SHARE-BASED COMPENSATION

12 Months Ended

Oct. 31, 2025

NOTE 12 - SHARE-BASED COMPENSATION

On April 2, 2025, at its annual meeting of shareholders, the shareholders of Photronics, Inc., approved the Company’s 2025 Equity Incentive Compensation Plan (the “2025 Plan”) under which incentive stock options, non-qualified stock options, stock grants, stock-based awards, restricted stock, restricted stock units, stock appreciation rights, performance units, performance stock, and other stock or cash awards may be granted. The maximum number of shares of common stock that may be issued under the 2025 Plan is five million shares. At the time of approval of the 2025 Plan, the Company’s 2016 Equity Incentive Compensation Plan (which was largely replicated by the 2025 Plan) was due to expire in early 2026 and had a limited quantity of shares remaining available for issuance. Awards may be granted to officers, employees, directors, consultants, advisors, and independent contractors of Photronics or its subsidiaries. In the event of a change in control (as defined in the 2025 Plan), the vesting of awards may be accelerated. The 2025 Plan prohibits further awards from being issued under prior plans.

The table below presents information on the Company’s share-based compensation expenses for the three most recent fiscal years.

	Year Ended
	October 31,		October 31,		October 31,
	2025		2024		2023
Expense reported in:
Cost of goods sold	$	3,233	$	2,704	$	1,259
Selling, general, and administrative		8,954		10,124		5,962
Research and development		1,201		1,062		780
Total expense incurred	$	13,388	$	13,890	$	8,001

Expense by award type:
Restricted stock awards *	$	11,966	$	13,868	$	7,909
Restricted stock units		1,216		-		-
Stock options		-		-		1
Employee stock purchase plan		206		22		91
Total expense incurred	$	13,388	$	13,890	$	8,001

Income tax benefits of share-based compensation	$	3,002	$	1,156	$	715

* During the year ended October 31, 2024, upon the departure of two executives from the Company and in accordance with the terms of their separation agreements, previously granted time-vesting restricted stock awards accelerated vesting. The Company accounted for the effects of the accelerated vesting of these stock awards as a modification, and recognized $1.2 million of incremental stock-based compensation expense for the acceleration of restricted stock awards, within selling, general and administrative expenses on the Consolidated Statements of Income for the year ended October 31, 2024.

Restricted Stock Awards

The Company periodically grants restricted stock awards, the restrictions on which typically lapse over a service period of one to four years. The fair values of the awards are determined on the date of grant, based on the closing stock price of the Company’s common stock. A summary of restricted stock award activity during 2025 and the status of the Company’s restricted stock awards as of October 31, 2025, is presented below.

Restricted Stock	Number of Shares			Weighted-Average Fair Value at Grant Date
Outstanding at October 31, 2024		1,423,602		$	23.23
Granted		583,238			23.42
Vested		(527,292	)		21.43
Cancelled		(73,876	)		24.14
Outstanding at October 31, 2025		1,405,672		$	23.93
Expected to vest as of October 31, 2025		1,303,385		$	23.89

The table below presents additional information on the Company’s restricted stock awards for the three most recent fiscal years.

	Year Ended
	October 31,		October 31,		October 31,
	2025		2024		2023
Number of shares granted		583,238		865,050		791,925
Weighted-average grant-date fair value of awards (in dollars per share)	$	23.42	$	29.50	$	16.84
Compensation costs not yet recognized	$	21,862	$	21,303	$	12,760
Weighted-average amortization period (in years)		2.6		2.8		2.8
Fair value of awards for which restrictions lapsed	$	11,302	$	9,755	$	6,256
Shares outstanding at balance sheet date		1,405,672		1,423,602		1,238,297

Restricted Stock Units

Commencing Q2 FY25, the Company began granting restricted stock units, the restrictions on which typically lapse over a service period of one to four years. The fair value of the awards is determined on the date of grant, based on the closing price of the Company’s common stock. A summary of restricted stock unit activity during 2025 and the status of the Company’s restricted stock unit awards as of October 31, 2025, is presented below.

Restricted Stock Units	Number of Units			Weighted-Average Fair Value at Grant Date
Outstanding at October 31, 2024		-		$	-
Granted		178,166			21.09
Vested		(41,514	)		22.52
Cancelled		-			-
Outstanding at October 31, 2025		136,652		$	20.65
Expected to vest as of October 31, 2025		134,366		$	20.59

The table below presents additional information on the Company’s restricted stock unit awards for the three most recent fiscal years.

	Year Ended
	October 31,		October 31,		October 31,
	2025		2024		2023
Number of units granted		178,166		-		-
Weighted-average grant-date fair value of awards (in dollars per share)	$	21.09	$	-	$	-
Compensation costs not yet recognized	$	2,485	$	-	$	-
Weighted-average amortization period (in years)		3.4		-		-
Fair value of awards for which restrictions lapsed	$	935	$	-	$	-
Restricted stock units outstanding at balance sheet date		136,652		-		-

Stock Options

Option awards generally vest in one to four years and have a ten-year contractual term. All incentive and non-qualified stock option grants must have an exercise price no less than the market value of the underlying common stock on the date of grant. The grant-date fair values of options are based on closing prices of the Company’s common stock on the dates of grant and are calculated using the Black-Scholes option pricing model. Expected volatility is based on the historical volatility of the Company’s common stock. The Company uses historical option exercise behavior and employee termination data to estimate expected term, which represents the period of time that options granted are expected to remain outstanding. The risk-free rate of return for the estimated term of an option is based on the U.S. Treasury yield curve in effect at the date of grant.

The table below presents a summary of stock options activity during 2025 and information on stock options outstanding at October 31, 2025.

	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at October 31, 2024		277,625		$	10.39
Granted		-		$	-
Exercised		(162,550	)	$	10.45
Cancellations, forfeitures, and adjustments		(1,000	)	$	11.35
Outstanding at October 31, 2025		114,075		$	10.30	1.64 years		$	1,551
Exercisable at October 31, 2025		114,075		$	10.30	1.64 years		$	1,551
Expected to vest as of October 31, 2025		-		$	-	- years		$	-

The table below presents additional information on stock option awards for the three most recent fiscal years.

	Year Ended
	October 31,		October 31,		October 31,
	2025		2024		2023
Number of options granted in period		-		-		-
Total intrinsic value of options exercised	$	2,127	$	2,981	$	1,654
Cash received from option exercises	$	1,698	$	1,888	$	1,101
Compensation cost not yet recognized	$	-	$	-	$	-
Weighted-average amortization period for cost not yet recognized (in years)		-		-		-

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (“ESPP”) permits employees to purchase Photronics, Inc. common shares at 85% of the lower of the closing market price at the commencement or ending date of the Plan year (which is approximately one year from the commencement date). The Company recognizes the ESPP expense over that same period. As of October 31, 2025, the maximum number of shares of common stock approved by the Company’s shareholders to be purchased under the ESPP was 1.85 million shares, of which approximately 1.7 million shares had been issued through October 31, 2025. As of October 31, 2025, there is $0.2 million of unrecognized compensation cost.