Dr. Christopher J. Progler
became an executive officer on June 21, 2006. Dr. Progler has been employed by Photronics since 2001 starting with the position of Corporate Chief Scientist. He was promoted to Vice President and Chief Technology Officer in 2004. In 2011 Dr. Progler assumed the added responsibility of Strategic Planning for the Company. Dr. Progler is a Fellow of SPIE - The International Society of Optics and Photonics. He serves on management boards of MP Mask, PDMC, Inpria and IMS nanofabrication. He also serves on technical advisory boards for MP Mask and the Cymer Laser division of ASML.
Sean T. Smith
was promoted to Senior Vice President and Chief Financial Officer on January 25, 2005. He was promoted to Vice President and Chief Financial Officer in March 2002 after serving as Vice President and Controller. He joined Photronics in April 2000.
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee of the Board of Directors (the Compensation Committee) is comprised of two of the independent, non-employee members of the Board of Directors. Neither of these individuals was an officer or employee of the Company at any time during fiscal year 2016 or at any other time, and neither of them have interlocking relationships as described in Item 407 of Regulation S-K. The Compensation Committee is responsible for setting and administering the policies governing compensation of our executive officers. The Compensation Committee reviews and approves, among other things, overall annual performance for the Named Executive Officers (identified in the Summary Compensation Table) as well as all participants in the Companys 2011 Executive Incentive Compensation Plan (2011 EICP).
The purpose of this Compensation Discussion and Analysis is to provide material information about the Companys compensation objectives and policies for its Named Executive Officers and to put into perspective the tabular disclosures and related narratives. The following report provides information about our compensation programs and policies as well as the outcomes and achievements that resulted in the determination of compensation to our Named Executive Officers. Specific 2016 compensation information for our Executive Chairman, Chief Executive Officer and other Named Executives Officers will be outlined in a series of tables following this report.
Summary
The Company is one of the worlds leading manufacturers of photomasks, which are high precision photographic quartz plates containing microscopic images of electronic circuits. Photomasks are a key element in the manufacture of semiconductors and flat panel displays (FPDs), and are used as masters to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits (ICs) and a variety of FPDs and, to a lesser extent, other types of electrical and optical components. Currently, research and development photomask activities for ICs are focused on 20 nanometer node and below and, for FPDs, on Generation 8 resolution enhancement, substrates larger than Generation 8 and more complex masks for AMOLED type displays. In 2014, we became the leading edge IC photomask merchant in the world. We believe we have more sub-20nm capability and capacity than all our competitors combined.
In fiscal 2016 total sales were down from the record-setting pace that was achieved in 2015, which resulted in lower profits despite focused efforts on cost control. However, we announced several strategic initiatives during the year which should position the Company for future growth. Additionally, our balance sheet is as strong as it has been at any time in our history, which allows for greater flexibility while exploring new growth opportunities.
We achieved net sales of $483 million in 2016, down 8% from 2015. FPD sales grew 15% as demand for high end masks was strong, especially during the first half of the year, when we were operating near full capacity. During the second half of the year, sales moderated.
Net income attributable to Photronics, Inc. shareholders was $46.2 million, including an income tax benefit of $4.8 million and an $8.8 million gain on the sale of an investment. Excluding these special items, net income fell from the previous year because of lower sales.
During fiscal 2016, the Company received special recognition from several customers, including UMC, Infineon, and XFAB. The Company announced several initiatives during fiscal 2016 that should enable us to grow the business. We announced (i) a $40 million investment to expand the capacity of our FPD business; (ii) one of the most significant investments in the history of the Company whereby over the next 5 years, we will invest