Letter from our CEO
Dear Investors,
2024 was a remarkable year for Lumen Technologies!
We strengthened our financial position and restored market confidence in Lumen. It started with our balance
sheet and debt restructuring, giving us ample time to execute our transformation. We lowered our debt load by
$1.6B and drove material improvement in our equity and debt trading values.
We established Lumen as the trusted network for AI, closing $8.5B in sales with big tech companies like
Microsoft, Amazon, Google, and Meta. These partnerships helped strengthen our free cash flow and amplified a
key message to the market: in a multi-cloud, AI-first world, fiber networking is critical infrastructure.
We made material progress transforming Lumen's corporate functions to drive overall productivity, efficiency,
and better customer experiences. For example:
• In Service Operations & Assurance, we delivered materially better year-over-year (YOY) customer satisfaction
scores in all four enterprise segments, four quarters in a row.
• We delivered over 15% YOY sales growth in our North American Enterprise channels, growing sales 13+% in
IP and Waves, and driving more than 500 customers to adopt our Lumen Digital Network-as-a-Service
(NaaS) platform.
• We enabled 85% of new Ethernet and IP data service sales in our major metro markets on a unified network
architecture—a key breakthrough for cost reduction and customer experience efficiency! This unified network
not only enables our advanced digital services, but in some use cases also reduces our average delivery time
by more than 12 days and implementation costs by as much as 50%.
• Our Quantum Fiber team delivered more than 500K enablements with 90+% YOY growth in fiber net adds,
while reducing expenses year over year.
We are excited for the road ahead. We have three clear priorities, each with detailed plans to deliver greater
customer, investor, and employee value in 2025 and beyond.
As we plan to deliver the next wave of value to investors, we shift our focus beyond functional excellence and
seek to differentiate ourselves by completely redefining Lumen’s customer experience. We believe our vision
comes at exactly the right time for both public and private sector organizations looking for that next-
generation, simple, and secure networking experience in the complex world of multi-cloud, AI-first architectures.
In the public sector, the new administration seeks to modernize and simplify our country’s infrastructure to
ensure the United States remains the premier economic and technology powerhouse. Lumen’s vision is perfectly
positioned to operationalize government agencies’ transformation plans, with our fiber network’s dense national
coverage, a fully digital customer experience in development, and an ecosystem of the world’s largest cloud
providers already embedded in our fabric. And across industries, as commercial enterprises accelerate their
cloud transformation journeys, there is a race for high performing, highly secure, digitally consumable
bandwidth—and Lumen is ready to deliver, faster than any other provider.
Our customers, partners, employees—and, of course, our investors—deserve more than they’ve received from
traditional telecom companies. And Lumen intends to deliver it with three clear priorities.
Priority #1: Driving Operational Excellence
We continue to drive operational excellence in everything we do, ensuring continuous improvement in sales
execution and churn mitigation, simplifying our core business processes, and leveraging modern platforms and
AI to deliver fundamental improvement in customer, partner, and employee experiences. We have identified
more than $1B of operating expenses—and a substantial amount of network expenses—that we plan to eliminate
by year end 2027, with over $250M of run rate cost benefit expected to be realized when we exit 2025.
3
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Mitigating revenue decline, simplifying our cost structure, and modernizing our enterprise technology backbone
are just the beginning of this transformation. What is most exciting about the Lumen strategy is the two-
pronged approach to how we are using our assets to uniquely serve our customers.
Priority #2: Building the Backbone for AI
We are leveraging our fiber network to capture what we see as a once-in-a-generation rise in demand for
networking services. Our strategy focuses on maximizing investor returns by ensuring sufficient network
capacity growth to capture market share, while simultaneously driving higher utilization of our existing
network assets.
We are increasing network capacity in three ways: building new routes funded by customers, partnering with
Corning to use their latest fiber innovations for up to 4x more fiber capacity, and leveraging photonics
innovation for up to 2x greater fiber efficiency. Our total inter-city network capacity has the potential to go from
12 million fiber miles in 2022 to 47 million fiber miles by 2028 (not including our 22 million miles of metro fiber).
We are also achieving better overall network utilization than ever before, with a plan to grow from 57% to 70%
by 2028. The big tech Private Connectivity FabricSM (PCF) agreements we signed include leasing existing empty
conduits as well as funding new builds. Meanwhile, enterprises have begun the journey to upgrade their
networks to make way for AI adoption. Our data shows a nearly 50% increase in 100G and 400G wave sales
across large enterprises and mid-markets in 2024 alone.
Building the backbone for the AI economy presents a significant, accretive opportunity for Lumen. We are
driving the strongest utilization of our network assets in Lumen’s history while creating substantial capacity for
growth. But we recognize that high speed, low latency connectivity is just table stakes, not the end game. CIOs
need more, and that’s what Lumen plans to deliver with our third priority.
Priority #3: Cloudifying Telecom
Today’s enterprise CIOs are faced with the expectation that they will continue to deliver warp-speed innovation
at an efficient cost, pushing lots of data to the right users, at the right places, at the right time, for the right
cost. And the architectural landscape has never been more complex, with apps and data sprinkled all over—on
prem, at the edge, and in multiple clouds. CIOs need expansive fiber network coverage with a digital platform
that allows them to seamlessly design, control, configure, and consume modern network services. Hello,
Lumen Digital!
What’s more, legacy networks were not built for a multi-cloud world. Public and commercial enterprises alike
have to use carrier neutral facilities to access the cloud connectivity market, resulting in costly and inefficient
cross-connect architectures. With Lumen’s digital networking ecosystem, customers can reduce the number of
required ports, improving performance, lowering cost, and enhancing security in this multi-cloud, AI-first world.
We have the right assets, the right vision, and the right team, at the right time. Our future is bright.
On behalf of the Board of Directors and Lumen leadership team, thank you for your continued support and trust
in Lumen.
Sincerely,
Kate Johnson
President and Chief Executive Officer
Lumen Technologies
Letter from our CEO
4
Letter from our Chairman of
the Board
Dear Investors,
On behalf of Lumen’s Board, I am honored to share some insight into our stewardship of the company.
It was an incredible year for Lumen. In partnership with the Board, the team delivered shareholder value by
strengthening our financial position, establishing ourselves as the trusted network for AI, and making significant
progress on our transformation.
In 2025, we look forward to delivering on three key company priorities—driving operational excellence, building
the backbone for AI, and cloudifying telecom. We believe our plan will deliver even more value to customers,
partners, employees, and investors.
Our Board, with a refreshed blend of skills and expertise across function and industry, remains fully engaged in
overseeing Lumen’s strategic plan and works closely with our senior leadership team to foster teamwork, trust,
and transparency.
While we made significant strides in 2024, we have more work to do and remain focused on delivering value to
our shareholders in 2025 and beyond. We are confident we have the right management team to execute our
priorities.
Thank you for your continued trust and investment in Lumen.
Sincerely,
T. Michael Glenn
Chairman of the Board
Lumen Technologies
5
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Table of Contents
01 Overview
Notice of 2025 Annual
Shareholders Meeting
8
About Lumen
9
Proxy Voting Roadmap
11
02 Governance
ITEM 1
Election of Directors
15
Board of Directors and Governance
16
Skills and Relevance to Lumen’s Strategy
16
Refreshment
17
Recent Board Changes
18
Our Director Nominees
19
How Our Board is Evaluated and Selected
25
How Our Board is Organized
29
Board Committees
30
Our Board’s Responsibilities
34
Shareholder Engagement
35
Director Compensation
42
ITEM 2
Ratify KPMG as Our 2025
Independent Auditor
46
Annual Evaluation and Selection of
Independent Auditors
47
Audit and Other Fees
47
Audit Committee Report
48
03 Proposals to
Amend Articles
of Incorporation
ITEM 3
Approval of a Reverse Stock Split and
Related Reduction of Our Authorized
Common Shares
50
ITEMS 4A. 4B, 4C, 4D
Approval of Technical Amendments
to Articles of Incorporation
56
04 Compensation
Our Executive Officers
59
ITEM 5
Advisory Vote on Executive
Compensation—“Say-On-Pay”
60
Letter from the Chair of the Human Resources and
Compensation Committee
61
Compensation Discussion & Analysis
63
SECTION ONE
Executive Summary
64
Business Highlights
64
Recalibrating Our 2024 Incentive Programs to
Align with Our Business Transformation
65
2024 Executive Compensation Aligned with
Business Performance
67
2024 Shareholder Engagement Highlights
68
Our Compensation Best Practices
70
SECTION TWO
Compensation Philosophy and Principles
71
Compensation Objectives and Principles
71
SECTION THREE
Pay and Performance Alignment
73
Pay Mix
73
Realized and Realizable Pay for Our NEOs
73
SECTION FOUR
Compensation Design, Awards, and
Payouts for 2024
75
Our Pay Elements
75
Recalibration of Our 2024 Incentive Programs
76
Target Compensation
79
Base Salary
81
2024 Short-Term Incentive Program
82
2024 Long-Term Incentive Compensation
88
LTI Linkage to Performance—No Payouts Under
2022 PBRS Awards
94
LTI Governance of Share Usage
96
Goal Setting Process and Incentive
Program Guidelines
97
Compensation Arrangements Related to
Leadership Transition
99
Other Benefits
102
SECTION FIVE
HRCC Engagement and
Compensation Governance
106
Role of Human Resources and
Compensation Committee
106
Equity Grant Timing Practices
106
6
Year-round Engagement Informs
Compensation Design and Awards
107
Role of CEO and Management
108
Role of Compensation Consultants
108
Role of Peer Companies
108
Stock Ownership Guidelines
112
Human Resources and Compensation
Committee Report
113
Compensation Tables
114
Summary Compensation Table
114
Grant of Plan Based Awards
116
Outstanding Equity Awards
118
Stock Vesting Table
119
Pension Benefits
119
Deferred Compensation
121
Potential Termination Payments
121
CEO Pay Ratio Disclosure
125
Pay Versus Performance Disclosure
126
05 Other Items
Other Matters
130
Equity Compensation Plan Information
130
Stock Ownership
131
Ownership of Executive Officers & Directors
132
Transactions with Related Parties
133
Insider Trading Policy
133
Delinquent Section 16(a) Reports
133
Compensation Committee Interlocks and
Insider Participation
133
Lumen Performance History
134
ITEM 6
Shareholder Proposal — Simple
Majority Vote
135
Frequently Asked Questions About
Voting and the Annual Meeting
137
Other Information
143
Proxy Materials
143
Annual Financial Report
143
06 Appendices
APPENDIX A - Non-GAAP Reconciliations
A-1
APPENDIX B - Annual Financial Report
B-1
APPENDIX C - Proposed Amendments to Our
Articles of Incorporation Pursuant to Item 3
C-1
APPENDIX D - Proposed Amended and Restated
Articles of Incorporation Pursuant to Items 4A, 4B,
4C and 4D
D-1
Forward-Looking Statements
Except for historical and factual information contained herein,
matters set forth in our 2025 proxy materials (and our
accompanying 2024 annual report) identified by words
such as “expects,” “believes,” “will” and similar expressions
are forward-looking statements as defined by the federal
securities laws and are subject to the “safe harbor” protection
thereunder. These forward-looking statements are not
guarantees of future results and are based on current
expectations only and are subject to uncertainties. Actual
events and results may differ materially from those
anticipated by us in those statements due to several factors,
including those disclosed in our other filings with the SEC.
We may change our intentions or plans discussed in our
forward-looking statements without notice at any time and
for any reason.
Certain Defined Terms
All references in this proxy statement or related materials to
“we,” “us,” “our,” the “Company” or “Lumen” refer to Lumen
Technologies, Inc. In addition, each reference to (i) the
“Board” refers to our Board of Directors, (ii) “Voting Shares”
refers collectively to our shares of Common Stock (“Common
Shares”) and shares of Series L Preferred Stock (“Preferred
Shares”), (iii) “Meeting,” “the meeting,” “annual shareholders
meeting” or “annual meeting” refers to the 2025 annual
meeting of our shareholders described further herein,
(iv) “named executives,” “named officers,” “named executive
officers” or “NEOs” refers to the current and former officers
listed in the Summary Compensation Table in this proxy
statement, (v) the “Audit Committee” refers to the Audit
Committee of our Board, (vi) “HRCC” refers to the Human
Resources and Compensation Committee of our Board,
(vii) “NCG Committee” refers to the Nominating and
Corporate Governance Committee of our Board, (viii) the
“Risk and Security Committee” refers to the Risk and Security
Committee of our Board, (ix) “SLT,” “senior leadership team”
or “senior officers” refers to our executive officers and a
limited number of additional officers whose compensation is
determined by the HRCC, (x) “Qwest” refers to our affiliate
Qwest Communications International Inc., (xi) “Level 3” refers
to our affiliate Level 3 Parent, LLC and its predecessor, Level
3 Communications, Inc., (xii) “SEC” refers to the U.S.
Securities and Exchange Commission, (xiii) the “Exchange
Act” refers to Securities Exchange Act of 1934, as amended,
(xiv) “Dodd-Frank Act” refers to the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010, (xv) “GAAP”
refers to U.S. generally accepted accounting principles,
(xvi) “NYSE” refers to the New York Stock Exchange,
(xvii) “2023 proxy statement” refers to our proxy statement
filed with the SEC on April 5, 2023 in connection with our
2023 annual meeting of our shareholders, (xviii) “2024 proxy
statement” refers to our proxy statement filed with the SEC
on April 5, 2024 in connection with our 2024 annual meeting
of our shareholders, (xix) “TSR” refers to total shareholder
return, (xx) “STI” refers to short-term incentive compensation,
(xxi) “LTI” refers to long-term incentive compensation,
(xxii) “CD&A” refers to the “Compensation, Discussion and
Analysis” section of this proxy statement, and (xxiii) “Bylaws”
refers to our Amended and Restated Bylaws (as amended
and restated through May 17, 2023). Unless otherwise
provided, all information is presented as of the date of this
proxy statement.
We include website addresses throughout this Proxy
Statement for reference only. The information contained or
referenced on our website and other websites mentioned in
this Proxy Statement are not a part of this Proxy Statement
and are not deemed incorporated by reference into this Proxy
Statement or any other public filing made with the SEC.
Table of Contents
7
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Notice of 2025 Annual
Shareholders Meeting
2025 Annual Meeting Information
Date and Time
Tuesday
May 13, 2025
8:30 am CT
Location
www.virtualshareholder
meeting.com/
LUMN2025
Record Date
You can vote if you were
a shareholder of record
at the close of business
on March 19, 2025
Proxy Mail Date
On or about
March 31, 2025
Items of Business
ITEM 1
ITEM 2
ITEM 3
Elect the 11 director nominees named
in this proxy statement
Ratify the appointment of KPMG LLP
as our independent auditor for 2025
Amend our Articles of Incorporation to
authorize a reverse stock split and a
related reduction in our authorized
Common Shares
Vote FOR
See page 15
Vote FOR
See page 46
Vote FOR
See page 50
ITEMS 4A, 4B, 4C, and 4D
ITEM 5
ITEM 6
Approve technical amendments and
updates to our Articles of
Incorporation
Advisory Vote on Executive
Compensation – “Say-On-Pay”
Shareholder proposal regarding simple
majority voting
Vote FOR A, B,
C, and D
See page 56
Vote FOR
See page 60
NO RECOMMENDATION
See page 135
Transact other business that may properly come before the annual meeting.
Proxy Voting
Shareholders are invited to attend the live virtual meeting. Even if you expect to attend, we urge you to vote in advance using
any of the following methods:
Your vote is important to us. We urge your participation.
By Internet
visit www.proxyvote.com
By phone
1-800-690-6903
By Mail
mark, sign, date & return
proxy card
Live virtual meeting
vote electronically at the
virtual annual meeting
Headquarters: 100 CenturyLink Drive, Monroe, LA 71203
Meeting Details: See “Frequently Asked Questions About Voting and the Annual Meeting” in this proxy statement for
further details.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held on
May 13, 2025
The Notice of 2025 Annual Meeting, Proxy Statement, and 2024 Annual Report and information on the means to vote by
Internet are available at www.proxyvote.com
By Order of the Board of Directors
Chris D. Stansbury,
Executive Vice President and
Chief Financial Officer
March 31, 2025
8
About Lumen
Who We Are
We are a networking company with the goal of connecting people, data, and applications quickly,
securely and effortlessly. We are unleashing the world's digital potential by providing a broad
array of integrated products and services to our domestic and global business customers and our
domestic mass markets customers. We operate one of the world’s most interconnected
communications networks. Our platform empowers our customers to swiftly adjust digital
programs to meet immediate demands, create efficiencies, accelerate market access and reduce
costs, which allows our customers to rapidly evolve their IT programs to address
dynamic changes.
Financial Strength:
2024 Results
$13.1B
Total Revenue
79%
from Business
($10.4 billion revenue)
21%
from Mass Markets
($2.7 billion revenue)
$3.9B
Adj. EBITDA
1.1M
Fiber Broadband Customers
Our Brands and Assets
163,000
On-Net buildings
340,000
fiber route miles
4.2M
fiber broadband-
enabled locations
17.8M
other broadband-
enabled locations
Recent Key Business Highlights
9
2024 ANNUAL REPORT
2025 PROXY STATEMENT
See Appendix A for definitions of terms used above, a reconciliation of our non-GAAP metrics used above to
GAAP measures, and a description of our special items. For more complete information on Lumen and our
recent performance, see the remainder of this proxy statement, including Appendix B.
What’s new for 2024 and 2025?
• Each of Michelle J. Goldberg and Stephen McMillan,
nominated for election to our Board for the first time
• Christoper Capossela, appointed to the Board and
its Human Resources and Compensation and
Audit Committees in 2024
• Diankha Linear, appointed to the Board and its
Nominating and Corporate Governance and Risk and
Security Committees in 2024
•
Mid-year changes to the metrics and targets for our
2024 short- and long-term incentive programs to
maintain alignment of our incentive awards with our
new strategic direction following the transactions
summarized in the “Recent Key Business Highlights”
chart above
•
Continued with the refreshment of our senior
leadership team
About Lumen
10
Proxy Voting Roadmap
ITEM 1
Election of Directors
u See page 15
The Board unanimously recommends a vote FOR each nominee
Our Board collectively possesses a wide array of skills, experiences, and perspectives that we believe strengthen
its ability to fulfill its oversight roles in creating and maintaining long-term sustainable shareholder value.
Each year, the Board reviews the skills necessary to effectively discharge its oversight responsibilities. We strive
to maintain a well-rounded Board with comprehensive experience. Below please find information about
our nominees.
Board Nominee Composition*
*
The information about Board committees reflects their anticipated membership and leadership following the 2025 annual meeting assuming
both Ms. Goldberg and Mr. McMillan are elected.
11
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Board Nominee Demographics
Age
Tenure
in 50s
in 60s
in 70s
new nominees for 2025
mid-range (<5 years)
longer-term (6-10 years)
Board Nominee Skills
Skills
Sales and
Marketing
7/11
Industry
3/11
Global Business
9/11
M&A
5/11
Digital
Transformation
6/11
Technology &
Innovation
8/11
Strategy
11/11
Governance &
Stakeholder
Alignment
6/11
Finance
5/11
HR
4/11
Risk
Management/
Cybersecurity
6/11
Strategic skills enhanced in the past 5 years (including skills of two new director nominees)
Sales & Marketing
Global Business
Digital Transformation
Technology & Innovation
Finance
Risk Management/Cybersecurity
Proxy Voting Roadmap
12
ITEM 2
Ratify KPMG as Our 2025
Independent Auditor
u See page 46
KPMG is an independent firm that provides us with significant industry and financial reporting expertise
at reasonable fees. The Audit Committee annually evaluates KPMG and determined that its retention
continues to be in the best interests of Lumen and its shareholders.
The Board unanimously recommends a vote FOR this proposal
ITEM 3
Approval of a Reverse Stock Split
and Related Reduction of Our
Authorized Common Shares
u See page 50
Similar to last year, the Board is once again recommending that our shareholders grant us discretionary
authority to amend our Articles of Incorporation to (1) effect a reverse stock split on the terms and
conditions described herein and (2) proportionately reduce our authorized Common Shares, which
would be effected if and only if the reverse stock split is both approved and implemented. Specifically,
we are proposing that our Chief Executive Officer and Chief Financial Officer, in consultation with the
Board, have the discretion to select the reverse stock split ratio from within a range between and
including one-for-two (1:2) shares and one-for-fifteen (1:15) shares, rather than proposing a specific fixed
ratio at this time.
The Board unanimously recommends a vote FOR this proposal
ITEMS 4A, 4B, 4C and 4D
Approval of Technical Amendments
to Articles of Incorporation
u See page 56
The Board is recommending that our shareholders approve technical amendments of our Articles of
Incorporation to align with requirements of the current Louisiana Business Corporation Act and to make
certain other updates.
The Board unanimously recommends a vote FOR these proposals
Proxy Voting Roadmap
13
2024 ANNUAL REPORT
2025 PROXY STATEMENT
ITEM 5
Advisory Vote on Executive
Compensation—“Say-On-Pay”
u See page 60
Pay and Performance Alignment
• Executive compensation targeted at the 50th percentile of peers and aligned with short- and
long-term business goals and strategy. The chart below represents our executive officers’ average
target total compensation for 2024.
n Base Salary
As with most companies, base salary is annual fixed cash
compensation that provides competitively set and stable
income to our executives.
n Short-Term Incentive (STI)
STI bonus is annual variable cash compensation based on the
achievement of annual performance measures.
n Time-Based Restricted Stock (TBRS)
Our grants of TBRS are 40% of the total annual LTI award that
vests over three years from the date of grant. TBRS are
intended to align our executives’ and shareholders’ interests
by focusing on the long-term value of our Common Shares.
The Board unanimously
recommends a
vote FOR this proposal
n Performance-Based Long-Term Cash (PLTC)
Our grants of PLTC are 60% of the total annual LTI award that
cliff vest three years from date of grant, based on the level of
achievement against pre-established performance measures
for two-equally weighted metrics over a three-year
performance period.
ITEM 6
Shareholder Proposal Regarding
Simple Majority Vote
u See page 135
We have received a shareholder proposal requesting that our Board take steps to provide for simple
majority voting on all matters submitted to shareholders for a vote.
The Board has determined to refrain from making a voting recommendation with respect to this
shareholder proposal.
The Board makes NO RECOMMENDATION regarding this proposal
Proxy Voting Roadmap
14
ITEM 1
Election of Directors
Lumen’s mission is to ignite business growth by connecting people, data, and applications—quickly,
securely, and effortlessly. We believe that strong corporate governance is key to achieving our mission.
Following the NCG Committee’s recommendation, the Board of Directors has nominated each of the
11 nominees below for a one-year term expiring at our 2026 annual meeting of shareholders or until his
or her successor is duly elected and qualified. All of the nominees were elected to the Board at the 2024
annual meeting with the exception of Christopher Capossela (who was appointed to our Board in
October 2024) and each of Michelle Goldberg and Stephen McMillan (who have been nominated for
election by shareholders for the first time at the 2025 annual meeting).
To be elected, each of the 11 nominees must receive an affirmative vote of a majority of the votes cast in
the director’s election. Any director failing to receive a majority of votes cast must promptly tender his
or her resignation, which will be addressed by us in the manner described in our Bylaws.
You may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to each nominee. Abstentions and
uninstructed shares are not counted as votes cast, and therefore will not affect the outcome of the vote
with respect to any nominee.
Director Nominees
See “Board of Director and Governance—Our Director Nominees” for information about each of the 11 nominees
for election to our Board.
The Board unanimously recommends a vote FOR each of the director nominees
15
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Board of Directors and Governance
Skills and Relevance to Lumen’s Strategy
Lumen’s NCG Committee uses a skills matrix as part of the Board’s annual evaluation, succession planning and
director nomination process. The goal is to ensure our director nominees collectively possess the relevant skills
and backgrounds for the Board to effectively discharge its responsibilities. The skills listed in this matrix only
indicate the most prominent skills that our Board relies upon. This matrix is not a comprehensive reflection of
the wide variety of skills that our director nominees possess and routinely contribute to Lumen.
Board Nominee Skills Matrix
Sales & Marketing Experience with Deep Customer Focus
Experience growing sales and market share with deep focus
on customer needs, and leveraging AI, and cloud-
based platforms
Industry Experience
Experience working in the telecommunications and
technology sectors
Global Business Experience
Broad leadership experience with multinational companies or
in international markets
M&A Experience
Experience navigating growth opportunities, assessing “build
or buy” decisions, analyzing strategic transactions and
negotiating complex transactions
Digital Transformation
Experience driving and implementing digital transformation
enterprise-wide with a focus on simplification, AI
and automation
Technology & Innovation
Deep experience working in technology, managing
technological change, driving innovation, anticipating
technology trends, and creating new business models
Strategy
Proven success in developing and implementing strategic
plans to help achieve long-term objectives while ensuring
alignment between strategy and execution
Governance & Stakeholder Alignment Experience
Proven experience in balancing the interests of all
stakeholders, while driving operational effectiveness,
transparent decision-making, and ethical standards
Finance Expertise
Significant expertise in corporate finance or financial
accounting, with strong understanding of financial statements,
cost structures, and operational metrics
HR Transformational Leadership Experience
Deep experience and insight into workforce management,
compensation design, culture, developing talent, succession
planning, with the goal of driving long-term growth
Risk Management/Cybersecurity Knowledge
Knowledge of the evolving landscape of data security,
information technology, and enterprise risk management
programs and the ability to oversee data privacy, compliance,
and cybersecurity frameworks, ensuring that operations are
secure, ethical, and aligned with regulatory requirements
Tenure
4
9
1
7
1
7
0
2
5
1
0
16
Refreshment
Our NCG Committee reviews Board and committee refreshment at least once a year as part of its regular
evaluation process. Our Board periodically receives recommendations from the NCG Committee about possible
changes designed to staff the Board and its committees with individuals who have the skills, experiences,
perspectives, and backgrounds necessary to make meaningful contributions to shaping and implementing
Lumen’s business strategies. To align with Lumen’s transformation, the NCG Committee has adopted an
evergreen approach to board refreshment. As such, the ongoing search for candidates whose skills are aligned
to the evolving strategic direction of the Company could result in the addition of new board members or the
resignation of then-current board members prior to next annual meeting.
Over the past year, the NCG Committee and Board considered a wide range of factors in assessing the
composition of the Board and its current and long-term needs, including:
• essential skill sets for driving technology transformation and overseeing our development and execution of
business strategies that advance our evolution into a digital-first company which delivers a simpler, more
intuitive, and enhanced customer experience;
• balancing fresh, new perspectives and experiences with institutional knowledge; and
• our stakeholders’ input on important elements of Board composition.
Board of Directors and Governance
17
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Recent Board Changes
We have made a concerted effort over the past several years to align our Board with Lumen’s strategic goals.
As discussed further below, four of our 11 nominees have been newly-selected by us over the past 13 months.
These four nominees were chosen following a process conducted with the assistance of a nationally-recognized
independent search firm, which identified 244 potential candidates, 16 of which were interviewed by Lumen.
Additions
For your consideration at the 2025
annual meeting are two new director
nominees—Michelle J. Goldberg and
Stephen McMillan.
Quincy L.
Allen
Kate
Johnson
James
Fowler
Diankha
Linear
Christopher
Capossela
Michelle J.
Goldberg
Stephen
McMillan
Effective
February 25, 2021,
we added
Quincy L. Allen to
the Board. Among
other reasons,
Mr. Allen was
selected for his
depth of
experience in the
technology
services industry,
including as IBM's
go-to-market
leader of cognitive
process services
and chief
marketing officer
for IBM Cloud.
In November
2022, Kate
Johnson, who was
newly our
President and
CEO, joined the
Board. Among
other reasons,
Ms. Johnson was
selected as CEO
(and a member of
our Board) for her
experience as a
technology
executive leading
digital and
business
transformations
while driving
growth.
Effective August 7,
2023, we added
James Fowler to
the Board. Among
other reasons,
Mr. Fowler was
selected for his
experience as an
innovation and digital
transformation
advocate, with more
than 25 years of
experience in
technology
leadership roles
for Fortune
100 companies, and
serving as Executive
Vice Chief
Technology Officer
of Nationwide
Insurance.
Effective February
21, 2024, we added
Diankha Linear to
the Board. Among
other reasons,
Ms. Linear was
selected for her
broad range of
experience across
technology,
military leadership,
logistics, and retail,
including as
President and CEO
of Community, a
technology startup
that disrupts the
market for how
brands interact
with their
customers.
Effective
October 29, 2024,
we added
Christopher
Capossela to the
Board. Among
other reasons,
Mr. Capossela was
selected for his
experience serving
as the Chief
Marketing Officer
of Microsoft, where
he led global
marketing across
the consumer and
commercial
businesses,
overseeing product
marketing,
business planning,
digital direct sales
and retail
partner sales.
Among other
reasons,
Ms. Goldberg is
being nominated
for her experience
as a seasoned
public company
board member and
transformation
strategist, with
over 20 years of
leadership
spanning
technology,
enterprise, financial
services, and
consumer sectors.
Among other
reasons,
Mr. McMillan is
being nominated
for his experience
as a global
technology
executive and
public company
CEO, with a proven
track record in
transformation,
financial growth,
and operational
excellence.
2021
2022
2023
2024
2025
Departures
At the 2025 annual meeting, the
following three current Lumen directors
will retire from the Board:
Virginia
Boulet
Jeffrey K.
Storey
W. Bruce
Hanks
Michael
Roberts
Peter C.
Brown
Steven T.
Clontz
Laurie
Siegel
At the 2021
annual meeting,
Virginia Boulet
retired from the
Board after
26 years
or service
In November
2022, our former
President and
CEO Jeffrey K.
Storey retired
from the Board.
At the 2023 annual
meeting, W. Bruce
Hanks retired from
the Board after
31 years of service
At the 2024
annual meeting,
Michael Roberts,
retired from the
Board, after
13 years of service
Mr. Brown
has served
as a
director
since 2009
Mr. “Terry”
Clontz has
served as a
director
since 2017
Ms. Siegel
has served
as a
director
since 2009
We remain actively focused on taking additional steps designed to ensure that our Board continues to be
staffed with a collection of individuals then meeting our objectives. For additional information on our processes
for selecting Board nominees, see “—How Our Board is Evaluated and Selected.”
Board of Directors and Governance
18
Our Director Nominees
The first item for consideration at the meeting will be the election of the 11 nominees listed below. The
information about each Board committee reflects its anticipated membership and leadership following the 2025
annual meeting assuming both Ms. Goldberg and Mr. McMillan are elected.
Quincy L. Allen
INDEPENDENT
65 years old
Director since: 2021
Committees: HRC
(Chair), NCG
Skills:
Experience
Quincy L. Allen has over 35 years of
leadership experience in the technology
services industry.
IBM Corporation, a publicly traded
multinational technology company
•
Go-To-Market Leader of Cognitive
Process Services and Chief Marketing
Officer for IBM Cloud (2015 to 2018)
Unisys Corporation, a publicly traded
global information technology company
•
Chief Marketing and Strategy Officer
(2012 to 2015)
Vertis Communications, a direct
marketing and advertising company
•
Chief Executive Officer (2009 to 2010)
Xerox Corporation, a publicly traded
global provider of digital print technology
and related solutions (1982-2009)
•
President of the Global Services and
Strategic Marketing Group
•
President of Production
Systems Group
Other Public Company Directorships
•
ABM Industries, Inc. (since 2021)
(member of Audit and Stakeholder and
Enterprise Risk Committees)
•
Office Depot (since 2020) (member
of Audit and Corporate Governance &
Nominating Committees)
Martha
Helena Béjar
INDEPENDENT
62 years old
Director since: 2016
Committees: HRC,
NCG (Chair)
Skills:
Experience
Martha Helena Béjar brings decades of
leadership experience in technology,
telecommunications, private equity, and
corporate governance.
DaGrosa Capital Partners LLC, a private
equity firm
•
Senior Partner/Advisor
(2022 to present)
Red Bison Advisory Group, LLC, which
provides business advisory services
•
Co-founder and principal (2012 to 2019)
Unium, Inc., a Wi-Fi technology provider
•
Chief Executive Officer (2016 to 2018)
Flow Mobile, Inc., a broadband
wireless company
•
Chief Executive Officer (2012 to 2015)
Infocrossing, Inc., a U.S.-based cloud
services affiliate of Wipro Limited
•
Chief Executive Officer and Chairperson
(2011 to 2012)
Wipro’s Information Technology
Services affiliate
•
President of Worldwide Sales and
Operations (2009 to 2011)
Microsoft Corporation, a publicly traded
multinational technology conglomerate
•
Corporate Vice President for the
communications sector (2007 to 2009)
Other
•
Prior to 2007, Ms. Béjar held diverse
executive sales, operations, engineering
and R&D positions at Nortel and
Bellcore/Bellsouth/AT&T.
Other Public Company Directorships
•
Commvault Systems (since 2018)
(chair of Nominations and
Governance Committee and member of
the Audit Committee)
•
Quadient SA (formerly Neopost) (2019
to June 2025) (chair of Nominating/
Governance and Compensation
Committees)
•
Sportsman’s Warehouse Holdings, Inc.
(since 2019) (chair of Nominating and
Governance Committee and member
of Audit Committee)
Previous Public Company
Directorships
•
Mitel Networks Corporation
•
Polycom, Inc.
A
Audit
HRC
Human Resources and Compensation
NCG
Nominating and Corporate Governance
RS
Risk and Security
Sales &
Marketing
Industry
Global
Business
M&A
Digital
Transformation
Technology
& Innovation
Strategy
Governance &
Stakeholder Alignment
Finance
HR
Risk Management/Cybersecurity
Board of Directors and Governance
19
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Christopher
Capossela
INDEPENDENT
55 years old
Director since: 2024
Committees: A, HRC
Skills:
Experience
Christopher Capossela is a senior
executive in the technology industry with
more than 30 years of experience working
at Microsoft, where he spent the last ten
years of his career as its Executive Vice
President and Chief Marketing Officer.
Microsoft, a publicly traded multinational
technology conglomerate (1991 to 2023)
•
Executive Vice President and Chief
Marketing Officer
•
Corporate Vice President, Consumer
Channels Group
•
Chief Marketing Officer
•
Corporate Vice President, Office
Marketing
Other Public Company Directorships
•
None
Kevin P.
Chilton
INDEPENDENT
70 years old
Director since: 2017
Committees: A,
RS (Chair)
Skills:
Experience
Kevin P. Chilton is retired from the U.S.
Air Force as a four-star general and
contributes considerable cybersecurity,
risk management and scientific leadership
experience to our Board.
Chilton & Associates, LLC, a consulting
company
•
President (2011-present)
34-year military career
•
Commander, U.S. Strategic Command
(2007 to 2011), overseeing the U.S.
Department of Defense’s nuclear,
space and cyberspace operations
•
Commander, U.S. Air Force, Space
Command (2006 to 2007)
•
NASA astronaut (1987 to 1996),
including three space shuttle flights
•
Deputy Program Manager of the
International Space Station (1996
to 1998)
Other Public Company Directorships
•
None
Previous Public Company
Directorships
•
Anadarko Petroleum Corporation
•
AeroJet Rocketdyne
•
Orbital ATK, Inc.
•
Orbital Sciences Corporation
A
Audit
HRC
Human Resources and Compensation
NCG
Nominating and Corporate Governance
RS
Risk and Security
Sales &
Marketing
Industry
Global
Business
M&A
Digital
Transformation
Technology
& Innovation
Strategy
Governance &
Stakeholder Alignment
Finance
HR
Risk Management/Cybersecurity
Board of Directors and Governance
20
James Fowler
INDEPENDENT
53 years old
Director since: 2023
Committees: A, RS
Skills:
Experience
James Fowler has more than 25 years of
leadership experience driving leading
digital technology innovation at two
Fortune 100 companies.
Nationwide Mutual Insurance Company, a
group of large U.S. insurance and financial
services companies
•
Chief Technology Officer (2018
to present)
General Electric, a publicly traded
multinational conglomerate
•
Group Chief Information Officer
(2015 to 2018)
•
Business Unit Chief Information Officer
(2003 to 2015)
•
Business Unit Six Sigma Blackbelt and
Infrastructure Architect (2000 to 2003)
Accenture, a multinational
professional services company
•
Technology Manager (1996 to 2000)
AT&T, a publicly traded multinational
telecommunications holding company
•
Systems Analyst (1993 to 1996)
Other Public Company Directorships
•
None
T. Michael
Glenn
INDEPENDENT
69 years old
Chairman of the Board
Director since: 2017
Committees: HRC
Skills:
Experience
T. Michael Glenn’s executive leadership
roles bring significant market
development, customer, communications,
strategic development and operational
experience to our Board.
FedEx Corp., a publicly traded
multinational company specializing in
transportation, e-commerce, and business
services (1981 to 2016)
•
President and Chief Executive Officer
of FedEx Corporate Services and a
member of its five-person Executive
Committee responsible for developing
and implementing strategic
business activities
•
Executive Vice President of Market
Development and Corporate
Communications
•
Senior Vice President, Worldwide
Marketing, Customer Service and
Corporate Communications for
FedEx Express
Oak Hill Capital Partners, a private equity
firm (2017 to 2020)
•
Senior Advisor
Other Public Company Directorships
•
Pentair PLC (since 2017) (chair of
Compensation Committee)
A
Audit
HRC
Human Resources and Compensation
NCG
Nominating and Corporate Governance
RS
Risk and Security
Sales &
Marketing
Industry
Global
Business
M&A
Digital
Transformation
Technology
& Innovation
Strategy
Governance &
Stakeholder Alignment
Finance
HR
Risk Management/Cybersecurity
Board of Directors and Governance
21
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Michelle J.
Goldberg
INDEPENDENT
55 years old
Director since:
Nominated for 2025
Committees: A, RS
Skills:
Experience
Michelle J. Goldberg is a seasoned board
director and transformation strategist
with over 20 years of experience in
early-stage technology businesses,
finance, and governance.
Ignition Partners, Venture Capital, an
early-stage venture capitalist firm
investing in technology sectors (2000
to 2023)
•
Partner
•
Principal
Other
•
Prior to 2000, Ms. Goldberg was a
consultant to financial institutions and
Microsoft and an investment banker in
middle market mergers and acquisitions
Other Public Company Directorships
•
Bakkt Holdings, Inc. (since 2021) (chair
of Audit and Risk Committee and
member of Governance and
Nominations Committee)
Previous Public Company
Directorships
•
Legg Mason
•
Taubman Centers, Inc.
•
Plum Creek Timber Company, Inc.
Kate Johnson
57 years old
Director since: 2022
Committees: None
Skills:
Experience
Kate Johnson is a seasoned technology
innovator with a proven track record of
driving business transformation success
at several Fortune 100 companies.
Lumen
•
President and Chief Executive Officer
(November 2022 to present)
Microsoft Corporation, a publicly traded
multinational technology conglomerate
•
President of Microsoft U.S., a division of
Microsoft Corporation (2017 to 2021)
GE, a publicly traded multinational
conglomerate
•
Executive Vice President and Chief
Commercial Officer, GE Digital (2016
to 2017)
•
Chief Executive Officer, GE Intelligent
Platforms Software (2015 to 2016)
•
Vice President and Chief Commercial
Officer (2013 to 2015)
Oracle, a publicly traded multinational
technology company
•
Senior Vice President for North America
Technology and Government Consulting
(2007 to 2013)
Red Hat, a publicly traded provider of
enterprise open-source software products
•
Vice President of Global Services and
Strategic Accounts (2004 to 2007)
Other Public Company Directorships
•
United Parcel Service (since 2020)
(member of Nominating and
Corporate Governance and Risk
Committees)
A
Audit
HRC
Human Resources and Compensation
NCG
Nominating and Corporate Governance
RS
Risk and Security
Sales &
Marketing
Industry
Global
Business
M&A
Digital
Transformation
Technology
& Innovation
Strategy
Governance &
Stakeholder Alignment
Finance
HR
Risk Management/Cybersecurity
Board of Directors and Governance
22
Hal Stanley
Jones
INDEPENDENT
72 years old
Director since: 2020
Committees: A (Chair),
RS
Skills:
Experience
Hal Stanley Jones brings significant
financial, public accounting and controls
experience to our Board.
Graham Holdings (formerly known as
the Washington Post Company), a
publicly traded diversified conglomerate
holding company
•
Chief Financial Officer (2009 to 2017)
•
Held various senior level positions at
The Washington Post Company
(1989 to 2008)
Kaplan Professional, a subsidiary of The
Washington Post
•
Chief Executive Officer and President
(2007 to 2008)
PricewaterhouseCoopers, a multinational
professional services brand of firms
•
Certified Public Accountant
(1977 to 1988)
Other Public Company Directorships
•
Playa Hotels and Resorts, N.V. (since
2013; it became publicly traded in 2017)
(member of Audit Committee and
Compensation Committee)
Diankha Linear
INDEPENDENT
51 years old
Director since: 2024
Committees: NCG, RS
Skills:
Experience
Diankha Linear is a senior executive and
proven operator with more than 20 years
of experience leading across highly
regulated technology, logistics, and
retail industries.
Community, Inc., a technology startup
that uses SMS to help brands engage with
their customer at scale
•
President & Chief Executive Officer
(2021 to 2024)
Convoy, Inc., an American technology and
logistics company
•
General Counsel & Corporate Secretary
(2017 to 2021)
Nordstrom, a publicly traded American
luxury specialty fashion retailer
•
Senior Director, Legal (2013 to 2017)
Expeditors International of Washington, a
publicly traded global logistics company
•
Director, Legal (2008 to 2013)
16-year military career (1991 to 2007)
•
US Army Reserve—Paratrooper/
Airborne, Logistics & Transportation
•
Civil Affairs—Special Operations
Forces Unit
•
Judge Advocate General (JAG) Officer
Other Public Company Directorships
•
None
A
Audit
HRC
Human Resources and Compensation
NCG
Nominating and Corporate Governance
RS
Risk and Security
Sales &
Marketing
Industry
Global
Business
M&A
Digital
Transformation
Technology
& Innovation
Strategy
Governance &
Stakeholder Alignment
Finance
HR
Risk Management/Cybersecurity
Board of Directors and Governance
23
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Stephen
McMillan
INDEPENDENT
54 years old
Director since:
Nominated for 2025
Committees: HRC, NCG
Skills:
Experience
Stephen McMillan is a visionary leader with
a proven track record in driving global
strategy, transforming organizations, and
leading a top big data company, while
championing value-based sales and
developing high-performance teams.
Teradata Corporation, a publicly-traded
cloud and hybrid data and analytics
company that provides a platform and
services for enterprise analytics,
including AI
•
President and Chief Executive Officer
(2020 to present)
F5, Inc., a publicly-traded transnational
technology company specializing in
security, cloud management, fraud
prevention, and network performance
•
Executive Vice President of Global
Services (2017 to 2020)
Oracle Corporation, a publicly-traded
multinational technology company
•
Senior Vice President, Customer
Success and Managed Cloud Services
(2015 to 2017)
•
Senior Vice President, Managed Cloud
Services (2012-2015)
IBM Corporation, a publicly-traded
multinational technology company
•
Vice President, IBM Strategic
Outsourcing (2009 to 2012)
•
Held various increasingly senior
leadership positions domestically and
abroad focused on global managed
services, consulting, and information
technology (1993 to 2009)
Other Public Company Directorships
•
Teradata Corporation (since 2020)
A
Audit
HRC
Human Resources and Compensation
NCG
Nominating and Corporate Governance
RS
Risk and Security
Sales &
Marketing
Industry
Global
Business
M&A
Digital
Transformation
Technology
& Innovation
Strategy
Governance &
Stakeholder Alignment
Finance
HR
Risk Management/Cybersecurity
Board of Directors and Governance
24
How Our Board is Evaluated and Selected
Evaluations
Our NCG Committee leads an annual evaluation of our Board, its members, and committees, and the Board
periodically assesses whether it has the skills, processes, structure, and policies necessary to effectively attain its
goals and fulfill its responsibilities. While the NCG Committee’s formal evaluation is conducted on an annual
basis, directors share their perspectives and suggestions throughout the year. The NCG Committee uses this
ongoing and annual feedback when considering Board composition, Board refreshment, and other governance
issues, as well as in connection with nominating directors to be elected to the Board. The NCG Committee
periodically engages nationally-recognized firms to assist it with the design and implementation of its director
evaluation and selection processes.
1
Questionnaires
Each director completes a
detailed questionnaire
Topics covered include, among others:
• Assessment of Board and committee composition, including size and
mix of skills and tenure
• Assessment of allocation of responsibilities among the Board and its
committees and their respective fulfillment of those responsibilities
• Assessment of Board and committee meeting procedures
• Assessment of supporting resources, including from our SLT
2
Interviews, Readout,
and Discussion
The Chairman meets with
each director
The Board reviews and
discusses the results
• The Chairman of the Board meets with each director individually to
obtain his or her assessment of the performance of the Board, its
committees, and each director
• The responses to the questionnaires and input from the discussions are
collected and compiled into a comprehensive report, highlighting key
themes, strengths, and areas for improvement
• The compiled results are presented to the entire Board during a
dedicated executive session. This readout includes a summary of the
findings, notable trends, and any significant discrepancies in responses
• Board members engage in an open and constructive discussion about
the results. They analyze the feedback, share perspectives, and identify
specific actions to address any identified issues
3
Action Items
These evaluations have
consistently enabled
us to refine our
governance practices
Over the past several years, this evaluation process has consistently
found that the Board and committees are operating effectively, while
also enabling us to continually refine the way the Board and its
committees operate, including:
• Adjusting the size and composition of the Board to address the
evolving strategic priorities of the Company
• Rotating committee memberships and chairs to ensure fresh
perspectives and leadership
• Ensuring committee chairs have ample time to review agendas and
committee members have sufficient time to review materials in
advance of meetings
Board of Directors and Governance
25
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Nomination Process
1
Succession Planning
The NCG Committee meets with the CEO regularly to discuss the Company’s long-term strategy
and what skills, if any, are missing from the Board to best complement that strategy and to
otherwise discuss the composition of the Board.
2
Identification of Potential New Directors
In the event of an open seat or perceived skill gap, the NCG Committee engages in a search
process, which typically includes the use of a nationally-recognized independent search firm. The
NCG Committee, the Chairman of the Board, the CEO, and the search firm, if any, will put together
a candidate profile to identify the skills, experience, and background that best align with the
Company’s strategy and the Board’s current needs. In connection with reviewing the Board’s
needs, the NCG Committee typically assesses succession planning issues to ensure that the Board
and its committees will continue to possess collectively a comprehensive and diverse set of skills,
experiences, perspectives, and backgrounds following planned retirements and committee chair
rotations. The resulting candidate profile is shared with the full Board and our Chief People Officer.
The NCG Committee then considers any suggestions provided by them and the search firm, if any,
and endeavors to create a pool of potential candidates that best fit the profile. The NCG
Committee also reviews candidates suggested by our shareholders who comply with our Bylaws.
We identified Messrs. Capossela and McMillan through the professional network of our senior
leadership team and Mses. Goldberg and Linear through the professional network of our non-
management directors, through processes augmented by services provided by a nationally-
recognized search firm.
3
Assessing Potential New Directors
The NCG Committee forms a search committee that is comprised of the Chairman of the Board,
the HRCC and NCG Committee chairs, and the CEO, who will seek to interview the candidates in
the pool. Candidates are initially interviewed remotely or in person by the search committee
members. Those who pass this stage are interviewed by the NCG Committee members in person.
Additionally, other Board members can participate in the interview process if they desire.
4
Decision and Nomination
The NCG Committee evaluates any potential director candidates the committee has interviewed to
determine which, if any, are the right choice in the context of the needs of the Board at that time.
This analysis is also done at least annually with respect to each current director.
The NCG Committee assesses each director candidate based on the individual’s independence,
character, judgment, and talent and endeavors to assemble a Board that has a comprehensive and
diverse set of skills, experiences, perspectives, and backgrounds in the context of the needs of the
Board at that time. The ͏NCG Committee may, but has not formally chosen to, establish additional
qualifications. Potential conflicts and “overboarding” are also evaluated, and no director may serve
on more than three other unaffiliated public company boards, unless this prohibition is waived by
the Board. We target average director tenure of no more than 10 years and set a goal of all Board
members (except our CEO) being independent. It is also the Board’s general sense that, in the
absence of compelling reasons to the contrary, as a guideline, a director should not stand for
election if he or she will have attained the age of 75 or if his or her service on the Board will have
exceeded 15 years, in either case at any time during the calendar year of the next annual meeting
of shareholders.
The NCG Committee recommends selected candidates to the full Board for approval.
Board of Directors and Governance
26
5
Appointment or Nomination
Following Board approval, the director candidates are either immediately appointed to the Board
to serve until the next annual meeting or nominated to stand for election by shareholders at that
next annual meeting.
A shareholder or group of up to 10 shareholders owning 3% or more of Lumen’s outstanding Common
Shares continuously for at least three years can nominate director candidates constituting up to 20%
of the Board and include these nominations in our annual meeting proxy materials.
6
Ongoing Assessment
The NCG Committee continuously assesses the composition of the Board to maintain alignment
with the Company’s evolving corporate strategy. This includes a periodic review of each director’s
independence, character, judgment, and talent; the directors’ collective set of skills, experiences,
perspectives and backgrounds in the context of the needs of the Board at that time; the relative
benefits of Board refreshment and organizational knowledge; and the results of previous
shareholder votes. This could result in the addition of new directors or the resignation of then-
current directors prior to the next annual meeting. The NCG Committee and the Board also
evaluate the effectiveness of these nominating processes and procedures on a periodic basis.
Orientation and Education
New directors participate in an orientation program that familiarizes them with the Company’s business,
operations, strategies, culture, and corporate governance practices to assist them in developing industry
knowledge to optimize their service on the Board. This includes meetings with the chairs of the Board
committees they have joined and members of our SLT to expedite their ability to effectively and fully discharge
their responsibilities. New directors are also assigned a director “buddy” to provide guidance and help them
integrate smoothly into the Board.
We encourage our directors to participate in continuing education programs focused on our business and
industry, their committee roles and responsibilities and the legal and ethical responsibilities of directors. We
reimburse our directors for the costs of these programs. We also provide continuing director education during
Board and committee meetings and other Board discussions. From time to time, these include presentations
from third parties.
Additionally, we encourage our directors to participate in nationally recognized governance organizations,
including the National Association of Corporate Directors.
Over the course of 2024, members of our Board collectively attended over 70 hours of continuing education
webinars and seminars covering an extensive list of topics, including those ranging from board committee
effectiveness, cybersecurity, and human capital management to SOX controls.
Board of Directors and Governance
27
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Independence and Board Committee-Related Determinations
Prior to the nomination of candidates for election to the Board at each annual meeting, the Board evaluates and
affirmatively determines each director nominee’s independence using the standards required by the SEC, NYSE,
and our Corporate Governance Guidelines. In addition, committee members are subject to any additional
independence or other requirements that may be required by the committee’s charter, the SEC, or NYSE. This is
also done in advance of any appointment of a new director by the Board. All such determinations are supported
by a detailed questionnaire completed by each candidate that solicits information about relationships that could
have an impact on his or her independence. Our management delivers reports on those relationships to the NCG
Committee. The NCG Committee evaluates those reports and considers all other known factors which could
influence a nominee’s independence, including transactions and relationships between the Company or affiliates
and our directors, executive officers, their immediate family members, or an entity in which any of them have a
significant interest. The NCG Committee chair, in turn, reports on these independence evaluations to the Board.
In early 2025, the Board reviewed all relationships between the Company and each current director and director
nominee and affirmatively determined that each is independent other than our CEO, Ms. Johnson. The Board
also determined that each of the current members of the HRCC, each additional director who served on the
HRCC for any part of 2024, and Mr. McMillan (who is expected to be appointed to the HRCC if he is elected at
the annual meeting), satisfies the heightened independence and other qualification requirements applicable to
members of that committee, as set forth in the committee’s charter, SEC rules, or the NYSE listing standards.
Further, the Board determined that (1) each director who is currently a member of the Audit Committee, each
additional director who served on the Audit Committee for any part of 2024, and Ms. Goldberg (who is
expected to be appointed to the Audit Committee if she is elected at the annual meeting), satisfies the
heightened independence and other qualification requirements applicable to members of that committee, as set
forth in the committee’s charter, SEC rules, or the NYSE listing standards, including the financial literacy
requirements of the NYSE listing standards and (2) each of Messrs. Allen, Brown, Jones, Capossela, Chilton and
Fowler is an audit committee financial expert within the meaning of SEC rules.
Board of Directors and Governance
28
How Our Board is Organized
Board Leadership Structure
T. Michael
Glenn
Chairman
of the Board
Responsibilities of Chairman of the Board
• Presides over meetings of the Board and at each meeting of the
independent directors
• Oversees the management, development, and functioning of the Board
• Acts as the Board’s principal intermediary with senior management
between meetings
• Represents the Board in stakeholder communications as needed
• In consultation with the CEO, plans and organizes the activities of the Board and the
schedule for Board meetings
• In consultation with the CEO, establishes the agendas for Board meetings
• Provides direction to the CEO on the quality, quantity, and timeliness of the flow of
information from management that is necessary for the independent directors to
perform their duties effectively and responsibly
• Ensures that all orders, policies, and resolutions of the Board are carried out
• Presides over shareholder meetings
• Performs any additional duties the Board may identify
The NCG Committee periodically reviews the Board’s leadership structure and, when appropriate, recommends
changes, taking into consideration the needs of the Board and the Company at the time. Since 2009, we have
elected a non-executive chairman.
We believe that separation of the Chairman and CEO positions has functioned effectively over the past several
years. Separating these positions has allowed our CEO to have primary responsibility for the operational
leadership and strategic direction of our business, while allowing our Chairman to lead the Board in its
fundamental role of providing guidance to and separate oversight of management.
Mr. Glenn has served as Lumen’s independent, non-executive Chairman since May 2020. Mr. Glenn’s extensive
experience developing and implementing strategic business activities makes him uniquely qualified to lead
the Board as Lumen executes its strategic plan for growth.
It is the sense of the Board that the Chairman of the Board should rotate approximately every five years,
although the Board may elect to extend the service of any chairperson should they decide it is in our best
interest to do so.
Board of Directors and Governance
29
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Board Committees
Each of our four standing Board committees supports the full Board with various risk management, governance,
and strategic responsibilities. Below is a description of each committee’s key responsibilities, along with a
summary of the key topics routinely covered by each committee throughout the year. Each committee also
considers other topics relevant to its areas of responsibility, as it deems necessary or advisable. Additional
information about the responsibilities of our committees is available in the committees’ respective charters,
which can be obtained on our website: www.lumen.com/en-us/about/governance.html.
Also set forth below is information about the membership and leadership of each standing Board committee, in
each case as we plan to have in place following the 2025 annual meeting if both Ms. Goldberg and Mr. McMillan
are elected, highlighting any changes, or expected changes, since January 1, 2024. It is the sense of the Board
that the chairs of our committees should rotate approximately every five years, although the NCG Committee
may elect to extend the service of any chairperson should they decide it is in our best interest to do so.
Audit Committee*
Meetings in 2024: 9
2024 Meeting Attendance: 98%
Jones
Capossela
Chilton
Fowler
Goldberg
* Each of Messrs. Jones, Capossela, Chilton, and Fowler is an “audit
committee financial expert”
Additions
October 2024: Christopher Capossela
May 2025: Michelle J. Goldberg
Departures
October 2024: Quincy L. Allen
May 2025: Peter C. Brown
Key Responsibilities
• Oversees the Company’s system of
financial reporting
• Assesses our major financial risks, including
matters potentially impacting financial
reporting, with management, our internal
auditors and our independent auditors
• Monitors the qualifications, independence and
performance of Lumen’s independent auditors
• Assists the Board in fulfilling its oversight
responsibilities relating to the adequacy and
effectiveness of
– our internal controls over financial reporting,
– our internal controls regarding information
technology security and
– our disclosure controls and procedures
See “Audit Committee Report” below for
additional information
Q1
• Prior Year Financial Statements Review
• Related Party Transactions Review
• KPMG Quarterly Report
• Proxy Statement Disclosure Review
• Internal Audit/SOX Quarterly Report
• Pension Accounting and Reporting Annual Update
• Litigation Quarterly Update
• Tax Report
Q2
• Q1 Financial Statements Review
• KPMG Quarterly Report
• Internal Audit/SOX Quarterly Report
• Litigation Quarterly Update
• Treasury Report
Q3
• Q2 Financial Statements Review
• KPMG Quarterly Report
• Internal Audit/SOX Quarterly Report
• Litigation Quarterly Update
• Debt Covenant Compliance Update
• Committee Self-Evaluation
Q4
• Q3 Financial Statements Review
• KPMG Quarterly Report
• Internal Audit/SOX Quarterly Report
• Litigation Quarterly Update
• Tax Legislative Update
• Committee Charter Review
Board of Directors and Governance
30
Human Resources
and Compensation
Committee
Meetings in 2024: 6
2024 Meeting Attendance: 100%
Allen
Béjar
Capossela
Glenn
McMillan
Additions
October 2024: Christopher Capossela
May 2025: Quincy Allen as Chair;
Stephen McMillan
Departures
May 2024: Michael J. Roberts
May 2025: Steven T. Clontz and Laurie
A. Siegel
Key Responsibilities
• Establishes executive compensation strategy
• Oversees design and administration of equity
incentive plans
• Approves compensation of senior officers
• Oversees human capital strategy
• Oversees, in consultation with management, our
compliance with regulations governing
executive and director compensation
• Monitors compensation, labor relations, and
workforce risk
See “CD&A” below for additional information.
Q1
• Approval of Payouts for (1) Prior Year
STI and (2) LTI with Performance
Periods Ended on December 31 of the
Prior Year
• Discussion of Performance for
Outstanding LTI Programs
• Approval of New STI and LTI
Design and Targets
• Approval of Yearly Delegated
Authority Under LTI Program
• Senior Officer Performance Assessments
• Approval of Yearly Compensation of
Senior Officers
• Proxy Statement Disclosure Review
• Prior Year Shareholder Engagement Review
• Quarterly Human Capital Update
Q2
• Discussion of Q1 Performance for STI
and Outstanding LTI Programs
• Approval of Outside
Director Compensation
• Proxy Advisor Reports and Executive
Pay Developments Review
• Employee Engagement Survey Results Review
• Change of Control Agreements Review
• Shareholder Engagement Review
• Quarterly Human Capital Update
Q3
• Discussion of Q2 Performance for STI
and Outstanding LTI Programs
• Compensation Peer
Group Approval
• Yearly LTI Design and Targets Review
• Quarterly Human Capital Update
• Committee Self-Evaluation
Q4
• Discussion of Q3 Performance for STI
and Outstanding LTI Programs
• Approval of TSR Peer Group
• Approval of Amendments to STI and LTI Plans
• Quarterly Human Capital Update
• Committee Charter Review
Board of Directors and Governance
31
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Nominating and Corporate
Governance Committee
Meetings in 2024: 4
2024 Meeting Attendance: 100%
Béjar
Allen
Linear
McMillan
Additions
February 2024: Diankha Linear
October 2024: Quincy L. Allen
May 2025: Stephen McMillan
Departures
May 2024: Michael J. Roberts
May 2025: Steven T. Clontz
and Laurie A. Siegel
Key Responsibilities
• Evaluates Board and committee composition
and director independence
• Recommends director candidates to full Board
• Onboards new directors
• Oversees director continuing education
• Leads annual Board and Committee evaluations
• Leads CEO succession planning
• Oversees CEO’s annual performance evaluation
• Recommends officers to the Board
• Assists the Board in fulfilling its oversight
responsibilities with respect to the management
of risks associated with the Company’s Board
leadership structure and corporate
governance matters
• Oversees the development and implementation
of our environmental, social, and corporate
governance strategies
• Recommends improvements to our governance
principles, policies, and practices
• Reviews political contributions reporting and
approves budget
Q1
• Director Independence and Committee-
Related Determinations
• Board and Committee
Composition, Refreshment, and
Succession Planning Discussion
• Recommend Slate of Directors for
Annual Meeting
• Proxy Statement Disclosure Review
• Director Orientation and Education
Program Review
• Political Contributions Budget Approval
• Quarterly Review of Corporate
Responsibility Developments
Q2
• Shareholder Engagement Update
• Annual Meeting Update
• Approval of Officer and Committee Composition
• Quarterly Review of Corporate
Responsibility Developments
Q3
• Quarterly Review of Corporate
Responsibility Developments
• Approval of Board and Committee
Self-Evaluation Process
• Committee Self-Evaluation
• Proxy Season Review
• Shareholder Engagement Planning and Review
• Director Education Program Review
Q4
• Shareholder Engagement and
Themes Report
• Board and Committee Self-
Evaluation Outcome Report
• Quarterly Review of Corporate
Responsibility Developments
• Charter and Corporate Governance
Guidelines Review
Board of Directors and Governance
32
Risk and Security Committee
Meetings in 2024: 4
2024 Meeting Attendance: 100%
Chilton
Fowler
Goldberg
Jones
Linear
Additions
May 2025: Michelle J. Goldberg
Departures
May 2025: Peter C. Brown
Key Responsibilities
• Assists the Board in fulfilling its oversight
responsibilities with respect to, among others:
– risks posed by cyberattacks or other
casualty events
– risks related to network reliability, privacy,
and regulations
– other key enterprise or operational risks as
jointly determined by the Committee
and management
– insurance program reviews
• Oversees our classified activities and facilities
through a subcommittee
• Oversees our corporate ethics and compliance
and enterprise risk management (“ERM”)
programs and activities
• Receives periodic reports on various risk
exposures, including quarterly reports on
cybersecurity, which typically include reports
on recent cyber intrusions, mitigation steps
taken in response to those intrusions and
ongoing cybersecurity initiatives, and periodic
reports from outside consultants regarding
cyber security
• Coordinates risk oversight functions of other
Board committees
Q1
• ERM Quarterly Update and Deep Dive
• Topical Risk Review
• Quarterly Cybersecurity Review
• Corporate Ethics and Compliance
Quarterly Review
Q2
• ERM Quarterly Update
• Topical Risk Review
• Cybersecurity Quarterly Review
• Regulatory Compliance Update
• Business Continuity Management Report
• Corporate Ethics and Compliance
Quarterly Review
Q3
• ERM Quarterly Update
• Topical Risk Review
• Cybersecurity Quarterly Review
• Privacy Update
• Corporate Ethics and Compliance
Quarterly Review
• Committee Self-Evaluation
Q4
• ERM Quarterly Update
• Topical Risk Review
• Cybersecurity Quarterly Review
• Corporate Ethics and Compliance
Quarterly Review
• Insurance Programs / Environmental Health and
Safety Review
• Committee Charter Review
Board of Directors and Governance
33
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Director Meeting Attendance
Directors are expected to attend all Board meetings, meetings of committees on which they serve, and the
annual shareholders meeting. All then-current directors attended our 2024 annual meeting. During 2024 there
were 28 total meetings of the full Board and its standing committees, consisting of four regular and one special
meeting of the Board and 22 standing, and one special, committee meeting. During 2024, our independent
directors met in executive session on a quarterly basis, led by our Chairman. Each director attended more than
90% of the total number of both the 2024 Board and the respective committee meetings on which he or she
then served.
Our Board’s Responsibilities
“In 2024, our Board focused a great deal of attention on debt restructuring, strategic
initiatives, succession planning, Company culture, and shareholder engagement efforts.
Our Board Chair and HRCC and NCG Committee chairs also devoted considerable time
towards evaluating our Board’s composition and identifying future candidates for
service with the right balance of skills, experiences, perspectives, and backgrounds that
best align with the Company’s strategy. A special search committee of the Board,
consisting of our Board Chair, the HRCC and NGC Committee chairs, and our CEO, was
responsible for identifying Lumen’s two newest directors, Diankha Linear and
Christopher Capossela, who joined in 2024. This committee also selected Michelle J.
Goldberg and Stephen McMillan, who have been newly nominated for election to our
Board at the 2025 annual meeting.”
Martha Helena Béjar
Nominating and Corporate Governance Committee Chair
Our Board and its committees collectively oversee our business and management’s development and
implementation of our strategies through regular meetings and communications with Lumen’s executive team.
We believe our governance policies and practices provide a transparent framework for effective governance
and compliance with SEC and NYSE requirements. The Board continually reviews our governance practices for
alignment with best practices and stakeholder interests and acts to enhance our ability to oversee the execution
of strategies that drive value for Lumen, our customers, employees and shareholders. Our Corporate
Governance Guidelines, along with other governance documents, including our Code of Conduct, Bylaws, and
committee charters, are available on our website: www.lumen.com/en-us/about/governance.html.
Board of Directors and Governance
34
Key Responsibilities of The Board
In addition to the responsibilities handled by its committees and its general oversight of the Company’s
performance, the Board believes its key responsibilities include:
Oversight of Strategy
Oversight of Risk
Stakeholder Engagement Succession Planning
Oversight of
Environmental,
Social, and
Corporate Governance
• Our Board regularly
engages in active
discussions with
management to
formulate and
implement
appropriate
strategies for the
Company and each
of its business
segments
• In addition to
regular Board and
committee
meetings, the Board
participates in an
annual in-depth
dedicated review of
the Company’s
overall strategy
with our
management team
• The Board,
along with its
committees,
reviews and
oversees Lumen’s
risk management
processes
• The Board also
works with
management to
assess our key
short- and long-
term risks and
mitigation efforts
• Members of the
Board, along with
members of
management,
engage on a year-
round basis with
holders of our equity
and debt securities,
as well as, from time
to time, proxy
advisory firms
• The Board
oversees
succession
planning for
members of our
senior leadership
team, including the
CEO, and reviews
the strengths and
development areas
of certain members
of our senior
leadership team
• The Board strives to
set an appropriate
“tone at the top”
and is otherwise
engaged in
developing a
positive corporate
culture
• The Board and
the NCG
Committee, in
conjunction with
designated
management teams,
periodically evaluate
our corporate
responsibility
programs and seek
to identify
meaningful
opportunities
to enhance
our programs
Shareholder Engagement
The Board believes that input from shareholders is a critical component in our efforts to continually enhance our
governance practices and maximize long-term shareholder value. As illustrated below, members of management
or the Board engage on a year-round basis with holders of our equity and debt securities, as well as, from time
to time, proxy advisory firms, and third-party rating firms.
FALL
• Regular outreach
focused on our
shareholders’ views
regarding corporate
governance, executive
compensation, and
sustainability
• Investor feedback
shared with directors
• ESG Report published
WINTER
• Additional
targeted outreach
• 10-K filed
• Governance and
compensation decisions
incorporate fall
feedback
SPRING
• Proxy statement filed
• Regular outreach to
largest investors and,
from time to time, proxy
advisory firms to
discuss significant items
to be considered at the
annual meeting
• Hold annual meeting
and report results
SUMMER
• Additional
targeted outreach
• Review results from
most recent annual
meeting with Board
• Review proxy season
trends with Board
• Investor feedback
shared with directors
• Evaluate practices in
light of business
priorities, corporate
governance trends,
best practices and
regulatory
developments
Board of Directors and Governance
35
2024 ANNUAL REPORT
2025 PROXY STATEMENT
By the Numbers: Shareholder Engagement in 2024
Reached out to
Top 30
shareholders,
currently representing
over 60%
of shares outstanding
Our NCG Committee Chair
regularly participated
in meetings
with shareholders
These efforts complement management’s outreach through participation by our CEO, CFO, and other senior
leaders in investor conferences in the U.S. and abroad, and through regular investor dialogue conducted by our
Investor Relations department.
In 2024, our Investor Relations department had over 650 unique investor engagements. We believe these
Investor Relations-led engagements help build strong relationships and goodwill with the analyst and
investor community. Although not part of this proxy statement, some of our investor presentations are
made available in the Investor Events section of Lumen’s corporate website at ir.lumen.com.
Board Responsiveness
Our Board is committed to constructive engagement and dialogue with our investors. We regularly evaluate and
respond to the views expressed by our equity and debt holders. This dialogue has led to enhancements in our
corporate governance, sustainability, and executive compensation practices that the Board believes are in the
best interests of Lumen and our shareholders.
2024 Shareholder
Engagement Team
• NCG Committee Chair
• Senior Vice President,
Investor Relations
• Vice President, Engagement
& Community
• Head of ESG
• Senior Vice President, Total Rewards
• Vice President, Executive Compensation
• Senior Vice President, Governance
& Securities
Topics Discussed
• Pay-for-performance alignment
• Recalibration of incentive programs
• Board composition and refreshment
• Corporate culture
• Leadership team transition
• Risk management
• Cybersecurity
• Capital allocation and growth strategy
• Governance practices
• Corporate responsibility and climate risk
What We Learned
• Investors were interested in learning
more about Lumen’s growth strategy,
long-term strategic plan, and
capital allocation
• Investors were interested in
learning more about Lumen’s
cultural transformation
• Investors were interested in learning
more about the mid-year changes we
made to our short-term and long-term
incentive programs
• Investors were interested in learning
more about how Lumen manages risk,
including cyber- and sustainability-
related risks
• Investors were interested in learning
more about the transition in our SLT
• Investors expressed their views on the
current and future composition of
the Board
• Investors expressed their views on
certain governance policies
and practices
Board of Directors and Governance
36
Actions taken in past five years in response to specific shareholder feedback or voting guidelines published
by our shareholders or proxy advisors include:
• Refreshed Board with seven new directors since 2021 (including our CEO and assuming the election of our
two new nominees), with three additional directors retiring at the 2025 annual meeting, resulting in a turnover
of 64% since 2021
• Significantly reduced average Board tenure from seven years following the 2021 annual meeting to three
years following the 2025 annual meeting (including our CEO and assuming the election of our two new
nominees)
• LTI—returned to three-year performance period and added Relative TSR performance metric in 2020
• LTI—replaced cumulative adjusted EBITDA with cumulative Free Cash Flow metric in 2024, eliminating
overlap with adjusted EBITDA in our STI plan
• Increased disclosure with respect to:
– Board composition
– Cyber security/data privacy
– Use, and governance of, AI
– Human capital management
– Corporate responsibility initiatives
– Incentive design rationale
– Rigorous goal setting process
– LTI governance and oversight
• Fully disclosed rationale for mid-year recalibration for our 2024 STI and LTI programs
• No changes to 2021 compensation program design—despite COVID-19 pandemic
Communications to the Board
Communication with shareholders and other interested parties is an important part of the governance process.
Any shareholder, debtholder or other stakeholder who wishes to contact the Board, the Chairman or any
Director can send correspondence to:
Mail: P.O. Box 5061, Monroe, Louisiana 71211
Email: boardinquiries@lumen.com
Stakeholders can also contact the Audit Committee directly by sending written correspondence to P.O. Box
4363, Monroe, Louisiana 71211.
Long-Term Strategic Planning
To ensure that our business strategies create long-term, sustainable value for our shareholders, our Board
regularly engages in active discussions with management to formulate and implement appropriate strategies for
the Company and each of its business segments. The Board and management routinely discuss key initiatives,
potentially transformative technologies, innovation, culture, and corporate governance opportunities focused on
driving long-term value. During 2024, this collaboration targeted (1) developing new revenue streams;
(2) enhancing and scaling capabilities to establish market leadership; (3) managing costs primarily through
digitizing and automating our operations; (4) maximizing cash and encouraging customer migrations to our
growth products; (5) strengthening our balance sheet; and (6) increasing margins through select price
increases. In addition to regular Board and committee meetings, which include presentations and discussions
of strategic and tactical initiatives, the Board participates in an annual in-depth dedicated review of the
Company’s overall strategy with our management team. The Board and our management team discuss the
industry and competitive landscapes, short and long-term plans, capital allocation strategies, and other mission-
critical topics.
Board of Directors and Governance
37
2024 ANNUAL REPORT
2025 PROXY STATEMENT
CEO and Executive Succession Planning
The Board and management recognize the importance of continuously developing our executive talent,
identifying potential outside candidates, and preparing for emergency situations. As such, our Board conducts a
formal review of our CEO succession plan on an annual basis. In turn, our CEO regularly conducts talent reviews
that include succession plans for our senior leadership positions. Both our Board and CEO are committed to a
comprehensive and proactive approach to succession planning, which includes:
• viewing succession planning as an ongoing process, not an “event”;
• developing a succession plan for different scenarios (emergency, accelerated, and orderly);
• linking succession planning to strategy by creating a CEO profile that focuses on what is most needed to lead
Lumen now and in the future;
• understanding the external market of CEO-ready talent and regularly update this understanding and
benchmark data;
• assessing the readiness of current key Lumen executives to assume the CEO and other top positions and
Lumen’s plans and timeframes for addressing any gaps in readiness; and
• ensuring that key Lumen executives have clear and actionable development plans, including detailed
coaching, and establish a regular and transparent process for leadership and the Board to track progress
against development goals as needed.
Our Leadership Transition
• During 2019, we began the refreshment of our leadership team, including the approval of a succession plan for
our then-current CEO and, with the assistance of an independent consulting firm, the identification of
potential replacement CEO candidates.
• Our CEO and CFO transitions were completed in 2022, with Ms. Johnson succeeding Jeffery K. Storey on
November 7, 2022 and Mr. Stansbury succeeding Neel Dev on April 4, 2022.
• During 2023, we added six of the members of our SLT, including our Chief Revenue Officer,
Ashley Haynes-Gaspar.
• During 2024, our Chief Technology and Product Officer, David Ward, joined the Company. Messrs. Ho and
Lakshmanan also joined us in 2024 and subsequently departed.
Board of Directors and Governance
38
CEO Evaluation Process
Our Board, primarily through its NCG Committee, conducts an annual evaluation of our CEO to ensure alignment
among our strategic objectives, her operational performance, and her leadership effectiveness. This process is
designed to provide structured and constructive feedback, promote accountability, and support continuous
leadership development.
1
Establishing Key
Performance Metrics
• At the beginning of each year, the NCG Committee, in consultation
with HRCC and the Board, establishes key goals against which our CEO
will be measured for the year, including (1) quantitative goals (such as
those measuring operational efficiency and strategic execution) and
(2) qualitative factors (such as those relating to leadership, culture, and
stakeholder engagement)
• While there may be overlap among them, these goals are separate
from the financial performance metrics and individual goals used by
the HRCC to determine our CEO’s incentive compensation payouts,
which are described elsewhere herein
2
Evaluating Performance
• Following the completion of each year, the CEO is evaluated with
respect to her prior year performance
– Board Questionnaire—The NCG Committee administers a structured
questionnaire to Board members, allowing each to assess the
CEO’s performance
– CEO Self-Evaluation—The CEO completes a self-assessment to
provide personal insight into her performance, including challenges
and accomplishments
• The NGC Committee evaluates her performance in relation to the
quantitative and qualitative goals set at the beginning of the year,
incorporating board feedback and CEO input, and consolidates the
feedback into a comprehensive assessment
3
Finalizing Feedback
& Review
• The consolidated results of the evaluation are promptly shared with the
CEO and the Board
• The NCG Committee considers the CEO’s past performance in
establishing the key goals against which she will be measured for the
ensuing year
• The HRCC considers the CEO’s performance in connection with
determining (1) the individual performance modifier component of her
short-term incentive plan payout for the prior year and (2) whether to
modify any element of her total compensation package for the
upcoming year
Board of Directors and Governance
39
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Risk Oversight
BOARD OF DIRECTORS
Audit Committee
Risk and Security
Committee
Human Resources
and Compensation
Committee
Nominating
and Corporate
Governance Committee
•
Internal Controls over
Financial Reporting
(Quarterly)
•
Risk Factors included in
periodic reports (Annual
with Quarterly Reviews)
•
Debt Covenant
Compliance
Risk (Annually)
•
Investment Risk related
to Treasury Activities
(As Needed)
•
Enterprise Risk
Management (Quarterly)
•
Cybersecurity (Quarterly)
•
Ethics and Compliance
(Quarterly)
•
Data Privacy (Biannually)
•
Regulatory (Annually)
•
AI (As Needed)
•
Executive Compensation
(Quarterly)
•
Human Capital Strategy
(Quarterly)
•
Workforce-related Risks
(Quarterly)
•
Risks Arising from
Compensation Policies
and Practices (Annually)
•
Environmental, Social,
and Corporate
Governance (Quarterly)
•
Political Contributions
(Annually)
•
Independence of
Directors and Board
Committees (Annually)
MANAGEMENT
• Under our ERM program, management develops a response plan for prioritized risks, including our cyber incident
response playbook. Management also develops plans for monitoring and mitigating identified key risks.
•
Management provides regular reports on our key risks and risk mitigation strategies to the Risk and Security
Committee and assists other Committees in monitoring the risks for which they are responsible.
ENTERPRISE RISK MANAGEMENT (ERM) PROGRAM
Assess
•
The ERM process involves an annual enterprise risks assessment based around 40 key financial, compliance,
operational, and strategic risks facing the Company identified by our SLT. The assessment process is facilitated by our
Internal Audit team in collaboration with the Ethics & Compliance group within our Legal department and involves
interviews with executives across business functions, and consideration of other factors such as the external
environmental and the history of previous issues which could indicate a relatively higher or lower risk in a
particular area.
•
The results of the assessment are presented by our Internal Audit team to the SLT, the Audit Committee, and the Risk
and Security Committee in order to define the most critical risks which the Board and management believe warrant
more detailed and frequent monitoring throughout the year.
•
Our Internal Audit team also uses the results of this Enterprise Risk Assessment to determine key focus areas within
the Internal Audit plan for the upcoming year and performs a quarterly update to the risk assessment to identify any
changes potentially requiring a response from our Board or Internal Audit team.
Monitor
•
For each of the critical ERM risks we identify executive risk owners who are responsible for defining key risk indicators,
metrics, and targets to indicate how effectively the respective risk is being managed.
•
On an annual basis each risk owner presents a deep-dive assessment to the Risk & Security Committee explaining their
quantitative measures, goals, and plans for the upcoming year.
•
On a quarterly basis, our Internal Audit team works with each executive risk owner to update these indicators, identify
any divergence from goals, and note actions taken and planned. The risk owners assign specific performance scores to
indicate their overall assessment of their management of that risk. The resulting dashboard and detail for these ERM
risks is presented to the Risk & Security Committee at each quarterly meeting.
•
Each Committee regularly reports to the full Board regarding its risk oversight functions.
Align
•
The results of our annual Enterprise Risk Assessment are compared to the charters of, and agendas for meetings of,
the Board Committees to ensure alignment between the Company’s assessment and coverage by the Board and its
Committees of the key risks. In addition, the Risk Factors disclosed in the Company’s annual reports on Form 10-K are
reviewed against the results of our annual Enterprise Risk Assessment to ensure alignment between the Company’s
assessment and external disclosures. We believe this combination of annual and quarterly review by the Board
Committees, along with the ability of the Board to call upon our executive risk owners at any time, allows the Board to
effectively exercise its oversight function over key risks to Lumen.
Board of Directors and Governance
40
Oversight of
Cybersecurity Risks
As a technology and communications company that transmits large amounts of information
over our global networks, maintaining the security and integrity of information and systems
under our control is a priority among our operational risk management efforts. We view
cybersecurity risk as an enterprise-wide risk, subject to control and monitoring at various
levels of management throughout the Company. The Risk and Security Committee and its
Chair review quarterly cybersecurity program updates on topics such as:
•
the cybersecurity program maturity;
•
risk assessments from our Information Security, Privacy, and Internal Audit groups with
respect to cybersecurity, including the adequacy and effectiveness of the Company’s
internal controls regarding cybersecurity;
•
incident updates;
•
emerging cybersecurity developments and threats; and
•
the Company’s strategy to mitigate cybersecurity risks, such as incident response strategy
in the event of security incidents or other system disruptions and cyber insurance coverage.
To assess and mitigate cybersecurity risk, we have implemented a global information security
management program that includes administrative, technical, and physical safeguards and we
periodically engage both internal and external auditors and consultants to assess and enhance
our program, all of which is subject to oversight by, and reporting to, the Risk and Security
Committee. We engage independent external auditors and consultants who are fully
accredited under various information security standards, including those administered by the
International Organization for Standardization and the PCI Security Council. Since 2021,
Lumen has maintained a Technology Security and Privacy Council. Its meetings are co-chaired
by Lumen’s Chief Security Officer, Chief Privacy Officer, and Chief Information Officer, who
provide organization level updates and also invite other presenters to provide updates on
emerging threats and other topical issues. For additional information, see our most recent
annual report on Form 10-K.
Oversight of Data
Privacy Risks
We manage data privacy risks using the American Institute of Certificate Public Accountants
(AICPA) Privacy Management Framework. This includes systematic evaluations of our privacy
policies, compliance with regulatory requirements, and the proactive implementation of
measures to mitigate potential threats. Further, the Risk and Security Committee regularly
receives reports on data privacy protection efforts and controls across the enterprise. These
efforts are intended to the safeguarding of our customers', employees', and partners' sensitive
information sensitive information and reinforce our commitment to maintaining their trust.
Oversight of Artificial
Intelligence-Related
Risks
Our Risk and Security Committee has primary responsibility for assisting the Board in its
oversight of the Company’s governance of AI and related risks. The Risk and Security
Committee receives regular updates on our AI strategy, risk, and responsible deployment and
such topics of review include business value and potential risks. To assess and mitigate AI-
related risk, we use the National Institute of Standards and Technology (NIST) AI Risk
Management Framework (AI RMF). Since 2024, Lumen has maintained an AI Advisory Board
that meets regularly to review proposed AI initiatives and evaluate data privacy and security
concerns, including with respect to the proposed use of AI within the Company to streamline
processes, assist employees, and create efficiencies. The Company also maintains an AI
Executive Board led by Lumen’s Chief Technology and Product Officer to which the Advisory
Board may escalate issues. The Company is committed to ethical AI principles. To assist with
this commitment, in 2024 the Company deployed an AI training program with multiple
different sessions based on the given employee’s prior knowledge base.
Oversight of Political
Contributions
Our Board and NCG Committee oversee our corporate political contributions. We strive to
advocate public policy solutions that best serve our stakeholders. Our semi-annual Political
Contributions Reports provide transparency in this process, demonstrating ethical corporate
governance. Specifically, these reports disclose our corporate political contributions and those
of our political action committees in accordance with applicable federal and state campaign
finance laws, as well as contributions to trade associations and 501(c)(4) organizations.
Although not part of this proxy statement, our most recent Political Contributions Reports can
be located on our website at www.lumen.com.
Board of Directors and Governance
41
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Oversight of
Human Capital
Management Risks
Our highly competitive business requires skilled and motivated employees and leaders with
the necessary expertise to execute our innovation, transformation, and growth strategies.
Developing and retaining top talent is a priority. The Board regularly discusses with
management Lumen’s continuous efforts to attract and retain the caliber of employee with
the type of knowledge and skills necessary to realize our goals. Both our directors and
management set a “tone at the top” through:
•
regularly meeting with our most senior human resources executive to discuss culture, talent
strategy and leadership development and staying ahead of market trends by identifying
early the skills needed for our future;
•
developing compensation programs that incentivize employees to pursue goals that align
with our strategies and operational imperatives;
•
designing strategies to attract a comprehensive range of skills and perspectives; and
•
designing strategies to bridge any gaps in our succession plans by cultivating our in-house
talent or engaging third parties.
Oversight of
Finance Risks
Our Audit Committee is primarily responsible for assisting the Board in its oversight of
financial risks. In performing this function, the Audit Committee monitors our capital needs
and financing plans and oversees our strategy for managing interest rate and currency risk.
The Audit Committee also monitors compliance with debt covenants in our financial
instruments, including those that apply to us or our subsidiaries. The Audit Committee also
periodically reviews our pension and other postretirement benefit obligations.
Oversight of
Other Risks
and Information
Our Board committees oversee certain other risks specified in the preceding section “—
Board Committees.”
Director Compensation
Overview
The Board believes that each of our non-employee directors (whom we also refer to as outside directors) should
be compensated through a mix of cash and equity-based compensation. Our HRCC, consisting entirely of
independent directors, has primary responsibility for periodically reviewing and considering any revisions to
director compensation.
Set forth below is a summary of how we compensated our outside directors in 2024, all of which was paid in
accordance with our Non-Employee Director Compensation Guidelines. This information does not include
compensation paid to our current President and CEO Kate Johnson, who does not receive any additional
compensation for her service as a director. Please see the “Compensation Tables—Summary Compensation
Table” below for details regarding the compensation paid by us to Ms. Johnson during 2024.
Board of Directors and Governance
42
Cash and Stock Payments
Each year, with assistance from its independent consultant, the HRCC reviews the market competitiveness of
our outside director compensation. We review the total compensation for an “average profile” director for their
cash fees (retainer, committee fees, and meeting fees) and equity awards and compare those amounts against
director compensation for the “Compensation Benchmarking Peer Group” described on page 108.
In May 2024, following the above-described process and based on input from its independent consultant,
the HRCC made no changes to our director compensation, which we determined was near the 50th percentile
as compared to our peers.
Annual Outside Director Compensation
Additional Annual Cash Compensation Supplemental Board Fee
• Non-Executive Chairman of the Board—$200,000
Audit Committee
• Chair—$35,000
• Member—$17,500
Nominating and Corporate
Governance Committee
• Chair—$30,000
• Member—$15,000
Compensation Committee
• Chair—$35,000
• Member—$17,500
Risk and Security Committee
• Chair—$30,000
• Member—$15,000
CASH FEES—We pay each outside director an annual cash retainer of $100,000 and additional annual fees to
the chairs and members of each of the committees as set forth in the table above.
As also set forth in the table above, we pay an annual supplemental Board fee to our non-executive Chairman of
the Board, Mr. Glenn, of $200,000. The Chairman’s duties are set forth principally in our Corporate Governance
Guidelines; see “How Our Board is Organized—Board Leadership Structure” for details.
EQUITY GRANT—Each outside director is entitled to an annual equity grant with a target grant value of
$200,000, prorated for partial years of service, with the number of shares determined by dividing this target
value by the volume-weighted average closing price of our Common Shares over a 15-day trading period ending
prior to the grant date. Such awards are granted as time-vested shares of restricted stock or, to the extent a
director elects to defer all or a portion of the award under our Non-Employee Directors Deferred Compensation
Plan described below, in the form of time-vested restricted stock units. All such awards vest on the one-year
anniversary of the date of grant, subject to the director’s continued service through that date, with vesting
accelerated in certain circumstances as described in the director’s award agreement. On May 16, 2024, each
outside director elected at our 2024 annual meeting was granted time-vested shares of restricted stock or,
for the directors who elected to defer all or a portion of such award, time-vested restricted stock units.
Further, following their respective appointments, Ms. Linear was granted a prorated award of time-vested
shares of restricted stock with a target grant value of $50,000 on February 22, 2024 and Mr. Capossela was
granted a prorated award of time-vested shares of restricted stock with a target grant value of $100,000 on
October 30, 2024.
Any dividends (or, for restricted stock units, dividend equivalents) on these awards are not paid currently but
rather accrue from the grant date through the date of vesting (for restricted stock) or the date of issuance of
the underlying shares (for restricted stock units) and are subject to the same vesting terms as the related award.
We did not pay dividends on our Common Shares during 2024.
As described in further detail in “Compensation Discussion & Analysis—Stock Ownership Guidelines” each
outside director is expected to acquire and maintain a certain level of beneficial ownership in Lumen stock.
EXTRAORDINARY SERVICE FEES—If we request that an outside director perform supplemental responsibilities,
the additional time and effort may be eligible for discretionary, supplemental cash or equity compensation. No
such compensation was paid for 2024.
Board of Directors and Governance
43
2024 ANNUAL REPORT
2025 PROXY STATEMENT
MAXIMUM ANNUAL COMPENSATION—In no event will the aggregate amount of cash and equity compensation
paid to an outside director for a given year exceed $750,000.
2024 Compensation of Outside Directors
Directors’ Compensation
Name
Fees Earned or
Paid In Cash
Stock
Awards(1)(2)(3)
All Other
Compensation
Total
Continuing Directors:
Quincy L. Allen
$ 134,375
$ 204,773
$
—
$ 339,148
Martha H. Béjar
$ 147,500
$ 204,773
$
—
$ 352,273
Christopher Capossela(4)
$ 33,750
$ 104,418
$
—
$ 138,168
Kevin P. Chilton
$ 147,500
$ 204,773
$
—
$ 352,273
James Fowler
$ 132,500
$ 204,773
$
—
$ 337,273
T. Michael Glenn
$ 317,500
$ 204,773
$ 5,000
$ 527,273
Hal S. Jones
$ 150,000
$ 204,773
$
—
$ 354,773
Diankha Linear(5)
$ 97,500
$ 256,249
$
—
$ 353,749
Retiring Directors:(6)
Peter C. Brown
$ 132,500
$ 204,773
$
—
$ 337,273
Steven T. “Terry” Clontz
$ 132,500
$ 204,773
$
—
$ 337,273
Laurie A. Siegel
$ 150,000
$ 204,773
$
—
$ 354,773
Former Director:
Michael J. Roberts(7)
$ 33,125
$
—
$
—
$ 33,125
(1)
For fiscal 2024, the HRCC granted an award of restricted shares or restricted stock units to the outside directors as follows: (i) 157,518 on
May 16, 2024 to each outside director elected at the 2024 annual meeting, which is equal to $200,000 divided by the volume-weighted
average closing price of our Common Shares over the 15-day trading period ending May 15, 2024; (ii) 34,317 on February 22, 2024 to Ms.
Linear, which is equal to $50,000 divided by the volume-weighted average closing price of our Common Shares over the 15-day trading
period ending February 21, 2024; and (iii) 15,608 on October 30, 2024 to Mr. Capossela, which is equal to $100,000 divided by the volume-
weighted average closing price of our Common Shares over the 15-day trading period ending October 29, 2024. However, as required by
SEC rules, the dollar value reported in this column reflects the grant date fair value of that award based upon the closing stock price of our
Common Shares on the date of grant in accordance with FASB ASC Topic 718. These awards vest on the one-year anniversary of grant date
of May 16, 2025, February 22, 2025 and October 30, 2025, respectively, subject to the director’s continued service through that date (with
vesting accelerated in certain limited circumstances). See “—Cash and Stock Payments.”
(2)
As of December 31, 2024, outside directors held the following unvested equity-based awards: (i) Messes. Béjar and Siegel and Messrs.
Brown, Clontz and Fowler each held, 157,518 shares of restricted stock; Mr. Capossela held 15,608 shares of restricted stock; and Ms. Linear
held 191,835 shares of restricted stock and (ii) Messrs. Allen, Chilton, Glenn, and Jones each held 157,518 RSUs.
(3)
As of December 31, 2024, the following outside directors held the following vested restricted stock units deferred under the Non-Employee
Director Deferred Compensation Plan: Mr. Allen—118,655; Ms. Béjar—111,213; Mr. Chilton—110,695; Mr. Glenn—149,800; and Mr. Roberts—
14,706. For further information on our directors’ stock ownership, see “Other Matters—Ownership of Executive Officers & Directors,” and for
information on certain deferred equity and cash fee arrangements, see “—Non-Qualified Deferred Compensation.”
(4)
Christopher Capossela was appointed to the Board in October 2024.
(5)
Diankha Linear was appointed to the Board in February 2024.
(6)
The terms of Mr. Brown, Mr. Clontz and Ms. Siegel will end in connection with the election of directors at the 2025 annual meeting.
(7)
Mr. Roberts’ term ended in connection with the election of directors at the 2024 annual meeting.
Board of Directors and Governance
44
Non-Qualified Deferred Compensation
NON-EMPLOYEE DIRECTORS DEFERRED COMPENSATION PLAN—In March 2019, the Board adopted a Non-
Employee Director Deferred Compensation Plan for our outside directors. Under this plan, our non-employee
directors may elect annually to defer all or any portion of their cash and equity compensation for the following
calendar year.
A participant may elect to receive his or her deferred amounts in a lump sum on either a fixed date of his or her
choice or upon the occurrence of an event, such as his or her separation from service with the Company
(generally, the date on which he or she is no longer a member of the Board). Alternatively, he or she may elect
to receive such amounts in two to five equal annual installments on a fixed date or following an event. In any
case, all amounts must be paid to the participant by the fifth anniversary of his or her separation from service.
All cash amounts deferred under this plan by non-employee directors are allocated among deemed investments
that follow the performance of a broad array of funds and are reflected in the market value of each participant’s
account. Distributed amounts will include investment returns in respect of these hypothetical investments,
whether positive or negative.
If a non-employee director elects to defer all or a portion of the director’s annual equity award under this plan,
as noted above the portion of the award subject to the deferral election will be issued as restricted stock units
instead of shares of restricted stock and will settle in shares on a fixed date elected by the director or following
a specified event.
Six of our current directors—Ms. Béjar and Linear and Messrs. Allen, Chilton, Glenn, and Jones—have participated
in this plan with respect to some or all of their recent awards, and Mr. Roberts participated in the plan through
his retirement from the Board on May 15, 2024.
LEGACY QWEST DEFERRED COMPENSATION PLAN—CLOSED TO NEW PARTICIPANTS
AND CONTRIBUTIONS—In connection with our 2011 merger with Qwest, we assumed the Qwest Deferred
Compensation Plan for Non-Employee Directors. Under this plan, Qwest outside directors could elect to defer all
or a portion of their cash directors’ fees, which were then converted to a number of “phantom units” based on
the value of a share of Qwest stock, with credit for dividends paid to shareholders “reinvested” in additional
phantom units. Plan balances attributable to amounts deferred on or after January 1, 2005, by Qwest directors
who joined our Board following the merger were converted, based on the merger exchange ratio, to phantom
units based on the value of one of our Common Shares. Other than the crediting and “reinvestment”
of dividends for outstanding phantom units, the Company did not make any contributions to, and no additional
elective deferrals were permitted under, this plan. During 2024, Michael J. Roberts was the only remaining
participant in this plan, and he had a balance of 9,569 phantom units, with an aggregate value of approximately
$12,439, as of the 2024 annual meeting, following which he ceased to serve on our Board. Subject to the terms
of the plan, Mr. Roberts’ account was distributed as a lump sum in cash following the end of his service as
a director.
Other Benefits
Each outside director is entitled to be reimbursed: (1) for expenses incurred in attending Board and committee
meetings; (2) for expenses incurred in attending director education programs; and (3) up to $5,000 per year for
the cost of an annual physical examination, plus related travel expenses. Our directors may use aircraft provided
under the Company’s time-share agreement with NetJets for Company-related business. We supply company-
owned tablets to certain of our outside directors for use in reviewing materials posted to a dedicated portal that
permits management to communicate with the Board.
Our Bylaws require us to indemnify our directors and officers under certain circumstances in connection with
their service to the Company. We have signed agreements with each of those individuals contractually
obligating us to provide these indemnification rights. We also provide our directors with customary directors
and officers liability insurance.
Board of Directors and Governance
45
2024 ANNUAL REPORT
2025 PROXY STATEMENT
ITEM 2
Ratify KPMG as Our 2025
Independent Auditor
The Audit Committee of the Board has appointed KPMG LLP as our independent auditor for the fiscal
year ending December 31, 2025 and we are submitting that appointment to our shareholders for
ratification on an advisory basis at the meeting. Although shareholder ratification of KPMG’s
appointment is not legally required, we are submitting this matter to the shareholders, as in the past,
as a matter of good corporate practice.
If the shareholders fail to vote on an advisory basis in favor of the appointment, the Audit Committee will
reconsider whether to retain KPMG and may appoint that firm or another without re-submitting the matter to
the shareholders. Even if the shareholders ratify the appointment, the Audit Committee may, in its discretion,
select a different independent auditor at any time during the year if it determines that such a change would be
in the Company’s best interests.
KPMG has advised us that one or more of its partners plan to participate in the meeting. We understand that
these representatives will be available to respond to appropriate questions and will have an opportunity to make
a statement if they desire to do so.
For a discussion of factors the Audit Committee considered in connection with re-appointing KPMG for the
2025 audit, see “—Annual Evaluation and Selection of Independent Auditors.”
Ratification of KPMG’s appointment as our independent auditor for 2025 will require the affirmative vote of a
majority of the votes cast on this proposal by holders of our Voting Shares. You may vote “FOR,” “AGAINST” or
“ABSTAIN” on this proposal. Abstentions are not counted as votes cast, and therefore will not affect the
outcome of the vote on this proposal.
The Board recommends that you vote FOR this proposal.
46
Annual Evaluation and Selection of
Independent Auditors
The Audit Committee annually evaluates the performance of the Company’s independent auditors, including the
senior audit engagement team, and determines whether to re-engage the current independent auditors or
consider other audit firms. KPMG has served as our independent auditors since 1977. In deciding to re-engage
KPMG as the Company’s independent auditors for 2025, the Audit Committee considered a number of
factors, including:
• KPMG’s global capabilities;
• KPMG’s technical expertise and knowledge of the Company’s global operations and industry;
• The quality and candor of KPMG’s communications with the Audit Committee and management;
• KPMG’s independence;
• The quality and efficiency of the services provided by KPMG, including input from management on KPMG’s
performance and how effectively KPMG demonstrated its independent judgment, objectivity and
professional skepticism;
• External data on audit quality and performance, including recent Public Company Accounting Oversight
Board reports on KPMG and its peer firms; and
• The appropriateness of KPMG’s fees, KPMG’s tenure as independent auditors (including the advantages and
disadvantages of a relatively long tenure) and the controls and processes in place that help ensure KPMG’s
continued independence.
Over the last several years, the Audit Committee has continued to evaluate and balance the benefits of auditor
rotation and retention. KPMG's engagement partner for our audit has, on occasion, been rotated more
frequently than required. This approach has ensured that we maintain high audit quality while benefiting from
fresh perspectives. The factors that the Audit Committee considered that favored the retention of KPMG as the
Company’s independent auditors included:
• Enhanced audit quality—KPMG’s significant institutional knowledge and deep expertise of the Company’s
global business, accounting policies and practices, recent divestiture transactions and internal control over
financial reporting enhance audit quality.
• Competitive fees—Because of KPMG’s familiarity with the Company and our industry, audit and other fees are
competitive with peer companies.
• Avoid costs associated with a new auditor—Bringing on new independent auditors would be costly and
require a significant time commitment, which could lead to management distractions.
Audit and Other Fees
The following table lists the aggregate fees and costs billed to us by KPMG and its affiliates for the 2024 and
2023 services identified below:
Fees
2024
2023
Audit Fees(1)
$ 13,017,316
$ 13,077,956
Audit-Related Fees(2)
106,200
92,806
Tax Fees(3)
390,697
297,419
All Other Fees(4)
545,720
157,056
Total Fees
$ 14,059,933
$ 13,625,237
(1)
Includes the cost of services rendered in connection with (i) auditing our annual consolidated financial statements, (ii) auditing our internal
control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, (iii) reviewing our quarterly financial
statements, (iv) auditing the financial statements of several of our subsidiaries, (v) statutory audits for certain of our foreign subsidiaries and
(vi) consultations regarding accounting standards.
(2)
Includes (i) the cost of preparing agreed upon procedures reports and providing general accounting consulting services, for both years, and
(ii) audit-related fees from the divestiture of the EMEA business, for 2023.
ITEM 2 Ratify KPMG as Our 2025 Independent Auditor
47
2024 ANNUAL REPORT
2025 PROXY STATEMENT
(3)
Reflects costs associated with general tax planning, consultation and compliance.
(4)
Reflects costs to (i) assess program and project activities related to system implementation, for both years, and (ii) provide observations
and recommendations related to a marketing plan and spending solution, for 2024.
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, as applicable. The Chairman is authorized to pre-
approve projects if the total anticipated cost of all projects pre-approved by him during any fiscal quarter does
not exceed $250,000. The Audit Committee has pre-approved the Company’s independent auditor to provide
up to $75,000 per quarter of miscellaneous permitted tax matters that do not constitute discrete and separate
projects and are not prohibited under applicable law. The Chairman and the Chief Financial Officer are required
periodically to advise the full Committee of the scope and cost of projects pre-approved by the Chairman and
the cost of all pre-approved miscellaneous permitted tax matters. Although applicable regulations permit us to
waive these pre-approval requirements in certain limited circumstances, the Audit Committee did not use these
waiver provisions in either 2023 or 2024.
Audit Committee Report
Our Audit Committee has oversight authority over Lumen’s financial reporting function, including our internal
controls over financial reporting (“ICFR”) and our external independent audit process. In carrying out its
oversight responsibilities, the Audit Committee:
• monitors management’s responsibility for fairly presenting our financial statements in conformity with U.S.
generally accepted accounting principles (“GAAP”) by maintaining accurate and reliable financial information
through our ICFR processes;
• appoints our independent auditor; and
• regularly communicates with our independent auditor regarding the scope and status of its annual audit of
our consolidated financial statements, including our ICFR.
As part of the Audit Committee’s oversight of the Company’s financial statements, the committee reviews and
discusses with the Company’s management, and internal and external auditors, management’s key initiatives
and programs aimed at maintaining and improving ICFR, the effectiveness of the Company’s internal and
disclosure control structure and the scope and adequacy of the Company’s internal auditing program.
The Committee met nine times in 2024, including in separate executive sessions with each of our independent
auditor, KPMG, our Chief Financial Officer, and representatives of our Internal Audit group. During 2024, the
Committee has reviewed and discussed the Company’s audited financial statements for 2024 with management
and discussed with KPMG: (i) those matters required to be discussed by the applicable requirements of the SEC
and the Public Company Accounting Oversight Board (“PCAOB”), including the quality of the Company’s
accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial
statements; (ii) the written disclosures required by PCAOB regarding the independent auditor’s communications
with audit committees concerning independence; (iii) KPMG’s independence and the effects that the provision
of non-audit services might have on KPMG’s independence; and (iv) various other matters pertaining to the
audit and other matters handled by KPMG. Moreover, the Committee emphasized the continued importance of
an environment supporting the integrity of the financial reporting process; oversaw the implementation of new
accounting standards and appropriate related internal controls; and coordinated with other committees of the
Board to oversee the Company’s risk management function, especially with respect to matters that could
impact the Company’s financial results or financial position.
ITEM 2 Ratify KPMG as Our 2025 Independent Auditor
48
Among other matters, over the course of the past year, the Committee also:
• reviewed the scope of and overall plans and
progress for the annual audit and the internal audit
program, including a review of critical accounting
estimates and significant unusual transactions;
• reviewed and discussed each quarterly and annual
financial statements and related earnings press
releases before issuance, including reviewing the
Company’s issuance of guidance and use of non-
GAAP financial information, the adequacy of
disclosures and management’s ICFR report and
discussion and analysis;
• discussed our 2024 critical accounting policies
with KPMG;
• discussed SEC regulatory changes;
• reviewed the Company’s debt compliance process,
including primary debt covenants, debt agreement
restrictions, maintenance covenant calculations
and liquidity implications;
• received reports on the Company’s goodwill
impairment testing;
• received periodic reports pursuant to our policy
for the submission of confidential communications
from employees and others about accounting,
internal controls and auditing matters and
conducted certain follow-up inquiries
as necessary;
• discussed Company capital allocation, investment,
and tax planning strategies;
• reviewed the performance of KPMG and KPMG’s
lead engagement partner and planned for the
future rotation of the lead engagement partner
should KPMG be retained as the
Company’s auditor;
• reviewed and discussed the effectiveness of our
disclosure controls and procedures;
• received quarterly reports from the head of
Internal Audit, including the Company’s work
regarding ICFR and met with other members of
the Internal Audit group;
• received and discussed reports each quarter on
the Company’s significant litigation issues;
• received and evaluated a report concerning the
Company’s major financial risks along with the
Company’s mitigating actions;
• reviewed the Company’s accounting for
income taxes;
• reviewed the Company’s accounting for pension
assets and liabilities; and
• received an annual report with regard to any hiring
of former employees of KPMG.
Taking all of these reviews and discussions into account and subject to the limitations on the role and
responsibilities of the Committee referred to in its charter, the undersigned Committee members recommended
to the Board that the Company’s audited consolidated financial statements be included in its Annual Report on
Form 10-K for the year ended December 31, 2024.
In addition to the Company’s Corporate Compliance program and Integrity Line, the Audit Committee has
established procedures for the receipt and evaluation, on a confidential basis, of any complaints or concerns
regarding our accounting, auditing, financial reporting or related matters. To report such matters, please send
written correspondence to Audit Committee Chair, c/o P. O. Box 4363, Monroe, Louisiana 71211.
Submitted by the Audit Committee of the Board of Directors as of February 17, 2025.
Hal Stanley Jones
(Chair)
Peter C. Brown
Christopher Capossela
Kevin P. Chilton
James Fowler
ITEM 2 Ratify KPMG as Our 2025 Independent Auditor
49
2024 ANNUAL REPORT
2025 PROXY STATEMENT
ITEM 3
Approval of a Reverse Stock Split and
Related Reduction of Our Authorized
Common Shares
The Board is recommending again this year that our shareholders grant us discretionary authority to amend our
Articles of Incorporation to (1) effect a reverse stock split on the terms and conditions described herein (a
“Reverse Stock Split”), and (2) proportionately reduce the number of our authorized Common Shares, if and
only if the Reverse Stock Split is both approved and implemented (the “Authorized Shares Reduction”), on the
terms and conditions specified below. Attached hereto as Appendix C is the text of the proposed form of
Articles of Amendment to our Articles of Incorporation (the “Articles of Amendment”), which reflects the
amendments proposed pursuant to this Item 3.
Over the past year, we elected not to exercise the discretionary authority approved at our 2024 annual meeting
to implement a reverse stock split on or before May 15, 2025, because we concluded that market conditions
over the past year did not warrant doing so. Because this discretionary authority terminates on May 15, 2025,
and for other reasons more fully described herein, we are asking that shareholders approve a proposal that is
substantially similar to the proposal approved at our 2024 annual meeting.
We are proposing that our Chief Executive Officer and Chief Financial Officer (collectively, the “Authorized
Officers”), in consultation with the Board, have the discretion to select a Reverse Stock Split ratio (the “Reverse
Split Ratio”) from within a range between and including one-for-two (1:2) shares and one-for-fifteen (1:15)
shares, rather than proposing a specific fixed ratio at this time. We believe that enabling the Authorized Officers,
in consultation with the Board, to set the Reverse Split Ratio within this stated range will provide us with the
flexibility to implement a Reverse Stock Split at a ratio reflecting our then-current assessment of the factors
described below under the heading “—Criteria to be Used for Determining Whether to Implement a Reverse
Stock Split” and thereby enhance our ability to implement a Reverse Stock Split that maximizes the anticipated
benefits for our shareholders. If we decide to implement a Reverse Stock Split and the Authorized Shares
Reduction, we will file the Articles of Amendment with the Secretary of State of the State of Louisiana (the
“Louisiana Secretary of State”), reflecting the Reverse Split Ratio selected by the Authorized Officers, in
consultation with the Board. The Reverse Stock Split and Authorized Shares Reduction would be effective (the
“Effective Date”) when the Articles of Amendment are filed with the Louisiana Secretary of State, or such later
date chosen by us and set forth in the Articles of Amendment. Except for adjustments resulting from the
treatment of fractional share interests as described below, each of our shareholders will hold the same
percentage of our outstanding Common Shares immediately following the Reverse Stock Split as such
shareholder holds immediately prior to the Reverse Stock Split.
In their sole discretion, the Authorized Officers, in consultation with the Board, will determine whether and when
to effectuate a Reverse Stock Split and the Authorized Shares Reduction, if at all. If we do not implement a
Reverse Stock Split and the Authorized Shares Reduction prior to the one-year anniversary of the date on which
this proposal is approved by the shareholders at the meeting (the “Approval Anniversary Date”), the authority
granted by this proposal to implement a Reverse Stock Split and the Authorized Shares Reduction
will terminate.
Reasons for a Reverse Stock Split
As discussed in greater detail below, implementing a Reverse Stock Split would reduce the number of our issued
and outstanding Common Shares, which we expect, absent other factors, would proportionately increase the
per share market price of our Common Shares at the Effective Date. Set forth below are the principal reasons
why we believe these changes would benefit the Company and its shareholders if implemented.
50
To potentially improve the marketability and trading costs of our Common Shares. The primary purpose of
implementing a Reverse Stock Split would be to increase the per share market price of our Common Shares. If
implemented, we believe the anticipated increase in the per share market price of our Common Shares could
improve the marketability and liquidity of our Common Shares and encourage interest and trading in our
Common Shares, as described further below.
• Broader Marketability: For various reasons, including stock price volatility, many brokerage firms, institutional
investors and funds have internal policies and practices that (1) prohibit them from investing in low-priced
stocks, (2) discourage individual brokers from recommending low-priced stocks to their customers, or
(3) restrict or limit the ability of customers to purchase such stocks on margin. Some of those policies and
practices may make the processing of trades in low-priced stocks economically unattractive to brokers. We
believe a Reverse Stock Split could increase analyst and broker interest in our Common Shares by avoiding
the applicability of these internal policies and practices.
• Lower Trading Costs: Investors may be dissuaded from purchasing stocks below certain prices because
brokers’ commissions, as a percentage of the total transaction value, can be higher for low-priced stocks.
To re-scale our capitalization to our current size. The Board believes that, if we implement a Reverse Stock
Split, it will bring the number of our outstanding Common Shares into better alignment with companies in our
industry with comparable revenue and market capitalization.
To improve perceptions of Lumen. Certain customers, vendors, lenders, employees, and other third parties may
perceive companies with low trading prices less favorably than those with higher trading prices. If our
implementation of a Reverse Stock Split increases the trading price of our stock, it may counteract any such
negative perceptions and increase the willingness of third parties to engage in business with us.
To attain stock exchange listing and administrative cost savings. We expect to realize meaningful savings in
stock exchange listing and other administrative fees as a result of the reduction in the number of our
outstanding Common Shares, if implemented.
Under applicable law, implementing a Reverse Stock Split does not require us to reduce the total number of our
authorized Common Shares. However, we believe that our authorized Common Shares should be
proportionately reduced if we implement a Reverse Stock Split. At present, we do not have any plans,
arrangements, understandings, or commitments to issue shares in connection with any transactions, including to
raise capital, restructure debt, expand our business through acquisitions, or effect a stock split.
Accordingly, for these and other reasons discussed herein, we believe that authorizing the Board to effect a
Reverse Stock Split and the Authorized Shares Reduction is in the best interests of the Company and
our shareholders.
Criteria to be Used for Determining Whether to Implement a Reverse Stock Split
In connection with determining whether and when to implement a Reverse Stock Split and which Reverse Split
Ratio to apply (the “Definitive Reverse Split Ratio”), the Authorized Officers, in consultation with the Board,
expect to consider various factors, including:
• the historical trading price and trading volume of our Common Shares;
• the then-prevailing trading price and trading volume of our Common Shares and the expected impact of a
Reverse Stock Split on the trading market for our Common Shares in the short- and long-term;
• the number of Common Shares outstanding;
• which Reverse Split Ratio would result in the least administrative cost to us;
• prevailing general market and economic conditions;
• the Company’s results of operations, financial position and prospects;
• input from our various constituents;
• the likely effect on the per share market price of our Common Shares; and
• the continued listing requirements for our Common Shares on the NYSE or other applicable exchanges.
ITEM 3 Approval of a Reverse Stock Split and Related Reduction of Our Authorized Common Shares
51
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Certain Risks and Potential Disadvantages Associated with a Reverse Stock Split
We cannot assure you that a Reverse Stock Split would increase our stock price. We expect that a Reverse
Stock Split would increase the per share market price of our Common Shares to a level that could attract more
investors. However, the effect of a Reverse Stock Split on the per share market price of our Common Shares
cannot be predicted with any certainty, and the history of reverse stock splits for other companies is varied,
particularly since some investors may view a reverse stock split negatively. It is possible that the per share
market price of our Common Shares after a Reverse Stock Split will not increase in the same proportion as the
reduction in the number of our outstanding Common Shares following the Reverse Stock Split, which would
cause a reduction in the value of the Company as measured by our market capitalization. In addition, it is also
possible that a Reverse Stock Split may not result in a per share market price that would attract increased
investor interest in our stock. Although we believe a Reverse Stock Split may enhance the desirability of our
Common Shares to certain potential investors, we cannot provide you with any assurances to this effect. Even if
we successfully implement a Reverse Stock Split, the market price of our Common Shares may thereafter
decrease due to factors unrelated to the Reverse Stock Split, including our results of operations, financial
position, or prospects. If a Reverse Stock Split is consummated and the per share market price of our Common
Shares declines, the percentage decline as a percentage of our overall market capitalization may be greater than
would occur in the absence of a Reverse Stock Split.
A Reverse Stock Split may decrease the liquidity of our Common Shares and result in higher transaction costs
for “odd lot” positions of less than 100 shares. The liquidity of our Common Shares may be negatively
impacted by a Reverse Stock Split, given the reduced number of shares that would be outstanding after the
Reverse Stock Split, particularly if the stock price does not increase as a result of the Reverse Stock Split. In
addition, if a Reverse Stock Split is implemented, it would likely increase the number of our shareholders who
own “odd lots” of fewer than 100 Common Shares. Brokerage commission and other costs of transactions in odd
lots are generally higher than the costs of transactions of 100 or more Common Shares. Accordingly, a Reverse
Stock Split may not achieve the desired results of increasing marketability and lowering trading costs of our
Common Shares described above.
Effects of a Reverse Stock Split
After the Effective Date of any Reverse Stock Split that we elect to implement, each shareholder would own a
reduced number of Common Shares. Any such Reverse Stock Split would affect all of our holders of Common
Shares uniformly (including shares held by our officers, directors, and employees) and would not affect any
shareholder’s percentage ownership interests in the Company, except in each case as a result of the payment of
cash in lieu of fractional share interests. Per share voting rights and other rights and preferences of the holders
of our Common Shares would not be affected by a Reverse Stock Split (other than as a result of the payment of
cash in lieu of fractional share interests) or the Authorized Shares Reduction.
The principal effects of implementing any Reverse Stock Split would be that:
• each 2 to 15 Common Shares (with the actual number depending on the Definitive Reverse Split Ratio),
whether restricted or unrestricted, owned by a shareholder on the record date (described further below)
would be combined into one Common Share;
• in lieu of receiving a fractional interest in a Common Share as a result of the Reverse Stock Split, the holder of
such fractional interest would instead receive cash, as explained more fully below under the heading “—Cash
Payment in Lieu of Fractional Interests;”
• the number of our authorized Common Shares will contemporaneously and correspondingly be reduced
based upon the Definitive Reverse Split Ratio pursuant to the Authorized Shares Reduction;
• the rights of holders of our restricted stock units, Preferred Shares and preferred share purchase rights would
be adjusted based on the Definitive Reverse Split Ratio as follows:
– proportionate adjustments would be made to the number of shares issuable upon the vesting of all
then-outstanding restricted stock units;
– the conversion price of our Preferred Shares would be increased;
– the terms and conditions of our outstanding preferred share purchase rights would be adjusted in the
manner discussed under the heading “—Effect on NOL Rights Agreement;” and
ITEM 3 Approval of a Reverse Stock Split and Related Reduction of Our Authorized Common Shares
52
– we would furnish all requisite notices of these adjustments, make all requisite filings, and make all necessary
adjustments in our records of the number of securities reserved for issuance under these instruments;
• any cash due in lieu of any fractional share interests related to the adjustment of our outstanding restricted
stock and restricted stock unit awards would remain subject to the vesting conditions applicable to the
related equity award and would be paid only if and when the underlying equity award vests; and
• the number of Common Shares then reserved for issuance under our equity incentive plan and any other
share limits described in such plan would be reduced proportionately based on the Definitive Reverse
Split Ratio.
The following table contains illustrative information, based on share data as of March 19, 2025, intended to show
the impacts of implementing a Reverse Stock Split and the Authorized Shares Reduction based on certain
hypothetical Reverse Split Ratios (without giving effect to the treatment of fractional share interests):
Potential Scenarios
Number of
Common
Shares
Authorized
Number of
Common
Shares
Issued and
Outstanding
Number of
Common
Shares
Reserved for
Future Issuance
Number of
Common
Shares
Authorized but
Unissued and
Unreserved
Pre-Reverse Stock Split
2,200,000,000
1,025,099,348
25,215,479
1,149,685,173
Post-Reverse Stock Split 1:2
1,100,000,000
512,549,674
12,607,740
574,842,587
Post-Reverse Stock Split 1:8
275,000,000
128,137,419
3,151,935
143,710,647
Post-Reverse Stock Split 1:15
146,666,667
68,339,957
1,681,032
76,645,678
Upon implementation of any Reverse Stock Split, our Common Shares would have a new CUSIP number, which
is a number used to identify our Common Shares.
Our Common Shares are currently registered under Section 12(b) of the Exchange Act and we are subject to the
periodic reporting and other requirements of the Exchange Act. The implementation of any proposed Reverse
Stock Split or the Authorized Shares Reduction would not affect the registration of our Common Shares under
the Exchange Act. We anticipate that our Common Shares would continue to be listed on the NYSE under the
symbol “LUMN” immediately following any Reverse Stock Split.
Effect on NOL Rights Agreement
The Board declared a dividend of one preferred share purchase right (“Right”) for each of our outstanding
Common Shares on February 25, 2019, and authorized and directed the issuance of one Right with respect to
each of our Common Shares that become outstanding after such date. As provided in our Second Amended and
Restated Section 382 Rights Agreement, dated as of November 15, 2023 (the “Rights Agreement”), each Right
currently entitles the holder thereof to purchase for $9.00 one ten-thousandth of a share of our Series CC Junior
Participating Preferred Shares (the “Series CC Preferred Stock”) in the event an Acquiring Person (as defined in
the Rights Agreement) acquires beneficial ownership of 4.9% or more of our outstanding Common Shares. If we
implement a Reverse Stock Split, the number of one ten-thousandths of a share of Series CC Preferred Stock
thereafter purchasable pursuant to each Right will automatically be proportionately increased in accordance
with the terms of the Right Agreement.
Cash Payment In Lieu of Fractional Interests
No fractional interest in a Common Share would be issued as a result of any Reverse Stock Split. Instead, in lieu
of any fractional share interests to which a shareholder would otherwise be entitled as a result of the Reverse
Stock Split, we would pay cash (without interest and subject to any required tax withholdings) equal to such
fraction multiplied by the average of the closing sales prices of our Common Shares for the five consecutive
trading days immediately preceding the Effective Date (with such average closing sales prices being adjusted to
give effect to the Reverse Stock Split). After the Reverse Stock Split, a shareholder otherwise entitled to a
fractional interest in a Common Share will not have any voting, dividend or other rights with respect to such
fractional interest, except the right to receive the cash payment described above.
ITEM 3 Approval of a Reverse Stock Split and Related Reduction of Our Authorized Common Shares
53
2024 ANNUAL REPORT
2025 PROXY STATEMENT
As of March 19, 2025, there were 73,868 shareholders of record of our Common Shares (which, for the sake of
clarity, excludes beneficial owners of our Common Shares holding such shares through a bank, broker or other
nominee). If the shareholders approve this proposal and we elect to implement a Reverse Stock Split,
shareholders owning, prior to the Reverse Stock Split, less than the number of our Common Shares that would
thereafter be combined into a single Common Share would no longer be shareholders. For example, if a
shareholder held 10 Common Shares immediately prior to the Reverse Stock Split and the Reverse Split Ratio
selected by the Board was 1:15, such shareholder would cease to be a shareholder of the Company following the
Reverse Stock Split and would not have any voting, dividend, or other rights, except the right to receive the
cash payment described above. Based on our shareholders of record as of March 19, 2025, and our Reverse Split
Ratio range of 1:2 to 1:15, we expect that cashing out fractional shareholders would reduce the number of
shareholders of record by between approximately 4,050 to 32,380 holders.
This reduction in the number of our record shareholders would be incidental to implementing a Reverse Stock
Split. We have not proposed this proposal for this purpose, and we do not intend for this transaction to be the
first step in a series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 of the
Exchange Act.
Procedures for Implementing a Reverse Stock Split
If the shareholders approve this proposal and we elect to implement a Reverse Stock Split, we would (1) retain
Computershare Trust Company, N.A., our transfer agent (or some other company providing comparable
services), to act as our “exchange agent” for the purpose of implementing the split, (2) establish a record date
(expected to be immediately prior to the Effective Date) for determining holders whose shares would be
combined in connection with the split, (3) file the Articles of Amendment with the Louisiana Secretary of State
to implement the Reverse Stock Split and the Authorized Shares Reduction, and (4) administer the split
substantially as summarized in this section.
Shareholders of record as of such record date holding all of their Common Shares electronically in book-entry
form would have their shares automatically exchanged by the exchange agent and would receive a transaction
statement indicating the number of post-split Common Shares they hold after the Reverse Stock Split, along
with payment in lieu of any fractional share interests.
Beneficial owners holding Common Shares through a bank, broker or other nominee should note that such
banks, brokers or other nominees may have different procedures for processing the Reverse Stock Split and
making payment for fractional share interests than those applied by us for record owners. If you hold your
shares through a bank, broker or other nominee and you have questions in this regard, you are encouraged to
contact your nominee.
Shareholders of record holding some or all of their Common Shares in certificate form would receive a letter of
transmittal from the Company or its exchange agent, as soon as practicable after the Effective Date. The
transmittal letter would be accompanied by instructions specifying how the shareholder may exchange their
certificates representing the pre-split Common Shares for a statement of holding. Any such holders would be
asked to surrender to the exchange agent their certificates representing their pre-split Common Shares. After
submitting certificates representing the pre-split Common Shares in this manner, any such shareholder would
hold post-Reverse Stock Split Common Shares electronically in book-entry form. This means that, instead of
receiving a new stock certificate, any such shareholder would receive a statement of holding that indicates the
number of post-Reverse Stock Split Common Shares held by that shareholder in book-entry form. We no longer
plan to issue physical stock certificates. If a shareholder is entitled to a payment in lieu of a fractional share
interest, the payment will be made as described above under “—Cash Payment In Lieu of Fractional Interests.”
Beginning on the Effective Date, each certificate representing pre-split Common Shares would be deemed to
evidence ownership of the post-Reverse Stock Split Common Shares. Shareholders would need to surrender
their old certificates in order to effect transfers of Common Shares. If an old certificate bears a restrictive
legend, the Common Shares in book-entry form would bear the same restrictive legend.
SHAREHOLDERS SHOULD NEITHER DESTROY NOR SUBMIT THEIR STOCK CERTIFICATES UNTIL THEY ARE
REQUESTED TO DO SO.
No Appraisal Rights
Under the Louisiana Business Corporation Act, shareholders will not be entitled to appraisal rights with respect
to a Reverse Stock Split or the Authorized Shares Reduction.
ITEM 3 Approval of a Reverse Stock Split and Related Reduction of Our Authorized Common Shares
54
Certain U.S. Federal Income Tax Considerations Related to a Reverse Stock Split
The discussion below is only a summary of certain U.S. federal income tax considerations generally applicable to
beneficial holders of Common Shares if we implement a Reverse Stock Split and does not purport to be a
complete discussion of all possible tax considerations or consequences. This summary addresses only those
shareholders who hold their pre-split Common Shares as “capital assets” as defined in the Internal Revenue
Code of 1986, as amended (the “Code”), and will hold their post-Reverse Stock Split shares as capital assets.
This discussion does not address all U.S. federal income tax considerations or consequences that could be
relevant to particular shareholders in light of their individual circumstances or to shareholders that are subject to
special rules, such as financial institutions, tax-exempt organizations, insurance companies, securities dealers,
and foreign shareholders. The following summary is based upon the provisions of the Code, applicable Treasury
Regulations thereunder, judicial decisions, and current administrative rulings, as of the date hereof, all of which
are subject to change, possibly on a retroactive basis. Tax considerations and consequences under state, local,
foreign, and other laws are not addressed herein. Each shareholder should consult his, her or its own tax advisor
as to the particular facts and circumstances that could be unique to such shareholder and also as to any estate,
gift, state, local or foreign tax considerations arising out of any Reverse Stock Split.
Any Reverse Stock Split implemented by us will qualify as a recapitalization for U.S. federal income tax
purposes. As a result:
• shareholders should not recognize any gain or loss as a result of the Reverse Stock Split, except as described
below with respect to cash received in lieu of fractional share interests;
• the aggregate basis of a shareholder’s pre-split Common Shares will become the aggregate basis of the
Common Shares held by such shareholder immediately after the Reverse Stock Split (excluding any portion of
such basis that is allocated to a fractional interest in a Common Share); and
• the holding period of the shares owned immediately after the Reverse Stock Split will include the
shareholder’s holding period of the pre-split Common Shares.
A shareholder who receives cash in lieu of a fractional interest in a Common Share should be treated as first
receiving such fractional share interest and then receiving cash in redemption of such fractional share interest. A
shareholder who receives cash in lieu of a fractional share interest should recognize capital gain or loss equal to
the difference between the amount of the cash received in lieu of the fractional share interest and the portion of
the shareholder’s adjusted tax basis allocable to the fractional share interest. Such gain or loss generally will be
long-term capital gain or loss if the shareholder’s holding period in its pre-Reverse Stock Split Common Shares is
more than one year as of the Effective Date. The deductibility of net capital losses by individuals and
corporations is subject to limitations. Shareholders should consult their tax advisors regarding the tax effects to
them of receiving cash in lieu of a fractional share interest based on their particular circumstances.
A shareholder may be subject to information reporting with respect to any cash received in exchange for a
fractional share interest. Shareholders who are subject to information reporting and who do not provide a
correct taxpayer identification number and other required information (such as by submitting a properly
completed Internal Revenue Service Form W-9) may also be subject to backup withholding at the applicable
rate. Any amount withheld under such rules is not an additional tax and may be refunded or credited against the
shareholder’s U.S. federal income tax liability, provided that the required information is properly furnished in a
timely manner to the Internal Revenue Service.
THE ABOVE DISCUSSION IS NOT INTENDED TO BE USED BY ANY PERSON, FOR THE PURPOSE OF
AVOIDING U.S. FEDERAL TAX PENALTIES. IT HAS BEEN PROVIDED SOLELY IN CONNECTION WITH
PROVIDING INFORMATION IN CONNECTION WITH SOLICITING VOTES IN FAVOR OF THIS PROPOSAL.
Required Vote
Approval of this proposal authorizing a Reverse Stock Split and the Authorized Shares Reduction requires the
affirmative vote of at least a majority of the votes entitled to be cast on this proposal by holders of our Voting
Shares. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions will have the same effect
as a vote against this proposal.
The Board recommends that you vote FOR approval of the authorization of a Reverse
Stock Split and the Authorized Shares Reduction.
ITEM 3 Approval of a Reverse Stock Split and Related Reduction of Our Authorized Common Shares
55
2024 ANNUAL REPORT
2025 PROXY STATEMENT
ITEMS 4A, 4B, 4C and 4D
Approval of Technical Amendments to
Articles of Incorporation
Effective January 1, 2015, the Louisiana Business Corporation Act (the “LBCA”) superseded its predecessor
statute, the Louisiana Business Corporation Law. We have not amended our Articles of Incorporation since 2012,
other than amendments necessary to reflect our name change, accommodate our rights plan, and replenish our
authorized shares following prior acquisitions. The Board has determined that it is advisable and in the best
interests of the Company and its shareholders to implement technical amendments to the Articles of
Incorporation to (1) conform them to the LBCA, which is based on the Model Business Corporation Act adopted
thus far by 34 states, and (2) make certain other technical updates, as described further below.
Reasons for Technical Amendments
These amendments are designed principally to align our Articles of Incorporation (the “Articles”) with the LBCA.
As a result of the adoption of the LBCA and the passage of time, a number of provisions in our existing Articles
are no longer applicable, current or relevant. Updating those provisions would assist in conforming our Articles
to the LBCA. All of the proposed amendments to our Articles are reflected in proposed amended and restated
articles of incorporation attached as Appendix D.
Summary of the Amendments and Effects of the Proposals
We are submitting to the shareholders the following four technical amendments as Items 4A, 4B, 4C
and 4D, respectively.
ITEM 4A: Update References to Prior Corporate Statute
The Articles currently include six explicit references to Louisiana’s prior corporate statute that was superseded
in 2015. We believe the intent of each such provision is clear, as each provision, in our view, is now governed by
a successor provision of the LBCA that has superseded the statutory provision currently cited in the Articles
(with the exception of one reference to a repealed statutory provision that we propose to strike). However, to
avoid any ambiguity, we propose replacing the superseded statutory references with references to the
applicable successor provisions in the LBCA. Appendix D sets forth (1) each of these corrected references,
appearing in Articles II, V(D)(6), V(E), VI(A), VI(B) and VII(B), and (2) newly-added references to the LBCA in
Article VII, which are intended to clarify that certain specified rights and limitations are now governed by the
LBCA.
ITEM 4B: Clarify Manner of Electing Directors
We propose adding a new sentence to Article IV(B) of our Articles affirming that the Company’s directors are
elected by majority voting in the manner prescribed by our Bylaws. In 2010, Lumen revised both its Bylaws and
Corporate Governance Guidelines to provide that the Company’s directors would be elected by majority voting
and revised its Corporate Governance Guidelines to provide that any director not receiving a majority of the
vote must promptly tender his or her resignation. This replaced our prior plurality voting standard for the
election of directors. Since the LBCA became effective in early 2015, we have been governed by La. R.S. 12:1-728,
which states that directors of Louisiana corporations are elected by plurality vote, unless the corporation’s
articles of incorporation otherwise provide. A different section of the LBCA, La. R.S. 12:1-1022, provides an
alternative governance structure for public companies. Although we believe La. R.S. 12:1-1022 sanctions our use
of a majority voting standard for the election of directors pursuant to our Bylaws, we propose re-affirming our
commitment to this majority voting standard by adding the above-cited clarification to Article IV(B).
56
ITEM 4C: Lower the Special Meeting Threshold
As discussed in more detail below, we propose to amend Article VI(B) of our Articles to lower the ownership
threshold necessary for shareholders to call a special shareholders’ meeting from a majority of the total voting
power to 25%.
Article VI(B) currently provides that shareholders may call a special shareholders’ meeting upon the written
request of any shareholder or group of shareholders holding in the aggregate at least a majority of the total
voting power. Under Section 702 of the LBCA (La. R.S. 12-1:702) that took effect in early 2015, shareholders of a
Louisiana corporation may call a special shareholders’ meeting upon the written request of any shareholder or
group of shareholders holding in the aggregate at least 10% of the corporation’s total voting power, provided
that the corporation may fix a lower percentage or a higher percentage not exceeding 25%.
In evaluating the appropriate ownership threshold required to request a special shareholders meeting, the Board
considered a number of factors, including: (1) the above-described changes to the law governing corporations in
Louisiana; (2) the practices of companies that are members of the S&P 500; (3) our current shareholder
outreach programs and other corporate governance policies; (4) the substantial Company resources required to
convene a special shareholders meeting; and (5) the interests of our shareholders as a whole.
As noted above, the LBCA permits a threshold percentage as high as 25% of the votes entitled to be cast on any
matter to be presented for consideration by the shareholders at the applicable special meeting. By lowering the
current majority threshold to 25%, the special meeting provision in our Articles would conform to the terms of
Section 702 of the LBCA.
Available survey data currently indicates that over 70% of S&P 500 companies offer shareholders the right to
call special meetings. Among that select group of S&P 500 companies, over one-third have adopted a
25% ownership threshold to call a special shareholders meeting, making it the most commonly used threshold.
We recognize that certain shareholder groups frequently advocate for a 10% threshold, but available survey
data suggests that a 10% threshold is uncommon. The Board believes that its proposal to amend Article VI(B)
would conform the Company’s requisite ownership threshold for calling a special shareholders’ meeting to the
most common practice of large U.S. public companies.
Our Board is firmly committed to maintaining strong and effective corporate governance policies that enable
shareholders to voice their views, including our extensive shareholder outreach programs described elsewhere
in this proxy statement. But our Board also recognizes that organizing and preparing for a special shareholders
meeting requires considerable investment of Company resources and a substantial commitment of time from
our senior leadership team, which could impose significant costs, including the costs of preparing and
distributing proxy materials, and divert Board and management attention from the oversight and management
of our operations. Accordingly, the Board believes that incurring the expense and disruption of a special
meeting should be limited to the consideration of those matters deemed by a broad consensus of our
shareholders to be of sufficient magnitude to warrant attention in advance of an annual meeting. The Board
believes that the proposed 25% threshold strikes the appropriate balance between enabling shareholders to call
a special meeting but only when the group of shareholders is sufficiently large to merit the investment of time
and expense associated with convening special shareholders meetings.
Based on its consideration of the factors discussed above, the Board believes that a 25% ownership threshold
(1) provides a meaningful right to our shareholders with less risk of abuse, (2) is consistent with the common
practice among large U.S. public companies, and (3) provides a favorable balance between ensuring the Board’s
accountability to shareholders and enabling the Board and management to operate the Company in an effective
manner without unnecessary expense and unwarranted disruption.
ITEM 4D: Remove Outmoded Reference to Transition Period
We propose to remove from Article IV(B) all references to our transition to an unstaggered board. Prior to 2012,
we maintained a staggered board in which approximately one-third of our directors were elected each year to
three-year terms. In 2012, we amended our Articles to provide for annual elections of all directors for one-year
terms, beginning with the 2012 annual meeting of shareholders. The current reference in the Articles to the
effective date of this change is no longer necessary, and we therefore propose eliminating it.
______________________________
ITEM 4A, 4B, 4C and 4D Approval of Technical Amendments to Articles of Incorporation
57
2024 ANNUAL REPORT
2025 PROXY STATEMENT
The foregoing description of our proposed technical amendments to the Articles is qualified in its entirety by the
complete text of all such amendments attached as Appendix D.
Procedures for Implementing Technical Amendments
If the shareholders approve the above-described proposals to amend our Articles, we intend to promptly file
with the Louisiana Secretary of State amended and restated articles of incorporation implementing such
amendments. The amended and restated articles of incorporation would be effective when filed with the
Louisiana Secretary of State. If the shareholders approve less than all of the above-described proposals, the
amended and restated articles of incorporation filed by us would reflect only the changes approved.
Under the LBCA, shareholders will not be entitled to appraisal rights with respect to any of these proposals.
Required Vote
Approval of each of Items 4A, 4B, 4C and 4D requires the affirmative vote of at least a majority of the votes
entitled to be cast on such proposal by holders of our Voting Shares. You may vote “FOR,” “AGAINST,” or
“ABSTAIN” on each proposal. Abstentions will have the same effect as a vote against such proposal. For Items
4B and 4C, uninstructed shares will also have the same effect as a vote against such proposal. Because brokers
will have discretionary authority to vote with respect to Items 4A and 4D, we do not expect there to be any
uninstructed shares for those proposals.
The Board recommends that you vote FOR approval of each of these technical
amendments to our Articles of Incorporation.
ITEM 4A, 4B, 4C and 4D Approval of Technical Amendments to Articles of Incorporation
58
Our Executive Officers
We currently have four executive officers. Biographical information for each of them (other than Ms. Johnson,
who also serves as a director and whose biography may be found under “Board of Directors and Governance—
Our Director Nominees”) is found below:
Ashley Haynes-
Gaspar
47 years old
Executive Vice
President, Chief
Revenue Officer
• Ashley Haynes-Gaspar has served as Lumen’s Chief Revenue Officer since January
2024 and, prior to that, served as our Executive Vice President, Customer Experience
Officer, Wholesale & International from January 2023 to January 2024.
• Ms. Haynes-Gaspar has responsibility for our revenue strategy, including driving
new sales and revenue streams, building strategic partnerships, and enhancing
customer experience.
• Prior to joining Lumen, Ms. Haynes-Gaspar served as the Chief Operating Officer of US
Business Applications & Industry at Microsoft, a publicly traded multinational
technology conglomerate, from December 2017 until January 2023.
• Before joining Microsoft, Ms. Haynes-Gaspar held various senior-level positions at GE, a
publicly traded multinational industrial conglomerate, including as the Chief Marketing
Officer for two of the company’s global divisions.
Chris D. Stansbury
59 years old
Executive Vice
President, Chief
Financial Officer
• Chris D. Stansbury has served as Lumen’s Executive Vice President, Chief Financial
Officer since April 2022.
• Mr. Stansbury has global responsibility for financial planning, accounting, tax, treasury,
investor relations, procurement and supply chain management and the global real
estate portfolio.
• Mr. Stansbury previously served as the Senior Vice President and Chief Financial
Officer of Arrow Electronics, Inc., a publicly traded multinational provider of electronic
components and enterprise computing products, from May 2016 through March 2022.
Prior to that, Mr. Stansbury served as Vice President, Finance, and Chief Accounting
Officer of Arrow Electronics, Inc. beginning in August 2014.
• Prior to joining Arrow Electronics, Inc., Mr. Stansbury held various positions within the
finance departments of Hewlett-Packard, Inc. and PepsiCo, Inc.
David Ward
56 years old
Executive Vice
President, Chief
Technology and
Product Officer
• David Ward has served as Lumen’s Chief Technology and Product Officer since August
2024 and served as our Chief Technology Officer from February 2024 until then.
• Mr. Ward is responsible for the development, integration, and deployment of Lumen’s
global network, as well as creating disruptive technologies through innovative
product development.
• Prior to joining Lumen, Mr. Ward was CEO of PacketFabric, a cloud-scale and carrier-
class Network-as-a-Service (NaaS) platform provider, from May 2020 until October
2023, where he oversaw its NaaS offering and led significant product expansions.
• Before joining PacketFabric, Mr. Ward served as a Senior Vice President, Chief
Technology Officer-Engineering and Chief Architect at Cisco Systems, a publicly
traded multinational digital communications technology conglomerate, from October
2012 until May 2020. He was also a Fellow at both Cisco Systems (from 2011 to 2012)
and Juniper Network (from 2009 to 2011).
• Mr. Ward was also an operating partner at Digital Alpha Advisors, an alternative asset
manager focused on digital infrastructure, from April 2020 until February 2024.
59
2024 ANNUAL REPORT
2025 PROXY STATEMENT
ITEM 5
Advisory Vote on Executive
Compensation—“Say-On-Pay”
We understand that executive compensation is an important matter for our shareholders. As such, each year, we
provide our shareholders the opportunity to vote on a non-binding, advisory resolution to approve the
compensation of our named executive officers (NEOs), as disclosed in the proxy statement for that year’s
annual meeting.
Under our executive compensation programs, our NEOs are rewarded for achieving specific annual and
long-͏term goals, as well as increasing shareholder value. The Human Resources and Compensation Committee
of our Board (HRCC) continually reviews our executive compensation programs to ensure they achieve the
goals of aligning our compensation with both current market practices and your interests as shareholders.
As discussed in greater detail elsewhere in this proxy statement, the HRCC spends considerable time and effort
to ensure that not only do we have the right leadership in place, but also that our executive compensation
programs continue to appropriately incentivize and reward each key member of the team in a manner that
aligns with shareholder interests. For additional information on our executive compensation programs generally
and our recent compensation actions specifically, we urge you to read the “Compensation Discussion &
Analysis” and “Compensation Tables” sections of this proxy statement.
At the meeting, we will ask you to vote, in an advisory manner, to approve the overall compensation of our
NEOs, as described in this proxy statement, including the Compensation Discussion & Analysis, the "Summary
Compensation Table" and the other related tables and disclosures. This proposal, commonly known as a
“say-on-pay” proposal, gives you the opportunity to express your views. This advisory vote is not intended to
address any specific element of compensation, but rather relates to the overall compensation of our NEOs and
our executive compensation policies and practices as described in this proxy statement. Your vote will not
directly affect, or otherwise limit, any existing compensation or award arrangement of any of our NEOs.
While this “say-on-pay” vote is advisory and will not be binding on our Company or the Board, it will provide
valuable information for future use by our HRCC regarding shareholder sentiment about our executive
compensation. Shareholders may also communicate directly with our HRCC or full Board on executive
compensation—or any other matters—by contacting us in the manner provided under “Board of Directors and
Governance—Shareholder Engagement.”
Approval of this proposal requires the affirmative vote of a majority of the votes cast on this proposal by
holders of our Voting Shares. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions
and uninstructed shares are not counted as votes cast, and therefore will not affect the outcome of the vote on
this proposal.
The Board recommends that you vote FOR this proposal.
60
Letter from the Chair of the Human Resources
and Compensation Committee
Dear Investors,
We appreciate the care you take in reading and considering this disclosure, and we are confident that it
demonstrates our commitment to deliver value aligned with your interests while attracting and retaining leaders
who are laser-focused on delivering superior results.
2024 Highlights
Business Transformation. Lumen achieved significant accomplishments in 2024. Our new senior leadership team
took pivotal steps in the transformation of our business to strengthen our financial position and restore our
reputation in the capital markets and telecom industry. In particular, we:
• negotiated $8.5 billion in Private Connectivity Fabric (PCF) partnerships, injecting cash into the Company;
• completed a $15 billion debt modification, which we believe is the largest private debt restructuring of
its kind;
• reduced our debt load by $1.6 billion; and
• restored investor confidence, driving a multi-billion increase in the market value of our senior debt securities
and a total shareholder return of 190%.
Shareholder Value Creation. We started 2024 with constraints on our equity pool given a share price below $2,
and, while we believe granting LTI awards in equity better aligns the interests of our employees and
shareholders, we awarded the 60% performance-based portion of our executives’ 2024 annual LTI awards and
50% of on-boarding LTI awards in cash instead of equity. As we took strides in our transformation throughout
2024, our shareholders and stock price responded and we ended 2024 with a total shareholder return (TSR) of
190%, which was our first positive TSR in three years, and created substantial value for our shareholders.
Additionally, you, our shareholders, approved our 2024 Equity Incentive Plan with 93% support in May 2024,
replenishing our equity pool with 43 million shares and enabling us to (1) return to 100% equity awards for our
senior leadership team in 2025, and (2) continue attracting and retaining key talent who will execute on our
strategy going forward.
Recalibration of Our Incentive Programs. Given the significant change in our business strategy and following a
multi-month review process with management and our independent compensation consultant, we realized our
short- and long-term incentive programs, approved in the beginning of 2024, were no longer aligned with our
new strategy. The HRCC unanimously determined that the mid-year adjustments to our incentive programs
described in the accompanying proxy statement were necessary to attain our goal of aligning the interests of
our executives with those of our shareholders under our new strategy.
The rationale and timing of these changes are described in greater detail under the heading “Compensation
Discussion & Analysis—Section Four—Compensation Design, Awards, and Payouts for 2024—Recalibration of
our 2024 Incentive Programs.”
ITEM 5 Advisory Vote on Executive Compensation—“Say-On-Pay”
61
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Moving into 2025
2025 Core Priorities. The three priorities described in the letter from our CEO, Kate Johnson, at the beginning
of the proxy statement have been expanded internally into five core priorities. We believe these will position us
for stability and growth:
• building the backbone for the AI economy;
• cloudifying telecom with Lumen Digital;
• bending the curve on core network services;
• modernizing and simplifying Lumen; and
• executing the plan in mass markets.
These strategic business priorities are built into our 2025 short-term incentive program and the 18,000
employees eligible to participate (representing 72% of the total employee population) have goals aligning their
individual responsibilities with these priorities. We are confident that these goals will keep us on the path
towards stability and growth, while positioning us as the trusted network for AI.
Finally, it has been an honor to serve as Chair of this HRCC and a member of Lumen’s Board in pursuit of our
vision to connect people, data, and applications—quickly, securely and effortlessly. It has been a pleasure to
serve with such a dedicated and talented group of individuals, including Quincy Allen, who will succeed me as
Chair of the HRCC as I exit the Board at the upcoming 2025 annual meeting.
Laurie Siegel
Chair of the Human Resources and
Compensation Committee
ITEM 5 Advisory Vote on Executive Compensation—“Say-On-Pay”
62
Compensation Discussion
& Analysis
The Compensation Discussion & Analysis (CD&A) is divided into five sections: (1) Executive Summary; (2)
Compensation Philosophy and Principles; (3) Pay and Performance Alignment; (4) Compensation Design,
Awards, and Payouts for 2024; and (5) HRCC Engagement and Compensation Governance. Please refer to the
roadmap below in order to navigate this portion of the proxy statement.
Roadmap
Compensation Discussion & Analysis
63
Section One—Executive Summary
64
Business Highlights
64
Recalibrating Our 2024 Incentive Programs to Align with Our Business Transformation
65
2024 Executive Compensation Aligned with Business Performance
67
2024 Shareholder Engagement Highlights
68
Our Compensation Best Practices
70
Section Two—Compensation Philosophy and Principles
71
Compensation Objectives and Principles
71
Section Three—Pay and Performance Alignment
73
Pay Mix
73
Realized and Realizable Pay for Our NEOs
73
Section Four—Compensation Design, Awards, and Payouts for 2024
75
Our Pay Elements
75
Recalibration of Our 2024 Incentive Programs
76
Target Compensation
79
Base Salary
81
2024 Short-Term Incentive Program
82
2024 Long-Term Incentive Compensation
88
LTI Linkage to Performance—No Payouts Under 2022 PBRS Awards
94
LTI Governance of Share Usage
96
Goal Setting Process and Incentive Program Guidelines
97
Compensation Arrangements Related to Leadership Transition
99
Other Benefits
102
Section Five—HRCC Engagement and Compensation Governance
106
Role of Human Resources and Compensation Committee
106
Equity Grant Timing Practices
106
Year-round Engagement Informs Compensation Design and Awards
107
Role of CEO and Management
108
Role of Compensation Consultants
108
Role of Peer Companies
108
Stock Ownership Guidelines
112
Human Resources and Compensation Committee Report
113
63
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Section One—Executive Summary
As described in our Board Committee section above, the HRCC oversees our executive compensation program.
More broadly, the HRCC provides direction to management on compensation programs for all employees with
the goal of retaining the skilled talent needed for Lumen to reach its strategic objectives. The HRCC seeks to
continuously improve our compensation programs based on changing market conditions, the evolving business
environment, and feedback from our shareholders. This CD&A reflects the HRCC’s overall philosophy on
employee compensation with a focus on compensation for our seven executive officers serving during the last
fiscal year (our “NEOs”).
Current Executives (Current NEOs):
Kate Johnson
President & Chief
Executive Officer
Chris D. Stansbury
Executive Vice President,
Chief Financial Officer
Ashley Haynes-Gaspar
Executive Vice President,
Chief Revenue Officer
David Ward
Executive Vice President,
Chief Technology and
Product Officer
Former Executives (Former NEOs):(1)
Stacey W. Goff, Former Executive Vice President, General Counsel and Secretary, through June 10, 2024, with
final service through August 2, 2024.
Chadwick Ho, Former Executive Vice President, Chief Legal Officer and Secretary, through February 7, 2025.
Satish Lakshmanan, Former Executive Vice President, Chief Product Officer, through August 30, 2024.
(1)
For additional information, see “Section Four—Compensation Design, Awards, and Payouts for 2024—Compensation Arrangements Related
to Leadership Transition.”
Business Highlights
As described in greater detail throughout this proxy statement, our Board, CEO, Senior Leadership Team, and
HRCC have spent considerable time and effort developing a multi-year strategy to transform Lumen from a
traditional telecom company into a networking company, and to execute on our mission to ignite business
growth by connecting people, data, and apps—quickly, securely, and effortlessly.
We faced challenging headwinds at the start of 2024, including continued decline in demand for legacy services
with higher margins, significant debt maturities due in the next few years, and a depressed stock price (which
dipped below $1 in late June). In 2024, while we exceeded our customer experience goals, we fell short of our
Adjusted EBITDA and Revenue targets, which resulted in payouts under our STI plan at 88.5% of the target level
for our senior leadership team. In addition, our failure to attain threshold performance for our Cumulative
Adjusted EBITDA target and TSR performance relative to our peers for the three-year performance period
ending December 31, 2024 resulted in the forfeiture of our 2022 performance-based LTI awards. See “Section
Four—Compensation Design, Awards, and Payouts for 2024.”
2024 Business Performance
$13.1B
$3.9B
$1.4B
$3.2B
Revenue
Adjusted EBITDA
Free Cash Flow
Capital Expenditures
Compensation Discussion & Analysis
64
See Appendix A for definitions of the terms used above, a reconciliation of our non-GAAP metrics used above
to GAAP measures, and a description of our special items (i.e., items investors may want to give special
consideration due to their magnitude, nature, or both). For more complete information on Lumen and our recent
performance, see the remainder of this proxy statement, including Appendix B.
Despite these headwinds, we leveraged the deep experience of our new leadership team to take pivotal steps in
our transformation that we believe is repositioning Lumen for stabilization and growth. In March, we
strengthened our balance sheet with $15 billion in debt modification and, between July and November, we
announced $8.5 billion in Private Connectivity Fabric (PCF) partnerships, which position us to serve as the
backbone of the AI economy.
Our shareholders and stock price responded well to these accomplishments and we ended 2024 with a total
shareholder return (TSR) of 190%.
Significant Long-Term Value Creation
Debt Modification and
TSA Transactions
Private Connectivity
Fabric Partnerships
Total Shareholder
Return(1)
$15B
$8.5B
190%
(1)
Calculated as of December 31, 2024 as compared to December 31, 2023.
Recalibrating Our 2024 Incentive Programs to Align with Our
Business Transformation
We believe that incentive plans evolve over time and should respond to the changing needs and strategies of
the Company. The HRCC conducts an annual comprehensive review of both our short-term and long-term
incentive compensation programs to ensure those plans are both competitive and align with the strategic goals
of the business. Generally, any changes to our incentive programs are implemented at the beginning of a year.
As described above, we pivoted significantly during 2024 to realize the $8.5 billion PCF opportunity, which we
believe will promote long-term growth and enhance Lumen's liquidity, despite near term dilution to EBITDA.
After an extensive review by the HRCC, management, and the HRCC's independent compensation consultant,
the HRCC determined that our short- and long-term incentive programs no longer incentivized our go-forward
measures of success. As such, in August 2024, the HRCC unanimously approved new goals for the second half
of 2024 for the STI program, and in November 2024, the HRCC approved changes to the financial metric for our
2024 LTI plan (leaving unchanged the relative TSR portion of the award). In doing so, the HRCC determined that
(1) making both of these changes was necessary to ensure a tight alignment of our awards with our new short-
and long-term strategies and (2) failing to make these changes would have constituted an abdication of the
HRCC’s responsibility to design and maintain programs that appropriately incentivize our key personnel to
expeditiously implement our strategies.
The rationale and timing of these changes are summarized below and described in greater detail under the
heading “Section Four—Compensation Design, Awards, and Payouts for 2024—Recalibration of our 2024
Incentive Programs.”
Compensation Discussion & Analysis
65
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Change
Rationale
Effective Date
Revised Financial
Target Goals
Given the mid-year shift in strategy, the HRCC determined that adjustments to
the financial target goals (adjusted EBITDA and Revenue) of our 2024 STI
program, comprising 85% of our NEO’s STI Target opportunity, were necessary to
align with our new business strategy and prevent payouts from being unfairly and
adversely affected. The HRCC approved a bifurcated approach to assessing 2024
performance, where performance would be evaluated based on targets
comprised of the sum of two discrete six-month performance periods: (1) the first
half of the year based on our guidance publicly announced in February; and (2)
the second half of the year based on our revised guidance publicly announced in
August, which included the impact and forecasts for the new PCF deals.
August 2024
Awarded the 60%
Performance-
Based Portion in
Cash instead
of Equity
We started the year with constraints on our equity pool given a share price below
$2, and, in an effort to manage our share usage, burn rate, dilution, and overhang
levels, awarded 60% of our annual, and a portion of on-boarding, LTI awards in
cash instead of equity. Following the replenishment of our equity pool in May
2024 and the rise in our share price, in March 2025, we were able to return our
annual 2025 LTI to 100% equity for our SLT.
March 2024
Replaced the
Financial
Performance
Metric
To better align our senior leadership team with our shareholder interests and our
revised long-term strategy, largely driven by the PCF partnerships announced in
the second half of 2024, the HRCC replaced the cumulative Adjusted EBITDA
metric in our 2024 LTI plan, comprising 50% of the performance-based portion of
our NEOs’ 2024 LTI award, with a cumulative Free Cash Flow metric and set the
three-year target goal, which included the impact and forecasts for the new PCF
deals. The HRCC determined that cumulative Free Cash Flow was the best metric
to incentivize the execution of our PCF deals and meet our debt covenant
obligations over the three-year performance period.
November
2024
The compensation programs approved for 2024 advanced our philosophy from prior years by emphasizing
rigorous performance goals in both short- and long-term incentive plans, including the three-year relative total
shareholder return and cumulative free cash flow goals in our long-term incentive plan.
The timeline below highlights key milestones in our business transformation and recalibration of our incentive
program during 2024, each of which are discussed in greater detail below and throughout this CD&A.
2024 Business Transformation and Recalibration of Our Incentive Programs(1)
____________________
(1)
For more thorough discussion on our incentive programs, recalibration, and performance, see “Section Four—Compensation Design, Awards,
and Payouts for 2024” in this CD&A. For more complete information on Lumen, our business transformation and our recent performance,
see “About Lumen” and Appendix B.
(2)
See “Section Four—Compensation Design, Awards, and Payouts for 2024—2024 Short-Term Incentive Program” in this CD&A for
more information.
(3)
See “Section Four—Compensation Design, Awards, and Payouts for 2024—2024 Long-Term Incentive Compensation” in this CD&A for
more information.
(4)
For more information on our 2024 Equity Incentive Plan, see our 2024 proxy statement.
Compensation Discussion & Analysis
66
2024 Executive Compensation Aligned with
Business Performance
As discussed in greater detail in this CD&A, 93% of our CEO’s total target compensation is at risk and our
incentive programs (1) are aligned with our corporate strategy, (2) support our efforts to incentivize and retain
our new leadership team, which is essential to our ability to execute on our transformation strategy, and (3) are
paid out based on our performance, which has a direct impact on realizable pay outcomes.
The chart below shows our overall level of achievement and company performance funding for the financial and
qualitative metrics in our 2024 STI plan:
Dollars in Millions
Performance
Metrics
Threshold
Target(1)
Maximum
Actual vs.
Target
Payout
%
Weighting
Weighted
Payout %
Adjusted
EBITDA
96.7%
66.7%
33.3%
Revenue
98.7%
93.4%
32.7%
Customer
Experience
Exceeded
Expectations
150%
22.5%
Weighted Payout Percentage of Company Performance Funding
88.5%
____________________
(1)
For more information on our Adjusted EBITDA and Revenue targets see “Section Four—Compensation Design, Awards, and Payouts
for 2024—Recalibration of our 2024 Incentive Programs” and “Section Four—Compensation Design, Awards, and Payouts for 2024—2024
Short-Term Incentive Program” in this CD&A.
2022 Long-Term Incentive Compensation
The chart below shows our overall level of achievement for the performance-based restricted share portion of
our 2022 LTI program over the three-year performance period from 2022 to 2024:
Dollars in Millions
Performance
Metrics
Threshold
Target(1)
Maximum
Actual vs.
Target
Payout
%
Weighting
Weighted
Payout %
Cumulative
Adjusted
EBITDA(1)
87.4%
0.0%
0.0%
Relative TSR(2)
n/a
0.0%
0.0%
Weighted Payout Percentage
0.0%
(1)
For more information on our Cumulative Adjusted EBITDA target see our 2023 proxy statement
(2)
If Lumen’s TSR is negative over the three-year period, the payout cannot exceed target regardless of our TSR performance relative to
our peers.
Compensation Discussion & Analysis
67
2024 ANNUAL REPORT
2025 PROXY STATEMENT
CEO Pay Aligned with Performance
Our CEO’s cumulative realizable pay, as of December 31, 2024, was 119% of target compensation for the twenty-
five months since her hire date in November 2022. For more information, see “Section Three—Pay and
Performance Alignment—Realized and Realizable Pay for Our NEOs.”
Lumen Technologies Stock Price History
2024 Shareholder Engagement Highlights
Each year we solicit feedback from shareholders on a wide range of topics (discussed in greater detail in “Board
of Directors and Governance—Our Board’s Responsibilities”). Our shareholder engagement related to our
executive compensation programs is summarized below. During 2024, our NCG Committee Chair (who is also a
member of the HRCC) participated in these engagements, along with various members of management. These
conversations have enabled us to receive input from our shareholders on how best to align the interests of
management and our shareholders and have enabled many of our shareholders to gain a better understanding
of the challenges of recruiting, retaining, and motivating top talent in a complex, rapidly changing industry that
continues to face the challenges of replacing declining legacy services with growing digital services.
The table below summarizes our compensation-focused shareholder engagement efforts during 2024,
including the feedback we heard, say-on-pay results, and actions our HRCC has taken. For more information on
our outreach, see “Board of Directors and Governance—Shareholder Engagement—By the Numbers:
Shareholder Engagement in 2024.”
Compensation Discussion & Analysis
68
2024 Shareholder Engagement
Spring Engagement: Following the filing of our 2024 proxy
statement, we sought engagements with our top 30 shareholders,
then representing approximately 56% of shares outstanding, to
solicit their feedback on executive compensation actions during
2023 and our new equity plan proposal.
What We Heard: Our investors appreciated the opportunity to
engage but generally only engage during that time period if they
have specific concerns. No significant concerns were noted.
Shareholder Approvals: At
our 2024 annual meeting, we
received support from the
holders of 92% of the shares
voted on our say-on-pay
proposal and 93% of the
shares voted on our 2024
Equity Incentive Plan.
Fall and Winter Engagement: As noted elsewhere herein, the mid-
year change in our strategy caused a misalignment between the
interests of our shareholders and the metrics and targets for our
2024 STI and LTI programs that were approved by the HRCC in the
first quarter of 2024, and upon which our executives were
incentivized. As a result, the HRCC approved the extraordinary
measure to adjust our 2024 STI program targets (in August) and
replace the financial metric for our 2024 LTI program (in
November) in order to appropriately align the interests of our
executives with those of our shareholders, and to incentivize the
execution on this extraordinary opportunity of $8.5 billion in
PCF deals.
Given the unusual nature of these changes, we undertook a
significant effort to seek input from shareholders, and we engaged
our top 30 shareholders, then representing approximately 61% of
shares outstanding, to explain the mid-year recalibration of our
2024 incentives and hear their feedback and considerations for our
2025 executive compensation programs.
What We Heard: The shareholders we met with listened to our
unique situation and reasoning for changes to our incentive
programs, and generally supported the recalibration of our
2024 LTI and STI programs, especially in light of the improved
business outlook and stock performance. They stressed the
importance in providing a clear and transparent rationale for the
adjustments in our disclosures regarding the recalibration of our
2024 incentive programs.
Response to Shareholder
Feedback: The HRCC reviewed
shareholder feedback and
ensured a robust disclosure in
this CD&A.
For more information, see
“Section Four—Compensation
Design, Awards, and Payouts
for 2024—Recalibration of our
2024 Incentive Programs,”
“Section Four—Compensation
Design, Awards, and Payouts
for 2024—2024 Short-Term
Incentive Program” and
“Section Four—Compensation
Design, Awards, and Payouts
for 2024—2024 Long-Term
Incentive Compensation.”
We look forward to continuing to engage in productive dialogue with our stakeholders on all governance and
stewardship matters, including compensation.
Compensation Discussion & Analysis
69
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Our Compensation Best Practices
The HRCC and management stay abreast of market trends and best practices through regular consultation with
the HRCC’s independent consultant and by attending various training programs and forums.
In addition to other practices described elsewhere in this proxy statement, below are a summary and brief
descriptions of certain compensation policies and practices.
What We Do
What We Do Not Do
Focus on performance-based compensation
weighted heavily towards long-term
incentive awards
Benchmark generally against 50th percentile
peer compensation levels
Maintain robust stock ownership guidelines
applicable to our executive officers and
outside directors
Annually review our compensation programs
to avoid encouraging excessive risk taking
Conduct an annual succession planning
process for our CEO
Conduct an annual “say-on-pay” vote
Discuss our executive compensation program
during shareholder engagement
Impose compensation forfeiture covenants
(“clawback”) broader than, and in addition to,
those mandated by law (such as, fraud and
reputational harm)
Review the composition of our peer groups at
least annually
Conduct independent and intensive
performance reviews of our senior officers
Cap the number of relative TSR performance-
based shares that may vest if our own
absolute TSR is negative
Review realizable pay of our senior officers
and total compensation “tally” sheets
Require shareholders to approve any future
severance agreements valued at more than
2.99 times the executive’s target
cash compensation
Maintain a supplemental executive
retirement plan
Permit our directors or any employee to hedge
our stock, or our directors or senior officers to
pledge our stock
Permit the HRCC’s compensation consultant to
provide other services to Lumen
Pay, provide, or permit:
(1) excessive perquisites,
(2) excise tax “gross-up” payments,
(3) single-trigger change of control equity
acceleration benefits, or
(4) dividend payments on unvested restricted
stock or RSUs
Compensation Discussion & Analysis
70
Section Two—Compensation Philosophy
and Principles
Our compensation philosophy is to structure a program designed to attract, develop, motivate and retain
executives and key employees with a total compensation package that is equitable, and that encourages and
rewards performance for execution against our company’s near and long-term strategies to build value for
our shareholders.
Compensation Objectives and Principles
Our compensation programs are designed to be market competitive, performance-based, and fiscally
responsible. Providing incentive compensation opportunities linked to our company performance is a key part of
our compensation programs, especially for our senior leaders, representing 93% and 86% of our CEO’s and
NEOs’ average total target direct compensation, respectively. But our STI and LTI programs extend much
further into our organization. For 2024, approximately 18,000 employees participated in our STI program and
approximately 1,200 employees received long-term awards under our LTI program, representing 72% and 5% of
the total employee population, respectively. For each participant in our incentive programs, including our NEOs,
his or her total target direct compensation and individual performance modifiers are determined based on
multiple factors, including the availability of talent, the criticality of skills, market compensation benchmarks, and
internal equity considerations.
Incentive Compensation Design
Each year, over the course of several meetings, the HRCC undergoes a multi-step process to (1) ensure our
performance objectives are aligned with our strategy, (2) establish rigorous threshold, target, and maximum
performance levels for our short- and long-term incentive plans, and (3) provide structure and promote fairness
against external and internal peers, as outlined in our Incentive Program Guidelines in “Section Four—
Compensation Design, Awards, and Payouts for 2024—Goal Setting Process and Incentive Program Guidelines”
in determination of our incentive payouts.
Compensation Discussion & Analysis
71
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Aligning Performance Objectives with Strategy
The HRCC selects short-term and long-term plan performance objectives designed to incentivize our executives
to drive execution of our overall business strategies and key strategic priorities over the relevant
performance period. The HRCC works with management and its independent consultant to structure our
incentive programs each year based on the following key design objectives:
Key Objectives
Aligned With Our Strategy
Ensuring that performance-based metrics
in our executive compensation programs
reward performance over multiple time
horizons and are aligned with our short-
and long-term strategies, including
individual contribution and Company
performance, and the goal of creating long-
term shareholder value while discouraging
excessive risk taking
Peer Benchmarked
Structuring our compensation programs to
be competitive, aligned to internal and
external peers
Utilizing an objective set of criteria to
determine companies for our
compensation benchmarking peer group
and TSR peer group
Challenging Goals
Setting short-and long-term targets at
challenging but reasonably achievable
levels that reflect priorities and drive
progress toward our long-term vision
Pay for Performance
Assessing effectiveness of prior year(s)
incentive designs and performance against
targets on a quarterly basis
Pay Mix
Allocating a significant portion of our NEOs
target compensation to performance-based
components, with a balance between cash
and equity and short- and long-term
incentives
Long-term target compensation
opportunities outweighing short-term
target opportunities.
Annual objectives complementing
sustainable long-term performance.
Formulaic
Maintaining STI and LTI programs with
payouts that are mostly formulaic and all of
which are determined based on actual
performance against challenging financial
and operational goals; with limited
adjustments, positive or negative, as
permitted and outlined in our Incentive
Program Guidelines described herein, or as
necessary to accomplish program
objectives, with any remaining portion
based on qualitative assessments of key
performance indicators.
Shareholder Feedback
Incorporating shareholder views,
including results of our annual say-
on-pay vote and our shareholder
engagement initiatives
Monitor Equity Usage
Monitoring share expense, burn rate, and
dilution against peer benchmarks
For additional information on alignment of our performance objectives with strategy, see “Section One—
Executive Summary—2024 Shareholder Engagement Highlights,” “Section Three—Pay and Performance
Alignment—Pay Mix,” “Section Three—Pay and Performance Alignment—Realized and Realizable Pay for
Our NEOs,” “Section Four—Compensation Design, Awards, and Payouts for 2024,” and “Section Five—HRCC
Engagement and Compensation Governance—Role of Peer Companies.”
Compensation Discussion & Analysis
72
Section Three—Pay and Performance Alignment
In allocating NEO target pay opportunities among the different compensation elements, the HRCC does not
adhere to a prescribed formula but generally emphasizes performance-based and at-risk elements.
Pay Mix
The following charts illustrate the approximate allocation of the total target direct compensation, as of
December 31, 2024, for our CEO and our other currently-employed named executive officers (Other NEOs),
respectively, between elements that are fixed and those that are variable, performance-based, and “at risk.” As a
result, the actual (or take home) pay that our executives realize in a given year may be more or less than their
total target compensation for that year, as illustrated in the “—Realized and Realizable Pay for our NEOs” below.
CEO—Total Direct Compensation (at Target)
Other NEOs—Total Direct Compensation (at Target)
____________________
(1)
As described elsewhere, 60% of the pay component of the LTI performance component, which has historically been awarded in equity, was
awarded in cash (PLTC) for 2024 due to our low stock price and limited number of shares available for grant.
Realized and Realizable Pay for Our NEOs
The values for LTI awards (both equity and cash) included in the 2024 “Summary Compensation Table” are
presented in accordance with SEC requirements and, for equity, reflect FASB ASC Topic 718 valuations.
Although this allows for comparison across companies, the HRCC has concluded that the prescribed calculation
does not fully represent the HRCC’s annual decision and does not allow for an accurate pay-for-performance
assessment. As such, our HRCC reviews both realized and realizable pay on an annual basis, calculated in the
manner described below.
Compensation Discussion & Analysis
73
2024 ANNUAL REPORT
2025 PROXY STATEMENT
The illustration and table below summarize the realized(1) and realizable(2) pay for our CEO and our other
currently-employed named executive officers (Other NEOs(3)). For each officer, 83% or more was at-risk variable
compensation (i.e., STI, TBRS, PBRS, and PLTC) during each of the last three years:
Year
Realized(1) and
Realizable(2) Pay as a %
of Target Pay for
Our CEO
Average Realized(1) and
Realizable(2) Pay as a %
of Target Pay for
Our Other NEOs(3)
2022
65%
36%
2023
116%
113%
2024
174%
135%
(1)
“Realized Pay” measures the actual pay realized for any given year by adding together: (i) actual salary paid during the year; (ii) any STI
bonus ultimately paid for that year; and (iii) the value of any time- and performance-based LTI awards that vested during the year (based on
the closing stock price on the relevant vesting date and, for PBRS, actual achieved payout levels). For further information on our 2022 and
2023 STI payout of 91% and 83.2%, respectively, see our 2023 and 2024 proxy statements. For further discussion on our 2024 STI payout of
88.5%, see “Section Four—Compensation Design, Awards, and Payouts for 2024—2024 Short-Term Incentive Program.” For further
discussion on our 2022 PBRS performance of 0%, see “Section Four—Compensation Design, Awards, and Payouts for 2024—LTI Linkage to
Performance—No Payouts Under 2022 PBRS Awards.”
(2)
“Realizable Pay” measures the actual pay realizable for a given year by adding together: (i) realized pay, as describe in note (1); and (ii) the
value of any unvested time- and performance-based restricted stock (TBRS and PBRS) (based on our stock price of $5.31 as of December
31, 2024 and, for PBRS, at “target” levels); and (iii) the value of any unvested time- and performance-based long-term cash awards (TLTC
and PLTC) (at “target” levels for PLTC). See our 2024 proxy statement for further information on our 2023 PBRS awards,. For further
discussion on our 2024 LTI awards, see “Section Four—Compensation Design, Awards, and Payouts for 2024—2024 Long-Term Incentive
Compensation.”
(3)
“Other NEOs” are Mr. Stansbury for 2022, 2023, and 2024, Ms. Haynes-Gaspar for 2023 and 2024, and Mr. Ward for 2024.
As described herein, STI and performance-based LTI payouts are determined at the end of a performance
period based on the actual achievement of pre-established goals.
• Short-Term Performance: In the last three years, all of our STI payouts were below target, for an average
payout of 88%.
• Long-Term Performance: For each of the three-year LTI performance periods ending on December 31, 2022,
2023, and 2024, we failed to achieve threshold performance, resulting in 0% payouts.
• Shareholder Value Creation: The performance of the Company’s stock has a material impact on the amount of
compensation ultimately realized by our NEOs, aligning their interests with those of our shareholders. While
our stock price declined between the time Ms. Johnson was appointed as our CEO in November 2022 and
June 2024, when it fell below $1, as of December 31, 2024, our stock price had increased to $5.31, representing
a one-year TSR of 190%.
Compensation Discussion & Analysis
74
Section Four—Compensation Design, Awards,
and Payouts for 2024
Our Pay Elements
The three core elements of our executive compensation program—which generally comprise our NEOs’ total
direct compensation—are base salary, annual STI bonus opportunity (typically paid in cash), and annual LTI
grants (historically consisting solely of equity-based awards but, as explained herein, were structured as a mix of
long-term performance-based cash (LTPC) and time-based restricted stock (TBRS) for 2024). Each element is
described below, including the performance metrics selected for our 2024 incentive programs.
CEO
Element and Description
2024 Design
Changes
2024 Performance Objectives
Aligned with Strategy
Base Salary
Base Salary
As with most companies, base salary is annual
fixed cash compensation that provides
competitively set and stable income to
our executives.
Short-Term
Incentive
Bonus
STI Program
STI bonus is annual variable cash
compensation based on the achievement of
annual performance measures.
Alignment to Compensation Philosophy
STI provides competitive short-term
incentive opportunities for our executives to
earn annual bonuses, typically paid in cash,
based on performance objectives that, if
attained, can reasonably be expected to (1)
promote our business and strategic
objectives and (2) correspond to those paid
to similarly situated and comparably-skilled
executives at peer companies. The HRCC
retains discretionary authority over
determining any and all amounts to be paid
under the STI plan.
Elected to measure our
STI performance
based on the sum of
two six-month
performance periods,
which aligns to our
mid-year change in
strategy, as described
in further detail in
“Section One—
Executive Summary—
Recalibrating Our 2024
Incentive Programs to
Align with Our
Business
Transformation.”
Adjusted EBITDA measures the
operational performance and profitability
of our businesses and is commonly used
by industry investors to evaluate our total
enterprise value. (50%)
Revenue generation is critical to our goal
of transitioning to growth. (35%)
Customer Experience is critical to maintain
and grow our revenue base. (15%)
A positive or negative adjustment for
individual performance based on “line of
sight” for their specific areas of
responsibility and individual objectives.
Any positive adjustments for a NEO’s
individual performance are capped at 20%
of the STI amount otherwise payable
based on Company performance.
(Individual Performance modifier)
Long-Term
Incentive
Compensation
LTI Program
LTI provides variable compensation
historically awarded annually solely in equity
that vests over three years from the date of
grant, with at least 60% of the award for our
senior leaders based on the level of
achievement of pre-established performance
measures for a three-year period.
Alignment to Compensation Philosophy
LTI fosters a culture of ownership, aligns the
long-term interests of our executives with
our shareholders, and helps to retain
executives through stock price growth and
the creation of long-term value.
Our performance-based awards are
dependent upon our performance
measured against key business objectives
over a three-year period, further
strengthening the alignment between
executive pay, Company performance and
shareholder value creation. The amount of
LTI compensation that is ultimately realized
depends on how successfully we execute
our strategic goals and our overall
stock performance.
Due to our low share
price and constraints
on our equity pool in
early 2024, we shifted
the 60% performance-
based portion of our
annual LTI awards
from equity to cash
Time-Vested LTI Awards (TBRS-40%) are
intended to align our executives and
shareholders interests by focusing on the
long-term value of our Common Shares.
Long-Term Performance-Based Cash
Awards (LTPC-60%) are comprised of
two-equally weighted metrics:
Cumulative Free Cash Flow measures our
ability to fund our long-term growth while
investing in our future and meeting our
debt obligations over a three-year
period. (30%)
Relative Total Shareholder Return or rTSR
rewards achievement of stock price
growth relative to our TSR peer group
over a three-year period and further
strengthens the alignment of executive
and shareholder interests. (30%)
Replaced Cumulative
Adjusted EBITDA
metric and Revenue
Modifier with
Cumulative Free Cash
Flow metric to align
our senior leadership
team with our strategy
to fund the investment
in our future while
concurrently meeting
our debt obligations
For a discussion of how the HRCC allocates compensation among these three key components, see “Section
Three—Pay and Performance Alignment.”
Compensation Discussion & Analysis
75
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Primary Performance Measure
As noted in our discussion of STI metrics below, in light of the systemic revenue decline for our high-margin,
legacy voice and copper wireline services, we annually adjust our cost structure, requiring a disciplined focus on
adjusted EBITDA and margins. The HRCC elected to continue the use of Adjusted EBITDA as our primary
performance measure for our 2024 STI awards, which incentivizes our senior officers to focus on both cost
savings and profitable revenue growth on an annual basis, consistent with our publicly-disseminated outlook.
In 2024, the HRCC changed the primary performance measure for our LTI awards, eliminating Cumulative
Adjusted EBITDA (which was our LTI program’s primary measure from 2020 to 2023 and overlapped with our
STI program), to Cumulative Free Cash Flow, which incentivizes our senior officers to focus on our ability to
fund our long-term growth while investing in our future and meeting our debt obligations.
Recalibration of Our 2024 Incentive Programs
The timeline below summarizes steps taken in 2024 by the HRCC, in conjunction with management and the
HRCC’s compensation consultant, after assessing the substantial impacts of mid-year developments in 2024
arising out of our strategy to transform our business.
Approval of Original 2024 STI Targets and 2024 LTI Awards
At its February 2024 meeting, the HRCC approved the design for our 2024 STI and LTI programs,
which aligned to our Company strategy at that time, as follows:
STI. For our 2024 STI program, the HRCC established threshold, target, and maximum performance
levels (the “Original 2024 STI Targets”) for Adjusted EBITDA and Revenue metrics, which
represented 50% and 35%, respectively, of the total opportunity for 2024. These targets were
aligned with our internal budget and publicly disseminated guidance at that time, and did not
contemplate the PCF partnerships that would be announced during the second half of 2024. The
remaining 15% was based on qualitative metrics measuring Customer Experience.
LTI. For our 2024 LTI program, the HRCC approved grant values for our officers (commensurate
with their respective LTI target opportunities) and the following design:
• Maintained 40% time-based restricted shares and determined number of shares as
described below.
• Shifted the 60% performance-based portion from equity to cash, maintaining the same two
equally-weighted metrics as our 2023 LTI awards, with the addition of a modifier:
• Relative TSR—the HRCC established the threshold, target, and maximum performance
levels; and
• Cumulative Adjusted EBITDA and a +/- 20% Revenue Modifier—the HRCC did not set the
cumulative Adjusted EBITDA threshold, target, and maximum performance levels or the
revenue modifier target in February, due to the pending debt restructuring and initial
indications that we could enter into transformative PCF deals later in the year, both of which
would impact our performance over the three-year performance period. The HRCC and
management agreed to monitor these items and discuss them at the HRCC’s next regularly
scheduled meeting in May.
Discussion of Change in Strategy’s Impact to Our 2024 STI and LTI Programs
During its May 2024 meeting, the HRCC discussed with our CEO and its independent
compensation consultant, Semler Brossy, our March 2024 debt restructuring transactions and
pending negotiations of our PCF partnerships which began shortly thereafter. All parties agreed
that the PCF partnerships would cause a significant shift in our strategy for 2024 and beyond,
and that the HRCC should continue to monitor events to ensure that our incentive programs
remained aligned with our business strategies.
Compensation Discussion & Analysis
76
Announcement of PCF Partnerships
As discussed elsewhere herein, in July 2024, Lumen announced our first PCF partnership with
Microsoft, and additional PCF partnerships were announced with Meta and Amazon during
October and November 2024, respectively.
Revised Outlook for 2024
In August, we revised our 2024 outlook to both decrease our anticipated Adjusted EBITDA and
increase our anticipated capital expenditures to reflect our change in strategy for the second
half of 2024, mostly driven by the material impacts of the multiple large PCF deals.
Analysis to Recalibrate our 2024 Incentive Programs to Align With Our New Strategy
Prior to approving the recalibration of our 2024 incentive programs, the HRCC, management,
and the HRCC’s independent compensation consultant completed a multi-month, thorough
analysis which included:
• Closely monitoring the negotiations of the PCF partnerships and projecting the timing of cash
flows and any unplanned costs associated to these projects and how they would impact our
2024, 2025, and 2026 forecasts;
• Striving to ensure that our key personnel would be incentivized against appropriately tailored
metrics and goals aligned with our new strategy over the respective one- and three-year
performance periods;
• Analyzing the impact this mid-year change in strategy would have on our previously
approved 2024 incentive programs and targets and if any payouts would be unfairly
impacted as a result; and
• Carefully weighing the pros and cons of various modifications to our 2024 incentive
programs, including the potential reactions of our shareholders.
Approval of Adjusted 2024 STI Targets
During its August 2024 meeting, the HRCC reviewed the recalibration analysis and determined that
(1) pursuing our long-term strategies to transform our business trajectory would negatively impact
our short-term adjusted EBITDA, (2) our annual 2024 results would include unanticipated additional
expenses related to our revised strategy and (3) adjustments to the Original STI Targets were
necessary to prevent our 2024 STI payouts from being unfairly adversely impacted by our pursuit
of long-term growth.
The HRCC adjusted the original 12-month Adjusted EBITDA and Revenue targets by approving new
targets comprised of the sum of two discrete six-month performance periods (the “Adjusted 2024
STI Targets”):
• The first half of 2024 (January 1 to June 30, 2024) based on Original Targets, and
• The second half of 2024 (July 1 to December 31, 2024) based on our revised guidance and
forecast, which included the impacts for the recently announced PCF deals.
The HRCC did not change the qualitative goals, established in early 2024, for our Customer
Experience objective.
The HRCC made this change in accordance with our Incentive Program Guidelines as described in
greater detail below.
Compensation Discussion & Analysis
77
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Continued Discussion of Aligning Our 2024 LTI Program with Our New Strategy
During its August 2024 meeting, the HRCC again reviewed the recalibration analysis and
determined that Cumulative Adjusted EBITDA and the Revenue modifier (as disclosed in our
2024 proxy statement) were no longer the most appropriate measures for the three-year
performance period underlying the 2024 LTI awards. The HRCC, management, and the HRCC’s
independent compensation consultant agreed that Cumulative Free Cash Flow would be a more
appropriate measure for our 2024 LTI program, as it measures our ability to fund and invest in
our growth over this three-year performance period.
At the time of this meeting, management was still negotiating PCF partnerships with Meta and
Amazon, so we delayed setting the Cumulative Free Cash Flow targets until our next regularly
scheduled HRCC meeting in November 2024.
Approval of Cumulative Free Cash Flow Targets
At its November 2024 meeting, with more than two years remaining in the three-year performance
period underlying the 2024 LTI awards, the HRCC formally approved the use of Cumulative Free
Cash Flow (in lieu of the original Cumulative Adjusted EBITDA and Revenue performance goals)
and established the threshold, target, and maximum performance levels for the LTI awards, based
on the information available at that time and aligned with our most recent internal forecast, which
included assumptions for the three announced PCF deals.
Approved Company Performance Funding for Our 2024 STI Program
In February 2025, the HRCC approved the calculated Company performance funding of 88.5% (as
confirmed by our Internal Audit group) for our 2024 STI program and based on the financial and
qualitative metrics detailed below. The HRCC reviewed audited results of the Company’s
performance as compared to Adjusted 2024 STI Targets and, as described in greater detail in this
section, determined and approved certain adjustments in accordance with our Incentive
Program Guidelines.
Compensation Discussion & Analysis
78
Target Compensation
As noted previously, the three key elements of our executive compensation program are base salary, STI bonus
opportunity, and LTI awards (60% of which were LTPC in 2024). The HRCC establishes target compensation
levels for each of our senior officers on each of these three elements, reviewing the pay mix and pay levels at
least annually.
On an annual basis, we review the competitive market analyses of the total direct compensation for our NEOs
and other senior officers. We target the median of our compensation peer group, while taking into consideration
all relevant factors, including (1) the need to attract, retain, and motivate employees with essential expertise
and skill, (2) internal equity for employees who make similar contributions and have comparable skill sets and
expertise, and (3) individual performance.
A summary of compensation changes during 2024 and the total target compensation opportunities, as of
December 31, 2024, for our Current NEOs are below:
Kate Johnson
President and
Chief Executive
Officer
2024 Total Target Compensation of $18,410,000
• Ms. Johnson received an 8% increase to her base salary (from $1,200,000 to
$1,300,000) and an increase to her STI target from 200% to 220%, effective
March 1, 2024.
Chris D. Stansbury
Executive Vice
President, Chief
Financial Officer
2024 Total Target Compensation of $7,412,500
• Mr. Stansbury received a 6% increase to his base salary (from $800,000 to $850,000)
and an increase to his LTI target opportunity from $5,000,000 to $5,500,000,
effective March 1, 2024.
• No changes were made to his STI target of 125%
Compensation Discussion & Analysis
79
2024 ANNUAL REPORT
2025 PROXY STATEMENT
David Ward
Executive Vice
President, Chief
Technology and
Product Officer
2024 Total Target Compensation of $4,000,000
• Mr. Ward joined the Company as our Chief Technology Officer on February 12, 2024.
His base salary of $675,000, STI target of 100%, and LTI target opportunity of
$2,500,000 were established upon his hiring through arms-length negotiations, taking
into account his qualifications and experience, data on comparable market level
compensation, and internal equity.
• Mr. Ward received on-boarding awards as part of his hiring compensation
package. For further details see “—Compensation Arrangements Related to
Leadership Transition.”
• In connection with Mr. Ward’s promotion to EVP, Chief Technology and Product
Officer, the HRCC approved an 11% increase to his base salary to $750,000, effective
as of August 30, 2024, and his LTI target opportunity was increased to $3,250,000,
which is effective for his 2025 annual LTI award.
Ashley Haynes-
Gaspar
Executive Vice
President, Chief
Revenue Officer
2024 Total Target Compensation of $3,600,038
• No changes were made to Ms. Haynes-Gaspar’s base salary or STI target.
• Ms. Haynes-Gaspar received an increase to her LTI target opportunity from
$2,000,000 to $2,350,000, effective March 1, 2024.
For more information on how we determined specific pay levels in 2024, see further discussion in ”—Base
Salary”, “—2024 Short-Term Incentive Program,” and “—2024 Long-Term Incentive Compensation” below in this
section and in “Section Five—HRCC Engagement and Compensation Governance—Role of Peer Companies
—Compensation Benchmarking Peer Group.” Each of these elements is discussed in greater detail below.
For information on the target pay levels of our Former NEOs, see discussion in “—Compensation Arrangements
Related to Leadership Transition.”
Compensation Discussion & Analysis
80
Base Salary
Early each year, the HRCC takes a number of steps in connection with setting annual base salaries, including the
review of: (1) compensation tally sheets and benchmarking data comparing our executive’s pay to our peer
group; (2) each senior officer’s pay and performance relative to other senior officers; (3) the scope and
complexity of the officer’s role; (4) the officer’s experience and proficiency and the criticality of the skill set
needed to execute the officer’s role; and (5) when the officer last received a pay increase.
In February 2024, as a result of the review and consideration of the above factors, Ms. Johnson and
Mr. Stansbury received salary increases of 8% and 6%, respectively, effective March 1, 2024, as set forth in
the table below, and the base salaries for our other NEOs employed at the time were left unchanged.
As described in greater detail in “Compensation Arrangements Related to Leadership Transition” in this section,
Messrs. Ward, Ho, and Lakshmanan’s base salaries were established upon their hiring through arms-length
negotiations taking into account their respective qualifications and experience, data on comparable market level
compensation, and internal equity. In connection with his promotion to EVP, Chief Technology and Product
Officer, the HRCC approved an increase of Mr. Ward’s base salary effective August 30, 2024.
NEO
Beginning
Annual Base
Salary(1)
Annual Base
Salary as of
December 31,
2024
% Increase
Current NEOs
Ms. Johnson
$ 1,200,000
$ 1,300,000
8%
Mr. Stansbury
800,000
850,000
6%
Mr. Ward
675,000
750,000
11%
Ms. Haynes-Gaspar
625,019
625,019
—
Former NEOs
Mr. Goff
700,000
—
—
Mr. Ho
700,000
700,000
—
Mr. Lakshmanan
550,000
—
—
(1)
The beginning base salary for Messes. Johnson and Haynes-Gaspar and Messrs. Stansbury and Goff are as of January 1, 2024. The beginning
base salary for Messrs. Ward, Ho and Lakshmanan are as of their respective hire dates as described further below.
For more information on how we determined specific pay levels in 2024, see further discussion under the
heading “Section Five—HRCC Engagement and Compensation Governance—Role of Peer Companies—
Compensation Benchmarking Peer Group.”
Compensation Discussion & Analysis
81
2024 ANNUAL REPORT
2025 PROXY STATEMENT
2024 Short-Term Incentive Program
As described below, the 2024 STI program incorporates three components in determining the calculated STI
bonus amount (payout) for our NEOs: (1) target bonus opportunity; (2) company performance funding; and
(3) individual performance modifier. The 2024 STI program applies not only to our senior leadership team, which
includes the NEOs, but also to approximately 18,000 employees of our Company.
TARGET
BONUS
OPPORTUNITY
×
COMPANY
PERFORMANCE
FUNDING
×
INDIVIDUAL
PERFORMANCE
MODIFIER
=
STI Bonus
Amount
(Base Salary x STI
Target Bonus %)
(0% to 200%)
(0% to 120% for NEOs)
(capped at 2x target
opportunity)
Notwithstanding Company performance, the bonus otherwise payable to any NEO, including any of our
employees, may be eliminated based on his or her individual performance.
2024 STI Target Bonus Opportunity
As noted above, 2024 STI target bonus opportunities were equal to the product of an employee’s (1) earned
base salary for 2024 and (2) his or her STI target bonus percentage, with any mid-year adjustments resulting in
a blended percentage based on the target bonus percentages before and after the adjustment.
The 2024 STI target opportunities for our NEOs are set forth in the table below. As reflected in that table,
following the annual review and consideration of compensation benchmarking at its first quarter meeting, the
HRCC increased the STI target bonus percentage for Ms. Johnson to 220% and left the STI target opportunities
unchanged for the other NEOs then employed.
NEO
Beginning
STI Target
Percentage(1)
STI Target
Percentage as of
December 31,
2024
% Increase
Current NEOs
Ms. Johnson(2)
200%
220%
+20%
Mr. Stansbury
125%
125%
—
Mr. Ward
100%
100%
—
Ms. Haynes-Gaspar
100%
100%
—
Former NEOs
Mr. Goff
120%
—
—
Mr. Ho
100%
100%
—
Mr. Lakshmanan
100%
—
—
(1)
The beginning STI target opportunities for Messes. Johnson and Haynes-Gaspar and Messrs. Stansbury and Goff reflect their respective
targets for 2023. The beginning STI target opportunities for Messrs. Ward, Ho, and Lakshmanan are as of their respective hire dates, as
described further below.
(2)
Effective March 1, 2024, the HRCC increased the STI target opportunity for Ms. Johnson to 220% in recognition of her performance as CEO
and to align with her external peers.
For more information on how we determined specific pay levels in 2024, see further discussion under the
heading “Section Five—HRCC Engagement and Compensation Governance—Role of Peer Companies—
Compensation Benchmarking Peer Group.”
Compensation Discussion & Analysis
82
2024 STI Metrics and Results
For 2024, the HRCC, after consultation with our CEO and its independent compensation consultant, Semler
Brossy, concluded that STI metrics and weightings comprising continued to align with our strategy.
1) Company Performance
n Adjusted EBITDA
Measures the operational performance and profitability of
our businesses
n Revenue
Generation of Revenue is critical to our goal of transitioning
for growth
n Customer Experience
Measures the ease of doing business with us through strategic
investments in areas that impact customer experience
The performance and results of our 2024 STI program are described in detail below.
As discussed elsewhere in this CD&A, the HRCC approved our 2024 STI design in February and, in response to
the change in our strategy in mid-2024, adjusted the 2024 STI targets for our financial metrics in August.
The table below details and reconciles the two discrete six-month performance periods comprising our Adjusted
2024 STI Targets.
(Amounts in Millions)
First Half of 2024
STI Targets(1)
Second Half of
2024 STI Targets(2)
Adjusted 2024
STI Targets(3)
Adjusted EBITDA(4)
$ 2,078
+
$ 1,997
=
$ 4,075
Revenue
$ 6,699
+
$ 6,583
=
$ 13,282
(1)
Represents the first half of the Original 2024 STI Targets, for the six-month period from January 1, 2024 through June 30, 2024. In February
2024, the HRCC established threshold, target, and maximum performance levels for Adjusted EBITDA and Revenue, with targets of
$4,200 million and $13,475 million, respectively, for the twelve-month period from January 1, 2024 through December 31, 2024 (the “Original
2024 STI Targets”). The Original 2024 STI Targets were rooted in our annual budget approved in February 2024 and external guidance (of
$4.1 to $4.3 billion for 2024 adjusted EBITDA) approved in February 2024, which did not contemplate the PCF partnerships that were
announced during the second half of 2024. The Original 2024 STI Targets were set below our actual 2023 financial results, as our 2023
results included the results of our divested EMEA business only through November 2023 and because of the continued decline in our legacy
services.
(2)
Represents the second half of our Adjusted 2024 STI Targets, for the six-month period from July 1, 2024 through December 31, 2024. In
August 2024, we revised our internal forecast for Revenue downward and reduced our guidance for Adjusted EBITDA to $3.9 to $4.0 billion
for 2024, reflecting the impact of (i) our March 2024 debt modification and (ii) capital outlay and operating costs for our new PCF deals.
(3)
As permitted under our Incentive Program Guidelines, in August 2024, following the actions described in footnote 2, the HRCC established
threshold, target, and maximum performance levels for Adjusted EBITDA and Revenue (the “Adjusted 2024 STI Targets”) comprised of the
sum of the targets for the two discrete six-month performance periods described above in footnotes 1 and 2. The Adjusted 2024 STI Targets
for Adjusted EBITDA and revenue are lower than the Original 2024 STI Targets by $125 and $193 million, respectively, and reflect the impact
of (i) our March 2024 debt modification and (ii) capital outlay and operating costs for our new PCF deals which were not contemplated in
our external guidance and annual budget approved in February 2024. See “—Recalibration of our 2024 Incentive Programs” and “—Goal
Setting Process and Incentive Program Guidelines” for more information.
(4)
As used in our STI plan, adjusted earnings before interest, taxes, depreciation, amortization and stock-based compensation expense
(“Adjusted EBITDA”) is a non-GAAP metric that excludes certain one time or non-recurring charges or credits and eliminates the effects of
certain unanticipated, extraordinary, unusual, or non-recurring transactions or items. See Appendix A for more information.
For more information see “Section Two—Compensation Philosophy and Oversight,” “—Goal Setting Process and
Incentive Program Guidelines,” and “—Recalibration of our 2024 Incentive Programs.”
For additional information on Lumen and our recent performance, see “Item 7. Management’s Discussion and
Analysis of the Financial Condition and Results of Operations” included in Appendix B.
Compensation Discussion & Analysis
83
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Calculation of Achieved Payout
The achieved payout percentage is calculated for each financial performance objective based on a
corresponding payout scale approved by the HRCC. If the threshold performance level with respect to any
particular financial performance objective under our STI program is not attained, the bonus payable to the
participating officer with respect to that portion of his or her targeted bonus opportunity will be calculated as
zero. If threshold performance is met, but and below target level performance, on any particular metric, each
participating officer will earn a reduced portion of his or her target bonus amount for that portion of the award.
If the maximum performance level with respect to any particular metric is met or exceeded, each participating
officer will earn a maximum of 200% of his or her target bonus amount for that portion of the award.
Measurement of the attainment of any particular metric is interpolated if actual performance is between (1) the
“threshold” and the “target” performance levels or (2) the “target” and the “maximum” performance levels.
Metric: Adjusted EBITDA (weighted 50%)
Alignment to Our Strategy
Adjusted EBITDA remained our most heavily-weighted STI financial performance objective, at 50%, for 2024.
We believe this metric is aligned with our shareholders’ best interests and our corporate strategy of pursuing
profitable growth. As described elsewhere herein, in light of the systemic revenue decline for our higher-margin
legacy services, we continuously need to adjust our cost structure—requiring a disciplined focus on Adjusted
EBITDA and margins. We also set targets for Adjusted EBITDA at levels below prior year results because of this
systemic decline, to ensure the program could effectively incentivize and reward our senior officers to focus on
both cost savings and profitable revenue growth.
As described above, in August 2024 we revised our 2024 Adjusted EBITDA outlook downward to reflect an
anticipated increase in our capital expenditures for the multiple large PCF deals which were not contemplated at
the beginning of the year. At that time, we did not accurately quantify the cost of (1) a third-party study to
establish a reasonably firm estimate of construction costs necessary to perform our obligations under our PCF
deals or (2) the establishment of a new network operations team to execute the multi-year complex
construction projects. For these and other reasons, our $3.939 billion of Adjusted EBITDA fell short of our
Adjusted 2024 Target goal for Adjusted EBITDA, achieving 66.7% payout. Even though the increased
investments in 2024 negatively impacted our near-term Adjusted EBITDA, we believe they will promote
long-term growth and enhance our liquidity and, as such, are ultimately in the best interest of our shareholders.
Adjusted 2024
Target Amount of
Adjusted EBITDA
Payout as a % of
Target Award
Results:
Maximum
≥ $4,686 million
200%
$3,939 million
(Below Target)
ACHIEVED
PAYOUT OF
66.7%
Target
$4,075 million
100%
Threshold
$3,871 million
50%
Below Threshold
< $3,871 million
0%
Metric: Revenue (Weighted 35%)
Alignment to Our Strategy
The generation of revenue is critical to our goal of increasing revenue from our growth products in amounts
sufficient to offset our continuing and systemic legacy revenue losses. Thus, we continued its weighting at 35%
for our 2024 STI plan.
The HRCC believes our senior officers were appropriately incentivized to achieve profitable revenue growth,
since the majority of our 2024 STI is based on Adjusted EBITDA.
Compensation Discussion & Analysis
84
Adjusted 2024
Target Amount
of Revenue
Payout as a % of
Target Award
Results:
Maximum
≥ $14,611 million
200%
$13,108 million
(Below Target)
ACHIEVED
PAYOUT OF
93.4%
Target
$13,282 million
100%
Threshold
$11,954 million
50%
Below Threshold
< $11,954 million
0%
Metric: Customer Experience (Weighted 15%)
We aim to improve customer satisfaction and service scores, invest in priority areas, and reduce complexity,
disruption, and repair times to boost customer satisfaction and, ultimately, revenue. Thus, customer experience
was weighted at 15% in our 2024 STI plan. While the overall customer experience metric is ultimately qualitative,
we used Net Promoter Scores (NPS) and Customer Health Scores (CHS) to help assess performance on a
quantitative basis.
Both our Mass Markets and Enterprise businesses focus on improving customer relationships, informed by data
trends. Regression analysis helps us prioritize programs that drive the most significant improvements. In
February 2024, the HRCC set performance targets for each business based on historical trends and
industry benchmarks.
Research suggests increased NPS, which is a lagging indicator which reflects customer loyalty, generates
increased spending within 24 months. We track both transactional NPS (tNPS) and relationship NPS (rNPS) for
our Mass Markets and Enterprise businesses. CHS is a leading indicator and includes over two dozen key
performance indicators across the customer lifecycle, providing actionable insights and predicting customer
behavior. The HRCC set a goal of tNPS for our Mass Markets business and set a goal of CHS for our Enterprise
business, each described in detail below.
Mass Markets tNPS. For our Mass Markets business, our 2024 tNPS goal was to maintain +64 while increasing
installations of products and services. While tNPS rose in the first half of 2024, despite a fourth quarter
rebound, Mass Markets ended 2024 with a +52 tNPS due to an unscheduled update by a third-party vendor
which caused significant operational impacts and outages, leading to quadrupled call volumes and
overwhelming our field operations.
Enterprise Customer Health Score. For our Enterprise business, our 2024 CHS goal was to improve the
combined scores of three groups of our Enterprise customers—large enterprise, customers migrating from one
or more of our services to another, and new customers based on recent interactions—by 5%. We achieved 96.3%
of this goal, and despite difficult headwinds of unplanned disconnects and outages, our quick response and
communication helped maintain customer trust.
Enterprise tNPS. While we not establish a goal for our 2024 STI in this regard, Enterprise customer satisfaction
(tNPS) rose over 30 points year-over-year, with all four customer segments showing significant improvement
each quarter. The Enterprise business achieved the highest rNPS in three years, with a 9.4 point increase during
the year.
Customer Experience Results
As noted above, our 2024 NPS and CHS results were slightly below our Mass Markets and Enterprise customer
experience goals. The HRCC determined that our commitment to customer experience, and the dedication and
resilience of our customer success and service delivery teams in the face of substantial challenges, enabled us to
deliver strong results not reflected by these scores. In reaching this conclusion, the HRCC noted that we closed
$8.5 billion in PCF deals with hyperscalers in 2024, repositioning the Company to be deeply relevant to
enterprises in the era of AI. We then drove $576 million of total contract value outside these PCF deals and
grew our funnel of potential business opportunities to nearly $1 billion of total contract value, including
additional PCF deals. Additionally, more than 500 new customers adopted our NaaS (Network as a Service)
services. These accomplishments were possible because of that repositioning of the Company, combined with
significant improvement in NPS because of our focus on customer experience, which collectively helped us
deliver a strong customer experience performance during the second half of 2024, as well as positioning us well
for 2025.
Compensation Discussion & Analysis
85
2024 ANNUAL REPORT
2025 PROXY STATEMENT
The HRCC determined that we meaningfully delivered on our commitments to our customers and improved our
customer trust, and therefore approved funding our 2024 customer experience goal at 150%.
2) Individual Performance Modifier
As contemplated by the STI plan and our Incentive Program Guidelines, the HRCC reserves the right to increase
or decrease the STI bonus payout level based on its qualitative assessments for each senior officer’s
performance against certain specific objectives and benchmarks, as well as overall Company and individual
performance during the year. The HRCC may eliminate the STI bonus otherwise payable to any of our executives
based on his or her individual performance, any upward adjustment for an NEO based on his or her individual
performance is capped at 20% (i.e., 120% of Company performance funding), and in no event can an executive
receive more than twice his or her target bonus opportunity.
Given the importance of our NEOs in making and putting into operation decisions that set the Company up for
future success, for 2024, the HRCC assessed each NEO’s individual performance against the following four
key objectives:
• Financial—relevant financial objectives based on the individual’s role;
• Strategic—goals vary based on individual and cover areas such as customer obsession, innovation and
investing for growth;
• Operations—goals vary based on individual and cover areas such as building a reliable execution engine and
radically simplifying our Company; and
• Organization—goals vary based on individual and cover areas such as culture, and talent retention
and development.
Given each NEO’s performance and leadership accomplishments and the resulting remarkable year and
significant “wins” which are not reflected in our 2024 results for Adjusted EBITDA and revenue and the resulting
STI payouts, the HRCC approved Individual Performance Modifiers of 120% for Mses. Johnson and Haynes-
Gaspar and Messrs. Stansbury and Ward.
Ms. Johnson
The year 2024 was remarkable! Under Ms. Johnson’s leadership, we made critical steps to
transform Lumen from a traditional telecom company to a networking company.
• Substantially strengthened our financial position and restored our reputation in the capital
markets and telecom industry. By negotiating the largest private debt restructuring of its
kind, signing $8.5B of private network deals to inject cash into the Company, and
reducing our debt by $1.6B, we removed an existential liquidity threat and restored
shareholder, customer, and employee confidence in Lumen.
• Drove operational excellence in both Mass Markets and Enterprise, reengineering our
major corporate functions by infusing our teams with fresh talent, streamlining our core
processes, beginning to reduce our complexity, and programmatically improving
our operations.
• Repositioned Lumen to be Big Tech’s “trusted network for AI.” We taught the world that
fiber networking truly is critical infrastructure, and that AI strategies need
network strategies.
• Achieved substantially stronger employee engagement scores, where 91% of employees
said their managers’ behaviors are consistent with Lumen’s culture.
120%
NEO
Individual Performance Scorecard
Individual
Performance
Modifier
Compensation Discussion & Analysis
86
Mr. Stansbury
Under Mr. Stansbury’s leadership, during 2024, we significantly improved our financial
outlook and restored investor confidence.
• Strengthened our balance sheet with the largest private debt restructuring of its kind
($15 billion in debt modifications) and repurchased over $750 million of our senior notes,
providing additional time for us to execute our transformation.
• Negotiated over $8.5 billion in PCF partnerships, injecting cash into the Company and
funding our ability to invest in our future.
• Restored investor confidence, driving a multi-billion dollar increase in the market value of
our senior debt securities and increasing the trading price of our equity from $1 to $5.31 at
year-end.
• Delivered adjusted EBITDA results of $3.9 billion, which is within our revised guidance,
and achieved 98.7% ($13.1 billion) of our budget for revenue.
120%
Mr. Ward
Mr. Ward is viewed by many as an industry icon. In his first year, he set the foundation to
simplify our company, drive operational efficiency, and accelerate our network effectiveness.
• Integrated legacy networks by connecting metro architecture across over 400 wire
centers and over 4,000 towers.
• Decommissioned over 30 applications and 3,800 servers, modernizing 3,595 databases,
and reclaiming over 2.26 petabytes of storage.
• Enhanced our service assurance processes, saving 4.2 million in operation hours.
• Replaced end-of-life firewalls and IT network equipment.
• Consolidated operations, reducing capital expenditures, and enabling a
talent refreshment.
• Developed technology and product roadmaps that we believe will drive the cloudification
of telecom services and position us as the backbone to the AI economy.
In August 2024, he assumed the position and responsibilities of Lumen’s Chief Product
Officer in addition to his role as Chief Technology Officer, immediately leading with vision,
clarity, and execution.
120%
Ms. Haynes-
Gaspar
Ms. Haynes-Gaspar is an innovative thinker with advanced problem-solving capabilities.
Ms. Haynes-Gaspar successfully executed against her goal to build a world-class
sales engine.
• Closed $8.5 billion in PCF sales.
• Achieved year-over-year seller productivity growth of 39%.
• Increased year-over-year deal wins and deal size by 20%+.
• Expanded year over year sales by 26% for large enterprise, 22% for mid-markets, and 2%
for public sector.
• Improved year-over-year renewals by 34% and migrations by 150% by targeting the
highest risk customers.
Ms. Haynes-Gaspar also delivered against our customer experience and CHS goals for our
Enterprise business, despite concerns from our customers regarding our long-term financial
stability, including:
• 30+ point rise in transactional NPS.
• 9.4 point rise in relational NPS with improvements across every segment.
120%
NEO
Individual Performance Scorecard
Individual
Performance
Modifier
In accordance with the STI plan, the HRCC also approved Individual Performance Modifiers of 90% for each of
our three former NEOs, Messrs. Goff, Ho and Lakshmanan, all of which were employed for at least three months
of the performance period and no longer employed as of the STI bonus payment date.
Compensation Discussion & Analysis
87
2024 ANNUAL REPORT
2025 PROXY STATEMENT
2024 STI Payouts
The HRCC approved each NEO’s STI bonus as summarized in the table below.
2024 STI Bonus Amounts
NEO
STI Target Bonus
Opportunity(1)
Company
Performance
Funding(2)
Individual
Performance
Modifier(3)
Calculated STI
Bonus Amount
Current NEOs
Ms. Johnson
$ 2,784,606
X
88.5%
X
120%
$ 2,957,252
Mr. Stansbury
$ 1,052,256
X
88.5%
X
120%
$ 1,117,496
Mr. Ward
$ 622,920
X
88.5%
X
120%
$
661,541
Ms. Haynes-Gaspar
$
625,019
X
88.5%
X
120%
$ 663,770
Former NEO
Mr. Ho
$ 392,070
X
88.5%
X
90%
$ 312,284
Mr. Goff
$
493,416
X
88.5%
X
90%
$ 393,006
Mr. Lakshmanan
$ 354,640
X
88.5%
X
90%
$ 282,471
(1)
Reflects the product of the salary the executive earned during 2024 (and, as such, reflect the fact that each of Messrs. Ward, Ho, and
Lakshmanan was employed for less than the full year) and his or her STI target bonus percentage for 2024 (adjusted, for Ms. Johnson, to
reflect her mid-year increase). See “—Target Compensation” above.
(2)
Calculated and adjusted as discussed in “—Company Performance” above.
(3)
See “—Individual Performance Modifier” above.
2024 Long-Term Incentive Compensation
Each year the HRCC approves long-term incentive compensation awards for our senior leadership team,
including the NEOs, and oversees the governance for LTI awards, approved by our CEO, for the approximately
1,200 employees in the upper management of our Company that are eligible for annual LTI awards.
2024 LTI Program
The HRCC believes the structure of our long-term incentive compensation reinforces our performance culture
and incents value creation for our shareholders and promotes retention through multi-year vesting.
Design and Metrics
Given our low stock price and the low number of shares available for grant prior to the approval of the 2024
Equity Incentive Plan, beginning in late 2023, the HRCC worked closely with management and the HRCC’s
independent compensation consultant to: (1) carefully monitor our share usage and projected awards; (2) solicit
feedback from our investors during multiple shareholder engagement calls, spanning our fall engagements in
2023 and 2024; and (3) thoroughly weigh the implications of various modifications for our 2024 LTI awards.
As a result, as described in more detail below, the HRCC recalibrated our annual LTI grants and granted two
long-term award vehicles in March 2024, maintaining the mix of 40% time- and 60% performance-based awards,
but shifting the 60% performance-based portion from equity to cash.
Compensation Discussion & Analysis
88
2024 LTI Program Metrics and Weightings
n Time-Based Restricted Stock (TBRS)
Maintained 40% time-based restricted stock that rewards the
creation of incremental shareholder value over a long-term
period and serves as a retention lever, through graded vesting
over three years.
n Performance-Based Long-Term Cash (PLTC)
Shifted the 60% performance-based portion from equity
to cash(1) that rewards performance achievement (between
0-200%) based on two equally-weighted metrics, described in
detail below, measured over a cumulative three-year period.
n Relative TSR
n Cumulative Free Cash Flow(2)
(1)
As described in further detail below, the shift to cash only applied to our 2024 annual LTI awards for the reasons described above and we
returned to equity, in the form of performance-based restricted stock, for our 2025 annual LTI awards.
(2)
As disclosed in our 2024 proxy statement, the “Initial 2024 LTI Design” included a 30% weighting for cumulative Adjusted EBITDA plus a
Revenue modifier and, as described in further detail below, the HRCC replaced the cumulative Adjusted EBITDA and Revenue modifier
metric with a cumulative Free Cash Flow metric in November 22, 2024.
Following the end of the three-year performance period from January 1, 2024 to December 31, 2026, the amount
of cash vesting under the PLTC granted in 2024 will be calculated by: (1) determining achievement of Lumen’s
TSR performance relative to our TSR Peer Group; and (2) determining achievement of the three-year
Cumulative Free Cash Flow target, each of which is described further below. Each metric is calculated
independently with the ultimate payout ranging between zero to 200% of the target cash amount granted. Any
cash amount earned under the PLTC for our current NEOs generally will vest in full on March 1, 2027, subject to
the holder’s continued employment through that date.
Relative TSR
The HRCC believes a relative metric is an important way to ensure that Lumen’s performance is measured
appropriately relative to peers. Our Relative TSR performance shares are measured on our percentile rank
versus the other 15 companies in our TSR peer group over the three-year period, which could result in a payout
of zero to 200% of this component of the target award. However, if Lumen’s TSR is negative over the three-year
period, the payout cannot exceed target—regardless of our TSR performance relative to our peers. We believe
this cap better aligns the LTI payout with the interests of our shareholders.
With the aid of its compensation consultant, the HRCC set a TSR peer group that is focused principally on
broader universe of companies we believe investors are considering when they decide whether to invest in us
or our industry. As a result, our TSR peer group listed below is comprised of telecommunications, cable and
other communications companies that are generally comparable to us in terms of size, markets and operations.
For more information regarding the determination of our TSR peer group, see “Section Five—HRCC
Engagement and Compensation Governance—Role of Peer Companies—TSR Peer Group” below.
TSR Peer Group
AT&T, Inc.
Comcast Corporation
Motorola Solutions, Inc.
Cable One, Inc.
Consolidated Communications
Telephone & Data Systems Inc.
Charter Communications
EchoStar Corporation
United States Cellular Corporation
CISCO Systems Inc.
Frontier Communications Parent, Inc.
Verizon Communications Inc.
Cogent Communications Holdings, Inc.
Liberty Global plc
Viasat, Inc.
Compensation Discussion & Analysis
89
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Cumulative Free Cash Flow
In March 2024, the HRCC approved the Initial 2024 LTI Design and the annual LTI grants for our senior
leadership team, including measuring half of the performance-based portion of the total LTI awards against
Cumulative Adjusted EBITDA, with a Revenue modifier.
The HRCC did not establish a Cumulative Adjusted EBITDA or Revenue target in March 2024, as management
was then in the process of negotiating the debt modification and TSA transactions and multiple large PCF deals
which would be announced during the coming months. The HRCC instructed management to continue to
monitor the negotiations, evaluate if Cumulative Adjusted EBITDA and Revenue were still the best metrics for
our 2024 LTI program in light of the change in our business strategies, and be prepared to discuss both at our
next regularly-scheduled HRCC meeting, in May.
As noted elsewhere herein, we completed $15 billion of TSA debt modification transactions in late March. At its
second quarter HRCC meeting in May, the large complex PCF deals which were ultimately announced in August,
October and November were still in negotiation, so the HRCC again deferred finalizing any targets for the
three-year period.
At our third quarter HRCC meeting in August, and following several months of review and discussions with our
CEO and the HRCC’s independent compensation consultant, the HRCC left the target PLTC grant values for our
executives unchanged but determined that replacing the Cumulative Adjusted EBITDA and removing the
Revenue modifier were necessary to appropriately align the interests of our senior leadership team with our
revised strategy and the interests of our shareholders. The HRCC also considered the additional benefit of
eliminating the duplicative use of Adjusted EBITDA in both our LTI and STI programs.
The HRCC further determined that a Cumulative Free Cash Flow metric, which measures our ability to fund our
long-term growth while investing in our future and meeting our debt obligations, is the financial metric best
aligned with our new long-term strategy for the three-year performance period ending December 31, 2026,
especially given the significant cash inflow and multi-year construction projects associated with the PCF deals,
as well as the debt maturities and capital investments projected during this period.
In connection with making these determinations, the HRCC noted that it is difficult to predict the timing and
costs related to the execution of the multiple large PCF deals. One unpredictable cost is unanticipated legacy
network maintenance issues that may be discovered during the construction process. Further, our PCF partners
are already requesting that we execute faster than what we contractually agreed upon, adding to the
complexity and difficulty of predicting timing and expense for multiple large PCF deals. Taking these items into
consideration, the Board approved a revised long-range plan in the third quarter of 2024. See “— Recalibration
of our 2024 Incentive Programs.”
In November 2024, in connection with the revisions for our long-range plan and eleven months into the
thirty-six month performance period, the HRCC approved the three-year cumulative target for the Free Cash
Flow metric. The HRCC believes that this target was set at a level that is both appropriate and sufficiently
challenging. We do not believe it is appropriate at this time to disclose our Cumulative Free Cash Flow target, as
it would constitute competitively sensitive forward-looking guidance.
The HRCC set the performance underlying the minimum and maximum levels of payout of 75% and 250% of
target, respectively, based on our historical performance, key assumptions included in our long-range plan,
and sensitivity analyses on alternative outcomes focused on identifying likely minimum and maximum
performance levels.
For more information see “Section Two—Compensation Philosophy and Principles.”
Compensation Discussion & Analysis
90
The table below outlines the targets and payout curves for the two equally-weighted metrics of our 2024 PLTC.
Performance Level
Attainment
Relative TSR(1) (50%)
Cumulative Free Cash Flow(3) (50%)
Target
Payout %(2)
Target Amount
Payout %(2)
Maximum
≥ 75th Percentile
200%
250% of Target Amount
200%
Target
50th Percentile
100%
Target Amount(4)
100%
Threshold
25th Percentile
50%
75% of Target Amount
50%
Below Threshold
< 25th Percentile
0%
<75% of Target Amount
0%
(1)
2024-2026 Relative TSR performance is measured against the 15-company TSR peer group described above.
(2)
Payouts interpolated between defined performance levels.
(3)
Cumulative Free Cash Flow is the sum of our Free Cash Flow for 2024, 2025, and 2026. See Appendix A for more information.
(4)
We do not feel it is appropriate to disclose our Cumulative Free Cash Flow target as it would constitute competitively sensitive
forward-looking guidance.
LTI Target Opportunity
The HRCC takes a number of steps in connection with setting long-term incentive target opportunities for each
of our senior officers, including the review of: (1) compensation tally sheets and benchmarking data; (2) such
officer’s pay and performance relative to other senior officers; (3) the scope and complexity of the officer’s role;
(4) the officer’s experience and proficiency and the criticality of the skill set needed to execute the officer’s role;
and (5) when the officer last received an increase to their LTI target opportunity.
As a result of the review and consideration of the above factors, in February 2024, the HRCC increased the LTI
target opportunities for Ms. Johnson to $14,250,000, Mr. Stansbury to $5,500,000 and Ms. Haynes-Gaspar
to $2,350,000.
The LTI target opportunities for each of Messrs. Ward, Ho, and Lakshmanan were established upon his hiring
through arms-length negotiations taking into account his qualifications, experience, comparable market
compensation levels for their positions, and internal equity. See “—Compensation Arrangements Related to
Leadership Transitions.”
2024 Annual LTI Grants
The HRCC granted annual LTI awards to our then-current NEOs other than Mr. Goff effective March 1, 2024 and
a prorated annual LTI award for Mr. Ho effective upon his hire date of June 10, 2024. Mr. Goff did not receive a
2024 annual LTI award.
2024 Annual LTI Grants
Time-Vested
Restricted Shares
Performance-Based
Long-Term Cash
Total Target
Grant Value(5)
NEO
No. of
Shares(1)(2)
Target Grant
Value(3)
Target Grant
Value(4)
Current NEOs
Ms. Johnson
3,609,194
$ 5,700,000
$ 8,550,000
$ 14,250,000
Mr. Stansbury
1,393,022
2,200,000
3,300,000
5,500,000
Mr. Ward(6)
633,192
1,000,000
1,500,000
2,500,000
Ms. Haynes-Gaspar
595,200
940,000
1,410,000
2,350,000
Former NEOs
Mr. Ho(6)
349,650
450,000
675,000
1,125,000
Mr. Lakshmanan(6)
379,915
600,000
900,000
1,500,000
(1)
Represents the number of restricted shares granted on March 1, 2024 to each of Messes. Johnson and Haynes-Gaspar and Messrs. Stansbury,
Ward, and Lakshmanan, and granted on June 10, 2024 to Mr. Ho. Each grant vests in three equal installments on each of the first three
anniversaries of the grant date, subject to the executive’s continued employment through the relevant vesting date. As discussed under “—
Compensation Arrangements Related to Leadership Transition,” the awards to each Messrs. Lakshmanan and Ho were canceled upon
his termination.
(2)
Any dividends on the shares of restricted stock would not be paid on unvested awards but would accrue and be paid or forfeited in tandem
with the vesting or cancellation, as the case may be, of the related shares.
Compensation Discussion & Analysis
91
2024 ANNUAL REPORT
2025 PROXY STATEMENT
(3)
For purposes of these grants, we determined the number of time-vested restricted shares granted to each executive by dividing the
approved target amount (representing 40% of total target grant value) by the volume-weighted average closing price of our Common
Shares over the 15-trading-day period ending one trading day prior to the grant date. However, as noted previously, for purposes of
reporting these awards in the "Compensation Tables—Summary Compensation Table," our shares of time-vested restricted stock are valued
based on the closing price of our Common Shares on the date of grant, as required by applicable accounting and SEC disclosure rules. For
2024, this resulted in the values reported in the "Compensation Tables—Summary Compensation Table" being slightly higher than those
shown above for most of our NEOs. See footnote 2 to the "Compensation Tables—Summary Compensation Table" for more information.
(4)
Represents the target amount of performance-based long-term cash (representing 60% of total target grant value) granted on March 1,
2024 to each of Messes. Johnson and Haynes-Gaspar and Messrs. Stansbury, Ward and Lakshmanan and on June 10, 2024 to Mr. Ho. Each
grant vests in full on the third anniversary of the grant date, if at all, based on the level of performance achieved against the underlying
metrics and subject to the executive’s continued employment through the relevant vesting date. As discussed under “2024 LTI Program”
above, the actual amount of cash that vests in the future, if any, may be lower or higher (between 0-200%) than the target, depending on
the level of performance achieved against two equally weighted metrics.
(5)
The total target grant value is commensurate with the LTI target opportunities for Messes. Johnson and Haynes-Gaspar and Messrs.
Stansbury, Ward, and Lakshmanan as of the grant date of March 1, 2024 and, for Mr. Ho, the total target grant value is pro-rated to reflect
his partial year of service and represents 50% of his initial LTI target opportunity.
(6)
Excludes the on-boarding LTI grants awarded to Messrs. Ward, Ho, and Lakshmanan in February, June, and January 2024, respectively,
which are described under “2024 On-Boarding Equity Grants” below.
2024 On-Boarding LTI Grants
As part of negotiating offer packages for Messrs. Ward, Ho, and Lakshmanan, they each received an
on-boarding LTI award as outlined in the table below. The HRCC’s independent compensation consultant
advised that these awards were customary in connection with recruiting new executives, and the HRCC
determined that each such grant was necessary to induce the executive to accept his offer of employment,
while also serving to align his interests with shareholders by giving him an immediate equity stake in the
Company. The HRCC further concluded that the on-boarding grants to each of Messrs. Ward and Lakshmanan
were appropriate to partially offset equity that he forfeited upon his departure from his then-prior employer.
Given our low stock price and limited available equity pool at the time of grant, and consistent with our 2024
annual LTI awards, on-boarding LTI awards granted to Messrs. Ward and Lakshmanan were granted in a mix of
equity and cash. Mr. Ho’s on-boarding LTI award was granted in 100% equity given that he joined the Company
after our shareholders’ approval of our 2024 Equity Incentive Plan replenished our equity pool.
2024 On-Boarding LTI Grants
Time-Vested
Restricted Shares
Time-Vested
Long-Term Cash
Total Target
Grant Value
NEO
No. of
Shares(1)(2)
Target Grant
Value(2)
Target Grant
Value(3)
Current NEO
Mr. Ward(1)
912,209
$ 1,250,000
$ 1,250,000
$ 2,500,000
Former NEOs
Mr. Ho(4)
505,051
650,000
—
650,000
Mr. Lakshmanan(4)
419,862
750,000
750,000
1,500,000
(1)
Represents the number of time-based restricted shares granted to Mr. Ward on February 12, 2024, Mr. Ho on June 10, 2024, and
Mr. Lakshmanan on January 8, 2024. The grant to Mr. Ward vests in four equal installments on each of the first four anniversaries of the
grant date, subject to his continued employment through the relevant vesting date. The grants to each of Messrs. Ho and Lakshmanan
vest in three equal installments on each of the first three anniversaries of the respective grant dates, subject to his continued employment
through the relevant vesting date.
(2)
For purposes of these grants, we determined the number of time-vested restricted shares granted to each executive by dividing the
approved total grant value by the volume-weighted average closing price of a share of our Common Shares over the 15-trading-day period
ending one trading day prior to the grant date,. However, as noted previously, for purposes of reporting these awards in the "Compensation
Tables—Summary Compensation Table," our shares of time-vested restricted stock are valued based on the closing price of our Common
Shares on the date of grant. See footnote 2 to the "Compensation Tables—Summary Compensation Table" for more information.
(3)
Represents the amount of time-based long-term cash granted to Mr. Ward on February 12, 2024 and Mr. Lakshmanan on January 8, 2025,
respectively. The grant to Mr. Ward vests in four equal installments on each of the first four anniversaries of the grant date, subject to his
continued employment through the relevant vesting date. The grant to Mr. Lakshmanan vests in three equal installments on the first three
anniversaries of the grant date, subject to his continued employment through the relevant vesting date.
(4)
See “—Compensation Arrangements Related to Leadership Transition” for information regarding the impact of each officer’s termination of
employment on these awards.
Compensation Discussion & Analysis
92
Comparison of 2024 LTI Grants with Amounts Reported in the
Summary Compensation Table
The amounts reported in the 2024 “Compensation Tables—Summary Compensation Table” are in accordance
with SEC requirements. As a consequence, the long-term cash awards (both performance- and time-based)
granted to our NEOs in 2024, and described in detail above, are not reflected. Although this allows for
comparison across companies, the HRCC has concluded that the total compensation reported in the
“Compensation Tables—Summary Compensation Table” for 2024 is anomalously low for our NEOs, as it does
not include the annual and on-boarding LTI awards for our NEOs in 2024. As the HRCC considers these
awards when evaluating our executive compensation, it believes this could cause a misalignment of our
pay-for-performance analyses for our current NEOs for 2024 and future years. Specifically, and as illustrated
in the table below:
• The 60% performance-based portion of our annual LTI awards were granted in cash instead of equity,
and thus the 2024 Summary Compensation Table for each of our current and former NEOs excludes
these amounts in accordance with SEC reporting requirements. For each of our current NEOs, the
performance-based portion of our 2024 LTI awards, to the extent earned, will instead be reported as
“Non-Equity Incentive Compensation” for 2027 in the Summary Compensation Table, assuming he or she is
a named executive officer for the year.
• Mr. Ward’s on-boarding time-based long-term cash award will be reported in four equal installments as
“Bonus” compensation for each of 2025, 2026, 2027, and 2028 in a Summary Compensation Table, assuming
he is a named executive officer for the relevant year.
Target Grant Value of
2024 Long-Term Cash Awards
Total Target Grant
Value of 2024 Long-
Term Cash Awards(3)
Year the Earned Amount of
Long-Term Cash Will Be
Reported in the Summary
Compensation Table(4)
NEO
Time-Vested
Long-Term Cash(1)
Performance-Based
Long-Term Cash(2)
Current NEOs
Ms. Johnson
$
—
$ 8,550,000
$ 8,550,000
2027
Mr. Stansbury
—
3,300,000
3,300,000
2027
Mr. Ward
1,250,000
1,500,000
2,750,000
2025, 2026, 2027 and 2028
Ms. Haynes-Gaspar
—
1,410,000
1,410,000
2027
(1)
Represents grants of time-vested long-term cash described above under “—2024 LTI On-Boarding Grants.” Mr. Ward is the only current
NEO with such an award and, assuming he is employed through the relevant vesting date and is a named executive officer for the relevant
year, one-quarter of the target amount (i.e., $312,500) will be reported as “Bonus” compensation for the year earned.
(2)
Represents the target amount of grants of performance-based long-term cash described above under “—2024 Annual LTI Grants.” Any
amount earned will be reported as “Non-Equity Incentive Compensation” for 2027 for any of the current NEOs who is a named executive
officer for the year.
(3)
Represents the aggregate target amount of time-vested and performance-based long-term cash awards described in footnotes 1 and 2.
These amounts are not reported in the 2024 “Summary Compensation Table.” Had they been awarded in equity instead, the total
compensation for each of our NEOs would be higher than the amounts reported in the “Summary Compensation Table.”
(4)
Represents the year any earned amount of long-term cash awards will be reportable in the "Compensation Tables—Summary
Compensation Table."
Compensation Discussion & Analysis
93
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Outstanding Performance-Based LTI Awards
As of December 31, 2024 and as illustrated in the table below, we had three outstanding tranches of LTI awards,
granted in 2022, 2023, and 2024, with overlapping three-year performance periods and performances metrics of
Relative TSR, Cumulative Adjusted EBITDA, or Cumulative Free Cash Flow.
Grant Year
Performance
Period
Metric
Weighting
2022(1)
2023(2)
2024
2025
2026
2022(3)
2022-2024
50%
3-YR Cumulative Adjusted EBITDA
50%
3-YR Relative TSR Modifier
2023
2023-2025
50%
3-YR Cumulative Adjusted EBITDA(4)
50%
3-YR Relative TSR
2024
2024-2026
50%
3-YR Cumulative Free Cash Flow
50%
3-YR Relative TSR
(1)
The sale our Latin American and 20-state ILEC businesses, which were completed in August 2022 and October 2022, respectively, occurred
during the first year of the three-year performance period for our outstanding 2022 LTI awards. For more information on these sales, see
Note 2—Divestitures of the Latin American, ILEC and EMEA Business— to the consolidated financial statements included in Item 8 of Part II
of our Annual Report on Form 10-K for the year ended December 31, 2024.
(2)
The sale our CDN and EMEA businesses, which were completed in October and November 2023, respectively, occurred during the second
and first year of the three-year performance period for our outstanding 2022 and 2023 LTI awards, respectively. For more information on
the sale of our EMEA business, see Note 2—Divestitures of the Latin American, ILEC and EMEA Business— to the consolidated financial
statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2024.
(3)
For more information on (i) our 2022 PBRS targets, including adjustments to the three-year Cumulative Adjusted EBITDA target, as
permitted under our Incentive Program Guidelines, and (ii) below threshold 0% payout, see “—LTI Linkage to Performance—No Payouts
Under 2022 PBRS Awards” below.
(4)
For 2023 PBRS, when the three-year Cumulative Adjusted EBITDA target was set in the first quarter of 2023, the Company assumed its
then-pending divestiture of its EMEA business would close on January 1, 2024. The sale our EMEA business was actually completed in
November 2023. The HRCC approved adjustments to the targets against which the 2023 LTI awards would be measured to prevent holders
of PBRS from receiving an unintended penalty from the accelerated closing.
LTI Linkage to Performance—No Payouts Under 2022
PBRS Awards
In early 2022, the HRCC approved 2022 PBRS awards(1) to approximately 1,600 employees, senior, and
executive officers based on two equally-weighted metrics (Cumulative Adjusted EBITDA and Relative TSR) over
a three-year period ending December 31, 2024.
As described in greater detail below, we achieved below threshold performance against the target for both
metrics, resulting in 0% payout and forfeiture of all 2022 PBRS awards.
____________________
(1)
For further discussion on our 2022 LTI Awards, see our 2023 proxy statement.
Compensation Discussion & Analysis
94
Cumulative Adjusted EBITDA Metric (weighted 50%)
Our 2022 Cumulative Adjusted EBITDA targets were set in the first quarter of 2022 based on our long-range
plan. We achieved results of $15,563 million Cumulative Adjusted EBITDA for the three-year period ending
December 31, 2024, which was below threshold performance.
Target Amount of
Adjusted EBITDA(1)
Payout as a % of
Target Award
Results:
Maximum
≥ $20,471 million
200%
$15,563 million(2)
(below threshold)
ACHIEVED
PAYOUT OF
0%
Target(2)
$17,801 million
100%
Threshold
$16,021 million
50%
Below Threshold
< $16,021 million
0%
(1)
As used in our 2022 LTI plan, adjusted earnings before interest, taxes, depreciation, amortization and stock-based compensation expense
(“Adjusted EBITDA”) is a non-GAAP metric that excludes certain one time or non-recurring charges or credits and eliminates the effects of
certain unanticipated, extraordinary, unusual, or non-recurring transactions or items. See Appendix A for more information.
(2)
For 2022 PBRS, when the three-year Cumulative Adjusted EBITDA target was set in the first quarter of 2022, the Company assumed its
then-pending divestitures of both its Latin American and 20-state ILEC business would close on July 1, 2022. The sales our Latin American
and 20-state ILEC business were actually completed in August 2022 and October 2022, respectively. The Company had not yet entered into
definitive agreement for the EMEA divestiture; as such, the targets set then assumed continued operations of that business (which was
subsequently sold in 2023) throughout the full three-year performance period. As permitted under our Incentive Program Guidelines, we
adjusted our target to reflect a net increase of $271 million in Adjusted EBITDA (not reflected in Appendix A), comprised of (i) an increase
of $392 million related to the Latin American business divested in August 2022 and closed approximately one month later than originally
projected in the budget, (ii) an increase of $31 million related to the 20-state ILEC business divested in October 2022 and closed
approximately three months later than originally projected in the budget, and (iii) a decrease of $151 million to reflect the sale of both our
EMEA and CDN businesses in November 2023 that were not included in the three-year target (which, therefore, assumed our continued
operations of those businesses during the entire three-year performance period). We believe these adjustments were necessary to measure
our performance results in the same manner the targets were set in the first quarter of 2022. See “—Goal Setting Process and Incentive
Program Guidelines—Incentive Program Guidelines—Mandatory Adjustments.”
Relative TSR Metric (Weighted 50%)
We achieved TSR of -46.5% for the three-year period ending December 31, 2024, which was below the
25th percentile of -13.93% and threshold performance for our peer group.
Relative TSR
Performance
Payout as a % of
Target Award
Results:
Maximum
≥ 75th Percentile
200%
-46.5%
(below threshold)
ACHIEVED
PAYOUT OF
0%
Target
50th Percentile
100%
Threshold
25th Percentile
50%
Below Threshold
< 25th Percentile
0%
All Outstanding 2022 PBRS Forfeited
As a result of our failure to achieve the threshold performance goals for both metrics, in 2025, the holders of our
outstanding 2022 PBRS awards, including two of our NEOs, forfeited a total of 3,241,634 performance-based
restricted shares or RSUs, and related accrued dividends, as set forth in the table below.
Performance-Based
Restricted Shares or RSUs
NEO
Target No. of
Shares
Target Grant
Value
Current and Former NEOs
Mr. Stansbury
236,435
$ 2,610,000
Mr. Goff(1)
112,652
$ 1,200,000
All other holders as a group (1,001 persons)
2,892,547
$ 31,987,216
Overall Total
3,241,634
$ 35,797,216
(1)
Mr. Goff was granted 126,734 PBRS ($1,350,000 target grant value) on February 25, 2022. Upon Mr. Goff’s termination on August 2, 2024,
14,082 shares ($150,000 target grant value) were forfeited and 112,652 ($1,200,000 target grant value) shares remained outstanding. The
remaining shares remained subject to their original performance conditions and vesting dates, in recognition of Mr. Goff’s prior service and
conditioned on his delivery of a release of claim, and were forfeited on March 1, 2025 due to below threshold performance.
Compensation Discussion & Analysis
95
2024 ANNUAL REPORT
2025 PROXY STATEMENT
LTI Governance of Share Usage
On a quarterly basis, the HRCC reviews our equity pool available for future grants and share usage, burn rate,
dilution and overhang levels, for the following one- and three-year periods and compared to industry
benchmark levels.
Historically, our awards have been awarded in the form of equity; however, the decline in our stock price put
increased pressure on our ability to incentivize our senior leadership team and employees through
equity awards. As described in greater detail and illustrated in the table below, in an effort to manage our share
usage, burn rate, dilution, and overhang levels, the HRCC modified the structure of LTI grants, beginning in
2023, by granting portions of annual, on-boarding, and special LTI awards for our senior leadership team and
employees below the executive level in cash.
We always intended our use of cash LTI awards to be a temporary measure, and as a result of the replenishment
of our equity pool in May 2024 and increased share price, in March 2025 we granted our 2025 annual LTI awards
in 100% equity for our senior leadership team and a mix of 50% equity and 50% cash for our employees below
the executive level. We intend to discontinue to use of cash awards for our employees below the executive level
when circumstances warrant.
Structure of LTI Grants(1)
Year
Year-over-Year Change to LTI Structure
Grant
Reason
Senior
Leadership
Team
Employees
Below the
Executive Level
2022
In 2022, consistent with past practice, all LTI awards were granted in
equity. We experienced a slight increase in our 2022 burn rate following
the decline in our stock price after announcing the elimination of
our dividend.
Annual
Grants
On-Boarding
and Special
Grants
2023
In an effort to manage our share usage, burn rate, dilution, and overhang
levels, the HRCC modified the structure of our annual LTI awards in 2023,
granting 100% of LTI awards in cash for employees below the executive
level and continuing to award 100% equity to our senior leadership team.
As a result, our 2023 burn rate was below both our 2022 burn rate and
benchmark levels.
Annual
Grants
On-Boarding
and Special
Grants
2024
As explained above, in response to the further decline in our stock price
and limited equity pool available in early 2024 and in an effort to minimize
shareholder value dilution, the HRCC further modified the 2024 LTI awards
for our senior leadership team by granting 60% of their annual and 50% of
their on-boarding(2) LTI awards in cash, and continued to grant 100% of LTI
awards for employees below that level in cash. Our 2024 burn rate was
below benchmark levels.
In May 2024, our shareholders approved our new 2024 Equity Incentive
Plan and replenished our equity pool with 43 million shares, which gave the
HRCC the flexibility to reinstate equity-based awards.
Annual
Grants
On-Boarding
and Special
Grants
2025
In early 2025, in an effort to strengthen the alignment with our
shareholders’ interests while continuing to manage our share usage, burn
rate, dilution, and overhang levels, the HRCC granted our 2025 annual
awards in 100% equity for our senior leadership team and 50% for
employees below the executive level, with the remaining 50% granted in
cash.
Annual
Grants
On-Boarding
and Special
Grants
(1)
The structure of our 2024 LTI grants are based on a mix of equity and cash as illustrated in the table above
(2)
For the reasons described elsewhere herein, the on-boarding grant for Mr. Ho was awarded in 100% equity.
Compensation Discussion & Analysis
96
Goal Setting Process and Incentive Program Guidelines
Goal Setting Process
Each year, as described in more detail below, based on information available at the time, the HRCC selects the
objectives against which performance will be measured under our incentive programs and establishes rigorous
threshold, target, and maximum performance levels for the selected objectives. At the time the goals are
established, the HRCC considers a variety of qualitative and quantitative factors, including:
Qualitative and Quantitative Factors
Company Strategy and
Operational Performance
• Goals rooted in our annual budget, public
guidance, and long-range strategic plan
• Sensitivity analyses on alternative
outcomes focused on identifying
likely minimum and maximum
performance levels
• Actual pay-for-performance alignment
with prior year(s) strategic goals
• Anticipated timing for execution of
our strategic initiatives and new
product launches
• Cash flow plan to execute on our capital
allocation priorities and debt covenant
compliance
• Evolving structure of the Company,
including any acquisitions
and divestitures
Industry and Macroeconomic
Environments
• The declining of legacy services at a
faster pace than demand is growing for
our newer lower-margin technology
services, which exerts significant
pressure on achieving the same or higher
year-over-year performance
– Prolonged systemic decline in demand
for our legacy copper-based wireline
mass market services
– Weaker demand for certain older
enterprise services
– Changing customer preferences,
increased competitive and pricing
pressures, and higher inflation
• External macroeconomic, inflationary
pressures, or supply constraint factors
that might influence our business and
financial performance, as described
further in our periodic reports filed with
the SEC
See “Section One—Executive Summary” and “Section Four—Compensation Design, Awards, and Payouts
for 2024.” For additional information on Lumen and our recent performance, see Item 7. Management’s
Discussion and Analysis of the Financial Condition and Results of Operations included in Appendix B.
Incentive Program Guidelines
While the performance objectives and targets under our incentive programs are designed to measure objective
performance over a specified period of time, the HRCC may make certain adjustments to our performance
calculations. To provide structure and promote fairness in addressing such situations, the HRCC has adopted
Guidelines on Administering Incentive Plans (our “Incentive Program Guidelines”) to aid the HRCC’s goal of
reaching equitable STI and LTI payout decisions that align performance with our targets and, ultimately, our
corporate strategy. As described in the table below, our Incentive Program Guidelines provide three types of
potential adjustments to our STI or LTI metrics that can affect the overall payout.
Mandatory Adjustments. The first type of adjustment occurs after completion of each performance period in
conjunction with the HRCC’s review of the financial results and assumptions, and requires the HRCC to make
adjustments to eliminate the effects of acquisitions or divestitures and certain other unanticipated events
specified in our Incentive Program Guidelines that correspond closely, but not exactly, with the “Non-GAAP
Special Items” financial trending schedule included in our earnings release for the corresponding
performance period.
Compensation Discussion & Analysis
97
2024 ANNUAL REPORT
2025 PROXY STATEMENT
These adjustments are necessary to measure our performance results in the same manner the targets were set
and may require the HRCC to adjust (1) our STI targets or performance results and (2) our three-year LTI targets
established under the performance-͏based portion of our annual LTI grants.
Discretionary Adjustments. The second type of adjustment provides the HRCC with discretionary authority to
adjust STI and LTI performance results based on any other “extraordinary, unusual, or non-recurring transactions
or items” to prevent award payouts from being unfairly impacted by such items. The adjustments may be
positive or negative and will only be made if the events were not known on the date the performance goals
were established or were not reflected in the forward-looking financial information used to set such goals.
Traditionally the HRCC has used this discretionary authority infrequently and principally to adjust for foreign
currency fluctuations necessary to measure our performance results in the same manner the targets were set.
Discretionary Adjustments to STI Payout Percentages. The third type of adjustment, as discussed in greater
detail above under “—2024 Short-Term Incentive Program,” provides the HRCC with discretionary authority to
adjust STI payouts. These discretionary adjustments may be made as either a specific feature of a given year’s
STI plan established in advance (for example, the capped individual performance modifier included in our
2024 plan design) or as equitable adjustments made in arrears in connection with the HRCC’s approval of final
STI payouts.
Adjustments Under Our Guidelines For Performance Periods Ending December 31, 2024
2024 STI
2022 PBRS
Mandatory Adjustments
• See Appendix A for details on the Non-GAAP Special Items previously reported
in our February 4, 2025 earnings release
• We adjusted our three-year cumulative Adjusted EBITDA targets for our 2022
LTI Awards to reflect the net impact of charges and credits related to the sale of
our Latin American, 20-state ILEC, EMEA and CDN businesses, which were not
anticipated when targets were set
n/a
Discretionary Adjustments
• We adjusted the performance results to true-up the bonus accruals for adjusted
EBITDA in our three-year cumulative adjusted EBITDA in our 2022 LTI Awards
• As discussed throughout this CD&A, we adjusted the targets for revenue and
adjusted EBITDA in our 2024 STI Plan, so that they were based on the sum of
two distinct six-month periods, which the HRCC determined was necessary to
prevent the STI payouts from being unfairly impacted by our mid-year change in
strategy that necessitated increased investments during 2024 not anticipated
when the STI grants were originally made in early 2024
n/a
• We adjusted the performance results to eliminate the effect of foreign currency
fluctuations for three-year cumulative adjusted EBITDA in our 2022 LTI Awards
n/a
Discretionary Adjustments to STI Payout Percentages
• No discretionary adjustments were made to the payout percentages for our
2024 STI Plan, other than negative adjustments for terminated executives
n/a
Compensation Discussion & Analysis
98
Compensation Arrangements Related to
Leadership Transition
Our Board and the HRCC have spent considerable time and effort ensuring that we have the right leadership in
place to deliver high-impact results and guide us on a path to growth. As described above in “Board of Directors
and Governance—Shareholder Engagement—CEO and Executive Succession Planning,” we have fully refreshed
our senior leadership team over the past few years.
The HRCC, after consultation with its independent compensation consultant, Semler Brossy, determined that the
proposed annual compensation package and on-boarding awards, described in greater detail below, for Messrs.
Ward, Ho, and Laksmanan (1) were consistent with our philosophy and customary for executive on-boarding pay
packages, (2) were necessary to attract high caliber talent to transform our operations and induce each
executive to join us, and (3) provided total compensation for each that was competitive against median levels
for comparable executive officer positions.
Compensation for David Ward, our New EVP, Chief Technology &
Product Officer
Mr. Ward joined the Company at a critical time of transformation and was recruited specifically for his
impressive technology and network experience and knowledge of our industry, how our customers think, and
what they need.
The HRCC approved the following annual compensation and on-boarding awards for Mr. Ward, who joined the
Company on February 12, 2024, as EVP Chief Technology Officer, responsible for our network, engineering,
technology, and security. A few months after his start, and in connection with the ongoing transition of our
senior leadership team, we expanded his responsibilities to include product development and he was promoted
to EVP Chief Technology and Product Officer on August 30, 2024.
Annual Compensation Package
Mr. Ward’s initial annual compensation package consisted of:
• Base salary of $675,000;(1)
• Target annual short-term incentive (STI) opportunity of 100% of base salary;
• Target annual long-term incentive (LTI) opportunity of $2,500,000;(2) and
• Retirement and health and welfare benefits generally available to all employees.
____________________
(1)
Following an expansion in his scope of responsibilities, Mr. Ward’s salary was increased to $750,000 on August 30, 2024. For more
information see “—Base Salary” above.
(2)
Following an expansion in his scope of responsibilities, Mr. Ward’s long-term incentive opportunity was increased to $3,250,000, effective
for his 2025 annual LTI award. For more information see “—2024 Long-Term Incentive Compensation” above.
On-Boarding Awards
In addition, the HRCC approved certain on-boarding awards described below. Based on information provided by
its independent compensation consultant, the HRCC determined that these awards were customary for
executive on-boarding pay packages and, in this case, were necessary to induce Mr. Ward to join the Company.
• Cash award of $1,000,000 to offset equity and annual bonus that Mr. Ward forfeited upon termination from
his prior employer. This cash award was paid upon his joining the Company, subject to a “clawback” if
Mr. Ward resigns or is terminated by the Company for “cause” (as defined in our Executive Severance Plan)
before the two-year anniversary of his start date.
• LTI award valued at $2,500,000 to offset equity that Mr. Ward forfeited upon termination from his prior
employer while aligning his interests with shareholders by providing an immediate equity stake in the
Company and retention. Based on the limited equity pool available at his time of hire, the HRCC determined
that these awards would be granted in the form of 50% time-based restricted stock and 50% time-based
cash, in each case vesting in four equal annual installments, subject to continued service.(1)
____________________
(1)
For more information see “—2024 Long-Term Incentive Compensation” above.
Compensation Discussion & Analysis
99
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Compensation Paid to Chadwick Ho, our Former EVP, Chief
Legal Officer
The HRCC approved the following annual compensation and on-boarding awards for Mr. Ho, who joined the
Company on June 10, 2024 as our EVP, Chief Legal Officer. Mr. Ho had extensive legal experience, especially in
the technology sector.
Annual Compensation Package
Mr. Ho’s initial annual compensation package consisted of:
• Base salary of $700,000;
• Target annual short-term incentive (STI) opportunity of 100% of base salary;
• Target annual long-term incentive (LTI) opportunity of $2,250,000,(1) beginning in 2025; and
• Retirement and health and welfare benefits generally available to all employees.
____________________
(1)
For 2024, Mr. Ho received a prorated long-term incentive award of $1,125,000, which is one-half of target annual LTI opportunity, awarded in
a mix of 40% time-vested restricted stock and 60% performance-based long-term cash.
On-Boarding Awards
In addition, the HRCC approved certain on-boarding awards described below. Based on information provided by
its compensation consultant, the HRCC determined that these awards were customary for executive
on-boarding pay packages and, in this case, were necessary to induce Mr. Ho to join the Company.
• Cash award of $650,000, which was paid upon his joining the Company, subject to a “clawback” if Mr. Ho
resigned or was terminated by the Company for cause before the two-year anniversary of his start date.
• Equity award valued at $650,000 consisting of time-vested restricted stock, vesting in three equal annual
installments, subject to continued service, which aligned his interests with shareholders by providing an
immediate equity stake in the Company.
Forfeited LTI Awards
Upon the termination of Mr. Ho’s employment on February 7, 2025, and in accordance with the terms of the
awards, his outstanding on-boarding equity award and prorated annual 2024 LTI award, with target grant values
of $650,000 and $1,125,000, respectively, were forfeited in their entirety. For more information see “—2024
Long-Term Incentive Compensation” above.
Compensation Paid and Severance Compensation to Be Paid to Satish
Lakshmanan, our former EVP, Chief Product Officer
Mr. Lakshmanan joined the Company on January 8, 2024 as our EVP Chief Product Officer. Mr. Lakshmanan
joined us from Amazon Web Services where he managed Artificial Intelligence Services. He had tremendous
experience in developing and growing world-class products and services, while helping businesses speed up
their digital transformation.
Annual Compensation Package
Mr. Lakshmanan’s initial annual compensation package consisted of:
• Base salary of $550,000;
• Target annual short-term incentive (STI) opportunity of 100% of base salary;
• Target annual long-term incentive (LTI) opportunity of $1,500,000; and
• Retirement and health and welfare benefits generally available to all employees.
Compensation Discussion & Analysis
100
On-Boarding Awards
In addition, to partially offset amounts that Mr. Lakshmanan forfeited upon his departure from his prior
employer, the HRCC approved certain on-boarding awards described below. Based on information provided by
its compensation consultant, the HRCC determined that these awards were customary for executive
on-boarding pay packages and, in this case, were necessary to induce Mr. Lakshmanan to join the Company.
• Cash award of $1,400,000 to offset equity and annual bonus that Mr. Lakshmanan forfeited upon termination
from his prior employer. This cash award was paid upon his joining the Company, subject to a “clawback” if
Mr. Lakshmanan resigned or was terminated by the Company for cause before the two-year anniversary of his
start date. Mr. Lakshmanan was terminated, not for cause, on August 30, 2024, thus this cash award was not
subject to the clawback.
• LTI award valued at $1,500,000 to offset equity that Mr. Lakshmanan forfeited upon termination from his
prior employer while aligning his interests with shareholders by providing immediate equity stake in the
Company and retention. Based on the limited equity pool available at his time of hire, the HRCC determined
that these awards would be granted in the form of 50% time-based restricted stock and 50% time-based
cash, vesting in three equal annual installments, subject to continued service.
Severance Compensation
As described further below, Mr. Lakshmanan was involuntarily terminated on August 30, 2024.
In exchange for Mr. Lakshmanan’s delivery of a release of claims in connection with his termination, he received
the following compensation and benefits payments under our pre-existing Executive Severance Plan and
broad-based programs for our employees:
• Cash severance payment of $1,100,000;(1)
• COBRA benefits for 52 weeks;(1) and
• a prorated annual bonus for 2024 based on actual company performance payout.(2)
____________________
(1)
For more information see “—Other Benefits—Severance Benefits” below.
(2)
For more information see “—2024 Short-Term Incentive Program” above.
Forfeited LTI Awards
Effective upon the involuntary termination of Mr. Lakshmanan’s employment on August 30, 2024, and in
accordance with the terms of the awards, his outstanding on-boarding and annual 2024 LTI awards (equity and
cash), each with a target grant value of $1,500,000, were forfeited in their entirety. For more information see “—
2024 Long-Term Incentive Compensation” above.
Severance Compensation to Be Paid to Stacey Goff, our former EVP,
General Counsel & Secretary
As described further below, after 26 years of service, Mr. Goff’s employment ended on August 2, 2024.
Severance Compensation
Mr. Goff joined the Company in 1998 and was named an executive officer in 2009. Over his 26 years of service,
he played a key role in countless acquisitions, helping to transition the Company towards the future and shape
the Company to address the rapidly evolving needs of our customers.
In November 2023, our CEO initiated a search to replace Mr. Goff and following the hiring of his successor on
June 10, 2024, Mr. Goff assisted his successor in completing pending projects related to the restructuring of our
debt and our PCF partnerships.
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In exchange for Mr. Goff’s delivery of a release of claims in connection with his involuntary termination, he
received the following compensation and benefits payments under our pre-existing Executive Severance Plan
and broad-based programs for our employees:
• Cash severance payment of $1,540,000;(1)
• COBRA benefits for 52 weeks;(1) and
• a prorated annual bonus for 2024 based on actual company performance payout.(2)
Impact on LTI Awards
In addition, in recognition of his prior service and conditioned on his delivery of a release of claims, the HRCC
approved the following treatment for a portion of his outstanding equity:
• Accelerated vesting of 181,832 outstanding time-based restricted stock granted to him in 2022 and 2023.
• Retention of a prorated portion (304,738 target shares) of his outstanding performance-based restricted
stock granted to him in 2022 and 2023, which remained subject to their original performance conditions and
vesting dates.
His remaining outstanding equity, consisting of performance-based restricted stock (167,751 target shares), was
forfeited upon his termination.
____________________
(1)
For more information see “—Other Benefits—Severance Benefits” below.
(2)
For more information see “—2024 Short-Term Incentive Program” above.
2022 Special Transformation Award
During 2022, our leadership team was experiencing recruitment, retention, and motivational challenges
following many years of revenue and adjusted EBITDA pressure, stock price decline, heavy workload to
complete two divestitures in 2022, and a third pending divestiture. In November of 2022, following candid talent
discussions with Ms. Johnson, the HRCC, with the assistance of its independent compensation consultant and
management, approved a transformation award for Mr. Goff to continue as General Counsel through April 2024,
including to oversee the Company’s successful execution of the then-pending sale of our European operations.
This special cash award of $1,125,000 vested in full on April 1, 2024 if, and only if, the EMEA divestiture was
completed by such date and subject to his continued employment through such date. Since these conditions
were met, Mr. Goff earned this award on April 1, 2024.
Other Benefits
As a final component of executive compensation, we provide certain 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 traditional broad-based qualified defined benefit and defined contribution retirement plans for our
employees who meet certain eligibility requirements. In addition to these qualified plans, we maintain
nonqualified supplemental plans that permit our officers to receive or defer amounts in excess of contribution
caps under the Code that limit the amount of benefits highly compensated employees are entitled to receive or
contribute under qualified plans. Additional information regarding our retirement plans is provided in the tables
and accompanying discussion included below under the heading “Compensation Tables.”
Change of Control Arrangements
We have agreed to provide cash and other severance benefits to each of our executive officers under certain
specified circumstances following a “change of control” of Lumen (generally: (1) any person becoming the
beneficial owner of 30% or more of the outstanding Common Shares; (2) a majority of our directors being
replaced; (3) consummation of certain mergers, substantial asset sales, or similar business combinations; or
(4) approval by the shareholders of a liquidation or dissolution of the Company).
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102
Under these agreements, change of control benefits are payable to our executive officers if, within a certain
specified period following a change of control (referred to as the “protected period”), the officer is terminated
without “cause” or resigns with “good reason.”
The table below shows (1) the length of the “protected period” afforded to officers following a change of control
and (2) the multiple of annual cash compensation and years of health and welfare benefits to which our officers
will be entitled if change of control benefits become payable under our agreements:
Protected Period
Multiple of
Annual Cash
Compensation(1)
Years of
Welfare
Benefits
CEO
2 years
2.5 times
2 years
Other Executives
1.5 years
2 times
2 years
Other Officers
1 year
1 time
1 year
(1)
Annual cash compensation for these purposes is equal to the sum of (i) his or her base salary in effect at the date of termination and (ii) for
the CEO, her target STI bonus for the year in which the termination occurs, and, for other executives and officers, the average of her or her
STI bonuses for the three years immediately preceding the year in which the termination occurs
Each is also entitled to: (1) the officer’s STI bonus for the year of termination, based on actual performance and
the portion of the year served; and (2) outplacement assistance for one year.
For purposes of these change of control agreements:
• “cause” means the officer’s: (1) willful breach of the provisions of his or her change of control agreement
pertaining to nondisclosure of confidential information, non-solicitation, non-disparagement, and, where
permitted by law, non-competition; (2) conviction of, or plea of guilty or nolo contendere to, a felony or other
crime involving dishonesty or moral turpitude; (3) workplace conduct resulting in the payment of civil
monetary penalties or the incurrence of civil non-monetary penalties that will materially restrict or prevent
him or her from discharging his or her obligations to us; (4) habitual intoxication during working hours or
habitual abuse of, or addiction to, a controlled substance; (5) material breach of Board-adopted policies
applicable to management conduct; (6) participation in the public reporting of any information contained in
any report filed by us with the SEC that was impacted by him or her knowing or intentional fraudulent or
illegal conduct; or (7) substantial, willful, and repeated failure to perform his or her duties as instructed by. or
on behalf of, the Board in writing; and
• “good reason” means: (1) any failure of ours to provide the officer with a position, authority, duties, and
responsibilities at least commensurate in all material respects with the most significant of those held,
exercised, and assigned by him or her at any time during the 180-day period immediately preceding the
change of control; (2) any action that results in a diminution in any material respect in such position, authority,
duties, or responsibilities; (3) a reduction of his or her base salary in effect as of the date of the change of
control without her consent (except for across-the-board salary reductions similarly affecting all or
substantially all similarly-situated officers); (4) he or she is advised of, manifests an awareness of, or becomes
aware of facts that would cause a reasonable person to inquire into any failure in any material respect by us
to comply with any of the provisions of his or her change of control agreement; or (5) any directive requiring
him or her to be based at any office or location more than 50 miles from the office at which she was based
immediately prior to the change of control or requiring him or her to travel on business to a substantially
greater extent than required immediately prior to the change of control, subject in each case to our right
to cure.
For more information on change of control arrangements applicable to our executives, including our rationale
for providing these benefits, see “Compensation Tables—Potential Termination Payments—Payments Made
Upon a Change of Control.” For information on change of control severance benefits payable to our junior
officers and managers, see “—Severance Benefits” in the next subsection below.
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2024 ANNUAL REPORT
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Severance Benefits
Over a decade ago, we adopted an Executive Severance Plan to support our management during transitions
and demonstrate our commitment to responsible corporate practices. Under our Executive Severance Plan, if an
executive officer is involuntarily terminated by us without “cause” or resigns without “good reason,” in each case
in the absence of a “change of control,” he or she will receive (i) cash severance payments equal to a multiple of
total targeted cash compensation, (ii) subsidized COBRA payments for a period of time, (iii) if employed for at
least three months during the year of termination, a prorated annual bonus for the year of termination based on
actual performance, and (iv) outplacement assistance. Severance benefits in connection with a qualifying
termination related to a change of control are governed by each officer’s change of control agreement and
described above.
The table below shows the multiple of total targeted cash compensation and years of COBRA benefits to which
the executive officer will be entitled upon a qualifying termination, which benefits are subject to the officer’s
execution of a release of claims in our favor and continued compliance with any applicable restrictive covenants:
Multiple of
Total Targeted Cash
Compensation(1)
Years of
COBRA
CEO
2 times
1 year
Other Executives and Senior Officers
1 time
1 year
(1)
Total targeted cash compensation for these purposes is equal to the sum of (i) his or her base salary and (ii) his or her target STI bonus
opportunity in effect at the date of termination.
Under our Executive Severance Plan:
• “cause” means the employee’s: (1) failure to substantially comply with supervisor directives, including
directives related to job performance; (2) misconduct; (3) conduct that violates our ethics and compliance
program, including our Code of Conduct; (4) conduct that is injurious to our reputation, customer
relationships, employees, or finances; (5) act(s) that, if proven in a court of law, would constitute a felony
crime; (6) act(s) of dishonesty, fraud, or moral turpitude; or (7) violation of any of the restrictive covenants
found in the plan (e.g., with respect to misuse of our proprietary information, competing with us while an
employee or during the 12 months after termination, and inducing our employees or customers to terminate
their relationship with us or provide services to one of our competitors while an employee or during the
12 months after termination); and
• “good reason” means an employee’s resignation following our offer to him or her of a “non-comparable
position (i.e., one offered as part of a reduction in headcount or certain corporate transactions like a sale that
do not constitute a change of control which would result in the employee having to relocate by more than
50 miles in driving distance or has a total targeted compensation that is 90% or less than his or her then-
current total targeted compensation), subject to our right to cure.
Under a policy that we adopted in 2012, we have committed to seek shareholder approval of any future senior
executive severance agreements providing for cash payments, perquisites, and accelerated health and welfare
benefits with a value greater than 2.99 times the sum of the executive’s base salary plus target bonus.
Perquisites
Officers are entitled to be reimbursed for the cost of an annual physical examination, plus related travel
expenses. For 2024, no NEOs were reimbursed for an annual physical examination.
For several years, the Company operated a fleet of company-owned aircraft for use by our CEO and executives
for business and personal travel. In late 2023, the Company sold its entire fleet of aircraft and entered into a
time-share agreement with NetJets to provide travel for our CEO and executives.
In conjunction with appointing Ms. Johnson as our CEO in 2022, we agreed to provide her with the personal
use of company-owned aircraft, at a cost to us of up to $200,000 per year, pursuant to her offer letter. In light
of the change to NetJets, in early 2024, the HRCC reviewed the anticipated cost associated with the personal
use of aircraft for our CEO via NetJets and changed the annual usage limit for our CEO from $200,000 to
50 flight hours.
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104
During 2024, our executives utilized NetJets for business travel from time to time, and the personal use of
NetJets for our CEO was below her 50-flight hour annual limit. For purposes of valuing and reporting our CEO’s
personal use of aircraft, we determine the incremental cost of aircraft usage on an hourly basis, calculated in
accordance with applicable SEC guidance. The aggregate incremental cost of this usage, which may be
substantially different than the cost as determined under alternative calculation methodologies, is reported as
“Other Compensation” in the "Compensation Tables—Summary Compensation Table" appearing below.
Only one other NEO utilized NetJets for personal use and, having reimbursed us for the full aggregate
incremental cost of the aircraft usage on an hourly basis, calculated in accordance with applicable SEC
guidance, no amount is reported in the "Compensation Tables—Summary Compensation Table"
appearing below.
For more information on the items under this heading, see the "Compensation Tables—Summary Compensation
Table" appearing below.
Forfeiture and Clawback of Incentive Compensation
Our Corporate Governance Guidelines authorize the Board to recover, or “clawback,” compensation from an
executive officer if the Board determines that any bonus, incentive payment, equity award or other
compensation received by the executive was based on any financial or operating result that was impacted by
the executive’s knowing or intentional fraudulent or illegal conduct. To date, no NEOs have been subject to
any clawbacks.
Equity Compensation. For all of our outstanding equity awards, all recipients of our LTI grants have been
required to contractually agree to forfeit their 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. For
unvested equity compensation, the recipient would forfeit any rights to future vesting of equity awards. We can
clawback previously vested equity by requiring the recipient to return to us any cash, securities, or other assets
received by him or her upon the sale of Common Shares he or she acquired through prior equity awards.
Short-Term Incentive Compensation. Our STI Program contains substantially similar forfeiture provisions under
which the recipient would forfeit any rights to future payments of certain STI awards if, at any time during his or
her employment with us (or after termination of employment and prior to the payment of the prior year’s STI
bonus), her or she engages in activity contrary or harmful to our interests.
Dodd-Frank Clawback Policy. In compliance with NYSE listing standards and final SEC rules under the Dodd-
Frank Act, effective October 2, 2023, the HRCC and Board adopted the Policy for the Recovery of Erroneously
Awarded Compensation (the “Dodd-Frank Clawback Policy”) that requires Lumen to recoup cash and/or equity
incentive compensation paid in the event of certain accounting restatements that correct an error in the
Company’s financial statements. The Dodd-Frank Clawback Policy operates in addition to our other forfeiture
and clawback policies and plan or award provisions described above.
Use of Employment Agreements
We have a long-standing practice of not providing traditional employment agreements to our officers and none
of our executives has an employment agreement. However, we do from time to time enter into initial
employment offer letters with prospective new employees, including executive officers, some of which include
future commitments on our part. The offer letter, dated September 12, 2022, we entered into with Ms. Johnson in
connection with her initial appointment as our CEO contains certain commitments by the Company with respect
to the impact of termination on her equity awards, which end on the third anniversary of her start date and are
described in greater detail under “Compensation Tables—Potential Termination Payments.” Her offer letter also
entitles her to certain personal use of private aircraft, as described under “—Perquisites” above.
Deductibility of Executive Compensation
Section 162(m) of the Code disallows a deduction to public companies for annual compensation over $1 million
paid to a chief executive officer and certain other executive officers, referred to as covered employees.
Although the deductibility of compensation is a consideration evaluated by the HRCC, the HRCC believes it is
important to preserve flexibility in designing compensation programs and that the lost deduction on
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105
2024 ANNUAL REPORT
2025 PROXY STATEMENT
compensation payable in excess of the $1 million limitation for the NEOs who are covered employees does not
outweigh the benefit of being able to attract and retain talented management. Accordingly, the HRCC will
continue to retain the discretion to approve compensation that exceeds the $1 million deductibility limit.
Other Employee Benefits
We maintain certain broad-based employee health and 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.
Section Five—HRCC Engagement and
Compensation Governance
Role of Human Resources and Compensation Committee
Lumen’s ability to fulfill our purpose is dependent on the quality and capabilities of our people. Lumen’s highly
competitive business requires attracting, developing, and retaining a motivated team that is inspired by
leadership, engaged in meaningful work, motivated by career growth opportunities, and thriving in a culture
where teamwork, trust, and transparency drive both individual and collective success.
As further described in “Board of Directors and Governance—Board Committees—Human Resources and
Compensation Committee,” the HRCC, which is composed of solely of independent directors, is responsible for,
among other things, the following:
• Determining and approving compensation for our CEO, other officers subject to Section 16 of the Exchange
Act, and officers that report directly to the CEO (i.e., the senior leadership team);
• Reviewing and approving the design and administration of the Company’s equity incentive and executive
compensation programs and practices, which includes oversight of our share usage, burn rate, dilution and
overhang levels;
• Reviewing and recommending to the Board of Directors the compensation and benefits for our Board of
Directors; and
• Overseeing the Board’s relationship with, and response to, stockholders on executive compensation matters.
As discussed elsewhere herein, the HRCC spent a considerable amount of time in 2024 engaged with its
independent compensation consultant and our management on the recalibration of our 2024 incentive
programs and monitoring of our share usage, burn rate, dilution, and overhang levels.
Equity Grant Timing Practices
The HRCC generally approves annual equity awards under our LTI program during a meeting in the first quarter
of each year. The HRCC’s first quarter meetings are scheduled approximately 15 months in advance and
targeted to fall within the window period following the release of our earnings for the fourth quarter of the
previous year, typically by at least a week. Consistent with recent years, in 2024 the awards were approved by
the HRCC on February 21, 2024 following our release of earnings for 2023 on February 4, 2024, with the grant
date for the LTI awards being March 1, 2024 and the award amounts based on the 15-day volume-weighted
average closing price ending the day prior to the grant date. As described in this CD&A, the LTI program for our
senior leadership team, including our NEOs, currently includes grants of time-based and performance-based
restricted shares or units and, for 2024, included performance-based cash awards. We have not granted stock
options in several years. The HRCC does not take material nonpublic information into account when determining
the timing and terms of equity awards, and the Company does not time the disclosure of material nonpublic
information for the purpose of affecting the value of executive compensation.
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106
Year-round Engagement Informs Compensation Design
and Awards
The HRCC’s processes to review and approve our executive compensation programs are both cyclical
and ongoing.
REVIEW CURRENT
PERFORMANCE
OBJECTIVES
• Quarterly review of
year-to-date results and
projected performance
against objectives
underlying outstanding
awards to measure our
projected payouts
against targets
and peers
• At-least annual review
of realized and
realizable pay and tally
sheets for our senior
leadership team
REVIEW MARKET
TRENDS AND
FEEDBACK
• At-least quarterly
engagement with the
HRCC’s independent
compensation
consultant
• Review compensation
trends at peer
companies and
market influences
• Shareholder
engagement in the
spring and fall, more
often if the
opportunity arises,
to gather feedback
from shareholders
regarding executive
compensation matters
and incentive design
CONSIDER IMPACT OF
BOARD’S APPROVAL OF
COMPANY STRATEGY
• Annual Board meeting
to set annual and
long-term strategy
• Board approval of
annual budget and
long-term plan
• During 2024, the
Board approved an
out-of-cycle revision
to our annual budget
in August and long-
term plan in
November, which
included assumptions
for the recently
announced Private
Connectivity Fabric
(PCF) partnerships
APPROVE CURRENT
PERFORMANCE
PAYOUTS AND SET
PERFORMANCE
OBJECTIVES FOR THE
UPCOMING YEAR
• Year-end review of
year-to-date results
and performance
against objectives
underlying
outstanding awards to
calculate and approve
our payouts against
targets and peers
• Annually, the HRCC
implements any
program design
changes to our
performance
objectives in light of
business priorities,
shareholder input,
corporate governance
trends, best practices
and regulatory
developments
• Annually, generally in
the first quarter, the
HRCC approves
performance
objectives and
rigorous targets for
the upcoming year
• During 2024, the
HRCC approved out-
of-cycle revisions to
our 2024 STI targets
and replaced the
financial metric for our
2024 LTI program
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2024 ANNUAL REPORT
2025 PROXY STATEMENT
Role of CEO and Management
The HRCC regularly reviews the compensation programs for our senior leadership team, including our NEOs, as
well as the wider group of participating employees, to ensure such programs achieve our compensation
objectives, including aligning executive compensation with our strategies and shareholder interests. As part of
this review, the HRCC closely monitors the compensation programs of, and pay levels of executives from,
companies of similar size and complexity to gauge our compensation strategies against market practices
and trends.
At least annually, the HRCC discusses its assessment of the performance of our CEO in executive session,
reviews her compensation, including as compared to “market” pay levels, and approves any changes to her
compensation. Similarly, for each other member of the senior leadership team, the HRCC discusses directly with
our CEO, in executive session as appropriate, the CEO’s and HRCC’s assessment of his or her performance and
the CEO’s recommendations regarding his or her compensation, including as compared to “market” pay levels
and internal peers, and approves any changes to his or her compensation.
Role of Compensation Consultants
The HRCC engages an independent compensation consultant to assist in the design and review of our executive
compensation programs, to determine whether the HRCC’s philosophy and practices are reasonable and
compatible with prevailing practices and to provide guidance on specific compensation levels based on industry
trends and practices.
Semler Brossy Consulting Group, LLC (Semler Brossy) began serving as the HRCC’s independent compensation
consultant in July 2021 and during 2024 attended all of the HRCC’s meetings. Semler Brossy supported the
HRCC and management by providing external market data and advising on industry trends and best practices.
Semler Brossy actively participated in the design, development, and recalibration of our 2024 incentive
programs and partnered with management on monitoring our share usage, burn rate, dilution, and overhang
levels and the shift to performance-based long-term cash for our 2024 LTI awards. Semler Brossy also
supported the HRCC in developing the compensation packages for the incoming and outgoing members of our
senior leadership team.
After conducting a nationwide search, in December 2024, the HRCC engaged Compensia Inc. (Compensia) as its
new independent compensation consultant, replacing Semler Brossy. Compensia participated in our HRCC
meetings in February 2025, advising and participating in the design and development of our 2025 executive
compensation programs. Neither Semler Brossy nor Compensia provides or provided any other services to the
Company and neither has or had a prior relationship with any of our NEOs. As required by SEC rules and NYSE
listing standards, the HRCC assessed the independence of both Semler Brossy and Compensia and concluded
that each firm’s work has not raised any conflicts of interest.
Role of Peer Companies
In the second half of each year, with assistance from its independent consultant, the HRCC determines the “peer
groups” to be used by Lumen for purposes of assessing the compensation for our senior officers (Compensation
Benchmarking Peer Group) and our total shareholder return performance (TSR Peer Group), which informs
decisions regarding our executive pay programs and compensation decisions for the following year.
Compensation Benchmarking Peer Group
Annually, with the assistance of its independent compensation consultant and management, the HRCC reviews
and approves the Compensation Benchmarking Peer Group—a list of peer companies we use in the competitive
market analyses of compensation for our NEOs and other senior officers.
We believe that our Compensation Benchmarking Peer Group should reflect Lumen’s industry, organizational
complexity, and market for management talent. However, we believe the list of direct peers is limited because
few, if any, other communications companies are similarly sized and similarly configured in terms of their lines of
business, markets, and customers.
Compensation Discussion & Analysis
108
Further, as we continue to evolve into a technology-focused networking company, our employee base, peer
group, and compensation programs are also evolving. Although in the past we had considerable success in
attracting and retaining talent with fiscally prudent market-based pay packages, we now compete with software
and other technology-focused companies for a more limited pool of leadership talent. As a result, the individuals
in that limited candidate pool, who frequently have unique talents and expertise, are able to command much
higher levels of compensation than what we have paid historically, making executive recruitment and retention
more challenging.
To address these challenges, the HRCC reviews and approves the list of companies that compose our
Compensation Benchmarking Peer Group during a two-step process.
In the first step, we use the framework below to capture companies that are comparable in size and have similar
business strategies and financial models, recognizing that there are very few, if any direct peers. The following
attributes are reviewed and screened in order of importance:
Screening Process
Analysis of Screening Process
Primary Screen
•
Revenues (target between one-half and two times
our revenue)
•
Market capitalization (target between one-third and
three times our market cap)
Secondary Screen
•
Assets (target between one-third and three times
our assets)
•
Enterprise value (target between one-third and three
times our enterprise value)
Qualitative Screen
•
Focus on companies with a growth strategy similar
to Lumen as it transitions away from its traditional
telecom business to its enterprise technology business
•
Disclosed peer of peers
•
Reverse peers
•
Peer group selected by proxy advisors
•
There are a limited number of potential peer companies
with comparable revenues, so the annual revenue for
some of our peers are more or less than our targeted
multiple. Notwithstanding that, our revenue is well
positioned compared to the median of our peers, at the
47th percentile. Additionally, each company in our
Compensation Benchmarking Peer Group is engaged in a
line of business conducted by us, and is included in the
peer of peers and proxy advisor peer screens, which
further supports their inclusion in such group.
•
There are very few peers with market capitalization
similar to ours. The HRCC, in agreement with its
independent consultant, believes revenue is a more
appropriate, stable, and common metric for sizing and
selecting peer groups and is a better measure for
assessing organizational complexity.
•
The HRCC believes the use of the median, and not the
average, for competitive market data mitigates the
inclusion of both larger and smaller peer companies.
Outcomes from Screening Process
2024 Compensation Benchmarking Peer Group
In August 2023, based on the results of the screening process and input from HRCC’s independent consultant, the
HRCC reviewed the 2023 Compensation Benchmarking Peer Group of 14 companies and approved its use without change
as the 2024 Compensation Benchmarking Peer Group.
2025 Compensation Benchmarking Peer Group
In August 2024, based on the results of the screening process and input from HRCC’s independent consultant, the
HRCC reviewed the 2024 Compensation Benchmarking Peer Group of 14 companies and, with the following changes,
approved the 14 companies in our 2025 Compensation Benchmarking Peer Group:
•
Removals (3 Companies). DISH network and VMWare were each acquired in late 2023, and as a result, their pay data
was no longer available. Charter Communications, Inc. remained a direct competitor in the traditional fiber and
broadband business and named Lumen as its peer; however, it exceeded all four of our financial screening criteria and
was no longer considered a peer of Lumen by proxy advisory firms.
•
Additions (3 Companies). EchoStar Corporation, NetApp, Inc., and Frontier Communications each have significant
overlap with Lumen’s business strategy and are comparable to Lumen based upon the financial screening criteria.
Compensation Discussion & Analysis
109
2024 ANNUAL REPORT
2025 PROXY STATEMENT
For our Primary Screen, with respect to both our 2024 and 2025 Compensation Benchmarking Peer Group,
Lumen was positioned at the 47th percentile in terms of revenue and below the 5th percentile of market
capitalization as of May 2023 and July 2024, respectively. Given the decline in our share price over the last few
years, which we hope to be temporary while we execute on our transformation, we placed greater weighting on
our Secondary Screen of assets for our 2024 and 2025 Compensation Benchmarking Peer Group, with respect
to which we were positioned at the 49th and 50th percentiles as of May 2023 and July 2024, respectively.
In the second step, the HRCC’s independent compensation consultant calculates median salaries for our senior
officer positions using compensation data publicly disclosed by members of the Compensation Benchmarking
Peer Group and, for executive positions with no publicly-disclosed compensation data, the HRCC reviews
compensation survey data for companies in the telecommunications industry and general industry that are
generally similar to us in size. Then, the HRCC compares the compensation of each of our senior officers to the
median compensation of comparable officers derived from such market analysis to determine if our senior
officers are being paid below, at, or above “market” rates.
The HRCC used median compensation data derived from its analysis of pay by members of our 2024
Compensation Benchmarking Peer Group to inform its compensation decisions and offer packages for our
senior officers throughout 2024. For more information see “Section Four—Compensation, Design, Awards and
Payouts for 2024” above.
Once established, we believe that a well-selected peer group for compensation benchmarking should remain in
use for several years to help inform reliable and consistent market positioning, longer-term pay trends, and
market practices. Our Compensation Benchmarking Peer Group is summarized in the table following discussion
of our TSR Peer Group below.
TSR Peer Group
We separately maintain a TSR Peer Group for purposes of measuring our relative stock price performance,
which impacts payouts under our LTI grants. As discussed above, our Compensation Benchmarking Peer Group
is somewhat constrained by the number of companies based on revenue, enterprise value, and market
capitalization. However, our TSR Peer Group is composed of a broader universe of companies we believe
investors are considering when evaluating whether to invest in Lumen or our industry because profiles of
investment opportunity and risk are likely to be more important to an investor than company size.
Compensation Discussion & Analysis
110
In November 2023, in preparation for the 2024 LTI grant, the HRCC’s independent compensation consultant
collaborated with management as part of an evaluation process to identify and screen relevant public
companies to determine our TSR Peer Group, with the desired result of at least 15 to 20 peer companies,
as follows:
Screening Process
Analysis of Screening Process
Primary Screen
•
The primary consideration when selecting our TSR Peer
Group for 2024 was the need to have peers with similar
industry, business, and risk profiles as ours
•
Start with a universe of potential similar industry peers
with technology, telecommunications, cable, and
satellite services and various technology industries
within our GICS industry and sub-industry
Secondary Screen
•
Conduct a historical stock price correlation between
Lumen and a potential peer universe based on the
industry sectors identified
•
Perform back-testing on historical stock performance
(including TSR and Beta and impacts of
macroeconomic factors that would impact all
companies similarly)
Qualitative Screen
•
Focus on companies with a growth strategy similar
to Lumen as it transitions away from its traditional
Telecom business to Enterprise Technology
•
Disclosed peer of peers
•
Reverse peers
•
Review disclosed compensation peer group by
proxy advisors
•
The analysis of our 2024 TSR Peer Group started with
a review of our 2023 TSR Peer Group.
•
Given the Company's strategic shift and recent stock
price volatility, our independent compensation
consultant recommended Lumen should maintain the
TSR peer group for the following cycle and reevaluate
the comparator group approach more holistically
for 2025, as Lumen's use of a custom peer group remains
uncommon among peers and across the broader
industry.
Outcomes from Screening Process
2024 TSR Peer Group
In August 2023, based on the results of the screening process and input from HRCC’s independent consultant, the HRCC
reviewed the 2023 TSR Peer Group of 15 companies and approved its use without change as our 2024 TSR Peer Group.
DISH Network Corp was subsequently acquired by EchoStar Corporation and was then excluded from our 2024 TSR
Peer Group.
2025 TSR Peer Group
In November 2024, based on the results of the screening process and input from HRCC’s independent consultant, the
HRCC reviewed the 2024 TSR Peer Group of 14 companies and, other than the removal of Consolidated Communications
Holdings, Inc. following its acquisition in December 2024, approved its use without change as our 2025 TSR Peer Group.
Compensation Discussion & Analysis
111
2024 ANNUAL REPORT
2025 PROXY STATEMENT
With respect to the 2024 TSR Peer Group, as of September 2023, Lumen was positioned at the 5th percentile
in terms of three-year TSR and the 23rd percentile in terms of market capitalization. Consistent with the decline
in our share price over the last few years, which we hope to be temporary while we execute on our
transformation, these peer rankings represent shifts compared to the analysis done in connection with the
establishment of the 2023 TSR Proxy Peer Group, where Lumen was positioned at the 31st and 46th percentiles
for three-year TSR and market capitalization, respectively, as of December 2022. With respect to our 2025 TSR
Peer Group, we were positioned at the 25th and 4th percentiles for three-year TSR and market capitalization,
respectively, as of September 2024.
The 2024 Compensation Benchmarking and TSR Peer Groups are summarized in the table below.
Our Compensation
Benchmarking Peer
Group
Common to both
peer groups
Our TSR Peer
Group
Cognizant Technology
Solutions Corp
DXC Technology Corp
Hewlett Packard Enterprise
NetApp
Oracle Corp
QUALCOMM Inc.
Seagate Technology plc
T-Mobile US, Inc.
Western Digital Corp
CISCO Systems Inc.
EchoStar Corp
Frontier Communications
Liberty Global plc
Motorola Solutions, Inc.
AT&T, Inc.
Cable One, Inc.
Charter Communications, Inc.
Cogent Communications
Holdings, Inc.
Comcast Corporation
Consolidated Communications
Telephone & Data Systems Inc.
United States Cellular Corporation
Viasat, Inc.
Verizon Communications Inc.
14 Compensation
Benchmarking peers
15 TSR peers
Stock Ownership Guidelines
Under our current stock ownership guidelines, our executive officers are required to beneficially own Lumen
stock in market value equal to a multiple of their annual salary, as outlined in the table below, and each outside
director must beneficially own Lumen stock equal in market value to five times the annual cash retainer payable
to outside directors.
Stock Ownership Guidelines
Party
Guideline
Value(1)(2)
CEO
6X Base Salary
$ 7,800,000
Other Current NEOs
3X Base Salary
$ 2,225,000
Outside Directors
5X Annual Cash Retainer
$ 500,000
____________________
(1)
Value for CEO of $7.8M is based on Ms. Johnson’s annual salary as of December 31, 2024.
(2)
Value reflected in the table for our other Current NEOs is based on the average annual salary for such officers as of December 31, 2024.
Each officer’s target, however, is based on his or her individual base salary.
Compensation Discussion & Analysis
112
Each executive officer and outside director has three and five years, respectively, to attain these targets. For any
year during which an executive or outside director does not meet his or her ownership target, the executive or
director is required to hold 65% of any Lumen stock that he or she acquires through our equity compensation
programs (other than any shares we sell to pay related taxes).
As of March 19, 2025, of our 15 then-current NEOs and outside directors, 14(1) were in compliance and one(2) was
within his five year compliance window.
____________________
(1)
Messrs. Allen, Brown, Chilton, Clontz, Fowler, Glenn, Jones, Stansbury and Ward and Messes. Béjar, Haynes-Gaspar, Johnson, Linear, and
Siegel were in compliance.
(2)
Mr. Capossela, who joined our Board on October 29, 2024, has until October 29, 2029 to comply with these guidelines.
Human Resources and Compensation
Committee Report
The HRCC has reviewed and discussed with management the report included above under the heading
“Compensation Discussion & Analysis.” Based on this review and discussion, the HRCC recommended to the
Board that the Compensation Discussion & Analysis report be included in this proxy statement and incorporated
into our Annual Report on Form 10-K for the year ended December 31, 2024.
Submitted by the Human Resources and Compensation Committee of the Board of Directors as of
March 6, 2025.
Laurie A. Siegel
(Chair)
Quincy L. Allen
Martha H. Béjar
Christopher
Capossela
Steven T. “Terry”
Clontz
T. Michael Glenn
Compensation Discussion & Analysis
113
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Compensation Tables
Summary Compensation Table
The following table sets forth the compensation paid to each of our NEOs in all capacities in which they served
for fiscal years 2022, 2023, and 2024.
Summary Compensation Table
Name and
Principal
Position
Year
Salary
Bonus(1)
Stock
Awards(2)
Non-equity
Incentive Plan
Compensation(3)
Change in
Pension
Value(4)
All Other
Compensation(5)
Total
Current NEOs(6)
Kate Johnson
President and CEO
2024 $ 1,283,607
— $ 6,135,630
$ 2,957,252
$
—
$
123,502 $ 10,499,991
2023 1,200,000
— 6,215,329
1,996,800
—
180,834 9,592,963
2022
180,840 $ 1,000,000
3,013,700
329,129
—
254,461
4,778,130
Chris D. Stansbury
EVP and CFO
2024 $
841,803
— $ 2,368,137
$ 1,117,496
$
—
$
30,300 $ 4,357,736
2023
800,000
—
3,271,226
915,200
—
10,354 4,996,780
2022
565,200 $ 150,000 8,792,466
642,915
—
10,854 10,161,435
David Ward
EVP, Chief
Technology &
Product Officer
2024 $
622,920 $ 1,000,000 $ 2,481,228
$
661,541
$
—
$
13,800 $ 4,779,489
Ashley Haynes-
Gaspar
EVP, Chief
Revenue Officer
2024 $
625,019 $ 250,000 $ 1,011,840
$ 663,770
$
—
$
21,462 $ 2,572,091
2023
553,972
250,000 2,160,675
483,950
—
9,000 3,457,597
Former NEOs
Stacey Goff
Former EVP,
General Counsel
and Secretary(7)
2024 $
411,202 $ 1,125,000 $
—
$ 393,006
$ 144,894
$ 1,599,900 $ 3,674,002
2023
700,000
— 1,079,907
698,880
176,563
63,999
2,719,349
2022
656,338
— 2,336,539
716,721
—
44,653
3,754,251
Chadwick Ho
Former EVP and
Chief Legal Officer
and Secretary(8)
2024 $
392,077 $ 650,000 $ 1,051,282
$ 312,284
$
—
$
11,754 $ 2,417,397
Satish Lakshmanan
Former EVP, Chief
Product Officer(9)
2024 $ 354,645 $ 1,400,000 $ 1,309,237
$ 282,471
$
—
$ 1,100,000 $ 4,446,353
(1)
For all NEOs other than Mr. Goff, the amounts in this column represent an on-boarding bonus paid to the NEO following his or her start date
and subject to a “clawback” if the NEO voluntarily resigns or is terminated for “cause” (as defined in our Executive Severance Plan) before
the two-year anniversary of his or her start date. For additional information regarding the impact of certain NEO departures on the on-
boarding bonuses, see “Section Four—Compensation Design, Awards, and Payouts for 2024—Compensation Arrangements Related to
Leadership Transition” in our CD&A. For Mr. Goff, the amount represents a special bonus award paid in April 2024, described in further detail
in “Section Four—Compensation Design, Awards, and Payouts for 2024—Compensation Arrangements Related to Leadership Transition” in
our CD&A.
(2)
For 2024, the amounts shown in this column reflect the fair value of grants of restricted stock made to our NEOs under our LTI program.
The fair value of the these awards, all of which have time-based vesting, has been determined in accordance with FASB ASC Topic 718,
based on the closing trading price of our Common Shares on the day of grant. As such, the amounts reported in this column reflect grant
date values ($1.23-$1.70) rather than the stock price used to calculate the number of shares underlying the awards ($1.29-$1.79), which was
the 15-day volume-weighted average closing price prior to the date of grant. As described in our CD&A, for our annual 2024 awards, we
granted long-term performance-based cash awards in lieu of performance-based equity awards, and as a result, the values reported in this
column are significantly below the NEOs’ LTI target grant values for 2024. Similarly, in 2024, we granted a portion of the initial LTI awards to
Messrs. Ward and Lakshmanan in cash instead of equity. All of these cash LTI awards are reflected in the “Grant of Plan Based Awards
Table” but, in accordance with SEC rules, will only be reflected in the "Summary Compensation Table" in our future proxy statements if and
when earned. For more information on our 2024 LTI awards, see the section entitled, “Section Four—Compensation Design, Awards, and
Payouts for 2024—2024 Long-Term Incentive Compensation” in our CD&A.
114
(3)
The amounts shown in this column reflect cash payments made under our short-term incentive program for actual performance for the
respective years. For additional information, see “Section Four—Compensation Design, Awards, and Payouts for 2024—2024 Short-Term
Incentive Program” in our CD&A.
(4)
Reflects the net change during each of the years reflected in the present value of Mr. Goff’s accumulated benefits under the defined benefit
plan discussed below under the heading “— Pension Benefits.”
(5)
We calculate the aggregate incremental cost based on the payments made by us to provide the applicable benefit. For fiscal 2024, the
amounts shown in this column are comprised of (i) the cost of personal use of aircraft via NetJets; (ii) Company contributions or other
allocations to our defined contribution plans; (iii) personal identity theft protection service; (iv) personal security costs; and (v) severance
benefits, in each case for and on behalf of the named executives as follows:
All Other Compensation—2024
NEO
Aircraft
Use
Contributions
to Plans
Identity
Theft
Protection
Security
Costs
Severance
Benefits(i)
Total 2024
All Other
Compensation
Current NEOs
Ms. Johnson
$
99,118
$ 13,800
$ 9,000
$ 1,584
$
—
$
123,502
Mr. Stansbury
—
13,800
9,000
7,500
—
30,300
Mr. Ward
—
13,800
—
—
—
13,800
Ms. Haynes-Gaspar
—
12,462
9,000
—
—
21,462
Former NEOs
Mr. Goff
—
30,698
—
—
1,569,202
1,599,900
Mr. Ho
—
11,754
—
—
—
11,754
Mr. Lakshmanan
—
—
—
—
1,100,000
1,100,000
(i)
See “Section Four—Compensation Design, Awards, and Payouts for 2024—Compensation Arrangements Related to Leadership
Transition” in our CD&A.
For additional information regarding perquisites, see “Section Four—Compensation Design, Awards, and Payouts for 2024—Other Benefits—
Perquisites” in our CD&A.
(6)
The employment of Ms. Johnson, Mr. Stansbury, Mr. Ward, and Ms. Haynes-Gaspar commenced on November 7, 2022, April 4, 2022,
February 12, 2024, and January 9, 2023, respectively,
(7)
Mr. Goff’s employment with us ended on August 2, 2024.
(8)
Mr. Ho’s employment with us began on June 10, 2024 and ended on February 7, 2025.
(9)
Mr. Lakshmanan’s employment with us began on January 8, 2024 and ended on August 30, 2024.
Compensation Tables
115
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Grant of Plan Based Awards
The following table presents additional information regarding all equity and non-equity incentive plan awards
granted to our NEOs in fiscal 2024.
Grants of Plan-Based Awards
Current NEOs
Ms. Johnson
STI Bonus
$ 1,392,303 $ 2,784,606 $ 5,569,212
TBRS—Annual
3,609,194
$ 6,135,630
PLTC—FCF
$ 2,137,500 $ 4,275,000 $ 8,550,000
PLTC—rTSR
$ 2,137,500 $ 4,275,000 $ 8,550,000
Mr. Stansbury
STI Bonus
$ 526,128 $ 1,052,256 $ 2,104,512
TBRS—Annual
1,393,022
$ 2,368,137
PLTC—FCF
$ 825,000 $ 1,650,000 $ 3,300,000
PLTC—rTSR
$ 825,000 $ 1,650,000 $ 3,300,000
Mr. Ward
STI Bonus
$
311,460 $
622,920 $ 1,245,840
TBRS—Initial
912,209
$ 1,404,802
TBRS—Annual
633,192
$ 1,076,426
PLTC—FCF
$ 375,000 $ 750,000 $ 1,500,000
PLTC—rTSR
$ 375,000 $ 750,000 $ 1,500,000
Ms. Haynes-
Gaspar
STI Bonus
$
312,510 $
625,019 $ 1,250,038
TBRS—Annual
595,200
$ 1,011,840
PLTC—FCF
$ 352,500 $ 705,000 $ 1,410,000
PLTC—rTSR
$ 352,500 $ 705,000 $ 1,410,000
Former NEOs
Mr. Goff
STI Bonus
$ 246,708 $
493,416 $ 986,832
Mr. Ho(6)
STI Bonus
$ 196,035 $ 392,070 $ 784,140
TBRS—Initial
505,051
$
621,213
TBRS—Annual
349,650
$ 430,070
PLTC—FCF
$ 168,750 $
337,500 $
675,000
PLTC—rTSR
$ 168,750 $
337,500 $
675,000
Mr.
Lakshmanan(7)
STI Bonus
$ 177,320 $ 354,640 $ 709,280
TBRS—Initial
419,862
$ 663,382
TBRS—Annual
379,915
$ 645,856
PLTC—FCF
$ 225,000 $ 450,000 $ 900,000
PLTC—rTSR
$ 225,000 $ 450,000 $ 900,000
NEO
Type of
Award and
Grant Date(1)
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (STI)(2)
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (LTI)(3)
All Other
Stock
Awards:
Unvested
Shares(4)
(#)
Grant Date
Fair Value
of All Other
Stock
Awards(5)
($)
Threshold
($)
Target
($)
Maximum
($)
Threshold
($)
Target
($)
Maximum
($)
(1)
Definitions of these terms and information on the grant dates appear elsewhere in these footnotes. The LTI awards granted on March 1, 2024
were approved by our HRCC on February 21, 2024, the LTI awards granted to Mr. Ho on June 10, 2024 were approved by the HRCC on April
25, 2024 and the LTI awards granted to Mr. Ward on February 12, 2024 were approved by the HRCC on February 2, 2024.
(2)
Consists of potential payouts under the annual STI bonus program for our NEOs for 2024 approved on February 26, 2024. The target is
equal to product of the executive’s earned base salary and his or her STI target bonus percentage. The threshold represents 50% of the
executive’s target, as for each of the three measures of our performance (adjusted EBITDA (50%), revenue (35%), and customer experience
(15%)), performance below 50% of that measure’s target would have resulted in no payment to the executive with respect thereto. The
maximum represents 200% of the executive’s target, as in no event could an executive have received more than 200% of his or her target
even if performance was 200% for each measure of our performance and his or her individual performance was assessed at 120% of target.
Further, while not reflected in the table, the bonus otherwise payable to any NEO could have been eliminated based on his or her individual
performance. See “Section Four—Compensation Design, Awards, and Payouts for 2024—2024 Short-Term Incentive Program” in our CD&A
for more information. The actual amounts paid for 2024 performance are reported in the “Non-Equity Incentive Plan Compensation” column
of the "Summary Compensation Table."
Compensation Tables
116
(3)
Consists of the performance-based portion of our 2024 LTI awards granted in the form of long-term cash (PLTC) awards on March 1, 2024
to each of Mses. Johnson and Haynes-Gaspar and Messrs. Stansbury, Ward, and Lakshmanan and June 10, 2024 to Mr. Ho. Performance
under each award will be measured over the three-year period from January 1, 2024 to December 31, 2026, half against our relative TSR
(PLTC-rTSR) and half against our cumulative free cash flow (PLTC-FCF). The awards to our current NEOs will vest, if at all, on March 1, 2027,
generally subject to continued employment through the relevant vesting date. Payout under these awards, if any, will be made in cash and
may range between zero to 200% of target. See “Section Four—Compensation Design, Awards, and Payouts for 2024—2024 Long-Term
Incentive Compensation” in our CD&A for more information.
(4)
Consists of time-based restricted stock (TBRS). For each of our NEOs, it includes the time-based portion of our 2024 LTI awards (TBRS-
Annual) granted on March 1, 2024 to each of Mses. Johnson and Haynes-Gaspar and Messrs. Stansbury, Ward, and Lakshmanan and June 10,
2024 to Mr. Ho. One-third of the TBRS-Annual granted to our current NEOs vested on March 1, 2025 and the remainder will vest in two equal
installments on each of the next two anniversaries of the grant date, generally subject to continued employment through the relevant
vesting date (the awards to each of our former NEOs having been canceled upon the termination of his employment). For each of Messrs.
Ward, Ho, and Lakshmanan, it also includes a time-based restricted stock on-boarding award (TBRS-Initial). Mr. Ward’s TBRS-Initial award
was granted on February 12, 2024; one-fourth of the award vested on February 12, 2025 and the remainder will vest in three equal
installments on the next three anniversaries of the grant date, generally subject to his continued employment through the relevant vesting
date. Mr. Ho’s TBRS-Initial award was granted on June 10 2024; one-third of the award would have vested on each of the first three
anniversaries of the grant date, had he remained continually employed through the relevant vesting date. Mr. Lakshmanan’s TBRS-Initial
award was granted on January 8, 2024; one-third of the award would have vested on each of the first three anniversaries of the grant date,
had he remained continually employed through the relevant vesting date. See “Section Four—2024 Long-Term Incentive Compensation” in
our CD&A for more information. As discussed elsewhere, while not appearing in this table, each of Messrs. Ward and Lakshmanan also
received time-based cash on-boarding awards. These on-boarding awards are described in more detail under “—Section Four—
Compensation Design, Awards, and Payouts for 2024—Compensation Arrangements Related to Leadership Transition.”
(5)
Calculated in accordance with FASB ASC Topic 718 in the manner described in Note 2 to the "Summary Compensation Table" above.
(6)
All of Mr. Ho’s TBRS and PLTC awards were forfeited when his employment ended on February 7, 2025.
(7)
All of Mr. Lakshmanan’s TBRS and PLTC awards were forfeited when his employment ended on August 30, 2024.
For more information, see “—Section Four—Compensation Design, Awards, and Payouts for 2024” and “—
Potential Termination Payments.”
Compensation Tables
117
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Outstanding Equity Awards
The following table summarizes information about all outstanding unvested equity awards held by our NEOs as
of December 31, 2024.
Outstanding Awards at December 31, 2024
Stock Awards
Equity Incentive Awards(1)
Name
Grant Date
Number of
Unvested
Shares (#)
Market Value
of Unvested
Shares ($)(2)
Number of
Unvested
Shares (#)
Market Value
of Unvested
Shares ($)(2)
Current NEOs
Ms. Johnson
11/7/2022
117,040
(3)
$
621,482
—
$
—
3/1/2023
973,236
(4)
5,167,883
—
—
5/18/2023
(5)
—
—
1,094,891
(6)
5,813,869
3/1/2024
3,609,194
(4)
19,164,820
—
—
Mr. Stansbury
4/4/2022
346,952
(7)
$ 1,842,315
118,218
(8)
$ 627,735
3/1/2023
512,230
(4)
2,719,941
—
—
5/18/2023
(5)
—
—
576,259
(6)
3,059,933
3/1/2024
1,393,022
(4)
7,396,947
—
—
Mr. Ward
2/12/2024
912,209
(9)
$ 4,843,830
—
$
—
3/1/2024
633,192
(4)
3,362,250
—
—
Ms. Haynes-Gaspar
1/9/2023
149,348
(10)
$ 793,038
—
$
—
3/1/2023
136,594
(4)
725,314
153,669
(6)
815,982
3/1/2024
595,200
(4)
3,160,512
—
—
Former NEOs(11)
Mr. Goff
2/25/2022
—
$
—
56,326
(8)
$
299,091
3/1/2023
—
—
96,043
(6)
509,988
Mr. Ho
6/10/2024
854,701
(12)
$ 4,538,462
—
$
—
(1)
Represents performance-based equity awards, payouts in respect of which may range between zero to 200%. The table above assumes
that, as of December 31, 2024, we would perform at “threshold” levels for our annual 2022 and 2023 awards, such that all performance-
based shares granted to each named executive would vest at 50% of target. With respect to our 2022 performance-based equity awards,
our actual performance was "below threshold" and therefore no shares vested (see note 7 below).
(2)
Calculated using the closing price of our Common Shares on NYSE on December 31, 2024, the last trading day of 2024, which was $5.31.
(3)
Represents the unvested portion of a prorated annual grant of time-vested restricted stock made to Ms. Johnson upon her start in 2022 that
will vest on November 7, 2025, generally subject to her continued employment through such date.
(4)
Represents the time-based portion of our 2023 or 2024 annual grant of time-vested restricted stock, as the case may be, that will vest in
three equal installments on each of the first three anniversaries of the grant date, generally subject to the executive’s continued employment
through the relevant vesting date.
(5)
Ms. Johnson and Mr. Stansbury’s awards were originally granted on March 1, 2023, but due to the number of shares then-available in our
share pool, the awards were canceled and reissued on May 18, 2023, following shareholder approval of the Second Amended and Restated
2018 Equity Incentive Plan, with terms identical to the original grants but for the grant date.
(6)
Represents the outstanding performance-based portion of our 2023 annual restricted stock awards, based on achieving threshold
performance goals. The number of shares earned will range between 0 to 200% of the number granted, depending on the Company’s
achievement level with respect to the following two separate performance targets for the three-year period from 2023 to 2025: (i) 50% of
the total target shares granted will be measured against the Company’s cumulative adjusted EBITDA results; and (ii) 50% of the total target
shares granted will be measured against the Company’s relative total shareholder return against the performance of a peer group of
companies in the communications industry, subject to certain limits if our actual TSR is negative. These awards will vest on March 1, 2026, if
at all, subject to the level of achievement against the metrics and the executive’s continued employment through such date for the
executives other than Mr. Goff. Mr. Goff was granted 345,755 target number of PBRS, 153,669 of which were forfeited upon his termination
on August 2, 2024, and 192,086 of which remained outstanding, subject to attainment of performance goals.
(7)
Mr. Stansbury was awarded two grants of time-vested restricted stock upon his start in 2022, consisting of (i) an annual grant and (ii) an
onboarding grant. Of the 157,622 shares of restricted stock granted in connection with his annual award, 52,540 vested on April 4, 2023,
52,541 vested on April 4, 2024, and 52,541 are unvested and will vest on the next anniversary of the grant date, generally subject to his
continued employment through such date. Of the 339,705 shares of his restricted stock granted in connection with his onboarding grant,
22,647 vested on each of April 4 of 2023 and 2024, 22,647 will vest on the next anniversary of the grant date, and 135,882 will vest on each
of the fifth and seventh anniversaries of the grant date, generally subject to his continued employment through the relevant vesting date.
Compensation Tables
118
(8)
Represents the outstanding performance-based portion of Messrs. Stansbury’s and Goff’s 2022 annual restricted stock awards, based on
achieving threshold performance goals. Mr. Stansbury and Mr. Goff had a target number of shares of 236,435 and 112,652, respectively,
outstanding on December 31, 2024. As described in greater detail in “Section Four—LTI Linkage to Performance-No Payouts Under 2022
PBRS Awards,” we achieved below threshold performance against the target for both of the metrics against which these awards were
measured, resulting in 0% payout and forfeiture of all 2022 PBRS awards.
(9)
Represents the unvested portion of the onboarding grant of time-vested restricted stock made to Mr. Ward upon his start in 2024, one-
fourth of which vested on February 12, 2025, and the remainder of which will vest in three equal installments on each of the next three
anniversaries of the grant date, generally subject to his continued employment through the relevant vesting date.
(10) Represents the unvested portion of the onboarding grant of time-vested restricted stock made to Ms. Haynes-Gaspar upon her start in 2023,
one-third which vested on each of January 9, 2024 and 2025, and the remainder of which will vest on the next anniversary of the grant date,
generally subject to her continued employment through such date.
(11)
Mr. Lakshmanan is excluded from the table, as his employment ended on August 30, 2024, and any outstanding equity awards he held on
that date were canceled in connection with his termination.
(12)
Mr. Ho was awarded two grants of time-vested restricted stock upon his start on June 10, 2024, consisting of (i) a prorated annual grant and
(ii) an onboarding grant. The total of 854,701 shares granted to Mr. Ho on June 10, 2024, all of which were unvested as of December 31,
2024, were forfeited when his employment ended on February 7, 2025.
For the impact the termination of the employment of each NEO would have on their equity awards, please see
“Potential Termination Payments” below.
Stock Vesting Table
The following table provides details regarding the equity awards held by our NEOs that vested during 2024.
Restricted stock was the only equity award held by our NEOs during 2024.
Stock Vested During 2024
Name
Number of Shares Acquired
on Vesting (#)(1)
Value Realized
on Vesting ($)(2)
Current NEOs
Ms. Johnson
603,657
$ 1,863,910
Mr. Stansbury
331,302
$ 515,657
Mr. Ward
—
—
Ms. Haynes-Gaspar
142,971
$ 232,360
Former NEO
Mr. Goff
309,213
$ 764,581
Mr. Ho
—
—
Mr. Lakshmanan
—
—
(1)
Represents time-vested equity awards that vested during 2024.
(2)
Based on the closing trading price of the Common Shares on the applicable vesting date.
Pension Benefits
The following table provides information on pension benefits payable to one of our former NEOs under (1) the
Lumen Combined Pension Plan, a broad-based qualified retirement plan established under Code Section 401(a),
which permits eligible participants (including officers) who have completed at least five years of service to
receive a pension benefit upon attaining early or normal retirement age and (2) the Supplemental Defined
Benefit plan, a non-qualified supplemental defined benefit plan, which is designed to pay supplemental
retirement benefits to certain officers in amounts equal to the benefits such officers would otherwise forego due
to Code limitations on compensation and benefits under qualified plans. We refer to these particular defined
benefit plans, both which are described in more detail in the text following the table, as our “Qualified Plan” and
our “Supplemental Plan,” respectively, and as our “Pension Plans,” collectively.
Mr. Goff was the only NEO eligible to participate in our Pension Plans, as they were closed to non-bargaining
employees (including our executives) hired after 2010.
Compensation Tables
119
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Pension Benefits
Participating NEO(1)
Plan Name
Number of Years of
Credited Service
Present Value of
Accumulated Benefit
as of 12/31/24(2)
Payments During
Last Fiscal Year
Mr. Goff(3)
Qualified Plan
25.67
$ 958,711
$ —
Supplemental Plan
25.67
$ 554,530
$ —
(1)
None of our other NEOs were eligible to participate in our Pension Plans, as they joined the Company after both plans were closed to
new participants.
(2)
We calculated the actuarial present values of accumulated benefits as of December 31, 2024 under the Qualified Plan and the Supplemental
Plan using the following material assumptions: the Pri-2012 healthy retiree table (projected generationally using the MP-2021 mortality
improvement scale) and, with respect to the Supplemental Plan, a 5.70% interest discount rate. For additional information regarding these
plans, see Item 7 and Note 11 to the notes to our audited financial statements included in Item 8 of our Annual Report on Form 10-K for the
year ended December 31, 2024, which are excerpted in Appendix B to this proxy statement.
(3)
The change in value of the accumulated pension benefits is due to a partial year of benefit accrual. as well as a one-year decrease in the
discount period, based on his years of service and age as of his employment termination date, which entitled Mr. Goff to a subsidized benefit
based on the terms of the plan.
PENSION PLANS. With limited exceptions specified in the Pension Plans, we “froze” both our Qualified Plan and
Supplemental Plan as of December 31, 2010, which means that no additional monthly pension benefits have
accrued under such plans since that date (although service after that date continues to count towards vesting
and benefit eligibility and a limited transitional benefit for eligible participants continued to accrue
through 2015).
Prior to this freezing of benefit accruals, the aggregate amount of each senior officer’s total monthly pension
benefit under both the Qualified Plan and Supplemental Plan was equal to his or her years of service since 1999
(up to a maximum of 30 years) multiplied by the sum of (1) 0.5% of his or her final average pay plus (2) 0.5% of
his or her final average pay in excess of his or her Social Security-covered compensation, where “final average
pay” was defined as his or her average monthly compensation during the 60 consecutive month period within
his or her last 10 years of employment in which he or she received his or her highest compensation. Effective
December ͏31, 2010, the Pension Plans were frozen and all future benefit accruals under the above formula
ceased (except where a collective bargaining agreement provides otherwise). In lieu of those additional
accruals, each affected participant’s accrued benefit as of December 31, 2010 was increased 4% per year,
compounded annually through the earlier of December 31, 2015 and the termination of the
participant’s employment.
Under both Pension Plans, “average monthly compensation” is determined based on the participant’s salary plus
annual cash incentive bonus. Although the retirement benefits described above are provided through separate
plans, we have in the past transferred benefits from the Supplemental Plan to the Qualified Plan and reserve the
right to make further similar transfers to the extent allowed under applicable law. The value of benefits
transferred to the Qualified Plan, which directly offset the value of benefits in the Supplemental Plan, will be
payable to the recipients in the form of enhanced annuities or supplemental benefits and are reflected in the
table above under the “Present Value of Accumulated Benefits as of 12/31/24” column.
The normal form of benefit payment under both of our Pension Plans is (1) in the case of unmarried participants,
a monthly annuity payable for the life of the participant and (2) in the case of married participants, an actuarially
equivalent monthly annuity payable for the lifetime of the participant and a survivor annuity payable for the
lifetime of the spouse upon the participant’s death. Participants may elect optional forms of annuity benefits
under each Pension Plan and, in the case of the Qualified Plan, an annuity that guarantees 10 years of benefits,
all of which are actuarially equivalent in value to the normal form of benefit. The enhanced annuities described in
the prior paragraph may be paid in the form of a lump sum, at the participant’s election.
The normal retirement age is 65 under both of the Pension Plans. Participants may receive benefits under both
of these plans upon “early retirement,” which is defined as attaining age 55 with five years of service. Under
both of these plans, the benefit payable upon early termination is calculated under formulas that pay between
60% to 100% of the base plan benefit and 48% to 92% of the excess plan benefit, in each case with the lowest
percentage applying to early retirement at age 55 and proportionately higher percentages applying to early
retirement after age 55.
Compensation Tables
120
Deferred Compensation
The following table provides information on contributions by, and on behalf of, one of our former NEOs under
our Supplemental Savings Plan, which is described in more detail in the text following the table.
Nonqualified Deferred Compensation
Participating NEO(1)
Aggregate
Balance at
December 31,
2023
Executive
Contributions
in 2024(2)
Company
Contributions
in 2024(3)
Aggregate
Earnings in
2024(4)
Aggregate
Withdrawals/
Distributions(5)
Aggregate
Balance at
December 31,
2024
Mr. Goff
$ 3,590,855
$ 36,210
$ 16,898
$ 549,554
$ —
$ 4,193,517
(1)
Of our NEOs, only Mr. Goff elected to participate in, and made contributions to, the Supplemental Savings Plan during 2024.
(2)
The amount in this column represents Mr. Goff’s contributions under the Supplemental Savings Plan of salary paid in 2024, all of which is
reported in the “Salary” column of the "Summary Compensation Table."
(3)
This amount in this column represents our match of Mr. Goff’s contributions under the terms of the Supplemental Savings Plan, all of which is
included as 2024 compensation in the “All Other Compensation” column of the "Summary Compensation Table."
(4)
This column represents aggregate earnings in 2024 including interest, dividends, and distributions earned with respect to deferred
compensation invested by Mr. Goff in the manner described in the text below, net of the $15 annual account fee.
(5)
Although Mr. Goff terminated employment in August 2024, payout of his aggregate balance was subject to delay under Section 409A of
the Code.
Supplemental Savings Plan
We established a Supplemental Savings Plan to give certain of our employees (including our executive officers)
the opportunity to defer a portion of their compensation in excess the deferral limits under the Internal Revenue
Code for our 401(k) plan and to allow us to make matching contributions based on such deferrals in excess of
those permissible under our 401(k) plan. Under our Supplemental Savings Plan, our senior officers may defer up
to 50% of their salary in excess of the Code limit on annual contributions to a 401(k) plan. For every dollar that
an eligible participant contributes to this plan up to 6% of his or her “excess” salary, we add an amount equal to
the total matching percentage then in effect for matching contributions made by us under our 401(k) plan
(which, for 2024, equaled the sum of all of the initial 1% contributed and half of the next 5% contributed). All
amounts contributed under our Supplemental Savings Plan by the participants or us are allocated among
deemed investments that follow the performance of the same broad array of funds offered under our
401(k) plan. This is reflected in the market value of each participant’s account. Participants may change their
deemed investments in these funds at any time. Participants in the Supplemental Savings Plan receive payment
of their account balances in a lump sum once they cease working full-time for us, subject to any deferrals
mandated by federal law (including Section 409A of the Code).
Potential Termination Payments
The materials below discuss payments and benefits that our current NEOs would have been eligible to receive if
they: (1) resigned, with or without good reason; (2) retired; (3) were terminated by us, with or without cause;
(4) died or became disabled; or (5) became entitled to termination benefits following a change of control of
Lumen, in each case, as of December 31, 2024.
Notwithstanding the information appearing below, our officers have agreed to forfeit their equity compensation
awards (and profits derived therefrom) if they compete with us or engage in other activity harmful to our
interests while employed with us or within 18 months after termination. Certain other compensation might also
be recoverable by us under certain circumstances after termination of employment. See “—Section Four—
Compensation Design, Awards, and Payouts for 2024—Other Benefits—Forfeiture and Clawback of Incentive
Compensation” for more information.
Compensation Tables
121
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Payments Made Upon All Terminations
Regardless of the manner in which an executive’s employment terminates, he or she is entitled to receive
amounts earned or vested during his or her term of employment (subject to the potential forfeitures discussed
above). With respect to each such terminated employee, such amounts include his or her:
• salary through the date of termination;
• any earned but unpaid annual incentive bonus for the year prior to termination; and
• equity awards that have vested.
He or she is also entitled to benefits accrued and vested under our qualified and non-qualified retirement plans
and continued health and welfare benefits to the extent required by law.
If an employee is terminated for cause or resigns without good reason, this represents the totality of payments
or benefits to which he or she is entitled.
Payments Made Upon Involuntary Terminations
In addition to all of the benefits described under “—Payments Made Upon All Terminations,” under our Executive
Severance Plan, an executive involuntarily terminated by us without “cause” or who resign for “good reason,” in
each case in the absence of a change of control (the impacts of which are governed by his or her change of
control agreement and described below), is also entitled, subject to certain conditions (including his or her
execution of a release of claims in our favor), to:
• a cash severance payment equal to a specified multiple of his or her targeted cash compensation;
• payment of his or her annual incentive bonus for the year or, for a partial year of service, a pro rata portion
thereof, based on actual Company performance, reduced by a 90% individual performance modifier;
• continued health benefits (including for his or her covered dependents) for the shorter of 12 months following
cessation of employment and the period for which the individuals are eligible, and have elected, such
coverage; and
• outplacement assistance benefits.
See “Section Four—Compensation Design, Awards, and Payouts for 2024—Other Benefits—Severance Benefits”
in our CD&A for more details about our Executive Severance Plan, including the amount of cash severance to
which each of our NEOs would be entitled and the meaning of “cause” and “good reason” for these purposes.
See “—Equity Acceleration Provisions of Ms. Johnson’s Offer Letter” for the impact of certain terminations upon
her equity awards. In addition, under our equity incentive plans, the HRCC has discretion to accelerate vesting of
all, or a portion of, unvested time-vested equity awards or permit an employee who is involuntarily terminated
by us without cause to retain all or a portion of his or her unvested performance-based equity awards for the
remainder of the applicable performance period, or a combination of both.
Payments Made Upon Retirement
In addition to all of the benefits described under “—Payments Made Upon All Terminations,” pursuant to our
qualified defined benefit and defined contribution plans, an executive is entitled, subject to certain conditions
with respect to age and service and his or her execution of a release of claims in our favor, to:
• payment of their annual incentive bonus for the year or, for a partial year of service, a pro rata portion
thereof, based on actual Company performance, reduced by a 90% individual performance modifier; and
• post-retirement health and welfare benefits.
In addition, under our equity incentive plans, the HRCC has discretion to accelerate the vesting of all, or a
portion of, unvested time-vested equity awards or to permit an employee who retires from the Company to
retain all or a portion of his or her unvested performance-based equity awards for the remainder of the
applicable performance period, or a combination of both.
Compensation Tables
122
Payments Made Upon Death or Disability
Upon death or disability, executives (or their estates) are generally entitled to (without duplication of benefits):
• payments under our disability or life insurance plans, as applicable;
• immediate vesting of any time-vested equity awards;
• immediate vesting of any performance-based equity awards, with performance deemed achieved at target;
• payment of their annual incentive bonus for the year or, for a partial year of service, a pro rata portion
thereof, with performance deemed achieved at target; and
• continued rights to receive (1) life, health, and welfare benefits, in the event of disabilities of employees
meeting certain service requirements, or (2) health and welfare benefits payable to surviving eligible
dependents, in the event of death of employees meeting certain age and service requirements.
Equity Acceleration Provisions of Ms. Johnson’s Offer Letter
Ms. Johnson’s offer letter provides for accelerated vesting of certain equity awards if she is involuntarily
terminated by us without “cause” or resign for “good reason” within three years following her start date (i.e.,
before November 7, 2025). Upon a qualifying termination and subject to her executing a release of claims in our
favor, (1) a prorated portion of her time-vested equity awards based on time served will immediately vest and
(2) she will retain a prorated portion of her performance-based equity awards based on time served (which will
continue to vest as if she had not been terminated except upon her death, when the awards would pay out
at target).
For these purposes, (1) “cause” has the meaning set forth in our Executive Severance Plan and (2) “good reason”
means (i) a reduction in Ms. Johnson’s status, title, duties, or responsibilities; (ii) a change in Ms. Johnson’s
reporting relationship so that she no longer reports directly to the Board; (iii) a reduction in Ms. Johnson’s base
salary, annual target STI opportunity, or annual target LTI opportunity; or (iv) any other material breach of her
offer letter, subject in each case to our right to cure.
Payments Made Upon a Change of Control
We offer our executives certain benefits following a change of control, which we believe enhance shareholder
value because:
• prior to a takeover, these protections help us to recruit and retain talented officers and to help maintain the
productivity of our workforce by alleviating concerns over economic security; and
• during or after a takeover, these protections (1) help our personnel, when evaluating a possible business
combination, to focus on the best interests of Lumen and its shareholders and (2) reduce the risk that
personnel will accept job offers from competitors after the commencement of takeover discussions.
Change of Control Agreements. We have entered into agreements that entitle each of our executives who are
terminated without “cause” or resign for “good reason” within a specified period following any “change of
control” of Lumen to receive certain cash severance and other benefits. See “Section Four—Compensation
Design, Awards, and Payouts for 2024—Other Benefits—Change of Control Arrangements” in our CD&A for
more details about our change of control agreements, including the amount of cash severance to which each
of our NEOs would be entitled and the meaning of “change of control,” “cause” and “good reason” for
these purposes.
Compensation Tables
123
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Impact on Equity Incentives. Under the terms of our equity incentive plans, incentives granted under those plans
will not vest, accelerate, become exercisable, or be deemed fully paid unless otherwise provided in a separate
agreement, plan, or instrument. None of our equity award agreements provide for any such accelerated
recognition of benefits solely upon a change of control. Instead, our award agreements provide that an
executive who is terminated without “cause” or resigns with “good reason” within 18 months following a
“change of control” (in each, as defined in manner consistent the meanings given to such terms in our change of
control agreements) will, subject to him or her executing a release of claims in our favor, be entitled to
(1) immediate vesting of any time-vested equity awards and (2) retain any performance-based equity awards
(which will continue to vest as if he or she had not been terminated except upon his or her death, when the
awards would pay out at target).
Estimated Potential Termination Payments
The table below provides estimates of the value of payments and benefits that would become payable if our
current NEOs were terminated in the manner described below, in each case based on various assumptions, the
most significant of which are described in the table’s notes.
Potential Termination Payments
Type of Termination of Employment(1)(2)
Name
Type of Termination
Payment(3)
Involuntary
Termination
Without
Cause(4)
Disability
Death
Termination
Upon a
Change of
Control(5)
Current NEOs
Ms. Johnson
Annual Bonus
$ 2,217,939
$ 2,784,606
$ 2,784,606
$ 2,957,252
Equity Awards(6)
14,162,662
45,753,400
45,753,400
45,753,400
Pension and Welfare(7)
69,800
—
—
69,800
Cash Severance(8)
8,320,000
—
—
10,400,000
Total
$ 24,770,401
$ 48,538,006
$ 48,538,006
$ 59,180,452
Mr. Stansbury
Annual Bonus
$
838,122
$ 1,052,256
$ 1,052,256
$
891,870
Equity Awards(6)
—
22,634,538
22,634,538
22,634,538
Pension and Welfare(7)
36,000
—
—
69,000
Cash Severance(8)
1,912,500
—
—
3,825,000
Total
$ 2,786,622
$ 23,686,794
$ 23,686,794
$ 27,420,408
Mr. Ward
Annual Bonus
$
496,156
$
622,920
$
622,920
$
661,541
Equity Awards(6)
—
10,956,079
10,956,079
10,956,079
Pension and Welfare(7)
26,900
—
—
50,800
Cash Severance(8)
1,500,000
—
—
3,000,000
Total
$ 2,023,056
$ 11,578,999
$ 11,578,999
$ 14,668,420
Ms. Haynes-Gaspar
Annual Bonus
$
497,828
$
625,019
$
625,019
$
573,860
Equity Awards(6)
—
6,396,202
6,396,202
6,396,202
Pension and Welfare(7)
5,800
—
—
8,600
Cash Severance(8)
1,250,038
—
—
2,500,077
Total
$ 1,753,666
$
7,021,221
$
7,021,221
$ 9,478,739
(1)
All data in the table reflects our estimates of the value of payments and benefits assuming the named officer was terminated on
December ͏31, 2024 and, for the potential payments upon a change of control, that a change of control had occurred during the 18 months
preceding December 31, 2024. The closing price of the Common Shares on such date was $5.31. The table reflects only estimates of amounts
earned or payable through or at such date. Actual amounts can be determined only at the time of termination. If a named officer voluntarily
resigns or is terminated with cause, he or she will not be entitled to any special or accelerated benefits but will be entitled to receive any
amounts earned or vested as of the termination date.
(2)
None of our current NEOs met the minimum age and service requirement to qualify for retirement benefits.
Compensation Tables
124
(3)
As further described above, upon termination of employment, the named officer may become entitled to receive certain special, accelerated
or enhanced benefits, including, subject to certain exceptions, the right to receive cash severance payments, accelerated vesting of his or
her outstanding equity awards, or current or enhanced health and welfare benefits. The table excludes (i) payments or benefits made under
broad-based plans or arrangements generally available to all salaried full-time employees and (ii) amounts earned or vested as of the
termination date.
(4)
The amounts listed in this column reflect payments to which the named officer would be entitled to under our Executive Severance Plan if
he or she is involuntarily terminated by us without cause or terminates his or her employment for good reason prior to a change of control.
The amounts listed in this column would not be payable if the officer voluntarily resigns without good reason or is terminated for cause. Nor
would they apply in the case of the officer’s termination due to death or disability. See “Section Four—Compensation Design, Awards, and
Payouts for 2024—Other Benefits—Severance Benefits” for more details.
(5)
The information in this column reflects payments to which the named officer would be entitled under his or her change of control agreement
if he or she is involuntarily terminated by us without cause or terminates his or her employment for good reason within a certain period
following a change of control. See “Section Four—Compensation Design, Awards, and Payouts for 2024—Other Benefits—Change of Control
Agreements” for more details.
(6)
The information in this row reflects the benefit to the named officer arising out of the accelerated vesting of some or all of his or her
restricted stock triggered by the termination of employment. The information in this row also assumes that the HRCC would not exercise its
discretion to accelerate vesting of any portion of his or her unvested time-based equity awards or permit the officer to retain any portion of
his or her unvested performance-based equity awards in the event he or she is involuntarily terminated by us without cause or terminates
his or her employment for good reason, notwithstanding that in the past the HRCC has generally approved both with respect to equity
awards granted at least one year prior to the termination date.
(7)
The information in this row reflects only the incremental benefits that accrue upon an event of termination and excludes benefits that were
vested on December 31, 2024.
(8)
The information in this row excludes, in the case of disability or death, payments to which the officer (or his or her estate) would be entitled
under Company-sponsored insurance plans.
For information regarding any severance payments made to our former NEOs, see “—Section Four—
Compensation Design, Awards, and Payouts for 2024—Compensation Arrangements Related to
Leadership Transition.”
CEO Pay Ratio Disclosure
As required by SEC rules, we are disclosing a ratio of the pay of our CEO to that of our median employee. For
2024, the total compensation of our CEO, Ms. Johnson (as reported in the "Summary Compensation Table") was
$10,499,991, while the annual total compensation for our median employee was $91,606. As a result, the ratio of
CEO pay to median employee pay was approximately 115 to 1.
We calculated our 2024 pay ratio using the following assumptions:
• Median employee determination. The median employee was determined by reviewing the annual total target
compensation (i.e., the sum of base salary, target short-term incentive, and target long-term incentive
awards) as of December 31, 2024 for the approximately 25,000 active employees employed on that date,
excluding our CEO.
• Median employee identification. The median employee was identified as a Customer Data Technician-CWA,
employed by us in the U.S. for eight years.
• Median employee total compensation calculation. To determine the median pay ratio, we calculated the
median employee’s pay using the same pay elements and calculation methodology as used in determining the
CEO’s pay for purposes of disclosure in the "Summary Compensation Table."
The SEC rules permit companies to choose between different methodologies for median pay calculations. Other
public companies may calculate their pay ratio using a different methodology than ours, and you should not
assume our ratio data is comparable to that of other companies.
Compensation Tables
125
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Pay Versus Performance Disclosure
In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Act , we provide the following
disclosure regarding executive compensation for our principal executive officers (“PEOs”) and Non-PEO NEOs
and Company performance for the fiscal years listed below. The HRCC did not consider the pay versus
performance disclosure below in making its pay decisions for any of the years shown.
Year
Summary
Compensation
Table Total for
PEO 1(1)
($)
Summary
Compensation
Table Total for
PEO 2(1)
($)
Compensation
Actually Paid to
PEO 1(1),(2),(3)
($)
Compensation
Actually Paid to
PEO 2(1),(2),(3)
($)
Average
Summary
Compensation
Table Total
for Non-PEO
NEOs(1)
($)
Average
Compensation
Actually Paid
to Non-PEO
NEOs(1),(2),(3)
($)
Value of
Initial Fixed
$100
Investment
based on:(4)
Net
Income
($ Millions)
Adjusted
EBITDA(5)
($ Millions)
TSR
($)
Peer
Group
TSR
($)
2024
$
—
$ 10,499,991
$
—
$ 32,495,808
$ 3,707,845
$ 7,297,378 $ 50.82 $ 197.38
$
(55)
$ 3,445
2023
—
9,592,963
—
7,258,427
3,396,054
1,846,687 17.52 140.75
(10,298)
4,146
2022
19,816,806
4,778,130
(5,200,491)
4,368,986
5,145,256
511,978 49.96 90.34
(1,548)
6,703
2021
22,654,781
—
32,390,881
—
4,057,947
5,127,580 112.34 150.28
2,033
8,424
2020
16,959,233
—
10,189,461
—
3,162,186
2,308,534 80.91 123.61
(1,232)
8,489
(1)
Jeffery K. Storey was our PEO from May 24, 2018 to November 7, 2022 (“PEO 1”). Kate Johnson has been our PEO since November 7, 2022
(“PEO 2”). The individuals comprising the Non-PEO NEOs for each year presented are listed below.
2020
2021
2022
2023
2024
Indraneel Dev
Indraneel Dev
Stacey W. Goff
Stacey W. Goff
Chris D. Stansbury
Stacey W. Goff
Stacey W. Goff
Chris D. Stansbury
Chris D. Stansbury
Ashley Haynes-Gaspar
Shaun C. Andrews
Shaun C. Andrews
Shaun C. Andrews
Ashley Haynes-Gaspar
David Ward
Scott A. Trezise
Scott A. Trezise
Scott A. Trezise
Scott A. Trezise
Chadwick Ho
Indraneel Dev
Satish Lakshmanan
Stacey. W. Goff
(2)
The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not
reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the "Summary Compensation
Table" Total with certain adjustments as described in footnote 3 below.
(3)
For 2024, compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEOs and the Non-PEO NEOs as set
forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the
totals from the Stock Awards column set forth in the "Summary Compensation Table." Amounts in the Exclusion of Change in Pension Value
column reflect the amounts, if any, attributable to the Change in Pension Value reported in the "Summary Compensation Table." There are
no amounts reported in the Inclusion of Pension Service Cost because with limited exceptions specified in the Pension Plans, we “froze” our
defined benefit pension plans as of December 31, 2010, as described under the heading “—Pension Benefits.”
Year
Summary
Compensation
Table Total for
PEO 2
($)
Exclusion of
Change in
Pension Value for
PEO 2
($)
Exclusion of
Stock Awards for
PEO 2
($)
Inclusion of
Pension Service
Cost for
PEO 2
($)
Inclusion of
Equity Values for
PEO 2
($)
Compensation
Actually Paid to
PEO 2
($)
2024
$ 10,499,991
$ —
$ (6,135,630)
$ —
$ 28,131,447
$ 32,495,808
Year
Average
Summary
Compensation
Table Total for
Non-PEO NEOs
($)
Average
Exclusion of
Change in
Pension Value for
Non-PEO NEOs
($)
Average
Exclusion of
Stock Awards for
Non-PEO NEOs
($)
Average Inclusion
of Pension
Service Cost for
Non-PEO NEOs
($)
Average Inclusion
of Equity Values
for Non-PEO
NEOs
($)
Average
Compensation
Actually Paid to
Non-PEO NEOs
($)
2024
$ 3,707,845
$ (24,149)
$ (1,370,288)
$ —
$ 4,983,970
$ 7,297,378
Compensation Tables
126
The amounts in the “Inclusion of Equity Values” columns in the tables above are derived from adding or
deducting the amounts set forth in the following tables:
Year
Year-End Fair
Value of Equity
Awards Granted
During Year That
Remained
Unvested as of
Last Day of Year
for PEO 2
($)
Change in Fair
Value from Last
Day of Prior Year
to Last Day of
Year of Unvested
Equity Awards for
PEO 2
($)
Vesting-Date Fair
Value of Equity
Awards Granted
During Year that
Vested During
Year for PEO 2
($)
Change in Fair
Value from Last
Day of Prior Year
to Vesting Date
of Unvested
Equity Awards
that Vested
During Year for
PEO 2
($)
Fair Value at Last
Day of Prior Year
of Equity Awards
Forfeited During
Year for PEO 2
($)
Total—Inclusion
of Equity Values
for PEO 2
($)
2024
$ 19,164,820
$ 8,207,410
$ —
$
759,217
$ —
$ 28,131,447
Year
Average Year-
End Fair Value of
Equity Awards
Granted During
Year That
Remained
Unvested as of
Last Day of Year
for Non-PEO
NEOs
($)
Average Change
in Fair Value from
Last Day of Prior
Year to Last Day
of Year of
Unvested Equity
Awards for Non-
PEO NEOs
($)
Average Vesting-
Date Fair Value of
Equity Awards
Granted During
Year that Vested
During Year for
Non-PEO NEOs
($)
Average Change
in Fair Value from
Last Day of Prior
Year to Vesting
Date of Unvested
Equity Awards
that Vested
During Year for
Non-PEO NEOs
($)
Average Fair
Value at Last Day
of Prior Year of
Equity Awards
Forfeited During
Year for Non-PEO
NEOs
($)
Total—Average
Inclusion of
Equity Values for
Non-PEO NEOs
($)
2024
$ 3,883,667
$ 1,126,566
$ —
$
13,136
$ (39,399)
$ 4,983,970
(4)
The Peer Group TSR set forth in this table utilizes the S&P 500 Communication Services Sector Index, which we also utilize in the stock
performance graph appearing herein under the heading “Other Matters—Lumen Performance History.” The comparison assumes $100 was
invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the S&P 500 Communication
Services Sector Index, respectively. Historical stock performance is not necessarily indicative of future stock performance.
(5)
We determined Adjusted EBITDA to be the most important financial performance measure used to link Company performance to
Compensation Actually Paid to our PEO 2 and Non-PEO NEOs in 2024. Adjusted EBITDA measures the operational performance and
profitability of our businesses, and we use this measure in our compensation programs to incentivize and reward our senior officers to focus
on the combination of cost savings and profitable revenue growth. Adjusted EBITDA, which is described in further detail in Appendix A –
Non-GAAP Reconciliations, is a non-GAAP metric. This performance measure may not have been the most important financial performance
measure for prior years and we may determine a different financial performance measure to be the most important financial performance
measure in future years.
Compensation Tables
127
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Relationship Between PEO and Non-PEO NEO Compensation
Actually Paid and Company Total Shareholder Return (“TSR”)
and Peer Group TSR
The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of
Compensation Actually Paid to our Non-PEO NEOs, and the Company’s cumulative TSR over the five most
recently completed fiscal years. The chart also compares the Company’s TSR to that of the S&P 500
Communications Services Sector Index TSR over the same period.
PEO and Average Non-PEO NEO Compensation Actually Paid Versus TSR
Relationship Between PEO and Non-PEO NEO Compensation
Actually Paid and Net Income
The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of
Compensation Actually Paid to our Non-PEO NEOs, and our Net Income during the five most recently
completed fiscal years.
PEO and Average Non-PEO NEO Compensation Actually Paid Versus Net Income
Compensation Tables
128
Relationship Between PEO and Non-PEO NEO Compensation
Actually Paid and Adjusted EBITDA
The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of
Compensation Actually Paid to our Non-PEO NEOs, and our Adjusted EBITDA during the five most recently
completed fiscal years.
PEO and Average Non-PEO NEO Compensation Actually Paid Versus Adjusted EBITDA
Tabular List of Most Important Financial
Performance Measures
The following table presents the financial performance measures that the Company considers to have been the
most important in linking Compensation Actually Paid to our PEO 2 and Non-PEO NEOs for 2024 to Company
performance. The measures in this table are not ranked.
Adjusted EBITDA
Free Cash Flow
Revenue
Compensation Tables
129
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Other Matters
Equity Compensation Plan Information
The following tables provide information as of December 31, 2024 about our equity compensation plans under
which Common Shares are authorized for issuance.
As of December 31, 2024
Plan Category
Number of securities
to be issued upon
exercise of
outstanding options
and rights (a)(1)
Weighted-average
exercise price of
outstanding options
and rights (b)(2)
Number of securities
remaining available for
future issuance under
plans (excluding
securities reflected in
column (a)) (c)(3)
Equity Compensation Plans approved
by shareholders:
2018 Equity Incentive Plan, as amended and
restated (the “2018 Plan”)
2,156,055
$ —
— (4)
2024 Equity Incentive Plan (the “2024 Plan”)
630,072
$ —
41,447,413
All shareholder approved plans
2,786,127
$ —
41,447,413
Equity Compensation Plans not approved
by shareholders:
None
—
$ —
—
All non-shareholder approved plans
—
$ —
—
Totals
2,786,127 (5)
$ —
41,447,413
(1)
Consists of restricted stock units (RSUs). The number assumes target performance for all outstanding unvested performance-vesting RSUs.
If achievement of maximum performance is assumed for outstanding performance-based equity awards, the number of Common Shares to
be issued as of December 31, 2024, would include an additional 8,849,813 shares, for a total of 11,635,940 Common Shares potentially
issuable as of December 31, 2024
(2)
The amounts in column (a) consist of RSUs, which do not have an exercise price.
(3)
Represents the number of shares available for issuance as new awards under our 2024 Plan as of December 31, 2024, subject to adjustment
as set forth in the plan. Any shares subject to an award granted under the 2024 Plan that is subsequently canceled, forfeited, or expires prior
to exercise or realization, whether in full or in part, shall be available again for issuance or delivery under the 2024 Plan. In addition, any
shares subject to an award granted under the 2018 Plan that, after May 15, 2024, is cancelled, forfeited, or expires prior to exercise or
realization, whether in full or in part, shall be available for issuance or delivery under the 2024 Plan. The 2024 Plan permits the granting of
non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, RSUs, and other stock-based awards to key
employees, officers, directors, advisors and consultants.
(4)
Upon adoption of the 2024 Plan, we ceased making awards under the 2018 plan.
(5)
This consists of 2,786,127 Common Shares underlying RSUs (assuming target performance for all performance-vesting RSUs). In addition, as
of December 31, 2024, we had 25,374,426 unvested shares of restricted stock outstanding (assuming target performance for all
performance-vesting restricted stock) (which, when combined with the Common Shares subject to RSUs in the prior sentence, yields a total
of 28,160,553 full-value awards outstanding, assuming target performance for all performance-vesting awards). If achievement of maximum
performance is assumed, the total number of full-value awards outstanding as of December 31, 2024, would be 37,010,366. RSUs and
restricted stock were the only types of equity awards outstanding as of December 31, 2024.
130
Stock Ownership
The following table sets forth information regarding ownership of our Common Shares by the persons known to
us to have beneficially owned more than 5% of the outstanding Common Shares as of the dates indicated below
(the “investors”).
Stock Ownership
Name and Address
Amount and
Nature of
Beneficial
Ownership of
Common Shares(1)
Percent of
Outstanding
Common Shares(1)
BlackRock, Inc.
50 Hudson Yards
New York, NY 10001
152,311,260
(2)
14.9%
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
118,327,820
(3)
11.5%
Dan Hagan
601 E Broadway
Suite 203
P.O. Box 1225
Columbia, Missouri 65205
55,000,000
(4)
5.4%
(1)
The figures and percentages in the table above have been determined in accordance with Rule 13d-3 of the SEC based upon information
furnished by the investors, except that we have calculated the percentages in the table based on the actual number of Common Shares
outstanding as of the record date, as opposed to the estimated percentages set forth in the reports of such investors referred to below in
such notes. In addition to Common Shares, we have outstanding Preferred Shares that vote together with the Common Shares as a single
class on all matters. One or more persons beneficially own more than 5% of the Preferred Shares; however, the percentage of total voting
power held by such persons is immaterial. For additional information regarding the Preferred Shares, see “Frequently Asked Questions
About Voting and the Annual Meeting—How many votes may I cast?”
(2)
Based on information contained in a Schedule 13G/A Report dated as of January 22, 2024, that this investor filed with the SEC. In this report,
the investor indicated that, as of December 31, 2023, it (1) shared voting power with respect to none of these shares, (2) held sole voting
power with respect to 148,604,763 of these shares, and (3) held sole dispositive power with respect to all of these shares.
(3)
Based on information contained in a Schedule 13G/A Report dated as of February 13, 2024, that this investor filed with the SEC. In this
report, the investor indicated that, as of December 29, 2023, it (1) held sole voting power with respect to none of these shares, (2) shared
voting power with respect to 657,954 of these shares, (3) held sole dispositive power with respect to 116,595,555 of these shares, and
(4) shared dispositive power with respect to 1,732,265 of these shares.
(4)
Based on information contained in a Schedule 13G Report dated as of September 10, 2024, that this investor filed with the SEC. In this
report, the investor indicated that, as of September 9, 2024, he (1) shared voting power with respect to none of these shares, (2) held sole
voting power with respect to all of these shares, and (3) held sole dispositive power with respect to all of these shares.
Other Matters
131
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Ownership of Executive Officers & Directors
The following table sets forth information, as of the record date, regarding the beneficial ownership of our
Common Shares held by: (1) each of our current directors, director nominees and NEOs; and (2) all of our
current directors and executive officers as a group. It also includes any shares underlying restricted stock units
that are scheduled to be issued within 60 days of our record date. 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
Beneficially Owned
Total Shares
Beneficially
Owned(2)
Vested
Deferred
Stock
Units(3) Percent of
Class
Unrestricted
Shares
Beneficially
Owned
Unvested
Restricted
Stock(1)
Current Named Executive Officers
Ms. Johnson(4)
3,228,807
8,530,632
11,759,439
—
1.1%
Mr. Stansbury(5)
1,143,222
4,599,892
5,743,114
—
*
Ms. Haynes-Gaspar
303,351
1,347,300
1,650,651
—
*
Mr. Ward
244,561
1,840,609
2,085,170
—
*
Former Named Executive Officers(6)
Mr. Goff
548,069
192,086
740,155
—
*
Mr. Ho
—
—
—
—
—
Mr. Lakshmanan
—
—
—
—
—
Outside Directors and Director Nominees
Mr. Allen
—
—
—
276,173
*
Ms. Béjar
75,822
157,518
233,340
111,213
*
Mr. Brown(7)
188,723
157,518
346,241
—
*
Mr. Capossela
—
15,608
15,608
—
*
Mr. Chilton
91,911
—
91,911
268,213
*
Mr. Clontz
425,634
157,518
583,152
—
*
Mr. Fowler
143,500
240,556
384,056
—
*
Mr. Glenn(8)
199,362
—
199,362
307,318
*
Ms. Goldberg(9)
—
—
—
—
—
Mr. Jones
146,594
—
146,594
157,518
*
Ms. Linear
—
191,835
191,835
—
*
Mr. McMillan(10)
—
—
—
—
—
Ms. Siegel(11)
224,452
157,518
381,970
—
*
All current executive officers and current directors as a group (15 persons)
Overall Total
6,415,939 17,396,504
23,812,443 1,120,435
2.3%
*Represents less than 1% of the total number of outstanding Common Shares as of the record date.
(1)
Reflects (i) for all shares listed, unvested shares of restricted stock over which the person holds sole voting power but no investment power
and (ii) with respect to our performance-based restricted stock granted to our executive officers, the number of shares that will vest if we
attain target levels of performance.
(2)
Excludes restricted stock units that do not vest and settle in shares within 60 days.
(3)
This column reflects vested equity awards deferred by outside directors that will settle in shares at a future date according to the directors’
elections, including 157,518 of deferred stock units held by Messrs. Allen, Chilton, Glenn, and Jones, which will vest on May 16, 2025, but will
not settle in shares until each such director’s elected deferral date.
(4)
Includes 2,278,362 shares held indirectly by Ms. Johnson in a trust.
(5)
Includes 500,000 shares held indirectly by Mr. Stansbury in a trust.
(6)
Reflects the last reported holdings of Mr. Goff, Mr. Ho and Mr. Lakshmanan on the date their employment with us terminated on August 2,
2024, February 7, 2025 and August 30, 2024, respectively (adjusted, for Mr. Goff, to reflect the forfeiture of his then-outstanding 2022 PBRS
award on March 1, 2025).
(7)
Includes 24,297 shares held by a tax-exempt charitable foundation, as to which Mr. Brown has voting and dispositive powers by virtue of his
control of the foundation.
(8)
Includes 77,143 shares held indirectly by Mr. Glenn in a trust.
(9)
Ms. Goldberg has been nominated for election to our Board at the annual meeting.
(10) Mr. McMillan has been nominated for election to our Board at the annual meeting.
(11)
Includes 44,536 shares held indirectly by Ms. Siegel in a trust.
Other Matters
132
Transactions with Related Parties
Review Procedures. At the beginning of each year, our Legal department requests that each of our directors
and executive officers complete a detailed questionnaire soliciting information on, among other things, related
parties (e.g., immediate family members or any entities in which any of them have a significant interest). The
SEC Finance department reviews information on payments to or from our directors or executive officers, or any
of their related parties, to determine if Lumen has engaged in any related party transactions. This analysis is
then shared with the Audit and NCG Committees. The Audit Committee chair, in turn, reports on this related
party transaction analysis to the Board
Recent Transactions. There were no related party transactions reportable under Item 404 of Regulation S-K for
2024.
Insider Trading Policy
Our insider trading policy governs the purchase, sale, and other dispositions of our securities by our directors,
officers, employees, consultants, and independent contractors, as well as by the Company itself. We believe our
insider trading policy is reasonably designed to promote compliance with insider trading laws, rules, and
regulations and applicable NYSE listing standards.
Our insider trading policy prohibits our directors and officers from entering into any hedging or monetization
transactions with respect to our securities. Our insider trading policy also prohibits our directors and Section 16
officers from pledging our securities as collateral or holding our securities in a margin account.
The full text of our insider trading policy was filed as Exhibit 19 to our Annual Report on Form 10-K for the year
ended December 31, 2024.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires Lumen’s directors, certain officers and greater than 10% shareholders
to file with the SEC certain reports regarding their beneficial ownership of our Common Shares. To our
knowledge, based solely on a review of SEC filings and written representations from our officers and directors,
we believe that, between January 1, 2024, through the date of this proxy statement, all such reports were filed
timely with the exception of one such report. Specifically, a report for our Chief Accounting Officer, Andrea
Genschaw, reporting share withholding and forfeiture of certain equity-based awards that occurred on
August 23, 2024 was filed on September 5, 2024 due to an administrative error.
Compensation Committee Interlocks and
Insider Participation
The following directors served on the HRCC for some or all of 2024: Quincy L. Allen, Martha H. Béjar,
Christopher Capossela, Steven T. “Terry” Clontz, T. Michael Glenn, Michael Roberts, and Laurie Siegel. No
member of the HRCC has been an officer or employee of the Company or any of our subsidiaries. Nor, during
2024, did any of our executive officers serve on the board of directors of any company that employed any
member of our Board.
Other Matters
133
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Lumen Performance History
The graph below compares the cumulative total shareholder return on our Common Shares with the cumulative
total return of the S&P 500 Index and the S&P 500 Communication Services Sector Index for the period from
December 31, 2019 to December 29, 2024, in each case assuming (1) the investment of $100 on January 1, 2020,
at closing prices on December 31, 2019 and (2) reinvestment of dividends.
December 31,
2019
2020
2021
2022
2023
2024
Lumen
$ 100.00
$ 80.91
$ 112.34
$ 49.96
$ 17.52
$ 50.82
S&P 500 Index
$ 100.00
$ 116.26
$ 147.52
$ 118.84
$ 147.64
$ 182.05
S&P 500 Communications Service Sector Index(1)
$ 100.00
$ 123.61
$ 150.28
$ 90.34
$ 140.75
$ 197.38
(1)
As of December 31, 2024 the S&P 500 Communications Service Sector Index consisted of Alphabet Inc., Meta Platforms, Inc., Netflix Inc.,
Comcast Corp., Charter Communications, Inc., Verizon Communications, Inc., T-Mobile US, Inc., AT&T Inc., Omnicron Group, Inc., Warner
Bros. Discovery, Inc., Paramount Group, Fox Corp, News Corp, Live Nation Entertainment, Inc., Take-Two Interactive Software, inc., Match
Group, Inc., The Walt Disney Company, Electronic Arts Inc., and The Interpublic Group of Companies, Inc.
Other Matters
134
ITEM 6
Shareholder Proposal — Simple
Majority Vote
The Company has been advised that John Chevedden, 2215 Nelson Ave., No. 205, Redondo Beach, California
90278, intends to present the following proposal at the annual meeting. In accordance with applicable SEC
rules, the proposed resolution and supporting statement, for which the Board and the Company accept no
responsibility, are set forth below. Mr. Chevedden has indicated that he holds the requisite number of our
Common Shares in accordance with Rule 14a-8 requirements. This proposal is required to be voted upon at the
annual meeting if properly presented. After careful consideration, the Board has determined not to make a
voting recommendation with respect to this proposal.
Proposal 6 - Simple Majority Vote
Shareholders request that our board take each step necessary so that each voting requirement in our charter
and bylaws (that is explicit or implicit due to default to state law) that calls for a greater than simple majority
vote be replaced by a requirement for a majority of the votes cast for and against applicable proposals, or a
simple majority in compliance with applicable laws. If necessary this means the closest standard to a majority of
the votes cast for and against such proposals consistent with applicable laws. This includes making the
necessary changes in plain English.
Shareholders are willing to pay a premium for shares of companies that have excellent corporate governance.
Lumen Technologies' supermajority voting requirements have been found to be one of 6 entrenching
mechanisms that are negatively related to company performance according to "What Matters in Corporate
Governance" by Lucien Bebchuck, Alma Cohen and Allen Ferrell of the Harvard Law School. Supermajority
requirements can be used to block proposals supported by most shareholder but opposed by the Board
of Directors.
This proposal topic, as a shareholder proposal, received 98% support each in 2024 at Domino's Pizza, FMC
Corporation, ConocoPhillips, Masco Corporation and Power Integrations.
Please vote yes:
Simple Majority Vote — Proposal 6
Board Statement in Response to Shareholder Proposal
The Board has carefully considered the proposal set forth above relating to the removal of supermajority voting
standards in our Articles. While the Board disagrees with certain assertions contained in the proposal’s
supporting statement and disclaims knowledge regarding the statistical information set forth therein, it would
support the concept of enhanced efficiency and streamlined decision-making reflecting the will of the majority if
this proposal is approved, and, accordingly, has determined to make no recommendation to our shareholders
regarding this proposal.
135
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Under our organizational documents, the affirmative vote of a majority of the votes cast, or entitled to be cast,
at a meeting in which a quorum exists is the voting standard for most matters voted upon by our shareholders.
Our Articles, however, impose heightened voting requirements for a number of fundamental governance items,
including “supermajority” voting requirements to approve certain specified business combinations, to amend
our Bylaws, and to amend certain specified sections of our Articles.
This proposal is advisory in nature only, and our Board does not recommend a vote either for or against the
proposal. Shareholders should note that approval of this proposal would not, by itself, implement a majority
voting standard as described in the proposal, and the Board and our shareholders would need to take
subsequent action to amend our Articles. In order to implement the majority voting standard, the Board would
need to recommend a formal amendment to our Articles. In accordance with our Articles, such amendment
would need to be approved at a subsequent meeting of shareholders in accordance with the voting standards
currently in effect. Therefore, a vote in favor of the proposal would constitute a recommendation that the Board
initiate this amendment process.
We believe higher voting requirements are appropriate in limited circumstances because certain fundamental
matters should require broad-based support from our shareholders. However, we regularly solicit input from our
shareholders on governance matters and recognize that some shareholders prefer a universal majority voting
standard. As such, we envision this proposal as an opportunity for shareholders to express their views on this
subject. We intend to consider the voting results on this proposal, together with additional shareholder input
received in the course of our regular shareholder engagement program, in our future deliberations regarding the
appropriate voting standards within our Articles and Bylaws.
Required Vote
Approval of this proposal requires the affirmative vote of a majority of the votes cast on this proposal by
holders of our Voting Shares. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions
and uninstructed shares are not counted as votes cast, and therefore will not affect the outcome of the vote on
this proposal.
The Board has determined to make NO RECOMMENDATION regarding this proposal.
ITEM 6 Shareholder Proposal — Simple Majority Vote
136
Frequently Asked Questions
About Voting and the
Annual Meeting
Q Why am I receiving these proxy materials?
A Our Board of Directors is soliciting your proxy to vote at our 2025 annual meeting of shareholders because
you owned shares of our stock at the close of business on March 19, 2025, the record date for the meeting
and are entitled to vote those shares at the annual meeting. This proxy statement and our annual report were
first made available to shareholders on or about March 31, 2025. This proxy statement is furnished in
connection with the solicitation of proxies by our Board to be voted during the annual meeting for the
purposes set forth in the accompanying Notice of 2025 Annual Shareholders Meeting.
Q How may I access these materials?
A
We are furnishing proxy materials to our shareholders primarily via the Internet instead of mailing printed
copies of those materials to each shareholder. By doing so, we save costs and reduce the environmental
impact of our annual meeting. On or about March 31, 2025, we commenced mailing a Notice of Internet
Availability of Proxy Materials (“Notice”) to most of our shareholders. The Notice contains instructions about
how to access our proxy materials online and submit your proxy online or by telephone. If you previously
chose to receive our proxy materials electronically, you will continue to receive access to these materials via
email unless you elect otherwise. If you would like to receive a paper copy of our proxy materials, please
follow the instructions included in the Notice.
Q When and how will the meeting be held?
A Date: May 13, 2025
Time: 8:30 am Central Time
Virtual Meeting Location: www.virtualshareholdermeeting.com/LUMN2025
Q How many votes may I cast?
A
You may cast one vote for every Common Share or Preferred Share that you owned on the record date,
which vote together as a single class on all matters. In this proxy statement, we refer to these shares as our
“Common Shares” and “Preferred Shares,” respectively, and as our “Voting Shares,” collectively. As of the
Record Date, we had 1,025,099,348 Common Shares and 7,018 Preferred Shares issued and outstanding.
137
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Q What matters will be considered at the meeting and what vote will be required to approve these matters?
A
The following table summarizes the proposals being considered at the meeting, the votes required for
passage of each proposal and the effect of abstentions and uninstructed shares held by brokers.
Items For Consideration
Item
Board Voting
Recommendation
Vote Required
for Approval
Effect of
Abstentions
Effect of
Uninstructed
Shares(1)
Page
Reference
ITEM 1
Elect the 11 director
nominees named herein
FOR
Affirmative vote
of a majority of
the votes cast
Not cast
Not cast
15
ITEM 2
Ratify KPMG LLP as our
independent auditor for 2025
FOR
Affirmative vote
of a majority of
the votes cast
Not cast
Discretionary
voting
46
ITEM 3
Approve a Reverse Stock Split
and Related Reduction of our
Authorized Common Shares
FOR
Affirmative vote
of a majority of
the votes entitled
to be cast
Same as
voting
against
Discretionary
voting
50
ITEM 4A
Approve an articles
amendment to update
references to prior
corporate statute
FOR
Affirmative vote
of a majority of
the votes entitled
to be cast
Same as
voting
against
Discretionary
voting
56
ITEM 4B
Approve an articles
amendment to clarify manner
of electing directors
FOR
Affirmative vote
of a majority of
the votes entitled
to be cast
Same as
voting
against
Same as
voting
against
56
ITEM 4C
Approve an articles
amendment to lower the
special meeting threshold
FOR
Affirmative vote
of a majority of
the votes entitled
to be cast
Same as
voting
against
Same as
voting
against
57
ITEM 4D
Approve an articles
amendment to remove
outmoded reference to
transition period
FOR
Affirmative vote
of a majority of
the votes entitled
to be cast
Same as
voting
against
Discretionary
voting
57
ITEM 5
Advisory Vote on Executive
Compensation – “Say-On-Pay”
FOR
Affirmative vote
of a majority of
the votes cast
Not cast
Not cast
60
ITEM 6
Shareholder Proposal
Regarding Simple
Majority Vote
NO
RECOMMENDATION
Affirmative vote
of a majority of
the votes cast
Not cast
Not cast
135
(1)
“Uninstructed Shares” refers to shares as to which a broker or custodian receives no voting instructions from the shares’ beneficial owner
and which, other than as noted below for Items 2, 3, 4A and 4D, cannot be voted under applicable NYSE standards. Because brokers will
have discretionary authority to vote with respect to Items 2, 3, 4A and 4D, we do not expect there to be any uninstructed shares for
those items.
Frequently Asked Questions About Voting and the Annual Meeting
138
For Items 1, 2, 5 and 6, (i) a majority of votes cast means the number of shares cast “for” a proposal exceeds
the number of votes cast “against” that proposal, (ii) abstentions will not be counted as votes cast and
(iii) uninstructed shares will not be counted as votes cast except with respect to Item 2, for which brokers
and custodians have discretion to vote under applicable NYSE standards. For Items 3, 4A, 4B, 4C and 4D,
abstentions will have the same impact as a vote against the proposal. For each of Items 4B and 4C,
uninstructed shares will also have the same impact as a vote against the proposal.
Q What is the difference between holding shares as a shareholder of record and as a beneficial owner?
A
If shares are registered in your name with our transfer agent, Computershare Investor Services L.L.C., you are
the “shareholder of record” of those shares and you may directly vote these shares, together with any shares
credited to your account if you are a participant in our automatic dividend reinvestment and stock
purchase service.
If your shares are held on your behalf in a stock brokerage account or by a bank or other nominee, you are
the “beneficial owner” of shares held in “street name.” We have requested that our proxy materials be made
available to you by your broker, bank or nominee, who is considered the shareholder of record of
those shares.
Q If I am a shareholder of record, how do I vote?
A
Regardless of whether you plan to join the annual meeting, please promptly submit your proxy and voting
instructions via the Internet, or by phone or mail as described herein. Shareholders are encouraged to submit
proxies and voting instructions in advance of the meeting as early as possible to avoid any possible delays.
Your proxy authorizes each of Kate Johnson and Chris D. Stansbury as your proxies at the 2025 annual
meeting, each with the full power of substitution, to represent and vote your Common Shares and Preferred
Shares as you directed.
If you are a shareholder of record, you may vote yourself or by proxy in any of the following four ways:
• By Internet: visit www.proxyvote.com and follow the instructions at that site
• By phone: call 1-800-690-6903 and follow the instructions provided
• By mail: if you have received printed proxy materials, mark, sign and date your proxy or voting instructions
card and return it to Broadridge Financial Solutions Inc.; if you have not received printed proxy materials
but would like to, you can request a paper copy of our proxy materials and, following receipt thereof,
mark, sign and date your proxy or voting instructions card and return it to Broadridge Financial
Solutions, Inc.
• By Live virtual meeting: vote electronically at the virtual annual meeting—
www.virtualshareholdermeeting.com/LUMN2025
Prior to the live meeting, if you need additional help with voting, please call proxy support at 866-232-3037
(Toll-free) or 720-358-3640 (International Toll). If you encounter any difficulties accessing the virtual
meeting webcast, please call the technical support number that will be posted on the annual meeting website
log-in page.
Unless otherwise noted below, you may vote by telephone or the Internet up until 11:59 p.m. Eastern Time on
May 12, 2025, but not thereafter.
Q If I am a beneficial owner of shares held in street name, how do I vote?
A
As the beneficial owner, you have the right to instruct your broker, bank or nominee how to vote your shares
by using any voting instruction card supplied by them or by following their instructions for voting.
Q If I am a retirement plan participant, how do I vote?
A
If you beneficially own any of our Common Shares by virtue of participating in our retirement plan, then you
will receive separate voting instructions that will enable you to direct the voting of these shares. You are
entitled, on a confidential basis, to instruct the trustee how to vote the shares allocated to your plan
account. The plan requires you to act as a “named fiduciary” under the Employee Retirement Income
Security Act of 1974, which requires you to exercise your voting rights prudently and in the interests of all
plan participants. Plan participants who wish to vote should instruct the trustee how to vote the shares
allocated to their plan accounts in accordance with the voting instructions. If you elect not to vote the
shares allocated to your accounts, your shares will be voted in the same proportion as voted shares
Frequently Asked Questions About Voting and the Annual Meeting
139
2024 ANNUAL REPORT
2025 PROXY STATEMENT
regarding each of the items submitted to a vote at the meeting. Plan participants that wish to revoke their
voting instructions must do so in accordance with the voting instructions. To be counted, your voting
instructions for shares held in our retirement plan must be received by 11:59 p.m. Eastern Time on May 8,
2025, but not thereafter.
Q What happens if I do not indicate my voting instructions for one or more of the matters on my proxy card?
A
If you execute and return your proxy but do not give voting instructions, your shares will be voted as
recommended by the Board. This means that unless your proxy is otherwise marked, properly executed
proxies will be: (1) voted FOR the election of each of the director nominees; (2) voted FOR each of the
other proposals other than Item 6; and (3) not voted with respect to Item 6.
Q Can I revoke or change my voting instructions after I deliver them?
A
Shareholders of record may revoke their proxy or change their votes at any time before their proxy is voted
at the meeting by timely giving a written revocation notice to our Secretary before the virtual meeting,
by timely delivering a proxy bearing a later date or by voting during the virtual meeting. Joining the virtual
meeting will not be enough to revoke your proxy. Beneficial shareholders may revoke or change their voting
instructions by contacting the broker, bank or nominee that holds their shares.
Q Could other matters be considered and voted upon at the meeting?
A
Our Board does not expect to bring any matter before the meeting other than those listed in this proxy
statement. Further, management has not timely received any notice that a shareholder desires to present any
matter for action at the meeting in accordance with our Bylaws (which are described below under “—What is
the deadline to propose actions for consideration at the 2026 annual meeting of shareholders or to nominate
individuals to serve as directors?”) and is otherwise unaware of any matter to be considered by shareholders
at the meeting other than those matters specified in the accompanying notice of the meeting. Our proxy and
voting instruction cards, however, will confer discretionary voting authority with respect to any other matter
that may properly come before the meeting. It is the intention of the persons named therein to vote in
accordance with their best judgment on any such matter.
Q What is the quorum requirement for the meeting?
A
Our Bylaws provide that the presence at the meeting, including by proxy, of a majority of the outstanding
Voting Shares constitutes a quorum to organize the meeting. For these purposes, abstentions and
uninstructed shares are counted as being present.
Q How do I participate in the annual meeting?
A
This year’s annual meeting will be held in a virtual format through a live webcast.
You are entitled to participate in the annual meeting if you were a record shareholder as of the close of
business on March 19, 2025, the record date, or if you hold a valid proxy for the meeting. To participate,
including to vote, in the annual meeting at www.virtualshareholdermeeting.com/LUMN2025, you must enter
the 16-digit control number found next to the label “Control Number” on your Notice, proxy card, or voting
instruction form, or in the email sending you the proxy statement. If you are a beneficial shareholder and
your voting instruction form indicates that you may vote those shares through the www.proxyvote.com
website, then you may access, participate in and vote at the annual meeting with the 16-digit control number
indicated on that Notice or voting instruction form. Otherwise, beneficial shareholders should contact their
broker, bank, nominee or other institution with whom you hold your account (preferably at least five days
before the annual meeting) and obtain a “legal proxy” in order to be able to attend, participate in or vote at
the annual meeting. If you are a beneficial shareholder, you may contact the broker, bank or other institution
with whom you hold your account if you have questions about obtaining your control number.
The question and answer session of the meeting will include questions submitted in advance of and
questions submitted live during the annual meeting. You may submit a question in advance of the meeting at
www.proxyvote.com after logging in with your Control Number. Questions may be submitted during the live
virtual annual meeting by following the instructions on your log-in screen.
We encourage you to access the annual meeting before it begins. Online check-in will start approximately
15 minutes before the meeting on May 13, 2025.
Frequently Asked Questions About Voting and the Annual Meeting
140
Q How can I view a list of shareholders entitled to vote at the annual meeting?
A
We will make a list of shareholders of record as of the record date available for inspection by shareholders of
record for any purpose germane to the 2025 annual meeting from April 3, 2025 through May 13, 2025 during
normal business hours at our headquarters located at 100 CenturyLink Drive, Monroe, Louisiana. We request
that you contact us in advance by phone at (318) 388-9000 or by email at investor.relations@lumen.com to
confirm someone will be present to assist you. The list will also be available to shareholders of record on the
meeting website at www.virtualshareholdermeeting.com/LUMN2025 during the virtual annual
meeting webcast.
Q What can I do if I need technical assistance during the annual meeting?
A
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and
Safari) and devices (desktops, laptops, tablets and cell phones) running the most updated version of
applicable software and plugins. If you encounter any difficulties accessing the virtual Meeting webcast,
please call the technical support number that will be posted on the annual meeting website log-in page.
Q Who sets the rules regarding conduct at the meeting?
A
Under our Bylaws, the Chairman has broad responsibility and legal authority to conduct the meeting in an
orderly and timely manner. This authority includes establishing rules for shareholders who wish to address
the meeting. Copies of these rules will be available during the virtual annual meeting webcast on the meeting
website at www.virtualshareholdermeeting.com/LUMN2025. The Chairman may also exercise broad
discretion regarding (1) recognizing shareholders who wish to speak, (2) determining the extent of discussion
on each item of business, and (3) consolidating the Company’s response to similar questions. In light of the
need to conduct all necessary business and to conclude the meeting within a reasonable period of time, we
cannot assure you that each question submitted will be addressed.
Q What happens if the meeting is postponed or adjourned?
A
The Chairman may postpone or adjourn the meeting. Unless a new record date is fixed, your proxy will still
be valid and may be voted at the postponed or adjourned meeting. You will still be able to change or revoke
your proxy until it is voted in the manner noted above.
Q Who pays the cost of soliciting proxies?
A
The Board, on behalf of the Company, is soliciting the proxy accompanying this proxy statement. Proxies
may be solicited by Lumen officers, directors and employees, none of whom will receive any additional
compensation for their services. Alliance Advisors, LLC may solicit proxies at a cost we anticipate will not
exceed $40,000. These solicitations may be made personally or by mail, telephone, messenger, email, or
other electronic transmission. Lumen will pay persons holding our Common Shares in their names or in the
names of nominees, but not owning such shares beneficially, such as brokerages, banks and other
fiduciaries, for the expense of forwarding solicitation materials to their principals. Lumen will pay all proxy
solicitation costs.
Q What is householding?
A
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery
requirements for Notices or other annual meeting materials with respect to two or more shareholders sharing
the same address by delivering a single Notice or other annual meeting materials addressed to those
shareholders. This process, which is commonly referred to as “householding,” potentially provides extra
convenience for shareholders and cost savings for companies.
This year, a number of brokers with account holders who are our shareholders will be householding our
proxy materials. A Notice will be delivered in one single envelope to multiple shareholders sharing an address
unless contrary instructions have been received from the affected shareholders. Once you have received
notice from your broker that it will be householding communications to your address, householding will
continue until you are notified otherwise or until you revoke your consent. If you hold your shares through a
broker and would prefer to receive a separate Notice, please notify your broker. If you hold your shares
directly and would prefer to receive a separate Notice, please submit a written request to our Corporate
Secretary at 100 CenturyLink Drive, Monroe, Louisiana 71203 or contact Broadridge Financial Solutions, Inc.
at (866) 540-7095. Shareholders who currently receive multiple copies of the Notice at their address and
would like to request householding of their communications should contact their broker. In addition, we will
promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of
the Notice to a shareholder at a shared address to which a single copy of the documents was delivered.
Frequently Asked Questions About Voting and the Annual Meeting
141
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Q What is the deadline to propose actions for consideration at the 2026 annual meeting of shareholders or
to nominate individuals to serve as directors?
A
You may submit proposals, including director nominations, for consideration at future annual meetings
of shareholders.
Shareholder Proposals in the Proxy Statement. To be eligible for inclusion in our 2026 proxy materials, any
shareholder proposal generally must be received by December 1, 2025 and must comply with Rule 14a-8
under the Exchange Act. (If the date of the 2026 annual meeting is more than 30 days before or after May 13,
2026, please consult Rule 14a-18(e)(2) under the Exchange Act to determine the applicable deadline.)
Director Nominations in the Proxy Statement. Our Bylaws permit a shareholder or group of up to
10 shareholders who have owned at least 3% of our outstanding Common Shares continuously for at least the
previous three years to submit director nominees for inclusion in our 2026 proxy materials if the nominating
shareholder(s) satisfies the requirements specified in our Bylaws. The number of shareholder-nominated
candidates appearing in any of our annual meeting proxy materials cannot exceed 20% of the number of
directors then serving on the Board. Based on the 11 directors constituting our Board immediately following
the meeting, two is the maximum number of proxy access candidates that we would be required to include in
our 2026 proxy materials for the 2026 annual meeting. With respect to shareholder-nominated candidates as
directors submitted for inclusion in our 2026 proxy materials, written notice of nominations must be
provided by the shareholder proponent(s) to us in accordance with our Bylaws. The notice generally must be
received by December 1, 2025. (If the date of the 2026 annual meeting is more than 30 days before or after
May 13, 2026, please consult our Bylaws to determine the applicable deadline.)
Other Proposals and Nominations. In addition, our Bylaws require shareholders to furnish timely advance
written notice of their intent to nominate a director or bring any other matter before a shareholders’ meeting,
whether or not they wish to include their candidate or proposal in our proxy materials. In general, notice
must be received in writing by our Secretary, addressed in the manner specified below, between
November 14, 2025 and February 12, 2026 and must contain various information and comply with all
applicable provisions as specified in our Bylaws. (If the date of the 2026 annual meeting is more than 30 days
before or more than 60 days after May 13, 2026, please consult our Bylaws to determine the
applicable deadline.) In addition to satisfying the foregoing requirements under our Bylaws, shareholders
who intend to solicit proxies in conformity with the SEC’s universal proxy rules in support of director
nominees other than our nominees must generally provide notice to our Secretary at the address noted
below that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 14,
2026. (If the date of 2026 annual meeting is more than 30 days before or after May 13, 2026, please consult
Rule 14a-9(b) under the Exchange Act to determine the applicable deadline.)
General. All proposals and nominations must be in writing and received by the applicable deadline(s)
described above at our principal executive offices at 100 CenturyLink Drive, Monroe, Louisiana 71203,
Attention: Corporate Secretary. If we do not receive a proposal or nomination by the deadline(s) described
above or if any nomination or proposal fails to comply with our Bylaw procedures, we may exclude or
disregard such proposal or nomination. The summaries above are qualified in their entirety by reference to
the full text of our Bylaws and Rules 14a-8 and 14a-19 under the Exchange Act. You may obtain a full copy of
our Bylaws by reviewing our reports filed with the SEC, by accessing our website at www.lumen.com or by
contacting our Secretary in the manner specified below.
Proxies granted by a shareholder will give discretionary authority to the proxy holders to vote on any
matters introduced pursuant to the above-described advance notice bylaw provisions, subject to applicable
rules of the SEC.
Frequently Asked Questions About Voting and the Annual Meeting
142
Other Information
Proxy Materials
As described further above, shareholders will receive only a written notice of how to access our proxy materials
and will not receive printed copies of the proxy materials unless requested. If you would like to receive a paper
copy of our proxy materials, you should follow the instructions for requesting the materials in the notice.
The full set of our materials include:
• the notice and proxy statement for the meeting;
• a proxy or voting instruction card; and
• our 2024 Annual Report furnished in the following multiple parts: (1) our 2024 Annual Financial Report, which
constitutes Appendix B to this proxy statement, and (2) the letters from our CEO, Chairman and HRCC Chair
included within this document (the “Supplemental Letters”).
Annual Financial Report
Appendix B includes our 2024 Annual Financial Report, which is excerpted from portions of our Annual Report
on Form 10-K for the year ended December 31, 2024, that we filed with the SEC on February 20, 2025. In
addition, we have provided you with a copy of, or access to, the Supplemental Letters. None of these
documents is a part of our proxy soliciting materials.
You may obtain a copy of our Form 10-K report without charge by writing to Corporate Secretary,
Lumen Technologies, Inc., 100 CenturyLink Drive, Monroe, Louisiana 71203, or by visiting our website
at www.lumen.com.
You may view online this proxy statement and related materials at www.proxyvote.com.
By Order of the Board of Directors
Chris D. Stansbury,
Executive Vice President and
Chief Financial Officer
March 31, 2025
143
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Appendix A
Non-GAAP Reconciliations
Description of Non-GAAP Metrics
Pursuant to Regulation G, the Company is hereby providing (i) definitions of non-GAAP financial metrics that
are used in the sections of the proxy statement under the headings “About Lumen,” “Compensation Discussion
& Analysis—Section One—Executive Summary” and “Compensation Discussion & Analysis—Section Four—
Compensation Design, Awards, and Payouts for 2024” and (ii) reconciliations of these metrics to the most
directly comparable GAAP measures.
The following describes and reconciles those financial measures as reported under accounting principles
generally accepted in the United States (GAAP) with those financial measures as adjusted by the items detailed
below. These calculations are not prepared in accordance with GAAP and should not be viewed as alternatives
to GAAP. In keeping with its historical financial reporting practices, the Company believes that the supplemental
presentation of these calculations provides meaningful non-GAAP financial measures to help investors
understand and compare business trends among different reporting periods on a consistent basis.
We use the term Special Items as a non-GAAP measure to describe items that impacted a period’s statement of
operations for which investors may want to give special consideration due to their magnitude, nature or both.
We do not call these items non-recurring because, while some are infrequent, others may recur in future periods.
In connection with setting performance targets for purposes of executive compensation, the Company from
time to time uses modified versions of the non-GAAP metrics referred to below. For further information of such
modifications, see “Compensation Discussion & Analysis—Section Four—Compensation Design, Awards, and
Payouts for 2024—Goal Setting Process and Incentive Program Guidelines.”
Adjusted EBITDA ($) is defined as net income (loss) from the Statements of Operations before income tax
(expense) benefit, total other income (expense), depreciation and amortization, stock-based compensation
expense and impairments.
Adjusted EBITDA Margin (%) is defined as Adjusted EBITDA divided by total revenue.
Management believes that Adjusted EBITDA and Adjusted EBITDA Margin are relevant and useful metrics to
provide to investors, as they are an important part of our internal reporting and are key measures used by
management to evaluate profitability and operating performance of Lumen and to make resource allocation
decisions. Management believes such measures are especially important in a capital-intensive industry such as
telecommunications. Management also uses Adjusted EBITDA and Adjusted EBITDA Margin (and similarly uses
these terms excluding Special Items) to compare our performance to that of our competitors and to eliminate
certain non-cash and non-operating items in order to consistently measure from period to period our ability to
fund capital expenditures, fund growth, service debt and determine bonuses. Adjusted EBITDA excludes non-
cash stock compensation expense and impairments because of the non-cash nature of these items. Adjusted
EBITDA also excludes interest income, interest expense and income taxes, and in our view constitutes an
accrual-based measure that has the effect of excluding period-to-period changes in working capital and shows
profitability without regard to the effects of capital or tax structure. Adjusted EBITDA also excludes
depreciation and amortization expense because these non-cash expenses primarily reflect the impact of
historical capital investments, as opposed to the cash impacts of capital expenditures made in recent periods,
which may be evaluated through cash flow measures. Adjusted EBITDA further excludes the gain (or loss) on
extinguishment and modification of debt and other income (expense), net, because these items are not related
to the primary business operations of Lumen.
There are material limitations to using Adjusted EBITDA as a financial measure, including the difficulty
associated with comparing companies that use similar performance measures whose calculations may differ
from our calculations. Additionally, by excluding the above-listed items, Adjusted EBITDA may exclude items
that investors believe are important components of our performance. Adjusted EBITDA and Adjusted EBITDA
Margin (either with or without Special Items) should not be considered a substitute for other measures of
financial performance reported in accordance with GAAP.
A-1
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Free Cash Flow is defined as net cash provided by (used in) operating activities less capital expenditures as
disclosed in the Statements of Cash Flows. Management believes that Free Cash Flow is a relevant metric to
provide to investors, as it is an indicator of our ability to generate cash to service our debt. Free Cash Flow
excludes cash used for acquisitions, principal repayments and the impact of exchange rate changes on cash and
cash equivalents balances.
There are material limitations to using Free Cash Flow to measure our performance as it excludes certain
material items that investors may believe are important components of our cash flows. Comparisons of our Free
Cash Flow to that of some of our competitors may be of limited usefulness since until recently we did not pay a
significant amount of income taxes due to net operating loss carryforwards, and therefore, generated higher
cash flow than a comparable business that does pay income taxes. Additionally, this financial measure is subject
to variability quarter over quarter as a result of the timing of payments related to interest expense, accounts
receivable, accounts payable, payroll and capital expenditures. Free Cash Flow (either with or without Special
Items) should not be used as a substitute for net change in cash, cash equivalents and restricted cash on the
Consolidated Statements of Cash Flows.
Non-GAAP Special Items
(Unaudited; $ in millions)
Special Items Impacting Adjusted EBITDA
2024
2023
Severance
$ 130
74
Consumer and other litigation
2
(3)
Net loss on sale of businesses(1)
17
121
Transaction and separation costs(2)
282
108
Net (gain) loss on sale of select CDN contracts and other(3)
(6)
73
Real estate transactions(4)
69
109
Total Special Items impacting Adjusted EBITDA
$ 494
482
Additional Special Items Impacting Net Loss
Goodwill impairment
$
— 10,693
Net gain on early retirement of debt(5)
(348)
(618)
Income from transition and separation services(6)
(157)
(128)
Gain on sale of investment
(205)
—
Tax effect of Special Items impacting Net Loss(7)
66
62
Total Special Items Impacting Net Loss
$ (150) 10,491
Special Items Impacting Cash Flows
Severance
$ 133
67
Consumer and other litigation
1
(3)
Transaction and separation costs(2)
254
147
Income from transition and separate services(6)
(104)
(149)
Total Special Items Impacting Cash Flows
$ 284
62
(1)
Reflects primarily the net loss of $102 million recorded for the year ended 2023 operating income.
(2)
Transaction and separation costs associated with (i) the sale of our Latin American business on August 1, 2022, (ii) the sale of our 20-state
ILEC business on October 3, 2022, (iii) the sale of our EMEA business on November 1, 2023, (iv) our March 22, 2024 debt transaction support
agreement and our September 24, 2024 exchange offer and (v) our evaluation of other potential transactions.
(3)
Includes primarily the recognition of (i) Q1 2024 previously deferred gain on sale of select CDN contracts in October 2023, based on the
transfer of remaining customer contracts as of March 31, 2024 and (ii) Q4 2023 write-off of an allocated portion of customer relationship
intangible assets in the amount of $121 million triggered by the sale of underlying CDN contracts, partially offset by recognition of a
$48 million gain on the transaction based on the percentage of contracts that had transferred control as of December 31, 2023.
(4)
Real estate transactions include primarily the Q4 2024 impairment loss for real estate held for sale, net of a gain associated with our real
estate rationalization program, the Q2 2023 and Q4 2023 loss on donation of real estate, and acceleration of costs associated with our real
estate rationalization program.
(5)
Reflects primarily net gains as a result of (i) cash tender offers and open market repurchases resulting in a reduction of consolidated
indebtedness of approximately $656 million in Q4 2024, (ii) repurchase of $75 million aggregate principal in Q2 2024, (iii) debt transaction
support agreement and resulting debt extinguishment in Q1 2024, (iv) $19 million of debt exchanges in Q2 2023, and (v) $1.5 billion of debt
exchanges in Q1 2023. There were no comparable gains or losses during Q4 2023 or Q3 2023.
Appendix A
A-2
(6)
Income from transition and separation services includes charges we billed for transition services and IT professional services provided to the
purchasers in connection with our 2022 and 2023 divestitures.
(7)
Tax effect calculated using the annualized statutory tax rate, excluding any non-recurring discrete items.
Adjusted EBITDA Non-GAAP Reconciliation
(Unaudited; $ in millions)
2024
2023
Net loss
$
(55)
(10,298)
Income tax (benefit) expense
(175)
61
Total other expense, net
690
653
Depreciation and amortization expense
2,956
2,985
Stock-based compensation expense
29
52
Goodwill impairment
—
10,693
Adjusted EBITDA
$ 3,445
4,146
Add back: Severance(1)
$
130
74
Add back: Consumer and other litigation(1)
2
(3)
Add back: Net loss on sale of businesses(1)
17
121
Add back: Transaction and separation costs(1)
282
108
Add back: Net (gain) loss on sale of select CDN contracts(1)
(6)
73
Add back: Real estate transactions(1)
69
109
Adjusted EBITDA excluding Special Items
$ 3,939
4,628
Net (loss) income excluding Special Items(1)
$ (205)
193
Total revenue
$ 13,108
14,557
Net loss margin
(0.4%)
(70.7%)
Net income margin, excluding Special Items
(1.6%)
1.3%
Adjusted EBITDA margin
26.3%
28.5%
Adjusted EBITDA margin excluding Special Items
30.1%
31.8%
(1)
Refer to Non-GAAP Special Items table for details of the Special Items included above.
Free Cash Flow Reconciliation
(Unaudited; $ in millions)
2024
2023
Net cash provided by operating activities
$ 4,333
2,160
Capital expenditures
(3,231) (3,100)
Free Cash Flow
1,102
(940)
Add back: Severance(1)
133
67
Add back: Consumer and other litigation(1)
1
(3)
Add back: Transaction and separation costs(1)
254
147
Remove: Income from transition and separation services(1)
(104)
(149)
Free Cash Flow excluding cash Special Items
$ 1,386
(878)
(1)
Refer to Non-GAAP Special Items table for details of the Special Items impacting cash flow included above.
Statistical Data
Statistical data regarding broadband-enabled locations refers to the total number of units capable of receiving
the Company’s broadband services at period end. For information on how we calculate the amount of our fiber
route miles or on-net buildings, please see our Annual Report on Form 10-K for the year ended December 31,
2024. Other companies may use different methodologies to count their broadband enabled units or to calculate
their other statistical data.
Appendix A
A-3
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Appendix B
Annual Financial Report
Index to Annual Financial Report
December 31, 2024
The materials included in this Appendix B are excerpted from Items 5, 7 and 8 of our Annual Report on
Form 10-K for the year ended December 31, 2024. We filed the Form 10-K with the Securities and Exchange
Commission on February 20, 2025, and have not updated any of the following excerpted materials for any
changes or developments since such date. Please see the Form 10-K for additional information about our
business and operations.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
B-2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
B-2
Consolidated Financial Statements and Supplementary Data
B-22
Report of Independent Registered Public Accounting Firm
B-22
Report of Independent Registered Public Accounting Firm
B-24
Consolidated Statements of Operations
B-25
Consolidated Statements of Comprehensive Income (Loss)
B-26
Consolidated Balance Sheets
B-27
Consolidated Statements of Cash Flows
B-28
Consolidated Statements of Stockholders’ Equity
B-30
Notes to Consolidated Financial Statements*
B-31
*
All references to “Notes” in this Appendix B refer to these Notes.
B-1
2024 ANNUAL REPORT
2025 PROXY STATEMENT
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
Our common stock is listed on the New York Stock Exchange ("NYSE") and the Berlin Stock Exchange and is
traded under the symbol LUMN and CYTH, respectively.
At February 18, 2025, there were approximately 74,000 stockholders of record, although there were
significantly more beneficial holders of our common stock.
Issuer Purchases of Equity Securities
The following table contains information about shares of our previously-issued common stock that we withheld
from employees upon vesting of their stock-based awards during the fourth quarter of 2024 to satisfy the
related tax withholding obligations:
Total Number of Shares
Withheld for Taxes
Average Price
Paid Per Share
Period
October 2024
31,772
$ 6.32
November 2024
53,569
9.10
December 2024
25,519
7.12
Total
110,860
For a description of our share repurchases in late 2022 under a share repurchase program that lapsed in
November 2024, see Note 20—Repurchases of Lumen Common Stock to our consolidated financial
statements included in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2024.
Equity Compensation Plan Information
See Item 12 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
All references to "Notes" in this Item 7 of Part II refer to the Notes to Consolidated Financial Statements included
in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Certain
statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 constitute
forward-looking statements. See "Special Note Regarding Forward-Looking Statements" immediately prior to
Item 1 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for factors
relating to these statements and "Risk Factors" in Item 1A of Part I of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2024 for a discussion of certain risk factors applicable to our
business, financial condition, results of operations, liquidity or prospects.
Overview
We are a networking company with the goal of connecting people, data, and applications quickly, securely and
effortlessly. We are unleashing the world's digital potential by providing a broad array of integrated products
and services to our domestic and global Business customers and our domestic Mass Markets customers. We
operate one of the world's most interconnected communications networks. Our platform empowers our
customers to swiftly adjust digital programs to meet immediate demands, create efficiencies, accelerate market
access and reduce costs, which allows our customers to rapidly evolve their IT programs to address dynamic
changes. With approximately 163,000 fiber on-net buildings and 340,000 route miles of fiber optic cable
globally, we are among the largest providers of communications services to domestic and global enterprise
customers. Our long-haul network throughout North America and Asia Pacific connects to metropolitan fiber
networks that we operate.
Appendix B
B-2
Divestitures of the Latin American, ILEC and EMEA Businesses
On August 1, 2022, affiliates of Level 3 Parent, LLC, an indirect wholly-owned subsidiary of Lumen Technologies,
Inc., sold Lumen’s Latin American business for pre-tax cash proceeds of approximately $2.7 billion.
On October 3, 2022, we and certain of our affiliates sold the portion of our incumbent local exchange carrier
("ILEC") business conducted primarily within 20 Midwestern and Southeastern states. In exchange, we received
$7.5 billion of consideration, which was reduced by approximately $0.4 billion of closing adjustments and
partially paid through the purchaser's assumption of approximately $1.5 billion of our long-term consolidated
indebtedness, resulting in pre-tax cash proceeds of approximately $5.6 billion. We retained the remainder of this
business, which is conducted in 17 states, primarily in the Western United States.
On November 1, 2023, we and certain of our affiliates sold Lumen's operations in Europe, the Middle East and
Africa ("EMEA") to Colt Technology Services Group Limited, a portfolio company of Fidelity Investments, for
pre-tax cash proceeds of $1.7 billion after certain closing adjustments and transaction costs. This consideration
is further subject to certain indemnities set forth in the Purchase Agreement, as amended and supplemented
to date.
For more information, see (i) Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses to our
consolidated financial statements in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2024 and (ii) the risk factors included in Item 1A of Part I of the Company’s Annual Report
on Form 10-K for the year ended December 31, 2024.
Macroeconomic Changes
Over the past few years macroeconomic changes have impacted us and our customers in several ways.
We believe macroeconomic changes over the past few years have resulted in (i) increases in certain revenue
streams and decreases in others, (ii) operational challenges resulting from inflation and shortages of certain
components and other supplies that we use in our business, (iii) delays in our cost transformation initiatives and
(iv) delayed decision-making by certain of our customers. None of these effects, individually or in the aggregate,
have to date materially impacted our financial performance or financial position.
Industry developments over the past few years have increased fiber construction demand from customers. The
resulting increase in construction labor rates increased the cost of enabling units to be capable of receiving our
Quantum Fiber broadband services. We believe these factors also occasionally contributed to a delay in
attaining our Quantum Fiber buildout targets.
Continued business uncertainty, supply constraints or inflationary pressures could materially impact our financial
results in a variety of ways, including by increasing our expenses, decreasing our revenues, further delaying our
network expansion plans or otherwise interfering with our ability to deliver products and services.
These above-mentioned macroeconomic factors, coupled with dis-synergies resulting from our 2022 and 2023
divestitures, changes in customer preferences and negotiations with our creditors through the end of the first
quarter of 2024, placed additional pressures on our financial performance and our market capitalization. These
developments contributed to us recognizing a total of nearly $14.0 billion in goodwill impairment charges in
2022 and 2023. Some of these pressures continue to impact us. To the extent these pressures continue, we
could experience additional deterioration in our projected cash flows or market capitalization, or make
significant changes to the assumed discount rates or market multiples that we use to determine the fair value of
our reporting units. Any of these could result in additional future impairments of our approximately $2.0 billion
of remaining goodwill.
For further information relating to these matters, see (i) “—Trends Impacting Our Operations” and (ii) Item 1A of
the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Reporting Segments
Our reporting segments are currently organized by customer focus, as follows:
• Business Segment: Under our Business segment, we provide our products and services under the following
five sales channels:
Appendix B
B-3
2024 ANNUAL REPORT
2025 PROXY STATEMENT
– Large Enterprise: Under our large enterprise sales channel, we provide our products and services to large
enterprise customers and carriers in North America.
– Mid-Market Enterprise: Under our mid-market enterprise sales channel, we provide our products and
services directly to medium-sized enterprises in North America, as well as through our indirect
channel partners.
– Public Sector: Under our public sector sales channel, we provide our products and services to the
public sector, including the U.S. Federal government, state and local governments and research and
education institutions.
– Wholesale: Under our wholesale sales channel, we provide our products and services to a wide range of
other communication companies providing wireline, wireless, cable, voice and data center services.
– International and Other: Under our international and other sales channel, we provide (i) various products
and services to multinational and global enterprise customers and carriers and (ii) services under the
limited number of our remaining content delivery network ("CDN") contracts.
• Mass Markets Segment. Under our Mass Markets segment, we provide products and services to domestic
residential and small business customers. At December 31, 2024, we served 2.5 million broadband subscribers
under our Mass Markets segment.
See Note 17—Segment Information to our consolidated financial statements in Item 8 of Part II of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2024 for additional information.
We categorize our Business segment revenue among the following products and services categories:
• Grow, which includes existing and emerging products and services in which we are significantly investing,
including our dark fiber and conduit, Edge Cloud, IP, managed security, software-defined wide area networks
("SD WAN"), Unified Communications and Collaboration ("UC&C") and wavelengths services;
• Nurture, which includes our more mature offerings, including ethernet and VPN data networks services;
• Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing voice,
and private line services; and
• Other, which includes equipment sales, managed and professional service solutions and certain other services.
We categorize our Mass Markets products and services revenue among the following categories:
• Fiber Broadband, under which we provide high speed broadband services to residential and small business
customers utilizing our fiber-based network infrastructure;
• Other Broadband, under which we provide primarily lower speed broadband services to residential and small
business customers utilizing our copper-based network infrastructure; and
• Voice and Other, under which we derive revenues from (i) providing local and long-distance voice services,
professional services, and other ancillary services, and (ii) federal broadband and state support programs.
From time to time, we may change the categorization of our products and services.
Trends Impacting Our Operations
In addition to the above-described impact of macroeconomic and industry pressures, our consolidated
operations have been, and will continue to be, impacted by the following trends:
• Customers’ demand for automated products and services and competitive pressures will require that we
continue to invest in new technologies and automated processes to improve our customers' experience and
reduce our operating expenses.
• The increased use of multi-cloud storage, digital applications, video streaming, gaming, robotics, quantum
computing, and artificial intelligence has substantially increased demand for robust, scalable network
services. We are continuing to enhance our product and service offerings and taking other steps to enable
customers to have access to greater bandwidth and capacity.
Appendix B
B-4
• Businesses continue to adopt distributed, global operating models. We are expanding and enhancing our fiber
network, connecting more buildings to our network to generate revenue opportunities and reducing our
reliance upon other carriers.
• Changes in customer preferences and in the regulatory, technological and competitive environment are
(i) significantly reducing demand for our more mature service offerings, commoditizing certain offerings, or
resulting in volume or rate reductions for other offerings and (ii) also creating certain opportunities for us
arising out of increased demand for advanced networking services and high-speed, low-latency secure
data transmissions.
• The operating margins of several of our newer, more technologically advanced services, some of which may
connect to customers through other carriers, are lower than the operating margins on our traditional, on-net
wireline services.
• Uncertainties regarding our financial performance and overall leverage have caused, and may continue to
cause, certain customers and other third parties to avoid transacting business with us.
• Our expenses will be impacted by higher vendor costs, reduced economies of scale and other dis-synergies
due to our 2022 and 2023 divestitures and any future divestitures.
• Declines in our traditional wireline services and other more mature offerings have necessitated right-sizing
our cost structure to remain competitive.
• We have historically generated revenue by entering into transactions that utilize excess conduit, fiber or other
assets on our network to create custom networks for our customers, including through our Private
Connectivity FabricSM solutions. We plan to continue to actively pursue additional revenue-generating
opportunities with respect to these assets through right-of-use agreements, leases or other agreements. We
may or may not consummate such transactions from time to time, and the revenue from and obligations
associated with any such opportunities may be significant, either individually or in the aggregate. The
completion of any future transactions may be subject to customary conditions, and may not be executed in a
timely manner, or at all.
These and other developments and trends impacting our operations are discussed elsewhere in Item 1A and
this Item 7.
Results of Operations
In this section, we discuss our overall results of operations and highlight special items that are not included in
our segment results. In "Segment Results" we review the performance of our two reporting segments in more
detail. Results in this section include the results of our Latin American, ILEC and EMEA businesses prior to their
sale on August 1, 2022, October 3, 2022 and November 1, 2023 respectively.
Operating Revenue
The following table summarizes our consolidated operating revenue recorded under each of our two segments
and in our five revenue sales channels within the Business segment described above:
Years Ended December 31,
2024 vs 2023
% Change
2023 vs 2022
% Change
2024
2023
2022
(Dollars in millions)
Business Segment:
Large Enterprise
$ 3,379
3,618
3,827
(7%)
(5%)
Mid-Market Enterprise
1,887
2,044
2,242
(8%)
(9%)
Public Sector
1,849
1,789
1,863
3%
(4%)
Wholesale
2,875
3,152
3,605
(9%)
(13%)
International and Other
373
980
1,562
(62%)
(37%)
Business Segment Revenue
10,363
11,583
13,099
(11%)
(12%)
Mass Markets Segment Revenue
2,745
2,974
4,379
(8%)
(32%)
Total operating revenue
$ 13,108
14,557
17,478
(10%)
(17%)
Appendix B
B-5
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Our consolidated operating revenue decreased by $1.4 billion for the year ended December 31, 2024 as
compared to the year ended December 31, 2023, $547 million of which was due to the sale of the EMEA
business and select CDN contracts in the fourth quarter of 2023. Our consolidated revenue decreased by
$2.9 billion for the year ended December 31, 2023 compared to the year ended December 31, 2022, $2.1 billion of
which was attributable to the sale of both our Latin American and ILEC businesses in the second half of 2022,
and the sale of our EMEA business in the fourth quarter of 2023. See our segment results below for
additional information.
Operating Expenses
The following table summarizes our operating expenses for the years ended December 31, 2024 and 2023. For
information regarding expenses for the year ended December 31, 2022, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Item 7 of Part II of our Annual Report Form 10-K for
the year ended December 31, 2023.
Years Ended December 31,
% Change
2024
2023
(Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization)
$ 6,703
7,144
(6%)
Selling, general and administrative
2,972
3,198
(7%)
Net loss on sale of businesses
17
121
(86%)
Depreciation and amortization
2,956
2,985
(1%)
Goodwill impairment
—
10,693
nm
Total operating expenses
$ 12,648
24,141
(48%)
nm
Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered
not meaningful.
Cost of Services and Products (exclusive of depreciation and amortization)
Cost of services and products (exclusive of depreciation and amortization) decreased by $441 million for the
year ended December 31, 2024 as compared to the year ended December 31, 2023. This decrease was primarily
due to a decrease of $440 million as a result of the sale of the EMEA business in the fourth quarter of 2023 and
a reduction of $147 million in employee-related expense from lower headcount in the business we retained
following that sale and the 2022 sales of our Latin American business and a portion of our ILEC business. These
decreases were partially offset by an increase in facilities costs of $120 million, as well as increases of $21 million
related to real estate and power expenses.
Selling, General and Administrative
Selling, general and administrative expenses decreased by $226 million for the year ended December 31, 2024
as compared to the year ended December 31, 2023. The decrease was due to (i) a decrease of approximately
$80 million due to the sale of the EMEA business, (ii) a decrease of approximately $67 million attributable to our
recognition of a non-recurring loss in connection with our donation of our Monroe, Louisiana campus in 2023
(iii) a decrease of $115 million in employee-related expenses as a result of our 2024 workforce reductions, and
(iv) a decrease of $150 million related to gains on various real estate and other asset sales during the year,
including $22 million due to the recognition in the first quarter of 2024 of a deferred gain on the fourth quarter
2023 sale of select CDN contracts. These decreases were offset by (i) an increase of $157 million in legal and
other professional fees mainly driven by our first and third quarter 2024 debt transactions and (ii) an increase of
$80 million attributable to an impairment loss related to the initiation of marketing our Broomfield, Colorado
office buildings to locate a buyer and the classification of those buildings as held for sale.
Net Loss on Sale of Businesses
For a discussion of the net loss on the sale of businesses that we recognized for the years ended December 31,
2024 and December 31, 2023, see Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses.
Appendix B
B-6
Depreciation and Amortization
The following table provides detail of our depreciation and amortization expense:
Years Ended December 31,
% Change
2024
2023
(Dollars in millions)
Depreciation
$ 1,890
1,932
(2%)
Amortization
1,066
1,053
1%
Total depreciation and amortization
$ 2,956
2,985
(1%)
Depreciation expense decreased by $42 million for the year ended December 31, 2024 as compared to the year
ended December 31, 2023 primarily due to a decrease of $63 million relating to changes in the depreciation lives
of fiber network assets and a decrease of $52 million relating to a net decline in depreciable assets. These
decreases were partially offset by (i) a $29 million increase relating to the removal of certain assets held for sale
and decommissioned assets, (ii) a $19 million increase relating to changes made at the beginning of 2024 in the
method of depreciation from the group method of depreciation to the straight line by individual asset method,
and (iii) an increase of $18 million from accelerated depreciation of CDN assets.
Amortization expense increased by $13 million for the year ended December 31, 2024 as compared to the year
ended December 31, 2023. The increase was due to a $43 million increase associated with the accelerated
amortization of software assets, mostly related to CDN contracts, and a $15 million increase associated with net
increases in amortizable assets. These increases were partially offset by (i) a $24 million decrease due to a
changed method of amortization as discussed in Note 1—Background and Summary of Significant Accounting
Policies "— Change in Accounting Estimates", (ii) a $12 million decrease related to changes in our CDN customer
relationships, and (iii) an $11 million decrease due to certain customer relationship intangible assets becoming
fully amortized in the second quarter of 2023.
Further analysis of our segment operating expenses by segment is provided below in "Segment Results."
Goodwill Impairments
We are required to perform impairment tests related to our goodwill annually, which we perform as of October
31, or sooner if an indicator of impairment occurs.
We report under two segments: Business and Mass Markets. As of December 31, 2024, we had three reporting
units for goodwill impairment testing: (i) Mass Markets, (ii) North America Business ("NA Business") and (iii) Asia
Pacific ("APAC") region. Prior to the divestiture of the EMEA business in November 2023, the EMEA region was
also a reporting unit and was tested for impairment in the pre-classification test as of October 31, 2022
discussed elsewhere herein. Similarly, prior to the August 2022 divestiture of our Latin American business, the
Latin American ("LATAM") region was also a reporting unit.
When we performed a qualitative impairment test during the fourth quarter of 2024, we concluded it was more
likely than not that the estimated fair value of each of our reporting units was greater than our carrying value of
equity of each of our reporting units as of our testing date. Therefore, we concluded no impairment existed as of
our annual assessment date in the fourth quarter of 2024.
The sustained decline in our share price during the second quarter of 2023 was considered a triggering event
requiring evaluation of goodwill impairment. During the second and fourth quarters of 2023, we determined
circumstances existed indicating it was more likely than not that the carrying value of one or more of our
reporting units exceeded its fair value. When we performed an impairment test, we concluded that the
estimated fair value of certain of our reporting units was less than their carrying value of equity as of our testing
date. As a result, we recorded non-cash, non-tax-deductible goodwill impairment charges aggregating to
$10.7 billion for the year ended December 31, 2023. When we performed our impairment tests during the fourth
quarter of 2022, we concluded that the estimated fair value of certain of our reporting units was less than our
carrying value of equity as of our testing date. As a result, we recorded non-cash, non-tax-deductible goodwill
impairment charges aggregating to $3.3 billion in the fourth quarter of 2022.
For additional information about our impairment charges, see (i) “—Macroeconomic and Industry Changes”
above and (ii) Note 3—Goodwill, Customer Relationships and Other Intangible Assets to our consolidated
financial statements in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2024.
Appendix B
B-7
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Other Consolidated Results
The following tables summarize our total other expense, net and income tax expense:
Years Ended December 31,
% Change
2024
2023
(Dollars in millions)
Interest expense
$ (1,372)
(1,158)
18%
Net gain on early retirement of debt
348
618
(44%)
Other income (expense), net
334
(113)
nm
Total other expense, net
$ (690)
(653)
6%
Income tax (benefit) expense
$ (175)
61
nm
nm
Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered
not meaningful.
Interest Expense
Interest expense increased by $214 million for the year ended December 31, 2024 as compared to the year
ended December 31, 2023. The increase was primarily due to an increase in the average interest rate from 5.9%
to 7.0%, which was partially offset by a decrease of $1.3 billion in our average outstanding long-term debt.
Net Gain on Early Retirement of Debt
For a discussion of the exchange offers that resulted in the net gain on debt that we recognized for the years
ended December 31, 2024 and 2023, see Note 7—Long-Term Debt and Credit Facilities.
Other Income (Expense), Net
Other income (expense), net reflects certain items not directly related to our core operations, including (i)
components of net periodic pension and post-retirement benefit costs, (ii) foreign currency gains and losses, (iii)
our share of income from partnerships we do not control, (iv) interest income from cash and cash equivalents,
(v) gains and losses from non-operating asset dispositions (see Note 19—Other Financial Information), (vi)
income from transition and separation services provided by us to the purchasers of our divested businesses and
(vii) other non-core items.
Years Ended December 31,
2024
2023
(Dollars in millions)
Pension and post-retirement net periodic expense
$ (152)
(158)
Foreign currency loss
(25)
(10)
Gain on sale of investment
205
—
Loss on investment in limited partnership
(10)
(75)
Loss on investment in equity securities
—
(22)
Transition and separation services
157
186
Interest income
119
41
Other
40
(75)
Other income (expense), net
$ 334
(113)
Income Tax Expense
For the years ended December 31, 2024 and 2023, our effective income tax rate was 76.1% and (0.6)%,
respectively. The effective tax rate for the year ended December 31, 2024 includes a $135 million favorable
impact of the exclusion of cancellation of debt income under Section 108 of the Internal Revenue Code. The
effective tax rate for the year ended December 31, 2023 includes a $2.2 billion unfavorable aggregate impact of
non-deductible goodwill impairments and a $137 million favorable impact as a result of utilizing available capital
losses generated by the sale of our Latin American business in 2022. For additional information, see Note 16—
Income Taxes to our consolidated financial statements in Item 8 of Part II of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2024 and "Critical Accounting Policies and Estimates—
Income Taxes."
Appendix B
B-8
Segment Results
General
Reconciliation of segment revenue to total operating revenue is below. The results presented in this section
include results of our Latin American, ILEC and EMEA businesses prior to their sale on August 1, 2022,
October 3, 2022 and November 1, 2023, respectively:
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Operating revenue
Business
$ 10,363
11,583
13,099
Mass Markets
2,745
2,974
4,379
Total operating revenue
$ 13,108
14,557
17,478
Reconciliation of segment EBITDA to total adjusted EBITDA is below:
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Net loss
$
(55)
(10,298)
(1,548)
Income tax (benefit) expense
(175)
61
557
Total other expense, net
690
653
1,086
Depreciation and amortization expense
2,956
2,985
3,239
Goodwill impairment
—
10,693
3,271
Stock-based compensation expense
29
52
98
Total adjusted EBITDA
$ 3,445
4,146
6,703
Business segment adjusted EBITDA
$ 5,411
6,055
7,200
Mass Markets segment adjusted EBITDA
1,453
1,517
2,610
Other unallocated expense
(3,419)
(3,426)
(3,107)
For additional information on our reportable segments and product and services categories, see Note 4—
Revenue Recognition and Note 17—Segment Information to our consolidated financial statements in Item 8 of
Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Business Segment
Years Ended December 31,
Percent Change
2024
2023
2022
2024 vs 2023
2023 vs 2022
(Dollars in millions)
Business Segment Product Categories:
Grow
$ 4,373
4,494
4,618
(3%)
(3%)
Nurture
2,961
3,493
4,128
(15%)
(15%)
Harvest
2,271
2,679
3,411
(15%)
(21%)
Other
758
917
942
(17%)
(3%)
Total Business Segment Revenue
10,363
11,583
13,099
(11%)
(12%)
Expenses:
Total expense
4,952
5,528
5,899
(10%)
(6%)
Total adjusted EBITDA
$ 5,411
6,055
7,200
(11%)
(16%)
Year ended December 31, 2024 compared to the year ended December 31, 2023 and the year ended December
31, 2023 compared to the year ended December 31, 2022.
Business segment revenue decreased $1.2 billion for the year ended December 31, 2024 compared to December
31, 2023 and decreased $1.5 billion for the year ended December 31, 2023 compared to December 31, 2022.
Approximately $547 million of the decrease for the year ended December 31, 2024 compared to December 31,
Appendix B
B-9
2024 ANNUAL REPORT
2025 PROXY STATEMENT
2023 was due to the sale of the EMEA business and select CDN contracts in the fourth quarter of 2023.
Approximately $1.0 billion of the decrease for the year ended December 31, 2023 compared to December 31,
2022, was due to the sale of the Latin American, ILEC and EMEA businesses in late 2022 and 2023. More
specifically, within each product category for the year ended December 31, 2024 compared to December 31,
2023 and for the year ended December 31, 2023 compared to December 31, 2022:
• Grow decreased $121 million and $124 million, respectively, reflecting decreases of approximately $272 million
and $370 million associated with the sale of the divested businesses. For the year ended December 31, 2024
compared to December 31, 2023, we saw growth in IP services of $107 million and an increase in revenue from
dark fiber and conduit of $112 million, partially offset by declines in other products, including declines in
wavelength services by $42 million. For the year ended December 31, 2023 compared to December 31, 2022,
we saw an increase of $244 million primarily in our IP, wavelengths, dark fiber, enterprise broadband and
colocation products and services.
• Nurture decreased $532 million and $635 million, respectively, approximately $88 million and $262 million of
which was associated with the sale of the divested businesses. The remainder of the declines were principally
attributable to declines in traditional VPN services of $314 million and $261 million, respectively, and declines
in Ethernet services of $117 million and $112 million, respectively.
• Harvest decreased by $408 million and $732 million, respectively, approximately $70 million and $370 million
of which was associated with the sale of the divested businesses. The remainder of the decline was principally
attributable to a $252 million and $265 million decline, respectively, in legacy voice and private line services.
• Other decreased by $159 million and $25 million, respectively. For the year ended December 31, 2024 as
compared to December 31, 2023, approximately $93 million of this decline was attributable to the above-
mentioned sale of select CDN contracts in late 2023 and decreases in equipment sales revenue of
approximately $29 million. For the year ended December 31, 2023 as compared to December 31, 2022,
approximately $48 million of the decline was attributable to decreased CDN revenue leading up to the above-
mentioned sale, partially offset by an increase in equipment sales revenue of $35 million.
Business segment expense decreased by $576 million for the year ended December 31, 2024 compared to
December 31, 2023 and decreased $371 million for the year ended December 31, 2023 compared to December
31, 2022. For the year ended December 31, 2024 compared to December 31, 2023 this decrease was primarily
driven by (i) a decrease of $209 million due to the above-mentioned sale of the EMEA business and select CDN
contracts in 2023, (ii) a $166 million reduction in overall network expense and (iii) a decrease of $138 million in
employee-related costs. For the year ended December 31, 2023 compared to December 31, 2022, the decrease
was primarily due to (i) the sale of the divested businesses of $230 million, (ii) an $81 million decrease in
employee-related costs, and (iii) a $68 million decrease in other network related costs.
Business segment adjusted EBITDA as a percentage of revenue was 52%, 52% and 55% for the years ended
December 31, 2024, 2023 and 2022.
Mass Markets Segment
Years Ended December 31,
Percent Change
2024
2023
2022
2024 vs 2023
2023 vs 2022
(Dollars in millions)
Mass Markets Product Categories:
Fiber Broadband
$ 736
637
604
16%
5%
Other Broadband
1,167
1,395
2,163
(16%)
(36%)
Voice and Other
842
942
1,612
(11%)
(42%)
Total Mass Markets Segment Revenue
2,745
2,974
4,379
(8%)
(32%)
Expenses:
Total expense
1,292
1,457
1,769
(11%)
(18%)
Total adjusted EBITDA
$ 1,453
1,517
2,610
(4%)
(42%)
Year ended December 31, 2024 compared to the year ended December 31, 2023 and the year ended
December 31, 2023 compared to the year ended December 31, 2022.
Appendix B
B-10
Mass Markets segment revenue decreased by $229 million for the year ended December 31, 2024 compared to
December 31, 2023 and decreased $1.4 billion for the year ended December 31, 2023 compared to December 31,
2022. Approximately $1.1 billion of the decreases for the year ended December 31, 2023 compared to
December 31, 2022 was due to the sale of our ILEC business in the fourth quarter of 2022. More specifically,
within each product category for the year ended December 31, 2024 compared to December 31, 2023 and for
the year ended December 31, 2023 compared to December 31, 2022:
• Fiber Broadband revenue increased $99 million and $33 million, respectively, primarily driven by growth in
the number of fiber customers associated with our continued increase in enabled locations from our Quantum
Fiber buildout. For the year ended December 31, 2023 compared to December 31, 2022, the increase was
partially offset by a decrease of $41 million due to the sale of the ILEC business.
• Other Broadband revenue decreased $228 million and $768 million, respectively, primarily due to fewer
customers for our lower speed copper-based broadband services. For the year ended December 31, 2023
compared to December 31, 2022, there was an additional decrease of $563 million due to the sale of the
ILEC business.
• Voice and Other decreased $100 million and $670 million, respectively. For the year ended December 31,
2024 compared to December 31, 2023, the decrease was principally due to the continued loss of copper-
based voice customers. For the year ended December 31, 2023 compared to December 31, 2022, the decrease
was due to (i) a $472 million decrease due to the sale of the ILEC business, (ii) continued loss of copper-
based voice customers, and (iii) the recognition in the first quarter of 2022 of $59 million of previously
deferred revenue related to the CAF II program, which lapsed on December 31, 2021.
Mass Markets segment expense decreased by $165 million for the year ended December 31, 2024 compared to
December 31, 2023 primarily due to (i) a decrease of $60 million in employee-related costs, (ii) a decrease of
$36 million in other network related costs, (iii) a decrease of $33 million in professional fees, and (iv) a decrease
of $10 million in network expenses. Mass Markets segment expense decreased $312 million for the year ended
December 31, 2023 compared to December 31, 2022 primarily due to a $295 million decrease due to the ILEC
divestiture and a $37 million decrease in professional fees, partially offset by an increase of $42 million in
employee-related costs and $27 million in marketing and advertising costs.
Mass Markets segment adjusted EBITDA as a percentage of revenue was 53%, 51% and 60% for the years ended
December 31, 2024, 2023 and 2022, respectively.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles that are generally
accepted in the United States. The preparation of these consolidated financial statements requires management
to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenue and
expenses. We have identified certain policies and estimates as critical to our business operations and the
understanding of our past or present results of operations related to (i) goodwill, customer relationships and
other intangible assets; (ii) pension and post-retirement benefits; (iii) loss contingencies and (iv) income taxes.
These policies and estimates are considered critical because they had a material impact, or they have the
potential to have a material impact, on our consolidated financial statements and because they require us to
make significant judgments, assumptions or estimates. We believe that our estimates, judgments and
assumptions made when accounting for the items described below were reasonable, based on information
available at the time they were made. However, actual results may differ from those estimates, and these
differences may be material.
Goodwill, Customer Relationships and Other Intangible Assets
We have a significant amount of goodwill and indefinite-lived intangible assets that are assessed at least
annually for impairment. At December 31, 2024, goodwill and intangible assets totaled $6.8 billion, or 20%, of
our total assets. The impairment analyses of these assets are considered critical because of their significance to
us and our segments and the subjective nature of certain assumptions used to estimate fair value.
We have assigned our goodwill balance to our segments at December 31, 2024 as follows:
Business
Mass
Markets
Total
(Dollars in millions)
As of December 31, 2024
$—
1,964
1,964
Appendix B
B-11
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized
software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer
relationships primarily over an estimated life of seven to 14 years, using the straight-line method, depending on
the customer. We amortize capitalized software using the straight-line method primarily over estimated lives
ranging up to seven years. We amortize our other intangible assets using the straight-line method over an
estimated life of nine to 20 years. Other intangible assets not arising from business combinations are initially
recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit
the useful life of an intangible asset, we classify them as indefinite-lived intangible assets and such intangible
assets are not amortized.
We assess our long-lived intangible assets, other than goodwill, with indefinite lives for impairment annually, or,
under certain circumstances, more frequently, such as when events or changes in circumstances indicate there
may be an impairment. We carry these assets at the estimated fair value at the time of acquisition and record
assets not acquired in acquisitions at historical cost. However, if their estimated fair value is less than their
carrying amount, we recognize an impairment charge for the amount by which the carrying amount of these
assets exceeds their estimated fair value. For the years ended December 31, 2024 and 2023, we concluded it
was more likely than not that our indefinite-lived intangible assets were not impaired, and therefore we recorded
no impairment charge for these assets.
We are required to assess our goodwill for impairment annually, or more frequently if an event occurs or
circumstances change that indicates it is more likely than not the fair values of any of our reporting units were
less than their carrying values. In assessing goodwill for impairment, we may first assess qualitative factors to
determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
Our annual impairment assessment date for goodwill is October 31, at which date we assess our reporting units.
We report two segments: Business and Mass Markets. At October 31, 2024, we had three reporting units for
goodwill impairment testing, which are (i) Mass Markets (ii) NA Business and (iii) APAC region. Prior to their
divestitures in 2023 and 2022, the EMEA and LATAM regions were also each considered their own
reporting unit.
Our reporting units are not discrete legal entities with discrete full financial statements. Our assets and liabilities
are employed in and relate to the operations of multiple reporting units and are allocated to individual reporting
units based on their relative revenue or earnings before interest, taxes depreciation and amortization
("EBITDA"). For each reporting unit, we compare its estimated fair value of equity to the carrying value of equity
that we assign to the reporting unit. If the estimated fair value of the reporting unit is greater than its carrying
value, we conclude that no impairment exists. If the estimated fair value of the reporting unit is less than the
carrying value, we record a non-cash impairment charge equal to the excess amount. Depending on the facts
and circumstances, we typically estimate the fair value of our reporting units by considering either or both of
(i) a discounted cash flow method, which is based on the present value of projected cash flows over a discrete
projection period and a terminal value, which is based on the expected normalized cash flows of the reporting
units following the discrete projection period, and (ii) a market approach, which includes the use of multiples of
publicly-traded companies whose services are comparable to ours. With respect to our analysis using the
discounted cash flow method, the timing and amount of projected cash flows under these forecasts require
estimates developed from our long-range plan, which is informed by wireline industry trends, the competitive
landscape, product lifecycles, operational initiatives, capital allocation plans and other company-specific and
external factors that influence our business. These projected cash flows consider recent historical results and are
consistent with our short-term financial forecasts and long-term business strategies. Due to inherent
uncertainties, actual cash flows could vary significantly from our projected cash flows. Our determination of the
discount rate is based on a weighted average cost of capital approach, which uses a market participant’s cost of
equity and after-tax cost of debt and reflects certain risks inherent in the projected cash flows. With respect to
our analysis using the market approach, we estimate the fair value of a reporting unit based upon a market
multiple applied to the reporting unit’s revenue and EBITDA, adjusted for an appropriate control premium based
on recent market transactions. We weigh these revenue and EBITDA market multiples depending on the
characteristics of the individual reporting unit. We also reconcile the estimated fair values of the reporting units
to our market capitalization to determine whether the indicated control premium is reasonable in comparison to
recent transactions in the marketplace. Our development of estimates of fair value under both the discounted
cash flow method and the market approach method are subject to inherent uncertainties and actual results
could vary significantly from our estimates.
Appendix B
B-12
Declines in our stock price in the past were a critical factor that led us to determine that our goodwill was
impaired. Future declines in our stock price could potentially cause additional impairments of our goodwill.
Changes in the underlying assumptions that we use in allocating the assets and liabilities to reporting units
under either the discounted cash flow or market approach method can result in materially different
determinations of fair value. We perform sensitivity analyses that consider a range of discount rates and a range
of EBITDA market multiples and we believe the estimates, judgments, assumptions and allocation methods used
by us are reasonable. Nonetheless, changes in any of them can significantly affect whether we must incur
impairment charges, as well as the size of such charges.
For additional information on our goodwill balances by segment and results of our impairment analyses, see
Note 3—Goodwill, Customer Relationships and Other Intangible Assets to our consolidated financial statements
in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Pension and Post-retirement Benefits
We sponsor a noncontributory qualified defined benefit pension plan (referred to herein as our qualified pension
plan, the "Lumen Combined Pension Plan" or the "Combined Pension Plan") for a substantial portion of our
current and former employees in the United States. As of January 1, 2022, we spun off a new pension plan (the
"Lumen Pension Plan") from the Combined Pension Plan in anticipation of the sale of a portion of our ILEC
business on October 3, 2022. We recognized pension costs related to both plans through the sale of the ILEC
business, at which time balances related to the Lumen Pension Plan were reflected in the calculation of our gain
on the sale of the ILEC business and the pension obligation and assets of the Lumen Pension Plan were
transferred to the purchaser.
In addition to the Lumen Combined Pension Plan, we also maintain several non-qualified pension plans for
certain eligible highly compensated employees. Due to the insignificant impact of these non-qualified plans on
our consolidated financial statements, we have excluded them from the following pension and post-retirement
benefits disclosures for 2024, 2023 and 2022. See Note 11—Employee Benefits for additional information.
We also maintain post-retirement benefit plans that provide health care and life insurance benefits primarily for
certain eligible retirees.
In 2024, approximately 64% of the Combined Pension Plan's January 1, 2024 net actuarial loss balance of
$1.4 billion was subject to amortization as a component of net periodic expense over the average remaining
service period of 13 years for participating employees expected to receive benefits under the plan. We treated
the other 36% of the Combined Pension Plan's beginning net actuarial loss balance as indefinitely deferred
during 2024. In 2024, approximately 75% of the beginning net actuarial gain of $337 million at January 1, 2024
for the post-retirement benefit plans was subject to amortization as a component of net periodic expense, with
the other 25% of the beginning net actuarial gain balance for the post-retirement benefit plans treated as
indefinitely deferred.
In 2023, approximately 62% of the Combined Pension Plan's January 1, 2023 net actuarial loss balance of
$1.4 billion was subject to amortization as a component of net periodic expense over the average remaining
service period of 14 years for participating employees expected to receive benefits under the plan. We treated
the other 38% of the Combined Pension Plan's beginning net actuarial loss balance as indefinitely deferred
during 2023. In 2023, approximately 56% of the beginning net actuarial gain of $371 million at January 1, 2023
for the post-retirement benefit plans was subject to amortization as a component of net periodic expense, with
the other 44% of the beginning net actuarial gain balance for the post-retirement benefit plans treated as
indefinitely deferred.
In 2022, approximately 62% of the Combined Pension Plan's January 1, 2022 net actuarial loss balance of
$2.2 billion was subject to amortization as a component of net periodic expense over the average remaining
service period of 14 years for participating employees expected to receive benefits under the plan. We treated
the other 38% of the Combined Pension Plan's beginning net actuarial loss balance as indefinitely deferred
during 2022. Additionally, upon the sale of the ILEC business on October 3, 2022, we recognized $564 million of
net actuarial pre-tax loss related to the Lumen Pension Plan, which partially offset our gain on the sale of the
business. We treated the entire beginning net actuarial loss of $217 million at January 1, 2022 for the
post-retirement benefit plans as indefinitely deferred during 2022.
Appendix B
B-13
2024 ANNUAL REPORT
2025 PROXY STATEMENT
In computing our pension and post-retirement health care and life insurance benefit obligations, our most
significant assumptions are the discount rate and mortality rates. In computing our periodic pension expense,
our most significant assumptions are the discount rate and the expected rate of return on plan assets. In
computing our post-retirement benefit expense, our most significant assumption is the discount rate.
The discount rate for each plan is the rate at which we believe we could effectively settle the plan's benefit
obligations as of the end of the year. We selected each plan's discount rate based on a cash flow matching
analysis using hypothetical yield curves from high-quality U.S. corporate bonds and projections of the future
benefit payments that constitute the projected benefit obligation for the plans. This process establishes the
uniform discount rate that produces the same present value of the estimated future benefit payments as is
generated by discounting each year's benefit payments by a spot rate applicable to that year. The spot rates
used in this process were derived from a yield curve created from yields on the 60th to 90th percentile of U.S.
high quality bonds.
The table below illustrates hypothetical changes in our benefit obligation for the qualified pension plan and the
post-retirement benefit plans obligation if we had selected a higher or lower discount rate.
Percentage
point change
Increase/(decrease) in
Benefit Obligation at
December 31, 2024
(Dollars in millions)
Combined Pension Plan discount rate
1%
$ (325)
(1%)
374
Post-retirement benefit plans discount rate
1%
(133)
(1%)
133
Published mortality rates help predict the expected life of plan participants and are based on historical
demographic studies by the Society of Actuaries ("SOA"). The SOA publishes new mortality tables and
projection scales on a regular basis which reflect updates to projected life expectancies in North America.
Historically, we have adopted the new projection tables immediately after publication. The SOA did not release
any revised mortality tables or projection scales in 2022, 2023 or 2024.
The expected rate of return on plan assets is the long-term rate of return we expect to earn on the plans' assets
in the future, net of administrative expenses paid from plan assets. The rate of return is determined by the
strategic allocation of plan assets and the long-term risk and return forecast for each asset class. The forecasts
for each asset class are generated primarily from an analysis of the long-term expectations of various third-
party investment management organizations, to which we then add a factor of 50 basis points to reflect the
benefit we expect to result from our active management of the assets. The expected rate of return on plan
assets is reviewed annually by management and our Board of Directors and is revised, as necessary, to reflect
changes in the financial markets and our investment strategy.
Changes in any of the above factors could significantly impact operating expenses in our consolidated
statements of operations and other comprehensive loss in our consolidated statements of comprehensive
income (loss), as well as the amount of the liability and accumulated other comprehensive loss of stockholders'
equity on our consolidated balance sheets.
Loss Contingencies
We are involved in several potentially material legal proceedings, as described in more detail in Note 18—
Commitments, Contingencies and Other Items. On a quarterly basis, we assess potential losses in relation to
these and other pending or threatened tax and legal matters. For matters not related to income taxes, if a loss is
considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated
loss. To the extent these estimates are more or less than the actual liability incurred upon resolving these
matters, our earnings will be increased or decreased accordingly. If the differences are material, our
consolidated financial statements could be materially impacted.
Appendix B
B-14
For matters related to income taxes, if we determine in our judgment that the impact of an uncertain tax
position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize in
our financial statements a benefit for the largest amount that is more likely than not to be sustained. We do not
recognize any portion of an uncertain tax position if we determine in our judgment that the position has less
than a 50% likelihood of being sustained. Though the validity of any tax position is a matter of tax law, the body
of statutory, regulatory and interpretive guidance on the application of the law is complex and often ambiguous,
particularly in certain of the non-U.S. jurisdictions in which we operate. As such, our tax positions may not be
sustained, which could materially impact our consolidated financial statements.
Income Taxes
Our provision for income taxes includes amounts for tax consequences deferred to future periods. We record
deferred income tax assets and liabilities reflecting future tax consequences attributable to (i) tax credit
carryforwards, (ii) differences between the financial statement carrying value of assets and liabilities and the tax
basis of those assets and liabilities and (iii) tax NOLs. Deferred taxes are computed using enacted tax rates
expected to apply in the year in which the differences are expected to affect taxable income. The effect of a
change in tax rate on deferred income tax assets and liabilities is recognized in earnings in the period that
includes the enactment date.
The measurement of deferred taxes often involves the exercise of considerable judgment related to the
realization of tax basis. Our deferred tax assets and liabilities reflect our assessment that tax positions taken in
filed tax returns and the resulting tax basis are more likely than not to be sustained if they are audited by taxing
authorities. Assessing tax rates that we expect to apply and determining the years when the temporary
differences are expected to affect taxable income requires judgment about the future apportionment of our
income among the states in which we operate. Any changes in our practices or judgments involved in the
measurement of deferred tax assets and liabilities could materially impact our financial condition or results
of operations.
In connection with recording deferred income tax assets and liabilities, we establish valuation allowances when
necessary to reduce deferred income tax assets to amounts that we believe are more likely than not to be
realized. We evaluate our deferred tax assets quarterly to determine whether adjustments to our valuation
allowances are appropriate in light of changes in facts or circumstances, such as changes in tax law, interactions
with taxing authorities and developments in case law. In making this evaluation, we rely on our recent history of
pre-tax earnings. We also rely on our forecasts of future earnings and the nature and timing of future deductions
and benefits represented by the deferred tax assets, all of which involve the exercise of significant judgment. At
December 31, 2024, we established a valuation allowance of $343 million primarily related to state NOLs, based
on our determination that it was more likely than not that this amount of these NOLs would expire unused. If
forecasts of future earnings and the nature and estimated timing of future deductions and benefits change in
the future, we may determine that existing valuation allowances must be revised or eliminated or new valuation
allowances created, any of which could materially impact our financial condition or results of operations. See
Note 16—Income Taxes to our consolidated financial statements in Item 8 of Part II of the Company’s Annual
Report on Form 10-K for the year ended December 31, 2024.
Liquidity and Capital Resources
Overview of Sources and Uses of Cash
We are a holding company that is dependent on the capital resources of our subsidiaries to satisfy our parent
company liquidity requirements. Several of our significant operating subsidiaries have borrowed funds either on
a standalone basis or as part of a separate restricted group with certain of its subsidiaries or affiliates. The terms
of the instruments governing the indebtedness of these borrowers or borrowing groups may restrict our ability
to access their accumulated cash. In addition, our ability to access the liquidity of these and other subsidiaries
may be constrained by tax, legal and other limitations. For additional information, see "—Debt Instruments and
Financing Arrangements" below.
At December 31, 2024, we held cash and cash equivalents of $1.9 billion. As of December 31, 2024, we had
approximately $737 million of borrowing capacity available under our approximately $1.0 billion of revolving
credit facilities, net of undrawn letters of credit issued to us thereunder. We typically use our revolving credit
facilities as a source of liquidity for operating activities and our other cash requirements. We had approximately
$59 million of cash and cash equivalents outside the United States at December 31, 2024. We currently believe
that there are no material restrictions on our ability to repatriate cash and cash equivalents into the United
States, and that we may do so without paying or accruing U.S. taxes or significant foreign taxes. We do not
currently intend to repatriate to the United States any material amounts of our foreign cash and cash
equivalents from operating entities.
Appendix B
B-15
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Our senior leadership team and our Board of Directors review our sources and potential uses of cash in
connection with our annual budgeting process and throughout the year as circumstances warrant. Generally
speaking, our principal funding source is cash from operating activities, and our principal cash requirements
include operating expenses, capital expenditures, income taxes, debt payments, periodic securities repurchases,
periodic pension contributions and other benefits payments.
Based on our current capital allocation objectives, during 2025 we project expending approximately $4.1 billion
to $4.3 billion of capital expenditures.
For the 12-month period ending December 31, 2025, we project that our fixed commitments will include (i)
$52 million of scheduled term loan amortization payments (ii) $39 million of finance lease and other fixed
payments and (iii) $321 million of debt maturities.
We will continue to monitor our future sources and uses of cash, and anticipate that we will make adjustments
to our capital allocation strategies when, as and if determined by our senior leadership team and our Board. We
may also draw on our revolving credit facilities as a source of liquidity for operating activities and to give us
additional flexibility to finance our capital investments, payments of debt, pension contributions and other
cash requirements.
For additional information, see "Risk Factors—Financial Risks" in Item 1A of Part I of the Company’s Annual
Report on Form 10-K for the year ended December 31, 2024.
Impact of Divestitures
As discussed in Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses to our consolidated
financial statements in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2024, we sold our Latin American, ILEC and EMEA businesses on August 1, 2022, October 3, 2022
and November 1, 2023, respectively. As further described elsewhere herein, these transactions have provided us
with a substantial amount of cash proceeds but have also reduced our base of income-generating assets that
generate our recurring cash from operating activities. For a discussion of the impact of our divestitures upon our
federal income taxes, see "Liquidity and Capital Resources–Federal Income Tax Obligations.”
Impact of PCF Transactions
During the second half of 2024, we announced that Lumen and its subsidiaries sold several billion dollars of new
PCF solutions.
Lumen and its subsidiaries expect to receive the majority of cash from these agreements, which include advance
payments to fund network expansion projects, over the next three to four years. Lumen and its subsidiaries will
incur certain material expenditures in connection with these agreements, and expect the majority of such
expenditures to be made over the same period of time. The payments Lumen and its subsidiaries actually make
and receive may vary materially from what is expected and will depend, among other things, on the timing of
delivery and installation of the products and services by Lumen and its subsidiaries.
During the second half of 2024, we began receiving advance payments under these agreements, which
increased our net cash provided by operating activities reflected in our consolidated statements of cash flows
and our deferred revenue reflected in our consolidated balance sheets. We anticipate that our continued receipt
of cash payments under these agreements will (i) cause our consolidated cash flows to vary from quarter to
quarter over the next several years and (ii) enable us to accelerate our network simplification initiatives. In
addition, we expect our consolidated capital expenditures to increase as we use these cash receipts to fund
network expansion projects contemplated under such agreements.
We expect to enter into additional agreements in the future to sell products and services as part of our PCF
solutions but cannot provide any assurances. See "Risk Factors" under Item 1A of Part II of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2024.
Capital Expenditures
We incur capital expenditures on an ongoing basis to expand and improve our service offerings, enhance and
modernize our networks, fulfill our contractual obligations, and compete effectively in our markets. We evaluate
our discretionary capital expenditure projects based on a variety of factors, including expected strategic
impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels and customer
retention) and our expected return on investment. The amount of our capital investment is influenced by,
among other things, current and projected demand for our services and products, our network and customer
contract requirements, cash flow generated by operating activities, cash required for debt service and other
purposes, regulatory considerations (such as governmentally-mandated infrastructure buildout requirements)
and the availability of requisite supplies, labor and permits.
Appendix B
B-16
Our capital expenditures continue to be focused on enhancing network operating efficiencies, developing new
services, and expanding our fiber network, including our Quantum Fiber buildout plan. A portion of our 2025
capital expenditures will also be focused on replacing aged network assets. For more information on our capital
spending, see (i) "—Overview of Sources and Uses of Cash" above, (ii) "Cash Flow Activities—Investing
Activities" below, (iii) —Impact of PCF Transactions above and (iv) Item 1 of Part 1 of the Company’s Annual
Report on Form 10-K for the year ended December 31, 2024.
Debt Instruments and Financing Arrangements
Debt Instruments
On March 22, 2024, Lumen Technologies, Level 3 Financing, Qwest and a group of consenting debtholders
representing over $15.0 billion of Lumen's outstanding consolidated long-term debt completed transactions
contemplated under the amended and restated transaction support agreement dated January 22, 2024 (the
"TSA Transactions"), which, among other things, extended maturities of the debt instruments of Lumen and
Level 3 Financing, Inc. and provided access to approximately $1.0 billion of new Lumen revolving credit facilities
maturing in 2028 to replace Lumen's former $2.2 billion revolving credit facility. In addition, Level 3 Financing,
Inc. privately placed $1.575 billion aggregate principal amount of newly-issued first lien notes, a portion of the
proceeds of which were used to reduce Lumen's consolidated indebtedness. For more information, see Note 7—
Long-Term Debt and Credit Facilities to our consolidated financial statements included under Item 8 of Part II of
this annual report.
On September 24, 2024, (i) Lumen Technologies issued approximately $438 million aggregate principal amount
of its newly-issued 10.000% Secured Notes due 2032 and paid approximately $14 million cash (excluding
accrued and unpaid interest payable with respect to the exchanged notes) in exchange for approximately
$491 million aggregate principal amount of its outstanding senior unsecured notes (which were concurrently
cancelled), and (ii) Level 3 Financing issued approximately $350 million aggregate principal amount of its
newly-issued 10.000% Second Lien Notes due 2032 in exchange for approximately $357 million aggregate
principal amount of its outstanding senior unsecured notes (which were concurrently cancelled). These
transactions reduced the aggregate principal amount of Lumen's consolidated indebtedness by approximately
$60 million.
Through open market repurchases and cash tender offers occurring throughout the year ended December 31,
2024, Lumen further reduced the aggregate principal amount of its consolidated indebtedness by
approximately $769 million.
At December 31, 2024, we had:
• $13.7 billion of outstanding consolidated secured indebtedness;
• $4.6 billion of outstanding consolidated unsecured indebtedness (excluding (i) finance lease obligations,
(ii) unamortized premiums, net and (iii) unamortized debt issuance costs); and
• approximately $737 million of unused borrowing capacity under our revolving credit facilities, as discussed
further below.
Under its credit agreements dated March 22, 2024, Lumen maintained at December 31, 2024 (i) approximately
$954 million of superpriority revolving credit facilities, under which we owed nothing as of such date, and we
had approximately $217 million of letters of credit issued and undrawn as of such date, and (ii) approximately
$3.6 billion of drawn superpriority term loan facilities. Under its credit agreements dated March 22, 2024, Level 3
Financing maintained at December 31, 2024, $2.4 billion of drawn secured term loan facilities. For additional
information, see (i) "—Overview of Sources and Uses of Cash," and (ii) Note 7—Long-Term Debt and Credit
Facilities to our consolidated financial statements in Item 8 of Part II of the Company’s Annual Report on Form
10-K for the year ended December 31, 2024.
At December 31, 2024, we had $220 million undrawn letters of credit outstanding, $217 million of which were
issued under our revolving credit facilities, $1 million of letters of credit outstanding under our $225 million
uncommitted letter of credit facility and $2 million of which were issued under a separate facility maintained by
one of our subsidiaries (the full amount of which is collateralized by cash).
In addition to indebtedness under their March 22, 2024 credit agreements, Lumen and Level 3 Financing, Inc. are
indebted under their respective outstanding senior notes, and certain of Lumen's other subsidiaries are indebted
under their respective outstanding senior notes.
Appendix B
B-17
2024 ANNUAL REPORT
2025 PROXY STATEMENT
For additional information on the terms and conditions of other debt instruments of ours and our subsidiaries,
including financial and operating covenants, see (i) Note 7—Long-Term Debt and Credit Facilities to our
consolidated financial statements in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2024 and (ii) "—Other Matters" below.
Future Debt Transactions
Subject to market conditions, we plan to continue to issue debt securities from time to time to refinance a
substantial portion of our maturing debt, including issuing debt securities of certain of our subsidiaries to
refinance their maturing debt to the extent permitted under our debt covenants and consistent with our capital
allocation strategies. The availability, interest rate and other terms of any new borrowings will depend on the
ratings assigned by credit rating agencies, among other factors.
As of the filing date of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, the
credit ratings for the senior secured and unsecured debt of Lumen Technologies, Inc., Level 3 Financing, Inc. and
Qwest Corporation were as follows:
Borrower
Moody's
Investors
Service, Inc.(1)
Standard &
Poor's(1)
Fitch Ratings
Lumen Technologies, Inc.:
Unsecured
Caa3
CCC-
CCC-
Secured
Caa1/Caa2
B
B+
Level 3 Financing, Inc.:
Unsecured
Caa1
CCC-
CCC-
Secured
B2/Caa1
CCC+
B+/CCC
Qwest Corporation:
Unsecured
Caa3
B-
B+
(1)
In August 2024, Moody's upgraded the Lumen Technologies Corporate Family Rating ("CFR") to Caa1 and placed the ratings of Lumen
Technologies' debt on positive outlook. In November 2024, Standard & Poor's placed the ratings of Lumen Technologies' debt on positive
credit watch.
Our credit ratings are reviewed and adjusted from time to time by the rating agencies. Any future changes in the
senior unsecured or secured debt ratings of us or our subsidiaries could impact our access to capital or
borrowing costs. We cannot provide any assurances that we will be able to borrow additional funds on
favorable terms, or at all. See "Risk Factors—Financial Risks" in Item 1A of Part I of the Company’s Annual Report
on Form 10-K for the year ended December 31, 2024.
From time to time over the past couple of years, we have engaged in various debt refinancings, redemptions,
tender offers, exchange offers, open market purchases and other transactions designed principally to reduce our
consolidated indebtedness, extend our debt maturities, improve our financial flexibility or otherwise enhance our
debt profile. Subject to market conditions, restrictions under our debt covenants, and other limitations, we
expect to opportunistically pursue similar transactions in the future to the extent feasible. See Note 7—Long-
Term Debt and Credit Facilities to our consolidated financial statements in Item 8 of Part II of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2024 for additional information.
Federal Income Tax Obligations
As of December 31, 2024, Lumen Technologies had approximately $570 million of federal NOLs which, for
U.S. federal income tax purposes, may be used to offset future taxable income. These NOLs are primarily related
to federal NOLs we acquired through the Level 3 Communications, Inc. acquisition on November 1, 2017 and are
subject to limitations under Section 382. We maintain a Section 382 rights agreement designed to safeguard
through late 2026 our ability to use those NOLs. We utilized a substantial portion of our previously available
NOLs to offset taxable gains generated by the completion of our 2022 divestitures. For additional information
about our NOLs, see Note 16—Income Taxes— to our consolidated financial statements in Item 8 of Part II of the
Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
We expect to use substantially all of our remaining NOLs in future periods in accordance with Section 382's
annual limitations, although we cannot guarantee this. See "Risk Factors—Financial Risks—We may not be able
to fully utilize our NOLs" in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2024.
Appendix B
B-18
In January 2024, we received a federal income tax cash refund of $729 million, including interest. The amounts
of our near-term future tax payments will depend upon many factors, including our future earnings and tax
circumstances and the impact of any potential corporate tax reform legislation or taxable transactions.
The Inflation Reduction Act enacted in 2022, among other things, implemented a new federal corporate
alternative minimum tax (“CAMT”) on adjusted financial statement income effective for tax periods occurring
after December 31, 2022. The CAMT had no material impact on our financial results as of December 31, 2024. In
addition, in 2021, the Organization for Economic Co-operation and Development (“OECD”) has issued Pillar Two
model rules introducing a new global minimum corporate tax of 15% and the OECD and the majority of its
participating countries continue to work toward the enactment of such tax. While the U.S. has not adopted Pillar
Two legislation, various other governments around the world have enacted such legislation that is effective for
tax periods after December 31, 2023. These global minimum tax rules have increased our administrative and
compliance burdens but the impact to our financial statements for the year ended December 31, 2024 was
immaterial. We anticipate further legislative activity and administrative guidance throughout 2025 and continue
to monitor evolving global tax legislation.
Pension and Post-retirement Benefit Obligations
We are subject to material obligations under our existing defined benefit pension plans and post-retirement
benefit plans. At December 31, 2024, the accounting unfunded status of our qualified and non-qualified defined
benefit pension plans and our qualified post-retirement benefit plans was $645 million and $1.7 billion,
respectively. For additional information about our pension and post-retirement benefit arrangements, see
"Critical Accounting Policies and Estimates—Pension and Post-retirement Benefits" in Item 7 of Part II of the
Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and Note 11—Employee Benefits
to our consolidated financial statements in Item 8 of Part II of the Company’s Annual Report on Form 10-K for
the year ended December 31, 2024.
As of January 1, 2022, we spun off the Lumen Pension Plan from the Combined Pension Plan in anticipation of
the sale of the ILEC business, as described further in Note 2—Divestitures of the Latin American, ILEC and EMEA
Businesses to our consolidated financial statements in Item 8 of Part II of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2024. At the time of the spin-off we transferred $2.5 billion of
pension benefit obligation and $2.2 billion of plan assets to the Lumen Pension Plan and we further contributed
approximately $319 million of cash in September 2022. This plan was subsequently assumed by the purchaser as
part of our ILEC business divestiture on October 3, 2022. Upon sale of the ILEC business, we recognized
$403 million of net actuarial loss and prior service cost, net of tax impact, related to the Lumen Pension Plan,
which partially offset our gain on sale of the business.
Benefits paid by our Combined Pension Plan are paid through the trust that holds the Combined Pension Plan's
assets. Based on current laws and circumstances, we do not expect any contributions to be required for our
Combined Pension Plan during 2025. The amount of required contributions to our Combined Pension Plan in
2026 and beyond will depend on a variety of factors, most of which are beyond our control, including earnings
on plan investments, prevailing interest rates, demographic experience, changes in plan benefits and changes in
funding laws and regulations. We occasionally make voluntary contributions to our plans in addition to required
contributions and reserve the right to do so in the future. We made a voluntary contribution of $170 million to
the trust for the Combined Pension Plan during 2024. We currently do not expect to make a voluntary
contribution in 2025.
Substantially all of our post-retirement health care and life insurance benefits plans are unfunded and are paid
by us with available cash. As described further in Note 11—Employee Benefits, aggregate benefits paid by us
under these plans (net of participant contributions and direct subsidy receipts) were $185 million, $194 million
and $210 million for the years ended December 31, 2024, 2023 and 2022, respectively. For additional
information on our expected future benefits payments for our post-retirement benefit plans, see Note 11—
Employee Benefits to our consolidated financial statements in Item 8 of Part II of the Company’s Annual Report
on Form 10-K for the year ended December 31, 2024.
For 2024, our expected annual long-term rate of return on the pension plan assets, net of administrative
expenses, was 6.5%. For 2025, our expected annual long-term rate of return on these assets, net of
administration expenses, remains 6.5%. However, actual returns could be substantially different.
Appendix B
B-19
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Our pension plan contains provisions that allow us, from time to time, to offer lump sum payment options to
certain former employees in settlement of their future retirement benefits. We record an accounting settlement
charge, consisting of the recognition of certain deferred costs of the pension plan, associated with these lump
sum payments only if, in the aggregate, they exceed the sum of the annual service and interest costs for the
plan’s net periodic pension benefit cost, which represents the settlement accounting threshold. The settlement
threshold was not exceeded for the years ended December 31, 2024, December 31, 2023 or December 31, 2022.
In the event of workforce reductions in the future, the annual lump sum payments may trigger
settlement accounting.
Future Contractual Obligations
Our estimated future obligations as of December 31, 2024 include both current and long term obligations. At
December 31, 2024, we had a current obligation of $412 million and a long-term obligation of $18.1 billion of
long-term debt (excluding unamortized premiums, net and unamortized debt issuance costs). Under our
operating leases, at December 31, 2024 we had a current obligation of $340 million and a long-term obligation
of $1.3 billion. As of such date, we had current obligations related to right-of-way agreements and purchase
commitments of $999 million and a long-term obligation of $2.6 billion. Additionally, as of such date we had a
current asset retirement obligation of $25 million and a long-term obligation of $132 million. Finally, at
December 31, 2024 our pension and post-retirement benefit plans had an unfunded benefit obligation, of which
$189 million is classified as current and $2.2 billion is classified as long-term. For additional information, see Note
5—Leases, Note 7—Long-Term Debt and Credit Facilities, Note 9—Property, Plant and Equipment, Note 11—
Employee Benefits and Note 18—Commitments, Contingencies and Other Items.
Federal Broadband Support Programs
In January 2020, the FCC created the Rural Digital Opportunity Fund (“RDOF”) program, a federal support
program designed to fund broadband deployment in rural America. For the first phase of this program, RDOF
Phase I, the FCC awarded $6.4 billion in support payments to be paid in equal monthly installments over
10 years. We were awarded RDOF funding in several of the states in which we operate and began receiving
monthly support payments during the second quarter of 2022. We received approximately $17 million in annual
RDOF Phase I support payments during 2023 and 2022. In the third quarter of 2024, we relinquished rights to
develop certain RDOF census blocks in four states, which resulted in (i) a reduction of our anticipated RDOF
Phase I support payments to approximately $16 million for the year ending December 31, 2024 and $15 million
each year thereafter through the program period and (ii) an expectation of payment to the federal government,
which we anticipate will be approximately $10 million.
For additional information on these programs, see (i) Note 4—Revenue Recognition to our consolidated financial
statements in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31,
2024, (ii) "Business—Regulation of Our Business" in Item 1 of Part I of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2024 and (iii) "Risk Factors—Legal and Regulatory Risks" in Item 1A
of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Federal officials have proposed changes to current programs and laws that could impact us, including proposals
designed to increase broadband access, increase competition among broadband providers, lower broadband
costs and increase broadband regulation. In late 2021, the U.S. Congress enacted legislation that appropriated
$65 billion to improve broadband affordability and access, primarily through federally funded state grants. As of
the date of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, various state
and federal agencies are continuing to take steps to make this funding available to eligible applicants, including
us. We anticipate that the release of this funding would increase competition for broadband customers in
newly-served areas.
Appendix B
B-20
Cash Flow Activities
The following table summarizes our consolidated cash flow activities for the years ended December 31, 2024
and 2023. For information regarding cash flow activities for the year ended December 31, 2022, see
"Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of Part II of
our Annual Report Form 10-K for the year ended December 31, 2023.
Years Ended December 31,
$ Change
2024
2023
(Dollars in millions)
Net cash provided by operating activities
$ 4,333
2,160
2,173
Net cash used in investing activities
(2,830)
(1,201)
1,629
Net cash used in financing activities
(1,851)
(18)
1,833
Operating Activities
Net cash provided by operating activities increased by $2.2 billion for the year ended December 31, 2024 as
compared to the year ended December 31, 2023 primarily due to (i) cash payments received in the third quarter
of 2024 pursuant to our recent sales of PCF solutions and (ii) our federal income tax cash refund of $729 million,
including interest, received in the first quarter of 2024. These increases were partially offset by (i) an increase in
net loss adjusted for non-cash expenses and gains, partly as a result of the sale of our EMEA business in late
2023, and (ii) a voluntary contribution of $170 million to the trust for the Combined Pension Plan during 2024.
Cash provided by operating activities is subject to variability period over period as a result of timing differences,
including with respect to the collection of receivables and payments of interest expense, accounts payable
and bonuses.
For additional information about our operating results, see "Results of Operations" above.
Investing Activities
Net cash used in investing activities increased by $1.6 billion for the year ended December 31, 2024 as compared
to the year ended December 31, 2023 primarily due to the pre-tax cash proceeds from the sale of the EMEA
business in 2023, partially offset by gross proceeds from the sale of an investment in the second quarter
of 2024.
Financing Activities
Net cash used in financing activities increased by $1.8 billion for the year ended December 31, 2024 as compared
to the year ended December 31, 2023 due to the substantially greater payments of long-term debt and
associated debt extinguishment costs and fees, partially offset by proceeds from issuance of long-term debt
in 2024.
See Note 7—Long-Term Debt and Credit Facilities to our consolidated financial statements in Item 8 of Part II of
the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for additional information on
our outstanding debt securities.
Other Matters
We have cash management and loan arrangements with a majority of our income-generating subsidiaries, in
which a substantial portion of the aggregate cash of those subsidiaries is periodically advanced or loaned to us
or our service company affiliate. Although we periodically repay these advances to fund the subsidiaries' cash
requirements throughout the year, at any given point in time we may owe a substantial sum to our subsidiaries
under these arrangements. In accordance with generally accepted accounting principles, these arrangements
are reflected in the balance sheets of our subsidiaries but are eliminated in consolidation and therefore not
recognized on our consolidated balance sheets. For additional information, see “Risk Factors” in Item 1A of
Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Appendix B
B-21
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Our network includes some residual lead-sheathed copper cables installed years ago that constitute a small
portion of our network. Recent media coverage of potential health and environmental risks associated with
these cables has resulted in regulatory inquiries and lawsuits, and could subject us to legislative or regulatory
actions, removal costs, compliance costs or penalties. As of December 31, 2024, we have not accrued for any
such potential costs and will only accrue when such costs are probable and reasonably estimable. For additional
information about related litigation and potential risks, see Note 18—Commitments, Contingencies and Other
Items to our consolidated financial statements in Item 8 of Part II of the Company’s Annual Report on Form 10-K
for the year ended December 31, 2024, and the risk factor disclosures included herein under “Risk Factors” in
Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
We are also involved in various other legal proceedings that could substantially impact our financial position.
See Note 18—Commitments, Contingencies and Other Items to our consolidated financial statements in Item 8 of
Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for
additional information.
Market Risk
As of December 31, 2024, we were exposed to market risk from changes in interest rates on our variable rate
long-term debt obligations and fluctuations in certain foreign currencies.
Our management periodically reviews our exposure to interest rate fluctuations and periodically implements
strategies to manage the exposure. From time to time, we have used derivative instruments to swap our
exposure to variable interest rates for fixed interest rates. We have established policies and procedures for risk
assessment and the approval, reporting and monitoring of derivative instrument activities. As of December 31,
2024, we did not hold or issue derivative financial instruments for trading or speculative purposes.
As of December 31, 2024, we had approximately $6.0 billion aggregate principal amount of debt bearing
unhedged floating interest rates based on the secured overnight financing rate ("SOFR"). A hypothetical
increase of 100 basis points in SOFR relating to our $6.0 billion of unhedged floating rate debt would, among
other things, decrease our annual pre-tax earnings by approximately $60 million.
We conduct a small portion of our business in currencies other than the U.S. dollar, the currency in which our
consolidated financial statements are reported. Prior to the November 1, 2023 divestiture of our EMEA business,
certain of our former European subsidiaries used the local currency as their functional currency, as the majority
of their sales and purchases were transacted in their local currencies. Although we continue to evaluate
strategies to mitigate risks related to the effect of fluctuations in currency exchange rates, we will likely continue
to recognize gains or losses from international transactions. Accordingly, changes in foreign currency rates
relative to the U.S. dollar could positively or negatively impact our operating results.
Certain shortcomings are inherent in the method of analysis presented in the computation of exposures to
market risks. Actual values may differ materially from those disclosed by us from time to time if market
conditions vary from the assumptions used in the analyses performed. These analyses only incorporate the risk
exposures that existed at December 31, 2024.
ITEM 8. Consolidated Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors
Lumen Technologies, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Lumen Technologies, Inc. and subsidiaries
(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations,
comprehensive income (loss), cash flows, and stockholders’ equity for each of the years in the three-year period
ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted
accounting principles.
Appendix B
B-22
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024,
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission, and our report dated February 20, 2025 expressed an
unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these consolidated financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide
a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication
of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the
critical audit matter or on the accounts or disclosures to which it relates.
Testing of revenue
As discussed in Note 4 to the consolidated financial statements, the Company recorded $13.1 billion of
operating revenues for the year ended December 31, 2024. The processing and recording of revenue are
reliant upon multiple information technology (IT) systems.
We identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter.
Complex auditor judgment was required in evaluating the sufficiency of audit evidence over revenue due to
the large volume of data and the number and complexity of the revenue accounting systems. Specialized
skills and knowledge were needed to test the IT systems used for the processing and recording of revenue.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor
judgment to determine the nature and extent of procedures to be performed over the processing and recording
of revenue, including the IT systems tested. We evaluated the design and tested the operating effectiveness of
certain internal controls related to the processing and recording of revenue. This included manual and
automated controls over the IT systems used for the processing and recording of revenue. For a selection of
transactions, we compared the amount of revenue recorded to a combination of Company internal data,
executed contracts, and other relevant third-party data. In addition, we involved IT professionals with
specialized skills and knowledge who assisted in the design and performance of audit procedures related to
certain IT systems used by the Company for the processing and recording of revenue. We evaluated the
sufficiency of audit evidence obtained by assessing the results of procedures performed, including the relevance
and reliability of evidence obtained.
/s/ KPMG LLP
We have served as the Company’s auditor since 1977.
Denver, Colorado
February 20, 2025
Appendix B
B-23
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors
Lumen Technologies, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Lumen Technologies, Inc. and subsidiaries' (the Company) internal control over financial
reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of December
31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023,
the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholders’
equity, for each of the years in the three-year period ended December 31, 2024, and the related notes
(collectively, the consolidated financial statements), and our report dated February 20, 2025 expressed an
unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. A company’s internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ KPMG LLP
Denver, Colorado
February 20, 2025
Appendix B
B-24
Lumen Technologies, Inc.
Consolidated Statements of Operations
Years Ended December 31,
2024
2023
2022
(Dollars in millions, except per share
amounts, and shares in thousands)
OPERATING REVENUE
$
13,108
14,557
17,478
OPERATING EXPENSES
Cost of services and products (exclusive of depreciation and amortization)
6,703
7,144
7,868
Selling, general and administrative
2,972
3,198
3,078
Net loss (gain) on sale of businesses
17
121
(113)
Loss on disposal groups held for sale
—
—
40
Depreciation and amortization
2,956
2,985
3,239
Goodwill impairment
—
10,693
3,271
Total operating expenses
12,648
24,141
17,383
OPERATING INCOME (LOSS)
460
(9,584)
95
OTHER EXPENSE
Interest expense
(1,372)
(1,158)
(1,332)
Net gain on early retirement of debt (Note 7)
348
618
214
Other income (expense), net
334
(113)
32
Total other expense, net
(690)
(653)
(1,086)
LOSS BEFORE INCOME TAXES
(230)
(10,237)
(991)
Income tax (benefit) expense
(175)
61
557
NET LOSS
$
(55)
(10,298)
(1,548)
BASIC AND DILUTED LOSS PER COMMON SHARE
BASIC
$
(0.06)
(10.48)
(1.54)
DILUTED
$
(0.06)
(10.48)
(1.54)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC
987,680
983,081
1,007,517
DILUTED
987,680
983,081
1,007,517
See accompanying notes to consolidated financial statements.
Appendix B
B-25
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Lumen Technologies, Inc.
Consolidated Statements of Comprehensive Income (Loss)
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
NET LOSS
$ (55)
(10,298)
(1,548)
OTHER COMPREHENSIVE INCOME:
Items related to employee benefit plans:
Change in net actuarial loss, net of $(30), $20 and $(205) tax
97
(59)
631
Reclassification of net actuarial loss to (loss) gain on the sale of businesses, net
of $—, $— and $(142) tax
—
(22)
422
Change in net prior service cost, net of $4, $4 and $(9) tax
(11)
(11)
30
Reclassification of prior service credit to (loss) gain on the sale of businesses,
net of $—, $— and $6 tax
—
—
(19)
Reclassification of realized loss on interest rate swaps to net (loss) income, net of
$—, $— and $(5) tax
—
—
17
Reclassification of realized loss on foreign currency translation to (loss) gain on
the sale of businesses, net of $—, $— and $— tax
—
382
112
Foreign currency translation adjustment, net of $0, $(3) and $58 tax
1
(1)
(134)
Other comprehensive income
87
289
1,059
COMPREHENSIVE INCOME (LOSS)
$ 32
(10,009)
(489)
See accompanying notes to consolidated financial statements.
Appendix B
B-26
Lumen Technologies, Inc.
Consolidated Balance Sheets
As of December 31,
2024
2023
(Dollars in millions
and shares in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
1,889
2,234
Accounts receivable, less allowance of $59 and $67
1,231
1,318
Other
1,274
1,223
Total current assets
4,394
4,775
Property, plant and equipment, net of accumulated depreciation of $23,121 and $21,318
20,421
19,758
GOODWILL AND OTHER ASSETS
Goodwill
1,964
1,964
Other intangible assets, net
4,806
5,470
Other, net
1,911
2,051
Total goodwill and other assets
8,681
9,485
TOTAL ASSETS
$ 33,496
34,018
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt
$
412
157
Accounts payable
749
1,134
Accrued expenses and other liabilities
Salaries and benefits
716
696
Income and other taxes
272
251
Current operating lease liabilities
253
268
Interest
197
168
Other
179
213
Current portion of deferred revenue
861
647
Total current liabilities
3,639
3,534
LONG-TERM DEBT
17,494
19,831
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes, net
2,890
3,127
Benefit plan obligations, net
2,205
2,490
Deferred revenue
3,733
1,969
Other
3,071
2,650
Total deferred credits and other liabilities
11,899
10,236
COMMITMENTS AND CONTINGENCIES (Note 18)
STOCKHOLDERS' EQUITY
Preferred stock — non-redeemable, $25.00 par value, authorized 2,000 and 2,000 shares,
issued and outstanding 7 and 7 shares
—
—
Common stock, $0.00 and $1.00 par value, authorized 2,200,000 and 2,200,000 shares, issued
and outstanding 1,014,768 and 1,008,486 shares
19,149
1,008
Additional paid-in capital
—
18,126
Accumulated other comprehensive loss
(723)
(810)
Accumulated deficit
(17,962)
(17,907)
Total stockholders' equity
464
417
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 33,496
34,018
See accompanying notes to consolidated financial statements.
Appendix B
B-27
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Lumen Technologies, Inc.
Consolidated Statements of Cash Flows
OPERATING ACTIVITIES
Net loss
$
(55)
(10,298)
(1,548)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
2,956
2,985
3,239
Net loss (gain) on sale of businesses
17
121
(113)
Loss on disposal groups held for sale
—
—
40
Goodwill impairment
—
10,693
3,271
Impairment of long-lived assets
83
27
5
Deferred income taxes
(209)
8
(1,230)
Provision for uncollectible accounts
72
100
133
Net gain on early retirement of debt
(348)
(618)
(214)
Debt modification costs and related fees
(79)
—
—
Gain on sale of investment
(205)
—
—
Unrealized loss on investments
10
97
191
Stock-based compensation
29
52
98
Changes in current assets and liabilities:
Accounts receivable
19
102
(158)
Accounts payable
(202)
(97)
98
Accrued income and other taxes
(189)
(1,185)
972
Other current assets and liabilities, net
304
(549)
(372)
Retirement benefits
(181)
(1)
46
Change in deferred revenue
1,763
230
6
Changes in other noncurrent assets and liabilities, net
655
500
252
Other, net
(107)
(7)
19
Net cash provided by operating activities
4,333
2,160
4,735
INVESTING ACTIVITIES
Capital expenditures
(3,231)
(3,100)
(3,016)
Proceeds from sale of businesses
15
1,746
8,369
Proceeds from sale of property, plant and equipment, and other assets
366
165
120
Other, net
20
(12)
3
Net cash (used in) provided by investing activities
(2,830)
(1,201)
5,476
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt
1,325
—
—
Payments of long-term debt
(2,678)
(185)
(8,093)
Net (payments of) proceeds from revolving line of credit
(200)
200
(200)
Dividends paid
(3)
(11)
(780)
Debt issuance and extinguishment costs and related fees
(283)
(14)
—
Repurchases of common stock
—
—
(200)
Other, net
(12)
(8)
(40)
Net cash used in financing activities
(1,851)
(18)
(9,313)
Net (decrease) increase in cash, cash equivalents and restricted cash
(348)
941
898
Cash, cash equivalents and restricted cash at beginning of period
2,248
1,307
409
Cash, cash equivalents and restricted cash at end of period
$ 1,900
2,248
1,307
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Appendix B
B-28
Supplemental cash flow information:
Income taxes refunded (paid), net
$
242
(1,303)
(76)
Interest paid (net of capitalized interest of $176, $111 and $66)
(1,245)
(1,138)
(1,365)
Supplemental non-cash information regarding financing activities:
Cancellation of senior unsecured notes as part of exchange offers (Note 7)
$
—
(1,554)
—
Issuance of senior secured notes as part of exchange offers (Note 7)
—
924
—
Cash, cash equivalents and restricted cash:
Cash and cash equivalents
$ 1,889
2,234
1,251
Cash and cash equivalents and restricted cash included in Assets held for sale
—
—
44
Restricted cash included in Other current assets
2
4
—
Restricted cash included in Other, net noncurrent assets
9
10
12
Total
$ 1,900
2,248
1,307
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
See accompanying notes to consolidated financial statements.
Appendix B
B-29
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Lumen Technologies, Inc.
Consolidated Statements of Stockholders' Equity
Years Ended December 31,
2024
2023
2022
(Dollars in millions except
per share amounts)
COMMON STOCK
Balance at beginning of period
$ 1,008
1,002
1,024
Issuance of common stock through dividend reinvestment, incentive and
benefit plans
8
6
11
Repurchases of common stock
—
—
(33)
Conversion to no-par stock value (Note 1)
18,133
—
—
Balance at end of period
19,149
1,008
1,002
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of period
18,126
18,080
18,972
Repurchases of common stock
—
—
(167)
Shares withheld to satisfy tax withholdings
(6)
(5)
(30)
Stock-based compensation and other, net
27
50
96
Dividends declared
—
1
(791)
Conversion to no-par stock value (Note 1)
(18,133)
—
—
Other
(14)
—
—
Balance at end of period
—
18,126
18,080
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance at beginning of period
(810)
(1,099)
(2,158)
Other comprehensive income
87
289
1,059
Balance at end of period
(723)
(810)
(1,099)
ACCUMULATED DEFICIT
Balance at beginning of period
(17,907)
(7,609)
(6,061)
Net loss
(55)
(10,298)
(1,548)
Balance at end of period
(17,962)
(17,907)
(7,609)
TOTAL STOCKHOLDERS' EQUITY
$
464
417
10,374
DIVIDENDS DECLARED PER COMMON SHARE
$
—
—
0.75
See accompanying notes to consolidated financial statements.
Appendix B
B-30
Lumen Technologies, Inc.
Notes To Consolidated Financial Statements
References in the Notes to "Lumen Technologies" or "Lumen," "we," "us," the "Company," and "our" refer to
Lumen Technologies, Inc. and its consolidated subsidiaries, unless the context otherwise requires.
Note 1—Background and Summary of Significant Accounting Policies
General
We are a networking company with the goal of connecting people, data, and applications quickly, securely and
effortlessly. We are unleashing the world's digital potential by providing a broad array of integrated products
and services to our domestic and global Business customers and our domestic Mass Markets customers. We
operate one of the world’s most interconnected networks. Our platform empowers our customers to swiftly
adjust digital programs to meet immediate demands, create efficiencies, accelerate market access and reduce
costs, which allows our customers to rapidly evolve their IT programs to address dynamic changes. Our specific
products and services are detailed in Note 4—Revenue Recognition.
Basis of Presentation
The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries
in which we have a controlling interest. Intercompany amounts and transactions with our consolidated
subsidiaries have been eliminated.
To simplify the overall presentation of our consolidated financial statements, we report immaterial amounts
attributable to noncontrolling interests in certain of our subsidiaries as follows: (i) income attributable to
noncontrolling interests in other income (expense), net, (ii) equity attributable to noncontrolling interests
in additional paid-in capital and (iii) cash flows attributable to noncontrolling interests in other, net
financing activities.
We reclassified certain prior period amounts to conform to the current period presentation, including the
recategorization of our Business revenue by product category and sales channel in our segment reporting for
2023 and 2022. See Note 17—Segment Information for additional information. These changes had no impact on
total operating revenue, total operating expenses or net loss for any period.
Operating Expenses
Our current definitions of operating expenses are as follows:
• Cost of services and products (exclusive of depreciation and amortization) are expenses incurred in providing
products and services to our customers. These expenses include: employee-related expenses directly
attributable to operating and maintaining our network (such as salaries, wages, benefits and professional
fees); facilities expenses (which include third-party telecommunications expenses we incur for using other
carriers' networks to provide services to our customers); rents and utilities expenses; equipment sales
expenses (such as data integration and modem expenses); and other expenses directly related to our
operations; and
• Selling, general and administrative expenses are corporate overhead and other operating expenses. These
expenses include: employee-related expenses (such as salaries, wages, internal commissions, benefits and
professional fees) directly attributable to selling products or services and employee-related expenses for
administrative functions; marketing and advertising; property and other operating taxes and fees; external
commissions; legal expenses associated with general matters; bad debt expense; and other selling, general
and administrative expenses.
These expense classifications may not be comparable to those of other companies.
Appendix B
B-31
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Summary of Significant Accounting Policies
Use of Estimates
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting
principles. These accounting principles require us to make certain estimates, judgments and assumptions. We
believe that the estimates, judgments and assumptions we make when accounting for specific items and
matters are reasonable, based on information available at the time they are made. These estimates, judgments
and assumptions can materially affect the reported amounts of assets, liabilities and components of
stockholders' equity as of the dates of the consolidated balance sheets, as well as the reported amounts of
revenue, expenses and components of cash flows during the periods presented in our other consolidated
financial statements. We also make estimates in our assessments of potential losses in relation to threatened
or pending tax and legal matters. See Note 16—Income Taxes and Note 18—Commitments, Contingencies and
Other Items for additional information.
For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably
estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the
estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated
loss if recovery is also deemed probable.
For matters related to income taxes, if we determine the impact of an uncertain tax position is more likely than
not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest
amount that is more likely than not to be sustained. We do not recognize any portion of an uncertain tax
position if the position has less than a 50% likelihood of being sustained. We recognize interest on the amount
of unrecognized benefit from uncertain tax positions.
For all of these and other matters, actual results could differ materially from our estimates.
Assets Held for Sale
We classify assets and related liabilities as held for sale when: (i) management has committed to a plan to sell
the assets, (ii) the net assets are available for immediate sale, (iii) there is an active program to locate a buyer
and (iv) the sale and transfer of the net assets is probable within one year. Assets and liabilities held for sale are
presented separately on our consolidated balance sheets with a valuation allowance, if necessary, to recognize
the net carrying amount at the lower of cost or fair value, less costs to sell. Depreciation of property, plant and
equipment and amortization of finite-lived intangible assets and right-of-use assets are not recorded while these
assets are classified as held for sale. For each period that assets are classified as being held for sale, they are
tested for recoverability. Unless otherwise specified, the amounts and information presented in the notes do not
include assets and liabilities that were classified as held for sale as of December 31, 2023 and December 31,
2022. See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses for additional information.
Revenue Recognition
We earn most of our consolidated revenue from contracts with customers, primarily through the provision of
communications and other services. Revenue from contracts with customers is accounted for under Accounting
Standards Codification ("ASC") 606. We also earn revenue from leasing arrangements (primarily from fiber
capacity and conduit leases and colocation agreements) and governmental subsidy payments, which are not
accounted for under ASC 606.
Revenue is recognized when control of the promised goods or services is transferred to our customers, in an
amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or
services. Revenue is recognized based on the following five-step model:
• Identification of the contract with a customer;
• Identification of the performance obligations in the contract;
• Determination of the transaction price;
• Allocation of the transaction price to the performance obligations in the contract; and
• Recognition of revenue when, or as, we satisfy a performance obligation.
Appendix B
B-32
We provide an array of communications services to business and residential customers, including local voice,
VPN, Ethernet, data, broadband, private line (including special access), network access, transport, voice,
information technology, video and other ancillary services. We provide these services to a wide range of
businesses, including global, enterprise, wholesale, government, and small and medium business customers.
Certain contracts also include the sale of equipment, which is not significant to our business.
We recognize revenue for services when we provide the applicable service or when control of a product is
transferred. Recognition of certain payments received in advance of services being provided is deferred. These
advance payments may include design, planning and engineering fees, as well as certain activation and
installation charges. If these advance payments are not separate performance obligations, we recognize them as
revenue over the actual or expected contract term using historical experience, which typically ranges from one
to five years depending on the service. In most cases, termination fees or other fees on existing contracts that
are negotiated in conjunction with new contracts are deferred and recognized over the new contract term.
For access services, we generally bill fixed monthly charges one month in advance to customers and recognize
revenue as service is provided over the contract term in alignment with the customer's receipt of service. For
usage and other ancillary services, we generally bill in arrears and recognize revenue as usage or delivery
occurs. In most cases, the amount invoiced for our service offerings constitutes the price that would be billed on
a standalone basis.
In certain cases, customers may be permitted to modify their contracts. We evaluate the change in scope or
price to identify whether the modification should be treated as a separate contract, as a termination of the
existing contract and creation of a new contract, or as a change to the existing contract.
Customer contracts are evaluated to determine whether the performance obligations are separable. If the
performance obligations are deemed separable and separate earnings processes exist, the total transaction
price that we expect to receive with the customer is allocated to each performance obligation based on its
relative standalone selling price. The revenue associated with each performance obligation is then recognized
as earned.
We periodically sell transmission capacity on our network. These transactions are generally structured as
indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount
of capacity or fiber for a specified term, typically 20 years. In most cases, we account for the cash consideration
received on transfers of transmission capacity as ASC 606 revenue which is adjusted for the time value of
money and is recognized ratably over the term of the agreement. Cash consideration received on transfers of
dark fiber is accounted for as non-ASC 606 lease revenue, which we also recognize ratably over the term of the
agreement. We do not recognize revenue on any contemporaneous exchanges of our transmission capacity
assets for other non-owned transmission capacity assets.
In connection with offering products and services provided to the end user by third-party vendors, we review
the relationship between us, the vendor and the end user to assess whether revenue should be reported on a
gross or net basis. In assessing whether revenue should be reported on a gross or net basis, we consider
whether we act as a principal in the transaction and control the goods and services used to fulfill the
performance obligations associated with the transaction.
We have service level commitments pursuant to contracts with certain of our customers. To the extent that we
determine that such service levels were not achieved or may not have been achieved, we estimate the amount
of credits to be issued and record a corresponding reduction to revenue in the period that the service level
commitment was not met or may not be met.
Customer payments are made based on billing schedules included in our customer contracts, which is typically
on a monthly basis.
We defer (or capitalize) incremental contract acquisition and fulfillment costs and recognize (or amortize) such
costs over the average contract life. Our deferred contract costs for our customers have average amortization
periods of approximately 50 months for Mass Markets customers and 35 months for Business customers. These
deferred costs are periodically monitored to reflect any significant change in assumptions.
See Note 4—Revenue Recognition for additional information.
Advertising Costs
Costs related to advertising are expensed as incurred and recorded as selling, general and administrative
expenses in our consolidated statements of operations. Our advertising expense was $94 million, $87 million
and $62 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Appendix B
B-33
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Legal Costs
In the normal course of our business, we incur costs to hire and retain external legal counsel to advise us on
finance, regulatory, litigation and other matters. Subject to certain exceptions, we expense these costs as the
related services are received.
Income Taxes
We file a consolidated federal income tax return with our eligible subsidiaries. The provision for income taxes
reflects taxes currently payable, tax consequences deferred to future periods and adjustments to our liabilities
for uncertain tax positions. We record deferred income tax assets and liabilities reflecting future tax
consequences attributable to tax NOLs, tax credit carryforwards and differences between the financial
statement carrying value of assets and liabilities and the tax basis of those assets and liabilities. Deferred taxes
are computed using enacted tax rates expected to apply in the year in which the differences are expected to
affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is
recognized in earnings in the period that includes the enactment date.
We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we
believe are more likely than not to be recovered. Each quarter we evaluate the need to retain or adjust each
valuation allowance on our deferred tax assets. See Note 16—Income Taxes for additional information.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not
subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash
equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating
investments for classification as cash equivalents, we require that individual securities have original maturities of
ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days
or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound
financial condition and in high quality and relatively risk-free investment products. Our cash investment policy
limits the concentration of investments with specific financial institutions or among certain products and
includes criteria related to credit worthiness of any particular financial institution.
Book overdrafts occur when we have issued checks but they have not yet been presented to our controlled
disbursement bank accounts for payment. Disbursement bank accounts allow us to delay funding of issued
checks until the checks are presented for payment. Until the issued checks are presented for payment, the book
overdrafts are included in accounts payable on our consolidated balance sheets. This activity is included in the
operating activities section in our consolidated statements of cash flows. There were $1 million and no book
overdrafts included in accounts payable at December 31, 2024 and 2023, respectively.
Restricted Cash
Restricted cash consists primarily of cash and investments that collateralize our outstanding letters of credit and
certain performance and operating obligations. Restricted cash is recorded as current or non-current assets in
the consolidated balance sheets depending on the duration of the restriction and the purpose for which the
restriction exists.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recognized based upon the amount due from customers for the services provided or at
cost for purchased and other receivables, less an allowance for credit losses. We use a loss rate method to
estimate our allowance for credit losses. For more information on our methodology for estimating our allowance
for credit losses, see Note 6—Credit Losses on Financial Instruments.
We generally consider our accounts past due if they are outstanding over 30 days. Our past due accounts are
written off against our allowance for credit losses and any recoveries of accounts previously written off are
generally recognized as a reduction in bad debt expense in the period received. The carrying value of accounts
receivable net of the allowance for credit losses approximates fair value. Accounts receivable balances acquired
in a business combination are recorded at fair value for all balances receivable at the acquisition date and at the
invoiced amount for those amounts invoiced after the acquisition date.
Appendix B
B-34
Property, Plant and Equipment
We record property, plant and equipment acquired in connection with our business acquisitions based on its
estimated fair value as of its acquisition date plus the estimated value of any associated legally or contractually
required retirement obligations. We record purchased and constructed property, plant and equipment at cost,
plus the estimated value of any associated legally or contractually required retirement obligations. Prior to
January 1, 2024, we depreciated the majority of our property, plant and equipment using the straight-line group
method over the estimated useful lives of groups of assets. Under the straight-line group method, assets
dedicated to providing telecommunications services (which comprise the majority of our property, plant and
equipment) that have similar physical characteristics, use and expected useful lives are pooled for purposes of
depreciation and tracking. We used the equal life group procedure to establish each pool's average remaining
useful life. Generally, under the straight-line group method, when an asset is sold or retired in the course of
normal business activities, the cost is deducted from property, plant and equipment and charged to
accumulated depreciation without recognition of a gain or loss. Effective January 1, 2024, we re-established all
of our assets individually, including accumulated depreciation, and began to depreciate all of our assets using
the straight-line method over the estimated useful lives of the specific asset. A gain or loss is recognized in our
consolidated statements of operations only if a disposal is unusual. Leasehold improvements are amortized over
the shorter of the useful lives of the assets or the expected lease term. Expenditures for maintenance and
repairs are expensed as incurred. During the construction phase of network and other internal-use capital
projects, we capitalize related employee and interest costs. Property, plant and equipment supplies used
internally are carried at average cost, except for significant individual items which are carried at actual cost.
We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property,
plant and equipment. Our reviews utilize models that take into account actual usage, physical wear and tear,
replacement history, assumptions about technology evolution and, in certain instances, actuarially determined
probabilities to estimate the remaining useful life of our asset base. Our remaining useful life assessments
evaluate the possible loss in service value of assets that may precede the physical retirement. Assets shared
among many customers may lose service value as those customers reduce their use of the asset. However, the
asset is not retired until all customers no longer utilize the asset and we determine there is no alternative use for
the asset.
We have asset retirement obligations associated with the legally or contractually required removal of a limited
group of property, plant and equipment assets from leased properties and the disposal of certain hazardous
materials present in our owned properties. When an asset retirement obligation is identified, usually in
association with the acquisition of the asset, we record the fair value of the obligation as a liability. The fair value
of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated
remaining useful life of the associated asset. Where the removal obligation is not legally binding, we expense the
net cost to remove assets in the period in which the costs are actually incurred.
We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the
carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped
with other assets and liabilities at the lowest identifiable level for which we generate cash flows independently
of other groups of assets and liabilities, absent a material change in operations. An impairment loss is
recognized only if the carrying amount of the asset group is not recoverable and exceeds its estimated fair
value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of
the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset
group. If the asset group's carrying value is not recoverable, we recognize an impairment charge for the amount
by which the carrying amount of the asset group exceeds its estimated fair value.
Goodwill, Customer Relationships and Other Intangible Assets
We initially record intangible assets arising from business combinations, such as goodwill, customer
relationships, capitalized software, trademarks and trade names, at estimated fair value. We amortize customer
relationships primarily over an estimated life of seven to 14 years, using the straight-line method, depending on
the type of customer. We amortize capitalized software using the straight-line method primarily over estimated
lives ranging up to seven years. We amortize our other intangible assets using the straight-line method over an
estimated life of nine to 20 years. Other intangible assets not arising from business combinations are initially
recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit
the useful life of an intangible asset, we classify them as indefinite-lived intangible assets and such intangible
assets are not amortized.
Appendix B
B-35
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Internally used software, whether purchased or developed by us, is capitalized and amortized using the
straight-line method over its estimated useful life. We have capitalized certain costs associated with software
such as costs of employees devoted to software development and external direct costs for materials and
services. Costs associated with software to be used for internal purposes are expensed until the point at which
the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use
software are capitalized only to the extent that they allow the software to perform a task it previously did not
perform. Software maintenance, data conversion and training costs are expensed in the period in which they are
incurred. We review the remaining economic lives of our capitalized software annually. Capitalized software is
included in other intangible assets, net, in our consolidated balance sheets.
Our long-lived intangible assets, other than goodwill, with indefinite lives are assessed for impairment annually,
or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate
there may be an impairment. These assets are carried at the estimated fair value at the time of acquisition and
assets not acquired in acquisitions are recorded at historical cost. However, if their estimated fair value is less
than the carrying amount, we recognize an impairment charge for the amount by which the carrying amount of
these assets exceeds their estimated fair value.
We are required to assess our goodwill for impairment annually, or more frequently if an event occurs or
circumstances change that indicates it is more likely than not the fair values of any of our reporting units were
less than their carrying values. We are required to write-down the value of goodwill of our reporting units in
periods in which the recorded carrying value of any such unit exceeds its fair value of equity. Our reporting units
are not discrete legal entities with discrete full financial statements. Therefore, we assess the equity carrying
value and future cash flows each time we perform a goodwill impairment assessment on a reporting unit. To do
so, we assign our assets, liabilities and cash flows to reporting units using allocation methodologies which we
believe are reasonable and consistent. This process entails various estimates, judgments and assumptions.
We are required to reassign goodwill to reporting units whenever reorganizations of our internal reporting
structure change the composition of our reporting units. Goodwill is reassigned to the reporting units using a
relative fair value approach. When the fair value of a reporting unit is available, we allocate goodwill based on
the relative fair value of the reporting units. When fair value is not available, we utilize an alternative allocation
methodology that we believe represents a reasonable approximation of the fair value of the operations
being reorganized.
For more information, see Note 3—Goodwill, Customer Relationships and Other Intangible Assets.
Derivatives and Hedging
From time to time we have used derivative instruments to hedge exposure to interest rate risks arising from
fluctuation in interest rates. We account for derivative instruments in accordance with ASC 815, Derivatives
and Hedging, which establishes accounting and reporting standards for derivative instruments. We do not use
derivative financial instruments for speculative purposes.
Derivatives are recognized in the consolidated balance sheets at their fair values. When we become a party to a
derivative instrument and intend to apply hedge accounting, we formally document the hedge relationship and
the risk management objective for undertaking the hedge, which includes designating the instrument for
financial reporting purposes as a fair value hedge, a cash flow hedge, or a net investment hedge.
As of December 31, 2024, we were not party to any swap agreements. All of our variable-to-fixed interest rate
swap agreements in place at the beginning of 2022 expired during the first half of 2022. While we held these
agreements, we evaluated the effectiveness as described in Note 15—Derivative Financial Instruments
(designated as cash-flow hedges) qualitatively on a quarterly basis. We reflected the change in the fair value of
the interest rate swaps in accumulated other comprehensive loss and subsequently reclassified into earnings in
the period the hedged transaction affects earnings, by virtue of qualifying as effective cash flow hedges. For
more information see Note 15—Derivative Financial Instruments.
Pension and Post-Retirement Benefits
We recognize the funded status of our defined benefit and post-retirement plans as an asset or a liability on our
consolidated balance sheets. Each year's actuarial gains or losses are a component of our other comprehensive
income (loss), which is then included in our accumulated other comprehensive loss on our consolidated balance
sheets. Pension and post-retirement benefit expenses are recognized over the period in which the employee
renders service and becomes eligible to receive benefits. We make significant assumptions (including the
discount rate, expected rate of return on plan assets, mortality and health care trend rates) in computing the
pension and post-retirement benefits expense and obligations. See Note 11—Employee Benefits for
additional information.
Appendix B
B-36
Foreign Currency
Local currencies of our foreign subsidiaries are the functional currencies for financial reporting purposes except
for certain foreign subsidiaries, primarily in Latin America prior to the August 1, 2022 sale of our Latin American
business. For operations outside the United States that have functional currencies other than the U.S. dollar,
assets and liabilities are translated to U.S. dollars at period-end exchange rates, and revenue, expenses and cash
flows are translated using average monthly exchange rates. Prior to the November 1, 2023 sale of our EMEA
business and the August 1, 2022 sale of our Latin American business, a significant portion of our non-United
States subsidiaries used the British pound, the Euro, or the Brazilian Real, as their functional currency, each of
which experienced significant fluctuations against the U.S. dollar during the periods covered by the Company’s
Annual Report on Form 10-K for the year ended December 31, 2024 when we operated the divested businesses.
We recognize foreign currency translation gains and losses as a component of accumulated other
comprehensive loss in stockholders' equity in our consolidated balance sheet and in our consolidated
statements of comprehensive (loss) income in accordance with accounting guidance for foreign currency
translation. Prior to the completion of our divestitures as discussed in Note 2—Divestitures of the Latin
American, ILEC and EMEA Businesses, we considered the majority of our investments in our foreign subsidiaries
to be long-term in nature. Our foreign currency transaction gains (losses), including where transactions with our
non-United States subsidiaries are not considered to be long-term in nature, are included within other income
(expense), net on our consolidated statements of operations.
Common Stock
On December 18, 2024, we amended our articles of incorporation to eliminate the par value of our common
stock (which was, prior to such amendment, $1.00 per share) as approved by our shareholders at our 2024
annual shareholders meeting. We recognized the change by reclassifying the balance in Additional paid-in
capital to Common stock on our consolidated balance sheet as of December 18, 2024. All changes in
capitalization previously recognized as Additional paid-in capital will hereinafter be recognized in Common
stock. This change had no other impact on our consolidated financial statements.
As of December 31, 2024, we had 41 million shares authorized for future issuance under our equity
incentive plans.
Preferred Stock
Holders of outstanding Lumen Technologies preferred stock are entitled to receive cumulative dividends,
receive preferential distributions equal to $25 per share plus unpaid dividends upon Lumen's liquidation and
vote as a single class with the holders of common stock.
Section 382 Rights Plan
We maintain a Section 382 Rights Plan to protect our U.S. federal net operating loss carryforwards ("NOLs")
from certain Internal Revenue Code Section 382 limitations. Under the plan, one preferred stock purchase right
was distributed for each share of our outstanding common stock as of the close of business on February 25,
2019, and those rights currently trade in tandem with the common stock until they expire or detach under the
plan. This plan was designed to deter trading that would result in a change of control (as defined in Code
Section 382), and therefore protect our ability to use our historical federal NOLs in the future. The plan is
scheduled to lapse in late 2026.
Dividends
The declaration and payment of dividends is at the discretion of our Board of Directors. On November 2, 2022,
we announced that our Board had terminated our quarterly cash dividend program.
Change in Accounting Estimates
Effective January 1, 2024, we changed our method of depreciation and amortization for incumbent local
exchange carriers ("ILEC") and certain competitive local exchange carriers ("CLEC") fixed assets from the group
method of depreciation to straight-line by individual asset method. Historically, we have used the group method
of depreciation for the property, plant and equipment and amortization of certain intangible capitalized
software assets of our ILECs and certain CLECs. Under the group method, all like kind assets for each subsidiary
were combined into common pools and depreciated under composite depreciation rates. Recent business
divestitures and asset sales have significantly reduced our composite asset base. We believe the straight-line
Appendix B
B-37
2024 ANNUAL REPORT
2025 PROXY STATEMENT
depreciation method for individual assets is preferable to the group method as it will result in a more precise
estimate of depreciation expense and will result in a consistent depreciation method for all our subsidiaries. This
change in the method of depreciation is considered a change in accounting estimate inseparable from a change
in accounting principle and has resulted solely in prospective changes to our depreciation and amortization
expense. This change in accounting estimate had an immaterial impact to our net loss and diluted loss per share
for the year ended December 31, 2024.
Additionally, during the first quarter of 2024, we updated our analysis of economic lives of owned fiber network
assets. As of January 1, 2024, we extended the estimated economic life and depreciation period of such assets
from 25 years to 30 years to better reflect the physical life of the assets that we have experienced and absence
of technological changes that would replace fiber. The change in accounting estimate decreased depreciation
expense by approximately $63 million, $48 million net of tax for the year ended December 31, 2024, and
resulted in an increase of $0.05, per diluted share for the year ended December 31, 2024.
Recently Adopted Accounting Pronouncements
Segments
On January 1, 2024, we adopted Accounting Standards Update ("ASU") 2023-07, “Segment Reporting (Topic
280): Improvements to Reportable Segment Disclosures.” This ASU is intended to improve reportable segment
disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU
does not change how a public entity identifies its operating segments, aggregates them or applies quantitative
thresholds to determine reportable segments. We did not early adopt this standard. Refer to Note 17—Segment
Information for more information on the impact of this ASU on our consolidated financial statements.
Government Assistance
On January 1, 2022, we adopted ASU 2021-10 "Government Assistance (Topic 832): Disclosures by Business
Entities about Government Assistance.” This ASU requires business entities to disclose information about certain
types of government assistance they receive. Refer to Note 4—Revenue Recognition for more information on
the impact of this ASU on our consolidated financial statements.
Investments
On January 1, 2024, we adopted ASU 2023-02, “Investments-Equity Method and Joint Ventures (Topic 323):
Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." This ASU
allows reporting entities to elect to account for qualifying tax equity investments using the proportional
amortization method, regardless of the program giving rise to the related income tax credits. The adoption of
this ASU did not have any impact on our consolidated financial statements.
On January 1, 2024, we adopted ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement
of Equity Securities Subject to Contractual Sale Restrictions." This ASU clarifies that a contractual restriction on
the sales of an investment in an equity security is not considered part of the unit of account of the equity
security and, therefore, is not considered in measuring its fair value. The adoption of this ASU did not have any
impact on our consolidated financial statements.
Leases
On January 1, 2024, we adopted ASU 2023-01, “Leases (Topic 842): Common Control Arrangements.” This ASU
requires all entities to amortize leasehold improvements associated with common control leases over the useful
life to the common control group. The adoption of this ASU did not have any impact on our consolidated
financial statements.
On January 1, 2022, we adopted ASU 2021-05, “Leases (Topic 842): Lessors—Certain Leases with Variable Lease
Payments.” This ASU (i) amends the lease classification requirements for lessors, (ii) provides criteria for lessors
to classify and account for a lease with variable lease payments that do not depend on a reference index or a
rate as an operating lease; and (iii) provides guidance with respect to net investments by lessors under
operating leases and other related topics. The adoption of this ASU did not have a material impact on our
consolidated financial statements.
Appendix B
B-38
Reference Rate Reform
In December 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-06, “Reference Rate
Reform (Topic 848) – Deferral of the Sunset Date of Topic 848." This ASU, which was effective upon issuance,
extends the period of time preparers can utilize the reference rate reform relief guidance in Topic 848, by
deferring the sunset date from December 31, 2022, to December 31, 2024, after which entities will no longer be
permitted to apply the relief in Topic 848. Based on our review of our key material contracts through
December 31, 2024, this ASU does not have a material impact on our consolidated financial statements.
Supplier Finance Programs
On January 1, 2023, we adopted ASU 2022-04, “Liabilities-Supplier Finance Program (Subtopic 405-50):
Disclosure of Supplier Finance Program Obligations.” This ASU requires a company that uses a supplier finance
program in connection with the purchase of goods or services to disclose sufficient information about the
program to allow a user of financial statements to understand the program’s nature, program activity during the
period, changes from period to period and the potential magnitude of program transactions. The adoption of
this ASU did not have a material impact on our consolidated financial statements.
Credit Losses
On January 1, 2023, we adopted ASU 2022-02, “Financial Instruments-Credit Losses (Topic 326): Troubled Debt
Restructurings (“TDR”) and Vintage Disclosures.” The ASU eliminates the TDR recognition and measurement
guidance, enhances existing disclosure requirements and introduces new requirements related to certain
modifications of receivables made to borrowers experiencing financial difficulty. The adoption of this ASU did
not have a material impact on our consolidated financial statements.
Adoption of Other ASUs
In July 2023, the FASB issued ASU 2023-03, “Presentation of Financial Statements (Topic 205), Income
Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480),
Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs
Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF
Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of
Regulation S-X: Income or Loss Applicable to Common Stock.” This ASU became effective for us once the
addition to the FASB Codification was made available in July 2023. This ASU amends or supersedes various
SEC paragraphs within the applicable codification to conform to past SEC staff announcements. This ASU does
not provide any new guidance. The adoption of this ASU did not have any impact on our consolidated
financial statements.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-04, "Debt—Debt with Conversion and Other Options (Subtopic
470-20): Induced Conversions of Convertible Debt Instruments." This ASU clarifies the requirements for
determining whether certain settlements of convertible debt instruments should be accounted for as induced
conversions rather than as debt extinguishments. This standard is effective for the annual period of fiscal 2026,
and early adoption is permitted. As of December 31, 2024, we do not hold convertible debt instruments and do
not expect this ASU will have any impact on our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses." This ASU
requires additional footnote disclosure of the details of certain income statement expense line items as well as
additional disclosure about selling expenses. This standard is effective for the annual period of fiscal 2027, and
early adoption is permitted. The guidance is to be applied prospectively, with the option for retrospective
application. We are currently evaluating the impact the adoption of this standard will have on our disclosures.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax
Disclosures.” This ASU requires that public business entities must annually (1) disclose specific categories in the
rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative
threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed
by multiplying pretax income or loss by the applicable statutory income tax rate). This ASU will become
effective for us in the annual period of fiscal 2025 and early adoption is permitted. We have chosen not to early
adopt this ASU and are currently evaluating its impact on our consolidated financial statements, including our
annual disclosure within our Income Taxes footnote.
Appendix B
B-39
2024 ANNUAL REPORT
2025 PROXY STATEMENT
In December 2023, the FASB issued ASU 2023-08, “Intangibles—Goodwill and Other—Crypto Assets (Subtopic
350-60): Accounting for and Disclosure of Crypto Assets.” This ASU is intended to improve the accounting for
certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period
with changes in fair value recognized in net income. The amendments also improve the information provided to
investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual
sale restrictions, and changes during the reporting period. This ASU will become effective for us in the first
quarter of fiscal 2025 and early adoption is permitted. As of December 31, 2024, we do not hold crypto assets
and do not expect this ASU to have any impact on our consolidated financial statements.
In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in
Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU incorporates certain SEC
disclosure requirements into the FASB Codification. The amendments in the ASU are expected to clarify or
improve disclosure and presentation requirements of a variety of FASB Codification topics, allow users to more
easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously
subject to the requirements, and align the requirements in the FASB Codification with the SEC’s regulations. This
ASU will become effective for each amendment on the effective date of the SEC's corresponding disclosure rule
changes. As of December 31, 2024, we do not expect this ASU to have any impact on our consolidated
financial statements.
In August 2023, the FASB issued ASU 2023-05, “Business Combinations – Joint Venture Formations (Subtopic
805-60): Recognition and Initial Measurement.” This ASU applies to the formation of entities that meet the
definition of a joint venture (or a corporate joint venture). The amendments in the ASU require that a joint
venture apply a new basis of accounting upon formation. This ASU will become effective for us in the first
quarter of fiscal 2025 and early adoption is permitted. As of December 31, 2024, we do not expect this ASU to
have any impact on our consolidated financial statements.
Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses
Latin American Business
On August 1, 2022, affiliates of Level 3 Parent, LLC, an indirect wholly-owned subsidiary of Lumen Technologies,
Inc., sold Lumen’s Latin American business pursuant to a definitive agreement dated July 25, 2021, to a fund
advised by Stonepeak Partners LP for pre-tax cash proceeds of approximately $2.7 billion.
For the year ended December 31, 2022, we recorded a $597 million net pre-tax gain on disposal associated with
the sale of our Latin American business. This gain is reflected as operating income within the consolidated
statements of operations.
In connection with the sale, we entered into a transition services agreement under which we provide the
purchaser various support services. In addition, Lumen and the purchaser entered into commercial agreements
whereby they provide each other various network and other commercial services. In addition, we agreed to
indemnify the purchaser for certain matters for which future cash payments by Lumen could be required. At the
time of sale, Lumen estimated the fair value of these indemnifications to be $86 million, which was included in
other long-term liabilities in our consolidated balance sheet and reduced our gain on the sale accordingly. See
Note 14—Fair Value of Financial Instruments for detail related to the carrying value and fair value of these
indemnifications as of December 31, 2024 and 2023.
The Latin American business was included in our continuing operations and classified as assets and liabilities
held for sale on our consolidated balance sheets through the closing of the transaction on August 1, 2022. As a
result of closing the transaction, we derecognized net assets of $1.9 billion, primarily made up of (i) property,
plant and equipment, net of accumulated depreciation, of $1.7 billion, (ii) goodwill of $245 million, (iii) other
intangible assets, net of accumulated amortization, of $140 million, and (iv) deferred income tax liabilities, net, of
$154 million. In addition, we reclassified $112 million of realized loss on foreign currency translation, net of tax, to
partially offset the gain on sale of our Latin American business.
Portion of ILEC Business
On October 3, 2022, we and certain of our affiliates sold the portion of our ILEC business primarily conducted
within 20 Midwestern and Southeastern states to affiliates of funds advised by Apollo Global Management, Inc.
In exchange, we received $7.5 billion of consideration, which was reduced by approximately $0.4 billion of
closing adjustments and partially paid through purchaser's assumption of approximately $1.5 billion of our
long-term consolidated indebtedness, resulting in pre-tax cash proceeds of approximately $5.6 billion. We
retained the remainder of our ILEC business, which is conducted in 17 states, primarily in the Western
United States.
Appendix B
B-40
For the year ended December 31, 2022, we recorded a $176 million net pre-tax gain on disposal associated
with the sale of our ILEC business. This gain is reflected as operating income within the consolidated statements
of operations.
In connection with the sale, we entered into a transition services agreement under which we provide the
purchaser various support services. In addition, Lumen and the purchaser entered into commercial agreements
whereby they provide each other various network and other commercial services. Under these agreements, we
committed to ordering services from the purchaser for which we expect to pay approximately $373 million over
a period of three years and the purchaser has committed to ordering services from us for which we expect to
receive approximately $67 million over a period of three years. We indemnified the purchaser for certain
matters for which, at the time of closing, future cash payments by Lumen were expected. Lumen had estimated
the fair value of these indemnifications to be $89 million, which was included in other current liabilities in our
consolidated balance sheet as of December 31, 2022, and increased our income tax expense accordingly as of
December 31, 2022. As of the first quarter of 2023, the full $89 million payment had been made.
The ILEC business was included in our continuing operations and classified as assets and liabilities held for sale
on our consolidated balance sheets through the closing of the transaction on October 3, 2022. As a result of
closing the transaction, we derecognized net assets of $4.8 billion, primarily made up of (i) property, plant and
equipment, net of accumulated depreciation, of $3.6 billion, (ii) goodwill of $2.6 billion and (iii) long-term debt,
net of discounts, of $1.4 billion. In addition, we reclassified $403 million of net actuarial loss and prior service
credit related to the Lumen Pension Plan, net of tax, conveyed to the purchaser to partially offset the gain on
the sale of our ILEC business.
EMEA Business
On November 1, 2023, affiliates of Level 3 Parent, LLC, sold Lumen's operations in Europe, the Middle East and
Africa ("EMEA") to Colt Technology Services Group Limited, a portfolio company of Fidelity Investments, for
pre-tax cash proceeds of $1.7 billion after certain closing adjustments and transaction costs. This consideration
is further subject to other post-closing adjustments and indemnities set forth in the purchase agreement, as
amended and supplemented to date. In connection with the sale, we entered into a transition services
agreement under which we provide the purchaser various support services. In addition, Lumen and the
purchaser entered into commercial agreements whereby they provide each other various network and other
commercial services.
The classification of the EMEA business as held for sale was considered an event or change in circumstance
which requires an assessment of the goodwill of the disposal group for impairment each reporting period until
disposal. We performed a pre-classification and post-classification goodwill impairment test of the disposal
group as described further in Note 3—Goodwill, Customer Relationships and Other Intangible Assets. As a result
of our impairment tests, we determined the EMEA business disposal group was impaired, resulting in a non-
cash, non-tax-deductible goodwill impairment charge of $43 million in the fourth quarter of 2022. We evaluated
the recoverability of the carrying value of the assets and liabilities held for sale relative to the agreed upon sales
price, adjusted for costs to sell, and recorded an estimated loss on disposal of $660 million during the year
ended December 31, 2022 in the consolidated statement of operations and a valuation allowance included in
assets held for sale on the consolidated balance sheet as of December 31, 2022. For the year ended December
31, 2023, we recorded a $102 million net loss on disposal associated with the sale of our EMEA business. This
loss is reflected as operating expense within the consolidated statements of operations.
The EMEA business was included in our continuing operations and classified as assets and liabilities held for sale
on our consolidated balance sheets through the closing of the transaction on November 1, 2023. As a result of
closing the transaction, we derecognized net assets of $2.1 billion, primarily made up of (i) property, plant and
equipment, net of accumulated depreciation, of $2.0 billion and (ii) customer relationships and other intangible
assets, net of accumulated amortization of $107 million. In addition, we reclassified $382 million of realized loss
on foreign currency translation, net of tax, with an offset to the valuation allowance and loss on sale of the
EMEA business.
We do not believe these divestiture transactions represented a strategic shift for Lumen. Therefore, the divested
businesses discussed above did not meet the criteria to be classified as discontinued operations. As a result, we
continued to report our operating results for the Latin American, ILEC and EMEA businesses in our consolidated
operating results through their respective disposal dates of August 1, 2022, October 3, 2022, and November 1,
2023, respectively.
Appendix B
B-41
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Note 3—Goodwill, Customer Relationships and Other Intangible Assets
Goodwill, customer relationships and other intangible assets consisted of the following:
As of December 31,
2024
2023
(Dollars in millions)
Goodwill(1)
$ 1,964
1,964
Indefinite-lived intangible assets
$
9
9
Other intangible assets subject to amortization:
Customer relationships(2), less accumulated amortization of $4,504 and $4,248
3,196
3,811
Capitalized software, less accumulated amortization of $4,067 and $4,045(3)
1,529
1,564
Patents and other, less accumulated amortization of $86 and $72(3)
72
86
Total other intangible assets, net
$ 4,806
5,470
(1)
We recorded cumulative non-cash, non-tax-deductible goodwill impairment charges of $10.7 billion during the year ended
December 31, 2023.
(2)
For the year ended December 31, 2023, customer relationships decreased $121 million in conjunction with the sale of select CDN customer
contracts, in the fourth quarter of 2023 that resulted in a net loss of $73 million included in selling, general and administrative expenses in
our consolidated statements of operations.
(3)
Certain capitalized software with a gross carrying value of $352 million and $183 million and trade names with a gross carrying value of
$153 million and $130 million became fully amortized during 2023 and 2022, respectively, and were retired during the first quarter of 2024
and 2023, respectively.
As of December 31, 2024 and December 31, 2023, the gross carrying amount of goodwill, customer relationships,
indefinite-lived and other intangible assets was $15.4 billion and $15.8 billion, respectively.
Our goodwill was derived from numerous acquisitions where the purchase price exceeded the fair value of the
net assets acquired.
We are required to assess our goodwill and other indefinite-lived intangible assets for impairment annually, or,
under certain circumstances, more frequently, such as when events or changes in circumstances indicate there
may be impairment. Our annual impairment assessment date for indefinite-lived intangible assets other than
goodwill is December 31. We completed our qualitative assessment of our indefinite-lived intangible assets other
than goodwill as of December 31, 2024, 2023 and 2022 and concluded it is more likely than not that our
indefinite-lived intangible assets are not impaired; thus, no impairment charge for these assets was recorded in
2024, 2023 or 2022. We are required to write down the value of goodwill only when our assessment determines
the carrying value of equity of any of our reporting units exceeds its fair value. Our annual impairment
assessment date for goodwill is October 31, at which date we assess our reporting units.
We report our results within two segments: Business and Mass Markets. See Note 17—Segment Information for
more information on these segments and the underlying sales channels. As of December 31, 2024, we had three
reporting units for goodwill impairment testing, which are (i) Mass Markets, (ii) North America Business ("NA
Business") and (iii) Asia Pacific ("APAC") region. Prior to the divestiture of the EMEA business in November
2023, the EMEA region was also a reporting unit and was tested for impairment in the pre-classification test as
of October 31, 2022, discussed below. Similarly, prior to its August 2022 divestiture, the LATAM region was also
a reporting unit.
Our reporting units are not discrete legal entities with discrete full financial statements. Our assets and liabilities
are deployed in and relate to the operations of multiple reporting units. When we assess goodwill for
impairment, we compare the estimated fair value of each reporting unit's equity to the carrying value of equity
that we assign to the reporting unit. If the estimated fair value of the reporting unit is greater than the carrying
value, we conclude that no impairment exists. If the estimated fair value of the reporting unit is less than the
carrying value, we record a non-cash impairment charge equal to the excess amount. Depending on the facts
and circumstances, we typically estimate the fair value of our reporting units by considering either or both of
(i) a discounted cash flow method, which is based on the present value of projected cash flows over a discrete
projection period and a terminal value, which is based on the expected normalized cash flows of the reporting
units following the discrete projection period, and (ii) a market approach, which includes the use of market
multiples of publicly-traded companies whose services are comparable to ours.
Appendix B
B-42
2024 Goodwill Impairment Analysis
At October 31, 2024, we performed our annual impairment analysis of the goodwill in our Mass Markets
reporting unit by using a qualitative assessment to determine whether it was more likely than not that the fair
value of the reporting unit was less than its carrying value. Factors considered in the qualitative assessment
included, among other things, macroeconomic conditions, industry and market conditions, financial performance
of the reporting unit and other relevant entity and reporting unit considerations. We concluded the estimated
fair value of our reporting unit was greater than our carrying value of equity as of our testing date. Therefore,
we concluded no impairment existed as of our annual assessment date in the fourth quarter of 2024.
2023 Goodwill Impairment Analyses
At October 31, 2023, we performed our annual impairment analysis of the goodwill of our three above-
mentioned reporting units. Given the continued erosion in our market capitalization, we determined our
quantitative impairment analysis would estimate the fair value of our reporting units using only the market
approach. Applying this approach, we utilized company comparisons and analyst reports within the
telecommunications industry which supported a range of fair values derived from annualized revenue and
earnings before interest, tax, depreciation and amortization ("EBITDA") multiples between 1.5x and 3.5x and
4.8x and 8.4x, respectively. In determining the fair value of each reporting unit, we used revenue and EBITDA
multiples below these comparable market multiples. We reconciled the estimated fair values of the reporting
units to our market capitalization as of October 31, 2023 and concluded that the indicated control premium of
approximately 2% was reasonable based on recent market transactions. Based on our assessments performed
with respect to the reporting units as described above, we concluded the estimated fair value of certain of our
reporting units was less than their carrying value of equity. As a result, we recorded a non-cash, non-tax-
deductible goodwill impairment charge of $1.9 billion on October 31, 2023.
During the second quarter of 2023, we determined circumstances existed indicating it was more likely than not
that the carrying value of our reporting units exceed their fair value. Given the continued erosion in our market
capitalization, we determined our quantitative impairment analysis would estimate the fair value of our reporting
units using only the market approach. Applying this approach, we utilized company comparisons and analyst
reports within the telecommunications industry which supported a range of fair values derived from annualized
revenue and EBITDA multiples between 1.5x and 4.3x and 4.6x and 10.5x, respectively. In determining the fair
value of each reporting unit, we used revenue and EBITDA multiples below these comparable market multiples.
The estimated fair values of the reporting units determined in connection with our impairment analysis in the
second quarter of 2023 resulted in no control premium, which we determined to be reasonable based on our
market capitalization relative to recent transactions. For the three months ended June 30, 2023, based on our
assessments performed with respect to the reporting units as described above, we concluded the estimated
fair value of certain of our reporting units was less than their carrying value of equity. As a result, we recorded
a non-cash, non-tax-deductible goodwill impairment charge of $8.8 billion for the three months ended
June 30, 2023.
The market approach that we used in the June 30, 2023 and October 31, 2023 tests incorporated estimates and
assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and
the achievement of certain strategic initiatives. In developing the market multiples applicable to each reporting
unit, we considered observed trends of our industry participants. Our assessment included many factors that
required significant judgment. Alternative interpretations of these factors could have resulted in different
conclusions regarding the size of our impairments.
2022 Goodwill Impairment Analyses
As of October 31, 2022, we estimated the fair value of our four above-mentioned reporting units by considering
both a market approach and a discounted cash flow method. We discounted the projected cash flows for our
Mass Markets, NA Business, EMEA and APAC reporting units using a rate that represented their weighted
average cost of capital as of the assessment date, which comprised an after-tax cost of debt and a cost of
equity, as disclosed in the table below. We utilized company comparisons and analyst reports within the
telecommunications industry which at the time of assessment supported a range of fair values derived from
annualized revenue and EBITDA multiples between 1.8x and 4.6x and 4.7x and 10.8x, respectively. We selected
a revenue and EBITDA multiple for each of our reporting units, resulting in an overall company revenue and
EBITDA multiple of 2.5x and 5.5x, respectively. We also reconciled the estimated fair values of the reporting
units to our market capitalization as of October 31, 2022 and concluded that the indicated control premium
Appendix B
B-43
2024 ANNUAL REPORT
2025 PROXY STATEMENT
of approximately 59% was reasonable based on recent market transactions, including our divestitures, and
our depressed stock price. Due to the depressed trading price of our stock at October 31, 2022, and our
assessment performed with respect to the reporting units described above, we concluded that the estimated
fair value of our NA Business reporting unit was less than our carrying value of equity for that reporting unit,
resulting in a non-cash, non-tax-deductible goodwill impairment charge of approximately $3.2 billion. See the
goodwill rollforward by segment table below for the impairment charges by segment. As of October 31, 2022,
the estimated fair value of equity exceeded the carrying value of equity for our Mass Markets, EMEA and
APAC reporting units by 97%, 171% and 101%, respectively. Based on our assessments performed, we concluded
that the goodwill assigned to our Mass Markets, EMEA and APAC reporting units was not impaired at
October 31, 2022.
As of October 31, 2022
Reporting Units
Mass Markets
NA Business
EMEA
APAC
Weighted average cost of capital
9.4%
9.4%
9.8%
11.3%
After-tax cost of debt
4.7%
4.7%
5.1%
6.3%
Cost of equity
14.0%
14.0%
14.4%
16.2%
Our classification of the EMEA Business as being held for sale as described in Note 2—Divestitures of the Latin
American, ILEC and EMEA Businesses was considered an event or change in circumstance which required an
assessment of our goodwill for impairment as of October 31, 2022. We performed a pre-announcement goodwill
impairment test described above to determine whether there was an impairment prior to the classification of
these assets as held for sale and to determine the November 2, 2022, fair values to be utilized for goodwill
allocation regarding the disposal group to be classified as assets held for sale. We also performed a post-
announcement goodwill impairment test using our estimated post-divestiture cash flows and carrying value of
equity to evaluate whether the fair value of our NA Business, Mass Markets and APAC reporting units that will
remain following the divestiture exceeds the carrying value of the equity of such reporting units after
classification of assets held for sale. We concluded no impairment existed regarding our post-divestiture
reporting units.
Separate from the annual, pre-announcement and post-announcement goodwill assessments discussed above,
we performed an assessment of our EMEA business disposal group for impairment using the purchase price
compared to the carrying value of the EMEA business net assets. As a result, the EMEA business disposal group
was impaired, resulting in a non-cash, non-tax-deductible goodwill impairment charge of $43 million. See
Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses for additional information regarding the
purchase price, carrying value, and impairment for goodwill of the EMEA business. See the goodwill rollforward
by segment table below for the impairment charges by segment.
The following table shows the rollforward of goodwill assigned to our reportable segments from December 31,
2022 through December 31, 2024.
Business
Mass Markets
Total
(Dollars in millions)
As of December 31, 2022(1)
$ 7,906
4,751
12,657
Impairment
(7,906)
(2,787)
(10,693)
As of December 31, 2023(1)
—
1,964
1,964
As of December 31, 2024(1)
$
—
1,964
1,964
(1)
Goodwill at December 31, 2024, December 31, 2023 and December 31, 2022 is net of accumulated impairment losses of $21.7 billion,
$21.7 billion and $11.0 billion, respectively.
For additional information on our segments, see Note 17—Segment Information.
As of December 31, 2024, the weighted average remaining useful lives of our finite-lived intangible assets were
approximately five years in total, approximately six years for customer relationships and four years for
capitalized software.
Appendix B
B-44
Total amortization expense for finite-lived intangible assets for each of the years ended December 31, 2024,
2023 and 2022 was $1.1 billion.
We estimate that future total amortization expense for finite-lived intangible assets will be as follows:
(Dollars in millions)
2025
$ 926
2026
875
2027
788
2028
717
2029
488
2030 and thereafter
1,003
Total finite-lived intangible assets future amortization expense
$ 4,797
Note 4—Revenue Recognition
Product and Service Categories
We categorize our products and services revenue among the following categories for the Business segment:
• Grow, which includes existing and emerging products and services in which we are significantly investing,
including our dark fiber and conduit, Edge Cloud, IP, managed security, software-defined wide area networks
("SD WAN"), Unified Communications and Collaboration ("UC&C") and wavelengths services;
• Nurture, which includes our more mature offerings, including ethernet and VPN data networks services;
• Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing voice,
and private line services; and
• Other, which includes equipment sales, managed and professional service solutions and other services.
We categorize our products and services revenue among the following categories for the Mass
Markets segment:
• Fiber Broadband, under which we provide high speed broadband services to residential and small business
customers utilizing our fiber-based network infrastructure;
• Other Broadband, under which we provide primarily lower speed broadband services to residential and small
business customers utilizing our copper-based network infrastructure; and
• Voice and Other, under which we derive revenues from (i) providing local and long-distance voice services,
professional services, and other ancillary services, and (ii) federal broadband and state support programs.
Reconciliation of Total Revenue to Revenue from Contracts with Customers
The following tables provide total revenue by segment, sales channel and product category. They also provide
the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"),
but is instead governed by other accounting standards. The amounts in the tables below include revenue for the
Latin American, ILEC and EMEA businesses prior to their sales on August 1, 2022, October 3, 2022 and
November 1, 2023, respectively:
Appendix B
B-45
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Year Ended December 31, 2024
Total Revenue
Adjustments for
Non-ASC 606
Revenue (1)
Total Revenue
from Contracts
with Customers
(Dollars in millions)
Business Segment by Sales Channel and Product Category
Large Enterprise
Grow
$ 1,733
(256)
1,477
Nurture
1,015
—
1,015
Harvest
441
—
441
Other
190
(1)
189
Total Large Enterprise Revenue
3,379
(257)
3,122
Mid-Market Enterprise
Grow
841
(25)
816
Nurture
690
—
690
Harvest
320
(4)
316
Other
36
(5)
31
Total Mid-Market Enterprise Revenue
1,887
(34)
1,853
Public Sector
Grow
596
(85)
511
Nurture
355
—
355
Harvest
389
(4)
385
Other
509
—
509
Total Public Sector Revenue
1,849
(89)
1,760
Wholesale
Grow
1,048
(287)
761
Nurture
740
(19)
721
Harvest
1,079
(140)
939
Other
8
—
8
Total Wholesale Revenue
2,875
(446)
2,429
International and Other
Grow
155
(4)
151
Nurture
161
—
161
Harvest
42
—
42
Other
15
—
15
Total International and Other
373
(4)
369
Business Segment by Product Category
Grow
4,373
(657)
3,716
Nurture
2,961
(19)
2,942
Harvest
2,271
(148)
2,123
Other
758
(6)
752
Total Business Segment Revenue
10,363
(830)
9,533
Mass Markets Segment by Product Category
Fiber Broadband
736
(13)
723
Other Broadband
1,167
(105)
1,062
Voice and Other
842
(31)
811
Total Mass Markets Revenue
2,745
(149)
2,596
Total Revenue
$ 13,108
(979)
12,129
Timing of revenue
Goods and services transferred at a point in time
$
136
Services performed over time
11,993
Total revenue from contracts with customers
$ 12,129
Appendix B
B-46
Year Ended December 31, 2023
Total Revenue
Adjustments for
Non-ASC 606
Revenue(1)
Total Revenue
from Contracts
with Customers
(Dollars in millions)
Business Segment by Sales Channel and Product Category
Large Enterprise
Grow
$ 1,709
(179)
1,530
Nurture
1,172
—
1,172
Harvest
537
—
537
Other
200
(5)
195
Total Large Enterprise Revenue
3,618
(184)
3,434
Mid-Market Enterprise
Grow
807
(28)
779
Nurture
829
—
829
Harvest
372
(4)
368
Other
36
(4)
32
Total Mid-Market Enterprise Revenue
2,044
(36)
2,008
Public Sector
Grow
473
(81)
392
Nurture
399
—
399
Harvest
383
(1)
382
Other
534
—
534
Total Public Sector Revenue
1,789
(82)
1,707
Wholesale
Grow
1,052
(251)
801
Nurture
827
(25)
802
Harvest
1,261
(165)
1,096
Other
12
—
12
Total Wholesale Revenue
3,152
(441)
2,711
International and Other
Grow
453
(115)
338
Nurture
266
—
266
Harvest
126
—
126
Other
135
—
135
Total International and Other
980
(115)
865
Business Segment by Product Category
Grow
4,494
(654)
3,840
Nurture
3,493
(25)
3,468
Harvest
2,679
(170)
2,509
Other
917
(9)
908
Total Business Segment Revenue
11,583
(858)
10,725
Mass Markets Segment by Product Category
Fiber Broadband
637
(16)
621
Other Broadband
1,395
(126)
1,269
Voice and Other
942
(36)
906
Total Mass Markets Revenue
2,974
(178)
2,796
Total Revenue
$ 14,557
(1,036)
13,521
Timing of revenue
Goods and services transferred at a point in time
$
178
Services performed over time
13,343
Total revenue from contracts with customers
$ 13,521
Appendix B
B-47
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Year Ended December 31, 2022
Total Revenue
Adjustments for
Non-ASC 606
Revenue (1)
Total Revenue
from Contracts
with Customers
(Dollars in millions)
Business Segment by Sales Channel and Product Category
Large Enterprise
Grow
$ 1,653
(199)
1,454
Nurture
1,274
—
1,274
Harvest
690
(2)
688
Other
210
(7)
203
Total Large Enterprise Revenue
3,827
(208)
3,619
Mid-Market Enterprise
Grow
768
(32)
736
Nurture
949
—
949
Harvest
494
(6)
488
Other
31
(2)
29
Total Mid-Market Enterprise Revenue
2,242
(40)
2,202
Public Sector
Grow
445
(79)
366
Nurture
492
—
492
Harvest
466
(3)
463
Other
460
(2)
458
Total Public Sector Revenue
1,863
(84)
1,779
Wholesale
Grow
991
(271)
720
Nurture
1,012
(23)
989
Harvest
1,551
(215)
1,336
Other
51
—
51
Total Wholesale Revenue
3,605
(509)
3,096
International and Other
Grow
761
(176)
585
Nurture
401
—
401
Harvest
210
—
210
Other
190
—
190
Total International and Other
1,562
(176)
1,386
Business Segment by Product Category
Grow
4,618
(757)
3,861
Nurture
4,128
(23)
4,105
Harvest
3,411
(226)
3,185
Other
942
(11)
931
Total Business Segment Revenue
13,099
(1,017)
12,082
Mass Markets Segment by Product Category
Fiber Broadband
604
(18)
586
Other Broadband
2,163
(200)
1,963
Voice and Other
1,612
(135)
1,477
Total Mass Markets Revenue
4,379
(353)
4,026
Total Revenue
$ 17,478
(1,370)
16,108
Timing of revenue
Goods and services transferred at a point in time
$
154
Services performed over time
15,954
Total revenue from contracts with customers
$ 16,108
(1)
Includes regulatory revenue and lease revenue not within the scope of ASC 606.
Appendix B
B-48
Customer Receivables and Contract Balances
The following table provides balances of customer receivables, contract assets and contract liabilities, net of
amounts classified as held for sale:
As of December 31,
2024
2023
(Dollars in millions)
Customer receivables, less allowance of $50 and $60
$ 1,193
1,256
Contract assets
19
29
Contract liabilities
733
698
Contract liabilities are consideration we have received from our customers or billed in advance of providing
goods or services promised in the future. We defer recognizing this consideration as revenue until we have
satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed
one month in advance and installation and maintenance charges that are deferred and recognized over the
actual or expected contract term, which typically ranges from one to five years depending on the service.
Contract liabilities are included within Deferred revenue on our consolidated balance sheets. During the years
ended December 31, 2024 and December 31, 2023, we recognized $443 million and $434 million, respectively, of
revenue that was included in contract liabilities of $698 million and $715 million as of January 1, 2024 and 2023,
respectively, including contract liabilities that were classified as held for sale.
Performance Obligations
As of December 31, 2024, we expect to recognize approximately $6.4 billion of revenue in the future related to
performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As
of December 31, 2024, the transaction price related to unsatisfied performance obligation that are expected to
be recognized in 2025, 2026 and thereafter was $2.9 billion, $1.7 billion and $1.8 billion, respectively.
These amounts exclude (i) the value of unsatisfied performance obligations for contracts for which we
recognize revenue at the amount to which we have the right to invoice for services performed (for example,
uncommitted usage or non-recurring charges associated with professional or technical services to be
completed) and (ii) contracts that are classified as leasing arrangements or government assistance that are not
subject to ASC 606.
Contract Costs
The following tables provide changes in our contract acquisition costs and fulfillment costs:
Year Ended December 31, 2024
Acquisition Costs
Fulfillment Costs
(Dollars in millions)
Beginning of period balance
$ 182
184
Costs incurred
151
176
Amortization
(130)
(138)
End of period balance
$ 203
222
Year Ended December 31, 2023
Acquisition Costs
Fulfillment Costs
(Dollars in millions)
Beginning of period balance
$ 202
192
Costs incurred
136
157
Amortization
(152)
(140)
Classified as held for sale
(4)
(25)
End of period balance
$ 182
184
Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs
include third party and internal costs associated with the provision, installation and activation of services to
customers, including labor and materials consumed for these activities.
Appendix B
B-49
2024 ANNUAL REPORT
2025 PROXY STATEMENT
We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis
over the average contract life of approximately 50 months for Mass Markets customers and 35 months for
Business customers. We include amortized fulfillment costs in Cost of services and products and amortized
acquisition costs in Selling, general and administrative in our consolidated statements of operations. We include
the amount of these deferred costs that are anticipated to be amortized in the next 12 months in Other under
Current Assets on our consolidated balance sheets. We include the amount of deferred costs expected to be
amortized beyond the next 12 months in Other under Deferred Credits and Other Liabilities on our consolidated
balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.
Governmental Funding
Lumen participates in various U.S. federal and state programs under which government support payments are
received to offset costs associated with providing services in targeted locations such as unserved or
underserved high-cost or rural areas, or for certain types of customers, including non-profit organizations,
educational institutions and local governmental bodies. In certain instances, support payments are conditioned
on specified infrastructure buildouts by milestone deadlines or provision of services at specified locations and
speed requirements. Commitments may be made annually, on a multi-year basis ranging from one to 10 years or
be on-going subject to periodic change or termination. Consistent with customary practice and as referenced in
ASC 832 Government Assistance, Lumen applies a grant model of accounting by which it accounts for these
transactions as non-ASC 606 revenue over the periods in which the costs for which the funding is intended to
compensate are incurred. This non-ASC 606 revenue is included in operating revenue in our consolidated
statements of operations. Corresponding receivables are recorded when services have been provided to the
customers and costs incurred, but the cash has not been received. These amounts are included in our accounts
receivable, less allowance in our consolidated balance sheets. Certain programs are subject to audits of
compliance with program commitments and, subject to the outcomes of those assessments, Lumen may be
required to reimburse the government entity for cash previously received, or, in some cases, pay a penalty.
Lumen evaluates each program and establishes a liability under the principles of ASC 450 if it is probable
support payments will be recaptured or a penalty will be imposed.
For the years ended December 31, 2024 and 2023, Lumen recorded non-customer revenue of $83 million and
$85 million, respectively, under government assistance programs, of which 18% and 17%, respectively, was
associated with state universal service fund support programs.
Between 2015 and 2021, we received approximately $500 million annually through the Federal Communications
Commission (the "FCC")'s Connect America Fund II ("CAF II"), a federal multi-year recurring subsidy program
for more extensive broadband deployment in price-cap ILEC territories. For this program, which ended on
December 31, 2021, we were required to meet certain specified infrastructure buildout requirements in 33 states
by the end of 2021, which required substantial capital expenditures. In the first quarter of 2022, we recognized
$59 million of previously deferred revenue related to the conclusion of the CAF II program based upon our final
buildout and filing submissions. The government has the right to audit our compliance with the CAF II program
and the ultimate outcome of any remaining examinations is unknown, but could result in a liability to us in
excess of our accruals established for these matters.
In early 2020, the FCC created the Rural Digital Opportunity Fund (the “RDOF”) program, a federal support
program designed to fund broadband deployment in rural America. For the first phase of this program, RDOF
Phase I, the FCC ultimately awarded $6.4 billion support payments to be paid in equal monthly installments over
10 years. We were awarded RDOF funding in several of the states in which we operate and began receiving
monthly support payments during the second quarter of 2022. We received approximately $17 million in annual
RDOF Phase I support payments for the years ended December 31, 2023 and 2022. In the third quarter of 2024,
we relinquished rights to develop certain RDOF census blocks in four states, which resulted in (i) a reduction of
the anticipated RDOF Phase I support payments to approximately $16 million for the year ending December 31,
2024 and $15 million each year thereafter through the program period and (ii) an expectation of payment to the
federal government, which we anticipate will be approximately $10 million.
Lumen participates in multiple state sponsored programs for broadband deployment in unserved and
underserved areas for which the states have state universal service funds sourced from fees levied on
telecommunications providers and passed on to consumers. During the years ending December 31, 2024
and 2023, Lumen participated in these types of programs primarily in the states of Nebraska, New Mexico
and Minnesota.
Appendix B
B-50
Note 5—Leases
We primarily lease various office facilities, colocation facilities, equipment and transmission capacity to or from
third parties. Leases with an initial term of 12 months or less are not recorded on our consolidated balance
sheets; we recognize lease expense for these leases on a straight-line basis over the lease term.
We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of
a finance or operating lease at the commencement date. Lease-related assets, or right-of-use assets, are
recognized at the lease commencement date at amounts equal to the respective lease liabilities. Lease-related
liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted
using our incremental borrowing rates. As part of the present value calculation for the lease liabilities, we use an
incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental
borrowing rates used for lease accounting are based on our unsecured rates, adjusted to approximate the rates
at which we could borrow on a collateralized basis over a term similar to the recognized lease term. We apply
the incremental borrowing rates to lease components using a portfolio approach based upon the length of the
lease term and the reporting entity in which the lease resides. Operating lease expense is recognized on a
straight-line basis over the lease term, while variable lease payments are expensed as incurred. Operating lease
assets are included in other, net under goodwill and other assets on our consolidated balance sheets.
Noncurrent operating lease liabilities are included in other under deferred credits and other liabilities on our
consolidated balance sheets.
Some of our lease arrangements contain lease components, non-lease components (including common-area
maintenance costs) and executory costs (including real estate taxes and insurance costs). We generally account
for each component separately based on the estimated standalone price of each component. For colocation
leases, we account for the lease and non-lease components as a single lease component.
Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or
lease liabilities for renewal periods unless we determine that we are reasonably certain of renewing the lease.
Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold
improvements are limited by the expected lease term, unless there is a transfer of title or purchase option
reasonably certain to be exercised. Our lease agreements do not generally contain any material residual value
guarantees or material restrictive covenants.
Lease expense consisted of the following:
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Operating and short-term lease cost
$ 446
459
451
Finance lease cost:
Amortization of right-of-use assets
25
32
37
Interest on lease liability
11
12
15
Total finance lease cost
36
44
52
Total lease cost
$ 482
503
503
We lease various equipment, office facilities, retail outlets, switching facilities and other network sites or
components from third parties. These leases, with few exceptions, provide for renewal options and rent
escalations that are either fixed or based on the consumer price index. Any rent abatements, along with rent
escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease
term. The lease term for most leases includes the initial non-cancelable term plus any term under renewal
options that we believe are reasonably assured.
On a regular basis, we rationalize our lease footprint. When we determine that we no longer need leased space,
we may incur accelerated lease costs. Our accelerated lease costs in December 31, 2024, 2023 and 2022 were
not material.
For the years ended December 31, 2024, 2023 and 2022, our gross rental expense, including the accelerated
lease costs discussed above, was $482 million, $503 million and $503 million, respectively. We also received
sublease rental income of $25 million for each of the years ended December 31, 2024, 2023 and 2022.
Appendix B
B-51
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Supplemental consolidated balance sheet information and other information related to leases is included below:
As of December 31,
Leases (Dollars in millions)
Classification on the Balance Sheet
2024
2023
Assets
Operating lease assets
Other, net
$ 1,119
1,230
Finance lease assets
Property, plant and equipment, net of accumulated depreciation
236
260
Total leased assets
$ 1,355
1,490
Liabilities
Current
Operating
Current operating lease liabilities
$ 253
268
Finance
Current maturities of long-term debt
17
16
Noncurrent
Operating
Other
959
1,040
Finance
Long-term debt
198
215
Total lease liabilities
$ 1,427
1,539
Weighted-average remaining lease term (years)
Operating leases
7.7
8.2
Finance leases
11.4
11.3
Weighted-average discount rate
Operating leases
8.90%
7.59%
Finance leases
4.40%
4.98%
Supplemental consolidated cash flow statement information related to leases is included below:
Years Ended December 31,
2024
2023
(Dollars in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases
$ 427
461
Operating cash flows for finance leases
11
12
Financing cash flows for finance leases
17
25
Supplemental lease cash flow disclosures:
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities
$ 191
143
Right-of-use assets obtained in exchange for new finance lease liabilities
2
10
As of December 31, 2024, maturities of lease liabilities were as follows:
Operating Leases
Finance Leases
(Dollars in millions)
2025
$ 340
27
2026
252
28
2027
204
28
2028
167
28
2029
131
26
Thereafter
592
140
Total lease payments
1,686
277
Less: interest
(474)
(62)
Total
1,212
215
Less: current portion
(253)
(17)
Long-term portion
$ 959
198
As of December 31, 2024, we had no material operating or finance leases that had not yet commenced.
Appendix B
B-52
Operating Lease Revenue
We lease various dark fiber and conduit, office facilities, colocation facilities, switching facilities, other network
sites and service equipment to third parties under operating leases. Lease and sublease income are included in
operating revenue in the consolidated statements of operations. See "Revenue Recognition" in Note 1—
Background and Summary of Significant Accounting Policies.
For the years ended December 31, 2024, 2023 and 2022, our gross rental income was approximately $1.0 billion,
$1.0 billion and $1.2 billion, respectively, which represents 7% of our operating revenue for each of the years
ended December 31, 2024, 2023 and 2022.
Note 6—Credit Losses on Financial Instruments
To assess our expected credit losses on financial instruments, we aggregate financial assets with similar risk
characteristics to monitor their credit quality or deterioration over the life of such assets. We periodically
monitor certain risk characteristics within our aggregated financial assets and revise their composition
accordingly, to the extent internal and external risk factors change. We separately evaluate financial assets that
do not share risk characteristics with other financial assets. Our financial assets measured at amortized cost
primarily consist of accounts receivable.
We use a loss rate method to estimate our allowance for credit losses. Our determination of the current
expected credit loss rate begins with our review of historical loss experience as a percentage of accounts
receivable. We measure our historical loss period based on the average days to recognize accounts receivable
as credit losses. When asset specific characteristics and current conditions change from those in the historical
period, due to changes in our credit and collections strategy, certain classes of aged balances, or credit loss and
recovery policies, we perform a qualitative and quantitative assessment to adjust our historical loss rate. We use
regression analysis to develop an expected loss rate using historical experience and economic data over a
forecast period. We measure our forecast period based on the average days to collect payment on billed
accounts receivable. To determine our current allowance for credit losses, we combine the historical and
expected credit loss rates and apply them to our period end accounts receivable.
If there is an unexpected deterioration of a customer's financial condition or an unexpected change in economic
conditions, including macroeconomic events, we assess the need to adjust the allowance for credit losses. Any
such resulting adjustments would affect earnings in the period that adjustments are made.
The assessment of the correlation between historical observed default rates, current conditions and forecasted
economic conditions requires judgment. Alternative interpretations of these factors could have resulted in
different conclusions regarding our allowance for credit losses. The amount of credit loss is sensitive to changes
in circumstances and forecasted economic conditions. Our historical credit loss experience, current conditions
and forecast of economic conditions may also not be representative of the customers' actual default experience
in the future, and we may use methodologies that differ from those used by other companies.
Appendix B
B-53
2024 ANNUAL REPORT
2025 PROXY STATEMENT
The following table presents the activity of our allowance for credit losses by accounts receivable portfolio:
Business
Mass Markets
Total
(Dollars in millions)
Balance at December 31, 2021
$ 88
26
114
Provision for expected losses
25
108
133
Write-offs charged against the allowance
(61)
(114)
(175)
Recoveries collected
10
6
16
Change in allowance in assets held for sale(1)
(5)
2
(3)
Balance at December 31, 2022
57
28
85
Provision for expected losses
35
65
100
Write-offs charged against the allowance
(62)
(65)
(127)
Recoveries collected
6
3
9
Balance at December 31, 2023
36
31
67
Provision for expected losses
26
46
72
Write-offs charged against the allowance
(32)
(58)
(90)
Recoveries collected
6
4
10
Balance at December 31, 2024
$ 36
23
59
(1)
Represents changes in amounts classified as held for sale related to the divestitures of our Latin American and ILEC businesses on August 1,
2022 and October 3, 2022, respectively, and the inclusion of a $5 million allowance for credit losses classified as held for sale as of
December 31, 2022 related to the divestiture of the EMEA business in 2023. See Note 2—Divestitures of the Latin American, ILEC and
EMEA Businesses.
Note 7—Long-Term Debt and Credit Facilities
At December 31, 2024, most of our outstanding consolidated debt had been incurred by us or one of the
following three subsidiaries, each of which has borrowed funds either on a standalone basis or as part of a
separate restricted group with certain of its subsidiaries:
• Level 3 Financing, Inc. ("Level 3 Financing"), including its parent guarantor Level 3 Parent, LLC, and certain
subsidiary guarantors;
• Qwest Corporation ("Qwest"); and
• Qwest Capital Funding, Inc., including its parent guarantor, Qwest Communications International Inc.
Each of these borrowers or borrowing groups has entered into a credit agreement with certain financial
institutions or other institutional lenders or issued senior notes. Certain of these debt instruments are described
further below.
Appendix B
B-54
The following table reflects the consolidated long-term debt of Lumen Technologies, Inc. and its subsidiaries
as of the dates indicated below, including unamortized premiums (discounts) and unamortized debt
issuance costs:
As of December 31,
Interest Rates(1)
Maturities(1)
2024
2023
(Dollars in millions)
Senior Secured Debt: (2)
Lumen Technologies, Inc.
Series A Revolving Credit Facility
SOFR + 4.00%
2028
$
—
—
Series B Revolving Credit Facility
SOFR + 6.00%
2028
—
—
Term Loan A(3)
SOFR + 6.00%
2028
357
—
Term Loan B-1(4)
SOFR + 2.35%
2029
1,606
—
Term Loan B-2(4)
SOFR + 2.35%
2030
1,606
—
Term Loan B(5)
SOFR + 2.25%
2027
56
3,891
Other Facilities(6)
N/A
N/A
—
1,399
Superpriority Notes
4.125% - 10.000%
2029 - 2032
1,247
—
Former Parent Secured Notes(7)
N/A
N/A
—
1,250
Subsidiaries:
Level 3 Financing, Inc.
Term Loan B-1(8)
SOFR + 6.56%
2029
1,199
—
Term Loan B-2(8)
SOFR + 6.56%
2030
1,199
—
Former Level 3 Facility(9)
SOFR + 1.75%
2027
12
2,411
First Lien Notes(10)
10.500% - 11.000%
2029 - 2030
3,846
925
Second Lien Notes
3.875% - 10.000%
2029 - 2032
2,579
—
Former Level 3 Senior Notes(11)
N/A
N/A
—
1,500
Unsecured Senior Notes and Other Debt:
Lumen Technologies, Inc.
Senior notes(12)
4.000% - 7.650%
2025 - 2042
1,428
2,143
Subsidiaries:
Level 3 Financing, Inc.
Senior notes(13)
3.400% - 4.625%
2027 - 2029
964
3,940
Qwest Corporation
Senior notes
6.500% - 7.750%
2025 - 2057
1,973
1,986
Former Term Loan(14)
N/A
N/A
—
215
Qwest Capital Funding, Inc.
Senior notes
6.875% - 7.750%
2028 - 2031
192
192
Finance lease and other obligations
Various
Various
254
285
Unamortized discounts, net
(395)
(4)
Unamortized debt issuance costs
(217)
(145)
Total long-term debt
17,906
19,988
Less current maturities
(412)
(157)
Long-term debt, excluding current maturities
$ 17,494
19,831
N/A - Not applicable
(1)
As of December 31, 2024. All references to "SOFR" refer to the Secured Overnight Financing Rate.
(2)
As discussed further below in this Note, the debt listed under the caption “Senior Secured Debt” is either secured by assets of the issuer,
guaranteed on a secured or unsecured basis by certain affiliates of the issuer, or both. As discussed further in footnotes 12 and 13 below, we
reclassified in the table above certain notes that were guaranteed, secured, or both prior to the TSA Effective Date (as defined below) from
“secured” to “unsecured” in light of amendments that released such security interests.
(3)
Term Loan A had an interest rate of 10.573% as of December 31, 2024.
(4)
Term Loan B-1 and B-2 each had an interest rate of 7.037% as of December 31, 2024.
(5)
Term Loan B had an interest rate of 6.937% and 7.720% as of December 31, 2024 and December 31, 2023, respectively.
(6)
Reflects revolving credit facility and term loan A and A-1 debt issued under the Former Parent Facilities (as defined below), which were due
in 2025 and had interest rates of 7.464% and 7.470%, respectively, as of December 31, 2023.
Appendix B
B-55
2024 ANNUAL REPORT
2025 PROXY STATEMENT
(7)
Former Parent Secured Notes were due in 2027 and had an interest rate of 4.000% as of December 31, 2023, prior to being cancelled on the
TSA Effective Date (as defined below).
(8)
The Level 3 Term Loan B-1 and B-2 each had an interest rate of 11.133% as of December 31, 2024.
(9)
Reflects Level 3 Tranche B 2027 Term Loan issued under the Former Level 3 Facility (as defined below), which had an interest rate of
6.437% and 7.220% as of December 31, 2024 and December 31, 2023, respectively.
(10) Includes Level 3's 10.500% Senior Secured Notes due 2030 issued in early 2023, the terms of which have been amended to be consistent
with Level 3's first lien notes issued on March 22, 2024.
(11)
Former Level 3 Senior Notes were due in 2027 - 2029 and had an interest rates of 3.400% - 3.875% as of December 31, 2023, prior to being
cancelled on the TSA Effective Date (as defined below).
(12)
The total amount of these notes at December 31, 2024 includes the remaining aggregate principal amount due under the Former Parent
Secured Notes, the terms of which were amended on March 22, 2024 to release the guarantees of such debt that could be released in
accordance with their indentures and the security interests relating thereto.
(13)
The total amount for these notes at December 31, 2024 includes the remaining aggregate principal amount due under the Former Level 3
Secured Notes, the terms of which were amended on March 22, 2024 to release the security interests relating thereto.
(14)
The Qwest Corporation Term Loan was due in 2027 and had an interest rate of 7.970% as of December 31, 2023, prior to being cancelled on
the TSA Effective Date (as defined below).
Long-Term Debt Maturities
Set forth below is the aggregate principal amount of our long-term debt as of December 31, 2024 (excluding
unamortized discounts, net, and unamortized debt issuance costs) maturing during the following years.
(Dollars in millions)
2025
$
412
2026
96
2027
250
2028
738
2029
7,203
2030 and thereafter
9,819
Total long-term debt
$ 18,518
2024 Debt Transactions
Cash Tender Offers
Pursuant to cash tender offers that commenced on November 12, 2024 (the "Cash Tender Offers"), in November
2024 we reduced the aggregate principal amount of our consolidated indebtedness by approximately
$393 million. In conjunction with the Cash Tender Offers, we recorded a gain of $33 million including an offset of
immaterial third-party fees in our aggregate Net gain on early retirement of debt in Other income (expense), net
in our consolidated statement of operations for the year ended December 31, 2024.
The following table sets forth the aggregate principal amount of each series of senior notes of Lumen and
Level 3 Financing retired in exchange for cash in November 2024 in connection with the Cash Tender Offers:
Debt
Aggregate Principal
Amount (in millions)
Lumen Technologies, Inc.
5.625% Senior Notes, Series X, due 2025
$ 33
7.200% Senior Notes, Series D, due 2025
3
5.125% Senior Notes due 2026
5
4.000% Senior Secured Notes due 2027 (unsecured)
4
6.875% Debentures, Series G, due 2028
24
Level 3 Financing, Inc.
3.400% Senior Secured Notes due 2027 (unsecured)
1
4.625% Senior Notes due 2027
48
4.250% Senior Notes due 2028
275
Total
$ 393
Appendix B
B-56
Exchange Offers
Pursuant to exchange offers that commenced on September 3, 2024 (the "Exchange Offers"), on
September 24, 2024:
• Lumen Technologies issued approximately $438 million aggregate principal amount of its newly-issued
10.000% Secured Notes due 2032 (the "New Lumen Notes") and paid approximately $14 million cash
(excluding accrued and unpaid interest payable with respect to the exchange) in exchange for approximately
$491 million aggregate principal amount of four series of its outstanding senior unsecured notes, maturing
between 2026 and 2029 (which were concurrently cancelled), and
• Level 3 Financing issued approximately $350 million aggregate principal amount of its newly-issued 10.000%
Second Lien Notes due 2032 in exchange for $357 million aggregate principal amount of two series of its
outstanding senior unsecured notes maturing in 2027 (which were concurrently cancelled).
These transactions reduced the aggregate principal amount of Lumen's consolidated indebtedness by
approximately $60 million.
The Company determined that the Exchange Offers constituted a debt modification consistent with ASC 470
and recorded no gain or loss. In conjunction with the Exchange Offers, we recorded $17 million of fees to
Selling, general and administrative expense in our consolidated statements of operations for the year ended
December 31, 2024.
The following table sets forth the aggregate principal amount of each series of senior unsecured notes of Lumen
and Level 3 Financing exchanged and retired on September 24, 2024 in connection with the Exchange Offers:
Debt
Aggregate Principal
Amount (in millions)
Lumen Technologies, Inc.
5.125% Senior Notes due 2026
$ 137
4.000% Senior Secured Notes due 2027 (unsecured)
188
6.875% Debentures, Series G, due 2028
80
4.500% Senior Notes due 2029
86
Level 3 Financing, Inc.
3.400% Senior Secured Notes due 2027 (unsecured)
77
4.625% Senior Notes due 2027
280
Total
$ 848
Transaction Support Agreement Transactions
On March 22, 2024 (the "TSA Effective Date"), Lumen Technologies, Level 3 Financing, Qwest and a group of
creditors holding a majority of our consolidated debt completed transactions contemplated under the amended
and restated transaction support agreement ("TSA") that such parties entered into on January 22, 2024 (the
"TSA Transactions"), including the termination, repayment or exchange of previous commitments and debt and
the issuance of new term loan facilities, notes, and revolving credit facilities.
The following table sets forth the aggregate principal amount of each of Lumen's consolidated debt
arrangements that were partially or fully paid in exchange for cash or newly-issued debt during the first quarter
of 2024 in connection with the TSA Transactions:
Appendix B
B-57
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Aggregate Principal Amount
(in millions)
Debt
Repaid
Exchanged
Lumen Technologies, Inc.
Term Loan A
$ 933
—
Term Loan A-1
266
—
Term Loan B
575
3,259
5.125% Senior Notes due 2026
116
147
4.000% Senior Notes due 2027
153
865
Level 3 Financing, Inc.
Term Loan B
—
2,398
3.400% Senior Notes due 2027
—
668
3.875% Senior Notes due 2029
—
678
4.625% Senior Notes due 2027
—
606
4.250% Senior Notes due 2028
—
712
3.625% Senior Notes due 2029
—
458
3.750% Senior Notes due 2029
—
453
Qwest Corporation
Term Loan B
215
—
Total
$ 2,258
10,244
The following table sets forth the aggregate principal balance as of December 31, 2024 of the debt issued by
Lumen or Level 3 Financing in connection with the TSA Transactions:
New Debt Issuances(1)
Aggregate Principal Amount
as of December 31, 2024
(in millions)
Lumen Technologies, Inc.
Term Loan A(2)
$ 357
Term Loan B-1(2)
1,606
Term Loan B-2(2)
1,606
4.125% Superpriority Notes due 2029-2030
808
Level 3 Financing, Inc.
Term Loan B-1
1,199
Term Loan B-2
1,199
10.500% First Lien Notes due 2029
668
11.000% First Lien Notes due 2029
1,575
4.875% Second Lien Notes due 2029
606
10.750% First Lien Notes due 2030
678
4.500% Second Lien Notes due 2030
712
3.875% Second Lien Notes due 2030
458
4.000% Second Lien Notes due 2031
453
Total
$ 11,925
(1)
Except for Lumen's Term Loan A and $1.375 billion of Level 3 Financing's 11.000% First Lien Notes due 2029, all of the new debt listed in this
table was issued in the first quarter of 2024 in exchange for previously-issued debt of Lumen or Level 3 Financing in connection with the
TSA Transactions.
(2)
Reflects approximately $66 million of term loan installment payments and paydowns made between the TSA Effective Date and
December 31, 2024.
In evaluating the terms of the TSA Transactions, we determined that for certain of our creditors the new debt
instruments were substantially different than pre-existing debt and therefore constituted a non-cash
extinguishment of old debt for Lumen Technologies and Level 3 Financing of $744 million and $2.6 billion and
the establishment of new debt for which we recorded a $275 million gain on extinguishment in the first quarter
of 2024. This new debt was recorded at fair value generating a reduction to debt of $492 million which was
included in our aggregate Net gain on early retirement of debt of $348 million, recognized in Other income
(expense), net in our consolidated statement of operations for the year ended December 31, 2024. The
Appendix B
B-58
remaining creditors’ newly-issued debt was not substantially different under the terms of the TSA Transactions
and was treated under modification accounting rules. In conjunction with the TSA Transactions, we paid
$209 million in lender fees and $174 million in additional third-party costs. Of these amounts, we offset
$157 million of lender fees against the gain on extinguishment and recorded $112 million in third-party costs to
Selling, general and administrative expense in our consolidated statement of operations for the year ended
December 31, 2024. In accordance with GAAP provisions for modification and extinguishment accounting,
$52 million in lender fees and $62 million in third-party costs, respectively, were capitalized and will be
amortized over the terms of the newly-issued indebtedness.
Repurchases of Debt Instruments
During 2024, we repurchased various debt instruments on the open market. These repurchases resulted in an
aggregate net gain of 40 million which is included in our aggregate Net gain on early retirement of debt in
Other income (expense), net in our consolidated statement of operations for the year ended December 31, 2024.
The following table sets forth the aggregate principal amount of each series of notes and term loans
repurchased during the year ended December 31, 2024:
Debt
Principal Amount
Repurchased
(in millions)
Lumen Technologies, Inc.
Term Loan A
$
2
Term Loan B-1
7
Term Loan B-2
7
5.625% Senior Notes, Series X, due 2025
70
7.200% Senior Notes, Series D, due 2025
13
6.875% Senior Notes, Series G, due 2028
7
4.500% Senior Notes due 2029
24
4.125% Superpriority Notes due 2029-2030
3
7.600% Senior Notes due 2039
5
7.650% Senior Notes due 2042
6
Level 3 Financing, Inc.
4.250% Senior Notes due 2028
34
3.625% Senior Notes due 2029
81
3.750% Sustainability-Linked Senior Notes due 2029
86
3.875% Senior Secured Notes due 2029 (unsecured)
18
Qwest Corporation
7.250% Senior Notes due 2025
13
Total
$ 376
2023 Debt Modification Transactions
Exchange Offers
Pursuant to exchange offers that commenced on March 16, 2023 (the “2023 Exchange Offers”), on March 31,
2023, Level 3 Financing issued $915 million of its 10.500% Senior Secured Notes due 2030 (the “10.500%
Notes”) in exchange for $1.535 billion of Lumen’s outstanding senior unsecured notes. On April 17, 2023, in
connection with the Exchange Offers, Level 3 Financing issued an additional $9 million of its 10.500% Notes in
exchange for $19 million of Lumen's outstanding senior unsecured notes. All exchanged notes were concurrently
cancelled. These transactions resulted in a $630 million net reduction in the aggregate principal amount of
Lumen’s consolidated indebtedness. In addition to the above-described exchange offers, we repurchased
$24 million aggregate principal amount of Lumen's outstanding senior unsecured notes during the first quarter
of 2023. These above-described transactions resulted in an aggregate net gain of $618 million for the year
ended December 31, 2023.
Appendix B
B-59
2024 ANNUAL REPORT
2025 PROXY STATEMENT
The following table sets forth the aggregate principal amount of each series of Lumen’s senior unsecured
notes retired during the year ended December 31, 2023, in connection with the above-described
exchange transactions:
Debt
Aggregate principal
(amounts in millions)
5.625% Senior Notes, Series X, due 2025
$
49
7.200% Senior Notes, Series D, due 2025
21
5.125% Senior Notes due 2026
291
6.875% Debentures, Series G, due 2028
52
5.375% Senior Notes due 2029
275
4.500% Senior Notes due 2029
558
7.600% Senior Notes, Series P, due 2039
164
7.650% Senior Notes, Series U, due 2042
144
Total
$ 1,554
Credit Facility Borrowings and Repayments
During 2023, Lumen borrowed $925 million from, and made repayments of $725 million to, the Former
Lumen Facilities.
2022 Borrowings and Repayments
During 2022, Lumen borrowed $2.4 billion from, and made repayments of $2.6 billion to, the Former
Lumen Facilities.
Interest Expense
Interest expense includes interest on total long-term debt. The following table presents the amount of gross
interest expense, net of capitalized interest:
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Interest expense:
Gross interest expense
$ 1,548
1,269
1,398
Capitalized interest
(176)
(111)
(66)
Total interest expense
$ 1,372
1,158
1,332
Lumen Credit Agreements
Superpriority Revolving/Term A Credit Agreement
On the TSA Effective Date, Lumen, as borrower, the lenders party thereto and Bank of America, as
administrative agent and collateral agent, entered into the Superpriority Revolving/Term A Credit Agreement
(the “RCF/TLA Credit Agreement”), providing for:
• a superpriority “first out” series A revolving credit facility with original commitments of approximately
$489 million (the “Series A Revolving Credit Facility”);
• a superpriority “second out” series B revolving credit facility with original commitments of approximately
$467 million (the “Series B Revolving Credit Facility”, and together with the Series A Revolving Credit Facility,
the “Lumen Revolving Credit Facilities”); and
• a superpriority secured term loan facility in the amount of approximately $377 million (the “Lumen TLA”).
Interest on borrowings under the RCF/TLA Credit Agreement is payable at the end of each interest period at a
rate equal to, at Lumen’s option:
• for the Series A Revolving Credit Facility, term SOFR (subject to a 2.00% floor) plus 4.00% for term SOFR
loans or a base rate plus 3.00% for base rate loans;
Appendix B
B-60
• for the Series B Revolving Credit Facility, term SOFR (subject to a 2.00% floor) plus 6.00% for term SOFR
loans or a base rate plus 5.00% for base rate loans; and
• for the Lumen TLA, term SOFR (subject to a 2.00% floor) plus a 6.00% for term SOFR loans or a base rate
plus 5.00% for base rate loans.
Lumen may prepay amounts outstanding under the Series B Revolving Credit Facility or Lumen TLA at anytime
without premium or penalty. If no amounts are outstanding under the Series B Revolving Credit Facility, Lumen
may prepay amounts outstanding under the Series A Revolving Credit Facility without premium or penalty.
Both of the Lumen Revolving Credit Facilities mature on June 1, 2028 (in each case subject to a springing
maturity in certain circumstances). The Lumen TLA matures on June 1, 2028 and requires Lumen to make
quarterly amortization payments of 1.25% of the initial principal amount and certain specified mandatory
prepayments upon the occurrence of certain transactions.
At December 31, 2024, no borrowings were outstanding under Lumen’s (i) Series A Revolving Credit Facility,
with commitments of approximately $489 million, or (ii) Series B Revolving Credit Facility, with commitments of
approximately $465 million.
Superpriority Term B Credit Agreement
On the TSA Effective Date, Lumen, as borrower, the lenders party thereto, Wilmington Trust, National
Association (“WTNA”), as administrative agent, and Bank of America, as collateral agent, entered into a
Superpriority Term B Credit Agreement (the “TLB Credit Agreement”), providing for:
• a superpriority secured term loan facility in a principal amount of approximately $1.6 billion maturing April 15,
2029 (the “Lumen TLB-1”); and
• a superpriority secured term loan facility in a principal amount of approximately $1.6 billion maturing April 15,
2030 (the “Lumen TLB-2”, and together with the Lumen TLB-1, the “Lumen TLB”).
Interest on borrowings under the TLB Credit Agreement is payable at the end of each interest period at a rate
equal to, at Lumen’s option, adjusted term SOFR (subject to a 0% floor) plus 2.35% for term SOFR loans or a
base rate plus 1.35% for base rate loans.
The Lumen TLB requires Lumen to make quarterly amortization payments of 0.25% of the initial principal
amount and certain specified mandatory prepayments upon the occurrence of certain transactions. Amounts
outstanding under the Lumen TLB may be prepaid at any time without premium or penalty.
Former Facilities
In connection with entering into the RCF/TLA Credit Agreement, all revolving commitments under Lumen’s
amended and restated credit agreement dated January 31, 2020 (the “Former Parent Facilities”) were
terminated and substantially all of the debt issued thereunder was repaid.
Level 3 Credit Agreements
Credit Agreement dated March 22, 2024
On the TSA Effective Date, Level 3 Financing, as borrower, Level 3 Parent, LLC. the lenders party thereto and
WTNA, as administrative agent and collateral agent, entered into a credit agreement (the “New Level 3 Credit
Agreement”), providing for:
• a secured term B-1 loan facility in the principal amount of approximately $1.2 billion maturing
April 15, 2029; and
• a secured term B-2 loan facility in the principal amount of approximately $1.2 billion maturing April 15, 2030.
Interest on borrowings under the New Level 3 Credit Agreement is payable at the end of each interest period at
a rate equal to, at Level 3 Financing’s option, term SOFR (subject to a 2.00% floor) plus 6.56% for term SOFR
loans or a base rate plus 5.56% for base rate loans.
Amounts outstanding under the New Level 3 Credit Agreement may be prepaid at any time, subject to a
premium of (i) 2.00% of the aggregate principal amount if prepaid on or prior to the 12-month anniversary of the
TSA Effective Date and (ii) 1.00% of the aggregate principal amount if prepaid after the 12-month anniversary of
the TSA Effective Date and on or prior to the 24-month anniversary of the TSA Effective Date. The New Level 3
Facilities require Level 3 Financing to make certain specified mandatory prepayments upon the occurrence of
certain transactions.
Appendix B
B-61
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Former Facility
In connection with entering into the New Level 3 Credit Agreement, substantially all of the indebtedness issued
under Level 3 Financing’s amended and restated credit agreement dated as of November 29, 2019 (the “Former
Level 3 Facility”) was repaid.
Senior Notes of Lumen and its Subsidiaries
The Company’s consolidated indebtedness at December 31, 2024 included:
• superpriority senior secured notes issued by Lumen;
• first and second lien secured notes issued by Level 3 Financing; and
• senior unsecured notes issued by Lumen, Level 3 Financing, Qwest, and Qwest Capital Funding, Inc.
All of these notes carry fixed interest rates and all principal is due on the notes’ respective maturity dates, which
rates and maturity dates are summarized in the table above.
Except for a limited number of senior notes issued by Qwest Corporation, the issuer generally can redeem the
notes, at its option, in whole or in part, (i) pursuant to a fixed schedule of pre-established redemption prices,
(ii) pursuant to a “make whole” redemption price or (iii) under certain other specified limited conditions.
Revolving Letters of Credit
We use various financial instruments in the normal course of business. These instruments include letters of
credit, which are conditional commitments issued on our behalf in accordance with specified terms and
conditions. Lumen may draw letters of credit under (i) an uncommitted $225 million revolving letter of credit
facility and (ii) the Lumen Revolving Credit Facilities.
At December 31, 2024, we had $220 million of undrawn letters of credit outstanding, $217 million of which were
issued under the Lumen Revolving Credit Facilities, $1 million of which were issued under our $225 million
uncommitted letter of credit facility and $2 million of which were issued under a separate facility maintained by
one of our subsidiaries (the full amount of which is collateralized by cash).
Certain Guarantees and Security Interests
Lumen’s obligations under its RCF/TLA Credit Agreement are unsecured, but certain of Lumen’s subsidiaries
have provided an unconditional guarantee of payment of Lumen’s obligations (such entities, the “Lumen
Guarantors”) and certain of such guarantees will be secured by a lien on substantially all of the assets of the
applicable Lumen Guarantors. Level 3 Parent, LLC, Level 3 Financing and certain of Level 3 Financing’s
subsidiaries have provided an unconditional guarantee of payment of Lumen’s obligations under its Series A
Revolving Credit Facility of up to $150 million and under its Series B Revolving Credit Facility of up to
$150 million, in each case secured by a lien on substantially all of their assets (such entities, the “Level 3
Collateral Guarantors”). The guarantee by the Level 3 Collateral Guarantors may be reduced or terminated
under certain circumstances. Qwest Corporation and certain of its subsidiaries have provided an unsecured
guarantee of collection of Lumen’s obligations under the Lumen Revolving Credit Facilities and Lumen TLA (the
“Qwest Guarantors”).
Lumen’s obligations under the TLB are unsecured. The term loans issued under this agreement are guaranteed
by the Lumen Guarantors and the Qwest Guarantors on the same basis as those entities guarantee Lumen’s
obligations under its RCF/TLA Credit Agreement.
Level 3 Financing’s obligations under the New Level 3 Credit Agreement are secured by a first lien on
substantially all of its assets. In addition, the other Level 3 Collateral Guarantors have provided an unconditional
guarantee of payment of Level 3 Financing’s obligations under the New Level 3 Credit Agreement secured by a
lien on substantially all of their assets.
Lumen’s superpriority secured senior notes are guaranteed by the Lumen Guarantors and the Qwest Guarantors
on the same basis as those entities guarantee Lumen’s obligations under its RCF/TLA Credit Agreement
(subject, in certain cases, to receipt of necessary regulatory approvals). Level 3 Financing’s obligations under its
first lien notes are secured by a first lien on substantially all of its assets (subject, in certain cases, to receipt of
necessary regulatory approvals), and are guaranteed by the other Level 3 Collateral Guarantors (or, for certain
such guarantors, for certain notes, will be guaranteed upon the receipt of required regulatory approvals) on the
same basis as the guarantees provided by such entities under the New Level 3 Credit Agreement. Level 3
Appendix B
B-62
Financing’s obligations under its second lien notes are secured by a second lien on substantially all of its assets,
and are guaranteed by the other Level 3 Collateral Guarantors on the same basis as the guarantees provided by
such entities under the New Level 3 Credit Agreement, except the lien securing such guarantees is a second lien.
Lumen's reimbursement obligations under its outstanding letters of credit are secured by guarantees issued by
certain of its subsidiaries.
Level 3 Financing's obligations under its unsecured notes are guaranteed on an unsecured basis by the same
affiliated entities that guarantee the New Level 3 Credit Agreement and Level 3 Financing's secured notes. The
senior unsecured notes issued by Qwest Capital Funding, Inc. are guaranteed by its parent, Qwest
Communications International Inc.
Covenants
Lumen
Under its Superpriority Revolving/Term Loan A Credit Agreement, Lumen may not permit:
(i) its maximum total net leverage ratio to exceed 5.75 to 1.00 as of the last day of each fiscal quarter, stepping
down to 5.50 to 1.00 with respect to each fiscal quarter ending after December 31, 2024 and further stepping
down to 5.25 to 1.00 with respect to each fiscal quarter ending after December 31, 2025; or
(ii) its interest coverage ratio as of the last day of any test period to be less than 2.00 to 1.00.
Lumen’s superpriority credit agreements and superpriority senior secured notes contain various representations
and warranties and extensive affirmative and negative covenants. Such covenants include, among other things
and subject to certain significant exceptions, restrictions on our ability to declare or pay dividends, repurchase
stock, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, engage
in transactions with our affiliates, dispose of assets and merge or consolidate with other persons.
Lumen’s senior unsecured notes were issued under four separate indentures. These indentures restrict Lumen’s
ability to (i) incur, issue or create liens upon its property and (ii) consolidate with or merge into, or transfer or
lease all or substantially all of its assets to, any other party.
Under certain circumstances in connection with a “change of control” of Lumen, Lumen will be required to make
an offer to repurchase each series of these senior notes (other than two of its older series of notes) at a price of
101% of the principal amount redeemed, plus accrued and unpaid interest.
Level 3 Financing
The New Level 3 Credit Agreement and Level 3 Financing's first and second lien secured notes contain various
representations and extensive affirmative and negative covenants. Such covenants include, among other things
and subject to certain significant exceptions, restrictions on their ability to declare or pay dividends, repay
certain other indebtedness, create liens, incur additional indebtedness, make investments, dispose of assets and
merge or consolidate with other persons. Also, under certain circumstances in connection with a “change of
control” of Level 3 Parent, LLC or Level 3 Financing, Level 3 Financing will be required to make an offer to
repurchase each series of its outstanding senior notes at a price of 101% of the principal amount redeemed, plus
accrued and unpaid interest.
Qwest Companies
The senior notes of Qwest Corporation were issued under indentures dated April 15, 1990 and October 15, 1999.
These indentures contain restrictions on the incurrence of liens and the consummation of certain transactions
substantially similar to the above-described covenants in the indentures governing Lumen’s senior unsecured
notes (but contain no mandatory repurchase provisions). The senior notes of Qwest Capital Funding, Inc. were
issued under an indenture dated June 29, 1998 containing terms substantially similar to those set forth in Qwest
Corporation's indentures.
Impact of Covenants
The debt covenants applicable to Lumen Technologies, Inc. and its subsidiaries could have a material adverse
impact on their ability to operate or expand their respective businesses, to pursue strategic transactions, or to
otherwise pursue their plans and strategies. The covenants of the Level 3 companies may significantly restrict
the ability of Lumen Technologies, Inc. to receive cash from the Level 3 companies, to distribute cash from the
Level 3 companies to other of Lumen’s affiliated entities, or to enter into other transactions among Lumen’s
wholly-owned entities.
Appendix B
B-63
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Certain of the debt instruments of Lumen Technologies, Inc. and its subsidiaries contain cross payment default
or cross acceleration provisions. When present, these provisions could have a wider impact on liquidity than
might otherwise arise from a default or acceleration of a single debt instrument.
The ability of Lumen Technologies, Inc. and its subsidiaries to comply with the financial covenants in their
respective debt instruments could be adversely impacted by a wide variety of events, including unforeseen
contingencies, many of which are beyond their control.
Compliance
As of December 31, 2024, Lumen Technologies believes it and its subsidiaries were in compliance with the
provisions and financial covenants in their respective material debt agreements in all material respects.
Guarantees
Lumen does not guarantee the debt of any unaffiliated parties, but, as noted above, as of December 31, 2024
certain of its key subsidiaries guaranteed (i) its debt outstanding under its superpriority credit agreements, its
superpriority senior secured notes and its $225 million letter of credit facility and (ii) the outstanding term
loans or senior secured notes issued by certain other subsidiaries. As further noted above, several of the
subsidiaries guaranteeing these obligations have pledged substantially all of their assets to secure certain of
their respective guarantees.
Subsequent Events
As of February 15, 2025, (i) Lumen Technologies redeemed approximately $132 million aggregate principal
amount of its unsecured senior notes and (ii) Level 3 Financing redeemed approximately $70 million aggregate
principal amount of its unsecured senior notes, both in exchange for cash.
Note 8—Accounts Receivable
The following table presents details of our accounts receivable balances:
As of December 31,
2024
2023
(Dollars in millions)
Trade and purchased receivables
$ 1,181
1,181
Earned and unbilled receivables
63
165
Other
46
39
Total accounts receivable
1,290
1,385
Less: allowance for credit losses
(59)
(67)
Accounts receivable, less allowance
$ 1,231
1,318
We are exposed to concentrations of credit risk from our customers. We generally do not require collateral to
secure our receivable balances. We have agreements with other communications service providers whereby we
agree to bill and collect on their behalf for services rendered by those providers to our customers within our
local service area. We purchase accounts receivable from other communications service providers primarily on a
recourse basis and include these amounts in our accounts receivable balance. We have not experienced any
significant loss associated with these purchased receivables.
Appendix B
B-64
Note 9—Property, Plant and Equipment
Net property, plant and equipment is composed of the following:
Depreciable
Lives
As of December 31,
2024
2023
(Dollars in millions)
Land
N/A
$
630
646
Fiber, conduit and other outside plant(1)
15-45 years
17,348
15,217
Central office and other network electronics(2)
3-10 years
16,616
15,741
Support assets(3)
3-30 years
6,804
6,714
Construction in progress(4)
N/A
2,144
2,758
Gross property, plant and equipment
43,542
41,076
Accumulated depreciation
(23,121)
(21,318)
Net property, plant and equipment
$ 20,421
19,758
(1)
Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures.
(2)
Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics
providing service to customers.
(3)
Support assets consist of buildings, data centers, computers and other administrative and support equipment.
(4)
Construction in progress includes inventory held for construction and property of the aforementioned categories that has not been placed
in service as it is still under construction.
During 2024, we initiated marketing of our Broomfield, Colorado office buildings to locate a buyer and have
classified those buildings as held for sale, resulting in an impairment loss of $80 million. During the second
quarter of 2023, we donated our Monroe, Louisiana campus and leased back a portion thereof. This donation
resulted in a $101 million loss recognized for the year ended December 31, 2023.
We recorded depreciation expense of $1.9 billion, $1.9 billion and $2.1 billion for the years ended December 31,
2024, 2023 and 2022, respectively.
Asset Retirement Obligations
As of December 31, 2024 and 2023, our asset retirement obligations balance was primarily related to estimated
future costs of removing equipment from leased properties and estimated future costs of properly disposing of
asbestos and other hazardous materials upon remodeling or demolishing buildings. Asset retirement obligations
are included in other long-term liabilities on our consolidated balance sheets.
Our fair value estimates were determined using the discounted cash flow method.
The following table provides asset retirement obligation activity:
Years Ended December 31,
2024
2023
(Dollars in millions)
Balance at beginning of period
$ 157
156
Accretion expense
12
6
Liabilities settled
(12)
(9)
Change in estimate
—
4
Balance at end of period
$ 157
157
The changes in estimate referred to in the table above were offset against gross property, plant and equipment.
Note 10—Severance
Periodically, we reduce our workforce and accrue liabilities for the related severance costs. These workforce
reductions result primarily from the progression or completion of our post-acquisition integration plans,
increased competitive pressures, cost reduction initiatives, process improvements through automation and
reduced workloads due to reduced demand for certain services.
Appendix B
B-65
2024 ANNUAL REPORT
2025 PROXY STATEMENT
During the fourth quarter of 2023 we reduced our global workforce by approximately 4% as part of our ongoing
efforts to reorganize Lumen for growth by right-sizing our operations to improve our profitability. As a result of
this plan, we incurred severance and related costs of approximately $53 million.
During April 2024, we further reduced our workforce by approximately 6% as a part of our efforts to change our
workforce composition to reflect our ongoing transformation and cost reduction opportunities that align with
our shapeshifting and focus on our strategic priorities. As a result of this plan, we incurred severance and related
costs of approximately $103 million during the second quarter of 2024. We have not incurred, and do not
expect to incur, any material impairment or exit costs related to either of these plans.
We report severance liabilities within accrued expenses and other liabilities - salaries and benefits in our
consolidated balance sheets and report severance expenses in selling, general and administrative expenses in
our consolidated statements of operations. As described in Note 17—Segment Information, we do not allocate
these severance expenses to our segments.
Changes in our accrued liabilities for severance expenses were as follows:
Years Ended December 31,
2024
2023
(Dollars in millions)
Balance at beginning of period
$
18
11
Accrued to expense
130
74
Payments, net
(136)
(67)
Balance at end of period
$
12
18
Note 11—Employee Benefits
Pension, Post-Retirement and Other Post-Employment Benefits
We sponsor various defined benefit pension plans (qualified and non-qualified) which, in the aggregate, cover a
substantial portion of our employees. Pension benefits for participants of the Lumen Combined Pension Plan
("Combined Pension Plan") and, through the October 3, 2022 sale of the ILEC business, the Lumen Pension Plan,
who are represented by a collective bargaining agreement are based on negotiated schedules. All other
participants' pension benefits are based on each individual participant's years of service and compensation. We
also maintain non-qualified pension plans for certain current and former highly compensated employees. We
maintain post-retirement benefit plans that provide health care and life insurance benefits for certain eligible
retirees. We also provide other post-employment benefits for certain eligible former employees. We use a
December 31 measurement date for all our plans.
As of January 1, 2022, we spun off the Lumen Pension Plan from the Lumen Combined Pension Plan in
anticipation of the sale of the ILEC business, as described further in Note 2—Divestitures of the Latin American,
ILEC and EMEA Businesses. At the time of the spin-off, the Lumen Pension Plan covered approximately
2,500 active plan participants along with 19,000 other participants. At the time of the spin-off, the Lumen
Pension Plan had a pension benefit obligation of $2.5 billion and assets of $2.2 billion. In addition, the
December 31, 2021 actuarial (loss) gain and prior service cost included in accumulated other comprehensive loss
was allocated between the Lumen Pension Plan and the Lumen Combined Pension Plan. Following a revaluation
of the pension obligation and pension assets for the Lumen Pension Plan, in preparation for the closing of the
sale of the ILEC business, we contributed approximately $319 million of Lumen's cash to the Lumen Pension Plan
trust to fully fund the pension plan in September 2022. The amounts allocated to the Lumen Pension Plan were
subject to adjustment up to the closing of the sale of the ILEC business on October 3, 2022, at which time the
plan was transferred along with the rest of the assets and liabilities of the ILEC business. We recognized pension
costs related to both plans through the sale of the ILEC business, at which time balances related to the Lumen
Pension Plan were reflected in the calculation of our gain on the sale of the business.
Pension Benefits
United States funding laws require a company with a pension shortfall to fund the annual cost of benefits earned
in addition to a seven-year amortization of the shortfall. Our funding policy for our Combined Pension Plan is to
make contributions with the objective of accumulating ample assets to pay all qualified pension benefits when
due under the terms of the plan. The accounting unfunded status of the Combined Pension Plan was $615 million
and $736 million as of December 31, 2024 and 2023, respectively.
Appendix B
B-66
We made a voluntary contribution of $170 million to the trust for the Combined Pension Plan in 2024. We made
no voluntary cash contributions to the Combined Pension Plan in 2023. As discussed above, we contributed
approximately $319 million of cash to the Lumen Pension Plan trust to fully fund the pension plan in September
2022 in preparation for the closing of the sale of the ILEC business. We paid $4 million and $5 million of benefits
directly to participants of our non-qualified pension plans in 2024 and 2023, respectively.
Benefits paid by the Combined Pension Plan are paid through a trust that holds all of the Plan's assets. The
amount of required contributions to the Combined Pension Plan in 2025 and beyond will depend on a variety of
factors, most of which are beyond our control, including earnings on plan investments, prevailing interest rates,
demographic experience, changes in plan benefits and changes in funding laws and regulations. Based on
current laws and circumstances, we do not believe we are required to make any contributions to the Combined
Pension Plan in 2025 and we do not expect to make voluntary contributions to the trust for the Combined
Pension Plan in 2025. We estimate that in 2025 we will pay approximately $4 million of benefits directly to
participants of our non-qualified pension plans.
We recognize in our consolidated balance sheets the funded status of the legacy Level 3 Parent, LLC qualified
defined benefit post-retirement plan. This plan was fully funded as of December 31, 2024 and 2023. Additionally,
as previously mentioned, we sponsor unfunded non-qualified pension plans for certain current and former
highly-compensated employees. The net unfunded status of our non-qualified pension plans was $30 million and
$33 million for the years ended December 31, 2024 and 2023, respectively. Due to the insignificant impact of
these pension plans on our consolidated financial statements, we have predominantly excluded them from the
remaining employee benefit disclosures in this Note, unless otherwise specifically stated.
Post-Retirement Benefits
Our post-retirement benefit plans provide post-retirement benefits to qualified retirees and allow certain
participants to receive benefits at no or reduced cost and other participants to receive benefits on a shared cost
basis. The post-retirement benefits not paid by the trusts are funded by us and we expect to continue funding
these post-retirement obligations as benefits are paid. The accounting unfunded status of our qualified post-
retirement benefit plan was $1.7 billion and $1.9 billion as of December 31, 2024 and 2023, respectively.
Assets in the post-retirement trusts were substantially depleted as of December 31, 2016; as of December 31,
2019 the Company ceased to pay certain post-retirement benefits through the trusts. No contributions were
made to the post-retirement trusts in 2024, nor 2023. Benefits are paid directly by us with available cash. In
2024, we paid $185 million of post-retirement benefits, net of participant contributions and direct subsidies. In
2025, we currently expect to pay directly $186 million of post-retirement benefits, net of participant
contributions and direct subsidies.
We anticipate our expected health care cost trend to range from 6.20% to 7.90% in 2025 and grading to 4.50%
by 2031. Our post-retirement benefit cost, for certain eligible legacy Qwest retirees and certain eligible legacy
CenturyLink retirees, is capped at a set dollar amount. Therefore, those health care benefit obligations are not
subject to increasing health care trends after the effective date of the caps.
Expected Cash Flows
The Combined Pension Plan payments, post-retirement health care benefit payments and premiums, and life
insurance premium payments are either distributed from plan assets or paid by us. The estimated benefit
payments provided below are based on actuarial assumptions using the demographics of the employee and
retiree populations and have been reduced by estimated participant contributions.
Combined
Pension Plan
Post-Retirement
Benefit Plans
Medicare Part D
Subsidy Receipts
(Dollars in millions)
Estimated future benefit payments:
2025
$ 569
188
(2)
2026
490
184
(2)
2027
473
180
(2)
2028
450
173
(2)
2029
433
166
(1)
2030 - 2034
1,899
720
(5)
Appendix B
B-67
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Net Periodic Benefit Expense
We utilize a full yield curve approach in connection with estimating the service and interest components of net
periodic benefit expense by applying the specific spot rates along the yield curve used in the determination of
the benefit obligation to the relevant projected cash flow.
The actuarial assumptions used to compute the net periodic benefit expense for our Combined Pension Plan and
post-retirement benefit plans are based upon information available as of the beginning of the year, as presented
in the following table.
Combined Pension Plan
Post-Retirement Benefit Plans
2024
2023
2022
2024
2023
2022
Actuarial assumptions at
beginning of year:
Discount rate
5.16% - 5.35%
5.45% - 5.69%
2.29% - 3.12%
5.17% - 5.42%
5.43% - 5.75%
2.19% - 5.78%
Rate of compensation increase
3.25%
3.25%
3.25%
N/A
N/A
N/A
Expected long-term rate of
return on plan assets(1)
6.50%
6.50%
5.50%
3.00%
3.00%
4.00%
Initial health care cost
trend rate
N/A
N/A
N/A
7.50% / 5.40%
7.20% / 5.00%
5.00% / 5.75%
Ultimate health care cost
trend rate
N/A
N/A
N/A
4.50%
4.50%
4.50%
Year ultimate trend rate
is reached
N/A
N/A
N/A
2031
2030
2025
N/A - Not applicable
(1)
Rates are presented net of projected fees and administrative costs.
Prior to the sale of the ILEC business on October 3, 2022, we realized pension costs related to the Lumen
Pension Plan. Net periodic benefit expense for our Combined Pension Plan and the Lumen Pension Plan
(through October 3, 2022, together the "Pension Plans") includes the following components:
Pension Plans
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Service cost
$ 24
25
44
Interest cost
251
270
194
Expected return on plan assets
(272)
(287)
(385)
Realized to gain on sale of businesses
—
—
546
Special termination benefits charge
—
2
—
Recognition of prior service credit
(7)
(7)
(10)
Recognition of actuarial loss
108
104
122
Net periodic pension expense
$ 104
107
511
Net periodic benefit expense for our post-retirement benefit plans includes the following components:
Post-Retirement Plans
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Service cost
$ 4
5
10
Interest cost
94
103
72
Realized to gain on sale of businesses
—
—
(32)
Recognition of prior service cost
(8)
(8)
8
Recognition of actuarial loss
(17)
(20)
(4)
Special termination benefits
2
—
—
Net periodic post-retirement benefit expense
$ 75
80
54
Appendix B
B-68
Service costs for our Combined Pension Plan and post-retirement benefit plans are included in the cost of
services and products and selling, general and administrative line items on our consolidated statements of
operations and all other costs listed above, except for amounts realized as part of the net gain on sale of
businesses, are included in other income (expense), net on our consolidated statements of operations for the
years ended December 31, 2024, 2023 and 2022. Additionally, a portion of the service cost is also allocated to
certain assets under construction, which are capitalized and reflected as part of property, plant and equipment
in our consolidated balance sheets. As a result of ongoing efforts to reduce our workforce, we recognized a one-
time charge in our net periodic post-retirement benefit expense in 2024 of $2 million and in our net periodic
pension expense in 2023 of $2 million, both for special termination benefit enhancements paid to certain eligible
employees upon voluntary retirement.
Our pension plan contains provisions that allow us, from time to time, to offer lump sum payment options to
certain former employees in settlement of their future retirement benefits. We record an accounting settlement
charge, consisting of the recognition of certain deferred costs of the pension plan associated with these lump
sum payments only if, in the aggregate, they exceed or are probable to exceed the sum of the annual service
and interest costs for the plan’s net periodic pension benefit cost, which represents the settlement accounting
threshold. As of December 31, 2024, the settlement threshold was not reached. In the event of workforce
reductions in the future, the annual lump sum payments may trigger settlement accounting.
Benefit Obligations
The actuarial assumptions used to compute the funded status for the plans are based upon information available
as of December 31, 2024 and 2023 and are as follows:
Combined Pension Plan
As of December 31,
Post-Retirement Benefit Plans
As of December 31,
2024
2023
2024
2023
Actuarial assumptions at end of year:
Discount rate
5.62%
5.21%
5.60%
5.20%
Rate of compensation increase
3.25%
3.25%
N/A
N/A
Initial health care cost trend rate
N/A
N/A
7.90% / 6.20%
7.50% / 5.40%
Ultimate health care cost trend rate
N/A
N/A
4.50%
4.50%
Year ultimate trend rate is reached
N/A
N/A
2031
2031
N/A - Not applicable
The Society of Actuaries did not release any revised mortality tables or projection scales in 2024, 2023, or 2022.
The short-term and long-term interest crediting rates during 2024 for cash balance components of the
Combined Pension Plan were 4.3% and 3.5%, respectively.
The following tables summarize the change in the benefit obligations for the Combined Pension Plan and post-
retirement benefit plans:
Combined Pension Plan
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Change in benefit obligation:
Benefit obligation at beginning of year
$ 5,212
5,295
9,678
Plan spin-off
—
—
(2,552)
Service cost
24
25
37
Interest cost
251
270
154
Special termination benefits charge
—
2
—
Actuarial (gain) loss
(119)
114
(1,432)
Benefits paid from plan assets
(552)
(494)
(590)
Benefit obligation at end of year
$ 4,816
5,212
5,295
Appendix B
B-69
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Post-Retirement Benefit Plans
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Change in benefit obligation
Benefit obligation at beginning of year
$ 1,919
1,995
2,781
Benefit obligation transferred to purchaser upon sale of business
—
—
(26)
Service cost
4
5
10
Interest cost
94
103
72
Participant contributions
27
32
37
Direct subsidy receipts
2
2
2
Plan amendments
—
—
(41)
Actuarial (gain) loss
(84)
14
(591)
Benefits paid by company
(214)
(228)
(249)
Benefits paid from plan assets
—
(4)
—
Special termination benefits charge
2
—
—
Benefit obligation at end of year
$ 1,750
1,919
1,995
Plan Assets
We maintain plan assets for our Combined Pension Plan and certain post-retirement benefit plans. As previously
noted, assets in the post-retirement benefit plan trusts were substantially depleted as of December 31, 2016. The
fair value of post-retirement benefit plan assets was $1 million, $1 million and $5 million at December 31, 2024,
2023 and 2022, respectively. Due to the insignificance of these assets on our consolidated financial
statements, we have predominantly excluded them from the disclosures of plan assets in this Note, unless
otherwise indicated.
The following table summarizes the change in the fair value of plan assets for the Combined Pension Plan:
Combined Pension Plan
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Change in plan assets
Fair value of plan assets at beginning of year
$ 4,476
4,715
8,531
Plan spin-off
—
—
(2,239)
Return on plan assets
107
255
(987)
Benefits paid from plan assets
(552)
(494)
(590)
Contributions
170
—
—
Fair value of plan assets at end of year
$ 4,201
4,476
4,715
The expected rate of return on plan assets is the long-term rate of return we expect to earn on the plan's assets,
net of administrative expenses paid from plan assets. It is determined annually based on the strategic asset
allocation and the long-term risk and return forecast for each asset class.
Our investment objective for the Combined Pension Plan assets is to achieve an attractive risk-adjusted return
over time that will provide for the payment of benefits while minimizing the risk of large losses in funded status.
We employ a liability-aware investment strategy designed to reduce the volatility of pension assets relative to
pension liabilities. This strategy is evaluated frequently and is expected to evolve over time with changes in the
funded status and other factors. Approximately 40% of plan assets is targeted to long-duration investment
grade bonds and interest rate sensitive derivatives and 60% is targeted to diversified equity, fixed income and
private market investments that are expected to outperform the liability with moderate funded status risk. At
the beginning of 2025, our expected annual long-term rate of return on pension assets before consideration of
administrative expenses is assumed to be 7.0%. Administrative expenses, including projected PBGC (Pension
Benefit Guaranty Corporation) premiums, reduce the annual long-term expected return, net of administrative
expenses, to 6.5%.
Appendix B
B-70
Permitted investments: Plan assets are managed consistent with the restrictions set forth by ERISA (the
Employee Retirement Income Security Act of 1974, as amended).
Fair Value Measurements: Fair value is defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing
and able to transact for an asset or liability at the measurement date. We use valuation techniques that
maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value
and then we rank the estimated values based on the reliability of the inputs used following the fair value
hierarchy set forth by the FASB. For additional information on the fair value hierarchy, see Note 14—Fair Value
of Financial Instruments.
At December 31, 2024, we used the following valuation techniques to measure fair value for assets. There were
no changes to these methodologies during 2024:
• Level 1—Assets were valued using the closing price reported in the active market in which the individual
security was traded. U.S. Treasury securities are valued at the bid price reported in an active market in which
the security is traded. Variation margin due from/(to) brokers is valued at the expected next day cash
settlement amount.
• Level 2—Assets were valued using quoted prices in markets that are not active, broker dealer quotations, and
other methods by which all significant inputs were observable at the measurement date. Fixed income
securities primarily utilize observable market information and are based on a spread to U.S. Treasury
securities and consider yields available on comparable securities of issuers with similar credit ratings, the new
issue market for similar securities, secondary trading markets and dealer quotes. Option adjusted spread
models are utilized to evaluate fixed income securities that have early redemption features. Derivative
securities traded over the counter are valued based on gains or losses due to fluctuations in indices, interest
rates, foreign currency exchange rates, security prices or other underlying factors. Repurchase agreements
are valued based on expected settlement per the contract terms.
• Level 3—Assets were valued using unobservable inputs in which little or no market data exists as reported by
the respective institutions at the measurement date. Valuation methods may consider a range of factors,
including estimates based on the assumptions of the investment entity.
The Combined Pension Plan's assets are invested in various asset categories utilizing multiple strategies and
investment managers. Interests in commingled funds are fair valued using a practical expedient to the net asset
value ("NAV") per unit (or its equivalent) of each fund. The NAV reported by the fund manager is based on the
market value of the underlying investments owned by each fund, minus its liabilities, divided by the number of
shares outstanding. Commingled funds can be redeemed at NAV, with a frequency that includes daily, monthly,
quarterly, semi-annually and annually. These commingled funds include redemption notice periods between
same day and 180 days. Investments in private funds, primarily limited partnerships, represent long-term
commitments with a fixed maturity date and are also valued at NAV. The plan has unfunded commitments
related to certain private fund investments, which in aggregate are not material to the plan. Valuation inputs for
these private fund interests are generally based on assumptions and other information not observable in the
market. Underlying investments held in funds are aggregated and are classified based on the fund mandate.
Investments held in separate accounts are individually classified.
Appendix B
B-71
2024 ANNUAL REPORT
2025 PROXY STATEMENT
The table below presents the fair value of plan assets by category and the input levels used to determine those
fair values at December 31, 2024. It is important to note that the asset allocations do not include market
exposures that are gained with derivatives. Investments include dividend and interest receivables, pending
trades and accrued expenses.
Fair Value of Combined Pension Plan Assets
As of December 31, 2024
Level 1
Level 2
Level 3
Total
(Dollars in millions)
Assets
Investment grade bonds(a)
$ 372
1,391
—
1,763
High yield bonds(b)
—
26
4
30
Emerging market bonds(c)
70
34
—
104
U.S. stocks(d)
260
2
1
263
Non-U.S. stocks(e)
14
—
1
15
Cash equivalents and short-term investments(o)
6
2
—
8
Total investments, excluding investments valued at NAV
$ 722
1,455
6
2,183
Other receivables
27
Investments valued at NAV
2,359
Liabilities
Repurchase agreements & other obligations(n)
$ —
(361)
—
(361)
Derivatives(m)
(1)
(6)
—
(7)
Total pension plan assets
$ 4,201
The table below presents the fair value of plan assets by category and the input levels used to determine those
fair values at December 31, 2023. It is important to note that the asset allocations do not include market
exposures that are gained with derivatives. Investments include dividend and interest receivable, pending trades
and accrued expenses.
Fair Value of Combined Pension Plan Assets
As of December 31, 2023
Level 1
Level 2
Level 3
Total
(Dollars in millions)
Assets
Investment grade bonds(a)
$ 390
1,838
—
2,228
High yield bonds(b)
—
32
4
36
Emerging market bonds(c)
57
57
—
114
U.S. stocks(d)
247
—
1
248
Non-U.S. stocks(e)
6
—
—
6
Multi-asset strategies(l)
28
—
—
28
Total investments, excluding investments valued at NAV
$ 728
1,927
5
2,660
Investments valued at NAV
2,192
Liabilities
Repurchase agreements(n)
$ —
(375)
—
(375)
Derivatives(m)
(1)
—
—
(1)
Total pension plan assets
$
4,476
Appendix B
B-72
The table below presents the fair value of plan assets valued at NAV by category for our Combined Pension Plan
at December 31, 2024 and 2023.
Fair Value of Plan Assets Valued at NAV
Combined Pension Plan
As of December 31,
2024
2023
(Dollars in millions)
Investment grade bonds(a)
$
72
105
High yield bonds(b)
340
110
Emerging market bonds(c)
69
—
U.S. stocks(d)
6
51
Non-U.S. stocks(e)
529
412
Emerging market stocks(f)
4
10
Private equity(g)
253
272
Private debt(h)
398
421
Market neutral hedge funds(i)
85
77
Directional hedge funds(j)
108
124
Real estate(k)
218
265
Multi-asset strategies(l)
—
27
Cash equivalents and short-term investments(o)
277
318
Total investments valued at NAV
$ 2,359
2,192
Below is an overview of the asset categories and the underlying strategies used in the preceding tables:
(a)
Investment grade bonds represent investments in U.S. Treasury securities, agencies, corporate bonds, mortgage-backed securities,
asset-backed securities and commercial mortgage-backed securities.
(b)
High yield bonds represent investments in below investment grade fixed income securities.
(c)
Emerging market bonds represent investments issued by governments and other entities located in emerging countries.
(d)
U.S. stocks represent investments in stocks of U.S. based companies.
(e)
Non-U.S. stocks represent investments in companies based in developed countries outside the U.S.
(f)
Emerging market stocks represent investments in stocks of companies located in emerging markets.
(g)
Private equity represents non-public investments in domestic and foreign buyout and venture capital funds. Private equity funds are
primarily structured as limited partnerships and are valued according to the valuation policy of each partnership, subject to prevailing
accounting and other regulatory guidelines.
(h)
Private debt represents non-public investments in performing and distressed credits.
(i)
Market neutral hedge funds hold investments in a diversified mix of instruments that are intended in combination to exhibit low correlations
to market fluctuations. These investments are typically combined with futures to achieve uncorrelated excess returns over various markets.
(j)
Directional hedge funds represent investments that may exhibit somewhat higher correlations to market fluctuations than the market neutral
hedge funds.
(k)
Real estate represents investments in a diversified portfolio of real estate properties.
(l)
Multi-asset strategies represent broadly diversified strategies that have the flexibility to tactically adjust exposures to different asset classes
through time.
(m)
Derivatives include exchange traded futures contracts as well as privately negotiated over the counter contracts. The market values
represent gains or losses that occur due to differences between stated contract terms and fluctuations in underlying market instruments.
(n)
Repurchase agreements and other obligations includes contracts where the security owner sells a security with the agreement to buy it back
at a future date and price. Other obligations include obligations to repay cash collateral held by a plan, net liability for investment purchases
pending settlement, and accrued plan expenses.
(o)
Cash equivalents and short-term investments represent investments that are used in conjunction with derivatives positions or are used to
provide liquidity for the payment of benefits or other purposes.
Appendix B
B-73
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Derivative instruments: Derivative instruments are used to reduce risk as well as provide return. The gross
notional exposure of the derivative instruments directly held by the Combined Pension Plan is shown below. The
notional amount of the derivatives corresponds to market exposure but does not represent an actual
cash investment.
Gross Notional Exposure
Combined Pension Plan
Years Ended December 31,
2024
2023
(Dollars in millions)
Derivative instruments:
Exchange-traded U.S. equity futures
$ 212
60
Exchange-traded Treasury and other interest rate futures
795
1,136
Exchange-traded Foreign currency futures
—
1
Interest rate swaps
149
214
Credit default swaps
124
72
Index swaps
701
94
Foreign exchange forwards
47
57
Options
15
32
Concentrations of Risk: Investments, in general, are exposed to various risks, such as significant world events,
interest rate, credit, foreign currency and overall market volatility risk. These risks are managed by broadly
diversifying assets across numerous asset classes and strategies with differing expected returns, volatilities and
correlations. Risk is also broadly diversified across numerous market sectors and individual companies. Financial
instruments that potentially subject the plans to concentrations of counterparty risk consist principally of
investment contracts with high quality financial institutions. These investment contracts are typically
collateralized obligations and/or are actively managed, limiting the amount of counterparty exposure to any
one financial institution. Although the investments are well diversified, the value of plan assets could change
materially depending upon the overall market volatility, which could affect the funded status of the plan.
The table below presents a rollforward of the Combined Pension Plan assets valued using Level 3 inputs:
Combined Pension Plan Assets Valued
Using Level 3 Inputs
High
Yield
Bonds
U.S.
Stocks
Non-U.S.
Stocks
Total
(Dollars in millions)
Balance at December 31, 2022
$ 4
1
—
5
Dispositions
(2)
—
—
(2)
Actual return on plan assets
2
—
—
2
Balance at December 31, 2023
4
1
—
5
Acquisition
—
—
1
1
Actual return on plan assets
—
—
—
—
Balance at December 31, 2024
$ 4
1
1
6
Certain gains and losses are allocated between assets sold during the year and assets still held at year-end
based on transactions and changes in valuations that occurred during the year. These allocations also impact
our calculation of net acquisitions and dispositions.
For the year ended December 31, 2024, the investment program produced actual gains on Combined Pension
Plan assets of $107 million as compared to expected returns of $272 million, for a difference of $165 million. For
the year ended December 31, 2023, the investment program produced actual gains on Combined Pension Plan
assets of $255 million as compared to the expected returns of $287 million, for a difference of $32 million. The
short-term annual returns on plan assets will almost always be different from the expected long-term returns
and the plans could experience net gains or losses, due primarily to the volatility occurring in the financial
markets during any given year.
Appendix B
B-74
Unfunded Status
The following table presents the unfunded status of the Combined Pension Plan and post-retirement
benefit plans:
Combined Pension Plan
Post-Retirement
Benefit Plans
Years Ended December 31,
Years Ended December 31,
2024
2023
2024
2023
(Dollars in millions)
Benefit obligation
$ (4,816)
(5,212)
(1,750)
(1,919)
Fair value of plan assets
4,201
4,476
1
1
Unfunded status
(615)
(736)
(1,749)
(1,918)
Current portion of unfunded status
—
—
(186)
(193)
Non-current portion of unfunded status
$ (615)
(736)
(1,563)
(1,725)
The current portion of our post-retirement benefit obligations is recorded on our consolidated balance sheets in
accrued expenses and other current liabilities-salaries and benefits.
Accumulated Other Comprehensive Loss-Recognition and Deferrals
The following table presents cumulative items not recognized as a component of net periodic benefits expense
as of December 31, 2023, items recognized as a component of net periodic benefits expense in 2024, additional
items deferred during 2024 and cumulative items not recognized as a component of net periodic benefits
expense as of December 31, 2024. The items not recognized as a component of net periodic benefits expense
have been recorded on our consolidated balance sheets in accumulated other comprehensive loss:
As of and for the Years Ended December 31,
2023
Recognition
of Net
Periodic
Benefits
Expense
Deferrals
Net
Change in
AOCL
2024
(Dollars in millions)
Accumulated other comprehensive (loss) income
Pension plans:
Net actuarial (loss) gain
$ (1,819)
108
(48)
60 (1,759)
Settlement charge
383
—
—
—
383
Prior service benefit (cost)
10
(7)
—
(7)
3
Deferred income tax benefit (expense)
381
(25)
14
(11)
370
Total pension plans
(1,045)
76
(34)
42 (1,003)
Post-retirement benefit plans:
Net actuarial gain (loss)
337
(17)
84
67
404
Prior service benefit (cost)
29
(8)
—
(8)
21
Curtailment loss
4
—
—
—
4
Deferred income tax (expense) benefit
(94)
6
(21)
(15)
(109)
Total post-retirement benefit plans
276
(19)
63
44
320
Total accumulated other comprehensive (loss) income
$ (769)
57
29
86
(683)
Appendix B
B-75
2024 ANNUAL REPORT
2025 PROXY STATEMENT
The following table presents cumulative items not recognized as a component of net periodic benefits expense
as of December 31, 2022, items recognized as a component of net periodic benefits expense in 2023, additional
items deferred during 2023 and cumulative items not recognized as a component of net periodic benefits
expense as of December 31, 2023. The items not recognized as a component of net periodic benefits expense
have been recorded on our consolidated balance sheets in accumulated other comprehensive loss:
As of and for the Years Ended December 31,
2022
Recognition
of Net
Periodic
Benefits
Expense
Deferrals
Net
Change in
AOCL
2023
(Dollars in millions)
Accumulated other comprehensive (loss) income
Pension plans:
Net actuarial (loss) gain
$ (1,752)
80
(147)
(67) (1,819)
Settlement charge
383
—
—
—
383
Prior service benefit (cost)
17
(7)
—
(7)
10
Deferred income tax benefit (expense)
367
(23)
37
14
381
Total pension plans
(985)
50
(110)
(60) (1,045)
Post-retirement benefit plans:
Net actuarial gain (loss)
371
(20)
(14)
(34)
337
Prior service benefit (cost)
37
(8)
—
(8)
29
Curtailment loss
4
—
—
—
4
Deferred income tax (expense) benefit
(104)
7
3
10
(94)
Total post-retirement benefit plans
308
(21)
(11)
(32)
276
Total accumulated other comprehensive (loss) income
$ (677)
29
(121)
(92)
(769)
Medicare Prescription Drug, Improvement and Modernization Act of 2003
We sponsor post-retirement health care plans with several benefit options that provide prescription drug
benefits that we deem actuarially equivalent to or exceeding Medicare Part D. We recognize the impact of the
federal subsidy received under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 in
the calculation of our post-retirement benefit obligation and net periodic post-retirement benefit expense.
Other Benefit Plans
Health Care and Life Insurance
We provide health care and life insurance benefits to essentially all of our active employees. We are largely
self-funded for the cost of the health care plan. Our health care benefit expense for current employees was
$281 million, $288 million and $296 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Union-represented employee benefits are based on negotiated collective bargaining agreements. Employees
contributed $79 million, $89 million, $101 million for the years ended December 31, 2024, 2023 and 2022,
respectively. Our group basic life insurance plans are fully insured and the premiums are paid by us.
401(k) Plans
We sponsor a qualified defined contribution plan covering substantially all of our U.S. employees. Under this
plan, employees may contribute a percentage of their annual compensation up to certain maximums, as defined
by the plan and by the Internal Revenue Service. Currently, we match a percentage of employee contributions in
cash. At December 31, 2024 and 2023, the assets of the plan included approximately 8 million and 9 million
shares of our common stock, all of which were the result of the combination of previous employer match and
participant directed contributions. We recognized expenses related to this plan of $82 million, $87 million and
$91 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Appendix B
B-76
Deferred Compensation Plans
We sponsor non-qualified deferred compensation plans for various groups that included certain of our current
and former highly compensated employees. The value of liabilities related to these plans was not significant.
Note 12—Stock-based Compensation
We maintain an equity incentive program that allows our Board of Directors (through its Human Resources and
Compensation Committee or a senior officer acting under delegated authority) to grant incentives to certain
employees and outside directors in one or more forms, including: incentive and non-qualified stock options,
stock appreciation rights, restricted stock awards, restricted stock units and market and other equity-
based awards.
Restricted Stock Awards and Restricted Stock Unit Awards
We grant equity based restricted stock and restricted stock units that contain service only conditions for
vesting (“Service Awards”), awards that contain both service and market conditions for vesting (“Market
Awards”) and awards that contain both service and performance conditions for vesting (“Performance
Awards”). The fair value of Service Awards is based upon the closing stock price on the accounting grant date
and the awards generally vest over periods ranging from one to four years. The fair value of Market Awards is
determined using Monte-Carlo simulations and the awards vest over periods up to three years. The number of
shares ultimately earned for Market Awards is typically based upon our total shareholder return as compared to
the return of selected peer companies and can range between 0% and 200% of the target number of shares for
the award. The fair value of Performance Awards is based upon the closing stock price on the accounting grant
date; however, the award value may increase, or decrease based upon the extent to which the performance
conditions are satisfied. Performance Awards vest over periods of up to three-years and specify a target
number of shares for the award. The recipient ultimately can receive between 0% and 200% of the target
number of shares depending upon the extent to which the performance conditions are satisfied. All stock
awards granted in 2024 were subject to service vesting conditions only.
The following table summarizes activity involving restricted stock and restricted stock unit awards for the year
ended December 31, 2024:
Number of
Shares
Weighted-
Average
Grant Date
Fair Value
(in thousands)
Non-vested at December 31, 2023
28,052
$ 6.82
Granted
14,274
1.69
Vested
(8,579)
6.70
Forfeited
(5,587)
12.25
Non-vested at December 31, 2024
28,160
3.18
During 2024, we granted 14.3 million shares of restricted stock and restricted stock unit awards at a weighted-
average price of $1.69. During 2023, we granted 14.8 million shares of restricted stock and restricted stock unit
awards at a weighted-average price of $1.85. During 2022, we granted 18.8 million shares of restricted stock and
restricted stock unit awards at a weighted-average price of $11.47. The total fair value of restricted stock and
restricted stock unit awards that vested during 2024, 2023 and 2022, was $27 million, $21 million and
$98 million, respectively. We do not estimate forfeitures but recognize them as they occur.
Appendix B
B-77
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Compensation Expense and Tax Benefit
For Service Awards that vest ratably over the service period, we recognize compensation expense on a straight-
line basis over the requisite service period for the entire award. For Service Awards that vest at the end of the
service period and for Market Awards, we recognize compensation expense over the service period. For our
Performance Awards, we recognize compensation expense over the service period and based upon the
expected performance outcome, until the final performance outcome is determined. Total compensation
expense for all stock-based payment arrangements for the years ended December 31, 2024, 2023 and 2022, was
$29 million, $52 million and $98 million, respectively. Our tax benefit recognized in the consolidated statements
of operations for our stock-based payment arrangements for the years ended December 31, 2024, 2023 and
2022, was $7 million, $12 million and $25 million, respectively. At December 31, 2024, there was $28 million of
total unrecognized compensation expense related to our stock-based payment arrangements, which we expect
to recognize over a weighted-average period of 1.4 years.
Note 13—Loss Per Common Share
Basic and diluted loss per common share for the years ended December 31, 2024, 2023 and 2022 were
calculated as follows:
Years Ended December 31,
2024
2023
2022
(Dollars in millions, except per
share amounts, shares in thousands)
Loss (numerator)
Net loss
$
(55)
(10,298)
(1,548)
Net loss applicable to common stock for computing basic loss per common share
(55)
(10,298)
(1,548)
Net loss as adjusted for purposes of computing diluted loss per common share
$
(55)
(10,298)
(1,548)
Shares (denominator):
Weighted-average number of shares:
Outstanding during period
1,014,554
1,006,787
1,028,069
Non-vested restricted stock
(26,874)
(23,706)
(20,552)
Weighted average shares outstanding for computing basic loss per common share
987,680
983,081
1,007,517
Incremental common shares attributable to dilutive securities:
Shares issuable under convertible securities
—
—
—
Shares issuable under incentive compensation plans
—
—
—
Number of shares as adjusted for purposes of computing diluted loss per
common share
987,680
983,081
1,007,517
Basic loss per common share
$
(0.06)
(10.48)
(1.54)
Diluted loss per common share(1)
$
(0.06)
(10.48)
(1.54)
(1)
For the years ended December 31, 2024, December 31, 2023, and December 31, 2022, we excluded from the calculation of diluted loss per
share 7.3 million shares, 0.3 million shares and 3.8 million shares, respectively, potentially issuable under incentive compensation plans or
convertible securities, as their effect, if included, would have been anti-dilutive due to our net loss position.
Our calculation of diluted loss per common share excludes non-vested restricted stock awards that are anti-
dilutive based upon the terms of the award and due to the lower stock price resulting in more assumed
repurchases and greater antidilution. Such shares were 16.0 million, 22.5 million and 13.8 million for 2024, 2023
and 2022, respectively.
Appendix B
B-78
Note 14—Fair Value of Financial Instruments
Our financial instruments consist of cash, cash equivalents, restricted cash, accounts receivable, accounts
payable, long-term debt (excluding finance lease and other obligations), interest rate swap contracts, certain
equity investments and certain indemnification obligations. Due primarily to their short-term nature, the carrying
amounts of our cash, cash equivalents, restricted cash, accounts receivable and accounts payable approximate
their fair values.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between independent and knowledgeable parties who are willing and able to transact for an
asset or liability at the measurement date. We use valuation techniques that maximize the use of observable
inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated
values based on the reliability of the inputs using the below-described fair value hierarchy.
We determined the fair values of our long-term debt, including the current portion, based on quoted market
prices where available or, if not available, based on inputs other than quoted market prices in active markets
that are either directly or indirectly observable such as discounted future cash flows using current market
interest rates.
The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows:
Input Level
Description of Input
Level 1
Observable inputs such as quoted market prices in active markets.
Level 2
Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3
Unobservable inputs in which little or no market data exists.
The following table presents the carrying amounts and estimated fair values of our following financial assets and
liabilities as of December 31, 2024 and 2023, as well as the input level used to determine the fair values
indicated below:
As of
December 31, 2024
As of
December 31, 2023
Input
Level
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
(Dollars in millions)
Long-term debt, excluding finance lease and other obligations
2
$ 17,652
17,127
19,703
13,304
Indemnifications related to the sale of the Latin
American business(1)
3
87
84
86
86
(1)
Non-recurring fair value recorded in connection with the sale of our Latin American business was measured as of August 1, 2022. See Note
2—Divestitures of the Latin American, ILEC and EMEA Businesses for further details.
Note 15—Derivative Financial Instruments
From time to time, we use derivative financial instruments, primarily interest rate swaps, to manage our
exposure to fluctuations in interest rates. Our primary objective in managing interest rate risk is to decrease the
volatility of our earnings and cash flows affected by changes in the underlying rates. We have floating rate
long-term debt (see Note 7—Long-Term Debt and Credit Facilities). These obligations expose us to variability in
interest payments due to changes in interest rates. If interest rates increase, our interest expense increases.
Conversely, if interest rates decrease, our interest expense also decreases. Through their expiration on
June 30, 2022, we designated the interest rate swap agreements described below as cash flow hedges. Under
these hedges, we received variable-rate amounts from a counterparty in exchange for us making fixed-rate
payments over the lives of the agreements without exchange of the underlying notional amount. The change in
the fair value of the interest rate swap agreements was reflected in accumulated other comprehensive loss and
was subsequently reclassified into earnings in the period that the hedged transaction affected earnings by virtue
of qualifying as effective cash flow hedges. We do not use derivative financial instruments for
speculative purposes.
In 2019, we entered into variable-to-fixed interest rate swap agreements to hedge the interest on $4.0 billion
notional amount of floating rate debt. All such hedges were expired as of December 31, 2022.
Appendix B
B-79
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Amounts accumulated in accumulated other comprehensive loss related to derivatives were indirectly
recognized in earnings as periodic settlement payments were made throughout the term of the swaps.
The amount of realized losses reclassified from accumulated other comprehensive loss to the statement of
operations consists of the following (in millions):
Derivatives designated as hedging instruments
Cash flow hedging contracts
Year Ended December 31, 2022
$ 22
For the year ended December 31, 2022, amounts included in accumulated other comprehensive loss at the
beginning of the period were reclassified into earnings upon the settlement of the cash flow hedging contracts
on March 31, 2022 and June 30, 2022. During the year ended December 31, 2022, $19 million of net losses on the
interest rate swaps have been reflected in our consolidated statements of operations upon settlement of the
agreements in the first half of 2022.
Note 16—Income Taxes
The components of the income tax (benefit) expense are as follows:
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Income tax (benefit) expense:
Federal
Current
$ 87
7
838
Deferred
(251)
(2)
(332)
State
Current
(29)
(6)
283
Deferred
15
55
(191)
Foreign
Current
2
—
32
Deferred
1
7
(73)
Total income tax (benefit) expense
$ (175)
61
557
Income tax (benefit) expense was allocated as follows:
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Income tax (benefit) expense in the consolidated statements of operations:
Attributable to income
$ (175)
61
557
Stockholders' equity:
Tax effect of the change in accumulated other comprehensive loss
$ 26
(21)
297
Appendix B
B-80
The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate:
Years Ended December 31,
2024
2023
2022
(Percentage of pre-tax loss)
Statutory federal income tax rate
21.0%
21.0%
21.0%
State income taxes, net of federal income tax benefit
4.1%
(0.2%)
(8.8%)
Goodwill impairment
—%
(21.9%)
(68.9%)
Change in liability for unrecognized tax position
(16.8%)
(0.1%)
(0.2%)
Legislative changes to Global Intangible Low-Taxes Income ("GILTI")
(1.2%)
—%
—%
Nondeductible executive stock compensation
(4.9%)
—%
(0.1%)
Change in valuation allowance
2.3%
1.3%
0.9%
Net foreign income taxes
(2.3%)
—%
3.0%
Research and development credits
6.5%
0.1%
1.1%
Divestitures of businesses(1)
—%
(0.4%)
(4.0%)
Indemnification refunds
11.2%
—%
—%
Cancellation of debt income
59.3%
—%
—%
Other, net
(3.1%)
(0.4%)
(0.2%)
Effective income tax rate
76.1%
(0.6%)
(56.2%)
(1)
Includes GILTI incurred as a result of the sale of our Latin American business.
The effective tax rate for the year ended December 31, 2024 includes a $135 million favorable impact from the
exclusion of cancellation of debt income ("CODI") under Section 108 of the Internal Revenue Code. The effective
tax rate for the year ended December 31, 2023 includes a $2.2 billion unfavorable impact of a non-deductible
goodwill impairment and a $137 million favorable impact as a result of utilizing available capital losses generated
by the sale of our Latin American business in 2022. The effective tax rate for the year ended December 31, 2022
includes a $682 million unfavorable impact of non-deductible goodwill impairments and $128 million unfavorable
impact related to incurring tax on GILTI as a result of the sale of our Latin American business.
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and
deferred tax liabilities were as follows:
As of December 31,
2024
2023
(Dollars in millions)
Deferred tax assets
Post-retirement and pension benefit costs
$
583
659
Net operating loss carryforwards
649
794
Other employee benefits
22
23
Other
744
511
Gross deferred tax assets
1,998
1,987
Less valuation allowance
(343)
(399)
Net deferred tax assets
1,655
1,588
Deferred tax liabilities
Property, plant and equipment, primarily due to depreciation differences
(3,447)
(3,332)
Goodwill and other intangible assets
(1,002)
(1,271)
Gross deferred tax liabilities
(4,449)
(4,603)
Net deferred tax liability
$ (2,794)
(3,015)
Of the $2.8 billion and $3.0 billion net deferred tax liability at December 31, 2024 and 2023, respectively,
$2.9 billion and $3.1 billion is reflected as a long-term liability and $96 million and $112 million is reflected as a
net noncurrent deferred tax asset, in other, net on our consolidated balance sheets at December 31, 2024 and
2023, respectively.
Income taxes receivable as of December 31, 2024 and 2023, were $483 million and $273 million, respectively.
Appendix B
B-81
2024 ANNUAL REPORT
2025 PROXY STATEMENT
For U.S. tax purposes, the Company is required to recognize CODI on the difference between the adjusted issue
price of the debt exchanged and the fair market value of the new debt issued. As a result of the 2023 Exchange
Offers, the Company realized approximately $663 million of CODI for U.S. tax purposes. See Note 7—Long-Term
Debt and Credit Facilities to our consolidated financial statements in Item 8 of Part II of the Company’s Annual
Report on Form 10-K for the year ended December 31, 2024 for discussion of the 2023 Exchange Offers. The
Internal Revenue Code provides that a debtor may exclude CODI from taxable income to the extent certain
exceptions apply but must reduce certain of its tax attributes by the amount of the excluded CODI. For the year
ended December 31, 2023, the Company excluded approximately $663 million of CODI from taxable income
under Section 108 of the Code and, accordingly, the Company’s tax attributes have been reduced by a
corresponding amount.
At December 31, 2024, we had federal NOLs of approximately $570 million, net of expirations from Section 382
limitations and uncertain tax positions, for U.S. federal income tax purposes. We expect to use substantially all
of these NOLs to reduce our future federal tax liabilities, although the timing of that use will depend upon our
future earnings and future tax circumstances. Our ability to use these NOLs is subject to annual limits imposed
by Section 382. If unused, the NOLs will expire between 2027 and 2031.
At December 31, 2024, we had state NOLs of $12 billion (net of uncertain tax positions). Our ability to use these
NOLs is subject to annual limits imposed by Section 382.
We establish valuation allowances when necessary to reduce the deferred tax assets to amounts we expect to
realize. As of December 31, 2024, we established a valuation allowance of $343 million as it is more likely than
not that this amount of NOLs will not be utilized prior to expiration. Our valuation allowance at December 31,
2024 and 2023 is primarily related to NOLs. This valuation allowance decreased by $56 million during 2024,
primarily due to changes in our state NOL carryforwards.
A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related
federal benefit) for the years ended December 31, 2024 and 2023 is as follows:
2024
2023
(Dollars in millions)
Unrecognized tax benefits at beginning of year
$ 1,424
1,318
Decrease in tax positions of prior periods netted against deferred tax assets
(4)
(411)
Decrease in tax positions taken in the current year
(64)
(73)
Increase in tax positions taken in the prior year
65
752
Decrease due to payments/settlements
—
(1)
Decrease from the lapse of statute of limitations
(158)
(52)
Decrease related to divestitures of businesses
—
(109)
Unrecognized tax benefits at end of year
$ 1,263
1,424
As of December 31, 2024, the total amount of unrecognized tax benefits that, if recognized, would impact the
effective income tax rate was $404 million. The unrecognized tax benefits also include tax positions that, if
recognized, would result in adjustments to other tax accounts, primarily deferred taxes, which would not impact
the effective tax rate but could impact cash tax amounts payable to taxing authorities.
Our policy is to reflect interest expense associated with unrecognized tax benefits in income tax (benefit)
expense. We had accrued interest (presented before related tax benefits) of approximately $217 million and
$100 million at December 31, 2024 and 2023, respectively.
We, or at least one of our subsidiaries, file income tax returns in the U.S. federal jurisdiction and various states
and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-
U.S. income tax examinations by tax authorities for years before 2004. The Internal Revenue Service and state
and local taxing authorities reserve the right to audit any period where NOLs are available.
Based on our current assessment of various factors, including (i) the potential outcomes of these ongoing
examinations, (ii) the expiration of statute of limitations for specific jurisdictions, (iii) the negotiated settlement
of certain disputed issues, and (iv) the administrative practices of applicable taxing jurisdictions, it is reasonably
possible that the related unrecognized tax benefits for uncertain tax positions previously taken may decrease by
up to $395 million within the next 12 months. The actual amount of such decrease, if any, will depend on several
future developments and events, many of which are outside our control.
Appendix B
B-82
In August 2022, the Inflation Reduction Act was signed into law and which, among other things, implemented
a corporate alternative minimum tax (“CAMT”) on adjusted financial statement income effective for tax
periods occurring after December 31, 2022. The CAMT had no material impact on our financial results as of
December 31, 2024. In addition, in 2021, the Organization for Economic Co-operation and Development
(“OECD”) issued Pillar Two model rules introducing a new global minimum corporate tax of 15% and the OECD
and the majority of its participating countries continue to work toward the enactment of such tax. While the U.S.
has not adopted Pillar Two legislation, various other governments around the world have enacted such
legislation that is effective for tax periods after December 31, 2023. These global minimum tax rules have
increased our administrative and compliance burdens, but the impact to our financial statements for the year
ended December 31, 2024 was immaterial. We anticipate further legislative activity and administrative guidance
throughout 2025 and continue to monitor evolving global tax legislation.
Note 17—Segment Information
Our business is managed based on customer-facing sales channels to align with how we support our customers.
Our chief operating decision maker ("CODM"), who is the CEO of the Company, makes decisions and assesses
the performance of the Company reviewing two segments: Business and Mass Markets. Our reportable
segments have not been aggregated.
Under our Business segment we provide products and services to meet the needs of our enterprise and
wholesale customers under five distinct sales channels: Large Enterprise, Mid-Market Enterprise, Public Sector,
Wholesale and International and Other. For Business segment revenue, we report the following product
categories: Grow, Nurture, Harvest and Other, in each case through the sales channels outlined above. The
Business segment included the results of our Latin American, ILEC and EMEA businesses prior to their sales on
August 1, 2022, October 3, 2022 and November 1, 2023, respectively.
Under our Mass Markets Segment, we provide products and services to residential and small business
customers. We report the following product categories: Fiber Broadband, Other Broadband and Voice and
Other. The Mass Markets segment included the results of our ILEC business prior to its sale on October 3, 2022.
See detailed descriptions of these product and service categories in Note 4—Revenue Recognition.
As described in more detail below, our segments are managed based on the direct costs of providing services to
their customers and directly associated headcount and non-headcount operating expenses. Shared costs are
managed separately and included in "other unallocated expense" in the table included below "—Revenue and
Expenses." As referenced above, we reclassified certain prior period amounts to conform to the current period
presentation. See Note 1—Background and Summary of Significant Accounting Policies for additional detail on
these changes. The CODM uses adjusted EBITDA as the key indicator in assessing performance and allocating
resources for both the Business segment and Mass Markets segment.
The following tables summarize our segment results for 2024, 2023 and 2022 based on the segment
categorization we were operating under at December 31, 2024.
Year Ended December 31, 2024
Business
Mass Markets
(Dollars in millions)
Segment revenue
$ 10,363
2,745
Segment expense
Cost of services and products
3,063
69
Headcount costs
1,237
651
Non-headcount costs
652
572
Total expense
4,952
1,292
Total segment adjusted EBITDA
$ 5,411
1,453
Appendix B
B-83
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Year Ended December 31, 2023
Business
Mass Markets
(Dollars in millions)
Segment revenue
$ 11,583
2,974
Segment expense
Cost of services and products
3,248
79
Headcount costs
1,473
768
Non-headcount costs
807
610
Total expense
5,528
1,457
Total segment adjusted EBITDA
$ 6,055
1,517
Year Ended December 31, 2022
Business
Mass Markets
(Dollars in millions)
Segment revenue
$ 13,099
4,379
Segment expense
Cost of services and products
3,436
121
Headcount costs
1,584
945
Non-headcount costs
879
703
Total expense
5,899
1,769
Total segment adjusted EBITDA
$ 7,200
2,610
Revenue and Expenses
Our segment revenue includes all revenue from our two segments as described in more detail above. Our
segment revenue is based upon each customer's classification. We report our segment revenue based upon all
services provided to that segment's customers. Our segment expenses include (i) specific cost of service
expenses incurred as a direct result of providing services and products to segment customers, (ii) headcount
costs, which primarily includes salaries, commissions, and group insurance, and (iii) non-headcount costs, which
primarily includes legal and other professional fees, marketing and advertising expenses, other network related
expenses, and external commissions. We have not allocated assets or debt to specific segments.
The following items are excluded from our segment results, because they are centrally managed and not
monitored by or reported to our chief operating decision maker by segment:
• network expenses not incurred as a direct result of providing services and products to segment customers
and centrally managed expenses such as Finance, Human Resources, Legal, Marketing, Product Management
and IT, all of which are reported as "other unallocated expense" in the table below;
• depreciation and amortization expense;
• goodwill or other impairments;
• interest expense;
• stock-based compensation; and
• other income and expense items.
Appendix B
B-84
The following table reconciles total segment adjusted EBITDA to net loss for the years ended December 31,
2024, 2023 and 2022:
Years Ended December 31,
2024
2023
2022
(Dollars in millions)
Total segment adjusted EBITDA
$ 6,864
7,572
9,810
Depreciation and amortization
(2,956) (2,985) (3,239)
Goodwill impairment
—
(10,693) (3,271)
Other unallocated expense
(3,419) (3,426) (3,107)
Stock-based compensation
(29)
(52)
(98)
Operating income (loss)
460
(9,584)
95
Total other expense, net
(690)
(653) (1,086)
Loss before income taxes
(230) (10,237)
(991)
Income tax (benefit) expense
(175)
61
557
Net loss
$
(55) (10,298) (1,548)
We do not have any single customer that comprises more than 10% of our consolidated total operating revenue.
The assets we hold outside of the U.S. represent less than 10% of our total assets. Revenue from sources outside
of the U.S. comprises less than 10% of our total operating revenue.
Note 18—Commitments, Contingencies and Other Items
We are subject to various claims, legal proceedings and other contingent liabilities, including the matters
described below, which individually or in the aggregate could materially affect our financial condition, future
results of operations or cash flows.
We review our litigation accrual liabilities on a quarterly basis, but in accordance with applicable accounting
guidelines only establish accrual liabilities when losses are deemed probable and reasonably estimable and only
revise previously established accrual liabilities when warranted by changes in circumstances, in each case based
on then-available information. As such, as of any given date we could have exposure to losses under
proceedings as to which no liability has been accrued or as to which the accrued liability is inadequate. Subject
to these limitations, at December 31, 2024 and December 31, 2023, we had accrued $78 million and $84 million,
respectively, in the aggregate for our litigation and non-income tax contingencies, which is included in Other
under Current Liabilities or Other under Deferred Credits and Other Liabilities in our consolidated balance sheets
as of such dates. We cannot at this time estimate the reasonably possible loss or range of loss, if any, in excess
of our $78 million accrual due to the inherent uncertainties and speculative nature of contested proceedings.
The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given
contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on
our results of operations but nonetheless could have an adverse effect on our cash flows.
In this Note, a reference to a "putative" class action means a class has been alleged, but not certified, in
that matter.
Principal Proceedings
Houser Shareholder Suit
Lumen and certain of its current and former officers and directors were named as defendants in a putative
shareholder class action lawsuit filed on June 12, 2018 in the Boulder County District Court of the state of
Colorado, captioned Houser et al. v. CenturyLink, et al. The original complaint asserted claims on behalf of a
putative class of former Level 3 Communications, Inc. ("Level 3") shareholders who became CenturyLink, Inc.
shareholders as a result of our acquisition of Level 3. It alleged that the proxy statement provided to the Level 3
shareholders failed to disclose various material information, including information about strategic revenue,
customer loss rates, and customer account issues, among other items. The original complaint sought damages,
costs and fees, rescission, rescissory damages, and other equitable relief. In May 2020, the court dismissed the
original complaint. The plaintiffs appealed that decision, and in March 2022, the appellate court affirmed the
district court's order in part and reversed it in part. It then remanded the case to the district court for further
proceedings. The plaintiffs filed an amended complaint asserting the same claims and prayer for relief, and we
filed a motion to dismiss. The court granted our motion to dismiss in May 2023 and the plaintiffs appealed that
dismissal. In August 2024, the appellate court set aside the trial court's dismissal. In October 2024, we filed a
petition with the Colorado Supreme Court seeking a review of the appellate court's decision.
Appendix B
B-85
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Quantum Fiber Disclosure Litigation
In re Lumen Technologies, Inc. Securities Litigation. On March 3, 2023, a purported shareholder of Lumen filed a
putative class action complaint originally captioned Voigt et al. v. Lumen Technologies, et al. (now captioned In
re Lumen Technologies, Inc. Securities Litigation, Case 3:23-cv-00286-TAD-KDM), in the U.S. District Court for
the Western District of Louisiana. The complaint alleges that Lumen and certain of its current and former
officers violated the federal securities laws by omitting or misstating material information related to Lumen’s
expansion of its Quantum Fiber business. The court appointed a lead plaintiff who filed an amended complaint,
seeking money damages, attorneys’ fees and costs, and other relief. On October 30, 2024, the court granted the
motion to dismiss we filed against the amended complaint. The plaintiff filed and then withdrew an appeal.
Associated Derivative Litigation. On August 5, 2024, a purported shareholder of Lumen filed a shareholder
derivative complaint on behalf of Lumen captioned Slack v. Allen, et al., Case 3:24-cv-01043-TAD-KMM, in the
U.S. District Court for the Western District of Louisiana. The complaint alleges claims for breach of fiduciary
duty, violations of the federal securities laws, and other causes of action against current and former officers and
directors of Lumen allegedly responsible for omitting or misstating material information related to Lumen’s
expansion of its Quantum Fiber business. The complaint seeks money damages, attorneys’ fees and costs, and
other relief. Substantially similar derivative cases have been filed as follows: (i) on August 20, 2024, Capistrano
v. Storey, et al., Case 3:24-cv-01130-TAD-KMM, in the U.S. District Court for the Western District of Louisiana;
and on (ii) October 11, 2024, Ostrow v. Johnson, et al., Case 2024-3706, in the 4th Judicial District Court for the
Parish of Ouachita, State of Louisiana, subsequently removed on October 11, 2024, to the U.S. District Court for
the Western District of Louisiana as Case 3:24-cv-01399-TAD-KMM. The plaintiff in the Ostrow case voluntarily
dismissed that proceeding.
Lead-Sheathed Cable Litigation
Disclosure Litigation. In re Lumen Technologies, Inc. Securities Litigation II. On September 15, 2023, a purported
shareholder of Lumen filed a putative class action complaint originally captioned Glauber, et al. v. Lumen
Technologies (now captioned In re Lumen Technologies, Inc. Securities Litigation II, Case 3:23-cv-01290), in the
U.S. District Court for the Western District of Louisiana. The complaint alleged that Lumen and certain of its
current and former officers violated the federal securities laws by omitting or misstating material information
related to Lumen’s responsibility for environmental degradation allegedly caused by the lead sheathing of
certain telecommunications cables. The court appointed lead plaintiffs who filed an amended complaint, seeking
money damages, attorneys’ fees and costs, and other relief.
Derivative Litigation. On June 11, 2024, a purported shareholder of Lumen filed a shareholder derivative
complaint on behalf of Lumen captioned Brown v. Johnson, et al., Case 3:24-cv-00798-TAD-KDM, in the U.S.
District Court for the Western District of Louisiana. The complaint alleges claims for breach of fiduciary duty,
violations of the federal securities laws, and other causes of action against current and former officers and
directors of Lumen relating to placement or presence of lead-sheathed telecommunications cables. The
complaint seeks damages, injunctive relief, and attorneys' fees. Substantially similar derivative cases have been
filed as follows: (i) on August 9, 2024, Pourarian v. Johnson, et al., Case 3:24-cv-01071-TAD-KMM in the U.S.
District Court for the Western District of Louisiana; (ii) on September 9, 2024, Capistrano v. Johnson, et al.,
Case 3:24-cv-01234-TAD-KMM in the U.S. District Court for the Western District of Louisiana; (iii) on September
16, 2024, Vogel v. Perry, et al., Case 2024-3360 in the 4th Judicial District Court for the Parish of Ouachita, State
of Louisiana, subsequently removed on September 17, 2024 to the U.S. District Court for the Western District of
Louisiana as Case 3:24-cv-01274-TAD-KMM; and (iv) on September 25, 2024, Murray v. Allen, et al.,
Case 3:24-cv-01320 in the U.S. District Court for the Western District of Louisiana.
Environmental Litigation
Parish of St. Mary. On July 9, 2024, a putative class action complaint was filed in the 16th Judicial District
Court for the Parish of St. Mary, State of Louisiana, Case 138575, asserting claims on behalf of all parishes,
municipalities, and citizens owning real properties in the State of Louisiana that have been affected by
lead-sheathed telecommunications cables installed by AT&T and Lumen or their predecessors. The complaint
seeks damages and injunctive relief under Louisiana state law. The case was removed to the United States
District Court Western District of Louisiana Lafayette Division, Case 6:24-CV-01001-RRS-DJA. On
December 6, 2024,
Appendix B
B-86
the plaintiffs voluntarily dismissed the class action complaint without prejudice. On December 13, 2024, St.
Mary’s Parish along with other parishes, municipalities, and two individuals served a notice of intent to file
citizen suit under the Louisiana Environmental Quality Act, asserting claims identical to the class action which
the plaintiffs voluntarily dismissed.
Blum. On November 6, 2023, a putative class action complaint was filed in the 16th Judicial District Court for the
Parish of St. Mary, State of Louisiana, Case 137935, asserting claims on behalf of all citizens owning real
properties in the State of Louisiana that have been affected by lead-sheathed telecommunications cables
installed by AT&T, BellSouth, Verizon, and Lumen or their predecessors. The complaint seeks damages and
injunctive relief under Louisiana state law. The case has been removed to Federal Court in the United States
District Court Western District of Louisiana Lafayette Division, Case 6:23-CV-01748.
State Tax Suits
Since 2012, a number of Missouri municipalities have asserted claims in the Circuit Court of St. Louis County,
Missouri, alleging that we and several of our subsidiaries have underpaid taxes. These municipalities are seeking,
among other things, declaratory relief regarding the application of business license and gross receipts taxes and
back taxes from 2007 to the present, plus penalties and interest. In a February 2017 ruling in connection with
one of these pending cases, the court entered an order awarding the plaintiffs $4 million and broadening the tax
base on a going-forward basis. We appealed that decision to the Missouri Supreme Court. In December 2019, it
affirmed the circuit court's order in some respects and reversed it in others, remanding the case to the circuit
court for further proceedings. The Missouri Supreme Court's decision reduced our exposure in the case. In a
June 2021 ruling in one of the pending cases, another trial court awarded the cities of Columbia and Joplin
approximately $55 million, plus statutory interest. On appeal, the Missouri Court of Appeals affirmed in part and
reversed in part, vacated the judgment and remanded the case to the trial court with instructions for further
proceedings consistent with the Missouri Supreme Court's decision.
FCRA Litigation
In November 2014, a putative class action complaint captioned Bultemeyer v. CenturyLink, Inc. was filed in the
United States District Court for the District of Arizona, Case CV-14-02530-PHX-SPL, alleging violations of the
Fair Credit Reporting Act (the "FCRA"). In February 2017, the case was dismissed for lack of standing. The
plaintiff appealed and the 9th Circuit reversed and remanded. Class certification was contested and ultimately
granted in 2023. The 9th Circuit denied Lumen’s request to appeal the class certification ruling. A jury trial was
conducted in September 2024. The jury found that CenturyLink willfully violated the FCRA and awarded each
class member $500 for statutory damages and $2,000 for punitive damages. If the verdict is not set aside in
connection with post-trial motion practice, Lumen will appeal to the 9th Circuit. We have not accrued a
contingent liability for this matter. While liability is possible, we have not determined it to be probable, and
damages exposure, if any, is uncertain.
Billing Practices Suits
In June 2017, a former employee filed an employment lawsuit against us claiming that she was wrongfully
terminated for alleging that we charged some of our retail customers for products and services they did not
authorize. Thereafter, based in part on the allegations made by the former employee, several legal proceedings
were filed, including consumer class actions in federal and state courts, a series of securities investor class
actions in federal courts and several shareholder derivative actions in federal and Louisiana state courts. The
derivative cases were brought on behalf of CenturyLink, Inc. against certain current and former officers and
directors of the Company and seek damages for alleged breaches of fiduciary duties. We have settled the
consumer and securities investor class actions and the derivative actions.
We have engaged in discussions regarding related claims with a number of state attorneys general, and have
entered into agreements settling certain of the consumer practices claims asserted by several state
attorneys general.
December 2018 Outage Proceedings
We experienced an outage on one of our transport networks that impacted voice, IP, 911, and transport services
for some of our customers between the 27th and 29th of December 2018. We believe that the outage was
caused by a faulty network management card from a third-party equipment vendor.
Appendix B
B-87
2024 ANNUAL REPORT
2025 PROXY STATEMENT
The FCC and four states initiated formal investigations. In November 2020, following the FCC's release of a
public report on the outage, we negotiated a settlement which was disclosed by the FCC in December 2020.
The amount of the settlement was not material to our financial statements.
In December 2020, the Staff of the Washington Utilities and Transportation Commission ("WUTC") filed a
complaint against us based on the December 2018 outage, seeking penalties of approximately $7 million for
alleged violations of Washington regulations and laws. The Washington Attorney General's office sought
penalties of $27 million. Following trial, the WUTC issued an order imposing a penalty of approximately
$1 million. That decision is now pending appeal to the Washington State of Court of Appeals.
Latin American Tax Litigation and Claims
In connection with the 2022 divestiture of our Latin American business, the purchaser assumed responsibility for
the Brazilian tax claims described in our prior periodic reports filed with the SEC. We agreed to indemnify the
purchaser for amounts paid with respect to the Brazilian tax claims. The value of this indemnification and others
associated with the Latin American business divestiture are included in the indemnification amount as disclosed
in Note 14—Fair Value of Financial Instruments.
Huawei Network Deployment Investigations
Lumen has received requests from the following federal agencies for information relating to the use of
equipment manufactured by Huawei Technologies Company ("Huawei") in Lumen’s networks.
• DOJ. Lumen has received a civil investigative demand from the U.S. Department of Justice in the course of a
False Claims Act investigation alleging that Lumen Technologies, Inc. and Lumen Technologies Government
Solutions, Inc. failed to comply with certain specified requirements in federal contracts concerning their use of
Huawei equipment.
• FCC. The FCC’s Enforcement Bureau issued a Letter of Inquiry to Lumen Technologies, Inc. regarding its
written certifications to the FCC that Lumen has complied with FCC rules governing the use of resources
derived from the High Cost Program, Lifeline Program, Rural Health Care Program, E-Rate Program,
Emergency Broadband Benefit Program, and the Affordable Connectivity Program. Under these programs,
federal funds may not be used to facilitate the deployment or maintenance of equipment or services provided
by Huawei, a company that the FCC has determined poses a national security threat to the integrity of U.S.
communications networks or the communications supply chain.
• Team Telecom. The Committee for the Assessment of Foreign Participation in the United States
Telecommunications Service Sector (comprised of the U.S. Attorney General, and the Secretaries of the
Department of Homeland Security, and the Department of Defense), commonly referred to as Team
Telecom, issued questions and requests for information relating to Lumen’s FCC licenses and its use of
Huawei equipment.
Marshall Fire Litigation
On December 30, 2021, a wildfire referred to as the Marshall Fire ignited near Boulder, Colorado. The Marshall
Fire killed two people, and it burned thousands of acres, including entire neighborhoods. Approximately 300
lawsuits naming various defendants and asserting various claims for relief have been filed. To date, three of
those name our affiliate Qwest Corporation as being at fault: Allstate Fire and Casualty Insurance Company, et
al., v. Qwest Corp., et al., Case 2023-cv-3048, and Wallace, et al. v. Qwest Corp., et al., Case 2023-cv-30488,
both of which have been consolidated with Kupfner et al v Public Service Company of Colorado, et al., Case
2022-cv-30195. The consolidated proceeding is pending in Colorado District Court, Boulder, Colorado,
Preliminary estimates of potential damage claims exceed $2 billion.
911 Surcharge
In June 2021, the Company was served with a complaint filed in the Santa Fe County District Court by Phone
Recovery Services, LLC (“PRS”), acting on behalf of the State of New Mexico. The complaint claims Qwest
Corporation and CenturyTel of the Southwest have violated the New Mexico Fraud Against Taxpayers Act since
2004 by failing to bill, collect and remit certain 911 surcharges from customers. Through pre-trial proceedings,
the Court narrowed the issues to be resolved by jury. On August 21, 2024, a jury decided the remaining issues,
and consequently all claims asserted, in Lumen's favor. The plaintiff has filed a Notice of Appeal and Lumen
submitted a cross-appeal as to the original motion to dismiss and motion for summary judgment.
Appendix B
B-88
Other Proceedings, Disputes and Contingencies
From time to time, we are involved in other proceedings incidental to our business, including patent
infringement allegations, regulatory hearings relating primarily to our rates or services, actions relating to
employee claims, tax issues, or environmental law issues, grievance hearings before labor regulatory agencies,
miscellaneous third-party tort actions, or commercial disputes.
We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities
which are seeking substantial recoveries. These cases have progressed to various stages and one or more may
go to trial within the next twelve months if they are not otherwise resolved. Where applicable, we are seeking
full or partial indemnification from our vendors and suppliers.
We are subject to various foreign, federal, state and local environmental protection and health and safety laws.
From time to time, we are subject to judicial and administrative proceedings brought by various governmental
authorities under these laws. Several such proceedings are currently pending, but none is reasonably expected
to exceed $300,000 in fines and penalties. In addition, in the past we acquired companies that had installed
lead-sheathed cables several decades earlier, or had operated certain manufacturing companies in the first part
of the 1900s. Under applicable environmental laws, we could be named as a potentially responsible party for a
share of the remediation of environmental conditions arising from the historical operations of our predecessors.
The outcomes of these other proceedings described under this heading are not predictable. However, based on
current circumstances, we do not believe that the ultimate resolution of these other proceedings, after
considering available defenses and any insurance coverage or indemnification rights, will have a material
adverse effect on us.
The matters listed in this Note do not reflect all our contingencies. The ultimate outcome of the above-described
matters may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of
our statements appearing above in this Note, and proceedings we currently consider immaterial may ultimately
affect us materially.
Right-of-Way
At December 31, 2024, our future rental commitments and Right-of-Way ("ROW") agreements were as follows:
(Dollars in millions)
2025
$ 204
2026
72
2027
71
2028
67
2029
54
2030 and thereafter
717
Total future minimum payments
$ 1,185
Purchase Commitments
We have several commitments to a variety of vendors for services to be used in the ordinary course of business
totaling $2.4 billion at December 31, 2024. Of this amount, we and our subsidiaries expect to purchase
$795 million in 2025, $1.2 billion in 2026 through 2027, $256 million in 2028 through 2029 and $164 million in
2030 and thereafter. These amounts do not represent our entire anticipated purchases in the future, but
represent only those items for which we were contractually committed as of December 31, 2024.
Appendix B
B-89
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Note 19—Other Financial Information
Other Current Assets
The following table presents details of other current assets reflected in our consolidated balance sheets:
As of December 31,
2024
2023
(Dollars in millions)
Prepaid expenses
$ 372
395
Income tax receivable
483
273
Materials, supplies and inventory
146
209
Contract assets
16
19
Contract acquisition costs
102
107
Contract fulfillment costs
109
102
Assets held for sale
24
104
Other
22
14
Total other current assets
$ 1,274
1,223
Current Liabilities
Included in accounts payable at December 31, 2024 and 2023 were $248 million and $274 million, respectively,
associated with capital expenditures.
Other Income (Expense), Net
Other income (expense), net reflects certain items not directly related to our core operations, including gains
and losses from non-operating asset dispositions. For the year ended December 31, 2024, Other income
(expense), net included a gain on sale of investment of $205 million.
Note 20—Repurchases of Lumen Common Stock
During the fourth quarter of 2022, our Board of Directors authorized a two-year program to repurchase up to an
aggregate of $1.5 billion of our outstanding common stock, which expired on November 2, 2024. During the
years ended December 31, 2024 and 2023, we did not repurchase any shares of our outstanding common stock
under this program. During the year ended December 31, 2022, we repurchased under this program 33 million
shares of our outstanding common stock in the open market for an aggregate market price of $200 million, or
an average purchase price of $6.07 per share. All repurchased common stock has been retired. As a result,
common stock and additional paid-in capital were reduced as of December 31, 2022 by $33 million and
$167 million, respectively.
Note 21—Accumulated Other Comprehensive Loss
Information Relating to 2024
The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated
balance sheet by component for the year ended December 31, 2024:
Pension
Plans
Post-
Retirement
Benefit
Plans
Foreign
Currency
Translation
Adjustment
and Other
Total
(Dollars in millions)
Balance at December 31, 2023
$ (1,045)
276
(41)
(810)
Other comprehensive (loss) income before reclassifications
(34)
63
1
30
Amounts reclassified from accumulated other comprehensive
income (loss)
76
(19)
—
57
Net current-period other comprehensive income
42
44
1
87
Balance at December 31, 2024
$ (1,003)
320
(40)
(723)
Appendix B
B-90
The table below presents further information about our reclassifications out of accumulated other
comprehensive loss by component for the year ended December 31, 2024:
Year Ended December 31, 2024
(Decrease) Increase
in Net Loss
Affected Line Item in Consolidated
Statement of Operations
(Dollars in millions)
Amortization of pension & post-retirement plans (1)
Net actuarial loss
$ 91
Other income (expense), net
Prior service cost
(15) Other income (expense), net
Total before tax
76
Income tax benefit
(19) Income tax (benefit) expense
Net of tax
$ 57
(1)
See Note 11—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and
post-retirement plans.
Information Relating to 2023
The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated
balance sheet by component for the year ended December 31, 2023:
Pension
Plans
Post
Retirement
Benefit
Plans
Foreign
Currency
Translation
Adjustment
and Other
Total
(Dollars in millions)
Balance at December 31, 2022
$ (985)
308
(422) (1,099)
Other comprehensive loss before reclassifications
(110)
(11)
(1)
(122)
Amounts reclassified from accumulated other comprehensive
income (loss)
50
(21)
382
411
Net current-period other comprehensive (loss) income
(60)
(32)
381
289
Balance at December 31, 2023
$ (1,045)
276
(41)
(810)
Appendix B
B-91
2024 ANNUAL REPORT
2025 PROXY STATEMENT
The table below presents further information about our reclassifications out of accumulated other
comprehensive loss by component for the year ended December 31, 2023:
Year Ended December 31, 2023
(Decrease) Increase
in Net Loss
Affected Line Item in Consolidated
Statement of Operations
(Dollars in millions)
Amortization of pension & post-retirement plans (1)
Net actuarial loss
$ 82
Other income (expense), net
Prior service cost
(15)
Other income (expense), net
Total before tax
67
Income tax benefit
(16)
Income tax (benefit) expense
Net of tax
$ 51
Year Ended December 31, 2023
Reclassification out of
Accumulated Other
Comprehensive Loss
Affected line item in Consolidated
Balance Sheets and Consolidated
Statement of Operations
Reclassification of realized loss on foreign currency
translation to valuation allowance within assets held
for sale(2)
$ 389
Assets held for sale
Reclassification of realized loss on foreign currency
translation to loss on sale of business(3)
(7)
Net loss (gain) on sale of businesses
Subtotal reclassification of realized loss on
foreign currency
382
Reclassification of net actuarial loss to valuation
allowance within assets held for sale(2)
(24)
Assets held for sale
Reclassification of net actuarial gain to loss on sale
of business(3)
2
Net loss (gain) on sale of businesses
Subtotal reclassification of net actuarial loss
(22)
Income tax benefit
—
Income tax expense
Net of tax
$ 360
(1)
See Note 11—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and post-
retirement plans.
(2)
Recognized in net income through net loss (gain) on sale of business for the year ended December 31, 2022 and included in our valuation
allowance in assets held for sale as of December 31, 2022.
(3)
(Decrease) increase to net loss for the year ended December 31, 2023.
Note 22—Labor Union Contracts
As of December 31, 2024, approximately 21% of our employees were represented by the Communications
Workers of America ("CWA") or the International Brotherhood of Electrical Workers ("IBEW"). Approximately
10% of our represented employees are subject to collective bargaining agreements that are scheduled to expire
over the 12 month period ending December 31, 2025.
Note 23—Dividends
The declaration of dividends is solely at the discretion of our Board of Directors.
On November 2, 2022, we announced that our Board had terminated our quarterly cash dividend program; as a
result no dividends were declared and paid in 2023 or 2024.
Our Board declared the following dividends payable in 2022:
Date Declared
Record Date
Dividend
Per Share
Total Amount
Payment Date
(in millions)
August 18, 2022
8/30/2022
$ 0.25
$ 253
9/9/2022
May 19, 2022
5/31/2022
0.25
253
6/10/2022
February 24, 2022
3/8/2022
0.25
253
3/18/2022
Appendix B
B-92
Appendix C
Proposed Amendments to Our Articles
of Incorporation Pursuant to Item 3
If the proposal to amend our articles of incorporation pursuant to Item 3 is approved and our Board elects to
implement a Reverse Stock Split, Section A of Article III of our restated articles of incorporation would be
amended and restated as follows (with language to be removed being shown as a strikethrough and language
to be added being shown in boldface underscored text):
ARTICLE III
Capital
A. Authorized Stock. The Corporation shall be authorized to issue an aggregate of 2,202,000,000
[____________]* shares of capital stock, of which 2,200,000,000 [___________] shares shall be Common
Stock, no par value per share, and 2,000,000 shares shall be Preferred Stock, $25.00 par value per share.
As of the Effective Time (as defined below), pursuant to the Louisiana Business Corporation Act and these
Articles of Amendment to the Articles of Incorporation of the Corporation, each [__] shares of the
Corporation’s Common Stock issued and outstanding at such time shall, automatically and without any action
on the part of the respective holders thereof, be combined and converted into one validly issued, fully-paid
and non-assessable share of the Corporation’s Common Stock (the “Reverse Stock Split”). No fractional
shares shall be issued in connection with the Reverse Stock Split and, in lieu thereof, any shareholder who
would otherwise be entitled to receive in connection therewith a fractional interest in a share of Common
Stock shall instead be entitled to receive a cash payment equal to the product determined by multiplying
such fraction by the average of the closing sales prices per share of the Common Stock for the five
consecutive trading days immediately preceding the Effective Date (as defined below) as reported on the
New York Stock Exchange (with such average closing sales price being multiplied by [___]), without interest.
For purposes of the foregoing paragraph, “Effective Date” means [_______ __] and “Effective Time” means
2:01 a.m. Central Time on the Effective Date.
___________________________________________________________
*
The amount of authorized shares will be reduced in proportion to the reverse stock split ratio selected by our Chief Executive Officer and
Chief Financial Officer, in consultation with the Board, if and only if the reverse stock is implemented.
C-1
2024 ANNUAL REPORT
2025 PROXY STATEMENT
Appendix D
Proposed Amended and Restated Articles of
Incorporation Pursuant to Items 4A, 4B, 4C
and 4D
If all of the proposals to make certain technical amendments to our articles of incorporation pursuant to Items
4A, 4B, 4C and 4D are approved, the below-referenced portions of Articles II, IV, V, VI and VII of our restated
articles of incorporation would be amended and restated as follows (with language to be removed being shown
as a strikethrough and language to be added being shown in boldface underscored text):
ARTICLE II
Purpose
The purpose of the Corporation is to engage in any lawful activity for which corporations may be formed under
the Business Corporation Law Act of Louisiana.
Article IV
Directors
B. Election and Term. All directors shall be elected by a majority vote of shareholders at and after the 2012
annual meeting of , subject to the terms and conditions prescribed in the Bylaws and Article IV(C) hereof. All
directors elected by shareholders shall hold office until the next annual meeting of shareholders and until their
successors are duly elected and qualified. Directors whose terms do not expire at the 2012 annual meeting of
shareholders shall hold office until the annual meeting for the year in which the director’s term expires and until
their successors are duly elected and qualified.
ARTICLE V
Certain Business Combinations
D. Definitions. The following terms, for all purposes of these Articles or the By-laws of this Corporation, shall
have the following meaning:
(6) “Capital Stock” means any Common Stock, Preferred Stock or other capital stock of the Corporation, or any
bonds, debentures, or other obligations granted voting rights by the Corporation pursuant to La. R.S. 12:75H the
Business Corporation Act of Louisiana.
E. Benefit of Statute. This Corporation claims and shall have the benefit of the provisions of R.S. 12:133 except
that the provisions of R.S. 12:133 shall not apply to any business combination involving an interested shareholder
that is an employee benefit plan or related trust of this Corporation.
ARTICLE VI
Shareholders’ Meetings
A. Written Consents. Any action required or permitted to be taken at any annual or special meeting of
shareholders may be taken only upon the vote of the shareholders, present in person or represented by duly
authorized proxy, at an annual or special meeting duly noticed and called, as provided in the Bylaws of the
Corporation, and may not be taken by a written consent of the shareholders pursuant to the Business
Corporation Law Act of the State of Louisiana.
D-1
2024 ANNUAL REPORT
2025 PROXY STATEMENT
B. Special Meetings. Subject to the terms of any outstanding class or series of Preferred Stock that entitles the
holders thereof to call special meetings, the holders of a majority 25% or more of all the Total Voting Power of
the Corporation votes entitled to be cast by shareholders on any issue proposed to be considered shall be
required to cause the Secretary of the Corporation to call a special meeting of shareholders pursuant to La. R.S.
12:73B1-702 (or any successor provision). Nothing in this Article VI shall limit the power of the President of the
Corporation or its Board of Directors to call a special meeting of shareholders.
ARTICLE VII
Limitation of Liability and Indemnification
A. Limitation of Liability. To the fullest extent permitted by the Business Corporation Act of Louisiana, Nno
director or officer of the Corporation shall be liable to the Corporation or to its shareholders for monetary
damages for breach of his fiduciary duty any action taken, or any failure to take action, as a director or officer,
provided that the foregoing provision shall not eliminate or limit the liability of a director or officer for (1) any
breach of his duty of loyalty to the Corporation or its shareholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3) liability for unlawful distributions of the
Corporation’s assets to, or redemptions or repurchases of the Corporation’s shares from, shareholders of the
Corporation, under and to the extent provided in La. R.S. 12:92D; or (4) any transaction from which he derived
an improper personal benefit.
B. Authorization of Further Actions. The Board of Directors may (1) cause the Corporation to enter into
contracts with its directors and officers providing for the limitation of liability set forth in this Article to the
fullest extent permitted by law, (2) adopt By-laws or resolutions, or cause the Corporation to enter into
contracts, providing for indemnification of directors and officers of the Corporation and other persons
(including but not limited to directors and officers of the Corporation’s direct and indirect Subsidiaries) to the
fullest extent permitted by law (including the adoption of provisions contemplated by La. R.S. 1-851(A)(2))
and (3) cause the Corporation to exercise the insurance powers set forth in procure insurance on behalf of
directors and officers of the Corporation and other persons (including but not limited to directors and
officers of the Corporation’s direct and indirect Subsidiaries) to the fullest extent permitted by La. R.S.
12:83F1-857 and any other relevant provision of the Business Corporation Act of Louisiana, notwithstanding
that some or all of the members of the Board of Directors acting with respect to the foregoing may be parties to
such contracts or beneficiaries of such By-laws or resolutions or the exercise of such powers. No repeal or
amendment of any such By-laws or resolutions limiting the right to indemnification thereunder shall affect the
entitlement of any person to indemnification whose claim thereto results from conduct occurring prior to the
date of such repeal or amendment.
Appendix D
D-2
Corporate Headquarters
100 CenturyLink Drive
Monroe, Louisiana 71203
General Information: 318-388-9000
Transfer Agent
For address changes, stock transfers, name changes, registration changes, lost stock certificates and stock
holdings, please contact:
Computershare Investor Services L.L.C.
P.O. Box 43006
Providence, RI 02940-3006
1-800-969-6718
www.computershare.com/lumen
Auditors
KPMG LLP
1225 17th Street, Suite 800
Denver, Colorado 80202
Investor Relations
Inquiries by securities analysts, investment professionals and shareholders about Lumen Technologies, Inc.
Common Shares, including requests for any SEC or other shareholder reports should be directed to:
investor.relations@lumen.com
ir.lumen.com
Annual Report
After the close of each fiscal year, Lumen Technologies, Inc. submits an Annual Report on Form 10-K to the SEC
containing certain additional information about its business. A copy of the 10-K report may be obtained without
charge by addressing your request to Corporate Secretary, Lumen Technologies, Inc., 100 CenturyLink Drive,
Monroe, Louisiana 71203, or by visiting our website at www.lumen.com.
Common Shares
Lumen Common Shares are traded on the New York Stock Exchange under the symbol LUMN.
As of March 19, 2025, the record date for the meeting, we had 1,025,099,348 Common Shares and 7,018
Preferred Shares issued and outstanding. There were 73,868 common shareholders of record.
Lumen, Lumen Technologies, Inc. and the Lumen logos are either registered service marks or service marks of
Lumen Technologies, Inc. and/or one of its affiliates in the United States and/or other countries. Any other
service names, product names, company names or logos included herein are the trademarks or service marks of
their respective owners.
Communications to the Board
Communication with shareholders and other interested parties is an important part of the governance process.
Any shareholder or other stakeholder who wishes to contact the Board, Chairman or any Director can send
correspondence to:
Write: P.O. Box 5061; Monroe, Louisiana 71211
Email: boardinquiries@lumen.com