In connection with an audit of the 2008 and 2009 U.S. federal income tax returns of our U.S. consolidated group, the U.S. Internal  Revenue Service has proposed that certain transfer pricing positions taken by the Company be adjusted, which could result in addi- tional federal income tax of approximately $11 million plus interest for this two year audit period. We believe that these transactions  are valid as originally recorded, and we are appealing this proposed adjustment. It is our belief that we will prevail on this issue;  consequently, we have made no additional income tax accrual for this proposed adjustment. In connection with our initial public offering in September 1995, our shareholders authorized our Management Board to repurchase  up to 10% of our issued share capital, the maximum allowed under Dutch law at the time, for a period of 18 months. This authoriza- tion was renewed at subsequent annual or special shareholder meetings. At our annual shareholders’ meeting on May 16, 2013, our  shareholders authorized an extension to repurchase up to 10% of our issued share capital through November 19, 2014 which may  be used for any legal purpose. The repurchase of shares in the open market is at the discretion of management pursuant to this share- holder authorization. From the activation of the share repurchase program on October 29, 2002 through December 31, 2013, we have  repurchased 36,186,389 shares for an aggregate purchase price of approximately $1.2 billion, or an average price of $32.91 per share  and have canceled 29,825,406 shares with an historical cost of $680.2 million. At December 31, 2013, we held 1,648,613 shares in  treasury with the authority to repurchase 3,026,387 additional shares under our stock repurchase program. The past cancellation of  shares had also been approved by shareholders at prior shareholder meetings. Subsequent to year-end, we have repurchased 246,104  shares at a total cost of approximately $45.2 million. At the annual meeting of shareholders on May 16, 2013, the shareholders approved the cancellation of 1,149,582 shares of our  common stock then held as treasury shares. These treasury shares were canceled on August 1, 2013, after the expiration of the waiting  period required under Dutch law. In accordance with FASB Accounting Standards Codification (“ASC”) 505-30-30-8, we charged the  excess of the cost of the treasury stock over its par value to additional paid-in capital and retained earnings. In February, May, August and November 2013, we paid quarterly dividends of $0.32 per share of common stock. The total dividends  paid in 2013 were $58.6 million. On January 13, 2014, we declared a quarterly dividend of $0.50 per share of common stock payable  February 21, 2014 to shareholders of record on January 24, 2014. We have granted stock options and restricted stock awards under two stock incentive plans: the 2007 Long-Term Incentive Plan (the  “Plan”) and the 2006 Non-employee Director Stock Incentive Plan (the “Director Plan “). Awards under the following two compen- sation programs have been granted pursuant to the Plan: (1) the Performance Share Award Program (“PSAP”) and (2) the Restricted  Share Award Program (“RSAP”). Since the inception of the Plan in 1995 until 2001, we awarded stock options as the primary form of equity compensation. In 2001,  we reassessed the form of award and elected to begin the use of restricted share grants which we believe are a stronger motivational  tool for our employees. Restricted share awards provide some value to an employee during periods of stock market volatility, whereas  stock options may have limited perceived value and may not be as effective in retaining and motivating employees when the current  value of our stock is less than the option price. Currently, our long-term equity incentive compensation is exclusively in the form of  restricted shares and performance restricted shares as no stock options were granted during 2013. We issue shares from either treasury stock or authorized shares upon the exercise of options or lapsing of vesting restrictions on  restricted stock. In 2013, we issued 12,000 shares and 222,176 shares out of treasury stock relating to the exercise of stock options  and the vesting of restricted stock, respectively. We do not use cash to settle equity instruments issued under stock-based compensa- tion awards. On April 2, 2007, the 1995 Long-Term Incentive Plan was amended, restated and renamed as the 2007 Long-Term Incentive Plan.  The primary changes effected by the 2007 amendment and restatement were to (a) extend the period during which awards may be  granted under the Plan to February 13, 2017, (b) require all stock options awarded under the Plan to have an exercise price per share  55 2007 Long-term Incentive Plan 13. STOCK-BASED COMPENSATION Dividend Policy 12. EQUITY Treasury Shares