Is Level $3$s focus on relative, not absolute$,$ performance the right one? Should the firm

use the same compensation approach for all of its employees?

$2.$ Is Level $3$s indexed option program a good way to pay for relative performance?

$3.$ What are the important ways that Level $3$s indexed option plan differs from the

conventional executive stock option?

$4.$ Would you expect the value of Level $3$s outperform stock option to be greater or less

than that of a conventional option? Would you expect it to be greater or less than the

value of Level $3$s stock price?

$5.$ What specific incentives will Level $3$s indexed option program create? Does it have any

other advantages or disadvantages? Would you expect the environment of declining

stock prices in telecommunications companies to affect the incentives created by the

indexed option program?

$6.$ What kind of value does Level $3$ place on the options? How would you assess their

valuation methodology? How would you go about calculating the value yourself?

$7.$ Suppose that you were CEO of Level $3.$ Would you recommend any changes to the

indexed option structure? Would your answer change if you were a shareholder of Level

$3$ and not the CEO?