Okay, I think we're good to go. So, ladies and gentlemen, welcome to this annual general meeting of ASML Holding N.V. We're happy to welcome you here in our TWINSCAN auditorium in Veldhoven. This, the meeting is a hybrid meeting. That means not all of us are present here. We also have people online, who can vote during the day or ask questions on our online platform. A warm welcome also to shareholders who are watching us online. First, I would like to start by introducing the members of the ASML Board of Management, whom you probably know most of them. Mr. Peter Wennink, Mr. Martin van den Brink, Mr. Christophe Fouquet, Mr. Frédéric J. M. Schneider-Maunoury, and Mr. Wayne Allan.
And Roger.
Roger Dassen sorry.
Thank you so much, Roger.
Roger. Sorry about that.
Thank you.
He is a very nice gentleman sitting to my left here. Sorry about that, Roger. I also want to welcome the members of the Supervisory Board, Annet Aris, Birgit Conix, Nils Andersen, Mark Durcan, Warren East, Alexander Everke, and Jack de Vries, all present here today. Ms. Terri Kelly is not attending this meeting due to personal reasons, but she's on via live video, I hope. Terri, up there. Your biggest, biggest, and most prominent position of everybody. So don't come to the meetings. Be online. I also want to welcome Jim Koonmen, who's on the in visitor's part so far, but we hope that he will be voted in and appointed as a member of the management team during the day. We also have Peter Groenland with us from KPMG, who is ASML's external auditor. And finally, I would like to introduce Mr.
Reinier Kleipool, who is a civil law notary at De Brauw, and who will act as secretary of the meeting. Given the international nature of ASML and as ASML's corporate language is English, and I with all apologies don't speak much Dutch, we will conduct the meeting in English. There is translation into Dutch available on the headphones or the sets that you've had delivered outside, at least have had offered. And there will also be a translation made if a question is asked in Dutch, into English, and then we will answer it, most likely in English. As usual, a recording will be made of the meeting to help us prepare the minutes. And I'll now give the floor to our civil notary, Mr. Kleipool. He'll explain the process for asking questions and also voting during the meeting. So, Reinier, over to you.
Thank you, Mr. Chairman. Before we begin, I will explain the process for asking questions. During today's meetings, you as shareholders will have two options to ask questions. For those participating via the online platform, you can ask questions during the meeting by using the chat function on the online platform. For those here in person, microphones are available for you to ask questions. Please remain seated and raise your hand should you have a question. Please wait until a microphone is brought to you. When asking questions, please state your name clearly and formulate your questions as short and concise as possible. If you are a proxy holder, please state the name of the shareholder you represent. For the proper conduct of business at the meeting, the chairman may limit the speaking time and/or the number of questions that you may ask.
The chairman will also determine who is best positioned to answer your question. I will now give a brief explanation of the voting process. Shareholders who are here in person can use the app, on their mobile device or the voting device that you received at the registration desk. Since this is a hybrid meeting, shareholders attending virtually can vote via the online platform. Registration details for this meeting are currently being processed. Once all information is available, I will announce how many shareholders are present or represented, the percentage of issued capital that they represent, and how many votes can be cast. After these announcements, the voting will be opened. Once the voting is open, you will have the opportunity to vote on all the items on the agenda up until we discuss agenda item 11, any other business. In other words, you do not have to wait for an agenda item to be discussed to submit your vote. You can change your vote by selecting another choice as long as the voting is opened throughout the meeting. You can make any changes until the vote closes, so at any time before we discuss agenda item 11. Mr. Chairman.
Thank you, Reinier. We now move on to agenda item 2, which is about the company's business and the financial situation and the ESG and sustainability matters. Under the agenda item number 2, Mr. Wennink and Mr. Dassen will give an overview. I will start by giving the floor to Roger, who I forgot. I'm sorry for that again. Thanks, God, you're here with all the numbers. Floor is yours.
Thank you, Mr. Chairman. What a what a big welcome on many occasions. That's much appreciated. I've got to share with you the financials the financials of 2023, and we're going to look a little bit, to, to 2024. So the highlights of 2023, you see them all here. 2023 was an interesting year, I have to say, for the semiconductor industry, because if you look at the semiconductor industry, it clearly was in a downturn. And if you look at the numbers, actually, the industry went backwards 8%. So the, the market the total, semiconductor market was in, decline. I think that's an interesting perspective because then if you look at the 30% growth of ASML, it is actually, I would say, quite exceptional.
So to grow 30% in an environment in a market that is actually in decline, I think, you know, is quite an interesting phenomenon. And why is that? Well, first and foremost, it is because the backlog that we had built up before 2023 was pretty substantial. So for a number of years, we've not been able to execute on the demand that was out there. For a number of years, actually, the demand of customers, both in China and outside of China, that demand was actually quite a bit higher than what we could deliver.
And that also meant that in a year of decline and 2023, clearly was a year in decline, you know, that there was still so much remaining demand out there that we could actually, you know, execute on those orders. So that's how we could grow 30% in spite of a down cycle in the industry. Quickly looking at the numbers, you know, some of the numbers that we have here. So as you see, EUR 27.6 billion, that was the total revenue of EUR 22 billion in system sales. And the balance is the Installed Base Management of EUR 5.6 billion. Gross margin improvement, in comparison to 2022, gross margin grew to 51.3%, net income of EUR 7.8 billion.
And the net bookings number of EUR 20 billion, and that means that, you know, if you compare that EUR 20 billion to the net system sales of EUR 22 billion, that actually means that our backlog is still very big at the beginning of the year because we only, you know, saw a decline in the backlog of EUR 2 billion. And that was primarily because, you know, the order bookings in the last quarter in Q4 were very substantial at 9.2, 9.2 billion. If you look at the right-hand side, it gives you the different technologies that we have and how the market developed there. You know, in short, EUV went up, as you see here, 30%. DUV went up even 60%. There was a lot of demand for immersion technology in particular, and that drove up the DUV sales by 60%.
The application business was actually a little bit in decline, which I think is logical in a market that is in decline, because, you know, the applications business really is the business where we have the shortest lead time. And that means this is not a business where you build up a significant backlog. So the backlog that really, you know, made us grow in a year of decline, I think that actually primarily relates to EUV and DPV technology and less so to applications. So that's why the application business declined as you see it here. Installed base business sort of stable, you know, short decline 2%. And all in all, we were able to return EUR 3.3 billion to shareholders, EUR 2.3 billion of that in dividends, EUR 1 billion in terms of share buyback.
As you see here, you know, if you see the buildup of our sales numbers, and you see particularly that the logic business was very substantial. Memory grew a little bit, but the logic business in particular grew very substantially from about EUR 10 billion in 2022 to nearly EUR 16 billion in 2023. So that's where you really see the big uptick. And this is both for advanced logic, but also for mature. There was a lot of demand also for mature. So advanced driven by AI we'll come to talk about the market later on. But, you know, artificial intelligence really drove the demand for the advanced logic material. While, you know, things like electrification, EVs, etc., really was a very big catalyst to demand for mature.
So it really was logic that drove a lot of the demand increase in 2023. You also see that here on this slide where we look at the different technologies and uses and the regional split. You know, and very rapidly on the technology side, you really see that our advanced technology, which is the combination of EUV and ArF immersion on this slide, in both years that actually accounted for 80% or more of the total sales. So it really is those leading technologies, you know, that are driving the revenue for ASML at 80% or over that in those two years. In terms of end use, you see that logic really, you know, constituted the lion's share of the sales as I also demonstrated to you in the growth that we saw on the previous slide. Regionally, obviously, the one thing that stands out here is the increase in China, China going from 14%-29%. I already hinted at it in my introduction. You know, the lion's share of the explanation there is there was a lot of demand in China in the years leading up to 2023. We could only fill, you know, only a very small portion of the demand that was out there in China.
When the rest of the industry was sort of in decline, that also meant that we were indeed able we had the capacity to execute on the historic demand that has been there from China. So that's the reason why China is a pretty substantial in our sales composition this year. The most interesting slides, right? All the numbers that we have here. And, you know, you can choose. We can go and discuss every single number. But then probably the chairman at some point in time is going to interrupt me and say, "We've got better things to do." So I'll just highlight the key things in here. And just look at a little bit of trends here, in the numbers.
So if you look at the total sales, then I think it's fair to say that from 2020 to 2023, in essence, you know, in a three-year growth trajectory, you actually see the company double in size. You see a healthy development of the gross margin. It got a bit of a beating after 2021 as a result of inflation. So that clearly had an impact. And also particularly in the last year in 2023, you really see the company gearing up for growth. I'll come to talk about that. But, you know, we really see substantial growth also for the second half of this decade. And that means that we're preparing for that, in all of our technologies. And obviously, that has a bit of a dampening impact on the gross margin.
But soon, that will reverse itself. You see that on the R&D fund front, we keep on, we keep on, pushing down the accelerator. You know, we have EUR 4 billion of R&D in this, in this year. And that really means that, you know, for all the technologies that we have out there, we have very clear roadmaps ahead of us that we believe are, you know, value adding to, to our to our customers. Net earnings, net income, as you see here, I just mentioned it already, EUR 7.8 billion. We have an earnings per share of nearly 20 EUR. And if you look at that trajectory, starting with 6 EUR in 2019 all the way to 20 EUR in 2023, I think that's a very healthy development for the company right there. In terms of net bookings, EUR 20 billion.
As I mentioned, nearly half of that really in Q4, a little over EUR 9 billion. If we look at cash flows, there's a couple of things to note here. On the one hand, you will see that we typically, you know, maintain pretty healthy cash levels. So you see around EUR 7 billion also at the end of 2023. So you see that particularly in the last couple of years, you see around EUR 7 billion as a healthy cash balance that we maintain, which I think gives us a lot of resilience as a company. You also see that the cash flow in comparison to last year was a little bit less. And that has to do with the fact that, you know, we are, first off, the industry is in a recession.
As we just saw, that also means that we get less orders. Less orders means less down payments. So that's one dynamic that you see there. And also, as I mentioned, we're really gearing up for growth because we really see in the second half of this decade quite some growth coming. And that means that, you know, we need to start taking in material, etc., etc., in order to be able to cater to that, to that growth. So those are the drivers as a result of which the cash flow last year was a little bit under pressure. But again, you will see that that will reverse itself in the years to come. And then finally, on the balance sheet, you see equivalent developments. For instance, you do see inventory picking up, right?
So, inventory going from EUR 7.2 billion to EUR 8.9 billion as you see here. And that is really related to what I just mentioned. You know, we are both for High-NA but also for other products, we are taking in quite some material that would allow us to, you know, experience the growth that we have been talking about before. You see us build; you actually see us build stuff when you look at our campus. But you also see it here in the numbers, right, where, by 2019, we were looking at EUR 2 billion. 2022, we were looking at EUR 4 billion of property, plant, and equipment. And now we're looking at EUR 5.5 billion in 2023. So that really tells you that we are building for the future as we call it.
You saw an interesting article probably this week that also talks about the longer-term growth plans for ASML and, you know, the plans that we have in terms of executing on those. Those are just some of the interesting developments that you see on the balance sheet. Quickly turning then to 2024, this year. We had a bit of a slow start, and we knew it, right? We have been saying right from the get-go, 2024 is very much a transition year. A transition year means that we're looking at 2024 in financial terms as a year that will have, like, similar top line as 2023. So we do not expect a growth in 2024. We expect that to be at a similar level, as we had it for 2023.
But it is a transition year because we do believe that 2025 as a significant growth year. And that means that we have to prepare for that growth. And I think you just saw some of the ingredients that are necessary to do that, right? We have to build. We have to hire people. We have to take in the material in order to cater to the demand that we believe is out there by 2025. So that's the growth year. So we know it would be a slow start. And we also really see the momentum growing throughout the year. So we know that Q3 and Q4, so the second half, are going to be substantially stronger.
We see that based on, you know, the based on the shipment schedule, based on the orders that we have from customers. We also really see that customers, the underlying dynamics in the customers' markets are improving. We see the utilization of our tools improving. We see that the inventory at our customers is improving. So, you know, the dynamics for the turnaround in the industry and, you know, to get out of this, out of the downturn and go to, to a pickup, we see that all the ingredients are there. And we believe that in 2025, we should find ourselves in the midst of that, of that uptick. So hence, an important ingredient for our expectation that 2025 is, is going to be a, a good growth year.
So with that, Q1 actually came in as we got it, in terms of top line. Gross margin a little bit better than we anticipated, primarily because of mix. We had a bit more immersion tools in there. And that's always good for the gross margin. And you see all the other numbers in there. Net bookings were quite a bit lower than we had in Q4. As I mentioned, Q4, it was huge, a record, order intake of EUR 9.2 billion. So some people were a little bit disappointed at EUR 3.6 billion in Q1. But frankly, if you look at the two combined, you're looking at EUR 13 billion of order intake for two quarters, which I would claim is very, very healthy.
And we also, you know, went to the exercise to say, you know, what are the orders that we still need in order to, you know, to cater to these higher levels of 2025? And I think that has. I think that clearly demonstrates that we're indeed looking at a very healthy trajectory all the way to this growth path in 2025. And then finally, the capital return to the shareholders. I already told you in my first slide, EUR 3.3 billion was returned to shareholders, EUR 2.3 billion of that in dividend and the EUR 1 billion in terms of share buyback. As we will propose to the AGM today, a total dividend for 2023 of EUR 6.10 per ordinary share, which would lead to a final dividend payment per ordinary share of EUR 1.75. That would, in essence, constitute a 5.2% increase in comparison to the dividend that we had for 2022. So that concludes my introduction on the financials. Back to the chairman.
Thank you very much, and I'll now pass the word over to Peter Wennink. Peter.
Thank you. Firstly, there was just a lectern. I know. And it's probably not the reason why the chairman overlooked you. And as you might have noticed, the probably single reason why the next CEO is chosen is because of height. That's right. I wouldn't accept that. Okay. Thank you very much. I'm standing here. And then in my career, I've been involved with ASML since 1984 as the partner of Deloitte to help ASML go public.
When I look back at those 30 years and then look at the drivers of the semiconductor industry, I could not have imagined that I would be showing you this slide because semiconductors are everywhere. Whereas the connected world, which we find so normal, the hyperconnectivity, the cloud infrastructure, the edge computing, whether it's your phone or your PC or your tablet or your car, it's completely normal. And semiconductors are also a very important driver for all the issues that we have to deal with when it comes to the major societal challenges, which, of course, includes climate change and the resource scarcity. You know, whereas the energy trend, you know, transition, I think, last year, we showed you some data that one gigawatt of, you know, solar takes $3.5-$4,000 of semiconductors. Same is for, you know, wind.
So semiconductors and climate change and renewable energy go hand in hand. They're basically joined to the hip. The same is true for electrification of mobility, the innovations that we will see in agriculture with drone technology. Of course, we can smarter use our limited resources and will help in the recycling. It's not only true for climate change and for the connectivity. It's also true for the social and economic shifts. We all know that without semiconductors, we would have not been able to survive COVID. It gave a big boost to working remotely. We think about the progress in med tech and in health sciences that without semiconductors, it's impossible if you think about the sensor technology needed there. Of course, also, it will be a driver. It is a driver in the geopolitical domain.
We're subject to that also because, because of everything I just said, it is very clear that the importance of semiconductors now becomes a geopolitical, strategic issue. Not having access to semiconductors, for the right type of development and technology is going to be devastating for every, you know, economy. So when we think about the application space, and we always think about. I'm going to talk about this a bit later. When you think about artificial intelligence, I didn't mention that because artificial intelligence will cover all of it, what I just said, whether it's connectivity, whether it's regarding the renewable energy, the climate change, the, you know, socioeconomic shifts. People think about artificial intelligence in terms of compute power. But AI is basically based on data, data and smart algorithms to actually use that data, to predict and to create these artificial intelligence solutions.
Now, and then think about data. So let's focus on the right-hand side on this cube. And it says, 1 ZB. We talk about these things. It's just words. But if you think about this, when you buy a new phone, you want, you know, a phone with sufficient gigabyte. Well, you know, 1,000 GB is 1 TB. And, 1,000 TB is 1 PB. And a million TB is 1 EB. And 1 billion TB is 1 ZB. And we produce every year, in 2025, about 175 ZB. Now, how much is that? If you calculate the number of hours in a year, it's about 8,700 hours. With 175 ZB, you could produce 7,300 hours of video for 8 billion people, every person on the planet. That's 175 ZB. That will increase over the next 10 years with a factor of 12.
So data and the collection of data and the production of data is going to be immense. That is actually what will happen. Why will it happen? Because when we currently look at how AI is applied, it is applied basically on certain, let's say, elements that we all know, whether it's the smartphone or your smartwatch or your PC or the cloud and to a certain level, industrial automation, where the data is collected and artificial intelligence is actually used to make us more productive. What will happen is that every single machine or object that has the ability to collect data, which will be everywhere - think about my first slide - is going to be connected through artificial intelligence and will create data that will create a support system for knowledge intervention, for decision-making, and creating value. So it's not only about compute.
It's definitely also about data creation. In order to be able to do that, we need massive amounts of semiconductors. Now, as you know, Martin and I are, you know, retiring today. People have told me over the last couple of months, "You're retiring at the height of the company's history and performance." I said, "No, no. No. We're not even in the middle because we keep growing because of this. And it and we will grow because we will need it. If we want to make sure that we can come to solutions on some of these major societal challenges, we need this. We need the support of hardcore technology and AI. We'll grow, perhaps not next year or the year thereafter. There's a lot of expectation. It will take some time because ultimately, it are these applications that will drive artificial intelligence.
We've created the hardcore technology in the semiconductor industry, companies like NVIDIA. But then ultimately, the explosion and the exponential growth of AI will happen when we're going to develop the applications. Now, and the question is, can we do that? Do we have the power? This is one of my favorite slides. I will use it every time when we talk about the growth of the industry and we talk to investors and to society. This is an important slide. These are the 50 biggest tech companies on the planet. They either make semiconductor equipment or they're in semiconductor manufacturing, semi-design. They make hardware. They make phones. They make PCs. Or they give you software and services like Google and Amazon and Microsoft. That earnings system, in 2022, we're just collecting the 2023 data. We don't have it all yet.
There's an earnings power of more than $600 billion of earnings before interest and tax. Yes, we'll have the innovation power because there is so much value being created through semiconductors and it ends applications, which will only go on to exponentially grow. This EBIT growth of this group of companies over the last 5 years has been double-digit compound annual growth rate. This is why we do believe it's going to happen. The innovation power, not only from a financial point of view but also from a technology point of view, is there. And of course, can only be done with people. I'll come to that later. So that means that the market expectations for the semiconductor industry are currently around $600 billion. It's going to grow by 2030 to about $1 trillion. There are estimates that are significantly over $1 trillion. So it's needed.
But you need to realize that the semiconductor industry took 50 years to build an industry that's capable of producing $600 billion worth of semiconductors. Now, the next 6-8 years, we need to almost double that. And this is why we need to build capacity. And this is why our customers will grow because of all the issues I just mentioned. And that's why ASML will grow with that industry and with our customers and with the end, you know, drivers of the ultimate value. And we do this with people. Now, when we look at ASML, we grew in 2023 from 39,000 people to over 42,000 people, of which roughly half, just over half, is in the Netherlands, of which 40% is non-Dutch. But every 100 people that we hire today, over 60, between 60-70, are non-Dutch. We have 123 nationalities here in Veldhoven.
You may recall my request to the Dutch government and to the politicians to maintain an investment climate that is helpful in keeping those knowledge workers here but also attracting them. I think it's critical. On top of that, we feel a very strong responsibility for sustainability, ESG, environmental, social, and governance challenges, which we divided in nine themes. On the environment, it's first of all about energy efficiency and climate action. It's our net zero greenhouse emissions in our value chain by 2040. We've said it last year. We're going to repeat it again. Zero waste from operations into landfill and into incineration. On the social part, we strongly believe that governments are an integral part of responsible societies. We need to create an attractive workplace for all. That means we have to have a very diverse, inclusive, healthy, and very engaged workforce.
It's critical to perform. Next to that, a responsible supply chain, a value chain. It's not only on us. We're a system integrator. We're a system architect. So we rely on our suppliers and our customers to actually follow us in our energy ambition and climate action goals. And that also means that we need to support and foster an innovation ecosystem. We're a system integrator. We're a system architect. We depend on an ecosystem where innovation and creation goes to the heart and the genes of the system. And that is necessary because these socioeconomic challenges are not once in a lifetime. They're once in many lifetimes. And this is why we need that ecosystem. And we need the innovation power, which I also think is a responsibility of society and of also of our politicians, not only of companies.
Then we need to stay a valued partner in our communities. You know, our people will work better when they thrive and they live in a responsible society that provides them with jobs so that they can afford a decent roof over their head, put food on the table, but also can put their kids to a good school and have access, everyone has access to medical care and their safety, whether it's physical, digital, or climate safety. We are part of the communities. We need to feel partly responsible for a responsible society. Then on governance, ESG sustainability is not a word on a PowerPoint. It has been driven down in our organization, into every layer of the organization, to go after these ESG goals. It's driven down. It's real.
We need to be transparent and engaged with our stakeholders to make sure that they can follow us and that we are reliable. We say what we do and we do what we say. Now, some examples on the environment. We'll go quickly through them. But while we grew, as Roger said it, our operations and output with 30%, our CO2 footprint reduced with 8%. So that's a significant reduction with a significantly higher output. The energy usage per wafer went down with 40% from 2019 to 2023. And of course, we're also engaging in attracting renewable energy. A good example is our business in Taiwan. When we further do that, we'll further invest in energy saving measures in our technology, specifically with EUV. And we'll upgrade our circular economy strategy to go to the next level.
And also on social, in 2022, we spent EUR 15 million as commitments in the community in terms of cash, in terms of in-kind investments. We have a very engaged population. Our engagement, with a very high engagement score of 80%, from 78% in 2022, a 4% attrition rate across the globe, also in areas where attrition is significantly higher than in the Netherlands. I think it's a proof of people feel connected to the company. And very important, we now have 20% women in our company, which five years ago was around 13%. The inflow is going to be 27% of the inflow is women, up from 24% in 2022. If we say we want to be a diverse company, an inclusive company, that number needs to go up. And it will go up. And of course, we will keep further increasing our efforts in this field.
On governance, we instituted the ESG committee as a subcommittee of the supervisory board. We're also recognized by several ESG rating agencies as the number 1 in our industry. We'll also, when we make internal decisions on investment projects, we will start using an internal carbon price. We will continue with intensive collaboration with our chain, our value chain, with our customers and with our suppliers to drive sustainability across the total value chain. We'll organize societal conferences, responsible and sustainable conferences in the areas where we operate, like in the Brainport, June 2024, here. Now, small picture, a video. What we see here is our High-NA EXE 5000 system built for the first time. It's been built. It's been shipped in December 2023. It's now under installation with one of our customers, Intel, which is indeed public.
We're showing the first images of those systems. We can print 10 and sub-10 nanometer lines. Why is that important? People might not realize, but with high-end EUV, with the similar productivity, we increase the transistor density with a factor of three. It actually means that we will have faster compute power. When you think about high-performance compute and all the data that needs to be generated, it's going to be essential. Why do we want to think about this as a major step forward? Well, it is a result of the evolution of lithography starting in 1984 when ASML was founded to where we are today. Now, EXE, this NXE, has a completely new optical architecture. We can actually keep shrinking. That optical architecture, the entire system, is completely new.
It is the result of years and years of work, almost 10 years, and billions and billions of R&D money and investments, whereby this system did not exist, if you can define existence by being able to print the 10-nanometer line, until a few weeks ago. Some people would call these risks too big, irresponsible. If you think about this, this is the result of millions and millions of mathematical calculations that only exist in simulations. And the only way you put it all together is by far the most complex machine on the planet. At one moment in time, you can prove it works. We did it a couple of weeks ago. So why is it important? Because this architecture will also be a basis, the optical architecture, the machine architecture, to create the next generation if needed. If our customers want High-NA, we have the ingredients.
We can do that. It will also be the basis for EUV for the next decades to come. So when I look at Martin and the team, and, you know, I'm always very proud when I look at him, it's he and his team made this possible, you know, and he leaves perhaps at the epitome of this technology development because before he leaves, he made sure that it worked. I think it's a big round of applause for Martin and the team. That was my part of telling you something about the future of this company. I hope I made it clear that while Martin and I will leave, we leave the company, as I always say, in a state of sweet and sour. The sour part is that we leave because we love the company dearly.
But the sweet part is we are where we are, not only from a technology point of view but also from a succession point of view. And Martin and I are very, very pleased that we have our internal succession, Christophe, but also Roger. I won't forget you. Hey, Frédéric. He's all me. He wouldn't care. Right, Jim? Yeah? So that makes us extremely happy because we both feel, Martin and I, that probably one of our most important responsibilities is to make sure that if anything would happen to us or we take the decision to retire, that the great team is now ready to take over. Thank you very much.
Thank you, Peter. Thank you, Peter. Thank you, Roger. We're now ready for questions. Would anybody be interested in asking a question? Yes. We'll have a mic coming to you. Can we have a microphone over here?
Thank you so much. My name is Gerben Everts. I represent the Dutch Shareholders Association, the VEB. First of all, I'd like to compliment the board, the non-executives, and the employees of ASML with the very good results of last year. Still, the backlog is significant and convincing despite the recent dip, which was well explained in public. Growth is high and, and steady. And you are really assisting, we just heard it, assisting the world significantly in the electrification, data collection, application of AI technology, and everything we depend on now but also in the future. Now, you, you are the company that shows that internal controls do matter. You did not mention them, but you, you really can be in control even in the most risky of projects, which, of course, the building of these machines is. That is not something which is automatic.
It's really a real effort, and it requires an enormous effort, an amount of dedication and wisdom by you and all the employees of ASML. Good results despite the geopolitical negatives. We shareholders understand the dilemma of ASML, your dependency on continuity of good relations with the U.S., with Cymer and other key elements in the chain, of the most innovative, components crucial for the completion of those brilliant, now the DUV and now the EUV machines. Compliments for the way you navigated the company through those challenges, accepting political realities, defending the continuity of the company, as well as a strong message addressed to the Dutch government with positive feedback. We heard them earlier this week.
So the continuity of ASML in the Netherlands is important, and we shareholders are convinced that the mutual interest is recognized both in the Dutch government as well as within ASML's leadership. But we do have a few questions, and requests for further clarification. A first question. In April this year, the US government asked ASML to stop servicing some advanced DUV machines that are sold to Chinese customers. Does this latest development in any way influence the 2025 or 2030 financial targets for the installed base management, or is it too early to tell? So that's the first question. And a follow-up on China. There are media reports that China is applying self-aligned quadruple patterning, or SAQP, to DUV machines. So this is the older generation technology. But nevertheless, they are able to make the 5 nanometer great chips without use of the EUV tools of ASML.
Can you comment on this development in China and the potential financial consequences for ASML? Is China catching up faster than ASML previously assumed? A second question, on ASML's high NA EUV. It's marketed as reducing the process complexity and enabling the scaling beyond the 2 nanometer. There are, however, industry experts that warn that the high NA EUV is initially too costly compared to the low NA EUV. As such adoption might be slow, ASML targets on the 20 NA EUV shipments in 2028 might be too optimistic. So could you please share your thoughts on the adoption and relative cost of the high NA EUV up to 2030 and compare this development with the low NA EUV double patterning? And B, what would be a slow adoption of high NA EUV? What would it imply for ASML's revenue and gross margin?
A third question. I have four, so I'll keep it short. As a consequence of the decrease in contract liabilities, ASML's free cash flow was low. As ASML's work through its backlog within net system sales, potentially below net bookings, the free cash flow will remain under pressure. Does ASML expect the backlog to recover after this year with net bookings outpacing the net system sales? In other words, will you be able to achieve a free cash flow above or at least in line with earnings? A final question on the here and now. How far can you expand in the Eindhoven region? Does the commitment of the Dutch government suffice? Is it sufficient to realize your operational financial plans until 2030, or is there also a plan B? Thank you for being able to address those questions.
Thank you for the four questions.
I think we'll pass the first two questions to Christophe and then, Roger, if you could take the last two questions.
Yeah. I think the first one on the service of EUV machines. The, yeah.
The service on the EUV machines. I will take that. You can take the 5 nanometer question, and I think that's probably it.
So the service of the EUV machines, we've had that question, yeah? Clearly, this is also something which is the result of what governments discuss amongst themselves or what they find as, you know, subject to what they call national security, yeah? We're not privy to that discussion. We're not participating in that discussion. What we do do, we provide them on their request with information on what services means, yeah, in terms of and that's what we do.
I think on the basis of that, I think the discussion between the governments take place. I think, it only affects those factories where there are certain export control restrictions, yeah? And so that in itself will not have a significant effect on the 2025-2030, you know, financials because it will be a limited number, yeah? So, this is something which is under negotiation, and our role is to inform.
All right, Christophe. Christophe, I think if you take the there was in the first question also a question of the effect of quadruple patterning. So if you could add to that.
Yeah. So when it comes to, you know, how far basically, you know, the technology can go in China, I think we have been very clear the whole time that, you know, 7 nanometer was possible.
We believe that 5 nanometer is also possible using multi-patterning. Now, the caveat to that is when we say it's possible, the question is in which condition. So it is possible if you want to create a development vehicle because, you know, you don't really care about yield. You don't really care about cost. But when you want to move such a technology to high-volume manufacturing, this is where multi-patterning is becoming very, very difficult. And also, technologically, you can do it. The yield of what you're going to get, the cost of what you're going to get, is going to be such that typically that doesn't fit the requirement of high-volume manufacturing. And this has been proven, I will say, by one very, big customer of ASML, Intel, who has been extremely public on how they could not succeed to advance beyond 10 nanometer without EUV.
I think they even wrote an article a few weeks ago stressing again the fact that not going to EUV was a major setback for them. So technically, you can. Economically, you can't. I think that's a bit the short answer to the question. And I think this is something we have been sharing with many people for many years. On your question to High-NA, the second question. So first, I'd like to come back again. I'm sure Martin could chip in. But Peter mentioned the fact that we have been able to expose already this 10 nanometer resolution image. We even have some initial one at eight nanometer.
This has created quite an excitement in ASML but also with our customer because this is the sign that this technology is now available, that most of the risk has been retired. A couple of days ago, we have exposed our first customer wafer in our lab here in Veldhoven. In the next few months, we expect all customers to come to see us with their wafer in order to basically check what they can do with this tool. All our EUV customers have already committed to High-NA. We have double-digit booking on High-NA. All of that has been done without any of our customers having one single image at hand. So this shows a bit the trust but also, I would say, the opportunity that this technology can represent for them. Now, you hear indeed a lot. There's a lot of articles.
So some customers are extremely bullish about High-NA. Some customers are more reserved. I think it's a bit of a matter of style. It's a bit of a matter of where those customers are also in their own business. What we know is that, again, everyone is going to look at it. Everyone is going to evaluate it. I think the real question about High-NA is not if our customers are going to use it. I think Peter made a strong case on that. The only question is how much and how fast they're going to use it. They will go step by step. If you remember, the EUV insertion didn't go all in. The first node was just a few EUV layers. Same will happen with High-NA because this is also a bit what we can do in terms of ramping the technology for our customer.
But as Moore's Law continues, we expect the demand for INA to grow. There was still debate, again, on how many layers, when, etc., etc. We are extremely relaxed about it. I always say, you know, it's not our role to push customers to use INA or low NA. Our role is really to give them both and the full flexibility, basically, to use either tool, whenever they need so that they can optimize their process and their cost. And for us, you know, I think we welcome the use of both systems because at the end of the day, I think it doesn't change, I would say, our resource dramatically, right? But we are in a very good place today with INA. And the next few months are going to bring more interest for sure. It also explains why slow adoption doesn't matter because then the alternative is double patterning, low NA. It's more low NA sales versus one system, High- NA. It's up to the customer.
[Foreign Language]OCOC on cash flow and order book and contract liabilities and after the expansion potential in Veldhoven.
Y es. Very good. Yeah. So, govern or on the free cash flow, the contract liabilities, good, good analysis. But there are many moving parts to the free cash flow of this year. You referred to the contract liabilities. Actually, the fact that the contract liabilities go down is actually as a result of lower fast shipment at the end of the year. So that's an important element why the contract liabilities went down by the end of 2023.
If you look at the moving parts, what are they? First off, there are down payments to your point, all right? So that, that's, that's a clear element in there. Of course, at a certain point in time, orders are coming back, and as a result of that, down payments are coming back. That is a given. I mean, many, many of the analysts have already pointed out that we have a few large customers that for a node transition that everyone knows they're going to make, they haven't placed orders yet. So, of course, that, that will, that will come somewhere in the next couple of quarters. And with that will come the cash inflow that will be linked to the down payments there. So that's one element. So inevitably, that will come back. We never guide order intake because you also know it's extremely lumpy, right?
I mean, we saw it very, very clearly as you pointed out in the past half year, 9.2 in Q4 and then 3.6 in Q1. So it's always very lumpy how to predict. But that it will come back in the next quarters, I mean, is a given. The second thing why the free cash flow is a bit under pressure, and was under pressure in 2023 is the fact that we're ramping, right? We know 2025 is going to be a, you know, a big growth year.
So we're already taking in material both for high NA, which has a very long lead time, but also for some of the other products in order for us to be able to, you know, to make those products and be able to sell them in the 2025 time frame. So you've also seen the inventory levels going up quite significantly. So that's the other element in that analysis. And lastly, I would say in 2023, some of our customers went through, you know, pretty tough times, and they asked for extended payments in a number of cases for us, which we granted to them. So it was a combination of things as a result of which free cash flow was under pressure.
But it's also clear to see, Gardiner, that, if the market really comes back in an upturn, that those dynamics will reverse, and that as a result of that, indeed, to your point, you're going to get to a situation where, free cash flow is in line with earnings or, as a matter of fact, as we've also seen in the past, could actually be ahead of the, ahead of earnings. So I think that is a realistic, realistic, assumption at a certain point during the, during the uptick. On the expansion, in Veldhoven or more broadly in Brainport, as, as you know, you know, we, we, we, we recently announced that, that we have the LOI with, with Eindhoven. So that clearly gives us the opportunity, I would say, for the longer term.
So this is really something that is not going to, you know, is not going to increase. It's not related to the increase of capacity in the medium term. This really is for, you know, the last years, I would say, of this decade and then into next decade. So I think the LOI, I think, is the result of a, you know, of a long discussion of pursuing, you know, all the options that are there. It's also clear, you know, and Peter referred to it, that the Dutch government has clearly recognized the circumstances that are necessary for us to grow. So I think the fact that we had a very positive reception of that in The Hague in the past couple of months, I think, was very positive to that as well.
Do we have a plan B? Well, you started your questions with risk management. Of course, we have a plan B. But, you know, we are very much looking into expanding here in this region, you know, still, both what Veldhoven gives us as a growth opportunity, but also what Eindhoven might give us on a go-forward basis. So that is clearly what we're very much focusing on. You know, if for whatever reason there were to be a slowdown in that capacity expansion, then, of course, we have the plans there, what we could do, you know, short-term is to optimize our capacity in order to still be able to cater to the demand. But in the longer term, we definitely need additional land to expand.
I think the LOI that we signed last Monday, I think, is a really good step up for that.
Thank you, [Foreign Language]OCE. I hope you're happy with the answers. Okay. Thank you very much. Any further questions? Can we have a microphone down here, please? To your left. Okay. Or my left. Sorry. You over here. Mr. Stevense. Okay. I'll do one more down. Yeah. Thank you.
Thank you, Mr. Chairman. We still believe that ASML is a Dutch company listed at the Amsterdam Stock Exchange. So we expect that shareholders' meetings should be held in the Dutch language. So having said that, we're a Dutch company. I said they think we should have it in Dutch, but that's okay.
It's okay. Thank you. I am speaking on behalf of the Foundation Legal Protection of Investors, SSB. I would like to congratulate the company with the excellent performance of this past year. China. We touched upon China briefly. There's just one more thing. China sort of expected what was happening, and they bought a lot. Can you still install the machines that you're no longer allowed to install, to service? Can you service these machines? And the market? Well, this is a full-fledged market. But the point is that the market now depends on AI and consumers. Could you perhaps elaborate with the models that you used? Could you share more information about the future? Well, it may look wonderful, but VDM will also disclose figures, and there might be hiccups. And consumers, most semiconductors end up in consumer products.
So these are two markets that we are incredibly dependent upon. So we would be happy to hear more about this. How about suppliers? Can they keep up with all these developments? And then finally, oh, yes, I do have some questions. Oh, questions have already been asked that I was intending to ask. So yes. Well, that's just about it. Yes.
Very much. So, we'll start with China. And, I think, Peter, you can answer that one.
Yep. Yeah. You've asked a question whether the machines that we've sold can be installed. The answer is yes. They can be serviced. Of course, not with those customers or the factories of those customers where export controls would prohibit the shipment. So we cannot indeed install them because we can't ship them.
There's also service in those limited number of factories cannot be serviced. But that was known, and that's in our planning. It's our financial models. So this is where we have certain restrictions. We can service them, but not with U.S. content, with you know spare parts that come out of the U.S. that are under export control. And then you cannot service them with those parts. Yeah? But that's for a limited number of your systems. Yeah? But we can install them. Anything else that we have sold, we can install, and we can service. Okay. So that was the first question.
The second question was that, as the market depends on AI and consumers, do we have a forecast, or do we have worries on the forecast that we have provided to the market, which is, if I'm not mistaken, 12% or approximately?
So, I'm happy to take that question. So, because you specifically asked for the models, so which models are you using to do that? And what we typically do, we do that very elaborately at the Capital Markets Day, which we'll have in November of this year again. We typically look at the various end segments, and we say, you know, what do we think the end markets are going to look like, which, of course, we'll do again in November. I would say it's not just consumer.
It's not just AI. You know, don't also underestimate things like automotive, right? I think the automotive market is very significant as well. And, you know, with electrification that we talked about, with advanced driver assistance systems, that will be a big market. I think Peter showed it, and I think that's been the one big development in the past couple of years is the huge diversification of end markets. So we're no longer dependent on smartphones or just PCs or whatever. There is such a wide array of applications of semiconductors as a result of which I think our diversification, I think, has become so much stronger, and we're less dependent on individual markets and how they develop. I still agree with you. AI has enormous potential, but we still have to figure out exactly how much it is.
I mean, there are people that say that AI is going to be a $400 billion business by 2027. There are others that say, well, that might be a bit of an exaggeration, and maybe it's going to be $200 billion or $300 billion by the end of this decade. We're still in the process of trying to sort that out, but we firmly believe that artificial intelligence and we actually already see it in our numbers that artificial intelligence is becoming meaningful. A year ago, it was nothing in our numbers. Right now, we really see both on the memory side and on the logic side, really customers ordering, ordering equipment that is specifically dedicated to, to artificial intelligence. So we clearly see it take off. But I agree with you. We still have some homework to do in order to really determine how big the market is. That is something that we would like to share with our analysts and investors in November of this year. Thanks. The final question was in suppliers.
Yeah. I think we're the consumer dependence, your answer. I think you answered that. And then we have the suppliers. Yeah? I think the suppliers is a good question. You know, we, as you know, we've been public saying that we would like our production capacity to grow to 90 EUV systems per year, 600 DPV systems, and 20 high NA systems. That is what our supply chain is now gearing up to. That's what they're building. I don't think we currently see any hurdles or big roadblocks of them not being able to do that. So I think it'll be there. Yeah? Suppliers are able to follow.
In the last 10 to 15 years, our suppliers have also grown. Some of them have merged, have become bigger companies with bigger resources. And this is why, although it remains a stretch, you know, Wayne is responsible for our strategic sourcing. He knows in his day-to-day work that, you know, you have to stay on top of these things. But I think, don't think, Wayne, there's going to be as any major issue. Yeah?
No, I think, suppliers are very ready. We start years in advance before first shipment. We start with development with our suppliers. We stay very close to them on capabilities, and I think we're in good shape. Yeah. Thank you.
Thank you. Any further questions? In the back. It's you, Christophe. It's VBDO.
Thank you so much. Dear members of the board, dear members of the supervisory board, my name is Edwin Janssen, and I represent VBDO, the Dutch Association of Investors for Sustainable Development. Once again, we've read your report with full attention. Congratulations with another year of great results and achievements. We'd like to ask questions on three separate topics, CSRD, living wages, and lobbying. I will introduce each topic separately before asking the corresponding question. Starting with CSRD. ASML concisely describes the process of the double materiality assessment in the annual report. VBDO expects full compliance with CSRD reporting in the next year. ASML has negative impacts in its value chain on topics such as biodiversity, water, e-waste that go beyond the impact of direct suppliers, tier one, and customers, tier one. Various stakeholders consider these relevant topics for the industry in general and for your specific sector, or for your sector specifically.
However, as the process is described briefly in the annual report, it is unclear for VBDO how ASML assesses and addresses those specific impacts. Three questions. To what extent does ASML have insights in those specific impacts that go beyond direct suppliers and customers? Second, does ASML expect changes in the double materiality assessment related to topics such as biodiversity, water, pollution, given the impacts that go beyond its direct suppliers and customers? And as a third question, how will ASML manage those specific impacts in its value chain? Would you want me to continue with the next topic or take a moment to answer first?
I think these are three good questions to answer, and I'll pass them to Christophe.
Yeah. So first, I think I'd like to say that we conduct our double materiality assessment in full compliance with CSRD.
I think we have been stepping up significantly this year to be ready, basically, to meet all CSRD requirements. If you look at our ESG strategy and reporting, it is based on the outcome of the DMA. We will disclose this process and the outcome in very much details in the annual report of 2024. The input from all stakeholders, including yours, is part of this assessment. When we look at our assessment, we consider all impact and risk across the entire value chain. That's including, of course, also the supply chain. The level of insight of our own operation is, of course, higher. When it comes, basically, to upstream and downstream, we're going to rely on subject matter aspects. We are working with a lot of people, basically, to get the most accurate possible information.
On your second question, which I think was about how we change the materiality assessment related to topics such as biodiversity, water, and pollution. So similar to last year, we consider those topics among many other in our DMA. And we typically don't expect many changes year on year because, you know, when it comes to climate, things are not changing dramatically year on year. Now, at the same time, we observe some changes, some smaller changes. We see, for example, that water scarcity is becoming more and more important in the Netherlands. And as a result, this could have an impact on our assessment. We are still in progress in the assessment. And again, we will publish the full outcome of that in our annual report 2024.
On your last question, which I think is about how do we manage also our supply chain, we have an overall supplier sustainability program. We are very much engaged, with all our suppliers in order to create also the awareness around ESG. I think Peter said this is a very important topic for ASML. We bring this topic also to our supplier. And in the relationship we have with them, through those programs, we ask them to work on what we think is critical. We ask them, for example, to reduce their CO2 emission to zero by 2030, as Peter mentioned. We also require them to adhere to the latest RBA Code of Conduct, which is a bit of a reference today in the industry. And if we identify new material topics out of our assessment, of course, this will be also transferred through this program to all our suppliers. So this is a bit the way we are working with the supply chain on that.
Okay. Thank you. I hope that was a good answer to the first question. And then you had on living wages and lobbying.
That's correct. Thank you. Thank you for this first set of answers. In the updated human rights policy, ASML states that it expects suppliers and other business partners to ensure living wages for workers in the supply chain. VBDO commends ASML for its transparency about this expectation and encourages ASML to increase reporting on this approach. However, VBDO was unable to find a policy for ensuring a living wage for workers in the supply chain, nor did we find any KPIs, nor a definition of the topic. Two questions. How does ASML address the important topic of living wage? Is ASML willing to increase reporting on this topic, on this approach in 2024? And the second question, will ASML include a definition of living wages and living income in the human rights policy and the code of conduct?
So Christophe, would you like to go whatever you think?
Yeah. You can, so first of all, of course, I think you know that ASML is committed to paying fair and balanced salaries and benefits. This is part of our code of conduct. We also expect our suppliers and other business partners to do the same. And that's, of course, includes ensuring a living wage for workers in the supply chain. How we do that with our suppliers, as I mentioned before, we use the RBA Code of Conduct. This is today, a reference.
This is also a code of conduct we ask all our suppliers to basically adhere to. There is in this code of conduct a clear reference to a minimum wage. Now, on top of that, that's very important, we are also finalizing a very extensive human rights sanity assessment on the ASML supply chain to identify any potential human rights impact. That includes, basically, living wage. In the next annual report, as part of the CR CSRD reporting, we will include a KPI that will be indicating the percentage of employees paid an adequate wage by country. So this will appear in the next annual report. To your second question, will ASML include a definition of living wage and living income in the human rights policy and the code of conduct?
So we are currently updating our human rights policy, which will also be based on the outcome of this salience assessment. And this updated policy will include, among other, more specific requirements on the process to identify and manage human rights impact, including an adequate wage. So we started with a human rights policy. You have seen it, I think, this year. We are working on this assessment. And this assessment will enrich, basically, the future of the policy.
Adequate wage? Do you now refer to a minimum wage or a living wage?
We are referring to living wage.
Thank you. That is clear.
And then lobbying. The third topic of lobbying.
Thank you for previous questions. Sorry. Answers. VBDO is pleased that ASML has published the revised government and external affairs report.
In the report, ASML discloses contributions to several associations and the type of involvement in some of these organizations. However, the list of memberships of ASML appears to be non-exhaustive. While the report sets a good example for sector peers, VBDO encourages ASML to include a comprehensive list of its memberships of industry associations and trade organizations so that ASML can continue to lead by example. And some of these industry associations also lobby against climate change, for example, and there's plenty of other topics. So the question, will ASML include an exhaustive list of its memberships of industry associations and trade organizations in the government and external affairs report?
Yeah. Thanks for, for recognizing, indeed, the step that we took there to, to publish, to publish this. It's good to know that you really see that as a good practice that others might follow. I have to say, by and large, it's pretty exhaustive. So, we'll take another look at it, try and make it even more robust. But you should assume that what is in that report really, you know, caters to the lion's share of the contributions that we've actually made. So we'll take another look, make sure that it's even more comprehensive in 2024. But it's pretty comprehensive. The lion's share really is already in there.
Thank you so much for answering this question.
Okay. Thank you. Do we have any further questions? Doesn't seem to be the case right now. So, the data registration for this meeting has been processed. So I'll now hand the floor to Reinier Kleipool to give us a status.
Thank you, Mr. Chairman. The total number of issued ordinary shares per the record date for this general meeting amounts to 399,584,578 ordinary shares. 6,347,822 of these ordinary shares are held by the company as treasury shares. Since each ordinary share carries one vote, the number of voting rights amounts to 393,236,756 votes. The count for today's meeting showed that at the start of the meeting, 308,157,955 shares were present or represented at this meeting. These represent 78.36% of the issued and outstanding ordinary shares as per the record date. This means that at today's meeting, all voting items on the agenda can be adopted by means of a simple majority of votes cast, as more than 50% of the outstanding share capital is represented. I give the floor back to Mr. Chairman.
Thank you very much. And I'm now open for the voting. And I'll ask the voting system or operator to switch on the voting system. I just wanna say that you have the opportunity to vote on all items at all times during the meetings, as Mr. Kleipool said earlier. And you don't need to wait for any particular item to be discussed before you cast your vote. And you can change the vote at any time. You just change to the new choice, and then that is done. And now we move on to agenda item 3A. And this is concerning the remuneration report for the board of management and the supervisory board for the financial year 2023 as prepared in accordance with the Dutch law. The general meeting today has an advisory vote on the remuneration report. I'll now give the floor to Ms. Kelly. I hope. Do we have connection? Terri, are you on? Over to you.
Yes. Thank you, Mr. Chairman. I'm so sorry. I cannot be there with you in person but happy to provide a virtual update of our report. We move to the first slide. Okay. Just to summarize, the 2023 report. This obviously is aligned with Dutch law and the EU Shareholder Rights Directive. You may recall that we implemented a change in policy in 2022 for the Board of Management. Then in 2023, we made some additional changes for this Supervisory Board. All of the topics in the report are aligned with the policy.
One of our, our key objectives is to continue to look at transparency. Hopefully, you found in the report, we, we try our best to enhance transparency and explain the rationale of in terms of some of the measures and incentives and methodology. We've also done a very extensive stakeholder outreach. I appreciate all of the engagement both with internal stakeholders as well as external stakeholders. This has really helped us, I think, inform our both our report and also any future changes we may contemplate on our policy both for the board of management and supervisory board. One unique element this year that you'll note in the report is we performed a societal benchmark.
I think it's probably the first of its kind to actually do some external comparison in the local Dutch market, and how our pay progression changes versus the external world. So we feel this again was something that we did and feel very proud of. And we're continuing to look at this in the future in terms of maybe future opportunities and other data points how well our pay policies map out from an external parameter. And then lastly, I wanna just cover on a couple of highlights from the report. And you'll see that we've made some moderate increases in our base salary that will end within our policy and closely with the market.
Then, lastly, the incentive measures, which is an area that we've made significant attention to, to really align both the short-term incentives and the long-term incentives with really the value drivers for ASML. So this is a key part of our work, certainly at the committee. If I go to the next slide, I'll just talk to you about the performance outcome for 2023. If you look at our short-term incentive, you'll note that we still have a high weighting on the financial measure of EBIT margin of 60%. We achieved good performance. Then again, in our non-financial measures, it's a good mix of what our customers care about. So these are the key areas aligned with our core business segments. And lastly, the technology leadership index.
I think we spoke at length about it, how much is it a lead indicator of the performance for ASML. So in total, we achieved 128.2% of target, aligned with our short-term incentive, which we felt, good performance. And then I'll move to the long-term performance. So again, a good mix of financial and non-financial measures. We achieved overall performance of 157.7% of target. I do wanna take this opportunity to just draw your attention to sustainability. And you heard earlier how important this is, for ASML, and certainly a focus area. And so in this particular case, we achieved a 0 payout, of target. And that is a little misleading. And I think it speaks to some of the challenges of trying to establish long-term, three-year incentive, targets.
In this case, I think we were probably a bit more aggressive in terms of the target setting. This sustainability measure is the Dow Jones Sustainability Index. In this case, we actually performed at number 6, I believe, out of 347 companies. So this is much broader than, I'd say, our semiconductor ecosystem. In this case, the performance target was 10% from the top performer. And you'll see we fell just short. And so our committee did deliberate on this because I think we felt the performance was quite good. But in this case, we probably did a not-so-good job of our target setting. And we know discretionary changes are not well looked upon by many of our stakeholders. So we made the decision to keep the data as it was, which still ended up in a very healthy result of 150.7%. So I believe that concludes my remarks, Mr. Chairman. I'll hand it over to you.
Thank you very much, Terri. I will now move over to questions. Are there any questions to this agenda item?
Yes. Thank you, Chairman. Thank you, Mrs. Kelly. Again, Gerben Everts, the Dutch Shareholders Association. A question for Mrs. Kelly. You ended with this ROIC, and I have a question on that. You wrote that ASML has reintroduced the performance measure, so the cash rate of return on capital, the ROIC, as metric for the long-term incentive plan, the LTI. Only recently, you stopped using the same metric, ROIC, with the argument that many investments have a longer return period than the three-year performance period of the LTI.
So consequently, the ROIC performance had to be regularly adjusted for extra R&D expenses, other changes, which were unforeseen at the time of the target setting. Well, the definition of ROIC has been slightly adjusted. Long-term contract liabilities are now deducted to calculate invested capital. This does not solve the earlier mentioned arguments. In fact, by adjusting, it potentially makes the ROIC figure even more volatile this year to the positive, but next year, it can be negative. So why has the remuneration committee decided to reintroduce ROIC with a weight of 40%, so really high, given the earlier arguments and which are still valid? Could you please respond to that?
Terri, are you online? Can you respond to this question?
Can you hear me?
Sure. Yeah. No.
So we had a lot of deliberation on this.
I think this is also in partnership with our CFO, Roger Dassen, that as we looked at alternatives, we contemplated using cash conversion rate, which you mentioned. But we always felt that ROIC was an important measure if we could control some of the variables that caused some of the challenges over the period. So the major changes that we made in the calculation is that we were taking the R&D component and fixing it according to our long-term plan. And we were very clear that if we abbreviate on the high side, if we invest more in research and development or less, we will make the adjustment and make it clear as to the rationale. As this was one of the major drivers that created the fluctuation. So with that change and a couple other minor changes, we felt comfortable and certainly supported by the board of management and our CFO, Roger Dassen, that this is still a much better measure than some of the other measures we looked at for our financial performance. And Roger Dassen, you may wanna say a couple other comments.
Should we try to repeat it because of the connection? If you can translate.
Yeah. Maybe for Mrs. Kelly. The connection is not it. So we'll maybe Roger maybe repeat it. Yeah. Yeah. Yeah. I'm sorry about that.
I'm happy to repeat it. Terry gave, you know, gave all the good ingredients. But, you know, I know them, and that's why I can understand it.
So we looked at a bunch of alternatives, 'cause as you know, in the past couple of years, we actually looked at more cash-driven metrics. But then we said, "Well, you know, cash is that, right? It doesn't really cut it in terms of the value that the company is adding." So we, we do believe that ROIC with, you know, the longer-term, improvement of, of profitability, measuring longer-term improvement of profitability, and also driving balance sheet efficiency, those are still the two things that you wanna achieve. And that's why I think the supervisory board, and the remuneration committee at some stage said we actually believe this is a better metric still than cash. But you're absolutely right. One of the key things that we ran into in the past couple of years was that sometimes we pushed down the accelerator harder on R&D.
Actually, the board of management got penalized for that because by, you know, by putting more money into R&D, which, of course, exactly to your point, long-term, beyond the three-year period, is gonna generate its yield. But short-term, even within the three-year period, obviously, you would be penalized for that. And that is something that the remuneration committee said that's unhealthy. So what we did to overcome that problem is to say in the ROIC, in the actual ROIC calculation, we actually take the budgeted R&D number, right? So you take the budgeted R&D number as per your longer-term forecast, and you fix it in there. So if you then, for whatever reason, are going to spend more on R&D, you don't get penalized on that. So that's the way it's been done. And that's, I think, Kevin, a way in which the problem that you rightfully identified is the reason why we abandoned this measure, the way that got addressed. So maybe that helps in clarifying what we did. It does, certainly. Thank you.
Thank you. Any other questions from shareholders? No. Does not seem to be the case. So we'll now, well, you're obviously welcome to vote on it now. And we continue with item 3B. And the item 3B concerns the discussions of the annual report and the adoption of the financial statement for the financial year 2023 as prepared in accordance with Dutch law. As you have seen, ASML published an annual report containing financial and non-financial information. This year, ASML has again prepared two sets of financial statements, one based on the US GAAP, the accounting principles which are generally accepted in the US, and one based on the international financial reporting standards that are adopted by the European Union and Dutch law. The 2023 financial statements based on IFRS and Dutch law are now submitted to you for adoption. And Mr. Groenland, who is our external auditor from KPMG, as I said earlier, is here and will give you an update on the audit procedures.
Thank you, Chairman. Good afternoon, ladies and gentlemen. My name is Peter Groenland, and I'm the external auditor for ASML on behalf of KPMG. KPMG has been the external auditor since 2016. And this is the third time I'm standing in front of you. It is my privilege to address you today. As shareholders, you are important users of our reports, and we value your trust. It is in that respect that I would first like to give my reflection on the recent media coverage on KPMG related to the completed investigation into the sharing of answers of mandatory training tests, which resulted in a settlement with the PCAOB, our US audit regulator. I deeply regret that this conduct has happened within KPMG. This should not have happened. KPMG has performed and is performing a thorough root cause analysis. And we've been taking various measures on training, culture, behavior, ethical decision-making. Individuals that have been involved and who participated in answer sharing have been sanctioned. And some of them had to leave the firm.
So for you as shareholders, I can imagine that it is relevant whether the audit of ASML was impacted. I can tell you that I have not been involved in exam answer sharing, which was also confirmed by the investigation. I now like to continue with the presentation on the 2023 audit of ASML, what we're standing here for. So I'm happy to have been provided the opportunity, first of all, to elaborate on our 2023 auditor's reports, our process, and observations. And to start off with the end product of our work, on February 14th, we issued a number of reports with respect to the IFRS financial statements and the US GAAP financial statements. The IFRS financial statements is the document, of course, here for voting, today. So I'll spend most time on that.
For the IFRS financial statements, we audited the consolidated financial statements and the company financial statements and assessed whether those were prepared in accordance with IFRS and Dutch law. We issued an unqualified opinion. I think that's always a difficult translation to somebody who's not outside, or not in the, audit practice. In proper Dutch, it's called a goedkeurende verklaring, so which implies that the financial statements give a true and fair view and that they have been prepared in accordance with IFRS and Dutch law. We also concluded that the reports by the board of management and the other information included in the annual report is consistent with the financial statements and does not contain material misstatements. In addition, the report and the other information contains all information required by Dutch law.
As it relates to the U.S. GAAP financial statements, it's good to note that we also issued an unqualified opinion on those financial statements but also on internal control over financial reporting, which basically means that we did not identify a material weakness in internal control. So continuing on with the key elements of our audit of the IFRS financial statements. In detail, they are included in the independent auditor's report that is included in the annual report on pages 316 through 321 if you want to have a look. But I'll go through the elements here clockwise. And I'd first like to indicate that an audit provides a high level of assurance but not an absolute level of assurance, which means that we may not detect all material errors and frauds during our audit. However, materiality is very important.
So we first determine materiality, the level at which we believe misstatements will reasonably influence users of the financial statements like yourselves. For the 2023 audits of ASML, we determined the materiality for the financial statements as a whole to be EUR 350 million, representing 3.7% of income before income taxes. We did report misstatements lower than that, right, in excess of EUR 17.5 million to the audit committee. Moving to risk assessment. In our risk assessment, we identify and assess the risks of material misstatement in the financial statements, whether caused by error or fraud. In line with the presumed risks of fraud laid down in our auditing standards, we identified fraud risks with respect to revenue recognition and management override of controls, of which the first, revenue recognition, is part of our key audit matter that I will discuss later on as part of observations.
Related to the risk of management override of controls, we evaluated relevant internal controls that mitigate fraud risks. We tested high-risk journal entries and evaluated key estimates and judgments for bias. Important to note is that our audit procedures did not reveal indications and/or reasonable suspicion of fraud that would be considered material to our audit. Similarly, we looked at noncompliance with laws and regulations, where we also evaluated various controls and involved forensic specialists and export control specialists, an important topic, especially this year. So with respect to the misappropriation of data by a now former ASML employee late in 2022, ASML reported the incident to relevant authorities and continued to assess this as a potential violation of certain export control regulations. As a conclusion on this topic, we did not reveal indications and/or reasonable suspicion of noncompliance that would be considered material to our audit.
Then, on going concern, we discussed and inspected management analysis of matters that would be impacting the company's going concern. Think about the industry developments and also the export restrictions to China. But the outcome of our procedures did not give reason to perform additional procedures. So, no going concern risks identified. As it relates to climate, we assessed whether there was a risk of material misstatements specific to climate for the 2023 financial statements. Think about valuation of long-lived assets, going concern assumption. But we did not identify such risk to be material for the 2023 financial statements. Then, talk about cyber. Cybersecurity, always an important topic. We have obtained an understanding how ASML uses IT and the impact of IT on the financial statements, which includes an assessment of the potential of cybersecurity incidents to have a material impact on the financial statements.
We did not identify a risk of material misstatement specific to cyber. On group audits, I would like to indicate that, as you are probably aware, ASML has a high level of centralization here in Veldhoven, in the Netherlands, which we mirror in our audits, which means that we performed our audit mostly centrally here from the Netherlands. Looking at specialists, for the more complex areas, we involved KPMG specialists in the areas of IT, tax, forensic, valuations, and a climate subject matter expert. We communicated our audit plan and our findings to the audit committee as a committee of the supervisory board. On a periodic basis, we discussed our audit findings with management and the audit committee. There's an active engagement with the audit committee. Our observations are taken seriously. We go to the next slide on our observations.
As mentioned, we had one key audit matter on revenue recognition, which is consistent with prior year. So in 2023, our key audit matter related to identification of distinct performance obligations in certain volume purchase agreements as well as revenue cutoff. Good to note why we identified this as a key audit matter is that agreements with customers often are complex and comprise multiple elements, multiple performance obligations. And as it relates to revenue cutoff, it does matter whether a machine is recognized in 2023 versus 2024. So other areas that we reported on and discussed with the audit committee included our view on estimates. So we believe the estimates management has used in preparing the financial statements were balanced.
As it relates to internal control observations, I already mentioned that we performed an audit of the effectiveness of internal control over financial reporting in conjunction with the audit of the U.S. GAAP financial statements, for which we issued an unqualified opinion. Then on the right side, I have non-financial information. So good to note that we've also performed procedures on the non-financial information that is included in ASML's annual report and issued a limited assurance report thereon. Limited assurance is a lower level of assurance that an audit would have, provided. Export control regulations, topic that, of course, could not be ignored last year. We assessed the impact of the changed export regulations on the financial statements.
Possible noncompliance could result in fines and penalties but also the potential impact on revenue recognition and the related balance sheet positions and the, as we just discussed, the possibility whether systems shipped to China could be installed later on. We performed procedures to address this risk. Lastly, on the 2024 audits, I expect the audit to be largely consistent with what we've applied in 2023. That's reflective of our audit plan that we've presented. There's one new element. It was already touched on. It's the CSRD. We've been engaged to perform a limited assurance engagement on the company's sustainability reporting in accordance with the CSRD, which is effective from 2024. This covers my presentation on 2023 audits and the opinion. On behalf of KPMG, I would like to thank you for your attention and thank you for your trust. I'm happy to take any questions. Chairman?
Thank you, Petra. Would there be any questions on this point for Petra or the company? Put these on again before you start. We need microphone. Microphone. Mic. That was to give me time. It's coming. Yep. The gentleman here in the second row. Thank you, Romanee. The word is to Stevense.
Thank you, Mr. Chairman. My name is Stevense. I'm chair of the Foundation Legal Protection of Investors. Well, you already touched upon a number of topics, topics that we would like to know more about. But, well, in our opinion, you didn't dive deep enough. First of all, cyber. The Chinese are desperate to find to figure out what's going on here. Well, we hope that your staff doesn't include people that pass information on. But we would love to know a bit more about this. And we would like to hear from you whether everything is safe and secure.
That's it. That's my first question. Now, Scope 3. Well, you touched upon that briefly. Well, that seems to me. Interrupt for one second. Is this question for us or is it for KPMG? For KPMG. Super. I was just to understand. Scope 3, this is, goes well. Scope 3, this is a question for the board of management. This seems to us to be an impossible situation to completely comply with all the rules. We would like to hear from you what your views are.
Could you repeat that, says Mr. Wennink?
Scope 3. Slowly but surely, we're fearing next year's shareholders' meeting, whether that shareholders' meeting could be held on time. Because if you send forms to the Far East and they return to sender or they don't even respond, then what? We would like to hear from you how you intend to sort this out. Those are our questions, Mr. Chairman. Thank you.
Thank you very much. And I think we'll take the first question, for Petra first or two questions, actually, which was, did you dive deep enough into cyber and, are your people safe and not involved in the passing on the information?
Yes, certainly. Thank you, Mr. Steven, for the question. It's an important topic, cyber, very, very much so, also in our audits. Our focus, of course, is to see whether there's a risk of material misstatements for the financial statements. So we do include that as a potential risk in our assessment of IT. And as you're aware and I also you pointed out, there was an incident indeed end of 2022 that the company also disclosed in their financial statements, that was a big scare, but was not material, right? It was not material to our audits. We did report on it as important to the reader. But that's the point. There's a lot of attention spent on cyber also within the company.
Yeah. And perhaps before we go into scope 3, I mean, you asked a very important question. Is everything safe? Is alles veilig? Well, everything is a lot. So, it's a continuous battle, huh, between the people who are trying to get hold of information through cyber means. So we continuously are upgrading our cyber resilience activities because it's a war. And, you know, this is where we put maximum effort in making sure that we can detect and we can respond. And then when we respond, we can effectively, you know, stop any action. This is what we do, yeah? L ike I said, the question I was triggered by you, is alles veilig? Is everything safe? You can never say that, yeah, because it's a continuous, you know, effort, which, by the way, perhaps Roger Dassen can comment on it, but we spent significant amounts of money and people in trying to save to actually stay safe as much as possible, yeah?
And Scope 3?
Yeah. So on the Scope S, I think, one thing I will agree with you. It's, it is a difficult target. I think we all are very much aware of that in ASML. But we thought, from the beginning, this was also a very responsible target to drive as a company. We talked a lot about our say responsibility towards society. And we believe that this is an important one. So if you look at Scope 3, I think the other element is, because the target is difficult, we know this is not something that we can do alone. We're going to have to do it with our supply chain. This is the upstream part. But we're also going to have to do it with our customer. We have supply chain. I talked already about the supplier program we have implemented. We are asking also our supplier to show their own commitment to reduce their CO2 emission to zero by 2030. And in order to drive that very aggressively this year, we have even decided to track this in one of our long-term incentives.
We're going to ask that 80% of our supplier, which are, I would say, the biggest one in terms of CO2 emission, show us commitment either by doing publicly or by writing a letter to go down to zero by 2030. And we want them to do that by 2026. So we are anticipating. We are working with them, ahead, as much as possible. So this is for the supply chain. For the customer, I think there's two parts. So first, the largest part of CO2 emission that our customer comes from energy consumption. I think we've talked about that in the past. One way to reduce that for us is to reduce the energy consumption per exposure, EUV. I think Peter mentioned we have already reduced that by 40% compared to the initial baseline. We plan to go down 60% by 2025.
We have more plans moving forward after 2025, after 2030, to continue to reduce the energy consumption. On top of that, our customers themselves, all of them are defining very aggressive plans to switch to green energy, or non-carbonic energy. Some of them are very advanced. Some of them in the U.S. are already claiming almost 100% use of renewable energy, which is, of course, important. In Asia, where it's a bit more complex, I think we mentioned that this year we've seen a major step done in Taiwan. I think there our customers are themselves very aggressive in committing to the target. We see, I would say, the same behavior in the entire world. So this is a very important matter for the industry. We have also joined a SEMI, I would say, group of people. We've been one of the founding members in order to help together with our colleagues to really drive this target. So it's a very, very difficult target. I give you that. But I think we have to do our very best to get there. And we have to do that with our partners.
Yeah. Good to indicate. I mean, as part of the CSRD, there'll be further steps and further disclosures in the 2024 annual report that we will be covering with limited assurance engagement next year.
And we do intend to hold the next AGM in one time. Okay. Any other questions? Yes, from VEB.
Thank you. Gerben Everts, VEB. This is a good thing about direct interaction. We just had the discussion on cyber risks for ASML. But cyber risk has another context as well. So a question for the auditor. Many thanks for your good, maybe even excellent, presentation. We really appreciate the auditor being here and providing us with your views in this case about the audit, which is extremely important for us. So many thanks for that. In terms of cyber, an audit firm will have access in the audit papers to a lot of information which can be confidential, which can be extremely confidential in certain instances, for instance, with ASML. What are the guarantees in place within KPMG that that information is not being exchanged, is not being used by others, and cannot be used to advise current or future competitors of ASML? So that's one question. What are the internal guarantees we have as an auditor that cyber is not, you know, fire KPMG an issue? The other is, you know, the formal sanity check this year.
We need to ask the question every time at the AGM. And that is you referred at the start. Many thanks for that. And you apologized for the exam fraud, as we refer to it, and that you were not involved. Can you guarantee that neither any other partner within your team here in the Netherlands, in the US, and other companies? The other auditors in the team of the audit of ASML were involved, nor the independent quality control within KPMG, such that we are sure that those that actually looked at the audit, they were all, you know, qualified to do that at the moment. So that's a sanity question we raise every time. Maybe you can refer to that as well. Thank you.
Yeah. Thank you, Mr. Everts. I question on cyber. So how we prevent information leakage from our own systems. This is, of course, an important topic that we also discuss with the company, as it relates to how we share information amongst each others and, and what, what information is, is kept where. It's important to say that our profession is all about confidentiality and our duty to, to be confidential about information that we obtained. So we have that embedded in our processes within KPMG.
Thank you, Petra. Any other questions?
There was a second question. Sorry.
Oh, sorry.
I'll thank you for that second question as well. And I fully appreciate you asking this question. Important to note on the exam answer sharing situation, you asked about the other partners on my audits. Important to note that due to the Dutch labor law and the GDPR privacy regulations, I cannot speak to the outcome of the investigation for any of my team members. I also do not have that information. But as noted at the beginning, it's important that KPMG sanctioned all those individuals that were involved in improper exam answer sharing, with some of them having to leave the firm. However, I have inquired personally of the five partners involved on the ASML audit, which include the EQCR or the quality control partner.
They confirmed that they had not received any help in doing exams or shared answers with others. So with my team on ASML, I spent significant time this year discussing accountability and ethics and reminding my team of the speak-up culture, the speak-up policy in our culture. I have no concerns about the quality of our audit and my opinion on the ASML financial statements. And lastly, I just wanted to mention that, you know, the investigation was going on for a while, for almost two years. And during the process, I've kept ASML's audit committee chair and the CFO up to date regularly.
Thank you. Any further questions to the company or to Petra? Doesn't seem to be the case. So we can now move to the agenda item 3C. And the agenda item 3C concerns the explanation of ASML's compliance with the Dutch corporate governance rule. This is a non-voting item. On January 23, the revised Dutch governance code took effect. In our 2023 report, we have outlined the main changes, which are not major but main changes of the revised code, and also explained how we have addressed the revised or new principles and the best practices, provisions of the code. As you can read in the annual report, ASML fully complies with the applicable best practice provisions of the revised code. Do you have any questions to this point? This does not seem to be the case. Then we will finalize this agenda item. I just wanna remind you again that you can vote anytime, but of course, also now. Then we move to agenda item 3D. This agenda item concerns the explanation of ASML's reserves and dividend policy. This is also a non-voting item.
ASML aims to pay an annual dividend that will grow over time to be paid out quarterly. As for any further explanation, you can see the explanatory notes to the agenda. Are there any shareholders with questions to the dividend policy? Does not seem to be the case. Thank you. We can finalize this agenda item and move on to 3E. The next item on item 3E is a proposal of the board of management to declare dividend for the financial year 2023. We made two interim dividend payments in 2022 and one in February 2024, each EUR 1.45 per ordinary share. The board of management now proposes declaring a final dividend of EUR 1.75 per ordinary share. That means that the total dividend for the financial year 2023 will be EUR 6.10 per ordinary share, which is a 5.2% increase over last year.
For the sake of completion, I just want to inform you that the Supervisory Board have approved the proposal. Are there any shareholders who would like to have a say on this or comment or question? Okay. I note there are no further questions regarding this agenda. We'll move on to the agenda item 4A. 4A is a proposal to discharge the members of the Board of Management, the Supervisory Board, from liability for the performance of their duties in the financial year 2023. These agenda items consist of two voting items. Item 3A is a discharge of the members of the Board of Management. 4A and 4B is a discharge of the members of the Supervisory Board. Are there any comments, questions to this point?
Does not seem to be the case. We can now move on to agenda item 5. Agenda item 5 concerns the proposal to approve the maximum number of ordinary shares made available for the remuneration of the board of management. The maximum number of shares amounts to 170,000 ordinary shares. The final granting of shares will be made by the supervisory board based on the applicable remuneration policy by applying the calculation method as described in that policy. The agenda item also includes a proposal that the general meeting designates the board of management as the body that is authorized to issue those ordinary shares subject to the approval of the supervisory board. The designation is requested for the period running from the date of this meeting through the AGM held in 2025.
For the information regarding the shares granted conditionally to the board of management for the financial year 2024, reference is made to the 2023 remuneration report. Here, we are open for questions. Any questions to this point? Does not seem to be the case. Then we can conclude this agenda item. Again, you can vote on this and other items, of course, now. We now move proceed to agenda item 6. Agenda item 6 concerns the composition of the board of management and consists of the two non-voting items. In accordance with Dutch law and ASML articles of association, the board of management members are appointed by the supervisory board subject to the general meeting being notified. As announced in the press release dated 30th of November 2023, Mr. Peter T. F. Wennink and Mr.
van den Brink will retire as Co-Presidents and members of the Board of Management as per date of this general meeting. That means today. At the end of the meeting, I would like to express some words of thanks to both Peter and Martin. And yeah, this was an information item. So we can move over to the second item, which is 6A, unless there are any questions to this point. No. So the Supervisory Board hereby gives notice to the intended reappointment of Mr. Christophe Fouquet as a member of the Board of Management in the position of President and Chief Executive Officer. The Supervisory Board intends to reappoint Mr.
Fouquet as a member of the board of management in the position of chief executive officer in view of his extensive leadership experience and deep understanding of ASML's technology and the semiconductor industry's ecosystem acquired through different roles, during his 15 years at, tenure at ASML, as well as the other, as well as at other companies. The supervisory board believes that Mr. Fouquet has the right leadership qualities and culture fit for the position and is confident that he'll continue to further build on the solid basis that they've been laid in previous years. Mr. Fouquet will also act as the chairperson of the board of management. Mr. Fouquet's reappointment will be effective per the day of this general meeting, again, today. The explanatory notes to the agenda contains the personal details of Mr. Fouquet and the main elements of his management services agreement, including his new remuneration package. So Christophe, may I now invite you to say a few words to the shareholders?
Wow. Told you, Sal. I know Peter is very proud of me right now. Thank you very much, Nils. It's an incredible honor to be selected as the next CEO of ASML. And I would like to thank ASML Supervisory Board for their trust and their support. I've been in the company for 15 years in different roles, usually connected to technology, customer, to our product. And since 2018, I have been part of the board of management of ASML. During this time, I've witnessed how critical ASML has become to the entire semiconductor ecosystem. But also how our technology has fueled innovation that made their ways to our application that we are now using in our life every day.
Peter and Martin have built a very solid foundation. We have a team of 42,000 people that bring a huge amount of talent to ASML. I'm very happy, together with the rest of the board of management, Roger, Frédéric, Wayne, soon to be Jim, to be able to write the next chapter of ASML and to continue to build significant value for our shareholder. I can promise you that we will be doing our best to grow the heritage that Peter and Martin left to us. Thank you very much. Okay. Great. Thank you, Christophe. Any questions from shareholders? Question from VEB? Thank you, chairman. Of course, we'll have drinks and celebrations, but I'd like to benefit from the occasion, to wish Mr. Fouquet all the best as the new CEO of ASML.
We believe you are most qualified and, including the last 15 years here, very well prepared to fulfill this important responsibility and, indeed, to write that next chapter. So much appreciated. Furthermore, in terms of benefit, as I have the mic, we'd like to be the first to wholeheartedly thank the other two gentlemen here: Mr. Wennink and Mr. van den Brink, for their absolutely phenomenal performance. For Dutch retail investors, European retail investors, and we are with many, as you know, because the retail market is large, ASML is one of the top three of the investments of our, of our members, and with very good results. And as individuals, you've made the many, the very many, very important decisions with great dedication, which were needed to develop the success. The success is not here for the sake of it. It's really developed by and under your leadership.
So you served the employees. You served the region. You served the country. You served them well and us, shareholders, extremely well. And in a considered, a very honest way, with clear language and absent too much ego. And that's what we, as shareholders, very much appreciate. So on behalf of the Dutch Shareholders Association, European shareholders, many, many thanks and a lot and the best of luck in the next endeavors for the two gentlemen here on the forefront as well. Thank you.
Okay. Any other question or comments? I think I will, as I said, also say a few words at the end so we don't need to pass the microphone. I think everybody are deeply grateful to Peter and Martin. So I now conclude this agenda item and confirm that Mr. Fouquet will be reappointed per end of this meeting for a four-year term as member of the board of management and in the position of President and Chief Executive Officer. We move to agenda item 6B. The supervisory board hereby gives notice of the intended appointment of Mr. Jim Koonmen as a member of the board of management in the position of Chief Customer Officer. In this role, Mr. Koonmen will assume primary responsibility for ASML's customer relationships. The appointment of Mr.
Koonmen as member of the Board of Management underscores our ambition to continuously increase our responsiveness to customer needs and to consistently deliver high-performance products and services, also in view of the continuous increase in the size and complexity of ASML's operations and business with customers, given that further strengthening customer trust and enhancing customer satisfaction are key drivers in our long-term success to customers among ASML key stakeholders. The Supervisory Board has decided to position the Chief Customer Officer role in the Board of Management, and the Supervisory Board is convinced that Jim is the right man to play a strong role as the voice of the customer within ASML and to drive closer collaboration and higher customer satisfaction. The appointment will be effective per date of this general meeting, again, today. The explanatory notes to the agenda contain the personal details of Mr. Koonmen and the main elements of his agreement, and his remuneration package. And Jim, I think it would be great if you would also say a few words to the shareholders.
Thank you, Nils. Good afternoon. My name is Jim Koonmen, and I joined ASML in 2007 when ASML acquired Brion Technologies in Santa Clara, California. From 2008 to 2015, I served as the general manager of Brion Technologies. In 2015, I became the CEO of Cymer Light Sources, a division of ASML in San Diego. And afterwards, I led ASML's applications business from 2018 through 2023. For the past 18 months, I have been focused on a company-wide transformation project focused on driving improvements in customer trust and performance at ASML.
I would very much like to thank the supervisory board for the opportunity to be appointed as a member of the board of management of ASML in the position of chief customer officer, taking on the primary responsibility for ASML's customer relationships. ASML is a very unique company with healthy growth prospects for the long term. Going forward, the size and the complexity of ASML's business will continue to increase, and it will require even stronger customer relationships and closer collaboration with our customers. It is an honor for me to contribute to the continued success of ASML in this role. And I would also like to say it's been the privilege of my professional life to work alongside Martin and Peter for my 17-year career at ASML. And I also look forward to the next chapter at ASML. Thank you very much. Thank you.
Thank you, Jim. Great. We now move on to questions. Are there any shareholders who would have a question to this point? Doesn't seem to be the case. So I now conclude this agenda item and confirm that Mr. Koonmen will be appointed per end of this meeting to a four-year term as a member of the Board of Management in the position of Chief Customer Officer. Welcome. Congratulations, Jim. Congratulations. So now we come to the composition of the Supervisory Board. This agenda item consists of three voting items and two discussion items. I would like to move on to agenda item 7A. Agenda item 7A concerns the discussion of the updated profile of the Supervisory Board. The current profile of the Supervisory Board was adopted in 2019. The profile is evaluated by the Supervisory Board on a regular basis.
Based on the evaluation of the profile that took place at the end of 2023, the supervisory board concluded that it was desirable to make certain adjustments to its profile in view of the growth of the company as well as external developments. Are there anyone who'd like to ask a question on the supervisory board profile? Doesn't seem to be the case. So I move on to 7B. And it's agenda item 7B, C, and D concerns the nominations of Miss Annet Aris, Mr. Mark Durcan, and Mr. Warren East for reappointment as members of the supervisory board. As announced last year, Annet Aris, Mark Durcan, and Mr. Warren East will retire in accordance with the rotation schedule at this general meeting. Miss Annet Aris, Mr. Mark Durcan, and Mr.
Warren East, all of the three, have informed us that they would the supervisory board, that they would stand for reelection if asked, which we have done. We now move on to the agenda item 7B. The agenda item 7B concerns specifically the reappointment of Annet Aris as member of the supervisory board. Mrs. Aris was first appointed as a member of the supervisory board in 2015 and has been its Vice Chair since 2021. Currently, she is a member of the selection and nomination committee, the remuneration committee, and the technology committee. Ms. Aris' previous appointments were based on the enhanced recommendation rights of the works council. The works council has kindly informed us that they support the nomination for Ms. Aris as a member of the for the next year. The supervisory board therefore nominates Ms.
Annet Aris for reappointment as a member of the supervisory board, not only because of the recommendation made by the works council, but also because of her extensive experience in the fields of strategy, consultancy, digital transformation, and management development. And she's also a great vice chair, if anybody should be interested in that. And we would like her to continue to give her valuable contribution to the board in the next year. So can we suggest that you vote in favor so we can continue to benefit from her experience? Can we move a little bit further? Are there any questions to this item? You can find all the background notes in the paper we sent out. Yes, Mr. Stevense? Give me one second. Thank you well.
Thank you. My name is Stevens here, representing the SSB. Yes, all three candidates. Well, we'd like to ask all the questions in one go for all three candidates. That way, I don't have to keep coming back. I'd like to hear from all the candidates what their motivation is, why would they like to be reappointed, why would they like to be considered for reappointment. Yeah?
Okay. Excellent. Yeah. So let me.
Good. We'll start with Annet. Yeah.
You've already started.
Sorry. Let me say a few words. Yes. So I've been a board member already for quite some time, as everyone has noticed, with, of course, a lot of passion and pleasure. We are now currently going through a period of quite a bit of change with the new board of management, with a new chair who settled in very well. But the reason that I'm here is, although I hide my gray hair, it's the gray hair and to kind of give the to ensure the continuity and also a bit of the institutional memory in the supervisory board. And that's in that role and still enjoying being in this board as much as in day one. And I'm very, very happy to to continue one more year.
So who wants to go next, Warren?
Yes. I'll go next. I've worked on and off in the semiconductor industry all of my career. And the slide that Peter presented earlier on in the meeting where he outlined the impact of semiconductors on the world, making all of our lives better, and improving our lot, has been a theme of my my career, for all that time. And ASML is a fantastic company to continue that journey with. Having been a CEO for 20+ years in a couple of different companies, I feel I can contribute and help, in particular, the new management team here at ASML over the next four years.
And I'll go next, Nils. Good afternoon, everyone. My name is Mark Durcan. I'm a long-term participant in the semiconductor industry, having worked throughout my career as first a CTO and then a COO and eventually a CEO at a large customer of ASML's. I'm interested in returning to my role on the supervisory board because I have a deep love for this company and for the management team and for everything it's accomplished. I feel a deep commitment to continue to help in any way that I can, from a technology perspective or, or bring any other knowledge I can to help advance the, the company into the future.
Thank you. Mr. Stevenson? I hope there was good explanations. I think we can only reiterate that we highly appreciate the efforts of both, Mrs. Aris and, Mr. Durcan and Mr. East, great board members. Thank you. Any further questions to this point? Just as a small reminder, you can, again, vote, on, or continue to vote at any time. The next issue, the next point is, the appointment of Mark Durcan as a member of the supervisory board. I think we now both provided arguments and commitment. Hopefully, you can support that.
And Mark is leading the technology committee and a great support for the board. Next point? Unless there are questions to Mr. Durcan, we move on. So now the appointment of Mr. East. And again, here, I think we argued very well. And Warren gave perfect reason why he's important and why he's committed. So I hope you can also approve this. And he definitely plays a very important role in the supervisory board work and fulfills, I think, all the expectations we could have of him. So any questions on Warren? It's not the case. So we conclude this item, and we proceed to item 7E. And 7E is a discussion item. And we give vacancies. So this is for information, for what will happen next year, where the Mrs. Aris and Mrs.
Koonmen comes up for re-election in the rotation scheme. We have the general meeting, and the works council have the right to recommend candidates for the vacancies that will arise since Annet was appointed based on the works council enhanced right of recommendation. This enhanced right of recommendation will also apply to the vacancy or re-appointment of Mrs. Aris. So we'll now take questions to this information point. Doesn't seem to be any questions here. So we will proceed with item 8. So the items 8, 9, and 10 are annual recurring agenda items relating to the company's capital structure, and consist of four voting items in total. Agenda item 8A concerns the authorization for issuing ordinary shares or granting rights to subscribe for ordinary shares up to 5% of general purp up to 5%.
It's for general purposes, and could be in connection with the occasion of a merger or an acquisition or another strategic alliance. Agenda item 8B concerns the authorization of the board of management to restrict or exclude preemption right in connection with the authorization of item 8A. And the background for that is that you sometimes want to give a direct emission to cement a partnership one way or the other. And of course, then, a preemptive right by the shareholders does not really work. So it asks for the authorization to allow ASML to react timely and quickly in particular circumstances that requires the issue of up to 5% shares. These authorizations will be valid for a period of 18 months. That is up to and including the 24th of October, 2025.
If you can approve these proposals, the existing authorities will cease to apply. Agenda item 9 and 10 contain proposals to execute share repurchases and share cancellations. As you've seen in the past, we aim to be flexible in executing a return of capital to our shareholders. For this to be possible, ASML asked the general meeting to mandate further share repurchases and to approve the cancellation of shares. It would allow us to implement further share buyback programs should the company decide to do so. Share buybacks may, among other transaction formats, take place on the open market through privately negotiated purchases in self-tender offers or through accelerated repurchase arrangements. We aim to be flexible in executing capital return of capital to our shareholders.
For this to be possible, we asked the general meeting to mandate further share repurchases and to approve the further cancellations of shares that will allow us to, well, to do the share buyback should we decide to do so. And I think we can see the authorization, as proposed, in 9 would allow ASML, in combination with a proposal under agenda item 10, to repurchase a maximum of 10% of the issued share capital as per the date of this meeting. And then we can cancel the shares afterwards, which is generally what you use or use to do in these cases. The share purchase authorization under agenda item 9A is requested for a period of 18 months starting today and ending on the 24th of October, 2025. If you generally approve this, the existing authorization that we have today no longer applies.
Detailed information regarding agenda 8, 9, and 10 can be found in the agenda and explanatory notes. Any questions under this point or these points over it, right? So then we move on to agenda item 11, which is any other business. As previously indicated, the opportunity to vote on the various voting items in the meeting agenda will now close. I would like to, if you have not done it already, finalize your voting now. We'll just have a little break for a few seconds, and then we'll move on. Anybody who has not finished voting? I don't see any hands. So, we're now closing the voting, and we're waiting for the results. We'll show them after we conclude on this agenda item. Then we move on to agenda item 11. Any other business? Are there any remaining questions you'd like to ask? No? Doesn't seem so. So, Mr. Kleipool, can we look at the voting results?
Yeah. Let's see whether the operator has the voting results already available. It's quick counting these days. Yeah. Well, I think we need to bring together too, the voting also from the online platform, so that may take a little bit of time. But it should be short. So we wait a little bit of time. So we do. We expected some questions or some comments in any other business. That's why. Yeah. So we're it. Should we post a time to send anything to you? This just takes a yeah. So here we see the voting results for the various agenda items. I'm not gonna name all the results, but I'll just settle for the voting percentages.
For agenda item 3A, we see 94.1% in favor and 5.9% against. For agenda item 3B, 99.88% in favor and 0.12% against. For agenda item 3E, 99.99% in favor and less than 0.1% against. Move on to agenda item 4A. We have 96.04% in favor and 3.96% against. For B, 95.27% in favor and 4.73% against. For agenda item 5, 97.48% in favor and 2.52% against. For agenda items 7B, 97.77% in favor and 2.23% against. Agenda item 7C, 99.36% in favor and 0.64% against. 7D, 96.6% in favor and 3.4% against. Agenda item 8A, 98.49% in favor and 1.51% against. Agenda item 8B, 97.67% in favor and 2.33% against. Agenda item 9, 99.74% in favor and 0.26% against. Agenda item 10, 99.81% in favor and 0.19% against. So all the requisite majorities have been met for the agenda items, Mr. Chairman.
Thank you very much. So I note that all proposals submitted to this general meeting has been adopted with the required majority. And that means that we're now come to the end of this AGM. I would, however, like Peter and Mark to invite Peter and Martin to the front of the stage. Well, thank you. So at the end of the supervisory board meeting, I think it is my privilege and I think a fantastic moment to once again thank Peter and Martin for many years of service to ASML. During your tenure, you have played a completely vital role in shaping this company into what it is today. And nobody has more than the two of you incorporated the values of the company, which are challenge, collaborate, and care.
These values are not just there by accident because ASML, with its very special, specific nature, lives from challenging what's possible, and taking on the challenge of revolutionizing the way that our customers have been able to increase the number of or their effectiveness and the capacity of the chips that they have been producing and change the digital industry. So the technical challenges have been enormous, and you've been forced to challenge every obstacle and limitation that others saw in the world to be able to do that. And you've done that in a way where the company has really thrived, and you've done it in a way where you have also been able to shape a whole industry, and a whole supply chain and a company in your vision by collaborating.
Because when ASML was young and you were starting, there was really not any. You were also young, young and starting. There was not room for buying and dominating or doing things. Everything had to be done through collaboration. And by that, in a way, you also managed to get so many people involved in creating the technical progress that we needed and enable it all. So that is only possible if you ensure and you take care of the people that work with you and that the people that work with you trust that you are intending the best for everybody most of the time, almost all of the time.
By that, you created a system and an organization that really has been able to live up to customers' expectations and hopes and maybe wildest dreams, in an incredible way. You created what people call the miracle in Veldhoven. There wouldn't be no miracle in Veldhoven if it was not for you and the way you led the company and the values and what and, and it just it's just so fitting that you stand here, both of you. You came at the same time. You leave at the same time. You came early. Yeah. But as CEOs. As CEOs, yeah. You started as CEOs. Yeah.
That means that it's it in a way, although it was not the sort of the best news I could get when I started as chairman, that you might leave at the same time. It is befitting because you've been such a team. You've been able to trust each other so much that you could share the work but share the work and also own the responsibility together. And that is what great partnership is about. So thank you very much. You've done, as I said to you earlier today, you've done one more thing, which I think is fantastic, and that is you created a company with a clear future, and you created a company where we have internal succession in place. So thank you for that. And of course, welcome to the new management team. But fantastic job. And you had, by the way, also created a bit of value to shareholders. So I think all of us in the room and all of you out there, we owe a really warm applause to Peter and Martin and a thanks. And having talked about pairs, I don't want you to talk at the same time. That doesn't work. So you start, Peter.
Well, I think there's little to add to what you said because, I mean, it is about our core values: challenge, collaborate, and care. You explained what that means to us. These are not words on a PowerPoint. These are true values. And I think they apply. And I know I speak on behalf of also Martin that it applies to our customers, first of all. You know, we do care a lot about our customers. We collaborated.
We challenged them a lot. We shipped them from time to time machines that didn't work that well. They stayed with us. They helped us to improve. We did that with our suppliers and with our partners because we cannot do this without them. They have been patient. Yes, we challenged them, but they've kept collaborating because we care about sharing the benefits with our partners. It's our communities. I said it in my speech. Without the community support and I think, you know, what the government did with Operation Beethoven is very important to the future growth of the company. And, of course, our shareholders. You know, I said our shareholders challenged us, but we challenged our shareholders also. I said it in an earlier speech.
You know, you challenge your shareholders who stay with us when EUV was not mature, where a lot of people asked the question, "Would it ever work?" And then shareholders stayed with us. That's a challenge that we gave our shareholders. And that challenge was widely accepted. So thank you very much. And then, of course, last but not least, our people. You know, sometimes you say, people stand on the shoulders of giants. With us, it's just the other way around. We stand on the shoulders of almost 43,000 giants, our people. And they've made things possible. Of some people said it's not possible. And it's been our huge privilege and honor to guide them and to and to give them a future and very clear direction of what needs to be done.
You know, I'm hugely grateful for the friendship that Martin gave me in all these years. Without Martin, it would have been totally impossible. I would have been a lost soul. So, having him next to me has been absolutely an honor. Yeah. Yeah. It's a bit higher. Okay. Good. Yeah. Yeah. I choose not to repeat what Peter says. I just like to second it. I'd like to make a few more remarks. A lot of people sitting here for many, many years, including shareholders, including employees, even an individual from the beginning, Case. It has been a roller coaster over the years, made many different machines. Every machine was a substantial challenge.
And it continues to be that, towards the end of my career, and that includes the last machine we created, the High-NA, which is not perfectly working at the front of our customers. But we know we're close enough to the end that we have major risk reduction to assume that we will continue our commitment to our customers. That's one remark I'd like to make. The second I'd like to make that the succession plan we have been through all the years has been not always consistently internal succession. And I'm enormously proud of my succession, Christophe, Jim, coming out of the product area where I believe I feel immensely proud that succession of the board has been confirmed by the supervisory board to be internal. And I know those gentlemen seriously be well.
I think and I think they will do well moving forward. Success. Thank you. Just for you . She has been my, you know, professional marriage. She's been assisting me, and it made her life very difficult from time to time. So, you know, this is your Ellen. So please, a big applause for also. Yeah. Yeah. Yeah. I want to have this to my wife, who's also here. Yeah. Yeah.
I'll take over from here. Because basically, I want to finalize finally, or congratulate, Christophe of his reappointment and, Jim of the appointment as members of the board of management, and Annet, Mark and Warren, congratulations of the reappointment as members of the supervisory board. I hereby close the meeting. Thank you all very much for joining. You can return or please return your voting devices to the staff at the reception desk, and would like to have you a drink. Like to invite you for a drink with us in the lobby, and hope you to see you again next year. Thank you.