The Knights Cross was a variation of the sought after Iron Cross which had 7 grades;
Iron Cross second class
Iron Cross first class
Knights Cross of the Iron Cross
Knights Cross with Oak Leaves
Knights Cross with Oak Leaves and Crossed Swords
Knights Cross with Oak Leaves, Crossed Swords and Diamonds
Knights Cross with Golden Oak Leaves, Crossed Swords and Diamonds
When one was decorated with the Knights Cross it was worn from a ribbon around the neck. The Iron Cross first class was worn on the left side of the uniform replacing the Iron Cross second class with a chest ribbon. One had to win the I.C. second class in order to be considered for the first class award.
The Knights Cross was a highly respected decoration and among U-boat men it was the greatest honor one could achieve for many. U-boats crews took great pride if their captain received this medal and sometimes it was added to the boat's insignia (on Schnee's U-201 for example).
U-boat captains would often joke about having "an itchy neck" (Halsschmerzen in German) that could only be cured by wearing the Knights Cross ribbon :)
Only 27 men received the Knights Cross with oak leaves, crossed swords and diamonds and both the lucky ones in the German Navy were U-boat commanders.
The highest grade of the Knights Cross (Knights Cross with Golden Oak Leaves, Swords and Diamonds) was tailored for Hitler's favorite fighter, Oberst Hans-Ulrich Rudel of the Luftwaffe, which destroyed more than 500 Russian tanks (and a battleship at Leningrad!) in his dual-cannon equipped Ju-87 Stuka aircraft in over 2500 combat sorties!