Elan Corporation

Last Amended: May 24, 2007

The following Amended and Restated Corporate Governance Guidelines (the “Guidelines”) have been adopted by the Board of Directors (the “Board”) of Elan Corporation, plc (the “Company”) to assist the Board in the exercise of its responsibilities. The Guidelines are in addition to, and are not intended to modify, any Irish law or regulation, or the Memorandum and Articles of Association of the Company. The Guidelines are subject to modification from time to time by the Board.

I.  MISSION OF THE BOARD

The Board is responsible for overseeing and guiding the management of the business of the Company. The Board’s responsibilities are active and not passive, and include the responsibility to regularly evaluate management policies and the effectiveness with which management implements its policies. 

II.  DIRECTOR RESPONSIBILITIES

Directors are expected to prepare for and participate in all Board meetings and meetings of committees on which they serve. The Board and each committee will meet as frequently as necessary to properly discharge their responsibilities. Directors are expected to review any materials provided in advance of each meeting.

III.  BOARD STRUCTURE

1.  Board Leadership

(a) Chairman and Chief Executive Officer

The Chairman of the Board (the “Chairman”) is responsible for the leadership and management of the Board. The Chief Executive Officer of the Company (the “Chief Executive Officer”) is responsible for the operation of the business of the Company.

(b) Lead Independent Director

The Chair of the Nominating and Governance Committee will serve as the “Lead Independent Director”.  The Lead Independent Director coordinates in a lead capacity the other independent directors and may perform, in particular and as appropriate, the following duties:

• Providing ongoing and direct feedback from the directors to the Chairman and the Chief Executive Officer;
• Participating in the preparation of agendas for Board meetings;
• Consulting with the Chairman as to an appropriate schedule of Board meetings and seeking to ensure that the independent directors can perform their duties responsibly while not interfering with the Company’s operations;
• Working with the Chairman to ensure the adequacy and timeliness of information that directors receive;
• Communicating the Board’s annual evaluation of the Chairman and the Chief Executive Officer;
• Consulting with the Chairman and the Chief Executive Officer on the designation of Board committees and Chairs;
• Recommending to the Chairman the retention of consultants who report directly to the Board; and
• Organizing and leading the periodic review of the Board’s governance procedures.         

In performing the duties described above, the Lead Independent Director is expected to consult with the Chairs of the appropriate Board committees and solicit their participation in order to avoid diluting the authority or responsibilities of such committee Chairs.

2. Board Composition and Membership

(a) Size of the Board

The Company’s Memorandum and Articles of Association provide that the number of directors will be no less than three and no more than fifteen.  The Board will assess its size from time to time.

(b) Independent Directors

One-half of the members of the Board will be independent by December 21, 2003, and two-thirds of the members of the Board will be independent from and after June 30, 2004.  

(c) Definition of Independence

After considering definitions of independence promulgated by various sources, the Company has decided to adopt a definition of independence based on the standard set by The New York Stock Exchange, the exchange on which most of the Company’s shares are traded.  Thus, the Board believes that, in order to be considered independent, directors must satisfy the independence requirements of The New York Stock Exchange as modified below.

A director will be considered independent only if the Board affirmatively determines that he or she has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a material relationship with the Company) or any consolidated subsidiary of the Company.  Furthermore, a director will not be considered independent if he or she:

(i) is, or has been, an executive of the Company or any of its consolidated subsidiaries or an employee of a present or former external auditor of the Company who has worked on the Company’s account;

(ii) is, or has been within the preceding five years, an employee of the Company or any of its consolidated subsidiaries;

(iii) is affiliated with or employed by, or whose immediate family member is, affiliated with or employed in a professional capacity by, a present or former internal or external auditor of the Company or any consolidated subsidiary of the Company, until three years after the end of the affiliation or the employment or auditing relationship;

(iv) receives, or has received within the preceding three years, or whose immediate family member receives, or has received within the preceding three years, more than $100,000 per year in direct compensation from the Company or any consolidated subsidiary of the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);

(v) is an executive officer or an employee, or whose immediate family member is an executive officer, of a company that makes payments to, or receives payments from, the Company or any consolidated subsidiary of the Company for property or services in an amount which, in any single year, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues, until three years after falling below such threshold;

(vi) is employed, or whose immediate family member is employed, as an executive officer of another company where any of the current executives of the Company or any of its consolidated subsidiaries serves on that company’s compensation committee, until three years after the end of such service or the employment relationship; or 

(vii) is an immediate family member of an individual who is, or has been within the preceding three years, an executive officer of the Company or its consolidated subsidiaries.

A “material relationship” can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others.

The Board will monitor its compliance with the New York Stock Exchange requirements for director independence on an ongoing basis.  Each independent director is expected to notify the Chairman and the Lead Independent Director as soon as reasonably practicable in the event that his or her personal circumstances change in a manner that may affect the Board’s evaluation of such director’s independence.

(d) Board Membership Criteria

The Nominating and Governance Committee will review with the Board, on an annual basis, the appropriate skills and characteristics required of Board members in the context of the current composition of the Board and in light of anticipated needs.  There are no firm prerequisites to qualify as a candidate for the Board, although the Board seeks a diverse group of candidates who possess the background, skills and expertise to make a significant contribution to the Board, the Company and its shareholders.

(e) Selection of New Directors

The Board has the right to fill casual vacancies and to select candidates for electoral recommendation.  The Nominating and Governance Committee is responsible for identifying and screening candidates in consultation with the Chairman and the Chief Executive Officer.

(f) Extending an Invitation to a Potential Director

The invitation to become a member of the Board should be extended by the Board itself via the Chairman, together with the Lead Independent Director as appropriate.

(g) Changes in Present Job Responsibility

The Board does not believe that directors who retire from or change the principal responsibility they held when they were selected for the Board should necessarily leave the Board. There should, however, be an opportunity for the Board, through the Nominating and Governance Committee, to review the continued appropriateness of Board membership under these circumstances and a director should be prepared to tender his or her resignation if requested by the Nominating and Governance Committee.

(h) Term Limits and Mandatory Retirement

The Board has not established any term limit to an individual’s membership on the Board or adopted a mandatory retirement age.  While such policies may help ensure that fresh ideas and viewpoints are available to the Board, the disadvantage of such policies is the potential loss of the contribution of directors whose knowledge of, and insight into, the Company and its operations has increased over a period of time.

As an alternative to term limits and mandatory retirement, the Nominating and Governance Committee will, in conjunction with the Chairman and the Chief Executive Officer, review each director’s continued service on the Board before such director’s third nomination to serve on the Board.  This approach also allows each director an appropriate opportunity to confirm his or her desire to continue as a member of the Board.  Such review will be in addition to the review conducted in connection with a director’s nomination to serve on the Board.

3.  Board Compensation and Evaluation

(a) Stock Ownership

Directors are encouraged to acquire and maintain equity stakes in the Company to strengthen the alignment of interests between the directors and the shareholders.

(b) Compensation of Directors

Management of the Company will report annually to the Nominating and Governance Committee regarding the status of the Board’s compensation in relation to peer companies.  Changes in Board compensation, if any, will be made on the recommendation of the Nominating and Governance Committee, after approval by the Board.

(c) Prohibition on Loans

Directors and officers of the Company may not receive, either directly or indirectly, a loan from the Company or any of its subsidiaries.

(d) Assessment of Board Performance

The Board will conduct a self-evaluation at least annually to determine whether it and its committees are functioning effectively.

4. Leadership Development

(a) Formal Evaluation of the Chairman and the Chief Executive Officer

On behalf of the Board, the Nominating and Governance Committee will conduct an annual evaluation of the Chairman and of the Chief Executive Officer, the results of which will be reviewed with the other independent directors.  The evaluation will be communicated to the Chairman and to the Chief Executive Officer by the Lead Independent Director.  The evaluation of the Chief Executive Officer will be based upon objective criteria, including the performance of the business, accomplishment of short-term and long-term objectives and the development of management.  Such criteria will be established at the beginning of each year by the Nominating and Governance Committee, with input from the Chairman and the Chief Executive Officer and the other independent directors.  The Leadership, Development and Compensation Committee will use the evaluation of the Chief Executive Officer in the course of its deliberations when reviewing and considering his compensation.

(b) Succession Planning

The Chairman will work with the Nominating and Governance Committee to develop policies and principles for Chief Executive Officer selection, as well as policies regarding succession in the event of an emergency or the retirement of the Chief Executive Officer.  The Chief Executive Officer will report annually to the Board regarding the development of senior management personnel and succession plans.  The Chief Executive Officer will work with the Nominating and Governance Committee to prepare, on a continuing basis, a short-term succession plan that delineates a temporary delegation of authority if some or all of the senior officers become unable to perform their duties.

(c) Director Development

The Nominating and Governance Committee will develop an appropriate orientation program for new directors as well as a program of ongoing education for all directors with an emphasis on enhancing their knowledge of corporate directors’ responsibilities and the businesses in which the Company is engaged.

5. Board Committees

(a) Number, Structure and Independence of Committees

There are three standing committees of the Board:  the Audit Committee, the Leadership, Development and Compensation Committee and the Nominating and Governance Committee.  The Audit Committee, the Leadership, Development and Compensation Committee and the Nominating and Governance Committee will consist solely of independent directors (as defined above).

(b) Assignment and Rotation of Committee Members

The Board, after consultation with the Chairman and the Chief Executive Officer, will appoint the members of the Nominating and Governance Committee.  The independent directors, after consultation with the Chairman and the Chief Executive Officer, will appoint the Chair of the Nominating and Governance Committee.  The Nominating and Governance Committee will recommend to the Board, after consultation by the Chair of the Nominating and Governance Committee with the Chairman and the Chief Executive Officer and consideration of the desires of individual Board members and appropriate skills and characteristics, directors to serve as members and chairs of the Board committees.  Subject to this Paragraph 5(b), the full Board will be responsible for appointing members and chairs of Board committees.  The Board will have the authority to remove any Committee member at any time without cause.

(c) Frequency and Length of Committee Meetings

The Chair of each committee will, in consultation with committee members, determine the frequency and length of the meetings of the committee.  The Audit Committee will meet at least quarterly.  The Nominating and Governance Committee and the Leadership, Development and Compensation Committee will meet at least once annually.

(d) Written Charters

Each standing committee will maintain a written charter approved by the Board, which will be reviewed at least annually by the respective committee and the Board.

IV. BOARD OPERATIONS

1. Board Meeting Proceedings

(a) Schedule of Meetings

The Chairman will consult with the Lead Independent Director as to an appropriate schedule of Board meetings, seeking to ensure that the independent directors can perform their duties responsibly while not interfering with the Company’s operations.

(b) Selection of Agenda Items

The Chairman, in coordination with the Lead Independent Director, will set the agenda for each Board meeting, taking into account input and suggestions from members of the Board.

(c) Distribution of Board Materials

Information that is important to the Board’s understanding of the business will be distributed in writing to the Board prior to each Board meeting.  Any presentation on specific subjects should be provided to Board members in advance so that time may be conserved at the Board meeting and discussion may be focused on questions that the Board may have about the material covered in the presentation.  The Lead Independent Director may request the inclusion of certain material in Board packages.

2. Sessions of Non-Management Directors

The non-management directors of the Board will meet without management at regularly scheduled executive sessions, and at such other times as they deem appropriate. The Board will also hold executive sessions at least twice a year at which only independent directors are present.  The Company has established a toll-free telephone number for interested parties to make their concerns known to the non-management directors.  If calling within the United States, the telephone number is 1-866-OUR-ELAN (1-866-687-3526).

3. Board and Independent Director Access to Top Management

The Lead Independent Director and all other Board members are free to contact, and will have complete access to, members of senior management, although they are encouraged to coordinate their contacts with the Chief Executive Officer.  Non-Board members may attend Board meetings with the concurrence of the Chairman and the Chief Executive Officer.

The senior executives of the Company are encouraged to initiate direct contact with the Lead Independent Director if they believe that there is a matter that should be brought to the attention of the Board.

4. Independent Advice

The Board or any committee of the Board (a “Committee”) will have the authority to retain legal counsel or other consultants to advise it.  The Board or any Committee may request any officer or employee of the Company or the Company’s outside counsel to attend any of its meetings or to meet with any of its members or consultants.  Generally, such independent advice should be sought with the knowledge of the Chief Executive Officer. The Lead Independent Director may recommend to the Chairman the retention of consultants who report directly to the Board.

5. Board Interaction with Institutional Investors, Research Analysts and Media

As a general rule, the Chief Executive Officer or his designee will speak on behalf of the Company.  If comments from the Board are appropriate, they should, in most circumstances, come from the Chairman.

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