Level 3 Communications, Inc. (the “Company”) is committed to always doing the right thing. Operating with a strong sense of integrity is critical to maintaining trust and credibility with our customers, employees, business partners and stockholders. The Company’s reputation for ethical behavior and integrity is one reason the Company is considered a leader in our industry. Maintaining that reputation is very important to the Board of Directors of the Company and management. The Board of Directors of the Company has adopted this Code of Ethics (“Code”) which is specifically designed to be part of an effective program to prevent and detect violations of corporate policies and the law. Before you review specific principles, you should have a general sense of the company’s basic principles reflected in this Code of Ethics. These principles are:
The fundamental principle that underlies the manner in which we do business is the use and exercise of good judgment. It is not possible for the Code to address every ethical or legal issue that an employee, officer or director may face. In addition, the Code is not a substitute for the exercise of good judgment by our employees, officers and directors.
We have adopted, and from time to time in the future may adopt additional, more detailed policies and procedures with regard to certain areas covered by the Code and other matters not mentioned in the Code. Those policies and procedures may also be amended or supplemented from time to time. Each supervisor and manager is responsible for ensuring that all employees under his or her supervision are thoroughly familiar with the Code and are applying it consistently in all of their business dealings. No employee-owner has the authority to violate any of the Code’s provisions or to direct or authorize others to do so.
The Code applies to all employees of Level 3 Communications, Inc, and to the employees of all the Company’s subsidiaries and affiliated business entities, domestic and foreign, over which the Company has control. As a result, references to “we” or “the Company” include Level 3 Communications, Inc., all of its subsidiaries and affiliated business entities over which it or a subsidiary has direct control. In business affiliations in which the entity conducting the activity is not a Company subsidiary, representatives of the Company shall use their influence to achieve adherence to the spirit and content of the Code. As used herein, the word "employees” includes officers, and, when they are acting on behalf of, or in the name of, the Company, the members of the Board of Directors of Level 3 Communications, Inc.
Compliance with the Code as well as the Company’s policies and procedures is a condition of employment with either the Company or any of its subsidiaries. Failure to comply with the Code could subject the violator to disciplinary action, up to and including termination. Please see “REPORTING VIOLATIONS OF THE CODE” below for more information.
Basic Principles And Practices
Full Disclosure
The Company’s policy is to promote full, fair, accurate, timely and understandable disclosure in the periodic reports filed by the Company and other communications made by the Company.
Accurate Business Records
The Company is committed to the integrity and completeness of its corporate recordkeeping. The Company will maintain books, records, and accounts that accurately and fairly reflect its transactions and will also maintain an effective worldwide system of internal controls. The improper alteration, destruction, concealment or falsification of records or documents is strictly prohibited and may result in disciplinary action and/or criminal penalties.
The Company will only enter into transactions pursuant to management’s specific authorization or established, formalized policies and procedures. The Company will record properly such transactions in the accounts of the Company to permit the preparation of the Company's financial statements in conformity with generally accepted accounting principles. Each entry will be coded into an account that accurately and fairly reflects the true nature of the transaction. The Company recognizes that proper recording of all transactions is essential to the Company’s control of its affairs and the accuracy of its financial reporting. To maintain the integrity of the accounting records, entries in the Company’s books and records must be prepared carefully and honestly and must be supported by appropriately adequate documentation to provide a complete, accurate, and auditable record. All employees have a responsibility to assure that their work is complete and accurate. The Company strictly prohibits employees and other representatives of the Company from deliberately making any false or misleading entry for any reason, and from assisting any other person in making a false or misleading entry involving the Company’s accounts.
Employees must provide accurate and complete information to the Company’s officers, legal counsel, internal auditors, independent auditors, and any other person authorized to receive the information. Secret activities (other than those mandated by law in proper accordance with government mandated procedures) invite misconduct, while full disclosure reinforces responsibility and acts as a powerful deterrent to wrongdoing. Therefore, the Company strictly prohibits any undisclosed or unrecorded transactions (again other than those mandated by law in proper accordance with government mandated procedures).
In addition, the Company will maintain its records in accordance with the Company’s record retention policy as in effect from time to time.
Compliance With Laws
The Company’s policy is to comply with all laws, rules and regulations that are applicable to its business, both in the United States and in other countries. As a result, the Company’s funds and assets shall not be used for an unlawful or improper purpose. Because the application of particular laws, rules and regulations to the Company’s business may be ambiguous, Employees must obtain legal advice from the Company’s Legal Department to ensure full compliance with all applicable laws, rules and regulations.
Conflicts Of Interest
While the Company respects the privacy of its employees in the conduct of their personal affairs, the Company expects its employees to act in the best interests of the Company and to apply sound judgment to avoid conflicts of interest. The Company also expects its employees not to engage in activities or have outside interests that would cause a conflict of interest for the Company; cause harm or embarrassment to the Company; or deprive the Company of the employee’s loyalty.
Each employee is expected to recognize and avoid those situations where personal or financial interests or relationships might influence, or appear to influence, the employee’s judgment on matters affecting the Company. Conflicts of interest may exist in those situations where the actions or activities of an employee involve obtaining improper personal gains or advantage by the employee or a family member or have an adverse effect on the Company's interests.
A potential conflict of interest may arise in a variety of different circumstances. While not all inclusive, the following are general guidelines regarding the types of activities that could give rise to a conflict of interest:
Employees must report actual or potential conflicts of interest to the Vice President in charge of the employee’s function and to the General Counsel or another designated member of the Legal Department. Two factors that will be considered when determining whether a conflict of interest exists are: (1) whether the employee is, or could be, in a position to influence the Company’s decisions with respect to the competitor, supplier or customer; and (2) whether the employee’s judgment could be affected, or could appear to be affected, as it relates to the competitor, supplier or customer because of the significance of the employee’s personal interest.
After a review of the facts and circumstances regarding the situation, the General Counsel or another designated representative of the Legal Department will make a decision as to whether the affected employee will be required to abstain from participating in the transaction or discussions in question. The employee’s disclosure obligation is a continuing obligation, and should the employee be involved in another situation involving the same or similar facts that gave rise to a review by the individuals identified above, the employee has the obligation to disclose again the circumstances causing the potential conflict of interest as outlined above.
Members of the Company’s Board of Directors are prominent individuals with substantial business activities outside of the Company. As a result, to avoid conflicts of interest, Directors are expected to disclose to the Chairman of the Nominating and Governance Committee and the General Counsel any personal interest that they may have in a transaction or business decision upon which the Board passes, and to recuse themselves from participation in any decision in which there is a conflict between their personal interests and the Company’s interests.
Confidentiality
The Company believes that it is the responsibility and duty of each employee not to disclose to any external person or firm information that is proprietary or otherwise “Confidential Information” as defined elsewhere by Company policy, except where the disclosure is required or mandated by law or is otherwise properly authorized. All employees must be careful not to disclose non-public information to unauthorized persons, and must exercise care to protect the confidentiality of such information received from another party. To the extent that an employee is uncertain as to whether information may be disclosed and/or to whom the information may be disclosed, they should consult their supervisor or manager or seek advice from the Legal Department.
Insider Trading
It is against the law to trade in the securities of any company when in possession of material, non-public (also referred to as “inside”) information. Material information includes any information that would influence a reasonable investor to trade (or not to trade) in securities, including (but not limited to) Company securities. Until such time as material information becomes public, an employee who obtains material inside information concerning the Company or concerning any other company cannot:
Persons who trade on inside information, as well as persons who tip others (who could be a family member who learned it from an employee), could be subject to civil and criminal proceedings. In addition, employees who the Company has determined to have engaged in such conduct are subject to disciplinary action, up to and including termination.
Further, many senior level Company employees are subject to special rules on insider trading. These employees can only buy or sell Company securities during limited periods or “windows” following the release of quarterly or annual earnings information.
Antitrust Compliance
The Company’s policy is to comply fully, and to ensure that its employees comply fully, with the letter and the spirit of all applicable U.S. federal and state antitrust laws, and where applicable the antitrust and competition laws of other countries.
Generally, antitrust laws prohibit practices that might unreasonably restrict competition. Agreements with competitors regarding such subjects as price fixing, market division, and output limitations are generally prohibited by these laws and violators are subject to criminal sanctions in the form of fines and imprisonment. Employees involved in transactions with competitors or potential competitors are expected to know that U.S. and foreign antitrust laws may apply to their activities and to consult the Legal Department prior to negotiating with, or entering into any agreement with, a competitor.
Antitrust laws apply to both corporations and individuals, and can therefore be violated by both corporations and individuals. Any employee of the Company who violates, or assists another to violate, antitrust laws may be subject to criminal prosecution, imprisonment, and fine. Employees who the Company determines have done so are subject to disciplinary action, up to and including termination. The actions of individual employees can also cause the Company to be prosecuted criminally and fined or to be sued for substantial civil damages.
Employment Matters
The Company strives to maintain a work environment that is free from all forms of inappropriate harassment, intimidation, or coercion. The Company expects all employees to be treated with dignity and respect. To this end, the Company strictly prohibits any harassment and/or derogatory comments or inappropriate conduct based upon a person's race, sex, age, national origin, sexual orientation, marital status, color, mental or physical disability, veteran status, or any protected physical or personal characteristic. The Company also has a policy prohibiting discrimination against employees, stockholders, directors, officers, customers or suppliers on account of race, color, age, sex, religion, sexual orientation, marital status, mental or physical disability or national origin. In addition, the Company strictly prohibits retaliation/victimization against an employee for complaining about alleged discrimination and/or harassment.
Gifts, Gratuities, And Entertainment
Receiving business gifts of nominal value in accordance with accepted business practices is permissible where customary. Receiving cash or gifts of significant value or that are not in accordance with accepted business practices is strictly prohibited. In this context, business gifts include meals and transportation. Customary business entertainment, including meals or transportation, is proper unless the value, cost, or frequency of the business entertainment is such that it could be interpreted as affecting an otherwise objective business decision.
When determining if a gift could be interpreted as affecting an employee’s otherwise objective business decision, the position of the employee and whether the employee is or could be in a position to influence the Company’s decisions with respect to the competitor, vendor, supplier or customer will be taken into account. Business-related social contacts can be in the best interest of the Company when properly conducted on a
limited basis.
Improper Payments
The Company strictly prohibits “Bribes, Kickbacks and Other Payoffs” to or from suppliers or customers. “Bribes, Kickbacks and Other Payoffs” include, but are not limited to:
The Foreign Corrupt Practices Act (the “FCPA”) prohibits the payment of kickbacks, bribes or payoffs to foreign government officials to favorably influence a decision involving a company’s business. The Company’s policy is to fully comply with the letter and spirit of the FCPA. Since the Company has significant activity abroad, it is imperative that all employees understand the activities prohibited by the FCPA to ensure the Company’s compliance with the law.
The FCPA prohibits a United States company, its stockholders, directors, agents, officers and employees from paying or authorizing the payment of any money or giving anything of value, directly or indirectly, to a foreign official for the purpose of:
A “foreign official” is broadly defined as any person acting in an official capacity on behalf of a foreign government or an instrumentality thereof.
It may be difficult to identify a “bright-line” test of precise facts or circumstances that would give rise to liability under the FCPA. Employees should be wary of requests for disproportionate discounts or excessive commissions as well as requests for the payment of large sums in cash or to bank accounts in third countries. Employees should also be aware of close family or business relationships between the Company’s agent and any high foreign official.
There are limited exceptions to the FCPA. The Company may on occasion be required to make a minor payment to a foreign government employee to expedite or facilitate “routine governmental action” rather than influencing a business decision. Such a payment is made simply to expedite a routine matter in a more timely or efficient manner. The FCPA expressly exempts facilitating or expediting payments, the purpose of which is to expedite or secure the performance of a “routine governmental action.” It is often difficult to determine the legality of a facilitating payment under local law, even when those payments are sanctioned by local authorities and are consistent with local custom. Therefore, such payments should be made only after consultation with the Legal Department.
In addition, special requirements may apply when contracting with any governmental body. Since government officials are obligated to follow specific codes of conduct and laws, special care must be taken in government procurement activities. Federal, state and local government departments and agencies are governed by laws and regulations concerning acceptance by their employees of entertainment, meals, gifts, gratuities and other things of value from companies and persons with whom those government departments and agencies do business or over whom they have regulatory authority. It is the Company’s policy to comply strictly with those laws and regulations.
These restrictions do not affect the right of employees, acting in an individual capacity and not as representatives of the Company, to support political parties or candidates of their choice.
Administration And Implementation Of The Code
The Nominating and Governance Committee of the Board of Directors is responsible for the administration of the Code. The Nominating and Governance Committee will, from time to time, establish those procedures as it deems necessary or desirable in order to discharge this responsibility. These procedures will provide for obtaining advice of legal counsel where appropriate. In discharging these responsibilities, the Nominating and Governance Committee may delegate authority to such committees, officers and other employees and may engage agents and advisors as it deems necessary or desirable.
Each supervisor or manager is responsible for distribution of the Code to appropriate personnel within their function or organization and for providing knowledge, education, and understanding of its importance and meaning. Each employee must acknowledge in writing receipt of the Code.
Employees may be required periodically to certify, in writing, compliance with the Code or to describe any deviations known to them.
Reporting Violations Of The Code
An employee who becomes aware of a violation of the Code or believes that a violation may take place in the future must report the matter. The report should be made to the employee’s immediate supervisor who, in turn, must report it to the Vice President of the functional area the employee works in and the Company’s Chief Legal Officer or another designated member of the Legal Department. Alternatively, the report may be made directly to the Company’s Chief Legal Officer or another designated member of the Legal Department. Thomas C. Stortz, the Company’s Chief Legal Officer, can be reached at 720-888-2505 or tom.stortz@level3.com. Should an employee not feel comfortable reporting an actual or potential violation of the Code through the above-stated means, the employee may report such an issue through the Company’s anonymous and confidential incident reporting system entitled MySafeWorkplace. Such a report may be made by contacting the MySafeWorkplace call center toll free at 800.461.9330 or by logging in to the MySafeWorkplace Web site at http://www.mysafeworkplace.com/. Both of these avenues are available 24 hours per day, 7 days per week.
It is a violation of the Code to intimidate, discharge, demote, suspend, threaten, harass or impose any form of retribution on any employee who utilizes the reporting system in good faith to report suspected violations (except that appropriate action may be taken against an employee if the Company determines that the employee has committed a violation of the Code or the Company’s policies).
The person or persons authorized by the Nominating and Governance Committee to investigate alleged violations of the Code will, as appropriate, in accordance with procedures established by the Nominating and Governance Committee:
In connection with any investigation of a reported violation or possible violation of the Code, employees must not (1) interfere with the investigation, such as by providing false, misleading or incomplete information, concealing information or encouraging others not to contribute to an investigation or (2) destroy or alter any information relevant to the investigation. In addition, the Company may disclose the results of investigations to law enforcement agencies.
The Company shall consistently enforce the Code through appropriate means of discipline, up to and including termination. Depending on the nature of the alleged violation of the Code and the outcome of the resulting investigation, the Nominating and Governance Committee may determine whether a violation of the Code has occurred and, if so, whether and to what extent any disciplinary action will be taken. Provided, however, that the Nominating and Governance Committee will not make such determinations with respect to employment-related matters.
The Company deems violations of the Code to be a serious matter and may in certain cases report such violations to appropriate law enforcement agencies to determine whether additional civil and/or criminal proceedings are appropriate.
Persons subject to disciplinary action may include, in addition to the violator, others involved in the wrongdoing such as:
Waiver
The Company may, in its sole discretion, grant waivers of the provisions of the Code from time to time after completing appropriate steps to review the facts and circumstances related to the requested waiver. Waivers are only effective if set forth in writing after full disclosure of the facts and circumstances surrounding the waiver.
If an employee believes that a waiver of the Code is necessary or appropriate, a request for a waiver and the reasons for the request must be submitted in writing to the General Counsel or another designated member of the Legal Department.
An executive officer1 or director must submit the request for a waiver to the Chairman of the Nominating and Governance Committee of the Board of Directors, with a copy to the General Counsel. Any waiver of the Code for executive officers and members of the Board of Directors can only be granted by the Board of Directors or a duly authorized committee of the Board of Directors and will be disclosed promptly to the Company’s stockholders.
1For purposes of the Code, an executive officer includes the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, any Executive Vice President, the General Counsel and the Controller.
Special Ethics Obligations
For Employees With Financial Reporting Responsibilities
These Special Ethics Obligations for Senior Financial Officers have been adopted by the Board of Directors of Level 3 Communications, Inc. to promote honest and ethical conduct, proper disclosure of financial information in the Company’s periodic reports, and compliance with applicable laws, rules, and regulations by the Company’s Senior Financial Officers. For purposes of these provisions, the term Senior Financial Officers means the Company’s Chief Executive Officer, Chief Financial Officer and Controller.
In performing his or her duties, each of the Senior Financial Officers must:
Violations of the Special Ethics Obligations for Senior Financial Officers, including failures to report potential violations by others, will be viewed as a severe disciplinary matter that may result in disciplinary action, up to and including termination. If you believe that a violation of the Special Ethics Obligations for Senior Financial Officers has occurred, please contact the Company’s Chief Legal Officer, Thomas C. Stortz, at tom.stortz@level3.com. You may also contact the Audit Committee of the Board of Directors at:
It is against the Company’s policy to retaliate against any employee for good faith reporting of violations of this Special Ethics Obligations for Senior Financial Officers.