Statement of planned implementation of Policy in 2023

A summary of how the proposed Policy will be applied to Directors’ remuneration for 2023 is set out below.

Executive Directors

Comparator group

The current benchmarking comparator group consists of the other oil majors (BP, Chevron, ExxonMobil, and TotalEnergies) and a selection of major Europe-based companies. The other oil majors are included in the comparator group as these represent our closest direct competitors operating in similar market conditions. The Europe-based companies are selected based on their size, complexity and global reach. For 2023, the REMCO has decided to replace BHP with Glencore. BHP delisted from the LSE and was therefore no longer considered a European company for the purpose of the peer group, and Glencore was selected as a replacement given its similarity to Shell in terms of size, sector and complexity (see table below). The REMCO retains the right to alter the comparator group as it sees fit in order to ensure it remains an appropriate and relevant benchmark.

The REMCO uses benchmark data from these companies only as a guide to the competitiveness of the remuneration packages. The REMCO does not seek to position our remuneration at any defined point against the comparator data.

Salaries

Wael Sawan was appointed as CEO on January 1, 2023 on a salary of £1,400,000. No increases are anticipated during 2023.

Effective January 1, 2023, Sinead Gorman received an increase of 2.8% and her salary for 2023 is £925,000.

In reviewing the CFO’s salary, the REMCO carefully considered the external environment, and the increases provided to the general workforce in the key markets of the UK, the USA, and the Netherlands (average 5.8%). The CFO’s increase for 2023 was positioned below this level and the REMCO recognised the “multiplier effect on total remuneration”.

The REMCO also paid close attention to the benchmarking analysis from the defined comparator groups. No specific benchmark position is defined, but the REMCO was satisfied that the positioning was appropriate against the benchmark groups following the increases.

Annual bonus

The REMCO reviewed the structure of the annual bonus scorecard as part of its comprehensive review of the Policy. The REMCO considered that the scorecard remained well-aligned with our strategic and operational priorities, and no changes are proposed for 2023.

The performance measures, weightings and link to strategy for the 2023 performance year are set out below. They remain unchanged from 2022.

See “Directors’ Remuneration for 2022” for further details of the performance measures.

Scorecard targets will be disclosed in the subsequent Directors’ Remuneration Report when they are no longer deemed to be commercially sensitive.

Long-term Incentive Plan

On February 3, 2023, a conditional award of performance shares under the LTIP was made to the Executive Directors resulting in 173,985 Shell plc shares being conditionally awarded to Wael Sawan and 103,458 to Sinead Gorman. The award had a face value of 300% (maximum performance outcome 600%) of the base salary for the CEO and 270% (maximum performance outcome 540%) of the base salary for the CFO, excluding potential share price appreciation and dividends.

Performance is measured over the three-year period January 1, 2023 to December 31, 2025. The performance measures, weightings and link to strategy for the 2023 award are set out below.

Further details of the energy transition performance condition are set out below.

As the 2023 LTIP awards to Executive Directors were granted prior to the shareholder vote on the proposed Policy, the TSR underpin will apply in the usual way: if Shell’s TSR ranking is fourth or fifth, the level of the award that can vest on the basis of the other measures will be capped at 50% of the maximum.

Discretion, malus and clawback

Variable-pay elements are subject to adjustment (malus) and recovery (clawback) provisions. The REMCO may adjust an award, for example by lapsing part or all of it, reducing the number of shares which would otherwise vest, by imposing additional conditions on it, or imposing a new holding period or applying clawback.

Please refer to the proposed Policy for a full description of the circumstances under which discretion, malus and clawback might be applied to a variable pay award.

Service contracts

Please refer to “Other regulatory and statutory information” in relation to the notice periods of Executive Director service contracts.

Pension

Wael Sawan and Sinead Gorman are eligible to participate in the defined contribution UK Shell Pension Plan with an employer contribution rate of up to 20% of salary, or take this as a pension cash alternative. They have chosen the latter. The UK Shell Pension Plan or associated pension cash alternative is available to new Shell employees in the UK at the same contribution levels.

Further details of Executive Director pension arrangements can be found in the section “Directors’ Remuneration for 2022”.

Benefits

In consideration of his appointment as CEO in 2023, Wael Sawan received support for his family’s relocation to the UK in line with the provisions of Shell’s International Mobility policies. In addition, in relation to their relocation to the UK, Wael Sawan and Sinead Gorman will continue to receive housing allowances until the end of 2023.

Executive Directors are provided with a chauffeured car for business travel, including home-to-office commuting. Other benefits, such as medical and other risk benefits are in line with those provided to the general workforce.

Non-executive Directors’ fees

The Company Chair fee is determined by the REMCO, and for 2023 is unchanged from the previous level of £785,000. The Chair of the Board does not receive any additional fee for chairing the Nomination and Succession Committee or attending any other Board Committee meeting.

The Non-executive Directors receive a basic fee. There are additional fees for the Senior Independent Director, a Board Committee chair or a Board Committee member, and for most Board meetings involving intercontinental travel. Business expenses (including transport between home and office and occasional business-required partner travel) and associated tax are paid or reimbursed by Shell.

The Board reviews Non-executive Directors’ fees periodically to ensure that they are aligned with those of other major listed companies. During these reviews the Board uses the largest 30 companies by market capitalisation listed on the FTSE and the European comparator group as its primary points of reference. The last general review was in 2022. Fees will remain unchanged for 2023.