Nomination and Succession Committee

Committee membership and attendance for 2023

Sir Andrew Mackenzie

Chair of the Committee

100% attendance

4 out of 4 possible meetings attended

Member since: October 1, 2020

Dick Boer

Committee member

100% attendance

4 out of 4 possible meetings attended

Member since: May 19, 2021

Ann Godbehere

Committee member

100% attendance

4 out of 4 possible meetings attended

Member since: October 27, 2021

Committee member	Member since	Meetings attended	% of meetings attended
Sir Andrew Mackenzie (Chair of the Committee)	October 1, 2020	4/4	100%
Dick Boer	May 19, 2021	4/4	100%
Ann Godbehere	October 27, 2021	4/4	100%
Euleen Goh	July 1, 2019 Retired May 23, 2023	2/2	100%

Purpose

The Nomination and Succession Committee (the "NOMCO") leads the process for appointments to the Board and Senior Management [A] positions, ensures plans are in place for orderly, well-planned succession, and oversees the development of a diverse succession pipeline of candidates. It also reviews the Company's policy, targets and strategy on diversity, equity and inclusion (DE&I), and monitors the effectiveness of these initiatives. It makes recommendations to the Board on corporate governance guidelines, as referred to in the Chair's introduction.

[A] In this section of the report, "Senior Management" refers to the Executive Committee and the Company Secretary, as defined by the UK Corporate Governance Code.

Talent management and succession

The NOMCO is fully engaged with the end-to-end talent management and senior succession planning approach that is deployed within Shell. It plays a key role in senior succession and resourcing. Retaining in-depth knowledge of the individuals within the talent pipeline is a NOMCO priority. The NOMCO makes time to personally meet and engage with numerous individuals within the pipeline. The NOMCO's oversight and input extend from recruitment to leadership identification and from leadership development to leadership appointment, all of which are underpinned by clearly articulated talent priorities and a commitment to advancing DE&I across Shell.

The NOMCO manages Board and supports Senior Management succession under a structured, proactive methodology. The processes have clear and agreed selection principles for short-, medium- and long-term succession and are aligned with Shell's strategic priorities.

For Non-executive Director succession, the NOMCO continues to follow its Principles for the Strategic Composition of the Board, adding factors as they evolve. These principles include both quantitative and qualitative principles, considering:

• the overall aspired Board composition and diversity of age; gender; race; ethnicity; educational, social, geographical and professional backgrounds; skills; knowledge; and experience that align with the Company's strategy including amongst other criteria consideration of the skills and strengths needed for the energy transition; and
• the values, attitudes, and behaviours expected of Directors.

During the year, the Principles for the Strategic Composition of the Board were reviewed and updated. The NOMCO also focused on the future needs for the Board's composition, including size and tenure, skills and experience, and the DE&I requirements of the UK Listing Rules, FTSE Women Leaders and the Parker Review. The current size of the Board was considered to be appropriate, also taking account of Committee memberships. Greater flexibility around Non-Executive tenure was also discussed. Although Shell does not publish its Principles for the Strategic Composition of the Board, it has published its updated Board and Senior Management Diversity Policy on the Company's website. This Policy highlights that Shell aims for a gender balance on the Board, with at least one senior Board position (Chair, CEO or CFO) held by a woman. In addition, Shell's target is to maintain the representation of both men and women at, or above, a minimum of 40%. We believe that this allows Shell to be truly representative of all genders and gender identities and provides flexibility during periods of change. Further, Shell aims to maintain or exceed having at least one Board member from an ethnic minority background.

For Senior Management succession, the selection principles include process-specific elements, such as a clear and proactive approach to identifying and developing succession candidates. The principles also outline the long-term structured nature of the succession planning process. There is also strong focus on ensuring that the principles reflect the leadership qualities required for future business success and that they advance the progress of diversity in all its forms.

Senior Management principles feature in the NOMCO's review of the succession plans which occurs in every Committee meeting. Using the principles, the NOMCO implements any changes through a well-defined and diligent process with overall Board engagement. The NOMCO agrees on candidate profiles and meets prospective candidates well ahead of any selection decision being necessary. It also engages the Board early in the process to ensure all Directors have an opportunity to meet and assess prospective candidates. Consequently, some of the leaders whom the NOMCO and Board engaged with extensively in the past became members of the Board (Wael Sawan and Sinead Gorman) or the Executive Committee (Philippa Bounds and Robin Mooldijk, and with Rachel Solway's appointment effective January 1, 2024, announced during the year).

During 2023, the NOMCO's annual in-depth look at the status and succession plans for Senior Management within Shell, along with the review of the talent pipeline in line with the business, was undertaken by the full Board. The Board reflected on the simplification of the senior leadership structure with clear accountabilities achieved in 2023 with a view to the further evolvement of the composition of the total workforce and of the organisation's culture as an enabler for performance.

Diversity of leadership

The NOMCO recognises that continuing to improve all types of diversity at each level of the Shell Group is crucial. Shell aims to be an inclusive workplace where everyone feels valued and respected and has a strong sense of belonging. The NOMCO's review of diversity objectives and strategies for the Shell Group as a whole also monitors the impact of diversity and inclusion initiatives.

In February 2021, Shell published its aspirations for diversity, equity and inclusion (DE&I) under the powering lives goal, with a focus on four areas of gender, race and ethnicity, LGBT+ and disability inclusion. When looking at our progress against our ambitions, women representation has steadily improved in recent years, with a two percentage point increase over the last year. Among experienced recruitment in 2023, Shell companies recruited 38% women, and among graduates 40%. Women representation in the top 1,200 roles ("Senior Leadership" positions) has strengthened by 2% during 2023 to 32%, and we continue to progress towards our aim of achieving 35% women senior leadership representation by 2025.

"Senior Leadership" is a Shell-specific measure and different from that which we are required to report under the Code, being female representation in Senior Management and their direct reports, where the percentage is 27%.

Nationality diversity, such as Asian and American talent, continues to be managed in accordance with the business outlook and we have a strong focus on progressing race and ethnic minority representation, beginning in the UK and the USA and followed by the Netherlands. The representation of people of colour among Shell's senior leaders in the USA has been actively tracked for many years. It stood at 26.9% at the end of 2023, compared with 17.3% in 2016. In the UK, race and ethnic minority representation among senior leaders was 18.3% [A].

[A] UK specific: the ethnicity declaration is voluntary, our ethnicity declaration rate is not 100% and all calculations are based on declaration rate of 76.6%. The 23.4% of our workforce who have not provided data or chosen not to declare their ethnicity were not included in our calculations.

In line with the recommendations from the 2023 Parker Review, Shell has reviewed its ambitions for ethnic minority representation at the senior management level and aims for 15% senior management positions [B] to be occupied by ethnic minority executives by December 2027.

[B] The 2023 Parker review defines Senior Management as the Executive Committee and the senior managers who report directly to them.

Although the NOMCO monitors Shell's organisational DE&I strategies and initiatives, it also holds itself accountable for the Board's own diversity and inclusion. Back in 2020, the Board's diverse composition met the Hampton Alexander requirements (now FTSE Women Leaders) and, in 2023, it met the Parker Reviews' objectives by reflecting 42% women representation with one ethnic minority director. Shell's Board diversity is aligned with the targets set by UK Listing Rules. The position of CFO is held by a woman and three Directors are from an ethnic minority group.

The People Strategy and diversity, equity and inclusion

Diversity continued to be a key area of focus during the year and is encompassed in the powering lives pillar of our Powering Progress strategy. The Board has developed and approved a new board DE&I policy further to a recommendation by the NOMCO. The policy is aligned to the requirements of the UK Corporate Governance Code and includes our targets for Board diversity, as well as complementing Shell's wider diversity policies and embracing Shell's values, code of conduct and sustainability goals. Currently, this policy is not applied to the individual Committees, although we strive to apply diverse representation across the Committees. DE&I across Committee membership remains an ongoing consideration. A copy of the DE&I policy is available on our website, shell.com/investors/environmental-social-and-governance/board-of-directors.

In relation to Board director appointments and diversity, the NOMCO oversees the development of a diverse pipeline for succession to the Board and monitors that all board appointments are subject to a formal, rigorous, and transparent procedure and that such appointments are based on merit and objective criteria taking into account (among other things) factors such as diversity of gender, age, educational and professional background, social, ethnic and geographical background and cognitive and personal strengths.

To this end, the NOMCO is responsible for engaging an independent executive search consultant, who assists in preparing shortlists of candidates, coordinating interviews and seeking references. In accordance with the Board DE&I policy, the NOMCO only engages with external search firms who are able to align with Shell's approach to DE&I in identifying suitable individuals from diverse pools of candidates.

Under the DE&I policy, the Board commits to:

• Ensuring an inclusive environment: Through inclusive behaviours and practices, we aim to create a board environment where every Board member feels valued, respected, and empowered to contribute fully;
• Ensuring support for External Best Practices: The Board endorses and supports external best practices, such as the FTSE Women Leaders Review, Parker Review, and others, to maintain and enhance diversity within the Board;
• Ensuring that Board appointments are managed with rigour and transparency: Candidates are evaluated based on merit, skills, experience, qualifications, performance, and business considerations, with due regard for diversity factors;
• Ensuring regular Board composition reviews: The Board regularly assesses the composition of the Board, including age, gender, race, ethnicity, educational, social, geographical, and professional backgrounds, skills, knowledge, and experience, making recommendations for necessary adjustments.

Shell has an inclusive Board environment, comprising individuals that are suitably qualified. They have the required skills, industry expertise, breadth of perspective and high-quality decision-making capabilities to support the strategy and overall direction of Shell.

From a gender perspective, the Board is comprised of five female directors and seven male directors, representing 42% female representation (2022: 55%, 2021: 50%). Two of the four main Board committees are chaired by a female director.

While the Board aspires to achieve gender parity, progress against diversity targets is sensitive to the size of the Board. In respect of other forms of diversity, three members of the Board self-identify as being from an ethnic minority background. In accordance with the Board's DE&I policy, the Board firmly believes that diversity fosters a broader range of perspectives, resulting in improved Board effectiveness, decision-making, and outcomes.

Committee activity

In addition to its considerations regarding succession (some of which were in the early part of 2023), the NOMCO made recommendations on corporate governance guidelines, monitored compliance with corporate governance requirements and made recommendations on corporate-governance-related disclosures. The NOMCO continues to monitor and review this area, considering whether and how current Company governance matters should be strengthened. Further insight on some of the NOMCO's areas of consideration in 2023 is provided below.