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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

Filed by the Registrant x

Filed by a Party other than the Registrant ¨

Check the appropriate box:

Level 3 Communications, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LEVEL 3 COMMUNICATIONS, INC.

1025 Eldorado Boulevard

Broomfield, CO 80021

April 7, 2016

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of Level 3 Communications, Inc. (“Level 3”) to be held at 9:00 a.m. on May 19, 2016, at the Level 3 Headquarters, 1025 Eldorado Boulevard, Broomfield, Colorado 80021.

At the Annual Meeting, you will be asked to consider and act upon the following matters:

Our Board of Directors recommends that you:

Information concerning these proposals and other important information is contained in the attached Notice of Annual Meeting and Proxy Statement. It is important that your shares be represented at the Annual Meeting, regardless of the number you hold. To ensure your representation at the Annual Meeting, if you are a stockholder of record, you may vote in person at the Annual Meeting. We will give you a ballot when you arrive. If you do not wish to vote in person or if you will not be attending the Annual Meeting, you may vote by proxy. You can vote by proxy over the Internet by following the instructions provided in the Notice of Internet Availability of Proxy Materials previously mailed to you, or, if you requested or otherwise received printed copies of the proxy materials, you can also vote by mail, by telephone or over the Internet as instructed on the proxy card you received. If you attend the Annual Meeting, you may vote in person even if you have previously returned a proxy card. Following the completion of the formal business portion of the Annual Meeting, members of our senior management will be making a presentation. We expect that this presentation will be followed by an open question and answer session with members of our senior management. We anticipate that the Annual Meeting will conclude at the end of the question and answer period, but in any event promptly at 10:30 a.m.

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Notice of 2016 Annual Meeting of Stockholders

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The matters to be considered at the Annual Meeting are more fully described in the accompanying Proxy Statement, which forms a part of this Notice.

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LEVEL 3 COMMUNICATIONS, INC.

1025 Eldorado Boulevard

Broomfield, CO 80021

PROXY STATEMENT

April 7, 2016

2016 ANNUAL MEETING OF STOCKHOLDERS

May 19, 2016

We are furnishing you this Proxy Statement in connection with the solicitation of proxies on behalf of the Board of Directors of Level 3 Communications, Inc. (“Level 3,” the “company,” “we,” “us,” or “our”) to be voted at the Annual Meeting of Stockholders to be held on May 19, 2016, or any adjournment or postponements thereof (the “Annual Meeting”). This Proxy Statement, the Notice of Annual Meeting, the accompanying Proxy and the Annual Report to Stockholders are first being mailed or made available to Stockholders on or about April 8, 2016. We sometimes refer to our Board of Directors as the “Board” and to this document as the “Proxy Statement.”

You should read the entire Proxy Statement before you cast your vote.

ELECTION OF DIRECTORS PROPOSAL (ITEM 1)

At the Annual Meeting, the 11 directors that are standing for election will be elected to hold office for a one-year term until the 2017 Annual Meeting, or until their successors have been elected and qualified. If any nominee shall, prior to the Annual Meeting, become unavailable for election as a director, the persons named in the accompanying form of proxy will, in their discretion, vote for that replacement nominee, if any, as may be recommended by the Board, or the Board may reduce the number of directors to eliminate the vacancy.

Nomination Procedures

In exploring potential candidates for director, the Nominating and Governance Committee of the Board considers individuals recommended by members of the committee, other directors, members of management, stockholders or self-nominated individuals. The committee is advised of all nominations submitted to us and determines whether it will further consider those candidates using the criteria described below. The committee members apply the criteria described below, and also exercise their judgment to select those potential candidates they believe are best suited to serve as members of our Board and, when considered as a group, provide a diversity of viewpoints, professional experiences, educational backgrounds, professional skills and other individual qualities and attributes that contribute to Board heterogeneity and effectiveness, including the potential candidate’s prior Board tenure.

In order to be considered, each proposed candidate must:

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After the Nominating and Governance Committee has completed its evaluation, it presents its recommendation to the full Board for the full Board’s consideration and approval. In presenting its recommendation, the committee also reports on other candidates who were considered but not selected.

In connection with our acquisition of Global Crossing Limited (“Global Crossing”), on April 10, 2011, we entered into a Stockholder Rights Agreement with STT Crossing Ltd. (“STT Crossing”), which was the majority shareholder of Global Crossing. We refer to this agreement as the STT Stockholder Rights Agreement. Pursuant to the STT Stockholder Rights Agreement, STT Crossing has the right to nominate for election to the Board that number of individuals as required by the terms of that agreement. For 2016, STT Crossing is entitled to designate for nomination two individuals and has selected Steven T. Clontz and Peter Seah Lim Huat.

Pursuant to the STT Stockholder Rights Agreement, the Nominating and Governance Committee of the Board, subject to the fiduciary duties of the members of that committee and any applicable regulation or listing requirement of the New York Stock Exchange, is obligated to nominate the individuals designated by STT Crossing for election to the Board. In addition, the Board is required to recommend that the stockholders vote in favor of the nominees designated by STT Crossing and we are required to use all reasonable efforts to cause the individuals to be elected as members of the Board. In making its recommendations to the full Board regarding the nominees for election to our Board at the Annual Meeting, the Nominating and Governance Committee of the Board considered the reasons stated by STT Crossing for why its designees were selected. These reasons are included in the Board Skills Matrix and the biographies below for each of the STT Crossing designees.

We will report any material change to any of these procedures in a quarterly or annual filing with the Securities and Exchange Commission, or the SEC, and any new procedure will be available on our website at www.level3.com.

The members of the Nominating and Governance Committee believe that each of the nominees meet the criteria described above. In addition to the information presented below regarding each nominee’s specific experience, qualifications, attributes and skills that led our Board to the conclusion that he or she should serve as a director, we also believe that all of our nominees have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to Level 3 and our Board.

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Director Qualifications, Experience and Tenure

Board Skills Matrix

Executive Management experience is important because directors with experience running public/private companies or other large organizations typically possess strong leadership qualities and the ability to identify and develop those qualities in others

Industry experience is important in overseeing the development and implementation of our business strategy and operating plan

Accounting/Finance experience is important in overseeing our financial reporting and internal controls to assure transparency and accuracy

Risk Management experience is important in overseeing the risks facing the Company

Global experience is important in understanding and reviewing our global business and strategy

Investor experience is important in overseeing our interface with the investment community and matters related to stockholder engagement

Cybersecurity experience is important in overseeing the cyber risks facing the Company and protecting corporate cybersecurity

Government/Regulatory experience is important to understand our business with various federal, state and local governmental departments and agencies and key regulatory issues affecting the company

US citizens who possess U.S. security clearance required pursuant to Executive Order 12968 to be appointed to the Classified Business and Security Committee

STT Designee by STT Crossing is required pursuant to the STT Stockholder Rights Agreement

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Set forth below is information as of March 15, 2016, about our nominees for election to our Board of Directors.

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Our Corporate Governance Guidelines provide that a director should not be nominated to a new term if he would be over age 73 at the time of the election; however, this limitation may be waived by the Board if the Board feels to do so would be in our interests.

Vote Required

Our By-laws provide that each of the 11 nominees for director will be elected by a majority of the votes cast with respect to that nominee by holders of our common stock present in person or represented by proxy and entitled to vote at the Annual Meeting. Since this election is not contested, a “majority of votes cast” means that the number of votes “For” a nominee’s election needs to be greater than the number of votes cast as “Against” that nominee’s election. Any current director who does not meet this standard is subject to the By-laws’ requirement regarding resignations by directors who do not receive a majority of “For” votes. Under the By-laws, any incumbent director in an uncontested election who does not receive more “For” votes than “Against” votes is required to submit an offer of resignation to the Board. The Nominating and Governance Committee decides whether to accept such offer of resignation.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEES NAMED ABOVE.

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Board Structure and Risk Oversight

The Board believes that independent oversight of management is an important component of an effective board of directors. The independent Board members have determined that the most effective Board leadership structure for Level 3 at the present time is for the president and chief executive officer (“CEO”) position to be separate from the Chairman of the Board position, a structure that has served us well for many years. The independent Board members believe that because the CEO is ultimately responsible for the day-to-day operation of Level 3 and for executing our strategy, and because our performance is an integral part of Board deliberations, the CEO should be an important part of the Board, but that under current circumstances, a different individual should act as Chairman of the Board. The Board retains the authority to modify this structure to best address our unique circumstances, and so advance the best interests of all stockholders, as and when appropriate.

The Board also believes, for the reasons set forth below, that its existing corporate governance practices also achieve independent oversight of management accountability. Our governance practices provide for strong independent leadership, independent discussion among directors and for independent evaluation of, and communication with, many members of senior management. These governance practices are reflected in our Corporate Governance Guidelines and the various Board committee charters, which are available on our website. Some of the relevant processes and other corporate governance practices include:

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The Board oversees our stockholders’ interest in our long-term and overall success and our financial performance. The full Board is actively involved in overseeing risk management for us. It does so in part through its oversight of our top executives who supervise day-to-day risk management throughout Level 3. In addition, our executives regularly discuss recurring themes or material risks with the members of the Board, including recurring themes and materials risks raised by the Board members.

In addition, each of our Board committees considers the risks within its areas of responsibilities. For example, the Audit Committee considers financial risk on a quarterly basis, recommends guidelines to various financial related exposures and discusses with management policies with respect to risk assessment and risk management. The Audit Committee also reviews:

The chairman of the Audit Committee reports to the full Board at regularly scheduled Board meetings on these reviews.

Material violations of our Worldwide Business Code of Conduct and related corporate policies are reported to the Audit Committee and, as required, are reported to the full Board. The Compensation Committee reviews our overall compensation program and its effectiveness at both linking executive pay to performance and aligning the interests of our executives and our stockholders. The Nominating and Governance Committee reviews our governance practices on an annual basis.

Corporate Governance

We have Corporate Governance Guidelines that address the governance activities of the Board and include criteria for determining the independence of the members of our Board. These guidelines are in addition to the requirements of the Securities and Exchange Commission and The New York Stock Exchange. The Guidelines also include requirements for the standing committees of the Board, responsibilities for Board members and the annual evaluation of the Board’s and its committees’ effectiveness. The Corporate Governance Guidelines are available on our website at www.level3.com. At any time that these guidelines are not available on our website, we will provide a copy upon written request made to Investor Relations, Level 3 Communications, Inc., 1025 Eldorado Boulevard, Broomfield, Colorado 80021.

Although we include references to our website throughout this proxy statement, any information included in our website is not part of this Proxy Statement.

At Level 3, we know that corporate governance is the foundation for sustainable growth. Our governance policies and structures are designed to promote thoughtful consideration of our business actions. During 2015, we took the following new governance actions:

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Corporate Governance at a Glance

Independence and Tenure

The Board also evaluates the independence of each director in accordance with applicable laws and regulations and its Corporate Governance Guidelines. Based on the recommendation of our Nominating and Governance Committee, the Board has determined that the following nominees are “independent” as required by applicable laws and regulations, by the listing standards of The New York Stock Exchange and by the Board’s Corporate Governance Guidelines: James O. Ellis, Jr., Kevin P. Chilton, Steven T. Clontz, Irene M. Esteves, T. Michael Glenn, Spencer B. Hays, Michael J. Mahoney, Kevin W. Mooney, Peter Seah Lim Huat and Peter van Oppen. The Board has also concluded that all of the members of each of the Audit, Compensation and Nominating and Governance committees are “independent” in accordance with these same standards.

Code of Ethics

We have a Worldwide Business Code of Conduct, specific portions of which serve as our “code of ethics” under the standards mandated by the Sarbanes-Oxley Act of 2002, as amended. The complete Worldwide Business Code of Conduct is available on our website at www.level3.com. At any time that the Worldwide Business Code of Conduct is not available on our website, we will provide a copy upon written request made to Investor Relations, Level 3 Communications, Inc., 1025 Eldorado Boulevard, Broomfield, Colorado 80021. If we amend the provisions of the Worldwide Business Code of Conduct that serve as our “code of ethics,” or if we grant any waiver from those provisions that applies to our executive officers or directors, we will publicly disclose such amendment or waiver as required by applicable law, including by posting such amendment or waiver on our website at www.level3.com or by filing a Current Report on Form 8-K.

Stockholder Engagement

The Board believes that feedback from our stockholders is important to understand the issues that matter most to our investors. The Board also believes that the most efficient way to obtain perspective from our investors is through frequent interactions between our stockholders and executive management (primarily our Chief Executive Officer and Chief Financial Officer), with regular readouts on this feedback to the Board. This direct dialogue provides the opportunity for our stockholders to provide input on our policies and practices and enables the Board and management to consider and address these concerns.

In 2015, in addition to management’s longstanding, regular engagement with investors on our business results, we initiated an outreach program aimed specifically at gathering feedback from the corporate

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governance organizations of our investors. This program was led by our Executive Vice President and Chief Legal Officer and throughout 2015, we met with investors’ corporate governance departments representing nearly 40 percent of our outstanding common stock.

The Board takes this feedback very seriously. Based on what we heard in these meetings, the Board made several changes to our corporate governance approach, including amending the company’s By-laws to implement majority voting for non-contested Director Elections and providing stockholders with the right of “proxy access” for director nominations.

A stockholder who wishes to communicate directly with the Board, a committee of the Board or with an individual director, regarding matters related to Level 3 should send the communication to:

Level 3 Communications, Inc.

Board of Directors [or committee name or

director’s name, as appropriate]

1025 Eldorado Boulevard

Broomfield, Colorado 80021

We will forward all stockholder correspondence about Level 3 to the Board, committee or individual director, as appropriate. Please note that we will not forward communications that are spam, junk mail and mass mailings, service complaints, service inquiries, new service suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements.

Board of Directors’ Meetings

The Board had a total of four meetings in 2015, with no director attending less than 75% of the meetings that were held during the time that the person was a Board member. All of our directors attended more than 75% of the meetings of the Board’s committees of which the person was a member. In addition, the non-management directors met without any management directors or employees present four times during 2015. These meetings are chaired by the Chairman of the Board.

Although we do not have a formal policy, it is expected that our Board members will attend our annual meetings. All of our Board members at the time of our 2015 Annual Meeting of Stockholders attended that meeting.

Section 16(a) Beneficial Ownership Reporting Compliance

To our knowledge, no person that was a director, executive officer or beneficial owner of more than 10% of the outstanding shares of our common stock failed to timely file during 2015 all reports required under Section 16(a) of the Securities Exchange Act of 1934, as amended.

Summary of Committee Assignments and Tenure

Audit																						C
Classified Business & Security						C
Compensation																C
Nominating & Governance		C
Tenure		11		3		4		4		2		4		2		9		2		5		3

Note that “C” indicates chair of committee

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Audit Committee

The Audit Committee is responsible for appointing, setting compensation for, and overseeing the work of our independent registered public accounting firm. The Audit Committee reviews the services provided by our independent registered public accounting firm, consults with the independent registered public accounting firm and reviews the need for internal auditing procedures and the adequacy of internal controls. The members of the Audit Committee are Peter van Oppen (Chairman), Irene M. Esteves, T. Michael Glenn and Kevin W. Mooney. The Board has determined that the members of the Audit Committee are independent within the meaning of the listing standards of The New York Stock Exchange. While other members of the Audit Committee, including Irene M. Esteves and Kevin W. Mooney, have the requisite credentials and financial background to qualify as a “financial expert” as defined by the SEC, the Board has designated Peter van Oppen, Chairman of the Audit Committee, as the “financial expert” pursuant to that definition. The Audit Committee met eight times during 2015.

The Audit Committee also has the responsibility, among other things, of assisting the Board in meeting its oversight obligations regarding: (i) the integrity of our financial statements; (ii) our compliance with legal and regulatory requirements; (iii) our independent auditor’s qualifications and independence; (iv) the performance of our independent auditors; and (v) the performance of our internal audit function. The Audit Committee maintains free and open communications between the directors, the independent auditors, our internal audit department and our financial management team. It is the Audit Committee’s expectation that the financial management team will fulfill its responsibility of bringing any significant items to the attention of the Audit Committee.

Additional information regarding the appointment of our independent auditor can be found under Item 5 (Ratify the Appointment of Independent Auditor), below.

The Audit Committee operates pursuant to a written charter. A copy of the Audit Committee’s charter is available on our website at www.level3.com. A copy of the Audit Committee’s 2015 Report is included as part of the disclosure for Item  5, below.

Classified Business and Security Committee

The Classified Business and Security Committee assists the Board in fulfilling its oversight responsibilities relating to our classified business activities and the security of personnel, data, and facilities. The Classified Business and Security Committee also establishes processes and procedures to ensure the security of our U.S. network assets, which include transmission and routing equipment, switches and associated operational support systems and personnel. The Classified Business and Security Committee is comprised solely of members of our Board who are U.S. citizens who, if not already in possession of U.S. security clearances, must apply for U.S. security clearances pursuant to Executive Order 12968 immediately upon their appointment to the committee. The current members of the Classified Business and Security Committee are Kevin P. Chilton (Chairman), James O. Ellis, Jr., and Jeff K. Storey. The Classified Business and Security Committee met four times during 2015.

Compensation Committee

The Compensation Committee is responsible for overseeing our compensation strategy and policies to allow us to attract key employees and to determine that employees are rewarded appropriately for their contributions, that employees are motivated to achieve our objectives, that key employees are retained, and that such strategy and policies support our objectives, including the interests of our stockholders. The Compensation Committee also approves the salaries, bonuses and other compensation for all executive officers, and reviews and recommends to the full Board the compensation and benefits for non-employee directors. The members of the Compensation Committee are Michael J. Mahoney (Chairman), Spencer B. Hays, Peter Seah Lim Huat and Peter van Oppen. The Board has determined that the members of the Compensation Committee are independent within the meaning of the listing standards of The New York Stock Exchange. The Compensation Committee met seven times in 2015.

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The Compensation Discussion and Analysis below provides additional information on the Compensation Committee’s processes and procedures for consideration of executive compensation as well as the role of the committee’s independent compensation consultant for 2015 compensation determinations, Towers Watson & Co. In addition, the Compensation Committee’s report is included at the beginning of the Compensation Discussion and Analysis. The Compensation Committee operates pursuant to a written charter. A copy of the Compensation Committee’s charter is available on our website at www.level3.com.

Compensation Committee Interlocks and Insider Participations

No member of the Compensation Committee during 2015 had a relationship that requires disclosure as a Compensation Committee Interlock.

Nominating and Governance Committee

The Nominating and Governance Committee provides oversight and guidance to the Board to ensure that the membership, structure, policies, and practices of the Board and its committees facilitate the effective exercise of the Board’s role in the governance of the company. The Committee (i) reviews and evaluates the policies and practices with respect to the size, composition, independence and functioning of the Board and its committees, (ii) reflects those policies and practices in our Corporate Governance Guidelines and other governance documents, and (iii) evaluates the qualifications of, and recommends to the full Board, candidates for election as directors. The members of the Nominating and Governance Committee are James O. Ellis, Jr. (Chairman), Kevin P. Chilton and Steven T. Clontz. The Board has determined that the members of the Nominating and Governance Committee are independent within the meaning of the listing standards of The New York Stock Exchange. The Nominating and Governance Committee met five times in 2015.

The Nominating and Governance Committee operates pursuant to a written charter. A copy of the Nominating and Governance Committee’s charter is available on our website at www.level3.com.

Strategic Planning Committee

In connection with the execution of the STT Stockholder Rights Agreement, we agreed to form a new committee of the Board to be called the Strategic Planning Committee. The Strategic Planning Committee was created to provide advice and assistance to the Board regarding the Board’s role in monitoring and implementing our strategic plan, which includes (i) the results of our process of defining our broad strategy to achieve our business objectives and maximize the value of the company for our stockholders and other stakeholders and (ii) the related plans to implement that strategy.

The Strategic Planning Committee did not meet during 2015 and the Company and STT have determined that until further notice while this committee will remain a standing committee of the Board, it will not meet separately and will have a single member, Mr. Clontz, who will not be compensated for this committee membership.

Director Compensation

During 2015, each of our directors (other than Mr. Ellis, whose compensation is described below) who was not employed by us during 2015 earned fees for Board service consisting of a $75,000 annual cash retainer. The director who serves as the chair of the Audit Committee earned an additional $35,000 annual cash retainer and the director who serves as the chair of the Compensation Committee earned an additional $30,000 annual cash retainer for serving as chair of those committees. Each chair of the Nominating and Governance Committee and the Classified Business and Security Committee received an additional $20,000 for serving as chair of that committee.

Any member of the Board who was not employed by us during 2015 earned a $15,000 annual cash retainer for each non-chair membership on the Audit Committee and the Compensation Committee. Any member of the Board who was not employed by us during 2015 earned a $10,000 annual cash retainer for each

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non-chair membership on the Nominating and Governance Committee and the Classified Business and Security Committee. James O. Ellis, Jr., our Chairman of the Board, is entitled to receive an annual cash retainer of $135,000 for serving as our Chairman of the Board.

We also compensate our non-employee directors with grants of RSUs. Each non-employee member of the Board receives a grant of restricted stock units, or RSUs, as of July 1 of each year, with the number of units determined by dividing $150,000 (or $250,000 for Mr. Ellis) by the volume-weighted average price of our common stock over the period from January 1 to June 30. The total number of RSUs issued to each non-employee member of the Board is subject to an overall cap of 6,666 shares (or 11,111 shares for Mr. Ellis). These RSUs vest and settle in shares of our common stock on the following July 1^st.

We reimburse our non-employee directors for travel, lodging and other reasonable out-of-pocket expenses in connection with the attendance at Board, committee and stockholder meetings, as well as for other reasonable expenses related to service on the Board. We also provide liability insurance for our directors and officers. A group of insurance companies provides this coverage. The annual cost of this coverage is approximately $1.8 million.

We do not maintain any pension, nonqualified defined contribution or other deferred compensation plans for our non-employee directors.

The following table summarizes for 2015 the fees earned or paid in cash to our directors, the full grant date fair value of restricted stock unit awards made to our directors and other compensation received by our directors.

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The following indicates the RSUs held by our non-employee directors at December 31, 2015:

Stock Ownership Guidelines for Directors

The Compensation Committee has adopted guidelines for ownership of our common stock for our Board members. These guidelines are reviewed at least annually, and may be updated or modified based on a variety of factors including stock market conditions.

The members of our Board are subject to an ownership guideline requiring them to hold stock that has a value that is equal to or greater than seven times (7x) the current annual cash retainer for a Board member. For members of our Board, the Board requires that each member hold all shares of our common stock received as compensation for Board service until such time as the Board member’s ownership of common stock meets the ownership guideline.

Board members are permitted to sell stock to cover income tax liabilities associated with the vesting of a stock award even if the Board member does not then meet the ownership guideline. Restricted stock unit awards provided to members of the Board vest one year after grant. To determine a Board member’s compliance with the ownership guideline, all awarded but unvested restricted stock units will be treated as shares of issued common stock on a one for one basis. In addition, shares of common stock held by the Board member, his or her spouse and minor children, along with shares of common stock held in the individual’s retirement accounts and in trusts for the benefit of these individuals, will be included for purposes of determining the Board member’s satisfaction of the ownership guideline.

The Board encourages each Board member to hold all shares of common stock received as compensation for Board service, or otherwise acquired, until the Board member is no longer a Board member. Any Board member who sells or otherwise transfers shares of common stock (other than as permitted above with respect to stock award vesting) where after giving effect to the sale or transfer, the Board member would own common stock in an amount less than the ownership guideline must volunteer to resign from the Board. The Board does not believe that such person should necessarily leave the Board. However, there should be an opportunity for the Board through the Board’s Nominating and Governance Committee to review the continued appropriateness of the Board member’s continued membership on the Board under the circumstances.

Diversity and Inclusion at Level 3

Level 3 believes that diversity—of thoughts, backgrounds and experiences—affects everything we do. With nearly 13,000 employees around the world, we are a naturally diverse collective of people, languages, cultures and expertise, and we draw upon our different perspectives as we work toward our vision of connecting and protecting the networked world. Whether our employees are working together on a product launch, discussing the best solution for a multi-national customer or sharing ideas over lunch during an all-employee event, our inclusive approach informs nearly every aspect of our work.

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Our executives and employees are guided by Level 3’s core values—one of which is respect—and we are committed to diversity and inclusion in our company, in our communities and in the marketplace.

Our military recruiting, peer mentoring for women and eight employee resource groups, or ERGS, are some examples of how we are developing and implementing initiatives that enhance diversity and build a positive, inclusive culture.

These efforts are bearing fruit. Employee engagement, based on feedback and participation in our initiatives, is strong and improving. In addition to other acknowledgements, we have won several diversity and inclusion awards, naming us a top employer for veterans (Military Times EDGE and CivilianJobs.com) and for Lesbian, Gay, Bisexual and Transgender (LGBT) equality (100 out of 100 score on the Human Rights Campaign’s 2016 Corporate Equality Index). Level 3 also received the Gold-Level Optimas Award in Global Outlook from Workforce Week magazine.

Reaffirmed by these responses and awards, we will continue to improve and add to our initiatives as we grow our culture of diversity and inclusion. Read more about Levels 3’s diversity and inclusion initiatives at www.level3.com/en/careers/diversity-inclusion/.

Additional Information for Submission of Nominations for Director

Our By-laws require that a stockholder who wishes to nominate an individual for election as a director at our Annual Meeting of Stockholders (other than through proxy access) must give us advance written notice not less than 90 days prior to the anniversary date of the prior year’s Annual Meeting of Stockholders and not more than 120 days prior to the anniversary date of the prior year’s Annual Meeting of Stockholders, and must be a stockholder of record on the date of the giving of the required notice and on the record date for the determination of stockholders entitled to vote at that meeting. The stockholder’s notice must provide the information required by our By-laws, which is summarized below, and is qualified in its entirety by the full text of our By-laws as the definitive statement of the required notice information.

Please see the Frequently Asked Questions section of this proxy statement for additional information that must be included in a stockholder notice.

This notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. All notices must be delivered or mailed to the Secretary, Level 3 Communications, Inc., 1025 Eldorado Boulevard, Broomfield, Colorado 80021.

Information About Our Executive Officers

Set forth below is information as of March 15, 2016, about our executive officers other than Mr. Storey. Our executive officers have been determined in accordance with the rules of the SEC.

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Executive Succession Planning

The Board’s responsibilities include succession planning for our President and CEO, Jeff Storey, and an oversight role with respect to succession planning for Mr. Storey’s direct reports. The Board engages in succession planning discussions with respect to Mr. Storey on an annual basis and on a periodic but regular basis with respect to Mr. Storey’s direct reports. The Board has the opportunity to interact with internal potential successors to Mr. Storey throughout the year at Board and committee meetings and other informal settings.

Certain Relationships and Related Transactions

Review and Approval of Related Party Transactions. We review all relationships and transactions in which we and (i) our directors, (ii) our executive officers, (iii) any person known by us to beneficially own over five percent of our outstanding common stock or (iv) their respective immediate family members, are participants under a written related party transactions policy. The purpose of this review is to determine whether these

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persons have a direct or indirect material interest in the transaction. Members of our Legal Department are primarily responsible for the development and implementation of processes and controls to obtain information from the directors and executive officers regarding related person transactions and for then determining, based on the facts and circumstances, whether the company or a related person has a direct or indirect material interest in the transaction. As required under SEC rules, related person transactions determined to be directly or indirectly material to the company or a related person are disclosed in our Proxy Statement. In addition, our Audit Committee reviews and determines whether to approve or ratify any related person transaction with a value equal to or over $50,000. In its review of a related party transaction that meets this threshold, the Audit Committee will consider:

Any member of the Audit Committee who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting approval or ratification of the transaction. However, that member may be counted in determining the presence of a quorum at a meeting of the committee that considers the transaction.

Related Party Transactions

The Audit Committee has reviewed and approved or ratified all of the following transactions which took place during 2015.

Company Aircraft. We impute as income the cost of personal travel using our corporate aircraft. We note that when a guest accompanies a member of our senior management on business travel and if required by applicable U.S. Internal Revenue Service regulations, we impute as income the cost of that additional travel to that executive. To calculate the amount of imputed income, we use the Internal Revenue Service’s Standard Industry Fare Level, or SIFL, rates. In addition, in certain limited circumstances we impute as income the cost of personal travel to an executive to the extent that the personal use of the corporate aircraft is at the direction of the company and for the company’s benefit in attracting and retaining a member of senior management. For 2015, no one had imputed income of $120,000 or more for personal use of the corporate aircraft.

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APPROVE, ON AN ADVISORY BASIS, NAMED EXECUTIVE OFFICER COMPENSATION (ITEM 2)

Under the SEC’s rules, we are required to provide you with the opportunity to cast a vote on the compensation for our named executive officers, which we refer to as NEOs, as defined in our Compensation Discussion and Analysis, or CD&A, below. This proposal is frequently referred to as a “say-on-pay” vote. This vote is on an advisory basis. Our executive compensation program is intended to attract, retain and motivate the executive talent required to achieve our corporate objectives and increase stockholder value.

As part of our efforts to satisfy the need to attract, retain and motivate the individuals who possess the skills necessary to grow our business, management and our Compensation Committee believe that our compensation programs should reflect our compensation philosophy. This philosophy includes the following core beliefs:

Our executive compensation program is described in the CD&A, related compensation tables and other narrative executive compensation disclosures required by the disclosure rules of the SEC, all of which are found in this Proxy Statement. In particular, the CD&A, beginning on page 24 of this Proxy Statement, describes our executive compensation program in detail, and we encourage you to review it.

Since the vote on this proposal is advisory, it is not binding on us. Nonetheless, the Compensation Committee, which is responsible for approving the overall design and administering certain aspects of the executive compensation program, will take into account the outcome of the vote when making future executive compensation decisions. The Board of Directors recommends that you approve the following non-binding resolution that will be submitted for a vote at the 2016 Annual Meeting in support of our executive compensation program:

RESOLVED, that the compensation paid to the company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and any related material disclosed in the Proxy Statement, is hereby APPROVED.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.

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Compensation Committee Report

The Compensation Committee of the Board has reviewed this Compensation Discussion and Analysis and discussed the analysis with management. The Committee recommended to our Board that this Compensation Discussion and Analysis be included in Level 3’s Form 10-K for the year ended December 31, 2015 and Level 3’s Proxy Statement with respect to the 2016 Annual Meeting of Stockholders.

Compensation Committee

Michael J. Mahoney (Chairman)

Spencer B. Hays

Peter Seah Lim Huat

Peter van Oppen

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Executive Summary

Level 3 is a premier provider of global communication services, creating solutions that strengthen the growth, efficiency and security of businesses around the world. Our vision is to be the trusted connection to the networked world. To fulfill that vision, we need to attract, motivate and inspire exceptional leaders to join Level 3 and grow with us.

We have designed our executive compensation program to reward outstanding leadership in our complex and global organization and the Committee supports a program that aligns executive pay with both our performance and the interests of our stockholders.

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COMPENSATION DISCUSSION AND ANALYSIS

In this Compensation Discussion and Analysis, the individuals shown below are identified as our “Named Executive Officers,” or NEOs. Please refer to the Summary Compensation Table and the additional tables that follow for detailed information on compensation paid to our NEOs.

Our executive compensation program appropriately balances the following fundamental compensation elements:

We believe that each of these compensation elements plays a meaningful role in a broad-based compensation program and work together to incent sustainable performance to create long-term value for our stockholders, while also supporting our recruiting and retention needs.

To stay aligned with the interests of our stockholders, management meets regularly with stockholders and collects information regarding their thoughts and concerns, including those relating to our compensation programs. The Committee reviews this feedback and considers it when making changes to our executive compensation programs. The Committee also uses a Peer Group analysis when evaluating total compensation, as discussed in the Peer Group section below .

Executive Compensation Aligned with Company Performance

2015 was a successful year for Level 3. The compensation provided to our NEOs for 2015 both motivated and rewarded them for delivering solid financial results, increasing the stock price and completing the capital markets activities as outlined below.

Financial Performance. For the year ended December 31, 2015, the key financial measures we used to evaluate our performance were Core Network Services Revenue growth, Adjusted EBITDA and Sustainable Free Cash Flow (Sustainable Free Cash Flow is calculated considering a variety of factors, including Adjusted EBITDA, capital expenditures, net cash interest expense and working capital). Core Network Services revenue increased 25.2% in 2015 compared to 2014. Our full-year 2015 Adjusted EBITDA increased 39.2% over full-year 2014. Our full-year 2015 Sustainable Free Cash Flow was $626 million, an increase of $375 million over full-year 2014. Below are charts that show our growth in these three financial measures, over the last three years. Because tw telecom was acquired on October 31, 2014, our 2014 results included two months of tw telecom results and 2015 reflects the results of the combined companies for the entire year.

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Stock Price Appreciation. In 2015, our year-end stock price increased from $49.38 as of December 31, 2014, to $54.36, an increase of 10.1% year-over-year. This followed the increases in 2014, 2013 and 2012 of 48.9%, 43.5% and 36.0%, respectively.

Capital Markets Activities. In 2015, we refinanced $4.9 billion in debt, resulting in annual cash interest savings of over $110 million. We also worked to improve Level 3’s credit ratings, receiving multiple upgrades that resulted in 2015 year-end ratings of Ba3 (stable) and BB- (positive) for Moody’s and S&P respectively. As of the end of 2015, we reduced our ratio of net debt (defined as total debt less cash and cash equivalents) to Adjusted EBITDA to 3.8x from 4.4x at year-end 2014 on a pro forma basis for the tw telecom acquisition and excluding acquisition-related expenses. We also decreased our weighted average cost of debt, excluding capitalized leases, to 4.8% from 5.9%. In addition, the weighted average maturity on Level 3’s outstanding debt was extended from 5.6 years at year-end 2014 to 6.0 years at year-end 2015.

Reconciliations to the closest GAAP measure and/or an explanation of how we calculate these measures are contained in Annex 1 to this proxy statement.

When determining the bonus payouts for the NEOs, the Committee considered our financial performance, the customer experience, and the retention of key employees. In connection with our financial performance, the Committee placed an emphasis on the increases to the “exit run rate” of the business, meaning the monthly recurring revenue we billed in December 2015 (as compared to the previous December). In addition to these quantitative measures, the Committee considered our performance in integrating the employees, customers, products and network of tw telecom.

Compensation Best Practices

Our executive compensation program incorporates and is administered according to what we believe are the following best practices.

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Pay Mix. The charts below show the percentage of pay that is at-risk compensation. We consider compensation to be “at-risk” if the award or vesting is subject to achievement of performance goals and/or the value received is dependent on our stock price.

Response to the Advisory Say-on-Pay Vote

Every year, our stockholders have the opportunity to cast an advisory vote on executive compensation, which is commonly referred to as a “say-on-pay” vote. At our 2015 Annual Meeting of Stockholders, approximately 98% of the votes cast on the say-on-pay proposal relating to 2014 compensation were voted in favor of the proposal. We also received a 98% approval rate on the say-on-pay vote at the 2014 Annual Meeting of Stockholders.

To foster stockholder engagement on compensation related questions, when members of senior management meet one-on-one with stockholders, the discussion often includes a dialogue around the stockholder’s views of our executive compensation programs and the stockholder’s assessment of how closely the programs tie to performance.

In view of the strong stockholder support of our executive compensation at the 2014 and 2015 annual meetings, the Committee maintained the principal features and performance-based elements of the executive compensation program in 2015. To continually align our executive compensation program with stockholder interests, we made the following changes in 2015:

For the Annual Meeting, our stockholders will again have the opportunity to approve our executive compensation program through the advisory say-on-pay vote. We encourage our stockholders to review this Compensation Discussion and Analysis prior to casting their advisory votes on this year’s proposal.

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Executive Compensation Program Philosophy

Our success depends in large part on our ability to attract, retain and motivate qualified executives who possess the skills necessary to grow our business. The following core principles provide a framework for our executive compensation program:

How We Determine Executive Compensation

Role of the Compensation Committee

Compensation decisions for our NEOs generally take place on an annual basis in February. The Committee determines the following with respect to our NEOs, other than our CEO. The Committee makes a recommendation to the independent members of the full Board for their approval of the following with respect to our CEO:

In making its determinations on compensation for an NEO, the Committee considers, among other factors:

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The determination of any bonus payout is at the full discretion of the Committee with respect to our NEOs, other than our CEO. The Committee makes a recommendation to the independent members of the full Board for their approval with respect to our CEO. In exercising this discretion, decisions are based on the Committee’s and Board’s assessment of the individual performance of our NEOs (including consideration of achievement of individual performance goals) and each NEO’s contribution to our meeting our overall corporate goals. Our Committee also considers our CEO’s recommendations with respect to the other NEOs. Individual performance targets or performance measures are not set for our NEOs.

We do not set individual performance targets or performance measures for our NEOs to receive LTI awards. The determination of these awards is made by the Committee in their discretion, which is informed by, among other things:

The Committee uses Peer Group data as a guideline to inform its action, but does not benchmark compensation to any specific level of compensation of the members of our Peer Group.

The Committee can exercise its discretion to implement, reject or modify any recommendations provided by any member of management, including our CEO.

Role of Independent Consultant

Prior to October 2015, the Committee retained Towers Watson & Co. as its compensation consultant. Towers Watson provided data and advice for the compensation determinations made by the Committee in February 2015.

The Committee uses a “Peer Group” as an additional source of information in reviewing compensation decisions and overall compensation program design for our senior executives, including the NEOs. Towers Watson assisted the Committee by researching publically traded companies in the same or similar industries, of similar size relative to revenue, market capitalization, enterprise value, EBITDA, and employee headcount. Towers Watson recommended adding and deleting companies to the Peer Group based on changes in Level 3 and the current Peer Group companies as well as changes to companies considered within the industry. The Committee reviews the companies in the executive compensation peer group annually.

Towers Watson provided the Committee with competitive information on compensation levels, programs and practices of our Peer Group. Towers Watson provides additional consulting services to us, primarily related to our EMEA region and as actuaries to the trustees under an EMEA pension plan that we acquired. Towers Watson also provides competitive compensation data for our Latin America region. None of our NEOs, other executive officers or any of our Board members participate in the EMEA pension plan nor are they included in the Latin American compensation analysis. In addition, the consulting teams at Towers Watson that provided these services for EMEA and Latin America did not consult with the team that provides services to the Committee.

For 2015, we paid Towers Watson approximately $58,000 for services provided to the Committee and approximately $71,000 for the other consulting services. For these other consulting and actuarial services,

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the decision to engage Towers Watson was not made by the management team that supports the Committee. Level 3 management did not retain any other compensation consultants to address the 2015 base pay and LTI awards of our NEOs. During 2015, the Committee conducted an evaluation of Towers Watson’s independence after considering the relevant regulations of the Securities and Exchange Commission and the listing standards of the New York Stock Exchange. The Committee concluded that Towers Watson was independent of management and that the other services performed by Towers Watson raised no conflict of interests with respect to the advice provided to the Committee.

In 2015, the Committee issued a request for proposal for executive compensation consulting services to the Committee, as a normal course of periodically reviewing the services provided to the Committee. As a result of this process, the Committee retained Deloitte Consulting LLP (“Deloitte Consulting”) as its compensation consultant in August 2015. Deloitte Consulting advised the Committee on the 2015 bonus payments, the 2016 Peer Group, and will advise the Committee on 2016 executive and board compensation matters.

Deloitte Consulting, along with other subsidiaries of Deloitte LLP (the parent of Deloitte Consulting), provided advisory and consulting services to us in 2015 primarily related to (a) our efforts to migrate our Enterprise Resource Planning (ERP) financial applications in 2015 and (b) property tax valuation services. The professionals delivering these services did not consult with the team that provides services to the Committee. For 2015, we incurred costs with Deloitte Consulting of approximately $100,000 for services provided to the Committee and we paid Deloitte Consulting and its affiliates approximately $3.6 million for the additional services described above. The decision to engage Deloitte Consulting and its affiliates for the advisory services relating to our ERP migration and property tax valuation services was not made by the Committee or the management team that supports the Committee. The Committee has concluded that Deloitte Consulting is independent of management and that the other services performed by Deloitte Consulting and its affiliates raised no conflict of interests with respect to the advice provided to the Committee.

Role of Management

Our CEO provides recommendations for each NEO’s base salary, bonus and LTI awards. He does not provide an assessment of the individual’s performance using quantifiable individualized performance measures. He develops his recommendations based on his subjective view of:

Towers Watson provided our CEO with the same information and analysis that it provided to the Committee, which in part informed his recommendations. With respect to 2015 compensation determinations, Mr. Storey was also provided with analyses by our Chief Administrative Officer and our Senior Vice President responsible for compensation and benefits in our Human Resources Department.

Peer Group

The Committee determines the Peer Group companies with assistance from the independent compensation consultant. The Committee first considers companies that are in our industry and lines of business, are competitors for our executive talent, and/or are considered as peers by proxy advisors. We then eliminate companies based on characteristics, such as revenue, market cap, number of employees and geography, which are not comparable with us.

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In October 2015, the Committee, with assistance from Deloitte Consulting, added three new companies to and removed five companies from the Peer Group.

The decision to remove Automatic Data Processing, Fiserv, NCR and Windstream was based on the Committee’s view that there was no longer good alignment between our ongoing business and the industry and market opportunities pursued by these companies. The Committee removed Dish Network from the list of peers based on its judgement that some of the executive pay practices at Dish were not consistent with other industry peers. Akamai Technologies, Equinix and Sprint were added because they are similarly-sized direct competitors of Level 3.

To assess how closely we align to the Peer Group companies, the Committee compares several metrics and determines our relative position to the members of the Peer Group. For the Peer Group companies, we used available data for the most recent fiscal year. For comparisons before October 2015, we used pro forma data for Level 3, taking into account the completion of the tw telecom acquisition. The percentile rankings shown below show the percentage of Peer Group companies that are the same or lower than us with respect to the particular metric. Level 3 is at the 72^nd percentile, on average, across the four metrics. In the future, the Committee may decide to make changes to the Peer Company so that Level 3 is closer to the 50^th percentile rankings. For now, the Committee considers the percentile ranking when making executive compensation decisions.

Peer Group Percentile

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While the Committee relies on the Peer Group analysis for market data comparisons, it does not consider the Peer Group analysis as a substitute for its collective business judgment.

Components of 2015 Executive Compensation

The principal components of our executive compensation program, along with the decisions made for each component relative to 2015 compensation, are shown below. We have also provided the metrics used for our performance-based compensation (bonus and PRSUs). Given the NEOs’ roles in leading Level 3 during 2015, the Committee considers the total compensation provided to the NEOs as set forth below for 2015 to be appropriate given our financial, operational and strategic achievements. The Committee has also concluded that the total compensation paid to the NEOs for 2015 is consistent with our compensation philosophy of paying for performance and rewarding the creation of stockholder value.

Base Salary

Base salary levels for our NEOs are typically reviewed annually as part of our performance review process, as well as upon a promotion or other change in job responsibility.

Determination of 2015 Salaries: In February 2015, the Committee reviewed the base salaries for our NEOs with recommendations from Mr. Storey. In March 2015, Ms. Pang received a 5% salary increase to $483,000 based on market data and individual performance.

Mr. Blount joined us on October 31, 2014 as a result of the acquisition of tw telecom Inc. At that time, the Committee determined that Mr. Blount’s salary with tw telecom was commensurate with his responsibilities as the Regional President, North America and Asia and no salary adjustment was needed.

Base salaries for the other NEOs remained the same during 2015.

Bonus

Our Corporate Discretionary Bonus Program is designed to reward our executives for performance against short-term financial and business goals. Our Committee does not establish performance targets that, if met in full or in part, automatically results in the payment of a bonus to any NEO. Instead, the Committee considers the performance against preset goals as one factor that influences the Committee’s decision to pay a bonus. These goals are not intended as specific targets.

In February 2015, our Committee determined the 2015 financial and business goals for the Corporate Discretionary Bonus Program, of which all NEOs are participants. These bonuses for 2015 did not have a preset minimum or maximum payout.

In August of each year, the Committee reviews the goals for the Corporate Discretionary Bonus Program to confirm that they remain appropriate. The Committee reserves the right to make adjustments during the year to the goals or the relative weighting assigned to the goals. No changes were made during 2015 to the goals or weightings or to their relative weightings.

The Committee assesses these goals and objectives after the completion of the year and determines the percentage at which to fund the bonus pool for our full employee base. When performance is above the targeted level, the Committee may elect to pay a bonus above the range of targeted payouts. Performance goals are assigned a weighting, which is not absolute in its application, but serves as a guideline to inform the Committee’s determination of the bonus payment level.

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Determination of 2015 Bonuses:

The 2015 Corporate Discretionary Bonus Program goals were:

The Committee also takes into account additional factors such as mergers, acquisitions, divestitures, capital markets activities, prevailing market and economic conditions and the subjective assessment of individual performance. These factors have no predetermined weighting in the assessment.

In February 2016, when determining the 2015 bonuses for the NEOs, the Committee considered our performance against the objectives described above as well as each NEO’s individual contribution to our success in 2015. Our performance against objectives is covered in the following items.

2015 Financial Goals. The following table summarizes our Board-approved budget targets, which may differ from our publicly issued outlook, as well as our actual results for 2015, as adjusted for foreign currency fluctuations and for payments of severance and accelerated interest payments that were not anticipated when the budget was initially set.

Reconciliations to the closest GAAP measure and/or an explanation of how we calculate these measures are contained in Annex 1 to this proxy statement.

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Customer experience. During the course of the year, our performance against this goal was measured by various customer satisfaction surveys. Our surveys use an eleven point scale, with a score of ten (the “top box”) representing very satisfied and a score of zero (the “bottom box”) representing very dissatisfied. Customer satisfaction scores increased globally versus 2014 results with increases in North America and EMEA and a nonsignificant decline in Latin America. Management and the Committee were satisfied with the performance toward this objective.

Attract and Retain an Appropriate Workforce. Given the nature of this objective, no specific quantitative targets were established by the Committee. The Committee determined that we have been able to retain the appropriate workforce, based in part on the review of a variety of voluntary turnover rate statistics, which showed our turnover rates were relatively flat globally with a significant decrease in EMEA and Latin America and a nonsignificant increase in North America compared to the prior year and below our industry benchmark.

Other Factors. The Committee also considered the integration of tw telecom employees, customers and network which substantially improved our ability to deliver competitive, high quality communications services in the United States, the capital markets activities completed during 2015, as discussed in more detail on in the Financial Performance section, above, and our stock price performance relative to peers.

For the year ended December 31, 2015, the Committee and the full Board of Directors were pleased with Mr. Storey’s leadership of Level 3 given:

The Committee’s assessment of our performance against the objectives described above, with an emphasis on the financial results, informed the Committee’s determination of the level at which to fund the bonus pool for the broad employee base.

Based on the performance described above and each NEO’s individual contribution to this performance, the Committee approved the payment of cash bonuses as indicated in the table below. The Board approved the payment of Mr. Storey’s bonus, based on a recommendation from the Committee:

Mr. Crouch’s bonus opportunity includes a supplement that was offered to him as an incentive to assume his role as Regional President of our EMEA region and our Global Accounts Management division. John Blount’s bonus consists of a non-discretionary bonus of $571,154 paid over the course of 2015 pursuant to his retention agreement, as well as a discretionary bonus of $500,000 that was paid pursuant to his retirement agreement as discussed in the section on Agreements with and Retirement of John Blount, below.

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Stock Based Awards

A critical component of our executive compensation philosophy is providing appropriate incentives to executives through our LTI program. For 2015, our LTI program included two types of equity awards. The first is performance-based restricted stock units — or PRSUs — that are earned only if a specified performance metric is achieved. If the required level of performance is achieved, the PRSUs fully vest over a period of three years after the start of the performance period, subject to the participant’s continued employment. The second type of equity award is restricted stock units — or RSUs — that generally vest over a period of 4 years, subject to the participant’s continued employment and the terms of the specific grant. We believe these awards serve several purposes, including:

Individual LTI awards are made after the Committee has determined the total number of awards or “pool” that will be available for the annual grants. The Committee considers several factors to inform its determination of the total number of awards in the pool. These factors include the Shareholder Value Transfer methodology, the “run rate” (as defined below) and additional factors that the Committee determines are appropriate.

The Shareholder Value Transfer, or SVT, methodology informs the determination of the number of shares for the pool available for LTI awards for the year.

This approach limits the number of shares available for grant each year and can vary in value depending upon our common stock price on the date of grant. The SVT methodology analyzes, as of the date of its calculation, the aggregate fair value of the current year’s LTI awards as a percent of our total market capitalization, and is calculated on a gross basis without taking into account cancellations and forfeitures of awards.

“Run rate” refers to a measure of the annual dilution to stockholders from our grant of common stock-based awards, and is defined as a fraction, the numerator of which is the shares issued pursuant to a plan and the denominator of which is the total shares outstanding.

RSUs. An RSU represents our agreement to issue to the employee shares of our common stock (or, in the Committee’s discretion, cash) on the date of vesting, so long as the employee is employed on that date. RSUs are generally granted on July 1 of each year. RSU grants for new hires, retention and promotions are made on the first day of the quarter following the event. The restrictions on RSUs generally lapse in equal annual installments over four years, subject to the terms of the specific grant. On the vesting date, the employee is issued the number of shares of common stock equal to the number of RSUs vested. Shares may be sold to cover tax withholding requirements with net shares deposited in employee brokerage accounts.

PRSUs. A PRSU represents our agreement to issue to the employee shares of our common stock (or, in the Committee’s discretion, cash) on the date that the PRSUs vest, so long as specific performance objectives are achieved. PRSUs are generally granted on April 1 of each year. The PRSUs issued in 2015 measure the performance period of January 1, 2015 through December 31, 2016, with the performance objective based on Adjusted EBITDA growth.