The following table shows the total share-based compensation expense (see below for types of share-based awards) included in the consolidated statements of income:


	2014	2013	2012
	$’M	$’M	$’M
	____________	____________	____________
Cost of product sales	8.5	4.4	6.3
Research and development	22.2	22.8	25.8
Selling, general and administrative	35.9	46.9	55.0
Reorganization costs	30.4	3.3	-
	____________	____________	____________
Total	97.0	77.4	87.1
Less tax	(23.8)	(18.1)	(23.8)
	____________	____________	____________
	73.2	59.3	63.3
	____________	____________	____________

There were no capitalized share-based compensation costs at December 31, 2014 and 2013.

At December 31, 2014, $83.1 million (2013: $97.0 million, 2012: $102.3 million) of total unrecognized compensation cost relating to non-vested awards is expected to be recognized over a period of 3 years.

At December 31, 2014, $71.2 million (2013: $90.3 million, 2012: $74.6 million) of total unrecognized compensation cost relating to non-vested in-the-money awards (based on the average share price during the year) is expected to be recognized over a weighted average period of 1.9 years (2013: 1.7 years, 2012: 1.7 years).

On May 2, 2013, the Company initiated the reorganization of its business to integrate the three divisions into a simplified One Shire organization (see Note 5 for details). As a result of this reorganization the Company modified the terms of certain of its equity awards to employees and directors impacted by the One Shire reorganization. Included in the stock compensation expense for the year to December 31, 2014, is $30.4 million (2013: $3.3 million, 2012: $nil) of incremental stock compensation costs related to the modification of awards granted to those individuals impacted by the One Shire reorganization.

The Company grants stock-settled share appreciation rights (“SARs”) and performance share awards over ordinary shares and ADSs to Executive Directors and employees under the Shire Portfolio Share Plan (Parts A and B). The SARs and PSAs granted under the Shire Portfolio Share Plan (Parts A & B) to Executive Directors are exercisable subject to performance and service criteria.

The principal terms and conditions of SARs and PSAs are as follows: (i) the contractual life of SARs is seven years, (ii) the vesting period of SARs and PSAs granted to employees below the level of Executive Vice President allows for graded vesting, and (iii) awards granted to Executive Directors contain performance conditions based on growth in adjusted return on invested capital (“Adjusted ROIC”) and Non-GAAP earnings before interest, taxation, depreciation and amortization (“Non-GAAP EBITDA”).

The Company also operates an Employee Share Purchase Plan and a Sharesave Scheme.

	Compensation type	Number of awards^*	Expiration period from date of issue	Vesting period
	____________	____________	____________	____________
Portfolio Share Plan - Part A	SARs	7,516,060	5 to 7 years	3 years cliff or graded vesting, subject to market or performance criteria for Executive Directors only
Sharesave Scheme	Stock options	108,479	6 months after vesting	3 or 5 years
Stock Purchase Plan	Stock options	120,977	On vesting date	1 to 5 years
Legacy Plans	Stock options	11,000	7 to 10 years	3 to 10 years, subject to market or performance criteria

		__________________
Stock-settled SARs and stock options		7,756,516
		__________________
Portfolio Share Plan - Part B	Performance share awards	2,166,181	3 years	3 years cliff or graded vesting, subject to market or performance criteria for Executive Directors only
		__________________
Performance share awards		2,166,181
		__________________

Stock-settled share appreciation rights granted under the Portfolio Share Plan – Part A are exercisable subject to performance and service criteria.

In respect of any award made to Executive Directors, performance criteria are based on Non-GAAP EBITDA and Adjusted ROIC targets. These performance measures provide increased alignment to the core activities and strategy of the Company.

Awards granted to employees below Executive Director level are not subject to performance conditions and are only subject to service conditions.

Once awards have vested, participants will have until the seventh anniversary of the date of grant to exercise their awards.

Options granted under the Sharesave Scheme are granted with an exercise price equal to 80% and 75% of the mid-market price on the day before invitations are issued to UK and Ireland employees, respectively. Employees may enter into three or five year savings contracts. No performance conditions apply.

Under the Stock Purchase Plan, options are granted with an exercise price equal to 85% of the fair market value of a share on the enrolment date (the first day of the offering period) or the exercise date (the last day of the offering period), whichever is the lower. Employees agree to save for a period up to 12 months. No performance conditions apply.

Options granted under this scheme were subject to certain performance criteria, which were based on the Company's share price or diluted EPS growth compared to a fixed growth rate. At December 31, 2014 all stock options outstanding under this scheme had met the required conditions and were exercisable.

A summary of the status of the Company's SARs and stock options as at December 31, 2014 and of the related transactions during the period then ended is presented below:

	Weighted average exercise price
Year to December 31, 2014	£	Number of	Intrinsic value
		shares^*	£’ M
	_______________	_______________	_______________
Outstanding as at beginning of period	18.88	15,029,182
Granted	35.38	1,762,767
Exercised	36.77	(7,393,055)
Forfeited	23.15	(1,642,378)
	_______________	_______________	________________
Outstanding as at end of period	33.27	7,756,516	93.5
	_______________	_______________	________________
Exercisable as at end of period	25.51	1,940,522	38.5
	_______________	_______________	________________

The weighted average grant date fair value of SARs and stock options granted in the year ended December 31, 2014 was £6.19 (2013: £3.37; 2012: £4.35).

SARs and stock options outstanding as at December 31, 2014 have the following characteristics:

Number of awards outstanding^*	Exercise prices	Weighted Average remaining contractual term (Years)	Weighted average exercise price of awards outstanding	Number of awards exercisable	Weighted average exercise price of awards exercisable
	£		£		£
________________	______________	__________	_______________	_____________	_____________

182,252	3.38-14.00	2.1	13.56	180,754	13.21
5,851,309	14.01-28.00	4.6	20.14	1,723,401	19.02
1,722,955	28.01-53.87	5.4	30.60	36,367	33.31
________________				_____________
7,756,516				1,940,522
________________				_____________

Performance share awards granted to Executive Directors under the Portfolio Share Plan – Part B are exercisable subject to certain market, performance and service criteria.

In respect of any award granted to Executive Directors, the performance criteria are based on Non-GAAP EBITDA and Adjusted ROIC targets.

Awards granted to employees below Executive Director level are not subject to performance conditions and are only subject to service conditions.

A summary of the status of the Company's performance share awards as at December 31, 2014 and of the related transactions during the period then ended is presented below:

Performance share awards	Number of shares^*	Aggregate intrinsic value £’M	Weighted average remaining life
	_______________	_______________	_______________
Outstanding as at beginning of period	2,701,299
Granted	1,260,282
Exercised	(1,324,169)
Forfeited	(471,231)
	_______________
Outstanding as at end of period	2,166,181	98.2	5.5
	_______________	_______________	________________
Exercisable as at end of period	-	N/A	N/A
	_______________	_______________	_______________

The weighted average grant date fair value of performance share awards granted in the year to December 31, 2014 is £35.11 (2013:£19.71; 2012: £21.56).

The total intrinsic values of share-based awards exercised for the years to December 31, 2014, 2013 and 2012 were $200.8 million, $298.3 million and $224.1 million, respectively. The total cash received from employees as a result of employee share option exercises for the period to December 31, 2014, 2013 and 2012 was approximately $17.4 million, $17.2 million and $16.2 million, respectively. In connection with these exercises, the tax benefit credited to additional paid-in capital for the years to December 31, 2014, 2013 and 2012 was $39.6 million, $11.9 million and $40.1 million respectively.

The Company will settle future employee share award exercises with either newly listed common shares or with shares held in the EBT. The number of shares to be purchased by the EBT during 2014 will be dependent on the number of employee share awards granted and exercised during the year and Shire plc's share price. At December 31, 2014 the EBT held 0.7 million ordinary shares and 0.3 million ADSs.

The Company estimates the fair value of its share-based awards using a Black-Scholes valuation model. Key input assumptions used to estimate the fair value of share–based awards include the grant price of the award, the expected stock-based award term, volatility of the Company's share price, the risk-free rate and the Company's dividend yield. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in estimating the fair values of Shire's stock-based awards. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company under guidance issued by the FASB on share-based payment transactions.

The fair value of share awards granted was estimated using the following assumptions:

Period ended December 31,	2014	2013	2012
	______________	______________	______________
Risk-free interest rate¹	0.3-1.8%	0.1-0.9%	0.2-1%
Expected dividend yield	0.2-0.4%	0.4-0.6%	0-0.6%
Expected life	1-4 years	1-4 years	1-4 years
Volatility	23-27%	23-26%	24-32%
Forfeiture rate	5-7%	5-9%	5-7%