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.  )

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CenturyTel, 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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2010 Notice of Annual Meeting

and Proxy Statement

and

Annual Financial Report

Thursday, May 20, 2010
2:00 p.m. local time
100 CenturyLink Drive
Monroe, Louisiana

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 20, 2010

This proxy statement and related materials are
available at www.envisionreports.com/ctl.

CenturyTel, Inc.
100 CenturyLink Drive
Monroe, Louisiana 71203

Notice of Annual Meeting of Shareholders

TIME AND DATE		2:00 p.m. local time on Thursday, May 20, 2010
PLACE		Corporate Conference Room CenturyLink Headquarters 100 CenturyLink Drive Monroe, Louisiana
ITEMS OF BUSINESS		(1) To elect as Class I directors the four nominees named in the accompanying proxy statement
		(2) To ratify the appointment of KPMG LLP as our independent auditor for 2010
		(3) To amend our articles of incorporation to change our name to CenturyLink, Inc.
		(4) To approve our 2010 Executive Officer Short-Term Incentive Plan
		(5) To act upon four separate shareholder proposals if properly presented at the meeting
		(6) To transact such other business as may properly come before the meeting and any adjournment.
RECORD DATE		You can vote if you are a shareholder of record on March 22, 2010.
PROXY VOTING		Shareholders are invited to attend the meeting in person. Even if you expect to attend, it is important that you vote by telephone or the Internet, or by completing and returning a proxy or voting instruction card.

Stacey W. Goff
Secretary

April 5, 2010

TABLE OF CONTENTS

		Page
GENERAL INFORMATION			1
ELECTION OF DIRECTORS			6
CORPORATE GOVERNANCE			13
Governance Guidelines			13
Independence			17
Committees of the Board			17
Director Nomination Process			18
Compensation Setting Process			20
Risk Oversight			20
Chairman and Lead Outside Director			20
Waivers of Governance Requirements			21
Access to Information			21
RATIFICATION OF THE SELECTION OF THE INDEPENDENT AUDITOR			22
AUDIT COMMITTEE REPORT			23
PROPOSAL TO CHANGE NAME			24
PROPOSAL TO APPROVE THE CENTURYLINK 2010 EXECUTIVE OFFICER SHORT-TERM INCENTIVE PLAN			24
SHAREHOLDER PROPOSALS			29
OWNERSHIP OF OUR SECURITIES			37
Principal Shareholders			37
Executive Officers and Directors			39
COMPENSATION DISCUSSION AND ANALYSIS			40
General Compensation Philosophy			40
Compensation Methodologies			40
Allocation of Compensation			41
Salary			42
Short-Term Incentive Bonuses			42
Long-Term Equity Incentive Programs			43
Other Benefits			45
Our Compensation Decision-Making Process			49
Discontinuance of Supplemental Executive Retirement Plan			54
Forfeiture of Prior Compensation			55
Stock Ownership Guidelines			55
Use of Employment Agreements			55
Other Compensation Matters			55
COMPENSATION COMMITTEE REPORT			56
EXECUTIVE COMPENSATION			56
Overview			56
Incentive Compensation			59
Pension Benefits			62
Deferred Compensation			66
Potential Termination Payments			67
DIRECTOR COMPENSATION			72
PERFORMANCE GRAPH			75
TRANSACTIONS WITH RELATED PARTIES			76
Recent Transactions			76
Review Procedures			76
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE			76
OTHER MATTERS			77
Conduct of the Meeting			77
Shareholder Nominations and Proposals			77
Annual Financial Report			77
Appendix A – Annual Financial Report			A-1
Appendix B – 2010 Executive Officer Short-Term Incentive Plan			B-1

CenturyTel, Inc.
100 CenturyLink Drive
Monroe, Louisiana 71203

PROXY STATEMENT

April 5, 2010

GENERAL INFORMATION

Why am I receiving these proxy materials?

     Our Board of Directors is soliciting your proxy to vote at our 2010 annual meeting of shareholders because you owned shares of our stock at the close of business on March 22, 2010, the record date for the meeting, and are entitled to vote those shares at the meeting. Our proxy materials are being made available to you on the Internet beginning on or about April 7, 2010. This proxy statement summarizes information regarding matters to be considered at the meeting. You do not need to attend the meeting to vote your shares.

Why did I receive a notice of Internet availability of proxy materials instead of a full set of proxy materials?

     In accordance with rules recently adopted by the Securities and Exchange Commission, we may furnish proxy materials, including this proxy statement, to shareholders by providing a written notice of how to access these documents on the Internet and how to vote your shares. Most shareholders will not receive printed copies of the proxy materials unless requested. If you would like to receive a paper copy of our proxy materials, you should follow the instructions for requesting the materials in the notice.

What do our materials include?

     The full set of our materials include:

	•		the notice and proxy statement for the meeting,
	•		proxy or voting instruction cards, and

•

our 2009 annual report furnished in the following two parts: (1) our 2009 Financial Report, which constitutes Appendix A to this proxy statement, and (2) our 2009 Review and CEO’s Message, prepared as a separate booklet.

Our 2009 annual report is not a part of our proxy soliciting materials.

When and where will the meeting be held?

     The meeting will be held at 2:00 p.m. local time on Thursday, May 20, 2010, in the corporate conference room at our corporate headquarters, 100 CenturyLink Drive, Monroe, Louisiana. If you would like directions to the meeting, please see our website, http://ir.centurylink.com.

On what matters will I vote at the meeting?

     Shareholders will vote on the following items at the meeting:

	•		the election of the four Class I director nominees named in this proxy statement (Item 1);
	•		the ratification of the appointment of KPMG LLP as our independent auditor for 2010 (Item 2);
	•		the amendment of our articles of incorporation to change our name to CenturyLink, Inc. (Item 3);
	•		the approval of our 2010 Executive Officer Short-Term Incentive Plan, which we refer to below as the “Incentive Plan” (Item 4);
	•		the four shareholder proposals described in this proxy statement if each is properly presented at the meeting (Items 5-8); and
	•		any other matters properly brought before the meeting.

What are the Board’s voting recommendations?

     The Board recommends that you vote your shares:

	•		FOR each of the Class I director nominees, the ratification of KPMG LLP as our independent auditor for 2010, the amendment to change our name to CenturyLink, Inc. and the approval of the Incentive Plan (Items 1 – 4); and
	•		AGAINST each of the four shareholder proposals (Items 5 – 8).

How many votes may I cast?

     You may cast one vote for every share of our common stock or Series L preferred stock that you owned on the record date. Our common stock and Series L preferred stock vote

together as a single class on all matters. In this proxy statement, we refer to these shares as our “Common Shares” and “Preferred Shares,” respectively, and as our “Voting Shares,” collectively.

How many votes can be cast by all shareholders?

     As of the record date, we had 299,766,053 Common Shares and 9,434 Preferred Shares outstanding, all of which were entitled to one vote per share.

How many shares must be present to hold the meeting?

     Our bylaws provide that the presence at the meeting, in person or by proxy, of a majority of the outstanding Voting Shares constitutes a quorum to organize the meeting.

What is the difference between holding shares as a shareholder of record and as a beneficial owner?

     If shares are registered in your name with our transfer agent, Computershare Investor Services L.L.C., (i) you are the “shareholder of record” with respect to those shares and (ii) you may directly vote these shares, together with any shares credited to your account if you are a participant in our automatic dividend reinvestment and stock purchase service or our employee stock purchase plans.

     If your shares are held on your behalf in a stock brokerage account or by a bank or other nominee, you are the “beneficial owner” of shares held in “street name.” We have requested that our proxy materials be made available to you by your broker, bank or nominee who is considered the shareholder of record with respect to those shares.

If I am a shareholder of record, how do I vote?

     If you are a shareholder of record, you may vote in person at the meeting or by proxy in any of the following three ways:

	•		call 1-800-652-8683 and follow the instructions provided;
	•		log on to the Internet at www.envisionreports.com/ctl and follow the instructions at that site; or
	•		request a paper copy of our proxy materials and, following receipt thereof, mark, sign and date your proxy card and return it to Computershare.

Please note that you may not vote by telephone or the Internet after 1:00 a.m. Central Time on May 20, 2010. You may revoke or change your proxy at any time before it is voted at the meeting by giving a written revocation notice to our secretary, by delivering timely a proxy bearing a later date or by voting in person at the meeting.

If I am a beneficial owner of shares held in street name, how do I vote?

     As the beneficial owner, you have the right to instruct your broker, bank or nominee how to vote your shares by using any voting instruction card supplied by them or by following their instructions for voting by telephone, the Internet, or in person.

If I am a benefit plan participant, how do I vote?

     If you beneficially own any of our Common Shares by virtue of participating in any retirement plan of CenturyLink or Embarq, then you will receive separate voting instruction cards that will enable you to direct the voting of these shares. These voting instruction cards entitle you, on a confidential basis, to instruct the trustees how to vote the shares allocated to your plan account. Some of the cards will similarly entitle you to direct the voting of a proportionate number of plan shares for which properly executed instructions are not timely received and some will require you to act in your capacity as a “named fiduciary,” which requires you to exercise your voting rights prudently and in the interest of all plan participants. Plan participants who wish to vote should complete and return voting instruction cards in the manner provided by such cards. If you elect not to vote the shares allocated to your accounts, your shares will be voted in the manner specified in the voting instruction cards. Plan participants that wish to revoke their voting instructions must contact the trustee and follow its procedures.

What vote is required to elect a director at the meeting?

     Our bylaws provide that each of the four directors nominated to serve as Class I directors will be elected if the number of votes cast in favor of the director exceeds the number of votes withheld with respect to the director. You may vote “for” all director nominees or withhold your vote for any one or more of the director nominees. If any of the four directors fail to receive a majority of the votes cast at the meeting, our bylaws will require such director to tender his resignation to the Board for its consideration.

What vote is required to adopt the other proposals at the meeting?

     The affirmative vote of the holders of a majority of the Voting Shares present in person or represented by proxy and entitled to vote at the meeting is required to ratify the appointment of KPMG LLP as our independent accountants and to approve the Incentive Plan and each of the shareholder proposals.

     The affirmative vote of the holders of two-thirds of the Voting Shares present in person or represented by proxy and entitled to vote at the meeting is required to amend our articles of incorporation to change our corporate name.

If I “abstain” from voting, what effect will that have on the meeting?

     Shares as to which the proxy holders have been instructed to abstain from voting with respect to any particular matter will be treated under the Company’s bylaws as not being present or represented for purposes of such vote. Because all matters must be approved by a specified percentage of votes cast or Voting Shares present or represented at the meeting, abstentions will

not affect the outcome of any such vote. Shareholders abstaining from voting will, however, be counted as present for purposes of constituting a quorum to organize the meeting.

Can my shares be voted if I do not return the proxy card and do not attend the meeting in person?

     Under the rules of the New York Stock Exchange, brokers who hold shares in street name for customers may, subject to certain exceptions, vote in their discretion on matters when they have not received voting instructions from beneficial owners. Under these rules, brokers who do not receive such instructions will be entitled to vote in their discretion at the meeting with respect to the ratification of the appointment of the independent auditor, the amendment to our articles to change our corporate name and the approval of the Incentive Plan, but will not be entitled to vote in their discretion with respect to the election of directors or any of the shareholder proposals. If brokers who do not receive voting instructions do not, or cannot, exercise discretionary voting power (a “broker non-vote”) with respect to any matter to be considered at the meeting, shares that are not voted will be treated as present for purposes of constituting a quorum to organize the meeting but not present with respect to considering such matter. Because all matters must be approved by a specified percentage of the votes cast or Voting Shares present or represented at the meeting, broker non-votes with respect to these matters will not affect the outcome of the voting.

What if I do not vote for a proposal on the proxy card I return?

     If you properly execute and return a proxy or voting instruction card, your shares will be voted as you specify. If you are a shareholder of record and make no specifications on your validly submitted proxy card, your shares will be voted (i) FOR the director nominees, (ii) FOR the ratification of the selection of KPMG LLP as our independent auditor, (iii) FOR the amendment to change our corporate name, (iv) FOR the Incentive Plan, and (v) AGAINST each of the shareholder proposals.

     If you are a beneficial owner of shares and do not give voting instructions to your broker, bank or nominee, they will be entitled to vote your shares only with respect to the matters specified in response to the immediately preceding question.

Who pays for soliciting proxies?

     We will pay all expenses of soliciting proxies for the meeting. Proxies may be solicited personally, by mail, by telephone or by facsimile by our directors, officers and employees, who will not be additionally compensated therefor. We will also request persons holding Voting Shares in their names for others, such as brokers, banks and other nominees, to forward materials to their principals and request authority for the execution of proxies, and we will reimburse them for their expenses incurred in connection therewith. We have retained Innisfree M&A Incorporated, New York, New York, to assist in the solicitation of proxies, for which we will pay Innisfree fees anticipated to be $15,000 and will reimburse Innisfree for certain of its out-of-pocket expenses.

Do I need identification to attend the meeting in person?

     Yes. Please bring proper identification, together with the notice of Internet availability mailed to you, which will serve as your admission ticket. If your shares are held in street name, please bring acceptable proof of ownership, such as a letter from your broker or an account statement stating or showing that you beneficially owned Voting Shares on the record date.

Could other matters be considered and voted upon at the meeting?

     Management has not timely received any notice that a shareholder desires to present any matter for action at the meeting in accordance with our bylaws (which are described in “Other Matters – Shareholder Nominations and Proposals”) other than the shareholder proposals described in this proxy statement, and is otherwise unaware of any matter to be considered by shareholders at the meeting other than those matters specified in the accompanying Notice of the meeting. Our proxy and voting instruction cards, however, will confer discretionary voting authority with respect to any other matter that may properly come before the meeting. It is the intention of the persons named therein to vote in accordance with their best judgment on any such matter.

What happens if the meeting is postponed or adjourned?

     Your proxy will still be valid and may be voted at the postponed or adjourned meeting. You will still be able to change or revoke your proxy until it is voted.

ELECTION OF DIRECTORS

(Item 1 on Proxy or Voting Instruction Card)

     As of May 20, 2010, the Board of Directors will be fixed at 13 members, which are divided under our articles of incorporation into three classes. Members of the respective classes hold office for staggered terms of three years, with one class elected at each annual shareholders’ meeting. The shareholders will elect four Class I directors at the meeting. Acting upon the recommendation of its Nominating and Corporate Governance Committee, the Board of Directors has nominated the four individuals listed below to serve as Class I directors.

     Unless authority is withheld, all votes attributable to the shares represented by each duly executed and delivered proxy will be cast for the election of each of these below-named nominees. Under our bylaw nominating procedures, these nominees are the only individuals who may be elected at the meeting. For additional information on our nomination process, see “Corporate Governance - Director Nomination Process.” If for any reason any such nominee should decline or become unable to stand for election as a director, which we do not anticipate, votes will be cast instead for another candidate designated by the Board, without resoliciting proxies.

     As discussed further under “General Information – What vote is required to elect a director at the meeting?”, each of the four nominees must receive a majority of the votes cast to be elected at the meeting.

     The following provides certain information with respect to each nominee, each other director whose term will continue after the meeting, and our executive officers. As discussed further elsewhere herein, five of our below-listed directors formerly served as directors of Embarq Corporation prior to our July 1, 2009 merger with Embarq Corporation, which we refer to herein as Embarq.

Class I Directors (for term expiring in 2013):

W. Bruce Hanks, age 55; a director since 1992; a consultant with Graham, Bordelon and Co., Inc., an investment management and financial planning company, since December 1, 2005; Athletic Director of the University of Louisiana at Monroe from March 2001 to June 2004; held various executive positions at CenturyLink from August 1980 through March 2001, most notably Chief Operating Officer, Senior Vice President – Corporate Development and Strategy, Chief Financial Officer, Senior Vice President – Revenues and External Affairs, and President – Telecommunications Services; worked as a certified public accountant with Peat, Marwick & Mitchell for three years prior to then; currently an advisory director of IberiaBank Corporation; also served on the executive boards of (i) the National Telecommunications Industry Association, (ii) the Cellular Telecommunications Industry Association and (iii) the National Rural Telecom Association, as well as numerous non-profit boards.

Committee Memberships:		Audit (Chairman); Risk Evaluation

C. G. Melville, Jr., age 69; a director since 1968; private investor since 1992; prior to then, served as President of Melville Equipment, Inc., a family-owned distributor of marine and industrial equipment, for nearly 30 years and as the chief executive officer of a family-owned telephone company for six years prior to its sale.

Committee Memberships:		Risk Evaluation (Chairman); Nominating
		and Corporate Governance

William A. Owens, age 69; a director since July 1, 2009; non-executive Chairman of the Board of CenturyLink since July 1, 2009; Managing Director, Chairman and Chief Executive Officer of AEA Investors Asia, a private equity company, since April 2006; Vice Chairman, President and Chief Executive Officer of Nortel Networks Corporation, a global supplier of communications equipment, from 2004 to 2005; Chairman and Chief Executive Officer of Teledesic LLC, a satellite communications company, from 1998 to 2003; served in the U.S. military from 1962 to 1996 holding various key leadership positions, including Vice Chairman of the Joint Chiefs of Staff; currently a director of Polycom, Inc., Wipro Limited, and Intelius Inc.; formerly a director of AEA Investors LLC, Flow Mobile, Unifrax Corporation, Amerilink within the past five years; a director of Embarq prior to July 1, 2009.

Committee Memberships:		Nominating and Corporate Governance;
		Risk Evaluation

Glen F. Post, III, age 57; a director since 1985; Chief Executive Officer of CenturyLink since 1992, and President since July 1, 2009; Chairman of the Board of CenturyLink between June 2002 and June 2009; held various positions at CenturyLink between 1976 and 1993; most notably Treasurer, Chief Financial Officer and Chief Operating Officer.

The Board unanimously recommends a vote FOR each of these nominees.

Class II Directors (term expires in 2011):

Virginia Boulet, age 56; a director since 1995; Special Counsel at Adams and Reese LLP, a law firm, since March 2002; prior to then, practiced as a corporate and securities attorney for Phelps Dunbar, L.L.P. from March 1992 to March 2002 and Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P. from May 1983 to March 1992; currently a director of W&T Offshore, Inc.

Committee Membership:		Nominating and Corporate
		Governance (Chairperson);
		Compensation

Peter Brown, age 51; a director since July 1, 2009; Chairman of Grassmere Partners, LLC, a private investment firm, since July 2009; held several executive level positions, including Chairman of the Board, President and Chief Executive Officer, and Chief Financial Officer, with AMC Entertainment Inc., a theatrical exhibition company, from 1990 until his retirement in February 2009; founded Entertainment Properties Trust, a NYSE-listed real estate investment trust, in 1997 and served as its Chairman of the Board of Trustees until 2003; serves or has served on numerous community and civic boards; formerly a director of National CineMedia, Inc. and Midway Games, Inc. within the past five years and a director of Embarq prior to July 1, 2009.

Committee Memberships:		Audit; Risk Evaluation

Richard A. Gephardt, age 69; a director since July 1, 2009; President and Chief Executive Officer of Gephardt Group, a multi-disciplined consulting firm, since January 2005; consultant to Goldman Sachs & Co. since January 2005; strategic advisor in the government affairs practice group of DLA Piper between June 2005 and December 2009; senior advisor to FTI Consulting between January 2007 and December 2009; member of the U.S. House of Representatives from 1976 to 2005, representing Missouri’s Third District and holding key leadership positions, including House Minority Leader; currently a director of Centene Corporation, Ford Motor Company, Spirit Aerosystems Holdings, Inc. and United States Steel Corporation and a director of Embarq prior to July 1, 2009.

Committee Memberships:		Nominating and Corporate
		Governance

Thomas A. Gerke, age 53; a director since July 1, 2009; Executive Vice Chairman, Regulatory and Governmental Affairs and Human Resources, of CenturyLink, since July 1, 2009; Chief Executive Officer and President of Embarq Corporation from December 2007 to March 2008 in an interim capacity and by appointment from March 2008 to June 2009; General Counsel – Law and External Affairs of Embarq from May 2006 to December 2007 and was responsible for Embarq’s Wholesale Markets business unit from January 2007 to December 2007; held various executive level positions at Sprint Nextel from 1994 to May 2006; prior to then, practiced as an attorney for Smith, Gill, Fisher & Butts in Kansas City; a director of Embarq prior to July 1, 2009.

Gregory J. McCray, age 47; a director since 2005; Chairman and Chief Executive Officer of Antenova Limited, a British company which develops and markets wireless components, since January 2003; Chairman and Chief Executive Officer of PipingHot Networks, a wireless start-up, from November 2000 to November 2002; Senior Vice President, Customer Operations, at Lucent Technologies from June 1997 to October 2000; Sales Vice President, U.S. Eastern Region, at Lucent Technologies from January 1994 to May 1997; held engineering, product management and other managerial roles at AT&T and IBM from May 1984 to December 1993.

Committee Membership:		Nominating and Corporate
		Governance; Risk Evaluation

Class III Directors (term expires in 2012):

Fred R. Nichols, age 63; has served as a director since 2003; private investor since March 2000; retired from Cox Communications, Inc. in February 2000, where had had served as Executive Vice President of Operations since August 1999; held various executive positions at TCA Cable TV, Inc. (which was publicly-traded between 1982 and its sale to Cox in 1999) from 1980 to 1999, most notably serving as Chairman, Chief Executive Officer and President from 1997 to 1999 and President and Chief Operating Officer from 1990 to 1997; also served on the executive boards of (i) the National Cable Television Association and the Cable Telecommunications Association, both cable industry trade associations, (ii) Telesynergy, a cable television programming consortium, and (iii) C-SPAN, a cable television network; prior to joining TCA in 1980, worked as a commercial banker for nine years and as a certified public accountant with Peat, Marwick & Mitchell for three years.

Committee Memberships:		Audit; Compensation

Harvey P. Perry, age 65; a director since 1990; non-executive Vice Chairman of the Board of Directors of CenturyLink since January 1, 2004; private investor since retiring from CenturyLink in December 2003; joined CenturyLink in 1984, serving as Secretary and General Counsel for approximately 20 years and Executive Vice President and Chief Administrative Officer for almost five years; prior to then, worked as an attorney in private practice for 15 years.

Committee Membership:		Compensation

Laurie A. Siegel, age 62; a director since July 1, 2009; Senior Vice President of Human Resources and Internal Communications for Tyco International Ltd., a diversified manufacturing and service company, since January 2003; held various positions with Honeywell International Inc. from September 1994 to December 2002, including Vice President of Human Resources – Specialty Materials; prior to then, was director of global compensation at Avon Products and a principal of Strategic Compensation Associates; a director of Embarq prior to July 1, 2009.

Committee Memberships:		Compensation (Chairperson)

Joseph R. Zimmel, age 56; a director since 2003; a business and financial consultant since November 2002; Advisory Director of the Goldman Sachs Group from December 2001 to November 2002; Managing Director of the Communications, Media & Entertainment Group for the Americas in the investment banking division of Goldman, Sachs & Co. from 1999 to 2001, after acting as Managing Director and a co-head of the group from 1992 to 1999; Managing Director in the mergers and acquisitions department of Goldman, Sachs & Co. from 1988 to 1992; currently a director of FactSet Research Systems Inc. and formerly a director of Digitas Inc. within the past five years.

Committee Membership:		Audit

Executive Officers Who Are Not Directors:

     Listed below is information on each of our executive officers who are not directors. Unless otherwise indicated, each person has been engaged in the principal occupation shown for more than the past five years.

Karen A. Puckett, age 49; Executive Vice President and Chief Operating Officer since July 2009; President and Chief Operating Officer from September 2002 until July 2009.

R. Stewart Ewing, Jr., age 58; Executive Vice President and Chief Financial Officer.

Stacey W. Goff, age 44; Executive Vice President, General Counsel and Secretary since July 1, 2009; Senior Vice President, General Counsel and Secretary prior to then.

Dennis G. Huber, age 50; Executive Vice President – Network and Information Technology since July 1, 2009; held various executive positions at Embarq and its predecessor companies from January 2003 through July 1, 2009, most notably Chief Technology Officer and Senior Vice President, Senior Vice President – Corporate Strategy and Development and Senior Vice President of Product Development.

William E. Cheek, age 54; President – Wholesale Operations since July 1, 2009; President – Wholesale Markets for Embarq from May 2006 until July 2009; served in this role at the local telecommunications division of Sprint Nextel Corporation from August 2005 until May 2006 and as Assistant Vice President, Strategic Sales and Account Management, in Sprint Business Solutions from January 2004 until July 2005.

David D. Cole, age 52; Senior Vice President – Operations Support.

CORPORATE GOVERNANCE

Governance Guidelines

     Listed below are excerpts and summaries of certain provisions of our corporate governance guidelines, which the Board reviews at least annually. For information on how you can obtain a complete copy of our guidelines, see “- Access to Information” below.

1.

Director Qualifications

•

The Board of Directors will have a majority of independent directors. The Nominating and Corporate Governance Committee is responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics of new Board members as well as the composition of the Board as a whole. This assessment will include members’ independence qualifications, as well as consideration of diversity, character, judgment, skills and experience in the context of the needs of the Board at that time. It is the general sense of the Board that no more than two management directors should serve on the Board.

•

The Board expects directors who change the job or responsibility they held when they were elected to the Board to volunteer to resign from the Board. It is not the sense of the Board that in every such instance the director should necessarily leave the Board. There should, however, be an opportunity for the Board, through the Nominating and Corporate Governance Committee, to review the continued appropriateness of Board membership under the circumstances.

•

On the terms and subject to the conditions specified in the Company’s bylaws, directors will be elected by a majority vote of the shareholders and any incumbent director failing to receive a majority of votes cast must promptly tender his or her resignation to the Board.

•

No director may serve on more than two other unaffiliated public company boards, unless this prohibition is waived by the Board. No director may serve on the board of a company or organization that competes with the Company or is otherwise likely to raise a significant conflict of interest, unless such service is approved by the Board. No director may be appointed or nominated to a new term if he or she would be age 75 or older at the time of the election or appointment.

•

The Nominating and Corporate Governance Committee will review each director’s continuation on the Board at least once every three years.

•

Annually, the Board will determine affirmatively which of its directors are independent for purposes of complying with these guidelines and the listing standards of the New York Stock Exchange, or NYSE. A director will not be independent for these purposes unless the Board affirmatively determines that the director does not, either directly or indirectly through the director’s affiliates or associates, have a material commercial, banking, consulting, legal, accounting, charitable, familial or other relationship with the Company or its affiliates, other than as a director. In making these determinations, the Board will consider all relevant facts and

circumstances of both the director and the director’s affiliates and associates, and the extent to which any such relationship could reasonably be expected to interfere with the exercise of independent judgment by the director. In no event, however, will a director be determined to be independent if any of the disqualifying events or conditions specified in Rule 303A.02(b) of the NYSE Listed Company Manual apply to the director. A member of the Audit Committee of the Board will not be deemed to be independent unless such member meets the standards set forth both in this paragraph and Rule 10A-3(b) promulgated under the Securities Exchange Act of 1934.

2.

Director Responsibilities

•

Each Board member is free to suggest the inclusion of items on the agenda. Each Board member is free to raise at any Board meeting subjects that are not on the agenda for that meeting. The Board will review the Company’s long-term strategic plans and the principal issues that the Company will face in the future during at least one Board meeting each year.

•

Unless otherwise determined by the Board, when a management director retires or ceases to be an active employee for any other reason, that director will be considered to have resigned concurrently from the Board.

3.

Board Committees

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The Board will have at all times an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. All of the members of these committees will be independent directors, as defined in Section 1 above.

•

The Chair of each committee, in consultation with the committee members, will determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee’s charter. The Chair of each committee, in consultation with members of the committee and others specified in the committee’s charter, will develop the committee’s agenda.

•

The Board and each committee have the power to hire independent legal, financial or other advisors as they may deem necessary, without consulting or obtaining the approval of any officer of the Company in advance.

•

Each committee may meet in executive session as often as it deems appropriate.

4.

Chairman; Lead Outside Director

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The Board shall elect from among its members a Chairman. The Chairman may be a director who also has executive responsibilities, including the CEO (an executive chair), or may be one of the Company’s independent directors (a non-executive chair). The Board believes it is in the best interests of the Company for the Board to remain flexible with respect to whether to elect an executive chair or a non-executive chair so that the Board may provide for succession planning and respond effectively to changes in circumstances.

•

The non-management directors will meet in executive session at least quarterly in conjunction with regularly-scheduled Board meetings and will, subject to the other terms of this paragraph, elect from among the independent directors a lead outside director at least annually. The lead outside director may call additional meetings of the non-management directors at any time. At all times during which the Chairman is a non-executive chair, all of the functions and responsibilities of the lead outside director shall be performed by the non-executive chair.

5.

Director Access to Officers and Employees

•

Directors have full and free access to officers and employees of the Company.

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The Board welcomes regular attendance at each Board meeting of senior officers of the Company.

6.

Director Compensation

•

Annually, the Compensation Committee reviews director compensation and benefits, and recommends any proposed changes to the Board for approval.

7.

Director Orientation and Continuing Education

•

The Nominating and Corporate Governance Committee shall maintain an Orientation Program for new directors. All new directors must participate in the Company’s Orientation Program, which should be conducted as soon as practicable after new directors are elected or appointed.

•

The Company will also maintain a Continuing Education Program for directors, pursuant to which it will endeavor to periodically update directors on industry, technological and regulatory developments, and to provide adequate resources to support directors in understanding the Company’s business and matters to be acted upon at board and committee meetings.

8.

CEO Evaluation and Management Succession

•

The Nominating and Corporate Governance Committee will conduct an annual review of the CEO’s performance. The Nominating and Corporate Governance Committee will provide a report of its findings to the Board of Directors (with appropriate recusals of the CEO and other management directors, as necessary) to enable the Board to ensure that the CEO is providing the best leadership for the Company in the long- and short-term.

•

The Nominating and Corporate Governance Committee should report periodically to the Board on succession planning. The entire Board will consult periodically with the Nominating and Corporate Governance Committee regarding potential successors to the CEO. The CEO should at all times make available his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals.

9.

Annual Evaluation

•

The Board of Directors will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively. The Nominating and Corporate Governance Committee will receive comments from all directors and report annually to the Board with an assessment of the Board’s performance, which will be discussed with the full Board. The assessment will focus on the Board’s contribution to the Company and specifically focus on areas in which the Board or management believes that the Board could improve.

10.

Recoupment of Compensation

•

In addition to any other remedies available to the Company and subject to applicable law, if the Board or any committee of the Board determines that any bonus, incentive payment, commission, equity award or other compensation awarded to or received by an executive officer was based on any financial or operating result that was impacted by the executive officer’s knowing or intentional fraudulent or illegal conduct, the Board or a Board committee may recover from the executive officer the compensation it considers appropriate under the circumstances. The Board has sole discretion to make any and all determinations under this paragraph.

11.

Stock Ownership Guidelines

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The Company expects its executive officers to beneficially own CenturyLink stock equal in market value to specified multiples of their annual base salary. For any year during which an executive does not meet his or her ownership target, the executive is expected to hold a specified percentage of the CenturyLink stock that the executive acquires through the Company’s equity compensation programs, excluding shares sold to pay taxes associated with the acquisition thereof. (See “Compensation Discussion and Analysis – Stock Ownership Guidelines” for information on the ownership multiples and holding percentages currently in effect.)

•

Unvested restricted stock and shares held through the Company’s benefit plans count towards the ownership targets, which are calculated based on trailing average stock prices and reviewed at least every three years. All executive officers have three years from the date they first become subject to a particular ownership level to attain that target. The Compensation Committee administers the guidelines, and may modify their terms and grant hardship exceptions in its discretion.

12.

Standards of Business Conduct and Ethics

•

All of the Company’s directors, officers and employees are required to abide by the Company’s long-standing ethics and compliance policies and programs, which include standards of business conduct. The Company’s program and related procedures cover all areas of professional conduct, including employment policy, conflicts of interests, protection of confidential information, as well as strict adherence to all laws and regulations applicable to the conduct of the Company’s business.

•

Any waiver of the Company’s policies, principles or guidelines relating to business conduct or ethics for executive officers or directors may be made only by the Board or one of its duly authorized committees and will be promptly disclosed as required by applicable law or stock exchange regulations.

Independence

     Based on the information made available to it, the Board of Directors has affirmatively determined that each of the directors, with the exception of Messrs. Gerke and Post, qualifies as an independent director under the standards referred to above under “– Governance Guidelines.” In making these determinations, the Board, with assistance from counsel, evaluated responses to a questionnaire completed by each director regarding relationships and possible conflicts of interest. In its review of director independence, the Board considered all known commercial, banking, consulting, legal, accounting, charitable, familial or other relationships any director may have with us.

     Some of our directors are employed by or affiliated with companies with which we do business in the ordinary course, either as a service provider, a customer or both. As required under the NYSE listing standards and our Corporate Governance Guidelines, our Board examined the amount spent by us with those companies and by those companies with us. Because in all cases the amount spent fell far below the threshold established in the NYSE listing standards and in our Corporate Governance Guidelines, our Board concluded that the amounts spent did not create a material relationship with us that would interfere with the exercise by any of these directors of his or her independent judgment.

Committees of the Board

     During 2009, the Board of Directors held four regular meetings, six special meetings, and a two-day strategic planning session.

     During 2009, the Board’s Audit Committee held nine meetings. The Audit Committee is currently composed of five independent directors, all of whom the Board has determined to be audit committee financial experts, as defined under the federal securities laws. The Audit Committee’s functions are described further below under “Audit Committee Report.”

     The Board’s Compensation Committee met 12 times during 2009. The Compensation Committee is composed of five directors, all of whom qualify as “non-employee directors” under Rule 16b-3 promulgated under the Securities Exchange Act of 1934 and all of whom, other than Harvey P. Perry, qualify as “outside directors” under Section 162(m) of the Internal Revenue Code. The Compensation Committee is described further below under “Compensation Discussion and Analysis.”

     The Board’s Nominating and Corporate Governance Committee (which we refer to below as the “Nominating Committee”) met six times during 2009. The Nominating Committee is responsible for, among other things, (i) recommending to the Board nominees to serve as directors and officers, (ii) monitoring the composition and size of the Board and its committees, (iii) periodically reassessing our corporate governance guidelines described above, (iv) leading the Board in its annual review of the Board’s performance, and (v) reviewing annually the Chief Executive Officer’s performance, reporting to the Board on succession planning for senior

executive officers and appointing an interim CEO if the Board does not make such an appointment within 72 hours of the CEO dying or becoming disabled. For information on the director nomination process, see “- Director Nomination Process” below.

     The Board also maintains a Risk Evaluation Committee, which met four times during 2009. The Risk Evaluation Committee is appointed by the Board to identify, monitor and manage risks to the Company’s business, properties and employees.

     Each of the committees listed above is composed solely of independent directors under the standards referred to above under “- Governance Guidelines.”

     If you would like additional information on the responsibilities of the committees listed above, please refer to the committees’ respective charters, which can be obtained in the manner described below under “- Access to Information.”

     We expect all of our directors to attend our annual shareholders’ meetings. Each of our directors then in office attended the 2009 annual shareholders’ meeting, other than one former director who was then sick.

Director Nomination Process

     Nominations for the election of directors at our annual shareholders’ meetings may be made by the Board (upon the receipt of recommendations of the Nominating Committee) or by any shareholder of record who complies with our bylaws. Under our bylaws, any shareholder of record interested in making a nomination generally must deliver written notice to the Company’s secretary not more than 180 days and not less than 90 days in advance of the first anniversary of the preceding year’s annual shareholders meeting. For the meeting this year, the Board has nominated the four nominees listed above under “Election of Directors” to stand for election as Class I directors, and no shareholders submitted any nominations. For further information on deadlines for submitting nominations for our 2011 annual shareholders meeting, see “Other Matters — Shareholder Nominations and Proposals.”

     The written notice required to be sent by any nominating shareholder must include (i) the name, age, business address and residential address of the nominating shareholder and any other person acting in concert with such shareholder, (ii) a representation that the nominating shareholder is a record holder of Voting Shares, and intends to make his nomination in person, (iii) a description of all agreements among the nominating shareholder, any person acting in concert with him, each proposed nominee and any other person pursuant to which the nomination or nominations are to be made and (iv) various biographical information about each proposed nominee, including principal occupation, holdings of Voting Shares and other information required to be disclosed in our proxy statement. The notice must also be accompanied by the written consent of each proposed nominee to serve as a director if elected, and an affidavit certifying that each proposed nominee meets the qualifications for service specified in the bylaws and summarized below. We may require a proposed nominee to furnish other reasonable information or certifications. Shareholders interested in bringing before a shareholders’ meeting any matter other than a director nomination should consult our bylaws for additional procedures governing such requests. We may disregard any nomination or submission of any other matter that fails to comply with these bylaw procedures.

     The Nominating Committee will consider candidates nominated by shareholders in accordance with our bylaws. Upon receipt of any such nominations, the Committee will review the submission for compliance with our bylaws, including determining if the proposed nominee meets the bylaw qualifications for service as a director. These provisions disqualify any person who fails to respond satisfactorily to any inquiry for information to enable us to make certifications required by the Federal Communications Commission under the Anti-Drug Abuse Act of 1988, or who has been arrested or convicted of certain specified drug offenses or engaged in actions that could lead to such an arrest or conviction.

     In the past, the Nominating Committee has considered director candidates suggested by Committee members, other directors, senior management and shareholders. In connection with our July 1, 2009 merger with Embarq, we added to our Board seven directors who previously served as directors of Embarq, one of whom voluntarily resigned in September 2009 due to time constraints. During the several years preceding the merger, the Nominating Committee retained, on an as-needed basis and at our expense, national search firms to help identify potential director candidates, including three directors added to the Board between 2003 and 2005. With respect to this year’s meeting, all of the nominees are incumbent directors with several years of prior service on our Board or Embarq’s Board. The Nominating Committee may retain search firms from time to time in the future to help identify potential director candidates.

     Under our corporate governance guidelines, the Nominating Committee assesses director candidates based on their independence, diversity, character, skills and experience in the context of the needs of the Board. Although the guidelines permit the Nominating Committee to adopt additional selection guidelines or criteria, it has chosen not to do so. Instead, the Nominating Committee periodically assesses skills and characteristics then required by the Board based on its membership and needs at the time of the assessment. In evaluating the needs of the Board, the Nominating Committee considers the qualification of incumbent directors and consults with other members of the Board and senior management. In addition, the Nominating Committee seeks candidates committed to representing the interests of all shareholders and not any particular constituency. The Nominating Committee believes this flexible approach enables it to respond to changes caused by director retirements and industry developments.

     In connection with assessing the needs of the Board, the Committee has sought individuals who possess skill and experience in a diverse range of fields. The Committee also has sought a mix of individuals from inside and outside of the communications industry.

     Of our current 14 directors, nine of them have experience in the communications industry, either through (i) acting as an executive of CenturyLink or Embarq now or in the past (Messrs. Gerke, Hanks, Perry and Post), (ii) acting as an executive of a communications equipment provider (Mr. McCray), a communications service provider (Mr. Nichols) or both (Mr. Owens), (iii) owning and managing telecommunications companies (Mr. Melville), or (iv) acting as an investment banker specializing in the communications industry (Mr. Zimmel). Seven of our directors are current or former chief executives of a company, five on behalf of communications companies (Messrs. Gerke, McCray, Nichols, Owens and Post) and two on behalf of non-communications companies (Messrs. Brown and Melville).

     Five of our directors have recent experience acting as directors of other publicly-owned companies (Mr. Owens, Ms. Shern, Ms. Boulet, Mr. Gephardt and Mr. Zimmel). Three of our directors have substantial experience in fields important to our future success: (i) government

relations (Mr. Gephardt), (ii) investment banking (Mr. Zimmel), and (iii) human relations (Ms. Siegel). Three of our directors formerly worked as certified public accountants (Ms. Shern and Messrs. Hanks and Nichols) and both of the other members of our Audit Committee are “audit committee financial experts” as defined under the federal securities laws (Messrs. Brown and Zimmel). Three of our directors are attorneys who have represented telecommunication companies (Ms. Boulet and Messrs. Gerke and Perry). Two of our directors have experience in international business (Messrs. McCray and Owens), which we believe can bring fresh perspectives to our U.S.-based business.

     In connection with determining the current composition of the Board, the Nominating Committee assessed the diverse range of skills and experience of our directors outlined above, coupled with the judgment that each has exhibited and the knowledge of our operations that each has acquired in connection with their service on the Board. Although it does not have a formal diversity policy, the Nominating Committee believes that our directors possess a diverse range of backgrounds, perspectives, skills and experiences.

     Although we do not have a history of receiving director nominations from shareholders, the Nominating Committee envisions that it would evaluate any such candidate on the same terms as other proposed nominees, but would place a substantial premium on retaining incumbent directors who are familiar with our management, operations, business, industry, strategies and competitive position, and who have previously demonstrated a proven ability to provide valuable contributions to the Board and CenturyLink.

Compensation Setting Process

     The Compensation Committee hires consulting firms to assist it in setting executive compensation. Since late 2004, the Committee has retained PricewaterhouseCoopers LLC to analyze our compensation programs for our top executives and outside directors, including providing benchmarking services. For additional information on the processes used by the Committee to set executive compensation and payments made to PricewaterhouseCoopers, see “Compensation Discussion and Analysis.”

Risk Oversight

     The Board oversees our risk management process in connection with overseeing our corporate strategies and operations. The Board also receives regular reports on risk management from the Risk Evaluation Committee. To a lesser degree, the Board monitors risk by receiving reports from the other committees of the Board, particularly the Audit Committee.

Chairman and Lead Outside Director

     Admiral William A. Owens serves as our Chairman and lead outside director. As explained further on our website, you may contact Mr. Owens by writing a letter to the Chairman and Lead Outside Director, c/o Post Office Box 5061, Monroe, Louisiana 71211 or by sending an email to boardinquiries@centurylink.com. As indicated above, the non-management directors meet in executive session at least quarterly.

     Mr. Owens was appointed as our Chairman and lead outside director on July 1, 2009, as required under our October 26, 2008 merger agreement with Embarq. Prior to July 1, 2009, Mr. Owens served as chairman of Embarq, and, prior to that, as the chief executive of a

communications equipment provider and a satellite company. We believe Mr. Owens’ service as our Chairman facilitates the post-merger integration of the management and operations of CenturyLink and Embarq.

Waivers of Governance Requirements

     Members of our Board are subject to our Corporate Governance Guidelines, which, among other things, prohibit a director from serving on more than two additional unaffiliated public company boards. In addition to serving on our Board, Richard A. Gephardt, William A. Owens and Stephanie M. Shern serve on the board of directors of more than two unaffiliated public companies. In connection with appointing each of them to the Board on July 1, 2009, the Board waived compliance by each such individual with the above-described service limitation, subject to the understanding that this waiver permits such individuals to serve only on the boards of the unaffiliated companies on which they were then serving, unless and until the individual is permitted to accept a new directorship under our Corporate Governance Guidelines then in effect due to any future reductions in the number of the individual’s directorships, any future changes in such guidelines, or any future additional waivers granted by the Board.

     In addition to serving on our Audit Committee since July 1, 2009, Ms. Shern currently serves on the audit committees of three other unaffiliated public companies for which she is a board member. Consistent with the NYSE listing standards, each member of our Audit Committee may serve on no more than two public company audit committees in addition to our Audit Committee without the review and approval of our Board of Directors. Our Board of Directors has discussed with Ms. Shern her audit committee memberships and has evaluated the demands on her time. Based on these discussions, our Board of Directors concluded in mid-2009 that Ms. Shern’s service on three other public company audit committees would not impair her ability to serve effectively on our Audit Committee.

     In early 2010, Ms. Shern discussed with the Chairman her time and travel commitments, as well as the desirability of reducing the size of the Board. Following these conversations, Ms. Shern and the Nominating Committee agreed that Ms. Shern would serve through the end of her current term ending at the meeting on May 20, 2010, at which time the size of the Board would decrease from 14 to 13.

Access to Information

     The following documents are filed as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2009, and are posted on our website at www.centurylink.com:

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Corporate governance guidelines

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Charters of our Board committees

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Corporate ethics and compliance program

RATIFICATION OF THE SELECTION OF THE INDEPENDENT AUDITOR

(Item 2 on Proxy or Voting Instruction Card)

     The Audit Committee of the Board has appointed KPMG LLP as our independent auditor for the fiscal year ending December 31, 2010, and we are submitting that appointment to our shareholders for ratification at the meeting. Although shareholder ratification of KPMG’s appointment is not legally required, we are submitting this matter to the shareholders, as in the past, as a matter of good corporate practice.

     If the shareholders fail to vote on an advisory basis in favor of the appointment, the Audit Committee will reconsider whether to retain KPMG LLP, and may appoint that firm or another without re-submitting the matter to the shareholders. Even if the shareholders ratify the appointment, the Audit Committee may, in its discretion, select a different independent auditor at any time during the year if it determines that such a change would be in the Company’s best interests. In connection with selecting the independent auditor, the Audit Committee reviews the auditor’s qualifications, control procedures, cost, proposed staffing, prior performance and other relevant factors.

     In connection with the audit of the 2010 financial statements, we entered into an engagement letter with KPMG LLP which sets forth the terms by which KPMG will provide audit services to us. That agreement is subject to alternative dispute resolution procedures and excludes punitive damage claims.

     The following table lists the aggregate fees and costs billed to us by KPMG and its affiliates for the 2008 and 2009 services identified below:

		Amount Billed
		2008				2009
Audit Fees (1)		$	2,793,000			$	4,925,000
Audit-Related Fees(2)			101,000				118,000
Tax Fees(3)			181,000				296,000
Total Fees		$	3,075,000			$	5,339,000

     The Audit Committee maintains written procedures that require it to annually review and pre-approve the scope of all services to be performed by our independent auditor. This review includes an evaluation of whether the provision of non-audit services by our independent auditor is compatible with maintaining the auditor’s independence in providing audit and audit-related services. The Committee’s procedures prohibit the independent auditor from providing any non-audit services unless the service is permitted under applicable law and is pre-approved by the

Audit Committee or its Chairman. The Chairman is authorized to pre-approve projects expected to cost no more than $75,000, provided the total cost of all projects pre-approved by the Chairman during any fiscal quarter does not exceed $125,000. The Audit Committee has pre-approved the Company’s independent auditor to provide up to $40,000 per quarter of miscellaneous tax services that do not constitute discrete and separate projects. The Chief Financial Officer is required periodically to advise the full Committee of the scope and cost of services not pre-approved by the full Committee. Although applicable regulations waive these pre-approval requirements in certain limited circumstances, the Audit Committee did not use these waiver provisions in either 2008 or 2009.

     KPMG has advised us that one or more of its partners will be present at the meeting. We understand that these representatives will be available to respond to appropriate questions and will have an opportunity to make a statement if they desire to do so.

     Ratification of KPMG’s appointment as our independent auditor for 2010 will require the affirmative vote of at least a majority of the voting power present or represented at the meeting.

The Board unanimously recommends a vote FOR this proposal.

AUDIT COMMITTEE REPORT

     Management is responsible for our internal controls and the financial reporting process. Our independent auditor is responsible for performing an independent audit of our consolidated financial statements and the effectiveness of our internal control over financial reporting, and to issue reports thereon. The Committee’s responsibility is to monitor and oversee these processes, and, subject to shareholder ratification, to appoint the independent auditor.

     In this context, the Committee has met and held discussions with management and our internal auditors and independent auditor for 2009, KPMG LLP. Management represented to the Committee that our consolidated financial statements were prepared in accordance with generally accepted U.S. accounting principles. The Committee has reviewed and discussed with management and KPMG the consolidated financial statements, and management’s report and KPMG’s report and attestation on internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. The Committee also discussed with KPMG matters required to be discussed by Statement on Auditing Standards No. 61.

     KPMG also provided to the Committee the written disclosures required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with audit committees concerning independence. The Committee discussed with KPMG that firm’s independence, and considered the effects that the provision of non-audit services may have on KPMG’s independence.

     Based on and in reliance upon the reviews and discussions referred to above, and subject to the limitations on the role and responsibilities of the Committee referred to in its charter, the Committee recommended that the Board of Directors include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2009.

     If you would like additional information on the responsibilities of the Audit Committee, please refer to its charter, which you can obtain in the manner described above under “Corporate Governance – Access to Information.”

Submitted by the Audit Committee of the Board of Directors.

W. Bruce Hanks (Chairman)
Fred R. Nichols
Joseph R. Zimmel
Peter C. Brown
Stephanie M. Shern

PROPOSAL TO CHANGE NAME

(Item 3 on Proxy or Voting Instruction Card)

     The Board has unanimously approved a proposal that the shareholders adopt an amendment to the articles of incorporation to change our name from “CenturyTel, Inc.” to “CenturyLink, Inc.”

     The name change is intended to conform the Company’s corporate name to the “CenturyLink” tradename adopted in mid-2009 as part of our rebranding strategy following the Embarq merger. We believe the “CenturyLink” tradename better describes the full range of our communication services than our prior tradename. We initially began using our “CenturyLink” tradename immediately upon completing the Embarq merger on July 1, 2009, and began using the “CenturyLink” tradename in our customer communications, building signage and vehicles several months later. As the final step in this rebranding initiative, we now wish to amend the articles of incorporation to conform our legal name to our new tradename.

     The legal name change will not be costly to implement. Virtually no new advertising costs will be required because we have already substantially completed our introduction of the CenturyLink tradename and logo in our operating markets. We intend to retain our stock trading ticker symbol “CTL.” The name change will not affect the validity or transferability of stock certificates currently outstanding, and you will not be required to surrender or exchange any certificates now held by you.

     To be adopted, the proposal to amend the articles of incorporation to change our name must receive an affirmative vote of the holders of two-thirds of the voting power present or represented at the meeting. If adopted, the amendment will become effective promptly after the meeting as soon as we file with the Louisiana Secretary of State the certificate required under state law.

The Board unanimously recommends a vote FOR this proposal.

PROPOSAL TO APPROVE THE CENTURYLINK 2010
EXECUTIVE OFFICER SHORT-TERM INCENTIVE PLAN

(Item 4 on Proxy or Voting Instruction Card)

     Our Board has adopted the CenturyLink 2010 Executive Officer Short-Term Incentive Plan (which we sometimes refer to herein as the Plan or Incentive Plan), subject to shareholder approval at the meeting. The Plan is designed to provide financial incentives to executive

officers to make significant, objectively measurable contributions to our overall performance and growth. As a key component of our executive compensation program, the Plan is intended to strengthen our ability to attract and retain members of the executive officer group. We propose to pay annual incentive bonuses to our executive officers for 2010 and future years under the Plan.

     The principal features of the Plan are summarized below. This summary is qualified in its entirety, however, by reference to the full text of the Plan, which is attached to this proxy statement as Appendix B.

Purpose of the Proposal

     Under Section 162(m) of the Internal Revenue Code, we may not deduct more than $1 million per year for compensation paid or accrued to the Chief Executive Officer or our four other most highly-compensated executive officers. However, Section 162(m) provides an exclusion from the $1 million per officer tax deductible limitation for qualified performance-based compensation that satisfies certain requirements, including shareholder approval. We are submitting the Plan for shareholder approval to qualify the annual incentive bonus to be paid to each participating executive officer under the Plan as performance-based compensation and therefore not subject to the Section 162(m) limitation.

     The Plan is virtually identical to our predecessor plan, the 2005 Executive Officer Short-Term Incentive Program, which was in effect from January 1, 2005 until December 31, 2009. For plans that permit a company’s compensation committee to select the goals for a given performance period from a list of such goals previously-approved by shareholders, Section 162(m) requires that the shareholders re-approve that plan at least every five years.

Terms of the Plan

     Administration of the Plan. If approved at the Meeting, the Plan will be administered by the Compensation Committee, or a subcommittee thereof (which we collectively refer to as the Committee), of the Board of Directors of the Company, which will have the power to designate participants, establish performance goals and objectives, adopt appropriate regulations, certify as to the achievement of performance goals, and make all determinations necessary for the administration of the Plan.

     Eligibility. Any executive officer may be designated by the Committee as a participant in the Plan for any year. At the time of the meeting, we expect to have seven executive officers eligible to be designated as participants. The Committee will designate prior to March 31 of each year the executive officers of the Company who will participate in the Plan that year. Executive officers who are not named as participants in the Plan will participate in other short-term incentive plans of the Company similar to the Plan but which may include a discretionary component based on individual performance.

     Incentive Bonus. Under the Plan, each participant will be eligible to be paid an incentive bonus based on the achievement of pre-established quantitative performance goals. The Committee will establish the performance goals for each year prior to March 31. The Committee will set the range of potential bonus awards for each participant, usually stated as a percentage of the participant’s base salary. If using more than one performance goal, the Committee will

determine the relative weight given each goal. The amount of any bonus will be objectively determinable, as the participant’s actual bonus will depend upon the degree to which the performance goals are achieved.

     The performance goals for each year will be based upon one or more of the following criteria relating to the Company or one or more of our divisions, subsidiaries or lines of business: return on equity, cash flow, assets or investment; shareholder return; target levels of revenues, operating income, cash flow, cash provided by operating activities, earnings or earnings per share; customer growth; customer satisfaction; or an economic value added measure. The Committee’s selection of performance criteria from this list and the targets the Committee chooses to assign to such selected performance criteria may vary among participants and across performance periods. For any performance period, the performance goals may be measured on an absolute basis or relative to a group of peer companies selected by the Committee, relative to internal goals or industry benchmarks, or relative to levels attained in prior years. Performance measurements will be adjusted as specified under the Plan to exclude the effect of non-recurring transactions and changes in accounting standards. At the time it sets performance goals, the Committee may define the terms listed above as it sees fit. Although the Committee typically establishes a single annual bonus, it may subdivide any year into two or more performance periods.

     No participant may be paid a bonus under the Plan of more than $3.0 million for any year. The Committee has discretion to decrease but not increase the amount of the bonus paid to a participant from the amount that is payable under the terms of the pre-established criteria for the applicable year. The Committee may determine to pay bonuses under the plan in whole or in part in (i) cash, (ii) Common Shares, or (iii) restricted stock or restricted stock units, in which case such stock or units will be paid under any of the Company’s stock-based incentive plans that provide for such types of grants. Prior to the payment of annual bonuses under the Plan, the Committee must certify that the performance goals and the applicable conditions to the payment of the bonus have been met.

     Forfeiture of Prior Compensation. Under the Plan, our officers will forfeit certain of their awards if at any time during their employment with us or within 18 months after termination of employment they engage in activities contrary or harmful to our interests. The Compensation Committee is authorized to waive these forfeiture provisions if it determines in its sole discretion that such action is in the best interests of the Company.

     Termination of Employment. If, after more than 90 days into a Plan year, a participant’s employment terminates as the result of disability, death, or retirement (on or after attaining age 55 following the completion of five full years of employment), the participant or his heirs or beneficiary will be entitled to receive a pro rata portion of the bonus that would otherwise be payable based on the achievement of the performance goals for that period. In all other situations, if employment is terminated during a Plan year for any other reason, the participant will not receive an award for that year unless the Committee determines otherwise in its discretion or unless otherwise provided in a change of control agreement between that participant and the Company.

     Amendments to the Plan. The Committee may amend, suspend, or terminate the Plan at any time. Any amendment or termination of the Plan shall not, however, affect the right of a

participant to receive any earned bonus for a completed performance period that has not yet been paid.

     Term of the Plan. The Plan applies to each of the five calendar years during the period beginning January 1, 2010 and ending December 31, 2014, unless terminated earlier by the Committee.

     Bonuses to be Paid. If the Plan is not approved at the Meeting, we would not make any incentive awards to participants under the Plan, but participants would instead be permitted to participate in the Company’s other bonus plans in order to provide total compensation commensurate with their responsibilities. Nothing in the Plan precludes the Board of Directors or its committees from making additional payments or special awards in their discretion outside of the Plan that may not qualify as performance-based compensation under Section 162(m).

Plan Benefits

     For fiscal 2010, seven executive officers have been named as participants. For information as to the bonuses that would have been paid to these individuals under the Plan for the last fiscal year if the Plan had been in effect, please see the amounts reported in the non-equity plan compensation column of the Summary Compensation Table, which may be found under “Executive Compensation — Overview”.

Equity Compensation Plan Information

     The following table provides information as of December 31, 2009 about our equity compensation plans under which shares of our common stock are authorized for issuance:

										(c)
		(a)								Number of securities
		Number of securities								remaining available for
		to be issued upon				(b)				future issuance under
		exercise of				Weighted-average exercise				plans (excluding
		outstanding options				price of outstanding				securities reflected in
Plan Category		and rights				options and rights				column (a))
Equity compensation plans approved by shareholders			9,318,553			$	37.85				5,300,450	(1)
Equity compensation plans not approved by shareholders			543,033	(2)			—				20,550,000	(3)
Totals			9,861,586			$	37.85				25,850,450

     In connection with our merger with Embarq, which closed on July 1, 2009, we assumed the Legacy Embarq Plan. The Legacy Embarq Plan was approved by Embarq’s shareholders on May 1, 2008 and no new grants may be made under the Plan after May 1, 2018, although awards made prior to that date may remain outstanding beyond that date. In accordance with NYSE rules, we intend to limit issuances of equity awards under the Legacy Embarq Plan to our employees who were employed by Embarq prior to the merger. The Legacy Embarq Plan will be administered by the compensation committee of our Board of Directors, which may delegate some of its authority to the chief executive officer, subject to certain exceptions. An aggregate 20,550,000 shares of our Common Stock (as adjusted pursuant to the merger agreement) may be issued under the Legacy Embarq Plan. The committee may make awards of qualified or nonqualified stock options with a maximum term of 10 years, restricted stock or restricted stock units, stock appreciation rights, performance shares and other stock units. Each share awarded as a stock option or stock appreciation right will reduce the maximum number of available plan shares by one share, while each share issued as any other type of award will reduce the maximum by three shares. Shares surrendered in payment of the exercise price of options or stock appreciation rights or in payment of withholding taxes are not eligible for reissuance under the Legacy Embarq Plan. No participant may be granted more than 1,370,000 shares in options or stock appreciation rights and 685,000 shares of all other award types in a calendar year. In addition, the maximum cash-based award under the Legacy Embarq Plan that may be paid, credited or vested to a participant in any calendar year is $7.5 million. Our Board amended the Legacy Embarq Plan in early 2010 to, among other things, reflect these merger-adjusted share limitations and conform the administration and change of control provisions to those of our other outstanding equity incentive plans.

Vote Required

     Approval of the Plan requires the affirmative vote of the holders of at least a majority of the voting power present or represented by proxy at the meeting. See “General Information”.

The Board unanimously recommends a vote FOR this proposal.

SHAREHOLDER PROPOSALS

(Items 5 through 8 on Proxy or Voting Instruction Card)

     We periodically receive suggestions from our shareholders, some as formal shareholder proposals. We give careful consideration to all suggestions, and assess whether they promote the best long-term interests of CenturyLink and its shareholders.

     We expect Items 5 through 8 to be presented by shareholders at the meeting. Following SEC rules, other than minor formatting changes, we are reprinting the proposals and supporting statements as they were submitted to us. We take no responsibility for them. On request to the Secretary at the address listed under “Other Matters — Annual Financial Report,” we will provide information about the sponsors’ shareholdings, as well as the names, addresses, and shareholdings of any co-sponsors. Adoption of each of these four proposals requires the affirmative vote of at least a majority of the voting power present or represented at the meeting.

     The Board recommends you vote AGAINST Items 5 through 8 for the reasons we give after each one.

Network Management Practices Report Proposal (Item 5)

     The following proposal was submitted by Trillium Asset Management Corporation, 711 Atlantic Avenue, Boston, Massachusetts 02111-2809.

     “The Internet is becoming the defining infrastructure of our economy and society in the 21^st century. Internet Service Providers (ISPs) like our company forge rules that shape, enable and limit Internet use.

     As such, ISPs have a weighty responsibility in devising network management practices. ISPs must give far-ranging thought to how these practices serve to promote — or inhibit — public participation in the economy and in civil society.

     Of fundamental concern is the effect ISPs’ network management practices have on public expectations of privacy and freedom of expression on the Internet.

Whereas:

•		The Internet serves as an engine of opportunity for social, cultural and civic participation in society;
•		46% of Americans used the Internet, email or text messaging to participate in the 2008 political process;
•		The Internet yields significant economic benefits to society, with online U.S. retailing revenues — only one gauge of e-commerce — exceeding $200 billion in 2008;
•		The Internet plays a critical role in addressing societal challenges such as provision of healthcare, with over 8 million Americans looking for health information online daily;

•		There is abundant evidence that Americans are alarmed about Internet privacy. A recent study of online advertising by researchers at the University of Pennsylvania and the University of California, Berkeley, found that “most adult Americans (66%) do not want marketers to tailor advertisements to their interests. Moreover, when Americans are informed of three common ways that marketers gather data about people in order to tailor ads, even higher percentages — between 73% and 86%—say they would not want such advertising;
•		Class action lawsuits in several states are challenging the propriety of ISPs’ network management practices;
•		Internet network management is a significant public policy issue; failure to fully and publicly address this issue poses potential competitive, legal and reputational harm to our Company;
•		Any perceived compromise by ISPs of public expectations of privacy and freedom of expression on the Internet could have a chilling effect on the use of the Internet and detrimental effects on society;
•		In 2008, CenturyLink’s practices became the subject of national controversy and the target of a major Congressional investigation. The company had entered into partnerships with an online advertising company, NebuAd, which allowed for targeted advertising to customers based on which web sites the customers liked to visit. Importantly, customers were required to “opt-out” of a Plan in which many were not aware they were enrolled;
•		In 2009, this proposal attracted 30.49% of the vote — a clear indication of significant shareholder concern. Since then CenturyLink has not taken any steps to address these issues.

     Resolved: shareholders request the board issue a report by October 2010, at reasonable expense and confidential information, examining the effects of the company’s Internet network management practices in the context of the significant public policy concerns regarding the public’s expectations of privacy and freedom of expression on the Internet.”

     The Board recommends that you vote AGAINST this proposal for the following reasons:

     CenturyLink’s emphasis on providing and expanding access to Internet services in rural areas and small towns in the United States fosters the freedom of expression of hundreds of thousands of people residing in those underserved areas. Our business practices are designed to promote, among other things, freedom of expression, privacy and other fundamental personal freedoms. Our employee policies and guidelines reflect these goals by incorporating ethical principles stressing the critical importance of the privacy rights of our customers and the confidentiality of their information. Our commitment to expanding Internet access to rural areas and small towns has enhanced freedom of expression, participation in the Internet-based economy and a sense of community in those areas. We share the proponents’ desire to promote privacy and freedom of expression on the Internet, and are continually evaluating and addressing these issues in our business practices and the communities in which we operate. We are

committed to evolving and enhancing these practices. We also have a strict requirement of compliance with U.S. government policies. Therefore, we believe that the preparation of the report requested by the proposal is unnecessary in light of our current efforts and established policies and practices relating to privacy and freedom of expression.

     Our Board and management invest significant time and resources to ensure that our services and policies promote, and are consistent with, our goals and initiatives regarding the improvement of privacy and freedom of expression. Our management is continuously studying policies for the acceptable use of customer information to ensure that we provide our customers with the best possible service while safeguarding their privacy. In particular, we have formed a management committee that reviews industry procedures regarding privacy and makes recommendations regarding the effective implementation of procedures that will further protect the privacy of our customers. Management has also developed and put in place a comprehensive set of policies that strictly prohibit employees from viewing or distributing customer information other than that required for proper provision of services.

     Although we cooperate with government agencies, which request data from us from time to time, we are committed to the goal of preventing the dissemination of our customers’ information to the maximum extent possible. Our legal department reviews each request for information from government agencies to determine the propriety of such request (unless the matter is a routine tax audit, safety or health inspection, employment law review or any other similar routine matter). We do not divulge customer information unless the request is made through a subpoena, warrant or other lawful means.

     In short, we believe our dedication to providing Internet access to rural communities fosters freedom of expression and our current confidentiality policies and procedures provide substantial protection of our customers’ privacy. The preparation of a report on this subject would be an unnecessary cost to us and our shareholders.

Limitation on Executive Compensation Proposal (Item 6)

     The following proposal was submitted by the Communications Workers of America Members’ General Fund, 501 Third Street, N.W., Washington, DC 20001-2797.

     “Resolved, the shareholders request that the CenturyLink Board of Directors take the steps necessary to adopt a policy that future employment contracts with the senior executives named in the proxy statement shall limit executive compensation to a competitive base salary, an annual bonus of not more than fifty percent of base salary, and competitive retirement benefits.

     Supporting Statement: We believe that the compensation of our company’s executives is excessive.

     The executive compensation policies described in the 2009 proxy statement assume that senior executives ought to be paid multiples of their base salary in annual and long-term equity “incentives” if they exceed targeted performance metrics, in addition to retirement benefits and “other compensation” that includes “dividends paid on . . . unvested restricted stock.” We submit that it does not make sense to think that such a broad array of compensation components may materially enhance the performance of our senior executives.

     In the three years of 2006-2008, for example, Glen F. Post III, Chairman and CEO of our company, received a salary averaging $1,000,000 per year, which the 2009 proxy statement describes as “a competitive fixed salary.” However, the Summary Compensation Table discloses that Mr. Post was credited with an annual average of $8,785,462 per year during those three years, a total that is nearly nine times the amount of his “competitive fixed salary.”

     Similarly, R. Steward Ewing, the Executive Vice-President and Chief Financial Officer, was paid a base salary averaging $557,828 per year in 2006-2008. Yet, his total compensation for those three years averaged $3,449,521, more than six times that base amount.

     We believe that our company needs compensation policies that are more focused and transparent, In our view, it is simply nonsense to assume that an executive may be motivated by “incentives” to enhance the level of his or her performance by a factor of more than 50%. In addition, it does not make sense to continue the company policy that executives may be paid “three times the [annual] bonus payable for attaining the target level of performance” if the relevant metric merely improves to at least “105% of the target amount.” (See 2009 Proxy Statement, p. 45). In 2008, for example, the annual bonus of Mr. Post could have been increased from the target level of $650,000, to as much as $1.95 million, a 300 percent increase, if the company attained a mere 5 percent increase in the relevant metrics.

     Finally, we are concerned that high awards of incentive pay may encourage risky behavior. As a New York Times report noted (November 17, 2008), ‘There is a widespread belief that the way Wall Street awarded bonuses in recent years helped feed the risky behavior that eventually created big losses . . . and helped create the current [economic] crises.’”

     The Board recommends that you vote AGAINST this proposal for the following reasons:

     We believe that we must have the flexibility to tailor compensation packages to meet competitive market conditions in order to attract and retain executives in our highly competitive industry. Designing a compensation package that will effectively motivate an executive officer to excel while taking into consideration the financial and performance goals of our company is a difficult and complex task. This proposal does not account for the numerous factors that must be considered in determining appropriate compensation and relies instead on an arbitrary figure that will severely limit our flexibility in creating compensation plans that support our goals and would put us at a competitive disadvantage in the marketplace for top executives.

     We have adopted performance-based compensation plans designed to align the interests of our executives with those of our shareholders by utilizing awards of annual and long-term incentive compensation. The Compensation Discussion and Analysis appearing elsewhere herein describes the philosophy, objectives and principal components of our executive compensation plans. We are committed to compensation plans that are fiscally responsible, and our shareholder-approved short-term bonus plan already includes an annual limit on the amount of bonuses we can pay to our executives. The proposed arbitrary limit on incentive compensation will limit the Compensation Committee’s ability to align our executive’s interests with those of the company and our shareholders and will make it more difficult to provide incentives for our executives to achieve our performance goals.

     The Board believes that the Compensation Committee is in the best position to determine compensation for our executive officers that is competitive and provides incentive opportunities linked to CenturyLink’s performance. As explained further in our response to Item 8, the Committee is comprised solely of independent directors who have a fiduciary duty to establish plans that are in the best interests of the shareholders. As further noted in that response, the Committee works carefully with independent consultants to design compensation plans that emphasize pay for performance in a competitive marketplace for talent. Additionally, the Committee periodically reviews executive compensation to determine whether our compensation plans provide incentives for excessive risk taking.

     Unlike the Wall Street bonus practices cited above by the proponent, we do not believe that our incentive programs created undue risk. In fact, the Compensation Committee has been advised by its independent consultant that the amount of our annual bonuses over the past couple years was generally lower than the average annual bonuses paid by our peer companies.

     In short, the Board believes that adoption of the proponent’s arbitrary and formalistic incentive cap would place us at a substantial disadvantage in attracting, motivating, and retaining the best leadership talent in today’s competitive environment and in the future by capping the incentives that may be paid to the executive officers.

Executive Stock Retention Proposal (Item 7)

     The following proposal was submitted by the Board of Trustees of the International Brotherhood of Electrical Workers Pension Benefit Fund, 900 Seventh Street, NW, Washington, DC 20001.

     “Resolved, that stockholders of CenturyTel, Inc. (“Company”) urge the Compensation Committee of the Board of Directors (the “Committee”) to adopt a policy requiring that senior executives retain a significant percentage of shares acquired through equity compensation plans until two years following the termination of their employment (through retirement or otherwise), and to report to stockholders regarding the policy before Company 2011 meeting of stockholders. The stockholders recommend that the Committee not adopt a percentage lower than 75% of net after-tax shares. The policy should address the permissibility of transactions such as hedging transactions which are not sales but reduce the risk of loss to the execution.

     Supporting Statement: Equity-based compensation is an important component of senior executive compensation at Company.

     Requiring senior executives to hold a significant portion of shares obtained through compensation plans after the termination of employment would focus them on Company long-term success and would better align their interests with those of Company stockholders. In the context of the current financial climate, we believe it is imperative that companies reshape their compensation policies and practices to discourage excessive risk-taking and promote long-term, sustainable value creation. A 2002 report by a commission of The Conference Board endorsed the idea of a holding requirement, stating that the long-term focus promoted thereby “may help prevent companies from artificially propping up stock prices over the short-term to cash out options and making other potentially negative short-term decisions.”

     Company’s Compensation Committee states it seeks to align the interest of senior managers with the long-term interests of shareholders but, as of March 30, 2009, the Company had no security ownership requirements or guidelines for senior executives, as it believes such requirements could cause hardships for officers with less tenure or lower net worth, and because it also saw no compelling need.

     Company must do more to ensure that equity compensation builds executive ownership. We want to encourage Company to develop a retention requirement approach which would be superior to a stock ownership guideline because a guideline loses effectiveness once it has been satisfied.

     We urge stockholders to vote for this proposal.”

     The Board recommends that you vote AGAINST this proposal for the following reasons:

     The Board agrees with the proponent that equity ownership by executive officers serves to align the long-term interests of our senior executives and shareholders. For this reason, in February 2010, our Compensation Committee adopted stock ownership guidelines that require our executive officers to hold a meaningful amount of our stock. As described further below, the Board believes that our new stock ownership guidelines, in conjunction with our performance-based compensation programs, successfully align the interests of our executive officers with those of our shareholders, making the adoption of the current proposal unnecessary. Additionally, the Board believes that adoption of the 75% threshold suggested by the proponent is an unnecessarily onerous restriction which may cause hardship for our executive officers and put us at a competitive disadvantage for attracting and retaining executive officers.

     Our stock ownership guidelines (which are discussed further in “Corporate Governance — Governance Guidelines” and “Compensation Discussion and Analysis — Stock Ownership Guidelines”) require our CEO to beneficially own CenturyLink stock with a value of at least five times his annual base salary and all other executive officers to beneficially own CenturyLink stock with a value of at least three times their annual base salary. Each executive officer has three years to attain these targets. We believe that these stock ownership guidelines will accomplish the proponent’s intended purpose of aligning executive and shareholder interests through equity ownership.

     Additionally, our executive compensation plans are designed to provide performance-based compensation and to align the interests of our executives with those of our shareholders by utilizing awards of restricted stock, restricted stock units, stock options and other incentive compensation. Our restricted stock grants typically vest over at least three years so that our executives realize full value from the grants only after serving the company for three or more years. The value realized upon vesting is directly tied to the long-term appreciation of our stock price over the vesting period, which benefits all shareholders. By virtue of our incentive plans and our newly adopted stock ownership guidelines, we believe we have already fulfilled the central objective of this shareholder proposal.

     While it is essential that our executive officers have a meaningful equity stake in our company, the Board also believes that it is important that we do not place undue hardships on our executive officers and do not disable them from being able to prudently manage their personal

financial affairs. The adoption of this policy would limit our executive officers’ abilities to engage in estate planning, portfolio diversification or charitable giving. As a result, if the proponent’s policy were adopted, we believe it would be more difficult to recruit, motivate and retain talented executives, which would ultimately be detrimental to the long-term interest of our company and shareholders.

     We do not believe that the type of retention policy described in the proposal is common practice among our company’s peers. As such, the adoption of this proposal would put us at a competitive disadvantage relative to our peers who do not have such restrictions and therefore are able to better balance equity and cash compensation and retain the types of experienced officers that we need in order to succeed in a highly challenging and competitive environment.

Executive Compensation Advisory Vote Proposal (Item 8)

     The following proposal was submitted by the AFL-CIO Reserve Fund, 815 Sixteenth Street, N.W., Washington, DC 20006.

     “RESOLVED: The stockholders of CenturyTel, Inc. (the “Company”) recommend that the Board of Directors (“Board”) adopt a policy requiring that the proxy statement include a proposal, submitted and supported by Management, seeking as advisory vote of shareholders to ratify and approve the report of the Committee on Compensation and Executive Development, and the executive compensation policies and practices described in the Compensation Discussion and Analysis.

     Supporting Statement: Investors are increasingly concerned about runaway executive compensation and its disconnect with performance. In 2009, stockholders filed nearly 100 “Say on Pay” resolutions. The proposals received, an average, 46% of the votes and passed at more than 20 companies—demonstrating strong shareholder support for this reform.

     A 2009 report by an executive compensation task force of the Conference Board recommends that companies restore investors’ trust in the ability of boards to oversee executive compensation plans by ensuring that the plans are “transparent, understandable and effectively communicated to shareholders.”

     “If shareholders need a vote on one issue, it is executive remuneration,” states a September 2009 report on Lessons from Say on Pay in the UK by Railpen Investments and PIRC Limited. Public companies in the United Kingdom have let shareholders cast a vote on the “directors’ remuneration report,” which discloses executive compensation, since 2002. Such a vote is not binding but gives shareholders a clear voice that could help shape executive compensation.

     “Say on Pay promotes a dialogue between investors and boards and encourages investors to engage with boards on a readily understandable issue, where interests may conflict,” Sir Adrian Cadbury, author of the 1992 Cadbury Report on UK Corporate Governance, observed. “It is also a litmus test of how far boards are in touch with the expectations of their investors.”

     An advisory vote establishes an annual referendum process for shareholders on executive compensation of the Named Executive Officer (“NEOs”). We believe this vote would give our Company useful information about investors’ views on NEO compensation. More than 25

companies, including Apple, Hewlett-Packard, Intel, Occidental Petroleum, Verizon and Microsoft, have already agreed to such a vote.

     RiskMetrics Group, the influential proxy voting service, backs these proposals. “RiskMetrics encourages companies to allow shareholders to express their opinions of executive compensation practices by establishing an annual referendum process. An advisory vote on executive compensation is another step forward in enhancing board accountability.”

     Congress is expected to soon pass legislation requiring an annual advisory vote on pay. However, we believe companies should demonstrate leadership and proactively adopt this practice.

     We urge you to vote FOR this proposal.”

     The Board recommends that you vote AGAINST this proposal for the following reasons:

     The Board supports the movement towards shareholder input on executive compensation. As explained further below, however, the Board recommends a vote against this particular proposal at this time. First, the Board believes it will be advantageous to defer action until 2011 to monitor legislative and other developments. Second, in the interim, we believe we will continue to provide effective avenues for shareholders to express their views on our executive compensation programs. Finally, we believe this specific proposal is flawed.

     Currently, an increasing number of U.S. companies are exploring various ways to provide meaningful shareholder advisory votes on their executive compensation, several of which include features not included in the proponent’s proposal. Several other companies that received governmental funding are implementing advisory votes mandated by law. Meanwhile, leaders of the U.S. Congress are exploring different forms of advisory votes designed to apply to all U.S. public companies. Rather than adopt the proponent’s proposal, the Board believes it preferable to monitor developments over the next year and carefully review the various types of advisory votes devised by others. If, over the next year, advisory votes are mandated by law for all U.S. public companies, we will comply with those requirements. If no such advisory vote is required by law by the time of our 2011 Annual Shareholders Meeting, then our Board expects, based on current circumstances, to develop a shareholder advisory vote policy to be implemented at our 2011 Annual Shareholders Meeting.

     Our compensation programs, like those of many companies, involve a wide range of considerations, as described in “Compensation Discussion and Analysis.” As noted above, currently there is no unified approach on implementing shareholder advisory votes to allow meaningful shareholder input regarding the wide range of executive compensation considerations. We believe that the best approach to designing a meaningful advisory vote policy is to allow our Compensation Committee time to consider the various alternatives. Following the Embarq merger, the membership of our Compensation Committee changed substantially. Since the merger, the Committee has undertaken a comprehensive review of our compensation philosophy, strategies, policies and practices. The Committee desires to complete this review process before soliciting an advisory vote on its new compensation programs. If the current proposal is adopted, our Compensation Committee will have considerably less flexibility

to create an effective shareholder advisory vote policy, which we believe could result in shareholders having a less effective voice on executive compensation.

     We do not believe deferring action on this issue will disadvantage our shareholders. We will continue our practice of welcoming shareholder comments on our executive compensation and benefit programs. Additionally, we will continue to submit our short- and long-term incentive programs to shareholder votes. For instance, in this proxy statement we are asking the shareholders to vote on our 2010 Executive Officer Short-Term Incentive Plan and next year we expect to ask our shareholders to vote on a new equity compensation program to replace the program approved by our shareholders in 2005. Accordingly, we believe that our open-door policy toward shareholders, coupled with our shareholder votes on incentive programs, will continue to allow our shareholders an effective means of communicating their views on executive compensation while we review adopting an advisory vote policy.

     Finally, the proponent’s proposal calls for a simple up or down annual vote on our Compensation Committee report and our compensation policies and practices generally. If the policy requested by the proponent was adopted and the shareholders adopt a general resolution disapproving our executive compensation, we would be unable to determine (i) whether the shareholders disapproved of all or only some of our specific compensation components, (ii) whether they disapproved of compensation paid to all or only some of our executives and (iii) the magnitude or rationale of the shareholders’ concerns. As such, we may be unable to react to the shareholders’ concerns in a meaningful fashion.

     In short, the Board believes that it would be premature and inadvisable to implement the advisory vote called for in this proposal.

OWNERSHIP OF OUR SECURITIES

Principal Shareholders

The following table sets forth information regarding ownership of our Common Shares by each person known to us to have beneficially owned more than 5% of the outstanding Common Shares or to have controlled more than 5% of the total voting power on December 31, 2009.

		Amount and
		Nature of
		Beneficial				Percent of
		Ownership of				Outstanding
Name and Address		Common Shares(1)				Common Shares(1)
Capital Research Global Investors 333 South Hope Street Los Angeles, California 90071			35,988,270	(2)			12.1	%
BlackRock, Inc. 40 East 52nd Street New York, New York 10022			21,826,782	(3)			7.34	%

Executive Officers and Directors

     The following table sets forth information, as of the record date, regarding the beneficial ownership of Common Shares by our executive officers and directors. Except as otherwise noted, all beneficially owned shares are held with sole voting and investment power and are not pledged to third parties.

		Components of Total Shares Owned
										Options or Rights
		Shares				Unvested				Exercisable				Total Shares
		Beneficially				Restricted				Within 60				Beneficially
Name		Owned(1)				Stock(2)				Days(3)				Owned(4)
Current Executive Officers:
Glen F. Post, III			372,684				335,600				852,666				1,560,950
Thomas A. Gerke			127,185				218,682				350,158				696,025
Karen A. Puckett(5)			86,588				133,650				285,000				505,238
R. Stewart Ewing, Jr.			62,847				108,134				145,600				316,581
Stacey W. Goff			40,405				74,175				131,000				245,580
David D. Cole(6)			82,368				74,175				229,501				386,044
Dennis G. Huber			36,710				35,119				70,302				142,131
William E. Cheek			15,772				32,287				45,373				93,432
Current Outside Directors:
Virginia Boulet(7)			6,533				6,393				—				12,926
Peter C. Brown			9,563				3,161				—				12,724
Richard A. Gephardt			2,574				3,161				3,282				9,017
W. Bruce Hanks			8,340				6,393				16,000				30,733
Gregory J. McCray			—				6,393				—				6,393
C.G. Melville, Jr.(8)			7,502				6,393				—				13,895
Fred R. Nichols			3,607				6,393				—				10,000
William A. Owens			16,153				9,482				—				25,635
Harvey P. Perry			45,042				6,393				—				51,435
Stephanie M. Shern(9)			1,179				3,161				—				4,340
Laurie A. Siegel			9,563				3,161				—				12,724
Joseph R. Zimmel(10)			8,686				6,393				13,667				28,746
All directors and executive officers as a group (20 persons)(11)			943,301				1,078,699				2,142,549				4,164,549
Former Executive Officer:
Michael A. Maslowski			20,238	(12)			—				67,500				87,738

COMPENSATION DISCUSSION AND ANALYSIS

General Compensation Philosophy

     We compensate our senior management through a mix of salary, annual bonuses, long-term equity compensation and employee benefits designed to be market-competitive and fiscally-responsible, and to reward annual and long-term performance that we believe correlates with maintaining and increasing long-term shareholder value.

     Over the past nine months, the Compensation Committee met 11 times to comprehensively review and update our compensation philosophy, strategies, policies and practices. In connection therewith, we believe we have implemented a more performance-based system that is better aligned to our core compensation goals.

     With respect to each component of compensation, we generally seek to match the compensation of comparable employees at other companies within our peer group and as compared to broader survey data. We generally seek to base our executives’ annual cash incentive compensation principally upon our company-wide performance and secondarily upon the executives’ individual performance. Officers and managers with lower levels of responsibility typically receive incentive compensation that places a greater emphasis on individual, departmental or divisional goals. We seek to align the interests of our senior managers with the long-term interests of shareholders through award opportunities that can result in ownership of our Common Shares, with top executives receiving a greater proportion of their total compensation in the form of equity grants compared to more junior officers. Substantial amounts of our executives’ compensation are subject to the risk of forfeiture if they quit or engage in detrimental activity. Whenever possible, we attempt to promote teamwork by offering the same compensation to executives whom we expect to make roughly equivalent contributions.

Compensation Methodologies

     When establishing compensation programs, we rely predominantly on annual reviews of multiple benchmarks that assist us in establishing compensation levels designed to be competitive with the compensation of comparable officers. We describe these benchmarks in detail below. As described further below, we also review the individual performance of each

senior manager, as well as all other factors deemed relevant to us. To assist us in this process, we review “tally sheets” that comprehensively reflect the multiple sources of each executive’s compensation, as well as the wealth accumulated by the executives under our compensation programs. We also periodically review data on the relationship of the compensation of our top executives to other employees.

Allocation of Compensation

     As noted above, we seek to pay our executives target levels of salary and bonus designed to match compensation levels paid to comparable executives at other companies. We believe this allows us to maintain competitive compensation packages and provides us with the flexibility to adjust quickly to changes in prevailing compensation practices.

     We seek to design our incentive compensation programs to reward annual and long-term performance that correlates to maintaining and increasing long-term shareholder value, while at the same time providing incentives that are equitable, realistic and reasonably within the control of the award recipient. We believe that our top executives have the greatest opportunity to directly impact our performance, and therefore believe it is appropriate to provide a greater portion of their total compensation in the form of long-term incentives that focus solely on company-wide performance. On the other hand, because our less senior officers have less control over our company-wide performance, we award them a relatively higher percentage of their total compensation in the form of salary and annual bonuses which frequently focus on individual, departmental or divisional goals within their control.

     Although we favor the use of performance-based compensation, we pay a portion of total compensation in the form of fixed salaries, which we believe is necessary to provide our officers with competitive pay packages and to lessen their concerns that an economic or industry downturn could undercut their personal financial planning.

     The allocation of compensation among categories is illustrated in the table below, which shows the percentage of 2009 compensation attributable to our three main components of compensation:

										Equity
		Cash Compensation								Compensation
		% from				% from Short-				% from Long-
		Salary				Term Bonus(1)				Term Bonus
CEO			17.7	%			15.6	%			66.8	%
Executive Vice Chairman(2)			44.6	%			55.4	%			—
COO			25.4	%			19.0	%			55.6	%
Other Executive VPs			28.0	%			17.1	%			54.9	%
Senior VPs			29.2	%			13.0	%			57.8	%

     We expect that these allocations may change from year to year as we adjust to changes in prevailing compensation practices.

Salary

     In January 2010, the Compensation Committee adopted a compensation philosophy that targets benchmark salaries at the 50^th percentile of salaries paid to comparable executives. The Committee uses percentile targets as starting points in its analysis, which we describe below under the heading “- Our Compensation Decision-Making Process.” Prior to 2010, we generally sought to compensate our long-standing executives with cash salaries equivalent to the 75^th percentile of salaries paid to similarly-situated executives at comparable companies, if justified by corporate and individual performance.

     In early 2009 the Committee determined that differences in the compensation practices of CenturyLink and Embarq should be addressed after the closing of the merger. The Committee also took note of the weak economy and its effect upon our financial performance. In addition, the Committee determined that the executives’ then-prevailing salaries remained generally in alignment with their targeted salary levels based on data compiled in 2008. Based on all of these factors, in early 2009 the Committee accepted management’s recommendation to maintain the salaries of each of our executive officers without change.

     In February 2010, the Compensation Committee and the Board elected to once again leave executive salaries unchanged, with one exception for an executive with a below-market salary.

Short-Term Incentive Bonuses

     We award short-term cash bonuses to key employees based on performance objectives that, if attained, can reasonably be expected to maintain or increase our long-term shareholder value. We strive to award bonus opportunities designed to match those paid to similarly-situated executives at comparable companies. Typically, these awards are granted annually, although, for the merger-related reasons described below, we granted two six-month bonus awards for 2009. We currently offer short-term incentive bonuses to approximately 2,260, or 11%, of our employees.

     Similar to its deliberations on salary, the Committee in early 2009 noted that the annual incentive bonus practices of CenturyLink and Embarq would need to be reconciled following the merger of the companies. The Committee also determined in early 2009 that setting full year financial performance targets was too speculative due to uncertainties regarding the timing and effects of the merger. Consequently, in early 2009 the Committee set bonus targets for the first six months of 2009 (covering the period prior to the merger), and in August 2009 set bonus targets for the second half of 2009 (covering performance of the combined company after the merger). Consistent with our practices over the past few years, the Committee in each case elected to base 60% of the executives’ potential 2009 bonus payments upon CenturyLink attaining targeted levels of operating cash flow and the remaining 40% upon attaining targeted levels of end-user revenue. For both the first and second half of 2009, the executive officers were granted an opportunity to earn a specified percentage of their respective salaries if “target” performance levels were met, with up to double or triple these amounts if the “maximum” levels

of performance were met and no bonuses if the “minimum” threshold performance levels were not attained.

     For both of the performance measures used for the 2009 bonus periods, each legacy CenturyLink executive was entitled to receive:

•		no payment		if we failed to achieve the minimum threshold performance level
•		a prorated payment of at least 50% but less than 100% of the target award		if we attained or exceeded the minimum threshold performance level but not the target performance level
•		a prorated payment of at least 100% but less than 300% of the target award		if we attained or exceeded the target performance level but not the maximum performance level
•		a payment of 300% of the target award		if we attained or exceeded the maximum performance level.

     As described in greater detail under the heading “- Our Compensation Decision-Making Process,” the Committee may exercise its negative discretion to reduce awards based on each executive’s individual performance during the prior year, although it chose not to with respect to 2009 performance. Finally-determined awards made to our executives for 2009 performance are reflected in the Summary Compensation Table appearing below under the column “Non-Equity Incentive Plan Compensation.” For additional information concerning these awards and our 2009 performance targets, see “Executive Compensation — Incentive Compensation — 2009 Awards.”

     Compared to our executive officers, the remainder of our senior officers have more diverse performance goals. When an officer or manager has responsibility for a particular business unit, division or region, the performance goals are typically heavily weighted toward the operational performance of those units or areas. Other individuals may receive individual performance goals. Depending on the level of seniority, these individuals may also receive a portion of their bonus based on overall corporate performance. As discussed below under the heading “- Our Compensation Decision-Making Process,” the CEO approves the performance goals of the non-executive officers under the general supervision of the Compensation Committee.

Long-Term Equity Incentive Programs

     Our shareholder-approved long-term incentive compensation programs authorize the Compensation Committee to grant stock options, restricted stock, restricted stock units and various other stock-based incentives to key personnel. We believe stock incentive awards (i) encourage key personnel to focus on our long-term performance, (ii) strengthen the relationship

between compensation and growth in the market price of the Common Shares and thereby align management’s financial interests with those of the shareholders and (iii) help attract and retain talented personnel.

     During the first half of 2010, we intend to offer long-term incentive compensation awards to approximately 245, or 1%, of our employees. As described further below, in early 2010 we revised our grant practices to more closely tie the value of the executives’ long-term incentive awards to our performance.

     The Committee generally determines the size of equity grants based on the recipient’s responsibilities and duties, and on information furnished by the Committee’s consultants regarding equity incentive practices among comparable companies. The Committee’s general philosophy is to provide long-term incentive compensation valued at the 50^th percentile of that paid to similarly-situated officers at comparable companies. The Committee awards long-term incentive grants annually to permit us to respond to changes in compensation practices more quickly than would be the case if we made larger, multi-year grants.

     We strive to pay equity compensation in forms that create appropriate incentives to optimize performance at reasonable cost, that minimize enterprise risk, and that are competitive with incentives offered by other companies. For several years prior to 2004, we paid all long-term equity compensation in the form of stock options, in part because of favorable accounting treatment which is no longer available. Between 2004 and 2007, the Compensation Committee paid the executives’ long-term compensation with a combination of stock options and restricted stock. The Committee believes that restricted stock, when compared to stock option grants, provides us an opportunity to provide similar performance incentives to increase share prices with the issuance of fewer Common Shares, thereby reducing potential dilution. Moreover, unlike options, restricted stock affords motivation under a greater range of market conditions. For 2008 and 2009, the Committee elected to issue all of our long-term equity compensation grants in the form of time-vested restricted stock for a variety of reasons, including the Committee’s recognition of the growing use of restricted stock by our peers and its desire to minimize the dilution associated with our rewards. In early 2010, the Committee issued to each executive officer restricted stock, half of which is time-vested and half of which is performance-vested.

     All of our restricted stock granted to key employees between 2005 and 2008 vests over a five-year period, provided the recipient remains employed by us. The restricted stock granted in early 2009 vests over a three-year period to align our vesting period to the period traditionally used by Embarq prior to the merger and to increase the potential to retain key employees over the next couple of years during the critical post-merger integration period. For additional information on the vesting terms of our equity awards, see “Executive Compensation — Incentive Compensation — Outstanding Awards.” All outstanding stock options held by our executive officers are fully vested.

     In establishing equity award levels, we review the equity ownership levels of the recipients and prior awards, but do not place great weight on this factor. We believe each annual grant of long-term compensation should match prevailing practices in order for our compensation packages to remain competitive from year to year, and to mitigate the risk of competitors offering compensation packages to our executives that have superior long-term incentives. Moreover, the accumulation of substantial awards (awarded in reasonable annual

increments) significantly increases each executive’s motivation to increase our share price and remain employed by us, and could deter executives from accepting job offers that trigger equity forfeitures. For these reasons, we do not place great weight on equity ownership levels or prior grants in connection with granting new awards.

     In early 2008, the Compensation Committee awarded equity incentive grants for the first year of a three-year program developed and approved by the Committee, with assistance from its consultant, PricewaterhouseCoopers LLP. In February 2009, the Committee confirmed the continued appropriateness of the methodologies it used in 2008 to set long-term compensation targets over the three-year period. However, in light of the sharp drop in worldwide equity prices over the prior year, the Committee considered whether to issue the same number of shares of restricted stock as granted in 2008 or to issue a greater number of shares with a value equal to that of the restricted stock issued in 2008. After conferring with its consultant, the Committee elected to issue in 2009 a number of shares of restricted stock equal to 115% of the number of shares granted in 2008, which approximated the mathematical average of the number of shares derived under these two methods. For more information, see the tables included under the heading “Executive Compensation” and the additional discussion below under the heading “- Our Compensation Decision-Making Process.” In early 2010, the Committee issued restricted stock based on a new, comprehensive review of the amount of awards paid to similarly-situated executives at comparable companies.

Other Benefits

     As a final component of executive compensation, we provide a broad array of benefits designed to be competitive, in the aggregate, with similar benefits provided by our peers. We summarize these additional benefits below.

     Retirement Plans. We maintain one or more traditional qualified defined benefit retirement plans for most of our employees who have completed at least five years of service, plus one or more traditional qualified defined contribution 401(k) plans for a similar group of our employees. With respect to these qualified plans, we maintain nonqualified plans that permit our officers to receive or defer supplemental amounts in excess of federally-imposed caps that limit the amount of benefits highly-compensated employees are entitled to receive under qualified plans. When we assess overall compensation levels for our senior management, we review the benefits expected to be received under these retirement plans and their contribution to our executives’ total compensation. However, we continue to place our primary emphasis on ensuring that our compensation programs do not lag behind those of our competitors, which could subject us to the risk of losing talented senior managers. Additional information regarding our retirement plans is provided in the tables and accompanying discussion included below under the heading “Executive Compensation.”

     Change of Control Arrangements. As described in more detail under “Executive Compensation — Potential Termination Payments — Payments Made Upon a Change of Control,” in 2000 we entered into agreements under which we agreed to pay each of our executive officers who is terminated without cause or resigns under certain specified circumstances within three years of any change of control of CenturyLink (i) a lump sum cash severance payment equal to three times the sum of such officer’s annual salary and bonus, (ii) the officer’s currently pending bonus, (iii) additional tax gross-up cash payments described further below and (iv) certain welfare benefits for three years.

     We believe these benefits enhance shareholder value because:

	•		prior to a takeover, these protections (i) help us recruit and retain talented officers by providing assurances that their compensation and benefits will not be reduced or eliminated upon a takeover and (ii) help maintain the productivity of our workforce by alleviating day-to-day concerns over economic security, and
	•		during or after a takeover, these protections (i) help our personnel, when evaluating a possible business combination, to focus on the best interest of CenturyLink and its shareholders, rather than being distracted by personal concerns, and (ii) reduce the risk that personnel will accept job offers from competitors during takeover discussions.

     In recommending and approving these change of control agreements in 2000, our Compensation Committee and Board, respectively, analyzed the terms of similar arrangements for comparable executives at other peer companies. This approach was used to set the terms of our 2000 agreements, including the amounts payable, the events triggering payment and the tax reimbursement provisions. We monitor the aggregate amount of payments that could potentially be made to our executives if they are terminated following a change of control, and believe these potential payments are relatively small in relation to our current aggregate equity value. In late 2008, we amended and restated each of the change of control agreements with our officers to ensure that payments made under these agreements would not result in the imposition of penalties under the deferred compensation provisions of Section 409A of the Internal Revenue Code.

     Under our 2000 agreements, change of control benefits are payable to our executive officers if within three years following a change in control the officer is terminated without cause or resigns with “good reason,” which is defined to include a diminution of responsibilities, an assignment of inappropriate duties, an increase in responsibilities or duties without a commensurate increase in compensation, and a transfer of the officer exceeding 35 miles. For the CEO’s agreement only, any failure of the CEO to be named the chief executive officer of the parent company surviving the change of control transaction is deemed to be diminution of responsibilities entitling the CEO to resign with “good reason.” All of these provisions are designed to assure our officers that they will retain a job with responsibilities, stature and career opportunities consistent with those enjoyed by them prior to the takeover. In addition, under our 2000 agreements change-of-control benefits are payable to our executive and senior officers if the officer resigns for any reason during the 30-day “window period” immediately following the first anniversary of the change of control. We believe this latter provision would help assure the acquirer of the services of our management team for at least one year following the change of control, while at the same time hastening the acquirer’s incentive to deal quickly and fairly in offering our officers appropriate career and compensation opportunities.

     If change of control benefits become payable under our 2000 agreements and related policies, the cash payment to our key employees is based on the following multiples of salary and bonus, and the right to health and welfare benefits continues for the following number of years:

		Multiple of		Years of
		Salary and		Welfare
		Bonus		Benefits
Executive Officers		3 times		3 years
Senior Officers (Job Grades 66 or 67)		2 times		2 years
Other Officers (Job Grades 64 or 65)		1.5 times		1.5 years
Other Key Personnel (Job Grades 61-63)		1.0 times		1.0 year

     Under our 2000 agreements, we agreed to reimburse our executive and senior officers for any taxes imposed as a result of change in control benefits. For the remainder of management, we cap their change in control benefits so that no taxes will be imposed.

     Completion of the Embarq merger constituted a change of control of CenturyLink, as defined under the 2000 agreements. In connection with the Embarq merger, substantially all of CenturyLink’s top officers (i) agreed to forego the right under their change of control agreements to resign during the 30-day period following the first anniversary of the closing and receive severance benefits in connection therewith, (ii) agreed that their outstanding equity awards would not vest solely as a result of the merger, provided that such awards would vest upon a termination of the award holder’s employment by us without cause or by the award holder’s resignation with “good reason,” and (iii) agreed that any changes in their responsibilities, titles or reporting relationships that were communicated to them prior to the merger would not be used as a basis for claiming severance payments. In addition, we amended several of our broad-based and executive benefit plans, including amendments to our incentive compensation plans that defer accelerated vesting of outstanding equity awards until the consummation of a change of control. For information on rights that certain of our directors have waived in connection with the Embarq merger, see “Director Compensation — Cash and Stock Payments.”

     Completion of the Embarq merger also constituted a change of control of Embarq, as defined under Embarq’s severance arrangements. Prior to being amended in connection with the merger, these severance arrangements were generally similar in nature to CenturyLink’s 2000 agreements, except that no Embarq officer was entitled to severance payments at multiples exceeding 2.0 times his or her annual compensation or to resign with severance benefits during “window periods” following a change of control. In connection with the Embarq merger, Thomas A. Gerke, Dennis G. Huber and four other of Embarq’s legacy senior officers entered into agreements permitting them to resign with severance benefits (in most cases at 1.5 or 2.0 times their annual compensation) during “window periods” of varying lengths beginning at various specified dates following the merger.

     During fiscal 2009, we entered into an agreement with one of our former executive officers, Michael A. Maslowski, to continue to retain his services following the Embarq merger. Pursuant to the retention agreement, Mr. Maslowski agreed to continue his employment with us until December 31, 2009, at which time he left the Company. Under the retention agreement, Mr. Maslowski is entitled to receive in mid-2010 a lump sum payment equal to the sum of:

•

three times his annual base salary in effect at December 31, 2009,

	•		three times the average bonus earned by him in the three prior fiscal years, and
	•		a bonus for the first half of 2009.

See the Summary Compensation Table appearing under the heading “Executive Compensation” for more information.

     In addition, Mr. Maslowski’s welfare benefits will continue through December 31, 2012 and a portion of Mr. Maslowski’s previously granted but unvested restricted stock vested. The retention agreement requires Mr. Maslowski to keep confidential company nonpublic information known to him.

     As noted above, we have not undertaken a comprehensive review of our current change in control arrangements since they were implemented in 2000. Later this year, the Compensation Committee intends to review our change in control arrangements to determine if any of these arrangements should be modified in light of changes in compensation practices over the past decade.

     For more information on our change of control arrangements, see “Executive Compensation — Potential Termination Payments — Payments Made Upon a Change of Control.”

     Reduction in Force Benefits. We pay severance benefits to non-union full-time employees who are terminated in connection with a reduction in force. Benefits are not paid if the employee voluntarily resigns or is terminated for performance reasons or in connection with the sale of a business unit or in a transaction that gives rise to the change-of-control payments described above. The amount of any applicable severance payment is based on the terminated employee’s tenure with us and willingness to waive claims, and can range from two to 52 weeks of the terminated employee’s base salary or wages.

     Retention Programs. In connection with the Embarq merger, CenturyLink and Embarq both adopted retention programs that pay cash awards to various employees who agree to remain employed for certain specified periods to assist with the post-closing integration of the companies. Executive officers are ineligible to participate in these programs.

     Perquisites. Between 1999 and mid-year 2009, we made cash payments to our officers in lieu of previously-offered perquisites, many of which continue to be offered by our peers. Effective July 1, 2009, we eliminated these separate cash payments and increased our officers’ cash compensation by an amount designed to equal to that of the eliminated payments. For the first six months of 2009, these payments to our executives ranged from $15,280 to $18,763.

     Officers are entitled to be reimbursed for the cost of an annual physical examination, plus related travel expenses.

     Under our aircraft usage policy, the CEO may use our aircraft for personal travel without reimbursing us, and each other executive officer may use our aircraft for up to $10,000 per year in personal travel without reimbursing us. In all such cases, personal travel is permitted only if aircraft is available and not needed for superseding business purposes. For purposes of valuing and reporting the use of our aircraft, we determine the incremental cost of aircraft usage on an hourly basis, calculated in accordance with applicable guidelines of the Securities and Exchange Commission. The incremental cost of this usage, which may be substantially different than the

cost as determined under alternative calculation methodologies, is reported in the Summary Compensation Table appearing below under the heading “Executive Compensation.” The Committee monitors this usage annually. In early 2010, the Committee elected to retain our aircraft usage policy based on its determination that the policy was providing valuable and cost-effective benefits to our executives residing in a small city with limited airline service.

     As explained in greater detail in our 2006 proxy statement, prior to the Sarbanes-Oxley Act of 2002, we funded supplemental life insurance benefits to our officers in excess of those generally afforded to employees. These benefits were provided pursuant to endorsement “split-dollar” insurance agreements between us and our officers in which CenturyLink and the officers’ beneficiaries would share death benefits payable under life insurance policies procured by us. In 2002, we suspended payment of further premiums under the “split-dollar” policies insuring the lives of our executive officers, but resumed paying premiums in 2006 under restructured arrangements approved by the Compensation Committee. These restructured arrangements, among other things, obligate us to pay premiums on the executive officers’ respective insurance policies sufficient to provide the same death benefits available under the prior agreements, and entitle the executive officers to purchase additional post-retirement coverage at their cost and to receive related tax gross-up cash payments in amounts sufficient to compensate them for income and employment taxes incurred as a result of our premium payments.

     Most years, we organize one of our regular board meetings and related committee meetings as a “board retreat” scheduled over a long weekend, typically in an area were we conduct operations. The spouses of our directors and executive officers are invited to attend, and we typically schedule recreational activities for those who are able and willing to participate.

     For more information on the items under this heading, see the Summary Compensation Table appearing below under the heading “Executive Compensation.”

     Other Employee Benefits. We maintain a stock purchase plan that enables most of our employees to purchase Common Shares on attractive terms. We also maintain certain broad-based employee welfare benefit plans in which the executive officers are generally permitted to participate on terms that are either substantially similar to those provided to all other participants or which provide our executives with enhanced benefits upon their death or disability. We also maintain a supplemental disability plan designed to ensure disability payments to our officers in the event payments are unavailable from our disability insurer.

Our Compensation Decision-Making Process

     Role of Compensation Committee. The Compensation Committee of our Board establishes, implements, administers and monitors our executive compensation programs, subject to the Board’s oversight. As described further below, the Compensation Committee’s compensation decision-making process requires a careful balancing of a wide range of factors involving the group and individual performance and responsibilities of our executives and the competitive compensation practices of other companies. Except with respect to annual cash bonuses, the Committee has not historically used quantitative formulas to determine compensation or assign weights to the various factors considered.

     The Compensation Committee also establishes, implements, administers and monitors our director cash and equity compensation programs. (Prior to 2010, the Nominating and

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Corporate Governance Committee of the Board was responsible for approving the cash compensation of our directors.)

     On July 1, 2009, we acquired Embarq under the terms of a merger agreement dated October 26, 2008. Between the time of the merger agreement and the closing, our incumbent Compensation Committee (comprised of C.G. Melville, Jr., James B. Gardner and Fred R. Nichols) met several times to discuss the compensation practices of CenturyLink and Embarq, and to set the compensation of our executive officers. In connection therewith, the incumbent Committee assessed differences in the compensation practices of CenturyLink and Embarq, and determined that these differences should be addressed and reconciled by the newly-constituted Compensation Committee named on July 1, 2009 in connection with the closing of the merger (comprised of Laurie A. Siegel, Harvey P. Perry, Fred R. Nichols, Virginia Boulet and Stephanie M. Shern).

     During the second half of 2009, the Committee met several times to begin the process of developing compensation programs designed for the combined company and, as further noted above, granted bonuses to the executive officers for the second half of 2009. Thereafter, the Committee and PricewaterhouseCoopers LLP undertook a comprehensive review of our compensation philosophy, strategies, policies and practices in preparation for setting our executives’ 2010 compensation.

     Role of Compensation Consultants. The Committee engages the services of a compensation consultant to assist in the design and review of executive compensation programs, to determine whether the Committee’s philosophy and practices are reasonable and compatible with prevailing practices, and to provide guidance on specific compensation levels based on industry trends and practices. Although the Committee seeks input from management during the consultant selection process, the consultant selection decision rests entirely with the Committee and the consultant works directly for and at the direction of the Committee.

     Since 2004, the Committee has engaged PricewaterhouseCoopers LLP (“PwC”) as its compensation consultant. The total amount paid to PwC for compensation consulting services during 2009 was $161,000.

     Prior to the Embarq merger, PwC did not conduct any material amount of non-compensation consulting work for us. However, during 2009 management engaged PwC to provide a variety of merger and systems integration services. The total amount paid during 2009 for systems integration services was $5,716,000. The systems integration assistance provided by PwC is expected to continue through 2010, although we expect the amount of fees to decrease as we complete integration of our customer care and billing systems.

     Management also engaged PwC to provide consulting services for a human resource design project for which PwC was paid $226,000 during 2009 and sales and use tax consulting services for which PwC was paid $49,000 during 2009.

     Following completion of the Embarq merger, the Committee undertook a comprehensive search to retain a compensation consultant for the combined company. In connection therewith, the Committee solicited proposals from and interviewed a number of compensation consulting firms. Among the criteria considered by the Committee during this review were the firms’ experience, familiarity with the telecommunications industry, independence and relative cost, as

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well as the degree to which the consultant’s approach to performing its services was consistent with the Committee’s culture and approach.

     After considering a number of alternatives, the Committee concluded that PwC was best-suited to provide the compensation consulting services required by it for 2009-2010. In reaching this conclusion the Committee considered, among other factors, the quality of compensation-related services provided by PwC in the past, the importance of providing continuity through the first post-merger compensation review process, the nature of and fees associated with the other work provided by PwC, and the mechanisms PwC has in place to ensure its compensation consulting practice is independent of its other practice groups.

     The Committee believes that the compensation consulting services provided by PwC are not impaired by the firm’s provision of other work and that adequate safeguards exist to ensure the continued independence and objectivity of PwC’s compensation consulting advice. In addition to its on-going monitoring of the other services concurrently being provided by PwC, the Committee has established the practice of approving in advance any other non-compensation services sought to be provided in the future by its compensation consultant.

     Review Process. Over the past decade preceding the Embarq merger, the Committee retained independent consulting firms every three years to conduct a detailed review of compensation philosophy, practices and programs, including the structure of our annual and long-term incentive compensation programs. During these comprehensive triennial reviews, the Committee typically sought to confirm that its philosophy and practices were reasonable and comparable to those of similar companies, to reconfigure our executive compensation programs if necessary to improve them or conform them to prevailing practices, to set annual salaries, and to establish target levels of incentive compensation to be granted to each executive officer during the upcoming three-year period. During the second and third year of each of these three-year periods, the Committee generally consulted with its independent consultants to determine if changes to the three-year program were necessary or appropriate, and to establish the specific salary and annual incentive compensation payable to the executives for the upcoming year. For the foreseeable future, the Committee intends to conduct compensation reviews on an annual, as opposed to triennial, basis.

     Based on input received from PwC, the Committee used the following three benchmarks during 2008 and 2009:

	•		broad-based compensation data for top executives from telecommunications companies and from other companies with revenues comparable to ours, all of which was derived from various national surveys and adjusted for aging
	•		a 15-company “financial” peer group of communications companies with median revenues generally comparable to ours
	•		a 14-company “industry” peer group of telecommunications and cable companies.

     During 2008 and 2009, the Committee afforded the greatest weight to the broad-based survey data, and the next greatest weight to the “financial” peer group. The “industry” peer group was used principally to confirm the relevancy of the first two benchmarks to our industry.

     In early 2008 the Committee expanded the “industry” peer group to consist of the following 14 companies: Cincinnati Bell, Citizens Communications, Windstream, Telephone & Data Systems, Embarq Corporation, Alltel, Qwest Communications, Sprint Nextel, AT&T, Verizon Communications, Comcast, Time Warner Cable, Charter Communications and Mediacom Communications, and the Committee adjusted the “financial” peer group to consist of the following 15 companies: Alltel, Primus Telecomm Group, Cincinnati Bell, IDT Corporation, Liberty Global, Citizens Communications, US Cellular, Telephone & Data Systems, Cablevision Systems, Qwest Communications, Embarq Corporation, Windstream, Global Crossing, MetroPCS Communications and Dobson Communications.

     As discussed above, the Committee determined in early 2009 to leave executive salaries unchanged, and generally to defer changes to executive compensation programs until after the Embarq merger. As such, the Committee’s use of benchmarks in early 2009 was limited. Following the merger, the Committee adopted new benchmarks and methodologies for use in setting future compensation, including eliminating AT&T, Verizon and Sprint Nextel from our peer group benchmark.

     In each year since 2005, the Committee and PwC used benchmarking data to determine median amounts of salary, annual bonuses and equity compensation paid to executives comparable to ours. In determining how much to compensate each officer, the Committee also extensively reviewed a wide range of other factors, including the officer’s individual performance and particular set of skills, the anticipated degree of difficulty of replacing the officer with someone of comparable experience and skill, the role the officer plays in maintaining a cohesive management team and improving the performance of others, the role the officer may have played in any recent extraordinary corporate achievements, the length of the officer’s service with us and within the telecommunications industry, the officer’s pay relative to other officers and employees, the officer’s prior compensation in recent years, the financial community’s assessment of management’s performance, and the recent performance of CenturyLink. In assessing our performance, we typically review how our actual revenues, cash flows, net income and other measures of financial performance relate to amounts previously projected by us or market participants, as well as the results of peer telecommunications companies. We also assess operational benchmarks, such as our access line losses or customer growth in relation to our competitors. Although we assess each officer’s individual performance in connection with establishing all components of compensation, we typically weigh this factor more heavily for salary determinations and less heavily for bonuses, which tend to be allocated among the officers primarily on the basis of their level of responsibility and pay grade.

     Each year, we compile lists of compensation data relating to each of our executives. These “tally sheets” include the executive’s salary, annual cash incentive award, equity-based compensation, perquisites, pension benefit accruals and other compensation. These tally sheets also show the executives’ holdings of our Common Shares and accumulated unrealized gains under prior equity-based compensation awards. The Compensation Committee uses these tally sheets to (i) review the total annual compensation of the executive officers, (ii) assess the executive officers’ wealth accumulation from our compensation programs and (iii) assure that the Committee has a comprehensive understanding of our compensation programs.

     Annual Bonus Procedures. To administer our annual bonus program, we maintain (i) a shareholder-approved short-term incentive plan for certain of the executive officers and (ii) an

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annual incentive bonus plan for other officers and managers. In connection with both of these bonus plans, during the first quarter of each year our Compensation Committee:

	•		establishes performance objectives, and for each determines a “target” level of performance, as well as “minimum” and “maximum” threshold levels of performance,
	•		determines the relative weight each performance objective should receive in connection with calculating aggregate bonus payments, and
	•		establishes the amount of bonus payable if the “target” level of performance is attained, which is typically defined in terms of a percentage of each officer’s salary.

     Upon completion of the fiscal year, the CFO adjusts our actual operating results in accordance with the Committee’s long-standing written procedures designed to eliminate the effects of extraordinary or non-recurring transactions that were not known, anticipated or quantifiable on the date the performance goals were established. The CFO then compares our adjusted operating results to the pre-determined minimum, target and maximum levels for each performance objective, and calculates a blended rate of our attainment of the performance objectives. These determinations and calculations are provided in writing to the Committee for its review and approval. Beginning in 2010, our Internal Audit Department has reviewed these determinations and calculations.

     We have traditionally believed that company-wide performance should be the major determinant of the amount of annual incentive bonuses for our executive officers. Nonetheless, bonuses payable to the executive officers in accordance with these procedures are subject to the “negative discretion” of the Committee to reduce the calculated bonus payment.

     Under our annual bonus programs, the Committee may pay the annual bonuses in cash or stock. Since 2000, the Committee has paid these bonuses entirely in cash. The Committee believes paying annual bonuses to our executives in cash is appropriate because:

	•		the executives are already receiving over half of their overall compensation in the form of equity grants, and
	•		the use of cash diversifies our compensation mix and prevents us from over-reliance on equity grants.

     Annual Equity Grant Procedures. Under our equity incentive plans, the exercise price of any stock options awarded by us must equal or exceed the fair market value of our stock on the date of grant, based on either the closing price on that date or an average selling price during a specified period determined by the Committee. As explained further above, annual grants of stock awards to executives are typically made during the first quarter after we publicly release our earnings. Grants of stock awards to newly hired executive officers who are eligible to receive them are made at the next regularly scheduled Committee meeting following their hire date. Under our option pricing policies that govern all other employees, (i) employees receive any options granted to them as of the fifth business day of the month that follows immediately after the month in which we complete our annual merit review process (typically in February or

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March) and (ii) newly hired or promoted employees receive any award of stock options on the fifth business day of the month that follows immediately after the month in which they are hired or promoted.

     Role of CEO in Compensation Decisions. Although the Compensation Committee approves compensation decisions for the executive officers, each year it receives the CEO’s recommendations, particularly with respect to executive salaries. The Committee believes the CEO is better able than it to assess:

	•		the relative strengths and weakness of the other executives and their recent performance,
	•		the possibility that differences in compensation among similarly situated executives could negatively impact morale, cohesion, teamwork or the overall viability of the executive group, and
	•		the relative vulnerability of executives to job solicitations from competitors.

     The Committee considers the CEO’s recommendations as one of the many factors it uses to establish compensation levels for each executive.

     In addition, the CEO is responsible for approving the annual salaries and bonuses of our non-executive officers, including approval of appropriate annual performance goals for such officers. The CEO also approves all equity compensation awards to the non-executive officers, acting under authority delegated by the Compensation Committee in accordance with our long-term incentive plans. The Committee oversees these processes and receives an annual report from the CEO.

Discontinuance of Supplemental Executive Retirement Plan

     As noted above, in early 2008 the Compensation Committee completed a comprehensive review of our compensation philosophies, practices and programs. In connection with this review, we decided to discontinue our Supplemental Executive Retirement Plan. Specifically, we (i) froze future benefit accruals effective February 29, 2008 and (ii) approved plan amendments permitting participants to receive in January 2009 a lump sum distribution of the present value of their accrued plan benefits. In connection with making this decision, the Committee determined that fewer companies were providing these type of benefits and that the plan was no longer necessary in order to ensure that CenturyLink was providing a competitive mix of pension and other compensation benefits. To a lesser extent, the Committee was also motivated by a desire to remove the impact of plan liabilities and expenses from CenturyLink’s financial statements. The Committee noted that freezing the plan could unsettle the financial planning of officers who had relied upon future accruals under the plan. To partially alleviate these future lost benefits, the Committee enhanced plan benefits by (i) crediting each active participant with three additional years of service and (ii) crediting each participant not accruing additional plan benefits with three additional years of age in connection with calculating the present value of any lump sum distributions made in 2009.

Forfeiture of Prior Compensation

     Recipients of our equity compensation grants have agreed to forfeit certain of their awards (and to return to us any cash, securities or other assets received by them upon the sale of Common Shares they acquired through certain prior equity awards) if at any time during their employment with us or within 18 months after termination of employment they engage in activity contrary or harmful to our interests. The Compensation Committee is authorized to waive these forfeiture provisions if it determines in its sole discretion that such action is in our best interests. We have filed with the Securities and Exchange Commission copies of our form of equity incentive agreements containing these forfeiture provisions. The 2010 Executive Officers Short-Term Incentive Plan to be voted upon by the shareholders at the meeting contains substantially similar forfeiture provisions, and we plan to add similar provisions to our other short-term incentive plans.

     In addition, our Corporate Governance Guidelines authorize the Board to recover compensation from an executive officer if the Board determines that any bonus, incentive payment, equity award or other compensation received by the executive was based on any financial or operating result that was impacted by the executive’s knowing or intentional fraudulent or illegal conduct. In addition, certain laws would require our CEO and CFO to reimburse us for incentive compensation paid or trading profits earned following the release of financial statements that are subsequently restated due to material noncompliance with SEC reporting requirements caused by misconduct.

Stock Ownership Guidelines

     In early 2010, our Compensation Committee adopted stock ownership guidelines. Under the current guidelines, we expect the CEO to beneficially own CenturyLink stock equal in market value to at least five times his annual base salary, and all other executive officers to beneficially own CenturyLink stock valued at least three times their annual base salary. Each executive officer has three years to attain these targets. For any year during which an executive does not meet his or her ownership target, the executive is expected to hold 65% of the CenturyLink stock that the executive acquires through our equity compensation programs, excluding shares sold to pay related taxes. For additional information on our stock ownership guidelines, see “Governance Guidelines.”

Use of Employment Agreements

     We have a long-standing practice of not providing employment agreements to our officers, although in connection with the Embarq merger we assumed several employment agreements applicable to legacy Embarq executives and became obligated to make severance payments to key employees under their change of control agreements under the circumstances described above.

Other Compensation Matters

     To the extent that it is practicable and consistent with our executive compensation objectives, we seek to comply with Section 162(m) of the Internal Revenue Code and the regulations adopted thereunder in order to preserve the tax deductibility of performance-based compensation in excess of $1 million per taxable year to each of our officers. However, if

compliance with Section 162(m) conflicts with our compensation objectives or is contrary to the best interests of the shareholders, we will pursue those objectives, regardless of the attendant tax implications. In each of the last several years, we granted time-vested restricted stock that did not qualify as performance-based compensation under Section 162(m).

     We have not adopted any formal prohibition against our officers hedging the economic risk of their holdings of our Common Shares. Although we believe that excessive use of such hedging could undercut the benefits of our equity incentive programs, we do not believe that our officers have acted in such manner. We plan to continue to periodically assess the merits of adopting hedging prohibitions in the future.

     As part of its duties, the Compensation Committee assesses risks arising out of our employee compensation policies and practices.

COMPENSATION COMMITTEE REPORT

     The Compensation Committee has reviewed and discussed with management the report included above under the heading “Compensation Discussion and Analysis.” Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis report be included in this proxy statement and incorporated into our Annual Report on Form 10-K for the year ended December 31, 2009.

Submitted by the Compensation Committee of the Board of Directors.

Laurie A. Siegel (Chairperson)
Fred R. Nichols
Stephanie M. Shern
Virginia Boulet
Harvey P. Perry

EXECUTIVE COMPENSATION

Overview

     The following table sets forth certain information regarding the compensation of (i) our principal executive and financial officers, (ii) each of our four most highly compensated executive officers other than our principal executive and financial officers and (iii) one of our former executive officers. In this proxy statement, we sometimes refer to these individuals as the “named officers.” Following this table is additional information regarding incentive compensation, pension benefits, deferred compensation and potential termination payments pertaining to the named officers. For additional information on the compensation summarized below and other benefits, see “Compensation Discussion and Analysis.”

Summary Compensation Table

Name and										Restricted				Stock				Non-Equity				Change in
Principal										Stock				Option				Incentive Plan				Pension				All Other
Position		Year				Salary				Awards(1)				Awards(1)				Compensation(2)				Value(3)				Compensation(4)				Total
Current Executives:
Glen F. Post, III			2009			$	1,009,440			$	3,817,764			$	—			$	891,619			$	389,379			$	1,358,805			$	7,467,007
Chief Executive Officer			2008				1,000,000				4,651,009				—				864,500				6,759,670				1,079,056				14,354,235
and President			2007				1,000,000				2,685,150				3,332,000				1,358,500				—	(5)			567,364				8,943,014
Thomas A. Gerke(6)			2009				431,035				—				—				535,364				214,908				285,237				1,466,544
Executive Vice Chairman, Regulatory and Governmental Affairs and Human Resources
Karen A. Puckett			2009				654,023				1,431,789				—				488,957				219,612				476,597				3,270,978
Executive Vice President			2008				640,772				1,744,265				—				468,725				1,770,115				447,375				5,071,252
and Chief Operating			2007				622,088				1,009,800				1,249,500				715,090				93,902				254,988				3,945,368
Officer
R. Stewart Ewing, Jr.			2009				588,237				1,193,105				—				359,895				270,162				466,066				2,877,465
Executive Vice			2008				574,924				1,453,463				—				344,092				2,778,643				484,084				5,635,206
President and Chief			2007				558,112				839,970				1,041,250				524,904				—	(5)			328,168				3,292,404
Financial Officer
David D. Cole			2009				424,853				773,200				—				260,074				195,604				288,981				1,942,712
Senior Vice			2008				412,828				941,958				—				247,078				1,591,316				270,634				3,463,814
President — Operations			2007				400,744				550,800				674,730				376,900				—	(5)			171,853				2,175,027
Support
Stacey W. Goff			2009				414,037				773,200				—				253,465				113,775				254,344				1,808,821
Executive Vice			2008				401,088				941,958				—				240,051				835,889				251,956				2,670,942
President,			2007				385,628				550,800				674,730				362,683				14,076				153,190				2,141,107
General Counsel and Secretary
Former Executive:
Michael A. Maslowski			2009				355,632				773,200				—				88,415				271,452				1,952,301	(7)			3,441,000
Former Executive			2008				353,712				941,958				—				188,175				858,851				301,355				2,644,051
Officer			2007				343,396				550,800				674,730				287,079				134,115				196,850				2,186,970

																										Insurance
																						Insurance				Premium Tax				Restricted
						Cash				Physical				Aircraft				Contributions				Premiums				Reimbursement				Stock
Name		Year				Allowance				Exam				Use				to Plans				Paid				Payments				Dividends				Total
Current Executives:
Mr. Post			2009			$	18,763			$	2,290			$	11,500			$	76,528			$	213,316			$	144,297			$	892,111			$	1,358,805
			2008				34,320				4,536				15,000				94,340				193,901				131,164				605,795				1,079,056
			2007				34,320				2,415				8,460				148,432				193,901				131,164				48,672				567,364
Mr. Gerke			2009				—				—				—				145				—				—				285,092				285,237
Ms. Puckett			2009				15,280				2,891				3,525				45,931				44,258				29,938				334,774				476,597
			2008				27,950				4,930				3,300				54,234				71,515				48,376				237,070				447,375
			2007				27,950				1,670				2,655				83,374				71,515				48,376				19,448				254,988
Mr. Ewing			2009				15,280				3,124				4,350				38,214				75,304				50,939				278,855				466,066
			2008				27,950				—				—				43,993				128,122				86,668				197,351				484,084
			2007				27,950				—				—				69,251				128,122				86,668				16,177				328,168
Mr. Cole			2009				15,280								5,400				27,547				35,531				24,035				181,188				288,981
			2008				27,950				—				—				31,589				49,119				33,226				128,750				270,634
			2007				27,950				—				—				50,950				49,119				33,226				10,608				171,853
Mr. Goff			2009				15,280				—				2,400				26,817				17,095				11,564				181,188				254,344
			2008				27,950				—				6,075				30,551				34,973				23,657				128,750				251,956
			2007				27,950				2,428				5,330				48,244				34,973				23,657				10,608				153,190
Former Executive:
Mr. Maslowski			2009				23,760				7,527				—				22,336				47,926				30,180				132,132				1,952,301	(7)
			2008				22,880				4,916				—				25,632				71,089				48,088				128,750				301,355
			2007				22,880				2,336				—				41,849				71,089				48,088				10,608				196,850

Incentive Compensation

     2009 Awards. The table and discussion below summarizes:

•

the range of potential payouts under incentive bonus awards that were:

	-		granted in February 2009 with respect to performance during the first half of 2009; and
	-		granted in August 2009 with respect to performance during the second half of 2009; and

•

grants of restricted stock made on February 26, 2009.

Grants of Plan-Based Awards

										Estimated Future
				Range of Payouts Under 2009 Non-						Share Payouts Under
				Equity Incentive Plan						Equity Incentive		Grant Date Fair
		Type of Award and		Awards(1)						Plan Awards		Value of Stock
Name		Grant Date		Minimum		Target		Maximum		Target		Awards(2)
Current Executives:
Glen F. Post, III		First Half of 2009 Bonus		$  162,500		$  325,000		$    975,000		—		$             —
		Second Half of 2009 Bonus		178,328		356,656		1,069,969		—		—
		Restricted Stock (2/26/09)		—		—		—		146,499		3,817,764
Thomas A.		Second Half of 2009 Bonus		226,849		453,698		907,396		—		—
Gerke(3)
Karen A. Puckett		First Half of 2009 Bonus		88,803		177,606		532,818		—		—
		Second Half of 2009 Bonus		98,075		196,150		588,451		—		—
		Restricted Stock (2/26/09)		—		—		—		54,942		1,431,789
R. Stewart Ewing, Jr.		First Half of 2009 Bonus		65,192		130,385		391,154		—		—
		Second Half of 2009 Bonus		72,342		144,685		434,054		—		—
		Restricted Stock (2/26/09)		—		—		—		45,783		1,193,105
David D. Cole		First Half of 2009 Bonus		46,812		93,623		280,870		—		—
		Second Half of 2009 Bonus		52,548		105,096		315,287		—		—
		Restricted Stock (2/26/09)		—		—		—		29,670		773,200
Stacey W. Goff		First Half of 2009 Bonus		45,595		91,190		273,569		—		—
		Second Half of 2009 Bonus		51,237		102,474		307,423		—		—
		Restricted Stock (2/26/09)		—		—		—		29,670		773,200
Former Executive:
Michael A.		First Half of 2009 Bonus		35,651		71,302		213,907		—		—
Maslowski(4)		Restricted Stock (2/26/09)		—		—		—		—		773,200

     During 2009, the Compensation Committee of our Board elected to base the amount of the senior officers’ 2009 annual incentive bonuses on whether we attained “minimum,” “target” or “maximum” threshold levels of operating cash flow and end-user revenues with respect to the six-month period ended June 30, 2009 (which preceded the Embarq merger) and the six-month period ended December 31, 2009 (which followed the Embarq merger). The Committee established the “minimum” “target” and “maximum” threshold levels of (i) operating cash flow at $575, $605 and $635 million, respectively, for the six months ended June 30, 2009, and at $1.813, $1.908 and $2.003 billion, respectively, for the six months ended December 31, 2009 and (ii) end-use revenues at $665, $700 and $735 million, respectively, for the six months ended June 30, 2009, and at approximately $2.257, $2.376 and $2.459, respectively, for the six months ended December 31, 2009. In each case, attainment of less than 95% of the target amount was designed to result in no bonus payment, and attainment of more than 105% of the target amount was designed to result in three times the bonus payable for attaining the target level of performance. For these purposes, “operating cash flow” meant our operating income plus depreciation and amortization, and “end-user revenues” meant our total operating revenues less “network access” revenues and certain other smaller revenue components included in the category described as “other” revenue in Appendix A to this proxy statement. For the six-month period ended December 31, 2009, we excluded from “operating cash flow” pension and other post-employment benefit costs. In all cases, we adjusted these amounts to eliminate the effects of extraordinary or non-recurring transactions in accordance with procedures further described elsewhere herein. For purposes of calculating the aggregate bonus payment, attainment of the operating cash flow and end-user revenue targets were weighed 60% and 40%, respectively. As reported in the Summary Compensation Table above, these awards resulted in cash payments to our named officers ranging from $257,574 to $906,603. For additional information, see “Compensation Discussion and Analysis — Annual Incentive Bonuses.”

     The restricted stock issued to our executive officers on February 26, 2009 vests over a three-year period, with one-third of the shares having vested on February 26, 2010 and one-third vesting on February 26, 2011 and February 26, 2012, respectively. The holders of these shares of restricted stock are recognized as the owners of such shares, and, accordingly, receive dividends with respect thereto.

     Subject to limited exceptions, the vesting of the above-described restricted stock will accelerate if the officer dies or becomes disabled or CenturyTel experiences a change of control, and may accelerate under certain other circumstances. These vesting provisions are described further in our shareholder-approved 2005 management incentive compensation plan, a copy of which we have filed with the Securities and Exchange Commission. All of these awards are subject to forfeiture if the officer competes with us or engages in certain other activities harmful to us, all as specified further in the forms of incentive agreements that we have filed with the Securities and Exchange Commission. See “- Potential Termination Payments.”

     Outstanding Awards. The table below summarizes information on stock options and unvested restricted stock outstanding at December 31, 2009.

Outstanding Equity Awards at December 31, 2009⁽¹⁾

		Option Awards																Stock Awards
		Number of Securities Underlying								Option				Option								Number of Shares				Market Value of Shares That
		Unexercised Options								Exercise				Expiration				Grant				That Have Not				Have Not
Name		Exercisable				Unexercisable(2)				Price				Date				Date				Vested(3)				Vested
Current Executives
Glen F. Post, III			92,666				—			$	32.99				2/25/2012				2/17/2005				11,700			$	423,657
			160,000				—				28.34				2/25/2014				2/20/2006				23,400				847,314
			200,000				—				33.40				2/17/2015				2/26/2007				35,100				1,270,971
			200,000				—				35.41				2/20/2016				2/21/2008				101,912				3,690,234
			133,334				66,666				45.90				2/26/2017				2/26/2009				146,499				5,304,729
Thomas A. Gerke(4)			2,948				—				66.71				1/03/2010				2/22/2007				27,677				1,002,184
			2,579				—				66.71				1/24/2010				2/27/2009				68,654				2,485,961
			472				—				66.71				2/08/2010				3/02/2008				73,494				2,661,218
			920				—				66.71				8/07/2010				2/27/2009				33,812				1,224,333
			11,809				—				66.71				5/11/2011
			3,614				—				33.65				2/11/2012
			3,635				—				35.11				2/19/2012
			13,007				—				35.11				3/27/2013
			5,804				—				24.72				2/10/2014
			11,609				—				24.34				2/10/2014
			67,530				—				36.30				2/08/2015
			95,304				—				32.90				2/07/2016
			49,414				16,305				41.19				2/22/2017
			130,613				86,202				30.62				3/02/2018
Karen A. Puckett			60,000				—				32.99				2/25/2012				2/17/2005				4,400				159,324
			75,000				—				33.40				2/17/2015				2/20/2006				8,800				318,648
			75,000				—				35.41				2/20/2016				2/26/2007				13,200				477,972
			50,001				24,999				45.90				2/26/2017				2/21/2008				38,220				1,383,946
																			2/26/2009				54,942				1,989,450
R. Stewart Ewing, Jr.			40,000	(5)			—				32.99				2/25/2012				2/17/2005				3,660				132,529
			62,500	(5)			—				28.34				2/25/2014				2/20/2006				7,320				265,057
			62,100	(5)			—				33.40				2/17/2015				2/26/2007				10,980				397,586
			62,500				—				35.41				2/20/2016				2/21/2008				31,848				1,153,216
			41,667				20,833				45.90				2/26/2017				2/26/2009				45,783				1,657,802
David D. Cole			81,000				—				32.99				2/25/2012				2/17/2005				2,400				86,904
			27,001				—				28.34				2/25/2014				2/20/2006				4,800				173,808
			40,500				—				33.40				2/17/2015				2/26/2007				7,200				260,712
			40,500				—				35.41				2/20/2016				2/21/2008				20,640				747,374
			27,001				13,499				45.90				2/26/2017				2/26/2009				29,670				1,074,351
Stacey W. Goff			50,000				—				34.20				8/26/2013				2/17/2005				2,400				86,904
			40,500				—				35.41				2/20/2016				2/20/2006				4,800				173,808
			27,001				13,499				45.90				2/26/2017				2/26/2007				7,200				260,712
																			2/21/2008				20,640				747,374
																			2/26/2009				29,670				1,074,351
Former Executive:
Michael A.Maslowski			27,000				—				35.41				2/20/2016
			40,500				—				45.90				2/26/2017