The Northern Irishman had been holding protracted talks with chairman Michael Johnston over extending his stay after winning the League Cup in his first full season as manager.
After Kilmarnock's last game of the season against Dunfermline, Shiels revealed he had turned down an approach from an English side, believed to be Bournemouth.
Shiels was appointed successor to Mixu Paatelainen last summer after initially being caretaker boss.




