Directors' Remuneration for 2023

Notes to the table: Single figure of total remuneration for Executive Directors (audited)

Pension

During the year, Wael Sawan and Sinead Gorman were 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. The UK Shell Pension Plan or associated pension cash alternative is available to new Shell employees in the UK at the same contribution levels and currently around half of UK employees participate in these arrangements. The majority of the remainder participate in a legacy defined benefit plan, which closed to new members in March 2013.

Annual bonus

The annual bonus is intended to reward the delivery of short-term targets derived from the operating plan. The REMCO reviews the bonus measures, weightings and targets annually to evolve with Shell's strategy and circumstances, and to ensure that the targets remain stretching but realistic. For 2023, the mathematical bonus outcome was 1.58. The REMCO reviewed performance against the scorecard, as below.

Financial delivery (35% weighting): we delivered $54.2 billion of CFFO against our target of $44 billion, helped by a robust macro and operational performance as well as working capital inflows. This exceeded our outstanding performance threshold of $54 billion, leading to a maximum outcome on this measure. As a reminder, the REMCO has a long-standing policy of not adjusting remuneration measures to take account of changes in energy prices and currency fluctuations, which supports alignment between pay outcomes and the shareholder experience.

Operational excellence (35%): a key underpin of our performance, operational excellence ensures we deliver for our customers and drive financial performance:

• Asset management excellence: Upstream controllable availability was outstanding with excellent performance in Gulf of Mexico (GOM), Kashagan, Petroleum Development Oman (PDO) and Bonga. Midstream availability was below target. Chemicals and Refining availability was also below target as a result of challenges at Shell Polymers Monaca (USA) as well as the recovery after a fire in Deer Park (USA) earlier in the year.
• Project delivery excellence: project delivery was above target. Highlights for the year include the successful start-ups of Vito (USA) and Oman Gas (Block 10) Phase 1 in the first quarter, with Timi (Malaysia) coming on stream in the second half of the year. The year ended on a high note with Mero-2 (Brazil) coming on stream in late December.
• Customer excellence: Customer Satisfaction Index was above target. This was driven by continued improvements in our customer platform and coordinated efforts to proactively communicate with our customers and manage demand during supply chain challenges, as well as dynamic pricing changes. Our Brand Share Preference was also above target.

Overall the outcome for operational excellence was above target.

"Shell's journey in the energy transition" (15%):

• Selling lower-carbon products: performance is measured based on the proportion of earnings in the Marketing segment coming from lower-carbon energy products, as well as non-energy products (see table below for the list of products included in this metric). We are below target for a range of reasons including lower lubricants demand and higher costs for lower-carbon Mobility products.
• Reducing operational emissions: performance is assessed based on GHG abatement projects that result in ongoing Scope 1 and 2 GHG reductions such as flare reduction and energy efficiency projects, site closures, decommissioning and transformations, and increasing the use of renewable electricity in our operations. This metric does not include the impact of divestments and acquisitions. The 2023 outcome was outstanding, reflecting the cumulative effects of actions across the portfolio, which support our target to halve Scope 1 and 2 operational emissions by 2030 on a net basis (2016 baseline). This includes abatement projects, use of renewable energy, and permanent shutdowns or conversions ("right-sizing") of assets.
• Partnering to decarbonise: we are building an electric vehicle charging business to help decarbonise road transport. In 2023 we opened 60 new electric vehicle hubs in China, Belgium, the Netherlands, and Germany, including our biggest electric vehicle site in the world in China, together with our joint-venture partner BYD.

Overall the score on the "Shell's journey in the energy transition" measure was above target.

Safety (15%): it remains our priority to run our day-to-day operations safely and ensure the well-being of all our people.

• Process safety continues to be measured through the number of Tier 1 and 2 operational safety incidents and was above maximum, with 63 events recorded compared with 66 in 2022, setting a new record for Shell, confirming our top-tier performance in the industry.
• Personal safety SIF-F performance is assessed based on the number of serious incidents which might occur in Shell's businesses based on the work plan for the year and our knowledge of industry incident rates. Our ultimate goal is zero harm to people working for Shell. Overall, 2023 SIF-F performance was of a similar magnitude to 2022 (which was itself a marked improvement from prior years), which is testament to the ongoing focus of our employees in keeping colleagues safe.

Overall, the score on the safety measure was at maximum. While underlying safety performance was strong, we tragically lost contractor colleagues during 2023. The REMCO reflected carefully on these events and Shell's broader safety performance and determined that the bonus outcome should be adjusted downwards to 1.55 (see "The REMCO's reflections on safety" below).

The table below summarises the 2023 annual bonus scorecard measures including their weightings, targets and outcomes.

Accordingly, the REMCO decided the final bonus outcome should be 155% of target and 77.5% of maximum. This results in a bonus of £2,710,000 for Wael Sawan and £1,720,000 for Sinead Gorman.

Long-term Incentive Plan vesting: 2021 LTIP

In 2021, Ben van Beurden and Jessica Uhl, at the time Executive Directors, were granted conditional share awards under the LTIP. The vesting of these awards is discussed in the "Payments to past Directors" section.

Wael Sawan and Sinead Gorman's 2021 LTIP awards are also disclosed for transparency, although they were not Executive Directors at the time of the award.

In determining the vesting outcome, the REMCO considered Shell's performance over the three-year period January 1, 2021 to December 31, 2023:

• Relative CFFO: on a relative basis as compared against the 2020 base year, Shell ranked fifth, resulting in 0% vesting for this performance condition.
• Relative TSR: over the performance period, Shell returned around $58 billion to shareholders in the form of dividends and share buybacks, whilst TSR was 92%. Relative to the other energy majors, Shell's TSR ranked second, resulting in 150% vesting for this performance condition.
• Relative ROACE: Shell's absolute 2023 ROACE for LTIP purposes was 7.2% (note that ROACE for the LTIP calculation is based on disclosed net income and is not adjusted for the after-tax interest expense and therefore differs from ROACE as calculated for purposes other than remuneration). On a relative growth basis compared with the 2020 base year, Shell ranked fourth, resulting in 0% of vesting for this performance condition.
• Absolute FCF: strong performance in all three years resulted in total FCF of $122.8 billion, above our maximum threshold of $71 billion. This resulted in a 200% of target vesting outcome on this performance condition.
• Absolute energy transition: the outcome of this performance condition is determined holistically by the REMCO, taking account of Shell's performance against defined performance indicators and also Shell's wider performance as it transitions to a net-zero emissions energy business. Overall, the REMCO determined the vesting outcome as 120% of target. Commentary on energy transition performance is provided below.

Our carbon targets

In 2023 we continued our progress on our path to become a net-zero emissions energy business by 2050. At the end of 2023, we had reduced our Scope 1 and 2 emissions by 31%, and the NCI of our energy products by 6.3% from our 2016 baseline.

2021 LTIP energy transition performance condition: outcome

Outcomes for the energy transition performance condition are determined by the REMCO based on quantitative performance and a qualitative assessment focused on Shell's short-term NCI reduction target and those elements that we understood at the time would make the most impact on achieving our goals over the three-year performance period relating to NCI: the growth of our power business, the growth of lower-carbon products, and the development of systems to absorb, capture and store carbon. This approach to the LTIP is intended to support experimentation and learning as to what actions will help deliver net-zero emissions in a profitable way. Accordingly, the REMCO uses the performance indicators as guidance, rather than applying a formulaic vesting outcome, when making its decisions.

The REMCO considered the Company's share price at the time of the awards, and determined to reduce the 2021 LTIP awards by 11.8% and 8.0% from the usual target award levels for Ben van Beurden and Jessica Uhl, respectively. The REMCO was cognisant of possible windfall gains arising from share price volatility in 2020, and took decisive action upfront to reduce awards at the start of the cycle to moderate the potential impact on LTIP award values. Notwithstanding the REMCO's proactive approach at the time of award, following the conclusion of the performance period, the REMCO further reflected on the share price at award and on vesting, noting that share price appreciation accounted for 34% of the total value of Wael Sawan's LTIP at vest. Taking this and the reduction to the initial awards into account, the REMCO was satisfied that the potential for windfall gains had been appropriately addressed.

The REMCO decided that the LTIP outcome was consistent with the target opportunity and intended operation of the plan under the Policy and appropriate, and therefore no adjustment to the vesting outcome was required. Accordingly, the REMCO decided that the LTIP should vest at 94% of target (equivalent to 47% of maximum).

The overall LTIP vesting outcomes for Wael Sawan and Sinead Gorman, including an illustration of the impact of share price movements and accrued dividends, are set out below. Wael Sawan was an Executive Committee member during 2021, and therefore his vested 2021 award is subject to a further three-year holding period which extends beyond his tenure as Executive Director, in line with the policy for Executive Committee members (and Executive Directors). Sinead Gorman was a Senior Executive during 2021, and therefore her vested 2021 award is not subject to further holding, though the shareholding guideline policy is applicable.

Consideration of 2023 single figure outcomes

In determining the final single figure outcomes for 2023, the REMCO also considered the personal performance of the Executive Directors.

Personal performance

The Executive Directors have demonstrated strong leadership in 2023. CEO Wael Sawan has made changes early in his tenure to simplify the Executive Committee for greater alignment, focus and accountability, enabling faster and better decision-making. Together with CFO Sinead Gorman, he has brought organisational focus on performance, discipline and simplification, driving an approach of creating more value while reducing emissions.

Key successes are noted throughout this report, particularly on the 2023 annual bonus and on the 2021 LTIP vesting outcome, and additional comments are provided below.

The sector faces many challenges. Critical to a successful 2023 has been Wael's leadership of the organisation, setting out an agenda to deliver increased shareholder returns through a balanced energy transition, helping to provide the secure energy the world needs whilst making progress towards our net-zero emissions targets. Demonstrating this focus, Capital Markets Day (CMD) in June 2023 set out a plan to operationalise the Powering Progress strategy with a clear and concise set of targets presented to the market. The Energy Transition Strategy 2024 (ETS24), worked on extensively by the leadership team in 2023, is another example of clear focus and effective collaboration (see the Shell Energy Transition Strategy 2024 on shell.com). By the end of 2023, key achievements also included:

• Delivery of strong financial results with net income of $19.6 billion and Adjusted Earnings* of $28.3 billion, and CFFO of $54.2 billion against plan target of $44 billion, reflecting continuous high-grading of our upstream assets and the strength of our trading businesses;
• Delivery of $23 billion of shareholder distributions* in 2023, 2% above the 30-40% of CFFO promised at CMD 2023;
• Reduction of net debt* to $43.5 billion;
• Continued refining of the portfolio, agreeing to sell home energy businesses in the UK and Germany, as well as the Shell Pakistan business;
• Delivery of improved operational performance, including Pearl GTL reaching 97% availability in the second quarter of 2023, one of its highest to date; and new production coming on line at the Timi platform in Malaysia which is powered by wind and solar energy, and lighter than a conventional platform, reducing both costs and emissions;
• Continued delivery of a range of lower-carbon projects including our CrossWind joint venture designed to produce the equivalent of around 3% of Dutch electricity demand; the opening of Shell's largest global charging site for electric vehicles in Shenzhen, China; and producing biofuel from sugar cane waste at the new second-generation ethanol plant, the world's largest, in our joint venture Raízen in Brazil;
• Setting out a clear framework in CMD for a simplified set of financial and carbon targets for the coming three years and in doing so, building Shell's investment case through the energy transition. Over the period between CMD and December 31, 2023, total returns have been 13.4% (compared with 8.5% for a global oil and gas index);
• Preparing for ETS24, published on March 14, 2024;
• Continuing Shell's role in shaping the broader energy conversation through engagements at CERAWeek, ADIPEC, and Energy Intelligence Forum and Shell's publication of new Energy Security scenarios (Archipelagos and Sky 2050);
• Maintaining a strong tone of care and safety ethos; and
• Maintaining Group-wide top quartile 2023 people survey scores for employee engagement and team leadership, alongside improvements in other areas that are key to our success such as collaboration and learner mindset.

* Non-GAAP measure (see Non-GAAP measures reconciliations).

During 2023, Sinead Gorman assumed responsibilities for strategy and sustainability in addition to finance. Working closely with the CEO, Sinead Gorman has played a pivotal role in delivering a year characterised by strong financial results, improved financial resilience and capital discipline. She has steered the finance function's disciplined capital stewardship and effective management of Shell's financial framework, allowing Shell to meet its organisational objectives and commitments to shareholders. By the end of 2023, Sinead Gorman's key achievements included:

• Playing a critical role in coordinating and driving the review that led to CMD 2023;
• Leading the team preparing for ETS24, taking stock of our progress, seeing what we have learnt, and supporting the team and the Board to consider the strategic choices as we transform Shell;
• Bringing significant focus to lease management as well as working capital management;
• Expanding the Tax Contribution Report to disclose not only the corporate income tax we paid across 97 countries but also our total tax contribution in more than half of these; and
• Driving healthy challenge on capital expenditure, allowing tightening of the range from $23-27 billion to $23-25 billion earlier than expected and allowing Shell to make shareholder distributions at the higher end of our guided range.

The REMCO also considered a range of other factors in finalising its remuneration decisions for 2023, including:

• Shell's performance in 2023 and over the LTIP performance period 2021-2023, and the formulaic outcomes of the bonus and the LTIP performance conditions;
• The impact of fatalities on the formulaic scorecard outcome;
• Absolute and relative TSR performance over the period;
• A range of factors that take account of Shell's performance beyond the formulaic outcomes of the variable pay structures, including safety, reputation, ethics and compliance, and feedback from the Audit and Risk Committee and the Sustainability Committee;
• The external environment and wider stakeholder experience, including shareholders' expectations with regard to executive pay decision-making and the employee experience;
• The Executive Directors' remuneration compared with the variable pay outcomes for the general workforce;
• The alignment of the Executive Directors with the shareholder experience through their high shareholding requirements; and
• The Executive Directors' remuneration compared with historical outcomes.

After reflecting on the above factors, the REMCO was satisfied that the Policy had operated as intended, and that the single figure outcomes for the CEO and the CFO represented a fair level of remuneration.

2023 LTIP

Scheme interests awarded to Executive Directors in 2023 (audited)

In 2023, the Executive Directors were awarded conditional share awards under the LTIP as set out in the table below. In approving the awards, the REMCO considered Shell's historical share price, including the share price over the prior year, and noted that the share price at award was around 20% higher than in 2022, and higher than average historical levels. The REMCO determined that the risk of windfall gain was limited, and therefore no adjustment was made to the award size.

The performance conditions and weightings applying to LTIP awards made in 2023 were: relative cash generation (25% weighting), relative TSR (25%), absolute OFCF (25%), and energy transition (25%).

Relative performance conditions

The relative performance conditions are based on our performance on key financial and external measures against our closest comparators. For each measure, we rank point-to-point growth based on the data points at the end of the performance period compared with those at the beginning of the period.

Cash generation is defined as CFFO divided by average capital employed, and measures Shell's ability to generate the top-line cash flow to finance investment in our business and shareholder distributions.

TSR measures actual value created for shareholders (i.e. change in share price plus dividends), and as in prior years, is calculated in US dollars using a 90-day averaging period.

Vesting under each relative performance condition is assessed independently, with the vesting outcome ranging from 0% to 200% of the target award in respect of the measure, in accordance with the following vesting schedule:

• Ranking first equals 200% vesting;
• Ranking second equals 150% vesting;
• Ranking third equals 80% vesting; and
• Ranking fourth or fifth equals 0% vesting.

Outperforming Shell's closest competitors on key financial metrics is challenging. The REMCO is aware that vesting for median performance is generally set at a limit of 25% of maximum for other UK companies, but notes that this is typically applied against a larger comparator group. A vesting outcome of 80% for median performance (40% of maximum) in a small comparator group is considered appropriate by the REMCO.

Absolute measures

Organic free cash flow (OFCF)

The OFCF performance condition supports the delivery of our cash flow priorities, which are to service and reduce debt, pay dividends, buy back shares, and make future capital investments.

The performance targets for OFCF are set by reference to Shell's annual operating plans, based on the sum of plan OFCF targets over the three-year performance period, and updating the plan each year to reflect a changing price premise. The REMCO has a long-standing no-adjustments policy, and believes it is more appropriate to set the target based on the aggregation of the annual operating plans rather than setting a three-year target at the outset and making necessary adjustments at the end. OFCF targets are disclosed retrospectively and in aggregate, following the conclusion of the three-year period.

Under the OFCF performance condition, achievement of threshold performance will result in 40% of the target award (20% of maximum) in respect of the OFCF vesting, increasing to full vesting for achievement of outstanding performance. A straight-line vesting schedule will apply for performance between threshold and outstanding. In 2023, the performance condition moved from FCF to OFCF to place greater emphasis on the operational outcomes.

Energy transition

For the 2023 award, the energy transition performance condition is based on NCI reduction and the supporting strategic themes of reducing Scope 1 and 2 emissions; building a renewable power business; growing new low-carbon energy offerings; and developing emission sinks and offsets with the REMCO making a holistic assessment of progress when making the vesting decision. The key factors in the REMCO's decision will be disclosed at the end of the performance period (unless commercially sensitive).

Under CMD, a number of long-term performance indicators were retired, and therefore the REMCO's determination of the extent to which awards will vest will be based on:

• Shell's related climate targets of short-term NCI reduction target of 9-13% by 2025 and halving Scope 1 and 2 emissions under operational control by 2030 on a net basis (2016 baselines);
• A qualitative assessment of the strategic context and business environment for the strategic themes; and
• A quantitative assessment of delivery of the operating plans for those businesses with most responsibility for the strategic themes.

TSR underpin

If Shell's TSR ranking is fourth or fifth, the level of the 2023 award that can vest on the basis of the other measures will be capped at 50% of the maximum.

Performance update on FCF/OFCF

2022 LTIP award

At December 31, 2023, FCF* performance was above target, with a strong outcome of $46 billion for 2022 (target $18 billion), and $36.5 billion for 2023 (target $24 billion). As one year of FCF performance remains, and 80% of the award is subject to relative and energy transition performance conditions, this does not reflect the potential vesting of the award.

2023 LTIP award

At December 31, 2023, OFCF* performance was above target, based on $35.9 billion for 2023 (target $22 billion). As two years of OFCF performance remain, and 75% of the award is subject to relative and energy transition performance conditions, this does not reflect the potential vesting of the award.

* Non-GAAP measure (see Non-GAAP measures reconciliations). The most comparable GAAP financial measure for organic free cash flow is cash flow from operating activities of $54 billion for 2023.

Statement of Directors' shareholding and share interests (audited)

Shareholding guidelines

The REMCO believes that Executive Directors should align their interests with those of shareholders by holding shares in Shell plc.

Only unfettered shares count towards an Executive Director's shareholding. Shares delivered that are subject to holding requirements also count towards the guidelines. The CEO and the CFO have five years from their respective appointment to the Board to achieve their respective shareholding requirements.

There is a Company-sponsored nominee account for each employee which allows for restrictions to be applied on the sale or transfer of shares that are subject to holding periods. The restrictions remain in force beyond the Executive Director's employment.

Directors' share interests

The interests, in shares of the Company or calculated equivalents, of the Directors in office during 2023, including any interests of their connected persons, are set out in the table below.

The changes to Directors' shareholdings as at March 8, 2024 are as follows:

• Wael Sawan's share interest increased by 82,797 ordinary shares after the delivery of the 2023 annual bonus shares and the vesting of the 2021 LTIP award; and
• Sinead Gorman's share interest increased by 36,137 ordinary shares after the delivery of the 2023 annual bonus shares and the vesting of the 2021 LTIP award.

At March 8, 2024, the Directors and Senior Management (see section "The Board") of the Company beneficially owned, individually and in aggregate (including shares under option), less than 1% of Company shares. These shareholdings are not considered sufficient to affect the independence of the Directors.

Dilution

In any 10-year period, no more than 5% of the issued ordinary share capital of the Company may be issued or issuable under executive (discretionary) share plans adopted by the Company, or 10% when aggregated with awards under any other employee share plan operated by the Company. To date, no shareholder dilution has resulted from these plans, although it is permitted under the rules of the plans, subject to these limits.

Payments for loss of office (audited)

There were no payments for loss of office to Executive Directors in 2023.

Payments to past Directors (audited)

Ben van Beurden stepped down from the Board and his role as CEO on December 31, 2022, and continued working as a full-time adviser to the Board until June 30, 2023. See the 2022 Directors' Remuneration Report for details of his role during 2023. As disclosed in last year's report, Ben van Beurden did not receive an LTIP award in 2023. His remuneration in respect of 2023 is set out below:

• Base salary: £710,000.
• Pension: pension cash allowance of 20% of salary.
• Annual bonus: £1,210,000 (determined based on Shell's performance as at Q2 2023).
• LTIP: Ben van Beurden received an LTIP award of 231,679 ordinary shares in 2021 (worth around 265% of salary), which has been pro-rated. The pro-rated award vested at 94% of target based on performance to December 31, 2023. Therefore, 204,589 ordinary shares (including accrued dividends) vested on March 7, 2024, with a value at vesting of €5,988,311 (equivalent to £5,123,469). A three-year holding period applies, which remains in force after termination.
• Benefits: £270,681, including relocation-related costs (£200,051), car allowance (£14,945), and grossing costs (£51,031).
• Loss of office: £1,420,000, equivalent to one times base salary. This was paid in six equal monthly instalments between July 1, 2023 and December 31, 2023, which would have been subject to mitigation in the event that he resumed a paid position in that time.

Former CFO Jessica Uhl received an LTIP award of 69,972 ADS in 2021 (worth around 248% of salary), which has been pro-rated. The pro-rated award vested at 94% of target based on performance to December 31, 2023. Therefore, 37,069 ADS (including accrued dividends) vested on March 7, 2024, with a value at vesting of $2,369,792. A three-year holding period applies, which remains in force after termination.

Payments below £5,000 are not reported as they are considered de minimis.

TSR performance and CEO pay

Performance graph

The graph below compares the TSR performance of Shell plc over the past 10 financial years with that of the FTSE 100 Index. The Board regards this index as the most appropriate broad market equity index for comparison, following the move of Shell's headquarters to the UK. Data shown is for the performance of RDS B shares prior to the assimilation of Shell's shares into a single line of ordinary shares on January 29, 2022.

CEO pay outcomes

The table below the graphs sets out (i) the single figure of total remuneration, (ii) the annual bonus outcome, and (iii) the LTIP vesting outcome for the CEO for the past 10 years.

Percentage change in remuneration of the Directors and employees

The table below compares the remuneration of the Executive and Non-executive Directors of Shell plc with an employee comparator group consisting of local employees in the UK, the USA, and the Netherlands. The local employee population of these countries is considered to be a suitable employee comparator group because: these are countries with a significant Shell employee base; a large proportion of senior managers come from these countries; and the REMCO considers remuneration levels in these countries when setting base salaries for Executive Directors. For the purposes of comparison, the change in employee remuneration is calculated by reference to the change in salary scale, benefits and annual bonus for a notional employee in each of the base countries, not by reference to the actual change in pay for a group of employees.

Taxable benefits are those that align with the definition of taxable benefits applying in the respective country. In line with the "Single figure of total remuneration for Executive Directors" table, the annual bonus is included in the year in which it was earned (rather than paid).

Relative importance of spend on pay

The table below sets out distributions to shareholders by way of dividends and share buybacks, and remuneration paid to or receivable by employees for the last five years, together with annual percentage changes.

Spend on pay can be compared with the major costs associated with generating income by referring to the "Consolidated Statement of Income". Over the last five years, the average spend on pay was around 5% of the major costs of generating income. These costs are considered to be the sum of: purchases; production and manufacturing expenses; selling, distribution and administrative expenses; research and development; exploration; and depreciation, depletion and amortisation.

External appointments

Neither Wael Sawan nor Sinead Gorman held any external Non-executive Director positions during 2023.

Statement of voting at 2023 AGM

Shell's 2023 AGM was held on May 23, 2023. The result of the poll in respect of 2022 Annual Report on Remuneration was as follows:

The result of the poll in respect of the 2023 Directors' Remuneration Policy at the 2023 AGM was as follows:

Shell has chosen to use option A (as defined in UK reporting regulations) to calculate the CEO pay ratio in accordance with guidance from the UK government that this is the preferred approach and the most statistically accurate method for identifying the ratios. Under option A, a comparable single figure for all UK employees has been calculated in order to identify the employees whose pay and benefits are at the 25^th, 50^th (median) and 75^th percentiles for comparison with the CEO. Employee pay has been calculated based on the total pay and benefits paid in respect of 2023 for all employees who were employed on December 31, 2023. For part-time workers and joiners in the year, pay and benefits have been annualised based on the proportion of their working time in the UK during the year. This is calculated with an approach consistent with the methodology for determining annual bonuses. The REMCO believes that this provides a fair and reasonable calculation of the pay ratios for Shell employees in the UK.

The ratio of the CEO's pay to the median UK employee is 58. The global pay ratio, calculated by comparing the CEO's single figure with the average employee headcount cost, is 78. The ratio at median for 2023 is lower than for 2022, reflecting a lower aggregate variable pay outcome for the new CEO in 2023 as compared with the previous CEO in 2022, and specifically, reflecting that his LTIP was granted prior to his appointment to the CEO role. Overall, the pay ratios are lower than in 2018 (the first year of reporting), reflecting reductions in the CEO bonus and LTIP opportunities over time, as well as changes in variable pay outcomes. The REMCO believes the CEO pay ratio for 2023 is appropriate and consistent with Shell's philosophy of pay for performance.

Directors' employment arrangements and letters of appointment

Executive Directors are employed for an indefinite period. Non-executive Directors, including the Chair, have letters of appointment. Details of Executive Directors' employment arrangements can be found in the Policy.

Compensation of Directors and Senior Management

During the year ended December 31, 2023, Shell paid and/or accrued compensation totalling $57 million (2022: $53 million) to Directors and Senior Management for services in all capacities while serving as a Director or member of Senior Management, including $2 million (2022: $2 million) accrued to provide pension, retirement and similar benefits. The amounts stated are those recognised in Shell's income attributable to Shell plc shareholders on an IFRS basis. See Note 33 to the "Consolidated Financial Statements". Personal loans or guarantees were not provided to Directors or Senior Management.

Workforce engagement on remuneration matters

Workforce engagement

Our employees are fundamental to our success. Fostering a collaborative culture and reinforcing a learner mindset is central to delivering Powering Progress. The Board's view is that all Directors have a collective responsibility for workforce engagement, ensuring that employees' voices are heard on all business matters, including pay, and that the Company communicates effectively to employees on our remuneration policies and practices.

The Board and management regularly engage with the workforce through a range of formal and informal channels. These include webcasts and all-employee messages from our CEO and other senior leaders; town halls and team meetings; virtual coffee connects; interviews with senior management; internal social platforms; and focused engagements. During interactive sessions, employees have the opportunity to ask about any topic, including pay. The Board's preference is to build on existing, long-standing channels of engagement for discussions around remuneration. During the year, management engaged with the workforce on what the 2023 performance metrics meant for each of us, giving employees the opportunity to ask any questions on this topic.

We conduct annual employee surveys, which receive high levels of response (88% in 2023, an all-time high). The Board was pleased to note strong results for the 2023 Shell People Survey, maintaining the outcomes for 2022 in a number of engagement-related categories. These are very encouraging results and are testament to Shell's strength, maturity, and resilience.

Wider employee context

The REMCO receives annual updates on workforce remuneration topics, including employees' views on pay matters; CEO pay ratio; workforce reward philosophy and principles; alignment of Shell values and behaviours with remuneration practices; and general employee salary planning and variable pay outcomes, taking account of the cost of living environment and the impact of this on our colleagues. The REMCO is also periodically updated on wider employee matters such as the UK gender and ethnicity pay gap analyses. In this way, the REMCO is able to satisfy itself that reward across Shell is aligned to our strategy, culture, and long-term sustainable success.

Shell adheres to its fair pay principles in all remuneration-related matters. Pay in Shell is market-competitive, free from bias, and provides security to our employees. Shell sets clear performance expectations, gives employees the opportunity to share in Shell's success through a variety of variable pay schemes, and is transparent and clear in its communication of remuneration. For more information, visit the "Human Rights" section of shell.com.

How executive remuneration aligns with wider Company pay policy

Executive remuneration structures in Shell are strongly aligned with the structures for the broader workforce, as set out in the table below.