February 1, 2004
Mpower Shares the Wealth
By Tara Seals
The boom might not quite be back,
but the bust just might be fading into memory. In a move reminiscent of the
high-flying 90s, Mpower Communications Corp. has launched a new equity
program for its agents based on stock warrants.
The program, which launched in December, offers Mpower agents
options to buy shares in the CLEC in exchange for increasing monthly recurring
revenue. Agents receive warrants when they increase their monthly billing by
This program is creative, unique and certainly brand new, says Jim Ferguson, president of sales and marketing at Mpower.
Agents must beat their monthly revenue numbers by $10,000 to
qualify for warrants. Thus, if a master agency billed $50,000 in recurring revenue
in September (the programs baseline month), it must grow to $60,000 to
receive 10,000 warrants. If it grows revenue by $15,000, 15,000 warrants are
awarded, and so on. Once a distribution is made, the agents baseline is reset
to the new level. So if they billed $50,000 in September and $67,000 in
October, they receive 17,000 warrants, explains Ferguson. But they have to
beat that $67,000 by $10,000 next time to gain more warrants.
The program, which is additional to regular compensation and
bonuses, is limited to master agents with a revenue commitment and a signed
agreement with Mpower, and they must register to participate. New agents also
are eligible and start off with a baseline of zero, but Ferguson says this does
not give them an unfair advantage. In both cases, the respective agent has to
bring us an additional $10,000 in revenue, he says. There are different
types of agents, and they have different ways of growing their revenue streams.
Stock warrants are worth the price of Mpower Holding Corp.
shares (the parent companys stock) for the day they are issued. Agents are
vested immediately once they receive the warrants and can exercise them at any
point until they expire three years later.
A warrant program assumes a companys stock appreciates in
value. For instance: If a warrant is issued when the stock is trading at $1.50,
the agent could wait and exercise the warrant later, when the stock price is,
say, $3.75. The value of that warrant is then $2.25, so 10,000 warrants would
have a value of $22,500.
So far, it looks like facilities-based Mpower is on the track
In the third quarter of 2003 Mpower posted a net loss of $1.2
Master agent and program participant Vince Bradley, president
Meanwhile, the CLEC, which offers service in California,
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