Board evaluation

[A] Separate reports were provided for the responses from the Board and the Executive Committee. The reports in relation to the ARC, NOMCO, SUSCO and REMCO were sent to the respective committee chairs.

Board review process

For 2023, it was recommended that the NOMCO conduct an internally facilitated questionnaire-based Board and committee evaluation. This was because of several Board effectiveness initiatives under way and an in-depth Board dynamics exercise, to be conducted in 2024.

Board members responded to questionnaires shared at the end of 2023, with the results being discussed at the January 2024 Board and committee meetings. Separate questionnaires were produced for the evaluation of the Chair, and the Board committees. In addition, the Chair held separate one-to-one discussions with each of the Directors to assess their individual performance during the year. To broaden the inputs into the evaluation process, members of the EC participated in the evaluation process, also completing questionnaires relating to their attendance at Board meetings.

The Company Secretary produced a feedback summary providing recommendations to the Directors. This report was shared with the Chair and committee Chairs and subsequently all Board members.

Insight

The feedback from the Board Directors was positive throughout their responses to the evaluation. Views were provided on: composition and dynamics; skills, capabilities and competencies; support and challenge; atmosphere in the room; the support the Board and Board committees receive; strategic focus; risk management and oversight; stakeholder engagement; and any priorities for change.

Board dynamics

In 2024, the Board plans to undertake a Board dynamics review. The review will be structured to identify the current state of Board practices, focusing on what works well and any factors which could be improved to accelerate effectiveness. Our Chief Human Resources and Corporate Officer and the Company Secretary will lead the review. The approach will be structured to provide ongoing maintenance and improvement of Board dynamics with continued support and input from the Directors.

Management and focus of meetings

The output from the 2023 Board evaluation highlighted the need for the Board's collective continued focus on the implementation of ETS24, and the continued delivery of plans outlined at Capital Markets Day (CMD) in June 2023. The continued optimisation and integration of the work of both the Board and the ARC on risk-related matters were also noted as continued areas of focus for 2024.

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 to fine-tune an already effective Board. There are good personal relationships, amid a collegial spirit, with a high degree of mutual respect. Directors are able to share opinions and guidance and feel that they are heard. The agenda has been broad and the committees have complemented the Board agenda to ensure that the Board has covered the areas viewed to be key.

Feedback themes for the committees

The committees were considered to be well-chaired and well-operated and received excellent input from Senior Management. All committee reviews provided focus on the meeting management and effectiveness, oversight, and performance improvement. Each individual committee analysed topics specific to the forum. The committees also provided feedback on the implementation of recommendations from the 2022 evaluation process.

Chair evaluation

The Chair was considered to have built and maintained strong relationships with the CEO, CFO and the Non-executive Directors. He was also thought to be very good at drawing out individual views in the room and keen to listen to views from all Directors. References to his knowledge, accessibility and support were made and these are valued across the Board.

Delivery against the 2023 ambitions

Several Board effectiveness initiatives were implemented and undertaken in 2023. The Board continued to focus on being a well-functioning Board and spent additional time on strategic matters. It placed an even greater focus on Shell's key stakeholders around the world. In line with this, the Board refreshed its agendas. It also implemented an initiative to enhance the quality of Board pre-reading materials to better support its priorities on strategy and enable it to use its time as effectively as possible.

Leadership changes to both the composition and structure of the EC were implemented, which has simplified the organisation structure.

The Board undertook a more strategic review of the committees' agendas and remit to ensure alignment with the Board's priorities and longer-term aspirations. The composition and the terms of reference of each committee were updated as a result of this work with the Audit Committee being redesignated the Audit and Risk Committee, and the Safety, Environment and Sustainability Committee being redesignated the Sustainability Committee. In addition, the Board reviewed the general information provided to Directors during their onboarding and throughout the year to ensure that all Directors achieve sufficient knowledge and understanding of the organisation, while balancing this against the volume of the materials provided.

Further, the NOMCO reviewed its Principles for the Strategic Composition of the Board to ensure these continue to reflect the strategic and diversity requirements of the Board.