.
		Mr. Schlather qualifies as an audit committee financial expert due to his extensive background in accounting and finance built through his career in public accounting. In addition to his professional and accounting experience described above, the Company believes that Mr. Schlather should serve as a director because he provides financial analysis and business acumen to the Board, which strengthens the Board’s collective qualifications, skills and experience.

PROPOSAL TWO:  RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP

The Audit Committee of the Board currently anticipates appointing Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm for the year ending December 31, 2018. For 2017, Ernst & Young was engaged by us to audit our annual financial statements, assess our internal control over financial reporting and to perform audit-related and tax services. We expect that representatives of Ernst & Young will be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions from shareholders.

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent external audit firm retained to audit the Company’s financial statements. As a matter of good corporate governance, the Audit Committee requests that shareholders ratify its anticipated selection of Ernst & Young to serve as our independent registered public accounting firm for 2018.

Although ratification by shareholders is not legally required, the Board believes that the submission is an opportunity for the shareholders to provide feedback on an important issue of corporate governance. If our shareholders do not approve the appointment of Ernst & Young, the appointment of our independent registered public accounting firm will be re-evaluated by the Audit Committee, but will not require the Audit Committee to appoint a different accounting firm. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different

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independent registered public accounting firm at any time during 2018 if it determines that such a change would be in the best interests of the Company and our shareholders.

Approval of this proposal requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to be voted on the proposal at our Annual Meeting. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on the proposal and will not have a positive or negative effect on the outcome of this proposal, however, there should be no broker non-votes on this proposal because brokers should have the discretion to vote uninstructed common shares on this proposal.

The Board of Directors recommends that you vote FOR Proposal Two.

Service Fees Paid to the Independent Registered Public Accounting Firm

For the fiscal years ended December 31, 2017 and 2016 we retained Ernst & Young to provide services in the following categories and amounts. The Audit Committee has considered the scope and fee arrangements for all services provided by Ernst & Young, taking into account whether the provision of non-audit-related services is compatible with maintaining Ernst & Young’s independence.

		2017				2016
Audit Fees		$	2,339,100			$	1,899,800
Audit Related Fees			79,500				145,900
Tax Fees			437,800				374,700
Total Fees		$	2,856,400			$	2,420,400

Audit Fees.  Audit fees include services associated with the annual audit of our consolidated financial statements, the audit of our internal control over financial reporting, the quarterly reviews of the financial statements included in our SEC Form 10-Q filings, international statutory audits and other services that are normally provided by the independent accountants in connection with regulatory filings. The increase in audit fees in 2017 primarily relates to various additional audit services including the implementation of the new revenue recognition standard, merger and acquisition transactions and the implementation of a new enterprise resource planning system.

Audit-related fees.  Audit related fees include services associated with assurance and related services that are reasonably related to the performance of the audit of the Company’s financial statements which includes assistance in financial due diligence related to mergers and acquisitions.

Tax Fees.  Tax fees relate to tax planning, domestic and international tax compliance and tax advice. The increase in tax fees in 2017 primarily relates to tax due diligence for mergers and acquisitions.

Pre-Approval Policies and Procedures

The Audit Committee’s policy is to approve in advance all audit and permitted non-audit services to be performed for the Company by its independent registered public accounting firm. Pre-approval is generally provided for up to one year, is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee also pre-approves particular services on a case-by-case basis. In accordance with this policy, the Audit Committee has delegated pre-approval authority to the Chairman of the Audit Committee. The Chairman may pre-approve services and inform the Audit Committee at the next scheduled meeting.

All services provided by Ernst & Young during fiscal year 2017, as noted in the previous table, were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described above.

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Audit Committee Report

In accordance with its written charter, the Audit Committee assists the Board in fulfilling its responsibility relating to corporate accounting, our reporting practices, and the quality and integrity of the financial reports and other financial information provided by us to any governmental body or to the public. Management is responsible for the financial statements and the financial reporting process, including assessing the effectiveness of the Company’s internal control over financial reporting. The independent registered public accounting firm is responsible for conducting audits and reviews of our financial statements in accordance with standards established by the Public Company Accounting Oversight Board, expressing an opinion on the conformity of the Company’s financial statements in accordance with generally accepted accounting principles, and auditing and reporting on the Company’s effectiveness of internal controls over financial reporting. The Audit Committee is comprised of five directors, each of whom is “independent” for audit committee purposes under the listing standards of the NYSE.

In discharging its oversight responsibility as to the audit process, the Audit Committee reviewed and discussed our audited financial statements for the year ended December 31, 2017, with management, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements. The Audit Committee also discussed with our independent registered public accounting firm, Ernst & Young, the matters required to be discussed under Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees. The Audit Committee has received the written disclosures and letter from Ernst & Young required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communication with the Audit Committee concerning independence. The Audit Committee discussed Ernst & Young’s independence with Ernst & Young. The Audit Committee also considered whether the provision of non-audit services by Ernst & Young is compatible with maintaining Ernst & Young’s independence.

The Audit Committee discussed with our Internal Audit Director and Ernst & Young the overall scope and plans for their respective audits. The Audit Committee also met with the Internal Audit Director and Ernst & Young, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of the Company’s financial reporting.

Based on the above-referenced review and discussions with management, the Internal Audit Director and Ernst & Young, the Audit Committee recommended to the Board, and the Board approved, that the audited consolidated financial statements for fiscal 2017 be included in the Company’s Annual Report on Form 10-K filed with the SEC.

The Audit Committee

Douglas C. Jacobs, Chairman
Ira C. Kaplan
William M. Lasky
George S. Mayes, Jr.
Paul J. Schlather

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PROPOSAL THREE:  SAY-ON-PAY

As required by Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”) we provide our shareholders with the opportunity to cast an annual advisory non-binding vote to approve the compensation of our Named Executive Officers as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables) (a “Say-On-Pay” proposal). We believe that it is appropriate to seek the views of shareholders on the design and effectiveness of the Company’s executive compensation program.

At the Company’s 2017 Annual Meeting of Shareholders, 92.8% of the votes cast on the Say-On-Pay proposal voted in favor of the proposal. The Compensation Committee believes this affirmed shareholders’ support of the Company’s approach to executive compensation.

Our goal for the executive compensation program is to attract, motivate, and retain a talented, entrepreneurial and creative team of executives to provide operational and strategic leadership for the Company’s success in competitive markets. We seek to accomplish this goal in a way that rewards performance and is aligned with our shareholders’ long-term interests. We believe that our executive compensation program, which emphasizes performance-based compensation and long-term equity awards, satisfies this goal and is strongly aligned with the long-term interests of our shareholders.

Base compensation is aligned to be competitive in the industry in which we operate. Performance-based compensation (cash and equity) represents 44-53% of each executive officer’s target compensation opportunity, with long-term incentives representing the largest portion of compensation. Targets for incentive compensation are based on financial performance targets and increasing shareholder value. The Compensation Committee retains the services of an independent compensation consultant to advise on competitive compensation and compensation practices.

The Board recommends that shareholders vote FOR the following resolution:

“RESOLVED that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

Because the vote is advisory, it will not be binding upon the Board or the Compensation Committee. The Board and the Compensation Committee value the opinions of our shareholders and will take into account the outcome of the vote when considering future decisions regarding executive compensation.

The affirmative vote of a majority of the common shares present or represented by proxy and voting at the Annual Meeting will constitute approval of this non-binding resolution. If you own common shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your common shares so that your vote can be counted on this proposal. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on this proposal and will not have a positive or negative effect on the outcome of this proposal.

The Board of Directors recommends that you vote FOR Proposal Three.

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PROPOSAL FOUR:  APPROVAL OF THE 2018 AMENDED AND RESTATED
DIRECTORS’ RESTRICTED SHARES PLAN

The Company’s current Amended Directors’ Restricted Shares Plan, as amended (the “DRSP”) was, upon the approval and recommendation of the Board of Directors, in accordance with the applicable law and the listing rules of the NYSE, approved by the Company’s shareholders at the 2005 Annual Meeting of Shareholders. An amendment to the DRSP increasing the number of common shares to 500,000 available for issuance under the DRSP was approved by the Company’s shareholders at the 2010 Annual Meeting of Shareholders. A further amendment to the DRSP increasing the number of common shares to 700,000 available for issuance under the DRSP was approved by the Company’s shareholders at the 2013 Annual Meeting of Shareholders. Currently, the DRSP authorizes the issuance of 700,000 common shares.

On March 7, 2018, the Board of Directors approved the 2018 Amended and Restated Directors’ Restricted Share Plan (the “2018 Plan”) (subject to shareholder approval) to amend and restate the DRSP to increase by an additional 150,000 common shares the number of common shares available for issuance under the DRSP, bringing the total to 850,000 common share. In addition, the material changes made to the DRSP in the 2018 Plan are that the 2018 Plan (i) eliminates the vesting of Restricted Shares granted under the DRSP in the event of “Potential Change in Control” (as defined in the DRSP), and (ii) clarifies that forfeited Restricted Shares, but not Restricted Shares used to satisfy tax withholding obligations, shall again be available for issuance under the 2018 Plan.

The Company is seeking approval of the 2018 Plan because the additional common shares available for issuance under the 2018 Plan will assist the Company in achieving its goal of promoting growth and profitability. The description of the 2018 Plan is subject to and qualified by Appendix A to this Proxy Statement (which sets forth the 2018 Plan).

Currently, under the existing DRSP there are 700,000 common shares reserved for issuance pursuant to grants or awards. At the end of 2017, grants for 616,113 common shares had been made under the DRSP. In March 2018, grants for 29,939 restricted common shares were made leaving 53,948 common shares available for issuance and grants under the DRSP.

Summary of the 2018 Plan

The 2018 Plan will increase the number of common shares available for issuance by 150,000 to bring the total common shares available for issuance to 850,000.

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If this proposal is approved, the total number of common shares authorized under the 2018 Plan would represent approximately 3% of our outstanding common shares.

Vote Required for Approval

The affirmative vote of a majority of the votes cast in person or by proxy by shareholders represented and entitled to vote at the Annual Meeting of Shareholders is required for approval of the 2018 Plan. Broker non-votes will not be treated as votes cast and will not have a positive or negative effect on the outcome of the proposal. Abstentions will be treated as votes cast and, consequently, will have the same effect as votes against the proposal.

The Board of Directors recommends that you vote FOR Proposal Four.

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CORPORATE GOVERNANCE

Corporate Governance Documents and Committee Charters

The Company’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers and the charters of the Board of Directors’ Audit, Compensation, and Nominating and Corporate Governance committees are posted on our website at www.stoneridge.com. Written copies of these documents are available without charge to any shareholder upon request. Requests should be directed to Investor Relations at the address listed on the Notice of Annual Meeting of Shareholders.

Corporate Ethics Hotline

We established a corporate ethics hotline as part of our Whistleblower Policy and Procedures to allow persons to lodge complaints about accounting, auditing and internal control matters, and to allow an employee to lodge a concern, confidentially and anonymously, about any accounting and auditing matter. Information about lodging such complaints or making such concerns known is contained in our Whistleblower Policy and Procedures, which is posted on our website at www.stoneridge.com.

Director Independence

The NYSE rules require listed companies to have a Board of Directors comprised of at least a majority of independent directors. Under the NYSE rules, a director qualifies as “independent” upon the affirmative determination by the Board of Directors that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). The Board has not adopted categorical standards of independence. The Board has determined that the following directors and nominees for election as a director are independent:

Jeffrey P. Draime		Kim Korth		George S. Mayes, Jr.
Douglas C. Jacobs		William M. Lasky		Paul J. Schlather
Ira C. Kaplan

Annual Board and Committee Self Evaluations

Our Corporate Governance guideline requires that the Board and each committee conduct an annual self-evaluation. The self-evaluations are intended to facilitate a candid assessment and discussion by the Board and each committee of its effectiveness as a group in fulfilling its responsibilities. Each year the Board and each committee conducts a self-evaluation/assessment using questionnaires to facilitate the evaluation. The Board and each Committee then reviews a summary of the questionnaires in connection with discussions to determine which areas the Board and Committee would like to focus on during the coming year to enhance its effectiveness.

The Board of Directors’ Role in Risk Oversight

It is management’s responsibility to manage risk and bring to the Board’s attention the most material risks to the Company. The Board has oversight responsibility of the processes established to report and monitor systems for material risks applicable to us. The Audit Committee regularly reviews enterprise-wide risk management, which includes treasury risks (foreign exchange rates, and credit and debt exposures), financial and accounting risks, legal and compliance risks, and other risk management functions. The Compensation Committee considers risks related to the attraction and retention of talent and related to the design of compensation programs and arrangements. The full Board considers strategic risks and opportunities and regularly receives reports from management on risk and from the committees regarding risk oversight in their areas of responsibility.

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The Board of Directors’ Role in Ethics and Compliance

The Company is committed to a culture of integrity and trust, to conducting all of its business dealings in compliance with applicable federal, state and foreign laws, rules and regulations and to operating with the highest standards of business ethics. To facilitate this, in 2017 the Board established the Compliance and Ethics Committee to assist the Board in overseeing (i) the Company’s activities in the areas of corporate responsibility, compliance and ethics, including oversight of the Company’s Code of Business Conduct and Stoneridge Integrity Program Charter, and (ii) the Company’s compliance with legal and regulatory requirements. Members of the Compliance and Ethics Committee are Ira C. Kaplan, Kim Korth and George S. Mayes, Jr.

Anti-Hedging Policy

Our Insider Trading Policy prohibits Company directors, officers and key employees covered by the pre-clearance procedures of the Insider Trading Policy from engaging in hedging transactions designed to offset decreases in the market value of the Company’s securities, including transactions in put options, call options or other derivative securities, on an exchange or in any other organized market, prepaid variable forwards, equity swaps, collars and exchange funds.

Anti-Pledging Policy

Our Insider Trading Policy prohibits directors, officers and key employees covered by the pre-clearance provisions of the Insider Trading Policy from holding Company securities in a margin account or pledging Company securities as collateral for a loan.

The Board of Directors

In 2017 the Board held seven meetings. Each Board member attended at least 75% of the meetings of the Board and of the committees on which he or she serves. Our policy is that directors are to attend the Annual Meeting of Shareholders. All of our current directors attended the 2017 Annual Meeting of Shareholders. Mr. Lasky has been appointed as the lead independent director by the independent directors to preside at the executive sessions of the independent directors. The Board’s independent directors meet regularly in executive session. All directors, except Mr. DeGaynor, the Company’s President and CEO, are independent.

Leadership of the Board

The Board does not have a formal policy regarding the separation of the roles of CEO and Chairman of the Board as the Board believes it is in the best interest of the Company and our shareholders to make that determination based on the position and direction of the Company and the membership of the Board. At this time, the Board has determined that having an independent director serve as Chairman is in the best interest of the Company and our shareholders. This structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing Board priorities and procedures. Further, this structure permits our President and CEO to devote more time focusing on the strategic direction and management of our day-to-day operations.

Committees of the Board

The Board has four standing committees to facilitate and assist the Board in the execution of its responsibilities. These committees are the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Compliance and Ethics Committee. Each member of the Audit, Compensation, Nominating and Corporate Governance and Compliance and Ethics

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Committees is independent as defined under the listing standards of the NYSE. The table below shows the composition of the Board’s committees:

Audit Committee		Compensation Committee		Nominating and Corporate Governance Committee		Compliance and Ethics Committee
Douglas C. Jacobs*		Jeffrey P. Draime		Jeffrey P. Draime		Ira C. Kaplan
Ira C. Kaplan		Douglas C. Jacobs		Ira C. Kaplan		Kim Korth
William M. Lasky		Kim Korth*		Kim Korth		George S. Mayes, Jr.*
George S. Mayes, Jr.		William M. Lasky		William M. Lasky*
Paul J. Schlather

Audit Committee

This committee held eight meetings in 2017. Information regarding the functions performed by the Audit Committee is set forth in the “Audit Committee Report,” included in this Proxy Statement. The Board has determined that each Audit Committee member is financially literate under the listing standards of the NYSE. The Board also determined that Mr. Jacobs and Mr. Schlather each qualify as an “audit committee financial expert” as defined by the SEC rules adopted pursuant to the Sarbanes-Oxley Act of 2002. In addition, under the Sarbanes-Oxley Act of 2002 and the NYSE rules mandated by the SEC, members of the audit committee must have no affiliation with the issuer, other than their Board seat, and receive no compensation in any capacity other than as a director or committee member. Each member of the Audit Committee meets this additional independence standard applicable to audit committee members of NYSE listed companies.

Compensation Committee

This committee held four meetings in 2017. Each member of our Compensation Committee meets the independence requirements of the NYSE, including the enhanced independence requirements applicable to Compensation Committee members under NYSE rules, is a non-employee director under Rule 16b-3 of the Exchange Act and is an outside director under Section 162(m) of the Internal Revenue Code. The Compensation Committee is responsible for establishing and reviewing our compensation philosophy and programs with respect to our executive officers; approving executive officer compensation and benefits; recommending to the Board the approval, amendment and termination of incentive compensation and equity-based plans; and certain other compensation matters, including director compensation. Our CEO makes recommendations regarding compensation of other officers to the Compensation Committee. The Compensation Committee can exercise its discretion in modifying any amount presented by our CEO. The Compensation Committee regularly reviews the total compensation obligations to each of our executive officers. During 2017, the Compensation Committee retained Total Rewards Strategies LLC to provide compensation related consulting services. Specifically, the compensation consultant provided relevant market data, current trends in executive and director compensation and advice on program design. In accordance with its charter, the Compensation Committee may delegate power and authority as it deems appropriate for any purpose to a subcommittee of not fewer than two members.

Nominating and Corporate Governance Committee

This committee held two meetings in 2017. The purpose of the Nominating and Corporate Governance Committee is to evaluate the qualifications of director nominees, to recommend candidates for election as directors, to make recommendations concerning the size and composition of the Board, to develop and implement our corporate governance policies and to assess the effectiveness of the Board.

Compliance and Ethics Committee

This committee, established December 2017, met informally on several occasions in 2017. See the “Board of Directors Role in Compliance and Ethics” on page 17.

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Nominations and Nomination Process

It is the policy of the Nominating and Corporate Governance Committee to consider individuals recommended by shareholders for membership on the Board. If a shareholder desires to recommend an individual for membership on the Board, then that shareholder must provide a written notice (the “Recommendation Notice”) to the Secretary of the Company at Stoneridge, Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377, on or before January 15 for consideration by this committee for that year’s election of directors at the Annual Meeting of Shareholders.

In order for a recommendation to be considered by the Nominating and Corporate Governance Committee, the Recommendation Notice must contain, at a minimum, the following:

The Nominating and Corporate Governance Committee determines, and periodically reviews with the Board, the desired skills and characteristics for directors as well as the composition of the Board as a whole. This assessment considers the directors’ qualifications and independence, as well as diversity, age, skill, and experience in the context of the needs of the Board. Directors should share our values and should possess the following characteristics: high personal and professional integrity; the ability to exercise sound business judgment; an inquiring mind; and the time available to devote to Board activities and the willingness to do so. The Nominating and Corporate Governance Committee does not have a formal policy specifically focusing on the consideration of diversity; however, diversity is one of the factors that the Nominating and Corporate Governance Committee considers when identifying candidates and making its recommendations to the Board. In addition to the foregoing considerations, generally with respect to nominees recommended by shareholders, the Nominating and Corporate Governance Committee will evaluate such recommended nominees considering the additional information regarding them contained in the Recommendation Notices. When seeking candidates for the Board, the Nominating and Corporate Governance Committee may solicit suggestions from incumbent directors, management and third-party search firms. Ultimately, the Nominating and Corporate Governance Committee will

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recommend to the Board prospective nominees who the Nominating and Corporate Governance Committee believes will be effective, in conjunction with the other members of the Board, in collectively serving the long-term best interests of our shareholders.

The Nominating and Corporate Governance Committee recommended to the Board each of the nominees identified in “Election of Directors” beginning on page 6 of this Proxy Statement.

Compensation Committee Interlocks and Insider Participation

None of the members of the Board’s Compensation Committee served as an officer at any time or as an employee during 2017. In addition, no Compensation Committee interlocks existed during 2017.

Communications with the Board of Directors

The Board believes that it is important for interested parties to have the ability to send communications to the Board. Persons wishing to communicate with the Board may do so by sending a letter to the Secretary of the Company at Stoneridge, Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377. The envelope must contain a clear notation indicating that the enclosed letter is a “Board Communication” or “Director Communication.” All such letters must identify the author and clearly state whether the intended recipients are all members of the Board or certain specified individual directors (such as the lead independent director or non-management directors as a group). The Secretary will make copies of all such letters and circulate them to the appropriate director or directors. The directors are not spokespeople for the Company and responses or replies to any communication should not be expected.

Transactions with Related Persons

There were no reportable transactions involving related persons in 2017.

Review and Approval of Transactions with Related Persons

The Board has adopted a written statement of policy with respect to related party transactions. Under the policy, a related party transaction is a transaction required to be disclosed pursuant to Item 404 of Regulation S-K or any other similar transaction involving the Company or the Company’s subsidiaries and any Company employee, officer, director, 5% shareholder or an immediate family member of any of the foregoing if the dollar amount of the transaction or series of transactions exceeds $25,000. A related party transaction will not be prohibited merely because it is required to be disclosed or because it involves related parties. Pursuant to the policy, such transactions are presented to the Nominating and Corporate Governance Committee for evaluation and approval by the committee, or if the committee elects, by the full Board. If the transaction is determined to involve a related party, the Nominating and Corporate Governance Committee will either approve or disapprove the proposed transaction. Under the policy, in order to be approved, the proposed transaction must be on terms that are fair to the Company and are comparable to market rates, where applicable.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

In this section we describe the compensation program for our Named Executive Officers (“NEOs”). We also discuss our compensation philosophy, policies and the decisions made by the Compensation Committee of the Board in 2017 as it relates to the compensation of our NEOs.

Named Executive Officers for 2017

Name			Title
Jonathan B. DeGaynor			President & Chief Executive Officer
Robert R. Krakowiak			Chief Financial Officer & Treasurer
Thomas A. Beaver			Vice President & President of Global Sales
Anthony L. Moore			Vice President Operations
Alisa A. Nagle			Chief Human Resources Officer
Michael D. Sloan(1)			Vice President

2017 Overview

We delivered a strong financial performance in 2017. The Company continues to drive strong financial performance through top-line growth that exceeded our underlying markets and continued operating efficiency improvement which contributed to higher, sustainable long-term margins. The Company continues to benefit from its focus on a product portfolio with smart products and those that focus on industry mega trends including intelligence, safety and security, fuel efficiency and emissions. The Company believes that focusing on smart products that address industry megatrends will have a positive impact on both our top-line growth and underlying margins. Our PST segment performance continued to improve as a result of cost reductions and operational improvements despite the continued challenging economic environment in Brazil during the first half of 2017.

The actions of the Compensation Committee (the “Committee”) and our pay-for-performance philosophy functioned such that compensation earned by our executives was aligned with our financial performance for 2017. Highlights from the year and our performance are as follows:

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As a result:

Compensation Philosophy and Objectives

Our Company’s compensation programs for executive officers are designed to attract, retain, motivate, and reward talented executives who advance our strategic, operational and financial objectives and thereby enhance shareholder value. The primary objectives of our compensation programs for executive officers are to:

A substantial portion of our executive officers’ annual and long-term compensation is tied to quantifiable measures of the Company’s financial performance, and therefore will not be earned unless at least the minimum threshold performance is achieved.

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Elements of Compensation

Following are the elements of our executive compensation program and the objectives for including them.

Element			Type				Objective
Base Salary			Cash – fixed				Attract and retain highly skilled executives by providing market competitive base salary that is aligned with the executive's responsibilities, experience & performance.
Annual Incentive Plan			Cash – variable				Motivate and reward the achievement of individual, division and/or corporate financial and operational strategic objectives.
Long-Term Incentive Plan			Equity and/or Cash – variable				Retain and reward key employees, and align the interests of employees with our shareholders and the long-term success of the Company.
Benefits & Perquisites			Non-cash				Retain key employees by providing market competitive health, welfare & retirement benefits, and limited perquisites that align with our compensation philosophy.

Mix of Compensation

Our executive compensation is based on our pay-for-performance philosophy, which emphasizes executive performance measures that closely correlate with the achievement of both short-term performance objectives and long-term shareholder value. A significant portion of our executive officers’ annual and long-term performance-based compensation is at-risk, with the amount of risk increasing with the officer’s position level. This provides more upside potential as well as downside risk for more senior positions because they have greater influence on our overall performance.

There is no pre-established policy or target for the allocation between cash and non-cash or short-term and long-term incentive compensation. Rather, the Committee reviews competitive market compensation information provided by our compensation consultant and considers the Company’s historical compensation practices in determining the appropriate level and mix of incentive compensation for each executive position.

Total Target Compensation

Total target compensation is the value of the compensation package that is intended to be delivered if performance goals are met. Actual compensation depends on the annual and long-term incentive compensation payout levels based upon the applicable performance achievement and, for a significant percentage of long-term awards, the price of our common shares and total return to shareholders measured against peer group TSR. The following charts show the weighting of each element of total target compensation for the CEO, and average for the other NEOs.

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These charts demonstrate our pay-for-performance philosophy, showing that annual and long-term incentive-based compensation comprises the majority of total target compensation.

Compensation Policies & Best Practices

To achieve the goals of aligning executive compensation with Company performance while maintaining strong corporate governance and minimizing risk, the Committee and the Company review and adopt policies and best practices that they believe are in the best interest of the Company and our shareholders. Following are some of the practices that have been adopted over time that we believe help us to achieve these goals.

The Compensation Committee

The Committee has the responsibility for determining the compensation paid to the Company’s executive officers. In carrying out its responsibilities, among other things, the Committee does the following:

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Independent Compensation Consultant

The Committee retains the services of an independent compensation consultant to assist the Committee with the following:

In 2017, the Committee’s compensation consultant was Total Rewards Strategies, LLC (“TRS”).

Management

The Committee considers the recommendations and evaluations of the CEO when setting the compensation of the other executive officers.

Comparator Group

The Comparator Group is comprised of some of our direct competitors and a broader group of companies in the electronic and motor vehicle parts manufacturing industries that the Committee believes is representative of the labor market from which we recruit executive talent. Factors used to select the Comparator Group of companies include, but are not limited to, industry segment, revenue, profitability, number of employees and market capitalization. The Committee reviews and approves the Comparator Group annually. The companies in the Comparator Group in 2017 were:

Actuant		EnPro Industries		Methode Electronics
Altra Industrial Motion		ESCO Technologies		Modine Manufacturing Company
AVX		Franklin Electric		OSI Systems
Barnes Group		Gentex		Rogers
Chart Industries		Gentherm		Shiloh Industries
CIRCOR		Graco		Spartan Motors
Columbus McKinnon		KEMET		Standard Motor Products
Commercial Vehicle Group		Littelfuse		Superior Industries
CTS		Lydall		Tower International
Dorman Products		Meritor		Wabash National

Compensation Benchmarking

TRS provides the Committee with the 50^th and 75^th percentiles of the Comparator Group for base salary, cash bonus, long-term incentives and total overall compensation. The Committee uses as a primary reference point the 50^th percentile when determining base salary, annual incentive and long-term incentive targets; each element of pay is adjusted to reflect competitive market conditions. The goal of the executive compensation program is to target overall compensation at the 50^th percentile of pay practices of the Comparator Group of companies. Actual target pay for an individual may be more or less

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than the referenced percentiles based on the Committee’s evaluation of the individual’s performance and potential. Consistent with the Committee’s philosophy of pay-for-performance, incentive payments can exceed target levels only if overall Company financial targets are exceeded and will fall below target levels if overall financial goals are not achieved.

Consideration of Shareholder Advisory Vote on Executive Compensation

At our 2017 Annual Meeting of Shareholders, our shareholders approved our compensation advisory resolution with 92.8% of the votes cast on the say-on-pay proposal voted for the proposal on the 2016 executive compensation described in our 2017 Proxy Statement. The Committee believes the shareholders vote affirms the Company’s approach to executive compensation.

Base Salary

Base salary is the foundation of our compensation program for our executive officers. The annual cash incentive compensation awards and long-term incentive awards are typically based on a percentage of base compensation. The base salary is set at competitive market levels to attract and retain our executive officers. Base salary levels for our executive officers are set on the basis of the executive’s responsibilities, the current general industry and competitive market data, as discussed above. In each case, due consideration is given to personal factors, such as the individual’s experience, competencies, performance and contributions, and to external factors, such as salaries paid to similarly situated executive officers by like-sized companies and in particular our comparator group. The Committee considers the evaluation and recommendation of the CEO in determining the base salary of the other executive officers. The Committee generally approves all executive officer base salaries at its December meeting, which become effective January 1 of the following year.

Executive officers’ base salaries remain fixed throughout the year unless a promotion, change in responsibilities, or special circumstances occur. In 2017, Mr. Krakowiak was not eligible for a base salary increase on January 1 due to his hire date on August 29, 2016. In recognition of his performance, Mr. Krakowiak was awarded a 5% base salary increase on August 1, 2017.

Annual Incentive Awards

Our executive officers participate in our Annual Incentive Plan (“AIP”) which provides for annual cash payments based on the achievement of specific financial goals. As described above, the Company believes that a substantial portion of each executive’s overall compensation should be directly tied to quantifiable measures of financial performance. At the February 2017 Compensation Committee meeting, the Committee approved the Company’s 2017 AIP targets and metrics. The AIP targets are expressed as a percentage of the executive officer’s base salary.

For 2017, the structure of our AIP included both consolidated financial performance metrics and, where appropriate, divisional or functional focused metrics to incentivize specific performance. In addition, there is an individual performance metric for executive officers (excluding Mr. DeGaynor) and other leaders in the company as a way to incentivize and reward specific strategic and measurable activities that are particular to each leader’s area of responsibility. The individual metrics are considered critical to the achievement of the overall financial and operational metrics. The individual performance metric functions as a multiplier to the Overall Weighted Achievement, and can range from 90% to 110%.

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The AIP metrics, weighting, metric performance targets, and achievement for 2017 are summarized as follows:

Mr. DeGaynor, Mr. Krakowiak, Mr. Beaver, Mr. Moore, Ms. Nagle:		Weight				Metric Target				Achievement
Consolidated Metrics:
Operating profit			60%				$58.0 million				137%
Free cash flow			20%				$43.1 million				110%
Return on invested capital			20%				14.7%				158%
Overall Weighted Achievement											135.3%

Mr. Sloan:		Weight				Metric Target				Achievement
Consolidated Metrics:
Operating profit			40%				$58.0 million				137%
Free cash flow			20%				$43.1 million				110%
Return on invested capital			20%				14.7%				158%
Divisional Metrics:
Operating income			10%				$72.6 million				134%
Free cash flow			5%				$47.3 million				115%
Return on invested capital			5%				32.0%				133%
Overall Weighted Achievement											133.8%

The consolidated and divisional financial performance metric targets were based on our 2017 business plan and were intended to be challenging but achievable based on industry conditions known at the time they were established. Under the 2017 AIP, the minimum level for achievement for the consolidated and divisional financial metrics was based on 80% of target while the maximum level was based on 130% of target.

The following table provides the 2017 AIP targets and achievement as a percent of base salary and as a dollar amount for our NEOs.

Executive Officer		Percent of Base Salary Target				Percent of Target Bonus Achieved				Target Bonus				Achieved Bonus
Jonathan B. DeGaynor			100%				135.3%			$	615,000			$	832,095
Robert R. Krakowiak			65%				148.8%				265,417				395,020
Thomas A. Beaver			55%				148.8%				179,581				267,270
Anthony L. Moore			50%				148.5%				154,500				229,384
Alisa A. Nagle			50%				142.1%				133,900				190,225
Michael D. Sloan			65%				133.8%				206,206				275,904

For each performance metric, specific levels of achievement for minimum, target, and maximum were set as described above. At target, 100% payout is achieved for each element of the plan; at maximum, 200% payout is achieved; and at minimum, 50% payout is achieved. Below the minimum, no incentive is earned under the plan. Minimum achievement under the Operating Income metric is required for the other metrics to payout above their minimum levels. The AIP incentive compensation payout earned between the minimum and maximum levels is prorated. The payment of compensation under the 2017 plan was subject to our overall performance and is included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.

In addition to AIP, Mr. Krakowiak received a sign-on bonus in the amount of $250,250. The Committee also approved discretionary bonuses for Mr. Krakowiak, Mr. Moore and Ms. Nagle in recognition of their accomplishment in 2017. These discretionary bonuses are included in the “Bonus” column of the Summary Compensation Table.

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Long-Term Incentive Awards

We believe that long-term incentive awards are a valuable motivation and retention tool and provide a long-term performance incentive to management. Under our Long-Term Incentive Plan (“LTIP”), executive officers may be granted share options, restricted common shares and other equity-based awards. Under our Long-Term Cash Incentive Plan (“LTCIP”), executive officers may be granted awards payable in cash. The long-term awards are calculated based on the fair value of the shares, shares equivalent or cash at the time of grant. In 2017, we used the following long-term incentive vehicles to provide grants to our executive officers.

SRI TSR v. Peer Group		Calculation of # of Shares				Shares Earned as a % of Target Shares
50th – 100th percentile			SRI percentile x 2.0				100% – 200%
30th – 49th percentile			50% + {2.5 × (SRI percentile – 30)}				50% – 99%
< 30th percentile			n/a				0%

		Threshold				Target				Maximum
Cumulative EPS		$	2.48			$	3.54			$	4.60

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The following chart shows the allocation of the LTIP awards that were granted in 2017:

The Committee determines the value of the annual grant to the executive officers by considering the comparison to our Comparative Group obtained during the annual compensation review process, as well as the executives’ responsibilities, performance and potential contributions. The targeted value of 2017 LTIP grants were established as listed in the table below.

Executive Officer		Targeted Value 2017 Grant
Jonathan B. DeGaynor		$	1,300,000
Robert R. Krakowiak			500,000
Thomas A. Beaver			336,000
Anthony L. Moore			309,000
Alisa A. Nagle			201,000
Michael D. Sloan			362,000

The grant date fair value of the time-based and performance share units awarded in 2017 are included in the “Stock Awards” column of the Summary Compensation Table. The time-based units awarded in 2017 are included in the “All Other Stock Awards” column of the Grants of Plan-Based Awards table, and the grant date fair value of the performance shares awarded are included in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns of the Grants of Plan-Based Awards table.

The Committee’s practice has been to approve the long-term incentive awards at the first regular meeting of the calendar year. As a general practice, awards under the long-term incentive plans are approved once a year unless a situation arises whereby a compensation package is approved for a newly hired or promoted executive officer and equity-based compensation is a component.

2015 Grant of Performance Based Shares

The performance period for the performance shares that were granted in 2015 ended on December 31, 2017. The shares vested on March 30, 2018, as shown below. These shares are included for each NEO in the “Outstanding Equity Awards at Year-End” table.

2015 LTIP Grant — Performance Period Results

Award Type & Metric

Grant Date

Vest Date

Allocation of Shares

Performance Results (2015 – 2017)

Payout % of Target Shares

Time-Based RSU

3/30/2015

3/30/2018

45%

n/a

100%

Performance Shares – EPS

3/30/2015

3/30/2018

35%

119% of target

130% of target

Performance Shares – TSR

3/30/2015

3/30/2018

20%

93rd percentile of Peer Group

150% of target

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The TSR Peer Group for the 2015 grant consisted of the following companies:

American Axle & Manufacturing		Commercial Vehicle Group		CTS
EnPro Industries		Esterline Technologies		Gentex
Graco		Littelfuse		Meritor, Inc.
Modine Manufacturing		Standard Motor Products		Superior Industries International
Titan International

Perquisites

We provide executive officers with limited perquisites that we and the Committee believe are reasonable and consistent with the overall compensation program to better enable us to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites provided to executive officers.

Perquisites that are provided to executive officers are different by individual and might include an auto allowance or spousal travel. The incremental costs of the perquisites listed above for the NEOs are included in the “All Other Compensation” column of the Summary Compensation Table.

Employment Agreements

We use employment agreements in limited situations. In 2015, we entered into a negotiated employment agreement with Mr. DeGaynor which remains in effect. This agreement provides for a minimum base salary of $500,000; participation in the annual incentive plan at a target of 100% of base salary; a monthly auto allowance, participation in the Company’s customary benefit plans including an annual executive physical; and participation in the long-term incentive plan. In addition, if Mr. DeGaynor is terminated without cause, we will be obligated to pay him the sum of his annual base salary and target annual incentive as well as health and welfare benefits for one year, and if the termination occurs in the last six months of the fiscal year, he would be paid a prorated annual incentive.

The Company has not entered into an employment agreement with any other NEO.

Severance Plan

We have an Officers’ and Key Employees’ Severance Plan (the “Severance Plan”). The NEOs covered under the Severance Plan include Mr. Krakowiak, Mr. Beaver, Mr. Moore, Ms. Nagle and Mr. Sloan. If a covered executive is terminated by us without cause, we will be obligated under the Severance Plan to pay the executive’s salary for 12 months and continue health and welfare benefits coverage over the same period of time. Mr. DeGaynor’s severance protection is provided in his employment agreement as described above.

Termination and Change in Control Payments

We have entered into change in control agreements with Mr. DeGaynor, Mr. Krakowiak, Mr. Beaver, Ms. Nagle and Mr. Sloan and certain other senior management employees. These agreements are designed to promote stability and continuity of senior management, both of which are in the best interest of Stoneridge and our shareholders. Our termination and change in control provisions for the NEOs are summarized below under “Potential Change in Control and Other Post-Employment Payments.”

Tax Deductibility of Compensation

Before January 1, 2018, Section 162(m) of the Internal Revenue Code of 1986, as amended (“the Code”) generally disallows a tax deduction to public companies for compensation in excess of $1.0 million paid to a Company’s CEO and the other NEOs, excluding the CFO. For 2017 qualifying performance-based

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compensation will not be subject to the deduction limit if certain requirements are met. In 2017 the Committee structured performance-based compensation so that it would not be subject to the deduction limit. However, beginning in 2018, Section 162(m) has been amended to remove from the deduction limit qualifying performance-based compensation, It will now limit the federal income tax deduction for annual individual compensation to $1.0 million for the NEOs, subject to a transition rule for written binding contracts in effect on November 2, 2017 and not materially modified after that date.

Consistent with our executive compensation philosophy of linking pay to performance and aligning executives to our shareholders’ interest, the Committee will continue to structure our compensation program so that a significant portion of total executive compensation is linked to Company performance. The Committee may determine that it is appropriate to pay performance-based compensation, which is not deductible.

Now that the performance-based compensation exception is no longer available, the Company may not generally attempt to meet the Section 162(m) requirements previously included in our plans related to the exception.

However, the Company intends to comply with the transition rule, to the extent possible, as of November 2, 2017, for written binding contracts as long as the Committee determines that to be in the Company’s best interest.

Accounting Treatment of Compensation

As one of many factors, the Committee considers the financial impact in determining the amount of and allocation of the different pay elements, including Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 Stock Compensation.

Share Ownership Guidelines

The Committee has established share ownership guidelines for our executive officers to enhance the linkage between the interests of our executive officers and those of our shareholders. These guidelines provide that the CEO, CFO and other executive officers must retain Company common shares equal in market value to five, four and three times, respectively, of their annual base salaries. The executive officers have a five year accumulation period from implementation, hire, or promotion to achieve compliance and are restricted from selling any common shares earned under a Company equity-based compensation plan until their ownership guideline has been reached.

Clawback Policy

The Company adopted a clawback policy which provides for recoupment of performance-based executive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under federal securities laws. The policy applies to current and former executives and requires reimbursement or forfeiture of any excess performance-based compensation received by an executive during the three completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement.

Compensation Risk Assessment

The Compensation Committee reviews the Company’s incentive compensation structure practices for all employees to evaluate any risks associated with the Company’s compensation programs.

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As part of the evaluation, the Compensation Committee reviews a compensation risk assessment that was prepared by Company management and its independent compensation consultant. The compensation risk assessment analyzes all Company compensation programs for various categories of compensation related risk.

The Compensation Committee considers, among other factors, the design of the incentive compensation programs, which are closely aligned to corporate performance, the mix of short term and long term compensation, the maximum payout levels for short term and long term incentives, the distribution of compensation between equity and cash, and other factors that mitigate risk.

The Compensation Committee determined that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.

Compensation Committee Report

We have reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on that review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

The Compensation Committee

Kim Korth, Chairwoman
Jeffrey P. Draime
Douglas C. Jacobs
William M. Lasky

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Summary Compensation Table

The following table provides information regarding the compensation of our NEOs for 2017.

Name and Principal Position		Year				Salary ($)				Bonus ($)(1)				Stock Awards ($)(2)				Non-Equity Incentive Plan Compensation ($)(3)				All Other Compensation ($)(4)				Total ($)
Jonathan B. DeGaynor President & Chief Executive Officer			2017			$	615,000			$	—			$	1,299,862			$	832,095			$	26,408			$	2,773,365
			2016				550,000								1,095,793				720,720				25,864				2,392,377
			2015				378,846								1,732,934				371,144				16,828				2,499,752
Robert R. Krakowiak Chief Financial Officer & Treasurer			2017				408,333				275,250				499,904				395,020				9,480				1,587,987
			2016				137,949				2,500				509,626				115,275				1,450				766,799
Thomas A. Beaver Vice President & President of Global Sales			2017				326,510								336,391				267,270				27,264				957,434
			2016				317,000				5,000				323,745				224,144				26,975				896,865
			2015				317,000								321,204				155,278				23,265				816,747
Anthony L. Moore Vice President Operations			2017				309,000				25,000				308,858				229,384				1,518				873,760
Alisa A. Nagle Chief Human Resources Officer			2017				267,800				25,000				200,973				190,225				9,386				693,384
Michael D. Sloan Vice President			2017				317,240								361,676				275,904				10,159				964,979
			2016				308,000				20,000				348,578				259,599				6,908				943,085
			2015				308,000								346,086				258,980				4,389				917,455

Executive Officer		Auto Allowance				401(k) Match				Group Term Life Ins				Spousal Travel				Deferred Compensation Match				Wellness Incentive				Total
Jonathan B. DeGaynor		$	14,400			$	8,100			$	2,622			$	1,286			$	—			$	—			$	26,408
Robert R. Krakowiak			—				8,100				1,380				—				—				—				9,480
Thomas A. Beaver			14,400				8,100				4,764				—				—				—				27,264
Anthony L. Moore			—				—				1,518				—				—				—				1,518
Alisa A. Nagle			—				6,548				1,338				—				900				600				9,386
Michael D. Sloan			—				5,552				4,607				—				—				—				10,159

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Grants of Plan-Based Awards in 2017

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Outstanding Equity Awards at Year-End

		STOCK AWARDS
Name		Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)(1)				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1)
Jonathan B. DeGaynor			51,355(2)			$	1,173,975				109,079(8)			$	2,493,546
			37,530(3)				857,936				56,295(9)				1,286,904
			31,230(4)				713,918				64,030(10)				1,463,726
Robert R. Krakowiak			12,669(5)				289,613				19,003(9)				434,409
			12,010(4)				274,549				26,025(10)				594,932
Thomas A. Beaver			12,780(2)				292,151				21,468(8)				490,758
			11,090(3)				253,517				16,630(9)				380,162
			8,080(4)				184,709				17,515(10)				400,393
Anthony L. Moore			6,793(6)				155,288				13,757(9)				314,485
			9,171(7)				209,649				16,080(10)				367,589
			7,420(4)				169,621
Alisa A. Nagle			6,650(3)				152,019				9,990(9)				228,371
			4,830(4)				110,414				10,460(10)				239,116
Michael D. Sloan(11)			13,770(2)				314,782				23,131(8)				528,775
			11,940(3)				272,948				17,905(9)				409,308
			8,690(4)				198,653				18,825(10)				430,340

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Shares Vested in 2017

		Stock Awards(1)
Executive Officer		Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)
Jonathan B. DeGaynor			21,855			$	402,132
Robert R. Krakowiak			—				—
Thomas A. Beaver			47,096				859,973
Anthony L. Moore			—				—
Alisa A. Nagle			—				—
Michael D. Sloan			34,361				627,432

Non-Qualified Deferred Compensation Plan

The Compensation Committee approved implementation of a non-qualified deferred compensation plan for our executive officers and certain other leaders in the organization, effective June 1, 2017. The plan provides the opportunity to defer current compensation and taxes until a future date, and to receive tax deferred investment returns on deferred amounts. The Company will provide matching contributions to the extent that participants are unable to receive a full match in the 401(k) plan, due to contribution and/or compensation limits. The plan allows eligible employees to defer up to 80% of their base salary, up to 100% of AIP and, beginning in 2018, up to 100% of LTIP (deferrals were limited in 2017 due to the partial implementation year). The minimum deferral period is three years.

Non-Qualified Deferred Compensation

Name		Executive contributions in last FY ($)				Registrant contributions in last FY ($)				Aggregate earnings in last FY ($)				Aggregate balance at last FYE ($)
Jonathan B. DeGaynor		$	—			$	—			$	—			$	—
Robert R. Krakowiak			—				—				—				—
Thomas A. Beaver			—				—				—				—
Anthony L. Moore			—				—				—				—
Alisa A. Nagle			30,000				900				978				31,878
Michael D. Sloan			—				—				—				—

Potential Change in Control and Other Post-Employment Payments

We have entered into a Change in Control Agreement (the “CIC Agreement”) with certain executive officers. There is no excise tax gross-up payment under the CIC Agreements. Our change in control agreements were designed to provide for continuity of management in the event of change in control of the Company. We think it is important for our executives to be able to react neutrally to a potential change in control and not be influenced by personal financial concerns. We believe our arrangements are consistent with market practice. For our NEOs covered under a CIC Agreement we set the level of benefits, as described below, to remain competitive with our select peer group. All payments under the CIC Agreement are conditioned on a non-compete, non-solicitation and non-disparagement agreement.

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We believe that the CIC Agreements should compensate executives displaced by a change in control and not serve as an incentive to increase personal wealth. Therefore, our CIC Agreements are “double trigger” arrangements. In order for the executives to receive the payments and benefits set forth in the agreement, both of the following must occur:

In March 2015, we entered into a Change in Control Agreement with Mr. DeGaynor as part of his employment agreement. The terms of this Change in Control Agreement are substantially similar to that described above. If the events listed above occur and the executive delivers a release to the Company, we will be obligated to provide the following to Mr. DeGaynor:

If the events listed above occur and the executive delivers a release to the Company, we will be obligated to provide the following to Mr. Krakowiak, Mr. Beaver, Ms. Nagle and Mr. Sloan:

Upon a change in control as defined by the Amended and Restated Long-Term Incentive Plan (“2006 LTIP”), restricted shares and performance-based restricted shares granted under that plan vest immediately and are no longer subject to forfeiture. Upon a change in control as defined by the 2016 LTIP, restricted shares and performance-based restricted shares granted under that plan remain subject to forfeiture under the original terms of the grant unless a triggering event, as described above, occurs within two years of the effective date of the change in control.

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We have a Severance Plan. The NEOs covered under the Severance Plan include Mr. Krakowiak, Mr. Beaver, Mr. Moore, Ms. Nagle and Mr. Sloan. If we terminate a covered executive without cause, we will be obligated under the Severance Plan to pay the executive’s salary for one year and continue health and welfare benefits coverage over the same period of time. Mr. DeGaynor’s severance protection is provided in his employment agreement as described above. No severance is payable if the NEO’s employment is terminated for “cause,” if they resign, or upon death or disability.

Value of Payment Presuming Hypothetical December 31, 2017 Termination Date

Upon resignation, no payments are due to any NEO in the table below. Assuming the events described in the table below occurred on December 31, 2017, each NEO would be eligible for the following payments and benefits:

		Termination Without Cause				Non-Termination Change in Control				Change in Control and NEO Resigns for Good Reason or is Terminated Without Cause				Disability				Death
Jonathan B. DeGaynor
Base Salary		$	615,000			$	—			$	1,230,000			$	153,750			$	—
Annual Incentive Award			615,000				—				1,441,440				—				—
Unvested and Accelerated Restricted Common Shares and Share Units			1,798,762				2,031,911				2,745,829				2,745,829				2,745,829
Unvested and Accelerated Performance Shares, Restricted Common Shares and Phantom Shares			2,554,554				2,871,902				3,744,468				2,554,554				2,554,554
Health and Welfare Benefits			25,359				—				50,718				—				—
Total		$	5,608,675			$	4,903,813			$	9,212,455			$	5,454,133			$	5,300,383
Robert R. Krakowiak
Base Salary		$	420,000			$	—			$	840,000			$	—			$	—
Annual Incentive Award			—				—				477,038				—				—
Unvested and Accelerated Restricted Common Shares and Share Units			204,986				289,613				564,162				204,986				204,986
Unvested and Accelerated Performance Shares, Restricted Common Shares and Phantom Shares			250,535				353,964				689,549				250,535				250,535
Health and Welfare Benefits			25,434				—				50,868				—				—
Total		$	900,955			$	643,578			$	2,621,617			$	455,521			$	455,521
Thomas A. Beaver
Base Salary		$	326,510			$	—			$	653,020			$	—			$	—
Annual Incentive Award			—				—				416,127				—				—
Unvested and Accelerated Restricted Common Shares and Share Units			474,025				545,668				730,377				474,025				474,025
Unvested and Accelerated Performance Shares, Restricted Common Shares and Phantom Shares			579,349				666,826				892,683				579,349				579,349
Health and Welfare Benefits			8,809				—				17,619				—				—
Total		$	1,388,693			$	1,212,494			$	2,709,826			$	1,053,374			$	1,053,374

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		Termination Without Cause				Non-Termination Change in Control				Change in Control and NEO Resigns for Good Reason or is Terminated Without Cause				Disability				Death
Anthony L. Moore(1)
Base Salary		$	309,000			$	—			$	—			$	—			$	—
Annual Incentive Award			—				—				—				—				—
Unvested and Accelerated Restricted Common Shares and Share Units			292,997				364,937				534,558				292,997				292,997
Unvested and Accelerated Performance Shares, Restricted Common Shares and Phantom Shares			199,949				256,238				463,578				199,949				199,949
Health and Welfare Benefits			18,922				—				—				—				—
Total		$	820,868			$	621,175			$	998,136			$	492,946			$	492,946
Alisa A. Nagle
Base Salary		$	267,800			$	—			$	535,600			$	—			$	—
Annual Incentive Award			—				—				257,127				—				—
Unvested and Accelerated Restricted Common Shares and Share Units			123,581				152,019				262,433				123,581				123,581
Unvested and Accelerated Performance Shares, Restricted Common Shares and Phantom Shares			150,622				186,080				320,954				150,622				150,622
Health and Welfare Benefits			24,635				—				49,271				—				—
Total		$	566,638			$	338,099			$	1,425,385			$	274,203			$	274,203
Michael D. Sloan
Base Salary		$	317,240			$	—			$	634,480			$	—			$	—
Annual Incentive Award			—				—				531,305				—				—
Unvested and Accelerated Restricted Common Shares and Share Units			510,555				587,731				786,384				510,555				510,555
Unvested and Accelerated Performance Shares, Restricted Common Shares and Phantom Shares			623,932				718,261				961,034				623,932				623,932
Health and Welfare Benefits			24,604				—				49,209				—				—
Total		$	1,476,331			$	1,305,992			$	2,962,412			$	1,134,487			$	1,134,487

CEO Pay Ratio

In compliance with Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K, we undertook activities to calculate the ratio of our CEO’s total annual compensation to that of our median employee. Following is a description of the methodology used and the resulting ratio.

Methodology

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Ratio

We calculated the 2017 total compensation data for both the CEO and the median employee. Our median employee’s total annual compensation in 2017 was $21,591. Our CEO’s total annual compensation in 2017 for purposes of calculating the CEO pay ratio was $2,773,365. The ratio of our CEO’s total annual compensation to the median of the annual total compensation of our median employee was 128 to 1.

Director Compensation

Non-employee directors are compensated for their services as directors as shown in the chart below.

Schedule of Director Fees

Cash Compensation
Annual Retainer – Director		$	75,000
Annual Retainer – Chairman			145,000
Additional Compensation:
Audit Committee Chair			12,500
Compensation Committee Chair			10,000
Nominating & Corporate Governance Committee Chair			7,500
Equity Compensation
Date of grant value			95,000

The Compensation Committee periodically reviews the compensation paid to the directors and may recommend changes to the full Board for approval, as appropriate. For 2017, the Committee recommended and the Board approved no increases to the cash or equity annual retainers for directors.

Pursuant to the Directors’ Restricted Shares Plan, non-employee directors are eligible to receive awards of restricted common shares. In 2017, all directors were granted 5,072 restricted common shares. The restrictions for those common shares lapsed on March 6, 2018.

Director Compensation Table

Non-Employee Director		Fees Earned or Paid in Cash				Stock Awards ($)(1)				Total Compensation ($)
Jeff Draime		$	75,000			$	95,000			$	170,000
Doug Jacobs			87,500				95,000				182,500
Ira Kaplan			75,000				95,000				170,000
Kim Korth			85,000				95,000				180,000
Bill Lasky			152,500				95,000				247,500
George Mayes, Jr.			75,000				95,000				170,000
Paul Schlather			75,000				95,000				170,000
Totals		$	625,000			$	665,003			$	1,290,003

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Director Share Ownership Guidelines

The Board has established share ownership guidelines for all non-employee directors. These guidelines provide that each director should own Company common shares equal in market value to four times the cash portion of the Board’s annual retainer. The Directors have a five year accumulation period from implementation of the guideline or appointment to the Board to achieve compliance and are restricted from selling any common shares earned under a Company equity-based compensation plan until their ownership guideline has been reached.

OTHER INFORMATION

Shareholder’s Proposals for 2019 Annual Meeting of Shareholders

Proposals of shareholders intended to be presented, pursuant to Rule 14a-8 under the Exchange Act, at our 2019 Annual Meeting of Shareholders must be received by the Company at Stoneridge, Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377, on or before December 6, 2018, for inclusion in our proxy statement and form of proxy relating to the 2019 Annual Meeting of Shareholders. In order for a shareholder’s proposal outside of Rule 14a-8 under the Exchange Act to be considered timely within the meaning of Rule 14a-4(c) of the Exchange Act, such proposal must be received by the Company at the address listed in the immediately preceding sentence not later than February 19, 2019.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers, and owners of more than 10% of our common shares, to file with the SEC and the NYSE initial reports of ownership and reports of changes in ownership of our common shares and other equity securities. Executive officers, directors and owners of more than 10% of the common shares are required by SEC regulations to furnish us with copies of all forms they file pursuant to Section 16(a). To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations that no other reports were required during the fiscal year ended December 31, 2017, all Section 16(a) filing requirements applicable to our executive officers, directors and more than 10% beneficial owners were complied with.

Other Matters

If the enclosed proxy is executed and returned to us via mail, telephone or Internet, the persons named in it will vote the common shares represented by that proxy at the meeting. The form of proxy permits specification of a vote for the election of directors as set forth under “Election of Directors,” the withholding of authority to vote in the election of directors, or the withholding of authority to vote for one or more specified nominees. When a choice has been specified in the proxy, the common shares represented will be voted in accordance with that specification. If no specification is made, those common shares will be voted at the meeting to elect directors as set forth under “Election of Directors”, FOR the proposals to (i) ratify the appointment of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2018; (ii) approve of the advisory resolution on executive compensation, and (iii) approve the 2018 Amended and Restated Directors’ Restricted Shares Plan.

The holders of shares of a majority of the common shares outstanding on the record date, present in person or by proxy, shall constitute a quorum for the transaction of business to be considered at the Annual Meeting of Shareholders.

If any other matter properly comes before the meeting, the persons named in the proxy will vote thereon in accordance with their judgment. We do not know of any other matter that may be presented for action at the meeting and we have not received any timely notice that any of our shareholders intend to present a proposal at the meeting.

By order of the Board of Directors,

		Thomas M. Dono, Jr.
Dated: April 5, 2018		Secretary

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Appendix A

Stoneridge, Inc.
2018 Amended and Restated
Directors’ Restricted Shares Plan

1.  Purpose of Plan.

The purpose of this 2018 Amended and Restated Directors’ Restricted Shares Plan (the “Plan”) of Stoneridge, Inc., an Ohio corporation (the “Company”), is to advance the interests of the Company and its shareholders by providing Eligible Directors (as defined in Section 3, below) with (a) an opportunity to participate in the Company’s future prosperity and growth, and (b) an incentive to increase the value of the Company based on the Company’s performance, development, and financial success. These objectives will be promoted by granting to Eligible Directors restricted Common Shares, without par value, of the Company (the “Restricted Shares”).

The Plan amends and restates the Company’s prior Amended Directors’ Restricted Shares Plan, as amended, and increases by 150,000 Common Shares, without par value, of the Company (from 700,000 to 850,000 shares) the number of shares authorized for issuance under the Plan.

2.  Administration of Plan.

The Plan will be administered by the Board of Directors (the “Board”). The Board shall have the power and authority to: (a) approve the grant of Restricted Shares to Eligible Directors (such Eligible Directors, “Participants”); (b) approve the terms and conditions, not inconsistent with the terms hereof, of any grant of Restricted Shares, including without limitation time and performance restrictions, and approve the form of Restricted Shares Grant Agreement (as defined in Section 5, below); (c) adopt, alter, and repeal such administrative rules, guidelines, and practices governing the Plan as it shall, from time to time, deem advisable; (d) interpret the terms and provisions of the Plan and any agreements relating thereto; and (e) take any other actions the Board considers appropriate in connection with, and otherwise supervise the administration of the Plan, all in a manner consistent with the other provisions of the Plan.

3.  Participants in Plan.

The persons eligible to receive Restricted Shares under the Plan shall be those directors of the Company who are not employees or officers (except for the non-executive Chairman of the Board) of the Company or any subsidiary of the Company (any such person, an “Eligible Director”).

4.  Shares Subject to Plan.

The maximum aggregate number of Common Shares that may be issued under the Plan as Restricted Shares shall be 850,000 Common Shares, without par value. Restricted Shares forfeited pursuant to Section 7 shall again be available for grant under the Plan. However, Restricted Shares retained or sold by the Company to satisfy withholding requirements pursuant to Section 8 shall not again be available for grants under the Plan. The shares that may be issued under the Plan may be authorized but unissued shares or issued shares reacquired by the Company and held as Treasury Shares. In the event of a reorganization, recapitalization, share split, share dividend, combination of shares, merger, consolidation, distribution of assets, or any other change in the corporate structure or shares of the Company, the Company will make such adjustments as it deems appropriate in the number and kind of Common Shares reserved for issuance under the Plan. In the event of any merger, consolidation or other reorganization in which the Company is not the surviving or continuing corporation, all Restricted Shares that were granted hereunder and that are outstanding on the date of such event shall immediately vest and no longer be subject to forfeiture on the date of such event.

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5.  Grant, Issuance of Restricted Shares.

The Restricted Shares issued by the Company in connection with the Restricted Share grants made under the Plan shall be authorized by the Board and shall be made in accordance with, and subject to the terms of a written agreement (the “Restricted Shares Grant Agreement”) in the form approved by the Board from time to time. To be effective, any such Restricted Shares Grant Agreement, shall be signed by an officer of the Company authorized by the Board, and signed by the Participant, set forth the terms and other conditions to which the award of Restricted Shares is subject, if any, the period of time that the Restricted Shares are subject to forfeiture, if any, and state that such Restricted Shares are subject to all the terms and conditions of the Plan and such other terms and conditions, not inconsistent with the Plan, as the Board may approve. The date on which the Board approves the granting of the Restricted Shares shall be deemed to be the date on which the Restricted Shares are granted for all purposes, unless the Board otherwise specifies in its approval.

The Board may, in its sole discretion, provide in the Restricted Shares Grant Agreement that the forfeiture period with respect to the Restricted Shares may lapse upon a Participant’s death or disability or upon a Change in Control (as defined in Section 12, below) of the Company. In addition, the Board may, in its sole discretion, provide in the Restricted Shares Grant Agreement that any vesting condition of continued service as a member of the Board of Directors shall not apply to a Participant who fails to satisfy that condition solely because after the date of the Restricted Shares Grant Agreement that Participant was not nominated by the Board of Directors for election to the Board of Directors at the next annual meeting of shareholders. Any Restricted Shares issued under the Plan, so long as subject to forfeiture (a) shall not be sold, transferred, assigned, pledged, hypothecated, anticipated, alienated, encumbered or charged, whether voluntarily, involuntarily or by operation of law (collectively, “Transferred”) and (b) shall be forfeited to the Company in the event a Participant to whom such Restricted Shares are awarded voluntarily ceases to be a director during the period of time, if any, specified by the Board. Restricted Shares awarded under the Plan will be issued in the name of the Participant and held by the Company (or the Company’s agent) during such period of time that the Restricted Shares are subject to forfeiture. At the time the award is made the Participant may be asked to execute one or more blank stock powers and deliver the same to the Company so that any shares which are forfeited may be cancelled.

6.  Annual Limitation on Restricted Share Grants to Eligible Directors.

In any calendar year, no grant to any one Eligible Director may exceed 10,000 Restricted Shares.

7.  Termination of Status as an Eligible Director.

Except as may be provided in the Restricted Shares Grant Agreement as permitted under Section 5, if a Participant’s status as an Eligible Director terminates for any reason (including death, disability (as defined by the Board from time to time, in its sole discretion), resignation, refusal to stand for reelection or failure to be elected) then unless otherwise determined by the Board, to the extent any grant of Restricted Shares held by such Participant is not vested (i.e., no longer subject to forfeiture) as of the date of such termination, such Restricted Shares shall automatically be forfeited on such date.

8.  Withholding Tax.

The Company, at its option, shall have the right to require the Participant to pay the Company the amount of any taxes which the Company is required to withhold with respect to such Restricted Shares or, in lieu of such payment, to retain or sell without notice a number of such Restricted Shares sufficient to cover the amount required to be so withheld. The Company, at its option, shall have the right to deduct from all dividends paid with respect to Restricted Shares the amount of any taxes which the Company is required to withhold with respect to such dividend payments. The obligations of the Company under the Plan shall be conditional on such payment or other arrangements acceptable to the Company.

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9.  Securities Law Restrictions.

No right under the Plan shall be exercisable and no Restricted Shares shall be delivered under the Plan except in compliance with all applicable federal and state securities laws and regulations. The Company shall not be required to deliver any Restricted Shares or other securities under the Plan prior to such registration or other qualification of such shares under any state or federal law, rule, or regulation as the Board shall determine to be necessary or advisable, in its sole discretion.

Unless such shares have been registered under the Securities Act of 1933, as amended (the “1933 Act”), the Restricted Shares Grant Agreement evidencing the award of Restricted Shares shall contain a representation in form approved by the Board that such Restricted Shares are not being acquired with a view to resale or distribution and will not be sold or otherwise Transferred by the Participant, except in compliance with the 1933 Act and the rules and regulations thereunder and any applicable state securities laws. The Board may impose such other restrictions on the Restricted Shares as it may deem advisable. Share certificates issued in connection with awards of Restricted Shares under the Plan shall bear such legends and statements as the Board shall deem advisable to assure compliance with federal and state securities laws and regulations and any other restriction imposed by the Board on such awards.

10.  Term of Plan.

This Plan shall continue until terminated by the Board. The Board shall have the unrestricted right to amend, modify, suspend or terminate the Plan at any time; provided, however, the Board may not modify the terms of any outstanding awards evidenced by executed Restricted Shares Grant Agreements.

11.  Shareholders Rights.

Participants to whom Restricted Shares have been issued under the Plan shall have the rights of shareholders with respect to the Company’s Common Shares so long as no forfeiture event has occurred, except that the Restricted Shares may not be Transferred during the forfeiture period.

12.  Change in Control.

Notwithstanding any provision of this Plan or any Restricted Shares Grant Agreement to the contrary, if a Change in Control (as defined below) occurs, then all Restricted Shares theretofore granted and not fully vested shall thereupon become vested (i.e., shall no longer be subject to forfeiture).

For purposes of the Plan, a “Change in Control” means the happening of any of the following:

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Provided, however, further that a change in control shall not be deemed to be a Change in Control for purposes of this Plan if the Board had approved such change prior to either (A) the commencement of any of the events described in Section 12(b)(i), (ii), or (iii) of this Plan, or (B) the commencement by any person other than the Company of a tender offer for Company Common Shares.

13.  Acceleration of Rights.

The Board shall have the authority, in its discretion, to accelerate the time of vesting of Restricted Shares whenever it may determine that such action is appropriate by reason of changes in applicable tax or other laws after the award of the Restricted Shares.

14.  Interpretation, Amendment or Termination of Plan.

The interpretation by the Board of any provision of the Plan or of any terms contained in any Restricted Shares Grant Agreement executed in connection with a grant of Restricted Shares under the Plan shall be final and conclusive upon all Participants under the Plan. The Board, without further action on the part of the shareholders of the Company, may from time to time alter, amend, or suspend the Plan or may at any time terminate the Plan; provided that no such action shall adversely affect any Participant’s rights with respect to an outstanding issuance of Restricted Shares then held by such Participant without such Participant’s consent nor (subject to the provisions of Section 4 dealing with adjustments in the number and kind of Common Shares reserved for issuance under the Plan due to reorganizations and other corporate actions) shall any such action increase the number of Common Shares that may be issued as Restricted Shares without the approval of the Company’s shareholders. No member of the Board will incur any liability for any action taken or admitted, or any determination made, in good faith in connection with the Plan.

15.  Government Regulations.

Notwithstanding any provision of the Plan or any Restricted Shares Grant Agreement executed pursuant to the Plan, the Company’s obligations under the Plan and such agreement shall be subject to all applicable laws, rules, and regulations and to such approvals as may be required by any governmental or regulatory agencies, including without limitation any stock exchange on which the Company’s Common Shares may then be listed.

16.  Governing Law.

The Plan shall be construed and governed by the laws of the State of Ohio.

17.  Effective Date.

The Plan shall become effective on the day it is approved by the Company’s shareholders.

The current Amended Directors’ Restricted Shares Plan, as amended (the “Existing Plan”), which was previously approved by the Company’s shareholders, shall remain in full force and effect and shall only be

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superseded by the Plan when, and if, the Company’s shareholders approve the Plan. For the avoidance of doubt, Restricted Shares granted under the Existing Plan prior to the effective date of the Plan shall continue under the terms of the written agreements under the Existing Plan and vest in the event of a Potential Change in Control, as set forth in such written agreements and the Existing Plan.

18.  Severability Clause.

In case any one or more of the provisions of this Plan shall be held invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and the invalid, illegal, or unenforceable provision shall be deemed null and void; however, to the extent permissible by law, any provision which could be deemed null and void shall first be construed, interpreted, or revised retroactively to permit this Plan to be construed so as to foster the intent of this Plan. This Plan and all transactions pursuant to this Plan are intended to comply in all respects with applicable laws and regulations.

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