About us

We're proud to be one of the world's leading specialty biopharmaceutical companies, but we're even more proud of the difference we make to the lives of people with life-altering conditions.

Corporate Governance Statement

The Board is committed to high standards of corporate governance and supports the provisions and principles set out in the Combined Code.

Statement of compliance with the Combined Code

Throughout the year to December 31, 2008 the Company has, in the Directors’ opinion, complied with the provisions set out in Section 1 of the Combined Code.

The Board

The Board comprises the Chairman, two Executive and seven Non-Executive Directors and meets at least five times a year. The Non-Executive Directors bring judgment which is independent of management to Board deliberations. The Executive Directors have responsibility for day-to-day business operations.

The Board has overall responsibility for managing Shire and its strategic direction and seeks to provide effective leadership and the control required for a listed company. It discharges those responsibilities through regularly scheduled meetings and ad hoc meetings as may be required. The Board has formally reserved specific matters to itself for determination and approval which include strategic issues, budgeting, changes in share capital, approval of the Group’s financial statements and approval of material contracts. In addition, it reviews the Group’s internal controls and risk management policies and approves its Code of Ethics. It also monitors and evaluates the performance of the Group as a whole, through engaging with the Chief Executive Officer, Chief Financial Officer and members of the Leadership Team, as appropriate. Matters not formally reserved to the Board are delegated to the Leadership Team and to various other Board Committees whose functions are described below.

Board members receive detailed information from Executive Directors, the Company Secretary, members of the Leadership Team and other senior managers to enable them to discharge their responsibilities effectively. All Directors have access to the advice and guidance of the Company Secretary and are encouraged to seek independent advice at the Group’s expense, where they feel it is appropriate. The Board is of the opinion that each of its members has the knowledge, aptitude and experience to perform the functions required of a Director of a listed company.

Biographical details of the members of the Board are shown on pages 36 and 37 of the Annual Report.

Independence of Directors

The Board considers Dr Barry Price, Mr David Kappler, Mr Patrick Langlois, Dr Jeffrey Leiden, Ms Kate Nealon, Mr David Mott and Dr Michael Rosenblatt to be Independent Non-Executive Directors. The Board views each of these Non-Executive Directors to be independent of management, independent in judgment and character and free from any business or other relationship which could materially interfere with the exercise of their independent judgment.

The Board, when making its determination on the independence of Dr Price, gave particular consideration to the fact that Dr Price has been a serving member of the Board for 13 years, that the Combined Code suggests that length of service of nine years or more is relevant to a determination of independence and that re-appointment should be subject to rigorous review. The Board noted that there have been substantial changes to the Board membership in 2008, which included the retirement of Dr James Cavanaugh and Mr Robin Buchanan and the appointment of Mr Graham Hetherington and Dr Michael Rosenblatt. The Board concluded that in its opinion Dr Price remains independent in judgment and character, his commitment to the Group is undiminished and his performance continues to be effective. In accordance with the Combined Code, Dr Price’s reappointment to the Board is for a one year term.

Throughout 2008 and up to the date of publication of this report, at least half the Board, excluding the Chairman, comprised Non-Executive Directors determined by the Board to be independent.

Board and Committee changes

On June 18, 2008 Dr James Cavanaugh retired from the Board and was succeeded as Chairman by Mr Matthew Emmens who upon appointment was elected a member of the Nomination Committee. Mr Angus Russell succeeded Mr Matthew Emmens as Chief Executive Officer on June 18, 2008. Mr David Kappler became Deputy Chairman and Chairman of the Nomination Committee on June 18, 2008. Full disclosure of the process followed in relation to the appointments of Mr Emmens as Chairman, Mr Russell as CEO and Mr Kappler as Deputy Chairman and the reasons for such appointments were disclosed in Shire’s 2007 Annual Report and Accounts.

Dr Michael Rosenblatt joined the Board on April 24, 2008. On July 1, 2008 Mr Graham Hetherington was appointed Chief Financial Officer. Mr Robin Buchanan stepped down from the Board on July 29, 2008.

In September 2008 the Board established the Science & Technology Committee and elected Dr Jeffrey Leiden as Chairman and Dr Michael Rosenblatt and Dr Barry Price as members of the Committee.

Roles and Responsibilities of Chairman, Deputy Chairman and Chief Executive Officer

The offices of Chairman, Deputy Chairman and Chief Executive Officer are held separately. The Chairman is responsible for the conduct of the Board and ensures that Board discussions are conducted in such a way that all views are taken into account and so that no individual Director or small group of Directors dominates proceedings. The Deputy Chairman’s role is to provide support and guidance to the Chairman and to deputize for the Chairman as required. The Chief Executive Officer has the overall responsibility for running the business on a day-to-day basis and chairs the Leadership Team.

The roles and responsibilities of the Chairman, Deputy Chairman and the Chief Executive Officer are clearly defined, separate and have been approved by the Board. More details of these can be found on the Company’s website www.shire.com.

Senior Independent Director

Mr David Kappler is the Senior Independent Director and during the year has chaired meetings of the Non-Executive Directors without the Chairman and the Executive Directors being present. Mr Kappler is available, as required, for consultation with shareholders on any matter of concern.

The Chairman

Shire’s Chairman, Mr Emmens, recently informed the Shire Board that he had been approached about the possibility of becoming the CEO and Chairman of Vertex Pharmaceuticals Inc. The Shire Board then discussed this possibility at a Board meeting chaired by its Deputy Chairman and without Mr Emmens. The discussion included consideration of the impact of this new position on the discharge of Mr Emmens’ responsibilities at Shire and whether Mr Emmens would have the time to fulfil both roles. The Board noted that Vertex is a US drug discovery and development company and there are no core competing technologies, therapeutic areas or products. The Board noted that there had been discussions between Mr Kappler and the current Chairman of Vertex in which the latter had confirmed that the Vertex Board is fully aware of Mr Emmens’ significant commitment to Shire and the Vertex Board acknowledged that Mr Emmens would be able to spend the time required to fulfil his responsibilities to Shire. The Board of Shire agreed that Mr Emmens had been an outstanding Chairman of Shire since he assumed that role in June 2008. The Shire Board also noted that Mr Emmens communications with the Shire Board and Leadership Team, who are based in many locations in multiple countries, has been facilitated by Mr Emmens’ in-depth knowledge of the Shire business from his five-year tenure as CEO and his good working relationship with both members of the Board and the Leadership Team. The Board considered the practicalities of the situation including how it would operate if Mr Emmens were unable to participate in an urgent Shire matter due to a possible Vertex commitment. In this regard the Board noted that as Shire is tax resident in Ireland it is obligated to hold all its Board meetings outside the UK, and as such there will always be an element of travel time before it can hold an urgent ad hoc Board meeting. As Mr Emmens is US-based this should allow some time for Mr Emmens to reschedule other commitments. The Board also noted that if Mr Emmens is unable to participate in a Shire Board meeting the Company’s Articles specify that the Deputy Chairman shall act as the Chairman of any meeting at which the Chairman is unable to participate. The Board reaffirmed its view that Mr Emmens’ international experience of the specialty biopharmaceutical industry, his expertise in responding to a dynamic and rapidly changing pharmaceutical environment and his experience of M&A in the international specialty biopharmaceutical area are all key attributes for the Shire Chairman to have. The Board unanimously agreed to permit Mr Emmens to take up this new role at Vertex if it is offered to him. The Board further agreed that if Mr Emmens assumes this new position that the Shire Board would keep under regular review at each Board meeting how things are working. The Vertex Board announced on February 5, 2009 that it had appointed Mr Emmens as President of Vertex with immediate effect and as Chief Executive Officer and as Chairman with effect from May 2009.

Mr Emmens stepped down from his role as non-executive director of Incyte Pharmaceuticals at the same time. Mr Emmens now has no Board commitments other than Shire and Vertex and will not take up any other positions whilst he remains Chairman of Shire.

The attendance of Directors at meetings of the Board and Committees of which they are members was as follows:

(i) X/y where x is the number of meetings attended and y is the number of meetings that could be attended. For example 2/4 indicates two meetings attended out of a possible four.
(ii) Meetings attended prior to retirement or since appointment.

The Chairman and the Non-Executive Directors met five times during the year without the Executive Directors being present.

Supply of information

The Executive Directors and the Company Secretary are responsible for ensuring that detailed information is provided to Board members in advance of any scheduled or ad hoc Board meeting. Before decisions are made, consideration is given to the adequacy of information available to the Board and, if necessary, decisions are deferred if further information is required.

Appointment and re-election of Directors

The Board has authority to appoint any person to be a Director. Any Director so appointed must retire and submit himself for election at the next AGM.

Non-Executive Directors are appointed ordinarily for a term of two years, subject to shareholder approval. Non-Executive Directors who have served on the Board for nine years or more are appointed for one year terms and, in accordance with the Combined Code, are subject to annual re-election by shareholders. Re-appointment of Non-Executive Directors following the expiry of their term of appointment is subject to Board approval.

No Director serves for more than three years without being subject to re-election.

The terms of appointment of each of the Non-Executive Directors and the service contracts of the Executive Directors are made available for inspection at the Company’s AGM.

Board performance evaluation

The Company conducted evaluations of the performance of the Board, its Committees and its Directors in 2008. The 2008 evaluations were undertaken by way of a formal review chaired, respectively, by the Chairman of the Board and the Chair of each Board Committee. Mr Emmens met with each Board member to discuss their views on a broad range of topics relating to the operation and effectiveness of the Board. The output of those meetings was discussed with the Board in plenary session. The evaluation of the Remuneration Committee was facilitated by external consultants. Members of the Audit, Compliance & Risk Committee completed performance evaluation questionnaires before that Committee’s review meeting. The non-attributable aggregated responses from these questionnaires formed the basis of the review. The evaluation of the Nomination Committee was by way of discussion. All the reviews covered a wide range of matters including adequacy of the composition of the Board and its Committees, performance of Directors and the adequacy of information provided. The Board and its Committees noted that the improvement to operating procedures identified in the previous year had been implemented. Following discussions in 2008, further improvements were identified for implementation in 2009.

Committees of the Board

The Board has established the Audit, Compliance & Risk Committee, the Remuneration Committee, the Nomination Committee and the Science & Technology Committee. Each Committee has written terms of reference which have been approved by the Board. The Terms of Reference of the Committees are available on the Company’s website www.shire.com. Details of each Committee are set out below:

1. Audit, Compliance & Risk Committee
The Audit, Compliance & Risk Committee has been established for the purpose of overseeing the accounting and financial reporting processes of the Group, the audit of its financial statements and the effectiveness of the Group’s risk management and internal control framework. It meets at least five times a year. The members of the Committee are all Independent Non-Executive Directors. For further information about the Audit, Compliance & Risk Committee, its membership and activities for the year ended December 31, 2008, please refer to the Audit, Compliance & Risk Committee report on pages 50 and 51 of the Annual Report.

2. Remuneration Committee
The Remuneration Committee determines on behalf of the Board the remuneration policy for the Executive Directors and other senior executives and the fixing of the terms of employment of the Executive Directors. The remuneration of the Executive Directors and the Chairman is determined by the Remuneration Committee. The remuneration of the Non-Executive Directors is determined by the Chairman and the Executive Directors. The remuneration of the members of the Leadership Team, other than the Executive Directors, is determined by the Chief Executive Officer following discussion with the Remuneration Committee. The members of the Remuneration Committee are all Independent Non-Executive Directors.

The Remuneration Committee met on seven occasions in 2008. For further information about the Remuneration Committee, its membership and activities for the year ended December 31, 2008, please refer to the Directors’ remuneration report on pages 52 to 65 of the Annual Report.

3. Nomination Committee
The Nomination Committee is responsible for identifying and nominating, for the approval of the Board, candidates for the Board. The Nomination Committee also ensures adequate succession planning for the Board and senior management. The Nomination Committee met four times in 2008. Each Committee member attended all Committee meetings which he was eligible to attend in the year.

The Nomination Committee retains the services of executive search consultants to assist it in the discharge of its responsibilities, as it considers necessary.

For further information about the Nomination Committee, its membership and activities for the year ended December 31, 2008 please refer to the Nomination Committee report on page 43 of the Annual Report.

4. Science & Technology Committee
The Science & Technology Committee is responsible for periodically reviewing and advising the Board on the Company’s strategic direction and investment in research, development and technology. Since it was established in September 2008, the Committee met on one occasion.

Leadership Team

The Board has delegated the day-to-day management of the Company to the Leadership Team, which operates within clear and formal parameters. The Leadership Team reports to and seeks guidance from the Board on a regular basis and normally meets once a month to deliberate on major business issues. It also considers those matters that are of a size and significance as to require referral to the Board before such matters are referred to the Board for final consideration and decision.

During 2008 the Leadership Team met twelve times. Mr Matthew Emmens chaired the Leadership Team until Mr Angus Russell succeeded him as Chief Executive Officer on June 18, 2008. At December 31, 2008 the Leadership Team comprised Mr Angus Russell (Chief Executive Officer), Mr Graham Hetherington (Chief Financial Officer), Mr Mike Cola (President of Specialty Pharmaceuticals), Ms Sylvie Grégoire (President of Human Genetic Therapies), Ms Barbara Deptula (Chief Corporate Development Officer), Mrs Anita Graham (Chief Administrative Officer), Ms Tatjana May (General Counsel) and Mr Joseph Rus (Executive Vice President of Alliance Management & New Market Development).

Directors’ remuneration

The Group’s remuneration policy is described in the Directors’ remuneration report on pages 52 to 65 of the Annual Report. The report details the level of remuneration for Directors and the basis upon which executive remuneration is determined.

Relations with shareholders

The Group is committed to maintaining constructive relationships with shareholders.

The Group announces its financial results quarterly. The Chief Executive Officer and Chief Financial Officer give presentations on the results each quarter by teleconference for institutional investors, analysts and the media. As the Company has securities listed on NASDAQ in the US, the Company also files quarterly reports on Form 10-Q and an Annual Report on Form 10-K with the US Securities and Exchange Commission (‘SEC’).

The Chief Executive Officer and the Chief Financial Officer, supported by other senior executives, also arrange individual and group meetings with major shareholders throughout the year to discuss the Group’s strategy and performance and to understand the views of major shareholders, which are then communicated to the Board as a whole. The Chairman and the Senior Independent Non-Executive Director are available also to meet with major shareholders.

The Company’s website at www.shire.com provides information about the Group and its business and is regularly updated. The Group’s Investor Relations department acts as a contact point for investors throughout the year.

At the Company’s Annual General Meeting shareholders are given the opportunity to ask questions of the Directors. The Directors also make themselves available informally after the meeting to answer questions from shareholders.

Corporate Responsibility (CR)

The Group recognizes the impact that its business may have on patients, employees, the community in which it operates and the environment.

The Group therefore attaches great importance to social and environmental issues and to ethical business practices. Accordingly, ultimate responsibility for them is taken at the highest levels. The Board reviews the Group’s general approach to corporate responsibility. The Board also reviews the specific business risks related to corporate responsibility matters, as part of the overall risk management review process.

The Corporate Responsibility Committee, which is chaired by the General Counsel, meets at least three times a year and is responsible for setting the policies and procedures that manage corporate responsibility issues, risks and opportunities. Corporate responsibility risks are managed within the overall framework of risk management, explained below under the heading ‘internal control’.

Further information, including 2008 highlights, can be obtained from the Company’s Corporate Responsibility website.

Code of Ethics

The Group is committed to the maintenance of high ethical standards in its dealings with all persons with whom it is involved. The Group’s Code of Ethics applies to all Directors and employees and is available for review on the Company’s website.

Donations to political organisations and EU political expenditure

The Group made no donations to EU Political Organizations during 2008. In 2006 Shire set up a Political Action Committee (‘PAC’) in the United States. The PAC is registered with the Federal Election Committee and attracts voluntary donations from US citizen employees and certain US suppliers and vendors. The PAC is run by a committee of employees which determines the political campaigns or political candidates the PAC will support. Contributions are held by the PAC in a separate and segregated fund and Shire does not contribute financially to this fund.

Financial disclosure, internal control and the role of the auditors

The Board has, through the Audit, Compliance & Risk Committee (‘ACR Committee’), established formal and transparent arrangements for financial reporting, the review of the internal control environment including compliance issues and external auditing. The Committee’s terms of reference extend to the Group’s compliance and risk management activities as a whole and not just the financial aspects of internal control.

The ACR Committee has independent access to the Group’s internal and external auditors throughout the year in addition to presentations from both on a quarterly basis. Any significant findings or identified risks are closely examined and are reported to the Board with recommendations for action.

All employees can, via an independently managed Global Compliance Helpline, raise any concerns in any of these areas and any other area, anonymously if they wish, to the Chief Compliance and Risk Officer in the strictest confidence without fear of discrimination or reprisal. The Chief Compliance and Risk Officer reports regularly to the ACR Committee on any issues that may arise through the Helpline and other sources.

1. Financial reporting and disclosure
The Board, with the assistance of the ACR Committee, has ultimate responsibility for the preparation of accounts and for the monitoring of systems of internal control. The Board strives to present a balanced assessment of the Group’s financial position and prospects and it endevors to present all financial, scientific and other information so as to be comprehensible to investors. The Group publishes quarterly financial reports so that its shareholders can monitor the Group’s financial position regularly.

In addition the Group has established a Disclosure Committee, which is chaired by the Chief Financial Officer. Its membership includes executives and senior managers from the Specialty Pharmaceuticals and HGT businesses and from the legal, finance, compliance and risk functions. Its responsibilities include ensuring that all material information is disclosed to investors in the Group’s periodic financial reports and that such information is recorded, summarised and reported accurately.

Following the enactment of the Sarbanes-Oxley Act 2002 in the United States, the Chief Executive Officer and the Chief Financial Officer are required to complete formal certifications, which confirm, inter alia, that:
— the Annual Report on Form 10-K in the United States does not contain any material misstatements or omissions;
— financial information reported in Form 10-K fairly presents the financial condition, results of operations and cash flows of the Group;
— the Chief Executive Officer and the Chief Financial Officer are responsible for determining and maintaining disclosure controls and procedures for the purposes of financial reporting in the United States;
— the Chief Executive Officer and the Chief Financial Officer have evaluated the effectiveness of those disclosure controls and procedures;
— the Chief Executive Officer and the Chief Financial Officer have indicated in Form 10-K whether there were any significant changes in the Group’s internal control over financial reporting; and
— based on the evaluation of the Chief Executive Officer and the Chief Financial Officer, all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect adversely the Group’s ability to record, process and report financial information included in Form 10-K have been disclosed to the Group’s auditors.

The Chief Executive Officer and the Chief Financial Officer have completed these certifications and they have been filed with the SEC in the United States as part of the Group’s Annual Report as at December 31, 2008 on Form 10-K.

2. Risk management, compliance and internal control
The Board, in accordance with the Turnbull Guidance on internal control, recognizes its overall responsibility to maintain a sound system of internal control to safeguard shareholders’ investments and the Group’s assets and to regularly review its effectiveness. Whilst the Board acknowledges its responsibility for the system of internal control, such systems are designed to manage rather than eliminate all risk. Accordingly even the most effective system of internal control can provide only reasonable and not absolute assurance against material misstatement or loss.

In 2008, the Board reviewed both the key risks faced by the Group and the effectiveness of the Group’s internal control systems. Aside from these reviews, the Board delegates responsibility to the ACR Committee for more regular review of both key risks and internal controls and for monitoring the activities of the internal audit function. The ACR Committee has kept these areas under regular review during 2008.

The Group has risk management, compliance and internal audit functions. The Chief Compliance and Risk Officer and the Vice President of Internal Audit report to the Chief Executive Officer and Chief Financial Officer, respectively, but each has direct access to the Chairman of the Group, the Chairman of the ACR Committee and the other members of that Committee. They also both attend and regularly present at ACR Committee meetings.

The Group’s risk management, compliance and internal audit strategy is based on a risk and control framework containing the following key elements:
— an effective control environment;
— an effective process to identify, assess and manage risks;
— effective internal control procedures; and
— effective internal audit.

Effective control environment
The key elements of the Group’s control environment are as follows:
— the Board has overall responsibility to maintain the internal control system and has delegated certain responsibilities to the Leadership Team and/or the ACR Committee;
— a framework of Corporate Values and a Code of Ethics which sets appropriate standards of ethical behavior are operational throughout the Group;
— the internal structure of the organization is well documented with clear reporting lines and clear limits of authority for different matters;
— a range of corporate policies, procedures and training have been implemented;
— the internal audit department, overseen by the Vice President of Internal Audit, carries out regular reviews of internal controls and reports findings to management and the ACR Committee; and
— the ACR Committee considers the major findings of any internal investigations and management’s response to them. The ACR Committee reports annually to the Board on the effectiveness of the Group’s control environment.

Effective identification, assessment and management of risks
Management of business risk is essential for ensuring that the Group creates and preserves shareholder value. Accordingly, the Group has an ongoing process for identifying, evaluating and managing the significant risks that it faces. This process has been in operation throughout the period under review and up to the date of the signing of the accounts. Material risks are recorded twice a year on a corporate risk schedule which allocates specific mitigation or management responsibility to members of the senior staff of the Group. During 2008 this schedule was reviewed by the Risk Council which is comprised of a cross-functional group of senior executives chaired by the Chief Compliance and Risk Officer, the Leadership Team, and higher risk items reviewed with the ACR Committee and the full Board.

Effective internal control procedures
The Group has a system of internal control procedures. Compliance with these procedures is monitored through a system of internal review and regular reports received from the Vice President of Internal Audit and the Group’s external auditors. Any significant issues arising are reported to the ACR Committee.

Effective internal audit
The internal review of the Group’s control procedures and compliance thereof is mostly undertaken through internal audit. The ACR Committee monitors and reviews the internal audit program, considers the findings of internal audit reviews and management’s response to them, and ensures efficient co-ordination between the Group’s internal and external auditors. The Group’s internal audit function, comprising a mixture of internal and outsourced resource, was operational throughout 2008. The ACR Committee, which is responsible for monitoring the activity of the internal audit function, has reviewed the effectiveness of the internal audit function during 2008.

3. External auditing
The ACR Committee has the primary responsibility for making a recommendation on the appointment, re-appointment and removal of the external auditor as well as for determining the remuneration of and overseeing the work of any accounting firm engaged to conduct the external audit. The Committee assesses at least annually the objectivity and independence of the external auditor taking into account relevant regulatory requirements. The Committee reviews and approves the annual external audit plan each year and ensures it is consistent with the scope of the auditors’ engagement. In order to ensure that the independence and objectivity of the external auditor is maintained, the Committee applies a formal policy for the provision of non-audit services. Such services are categorized as follows:
— services for which the external auditors are explicitly excluded;
— services for which the external auditors can be engaged without prior referral to the Committee; and
— services for which pre-approval of the Committee is required.

The Committee also considers the fees paid to the external auditors and whether the fee levels for non-audit services, individually and in aggregate, relative to the audit fee are appropriate so as not to undermine their independence.

Management’s report on internal control over financial reporting
The Group’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13(a) to 15(f) or 15(d)–15(f) promulgated under the US Securities Exchange Act of 1934.

Because of inherent limitations of internal control over financial reporting, material misstatements due to error may not be prevented or detected on a timely basis. Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Group’s management assessed the effectiveness of the Group’s internal control over financial reporting for the purposes of the Company’s Annual Report on Form 10-K as at December 31, 2008, which was filed with the US Securities and Exchange Commission on February 27, 2009. In making this assessment, the Group’s management used the criteria set forth in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations (‘COSO’) of the Treadway Commission.

Based on its assessment, management believes that, as of December 31, 2008 the Group’s internal control over financial reporting is effective.

Deloitte LLP, the Group’s external auditor, an independent registered public accounting firm, has issued an audit report on the design and effectiveness of the Group’s internal control over its Form 10-K US GAAP financial reporting. The Auditor’s Report appears on page F-3 of the Group’s Annual Report on Form 10-K.

Changes in internal control over financial reporting
During the year ended December 31, 2008 there were no changes in Shire’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Shire’s internal control over financial reporting.

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