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Fortune · 9 days ago

ASML's CEO is putting his paycheck on the line for employee morale. It could help retain talent that's nearly impossible to replace

Reported by Fortune. The analysis below is ours.

Black office chairs along a long meeting table, softly out of focus
Photo: Michael Fousert on Unsplash

73.5%

ASML's engagement index this year, down from 78% in 2025

ASML's annual employee survey, with more than 38,000 of roughly 44,000 employees taking part; the memo and results were first reported by Business Insider

The unusual part is not the pay link, it is the order of events: a score fell, the chief executive said why, and the fix was to put leaders' own money behind six questions about trust and safety. What nobody outside ASML can yet see is the weight or the start date, which is the difference between a signal and a slogan.

Why is ASML tying executive pay to employee satisfaction?

ASML, the Dutch maker of the chip-lithography machines the semiconductor industry depends on, ran its annual employee survey and found its engagement index had fallen from 78% in 2025 to 73.5% this year. More than 38,000 of its roughly 44,000 employees answered. Chief executive Christophe Fouquet told staff in a memo, first reported by Business Insider and picked up by Fortune, that the drop reflected a "disruptive and emotional year". His response was to build a new Workplace Experience Index from six of the survey's questions and write it into the long-term incentive plan for senior leaders, himself and the rest of the Board of Management included.

The memo, as reported, does not say how much weight the index will carry in executive pay or when it will first be applied. That matters. A measure that sits inside a pay plan at five per cent is a different thing from one that sits at thirty, and until the weight is published the honest description is a commitment to link pay, not yet a link.

What was the disruption behind the score?

In January, on the day it reported record results, ASML announced plans to cut about 1,700 positions, roughly 3.8% of its workforce, mostly management roles in technology and IT in the Netherlands and the United States. The company said the aim was to strip out bureaucracy and free engineers to focus on innovation. Dutch unions objected, and ASML later agreed a social plan with four of them, finalised in June, which rules out compulsory layoffs until 1 May 2027 and relies on redeployment inside the company.

Fouquet tied the slide in engagement to that upheaval. It is a familiar sequence: a restructuring that is sensible on a spreadsheet lands on people as uncertainty, and the next survey records it. What is less familiar is a chief executive naming the cause in writing and then attaching his own remuneration to repairing it.

What do the six questions measure?

According to the reporting, the index covers whether employees trust senior leadership to make the right decisions, whether they can share their opinions without fear of retaliation, whether they understand their role, whether their team operates effectively, and whether their direct manager cares about them. Notice what is on that list and what is not. It is about trust, safety to speak up, clarity and the manager relationship. It is not a general happiness score, and it does not ask about pay, perks or the canteen.

These are also the questions a leader can act on directly. A senior team cannot make an employee happy, but it can make decisions explainable, make dissent survivable and make sure every manager has the time and the permission to care.

Is linking pay to engagement a good idea?

It is uncommon but not unprecedented. Business Insider noted that IBM and Aviva have included engagement in executive pay targets before. Martijn Hendriks, a researcher at the Erasmus Happiness Economics Research Organization, told Fortune that in general there is no direct link between engagement and CEO compensation, and that ASML has more reason than most to care because its workforce is so specialised that replacing people is expensive.

There are real risks in the design, and none of them is proven here. A score that pays leaders can be pushed up by the wrong means: softer questions, a survey timed after a good quarter, or quiet pressure on teams to answer kindly. The defence is the one any measure needs, which is that people can see what is counted, who answered and whether the answers move when something real changes.

How can a manager tell whether their people trust the decisions being made?

You do not need a pay plan to ask the six questions of your own team. Watch for the signs that sit behind them:

  • Decisions announced without a reason, then explained in the corridor.
  • Questions at the end of a meeting that nobody asks, followed by messages that everybody sends.
  • People who understand their goal but not why it changed last month.
  • Disagreement that only appears after the meeting is over.

Questions managers ask

Does a falling engagement score always mean a restructuring went badly? No. ASML's own explanation is that the score reflects a period of significant change. A fall after upheaval is expected, and the useful question is whether it recovers once the uncertainty is resolved.

Should leaders be paid on how employees feel? The evidence in this story is thin on outcomes, because the policy is new. The case for it is that it makes leaders answerable for the part of culture that survey scores can capture. The case against is that any target invites gaming. Publishing the questions and the weight is what keeps it honest.

What can a team lead do this week? Pick one of the six questions, put it to the team in plain words, and act on one thing you hear. Doing it once is a gesture. Doing it every week is a habit.

What MeaningFuel does about it

Before it happensWhat the daily ritual works on, every working day
Trust and Courage every working morning, for the leader and the newest starter on the same two-minute question. Safety to speak up is the item on ASML's list that is built slowest and lost fastest, and a daily habit builds it in small pieces long before a restructuring tests it.
After it hasThe module prescribed to the team that has this
Book Trust in Leadership for the team that has just been through a reorganisation: ten short daily lessons over two working weeks, two ten-minute debriefs its lead runs, and check-ins after. It works on exactly what an engagement score drops on, which is whether people trust the decisions made above them.
What management seesThe reading that makes either one provable
Whether people are taking part and whether it is landing, by team, against the previous period of the same length. Insights reads engagement as a trend you can watch between annual surveys, so a fall like ASML's is visible in weeks and not at the next yearly count.

The offsite worked. That was never the problem.

Week six is the problem. The person who ran it has moved teams, the thing everyone agreed has quietly stopped happening, and nobody can name the day it stopped.

MeaningFuel keeps it going: one short insight each working day on the values you chose, and a two-week micro-training for any team that falls behind. You see which teams carry them, pooled, with nobody named.

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