SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for use of the
[X] Definitive proxy statement Commission only (as permitted by
[ ] Definitive additional materials Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to Rule 14a-11(C)or Rule 14a-12
PHOTRONICS, INC.
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(Name of Registrant as specified in Its Charter)
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(Name of Person[s] Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement number:
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(3) Filing party:
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(4) Date filed:
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PHOTRONICS, INC.
1061 East Indiantown Road
Jupiter, Florida 33477
(561) 745-1222
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 20, 2002
---------------------
TO THE SHAREHOLDERS OF PHOTRONICS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Photronics, Inc. will be held in the Soho Complex-7th Floor at the Marriott
Marquis-Time Square, 1535 Broadway, New York, NY 10036 on March 20, 2002, at
12:00 p.m. local time, for the following purposes:
1) To elect five (5) members of the Board of Directors;
2) To approve an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of Common Stock from
75,000,000 to 150,000,000;
3) To approve an amendment to the Photronics, Inc. 2000 Stock Plan to
increase the authorized number of shares of Common Stock available for
issuance from 1,000,000 to 2,500,000; and
4) To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed February 12, 2002 as the record date for
determining the holders of common stock entitled to notice of and to vote at
the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES.
By Order of the Board of Directors
James A. Eder
Secretary
February 20, 2002
PHOTRONICS, INC.
1061 East Indiantown Road
Jupiter, Florida 33477
(561) 745-1222
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PROXY STATEMENT
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For the Annual Meeting of Shareholders
to be held on March 20, 2002
GENERAL INFORMATION
The enclosed proxy is solicited by the Board of Directors (the "Board" or
"Board of Directors") of Photronics, Inc. (the "Company"), to be voted at the
Annual Meeting of Shareholders to be held on March 20, 2002, at 12:00 p.m.
local time in the Soho Complex-7th Floor at the Marriott Marquis-Time Square,
1535 Broadway, New York, NY 10036, or any adjournments or postponements thereof
(the "Annual Meeting"). This proxy statement and the enclosed proxy card are
first being sent or given to shareholders on or about February 20, 2002.
Voting by Proxy
The persons named as proxies on the accompanying proxy card have informed
the Company of their intention, if no contrary instructions are given, to vote
the shares of the Company's common stock ("Common Stock") represented by such
proxies "FOR" Proposals 1, 2 and 3, and in accordance with their best judgment
on any other matters which may come before the Annual Meeting. The Board of
Directors does not know of any business to be brought before the Annual Meeting
other than as set forth in the notice.
Any shareholder who executes and delivers a proxy may revoke it at any
time prior to its use upon (a) receipt by the Secretary of the Company of
written notice of such revocation; (b) receipt by the Secretary of the Company
of a properly executed proxy bearing a later date; or (c) appearance by the
shareholder at the Annual Meeting and his or her request to revoke the proxy.
Any such notice or proxy should be sent to Photronics, Inc., 1061 East
Indiantown Road, Jupiter, Florida 33477, Attention: Secretary. Appearance at
the Annual Meeting without a request to revoke a proxy will not revoke a
previously executed and delivered proxy.
Quorum; Required Votes
Only shareholders of record at the close of business on February 12, 2002
are entitled to notice of and to vote at the Annual Meeting. As of February 12,
2002, there were 30,373,076 shares of Common Stock issued and outstanding, each
of which is entitled to one vote. At the Annual Meeting, the presence in person
or by proxy of the holders of a majority of the total number of shares of
outstanding Common Stock will be necessary to constitute a quorum. Assuming a
quorum is present, the matters to come before the Annual Meeting that are
listed in the Notice of Meeting require the following votes to be approved: (1)
Proposal 1 (election of directors) -- a plurality of the votes cast by the
shareholders entitled to vote at the Annual Meeting: (2) Proposal 2 (amendment
to the Company's Certificate of Incorporation) -- the affirmative vote of a
majority of the Common Stock entitled to vote at the Annual Meeting: (3)
Proposal 3 (amendment to the Photronics, Inc. 2000 Stock Plan) -- the
affirmative vote of a majority of those shares of Common Stock, present in
person or by proxy and voting at the Annual Meeting. Abstentions will be
considered as present but will not be considered as votes in favor of any
matter; broker non-votes will not be considered as present for the matter as to
which the shares are not voted.
OWNERSHIP OF COMMON STOCK BY DIRECTORS, NOMINEES,
OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information on the beneficial
ownership of the Company's Common Stock as of February 12, 2002, by (i)
beneficial owners of more than five percent of the Common Stock, (ii) each
director, (iii) each nominee for election as a director, (iv) each executive
officer named in the summary compensation table set forth below, and (v) all
directors and executive officers of the Company as a group.
Amount and Nature of Percentage
Name and Address of Beneficial Owner Beneficial Ownership(1) of Class
- ----------------------------------------------------------- ------------------------- -----------
Robert J. Bollo ........................................... 96,417(2) *
Daniel Del Rosario ........................................ 31,097(2) *
Paul Fego ................................................. 31,291(2) *
Walter M. Fiederowicz ..................................... 48,730(2)(3) *
Joseph A. Fiorita, Jr. .................................... 63,150(2)(4) *
James L. Mac Donald ....................................... 601,948(2) 2.0
Constantine S. Macricostas ................................ 2,734,074(2)(5) 9.0
Willem D. Maris ........................................... 11,500(2) *
Michael J. Yomazzo ........................................ 323,634(2)(6) 1.1
Macricostas Partners, L.P. ................................ 2,280,000 7.5
1122 Bel Air
Allen, Texas 75013
High Rock Capital LLC ..................................... 1,898,780(7) 6.3
High Rock Asset Management LLC
28 State Street
18th Floor
Boston, MA 02109
Directors and Executive Officers as a group (13 persons) .. 4,003,722(8) 13.2
- ----------
* Less than 1%
(1) Except as otherwise indicated, the named person has the sole voting and
investment power with respect to the shares of Common Stock set forth
opposite such person's name.
(2) Includes shares of Common Stock subject to stock options exercisable as
of February 12, 2002 (or within 60 days thereof) as follows: Mr. Bollo
95,625; Mr. Del Rosario 30,250; Mr. Fego 30,875; Mr. Fiederowicz 16,250;
Mr. Fiorita 40,250; Mr. Mac Donald 218,436; Mr. Macricostas 122,000; Mr.
Maris 2,500; and Mr. Yomazzo 178,000. Also includes shares subject to
forfeiture under restricted stock award grants as follows: Mr.
Fiederowicz 3,000, Mr. Maris 3,000, Mr. Fiorita 3,000 and Mr. Yomazzo
3,000.
(3) Includes 10,500 shares owned by the wife of Mr. Fiederowicz as to which
shares he disclaims beneficial ownership.
(4) Includes 300 shares owned by the wife of Mr. Fiorita, as to which shares
he disclaims beneficial ownership.
(5) Includes 34,000 shares held by the wife of Mr. Macricostas as to which
shares he disclaims beneficial ownership. Also includes 2,280,000 shares
owned by Macricostas Partners, L.P., of which Mr. Macricostas is a
limited partner and 50,618 shares owned by the corporate general partner
of such partnership of which Mr. Macricostas is President, a director and
a significant shareholder. Mr. Macricostas disclaims beneficial ownership
of those shares not represented by his ownership interests.
(6) Includes 46,000 shares held by a trust for the benefit of Mr. Yomazzo's
wife as to which shares Mr. Yomazzo disclaims beneficial ownership. Also
includes 86,000 shares owned by Yomazzo Associates Limited Partnership of
which Mr. Yomazzo is a general partner and a limited partner. Mr. Yomazzo
disclaims beneficial ownership of those shares not represented by his
ownership interests.
2
7) According to a Schedule 13G dated February 12, 2001, High Rock Capital LLC
("HRC") and High Rock Asset Management LLC ("HRAM") reported that HRAM has
sole voting and dispositive power over 178,890 shares of Common Stock and
HRC has sole voting power over 1,418,700 and sole dispositive power over
1,719,800 shares of Common Stock.
8) Includes the shares listed in notes (2), (3), (4), (5), and (6) above.
PROPOSAL 1
ELECTION OF DIRECTORS
A board of five directors is to be elected at the Annual Meeting to serve
until the 2003 annual meeting of shareholders and until their successors are
elected and qualified. The names of, and certain information with respect to,
the nominees for election as directors are set forth below.
If, for any reason, any of the nominees shall become unable to stand for
election, the individuals named in the enclosed proxy may exercise their
discretion to vote for any substitutes chosen by the Board of Directors, unless
the Board of Directors should decide to reduce the number of directors to be
elected at the Annual Meeting. The Company has no reason to believe that any
nominee will be unable to serve as a director.
The Board of Directors recommends a vote "FOR" the election of each of the
following nominees:
Nominees:
Director
Name and (Age) Since Position with the Company
- -------------- -------- -------------------------
Walter M. Fiederowicz .............. 1984 Director
(55 years)
Joseph A. Fiorita, Jr. ............. 1987 Director
(57 years)
Constantine S. Macricostas ......... 1974 Chief Executive Officer,
(66 years) Chairman of the Board
and President
Willem D. Maris .................... 2000 Director
(62 years)
Michael J. Yomazzo ................. 1977 Director
(59 years)
In addition to the information set forth in the table above, the following
provides certain information about each director and nominee for election,
including his principal occupation for at least the past five years.
Walter M. Fiederowicz has been a private investor and consultant since
August 1997. From April 1997 until August 1997, he served as the President and
Chief Executive Officer of WorldCorp., Inc., the holding company of World
Airways, Inc., a provider of long-range passenger and cargo air transportation
services to major airlines, and of InteliData Technologies Corporation, a
provider of caller identification based telecommunications devices, smart
telephones and on-line electronics information services. Mr. Fiederowicz served
as Chairman of Colonial Data Technologies Corp., a distributor of
telecommunications equipment which subsequently merged into InteliData
Technologies Corporation, from August 1994 to March 1996. He currently serves
as Chairman of the Board of Meacock Capital, plc, an investment vehicle for the
Lloyd's insurance market. He also is Chairman of the Board of Heritage
Underwriting Agency, plc, the holding company of the Lloyd's insurance
underwriter and serves as a director of First Albany Companies, Inc., the
parent of a broker-dealer. Mr. Fiederowicz is a member of the Audit,
Compensation and Executive Committees.
3
Joseph A. Fiorita is a partner in Fiorita, Kornhaas and Van Houten, P.C.,
an independent certified public accounting firm located in Danbury,
Connecticut. Mr. Fiorita is Chairman of the Audit Committee and a member of the
Nominating and Compensation Committees.
Constantine S. Macricostas is the Chief Executive Officer and Chairman of
the Company. In January 2002, he temporarily assumed the position of President
upon the retirement of James L. Mac Donald. From August 1997 to June 2000 he
was the Chairman of the Board of the Company, and also served as Chief
Executive Officer of the Company from 1974 until August 1997. Mr. Macricostas
is Chairman of the Executive Committee. Mr. Macricostas is a director of
RagingWire Telecommunications, Inc.
Willem D. Maris served as the President and Chief Executive Officer of ASM
Lithography Holding N.V. from June 1990 until his retirement in January 2000.
Headquartered in the Netherlands, ASML develops, manufactures, markets and
services advanced lithography projection systems for the fabrication of
integrated circuits. He is a director of FSI International, Inc. and Chairman
of the Supervisory Board of BE Semiconductor Industries N.V. Mr. Maris is a
member of the Audit, the Nominating and the Strategic Alliance & Planning
Committees.
Michael J. Yomazzo retired as an employee of the Company in January, 2001.
Prior to that date he was the Vice Chairman of the Company since January 1,
1999. He served as Chief Executive Officer of the Company from August 1997
until December 31, 1998 and as President from January 1994 until December 31,
1998. From November 1990 until January 1994, he served as Executive Vice
President and from July 1989 until November 1990, he served as Senior Vice
President-Finance and Planning. Mr. Yomazzo is a director of WaveCrest
Corporation and ATMI, Inc. Mr. Yomazzo is a member of the Executive, the
Nominating and the Strategic Alliance & Planning Committees.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met seven (7) times during the 2001 fiscal year.
During fiscal 2001, each director attended at least 75% of the total number of
meetings of the Board of Directors and of all committees of the Board on which
such director served.
The Company's Board of Directors has Audit, Executive, Compensation,
Nominating and Strategic Alliance & Planning Committees. Membership of the
Audit, Compensation and Nominating Committees is comprised of non-employee
directors.
The Audit Committee's functions include recommending to the Board of
Directors the engagement of the Company's independent certified public
accountants, reviewing with such accountants the plan for and results of their
auditing engagement and the independence of such accountants. All members of
this Committee are non-employee directors. The Audit Committee held five (5)
meetings during the 2001 fiscal year.
The Compensation Committee's functions include establishing compensation,
policies and programs for the executive officers of the Company and
administration of the Company's stock plans. The Compensation Committee held
four (4) meetings during the 2001 fiscal year.
The Executive Committee, with certain exceptions, may exercise all of the
authority of the Board between regular meetings of the entire Board. The
Executive Committee met one (1) time during this past fiscal year. In addition,
this Committee met informally with senior management throughout the year.
The Strategic Alliance & Planning Committee reviews and provides
recommendations to the entire Board on various matters relating to strategic
alliances and long-range planning for the Company's business. This Committee
held one (1) meeting during the past fiscal year.
The Nominating Committee reviews the qualifications of future Board
members and recommends nominations to the Board. The Nominating Committee will
consider nominations for future election to the Board, and shareholders may
submit in writing the names and qualifications of proposed nominees to the
Secretary of the Company. This Committee was established in February 2002, and
accordingly, did not meet in the past fiscal year.
4
AUDIT COMMITTEE REPORT
The Audit Committee is composed of three directors, each of whom is
independent as defined by the listing standards of the National Association of
Securities Dealers, Inc.
For the fiscal year ended October 31, 2001, the Audit Committee reviewed
and discussed the audited financial statements with management, discussed with
the independent auditors the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards) and received the written
disclosures and a letter from the independent accountants required by
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees). The Audit Committee discussed with the independent
accountants the independence of the independent accountants. Based on the
foregoing meetings, reviews and discussions, the Audit Committee recommended to
the Board of Directors that the audited financial statements for fiscal 2001 be
included in the Company's Annual Report on Form 10-K for filing with the
Securities and Exchange Commission.
This report is submitted by:
Joseph A. Fiorita, Jr. Chairman
Walter M. Fiederowicz
Willem D. Maris
Audit Fees
The aggregate fees for professional services rendered by Deloitte & Touche
in connection with their audit of our consolidated financial statements for the
2001 fiscal year was approximately $327,000.
Financial Information Systems Design and Implementation Fees
There were no professional services rendered by Deloitte & Touche in the
2001 fiscal year relating to financial information systems design and
implementation.
All Other Fees
The aggregate fees for all other services rendered by Deloitte & Touche in
the 2001 fiscal year was approximately $635,000 and can be sub-categorized as
follows:
Attestation Fees. The aggregate fees for attestation services rendered by
Deloitte & Touche for matters such as comfort letters and consents related to
SEC and other registration statements, audits of employee benefit plans,
agreed-upon procedures, due diligence pertaining to acquisitions and
consultation on accounting standards or transactions was approximately
$206,000.
Other Fees. The aggregate fees for all other services, such as
consultation related to tax planning and compliance, rendered by Deloitte &
Touche in the 2001 fiscal year was approximately $429,000.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid or accrued by the Company for services rendered for each of the three
fiscal years during the period ended October 31, 2001 to each of the
individuals who served (i) as the Chief Executive Officer, during the 2001
fiscal year, and (ii) the four other most highly compensated executive officers
of the Company whose total salary and bonus exceeded $100,000 (such executives
are collectively referred to as the "Named Executives").
5
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
-------------
Annual Compensation
------------------------ Stock All Other
Name/Principal Position Year Salary ($) Bonus ($) Options (#) Compensation ($)(1)
- ------------------------------------ ------ ------------ ----------- ------------- ---------------------
Constantine S. Macricostas ......... 2001 337,000 100,000 68,000 78,400
Chairman, Chief Executive Officer 2000 167,500 123,500 5,000 80,870
1999 181,836 0 0 78,200
James L. Mac Donald ................ 2001 291,000 30,000 3,000 44,027
President (2) 2000 258,365 30,000 50,000 43,695
Robert J. Bollo .................... 2001 231,000 65,000 25,000 35,900
Senior Vice President, 2000 175,027 75,000 75,000 5,695
and Chief Financial Officer 1999 150,939 0 7,500 3,019
Paul J. Fego (3) ................... 2001 199,000 50,000 0 3,400
Senior Vice President
North American Operations
Dan Del Rosario (3) ................ 2001 188,000 55,000 10,000 3,400
Senior Vice President
Asia Operations
- ----------
(1) Represents primarily (i) premiums paid on life insurance policies owned
by each of the Named Executives, as to which the Company shall be
entitled to be repaid unless the respective individual satisfies certain
length of service requirements; and (ii) matching contributions made by
the Company pursuant to the Company's 401(k) Savings and Profit Sharing
Plan. The amount of premiums paid in the 2001 fiscal year were as
follows: Mr. Macricostas $75,000; Mr. Mac Donald $40,627; and Mr. Bollo
$22,500. The matching 401(k) contributions made during fiscal year 2001
were as follow: Mr. Macricostas, $3,400; Mr. Mac Donald, $3,400; Mr.
Bollo, $3,400; Mr. Fego, $3,400 and Mr. Del Rosario, $3,400.
(2) Mr. Mac Donald was elected President of the Company in July 2000. Mr. Mac
Donald was the President, Chief Executive Officer and Chairman of
Align-Rite International, Inc., prior to the merger of that company with
the Company in June 2000. Mr. Mac Donald retired as the President of the
Company and Director on December 31, 2001.
(3) Messrs. Fego and Del Rosario were not considered Executive Officers of
the Company prior to fiscal year 2001.
Stock Options
The Company maintains stock option plans which allow for the grant of
stock options and restricted stock awards to directors and executive officers
of the Company as well as other employees of the Company. The Company's stock
option plans do not provide for the issuance of stock appreciation rights
("SAR'S"). The following table sets forth certain information with respect to
(i) options granted to the Named Executives during the 2001 fiscal year, and
(ii) the value of such options at assumed annual rates of stock price
appreciation.
6
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term (3)
-------------------------------------------------------------- ---------------------
Number of
Securities % of Total
Underlying Options Granted To Exercise or
Options All Employees Base Price Expiration 5% / 10%
Name Granted (1) in Fiscal Year ($/Share)(2) Date $
- -------------------------------- ------------- -------------------- -------------- ------------ ---------------------
Constantine Macricostas ........ 68,000 19.3% 16.125 12/4/10 689,583/1,747,539
James L. Mac Donald ............ 3,000 0.8% 16.125 12/4/10 30,420/77,100
Robert J. Bollo ................ 25,000 7.1% 16.125 12/4/10 253,500/642,500
Paul J. Fego ................... 0 N/A N/A N/A N/A
Daniel Del Rosario ............. 5,000 2.8% 16.125 12/4/10 101,400/257,000
5,000 27.340 5/16/11
- ----------
(1) The option vests over four years in four equal annual installments. The
Board of Directors may accelerate the vesting of the option if the
Company merges or consolidates with another company, sells substantially
all of its assets, or a "Change in Control" involving the Company occurs.
(2) All options were granted at the fair market value at the date of grant.
(3) Potential gains are net of exercise price, but before taxes associated
with exercise. These amounts represent certain assumed rates of
appreciation only, in accordance with the Securities and Exchange
Commission's rules. Actual gains, if any, on stock option exercises are
dependent on the future performance of the common stock, overall market
conditions and the option holders' continued employment through the
vesting period. The amounts reflected in this table may not necessarily
be achieved.
The following table sets forth certain information with respect to options
exercised during the 2001 fiscal year by the Named Executives and the value of
options held by the Named Executives on October 31, 2001.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Shares Underlying In-the-Money
Acquired Unexercised Options at Options at Fiscal
on Value Fiscal Year End Year End ($) (2)
Exercise Realized Exerciseable/ Exerciseable/
Name (#) ($)(1) Unexerciseable Unexerciseable
- ------------------------------------ ---------- ---------- ------------------------ ---------------------
Constantine S. Macricostas ......... -0- -0- 122,000/56,000 1,435,009/470,826
James L. Mac Donald ................ -0- -0- 218,436/37,500 4,233,126/19,564
Robert J. Bollo .................... -0- -0- 95,625/76,875 1,067,699/242,803
Paul J. Fego ....................... 6,250 97,125 30,875/9,375 244,568/46,125
Daniel Del Rosario ................. -0- -0- 30,250/15,875 249,524/55,746
- ----------
(1) Represents the difference between the closing price of the common stock
on the date of exercise and the exercise price, multiplied by the number
of shares acquired on exercise.
(2) Based upon the fair market value share price of $24.82 at fiscal year
end, less the share price to be paid upon exercise.
7
Certain Agreements
Mr. Mac Donald retired as the President and a Director of the Company on
December 31, 2001. In accordance with the employment agreement Mr. Mac Donald
had with Align-Rite Corporation and his current severance agreement with the
Company, he has agreed to make himself available as a consultant for a period
of two (2) years following his retirement as an officer of the Company at an
annual retainer of $300,000 per year. Mr. Mac Donald is entitled to receive
medical benefits on the same terms as active employees, and exercise his vested
options during the two (2) year period following his retirement. Among other
things, Mr. Mac Donald has also agreed that during the term of the consulting
arrangement he will not be employed by or otherwise engage in any activity that
competes with the Company's business.
Mr. Bollo's three year employment agreement provides that he is entitled
to a base salary of $225,000, a guaranteed bonus of $65,000 for fiscal 2001,
and other benefits comparable to those received by the other Named Executives.
If he is terminated by the Company, other than for "Cause", he shall be
entitled to a payment equal to Mr. Bollo's current base salary and to be paid
out over a period of twelve months. The Agreement also provides for severance
payments in the event of his involuntary termination of employment following a
"change of control" of the Company. Mr. Bollo has agreed not to engage in any
activity that competes with the Company's business during the term of the
agreement and for one year thereafter.
Mr. Macricostas' employment agreement provides that if he is terminated
under certain conditions, he will be entitled to continued salary and benefits
for one year. In addition, the agreement provides for him to serve as a
consultant to the Company upon his retirement for a period of three (3) years
for a consulting fee of $175,000 per year.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company receive a fee of $2,500 for
each director's meeting attended and are granted a restricted stock award of
3,000 shares per year. The restrictions on these awards lapse quarterly over
the one-year service period. From time to time, non-employee directors may also
be granted stock options. The Chairman of the Audit Committee receives a
monthly fee of $3,000.
Mr. Yomazzo retired as an employee of the Company on January 31, 2001. In
accordance with his consulting agreement, Mr. Yomazzo has agreed to make
himself available to provide consulting services to the Company of up to ten
hours per month for a period of three (3) years from his date of retirement, at
an annual retainer of $125,000. Mr. Yomazzo is eligible to receive medical
benefits, on the same terms as active employees of the Company. In addition,
the Company has agreed to continue to pay premiums for four years on an
insurance policy owned by Mr. Yomazzo and the Company has waived its rights to
receive a refund of premiums previously paid by the Company under that policy.
Mr. Yomazzo has also agreed that during the term of the consulting agreement he
will not be employed by or otherwise engage in any activity that competes with
the Company's business.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Philosophy
The Compensation Committee of the Board of Directors (the "Committee") was
established in 1992 and is responsible for the establishment of executive
compensation and administration of the Company's stock plans.
The Committee's philosophy is that executive compensation must be
competitive with other comparable employers to insure that qualified employees
can be attracted and retained and that the Company's compensation practices
should provide incentives and rewards for achieving or exceeding goals and for
creating a return to the Company's shareholders. The Committee uses three
components to achieve these goals: base salary, bonuses and stock-based awards.
8
The Committee evaluates and establishes base salary levels in light of
economic conditions and comparisons to other similarly situated companies.
Bonuses, if any, are dependent upon an evaluation of the Company's performance
and achievement of its financial and other goals during the relevant period,
and the achievement of specific objectives of each executive officer. Stock
options awards, which the Committee believes provide a strong link between
executive compensation and shareholder return, are used to provide long-term
incentives based on shareholder return.
In establishing compensation levels for the executive officers of the
Company, including the Named Executives, the Committee considers compensation
at companies in the electronics industries with similar levels of sales and
capital. The companies considered were not necessarily the same as those
included in the performance chart below due to the difference in the size of
the companies considered. The Committee adjusts executive compensation in
connection with this review. Generally, the Committee believes that its
expectation of performance of the Company and its executive officers should
allow executive compensation to fall within the median to 75th percentile of
compensation of this comparison group. The Committee believes that its
three-part approach provides reasonable compensation to the executives which is
aligned with the Company's needs and results and balances both short and
long-term goals.
Section 162(m) of the Internal Revenue Code limits the Company's ability
to deduct certain compensation (in excess of $1,000,000 per year per person)
paid to the Named Executives unless certain formal requirements are satisfied.
The Committee believes, however, that its ability to subjectively evaluate
executive officer performance is an important part of its function and its
ability to provide incentives. Additionally, compensation paid to the Named
Executives has historically not exceeded deductibility limits under Section
162(m). Accordingly, the Committee has not required that all compensation
programs comply with Section 162(m), although the Committee considers
compliance in establishing individual compensation components.
2001 Executive Compensation
The Committee considered the factors discussed above in determining
executive compensation for the 2001 fiscal year.
Mr. Macricostas is currently the Chairman of the Board and the Chief
Executive Officer of the Company. The Committee used the executive compensation
practices described above in determining his 2001 salary. In setting the salary
and awarding the grant of stock options, the Committee considered the overall
assessment of Mr. Macricostas' leadership in establishing and achieving the
Company's short-term business goals and long-term strategic plans. The
Committee also considered the salaries paid to other chief executive officers
of electronics companies comparable in size to the Company. The 2001 bonus was
paid in recognition of Mr. Macricostas's contribution to completing several key
acquisitions and developing the strategic initiatives undertaken by the Company
in 2001.
Respectfully submitted,
Walter M. Fiederowicz, Chairman
Joseph A. Fiorita, Jr.
9
PROPOSAL 2
AMENDMENT OF THE COMPANY'S CERTIFICATES OF INCORPORATION
TO INCREASE THE AUTHORIZED NUMBER OF SHARES
The Company's Certificate of Incorporation currently authorizes the
issuance of 75,000,000 shares of Common Stock, $0.01 par value, and 2,000,000
shares of preferred stock, $0.01 par value. On February 6, 2002, the Board of
Directors of the Company adopted a resolution approving an amendment to the
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 75,000,000 to 150,000,000 and resolved to submit the proposed
amendment to the shareholders at this Annual Meeting.
Purpose and Effect of the Amendment
The general purpose and effect of the proposed amendment to the
Certificate of Incorporation will be to authorize the issuance of up to
75,000,000 additional shares of Common Stock. The Board of Directors believes
that it is prudent to have the additional shares of Common Stock available for
general corporate purposes, including acquisitions, equity financings, grants
of stock options, payment of stock dividends, stock splits or other
recapitalizations.
The Company currently has 75,000,000 authorized shares of Common Stock. As
of February 12, 2002 the Company had 30,373,076 shares issued and outstanding
and of the remaining 44,626,924 authorized but unissued shares, has reserved
(i) 9,105,798 shares in connection with the possible conversion of outstanding
notes pursuant to its 6% Convertible Subordinated Notes due 2004 and its 4 3/4%
Convertible Subordinated Notes due 2006; (ii) 3,128,571 shares issuable
pursuant to the Company's stock option plans (this number does not include the
additional 1,500,000 shares of Common Stock described in Proposal 3); (iii) and
151,546 shares issuable pursuant to the Company's Employee Stock Purchase Plan.
Except in connection with the reserved shares described above, the Company
currently has no arrangements or understanding for the issuance of any
additional shares of Common Stock, although opportunities for acquisitions and
equity financings could arise at any time. If the Board of Directors deems it
to be in the best interest of the Company and the shareholders to issue
additional shares of Common Stock in the future, the Board of Directors
generally will not seek further authorization by vote of the shareholders,
unless such authorization is otherwise required by law or regulations.
Although not a factor in the Board's decision to adopt the proposed
amendment, the increase in the authorized number of shares of Common Stock
could have an anti-takeover effect. The Board, however, does not believe that
it will have such an effect. If the Company's Board of Directors desired to
issue additional shares in the future, such issuance could dilute the voting
power of a person seeking control of the Company, thereby deterring or
rendering more difficult a merger, tender offer, proxy contest or an
extraordinary corporate transaction opposed by the Company. The Board of
Directors is not aware of any attempt or contemplated attempt, to acquire
control of the Company and this proposal is not being presented with the intent
that it be utilized as a type of anti-takeover device.
Vote required and Board of Directors Recommendation
The affirmative vote of a majority of the Common Stock entitled to vote
will be required to approve the amendment to the Certificate of Incorporation
increasing the number of authorized shares of Common Stock from 75,000,000 to
150,000,000.
The Board believes that the proposed amendment to the Company's
Certificate of Incorporation is in the best interest of the shareholders and
the Company for the reasons stated above.
The Board of Directors recommends a vote "FOR" approval of this proposal.
10
PROPOSAL 3
APPROVAL OF THE AMENDMENT TO THE PHOTRONICS, INC. 2000 STOCK PLAN
TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
Background
For the purpose of aiding the Company and its subsidiaries in attracting,
retaining and motivating personnel and encouraging stock ownership by
employees, the Company has had some form of stock option plan for employees
since 1986.
The Photronics, Inc. 2000 Stock Plan ("Plan") was approved by the
shareholders of the Company at the Annual Meeting held on April 4, 2000. This
Proposal No. 3, if approved by the shareholders, would increase the number of
shares of Common Stock available for Awards under the Plan. There are currently
1,000,000 shares of our Common Stock authorized for issuance under the Plan. Of
that number, 979,950 shares have already been granted, leaving only 20,050
shares available for future grant under the Plan. In addition, there are
currently only 13,713 shares available for grant under the Company's other
employee stock option plans. This amendment would increase the number of shares
of Common Stock authorized for issuance under the Plan from 1,000,000 to
2,500,000 shares. The Board approved this amendment at a regular meeting held
on February 6, 2002 subject to the approval of the shareholders.
The Board believes the Plan should be amended to increase the number of
shares authorized for issuance in order to enable the Company to provide stock
based Awards to employees and non-employee Directors who have been responsible
for the Company's financial success and who will help meet the Company's goals
in the future. Approval of this proposal requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock present in
person or by proxy at the Annual Meeting.
The Board of Director's recommends a vote "FOR" approval of this proposal.
The following is a summary of the material features of the Plan, as
amended. The Plan is qualified in its entirety by reference to the text of the
Plan, a copy of which was attached to the Company's 2000 Proxy Statement and
may be obtained from the Company.
Administration
The Plan is administered by the Board of Directors or a committee of the
Board (currently the Compensation Committee) composed of two or more directors
(references to the Board also refers to such a committee, unless otherwise
stated). The Board has the authority to determine, subject to the provisions of
the Plan, to which employees or directors Awards are granted, the time at which
Awards are granted, the number of shares subject to Awards granted, the option
exercise price per share, the period over which the Awards vest, whether
options are to be ISOs or NQOs (as defined below), the period during which each
option may be exercised, and the conditions that are applicable to any
restricted stock award or option, including whether any option or restricted
stock Award shall be subject to performance objectives. The Board may make all
other determinations related to Awards under the Plan. The Board may also
accelerate the vesting date of any Awards and, with the consent of the holder,
cancel, modify or amend any Award; provided that the Plan prohibits a reduction
of option exercise prices except in connection with adjustments related to
stock splits and other changes in the capitalization of the Company.
Plan Participation
Under the Plan, grants of stock options and restricted stock awards may be
made to employee and outside directors of the Company, or approximately 1,726
individuals. As of the date of this proxy statement, Awards have been made to
approximately 400 employees and directors of the Company covering a total of
979,950 shares of the Company's Common Stock.
11
Stock Options
Options may be granted that are intended to qualify as incentive stock
options ("ISOs") under Section 422 of the Internal Revenue Code (the "Code").
Options that are not intended to qualify as ISOs (referred to as "non-qualified
options" or "NQOs") may also be granted. Currently, in order to qualify as an
ISO under Code Section 422, an option must, among other things (i) be granted
only to an employee, (ii) be granted at an exercise price that is no less than
100% of the fair market value of the Common Stock on the date of grant (an
exercise price of at least 110% of fair market value is currently required for
an employee who owns stock or currently exercisable options exceeding 10% of
the voting power of the Company's capital stock), and (iii) terminate no later
than ten (10) years from the date of grant, or sooner upon termination of
employment with the Company. The exercise price per share of each option may be
paid, at the election of the optionee, in cash and/or by delivery of previously
acquired Common Stock.
Restricted Stock
Upon the grant of a restricted stock Award under the Plan, a certificate
representing the shares of Common Stock covered by the Award are issued in the
name of the recipient of the Award, after execution by the recipient of an
Award agreement and any other documents which the Board may require. The shares
covered by the Award are subject to the possibility of forfeiture if
restrictions and conditions established by the Board at the time the Award is
granted are not satisfied, and such shares shall not be transferable by the
recipient unless and until they are not longer subject to forfeiture. Such
restrictions and conditions may include, among other things, specified measures
of the Company's financial performance or the individual recipient's
performance or continuation of the recipient's employment, or combinations
thereof. Restricted stock Awards will not require the payment of any cash
consideration by the recipient to the Company.
During the period the shares covered by a restricted stock Award are
subject to forfeiture, the recipient of the Award has the rights and privileges
of a shareholder as to such shares, including the right to vote the shares, but
not the right to transfer or otherwise dispose of the shares or to receive
dividends or distributions with respect to the shares. All dividends and
distributions with respect to shares subject to forfeiture are also subject to
the terms of the restricted stock Award. If and when the restrictions and
conditions established by the Board have been satisfied, the recipient will
receive unrestricted ownership of the shares and any dividends and
distributions with respect thereto.
Upon the grant of a restricted stock Award, the Company incurs a
compensation expense for financial reporting purposes with respect to the
shares covered by the Award in an amount equal to the fair market value of the
share at the date of grant. This expense is reported over the period during
which the shares are subject to forfeiture.
Shares Available
A maximum of two million five hundred thousand 2,500,000 shares of Common
Stock may be issued under the Plan; provided, however, that no more than (i)
ten percent (10%) of such shares may be available cummulatively for grants of
restricted stock, and (ii) fifteen percent (15%) of such shares may be subject
to Awards granted to any individual in any calendar year. Such shares may be
authorized but unissued shares, shares previously issued and reacquired by the
Company, or both. Any shares subject to Awards which, for any reason, expire or
are terminated or forfeited, become available again for the grant of Awards
under the Plan. On February 12, 2002, the closing price of the Common Stock on
the NASD National Market was $32.99 per share. In the event of a stock
dividend, share distribution, recapitalization, merger, consolidation,
split-up, spin-off, combination or exchange of share or similar action with
respect to the Common Stock, the Board makes adjustments to outstanding Awards
and shares available for future grant in order to reflect any such event.
Termination of Awards
To the extent exercisable on the date of termination of employment or
service as a director, NQOs are exercisable until thirty (30) days after
termination for any reason, except in the case of death,
12
disability or for cause. If the holder's employment (or a director's service)
is terminated due to death or disability, a NQO may only be exercised, to the
extent exercisable on the date of termination, during the six (6) months after
the date of such termination. All options expire immediately if termination of
employment or service as a director was for cause. In no event, however, may
any option ever be exercised after its term has expired. ISOs will terminate
after termination of employment to the same extent as NQOs, but no later than
the time periods required under Section 422 of the Code and the regulations
promulgated thereunder.
If the employment or service as a director of a recipient of a restricted
stock Award is terminated for any reason, other than due to death, disability
or normal retirement, all of the shares which then remain subject to forfeiture
are automatically forfeited and transferred to the Company at no cost to the
Company. The Board may, if such termination is due to death, disability or
normal retirement, deem that the restrictions or conditions on all or any of
the shares subject to forfeiture have been met, subject to such further terms
and conditions, if any, as the Board may deem appropriate.
The Plan provides that if a recipient of an Award engages in activities
which are in competition with those engaged in by the Company (except with
respect to employees residing in California) or other behavior contrary to the
interests of the Company within one (1) year of leaving the employ of the
Company, the Company may effect a forfeiture of any outstanding options and
restricted stock and require such recipient to pay to the Company an amount
equal to the difference between the market value of the shares acquired under
Awards exercised or vested within one (1) year prior to leaving the employ of
the Company after deduction for, in the case of an option, the exercise price
of the options.
Transferability
The Board may permit participants to transfer NQOs to such persons, and
upon such terms and conditions as the Board may determine. Otherwise, Awards
granted under the Plan are not transferable other than by will or the laws of
descent and distribution.
Change in Control
Upon the occurrence of a change of control of the Company (as defined in
the Plan); (i) all options automatically become exercisable, (ii) the
restrictions on all shares subject to restricted stock Awards lapse, and
unrestricted certificates are issued to restricted stock holders; and (iii) the
performance objectives set forth in any performance Award are deemed fulfilled.
Amendment and Termination
The Plan may be amended, suspended or terminated by the Board at any time,
without the approval of shareholders or participants, provided that no such
action may, without a participant's written consent, adversely affect any
previously granted Award. In addition no amendment may be made without
shareholder approval to the extent that, under applicable law and regulations,
including the Code, such amendment would disqualify option for treatment as
ISOs or would disqualify Awards for treatment as "qualified performance-based
compensation" within the meaning of Code Section 162 (m). No grants may be made
under the Plan after a date which is ten (10) years following the effective
date of the Plan (April 4, 2010).
Certain Federal Income Tax Consequences
The following is a brief summary of the principal U. S. Federal income tax
consequences of certain transactions under the Plan, based on current United
States Federal income tax laws. This summary is not intended to be exhaustive,
does not constitute tax advice and, among other things, does not describe
state, local or foreign tax consequences.
Under the Code, no income is recognized by the recipient of a NQO at the
time the option is granted, unless the NQO has a readily ascertainable fair
market value. Upon exercise of a NQO, the optionee will recognize ordinary
compensation income in an amount equal to the excess, if any, of the fair
market value
13
of the shares exercised over the aggregate option exercise price (the
"Spread"). The Company will generally be entitled to a deduction equal to the
Spread, subject to any limitation on deductability imposed by Section 162(m) of
the Code, as discussed below.
When an optionee disposes of shares acquired by the exercise of a NQO, any
gain or loss will generally be treated as a long-term or short-term capital
gain, depending upon the holding period of the shares. The holding period for
shares acquired pursuant to the exercise of a NQO begins on the date of
exercise. An optionee's tax basis in shares of Common Stock acquired by
exercise of a NQO will be equal to the exercise price plus the amount taxable
as ordinary income.
If an optionee pays the exercise price of an NQO in full or in part with
shares of previously acquired Common Stock, such exercise will not affect the
tax treatment described above. With respect to such exercise, no gain or loss
generally will be recognized to the optionee upon the surrender of the
previously acquired shares to the Company. The shares received upon exercise
which are equal in number to the previously acquired shares tendered will have
the same tax basis as the previously acquired shares surrendered to the
Company, and will have a holding period for determining capital gain or loss
that includes the holding period of the shares surrendered. The value of the
remaining shares received by the optionee will be taxable to the optionee as
compensation. The remaining shares will have a tax basis equal to the fair
market value recognized by the optionee as compensation income and the holding
period will commence on the exercise date. Shares tendered to pay applicable
income and payroll taxes arising from such exercise will generate taxable
income or loss equal to the difference between the tax basis of such shares and
the amount of income and payroll taxes satisfied with such shares. Such income
or loss will be treated as long-term or short-term capital gain or loss
depending on the holding period of the shares surrendered. Where the shares
tendered to pay applicable income and payroll taxes arising from such exercise
generate a loss equal to the difference between the tax basis of such shares
and the amount on income and payroll taxes satisfied with such shares, such
loss may not be currently recognizable if, within a period beginning thirty
(30) days before the exercise date and ending thirty (30) days after that date,
the optionee acquires or enters into a contract or option, including a reload
option, to acquire additional Common Stock.
Upon the grant or exercise of an ISO, the optionee will not recognize
income, but will recognize income only when he or she subsequently disposes of
the shares. However, the amount of the income not recognized is a tax
preference item for the purposes of computing the alternate minimum tax.
If the optionee disposes of the shares acquired no earlier than the later
of one year from the date of exercise or two years from the date of grant of
the ISO, the amount realized from the sale that exceeds the option exercise
price will not be recognized by the optionee as ordinary income; rather, such
amount will be taxed as a long-term capital gain. Also, the Company will not be
entitled to any deduction.
If the disposition occurs prior to the later of one year from the date of
exercise or two years from the date of grant (a "Disqualifying Disposition"),
the optionee will recognize ordinary income equal to the excess, if any,
between (a) the fair market value of the shares on the date of exercise of the
option (or, if less, the amount realized on the disposition of the shares
acquired on exercise); and (b) the option exercise price. The optionee will
also recognize a long-term or short-term capital gain (depending on the holding
period which begins on the date of exercise) on any further gain measured by
the excess, if any, between the amount received upon disposition of the shares
and the fair market value of the shares on the date of exercise of the option.
An optionee's tax basis in shares of Common Stock acquired by exercise of an
ISO will be equal to the exercise price plus the amount taxable as ordinary
income. If an optionee makes a Disqualifying Disposition, the Company will be
entitled to an income tax deduction equal to the amount recognized by the
employee as ordinary income.
If an optionee pays the exercise price of an ISO in full or in part with
previously acquired shares of Common Stock, the exchange will not affect the
tax treatment of the exercise. Upon such exchange, no gain or loss generally
will be recognized upon the delivery of the previously acquired shares to the
Company, and the shares issued in replacement of the shares tendered to pay the
exercise price will have the same basis and holding period for capital gain
purposes as the previously acquired shares. An optionee, however, would not be
able to utilize the holding period for the previously acquired shares for
14
purposes of satisfying the ISO statutory holding period requirements.
Additional shares of Common Stock will have a basis of zero and a holding
period that commences on the date the Common Stock is issued to the optionee
upon exercise of the ISO. If such an exercise is effected using shares of
Common Stock previously acquired through the exercise of an ISO, the exchange
of the previously acquired shares may be a Disqualifying Disposition of such
Common Stock if the holding periods discussed above have not been met.
If an ISO is exercised at a time when it no longer qualifies as an ISO,
the option will be treated as a nonqualified option. Subject to certain
exceptions for disability or death, an ISO generally will not be eligible for
the Federal income tax treatment described above if it is exercised more than
three (3) months following a termination of employment.
Unless a recipient of a restricted stock Award elects to be taxed at the
time of grant with respect to the shares subject to the Award, the recipient
will not recognize income until the possibility of forfeiture lapses. When, and
as the possibility of forfeiture lapses, the recipient will recognize ordinary
income in an amount equal to the fair market value of the shares at that time.
A recipient of a restricted stock Award may elect, within thirty (30) days
following the date of grant, to recognize ordinary income at the date of the
grant with respect to the shares subject to the Award in an amount equal to the
fair market value of the shares at the date of grant, determined without regard
to the possibility of forfeiture. The Company will be entitled to a deduction
at the time ordinary income is recognized by a recipient of a restricted stock
Award equal to the amount so recognized. If a recipient of a restricted stock
Award elects to be taxed at the date of grant and the shares are subsequently
forfeited, the recipient is not entitled to a deduction as a consequence of
such forfeiture and the Company must recognize as ordinary income the amount it
previously deducted with respect to such Award. Any dividends with respect to
shares subject to forfeiture pursuant to a restricted stock Award granted to a
recipient who has not elected to be taxed at the date of grant of the Award are
treated as additional compensation, taxable as ordinary income to the recipient
and deductible by the Company when received by the recipient. If any election
has been made to be taxed at the date of grant, the dividends represent
ordinary dividend income to the recipient and are not deductible by the
Company.
To the extent that the vesting period of any options or restricted stock
Awards are accelerated on account of a proposed dissolution or liquidation of
the Company, or a sale of substantially all of the assets of the Company, or
the merger or consolidation of the Company with or into another corporation,
the value of the options at the time of vesting could be treated as a
"parachute payment" subject to an excise tax imposed on the holder. Such
consequences would only follow, however, if the total "parachute payments"
(including the value of the option) were of sufficient magnitude to give rise
to "excess parachute payments" as defined in the Code.
15
PERFORMANCE GRAPH
The following graph compares the yearly percentage change at October 31(*)
of the indicated year in the cumulative total shareholder return on the
Company's Common Stock with the cumulative total return on (i) securities
traded on the NASDAQ market, and (ii) publicly-traded securities of companies
which have indicated that their business falls within Standard Industrial
Classification (SIC) Code 367 (Electronic Components and Accessories) (the
"Peer Index"). The graph assumes that $100 was invested on October 31, 1996 in
the Company's Common Stock, in NASDAQ market index and in the Peer Index, and
that all dividends were reinvested. Although the Company believes this graph
reflects favorably on the Company, it does not believe that the comparison is
necessarily useful in determining the quality of the Company's performance or
in establishing executive compensation.
Comparison of Five-Year Cumulative Total Return
Among Photronics, Inc., NASDAQ Over-the-Counter Securities
and Publicly-Traded Companies with SIC Code 367
[GRAPHIC OMITTED]
Oct-96 Oct-97 Oct-98 Oct-99 Oct-00 Oct-01
-------- -------- -------- -------- -------- -------
Photronics Inc. ................. $ 92 $145 $148 $142 $153 $184
NASDAQ Stock Mkt Index .......... $118 $155 $174 $294 $331 $141
SIC Code 367 .................... $115 $160 $165 $338 $491 $169
The SIC Code 367 Peer Index consists of all publicly traded US companies with
SIC Code 3671-3679.
* Commencing in fiscal 1997, the Company's formal fiscal year end is determined
in accordance with a 52-week fiscal year. However, for consistency in reporting
periods, a nominal year end of October 31st has been used in the presentation.
16
CERTAIN TRANSACTIONS
The Company leased a building at one of its manufacturing facilities and a
contiguous parcel of land from entities controlled by Constantine S.
Macricostas, the Chief Executive Officer, and Chairman of the Board of the
Company. The rent paid to these entities for the fiscal year ended October 31,
2001 was approximately $84,000.
Financing for construction of such leased building and the acquisition of
certain equipment was provided through the sale of industrial development bonds
issued by the Connecticut Development Authority (the "CDA"). As lessee, the
Company was obligated to serve as guarantor of certain of the bonds issued by
the CDA. As of October 31, 2001 there was outstanding a total of approximately
$260,000 in principal amount of industrial development bonds for which the
Company is a guarantor.
Mr. Constantine Macricostas is a founder, majority shareholder and the
Chairman of the Board of RagingWire Telecommunications, Inc., a leading
supplier of secure data center facilities and managed IT services, located in
Sacramento, California. In 2002, the Company entered into a fifty-two month
service contract with RagingWire to provide services to all of the Company's
worldwide facilities at a cost of approximately $3.2 million per year.
The Company believes that the terms of the transactions described above
with affiliated persons were negotiated at arm's-length and were no less
favorable to the Company than the Company could have obtained from
non-affiliated parties.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche LLP to serve as the
independent certified public accountants for the Company for its 2002 fiscal
year. Deloitte & Touche LLP has served as the Company's independent certified
public accountants since July 1992. Representatives of Deloitte & Touche LLP
are expected to be present at the Annual Meeting, will have the opportunity to
make a statement, if they desire to do so, and will be available to respond to
appropriate questions.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors knows of no
matters which will be presented for consideration at the Annual Meeting other
than the proposals set forth in this proxy statement. If any other matters
properly come before the Annual Meeting, the persons named in the proxy will
act in respect thereof in accordance with their best judgment.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors and persons who beneficially own
more than ten percent of a registered class of the Company's equity securities
to file an initial report of beneficial ownership on Form 3 and changes in
beneficial ownership on Form 4 or 5 with the Securities and Exchange Commission
(the "SEC"). Executive officers, directors and greater than ten percent
shareholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on its review of the copies
of such forms received by it, or written representations from certain reporting
persons, the Company believes that during the last fiscal year, all filing
requirements applicable to its officers, directors and ten percent shareholders
were satisfied.
17
SHAREHOLDER PROPOSALS
Shareholder proposals intended for inclusion in the Company's proxy
statement for the 2003 Annual Meeting of Shareholders must be received by the
Company no later than October 23, 2002 and must meet certain requirements of
applicable laws and regulations in order to be considered for possible
inclusion in the proxy statement for that meeting. In addition, for shareholder
proposals to be presented at the 2003 annual meeting of shareholders without
inclusion in the Company's proxy statement for that year, notice of such
proposal must be received by the Company no later than January 6, 2003 to
prevent the Company from being able to exercise its discretionary voting
authority with respect to that proposal (subject to the rights of the Company
and the proponent contained in the federal proxy rules). Proposals may be
mailed to Photronics, Inc. to the attention of James A. Eder, Secretary, 1061
East Indiantown Road, Jupiter, Florida 33477.
SOLICITATION OF PROXIES AND COSTS THEREOF
The Company has retained Georgeson Shareholder Communications Inc., a
proxy solicitation firm to assist the Company in soliciting proxies at this
Annual Meeting for a fee of $8,500 plus reasonable expenses. This proxy
solicitation is being made by the Board of Directors of the Company and the
cost of such solicitation of proxies will be borne by the Company. In addition,
employees of the Company, without extra remuneration, may solicit proxies
personally or by telephone or cable. The Company will reimburse brokerage
firms, nominees, custodians and fiduciaries for their out-of-pocket expenses
for forwarding proxy materials to beneficial owners and seeking instruction
with respect thereto.
February 20, 2002
18
PHOTRONICS, INC.
15 SECOR ROAD
BROOKFIELD, CT 06804
VOTE BY INTERNET - www.proxyvote.com
-----------------
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the
web site. You will be prompted to enter your 12-digit Control Number which is
located below to obtain your records and to create an electronic voting
instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before cut-off date or meeting date. Have your
proxy card in hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Photronics, Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: PHOTRN KEEP THIS PORTION FOR YOUR RECORDS
- -----------------------------------------------------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
_____________________________________________________________________________________________________________________________
PHOTRONICS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF ------
THE BOARD OF DIRECTORS |
|
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL TO WITHHOLD AUTHORITY TO VOTE, MARK
ALL ALL EXCEPT "FOR ALL EXCEPT" AND WRITE THE
NOMINEE'S NUMBER ON THE LINE BELOW.
1) To elect the following five (5) persons as Directors:
01) Walter M. Fiederowicz 04) Constantine S. Macricostas 0 0 0 __________________________________
02) Joseph A. Fiorita, Jr. 05) Willem D. Maris
03) Michael J. Yomazzo
Vote On Proposals For Against Abstain
2) To approve an amendment to the Company's Certificate of Incorporation to increase the number of 0 0 0
authorized shares of Common Stock from 75,000,000 to 150,000,000;
3) To approve an amendment to the Photronics, Inc. 2000 Stock Plan to increase the authorized number 0 0 0
of shares of Common Stock available for issuance from 1,000,000 to 2,500,000; and
4) In their discretion, such other business as may properly come before the meeting or any adjour-
ments or postponements thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED (OR NOT VOTED)
ON ITEMS 1, 2 AND 3 AS DIRECTED BY THE SHAREHOLDER, BUT IF NO
DIRECTION IS INDICATED, WILL BE VOTED FOR EACH ITEM. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE ITEMS.
PLEASE SIGN AS NAME(S) APPEAR HEREON. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH.
Please mark, sign, date and return this proxy card using the
enclosed envelope.
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Signature(PLEASE SIGN WITHIN BOX) DATE Signature (Joint Owners) Date
_____________________________________________________________________________________________________________________________
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________________________________________________________________________________
PROXY
PHOTRONICS, INC.
2002 ANNUAL MEETING OF SHAREHOLDERS
MARCH 20, 2002
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The undersigned hereby appoints Robert J. Bollo, James A. Eder and Constantine
S. Macricostas, or any one or more of them acting in the absence of the others,
with full power of substitution, as proxies of the undersigned, and hereby
authorizes each or any of them to vote, as designated on the other side, all
shares of common stock of Photronics, Inc., which the undersigned is entitled to
vote if personally present at the 2002 Annual Meeting of Shareholders of
Photronics, Inc. to be held at 12:00 p.m. on March 20, 2002 in the Soho
Complex-7th Floor at The Marriott Marquis-Times Square, 1535 Broadway, New York,
N.Y., 10036 and at any adjournments or postponements thereof.
(PLEASE DATE AND SIGN PROXY CARD ON OTHER SIDE)
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