The Royal Dutch Shell plc Board’s Remuneration Committee approved a 2020 annual bonus scorecard that had a 20% weighting on Sustainable Development (safety and environment each weighted at 10%) based on Shell’s operating plan. This was based on recommendations from the Board’s Safety, Environment and Sustainability Committee. This scorecard was not communicated to participants as within a few weeks it became clear that the operating plan was no longer appropriate. In April 2020, the Board’s Remuneration Committee determined that there should be no 2020 annual bonuses.
Long-term incentive plan
In December 2018, Shell announced plans to link executive remuneration to short-term targets to reduce the Net Carbon Footprint of the energy products we sell, including our customers’ emissions from their use of our energy products.
Following discussions with major shareholders and based on recommendations from the Board's Safety, Environment and Sustainability Committee, the Board’s Remuneration Committee added an energy transition condition to the 2019 long-term incentive plan award. This condition included our first three-year target aligned with the trajectory of our long-term Net Carbon Footprint ambition at the time. It also featured other measures linked to our strategic ambitions, including the growth of Shell’s power business, the commercialisation of advanced biofuel technology, and the development of sinks to capture and store carbon (see Business strategy).
The energy transition condition was included again in the 2020 long-term incentive plan awards for Executive Directors and senior executives and was also incorporated into the performance share plan awards made to around 16,500 employees globally.
For 2021 share awards, the weighting of the energy transition condition has doubled, and for the long-term incentive plan it has been increased from 10% to 20%. The target range for the 2021-2023 long-term incentive plan grant is a 6-8% reduction in net carbon intensity against the 2016 baseline of 79 grams of CO2 equivalent per megajoule. The other targets linked to our strategic ambitions will also evolve, with the metric connected to commercialising advanced biofuel technology broadening to a measure of growing new cleaner energy product offerings. The targets for the leading energy transition measures are commercially sensitive and will be disclosed retrospectively.
Read more about executive remuneration in the 2020 Directors’ Remuneration Report in the Annual Report.