Over the course of 50 years we have grown to become a global company that develops innovative solutions for our customers, and manages the best interests of our investors, our employees, society and other stakeholders. Read on to discover what we achieved in 2018.
The demand for smaller, faster and cheaper semiconductor chips continues to rise, driven by advancements in cloud computing, artificial intelligence, smartphones and the Internet of Things.
Our technology is the first step towards making it all possible, as our R&D investment in new materials, new products and new processes means we can help our customers develop their technology roadmap, and further extend Moore’s Law.
In 2018, this led to the introduction of the Synergis ALD tool, which leverages the core technologies from our Pulsar and EmerALD ALD products for high productivity thermal ALD applications. The new Synergis tool allows us to address more ALD applications and therefore increases our served market. Together with our other products and services, this contributed to our strong financial results, which included:
We operate in a fast-paced industry that continues to reshape the world, and our innovative technology enables the semiconductor industry to achieve advancements in computing, communications, energy, transportation, medicine and beyond.
To ensure that we can continue to make a difference to our customers, employees, and company stakeholders, in 2018 we concentrated on the following three key elements of our strategy.
In addition to our fundamental R&D efforts, we continuously expand and deepen our strategic cooperation with key customers, suppliers, chemical manufacturers, and research institutes. This approach enables us to remain innovative and swiftly meet the changing demands of our customers.
We are a key player in the deposition equipment segments for ALD and epitaxy, and a focused niche player for PECVD and vertical furnaces. As a leader in the segment, ALD has turned into a key growth driver for our business, from which we support virtually all of the leading customers in the semiconductor industry. Our newest ALD tool, Synergis, is designed to address a wide range of existing and new ALD applications, effectively increasing the market we serve.
In addition to our internal optimization programs, we are working with our suppliers to improve fundamental quality through statistical methods and process controls. In addition to addressing the technology needs of our customers, we also focus on further increasing equipment throughput and equipment reliability, thereby lowering the cost per wafer of our wafer processing systems.
In 2018, we achieved revenue growth of 11% reaching a record high revenue of €818 million, with sales increasing mainly in the logic, DRAM and analog segments. By industry segment, our 2018 revenue stream was led by memory, closely followed by the logic and foundry segments.
While our ALD product lines continued to be our key sales driver in 2018, accounting for more than half of total equipment revenue, our other product lines also contributed strongly. In our epitaxy product line we increased sales, following the strong growth we achieved in 2017, and we saw additional sales increases in PECVD and vertical furnaces.
Our industry experienced continued growth in 2018, with worldwide semiconductor industry sales increasing by around 14%. This was driven by high memory prices and broad-based electronics demand for cloud services, mobile devices, automotive and industrial applications. These drivers helped the wafer fab equipment market grow by around 10% in 2018.
Our 2018 sales grew to record levels, reaching €818 million. ALD continued to be the key driver, although the other product lines also made a strong contribution.
We benefited from a further increase in wafer fab equipment spending following the very strong market growth in 2017. Our operating profit increased to €124.3 million from €113.2 million in 2017, while the operating profit margin remained stable.
New bookings increased by 22% in 2018 to €942 million, with equipment bookings for ASMI as a whole led by logic, followed by foundry and then memory. Total research and development (R&D) expenses, excluding impairment charges, decreased by 1% in 2018 compared to 2017, mainly as a result of higher capitalization of development expenses.
Our 2018 sales grew to record levels, reaching €818 million. ALD continued to be the key driver, although the other product lines also made a strong contribution.
We benefited from a further increase in wafer fab equipment spending following the very strong market growth in 2017. Our operating profit increased to €124.3 million from €113.2 million in 2017, while the operating profit margin remained stable.
New bookings increased by 22% in 2018 to €942 million, with equipment bookings for ASMI as a whole led by logic, followed by foundry and then memory. Total research and development (R&D) expenses, excluding impairment charges, decreased by 1% in 2018 compared to 2017, mainly as a result of higher capitalization of development expenses.
During 2018, we returned approximately €607 million to shareholders in the form of dividends, share buybacks and the capital return. This was up from €281 million in 2017 and €140 million in 2016.
Over the 2010-2018 period, we returned more than €1.6 billion to the financial markets through dividends, share buybacks, return of capital, and buyback of convertible bonds.
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In 2018, we paid a dividend of €0.80 per common share and we will propose to the forthcoming AGM to declare a dividend of €1.00 per share for 2019. The proposed 2019 dividend will mark the ninth consecutive year that we have paid a dividend.
This remuneration report is based on the remuneration policy of ASM International N.V. (ASMI), dated May 21, 2014. The remuneration policy was adopted by the 2014 Annual General Meeting of Shareholders.
The remuneration policy was reviewed by the Supervisory Board in 2014 and is applicable to members of the Management Board of ASMI. An analysis of different scenarios was included in this review.
The objective of the remuneration policy is twofold:
The remuneration structure includes four components:
The remuneration peer group currently consists of the following companies:
The amounts paid as base salaries to the members of the Management Board in 2018 were as follows:
C.D. del Prado | €668,725 | |
P.A.M. van Bommel | €426,243 |
Each year, a short-term incentive can be earned, based on the achievement of specific challenging targets. These targets are for 75% based on company financial targets, being sales, EBIT and free cash flow, and for 25% based on non-financial targets. These non-financial targets are derived from ASMI’s strategic and organizational priorities and include qualitative targets that are relevant to the responsibilities of the individual Management Board member.
The on-target bonus percentage for the CEO is 100% of base salary, with a maximum pay-out of 150% of base salary. The on-target bonus percentage for the other members of the Management Board is 75% of base salary, with a maximum pay-out of 125% of base salary.
For the year 2018 the Management Board partially met the financial targets and met the non-financial targets.
Based on the results in 2018, the following bonuses shall be paid:
C.D. del Prado | €510,681 | |
P.A.M. van Bommel | €257,450 |
The long-term incentive scheme for the members of the Management Board, which was approved in the 2014 Annual General Meeting of Shareholders, consists of stock options and performance shares.
The long-term incentive scheme has the following main features:
The mix between stock options and performance shares will be determined annually by the Supervisory Board, taking into account the objectives of the remuneration policy.
The Supervisory Board decided to grant the following value to:
C.D. del Prado:
Performance shares | €936,215 |
P.A.M. van Bommel:
Performance shares | €441,162 |
The grant date is April 25, 2019.
In 2018, the three year performance period of the performance shares granted to the members of the Management Board in April 2016 has been completed.
Based on the achievement of the performance criteria, the realization percentage is 64.3% This leads to the following vesting of the performance shares awarded.
Performance Shares awarded April 22, 2016 1 | Performance Shares vested April 22, 2019 | |||
C.D. del Prado | 12,056 | 7,752 | ||
P.A.M. van Bommel | 6,078 | 3,908 |
The pension contributions paid in 2018 were as follows:
C.D. del Prado | €119,450 | |
P.A.M. van Bommel | €88,848 |
As of 2015, the members of the Management Board no longer participate in the industry wide pension fund. They are offered participation in a defined contribution plan for their salary up to € 105,075 (2018). For their salary above €105,075, the members of the Management Board are compensated with an amount equal to the employer pension contribution. The members of the Management Board have the option to participate in a net pension plan offered by the company or to have the compensation paid out in cash.
The pension contributions vary from 7.2% to 28.4% of the pensionable salary depending on age. The members of the Management Board contribute 4.6% of the pensionable salary and ASMI pays the remaining part.
There are no arrangements regarding early retirement.
A number of other arrangements are offered to members of the Management Board, such as expense and representation allowance, disability insurance, accident insurance and a company car.
ASMI’s policy does not allow personal loans to members of the Management Board.
All members of the Management Board have a written contract of employment with ASMI or one of its related subsidiaries. The members of the Management Board have been appointed to the Management Board for a four year period:
For future new appointments to the Management Board, the term of the appointment will also be set at four years.
As is mentioned in the employment agreements of the members of the Management Board, in case of termination of the employment on behalf of the company, the members of the Management Board are eligible for a severance payment of maximum one year base salary.
The ratio of the CEO remuneration and the average remuneration of all other employees (the pay ratio) is calculated by dividing the remuneration of the CEO by the average remuneration of all employees. The remuneration of the CEO is the total of base salary, bonus and share based payments, as published in Note 25 to the consolidated financial statements of this report. The average remuneration of all employees is calculated by dividing the total personnel costs (wage and salaries and share based payments) as published in Note 23 to the consolidated financial statements minus the remuneration of the Management Board, by the total number of employees.
The 2017 CEO pay ratio is 25.
The 2018 CEO pay ratio is 27.
The remuneration of the members of the Supervisory Board is not dependent on our financial results. No member of the Supervisory Board personally maintains a business relationship with ASMI other than as a member of the Supervisory Board. The Nomination, Selection and Remuneration Committee (NSR) is responsible for reviewing and, if appropriate, recommending changes to the remuneration of the Supervisory Board. Any recommended changes to the remuneration of the members of the Supervisory Board must be submitted to the Annual General Meeting of Shareholders (AGM) for approval.
The remuneration of the Supervisory Board was approved by the shareholders in the 2018 AGM. The Supervisory Board's annual remuneration has been fixed as follows:
Year ended December 31, | ||
(Amount in euros) | 2018 | |
Base remuneration: | ||
Chairman of the Supervisory Board | 70,000 | |
Member of the Supervisory Board (other than the Chairman) | 50,000 | |
Additional remuneration: | ||
Chairman of the Audit Committee | 10,000 | |
Member of the Audit Committee (other than the Chairman) | 7,500 | |
Chairman of the Nomination, Selection and Remuneration Committee | 8,500 | |
Member of the Nomination, Selection and Remuneration Committee (other than the Chairman) | 6,000 |