Consideration of wider employee views
The REMCO takes account of the pay and employment conditions of the broader workforce when setting the Policy for Executive Directors.
Whilst no specific employee groups were consulted as part of the 2023 Policy review, Shell promotes and maintains good relations with employee representative bodies as part of its employee engagement programme, and operates multiple forums through which employees can engage on various business matters, including pay.
When determining Executive Directors’ remuneration structure and outcomes, the REMCO reviews a set of information, including relevant reference points and trends, which includes internal data on employee remuneration (for example, employee relations matters in respect of remuneration, and average salary increases applying in the Netherlands, UK and the USA). During the Policy review, pay and employment conditions of the wider Shell employee population were taken into account by adhering to the same performance, rewards and benefits philosophy for the Executive Directors, as well as overall benchmarking principles. Furthermore, any potential differences from other employees (see “Differences in Remuneration Policy for Executive Directors from that for other employees”) were taken into account when providing the REMCO with advice in the formation of the Policy.
The REMCO is kept informed by the CEO, the Chief Human Resources & Corporate Officer, and the Executive Vice President Performance and Reward on the bonus scorecard and any relevant remuneration matters extending below the Board and Executive Committee.
See the “Workforce engagement on remuneration matters” section in the Annual Report on Remuneration for more information on how Shell considers and engages with the broader workforce on remuneration matters.
Consideration of shareholder views
The REMCO engages with major shareholders regularly throughout the year. Such engagement allows the REMCO to hear shareholders’ views on Shell’s approach to executive remuneration, and test proposals when developing or evolving the Policy. In recent years, the REMCO has responded to shareholder views, including the approach to energy transition metrics in the LTIP, the quantum of executive pay and the broader use of discretion to manage remuneration outcomes. In developing the proposed Policy, the REMCO again consulted with shareholders and received a diverse range of views that have helped to determine which proposals to refine and which to discard. For example, as a result of shareholder feedback in the fourth quarter of 2022, the REMCO determined not to proceed with seeking support for recruitment provision that would permit an extended notice period on hiring. Shareholders have been helpful in emphasising the need for balanced metrics in the LTIP to help avoid unintended consequences as Shell progresses through the energy transition. In 2022, the continued interest in the energy transition LTIP measure directly influenced increased transparency in Shell’s reporting on the progress of its energy transition journey.
It was clear to the REMCO that, whilst there were inevitably contrasting views around the different aspects of the Policy, shareholders are supportive of Shell’s overall approach to remuneration and the REMCO’s careful deliberations in decision-making. The REMCO will continue to review the Policy regularly to ensure it continues to reinforce Shell’s long-term strategy and closely aligns with shareholders’ interests.
Additional Policy statement
The REMCO reserves the right to make payments outside of the Policy in limited, exceptional circumstances, such as for regulatory, tax or administrative purposes, or to take account of a change in legislation or exchange controls, and only where the REMCO considers such payments are necessary to give effect to the intent of the Policy.
Signed on behalf of the Board
/s/ Caroline J. M. Omloo
Caroline J.M. Omloo
March 8, 2023