Introduction

This summary Directors' remuneration report outlines the Company's remuneration policy and approach as developed by the Remuneration Committee (the 'Committee'), and provides the annual remuneration of the Board in 2009.

Pound sterling denominated amounts are converted to US dollar amounts at the average exchange rate for the year ended December 31, 2009 of £1:$1.5647 (2008: £1:$1.8542) unless otherwise stated.

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Remuneration policy

The Committee considers that an effective remuneration policy, aligned to the Company's business needs, is important to the Company's success. It directly impacts the Company's ability to recruit, retain and motivate employees of the highest caliber who will be able to deliver sustained value to shareholders, even in the most challenging times.

In 2009 the Committee approved the Total Rewards Guiding Principles for reward programs for all employees, including Executive Directors, senior leadership, and the broader employee population. The guiding principles are:

Guiding Principle	Description
Simple and understandable	Each element of the package has a clear purpose Plan drivers are easily understood by participants Pay decisions are not mechanistic Plans are simple to implement Plans are transparent and easily communicated
Competitive	Plans are competitive with the external market Plans help to attract and retain talent
Strategically and culturally aligned	Incentive Plans support success, aligned with Shire's goals Plan designs support Shire Culture
Performance oriented	Differentiate based on performance Maintain link to overall Group performance
Valued by employees	Employee perceived value is aligned with cost to Company Plans drive shareholder value Plans minimize accounting cost and provide tax efficiencies where possible

In addition, the Committee reconfirmed the following compensation philosophy:

• pay should be targeted at the 50th percentile for median level performance. However, compensation plans should allow for the achievement of top quartile pay levels, if appropriate, to recognize the highest levels of performance;
• benchmarking should consider each individual component of pay (base salary, annual incentive, and long-term incentive targets). Additionally, market data for total cash and total direct compensation will also be part of the pay decision;
• percentage of pay at risk should consider the external market.

Further guidelines for Executive Directors and other members of senior leadership include:

• base pay and incentive targets are determined with reference to a blended US/UK market comparison group. Pay is targeted at or around the median relative to the comparison group and actual amounts may be higher or lower than the median based on performance;
• the Committee currently aims for variable compensation to represent over two-thirds of total remuneration; and
• executive Directors and senior leadership are encouraged to own shares in the Company in order to ensure the alignment of their interests with those of the Company's shareholders.

The Remuneration policy, through the Guiding Principles and compensation philosophy, is designed to balance the needs of the Company, the shareholders, and employees. It recognizes the importance for reward programs to link to Company strategy, with a focus on performance and achieving shareholder value, while also providing programs that are competitive, are valued by employees, and reward them for strong performance in the achievement of Company and individual goals.

The Committee was also mindful of achieving this balance in 2009, in light of the wider economic downturn. The Committee recognized this external environment in making decisions and was focused on ensuring that salary increases, plan payouts for bonuses and long-term incentives were closely aligned to Company performance and the creation of shareholder value.

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Service contracts

The Executive Directors' service contracts are based on a rolling term. The contracts contain obligations on the Executive Directors in respect of intellectual property, together with post-termination restrictions. The Committee's view is that the Company should retain the right to make a payment in lieu of notice to a Director. In the event of early termination, Executive Directors should be treated fairly but paid no more than is necessary. Moreover, there should be no element of reward for failure.

Mr Russell's contract, which is dated July 2, 2008, reflects his promotion to Chief Executive Officer in June, 2008 and incorporates contract provisions reflecting current best practice for Executive Directors' contracts. Effective January 1, 2010, Mr Russell's contract was amended to reflect his move to the US, including changes to benefits and pension arrangements noted above. Otherwise, all terms remained the same except for those required for the contract to be compliant with US law.

Mr Hetherington's contract is dated July 2, 2008. Mr Russell's and Mr Hetherington's contracts require them to give Shire 12 months notice. Shire is required to give Mr Russell and Mr Hetherington 12 months notice of termination, other than if termination is for cause.

The contracts contain phased payment provisions which would entitle Shire to terminate an Executive Director's employment and make a severance payment not as a lump sum but in monthly instalments over the length of the notice period. These provisions allow the payments to be reduced, or eliminated entirely, by income obtained by the director from a new post.

In the event of termination of employment within 12 months of a change in control, the amount payable to Mr Russell and Mr Hetherington is one year's salary and the cash equivalent of one years pension, car allowance and other contractual benefits. Any annual bonus payable is at the discretion of the Committee and is capped at the contractual maximum level.

The amount of annual bonus payable upon termination of employment in any other circumstances, other than for cause, is at the discretion of the Committee and is capped at the contractual target level.

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Non-Executive Directors and the Chairman

Each Non-Executive Director is paid a fee for serving as a Director and additional fees are paid for membership or chairmanship of the Audit, Compliance & Risk, Remuneration, Nomination and Science & Technology Committees. The Chairman of the Company receives an inclusive fee. Fees are determined by the Executive Directors and the Chairman, with the exception of the Chairman's fee which is determined by the Committee and confirmed by the Board. Fees are benchmarked against Chairman and Non-Executive Director fees of comparable companies. The fees paid to the Chairman and Non-Executive Directors are not performance-related. Details of fees paid to the Chairman and Non-Executive Directors in 2009 are set out in the table below.

The Non-Executive Directors are not eligible to join the Company's pension scheme. Non-Executive Directors do not participate in any of the Company share schemes or other employee benefit schemes and no options have been granted to Non-Executive Directors in their capacity as Non-Executive Directors of Shire plc.

Non-Executive Directors are appointed by the Board ordinarily for a term of two years. At the expiration of the two year term Non-Executive Directors are not required to be re-elected by shareholders (unless the expiration of the term coincides with a particular Non-Executive Director's turn to retire by rotation), but may be re-appointed by the Board. Non-Executive Directors who have served on the Board for nine years or more are appointed by the Board for one year terms and, in accordance with the Combined Code on Corporate Governance published by the UK Financial Reporting Council in June 2008, are subject to annual re-election by shareholders. Non-Executive Directors are not entitled to compensation for loss of office.

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Aggregate Directors' remuneration

The following table gives details of the aggregate remuneration paid to Executive Directors and Non-Executive Directors including the value of the exercise of options, Share Appreciation Rights ('SAR Awards') and vesting of Performance Share Awards ('PSA Awards'):

	2009 $'000	2008 $'000
Emoluments	5,508	6,609
Money purchase pension contributions	674	696
Sub-total of annual emoluments	6,182	7,305
Other income arising from release/exercise of long-term incentives(1)
Gains on exercise of share options and SAR Awards and release of PSA Awards	22,448	304
Gains on the release of long-term incentive plan awards	1,904	2,530
Total emoluments and other income arising from long-term incentives	30,534	10,139

1. Includes the value of shares that were released under long-term plans and gains realized in these years.

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Summary of Executive Directors' remuneration

The following table gives details of the remuneration received in 2009 by each Executive Director individually:

	Basic salary			Incentive(1)						Car allowance			Benefits in kind(2)			Total			Pension contributions
				Cash element			Restricted share element
	2009 £'000	2008 £'000		2009 £'000	2008 £'000		2009 £'000	2008 £'000		2009 £'000	2008 £'000		2009 £'000	2008 £'000		2009 £'000	2008 £'000		2009 £'000	2008 £'000
Angus Russell(3)(4)(5)	684	524		552	572		314	323		18	16		1	11		1,569	1,446		188	223
Graham Hetherington(6)(7)	416	200		267	139		183	77		12	6		2	1		880	423		243	51

1. Cash element includes any amounts paid into pension arrangements as supplemental pension contributions in return for an equivalent waiver in the cash element.
2. Benefits in kind are comprised of private medical insurance and tax return preparation.
3. Mr Russell received a long service award of £1,864.41 in 2009 which is included in his basic salary.
4. In 2008, Mr Russell contractually agreed with his employing company that supplemental pension contributions amounting to £75,000 be made into his pension arrangements in return for an equivalent waiver in the cash element of his EAIP award for the 2007 performance period.
5. Mr Russell received a basic salary of £414,170 p.a. as Chief Financial Officer pro-rated for the period January 2008 to June 2008 and a basic salary of £602,000 p.a. as Chief Executive Officer pro-rated for the period June 2008 to December 2008.
6. In 2009, Mr Hetherington contractually agreed with his employing company that supplemental pension contributions amounting to £139,000 be made into his pension arrangements in return for an equivalent waiver in the cash element of his EAIP award for the 2008 performance period.
7. Mr Hetherington was appointed Chief Financial Officer in July 2008 and received a basic salary of £400,000 p.a. pro-rated for the period until December 2008.

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Summary of Non-Executive Directors' fees⁽¹⁾

The following table gives the total fees received in 2009 by each Non-Executive Director.

	Fees
	2009 £'000	2008 £'000
Matthew Emmens(2)	355	158
Dr Barry Price	88	58
David Kappler	129	90
Patrick Langlois	97	70
Dr Jeffrey Leiden	113	65
Kate Nealon	102	75
David Mott(3)	77	63
Dr Michael Rosenblatt(4)	98	36
David Stout(5)	12	-

1. The Non-Executive Directors' fees include travel allowances paid for each transatlantic trip made on Board business.
2. Mr Emmens was appointed Chairman on June 18, 2008.
3. Mr Mott stepped down from the Board on October 30, 2009.
4. Dr Rosenblatt was appointed to the Board on April 24, 2008, and stepped down on December 23, 2009.
5. Mr Stout was appointed to the Board on October 31, 2009.

Three-year historical TSR performance. Change in value of a hypothetical £100 holding over three years		Five-year historical TSR performance. Change in value of a hypothetical £100 holding over five years

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