Travelers 2014 Annual Report Download - page 230

Table of Contents
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. INCOME TAXES (Continued)
The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2014 and
2013:
Included in the balances at both December 31, 2014 and 2013 were $2 million of unrecognized tax benefits that, if recognized, would affect the
annual effective tax rate. Also included in the balances at those dates were $21 million and $19 million, respectively, of tax positions for which the
ultimate deductibility is certain, but for which there is uncertainty about the timing of deductibility. The timing of such deductibility would not
affect the annual effective tax rate.
The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in income taxes. During the years ended
December 31, 2014 and 2013, the Company recognized approximately $31 million and $(67) million in interest, respectively. The Company had
approximately $58 million and $27 million accrued for the payment of interest at December 31, 2014 and 2013, respectively.
The IRS is conducting an examination of the Company's U.S. income tax returns for 2011 and 2012. The Company does not expect any
significant changes to its liability for unrecognized tax benefits during the next twelve months.
13. SHARE - BASED INCENTIVE COMPENSATION
The Company has a share
- based incentive compensation plan, The Travelers Companies, Inc. 2014 Stock Incentive Plan (the 2014 Incentive
Plan), which was approved by the Company's shareholders in May 2014 and replaced The Travelers Companies, Inc. Amended and Restated 2004
Stock Incentive Plan, as amended (the 2004 Incentive Plan). The purposes of the 2014 Incentive Plan are to align the interests of the Company's
non - employee directors, executive officers and other employees with those of the Company's shareholders, and to attract and retain personnel by
providing incentives in the form of share
- based awards. The 2014 Incentive Plan permits grants of nonqualified stock options, incentive stock
options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, deferred stock units, performance awards and other share
-
based or share - denominated awards with respect to the Company's common stock. The number of shares of the Company's common stock
authorized for grant under the 2014 Incentive Plan is 10 million shares, subject to additional shares that may be available for awards as described
below. The Company has a policy of issuing new shares to settle the exercise of stock option awards and the vesting of other equity awards.
In connection with the adoption of the 2014 Incentive Plan, the 2004 Incentive Plan was terminated, joining several other legacy share
- based
incentive compensation plans that had been terminated in prior years (together, the legacy plans). Outstanding grants were not affected by the
termination of the legacy plans, including the grant of reload options related to prior option grants under the legacy plans. As of December 31,
2012, there were no longer any options eligible for reload.
229
(in millions)
2014
2013
Balance at January 1
$
21
$
24
Additions for tax positions of prior years
2
—
Reductions for tax positions of prior years
—
( 3
)
Additions based on tax positions related to current year
—
—
Balance at December 31
$
23
$
21