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

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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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2009 Notice of Annual Meeting

and Proxy Statement

and

Annual Financial Report

Thursday, May 7, 2009
2:00 p.m. local time
100 CenturyTel Drive
Monroe, Louisiana

March 30, 2009

Dear Shareholder:

     It is a pleasure to invite you to our 2009 Annual Meeting of Shareholders on Thursday, May 7, beginning at 2:00 p.m. local time, at our headquarters in Monroe, Louisiana. I hope you can attend.

     As in the past, this booklet includes our formal notice of the meeting, our proxy statement and our annual financial report.

     Most of you have received with this booklet a proxy card that indicates the number of votes that you will be entitled to cast at the meeting according to the records of CenturyTel or your broker or other nominee. Each CenturyTel share that you have “beneficially owned” continuously since May 30, 1987 generally entitles you to ten votes; each other share entitles you to one vote. Shares held through a broker or other nominee are presumed to have one vote per share. In lieu of receiving a proxy card, participants in our benefit plans have been furnished with voting instruction cards. The reverse side of this letter describes our voting provisions in greater detail.

     Regardless of how many shares you own or whether you plan to attend the meeting in person, it is important that your shares be voted at the meeting. At your earliest convenience, please vote by telephone or the Internet, or by completing and returning your proxy or voting instruction card in the enclosed return envelope.

     Thank you for your interest and continued support.

Sincerely,

Glen F. Post, III
Chairman of the Board and
Chief Executive Officer

VOTING PROVISIONS

Shareholders

     Record Shareholders. In general, shares registered in the name of any natural person or estate that are represented by certificates dated as of or prior to May 30, 1987 are presumed to have ten votes per share and all other shares are presumed to have one vote per share. However, the Company’s articles of incorporation (the relevant provisions of which are reproduced below) set forth a list of circumstances in which the foregoing presumptions may be refuted. If you believe that the voting information set forth on your proxy card is incorrect or a presumption made with respect to your shares should not apply, please send a letter to the Company briefly describing the reasons for your belief. Marking the proxy card or contacting us in any other manner will not be sufficient notification that you believe the voting information thereon is incorrect.

     Beneficial Shareholders. All shares held through a broker, bank or other nominee are presumed to have one vote per share. The Company’s articles of incorporation set forth a list of circumstances in which this presumption may be refuted by the person who has held since May 30, 1987 all of the attributes of beneficial ownership referred to in Article III(C)(2) reproduced below. If you believe that some or all of your shares are entitled to ten votes, you may follow one of two procedures. First, you may write a letter to the Company describing the reasons for your belief. The letter should contain your name (unless you prefer to remain anonymous), the name of the brokerage firm, bank or other nominee holding your shares, your account number with such nominee and the number of shares you have beneficially owned continuously since May 30, 1987. Alternatively, you may ask your broker, bank or other nominee to write a letter to the Company on your behalf stating your account number and indicating the number of shares that you have beneficially owned continuously since May 30, 1987. In either case, your letter should indicate how you wish to have your shares voted.

     Other. The Company will consider all letters received prior to the date of the Annual Meeting and, when a return address is provided in the letter, will advise the party furnishing such letter of its decision, although in many cases the Company will not have time to inform an owner or nominee of its decision prior to the time the shares are voted. In limited circumstances, the Company may require additional information before making a determination. If you have any questions about the Company’s voting procedures, please call the Company at (318) 388-9500.

Participants in Benefit Plans

     Participants in the Company’s Dollars & Sense Plan or Union 401(k) Plan have received voting instruction cards in lieu of a proxy card. Only the trustees of these plans, in their capacity as directed trustees, can vote the plan shares at the Annual Meeting. However, if you are a participating current or former CenturyTel employee, you are designated as a “Named Fiduciary” for voting purposes, which entitles you, on a confidential basis, to instruct the trustees how to cast the votes attributable to the shares allocated to your plan account, as well as a proportionate number of plan shares for which properly executed instructions are not timely received. By signing and returning your voting instruction card, you are accepting your designation under the plans as a “Named Fiduciary,” and you therefore are required to exercise your voting rights prudently and in the interest of all plan participants. If you elect not to vote the shares allocated to your accounts, your shares will be voted in accordance with voting instructions received by the trustees from those plan participants who do vote.

* * * *

Excerpts from the Company’s Articles of Incorporation

     Paragraph C of Article III of the Company’s articles of incorporation provides as follows:

     (1) Each share of Common Stock . . . which has been beneficially owned continuously by the same person since May 30, 1987 will entitle such person to ten votes with respect to such share on each matter properly submitted to the shareholders of the Corporation for their vote, consent, waiver, release or other action . . .

(2) (a) For purposes of this paragraph C, a change in beneficial ownership of a share of the Corporation’s stock will be deemed to have occurred whenever a change occurs in any person or group of persons who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares (i) voting power, which includes the power to vote, or to direct the voting of such share; (ii) investment power, which includes the power to direct the sale or other disposition of such share; (iii) the right to receive or retain the proceeds of any sale or other disposition of such share; or (iv) the right to receive distributions, including cash dividends, in respect to such share.

     (b) In the absence of proof to the contrary provided in accordance with the procedures referred to in subparagraph (4) of this paragraph C, a change in beneficial ownership will be deemed to have occurred whenever a share of stock is transferred of record into the name of any other person.

     (c) In the case of a share of Common Stock . . . held of record in the name of a corporation, general partnership, limited partnership, voting trustee, bank, trust company, broker, nominee or clearing agency, or in any other name except a natural person, if it has not been established pursuant to the procedures referred to in subparagraph (4) that such share was beneficially owned continuously since May 30, 1987 by the person who possesses all of the attributes of beneficial ownership referred to in clauses (i) through (iv) of subparagraph (2)(a) of this paragraph C with respect to such share of Common Stock . . . then such share of Common Stock . . . will carry with it only one vote regardless of when record ownership of such share was acquired.

     (d) In the case of a share of stock held of record in the name of any person as trustee, agent, guardian or custodian under the Uniform Gifts to Minors Act, the Uniform Transfers to Minors Act or any comparable statute as in effect in any state, a change in beneficial ownership will be deemed to have occurred whenever there is a change in the beneficiary of such trust, the principal of such agent, the ward of such guardian or the minor for whom such custodian is acting.

     (3) Notwithstanding anything in this paragraph C to the contrary, no change in beneficial ownership will be deemed to have occurred solely as a result of:

     (a) any event that occurred prior to May 30, 1987, including contracts providing for options, rights of first refusal and similar arrangements, in existence on such date to which any holder of shares of stock is a party;

     (b) any transfer of any interest in shares of stock pursuant to a bequest or inheritance, by operation of law upon the death of any individual, or by any other transfer without valuable consideration, including a gift that is made in good faith and not for the purpose of circumventing this paragraph C;

     (c) any change in the beneficiary of any trust, or any distribution of a share of stock from trust, by reason of the birth, death, marriage or divorce of any natural person, the adoption of any natural person prior to age 18 or the passage of a given period of time or the attainment by any natural person of a specified age, or the creation or termination of any guardianship or custodian arrangement; or

     (d) any appointment of a successor trustee, agent, guardian or custodian with respect to a share of stock.

     (4) For purposes of this paragraph C, all determinations concerning changes in beneficial ownership, or the absence of any such change, will be made by the Corporation. Written procedures designed to facilitate such determinations will be established by the Corporation and refined from time to time. Such procedures will provide, among other things, the manner of proof of facts that will be accepted and the frequency with which such proof may be required to be renewed. The Corporation and any transfer agent will be entitled to rely on all information concerning beneficial ownership of a share of stock coming to their attention from any source and in any manner reasonably deemed by them to be reliable, but neither the Corporation nor any transfer agent will be charged with any other knowledge concerning the beneficial ownership of a share of stock.

* * * *

     (8) Shares of Common Stock held by the Corporation’s employee benefit plans will be deemed to be beneficially owned by such plans regardless of how such shares are allocated to or voted by participants, until the shares are actually distributed to participants.

* * * *

TABLE OF CONTENTS

		Page
GENERAL INFORMATION			1
Background			1
Voting and Solicitation of Proxies			1
Embarq Merger			2
ELECTION OF DIRECTORS			4
CORPORATE GOVERNANCE			9
Governance Guidelines			9
Independence			12
Committees of the Board			12
Director Nomination Process			13
Presiding Director			14
Access to Information			14
RATIFICATION OF THE SELECTION OF THE INDEPENDENT AUDITOR			15
AUDIT COMMITTEE REPORT			16
SHAREHOLDER PROPOSALS			17
Director Election Majority Vote Proposal			17
Executive Compensation Advisory Vote Proposal			19
Network Management Practices Report Proposal			22
OWNERSHIP OF OUR SECURITIES			24
Principal Shareholders			24
Executive Officers and Directors			26
COMPENSATION DISCUSSION AND ANALYSIS			27
General Compensation Philosophy			27
Compensation Methodologies			27
Allocation of Compensation			28
Salary			29
Annual Incentive Bonuses			29
Long-Term Equity Incentive Programs			31
Other Benefits			33
Our Compensation Decision-Making Process			36
Compensation Matters Relating to Embarq Merger			40
Discontinuance of Supplemental Executive Retirement Plan			41
Forfeiture of Prior Compensation			41
Other Compensation Matters			41
COMPENSATION COMMITTEE REPORT			42
EXECUTIVE COMPENSATION			42
Overview			42
Incentive Compensation			45
Pension Benefits			48
Deferred Compensation			51
Potential Termination Payments			52
DIRECTOR COMPENSATION			57
PERFORMANCE GRAPH			58
TRANSACTIONS WITH RELATED PARTIES			59
Recent Transactions			59
Review Procedures			60
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE			60
OTHER MATTERS			60
Conduct of the Meeting			60
Shareholder Nominations and Proposals			61
Annual Financial Report			62
Appendix A – Annual Financial Report			A-1

CenturyTel, Inc.
100 CenturyTel Drive
Monroe, Louisiana 71203
(318) 388-9500

PROXY STATEMENT

March 30, 2009

GENERAL INFORMATION

Background

     Our Board of Directors is soliciting proxies for use at the CenturyTel, Inc. Annual Meeting of Shareholders to be held at the time and place described in the accompanying notice, and at any adjournments thereof. On or about April 3, 2009, we began mailing this proxy statement to our shareholders of record as of March 25, 2009.

     On October 26, 2008, we entered into an Agreement and Plan of Merger among Embarq Corporation, us and one of our subsidiaries (which we refer to in this proxy statement as the “Merger Agreement”), and on January 27, 2009 our shareholders approved certain transactions relating thereto. As described in greater detail under the heading “— Embarq Merger,” our management and certain provisions of our bylaws and other governance documents will be impacted by the transactions contemplated by the Merger Agreement.

Voting and Solicitation of Proxies

     If your shares are held in your name, you may vote by telephone or the Internet, or by completing, signing, dating and returning the enclosed proxy card in the envelope provided. Voting by any of these methods will not affect your right to attend the meeting and vote.

     If you are a participant in our Automatic Dividend Reinvestment and Stock Purchase Service or our Employee Stock Purchase Plans, our enclosed proxy card covers shares credited to your account under each plan, as well as any shares directly registered in your name. You should not, however, use the proxy card to vote any shares held for you in our Dollars & Sense Plan (which we refer to below as our qualified 401(k) plan) or Union 401(k) Plan. Instead, participants in these plans will receive from the plan trustees separate voting instruction cards covering these shares. Plan participants should complete and return these voting instruction cards in the manner provided by such cards and the instructions appearing on the reverse side of the chairman’s letter above.

     As of March 25, 2009, the record date for determining shareholders entitled to notice of and to vote at the Annual Meeting, we had outstanding 100,539,406 shares of common stock and

9,434 shares of Series L preferred stock that vote together with the common stock 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. Our Amended and Restated Articles of Incorporation (which we refer to in this proxy statement as our “Articles”) generally provide that holders of Common Shares that have been beneficially owned continuously since May 30, 1987 are entitled to cast ten votes per share, subject to compliance with certain procedures. In this proxy statement, we sometimes refer to these holders as our “Long-Term Shareholders.” Article III of our Articles and the voting procedures that we have adopted thereunder contain several provisions governing the voting power of Common Shares, including a presumption that each Common Share held by nominees or by any holder other than a natural person or estate entitles such holder to one vote, unless the holder furnishes us with proof to the contrary. Applying the presumptions described in Article III and information known to us, our records indicate that 138,896,221 votes are entitled to be cast at the Annual Meeting, of which 138,886,787 (99.99%) are attributable to the Common Shares. Unless otherwise indicated, we have calculated all percentages of voting power in this proxy statement based on this number of votes. For information on a pending proposal to eliminate the enhanced voting rights of our Long-Term Shareholders after the Annual Meeting, see “– Embarq Merger.”

     We will pay all expenses of soliciting proxies for the Annual 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 proxy 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 $12,000 and will reimburse Innisfree for certain of its out-of-pocket expenses.

Embarq Merger

     On January 27, 2009, our shareholders approved proposals to:

	•		issue Common Shares in connection with the merger (which we refer to in this proxy statement as the “Embarq Merger”) of one of our subsidiaries with Embarq Corporation, pursuant to the terms of the Merger Agreement;
	•		amend our Articles to eliminate the rights of our Long-Term Shareholders to cast ten votes per Common Share and to provide instead that all holders of Common Shares will be entitled to one vote per share; and
	•		amend our Articles to increase the authorized number of Common Shares.

     Completion of the Embarq Merger is subject to the receipt of federal and state regulatory approvals and other customary closing conditions. Subject to these conditions, we currently expect to complete the Embarq Merger after the Annual Meeting but before the end of the second quarter of 2009. The two above-listed proposals to amend our Articles will be implemented only upon consummation of the Embarq Merger. Therefore, we do not expect the

proposal to eliminate the enhanced voting rights of our Long-Term Shareholders to apply until after the Annual Meeting.

     Following the Embarq Merger, our Board of Directors will be expanded to consist of 15 directors, eight of whom will be designated by us and seven of whom will be designated by Embarq Corporation. Upon the completion of the Embarq Merger, our Board is expected to include Virginia Boulet, W. Bruce Hanks, Gregory J. McCray, C.G. Melville, Jr., Fred R. Nichols, Harvey P. Perry, Glen F. Post, III, and Joseph R. Zimmel, who are currently directors of CenturyTel, and Peter C. Brown, Steven A. Davis, Richard A. Gephardt, Thomas A. Gerke, William A. Owens, Stephanie M. Shern and Laurie A. Siegel, who are currently directors of Embarq Corporation. To accommodate these changes, the following CenturyTel directors have agreed to resign upon completion of the Embarq Merger:  William R. Boles, Jr., Calvin Czeschin, James B. Gardner and Jim D. Reppond.

     As of the effective time of the Embarq Merger, the 15 directors will be allocated into three classes of five directors each. At such time, CenturyTel-designated directors will constitute a majority of the members of each of the committees of the Board of Directors, with directors designed by Embarq Corporation constituting one less than the number of CenturyTel-designated directors on each Board committee. Embarq Corporation will designate the initial chairperson of the Compensation Committee, and we will designate the initial chairpersons of the remaining committees, including the Nominating and Corporate Governance Committee.

     Following the Embarq Merger, Glen F. Post, III, currently Chairman of the Board and Chief Executive Officer of CenturyTel, will continue to serve as Chief Executive Officer and will also serve as President. Admiral William A. Owens, currently the non-executive Chairman of the board of Embarq Corporation, will serve as CenturyTel’s non-executive Chairman of the Board. Thomas A. Gerke, currently the President and Chief Executive Officer of Embarq Corporation, will serve as executive Vice Chairman of the Board. Harvey P. Perry, currently non-executive Vice Chairman of the Board of CenturyTel, will continue to serve as non-executive Vice Chairman of the Board. R. Stewart Ewing, Jr., currently Chief Financial Officer of CenturyTel, Karen A. Puckett, currently Chief Operating Officer of CenturyTel, and Stacey W. Goff, currently General Counsel of CenturyTel, will continue to serve in those positions. Dennis G. Huber, currently Chief Technology Officer of Embarq Corporation, will serve as the executive responsible for Network and Information Technology. William E. Cheek, currently President, Wholesale Markets, of Embarq Corporation, will serve as the executive responsible for Wholesale Operations.

     In connection with completing the Embarq Merger, we intend to:

	•		amend our corporate governance guidelines to, among other things, define the scope of duties of the lead outside director and any non-executive chairman.
	•		amend our bylaws to, among other things, effect changes necessitated by the Merger Agreement, including a new bylaw providing that for a period of one year following the Embarq Merger, if William A. Owens ceases to be chairman or lead outside director, his successor will be chosen from among the seven directors designated by Embarq Corporation.

•

amend the charter of the Nominating and Corporate Governance Committee of the Board to grant such committee additional responsibilities for executive succession.

     Additional information about Embarq Corporation and its management is included in documents that it has filed with the Securities and Exchange Commission (which we sometimes refer to in this proxy statement as the “SEC”). You may obtain these documents from the SEC’s website at www.sec.gov or Embarq Corporation’s website at www.EMBARQ.com. Embarq Corporation’s documents are not a part of these proxy soliciting materials.

ELECTION OF DIRECTORS

(Item 1 on Proxy or Voting Instruction Card)

     Currently, the Board of Directors is fixed at 12 members, which are divided under our Articles 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 III directors at the Annual 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 III 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 Annual 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.

     The following provides certain information with respect to each nominee, each other director whose term will continue after the Annual Meeting, and each of our executive officers named in the compensation tables appearing elsewhere herein. Unless otherwise indicated, each person has been engaged in the principal occupation shown for more than the past five years. As discussed in greater detail elsewhere herein, upon completion of the Embarq Merger, (i) four of the 12 directors named below have agreed to resign, (ii) seven additional directors designated by Embarq Corporation will be included in our new 15-member Board and (iii) the 15 directors will be allocated among the three classes shown below. For information on the composition of the Board of Directors following the Embarq Merger, see “General Information - Embarq Merger.”

Class III Directors (for terms expiring in 2012, subject to re-allocation in connection with the Embarq Merger):

(PHOTO OF FRED R. NICHOLS)		Fred R. Nichols, age 62; a director since 2003; retired in 2000 after serving as an executive officer of Cox Communications, Inc. or TCA Cable TV, Inc. for several years prior to his retirement.
		Committee Memberships:   Audit; Compensation
(PHOTO OF HARVEY P. PERRY)		Harvey P. Perry, age 64; a director since 1990; non-executive Vice Chairman of the Board of Directors of CenturyTel since January 1, 2004; retired from CenturyTel on December 31, 2003 after serving as Executive Vice President and Chief Administrative Officer for almost five years, as Secretary for 18 years and as General Counsel for 20 years.
		Committee Membership:   Executive
(PHOTO OF JIM D. REPPOND)		Jim D. Reppond, age 67; a director since 1986; retired from CenturyTel in 1996 after serving as President-Telephone Group (or a comparable predecessor position) for several years; has agreed to resign as a director upon completion of the Embarq Merger.
		Committee Memberships:    Executive; Nominating and Corporate Governance
(PHOTO OF JOSEPH R. ZIMMEL)		Joseph R. Zimmel, age 55; a director since 2003; provides business and financial advisory services; retired in 2002 after serving as a managing director of the investment banking division of The Goldman Sachs Group, Inc. from 1996 to 2001; a director of FactSet Research Systems Inc.
		Committee Membership:   Audit

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

Class I Directors (term currently expires in 2010):

(PHOTO OF WILLIAM R. BOLES, JR.)		William R. Boles, Jr., age 52; a director since 1992; an attorney with The Boles Law Firm, of which Mr. Boles is owner and director; has agreed to resign as a director of CenturyTel upon completion of the Embarq Merger.
		Committee Membership:   Risk Evaluation
(PHOTO OF W. BRUCE HANKS)		W. Bruce Hanks, age 54; 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; a senior or executive officer of CenturyTel with operational or strategic development responsibilities for several years prior to such time; an advisory director of IberiaBank Corporation.
		Committee Memberships:   Risk Evaluation (Chairman); Audit
(PHOTO OF C. G. MELVILLE, JR)		C. G. Melville, Jr., age 68; a director since 1968; private investor since 1992; retired executive officer of an equipment distributor.
		Committee Memberships:    Compensation (Chairman); Nominating and Corporate Governance
(PHOTO OF GLEN F. POST, III)		Glen F. Post, III, age 56; a director since 1985; Chairman of the Board of CenturyTel since June 2002 and Chief Executive Officer of CenturyTel since 1993.
		Committee Membership:   Executive (Chairman)

Class II Directors (term currently expires in 2011):

(PHOTO OF VIRGINIA BOULET)		Virginia Boulet, age 55; a director since 1995; Special Counsel at Adams and Reese LLP, a law firm; a director of W&T Offshore, Inc.
		Committee Membership:    Nominating and Corporate Governance (Chairperson)
(PHOTO OF CALVIN CZESCHIN)		Calvin Czeschin, age 73; a director since 1975; President and Chief Executive Officer of Yelcot Telephone Company and Ultimate Auto Group; has agreed to resign as a director upon completion of the Embarq Merger.
		Committee Memberships:   Executive; Risk Evaluation
(PHOTO OF JAMES B. GARDNER)		James B. Gardner, age 74; a director since 1981; Chairman of Commerce Street Capital, LLC, a financial services firm spun off from Samco Capital Markets, Inc., since October 1, 2007; Senior Managing Director of Samco Capital Markets, Inc. from May 17, 2006 to September 30, 2007; Managing Director or Senior Managing Director of the capital markets division of Samco for 12 years prior to 2006; has agreed to resign as a director upon completion of the Embarq Merger.
		Committee Memberships:   Audit (Chairman); Executive; Compensation
(PHOTO OF GREGORY J. McCRAY)		Gregory J. McCray, age 46; a director since 2005; Chief Executive Officer of Antenova Limited, a British company which develops and markets wireless components, since January 2003.
		Committee Membership:   Risk Evaluation

Executive Officers Who Are Not Directors:

     Listed below is current information on each of our executive officers who are not directors. For further information on the duties and responsibilities of these executive officers after the Embarq Merger, see “General Information – Embarq Merger.”

     

(PHOTO OF KAREN A. PUCKETT)		Karen A. Puckett, age 48; President and Chief Operating Officer.
(PHOTO OF R. STEWART EWING, JR)		R. Stewart Ewing, Jr., age 57; Executive Vice President and Chief Financial Officer.
(PHOTO OF DAVID D. COLE)		David D. Cole, age 51; Senior Vice President – Operations Support.
(PHOTO OF STACEY W. GOFF)		Stacey W. Goff, age 43; Senior Vice President, General Counsel and Secretary.
(PHOTO OF MICHAEL E. MASLOWSKI)		Michael E. Maslowski, age 61; Senior Vice President and Chief Information Officer.

CORPORATE GOVERNANCE

Governance Guidelines

     Listed below are excerpts from our corporate governance guidelines, which the Board reviews at least annually. As discussed further under “General Information — Embarq Merger,” we intend to revise our guidelines upon completing the Embarq Merger. 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, age, character, judgment, skills and experience in the context of the needs of the Board. 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.
	•		No director may serve on more than two other unaffiliated public company boards, unless this prohibition is waived 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.
	•		Directors will be deemed to be “independent” if (i) the Board affirmatively confirms that neither the director nor any organization with which the director is affiliated receives any payments from the Company other than Permissible Directors Compensation (as defined below) and (ii) none of the disqualifying events or conditions specified in Rule 303A(2)(b) of the NYSE Listed Company Manual apply to the director. For purposes hereof, “Permissible Directors Compensation” means (i) director and committee fees, (ii) reimbursement for an annual physical, continuing education, travel and other out-of-pocket expenses in accordance with the Company’s applicable policies and (iii) a pension or other form of deferred compensation for prior service, provided such compensation is not contingent in any way on continued service. The Board may make determinations or interpretations under this paragraph, provided that they are consistent with the foregoing standards.

•

Once the Board has determined that a director is independent, the director may not engage in any transaction with the Company, either directly or indirectly through an immediate family member or related entity, without such transaction being approved by the Board.

2.

Director Responsibilities

	•		The Chairman will establish the agenda for each Board meeting. 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.
	•		The non-management directors will meet in executive session at least quarterly. The director who presides at these meetings will be an independent director chosen annually by the non-management directors, and his or her name will be disclosed in the annual proxy statement.

3.

Board Committees

	•		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.

Director Access to Officers and Employees

	•		Directors have full and free access to officers and employees of the Company.
	•		The Board welcomes regular attendance at each Board meeting of senior officers of the Company.

5.

Director Compensation

•

The form and amount of director compensation will be determined by the Nominating and Corporate Governance Committee on the terms and conditions

(and subject to the exceptions) set forth in its charter, and such Committee will review director compensation annually.

6.

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.

7.

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.

8.

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.

9.

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 Corporate Compliance Program, which includes standards of business conduct and ethics. 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 Audit Committee 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 Virginia Boulet, James B. Gardner, W. Bruce Hanks, C. G. Melville, Jr., Gregory J. McCray, Fred R. Nichols, Harvey P. Perry, Jim D. Reppond and Joseph R. Zimmel qualify as independent directors 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, consulting, legal, accounting, charitable, and familial relationships any director may have with CenturyTel or its management.

Committees of the Board

     During 2008, the Board of Directors held four regular meetings, 16 special meetings, and a three-day strategic planning session.

     During 2008, the Board’s Audit Committee held seven meetings. The Audit Committee is currently composed of four 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 once during 2008. The Compensation Committee is composed of three directors, all of whom qualify as “non-employee directors” under Rule 16b-3 promulgated under the Securities Exchange Act of 1934 and 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 five times during 2008. 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, (v) reviewing annually the Chief Executive Officer’s performance and reporting to the Board on succession planning for senior executive officers and (vi) overseeing the cash compensation of our non-employee directors. For information on the director nomination process, see “- Director Nomination Process” below.

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

     The Board also maintains a Risk Evaluation Committee, which met three times during 2008.

     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 director attended the 2008 annual shareholders meeting.

Director Nomination Process

     Nominations for the election of directors at our annual shareholder 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 CenturyTel’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 Annual Meeting this year, the Board has nominated the four nominees listed above under “Election of Directors” to stand for election as Class III directors, and no shareholders submitted any nominations. For further information on deadlines for submitting nominations for our 2009 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 the recent past, the Nominating Committee has retained, on an as-needed basis and at our expense, national search firms to help identify potential director candidates. Each of our three newest directors were initially identified or screened by national search firms retained by the Nominating Committee. With respect to this year’s annual meeting, all of the nominees are incumbent directors with several years of prior service. 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, age, 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.

     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 CenturyTel.

Presiding Director

     As indicated above, the non-management directors meet in executive session at least quarterly. The non-management directors have selected Fred R. Nichols to preside over such meetings. As explained further on our website, you may contact Mr. Nichols by writing a letter to the Presiding Director, c/o Post Office Box 5061, Monroe, Louisiana 71211. As discussed further under “General Information — Embarq Merger,” Admiral William A. Owens will serve as our Chairman and lead outside director upon completion of the Embarq Merger.

Access to Information

     The following documents are filed as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2008, and are posted on our website at www.centurytel.com:

	•		Corporate governance guidelines
	•		Charters of our Board committees

•

Corporate compliance program (which includes our code of ethics)

We will furnish printed copies of these materials upon the request of any shareholder.

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, 2009, and we are submitting that appointment to our shareholders for ratification at the Annual 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 CenturyTel’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 2009 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 2007 and 2008 services identified below:

		Amount Billed
		2007				2008
Audit Fees (1)		$	2,877,000			$	2,793,000
Audit-Related Fees(2)			152,000				101,000
Tax Fees(3)			397,000				181,000
All Other Fees(4)			1,000				0
Total Fees		$	3,427,000			$	3,075,000

     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 2007 or 2008.

     KPMG has advised us that one or more of its partners will be present at the Annual 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 2009 will require the affirmative vote of at least a majority of the voting power present or represented at the Annual 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 2008, 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, 2008.

     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.

		James B. Gardner (Chairman)		Fred R. Nichols
		W. Bruce Hanks		Joseph R. Zimmel

SHAREHOLDER PROPOSALS

(Items 3, 4 and 5 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 CenturyTel and its shareholders.

     We expect Items 3 through 5 to be presented by shareholders at the Annual 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 three proposals requires the affirmative vote of at least a majority of the voting power present or represented at the Annual Meeting.

     The Board recommends you vote AGAINST Items 3 through 5 for the reasons we give after each one.

Director Election Majority Vote Proposal (Item 3)

     The following proposal was submitted by the Sheet Metal Workers’ National Pension Fund, Edward F. Carlough Plaza, 601 N. Fairfax Street, Suite 500, Alexandria, Virginia 22314.

     “Resolved: That the shareholders of CenturyTel, Inc. (“Company”) hereby request that the Board of Directors initiate the appropriate process to amend the Company’s governance documents (articles of incorporation or bylaws) to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders, with a plurality vote standard retained for contested director elections, that is, when the number of director nominees exceeds the number of board seats.

     Supporting Statement: In order to provide shareholders a meaningful role in director elections, the Company’s director election vote standard should be changed to a majority vote standard. A majority vote standard would require that a nominee receive a majority of the votes cast in order to be elected. The standard is particularly well-suited for the vast majority of director elections in which only board nominated candidates are on the ballot. We believe that a majority vote standard in board elections would establish a challenging vote standard for board nominees and improve the performance of individual directors and entire boards. The Company presently uses a plurality vote standard in all director elections. Under the plurality standard, a board nominee can be elected with as little as a single affirmative vote, even if a substantial majority of the votes cast are “withheld” from the nominee.

     In response to strong shareholder support for a majority vote standard, a strong majority of the nation’s leading companies, including Intel, General Electric, Motorola, Hewlett Packard, Morgan Stanley, Home Depot, Gannett, Marathon Oil, and Pfizer, have adopted a majority vote standard in company bylaws or articles of incorporation. Additionally, these companies have adopted director resignation policies in their bylaws or corporate governance policies to address post-election issues related to the status of director nominees that fail to win election. Other companies have responded only partially to the call for change by simply adopting post election director resignation policies that set procedures for addressing the status of director nominees that receive more “withhold” votes than “for” votes. At the time of this proposal submission, our Company and its board had not taken either action.

     We believe that a post election director resignation policy without a majority vote standard in company governance documents is an inadequate reform. The critical first step in establishing a meaningful majority vote policy is the adoption of a majority vote standard. With a majority vote standard in place, the board can then take action to develop a post election procedure to address the status of directors that fail to win election. A majority vote standard combined with a post election director resignation policy would establish a meaningful right for shareholders to elect directors, and reserve for the board an important post election role in determining the continued status of an unelected director. We urge the Board to take this important step of establishing a majority vote standard in the Company’s governance documents.”

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

     Our directors, like those of most other public corporations, are elected by a plurality of votes cast by shareholders. This means that the nominees receiving the greatest number of votes from holders of our Voting Stock at the Annual Meeting will be elected as directors. The Board believes that this system of electing directors best serves the interests of our shareholders. The plurality voting system is fair and impartial in that it applies equally to any candidate who is nominated for election to the Board. The nominees who receive the most votes cast will be elected to our Board, whether those candidates are nominated by the Board or by shareholders.

     The proposal recognizes the inherent fairness of the plurality vote standard by retaining this standard in the case of contested elections. The majority vote standard set forth in the proposal would only apply to director elections where the shareholders have chosen not to nominate a new director.

     Over the last several years, each of our director nominees was elected by more than 89% of the total votes cast. The proposal suggests that our directors are being elected by a minimal number of votes cast and that our voting system needs to be reformed. However, our elections for the last several years clearly indicate this is not the case.

     Implementation of the proposal could have the unintended consequence of unnecessarily increasing the cost of soliciting shareholder votes. For example, the implementation of this proposal could provide special interest shareholder groups the power to promote expensive and time-consuming “vote withholding” campaigns that are not in the best interest of all shareholders, forcing us to implement proactive telephone solicitations, additional mailings of proxy soliciting materials or other strategies to obtain the required vote. This could result in increased spending in routine elections. The Board believes this would be a poor use of our assets.

     Additionally, the proposal defers action on how to address the situation in which one or more incumbent directors fail to receive a majority of votes, which certain leading governance experts have cited as a potential shortcoming. If the proposal was implemented, an incumbent director who did not receive a majority of the votes cast would nonetheless remain in office until such person’s successor is elected and qualified. If the incumbent director were to leave office, our Board has the right under our Articles to fill the vacancy, or the position could remain vacant. These alternatives would not necessarily reflect the views of shareholders that have chosen to exercise their right to vote for the directors of their choice. As a result, adoption of the proposed majority vote standard could result in a less democratic process than the election of directors by plurality vote.

     The possibility of failed elections could have other adverse consequences as well. For example, the failure to elect director candidates could impair our ability to comply with the independence requirements in the NYSE listing standards and our Corporate Governance Guidelines, and could also adversely affect our ability to retain and attract qualified directors.

     The value of requiring a majority vote to elect directors is being actively discussed and evaluated by a number of independent groups, companies and interested investors. Unless and until a consensus develops that majority voting systems are an improvement, we believe retaining our current plurality voting standard is in our shareholders’ best interest.

Executive Compensation Advisory Vote Proposal (Item 4)

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

     “Resolved, That the shareholders of CenturyTel, Inc. (the “Company”) request that the Board of Directors adopt a policy that provides shareholders the opportunity at each annual shareholder meeting to vote on an advisory resolution, proposed by management, to ratify the compensation of the named executive officers (“NEOs”) set forth in the proxy statement’s Summary Compensation Table (the “SCT”) and the accompanying narrative disclosure of material factors provided to understand the SCT (but not the Compensation Discussion and Analysis). The proposal submitted to shareholders should make clear that the vote is non-binding and would not affect any compensation paid or awarded to any NEO.

     Supporting Statement: Investors are increasingly concerned about mushrooming executive compensation, especially when insufficiently linked to performance. In 2008, shareholders filed close to 100 “Say on Pay” resolutions. Votes on these resolutions have averaged 43% in favor, with 10 votes over 50%, demonstrating strong shareholder support for this reform.

     An Advisory Vote establishes an annual referendum process for shareholders about senior executive compensation. We believe the results of this vote would provide the board and management useful information about shareholder views on the Company’s senior executive compensation.

     In its 2008 proxy, Aflac submitted an Advisory Vote resulting in a 93% vote in favor, indicating strong investor support for good disclosure and a reasonable compensation package. Aflac Chairman and CEO Daniel Amos said, “An advisory vote on our compensation report is a helpful avenue for our shareholders to provide feedback on our pay-for-performance compensation philosophy and pay package.”

     To date, 10 other companies have agreed to an Advisory Vote, including Verizon, MBIA, H&R Block, Ingersoll Rand, Blockbuster and Tech Data. TIAA-CREF, the country’s largest pension fund, has successfully utilized the Advisory Vote twice.

     Influential proxy voting service RiskMetrics Group recommends votes in favor, noting: “RiskMetrics encourages companies to allow shareholders to express their opinions of executive compensation practices by establishing an annual referendum process. An advisory note on executive compensation is another step forward in enhancing board accountability.”

     The Council of Institutional Investors endorsed advisory votes, and a bill to allow annual Advisory Votes passed the House of Representatives by a 2-to-1 margin. We believe company leaders should adopt an Advisory Vote voluntarily before required by law.

     We believe that existing U.S. Securities and Exchange Commission rules and stock exchange listing standards do not provide shareholders with sufficient mechanisms for providing input to boards on senior executive compensation. In contrast, in the United Kingdom, public companies allow shareholders to cast a vote on the “directors’ remuneration report,” which discloses executive compensation. Such a vote is not binding, but gives shareholders a clear voice that could help shape senior executive compensation.

     We believe that a company that has a clearly explained compensation philosophy and metrics, reasonably links pay to performance, and communicates effectively to investors would find a management sponsored Advisory Vote a helpful tool.

     We urge CenturyTel’s Board to allow shareholders to express their opinion about senior executive compensation through an Advisory Vote.”

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

     We believe ensuring that executive compensation is appropriate is an important issue for all shareholders, and we share that goal. Nonetheless, we believe this proposal is unnecessary, unworkable and potentially harmful.

     The proposal is unnecessary. The proposal is unnecessary because we already employ a thorough process designed to pay appropriate levels of executive compensation to attract and retain the managerial talent necessary to maintain our competitiveness. As explained in greater detail under the heading “Compensation Discussion and Analysis,” the Board has delegated its powers to set executive compensation to its Compensation Committee, which is composed solely of independent directors who have a fiduciary duty to establish programs that are in the best interests of the shareholders. The Committee works with its independent consultant to establish compensation programs designed to match programs of comparable companies and to create incentives to maintain and increase shareholder value. In connection with performing its duties, the Committee spends a substantial amount of time reviewing a wide range of information impacting executive compensation, including trends in executive compensation and detailed benchmarking data on prevailing compensation levels at comparable companies. In accordance with the federal proxy rules, we explain in detail the Committee’s processes and conclusions in our annual proxy statements. In short, we believe our current structure is appropriately designed and balanced to achieve and communicate our executive compensation goals.

     The proposal is unworkable. We believe it is unrealistic to expect this proposal would enable shareholders to provide meaningful input on decisions that entail a thorough understanding of a wide variety of factors, including prevailing compensation philosophies and practices nationwide and in our industry. Establishing appropriate executive compensation arrangements is a complex process requiring careful balancing of a wide range of factors, including proprietary information about our strategies and performance, changing industry conditions, accounting requirements, tax laws, and the competitive compensation practices of other companies. We believe this balancing should continue to be the responsibility of disinterested independent fiduciaries who have the time, experience, expertise, resources and access to proprietary data that is necessary to design and administer effective programs. We further believe the proposal is a blunt instrument that would not provide us with meaningful insight into specific shareholder concerns regarding our programs, and could lead to confusion about what prompted the shareholders’ vote. For instance, if 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 would be unable to react to the shareholders’ concerns in a meaningful fashion. We believe it would be far more helpful if shareholder concerns are specifically addressed, and we already have processes in place to facilitate effective shareholder communications. See “Corporate Governance — Presiding Director.” Instead of encouraging shareholders to take advantage of our current policies and procedures, we believe the proposal advocates substituting a less effective mechanism.

     The proposal is potentially harmful. Finally, the proposal is potentially harmful in several respects, including the following:

	•		by requiring a practice not followed by most other U.S. companies, the proposal could harm our ability to retain or attract talented managers to the extent that they perceive this new practice as a threat to our long-standing commitment to pay competitive compensation
	•		by creating the risk that the good faith judgments of our disinterested independent directors could be “second-guessed,” the proposal could negatively impact the willingness of members of our Compensation Committee to continue to serve
	•		by requiring us to provide new disclosures, implement new processes, and incur new legal risks, the proposal would require us to incur unnecessary legal and proxy solicitation expenses and could increase our expenditures on directors’ fees and insurance
	•		by creating a blunt instrument of shareholder input, the proposal could result in unclear directives that create confusion over corporate goals, distract management, and interfere with more effective means of facilitating useful shareholder communications.

     In summary, we do not believe the proposal will enhance our governance practices or improve our shareholder communications, nor is it in the best interests of shareholders.

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 21st century. Its potential to open new markets for commerce, new venues for cultural express and new modalities of civic engagement is without historic parallel.

     Internet Service Providers (ISPs) serve as gatekeepers to this infrastructure: providing access, managing traffic, insuring communication, and forging rules that shape, enable and limit the public’s use of the Internet.

     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 — the public’s 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:

	•		More than 211 million Americans — 70% of the U.S. population — now use the Internet;
	•		The Internet serves as an engine of opportunity for social, cultural and civil participation in society;

	•		46% of Americans report they have used the Internet, e-mail 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 health care, with over 8 million Americans looking for health information online each day;
	•		72% of Americans are concerned that their online behaviors are being tracked and profiled by companies;
	•		53% of Americans are uncomfortable with companies using their email content or browsing history to send relevant ads;
	•		54% of Americans are uncomfortable with third parties collecting information about their online behavior;
	•		Our Company provides Internet access to a very large number of subscribers and is considered a leading ISP;
	•		Our Company’s network management practices have come under public scrutiny by consumer and civil liberties groups, regulatory authorities and shareholders;
	•		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.

     Therefore, be it resolved, that shareholders request that the Board of Directors prepare a report, excluding proprietary and confidential information, and to be made available to shareholders no later than November 30, 2009, 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:

     CenturyTel’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 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 the Company and its shareholders, and therefore the Board recommends that you vote against 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, 2008.

		Amount and
		Nature of
		Beneficial		Percent of				Percent
		Ownership of		Outstanding				of Voting
Name and Address		Common Shares(1)		Common Shares(1)				Power(2)
Capital Research Global Investors 333 South Hope Street Los Angeles, California 90071		9,060,670(3)			9.0	%			6.5	%
LSV Asset Management 1 North Wacker Drive Suite 4000 Chicago, Illinois, 60606		5,288,587 (4)			5.3				3.8
State Street Bank and Trust Company State Street Financial Center One Lincoln Street Boston, Massachusetts 02111		5,134,832 (5)			5.1				3.7
Trustees of CenturyTel benefit plans c/o T. Rowe Price Retirement Plan Services T. Rowe Price Investment Services, Inc. 4515 Painters Mill Road Owings Mills, Maryland 21117-4903		4,010,280 (6)			4.0				19.4

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
		Shares				Unvested				Exercisable				Total Shares
		Beneficially				Restricted				Within 60				Beneficially
Name		Owned(1)				Stock(2)				Days(3)				Owned(4)
Executive Officers:
Glen F. Post, III			289,164				318,611				1,106,000				1,713,775
Karen A. Puckett			53,410	(5)			119,562				260,001				432,973
R. Stewart Ewing, Jr.			54,184				99,591				124,767				278,542
Michael E. Maslowski			19,284				64,710				54,001				137,995
David D. Cole			65,470	(6)			64,710				301,002				431,182
Stacey W. Goff			17,658				64,710				117,501				199,869
Outside Directors:
William R. Boles, Jr.			13,054				5,318				0				18,372
Virginia Boulet			10,300	(7)			5,318				0				15,618
Calvin Czeschin			29,591	(8)			5,318				0				34,909
James B. Gardner			9,239				5,318				16,000				30,557
W. Bruce Hanks			5,739				5,318				46,000				57,057
Gregory J. McCray			3,767				5,318				0				9,085
C.G. Melville, Jr.			5,951	(9)			5,318				0				11,269
Fred R. Nichols			4,682				5,318				0				10,000
Harvey P. Perry			40,777				5,318				0				46,095
Jim D. Reppond			50,739				5,318				0				56,057
Joseph R. Zimmel			11,050	(10)			5,318				13,667				30,035
All directors and executive officers as a group (17 persons)			684,059	(11)			790,392				2,038,939				3,513,390

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 competitive with the compensation of comparable officers and to reward annual and long-term performance that we believe correlates with maintaining and increasing shareholder value. With respect to each component of compensation, we generally seek to match the compensation of comparable employees at other companies, although we typically provide our executive officers with above-average salaries if justified by corporate and individual performance. 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. We have a long-standing practice of not providing employment agreements to our officers, but do provide customary change of control, pension and welfare benefits to our key personnel.

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 review data on the relationship of the compensation of our top executives to lower paid employees. Our review of this data on wealth accumulation and internal pay levels provides us with additional information on our pay practices, but to date, for the reasons discussed below, neither of these have been major factors in setting compensation levels.

Allocation of Compensation

     We do not use fixed ratios to allocate total compensation between cash and non-cash compensation or among the various compensation components. Instead, we seek to pay our executives the target levels of salary and bonus discussed further below, all of which are set in relation to compensation levels paid to comparable executives at other companies. We believe this allows us to maintain competitive compensation packages, and 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 as highly as possible to maintaining and increasing 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 incentive compensation, we believe it is necessary and prudent to pay a portion of total compensation in the form of a competitive fixed salary. We believe the payment of a fixed salary to our officers helps maintain productivity by alleviating concerns that an economic or industry downturn could undercut their personal financial planning. Equally importantly, we believe our failure to pay a competitive salary could harm our ability to recruit and retain management.

     Implementation of our compensation practices has generally resulted in our CEO receiving a higher percentage of his total compensation in the form of long-term equity incentives, and a smaller percentage in salary and cash bonuses. On the other hand, less senior officers typically receive in most (but not all) years a relatively smaller percentage of their total compensation in the form of long-term equity incentives, and a higher percentage in salary and cash bonuses. This allocation is illustrated in the table below, which shows the percentage of 2008 compensation attributable to our three main components of compensation:

										Equity
		Cash Compensation								Compensation
		% from				% from				% from Long-
		Salary				Annual Bonus				Term Bonus
CEO			24.6	%			21.3	%			54.1	%
President and Executive VP			28.0				18.7				53.3
Senior Vice Presidents			25.7				14.8				59.5

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

Salary

     We generally seek 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. We believe this gives us the flexibility to pay above-market salaries to talented executives who could be viewed as attractive targets by other companies, many of whom are larger than us with far greater resources. The Compensation Committee of our Board uses these percentile targets as starting points in its analysis, which we describe below under the heading “- Our Compensation Decision-Making Process.”

     In February 2008, the Compensation Committee determined that the salary of each of its executives was generally in alignment with the 75^th percentile target salary based on 2007 compensation data provided by PricewaterhouseCoopers LLP, the Committee’s compensation consultant. The Committee also determined that our corporate performance and the executives’ individual performance over the prior year justified paying salaries in alignment with these 75^th percentile targets. After applying the other factors described under the heading “- Our Compensation Decision-Making Process” and considering input from the CEO, the Committee elected to raise the salary of each executive by 3%, except for (i) the CEO, whose salary was left unchanged principally due to the tax advantages of limiting his annual salary to $1 million under Section 162(m) of the Internal Revenue Code, and (ii) the General Counsel, who received a 4% raise to better align the correlation of his actual and target salaries to that of the other executives. Based on input from PricewaterhouseCoopers, the Committee determined that these 3% and 4% raises were necessary to keep the recipients in alignment with their respective 75^th percentile target salaries, which the Committee estimated would increase in connection with raises given during 2008 to similarly-situated executives at comparable companies. These raises were also generally consistent with our goal to promote teamwork through equal treatment to the extent possible.

     In February 2009, the Compensation Committee and the Board elected to leave executive salaries unchanged.

Annual Incentive Bonuses

     Our practice is to award annual cash bonuses to key employees based on performance objectives that, if attained, can reasonably be expected to maintain or increase our value. We strive to award bonus opportunities that can reasonably be expected to result in our total cash compensation (consisting of salary and cash bonuses) to equal or exceed the 50% percentile of total cash compensation paid to similarly-situated executives at comparable companies. We currently offer annual incentive bonuses to approximately 1,075 of our employees. As described in greater detail under the heading “- Our Compensation Decision-Making Process,” our Compensation Committee annually establishes “target” levels of one or more company performance objectives under our annual incentive bonus programs.

     For 2008, the Committee elected to base 60% of the executives’ potential bonuses upon CenturyTel attaining targeted levels of operating cash flow and the remaining 40% upon attaining targeted levels of end-user revenue. The Committee selected these targets based on management’s view that attainment of the targets would likely correlate with maintaining or

increasing shareholder value. In connection with acting upon management’s recommendations, the Committee assessed the relationship of the targets to the Company’s publicly-disclosed financial guidance and discussed with PricewaterhouseCoopers the bonus targets used by other comparable companies. For 2008, the executive officers were granted an opportunity to earn a specified percentage (ranging between 40% to 65%) of their respective salaries if “target” performance levels were met, with up to triple these amounts if the “maximum” levels of performance were met and no bonuses if the “minimum” threshold performance levels were not attained. In selecting these percentages, the Committee attempted to produce opportunities for each executive’s total cash compensation to equal or exceed the 50^th percentile targets described in the preceding paragraph. To promote teamwork, three of our six executives were granted an opportunity to earn the same percentage of their respective salaries (45%) if “target” performance levels were met.

     For both of the 2008 performance measures, the executives were 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 CEO and Committee may exercise their negative discretion to reduce awards based on each executive’s individual performance during the prior year. Neither the CEO nor the Committee exercised his or its negative discretion to reduce awards based upon 2008 performance. Finally-determined awards made to our executives on February 23, 2009 for 2008 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 2008 performance targets, see “Executive Compensation — Incentive Compensation — 2008 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, 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. We currently offer long-term incentive compensation awards to approximately 480 of our employees.

     Incentives granted under these programs become exercisable based upon criteria established by the Committee. 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. Since 2001, the Committee has elected to award annual incentive grants as opposed to larger, multi-year grants. The Committee believes annual grants provide us with greater flexibility than multi-year grants to respond to changes in compensation practices.

     We strive to pay equity compensation in forms that create appropriate incentives to optimize performance at reasonable cost, and 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. We selected this form partly because of favorable accounting and tax treatments. For the last several years, however, it has been clear that the favorable accounting treatment of stock options was subject to change, and beginning in 2006 the adoption of Statement of Financial Accounting Standards No. 123(R) (which we frequently refer to as SFAS 123(R)) has eliminated the favorable accounting treatment of options. Moreover, for a variety of reasons many executive compensation experts have advised companies to avoid over-reliance on stock options. As a result, many experts, including ours, began to recommend other forms of equity compensation.

     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 still affords motivation to increase stock prices even if the share price becomes substantially depressed. On the other hand, the Committee believes that stock option grants also provide various advantages, including the potential for favorable tax treatment under Section 162(m) of the Internal Revenue Code. Based on this, the Committee concluded during this period that

paying equity incentives jointly in the form of restricted stock and stock options was consistent with the goal of creating appropriate incentives at reasonable costs. Using a ratio that valued a share of restricted stock 337.5% higher than an option to purchase a share, we paid during this period half of the value of our long-term incentive awards in restricted stock and half in options. You should note, however, that other valuation methods (including those that we are required to use under the federal proxy rules) may assign different relative or aggregate valuations to our grants.

     For 2008, the Committee elected to issue all of our 2008 long-term equity compensation 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. The Committee also considered the retentive value of restricted stock under varying market conditions, and the loss of accounting advantages formerly associated with stock options. For similar reasons, in early 2009 the Committee again issued all of our 2009 long-term equity compensation in the form of time-vested restricted stock.

     Currently, all of our outstanding stock options vest over a two- or three-year period. All of our restricted stock granted between 2005 and 2008 vests over a five-year period, provided the recipient remains employed by us. In early 2009, the Committee granted restricted stock with a three-year vesting period for the reasons described further under “- Compensation Matters Relating to Embarq Merger.” For additional information on the vesting terms of our equity awards, see “Executive Compensation — Incentive Compensation — Outstanding Awards.”

     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. Based on data compiled by PricewaterhouseCoopers, the Committee determined that the target amount of long-term compensation proposed for 2008, 2009 and 2010 was consistent with its goal of granting long-term incentive awards with a value commensurate with those paid to similarly-situated executives at comparable companies. To promote teamwork, three of our six executives received identical awards in 2008. 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 ending in 2010. 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.”

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 a traditional qualified defined benefit retirement plan for most of our employees who have completed at least five years of service, plus a traditional qualified defined contribution 401(k) plan for a similar group of our employees. With respect to both of 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 review overall compensation levels for our senior management, we factor in 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 CenturyTel (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 CenturyTel 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 amounts payable and the events triggering payment. 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. We further believe our change of controls benefits are substantially consistent with the general practice among our peers, although we have not commissioned any recent study specifically designed to confirm this. 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.

     The 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, change-of-control benefits are payable to our executive and senior officers if the officer resigns for any reason during the 30-day 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, 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

     Based on our survey of prevailing practices in 2000, we agreed in our 2000 change of control agreements to reimburse only 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.

     In connection with our pending business combination with Embarq Corporation, most of our officers have agreed to forego certain benefits that would otherwise be available to them upon completion of such transaction. See “- Compensation Matters Relating to Embarq Merger.” 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 65 weeks of the terminated employee’s base salary or wages.

     Perquisites. Since 1999, we have made cash payments to our officers in lieu of previously-offered perquisites, many of which continue to be offered by our peers. During 2008, these payments to our executives ranged from $22,880 to $34,320.

     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 cost of this usage may be substantially higher under certain alternative cost calculation methodologies.

     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 CenturyTel and the officer’s 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.

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

     Other Employee Benefits. We maintain stock purchase plans that enable 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. The Board has elected to invest CenturyTel’s matching contribution under the 401(k) Plan in Common Shares so as to further align employees’ and shareholders’ financial interests.

Our Compensation Decision-Making Process

     Compensation Committee. The Compensation Committee of our Board establishes, implements, administers and monitors our programs for compensating executive officers. The Committee engages its own consultants. As described in more detail below under “- Triennial Review Process,” the consultants assist the Committee to design executive compensation programs, to determine whether the Committee’s philosophy and practices are reasonable and compatible with prevailing practices, to gather data on the compensation paid to executives at other companies, and to provide guidance on specific compensation levels based on industry trends and practices.

     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 does not typically use quantitative formulas to determine compensation or assign weights to the various factors considered.

     The Compensation Committee also establishes, implements, administers and monitors our director equity compensation programs. The Nominating and Corporate Governance Committee of the Board is responsible for approving cash compensation of our directors, and typically works closely with the Compensation Committee and its consultants to review prevailing director compensation trends and practices.

     As explained further in our committee charters, our Board reviews all compensation actions taken by the Board’s committees. Unless otherwise provided by our charters or applicable law, these committee actions are subject to ratification by the Board.

     Triennial Review Process. Over the past decade, the Committee has 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 has typically sought to confirm that its philosophy and practices are 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 consults with its independent consultants to determine if changes to the three-year program are necessary or appropriate, and to establish the specific salary and annual incentive compensation payable to the executives for the upcoming year.

     For several years, the Committee has completed its triennial or annual review in February in conjunction with the first regularly scheduled board meeting of the year. This enables the Committee to approve in February all executive salary adjustments and bonus awards shortly following the completion of our performance review process and the release of our financial results for the previously-completed calendar year. The Committee also periodically adjusts salaries at other times of the year if necessary to reflect promotions or other changes in job responsibilities.

     Since late 2004, the Committee has engaged PricewaterhouseCoopers LLP as its compensation consultant. In February 2008, the Committee, following several months of work with PricewaterhouseCoopers, adopted a three-year executive compensation program covering 2008, 2009 and 2010. In connection with this triennial review, the Committee and PricewaterhouseCoopers compared our officer compensation to the following three benchmarks:

	•		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.

Although the Committee reviews all three of these benchmarks, it affords the greatest weight to the broad-based survey data, and the next greatest weight to the “financial” peer group. The “industry” peer group is used principally to confirm the relevancy of the first two benchmarks to our industry. Each year the Committee reviews the appropriateness of the peer groups, and makes adjustments to reflect mergers, sales, corporate reorganizations or other industry changes.

     In connection with our review of executive compensation in early 2008, we compared our officer compensation to the three benchmarks described above. As part of this review, 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.

     In each year since 2005, the Committee and PricewaterhouseCoopers used the benchmarking data to determine median amounts of salary, annual bonuses and equity compensation paid to executives comparable to ours (as well as salary levels equal to the 75^th percentile). 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 officer’s tenure 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 CenturyTel. 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. The tally sheet also shows the executive’s holdings of our Common Shares and accumulated unrealized gains under prior equity-based compensation awards. The Compensation Committee uses these tally sheets to estimate the total annual compensation of the executive officers, and to assess the executive officers’ wealth accumulation from our compensation programs. During 2008, the Committee’s review of tally sheets helped confirm that our compensation levels were generally commensurate with those of our peers, which helped us to attain our predominate goal of offering competitive compensation packages.

     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 annual incentive bonus plan for other officers and managers. In connection with both of these bonus plans, in February 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
	•		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 or anticipated 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.

     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, the bonus payable to the CEO in accordance with these procedures is subject to the “negative discretion” of the Committee to reduce the calculated bonus payment. The bonuses payable to each other executive officer in accordance with these procedures is subject to the “negative discretion” of the CEO to reduce the calculated bonus payment based on his assessment of the officer’s performance during the prior year, including an assessment of the degree to which such officer attained his or her individual performance goals for such year.

     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
	•		the executive has fully earned his bonus, which we do not believe should be subject to the further risk of loss associated with equity grants, and
	•		use of cash diversifies the 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 closing price of our stock on the date of grant (or, if the markets are closed on such date, the immediately preceding trading date). As explained further above, any annual grants of stock awards to executives are made at the Committee’s regularly scheduled meeting in February. 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 their options 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 March) and (ii) newly hired or promoted employees receive their 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 all 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.

Compensation Matters Relating to Embarq Merger

     Completion of the pending Embarq Merger will constitute a change of control of CenturyTel. As a result, each executive and other officer covered by change of control arrangements will be entitled to compensation and benefits commensurate with those in effect at the time of the closing of the transaction, and will further be entitled to the benefits described above if they are terminated without cause or resign with “good reason” during certain specified periods after the closing. See “- Other Benefits — Change of Control Arrangements.” In connection with the Embarq Merger, (i) substantially all of our top officers 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) 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, and (iii) substantially all of our top officers and managers agreed that their outstanding equity awards will not vest solely as a result of the Embarq Merger, provided that such awards will vest upon a termination of the award holder’s employment by us without cause or by the award holder’s resignation with “good reason.” For information on rights that certain of our directors have waived in connection with the Embarq Merger, see “Director Compensation — Cash and Stock Payments.”

     Prior to the closing of the Embarq Merger, we intend to establish a retention program that will pay cash awards to various of our employees who agree to remain employed by us for certain specified periods to assist with the post-closing integration of the companies. We currently do not expect any of our executive officers to participate in this program. In addition, in early 2009 the Compensation Committee shortened to three years the vesting period of restricted stock issued to our officers to increase its potential to retain them over the next couple of years and to align our vesting period to that of Embarq Corporation.

Discontinuance of Supplemental Executive Retirement Plan

     As noted above, in early 2008 the Compensation Committee completed a comprehensive triennial 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 CenturyTel 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 CenturyTel’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

     Our officers have agreed to forfeit certain of their equity compensation 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 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 incentive agreements containing these forfeiture provisions.

     We have never to our knowledge restated our financial statements, and currently have no formal policies regarding whether we would adjust previously-awarded annual incentive bonuses in the event we restated the financial statements upon which such bonuses were based. Under certain circumstances, however, equity awards to culpable executives could be subject to forfeiture under the provisions summarized in the preceding paragraph. 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.

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. Since 2006, the Compensation Committee has elected to maintain our CEO’s salary at $1 million principally to preserve its tax deductibility. 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 believe that our compensation programs create an appropriate incentive for our senior managers to benefit from appreciation in the value of our stock. Although we have reviewed the merits of imposing mandatory security ownership requirements, we have thus far chosen not to do so, primarily because such requirements could cause hardships for officers with less tenure or lower net worth, and because we saw no compelling need to mandate rigid requirements. Similarly, 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 ownership requirements or hedging prohibitions in the future.

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, 2008.

Submitted by the Compensation Committee of the Board of Directors.

C. G. Melville, Jr. (Chairman)       James B. Gardner       Fred R. Nichols

EXECUTIVE COMPENSATION

Overview

     The following table sets forth certain information regarding the compensation of (i) our principal executive and financial officers and (ii) each of our four most highly compensated executive officers other than our principal executive and financial officers. In this proxy statement, we sometimes refer to these six executive officers 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)(2)				Compensation(3)				Value(4)				Compensation(5)				Total
Glen F. Post, III			2008			$	1,000,000			$	2,200,174			$	—			$	864,500			$	6,759,670			$	1,079,056			$	11,903,400
Chairman of the			2007				1,000,000				1,437,290				4,610,606				1,358,500				—	(6)			567,364				8,973,760
Board and Chief			2006				1,000,000				1,244,231				1,449,394				702,000				497,552				586,051				5,479,228
Executive Officer
Karen A. Puckett			2008				640,772				851,550				751,861				468,725				1,770,115				447,375				4,930,398
President and Chief			2007				622,088				565,459				684,823				715,090				93,902				254,988				2,936,350
Operating Officer			2006				602,384				492,855				287,062				357,816				180,781				252,838				2,173,736
R. Stewart Ewing, Jr.			2008				574,924				708,760				—				344,092				2,778,643				484,084				4,890,503
Executive Vice			2007				558,112				470,359				1,041,250				524,904				—	(6)			328,168				2,922,793
President and Chief			2006				540,448				409,966				852,500				262,658				359,134				110,561				2,535,267
Financial Officer
David D. Cole			2008				412,828				462,905				406,005				247,078				1,591,316				270,634				3,390,766
Senior Vice			2007				400,744				308,432				369,805				376,900				—	(6)			171,853				1,627,734
President —			2006				388,020				268,830				155,013				188,578				172,849				170,419				1,343,709
Operations Support
Stacey W. Goff			2008				401,088				462,905				406,005				240,051				835,889				251,956				2,597,894
Senior Vice President,			2007				385,628				308,432				369,805				362,683				14,076				153,190				1,593,814
General Counsel			2006				339,184				268,830				155,013				178,848				110,675				142,492				1,195,042
and Secretary
Michael E.Maslowski			2008				353,712				462,905				507,772				188,175				858,851				301,355				2,672,770
Senior Vice President			2007				343,396				308,432				455,445				287,079				134,115				196,850				1,725,317
and Chief Information			2006				332,524				268,830				155,013				143,650				294,977				196,276				1,391,270
Officer

																										Insurance
																						Insurance				Premium Tax				Restricted
						Cash				Physical				Aircraft				Contributions				Premiums				Reimbursement				Stock
Name		Year				Allowance				Exam				Use				to Plans				Paid				Payments				Dividends				Total
Mr. Post			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
			2006				34,320				2,103				5,350				144,386				215,854				146,013				38,025				586,051
Ms. Puckett			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
			2006				27,950				1,670				0				80,619				75,874				51,325				15,400				252,838
Mr. Ewing			2008				27,950				0				0				43,993				128,122				86,668				197,351				484,084
			2007				27,950				0				0				69,251				128,122				86,668				16,177				328,168
			2006				27,950				2,697				825				66,279				0				0				12,810				110,561
Mr. Cole			2008				27,950				0				0				31,589				49,119				33,226				128,750				270,634
			2007				27,950				0				0				50,950				49,119				33,226				10,608				171,853
			2006				27,950				0				2,275				47,997				49,985				33,812				8,400				170,419
Mr. Goff			2008				27,950				0				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
			2006				27,950				0				6,422				42,840				33,929				22,951				8,400				142,492
Mr. Maslowski			2008				22,880				4,916				0				25,632				71,089				48,088				128,750				301,355
			2007				22,880				2,336				0				41,849				71,089				48,088				10,608				196,850
			2006				22,880				3,378				0				36,971				74,352				50,295				8,400				196,276

Incentive Compensation

     2008 Awards. The table and discussion below summarizes (i) the range of potential payouts under the annual incentive bonus awards granted in February 2008 (and paid in February 2009) and (ii) grants of restricted stock made on February 21, 2008.

Grants of Plan-Based Awards

										Estimated
										Future Share
										Payouts
										Under Equity		Grant Date
				Range of Payouts Under 2008 Non-						Incentive		Fair Value of
		Type of Award and		Equity Incentive Plan Awards(1)						Plan Awards		Stock
Name		Grant Date		Minimum		Target		Maximum		Target		Awards(2)
Glen F. Post, III		Annual Bonus		$325,000		$650,000		$1,950,000		—		—
		Restricted Stock (2/21/08)		—		—		—		127,390		$4,651,009
Karen A. Puckett		Annual Bonus		176,212		352,425		1,057,274		—		—
		Restricted Stock (2/21/08)		—		—		—		47,775		1,744,265
R. Stewart Ewing, Jr.		Annual Bonus		129,358		258,716		776,147		—		—
		Restricted Stock (2/21/08)		—		—		—		39,810		1,453,463
David D. Cole		Annual Bonus		92,886		185,773		557,318		—		—
		Restricted Stock (2/21/08)		—		—		—		25,800		941,958
Stacey W. Goff		Annual Bonus		90,245		180,490		541,469		—		—
		Restricted Stock (2/21/08)		—		—		—		25,800		941,958
Michael E. Maslowski		Annual Bonus		70,742		141,485		424,454		—		—
		Restricted Stock (2/21/08)		—		—		—		25,800		941,958

     In February 2008, the Compensation Committee of our Board elected to base the amount of the senior officers’ 2008 annual incentive bonuses on whether we attained “minimum,” “target” or “maximum” threshold levels of 2008 operating cash flow (established at $1.173, $1.235 and $1.297 billion, respectively) and 2008 end-user revenues (established at $1.382,$1.455 and $1.528 billion, respectively). 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. In both 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 $188,175 to $864,500. For additional information, see “Compensation Discussion and Analysis — Annual Incentive Bonuses.”

     The restricted stock issued to our executive officers on February 21, 2008 vests over a five-year period, with one-fifth of the shares having vested on February 21, 2009 and one-fifth vesting on February 21, 2010, February 21, 2011, February 21, 2012, and February 21, 2013, 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. As described further under “Compensation Discussion and Analysis — Compensation Matters Relating to Embarq Merger,” substantially all of our top officers have agreed to waive certain of their rights to accelerated vesting in connection with the Embarq Merger. 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, 2008.

Outstanding Equity Awards at December 31, 2008⁽¹⁾

			Option Awards																	Stock Awards
																												Market
																								Number of				Value of
			Number of Securities Underlying								Option				Option									Shares That				Shares That
			Unexercised Options								Exercise				Expiration					Grant				Have Not				Have Not
Name			Exercisable				Unexercisable(2)				Price				Date					Date				Vested(3)				Vested
Glen F. Post, III				320,000				0			$	34.63				2/21/2010					2/25/04				46,800	(4)		$	1,279,044
				92,666				0				32.99				2/25/2012					2/17/05				23,400				639,522
				160,000				0				28.34				2/25/2014					2/20/06				35,100				959,283
				200,000				0				33.40				2/17/2015					2/26/07				46,800				1,279,044
				133,334				66,666				35.41				2/20/2016					2/21/08				127,390				3,481,569
				66,668				133,332				45.90				2/26/2017
Karen A. Puckett				60,000				0			$	32.99				2/25/2012					2/25/04				22,000	(4)			601,260
				75,000				0				33.40				2/17/2015					2/17/05				8,800				240,504
				50,000				25,000				35.41				2/20/2016					2/20/06				13,200				360,756
				25,000				50,000				45.90				2/26/2017					2/26/07				17,600				481,008
																					2/21/08				47,775				1,305,691
R. Stewart Ewing, Jr.				40,000	(5)			0			$	32.99				2/25/2012					2/25/04				18,300	(4)			500,139
				62,500	(5)			0				28.34				2/25/2014					2/17/05				7,320				200,056
				62,100	(5)			0				33.40				2/17/2015					2/20/06				10,980				300,083
				41,667				20,833				35.41				2/20/2016					2/26/07				14,640				400,111
				20,834				41,666				45.90				2/26/2017					2/21/08				39,810				1,088,007
David D. Cole				85,000				0			$	34.63				2/21/2010					2/25/04				12,000	(4)			327,960
				81,000				0				32.99				2/25/2012					2/17/05				4,800				131,184
				27,001				0				28.34				2/25/2014					2/20/06				7,200				196,776
				40,500				0				33.40				2/17/2015					2/26/07				9,600				262,368
				27,000				13,500				35.41				2/20/2016					2/21/08				25,800				705,114
				13,500				27,000				45.90				2/26/2017
Stacey W. Goff				50,000				0			$	34.20				8/26/2013					2/25/04				12,000	(4)			327,960
				27,000				13,500				35.41				2/20/2016					2/17/05				4,800				131,184
				13,500				27,000				45.90				2/26/2017					2/20/06				7,200				196,776
																					2/26/07				9,600				262,368
																					2/21/08				25,800				705,114
Michael E. Maslowski				19,142				0			$	45.54				3/24/2009					2/25/04				12,000	(4)			327,960
				13,500				13,500				35.41				2/20/2016					2/17/05				4,800				131,184
				13,500				27,000				45.90				2/26/2017					2/20/06				7,200				196,776
																					2/26/07				9,600				262,368
																					2/21/08				25,800				705,114