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Lumos Networks Corp. – ‘DEF 14A’ for 5/1/13

On:  Tuesday, 3/12/13, at 5:02pm ET   ·   Effective:  3/12/13   ·   For:  5/1/13   ·   Accession #:  1193125-13-103339   ·   File #:  1-35180

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 3/12/13  Lumos Networks Corp.              DEF 14A     5/01/13    1:1.2M                                   Donnelley … Solutions/FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Notice and Proxy                                    HTML    983K 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant  x                              Filed by a Party other than the Registrant  ¨

Check the appropriate box:

LUMOS NETWORKS CORP.

(Name of registrant as specified in its charter)

(Name of person(s) filing proxy statement, if other than the registrant)

Payment of Filing Fee (Check the appropriate box):

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March 12, 2013

Dear Stockholder:

You are cordially invited to attend our 2013 Annual Meeting of Stockholders of Lumos Networks Corp., which will be held at 9:00 a.m. (local time) on Wednesday, May 1, 2013, at The Chrysler Building, 405 Lexington Avenue, 9^th Floor, New York, New York.

The principal business of the 2013 Annual Meeting of Stockholders will be (i) the election of eight directors to serve until the 2014 Annual Meeting of Stockholders, (ii) the approval of a non-binding advisory resolution approving the compensation of our named executive officers, (iii) the approval of the material terms allowing for certain performance-based awards under our 2011 Equity and Cash Incentive Plan pursuant to Section 162(m) of the Internal Revenue Code and (iv) the ratification of the appointment by the Audit Committee of the Board of Directors of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2013. We will also review our results for the past fiscal year and report on significant aspects of our operations during the first quarter of 2013.

In accordance with the rules approved by the Securities and Exchange Commission, we are furnishing proxy materials to certain stockholders over the Internet. You may read, print and download our annual report on Form 10-K and proxy statement at http://www.envisionreports.com/LMOS. On or before March 18, 2013, we will mail our non-registered stockholders a notice containing instructions on how to access our 2013 proxy statement and annual report on Form 10-K and vote online or by telephone. The notice also provides instructions on how those stockholders can request a paper copy of these documents if they desire. All other stockholders will continue to receive our annual report on Form 10-K and proxy statement by mail.

If you do not attend the 2013 Annual Meeting of Stockholders, we request that you vote by telephone or Internet, or if you received a paper copy of the proxy card by mail, by signing your proxy card and mailing it in the envelope provided. The proxy card materials provide you with details on how to vote by these three methods. The prompt vote by telephone or Internet or return of your proxy card will be appreciated. If you decide to attend the 2013 Annual Meeting of Stockholders, you may revoke your proxy and personally cast your vote.

Thank you, and we look forward to seeing you at the 2013 Annual Meeting of Stockholders or receiving your proxy vote.

Sincerely yours,

Timothy G. Biltz

President and Chief Executive Officer

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LUMOS NETWORKS CORP.

One Lumos Plaza

Waynesboro, Virginia 22980

(540) 946-2000

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Notice is hereby given that the 2013 Annual Meeting of Stockholders of Lumos Networks Corp. (“Lumos Networks” or the “Company”) will be held at 9:00 a.m. (local time) on Wednesday, May 1, 2013, at The Chrysler Building, 405 Lexington Avenue, 9^th Floor, New York, New York. The meeting is called for the following purposes:

The Board of Directors has fixed the close of business on March 8, 2013 as the record date for the purpose of determining the stockholders who are entitled to notice of and to vote at the meeting and any adjournment or postponement thereof.

Waynesboro, Virginia

March 12, 2013

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. PLEASE VOTE YOUR SHARES ACCORDING TO THE INSTRUCTIONS CONTAINED IN THE PROXY MATERIALS YOU RECEIVED SO THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING. IF YOU DECIDE TO ATTEND THE 2013 ANNUAL MEETING OF STOCKHOLDERS, YOU MAY REVOKE YOUR PROXY AND PERSONALLY CAST YOUR VOTE.

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LUMOS NETWORKS CORP.

One Lumos Plaza

Waynesboro, Virginia 22980

PROXY STATEMENT

For the Annual Meeting of Stockholders

to be held May 1, 2013

This proxy statement is furnished by and on behalf of the Board of Directors of Lumos Networks Corp., or Lumos Networks, in connection with the solicitation of proxies for use at our 2013 Annual Meeting of Stockholders to be held at 9:00 a.m. (local time) on Wednesday, May 1, 2013, at The Chrysler Building, 405 Lexington Avenue, 9^th Floor, New York, New York, and at any adjournments or postponements thereof. This proxy statement and the proxy card are being made available to our stockholders of record on March 8, 2013, the record date. Our Board of Directors is making these materials available to you on the Internet, or for registered stockholders or upon your request, is delivering printed versions of these materials to you by mail. On or before March 18, 2013, we will mail a notice to our non-registered stockholders containing instructions on how to access the proxy statement and annual report on Form 10-K and vote, and on or about March 18, 2013, we will mail the proxy statement and annual report on Form 10-K to all of our other stockholders.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF

PROXY MATERIALS FOR THE 2013 ANNUAL MEETING OF

STOCKHOLDERS TO BE HELD ON MAY 1, 2013

The Proxy Statement and Annual Report on Form 10-K are Available

at

http://www.envisionreports.com/LMOS.

THE BOARD OF DIRECTORS URGES YOU TO PROMPTLY VOTE YOUR SHARES IN ACCORDANCE WITH THE INSTRUCTIONS IN THE PROXY MATERIALS YOU RECEIVED SO THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING.

YOUR VOTE IS IMPORTANT!

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SOLICITATION, VOTING AND REVOCABILITY OF PROXIES

General

Proxies will be voted as specified by the stockholder or stockholders granting the proxy. Stockholders can vote in person at the 2013 Annual Meeting of Stockholders or by proxy. There are three ways to vote by proxy:

Internet and telephone facilities will be available 24 hours a day and close at 12:00 a.m. (Eastern time) on May 1, 2013.

Unless contrary instructions are specified, if the proxy card is executed and returned (and not revoked) prior to the 2013 Annual Meeting of Stockholders, the shares of our common stock, $0.01 par value per share, or Common Stock, represented thereby will be voted FOR all of the proposals set forth in this proxy statement. The submission of a proxy will not affect a stockholder’s right to attend and to vote in person at the 2013 Annual Meeting of Stockholders. A stockholder who submits a proxy may change or revoke it at any time before it is voted by filing with our Secretary either a written revocation or an executed proxy bearing a later date, by attending and voting in person at the 2013 Annual Meeting of Stockholders or granting a subsequent proxy through the Internet or by telephone.

Only holders of record of Common Stock as of the close of business on the record date will be entitled to vote at the 2013 Annual Meeting of Stockholders. Holders of shares authorized to vote are entitled to cast one vote per share on all matters voted upon at the 2013 Annual Meeting of Stockholders. As of the close of business on the record date, there were 21,930,737 shares of Common Stock outstanding.

If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions from the holder of record. You must follow the instructions of the holder of record in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholders owning shares through certain banks and brokers. Please follow the instructions provided on your proxy card or voting instructions. If your shares are not registered in your own name and you plan to vote your shares in person at the 2013 Annual Meeting of Stockholders, you should contact your broker or agent to obtain a legal proxy or broker’s proxy card and bring it to the 2013 Annual Meeting of Stockholders in order to vote.

With respect to shares held in the Lumos Networks Savings and Security Plan, your proxy card, when signed and returned, or your telephone or Internet vote, will also constitute voting instructions to New York Life (the “Trustee”) for these shares. Shares for which voting instructions are not received, subject to the Trustee’s fiduciary obligations, will be voted by the Trustee in the same proportion as the shares for which voting instructions are received from other participants in the plan. To allow sufficient time for voting by the Trustee, your voting instructions must be received by 12:00 a.m. (Eastern time) on April 30, 2013.

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Only stockholders who own Common Stock as of the close of business on March 8, 2013 will be entitled to attend the 2013 Annual Meeting of Stockholders. Proof of stock ownership as of this date and some form of government-issued photo identification (such as a valid driver’s license or passport) will be required for admission to the 2013 Annual Meeting of Stockholders. If you hold your shares of Common Stock in a brokerage account or through another nominee, you are the beneficial owner of those shares but not the record holder and you will need to obtain a “legal proxy” from the record holder to attend the 2013 Annual Meeting of Stockholders.

Quorum Required

According to our bylaws, the holders of a majority of the shares entitled to be voted must be present or represented by proxy to constitute a quorum. Each outstanding share is entitled to one vote on all matters. For purposes of the quorum and the discussion below regarding the vote necessary to take stockholder action, the stockholders who are present at the 2013 Annual Meeting of Stockholders in person or by proxy and who abstain from voting are considered stockholders who are present and entitled to vote and they count toward a quorum. Abstentions and shares of record held by a broker or its nominee that are voted on any matter are included in determining whether a quorum is present. Broker shares that are not voted on any matter, or “broker non-votes,” will not be included in determining whether a quorum is present.

Vote Required

Under rules of self-regulatory organizations governing brokers, your bank, broker or other nominee may vote your shares in its discretion on “routine” matters. These rules also provide, however, that when a proposal is not a “routine” matter and your bank, broker or other nominee has not received your voting instructions with respect to such proposal, your bank, broker or other nominee cannot vote your shares on that proposal. When a bank, broker or other nominee does not cast a vote for a routine or a non-routine matter, it is called a “broker non-vote.” Your bank, broker or other nominee may not vote your shares with respect to (i) the election of the nominees for director, (ii) the non-binding advisory resolution to approve the compensation for our named executive officers or (iii) the approval of the material terms allowing for certain performance-based awards under our 2011 Equity and Cash Incentive Plan pursuant to Section 162(m) of the Internal Revenue Code, in the absence of your specific instructions as to how to vote with respect to such proposals, because under the rules these proposals are not considered “routine” matters. The ratification of the appointment of KPMG LLP is considered a routine matter.

Under our bylaws, at the 2013 Annual Meeting of Stockholders a nominee for director will be elected to the Board if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. Only votes actually cast will be counted for the purpose of determining whether a particular nominee received the required vote. A stockholder may withhold votes from any or all nominees by notation on the proxy card. Except to the extent that a stockholder withholds votes from any or all nominees, the persons identified as proxies and attorneys-in-fact, in their sole discretion, will vote such proxy for the election of the nominees listed below as directors. Abstentions and broker non-votes will have no effect on the outcome of the election of directors.

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If a nominee does not receive the required vote, he or she shall offer to resign. The Board of Directors will consider whether to accept the resignation in accordance with the procedures set forth in our Corporate Governance Guidelines.

Pursuant to the terms of the Shareholders Agreement, dated as of October 31, 2011, among us, Quadrangle Capital Partners LP, Quadrangle Select Partners LP, Quadrangle Capital Partners-A, LP, Quadrangle NTELOS Holdings II LP (together with Quadrangle Capital Partners LP, Quadrangle Select Partners LP and Quadrangle Capital Partners-A LP, the “Quadrangle Entities”) and the management stockholders named therein, or the Shareholders Agreement, the Quadrangle Entities currently have the right to nominate three directors. The Shareholders Agreement also provides that one director will be our Chief Executive Officer for so long as he or she is employed by us. In accordance with the Shareholders Agreement, the Quadrangle Entities and the other management stockholders party thereto each are required to vote for such nominees and take all other necessary action to ensure that these nominees are elected to the Board of Directors. Accordingly, it is expected that these stockholders will vote for approval of the nominees for director identified below. The parties to the Shareholders Agreement, including the Quadrangle Entities, own an aggregate of approximately 26% of the shares entitled to vote.

With respect to the other matters to be voted upon at the 2013 Annual Meeting of Stockholders, approving the non-binding advisory resolution approving the compensation of our named executive officers, approval of the material terms allowing for certain performance-based awards under our 2011 Equity and Cash Incentive Plan pursuant to Section 162(m) of the Internal Revenue Code and ratifying the appointment of KPMG LLP, each requires the affirmative vote of a majority of the shares present or represented and entitled to vote at the 2013 Annual Meeting of Stockholders to be approved. Abstentions will have the same effect as a vote against these proposals and broker non-votes will not affect the outcome of the vote on these proposals.

With respect to any other matters that may come before the 2013 Annual Meeting of Stockholders, if proxies are returned, such proxies will be voted in a manner deemed by the proxy representatives named therein to be in our best interests and the best interests of our stockholders.

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PROPOSAL 1 – ELECTION OF DIRECTORS

Separation from NTELOS Holdings Corp.

On October 31, 2011, we became an independent, publicly-traded company following our spin-off from NTELOS Holdings Corp. (“NTELOS”)

The Board of Directors

Our bylaws provide that the Board of Directors shall, subject to compliance with the Shareholders Agreement, consist of such number of directors as determined from time to time by resolution of the board. The current size of the Board of Directors is fixed at eight, and we currently have eight directors.

The Board of Directors held eight meetings in 2012. During 2012, each member of the Board of Directors currently standing for election attended all of the aggregate number of (i) meetings of the Board of Directors and (ii) meetings held by all committees of the Board of Directors on which the director served. Each director is elected to a term of one year and serves until a successor is duly elected and qualified or until his or her death, resignation or removal.

Nominees Standing for Election

Messrs. Timothy G. Biltz, Steven G. Felsher, Robert E. Guth, Michael Huber, James A. Hyde, Michael K. Robinson and Jerry E. Vaughn and Ms. Julia B. North are standing for election as directors to the Board of Directors at the 2013 Annual Meeting of Stockholders, each to serve until the 2014 Annual Meeting of Stockholders or until their successors are duly elected and qualified. The Board of Directors has determined that the following nominees are “independent” under applicable NASDAQ Listing Standards as discussed below under “Corporate Governance Matters – Director Independence”: Messrs. Felsher, Guth, Huber, Robinson and Vaughn and Ms. North.

Pursuant to the terms of the Shareholders Agreement, the Quadrangle Entities currently have the right to nominate three directors. The Shareholders Agreement also provides that one director will be our Chief Executive Officer for so long as he or she is employed by us. The Quadrangle Entities have nominated Messrs. Felsher, Guth and Huber for election at the 2013 Annual Meeting of Stockholders. Mr. Biltz is our Chief Executive Officer and has been nominated by the Board of Directors in accordance with the Shareholders Agreement.

Set forth below is certain biographical information as of March 1, 2013 furnished to us by the directors standing for election at the 2013 Annual Meeting of Stockholders:

Timothy G. Biltz, age 54, was appointed President and Chief Executive Officer on April 26, 2012 and as a director on May 17, 2012. Mr. Biltz has served as director of NTELOS since December 21, 2006. Mr. Biltz also served as a director for iPCS, Inc., a wireless service provider from August 2004 through December 2009 and served as Chairman of the iPCS Inc. Board starting in November 2006. From 1999 to 2005, Mr. Biltz was the Chief Operating Officer of SpectraSite, Inc., a publicly-traded wireless and broadcast signal tower company. From 1989 to 1999, Mr. Biltz was employed by Vanguard Cellular Systems, Inc. in a number of posts of increasing responsibility ultimately serving as the Executive Vice President and Chief Operating Officer, responsible for sales, marketing, information technology, distribution, operations and human resources.

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Mr. Biltz’s previous senior leadership positions and board positions with other private and public companies have given him valuable experience with corporate strategy, corporate governance, operating responsibilities, executive compensation and human resources issues, all of which are essential to our Board of Directors.

Steven G. Felsher, age 63, has been a director since November 1, 2011. Mr. Felsher has served as a Senior Advisor for Quadrangle Group LLC, a private investment firm, since January 2011. Mr. Felsher previously served as Vice Chairman and Chief Financial Officer for Grey Global Group Inc., a global marketing services company, where he worked from 1979 until 2007 and has been involved in board, consulting and advisory assignments since then. Mr. Felsher also serves on the board of directors of West Corporation. Mr. Felsher served as a director of NTELOS from February 24, 2011 until November 2, 2012. Within the last five years, Mr. Felsher also previously served on the board of directors of Kit Digital Inc.

Mr. Felsher’s years at Grey Global Group Inc. have given him significant experience with the operation of a public company. His experience as a Chief Financial Officer has also allowed him to gain significant knowledge of the financial and corporate governance aspects of operating a business. In addition, Mr. Felsher’s experience with a marketing company provides a unique and valuable perspective to our Board of Directors in evaluating the customer service and marketing aspects of our business.

Robert E. Guth, age 49, has been a director and Chairman of our Board of Directors since November 1, 2011. Mr. Guth has served as President and Chief Executive Officer of RDA Holding Co., the parent company of The Reader’s Digest Association, Inc., since September of 2011, where he also serves on the board of directors. On February 18, 2013, RDA Holding Co. filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code. Mr. Guth served as a director of NTELOS from December 17, 2009 to October 31, 2011. Mr. Guth also currently serves on the board of directors of Integra Telecom, Inc., and Otelco, Inc. Previously, he served as President of the Business Markets Group at Level 3 Communications, LLC, a provider of integrated communications services, from 2006 to 2007. Prior to that he served as Chairman, President and Chief Executive Officer at TelCove Inc., a telecommunications company, from 2002 to 2006 when TelCove was acquired by Level 3 Communications. He was Vice President of Business Operations at TelCove from 2000 to 2002 and Regional Vice President and General Manager at TelCove from 1996 to 2000. Prior to joining TelCove, he worked in sales and sales management roles at AT&T Inc. from 1985 to 1996.

Mr. Guth’s senior leadership positions with a number of companies, including telecommunications companies, have given him a diverse understanding of our industry, including operational and sales expertise that is particularly relevant to our business. These previous positions and his current service as director of another telecommunications company provide experience that is important to our Board of Directors.

Michael Huber, age 44, has been a director since November 1, 2011. Since January 2004, Mr. Huber has served as a Managing Principal of Quadrangle Group LLC, a private investment firm, and since January 2011, Mr. Huber also has served as President of Quadrangle. Mr. Huber currently serves on the boards of directors of NTELOS Holdings, Data & Audio-Visual Enterprises Holdings Inc., GET AS and Tower Vision and as a managing member of Access Spectrum LLC and of Hargray Holdings LLC. Mr. Huber is also a member of the Board of Trustees of Macalester College.

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Mr. Huber’s leadership position with a private investment firm that focuses on the telecommunications industry provides experience that is valuable in understanding and evaluating our business. His experience working with a number of his firm’s portfolio companies, including serving on the board of a number of telecommunications companies, is especially valuable to our Board of Directors in guiding the direction of our business. He also has extensive experience in mergers and acquisitions and capital markets activities. Mr. Huber’s skills and experience have positioned him to bring experience and industry knowledge to our Board of Directors.

James A. Hyde, age 48, has been a director since February 16, 2011. Mr. Hyde previously served as our Chief Executive Officer from November 1, 2011 through April 25, 2012. Mr. Hyde was appointed to his current positions of President, Chief Executive Officer and director of NTELOS on December 17, 2009 after joining NTELOS as President and Chief Operating Officer on March 31, 2009. Mr. Hyde also currently serves on the board of directors and is a member of the executive committee of the board for the Competitive Carriers Association. Previously, he was employed by Deutsche Telekom and VoiceStream Wireless, a telecommunications and information technology service company, from 1997 to 2009 and was appointed as the Managing Director and CEO of T-Mobile UK (a subsidiary of Deutsche Telekom) in January 2006. He also served as a member of the T-Mobile International Executive Management Committee and as an Executive Advisor to the T-Venture Funds. From 2002 until January 2006, Mr. Hyde served as Vice President of U.S. Indirect Sales and Sales Operations for T-Mobile USA. In 2000, Mr. Hyde became Executive Director of U.S. Sales Operations for VoiceStream Wireless and, following Deutsche Telekom’s July 2001 acquisition of VoiceStream (renamed T-Mobile), he held this position until 2002. Mr. Hyde joined VoiceStream Wireless in 1997 as a Director of Regional Indirect Sales and Operations.

With his years of experience at NTELOS and T-Mobile, including being responsible for T-Mobile’s entire United Kingdom operations, Mr. Hyde brings great operating as well as sales and marketing perspective in the telecommunications industry that is critical to our Board of Directors in understanding and evaluating our business. Mr. Hyde’s knowledge of our business and our operations is critical to the Board of Directors in evaluating and directing our future.

Julia B. North, age 65, has been a director since November 1, 2011. Ms. North served as a director of NTELOS from December 20, 2007 until October 31, 2011. Ms. North is presently retired. Ms. North served as the President and Chief Executive Officer of VSI Enterprises, Inc. from 1997 to 1999. Prior to joining VSI Enterprises, Ms. North served as President of Consumer Services for BellSouth Telecommunications from 1994 to 1997. She currently serves on the boards of directors, compensation committees and nominating and governance committees of Acuity Brands, Inc. and Community Health Systems, Inc. Ms. North is currently the chairperson of the Nominating and Governance Committee of Community Health Systems, Inc. Within the last five years, Ms. North previously served on the board of directors of Simtrol, Inc.

Ms. North’s senior leadership positions as well as her operational experience in the telecommunications industry, particularly the wireline industry, give her significant knowledge that is a valuable resource to our Board of Directors. Ms. North’s diverse perspective and experience gained from holding senior leadership and board positions at public companies is particularly helpful for her position as chairperson of the Compensation Committee.

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Michael K. Robinson, age 55, has been a director since November 1, 2011. Mr. Robinson joined Broadview Networks, Inc., a network-based business communications provider serving customers nationwide, but with principal operations and assets in the northeast United States, as Chief Executive Officer in March 2005. On August 22, 2012, Broadview Networks Holdings, Inc. filed a voluntary petition under chapter 11 of the United States Bankruptcy Code and subsequently emerged from bankruptcy in October 2012. Mr. Robinson currently serves on the board of directors of Broadview and FairPoint Communications, Inc., a publicly traded telecommunications company. From July 1998 to March 2005, Mr. Robinson served as Executive Vice President and Chief Financial Officer of US LEC Corp., a publicly traded competitive communications provider. Prior to joining US LEC, Mr. Robinson spent 10 years in various management positions with the telecommunications division of Alcatel, including Executive Vice President and Chief Financial Officer of Alcatel Data Networks and the worldwide financial operations of the enterprise and data networking division of Alcatel. Prior to these roles, Mr. Robinson was chief financial officer of Alcatel Network Systems. Before joining Alcatel, Mr. Robinson held various management positions with Windward International and Siecor Corp. (now Corning).

Mr. Robinson’s senior leadership positions with competitive communications companies have provided him with extensive knowledge of our industry. His prior chief financial officer experience is valuable to our Board of Directors and the Audit Committee. He also has strong experience in mergers and acquisitions and capital markets activities.

Jerry E. Vaughn, age 68, has been a director since November 1, 2011. Mr. Vaughn served as a director of NTELOS from December 20, 2007 until October 31, 2011. Mr. Vaughn is presently retired. Mr. Vaughn served as the Chief Administrative Officer of Mobile Storage Group, a provider of secure portable storage container solutions, from November 2006 until its merger into Mobile Mini in June 2008. Mr. Vaughn served as Senior Vice President and Chief Financial Officer of Valor Communications Group, Inc., a telecommunication services provider, from 2005 until its merger into Windstream Corporation in July 2006. From 1999 to 2005, Mr. Vaughn served as Chief Financial Officer of US Unwired, Inc., a wireless communications provider. Prior to joining US Unwired, Inc., Mr. Vaughn served in executive positions with GE Capital, Nortel Networks and Mellon Bank.

Mr. Vaughn’s senior leadership positions at a number of companies have given him knowledge of the telecommunications industry, as well as other operational expertise, that is essential to our Board of Directors in understanding and evaluating our business. His experience as Chief Financial Officer of Valor Communications Group, Inc. and US Unwired, Inc. has given him financial expertise to serve as one of our audit committee financial experts and chairperson of the Audit Committee. He has also gained experience in risk management through these leadership positions, which is essential to our Board of Directors and the Audit Committee.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED ABOVE.

Committees of the Board of Directors

We have the following standing committees of the Board of Directors: Compensation Committee, Audit Committee and Nominating and Governance Committee. Each committee has a charter which is available for review at the following website, www.lumosnetworks.com. The charters may be found by clicking “Investor Relations” and then “Governance Documents.”

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Compensation Committee

The Compensation Committee presently consists of Ms. North (Chairperson) and Messrs. Felsher and Guth. The Compensation Committee met ten times during the year ended December 31, 2012. The Compensation Committee is responsible for:

The Board of Directors has determined that all of the members of the Compensation Committee are independent as defined in Rule 5605(a)(2) of the NASDAQ Listing Standards.

Audit Committee

The Audit Committee presently consists of Messrs. Vaughn (Chairperson), Guth and Robinson. The Audit Committee met six times during the year ended December 31, 2012. The Audit Committee is responsible for overseeing:

The Board of Directors has determined that all of the members of the Audit Committee are independent as defined in Rules 5605(a)(2) and 5605(a)(2)(A) of the NASDAQ Listing Standards and Sections 10A(m)(3)(a) and (B) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Board of Directors has determined that all members of the Audit Committee are financially literate as prescribed by the NASDAQ Listing Standards and that Messrs. Robinson and Vaughn are each an “audit committee financial expert,” within the meaning of the regulations promulgated by the SEC. No member of the Audit Committee received any payments in 2012 from us or our subsidiaries other than compensation received as a director of Lumos Networks.

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Nominating and Governance Committee

The Nominating and Governance Committee presently consists of Messrs. Robinson (Chairperson), Felsher and Vaughn. The Nominating and Governance Committee met two times during the year ended December 31, 2012. The Nominating and Governance Committee is responsible for:

The Board of Directors has determined that all of the members of the Nominating and Governance Committee are independent as defined in Rule 5605(a)(2) of the NASDAQ Listing Standards.

Corporate Governance Matters

Identifying and Evaluating Nominees

The Shareholders Agreement currently entitles the Quadrangle Entities to designate three members of the Board of Directors, at least one of whom must be “independent” under applicable NASDAQ and SEC rules. The Shareholders Agreement also provides that one director will be our Chief Executive Officer for so long as he or she is employed by us.

The Nominating and Governance Committee identifies nominees for director on its own as well as by considering recommendations from other members of the Board of Directors, our officers and employees, and other sources that the Nominating and Governance Committee deems appropriate, including executive search firms. The Nominating and Governance Committee also will consider stockholder recommendations for nominees for director subject to such recommendations being made in accordance with our bylaws. In addition to the Nominating and Governance Committee’s charter, we have adopted Corporate Governance Guidelines that contain, among other matters, important information concerning the Nominating and Governance Committee’s responsibilities when identifying and evaluating nominees for director. You will find the charter and guidelines at www.lumosnetworks.com by selecting the following links: “Investor Relations” and then “Governance Documents.”

As required by our bylaws, any stockholder recommendation for a nominee for director to be voted upon at the 2014 Annual Meeting of Stockholders must be submitted in writing to our Secretary or Assistant Secretary no later than 90 days nor more than 120 days before the first anniversary of the 2013 Annual Meeting of Stockholders. For nominations, such stockholder’s notice shall set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made (i) the name and address of such stockholder and of such beneficial owner, if any, (ii) (A) the class or series and number of shares which are, directly or indirectly, owned beneficially and of record by such stockholder and such beneficial owner, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares or with a value derived in whole or in part from the value of any class or series of shares of Lumos Networks, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of Lumos Networks or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholders’ and such beneficial owner and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of Lumos Networks, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder and such beneficial owner has a right to vote any shares of any security of Lumos Networks,

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(D) any short interest in any security of Lumos Networks (a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of Lumos Networks owned beneficially by such stockholder and such beneficial owner that are separated or separable from the underlying shares of Lumos Networks, (F) any proportionate interest in shares of Lumos Networks or Derivative Instruments held, director or indirectly, by a general or limited partnership in which such stockholder and such beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (G) any performance-related fees (other than an asset-based fee) that such stockholder and such beneficial owner is entitled to based on any increase or decrease in the value of shares of Lumos Networks or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such stockholder and such beneficial owner’s immediate family sharing the same household (which information shall be supplemented by such stockholder and beneficial owner, if any, not later than 10 days after the record date for the meeting to disclose such ownership as of the record date), (iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (iv) a statement whether such stockholder or any other person known to the stockholder will deliver a proxy statement and form of proxy to holders of at least the percentage of the Lumos Networks voting shares required under applicable law to carry the proposal and (v) a representation that the stockholder is a holder of record of stock of Lumos Networks entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination or propose such business specified in the notice before the meeting. These requirements are separate from the requirements that stockholders must meet to include proposals in the proxy materials for the 2014 Annual Meeting of Stockholders, discussed later in this proxy statement.

The Nominating and Governance Committee will evaluate all candidates for election to the Board of Directors, regardless of the source from which the candidate was first identified, based upon the totality of the merits of each candidate and not based upon minimum qualifications or attributes. In considering the individual nominees, the Nominating and Governance Committee will take into account the qualifications of other members of the Board of Directors to ensure that a broad variety of skill sets and experience beneficial to us and our business are represented on the Board of Directors and will also take into account the characteristics of each individual under consideration, including that individual’s competencies, experience, reputation, integrity, independence, potential for conflicts of interest and other appropriate qualities. The Corporate Governance Guidelines require that in considering the composition of the Board of Directors, diversity of backgrounds and expertise should be emphasized and the Nominating and Governance Committee shall consider the average tenure of the entire Board of Directors.

The Nominating and Governance Committee also periodically considers the individual and aggregate skill sets of the Board of Directors, based on a review of:

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Pursuant to our bylaws, to be eligible for election or re-election, a person must enter into an agreement providing that such person (i) is not and will not become party to any voting commitment that has not been disclosed to us or could limit or interfere with such person’s fiduciary duties if elected, (ii) is not and will not become party to any compensation, reimbursement or indemnification agreement with any person other than us and (iii) will comply with all of our applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines. When considering a director standing for re-election, in addition to the attributes described above, the Nominating and Governance Committee shall consider that individual’s past contribution and future commitment to Lumos Networks. Additionally, the Nominating and Governance Committee will continue to seek to populate the Board of Directors with a sufficient number of independent directors to satisfy NASDAQ Listing Standards and SEC requirements. The Nominating and Governance Committee will also seek to ensure that the Board of Directors will have at least three independent members to serve on the Audit Committee that satisfy NASDAQ financial and accounting experience requirements and at least one member who qualifies as an “audit committee financial expert.”

There is no difference in the manner by which the Nominating and Governance Committee evaluates prospective nominees for director based on the source from which the individual was first identified.

Board Leadership Structure and Role in Risk Oversight

Mr. Biltz serves as our Chief Executive Officer, and Mr. Guth serves as our non-executive Chairman of the Board. Our policy is to have a Chairman of the Board who is an independent director. We believe having separate Chief Executive Officer and Chairman of the Board positions is the most appropriate structure for Lumos Networks and our stockholders. We believe it is appropriate for Mr. Biltz to be able to focus his efforts on serving as our Chief Executive Officer while working closely with our Chairman of the Board, Mr. Guth. The Board of Directors may in the future revisit this policy from time to time. The Chairman of the Board has the following duties:

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The Board of Directors also has three standing committees, Audit, Compensation and Nominating and Governance. Each committee has a separate chairperson and each of the committees is comprised solely of independent directors. Our Corporate Governance Guidelines provide that the independent directors will meet in executive session at least two times a year, and the Chairman of the Board will preside at these sessions.

Our Audit Committee charter provides that the Audit Committee is responsible for evaluating and monitoring our financial risks and our compliance with laws and regulations. On a regular basis, our Audit Committee reviews and discusses with management our major financial and operating risks and exposures and the steps management has taken to monitor and control such risks and exposures, including our risk assessment and risk management policies.

Although the Audit Committee has primary responsibility for overseeing these matters, the full Board of Directors and our other committees are actively involved in overseeing risk management. Our Corporate Governance Guidelines provide that the Board of Directors and each committee are responsible for overseeing our program for identifying, evaluating and controlling significant risks. Management updates the entire Board of Directors on a quarterly basis on key business risks affecting our business. The Board of Directors also engages in periodic discussions with the Chief Financial Officer and other members of management regarding risks as appropriate. In addition, each of the other committees of the Board of Directors considers risks within its area of responsibility and regularly reports to the Board of Directors.

The Compensation Committee considers succession planning, human resources risks and risks that may be a result of our executive compensation programs, as described in the Compensation Discussion and Analysis section later in this proxy statement. The Compensation Committee has a Compensation Recoupment Policy that authorizes the Board of Directors to obtain reimbursement of any portion of any performance-based compensation paid or awarded, whether cash or equity based, where the payment or award was predicated upon the achievement of certain financial results or metrics that are subsequently the subject of a restatement or correction, from the officers and from other employees responsible for accounting errors resulting in the restatement or correction. The Compensation Committee also has approved Stock Ownership Guidelines, which are described later in this proxy statement.

In January 2013, the Compensation Committee considered our incentive compensation plans for executive officers and other employees and does not believe they pose any material risks to us. With respect to our annual short-term incentive compensation plan, the Compensation Committee has approved the use of revenue and Adjusted EBITDA as the performance metrics.

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The Compensation Committee believes using these metrics does not pose material risk to the Company or its stockholders and, in fact, aligns the interests of our officers and employees with our stockholders because these are the performance metrics most monitored by the investment community. Additionally, beginning in 2012, the annual short-term incentive compensation plan includes a specific individual performance objective which can be used by the Compensation Committee to adjust the payout after taking into account the quality of the individual’s performance during the year. The Compensation Committee also believes the completion of major capital projects provided for in the business plan and capital efficiency are important to stockholders and the long-term growth of the Company. Accordingly, the Compensation Committee expects to condition any payout under the annual short-term incentive compensation plan on satisfaction of these items. In addition to considering the short-term incentive compensation plan for our eligible employees, the Compensation Committee also receives an annual presentation on the design of our sales incentive programs for our sales employees. Following this presentation, the Compensation Committee determined that these programs, like our short-term incentive plan, do not encourage behavior that would not be in our long-term interest. The Compensation Committee also asked management to inform it in the future about any proposed material changes to the sales incentive programs. With respect to our long-term incentive plans, the Compensation Committee has approved vesting requirements to incentivize long-term performance and approved using a blend of restricted stock awards and stock options. The Compensation Committee also approved stock price-related performance conditions for certain of our Chief Executive Officer’s equity awards when he was employed in April 2012.

The Nominating and Governance Committee, along with the full Board of Directors, considers potential governance-related risk matters. The current leadership structure of the Board of Directors supports the risk oversight functions described above with independent leadership provided by our Chairman of the Board and with six of our eight directors being independent.

Stockholder Communications with the Board of Directors

We encourage stockholders to communicate with the Board of Directors by sending written correspondence to the Chairperson of the Nominating and Governance Committee at: Lumos Networks Corp., Attention: Corporate Secretary, One Lumos Plaza, P.O. Box 1068, Waynesboro, Virginia 22980. The Chairperson of the Nominating and Governance Committee and his duly authorized agents are responsible for collecting and organizing stockholder communications. Absent a conflict of interest, the Chairperson of the Nominating and Governance Committee is responsible for evaluating the materiality of each stockholder communication and determining whether further distribution is appropriate, and, if so, whether to (i) the full Board of Directors, (ii) one or more directors and/or (iii) other individuals or entities.

Director Independence

The Board of Directors considers director independence based both on the meaning of the term “independent director” set forth in Rule 5605(a)(2) of the NASDAQ Listing Standards and on an overall review of transactions and relationships, if any, between the director and Lumos Networks. Presently, our Board of Directors is comprised of a majority of independent directors and all committees of the Board of Directors are comprised only of independent directors.

In February 2013, the Nominating and Governance Committee and the Board of Directors undertook their annual review of director independence. There were no transactions or relationships between any director or any member of his or her immediate family and Lumos Networks that would be inconsistent with a determination that the director is independent for the Committee and the Board of Directors to consider.

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Our directors Michael Huber and Jim Hyde are also directors of NTELOS and our director Jim Hyde is also the Chief Executive Officer of NTELOS. Prior to the spin-off when we were a subsidiary of NTELOS, the two companies entered into transition agreements and ordinary course of business commercial arrangements which became effective upon the spin-off.

The Nominating and Governance Committee and the Board of Directors have determined that Messrs. Felsher, Guth, Huber, Robinson, Vaughn and Ms. North are independent under the NASDAQ Listing Standards.

Policy Regarding Attendance at Annual Meetings

We have a policy encouraging directors to attend annual meetings of stockholders.

Code of Ethics

We have also adopted a Code of Business Conduct and Ethics for directors, officers and employees. Copies of this code may be found at the following website, www.lumosnetworks.com. You will find the code by selecting the following links: “Investor Relations” and then “Governance Documents.”

Director Compensation

The following table presents the compensation earned by our directors only for services as a member of our board of directors for the fiscal year ended December 31, 2012. Directors who are also our employees or who are designated by the Quadrangle Entities pursuant to our Shareholders Agreement do not receive any compensation from us for their service as directors.

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The Compensation Committee periodically considers our director compensation policy with a primary objective of matching compensation levels to the relative demands associated with serving on the Board of Directors and its various committees. The Compensation Committee also takes into account the compensation policies of other public company boards of directors by reviewing the same comparison group of companies as are reviewed by our Compensation Committee when considering the compensation of our executive officers.

During 2012, our non-employee directors (excluding directors who are affiliated with, and designated by, the Quadrangle Entities pursuant to our Shareholders Agreement and directors who are our employees) were eligible to receive the following cash compensation:

an annual retainer of $25,008, payable monthly;

a fee of $2,000 for each board meeting, meeting of independent directors and stockholder meeting attended in person or $1,000 if attended telephonically in lieu of attending in person; and

a fee of $1,500 for each committee meeting attended in person or $800 if attended telephonically in lieu of attending in person.

During 2012, the chairs of the board committees received additional annual retainers, payable monthly:

the chairperson of our Board of Directors received an annual retainer at the rate of $35,004;

the chairperson of our Audit Committee received an annual retainer at the rate of $15,000;

the chairperson of our Compensation Committee received an annual retainer at the rate of $5,004; and

the chairperson of our Nominating and Governance Committee received an annual retainer of $5,004.

We do not pay compensation to directors who are affiliated with, and designated by, the Quadrangle Entities pursuant to our Shareholders Agreement or who are our employees for their service as directors. However, we do reimburse each of our directors for reasonable travel and other expenses incurred in connection with attending all board and board committee meetings.

For fiscal year 2012, we had five non-employee independent directors (excluding directors who are affiliated with, and designated by, the Quadrangle Entities pursuant to our Shareholders Agreement): Robert Guth, Julia North, Michael Robinson and

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Jerry Vaughn. The remaining directors who served in 2012 were our current Chief Executive Officer, our prior Chief Executive Officer (through April 25, 2012), our President (through April 25, 2012) and two representatives of the Quadrangle Entities. These remaining directors were not compensated by us for their roles as directors. In addition to their director status during 2012, Mr. Guth was chairperson of the Board of Directors, Mr. Vaughn was chairperson of the Audit Committee, Ms. North was chairperson of the Compensation Committee and Mr. Robinson was chairperson of the Nominating and Governance Committee, and they were compensated accordingly as disclosed in the table above.

The Board of Directors believes that its members should be encouraged to own shares of our Common Stock. In addition to ownership guidelines applicable to our executive officers, the Board of Directors included an ownership and retention requirement applicable to those directors receiving director compensation. The guidelines generally require that each such director own a minimum number of shares of our Common Stock having a value equal to three times the annual cash retainer for directors. Each director receiving director compensation generally has three years from the later of November 2011 and his or her date of appointment to the Board to meet the guidelines. Each director must maintain the minimum value of equity ownership provided in these stock ownership guidelines.

To assist us in attracting and retaining qualified and experienced individuals for service as non-employee directors, each such non-employee director (excluding non-employee directors who are designated by the Quadrangle Entities pursuant to our Shareholders Agreement) receives an initial equity award grant and thereafter, commencing on January 1 of the subsequent year, an annual equity award grant. These equity award grants have generally included a mix of stock options and restricted stock in order generally to synchronize the types of equity awards received by directors with those received by our employees. The number of options to purchase shares of our Common Stock is equal to the quotient of $18,600 and the Black-Scholes option-pricing model valuation of our Common Stock for the trading days in the second calendar month prior to a grant date, or such lesser number for a particular grant date as the Board of Directors may determine in its sole discretion, and which number of options granted shall not exceed 8,600. Additionally, such non-employee directors receive an annual grant of shares of our Common Stock subject to a restriction period (“restricted stock”) with an aggregate value equal to $43,400 (with such value to be calculated based on the average closing price of our Common Stock for the trading days in the second calendar month prior to a grant date and with the resulting number of shares being rounded up to the next whole number), or such lesser award for a particular grant date as the Board of Directors shall determine in its sole discretion. The annual stock option and restricted stock grants are automatic and non-discretionary on each of the grant dates and vest on the first anniversary of their respective grant dates. However, as a result of our low Black-Scholes valuation in December 2012, the Compensation Committee determined to grant the January 1, 2013 equity awards exclusively in restricted stock in order to reduce dilution.

Pursuant to our 2011 Equity and Cash Incentive Plan, we granted Messrs. Guth, Robinson and Vaughn and Ms. North options to purchase 3,791 shares each of Common Stock on January 3, 2012 at an exercise price per share of $16.89, the last closing price of the Common Stock on the NASDAQ Global Select Market as of the date of grant. These options vest and become exercisable on the first anniversary of the date of grant. Additionally, we granted each of the aforementioned non-employee directors 2,891 shares of our Common Stock subject to a restriction period. These restricted shares vest on the first anniversary of the grant date.

We also have a policy to provide, as needed, an ongoing education program for all directors and will pay the program costs and associated travel expenses related to such director education programs.

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EXECUTIVE OFFICERS

Our executive officers serve at the discretion of the Board of Directors, and serve until their successors are elected and qualified or until his or her earlier death, resignation or removal. Our executive officers presently include: Timothy G. Biltz, Harold L. Covert, Jr., Joseph E. McCourt, Jr. and Mary McDermott. The following sets forth biographical information for our executive officers who are not directors. Biographical information for Timothy G. Biltz, who is also a director, is provided in the section entitled “Proposal 1—Election of Directors—Nominees Standing for Election” of this proxy statement.

Harold L. Covert, age 66, has been Executive Vice President, Chief Financial Officer and Treasurer since November 1, 2011. Mr. Covert previously was an independent business consultant and private investor since October 2010. From October 2007 until January 2010, Mr. Covert was Chief Financial Officer of Silicon Image, Inc., a semiconductor company, and from September 2009 through September 2010, was its President. From October 2005 to August 2007, Mr. Covert was Executive Vice President and Chief Financial Officer of Openwave Systems Inc., a software applications and infrastructure company. Prior to Openwave, Mr. Covert was Chief Financial Officer at Fortinet Inc. from 2003 to 2005, and Chief Financial Officer at Extreme Networks, Inc. from 2001 to 2003. From 2000 to 2001, Mr. Covert served as Chief Financial Officer of Silicon Graphics, Inc., a computer systems company. Prior to Silicon Graphics, he held a variety of financial and accounting positions over the course of over 20 years in the high-technology industry, including Executive Vice President and Chief Financial Officer of Adobe Systems, Inc. Mr. Covert is a director and Chairman of the Audit Committee at each of JDS Uniphase Corporation, an optical communications, test and measurement company, Harmonic, Inc., a broadband optical networking and digital video systems company, and Solta Medical Inc., an aesthetic medical company.

Joseph E. McCourt, Jr., age 51, was appointed executive Vice President and Chief Revenue Officer in May 2012. Prior to joining Lumos Networks, he served as Vice President of Commercial Sales since October 2011 for 1901 Group, a privately-held information management company focused on IT performance efficiency. From May 2010 to October 2011, he served as Vice President of Sales for Zayo Enterprise Networks. From January 2007 to May 2010, he served as Vice President of Sales and Customer Operations for DukeNet Communications. From April 2004, he served as Regional Vice President for Telcove, until it was acquired by Level 3 Communications in July 2006. Mr. McCourt continued with Level 3 Communications as Senior Vice President of Sales for Business Markets until January 2007. Prior to joining Telcove, Mr. McCourt held sales management positions with Time Warner Telecom and MFS / Worldcom. Prior to that, he was the Director of Communications at Brooks Brothers Clothing.

Mary McDermott, age 58, has been our Senior Vice President—Legal and Regulatory Affairs and Secretary since November 1, 2011. Ms. McDermott previously served as Senior Vice President—Legal and Regulatory Affairs of NTELOS since May 2, 2005 and NTELOS Inc. since August 2001. From March 2000 to August 2001 she served as Senior Vice President and General Counsel of Pathnet Telecommunications, Inc. From April 1998 to March 2000, she served as Senior Vice President Chief of Staff for Government Relations for the Personal Communications Industry Association. From May 1994 to April 1998, she served as Vice President—Legal and Regulatory Affairs for the United States Telecom Association. She began her telecommunications career with the NYNEX legal department. Ms. McDermott was an executive officer of NTELOS Inc. when it filed a Voluntary Petition under Chapter 11 of the United States Bankruptcy Code in March 2003. NTELOS Inc. emerged from bankruptcy in September 2003.

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Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own beneficially more than 10% of our Common Stock to file reports of ownership and changes in ownership of such stock with the SEC and NASDAQ. These persons are also required by SEC regulations to furnish us with copies of all such forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, all persons subject to the reporting requirements of Section 16(a) filed the required reports on a timely basis for the year ended December 31, 2012.

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BENEFICIAL OWNERSHIP OF COMMON STOCK

The following table sets forth information, as of March 1, 2013, regarding the beneficial ownership of our Common Stock by (i) our directors, (ii) our named executive officers (“NEO”), (iii) stockholders owning more than 5% of our Common Stock and (iv) all of our directors and executive officers as a group.

Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power over securities. Except in cases where community property laws apply or as indicated in the footnotes to this table, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of Common Stock shown as beneficially owned by the stockholder. Percentage of beneficial ownership is based on 21,937,597 shares of Common Stock outstanding as of March 1, 2013. Shares of Common Stock subject to options that are currently exercisable or exercisable within 60 days of March 1, 2013 are considered outstanding and beneficially owned by the person holding the options for the purposes of computing the percentage ownership of that person but are not treated as outstanding for the purposes of computing the percentage ownership of any other person. Unless indicated otherwise in the footnotes, the address of each individual listed in the table is c/o Lumos Networks Corp., One Lumos Plaza, P.O. Box 1068, Waynesboro, Virginia 22980.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Our Compensation Philosophy

The objective of our compensation program is to attract and retain those employees whose judgment, abilities and experience will contribute to our continued success. The program is designed to provide overall competitive pay levels through a mix of base salary, bonus and equity compensation and ownership, with an emphasis on incentive compensation, create proper incentives to align management’s incentives with the long-term interests of our stockholders and reward superior performance. The Compensation Committee (the “Committee”) is responsible for the following:

Consideration of 2012 “Say on Pay” Voting Results

At our 2012 annual meeting, our first advisory vote on executive compensation received the support of ninety-five percent (95%) of the votes cast on the proposal. The Committee reviewed these results and accordingly continued using similar cash compensation objectives, program and rationale for our named executive officers during 2013, while approving a one-time expanded equity award grant in recognition of the importance of aligning executive officers’ interests with those of shareholders. Also during the 2012 annual meeting, stockholders were provided a non-binding advisory vote on the frequency at which stockholder advisory votes on executive compensation should be held. Consistent with the recommendation of our board of directors, approximately seventy-nine percent (79%) of votes cast on the proposal were cast in favor of holding shareholder advisory votes on executive compensation on an annual basis. Accordingly, our board of directors has determined to hold such votes on an annual basis.

Executive Summary

As described in this Compensation Discussion and Analysis, the Committee believes the overall compensation for our executive officers, both on a targeted and actual basis, was reasonable and within the range of compensation offered by benchmark companies and adequately reflected our performance in 2012. The Committee also believes the 2012 compensation design was effective in driving this performance by generating meaningful rewards for achieving business objectives. Following is a brief overview of our 2012 performance.

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During 2012, we focused on validating our strategy of being a broadband fiber-based service provider focused on data solutions and mobility, strengthening our management team, improving our addressed marketplace penetration and pursuing near term edge-out marketplace opportunities by investing in our network through customer success-based capital projects with an emphasis on maximizing capital efficiency and achieving continuous financial performance improvement.

For 2012, we achieved revenue of $207 million and Adjusted EBITDA (as defined below) of $89 million, representing a margin of 43%. While recent FCC access reform and carrier network grooming have negatively impacted our rural local exchange carrier (“RLEC”) business, we continue to see growth in revenues from enterprise data and carrier data products within our Competitive business. Revenues from our Competitive business accounted for approximately 76% of our total revenue for 2012. We experienced sequential year-over-year revenue growth of 16.4% in our strategic data products, which represented approximately 65% of our Competitive segment revenue and 50% of our total revenue for 2012. This growth was primarily attributable to increases in customer bandwidth demand, growth in the number of on-net buildings and more than doubling our fiber connections to wireless cell sites during 2012. The level of decline of RLEC access revenues from carrier network grooming and access reform was expected over time and was anticipated by the capital structure we put into place in 2011.

Role of Compensation Consultant

The Committee is authorized to retain experts, consultants and other advisors to aid in the discharge of its duties, and engages an independent compensation consultant periodically to assist management and the Committee in determining the appropriate base salaries, target short-term incentive percentages and long-term incentive compensation of our NEOs. The Committee engaged Hay Group (the “Consultant”), a nationally known compensation consulting firm, in January 2012 to prepare a report which presented the Consultant’s assessment of executive compensation for our executive officers relative to a peer group and published survey compensation data.

In February 2013, the Committee considered the independence of the Consultant in light of new SEC rules and proposed NASDAQ listing standards. Specifically, the Committee considered the following factors with respect to the Consultant’s independence: (1) other services provided to us by the Consultant; (2) fees paid by us as a percentage of the Consultant’s total revenue; (3) policies or procedures maintained by the Consultant’s that are designed to prevent a conflict of interest; (4) any business or personal relationships between the individual consultants involved in the engagement and a member of the Committee; (5) any company stock owned by the individual consultants involved in the engagement; and (6) any business or personal relationships between our executive officers and the Consultant or the individual consultants involved in the engagement. The Committee considered these factors and determined that the work of the consultant did not raise any conflicts of interest. The Consultant also determined that its work for the Committee did not raise any conflicts of interest and confirmed this in a written statement delivered to the Committee.

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Targeted Overall Compensation

Each of our NEOs has an employment agreement with us that is described below. Pursuant to these employment agreements, each of our NEOs receives a base salary and is also eligible to participate in the annual short-term incentive plan (referred to as the Team Incentive Plan or “TIP”, discussed below) with an annual target up to a specified percentage of base salary. Commencing with our 2013 fiscal year the Committee expects that each of the NEOs will have annual corporate goals and objectives and his or her performance will be evaluated annually against those goals and objectives to assist in determining his or her total paid compensation. Under our compensation structure, the mix of base salary and target short-term incentive compensation varies depending on the employee’s level within our organization. The Committee also retains the discretion to grant incentive payments outside of the TIP. Our 2011 Equity and Cash Incentive Plan is used in connection with the annual short-term incentive plan as well as to provide long-term incentives through the issuance of stock options, restricted stock or other long-term incentives to the NEOs as a component of total compensation.

The Consultant’s January 2012 report included a detailed analysis of the base salary, short-term incentives as a percentage of salary and long-term incentive payouts for our NEOs and vice presidents, including recommended targets for each of these metrics.

The Consultant identified a group of comparable telecommunications companies (the “Peer Group”) to assist it in assessing the compensation arrangements of our executive officers. The companies included in this Peer Group were determined in connection with a study prepared by the Consultant which compared revenue, number of employees, net income, total assets and market capitalization of various companies within the telecommunications sector against these same metrics for us. Our management reviewed the Consultant’s recommended peer group and approved the use of the following 12 companies as a benchmark for determining our executive officer compensation arrangements for 2012:

In addition, the Consultant’s January 2012 compensation study included consideration of compensation benchmarks for our executive officers and vice presidents from the Consultant’s national compensation database, which the Consultant refers to as the “Executive Compensation Report.”

The Committee Process

Our Committee designs, evaluates and approves our executive compensation plans, policies and programs. The Committee also expects to annually review and evaluate the goals and objectives relevant to the compensation of the Chief Executive Officer and annually evaluate the performance of the Chief Executive Officer in light of those goals and objectives. To assist in determining the level of compensation and awards for the Chief Executive Officer, the Committee will review corporate performance over the past 12 months and the Chief Executive Officer’s compensation relative to the most recent compensation study provided by the Consultant and Peer Group data available in public proxy statements, ensuring that the recommended compensation levels meet corporate objectives.

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Additionally, the Committee establishes compensation levels and compensation awards for the other NEOs. For these other NEOs, the Chief Executive Officer will review individual responsibility and experience and corporate performance data from the most recent compensation study provided by the Consultant and for Peer Group data available in public proxy statements, and make recommendations to the Committee. The Chief Executive Officer attends the Committee meetings; however, the Committee also will meet in executive session without the Chief Executive Officer (or other members of management) present when discussing the Chief Executive Officer’s compensation and other matters.

The Committee also administers our equity-based compensation plans. The Committee will periodically review our management “talent” levels and management succession planning. The Committee reports regularly to the board of directors on matters relating to the Committee’s responsibilities. The Chairperson of the Committee works in conjunction with senior management in establishing the agenda for committee meetings. In addition, the Committee follows regulatory and legislative developments and considers corporate governance best practices in performing its duties.

Deductibility of Compensation

Under Section 162(m) of the Internal Revenue Code (the “Code”), compensation in excess of $1,000,000 paid in any one year to a public corporation’s covered employees who are employed by the corporation at year-end will not be deductible for federal income tax purposes unless the compensation is considered “qualified performance-based compensation” under Section 162(m) of the Code (or another exemption is met). Covered employees include the Chief Executive Officer and our three other most highly compensated executive officers as of the last day of the taxable year other than our Chief Financial Officer. The rules and regulations promulgated under Section 162(m) of the Code are complicated and subject to change from time to time, sometimes with retroactive effect. There can be no guarantee, therefore, that amounts potentially subject to the Section 162(m) limitations will be treated by the Internal Revenue Service as qualified performance-based compensation under Section 162(m) of the Code and/or deductible by us. A number of requirements must be met under Section 162(m) of the Code in order for particular compensation to so qualify for the exception such that there can be no assurance that “qualified performance-based” compensation under the 2011 Cash and Equity Incentive Plan will be fully deductible under all circumstances. The Committee addresses this issue when considering compensation arrangements for the executive officers. However, the Committee also believes that it is important that it have the flexibility to offer compensation that may not be deductible because of the Section 162(m) cap if deemed necessary to attract and retain qualified executive officers.

Our NEOs

Our 2012 named executive officers (“NEOs”) are our President and Chief Executive Officer, Timothy G. Biltz, our Chief Financial Officer, Harold L. Covert, our Executive Vice President and Chief Revenue Officer, Joseph E. McCourt, Jr. and our Senior Vice President, Legal and Regulatory Affairs, Mary McDermott. Also included are our former Chief Executive Officer, James A. Hyde, our former President, Michael B. Moneymaker, and our former Senior Vice President, David J. Keller.

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Base Salaries

Each NEO’s employment agreement sets forth a base salary which is subject to annual adjustment as determined by the Committee. The Committee intends to review compensation (including new short-term and long-term incentive grants) for each NEO and all other employees in late February or early March each year, which allows for consideration of audited financial results of the previous fiscal year. Annual salary rates, which become effective April 1, take into consideration each NEO’s performance for the year and are designed to result in an adjusted salary that is within an acceptable range of the target established by the Committee, which generally represents the median salary for each NEO’s comparable position within the Peer Group.

The Committee determined not to adjust our NEO’s base salaries in 2012. In making this determination, the Committee reviewed the proprietary compensation study provided by the Consultant in January 2012 coupled with the compensation disclosures in the recent proxy statements of the Peer Group. The Committee also took into account our financial results for 2011 and our financial guidance at that time for 2012. The 2012 target base salary for our named executive officers was reviewed relative to the median “market consensus” base salary included in the January 2012 compensation study provided by the Consultant, which was computed with equal weighting given to (i) the median of the compensation for comparable positions from the Consultant’s national database, and (ii) the median base salary of the comparable position of the Peer Group, both of which were adjusted for inflation. The Committee also considered management’s recommendation of salary range placements relative to the 2011 target base salary based upon attributes such as individual responsibility and experience. The Committee approved a competitive base salary range placement of 100% for each of our NEOs. The Committee multiplied the target benchmark (the inflation-adjusted average described above) by the competitive salary range placement to determine the 2012 target salary for each NEO (referred to below as the “2012 Target Base Salary”).

The following table shows the annual base salary applicable to each of our NEOs during 2012:

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The Committee determined that for each of our executive officers, including our NEOs listed above, the unadjusted base salary effective April 1, 2012 was within a reasonable range of the computed 2012 Target Base Salary, as described below. The acceptable range utilized by the Committee was defined by the Consultant as 85% to 115% of the targeted base salary. Mr. Covert’s unadjusted base salary was 101.1% of the 2012 Target Base Salary; Ms. McDermott’s unadjusted base salary was 109.5% of the 2012 Target Base Salary; Mr. Moneymaker’s unadjusted base salary was 90.3% of the 2012 Target Base Salary; and Mr. Keller’s unadjusted base salary was 85.4% of the 2012 Target Base Salary.

On April 26, 2012, we hired Mr. Biltz as President and Chief Executive Officer with a base salary of $425,000. This salary was determined after taking into account (i) advice from the Consultant as to an appropriate salary for an incoming President and Chief Executive Officer, based upon his prior experience and compensation level, and (ii) the base salary level paid to the former President.

On May 29, 2012, we hired Mr. McCourt as Executive Vice President and Chief Revenue Officer with a base salary of $210,000. This salary was determined after taking into account the compensation of Executive Vice Presidents or Chief Revenue Officers of the companies included in the Peer Group.

Annual Short-Term Incentive Compensation

We have adopted the practice of awarding annual cash incentive awards under a Team Incentive Plan (“TIP”). Participation in the TIP is available to all of our salaried-exempt employees with a hire date prior to October 1 of the applicable year, except those employees who are covered by a formal sales incentive plan. Each of our NEOs participated in our 2012 TIP with the exception of Mr. Hyde, who was not eligible during his interim term as Chief Executive Officer. The TIP award is equal to the product of (i) the individual’s eligible base salary earnings for the year, (ii) the individual’s targeted short-term incentive percentage up to a maximum percentage provided for in the plan (as finally determined based on achievement of individual performance objectives), and (iii) the Company’s weighted performance achievement percentage. The TIP award gives officers the potential to receive a lump sum payment on or before March 15 of the succeeding year based on achievement of specified company-wide performance goals established by the board of directors, which are established at the beginning of the year under circumstances set forth in the annual short-term incentive plan. The Committee has full discretion to qualify the annual short-term incentive plan, certify that the performance goals have been achieved, terminate the plan or increase or decrease the funding available to the plan. Additionally, a TIP award may be decreased or an additional incentive award may be authorized by the Committee in its discretion as necessary to support Lumos Networks’ business needs.

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The purpose of the TIP is to focus corporate and individual efforts on the accomplishment of specific financial objectives and to motivate individual participants to achieve or contribute to these objectives. It also serves to assign an at-risk element to each of our NEO’s total compensation based directly on the achievement of desired results.

Each of our NEOs (other than Mr. Hyde) participated in the 2012 TIP. The Committee determined the 2012 targeted bonus percentages in February 2012 for each of our eligible NEOs by computing the average of (i) the general market median as reflected in the January 2012 compensation study provided by the Consultant and (ii) the median target short-term incentive percentage of the comparable position of the Peer Group ((i) and (ii) together, the “Average Median Short-Term Incentive Percentage”). The Average Median Short-Term Incentive Percentages for the participating NEOs ranged from 36% to 66%. Based on these results, the Committee determined that the current targeted short-term incentive percentages for the eligible NEOs were competitive; therefore, their 2012 targeted bonus percentages remained unchanged at 60% for Mr. Covert, 50% for Ms. McDermott, 100% for Mr. Moneymaker and 40% for Mr. Keller. In his role as Senior Vice President of Sales and Marketing, Mr. Keller also received quarterly incentive payments tied to sales results (targeted at 30% of his base salary).

Effective on his hire date of April 26, 2012, Mr. Biltz’s annual short-term incentive percentage was established by our Committee at 100%, which is equivalent to the annual short-term incentive percentage applicable to Mr. Moneymaker while he served as President.

Effective on his hire date of May 29, 2012, Mr. McCourt’s annual short-term incentive percentage was established by our Committee at 40%, after consideration of short-term incentive compensation for Executive Vice Presidents or Chief Revenue Officers of the companies in the Peer Group. Mr. McCourt in 2012 was also eligible to receive quarterly incentive payments tied to sales results (targeted at 30% of his base salary).

For our eligible NEOs, the company weighted performance achievement percentage described above for the 2012 TIP was based on our consolidated financial results for the period January 1, 2012 through December 31, 2012 and measured and weighted based on the following two financial metrics in 2012, which were approved by the Committee in February 2012: (i) revenue, net of inter-company eliminations, 60% and (ii) net income before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, net income attributable to non-controlling interests, other expenses/income, equity-based compensation charges, acquisition related charges, restructuring related charges, costs related to the separation of the Company from NTELOS Holdings Corp. and amortization charges related to benefit plan actuarial gains and losses, which is referred to as Adjusted EBITDA, 40%. The Committee selected these metrics in February 2012 after considering the focus on these metrics by the investment community in evaluating Lumos Networks and the appropriateness and significance of growth in each of these metrics in 2012, as described below. In addition to the Revenue and Adjusted EBITDA performance factors, at the end of each quarter, the Committee qualifies the 2012 TIP after its review of the Company’s progress relating to the key projects and initiatives outlined in the Company’s business plan, including but not limited to major capital projects and efficiency of capital spending.

We believe Adjusted EBITDA is a meaningful indicator of our performance that provides useful information to investors regarding our financial condition and results of operations. Adjusted EBITDA is a non-GAAP measure commonly used in the communications industry, and

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by financial analysts and others who follow the industry, to measure operating performance. Additionally, Adjusted EBITDA is a primary financial covenant measure in our senior secured credit facility. Adjusted EBITDA should not be construed as an alternative to operating income or cash flows from operating activities (both of which are determined in accordance with generally accepted accounting principles) or as a measure of liquidity. For further discussion and a reconciliation of Adjusted EBITDA, please see Part II, Items 7 & 8 of our Annual Report on Form 10-K filed on March 8, 2013.

The Committee established the target for 100% payout under the 2012 TIP at a level consistent with the 2012 operating plan. The Committee set the minimum performance targets at a level that the Committee believed would be the minimum acceptable company performance that would merit a TIP payout. The Committee set maximum performance targets at a level that would result in a TIP payout at 200% of the target, which was believed to be realizable only upon exceptional outperformance of the business objectives.

The following table details the minimum, target and maximum levels that had to be achieved by Lumos in order for a 0%, 100% or 200% payout under the 2012 TIP:

On December 14, 2012, the Compensation Committee, after taking into account the Company’s estimated performance relative to these targets for 2012 and the projected TIP payout based on this performance, authorized preliminary payments under the TIP to its officers of 90% of such projected TIP payout.

In February 2013, the Committee approved a weighted 2012 performance achievement of 100% for Mr. Biltz, Mr. Covert, Mr. McCourt and Ms. McDermott. Mr. Biltz’s TIP payout for 2012 was reduced by a one-time signing bonus of $255,000, separately provided for in his Employment Agreement and paid in 2012.

Mr. Moneymaker did not receive a 2012 TIP payout due to his separation from the Company in April 2012, although amounts in lieu of the TIP were included in his severance payments.

Mr. Keller did not receive a 2012 TIP payout due to his separation from the Company in December 2012, although amounts in lieu of the TIP were included in his severance payments.

In addition to the TIP, Mr. McCourt is eligible to participate in a quarterly sales incentive program, which is established annually by management and approved by the Committee in the first quarter of each year. The target compensation under this plan is 30% of Mr. McCourt’s base salary. The quarterly payout, which is generally made no later than two and a half months after the end of each quarter, is based on achievement relative to the following quarterly targets: Competitive segment revenues, new monthly revenue, new contract revenue and renewal revenue. Mr. Keller was also eligible to participate in the sales incentive program until his

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separation from the Company in December 2012. His target compensation under the plan was also 30% of his base salary.

Long-Term Incentive Compensation

Long-term incentive compensation (“LTI”) is granted pursuant to our 2011 Equity and Cash Incentive Plan. Our Equity and Cash Incentive Plan defines the incentive arrangements for eligible participants and:

The 2011 Equity and Cash Incentive Plan permits the Committee to award stock options, grants of restricted stock, stock appreciation rights and performance unit awards that are tied to corporate performance because the Committee believes such awards provide an effective means of delivering incentive compensation and also encourage stock ownership on the part of management. Our Committee currently intends to grant stock options and restricted stock on an annual basis and approved grants for 2013 in February 2013.

With the exception of certain significant promotions and new hires, our Committee generally intends to grant equity awards in the first fiscal quarter of a year. This timing enables us to consider our prior year performance and the potential recipients’ prior year performance as well as our expectations for the future. The Committee’s schedule also is designed so that future regular equity awards could be granted following the release of prior year financial results.

In order to determine 2012 LTI targets for our NEOs, the Committee established a benchmark for each NEO based on the current LTI values established in the January 2012 compensation study, which was determined with equal weighting given to (i) the median LTI for comparable positions from the Consultant’s national database, and (ii) the median for comparable positions of the Peer Group, both of which were adjusted for inflation. The compensation study provided three alternatives for 2012 LTI values: 10% below market median values, at market median values and 10% above market median values. The 2012 LTI values were established by the Committee for each NEO after consideration of the results of the January 2012 compensation study and other qualitative factors related to length of service and individual performance. The 2012 LTI values established by the Committee for Mr. Covert, Ms. McDermott and Mr. Moneymaker were at market median values and 10% below the market median values for Mr. Keller as presented in the compensation study.

The 2012 LTI target values determined by the Committee for our NEOs were the following: $356,250 for Mr. Covert; $219,732 for Ms. McDermott; $825,000 for Mr. Moneymaker; and $175,898 for Mr. Keller. The 2012 LTI awards were split equally between

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restricted stock and stock options. In order to determine the number of shares of restricted stock granted in February 2012, the Committee divided 50% of the 2012 LTI target value by the average closing stock price of our common stock for the month of January 2012, or $16.05 per share. Accordingly, on February 29, 2012, the Committee approved the following restricted stock awards: 11,098 for Mr. Covert; 6,845 for Ms. McDermott; 25,701 for Mr. Moneymaker; and 5,480 for Mr. Keller. In order to determine the number of stock options granted in February 2012, the Committee divided 50% of the LTI target value by the average Black-Scholes value of one option to purchase one share of our common stock for the month of January 2012, or $5.18 per share. Accordingly, the Committee approved the following stock option awards for the NEOs on February 29, 2012: 34,380 for Mr. Covert; 21,206 for Ms. McDermott; 79,618 for Mr. Moneymaker; and 16,975 for Mr. Keller. The Committee did not adjust the number of annual LTI equity awards upward or downward based on the closing price of our common stock on the date of grant; therefore, the dollar value of the LTI grants on the date of grant varied based on changes in the price of our common stock. The actual value of the annual LTI awards for the NEOs on the February 29, 2012 grant date was: $272,423 for Mr. Covert; $168,029 for Ms. McDermott; $630,884 for Mr. Moneymaker; and $134,513 for Mr. Keller.

On his hire date of April 26, 2012, the Committee granted to Mr. Biltz a multi-year award of 165,000 shares of restricted stock and 500,000 stock options (50% of which are performance-based with vesting tied to our stock price performance) with a total grant date fair value of $2,350,950. The Committee determined, after consideration of many factors such as competitiveness of the LTI value in relation to the Peer Group and Mr. Biltz’s experience level, that the equity awards created an appropriate alignment between Mr. Biltz and Company value creation. In light of this multi-year award, the Committee did not grant an equity award to Mr. Biltz in February 2013 when it granted equity awards to other executive officers.

On his hire date of May 29, 2012, the Committee granted to Mr. McCourt 16,283 shares of restricted stock and 115,238 stock options with a total grant date fair value of $340,533 after reviewing the benchmark of the companies included in the Peer Group and the initial equity grant levels for other officers recently hired.

Pursuant to applicable SEC rules, the amounts reflected as stock and option awards in the Summary Compensation Table below include the aggregate grant date fair value of the respective awards granted during the year.

Total Direct Compensation

The 2012 target total direct compensation (“TDC”) for each of the NEOs, consisting of base salary, short-term incentive compensation (TIP) and long-term incentive programs (as described above) was determined by the Committee after consideration of the competitive analysis provided by the Consultant in the January 2012 compensation study (each NEO’s respective TDC in comparison to those holding similar positions in our Peer Group and based on the Consultant’s survey results). The Committee also applies a pay-for-performance philosophy that strives to link the interests of our executives with those of our stockholders. As illustrated by the following table, a substantial portion (approximately 69% on weighted average target levels) of TDC for our executives who were named executive officers at the time of the 2012 annual compensation review performed by the Committee is “at-risk” or performance-based.

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Furthermore, the total direct compensation provided under our initial employment agreements with Mr. Biltz, our President and Chief Executive Officer appointed on April 26, 2012, and Mr. McCourt, our Executive Vice President and Chief Revenue Officer appointed on May 29, 2012, were designed with a substantial majority of the compensation being “at-risk” or performance-based, particularly for Mr. Biltz with approximately 79% of his total direct compensation “at-risk” or performance-based. This is illustrated in the following table.

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Stock Ownership Guidelines

Our board of directors approved stock ownership guidelines for our executive officers to emphasize the link between officers and the long-term interests of our stockholders and to enhance our image by openly communicating to investors, market analysts and the public that officer interests are tied directly to our long-term success through personal capital investment in our common stock. The stock ownership guidelines generally require that each executive own a fair market value of our common stock equal to a multiple of the executive’s base salary as determined by our board of directors. The guidelines for our NEOs are as follows: five times annual base salary for our Chief Executive Officer and three times annual base salary for our other NEOs. The guidelines require our NEOs to reach these ownership levels within three years of November 1, 2011, or by October 31, 2014, or, if later, within three years of being appointed CEO or other named executive officer.

Employment Agreements

We maintain employment agreements with each of our NEOs. These employment agreements provide that the base salary, TIP participation and certain other benefits would continue throughout the term of the employment agreements, and the agreements also contain non-compete provisions, change of control protection and severance arrangements. The specific details regarding each NEO’s non-compete provisions, change in control protection and severance arrangements are described later in this Compensation Discussion and Analysis, beginning with the section titled “Change in Control and Severance Arrangements.” Specific terms of each employment agreement are as follows:

In connection with his appointment as our President and Chief Executive Officer, we entered into an agreement with Mr. Biltz, dated as of April 26, 2012. This employment agreement was subsequently replaced in its entirety by a new employment agreement dated August 30, 2012. The employment agreement expires on April 30, 2016 and will automatically renew for successive one-year periods thereafter unless notice of termination is previously provided. However, if the employment agreement has less than 24 months remaining upon the occurrence of a “change in control,” as such term is defined in the employment agreement, the employment term is automatically extended so that the employment term shall not expire until 24 months following the “change in control.” The employment agreement provides for an annual base salary of $425,000 per year and a target bonus opportunity of 100% of Mr. Biltz’ base salary, which will be paid if the bonus criteria, as set by our Board, for the applicable period are met. The agreement also provides for a one-time signing bonus of $255,000, which was applied against the 2012 annual bonus approved by the Board to the extent the annual bonus exceeds this amount. The agreement also provides that we will make Mr. Biltz an “initial equity” grant effective upon his appointment as our President and Chief Executive Officer of 165,000 shares of time-based restricted stock, 250,000 performance-based stock options and 250,000 time-based stock options.

In connection with his appointment on September 19, 2011, as our Executive Vice President, Chief Financial Officer and Treasurer, we entered into an agreement with Mr. Covert, dated as of September 19, 2011. The employment agreement expires on December 31, 2013 and will automatically renew for successive one-year periods unless notice of termination is previously provided. However, if the employment agreement term has less than 24 months

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remaining upon the occurrence of a “change in control,” as such term is defined in the employment agreement, the employment term is automatically extended so that the employment term shall not expire until 24 months following the “change in control.” The employment agreement provides for an annual base salary of $285,000 per year and a target bonus opportunity of 60% of Mr. Covert’s base salary, which will be paid if the bonus criteria, as set by our board of directors, for the applicable period are met. Under this agreement, Mr. Covert received an “initial equity” grant effective upon his appointment of 24,604 shares of restricted stock (number of shares as converted to Lumos Networks restricted stock on November 1, 2011) which, beginning on the first anniversary of his appointment, will vest 33 1/3% for each full year of his continued employment, and an initial equity grant of 88,277 stock options exercisable for shares of common stock (number of options as converted to Lumos Networks stock options on November 1, 2011), which, beginning on the first anniversary of the appointment, will vest 25% for each full year of his continued employment.

Upon hiring Mr. McCourt as our Executive Vice President and Chief Revenue Officer, we entered into an employment agreement with him dated as of May 29, 2012. The employment agreement expires on December 31, 2013 and will automatically renew for successive one-year periods thereafter unless notice of termination is previously provided. However, if the employment agreement term has less than 24 months remaining upon the occurrence of a “change in control,” as such term is defined in the employment agreement, the employment term is automatically extended so that the employment term shall not expire until 24 months following the “change in control.” The employment agreement provides for an annual base salary of $210,000 and a target bonus opportunity of 70% of Mr. McCourt’s base salary (40% which will be paid if the bonus criteria, as set by our board of directors, for the applicable period are met and 30% which is tied to the sales incentive plan and will be paid in the form of commission payments). The agreement also provided for an “initial equity” grant effective upon his appointment of restricted stock valued at $142,800 and stock options valued at $214,200 which vest subject to his continued employment.

We entered into an employment agreement with Ms. McDermott on August 30, 2012, which will expire on December 31, 2013 and will automatically renew for successive one-year periods thereafter unless notice of termination is previously provided. However, if the employment agreement term has less than 24 months remaining upon the occurrence of a “change in control,” as such term is defined in the employment agreement, the employment term is automatically extended so that the employment term shall not expire until 24 months following the “change in control.” The employment agreement provides for an annual base salary of $219,732 per year and a target bonus opportunity of 50% of Ms. McDermott’s base salary, which will be paid if the bonus criteria, as set by our board of directors, for the applicable period are met.

Qualified Retirement Plan

Lumos Networks offered a qualified pension plan (the “Pension Plan”) to all employees hired before October 1, 2003 to provide an annual retirement benefit. In December 2012, our board of directors approved a cost reduction plan which involved an employee reduction-in-force, consolidation of certain facilities and freezing the accumulation of certain postretirement benefits. In connection with this, the Pension Plan was frozen effective December 31, 2012 and no additional benefits will be accrued by participants for services rendered beyond this date. Our board of directors recognizes that the Pension Plan has provided a valuable benefit in the

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retention of the experienced workforce of the Company. However, that value has been in recession given that the Pension Plan has been frozen to new participants since 2003. Furthermore, the decision was made after consideration of postretirement benefits offered in relation to our Peer Group. Ms. McDermott is our only current NEO who is an active participant in the Pension Plan. Messrs. Moneymaker and Keller were active participants in the Pension Plan until their separation from the Company on April 30, 2012 and December 31, 2012, respectively.

Non-qualified Supplemental Retirement Plan

In addition to the Pension Plan, we provided the Executive Supplemental Retirement Plan (“SERP”) to supplement the retirement benefits payable under Lumos Networks’ tax-qualified plans to those key employees selected to participate. The accumulation of benefits under the SERP was also frozen effective December 31, 2012. Ms. McDermott is the only active employee participant in the SERP. The SERP participation benefit is provided in her employment agreement. The SERP is a non-qualified, unfunded retirement plan that was provided primarily for the purpose of providing our NEOs with retirement benefits for the portion of their salary in excess of $245,000 which is not covered by the Pension Plan, and for the portion of their salary which is not covered by any other tax-qualified company-funded retirement benefit. Mr. Moneymaker was an active participant in the SERP until his separation from the Company on April 30, 2012.

Change of Control Payments

The employment agreements with our NEOs provide our NEOs with change of control protection as described under “Change of Control and Severance Arrangements” later in this proxy statement. We believe that by providing NEOs with this change of control protection, it allows our senior management to focus on maximizing stockholder value and mitigate the necessity for management’s attention to be diverted toward finding new employment in the event a change of control occurs. We also believe that this arrangement facilitates the recruitment of talented executives through the provision of guaranteed protection in the event Lumos Networks is acquired shortly after the executive accepts an employment offer with us.

Severance Arrangements with our NEOs

Each NEO’s employment agreement with us provides for severance arrangements upon the occurrence of certain events, as described under “Change of Control and Severance Arrangements” later in this proxy statement. We believe that companies should provide reasonable severance benefits to employees. With respect to our NEOs, these severance benefits should reflect the fact that it may be difficult for executives to find comparable employment within a short period of time. Such arrangements also should separate Lumos Networks from the former executive as soon as practicable.

Compensation Recoupment Policy

In order to further align management’s interests with the interests of stockholders and support good governance practices, our board of directors approved a Compensation Recoupment Policy. The Compensation Recoupment Policy provides that our board of directors will have the authority to obtain reimbursement of any portion of any performance based compensation paid or awarded, whether cash or equity based, where the payment or award was predicated upon the achievement of certain financial results or metrics that are subsequently the subject of a restatement or correction, from the officers and from other employees responsible for accounting errors resulting in the restatement or correction.

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Perquisites and Other Benefits

The Committee provides certain perquisite benefits to our NEOs. The perquisite offerings are reviewed annually by the Committee and changes are made, if necessary, to align these benefits with those of our peer group. The Committee conducted its annual review in February 2012 and determined that the existing perquisite offerings were appropriate after consideration of total compensation value to our NEOs in relation to our Peer Group.

In addition to the cash and equity compensation discussed above, we provide our NEOs with the same benefit package available to all of our salaried employees. The package includes:

In November 2012, the Committee adopted a Temporary Living Allowance policy that provides for a temporary living allowance of $4,100 per month for our executive officers who receive a relocation package in conjunction with their employment offer or promotion. The temporary living allowance will cease upon the earlier of the executive officer’s relocation to his/her assigned location or the lapse of two years. If the executive officer relocates after receiving temporary living allowance payments, any relocation expense reimbursements will be reduced by the cumulative amount of temporary living allowance already received.

We also provide each of our NEOs with a vehicle allowance and the retirement and change of control benefits described above.

Advisory Votes on Executive Compensation

As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the subsequent rules and regulations promulgated by the SEC, we are including a non-binding advisory resolution approving the compensation of our named executive officers. The vote on this proposal will be non-binding on the Board and us and will not be construed as overruling a decision by the Board or us. This vote will not create or imply any change to our fiduciary duties or create or imply any additional fiduciary duties for the Board or us. However, the Compensation Committee values the opinions that our shareholders express in their votes and will consider the outcome of the vote when making future decisions on executive compensation, as it deems appropriate.

At the 2012 Annual Meeting of Shareholders, 95 percent of the shares cast on the proposal were voted for the non-binding advisory resolution approving the compensation of our named executive officers. In light of that result, the Board implemented substantially the same objectives, program and rationale for the compensation of our named executive officers in 2012, as disclosed in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative on pages 22 through 52 in this Proxy Statement.

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In addition, at the 2012 Annual Meeting of Shareholders a large majority of our shareholders approved, on a non-binding basis, the holding of the non-binding vote on the compensation of our named executive officers on an annual basis. As previously disclosed, the Board and management determined to implement an annual advisory vote on the compensation of our named executive officers. As a result, we are including the non-binding advisory resolution approving the compensation of our named executive officers again in this Proxy Statement. See Proposal 2 on page 56 of this Proxy Statement.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” section of this proxy statement with management and, based on such review and discussion, the Compensation Committee recommends that it be included in this proxy statement.

The Compensation Committee Report does not constitute solicitation material and shall not be deemed filed or incorporated by reference into any of our other filings and/or the Securities Act or the Exchange Act, except to the extent that we specifically incorporate this report by reference therein.

Compensation Committee Interlocks

The Compensation Committee currently consists of Messrs. Felsher and Guth and Ms. North. No member of the Compensation Committee was an employee of Lumos Networks during the last fiscal year or an officer of Lumos Networks in any prior period. There are no Compensation Committee interlocks between us and other entities involving our executive officers and members of the Board of Directors who serve as an executive officer or board member of such other entities.

Certain Relationships and Related Transactions

Our Board of Directors has adopted a written policy that generally provides that we may enter into a related party transaction only if the Audit Committee shall approve or ratify such transaction in accordance with the guidelines set forth in the policy and if the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party; the transaction is approved by the disinterested members of the Board of Directors; or the transaction involves compensation approved by our Compensation Committee.

Our Audit Committee Charter provides that management shall report to the Audit Committee any proposed “related party” transaction that might be considered material to us or the related party, or required to be disclosed by applicable disclosure rules. The Audit Committee shall be responsible for the review and oversight contemplated by NASDAQ with respect to any such reported transactions. We have not entered into any material related party transactions during 2012 or the period from that date through the date of this proxy statement.

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Summary Compensation Table

The following table summarizes the prior three years’ compensation of our NEOs. Prior to October 31, 2011, Lumos Networks was not a separate operating company. Accordingly, the information presented for 2011 reflects compensation paid to our NEOs by our former parent and its subsidiaries prior to the spin-off from NTELOS and by us and our subsidiaries after the spin-off, and the information presented for 2010 reflects compensation paid to our NEOs by NTELOS.

The 2012 amounts for Messrs. McCourt and Keller represent the quarterly commission payments they earned under the quarterly sales incentive program.

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The compensation paid to Mr. Hyde by NTELOS in 2011, which was calculated on the same basis as the compensation information required in the Summary Compensation table, was comprised of the following: salary $612,500; bonus $0; stock awards $935,230; option awards $680,990; non-equity incentive plan compensation $475,300; change in pension value and non-qualified deferred compensation earnings $0; all other compensation $23,126; and total $2,727,146.

The compensation paid to Mr. Hyde by NTELOS in 2010, which was calculated on the same basis as the compensation information required in the Summary Compensation table, was comprised of the following: salary $575,000; bonus $57,500; stock awards $999,699; option awards $0; non-equity incentive plan compensation $492,085; change in pension value and non-qualified deferred compensation earnings $0; all other compensation $17,536; and total $2,141,820.

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Grants of Plan-Based Awards

The following table summarizes awards made to our NEOs during the year ended December 31, 2012.