Ladies and gentlemen, welcome to this annual general meeting of ASML Holding N.V. We are happy to welcome you here in our TWINSCAN Auditorium in Veldhoven. Today's general meeting is a hybrid meeting. This means that shareholders are also attending the meeting virtually, and they are voting and asking questions on our online platform. A warm welcome also to everybody attending this meeting virtually. I would also like to welcome the members of ASML's Board of Management, Mr. Christophe Fouquet, Mr. Roger Dassen, Mr. Frédéric Schneider-Maunoury , Mr. Wayne Allan, and Mr. Jim Klugman. Of course, also a welcome to the members of the ASML Supervisory Board: Ms. Annet Aris, Ms. Terri Kelly, Ms. Birgit Conix , Ms. An Steegen , Mr. Mark Durcan, Mr. Warren East, Mr. Alexander Everke, and Mr. Jack de Kreij. Furthermore, I want to extend a special welcome to Ms.
Karien van Gennip , who is hopefully being elected onto the board today. Welcome to you. Great to have you here. We also have Petra Groenland, who is our Auditor. She represents KPMG's accountants, our external audit company. Representatives of PwC, our new External Auditor, are also here to take note of the proceedings of this AGM. Finally, I would like to introduce Mr. Reinier Kleipool, civil law notary at De Brauw. Mr. Kleipool will act as secretary of the meeting. Given the international nature of ASML, and because ASML's corporate language is English, we'll conduct this meeting in English. We provide a Dutch translation of the meeting, and all questions that are asked in Dutch will be translated into English as well. As usual, a recording will be made of the meeting to help us prepare the minutes. I now give the floor to Mr. Kleipool.
He'll explain the process for asking questions and voting during the meeting. Mr. Kleipool, over to you.
Before we begin, I will explain the process for asking questions. During the meeting, shareholders will have two options to submit 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 are representing. For proper conduct of business at the meeting, the Chairman may limit the speaking time and/or the number of questions. The Chairman will also determine who is best positioned to answer your question.
I will now give a brief explanation on the voting procedures. Shareholders who are here in person can vote using the app on their mobile device or the voting device that you have received at the registration desk. As this is a hybrid meeting, shareholders attending virtually can vote via the online platform. Registration details for the meeting are currently being processed, and once all information is available, I will announce how many shareholders are present or represented, the percentage of the 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 have the opportunity to vote on all voting items on the agenda. There will be up until we discuss agenda item 13, 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 open. You can make any changes until the vote closes, so at any time before we discuss agenda item 13. I hand it back to you, Mr. Chairman.
Thank you, Reinier. We will now move on to agenda item 2, which is a discussion item. Under agenda item 2, Mr. Fouquet and Mr. Dassen will provide an overview of the company's performance and current state of affairs. I will now give the word over to Christophe Fouquet.
Thank you, Nils.
Good morning.
[Foreign language]
Those new applications. In order to do that, our industry will require major innovations to address power consumption, which is a real challenge for AI, but also cost. This means that a lot of the product mix is going to shift towards advanced logic and advanced memory, which is, of course, an opportunity for ASML. Our customer remains at the core of our strategy, and we strongly believe that ASML will remain at the core of their choices, their technology choices, in order to be able to execute on their roadmap. We expect that the shift towards more advanced technology will continue to increase the demand for lithography, and I will come back to that in my presentation.
We also expect that the work we are going to do in our technology, scaling EUV for lower cost, extending holistic lithography to support 3D front-end integration, and continuing to improve Deep UV to remain very competitive in the market, will basically continue to address the need of our customer. Based on these dynamics, we expect a 2030 revenue opportunity between EUR 44 billion and EUR 60 billion, with gross margin expected between 56%-60%, just as we have explained our capital market day back in November. Now, of course, you will have noticed that geopolitics, recent tariff implementation, negotiations continue to create global economic uncertainty. Both on the short term and on the long term. Let me talk a bit about AI. We used to talk about chip everywhere, and nowadays we start to talk about AI everywhere.
The reason for that is, yes, chips are going to be the foundation for any advanced application moving forward. I could name a few: energy transition, electrification of cars, healthcare. You have the list here on the slide. More and more, this will be complemented basically by AI. We see our customer investing heavily into AI infrastructure in order to be able to develop those applications. I picked a few examples that were presented in Las Vegas earlier this year of such applications. What you will see is that they are basically covering everything. This is an example of an industrial application with an autonomous tractor. This is robots. Robotics is mostly going to be one of the fields that will expand significantly in the next few years.
This is basically the personal AI computer that was presented by NVIDIA, trying to bring AI basically to the consumers, fewer consumer applications in the house. This is AI-powered plant box coming from Korea. Of course, healthcare, as you have seen already, is going to be also a very important application. AI will be everywhere. I think what we expect in the next few years is that this will also drive demand for more chips and, therefore, demand for more products from ASML. This is what you see here. We still look at a market opportunity of about $1 trillion at the horizon of 2030. We are still looking at further opportunity with AI, but as you know, the market is still developing.
We still have to see exactly how it's going to play out, and, therefore, we'll continue to observe very carefully how this is going. When it comes to AI, people think usually about very advanced applications, high-power computing. AI also requires the generation of many, many data. You cannot use AI without data. This is good because it means basically that AI will drive both advanced technology, as I talked about, but also what we call mainstream technology, all the semiconductor chips basically that are going to drive the data generation. When it comes to our product, it means basically that we are going to have demand on both advanced technology, EUV, but also the rest, Deep UV, for all the mainstream semiconductors. This is a trend we have seen for quite a few years, and we continue to see that.
This is why we continue to basically focus on extending our overall product portfolio. Now, let me talk a bit about technology. I talked about uncertainty on the market. I think you have all experienced that in the last few months. Technology is a bit our rock. It's our lighthouse. We know that if we develop the right product, if we stay strongly engaged with our customer, we will remain in a very strong position in the market. Therefore, I'll continue to focus on all the key products of ASML. This is EUV Low-NA. We just released basically our latest generation, the NXE: 3800E, which provides record overlay accuracy performance, record productivity.
This is very important because, as we have explained in our capital market day, as we continue to reduce the cost of EUV, we create more opportunity for our customer to use EUV more and therefore to sell more product. This is what you see here, comparing the pink curve, which is the cost of EUV, with the blue curve, which is the cost of multi-patterning in different applications. You see over time that EUV becomes cheaper, which allows us basically to convert more business from non-litho to litho. This has been a strategy ASML has been driving for the last 40 years, driving our customer to use single-expose lithography to increase our litho intensity, to increase our business. This is something we continue to do moving forward. Another good example of that is, of course, High-NA.
High-NA, as you have heard in the last few months, is now at our customers. We have shipped a few tools already. The first few tools already, they are being used by our customer. They're exposing many million wafers. Here again, the idea is that High-NA, as our customer continues to evolve their technology, High-NA will help them to simplify patterning. You can see it on this very simple example. On the left, you have Low-NA, where basically to create a certain pattern, a certain metalization, there will be the need to use three different masks, which is expensive, time-consuming, and creates potentially an issue. Using High-NA, customers will be able to do that in one shot. Again, moving from multi-patterning on the left to single-expose on the right.
This comes at a benefit of about 30% less cost, which, of course, is extremely valuable for our customer. High-NA continues basically this strategy of ASML in lithography. Now, of course, we talk a lot about EUV because EUV is being used by our customer to expose the most critical layers. This is also why this is a tool that allows our customer to go to the next nodes. Deep UV, as you see here, is also used on most of the layer. In fact, we expose a lot more wafers with Deep UV than we do with EUV. Therefore, it is also important for us to remain very competitive in this market. As a result of that, we have also continued to develop, to invest in our Deep UV technology, to remain competitive and to continue to differentiate.
We have released a new KrF product this last year, sorry, 2024, which boosts productivity to more than 400 wafer per hour. We have developed the latest advanced immersion tool, which basically will complement EUV on the most advanced layers. This year, we are about to ship our latest iLine system, that will also allow us to compete in advanced packaging, which is also a bigger opportunity moving forward. Finally, on technology, multi-beam. This is also a product where we have made huge progress last year. What you see here is very simple. We are just adding basically more and more beam, simple on the slide, very complicated in real life to execute.
This gives us a chance basically to provide a tool that will be a lot faster, a lot more cost-effective to our customer, which is very important as this tool more and more will support basically yield analysis after very advanced lithography. This is for technology. A couple more things I'd like to share with you. We are continuing to invest in our footprints. Yes, we see some uncertainty on the short term, but we still truly believe that on the long term, the market is strong, and therefore we need to be ready to have the right capacity for EUV, for Deep UV. We are extending pretty much anywhere we have a presence in the U.S., in Europe, of course, and in Asia. Asia is, of course, because we have a large amount of customers there.
This has not stopped because we continue to believe that we have to be ready basically for the future. Finally, I'd like to say a few words about our engagement with communities. I think this has been also something we have developed quite strongly in the last couple of years. We are, of course, becoming a bigger player in Brainport in the Netherlands, in Europe, but I will say, in fact, in the entire ecosystem. Therefore, we believe that we have to make sure that our community benefits from that, and in some way, we can develop the community to support our growth. A lot of activity around basically education, around ESG innovation. A lot of our employees are spending more and more time basically doing volunteer work. They like it, and we are very proud of them when they do that.
We have, of course, other activities such as investing in housing, investing in cultural, I would say, activities so that ASML also is a positive force in any of the communities we are going to be. This is the end of my presentation. With that, I'd like to give the floor to Roger.
Thank you, Christophe, and good morning, everyone. As Christophe said, easy on the slides, difficult to execute. I think that probably also pertains to the numbers that we have for this year. When we started the year, we actually said we think 2024 is sort of going to be in the same ballpark as 2023. We said from the revenue perspective, we believe 24 is going to be in line with 23. We said probably the gross margin for 24 is going to be a bit lower than it is for 23.
The end result is more or less in line with that. We were able to grow a little bit, so we had about 3% growth this year, 2024, in comparison to 2023. In fact, we were able to sustain the gross margin at the 51.3% level. I think kudos to everyone at ASML for making that possible, for controlling cost the way that everyone has been doing, and also being able to continue to deliver value to our customers, and for us to be rewarded by the customers for the value that we were providing, because that's the way we ultimately drive our gross margin. Net bookings, a little bit below what you might have seen in previous years, but still, we ended the year with a very, very strong bookings number and backlog number in 2024.
All in all, 2024 very much in line with 2023 in terms of top line. However, if you take a deep dive into it, you will see that there were quite some moving parts. You see them on the right-hand side. EUV was actually a little bit lower. 2023 was extremely strong from an EUV perspective. 2024 was a little lower than that, 9% lower, still at EUR 8.3 billion. Christophe just showed it. I think highlight of the year definitely was the fact that we were able to bring our 3800 and 5000 systems up and running, get them to the customer, get them actually accepted by the customer. As a result of that, we could recognize revenue on multiple 5000 and 3800 systems. I think that is a very good foundation for the future.
When it comes to Deep UV, Deep UV was strong, increased 4% to EUR 12.8 billion, as you see here. There are two very important new product introductions, the 2150, which is the latest and greatest immersion tool that we have at ASML. Also quite revolutionary, I would say, the 870B, which is our NXE-based dry tool, both introduced last year and shipped, and recognized in terms of revenue to customers. The application business grew quite strongly, 20%, two main drivers. First, the YieldStar, the overlay tool that we have, but also, and this is really good news, I think, the multi-beam tool. The fact that we were able to get multi-beam, not just shipped to the customer, but actually recognized in revenue, accepted by the customer, I think, was a big breakthrough.
As many of you know, multi-beam really came from the HMI transaction quite a few years ago. I think it's fair to say that getting multi-beam really at the level of productivity that Christophe was showing that is necessary for it to really break through with our customers in terms of giving them the productivity they need to deploy this in HBM has been a long journey. I think to have the system recognized and accepted by customers, was a big breakthrough. Definitely not at the end of the development journey there. There is still a huge potential, we believe, when it comes to that, but a big step up there. Finally, install-based business. Providing value to our customers on the tools that are already deployed there, both in terms of service and in terms of upgrades, I think, has been a really strong business.
You see that it grew 16% to EUR 6.5 billion in 2024. All in all, I would say a year, as we sort of anticipated at the beginning, maybe a little bit stronger than we anticipated when we started 2024. If you look at the details, I'll be very quick here. On the technology front, as I mentioned before, EUV was very strong in 2023, was a little less strong in 2024, where you really could see our customers digesting the many EUV tools that they had bought in the year before. The immersion business, what's called here RFI, was very strong in 2024. In terms of end use, it's interesting to recognize how strong the memory business is.
This is very much driven, again, by AI because AI requires, as you know, high bandwidth memory, very sophisticated memory, and there was high demand for that in 2024. Therefore, the memory business in 2024, very, very strong. If you look at the regional split, I think the one thing that will catch your eye, I think, is the China business. China business is very strong. This is on the back of two things. First off, the memory business in China was also strong in 2024, just as it was strong on a global basis. Also, as many of you know, China is really investing to become a significant player in what we call mainstream logic.
The logic that you do not have at the cutting edge, not for AI, maybe not for the latest generation of smartphones, but the kind of stuff that you need for electrification of vehicles, for instance. That is a key application. I think we all know that China is pretty strong in that regard, and that drives their demand for mainstream logic. I think that is what you see there, where the China business really picked up in last year. Here you again see how the memory business really picked up, as you see the logic business, a bit of digestion of the very significant addition of capacity that happened there in 2022 and 2023, but still holding up quite nicely. As I mentioned before, the install-based business grew significantly.
In terms of cash return to shareholders, in total, in 2024, we paid a dividend of EUR 2.5 billion, so both the final dividend for 2023 and the number of interim dividends that we paid. We purchased EUR 500 million of shares. As you probably saw, we have been purchasing shares significantly at the beginning of this year, getting the total number that we purchased in shares all the way up until mid-April to approximately EUR 5.2 billion under the program that we currently have. In terms of our intention for dividend for the year, as you see here, if you follow the proposal that we have to the AGM, we would have a total dividend for 2024 of 6.4%, which is approximately a 5%, 4.9%, as you see here, increase over last year. The quarter. We just had that.
As you know, we just had our release of the Q1 results last quarter. I have to say a strong start of the year with a total net sales of EUR 7.7 billion, sort of the midpoint of our guidance that we provided for the quarter. Very strong gross margin as a result of the mix of tools that we were able to ship this quarter. Again, here, recognition also in the install base by our customers. Customers really valuing the service that we provide, the upgrades that we provide, and that resulted in a very strong gross margin on the install-based business, leading to a gross margin quite ahead of what we guided at 54%. Net bookings at EUR 3.9 billion, quite a bit less than we had in the quarter before. In Q4, we had EUR 7.1 billion. We always say it is lumpy.
We say it is lumpy when it is high. We say it is lumpy when it is low because that's the way it works. Because typically, how our customers order, these are significant amounts of money. When customers place an order with ASML, typically, this could be in the billions. That requires quite some board work and board approval by our customers to get that done. You don't go through that hassle every single quarter. If you place a big order in one quarter, it's not very likely that you will get a big order in the quarter thereafter. That's why there is this lumpiness in the order intake. That's also the reason, as some of you know, that we said we actually stopped providing that number on a go-forward basis because it is not reflective, we think, of the business momentum that we have within ASML.
We will continue to provide a number throughout this year. What we will do is every year, we will provide the backlog number, so the total backlog number, and stick to that. In terms of the composition of our sales in the Q1, as you see here, compared to the Q4 2024 quarter, again, here you see the EUV business picking up. That was 14 tools that we were able to recognize in revenue in the first quarter. A strong quarter there. Memory business, again, quite resilient, even though we expect it to level off a bit for the remainder of the year. We expect the year to be approximately one-third memory, two-thirds logic. You see China growing to what we think is a more normalized % for the China business in our numbers.
We said on the call that we believe the China business will be a little bit above 25% of our total sales. I think this is more or less in line with that guidance for the year. Outlook for the second quarter, outlook for the full year. Second quarter, a little bit lower in terms of total revenue. This is not business momentum by any stretch of the imagination. It is just the way that shipments are scheduled throughout the year. This is what we also expected at the beginning of the year. As we also said, we believe the second half of the year is probably going to be bigger than the first half in terms of sales. Gross margin, we expect between 50%-53%.
That's quite a wide window because typically, we have only one or two percentage points in that window. The reason we did that is the uncertainty that Christophe talked about, right? The fact that there is uncertainty around tariffs, what are the tariffs, how are tariffs going to be passed on, particularly in the short term. I'm sure we'll come to talk about that a bit, but that's the reason why we said in the short term, there is some uncertainty there. That's why we take a slightly wider window for the gross margin. You see the rest of the numbers as indicated here. When it comes to the full year, of course, there is the macro caveat that Christophe also talked about.
Given the conversations that we're currently having with customers, we believe that the window that we provided at the beginning of the year and actually started to provide last year, between EUR 30 billion and EUR 35 billion, and the gross margin between 51%-53% is probably the right way to characterize our expectations for 2025. Christophe showed you the hardware. He showed you the buildings that we're constructing. Of course, no buildings without the software, which is the talent that we grow within ASML to continue to lead the company to its future. Just some data points on the talent front, what we do in order to continue to make ASML attractive for talent.
We have quite some interns and work students, as you see here, nearly 1,400 interns and work study students that we had the benefit of in 2024, quite an increase in comparison to 2023. We have 31% female talent in the ASML student programs. That really is one of the things that we're putting a lot of emphasis on to grow that within ASML. I think that was a good data point there as well. We have more than 100 universities in our global ecosystem that we're collaborating with, either on research projects or, in fact, on the talent agenda. I love that sound because at the end of the day, it is made on an ASML device, so just got to bear with us for that. The progress on the talent agenda, just a few data points here in terms of our headcounts.
As you see here, approximately 20% of our headcount in the United States, a little over that in Asia, and a little over 50% of our headcount in the Netherlands. Obviously, with that also in EMEA. You see quite some diversity in terms of nationalities. You see in the Netherlands, with the 23,000 people that we have there, they represent 124 nationalities. That's the level of diversity that you have when you walk here on the campus. For ASML in total, so on a global basis, it's actually 148 nationalities that we employ. 21% of our global headcount are female at an attrition rate of 3.8%, which I think is low by any standard and is something that we're very proud of because it means that we are able to offer our talents a development opportunity that makes them stay with ASML.
A couple of things, my final slide on ESG and on the sustainability agenda. A big year for us, 2024, in that regard, not just because of the progress that we made, but also because it's our first report on 2024 based on the ESRS requirements. That is why it's a big year. A lot of hard work. I'm looking at the people that have been working extremely hard here on the front row to get it done. Actually, I'm very proud with what the team has achieved in terms of transparency on this front. It is not just the transparency. We actually made quite some progress there. If you look at environment, you see that we were able to reduce our scope one and two emissions from 60 to 33 kilotons since 2019. I think that is a key achievement there.
You could see how we've been doing that by trying to reduce energy consumption going into renewables. Those were key steps in that regard. Actually, reducing the energy consumption of our EUV tool per wafer pass by 54%. Our ambition by 2025 is to get it to 60%. There is still some work to be done this year, but at least nicely on track to achieve that objective. We actually had our first Deep UV and YieldStar systems transported by ocean freight. If you had told me five years ago that we would do it, I would have said, "No way. Our systems are way too complex, are way too sophisticated to be put on ocean freight." We were able to do it.
This is a major step also on the environmental protection, obviously, because by ocean freight, it is considerably lower than by air freight. Finally, achieved an 88% reuse rate of parts returned from field and factory, which I think is a good achievement there. On the social front, we had an employee engagement score of 78.9%, which I think is a strong data point over a three-year rolling average that is. We were able to actually support the building of affordable houses in the region, in the Brainport region. We were actually able to financially sponsor 1,286 affordable houses to be built in the region. All in all, per employee, we invested nearly EUR 1,100. Our ambition is to continue to grow that number in the next couple of years.
Finally, as I mentioned on the governance front, the highlights there, obviously, the ESRS requirements and our report based on that, but also the fact that the rating agencies gave us some good score, sustainability giving us the number one position in the industry, MSCI giving us a triple-A rating. Also on CDP climate, we made some good progress in the past couple of years, getting us to an A-minus score there. All in all, pretty proud of the achievements there. Dear shareholders, that is it as far as I'm concerned in terms of the progress that we made in 2024. With that, I would like to hand the meeting back over to Arjenna.
Thank you, Roger. Thank you, Christophe, of course, as well. We are now ready to take questions. Is there anybody, any shareholder who would like to ask a question? Already one? Please state your name.
Thank you, Mr. Chairman. Also, thank you, Mr. Fouquet, Mr. Dassen, for the welcome introduction today. My name is Gerben Everts. I represent the Royal Dutch Shareholder Association, also known as the VEB. I have a few questions on the financials in particular, but also looking at it from a competition angle and from a U.S. angle. On the 2nd of April, the U.S. announced the 20% tariffs on all EU products, which seem to include semiconductor equipment of ASML as well. Despite a temporary delay, the three-month delay in the execution and a possible exemption of semiconductor equipment, ASML last week announced that it's doing everything possible to limit the direct impact from tariffs and expect the impact to be limited. They also noted that the indirect impact might be significant and more impactful.
We understand that if the whole world and all economies would suffer from an overall lower economic growth worldwide, of course, the sale revenues of ASML will suffer as well. My questions, what would need to happen specifically to hit the low end of the guided range? We just saw the EUR 30 billion of net sales. Would such a critical scenario require push-outs for DUV systems from non-Chinese customers as well, other than TSMC? What is necessary to hit through the lower guided range? More in general, do you believe that ASML could theoretically fully pass on tariffs, the so-called direct impact onto end customers, whereby the impact of the tariffs on the financials is minimized? Do you have market power, in other words?
Can you give some color on the degree to which the U.S. content of ASML machines, such as the LightSource, San Diego Cymer operations, whether they reduce the impact of tariffs, giving meaningful production and R&D will then happen and stay in the U.S.? A question on TSMC, very important client, of course. As a result of financial and technological issues faced by foundry customers like Intel and Samsung, there are some worries about increased reliance on TSMC. Should, in fact, this fear less units being sold as TSMC might become more efficient and have more scale, or also lower pricing due to the fact that TSMC would have more bargaining power? Also on TSMC, they keep ramping up the production in its two nanometer process nodes at, for example, the Taiwanese Hsinchu and Kaohsiung locations, which will obviously require more semiconductor tooling, both DUV and EUV.
Do you expect more orders from TSMC and consequently a higher result in the next quarters? On competition pressure, there have been some rumors, mainly pushed by the Chinese media, for instance, the South China Morning Post, about China developing an ASML alternative. For example, Chinese Huawei and SMIC are supposed to have developed a DUV scanner using a different LightSource technology. Some people are even hinting at a deep-sea moment in lithography being closed. Of course, as shareholders, we don't want it to happen. What is the current view of ASML on the risk of a DUV alternative being developed that could disrupt ASML? Specifically, can discharge-produced plasma DUV disrupt ASML? Is that technologically not an option for high-volume chip manufacturing? A follow-up question on your presentation and an issue also raised last year.
You're probably aware that there continues to be questions around the High- NA EUV roadmap, especially with TSMC looking into the EUV multi-patterning. You just referred to that. And SK Hynix stating publicly that multi-patterning EUV is cheaper than High- NA EUV single patterning. Mr. Fouquet, you just referred to this in your presentation. What is ASML's view on this and the adoption of High NA EUV? Will single patterning High NA EUV outweigh and continue to outweigh the benefits of multi-patterning of regular techniques? The ultimate question, if you allow me, Mr. Chairman. ASML holds about 90% market share in immersion DUV, and Nikon is looking to gain market share and wants to deliver a prototype immersion DUV tool to be a, as they refer to, major semiconductor maker by 2027, so in two years.
The new tool should be able to compete with ASML's systems, while Nikon prices tend to be significantly lower. What is your view on this? Mr. Dassen, you ended with ESG, the most important topic in society. Let me echo that. ASML's EUV systems today use about 50% less energy per wafer pass than in 2018, from 12.8 to 5.9 per wafer pass. This is, and that is very important, a great achievement, both in terms of declining the cost of ownership for customers and, of course, the environment. ASML is looking to get this below 5.1 per wafer pass in 2027. Yet EUV tools still consume at least 10 times more energy than DUV immersion tools, 0.55. Can you, in layman's terms, explain if and how much of this gap is possible to bridge in the years to come? Those were my questions.
Thank you for allowing us to flow.
Thank you very much. Quite an elaborate bit of homework for us. Thank you. I think I will almost suggest that we answer them a little bit from the back. We start with the market position, from where the increased reliance on TSMC, and take the following questions from then. Maybe Christophe, you could do that, and then afterwards, Roger could talk about the tariffs and the risk of hitting the lower end of our guidance.
Very good. Thank you, Niels. I tried to go back through your whole list, and if I forget anything, please let us know. I'll do my very best. I think we have got indeed a lot of questions about the potential reliance on TSMC. Maybe two elements here. If you look first at the market share split for foundries in the last five years at least, I think that one customer took a very large part of the market share. I think this is not something that is really new if you look at the split. It means that in the course of the last few years, we have developed a relationship with the different customers, including the one you mentioned, to take this into account. The question comes a lot.
This is not something we fear, to be honest, because the type of relationship we have with our customer is on the value we provide to them, on the engagement we have on the long term. We work in such a way that I would say we are not too sensitive to the different split of the market share. That is the first point. I will take a look to what has happened in the last five years. Maybe this will address some of your concern. The second point is that foundries, of course, is a field that is still extremely competitive. Yes, one customer today is doing extremely well, taking most of the market, but you also see that the other two are not giving up. In many ways, this has almost become a matter of national security for a few countries.
We still expect also that the competition there will remain. I think time will say how much the split may or may not change. I like also to stress the fact that, well, we're not in a situation where the other two players have given up. I think they give, in fact, all the other sign, as you read in the press regularly. That is for the split. Now, on the order themselves, I think Roger could put more color on that. Yes, if you look, of course, in the next couple of years, I will extend that to also 2025, 2026. There is a major ramp happening on 2 nanometer. That major ramp would happen first with one customer. Therefore, if we look at the next couple of years, this will be an important part of our business.
Now, looking at the question you have basically on the competitive pressure, I think coming out of China, on the alternative, basically being potentially created for lithography. The first thing I'd like to say is that when you are going to restrict a country to have access to a certain technology, they will do everything they can in order to develop that technology. I think that's an argument we have tried to make government, who make those decisions, very sensitive to. A good reason to do that is if we look at our peers, if we look at other products that are being used for patterning, such as edge deposition, we have seen, in fact, China making major progress in those products. In many cases, right, being able to also have systems that they can use today to produce some of their chips.
If you are going to stop people from having access to a product, they will do everything they can to have their own, basically. That is a dynamic we have to take into account. Now, when it comes to lithography, the good news for us is this is a bit more complicated. There are a few reasons for that. The first one is if you look at lithography, historically, Europe and Japan have been the only two places where lithography came from. That is because, of course, of the supplier of lithography system, including ASML, but also because of the ecosystem around it, the whole supply chain, which I think you understand is also very, very important. We always talk about Zeiss, Trumpf at ASML, and it is because what they do is also, of course, very critical to lithography.
That entire ecosystem is extremely difficult to be produced. China has been trying for many, many years. I think the moment the semiconductor industry went to China more than 30 years ago, we started to see some potential competition on lithography in China. The progress has been limited. I think today our market share in China is still extremely high on all products. We have, of course, a lot of news come to you in a minute about China making progress in lithography. I would say this is not yet seen in our customer's factory. Our customer in China, as long as they can, they would like to work basically with ASML tools. Now, if I look at EUV more specifically, because yes, there were also some news around EUV, I think you will see over time mostly more of those news.
The reason for that is that it becomes clear for everyone that EUV is absolutely critical to produce any advanced logic chips below 5 nanometer. That is also something we have explained to many people in the last few years. I think everyone comes to the realization, also China, that without EUV, you may be able to do a few chips in research, but you will not be able to manufacture in high volume. Therefore, the same statement as before, China would like to have EUV, and they would like to show progress on EUV. What we have seen so far is very limited. I always remind people that when it comes to EUV source, when it comes to some EUV optic, we had that 30-40 years ago.
We could image some wafer with EUV more than 30 years ago with very low energy source and maybe one or two milliwatt. You will see a lot of that, but it doesn't in any case is, I would say, the sign that there is a product ready to run high volume manufacturing. To make it short, I think there's still a long way to go. At the same time, since the restrictions are there, I think that we will see, of course, China trying to increase its effort to make as much progress as possible. This is for the competitive pressure. On the High-NA roadmap, I think I indeed just talked about it. Yes, there's a lot of discussion about the cost of single- exposed High-NA versus the cost of multi-patterning Low- NA. Let me be clear here.
As I explained before, no one will use a new technology if it's more expensive than the previous one. Right? We know, even as we started to design High-NA almost 10 years ago, that the cost of High-NA single expose had to be lower than the cost of multi-patterning Low-NA EUV so that the tool is being used. Now, what is going to happen with High-NA is what is happening with Low-NA. You have seen my graph on Low-NA. Today, we still have multi-patterning Deep UV as we speak. Low-NA has not replaced of Deep UV multi-patterning because initially the cost of Low-NA was too high. This is why, with our roadmap, we continue to drive down the cost of Low-NA EUV so that we continue to convert more and more multi-patterning High-NA layers to Low-NA.
That's good news because it means that the lithointensity and therefore the share of our business in patterning continues to increase. The same will happen with High-NA. High-NA will be adopted first on layers where there's a huge cost benefit. I showed one of them. In some layers for DRAM logic, we see 30% cost improvement, which, of course, means customer will want to do that. Over time, as we mature the platform, as we work on the roadmap, we will also, I will say, work with our customer to make sure that single exposed is chosen as much as possible because single exposed is always better for our customer. It's simpler, it's shorter cycle time, it's better yield, and that should be lower cost. That dynamic, I think, will also take place over the next few years.
Realize when we do something like High-NA, we think about High-NA for the next 10, 15, 20 years, not for the next two, three years where I think the transition will happen. This is for High-NA and single exposed. I think I have two more questions. On Deep UV, yes, strong market share. I think I also explained that Deep UV is still a very, very important tool for our customer. This is why also we continue to invest. I think that if you look at our R&D in Deep UV today, it is at a whole time high. Yes, we spend quite some money in EUV, but I will say we spend about half of this money also on Deep UV to continue basically to remain competitive. Yes, the market is great, so everyone wants a piece of it.
As you have seen, some competitors have announced new tools. I think again, I would invite you to look back at the last 10 years. This is something they have done for many, many years. We still believe that some of the very fundamental technology we have on Deep UV, one of them being the TWINSCAN. We do not show this anymore because this is almost 20 years old now. The TWINSCAN, the ability to have two stages, ones that allow us to measure the wafer while the other one is exposing it, still provide a very, very strong advantage when it comes to productivity, accuracy, and a combination of the two. We will continue to drive, I will say, those products hard. We are going to work also on cost quite a bit to make sure that we remain competitive. Yes, the threat is here.
I think it has always been here. We will fight it. We will also, as I explained, even on products like iLine, we will even develop new products to, in fact, also get some more market share. It is not like we are also not trying to get more market share in places where maybe it is a bit lower for us. Finally, I think on the EUV power reduction, first, thank you for acknowledging the fact that this is an important thing. It is a lot of work. We have been from day one on the mission to really reduce the power consumption of EUV because we knew that this was first one of the biggest impacts we had on the environment. We also knew, as you said, that this was a major cost impact for our customer. We have gone down 54%.
We plan to go down more than 80% by the end of 2040. We continue to make progress on the source. We are increasing the conversion efficiency of the source, which means that for the same watt at the power plug, you get more EUV energy on the wafer. We continue to improve the optic with Zeiss, the transmission of the optic, which means that the optic are going to capture less light, so you get again more on the wafer. Therefore, we continue basically to be very, very aggressive in getting less energy consumed per wafer exposed. This is good for the environment. This is good for cost. This is also helping our customer, by the way, to achieve their own environment target. There we have a lot, a lot of ideas to continue to do that very aggressively. Roger talked about ESG.
I think from day one, we wanted to do that because we failed. This is also the right thing to do on EUV. The progress is very good. Now, I give it back to Roger. He is going to give the rest of the numbers.
Maybe one additional comment on ESG, because you drew a comparison between Deep UV immersion and EUV. Of course, you cannot do that just for our tool, right? You have to look at the entire manufacturing process. There, the same applies as what Christophe was talking about in terms of cost. When you compare single-expose EUV with multi-patterning in Deep UV, that also applies to the environmental footprint.
I.e., when you look at multi-patterning, you shouldn't just look at the litho component of it, but then you also see the huge environmental footprint of all the other stuff that needs to happen in terms of deposition, etc., etc. If you look at some of the reports that have been done on that front that try to draw the comparison between multi-patterning Deep UV versus single exposed EUV in that regard, I think you will quickly come to the conclusion that also there, there is a strong case to be made for EUV and that ultimately the total integral footprint of EUV is not as ugly as you might look at when you just draw the comparison between the carbon footprint of a Deep UV tool versus an EUV tool. In total, it really works also on the environmental side. Your financial question on the bandwidth for the revenue.
When we started the year, we said if you look at the midpoint of our guidance, so the 32 and a half, what could lead to the upper end of the bandwidth, what could lead to the lower end? I think Christophe made it very clear that what is really driving the growth this year is AI. AI is really driving the growth for ASML. That also means that if you look at the upside and the downside, you have to look at how AI plays a role here. On the downside, as we said before, there are a few customers that are currently not really benefiting from the AI expansion. A North American company and a South Korean company come to mind in that regard. They do not have their share in the AI boost that is currently going on.
At the midpoint of our guidance, those two customers are not completely de-risked. If, for whatever reason, those customers really struggle to gain traction, that could lead you to the lower end of the bandwidth. I would not say, because you specifically asked about TSMC in this regard, I think you are right in your conclusion. If you look at TSMC and if you simply look at the comments that were made by their CEO on the call last week, on the earnings call last week, he clearly confirmed that N2 is a big node for TSMC and that the buildup of that node in terms of the RAM profile that it is actually similar to N3. I.e., he said it is a big node. We have more tape outs than we have for N3, but the RAM profile really mimics the RAM profile that we have for N3.
If you follow that logic, then indeed this year, but also next year should be big years in terms of capacity addition in the two plants that you mentioned in Hsinchu and Kaohsiung. I think the downside to us really at that point would be related to the customers that are not really benefiting from the AI revolution, if you like, them not able to gain traction. Additional considerations, of course, as we always say, export controls is beyond the control, right? This is something that could take you if you specifically look at the downside scenario. Finally, but you already made reference to that, I think no one is currently in a position to gauge what the indirect implications of the whole tariff discussion are going to be. We do not even attempt to do that.
On the tariff side, to be specific to a number of the questions that you had, it might be good just to look at where could tariffs actually hit ASML. I think the one thing that is obvious for everyone to see is you import a tool into the United States and you get tariffs imposed on that. Currently not the case, but it could come to the point that you made, right? If tariffs are being imposed on the export of systems from the Netherlands into the United States, of course, that would be the first category. I think we said it last week. We do believe that that burden should be passed on to the next element in the value chain. I think in good English, I think that's called the customer, right?
I think that is what we think is fair and right to do. That is the first category. You also made reference to the fact that we have U.S. operations. We have U.S. manufacturing operations. Interestingly, Mr. Everts, that is actually a negative at this stage because the fact that we have manufacturing operations in the United States means that we're actually shipping parts from Europe, from Canada, or whatever into the United States. They get assembled into a module. That module is being sent back from the United States to the Netherlands. It's being integrated into the full system, and then the full system is being exported to Taiwan, Korea, or the United States. Before you know it, you get a stacking of tariffs, right?
Because before you know it, the part that you send from the EU to the United States could be taxed with tariffs and gets, as I mentioned, integrated into the module, gets sent back to the Netherlands, and then again, you get a tariff hit when you ship the tool to the United States. Clearly, A, that shouldn't be the goal of tariffs, right? Because the goal of the tariffs at the end of the day would be to onshore manufacturing capability in the United States, not to make it even more complex and expensive. I think I'm sure the U.S. administration is thinking this through, that this is actually a negative for manufacturing in the United States.
Secondly, we have to look from our vantage point, how can we have all of our screens conducted in such a way that we can actually minimize that risk of stacking of tariffs? One of the things we're currently looking into is can we establish a free trade zone between our manufacturing capability here and the manufacturing capability in the U.S. in order to make sure that you don't get this burden of double- stacking of tariffs? A final component that I could call out in this regard is tariffs on parts that we send to the field. The parts that we need in the United States for the service to our customers. There, the passing on of the tariffs is a little bit more tricky because there, obviously, we have existing contracts and service contracts with customers that we have to honor.
There might be a bit of a window before we're really able to pass on in full the impact that that would have on our cost. Pretty comprehensive answer, but those are all the moving parts that we have on tariffs, the way we look at it, the impact it could have on us, and what our intentions are in terms of passing it on. Thank you. I hope that was answers to some of your questions at least.
Thank you.
Super.
Thank you. Anybody else who would like to ask a question?
Thank you. My name is Lurks. I'm a private investor and also a member of VEB. Are measures considered notwithstanding developments here in this region to mitigate the impact of tariffs from America, for instance, by relocating production capacity more than now? That's my question.
As I mentioned, we are definitely looking at measures how to mitigate the impact. If you think about relocating the total system integration and the total assembly of our tools and move that from here to the United States, I think everyone that looks at what has been built here, not just at our campus, but also what has been built here in the ecosystem, it would take many, many, many years before we would be able to do that. I do not think that is a solution to the problem that we have at hand here.
I think the solution to the problem that we have at hand here is to, A, work with all the alternatives that we have to mitigate the impact, and B, make sure that in the analysis that the U.S. administration is currently doing to understand what is the right tariff structure for the semiconductor ecosystem and what should we do or not do to make sure that the U.S. government has all the data points to come up with a sensible solution there because making semiconductor manufacturing more expensive in the United States by putting tariffs on parts and putting tariffs on new systems, we believe at the end of the day is not conducive to getting onshoring of semiconductor manufacturing. I think those are the two things that we're currently looking into.
Moving assembly to the U.S. would be an extremely long-term solution and would not be the way we look at it because we would like to build where we have the capability. We have the capability here in this region to do what we do.
Thank you, Roger. Anybody else? Question over there on this side?
Can I try to use the microphone?
No, please do use the microphone because we have digital or online attendance as well.
Good morning. My name is [Eric Liebers]. I'm a private investor just from the area and the local. I'm happy with the forecasted growth for this year, the $30 billion-$35 billion. We're happy with that.
Also, at the same time, living here in the area, living between people working at ASML or at one of the companies supplying to ASML, that the supply chain is still experiencing a big dip in orders already for the last quarters. Is that an inventory effect, or can you elaborate a little bit on the expectations for that part?
Thank you. Christophe, will you take that one?
Yeah, I can take the question. I think that, well, you've seen the forecast for this year. I think we also mentioned to the market mostly we see 2026 to be also a growth year again, based on the discussion we have with our customers. Now, if you look at the last few years, I think if you go back to 2022, 2023, we have grown extremely rapidly, right?
This was a time where we couldn't generate enough machines for our customer. I think that period of time has stopped basically last year, where we have seen a bit of a rationalization of the market. Also, the transition to AI, as Roger explained before, has created a bit of shift. We have seen some customers being a bit left behind, and some of those customers basically had a pretty strong forecast in the past. There was a bit of, I would say, correction last year. This is also what we communicated in Q3. On top of that, this very, very strong growth, I think we feel today we have to rationalize. This is true for our supplier, but that's also true for ASML. If you look at our growth, Roger showed a number indirectly. T his has also calmed down quite a bit in 2024.
It's going to be very limited in 2025, and we still have to mostly see what's happened next year, but we don't expect in any case to grow in the way we did in the last few years. It is a bit maybe disappointing for some of our suppliers because it's nice to always get the number going, but we also think this is a good time to really work together with them to rationalize a bit the growth we have seen in the last few years because, to be honest, this was also not very sustainable. We grew very fast. We saw that we didn't always do a good job onboarding people. We went down in efficiency, so did our supplier. We didn't use the footprint to the full extent.
I think now the discussion we're having with them is how do we rationalize the very strong growth we had, I would say in some way take benefit of the current maybe change in the market and the AI insertion to make sure that we become more efficient together and we can make a much better use of the footprint. I think the main discussion now is if you want, how do we do maybe more with less because we have a bit of time to work on that.
While gearing up for significant growth, right? You have seen our 2030 material, and you saw Christophe there, where we are talking about quite significant growth between EUR 44 billion-EUR 60 billion. I think that's it. Shorter- term, navigating that situation while gearing up for growth that is clearly coming towards the end of the decade.
I think that's the main exercise now.
Okay. Thank you. Any other questions?
Dear members of the board, dear members of the Supervisory Board as well.
Could you speak up a little bit?
Yes. This should be better, but.
Yeah.
Okay. Good. My name is Edwin Janssen, and I represent the Dutch Association of Investors for Sustainable Development, or VBDO. Our members leverage a total of upwards of EUR 1 trillion. Your answers will be included in the advice to our members. 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 topics. I will introduce each topic shortly, starting with biodiversity, before asking the corresponding questions.
Regarding biodiversity, ASML does not consider biodiversity a material topic in its 2024 DMA, despite upstream dependencies on mining activities, which are known to impact through deforestation, land degradation, as well as pollution. While ASML supports local green initiatives, the company does not address biodiversity through policy targets or in the supply chain. The question, first one, does ASML recognize the increasing importance of biodiversity and healthy ecosystems, and could the company elaborate how this might affect the company's materiality assessment moving forward? The second question on this topic, in the meantime, how will you address biodiversity considering the company's reliance on mined raw materials and the potential biodiversity risks across its upstream supply chain?
Okay. Do you want me to? We'll summarize that first. I think you know that we conduct our double materiality assessment in line with the CSRD recommendation.
That's the way we do it in ASML. Out of this, we have identified 50 materials, ESG topics across our value chain, and we report on 6 of the 10 ESRS topical standards. I think you're also aware that the level of insight of our impacts from our own operation is a lot stronger, is a lot, I would say, precise, a lot more precise than what we know from basically our supply chain. This being said, we continue to improve the supply chain transparency to better understand any impact and risk, and we do so by taking a risk-based approach. For example, we identify which of the materials we source, in which region we source them, and which one of those could present a higher risk for the environmental impact. This is the way we do it.
This has been quite, I would say, an intense activity, but this is something that, again, takes a lot more time and a lot more work than just assessing our own basically impact. We will continue to do that, and whatever finding we have, we will take it into account in our next double materiality assessment. On top of that, in the meantime, we will continue with our local initiatives everywhere. For instance, one of the programs of the community partnership program relates to green communities, which aims to preserve or develop green spaces, not only here in the Netherlands, but in all the different places where we operate.
All right. Thank you. Last question. Regarding the second topic, sorry, the second question. Although ASML states its relatively low water use compared to peers, it operates in, sources from, and supplies to regions experiencing water stress.
This includes California, Texas, Taiwan. Water is not identified as material, and no concrete targets or KPIs have been set. However, will ASML introduce concrete targets and KPIs in the next annual report for water use, recycling, and risk management, both in its own operations as well as throughout the supply chain, particularly in water-stressed regions?
Here again, in line with the CSRD recommendation, we have not seen water as a materiality. Now, our DMA assessment is showing that this is increasing, right? I would say we mostly expect in the future that this could become a topic of materiality. When this happens, as we do with any other topic, we will have KPI, we will have a plan basically to also address that and report on it in our future annual report.
Not the case today, but I think this is a matter of time when water becomes also material.
Thank you. With regards to living wages, VPO commends ASML for defining living wage in its annual report. ASML also confirms that it pays wages above the minimum and living wage benchmarks in all countries where it operates in. However, VPO is curious to hear how ASML is addressing this theme in its supply chain where obviously the risks are also the highest. The question is, will ASML introduce policies, KPIs, and supplier due diligence to ensure that workers in the supply chain, especially in high-risk countries, also receive a living wage?
Here again, we ask all our suppliers to basically adhere to the Responsible Business Alliance, the RBA Code of Conduct. Today, the current RBA COC includes a reference to minimum wage.
The RBA is still in the process of aligning its own COC with the Corporate Sustainability Due Diligence Directive, the CSDDD, including requirements regarding living wage. This is not done yet. We also believe that in this case, the industry collaboration is key to effective human rights due diligence, including action on living wages. Companies share supply chains, they share suppliers, so we believe that if we are aligning on living wage standards, approaches, tools, we will be able to create leverage and together mostly be able to go more quickly to the end results of that. Therefore, we continue to support the living wage initiative of the RBA to basically bring this view to as many suppliers as possible. We also identify living wage as a silent issue, so that is an inherent risk in some of our supply chains.
We have established a due diligence program, which is called the Responsible Supply Chain, to further strengthen our due diligence, including alignment with international frameworks and upcoming legislation. We plan to publish our updated human rights policy letter this year as well.
Thank you. Specifically with regards to the CSRD and ESRS in general, the VPO commends ASML for the elaborate and insightful overview of the impacts, risks, and opportunities that were identified based on the material. At the DMA, ASML highlights the role of stakeholder inputs in its double materiality process, but it also states it does not engage directly with affected stakeholders, such as workers, communities in its value chain. The question, how does ASML ensure that affected stakeholders such as value chain workers and local communities are meaningfully represented in the materiality assessment and broader due diligence processes?
First, I think the stakeholder input is extremely important for DMA assessment every year. We do that every year. Another important input to the DMA is our human rights saliency, sorry, assessment. It's a difficult word for me to pronounce. As part of this assessment that we did last year, we conducted stakeholder engagements with credible proxies of these stakeholder groups. We are, for example, engaged with NGOs and human rights organizations who are specifically knowledgeable about the issue and about the workers, and we take this into account basically in our assessments. That's also a way to give us some information about the supply chain. The saliency assessment is the very first step we have taken to identify potential impact. The next step will be to engage with the affected stakeholder more deeply, and we will do that whenever possible.
Thank you.
You're welcome.
Very well.
Any further questions? It's a little long arms needed to get into the middle of the row.
Thank you. My name is [Rutger Zettler] from The Hague, and I'm a private investor in ASML as well. So I'm quite interested to hear about your opinion, what your expectation of the global chip market will be once China decides to invade Taiwan. Are they going to bomb all the TSMC plants, and how will the chip market look like once that happens? Thank you.
That is quite a layered question. Of course, not the first time we hear it. Christophe, maybe short, but of course, we can't give you a very good answer to this one.
I was hoping it's a question for you, Mr. Chairman.
Take it anyway.
No, I think that there are so many speculations nowadays.
It's, of course, making the way we look at our industry more difficult. There's no sign of anything to describe, and therefore, we're not acting on this, but I think we have, of course, to take into account more and more complex geopolitics scenarios. This is what we do with the Board of Management. We do that for geopolitics. We do that, Roger explained it at length with tariff. I think the world we live in has become a lot more complex, and therefore, we need to create, I would say, the readiness, the flexibility to deal basically with a lot of potential changes on the industry. I will leave it to that because the rest is highly speculative, but I can guarantee you that the Board of Management, together with the Supervisory Board, spent quite some time to make sure that ASML can adjust.
I think if you look at the last 12 months, there's been a huge amount of things we didn't expect, and every time we have made our very best to adjust to the situation, and we'll continue to do that.
I think maybe adding one thing, people say if Taiwan is bombed or the chips cannot access the global market, you would assume that you would have a need for machines elsewhere. Of course, it's also a time where friction in the world will be significant then, and it's very hard to predict what happens. It's hard to imagine that you, let's say, take Taiwan out of the equation without capacity being built up elsewhere. I'm sure you meet, since you're from The Hague, a lot of politicians will tell you that they have sleepless nights because they are worried about chip supplies.
The answer to that is you should probably build up some capacity closer to home. That is just a sales pitch.
Right. Okay. Any further questions? There's one again from you. Thank you.
Another speculative question. There has been an elaborate report in the magazine The Economist how China is seeping into and infiltrating Taiwan and other important installations in the world. They do not go in by force, but by being smart. Now, there is rumor that there is supposed to be a kind of kill switch in the power of ASML that should China start to get really naughty, they can just take their toys away by pushing the kill switch. Is that so? I expect you will say, "Well, that is only speculation."
It's probably a good answer. I think it's been a while since we got the question about the kill switch.
We were hoping this is gone. I think what we explained in the past is that our EUV machines are extremely complex. If we were to be in a situation where ASML cannot service those tools, there is a high probability that those tools will not function anymore because they require a lot of care every day. As you know, we have many, many service engineers at our customer to keep the system up and running. This is a bit, I would say, what will happen. This being said, our tools belong to our customer once we sold them, and therefore, the only people who can decide to put them on and off are our customers. I think that the first part of my explanation was maybe the reason why people thought we have this magic power, which we neither have nor want.
By lack of care.
Any further questions? Doesn't seem to be the case. We have good news for you, and that is that the data on the registrations for the meeting has been processed, and we'll make some formal statements, and I'll give the floor to Mr. Kleipool.
Thank you, Chairman. The total number of issued ordinary shares per the record date for this general meeting amounts to 393,830,692 ordinary shares, of which 4,034,993 shares are held by the company as treasury shares. As each ordinary share carries one vote, the number of voting rights per the record date amounted to 389,795,699. The count for this meeting showed that at the start of the meeting, 280,714,147 ordinary shares were present or represented at the meeting, giving the right to an equal number of votes.
These shares represent 72.02% of the issued and outstanding ordinary shares per the record date. As a result, all voting items on the agenda, except for agenda item six, can be adopted by a simple majority of votes cast, as more than 50% of the outstanding share capital is represented at this meeting. For agenda item six, the proposal to amend the remuneration policy for the Board of Management, a majority of 75% of votes cast is required by law. Back to you, Mr. Chairman.
Thank you, Reinier. With these instructions, I will now open for the voting.
Just to repeat what Reinier said at the opening or earlier in the meeting, you can vote on any item at any time, and you can also change your opinion as the meeting goes on, provided if you hear good arguments for changing your mind, or just do it at any time, and you can do it until the meeting closes. We now move on to agenda item three, and agenda item 3A concerns a remuneration report for the Board of Management and the Supervisory Board for the financial year 2024, as prepared in accordance with Dutch law. The general meeting has an advisory vote on the remuneration report, and I'll now give the word over to Terri Kelly, Chair of the Remuneration Committee, to add some words to this.
Yes, thank you, Mr. Chair. I have a couple of short slides to share.
As Nils mentioned, this complies with the Dutch law as well as the EU shareholder rights directive. Remember that this report is aligned with policy changes we've made for the Board of Management in 2022 and that of the Supervisory Board in 2023. I'll just spend a minute just on some of the work streams of the committee, and certainly in my capacity as Chair, I'd say a major one was outreach to our external stakeholders and certainly our internal stakeholders, certainly with the Works Council, which you'll hear more about later. This has been very helpful for formulation of both the report as well as input on any policy changes. I appreciate that engagement.
The two main items we focus on this year as a committee, certainly an important one is an updated policy for the Board of Management that would be adopted this year, and then some changes in the supervisory fee structure that we'd like to propose as well. Just looking at the report, hopefully you all read it over many times, but a couple of key points we saw for the Board of Management, just modest base salary increases of 4%. We did utilize the flexibility, which we're reaching the end of that flexibility under the current Board of Management policy. As I mentioned, this is a key reason why we're looking to update the policy this year.
Obviously, another important aspect of the report is the performance to the short-term and long-term incentives, which I'd like to just go into a bit more detail on the next slide. On the short-term incentives, again, I think we have very good alignment with the output of the key measures, but also how the company has performed. I will say it's been a very collaborative effort with the Board of Management to figure out what are the most important measures, both financial and non-financial, that really drive the strategic priorities, both in the short term and the long term. You see for this year, we achieved 136.1% of targets, so good performance, but again, also very aligned with the performance of the company. Just a couple of things to note. The financials continue to be about 60% weighting, even margin.
On the non-financial, we have a nice focus on some of the most important priorities for our customer, representation from each of our major business units, as well as a customer trust survey that we implemented over a year ago. That is another great way for us to get input. Lastly, our technology leadership index, which really gives you an indication of kind of our technology roadmap, which we think is a very important indicator of our success. Again, that's on the short term, and then I'll move to the long-term incentives. Again, the structure, this is over the 2022 to 2024 timeframe. We continue to use relative TSR as a primary financial measure. In this period, we have the average cash conversion rate, which actually performed quite well.
We look at the technology leadership index, which is on a longer time horizon and saw very good performance. We have a number of ESG measures, some of which we touched on in the earlier presentation, which again align around some of the most important business priorities and impact that the company can have on our footprint. All told, that resulted in 132.3% performance to target. We feel as a committee, this is very much aligned with that incentive payout with the performance of the company. With that, I'll conclude my report on this. Mr. Chair.
Thank you, Terri. We now will move on to questions now. Are there any questions in the room? Anybody would like to have a question?
It's so straightforward, right?
Thank you for all the work you've done consulting with shareholders and proxy agencies and so on. Remuneration is not a simple item in large companies like ours, but thank you. If there are no further questions, we'll conclude this item and move on to item 3B. Item 3B concerns the discussion of the 2024 annual report and the adoption of the financial statements for the financial year 2024 as prepared in accordance with Dutch law. ASML published the annual report containing financial and non-financial information. This year, we have again prepared two sets of financial statements. One is based on U.S. GAAP, which are the accounting principles generally accepted in the U.S., and one based on the International Financial Reporting Standards as they're adopted by the EU and Dutch law. It's the latter on which we vote.
It is the 2024 financial statements based on IFRS and Dutch law, and they are submitted to you for adoption. Petra Groenland, our External Auditor from KPMG, is with us today, as I have previously announced, and she would like to give you some insight, or at least is willing to give you some insight into the audit. Over to you, Petra.
Thank you, Chairman. Good morning, ladies and gentlemen. My name is Petra Groenland, and on behalf of KPMG, I have been the External Auditor for ASML for the 2024 financial statements. KPMG has been the financial Auditor, the External Auditor of ASML since 2016. This was my personal fourth year and our firm's last year. It is my privilege to stand before you and address you as shareholders. You are important users of our reports, and we value your trust.
I'm happy to have been provided the opportunity by ASML to elaborate on our reports, our product audit process, as well as our audit observations. At the start with the end product of our work, we issued a number of unqualified audit reports. On March 5th, we issued a report with respect to the IFRS financial statements, which implies that those financial statements give a true and fair view and that they have been prepared in accordance with IFRS accounting standards as endorsed by the EU and Dutch law. We also concluded that the management report and other information in the annual report is consistent with the financial statements and does not contain material misstatements. In addition, the report and other information contains all information required by Dutch law.
We also issued an unqualified audit opinion with respect to the U.S. GAAP financial statements, and we issued an unqualified audit opinion on the effectiveness of internal control over financial reporting, the Sarbanes-Oxley Act, and besides the audit of the financial statements, we performed a limited assurance engagement on the 2024 sustainability statements, also included in the annual report. I will now continue my presentation with the key elements of the audit process and our observations related to the IFRS financial statements, so the statements that you will be voting on today. These elements are further included in more detail in the annual report on pages 397-402 of the IFRS annual report. I'll go through the elements that we have here on the slide clockwise.
Just to clarify, the objective of an audit is to plan and perform it such that we obtain sufficient and appropriate audit evidence for our opinion. 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 audits. To go to materiality, we determined materiality for the 2024 audit at EUR 350 million, representing 3.5% of income before income taxes for 2024. Materiality is the level at which we believe misstatements will likely influence the users of the financial statements like yourselves. We did look at lower numbers, of course. Misstatements in excess of EUR 17.5 million were reported to the audit committee of the Supervisory Board. Going to risk assessment and group audits.
In our audits, we focus on those areas that have the biggest risk or potential for material misstatement to the financial statements. Usually, those are the larger account balances and/or areas that require management judgments estimates. In our risk assessment, among other topics, we have also taken into account the following risks that we list here on the slide. Fraud and non-compliance with laws and regulations that I will touch on on the later slide as well. Going concern, climate-related risks, and cyber. As part of our procedures related to going concern, we discussed and we inspected management's analysis of matters that potentially could impact the company's going concern, including the delayed recovery of the semiconductor market, but also the export restrictions to China. We did not identify going concern risks for the company.
Further, the outcome of our procedures did not give reason to do anything further on this. On climate-related risks, as part of its strategy, management has considered the influence of climate on its business operations. You can read more about this on pages 190-230 of the sustainability statements. We have considered the connectivity of the sustainability statements with the financial statements. We have assessed whether the identified climate risks could also have a material impact on the financial statements, for example, on the valuation of long-lived assets and the going concern assumption. We did not identify a risk of material misstatements specific to climate for the 2024 financial statements. On cyber, as disclosed on page 75 of the annual report, ASML acknowledges that cybersecurity threats are constantly evolving with an increasing number of cyber attacks.
As part of our audit, together with our IT colleagues and specialists, we have obtained an understanding of how ASML uses IT and the impact of IT on the financial statements, which includes an assessment of the potential for cybersecurity incidents to have a material impact on the 2024 financial statements. We did not identify a risk of material misstatements specific to cyber. As it relates to group audits, considering that ASML has a high level of centralization of operations here in the Netherlands, especially in Veldhoven, and we just discussed, we mirrored that in our audit, which means that we performed our audit mostly centrally here from the Netherlands. Going to specialist involvement, for more complex audit areas, we involved our KPMG specialists in the areas of IT, tax, forensic, valuations, legal, and climate change subject matter expert.
On communication, we communicated our audit plan and our audit findings in writing to the audit committee as a committee of the Supervisory Board. We discussed our findings on a periodic basis with management as well as the audit committee. We feel that there's an active engagement with the audit committee and that our observations are taken seriously. Going to the next slide with audit observations. Similar to last year, we identified one key audit matter that related to revenue recognition. Specifically, it related to the identification of distinct performance obligations in certain volume purchase agreements, as well as revenue cutoff. The reasons why this was of most significance to our audit is that, similar to last year's, agreements with customers are often complex and comprise of multiple elements, multiple performance obligations.
A high degree of auditor judgment was required in evaluating management's identification of those individual elements within the contracts with customers. We also identified a risk that revenue was not recognized in the correct accounting period, a so-called cutoff risk. We selected sales transactions before and after the 31st of December year-ends and assessed whether revenue was recognized in the right financial year. The results of our procedures were satisfactory. Going to the right-hand side on fraud risks and approach, in line with our auditing standards, we identified inherent risks on fraud with respect to revenue recognition as well as management override of controls, of which the first, revenue recognition, is described as part of our key audit matter, which I just discussed. In response 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. Our audit procedures did not reveal indications and/or reasonable suspicion of fraud or non-compliance that were considered material to our audit. I'll touch on a number of other audit areas that we reported on and/or discussed with the audit committee. Sustainability statements. As mentioned, we issued a limited assurance opinion on the sustainability statements. This was the first year that the company prepared the sustainability statements in compliance with the ESRS as adopted by the European Commission. As the European Corporate Sustainability Reporting Directive, the CSRD, was not yet transposed into Dutch law, our engagement to provide limited assurance was effectively a voluntary engagement rather than on a legally required basis. We performed limited assurance on the sustainability statements.
As defined in our assurance reports that you can find on pages 403 to 405 of the annual report, limited assurance provides a substantially lower level of assurance than an audit would have. We did issue an unqualified conclusion, which means that nothing has come to our attention that causes us to believe that the sustainability statements were not prepared in all material respects in accordance with the ESRSs and in accordance with the double materiality assessments carried out by ASML. The information reported was compliant with the reporting requirements on the EU taxonomy as a last element.
In our assurance report, we added a paragraph, what we call an emphasis of matter, regarding the context of these new reporting standards being applied for the first time, but also the measurement uncertainty that was included with respect to the quantitative metrics, the comparability of sustainability information between entities and over time, and the DMA process as a fundament of the impacts, risk, and opportunity disclosures that are included in the sustainability statements. Going to export control, we assessed the impact of the changed export control regulations on management's process and as well as on the financial statements. Possible non-compliance with export regulations could result in fines and penalties, which would require an accrual and/or disclosures to the financial statements. We also assessed the potential impact on revenue recognition and the related balance sheet positions and performed procedures to address this.
For example, we assessed whether systems shipped to China could still be implemented. On estimates, our assessment is that the estimates were balanced. Going to the left side, internal control observations. As mentioned at the beginning, in conjunction with our audit of the U.S. GAAP financial statements, we performed an audit of the effectiveness of internal control over financial reporting. We issued an unqualified opinion thereon, meaning that we did not identify a material weakness in internal control over financial reporting at that year-end. Our audit procedures were determined in the context of the audit of the financial statements taken as a whole, for which we issued unqualified audit opinions. My observations here today with respect to the key audit matter, fraud, non-compliance with laws and regulations, and other audit observations should be viewed in that context and not as separate opinions or conclusions.
To next year's audit, that will be performed by PricewaterhouseCoopers. This covers my presentation on the 2024 audits and our observations. As this was the last year that KPMG was the Auditor of ASML, on behalf of all of my colleagues that supported me in the audit, I would like to thank you for your attention and thank you for your trust. I'm happy to take any questions you may have. Back to you, Jeremy.
Thank you very much, Petra. And thank you from the company and the audit committee. We've said that a number of times. It's a great job you've done over the years. It's been a real pleasure working with you. That doesn't preempt, of course, the shareholders for having questions today. I'll direct the questions to the floor. Any questions? That does not seem to be the case.
If there are no further questions, we will move on to agenda item 3C. This is a discussion item. The agenda 3C concerns the explanation of ASML's reserves and dividend policy. This is a non-voting item and really quite simple. ASML aims to pay an annual dividend that will grow over time to be paid out quarterly. For further explanation, you are welcome to look into the notes that we send out. Simple is always good. All right. Any questions to this? Hopefully a gradually increasing dividend. Thank you.
If there are no questions to this, we will move to agenda item 3D. This is a voting item. Agenda 3D is the proposal by the Board of Management to declare dividend for the financial year 2024. Roger already alluded to this earlier.
We made two interim dividend payments in 2024, one in February 2025 and one in, and each of them were EUR 1.52 per share. The Board of Management now proposes to declare a final dividend of EUR 1.84, which brings the total dividend for the year to EUR 6.40 per ordinary share. As Roger said earlier, this is an increase of 4.9% compared to last year. The total dividends for 2024 represent 33% of earnings per share for the year. The Supervisory Board has approved the proposal. Just for your information, any questions to this point? It does not seem to be the case. We will move on to the next item, which is agenda item 4. Here we have two voting items.
The first is a proposal to discharge the members of the Board of Management and, well, actually the two of them, and the Supervisory Board from liability and for the performance for the duties in the financial year 2024. We have split it up in two voting items. The 4A is a discharge of the members of the Board of Management. The item 4B is a discharge of the members of the Supervisory Board. Any questions from the shareholders to these points? If that is not the case, we will move on to agenda item 5, which is another voting item, and it is the proposal to approve the maximum number of ordinary shares available for the remuneration of the Board of Management. The maximum number of shares that is proposed amounts to 170,000 ordinary shares.
The final granting of these shares will be made by the Supervisory Board based on the applicable remuneration policy. The agenda item also includes the proposal to designate the Board of Management as the body that is authorized to issue these 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 to the AGM that will be held in 2026. They will be held in 2026. For the financial year 2025, a total number of 30,480,760 shares will be granted conditionally to the Board of Management, provided that the proposed remuneration policy for the Board of Management is adopted today. If the proposed remuneration policy does not receive the required voting majority, the total number of shares that will be to the Board of Management will be 25 million. Sorry. 25 million.
597,825 shares in line with the current remuneration policy. We'll now move on to the questions. If there are any questions, and if I need to repeat the numbers, let me know. VB.
[Herman Everett] of the Royal Dutch Shareholders Association. This also includes the revised remuneration policy, isn't it?
Yes.
Okay. We've read it with some caution because there is a new element in the revised remuneration policy.
Sorry, actually, that's in the. It will come. It will come. It's the next point, so. I'll wait for the next point. Yeah, just wait for that, yeah.
Right, because there was no number on hands-on. Yeah.
Any other questions? Doesn't seem to be the case. We'll move on. Just remind you, it's possible to vote on every item already now and up till we come to agenda item 13.
We'll proceed with agenda item 6, and that is actually what you're referring to, the proposal to adopt the revised remuneration policy for the Board of Management. As this is a remuneration matter, Terri, I'll pass the word to you again.
Okay. Thank you, Mr. Chair. Again, we will take questions at the end. This has been an important piece of work for our committee and again, some major outreach. I will just stress that we feel we're reaching some of the limits under our current policy that was adopted in 2022, and we think that this current policy addresses many of those issues. Just some background, maybe not surprising, for sure, if you look at ASML as a company, it hasn't gotten any less challenging.
If you think about just the sheer size and growth and complexity, and obviously, this also reflects the talent we need at the most senior level of leadership. Part of our dual role is to make sure we have fair remuneration, but at the same time, we attract and retain the kind of talent, not just today, but also envisioning possible changes in the composition of our board of management, looking at the broader needs we may need in the future. That is part of our goal with this updated policy. Another part of our practice every other year is to do a benchmark study looking at the external market, and we also see quite a bit of movement in that data as well.
Last but not least, as you know, we've had some structural changes at the senior leadership level, moving more to a single presidency. That does have some implications of how we have looked and measured our remuneration against the peer set, which I'm happy to explain. For all those considerations, we felt the time was right to revisit and update the policy, which hopefully you had a chance to read. Consistent with what we did in 2022, our approach will be very incremental. We do not intend to adopt all of the room and flexibility in the policy, but take a very measured approach and revisit that every year. With that, again, our goal is to strive to close the gap.
We know our philosophy is going to be measured, both looking at internal fairness as well as the external competitiveness, and you'll hear more, but we try to take into account the societal aspects as well. I just want to briefly talk about some of the main changes to the policy. One, we made some slight tweaks to the peer group. And so today, we have about 33% that are represented with the changes. So we're bringing in a couple more of the very key semiconductor participants, customers, and peer organizations, which we think are very relevant to our market. Again, we recognize we probably could have put more into the peer group in terms of U.S. presence, but we also recognize there's a very different pay practice. Another way we're trying to take a very measured approach of European presence as well as U.S. presence.
We also dropped a couple of the historical peer groups just because they did not fit some of the basic criteria. On the STI/LTI, we are recommending increasing the levels that can be paid out at target, going up to 150% for the short-term incentive and up to 350% for the long-term. We added a new dimension, which is in business-critical situations, the ability to go up to 450%. I would consider this more the exception than the rule, just to give us the flexibility that we can act quickly if we have a situation where we have to either draw in key talent or we have to retain key talent. Again, we identified that as, again, just in very rare occasions, but we wanted to have the flexibility in the policy to not have to bring it back to vote and to be able to act swiftly.
I will say in all these situations, we would be very transparent in our report in terms of when we use that kind of guidance and the rationale. The other matter that we've got a lot of feedback on is the TSR payout curve. We did make an additional move to change the line of the curve just to be a little bit more competitive and also in line with market practice. I think a step further to what we're also hearing from our external stakeholder outreach. Commensurate with the higher opportunities for the LTI, we did increase the share ownership guidelines. For the CEO, it now goes to four times base salary, and for the other board members, three times base salary.
On the actual STI and LTI measures, we've really just given ourselves more flexibility, both in terms of the weighting of the different components on the financial, non-financial side, and also the parameters that we use to measure performance. Again, these will be very much highlighted in our reports. You'll have a lot of transparency in terms of the incentives that we chose, and you see that obviously reflected in this report as well. Those are the main items. Just a little bit on the outreach that we did and just the main themes. Again, this was captured in the report both in terms of our external stakeholder feedback, but also from the Works Council, which you'll be hearing briefly in a minute on that.
I personally engaged with a number of external shareholders and proxy advisors over the course of the year. I think we got overall very positive feedback and understanding of the rationale for us to make the changes we need to, again, continue to retain the talent that we need at the most senior level. I think there was also good support for some of the changes and movement we made, again, in the lowering the vesting on the relative TSR. Obviously, the feedback in our report and just the level of disclosure was deemed very high. Again, we did get some feedback. There are a few shareholders that would like to see no vesting under the median for TSR, but we, again, feel we made the right step by reducing the vesting at the 25th percentile to zero.
As I mentioned, you'll hear later, we've had good collaboration with the Works Council, and that feedback, in our view, has been taken into account as we think about balancing the various stakeholder views in our final recommendation. I think that concludes my report on the policy.
Thank you, Terri. As Terri already alluded to in her presentation, the Works Council has issued an advice on the proposed remuneration policy, and they would like to use their rights to explain this position at the AGM. Therefore, I'll give the words to Klaas Brantjes , who is Chair of the Works Council. Klaas, welcome.
Thank you, Chairman. Dear ASML shareholders, Supervisory Board, Board of Management, my name is Klaas Brantjes, and I'm the Chair of the ASML Works Council. We represent the employees of ASML in the Netherlands.
Today, I'm speaking to you on behalf of the Works Council regarding the remuneration of the Board of Management. As a Works Council in the Netherlands, we have the right to advise according to the Dutch Civil Code on remuneration policy of the Board of Management and the Supervisory Board. We acknowledge that remuneration is a complex and sensitive topic. Over the past three years, the Works Council of ASML collaborated closely with the Supervisory Board on executive remuneration. Together, we reached an in-depth understanding of the underlying dynamics. We explored each other's values and perspectives on executive remuneration. First and foremost, we feel proud and grateful for this collaboration. It reflects the DNA of this company. Together with members of the Supervisory Board, Mrs. Annet Aris and Mrs. Terri Kelly, we introduced a first-of-its-kind societal benchmark.
This benchmark compares trends in our executive remuneration with what happens in the broader Dutch society. We appreciate the insight into how we compare to the very society in which our company is rooted. We are looking forward to refining and discussing the application of this metric in the future. Leading up to the final remuneration, we successfully elevated our discussion to the underlying values. One of these is fairness. We agreed that it is important for our leadership to receive a fair remuneration package. Another important value is esprit de corps. The Works Council identified this as a key driver for collaboration within ASML. It describes the shared purpose of our leaders and our colleagues. We cherish the quality of our work environment and the ability to make a lasting and positive impact. Esprit de corps enabled ASML to grow and to retain its world-class leaders.
As ASML employees, we appreciate and we desire to preserve our esprit de corps. We evaluated the proposal against these values. Ultimately, the Works Council maintains a two-sided view of the proposed policy changes. To begin with, ASML invested for many years in the maturity of its top leadership. We support the intention to protect this investment and to retain our top leadership. At the same time, we are concerned about the outcome of the remuneration policy. Fairness also has to do with timing and the level of the proposed changes. Some of our key customers face financial and strategic challenges. The global semiconductor industry currently faces a complex market dynamic. As such, our executive team stressed the need for stricter cost discipline. This is something that we understand and support. Also, ASML does not have a history of struggling to retain its top talent.
Therefore, we advise to make explicit in the policy how the gradual implementation will be effectuated. As the policy now stands, total executive compensation increases with double-digit growth rates. This is generally not the case for our employees in our company. Neither do we see this trend in society at large. We believe that this has a negative impact on societal cohesion and on our own esprit de corps. We consider the outcome of the policy to be the result of an upwards global trend in executive remuneration. These global trends in executive remuneration, however, are outside of our direct control. Therefore, we appeal to you, our shareholders, and investors across the industry for help. We encourage you to set a new market practice in terms of executive remuneration that takes into account more heavily the societal impact.
Dear Supervisory Board members, Board of Management, and ASML shareholders, as representatives of ASML employees in the Netherlands, we recognize and support the intent behind this proposal, and we would like to continue our collaboration with the Remuneration Committee. We want to continue to discuss our concerns about the timing and level of remuneration. It is important to us that the way that the policy is carried out truly supports the future success of ASML. Finally, we would once more like to express our gratitude to the Supervisory Board for our collaboration. The Works Council has nominated Karien van Gennip into the Supervisory Board. We appreciate your support and help during the nomination process. I would like to express, on behalf of the entire Works Council, our wholehearted support and confidence in Karien. Welcome to ASML. Annet Aris. With that, your tenure in the Supervisory Board reaches its completion.
In the past years, we spoke periodically on many different topics. Thank you for your wisdom, your patience, and your expertise. The full Works Council wishes you all the best. Thank you all for your attention, and we wish you a lot of wisdom in your decisions.
Thank you, Klaas. We really genuinely value the relationship and continuous dialogue between you and your colleagues in the Works Council, so thank you very much for this. Before we go to questions, I think I just would like to clarify the number of shares that will be distributed under the two alternative, either the old or the new remuneration policy. We said that we would like approval of 170,000 shares in total, under the outstanding or the shares that can be distributed.
If the new remuneration policy is approved, the total number that will be going to management or be available for management, subject to all the conditions, will be 30,480 shares. If it is not approved, the total amount of shares that will be available for distribution, subject to the various conditions and our approval, will be 25,597. I apologize for the confusion. Now open for questions on item six. Back to you. Sorry for interrupting you two minutes before, so you now have to repeat yourself.
No worries. Sorry for being at the wrong agenda item because that was the issue. Why did you ask me? Reference of shareholders and stakeholders, philosophy that refers to remuneration policy, of course, is important. However, on one specific issue, shareholders are more skeptical.
Your proposal for the remuneration policy of the Board of Management, ASML, wants to be able to set a target long-term incentive at a maximum of 450% of base salary, as it is called in business-critical circumstances. Those three words are important. This is an open definition. It could be easily misused or interpreted flexibly. It could lead to some jealousy between critical and non-critical board members, might negatively impact collective decision-making, and it will always mean, let me be clear, that people born in the U.S. would receive a higher pay due to the historic difference between the Wild West bang-boom capital markets and a more considerate and more inclusive EU market, those born on the EU soil. As Dutch investors, we believe ASML is also in the national interest. In the answering of my questions, this was referred by both Mr. Fouquet and Mr. Dassen.
Dutch interest, EU interest, all two are true. The board should, in our view, be and remain a reflection of this. This is, in our view, business-critical under all circumstances and should not be a flexible lever to the discretion of the Supervisory Board. That is my opinion, but can you explain, especially Mrs. Kelly, the business-critical reasons you have in mind that can apply in relation to talent retention in case of competitive offers? Because that's what this remuneration policy change is referring to.
Terri, will you take that?
Yeah. I will attempt to take this. Again, we don't have anything specifically in mind today, but we are trying to create a policy that gives us the runway over the next couple of years. Again, not just to attract, but to retain the talent that we have.
I think we do see this as the exception, not the rule. You really need to look at the 350% as kind of our working model at the top range. We do not also want to find ourselves in a situation where we cannot attract and retain the talent we need at such a critical time for this company. That was the origin of the 450%. Our thinking is that we would be very explicit about why we chose to make such a decision. We are also very conscious of the Board of Management as a whole in terms of treating them all fairly. I think our intent was not to single out one population, but just look in general at dynamics that we cannot anticipate today. Certainly, we want to have the flexibility.
Because I think another role we have, not just as our committee, but as the Supervisory Board, is to have the top talent that we need to manage a very complex organization. This may come in different forms. You mentioned geography, but there is also key capability that we might need to attract over the course of the next several years in the BOM composition. A number of considerations. It really was just to give us the flexibility. We do not take that lightly. I will say we will be very deliberate. If we are to pull that trigger, it is because we feel we have a significant issue that we must address and really for the benefit of the company. That is the spirit of it.
We would be very clear in our report as to whether we used it, why we used it, who we used it for. Nothing will be hidden on that end as well. That is the spirit of putting that added provision, that we do not have to bring it back to vote because a lot of these decisions have to be made in quick time. We just want to have that flexibility. Yep.
Quick follow-up question. In the Dutch Corporate Governance Code, remuneration, of course, is an important topic. You explained this, and I understand the consideration. Also in the code, there is a possibility to ask executive management whether they feel comfortable with their remuneration. I would like to ask Mr. Fouquet and Mr.
Dassen in particular whether they see this as a requirement which is really needed to retain them, or whether this is a bit superfluous because their salary, in my view, is an adequate representation of their talents, their work-life balance, and all the things you offer for this important job. May I ask you whether you feel that this is really something which you need to step up from the 350% to the 450% for you to continue to be motivated?
Yep. Before you go there, I just want to clarify. There is a lot of good conversation that I have to inform the policy. It is not just about these individuals. It is also about future composition. It is a statement of today, but as much a statement of tomorrow. You can answer. What do you think, Christophe?
It is not a prepared answer, as well as it should be.
No. I think Terri said it very well. This is not in any way with me or I think she will say the same thing in mind. I think Terri has been taking into account the reality of the world we live in, where we want to have a global team. I think you see that today. It's sometimes difficult to attract people outside the Netherlands because, of course, the practice in the U.S., for example, are very different. You could still say that, maybe this is not something we have to address. You have to also realize that those practices can be also applied even for people here in the EU. I think we also see that the U.S. continues to attract or try to attract talent, basically, out of the EU by making also a much stronger offer.
This is just the reality of this world, I think, which Terri is trying to be flexible to. Don't worry. I think this is not something that has been designed, at least for me. And I will let Roger speak for himself.
I'll be very brief and confirm everything that Christophe just said. Clearly not for me in this current set of circumstances. Maybe let me add, based on other searches I've been part of in my career, we are not paying very high salaries in Europe in general, but in particular, not in the Netherlands. The remuneration debates are quite complicated to the extent that an American shareholder that would happily approve a certain salary in the U.S. for U.S. or foreign nationality executive will vote against it in the European area for perceived political reasons.
I think it's something we have to be aware of. If you ask me, is there something that you could be nervous about as a shareholder or a board member in ASML? It will be many other things as well. It would be a big irritation if we lost top- quality management because, of it would not be because of 100% of base salary, more or less, in the LTI, but because of not meeting the global level of pay. It's just a reflection. In this, I think we've debated. Now we heard that for [Roger] and Christophe, it's not really an issue, and I'm glad. We just have to be a little bit careful in Europe that it doesn't become a pillar when we lose too much talent.
Mr. Jones, I'd just add one more comment because even at that level, 450, that pales in comparison to the kinds of LTIs that you see by U.S.-based companies. We have already tried to apply some judgment. Even if you look at our total peer group of 70, whatever, 60-some % European, I think the median for LTI is 500. We are still below that for that aggregate and well below that for what is typically paid out in the U.S. We are very conscious. We do not want to follow that practice. I will just say one other important thing because the majority of this is in the incentive, specifically the long-term incentive.
I think for our committee, we pay as much attention to the performance parameters that are tied to that incentive because I think that's what we need to really watch is do they really project the performance of the company and the business priorities. I think there's been very good alignment there. I think that also provides a counterbalance when we think about the payouts on the LTI. Thank you.
Thank you. Any other questions to this point? Doesn't seem to be the case. We will move on to the voting item number seven. It is a proposal to amend the remuneration payable to the members of the Supervisory Board. If adopted, the changes will be effective 1st April 2025. The proposed changes are in line with the remuneration policy for the Supervisory Board in the version from 2023.
We have sent out a proposed overview of the fees we're proposing and the rationale for the proposal. You can see that in the explanatory notes to the agenda. Terri, you're asked again to give a brief explanation about the proposal.
Yes. Thank you, Mr. Chair. This is really aligned with the policy we adopted for the Supervisory Board in 2023, where we actually removed the component of the explicit fees. We want to just give you a bit more rationale for the proposed increases. The main group that we look at is the two-tier AEX companies. Because of the sheer size of ASML, when you look at that aggregate group, we're at the 87th percentile, so at the higher end of that range. That is the primary benchmark that we look at.
Similar to the Board of Management, every other year, we do an external study just to look at what is happening in terms of pay practices. The other thing we do is just because we are an international Board of Management, we do look at some of the international peer groups just to see how that stacks up. As you can imagine, because of the difference in pay practices, these increases that we are proposing are very modest in that context as well. Not only did we look at the external market, we also looked at the work, the actual work. As you heard, there is a lot of work happening with the Board of Management. I would say that also translates to my fellow colleagues on the Supervisory Board, more engagement, more conversations, and obviously, dealing with a number of challenging issues.
That just puts more work on the supervisory board members. From all those aspects, it was our recommendation in line with the benchmark information that we make incremental changes to the proposed fees. You will see the structure across the board. We think that this is, again, supported through the policy. The only other change we made is we used to have an allotment of expenses, a fixed number, and that really is not the market practice. We have taken that out, and we are just going to follow normal expense practice there. Otherwise, it is all very much in line.
Thank you, Terri. I hope that was clear. Any questions from the audience? Does not seem to be the case. We will move on to agenda item eight, which is the composition of the supervisory board.
We have the two voting, and one discussion item on this agenda point. As announced last year, Mrs. Birgit Conix and Ms. Annet Aris will retire at the AGM in accordance with the Supervisory Board's rotation schedule. Birgit Conix has informed the Supervisory Board that she is available for reappointment. Annet Aris has, unfortunately, informed the Supervisory Board that she will not be available for a reelection. In agenda item eight A, we nominate Birgit Conix. for the reappointment as a member of the Supervisory Board. As previously mentioned, we will also, in the agenda item, nominate Karien van Gennip as a new board member. I would first like to say a few words about Annet, who has been an important part of our board for 10 years.
During her time at ASML, she has given us all her valuable insights, dedication, and a lot of experience. Her vision and leadership have helped us through many challenges and opportunities. Since her appointment in 2015, she has served on three committees and is still serving on three committees as the only member, I think, of the board: the Remuneration Committee, the Technology Committee, and the Selection and Nomination Committee. In 2021, she became Vice Chair of the Supervisory Board. Her original appointment and renewals were based on recommendations of the Works Council, which really show how much you've been respected, not only among your colleagues in the board, but also with the employees and management of the company.
You played a key role in the leadership transaction and made a big contribution in the remuneration discussion, using knowledge and insight and connections to make sure our policies are fair and competitive. Your commitment to excellence and your ability to inspire have left a lasting impact. You have been a mentor, a guide, and a friend, always available and always ready to share your knowledge and support. As you start your next chapter, we want to thank you really deeply for your contribution. Your legacy will stay to guide us. I am sure that whatever you decide to do next or continue to do next, your impact will be of similar value. Please join me, all of you, in wishing Annet all the best for the future. We will be missing you on the board, but we are looking forward to following you going forward as well.
Thank you. Thank you very much. As I just mentioned, Annet is the Vice Chair of the Supervisory Board. I would also like to inform you hereby that Terri Kelly will support Annet as a Vice Chair of the Supervisory Board. During today's discussions, you've had ample opportunity to get an impression of Terri's capabilities. Congratulations to you. That goes to the proposal. Eight A is the proposal to reappoint Mrs. Birgit Conix as member. It will be for a period of four years, starting today and ending at the 2029 AGM. Birgit became a member of ASML's Supervisory Board in 2021. She's been the Chair of the ESG Committee and a member of the Audit Committee. She will continue in these committee roles. We look forward to continuing to be contributing or benefiting from her great contributions.
Yeah, Birgit's biggest details are in the explanatory notes to the agenda, but very strong experience in global business and financial experience. We will just open for questions on this. I don't suppose there are any, but if there are any questions to Birgit's reappointment. No, doesn't seem to be the case. We will move on to eight B. The eight B is a proposal to appoint Karien van Gennip as member of our Supervisory Board. The appointment is also for a period of four years from today and until the 2029 AGM. If appointed, Karien will become a member of the ESG committee and the Remuneration Committee.
We would like to nominate her, but this is also happening in full alignment with the recommendation of the Works Council, as we heard earlier, particularly because of your broad background and rich experience in professional services, financial services, and public policy. You very much fit the description of people we need on the board. The explanatory notes of the agenda give further background to and details on this nomination point. After we made the proposal and after we sent out the agenda, it has been announced that Karien has been appointed as member of the Dutch Monitoring Committee, Corporate Governance Code, for the Dutch Corporate Governance Code, and as member of the board of the Royal Dutch Concert Orchestra. Karien, would you be kind enough to say a few words about yourself? Thank you.
I'll be short, of course.
Ladies and gentlemen, dear shareholders, it's an honor to stand here today and to address you on the occasion of, hopefully, my appointment to the Supervisory Board of ASML. I would like to express my gratitude for the trust and the confidence placed in me by the Works Council, thank you, Klaas, and by the Supervisory Board. As we all know, ASML holds a truly unique position, not only as a global technology leader, but also as a key enabler of innovation, of economic growth, and digital transformation, and ASML's unwavering commitment to excellence, to sustainability, and to collaboration across the entire ecosystem. Throughout my career, both in private and in public, I have seen that vital role that cutting-edge technology plays in shaping our societies, in shaping our economies, and of the importance of vibrant ecosystems like here in Brabant.
I'm truly motivated to contribute my experience and perspective to help ASML through this next phase of development. As some of you know, this region, as well as Brainport, are really special to me. As a member of the Supervisory Board, I look forward to work closely together with my fellow board members, with the management team, with all of you shareholders, and all the stakeholders to ensure that ASML continues to lead with integrity, ambition, and purpose. Thank you once again for this opportunity, and I am proud to become part of the ASML journey. Thank you, Nils.
Thank you, Karien. Any questions to this point? It doesn't seem to be the case. Welcome, Karien, unless we have a surprise in the voting. We can conclude this item and continue to item eight C, which is for discussion.
It is basically the point of it is to give notice of the vacancies that are set to arise in the Supervisory Board at the next AGM in 2026. In 2026, the appointment terms of Terri Kelly, Alexander Everke, and An Steegen will end in accordance with the rotation schedule. This is just an announcement. The General Meeting and the Works Council have the right to recommend candidates for the vacancies that arise of Ms. Kelly and Ms. Steegen in particular. Basically, that's the information. Any questions to this point? No questions. If there are no questions under this, we will move on to agenda item nine. Here we have two voting points. The first one, it is two voting items relating to the appointment of PricewaterhouseCoopers or PwC accountants as the Auditors for the company for next year.
We submit this following the recommendation of the audit committee, just for the sake of good order. The 9A concerns the reappointment of PwC as the External Auditor to issue an internal independent opinion on our financial statements for the reporting year 2026. The agenda item 9B relates to the same PwC giving an assurance of sustainability statements for the reporting year 2025 and 2026, and to issue a limited assurance opinion, as you learned from Petra's presentation earlier, that this has not been passed into Dutch law yet. It is a little bit at the moment a voluntary issue, but it probably will not be a voluntary issue next time. These are the voting issues. Any questions to this one? No questions. We move to the agenda items 10, 11, and 12.
They are agenda points that are annually recurring, and it's relating to our capital structure. It consists of four voting items in total. Agenda item 10A concerns the authorization for issuing ordinary shares or granting rights to subscribe for ordinary shares. The authorization is limited to a maximum of 5% for general purposes and a maximum of 5% in connection with mergers, acquisitions, and/or strategic alliances. Agenda item 3B concerns the authorization of the Board of Management to restrict or exclude preemption rights in connection with the authorization up to these 5% in item 10A.
We annually ask for these authorizations to allow ASML to react timely and quickly if particular circumstances arise that could, for instance, be an opportunity to acquire a company where all or part of the payment would be in shares, but it could also be in other circumstances. Agenda item 11 and 12 contain proposals to execute share repurchases and share cancellations. This goes back to that we aim to be flexible in executing the return of capital to our shareholders if we see room for it or an opportunity for it. We therefore ask you to mandate further share repurchases and to approve the cancellation of shares. The authorizations proposed in agenda item 11 and 12 allow ASML to repurchase a maximum of 10% of the issued share capital as per the date of this AGM and then cancel these shares.
The authorization requested under agenda item 10 and 11 are requested for a period of 18 months, starting today and ending on the 23rd of October 2026. This is because of transaction times and complications in completing things like this. If the general meeting approves this proposal, the existing authorizations will no longer apply. These things cannot come on top of each other. You have detailed information in the explanatory notes to the material we send out. Anyway, we'll be happy to take questions. No questions to this. We'll move on to agenda item 13, any other business. As I've said a few times, hopefully, you've all heard that we were free to vote throughout. If you still have to vote, please do it now. I'll close the voting in a few minutes or very shortly. Sorry, Mr. Everts.
Thank you, Chairman.
On any other business, I'd like to refer to the publication of the third quarter 2024 results. For Investors, it was very unfortunate that the publication went out during trading hours, one day prior to the initially announced date. This was not the first time for ASML. You announced that the Authority of Financial Markets had started an investigation, and we shareholders would like to learn more about the outcome. The market impact of the third quarter results was material. The share price of ASML dropped significantly. Let me be clear, my suggestion to look into reasonable compensation for Investors is not linked to the content of the third quarter report, but solely on the timing of its publication.
Investors could not have anticipated a mistake by ASML or any third party commissioned by ASML such that the results would go out one day prior to the announced date. Some have put in positions in the order book to buy shares or call options for prices lower than the most recent price before the publication or even way out of the market. Many investors withdraw those orders by the end of the day to prevent that the announced Q3 results will hit their orders. Investors put in orders to sell put options. The same is true for them. All orders executed for prices between the share price prior to the early release and the share price after the prior release of the Q3 results were hit by surprise.
In our world, and to be reasonable, ASML should do whatever they can do to compensate those few, I presume, investors that can really prove to have suffered losses due to the mistake made by the unintended, I presume, prior release by ASML. These are no big amounts, but would show that ASML is willing to learn from mistakes and adheres to basic governance principles that investors that had no clue that this could happen to them are compensated for the loss. These are not a lot of investors, but it does small amount with significant losses they could not foresee. Are you willing to look into that with us to compensate those investors?
The answer is no. We have been cleared in this by the AFM. A mistake was made, obviously, but it was corrected as quickly as possible.
Generally, a company is anyway obliged to send out messages or information if it has something to inform. Coming a day early or not a day early is not really an argument. You have to release when you know that you've something.
Mr. Andersen, your answer could not be more wrong. I used to be the regulator at the AFM. I do not talk on their behalf, but I talk on the behalf of what they need to do. They need to protect investors. Investors know one thing. Before 9:00 A.M. on that very day, the day after, the results should be released. If you do that during trading hours and no one could have anticipated that, that is not the way you act as a global citizen, as a listed company in the Netherlands.
That the AFM is doing an investigation and would say, "Well, it was not intentional, and you don't get a fine," we take that for granted. It's their decision. We don't take that as the answer. There are investors that have really suffered losses that could not have prevented those. It's because of a prior release, which is a mistake made or by ASML or by those commissioned by ASML to inform the market the next day, not the day before. If you really say bluntly, which I would not have expected from you as a Chairman, bluntly, "No, no compensation," not even asking us to verify whether those investors are there and what the losses are, this is not a good answer. It is really not the way to go.
I would really like you to reconsider that answer and to verify with us who are those investors. Did they do anything wrong? No. They just have the orders in the order book. You made a mistake. A company can make mistakes. Publicly, I said, "I take it. Sometimes things can go wrong. I'm not immediately going to the courts and seek for compensation." If you make a mistake, you need to be stretching your back and say, "We take the responsibility for that, and we compensate those that have suffered losses due to our misconduct." That is the question I raise to you. If you say no, you would really have a hard time to convince investors. I don't think that this issue is an issue you would like to test the waters with me. Thank you.
I will just rephrase my answer then. We, at the moment, were not envisaging paying compensations on this because we made a mistake. We were cleared. That is the answer for now. You may consider it wrong, but that is where we stand. By the way, we will close the voting now. We will wait a little bit until the results come up on the screen. In the meantime, I give the floor to Mr. Kleipool.
Yes. Thank you, Chairman. We are waiting for the votes to be counted. When they are ready, they will be shown on the screen. We will then show the votes. That takes a minute. In the meantime, if there are other questions on any other business, feel free. Here we are. I will just read out the percentages, Mr. Chairman.
For agenda item 3A, we have 92.76% in favor, 7.24% against. 3B, 99.81% in favor. 3D, 99.99% in favor. Agenda item 4A, 98.04% in favor. 4B, 98.06% in favor. Agenda item 5, 94.23% in favor. The remainder against. We can go to the next results. You have to go here. Agenda item 6, 91.43% in favor. Item 7, 98.17% in favor. 8A, 98.61% in favor. Item 8B, 98.81% in favor. Agenda item 9A, 99.93% in favor. We will go to the remaining items, 10, 11, and 12. 9B, 99.87% in favor. 10A, 98.66% in favor. 10B, 98.46% in favor. Item 11, 99.49% in favor. Item 12, 99.55% in favor. All voting items have received the required majority, Mr. Chairman. Back to you.
Thank you very much. That is great news. All proposals have been adopted with the required majority.
That brings us to the end of this AGM. Before we close, we have a small token for Annet coming from the back of the stage. Esther and Birgit are there. Corinne, congratulations to your reappointment and appointment. Corinne, congratulations on becoming Vice Chair. Big shoes to fill. Thank you. Thank you. I hereby close the 2025 AGM. If you kindly return your voting devices to the staff or registration desk when you leave, we would like to invite you for some refreshments in the lobby. We will be there and can have discussions on everything you did not cover during the meeting. Thank you very much. Have a great day. Thank you.