Board activities and evaluation

Board activities

The Board is responsible for establishing the Group’s purpose, values and strategy and ensuring that these and Group culture are aligned. Accordingly, the Board works to a yearly meeting plan with corresponding agendas and pre-read papers, provided digitally. Agenda items include reports from the Chief Executive Officer, the Chief Financial Officer and each Board committee. Other updates throughout the year came from various businesses and key functions, including Investor Relations; Health and Safety, Security and Environment; Information Technology; Human Resources; and Legal, as well as the Company Secretary. The Board also considers and approves the quarterly, half-year and full-year financial results, shareholder distributions and the associated announcements, and, at most meetings, considers investment, divestment and/or financing proposals, as well as conducting post-investment reviews and performance tracking, as and when required. Additionally, the Board reviews the Group’s annual operating plan, including activities to ensure the Group’s carbon reduction targets are met. To enable purposeful debates and focus on particular aspects of agenda topics, including the impact on key stakeholders, Directors have an opportunity to specify information they require to be provided in advance of Board meetings.

During the year, where possible, certain Non-executive Directors conducted site visits. The visits were designed to provide Directors with a deeper insight into certain business operations.

More detail on these can be found in the table below.

Some of the activities and areas of Board focus over the year are summarised in the table below. The information below is not exhaustive. Information on other topics discussed by the Board and details of the resulting decisions are covered elsewhere, primarily in the Section 172 statement provided earlier in this report. In some cases, a brief outline has been provided below, and page references are provided for additional and more comprehensive information.

Board Strategy Days

In contrast to 2021’s virtual June Strategy Days, for 2022, in-person meetings were held in Singapore over the course of three days. This was the first time both the Board and Executive Committee were able to spend time together in person since the COVID-19 pandemic started in early 2020. The programme for the event aimed at having engaging and interactive sessions (with deep dives and break-outs), with both internal and external stakeholders (including staff, customer, supplier, regional country chairs and other key stakeholders).

The event, under the headline “Onwards Together”, focused on Shell’s role in energy transition in country and how this is implemented, by tying together not only individual pieces of the portfolio but connecting Shell’s heritage with its future. Around this theme, the event provided for the following key discussion and engagement opportunities:

• An in-depth discussion on strategy and business implementation, with an emphasis on the added value of Shell’s integrated portfolio in accelerating energy transition in country;
• Review of the role of Upstream in driving the energy transition;
• Review of the continuing demand for gas, and its decarbonisation journey;
• Review of Financial Framework;
• Review of safe operations and digitalisation as an enabler;
• Deep dives on low-carbon fuels, Aviation, Chemicals, Renewables and Energy Solutions, and carbon capture and storage;
• An Asian perspective on the energy transition and its geopolitical context, including engagement with Shell leaders from across the region;
• Review of growing our sustainable future safely and competitively where presenters included a cross-section of business and site staff;
• A visit to Shell operations, notably the Shell Energy and Chemicals Park on Pulau Bukom focusing on readying the site for growth;
• Engagements with a cross-section of Shell’s approximately 3,000 staff in Singapore who work across six work sites in a range of key businesses and functions;
• Consistent with the customer back strategy, discussions with key customers and stakeholders in the region; and
• Discussion of core elements of the Powering Progress strategy.

Use the interactive tool to filter our different topics by considered stakeholders

Board evaluation

Board Review Process

The 2022 Board evaluation looked to support the discussion on the way ahead as Shell faces its biggest challenge, managing the business through the energy transition.

As required by the Code every three years, the 2022 evaluation was conducted differently from that in 2021 and 2020. First, the evaluation was an externally facilitated self-evaluation by an external provider, Jan Hall of No 4, through one-on-one interviews with the Board and key individuals, as opposed to a questionnaire approach for 2020 and 2021. Second, the 2022 evaluation process guided a more strategic review of the Board and its operation to consider not merely how the Board might make improvements to an already well-functioning Board but also how to be the most effective Board it can be for Shell over the next 3-5 years. The evaluation was conducted according to the guidance in the Code. Jan Hall and No 4 have no connection or relationship to the Company or to any Director.

Selecting the facilitator

The tender process to select the individual/company that would facilitate the 2022 Board Evaluation was led by Euleen Goh, Deputy Chair and Senior Independent Director, supported by Caroline Omloo, Company Secretary. Euleen Goh presented a short list of providers to the Nomination and Succession Committee for discussion and selection of the provider.

Planning for the evaluation

The process started with briefing meetings where Jan Hall met the Chair, CEO, Deputy Chair/Senior Independent Director, Company Secretary and previous Company Secretary. These meetings helped Jan Hall understand the Board, how it operates, the strategic priorities for Shell and she then formulated a comprehensive brief for the evaluation process. Jan Hall then prepared a discussion guideline which formed the basis of her one-on-one meetings. The discussion guideline was sent to the individuals who participated in the Board evaluation ahead of her meetings with them.

Discussion and Observation (Stage 1)

In October and November 2022 detailed interviews were conducted with every Board member, the Company Secretary and prior Company Secretary, the External Audit partner, all members of the Executive Committee, the Committee Secretaries and the Chief Internal Auditor. All participants were interviewed by Jan Hall who facilitated an open, confidential, unattributed conversation with each person. She observed the Board and Committee meetings in October and a Committee meeting in December. In addition, she reviewed the materials presented to Directors ahead of these meetings.

Analysis (Stage 2)

A report synthesising and summarising feedback from all of the input, and making recommendations was prepared and shared with the Chair and CEO for comment.

Outcomes (Stage 3)

Draft conclusions were discussed with the Chair and subsequently discussed with the whole Board at a dedicated meeting held in January 2023, which was also attended by Jan Hall. This format provided a freer and unconstrained discussion. She highlighted key findings from the evaluation, facilitated discussion and answered any questions. Jan Hall separately discussed the report on the Chair’s performance with Euleen Goh, the Senior Independent Director. A separate discussion in relation to the performance of the Chair was led by Euleen Goh (in the absence of the Chair). Individual feedback was provided to each director by the Chair.

Overall the Board was found to be functioning well, with a high level of commitment from both the Non-executive and Executive Directors. Improvements identified were merely to fine-tune an already effective Board. There is a collegiate spirit and good personal relationships with a high degree of mutual respect, with people able to speak up and feel that they are listened to. The agenda has been broad ranging and the Committees have complemented the Board agenda to ensure that the Board has covered the areas viewed to be key.

At the time of the evaluation process, the Nomination and Succession Committee was undertaking a recruitment process for new Non-executive Directors in preparation of anticipated departures in 2023. Therefore, no changes were found to be necessary to the Board composition as a result of the evaluation.

Feedback on the themes from the Board discussion

The Board intends to continue to focus on being a well functioning Board, spending additional time on strategic matters and placing an even greater focus on Shell’s key stakeholders around the world. In line with this the Board will refresh its agendas to better support its priorities on strategy and utilise its time as effectively as possible. Further, the Board confirmed its continued support to help the CEO deliver Shell’s goals in the short, medium and long term, with specific focus on driving greater accountability throughout the organisation; evolving Shell’s culture to become more agile and to move at greater pace; building on his newly announced changes to the Executive Committee, to focus on developing the leadership across Shell and optimising people development and talent management.

Feedback themes for the Committees

The Committees were considered to be well chaired and well operated. It was agreed that the Board would undertake a more strategic review of the Committees’ agendas and remit to ensure alignment with the Board’s future priorities and longer term aspirations. In addition, there was wide recognition of the value of greater involvement of all Board members in matters of Board and Executive succession, as had been facilitated for the appointment of the new CEO and recent changes to the Executive Committee. It is therefore anticipated that this format will also be adopted going forward.

Chair evaluation

The Chair was considered to have the respect of his Board colleagues who all feel he had led the Board very well through a year of change, and is leading the Board to focus on the right areas and issues. His accessibility and support were highly valued and he was considered to bring a wealth of relevant knowledge which he is able to deploy in a strategic way in the context of the challenges Shell is facing.