It’s Time for Change at Lifeway Foods
Lifeway’s Board has failed its shareholders, prioritizing CEO enrichment over company value. As the company’s largest shareholders and founding family, Edward and Ludmila Smolyansky are calling for new leadership to restore integrity and drive real growth.
Board of Directors Nomination Letter
Edward Smolyansky
1219 N Wells St
Chicago, IL 60610
March 17, 2025
Dear Shareholders,
Together, Ludmila Smolyansky and I are the largest shareholders of Lifeway Foods, Inc. (NASDAQ: LWAY; “Lifeway” or the “Company”), with collective beneficial ownership of 4,163,141 shares of common stock, equating to approximately 27.4% of the shares reported by the Company to be outstanding. Additionally, we have served in several leadership roles at the Company throughout its nearly 40-year history.
The Company has reached an inflection point. While the Board’s insistent capitulation to Lifeway’s self-absorbed and self-interested CEO has always been in question, it now must prove in court that its conduct did not breach the directors’ fiduciary duties to shareholders.
The latest suit was brought by Danone, the Company’s largest unaffiliated investor for over 25 years. Danone alleges that the directors breached their fiduciary duties when the Board granted 283,337 shares of stock to CEO Julie Smolyansky without obtaining Danone’s consent per its 1999 shareholder agreement with the Company. The grant was suspicious given the cash retention bonus paid to CEO Smolyansky of $2 million announced immediately prior.
All of this followed the rejection of an unsolicited offer from Danone, its second, to buy the shares of the Company it did not own for $27 per share, representing a premium of 72% over the 3-month volume-weighted average price.
Instead of negotiating better terms with Danone and/or mending fences with its largest shareholder, we find the Company having to contend with litigation stemming from clearly questionable conduct. Importantly, the timing and magnitude of the $8.5 million aggregate CEO award in cash and shares – equating to more than 94% of the Company’s 2024 net income – suggests that this Board is far more interested in enriching the CEO than maximizing value for all shareholders.
The Board’s failure to maximize shareholder value while enriching the CEO warrants a complete and immediate overhaul.
This change requires a new slate of independent directors, including George Sent. As a leading investment banker for the food and beverage industry, he is well-suited to assist the Board in objectively evaluating the strategic alternatives and acquisition offers received by the Company. As the former lead independent director for Lifeway and former chair of Lifeway’s Audit and Corporate Governance Committee, Mr. Sent is already intimately familiar with the Company and the corporate governance challenges it faces.
The proposed slate also includes Edward Smolyansky, a member of the founding family and one of the largest shareholders of the Company, with prior service to the Company in several key roles, including Controller, CFO, COO, and Director.
The new slate also includes Ludmila Smolyansky, co-founder of Lifeway and former Chair of the Board. Mrs. Smolyansky, together with her husband Michael, introduced kefir to the U.S. market and helped turn a basement operation into a global enterprise. With her help, the Board can return to its business of maximizing value for shareholders and revive the integrity and spirit upon which the Company was founded.
It is Time for Complete and Immediate Change at the Lifeway Board
Lifeway can no longer be burdened with a Board incapable of putting the interests of its shareholders ahead of those of its CEO. The relationship with the Company’s largest investor must be repaired, and an independent committee can be formed to evaluate all strategic alternatives aimed at maximizing value for shareholders. However, we must act now.
The proposed slate has the right balance of kefir product expertise, shareholder representation, Board and operational familiarity with Lifeway, and financial and transactional experience to usher in a new growth phase for Lifeway.
Backgrounds and summaries for the nominees are included in the pages to follow. We look forward to your support in bringing about the complete and immediate change needed to create shareholder value.
Sincerely,
Edward Smolyansky
Nominees and Bios for Immediate Change at Lifeway
Ludmila Smolyansky
Co-founder and Former Chairperson, Lifeway Foods, Inc.
In 1986, Ludmila Smolyansky and her husband Michael founded Lifeway, introducing kefir to the American market. After the company went public in 1988, Ludmila played a pivotal role in Lifeway's growth. Following Michael’s passing in 2002, she became Chairperson of the Board, guiding the company through its expansion to over $119 million in annual revenues by 2021. Smolyansky’s leadership extended well beyond her role as Chairperson, which she held until August 2022. With over 40 years of experience in the health food industry, she was instrumental in developing Lifeway’s operational and strategic direction. Even after retiring as a company employee in 2010, she continued to serve as a consultant and remained a key figure on the Board. As a cultured dairy and probiotic pioneer, Ludmila’s insight into food manufacturing, distribution, and strategic planning has been invaluable to Lifeway's success. Her industry knowledge and business acumen have made her a recognized leader in natural and organic products.
Edward Smolyansky
Former Chief Operating Officer, Lifeway Foods, Inc.
Mr. Smolyansky is one of the largest shareholders of Lifeway, a leading U.S. producer of kefir. As a member of Lifeway’s founding family, he served as the company’s COO for over a decade, overseeing critical operations and strategic growth initiatives. He also held roles as CFO and Treasurer after starting his tenure at Lifeway as Controller. He also served as a director from 2017 to 2022. Edward is a recognized leader in the dairy and probiotic products industry with extensive financial and operational experience. At Lifeway, he played a key role in integrating strategic acquisitions, developing innovative products, and collaborating with investors and financial institutions. Edward’s father founded Lifeway and entrusted him with the company’s secret kefir formulas and processing methods, and he has been committed to perfecting and enhancing those products ever since. Edward brings a fresh perspective and a deep understanding of the evolving dairy landscape. He has a clear vision and strategic plan to revitalize Lifeway, aligning the company with shareholder interests and future market demands.
George Sent
Managing Director, Cascadia Capital
Mr. Sent is a seasoned investment banking professional with over two decades of experience, currently serving as Managing Director at Cascadia Capital, specializing in the Food, Beverage & Agribusiness sector. Sent’s expertise in mergers and acquisitions, private equity capital raises, and strategic board advisory is backed by fifteen years of concentrated work in the food and beverage industry.
Cindy Curry
Chief Financial Officer, Rakuten Advertising
Robert Whalen
Senior Advisor, AIR Asset Management
Richard Beleutz
Founder and Chief Executive Officer, AIR Asset Management
Michael Leydervuder
CEO and Managing Partner, L Development
Statement from Edward and Ludmila Smolyansky
Edward and Ludmila Smolyansky Launch Campaign to Replace Board of Directors at Lifeway Foods (NASDAQ: LWAY)
CHICAGO, March 17, 2025 /PRNewswire/ -- Edward Smolyansky, who, together with Ludmila Smolyansky, beneficially owns 4,163,141 shares of common stock, today launched a formal campaign to stop the further erosion of value taking place at Lifeway Foods, Inc. (NASDAQ: LWAY) by submitting and filing a Notice regarding Planned Nominees for election at the upcoming 2025 Annual Meeting.
Lifeway Foods has reached an inflection point. The Board’s continued deference to the CEO has raised serious governance concerns, and it must now demonstrate in court that its actions align with its fiduciary responsibilities to shareholders.
The latest suit was brought by Danone, Lifeway’s largest unaffiliated investor for over 25 years. Danone alleges that the directors breached their fiduciary duties when the Board granted 283,337 shares of stock to CEO Julie Smolyansky without obtaining Danone’s consent per its 1999 shareholder agreement with Lifeway Foods.2 The grant was suspicious given the cash retention bonus paid to CEO Smolyansky of $2 million3 announced immediately before.
All of this followed the rejection of an unsolicited offer from Danone, its second, to buy the shares of Lifeway it did not own for $27 per share, representing a premium of 72% over the 3-month volume-weighted average price.
Instead of negotiating better terms with Danone and/or mending fences with its largest single shareholder, we find Lifeway Foods having to contend with litigation stemming from clearly questionable conduct. Importantly, the timing and magnitude of the $8.5 million aggregate CEO award in cash and shares – equating to more than 94% of Lifeway Foods’ 2024 net income – suggests that this Board is far more interested in enriching the CEO than maximizing value for all shareholders.
The Board’s failure to maximize shareholder value while enriching the CEO warrants a complete and immediate overhaul.
This change requires a new slate of independent directors, including George Sent. As a leading investment banker for the food and beverage industry, he is well-suited to assist the Board in objectively evaluating the strategic alternatives and acquisition offers received by Lifeway Foods. As the former lead independent director for Lifeway and former chair of Lifeway’s Audit and Corporate Governance Committee, Mr. Sent is already intimately familiar with Lifeway Foods and the corporate governance challenges it faces.
The proposed slate also includes Edward Smolyansky, a member of the founding family and one of the largest shareholders, with prior service to Lifeway Foods in several key roles, including Controller, CFO, COO, and Director.
The new slate also includes Ludmila Smolyansky, co-founder of Lifeway and former Chair of the Board. Mrs. Smolyansky, together with her husband Michael, introduced kefir to the U.S. market and helped turn a basement operation into a global enterprise. With her help, the Board can return to its business of maximizing value for shareholders and revive the integrity and spirit upon which Lifeway Foods was founded.
It is Time for Complete and Immediate Change at the Lifeway Board
Lifeway can no longer be burdened with a Board incapable of putting the interests of its shareholders ahead of those of its CEO. The relationship with Lifeway Foods’ largest investor must be repaired, and an independent committee can be formed to evaluate all strategic alternatives aimed at maximizing value for shareholders. However, we must act now.
“Lifeway has disregarded not only a respected global partner but also its own founding family,” said Edward Smolyansky. “Since 2021, Lifeway Foods has spent millions of shareholder dollars attempting to control the election process rather than focusing on delivering value. They have made repeated efforts to remove me as a shareholder, all of which have failed. Now, they are taking a similar approach with Danone. While I cannot speak for them, Ludmila and I are committed to restoring accountability and leadership at Lifeway.”
The proposed slate has the right balance of kefir product expertise, shareholder representation, Board and operational familiarity with Lifeway, and financial and transactional experience to usher in a new growth phase for Lifeway.
For more information about the 2025 Lifeway Foods Proxy Campaign, follow Edward Smolyansky on LinkedIn and visit freelifeway.com, which provides backgrounds and summaries for the nominees, as included in the formal nomination letter to the Board and associated SEC filings.