LEVEL 3 COMMUNICATIONS BEGINS TRADING ON NASDAQ NATIONAL MARKET UNDER THE SYMBOL "LVLT"
Company Announces Innovative Stock Option Program Aligning Management Interests with Shareholders' Interests Stock Option Plan Based On Company's Ability To Outperform S&P 500 Index
OMAHA, NE, April 1, 1998 – Level 3 Communications, Inc. announced that its common stock began trading today on the Nasdaq National Market under the listing symbol "LVLT." A ceremony marking the first trade was held at Nasdaq's MarketSite in New York attended by Level 3 senior executives, members of the company's Board of Directors, Nasdaq officials and other invited guests. The listing follows the separation of Level 3 and the construction subsidiary of Peter Kiewit Sons, Inc. (PKS), which was completed March 31.
As a result of the separation, Level 3's former PKS Class D stock – traded on the OTC bulletin board under the symbol KIWT – is now the common stock of Level 3, trading under the symbol "LVLT." The change requires no action by holders of the Class D stock. Level 3 did not make a public offering of its common stock in connection with the listing. Approximately 147 million shares of Level 3 common stock are outstanding.
Outperformance Stock Option Program Benefits Shareholders and Management Simultaneous with the first day of trading of Level 3 Communications' common stock on Nasdaq, the company announced the first award of options under its new Outperformance Stock Option program (OSO). The strike price for the initial options award will be based on the price of Level 3's stock at the end of the first day of trading.
"One of the primary reasons the company elected to list its stock on the Nasdaq National Market is to benefit its shareholders by making it easier to follow the company and easier to buy and sell the stock," said James Q. Crowe, president and CEO of Level 3. "By basing the strike price of the initial OSO awards on the closing price on the first day of Nasdaq trading of our stock, our managers are – in effect – buying into the future of our company at the same price as our shareholders." "Under the plan, shareholders receive a market return on their investment before executives receive any return on their options," said Crowe. "Level 3's OSO program directly aligns management's and shareholders' interests by basing stock option value on the company's ability to outperform the market in general, as measured by the Standard & Poor's (S&P) 500 index."
"The OSO program calls on the management of our company to 'put their money where their mouth is.' We think this unique program provides a new way to look at compensation and helps align the interests of management with the shareholders of the company." Crowe noted that normally, a stock option gives the holder the right to purchase a share of stock at a fixed price over a specified period of time. Under the Level 3 OSO plan, the exercise price is indexed to the performance of S&P 500. If Level 3's stock price does not outperform the S&P 500 index, the options have no value. "In return for assuming the greater risks associated with the OSO program, our managers have the chance to receive significantly more value than traditional programs provide – if we outperform the S&P 500," said Crowe. This program also eliminates the so called "rising tide" phenomenon in which a strong economy and stock market boosts a company's absolute levels of performance, while the company continues to underperform the broader market.
"In such cases, under traditional stock plans, executives who have been granted options can benefit from substantial low-risk profits at the expense of shareholders due to dilution of the outstanding stock base. This is obviously not in the interests of shareholders and is not the case with our OSO program," said Crowe. (For an example of how Level 3's OSO program compares to a standard option program, please see the attached table.)
Innovative Stock Option Program Needed To Attract Highest Quality Technical Workforce
Level 3 believes its future success is in large part based on attracting, hiring and retaining the highest quality of employees. This must be accomplished despite a recognized scarcity of technology workers. "Clearly the need to attract the best and the brightest to Level 3 will be dependent on our being able to apply innovative recruiting and compensation programs," said Crowe.
The company believes the best employees are attracted to companies that provide the opportunity to become owners. Level 3 also believes employee-owners make a difference. "Employee-owners see things differently, they take appropriate risks, they do what it takes to make the business grow, they are not satisfied with being average," said Crowe. "For that reason we have designed our compensation and reward programs to give every level of employee an opportunity to become an owner." "Investors looking to purchase a growth company's stock are interested in earning a superior return on their investment," said Crowe. "We are looking for executives with a similar perspective – employees who want to have a stake in their company and in outperforming the market."
About Level 3 Communications
Level 3 Communications, Inc. (NASDAQ: LVLT), an international communications company, operates one of the largest Internet backbones in the world, connecting 180 markets in 18 countries. The company serves a broad range of wholesale, enterprise and content customers with a comprehensive suite of services including: Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice and voice over IP services, content delivery and media distribution services. These services provide the building blocks to enable Level 3’s customers to meet their growing demands for advanced communications solutions. The company’s Web address is www.Level3.com.
"Level 3 Communications,” "Level 3," the red 3D brackets and the Level 3 Communications logo are registered service marks of Level 3 Communications, LLC in the United States and/or other countries. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc. Any other service, product or company names recited herein may be trademarks or service marks of their respective owners.
Forward-Looking Statement
Some of the statements that we make in this press release are forward looking in nature. These statements are based on management’s current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside our control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent us from achieving our stated goals include, but are not limited to our ability to: successfully integrate acquisitions; increase the volume of traffic on our network; defend our intellectual property and proprietary rights; develop new products and services that meet customer demands and generate acceptable margins; successfully complete commercial testing of new technology and information systems to support new products and services; attract and retain qualified management and other personnel; and meet all of the terms and conditions of our debt obligations. Additional information concerning these and other important factors can be found within Level 3’s filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
