DEF 14A of Lifeway Foods, Inc., Apr 30, 2026

DEF 14A of Lifeway Foods, Inc.

Filed Apr 30, 2026 · FY20250001683168-26-003375

Open on EDGAR

  1. PROPOSAL ONE: ELECTION OF DIRECTORS

    PROPOSAL ONE: ELECTION OF DIRECTORS The Board currently consists of eight (8) directors, but the Board has the authority to increase or decrease that size depending on an assessment of its needs and other relevant circumstances at any given time. The seven (7) current members of our Board other than Jason Scher have been nominated for re-election. As of the Annual Meeting, Jason Scher will no longer be a member of our Board, and the Board will then decrease in size to seven (7) members so no vacancy will exist on the Board. Each nominee has consented to being named as a nominee for election as a director and has agreed to serve if elected. At the Annual Meeting, directors will be elected to serve a term of office ending at the 2027 Annual Meeting or such time as their successors are elected and qualified. Shareholders and their proxies are being asked to vote on these seven (7) persons nominated for the Board:

  2. PROPOSAL ONE: ELECTION OF DIRECTORS

    | Name | Age | Director since | Occupation | ACG Committee Membership | Compensation Committee Membership | | Kirk Chartier | 63 | 2025 | Chief Strategy Officer of Enova International, Inc. | F | M | | Juan Carlos (“JC”) Dalto | 62 | 2022 | Chief Executive Officer of Savencia Fromage & Dairy, Americas | | | | Rachel Drori | 44 | 2025 | Founder of Daily Harvest | | | | Andee Harris | 54 | 2025 | Chief Executive Officer of Crisis Prevention Institute | M, F | | | Susie Hultquist | 58 | 2025 | Chief Executive Officer of Spokin | | M | | Dorri McWhorter | 53 | 2020 | President and CEO of the Executives' Club of Chicago | M, F | | | Julie Smolyansky | 52 | 2002 | President, CEO and Secretary, Lifeway Foods | | |

  3. PROPOSAL ONE: ELECTION OF DIRECTORS

    | ACG: Audit and Corporate Governance | M: Member | F: Financial Expert |

  4. PROPOSAL ONE: ELECTION OF DIRECTORS

    | The Board of Directors recommends that you vote “FOR” the election of each of the nominees. |

  5. 2025 “Say-on-Pay” Vote, Shareholder Engagement Process and Input from Shareholders

    2025 “Say-on-Pay” Vote, Shareholder Engagement Process and Input from Shareholders The shareholder advisory votes on say on pay decreased from 58.5% in 2024 to 53.3% in 2025. The Compensation Committee, along with the Board of Directors and the Company’s management were disappointed with the outcome and took it seriously. In order to gain a better understanding of our shareholders’ perspectives on our executive compensation program and any other shareholder concerns, during 2025 and through the Record Date in 2026, we carried out a campaign of engagement with shareholders described below. As previously disclosed by the Company in its filings with the SEC, the Company has discussed executive compensation and other matters with Danone. As a result of those discussions, the Company entered into the Cooperation Agreement with Danone pursuant to which we and Danone agreed to comply with the terms of that certain Stockholders’ Agreement dated as of October 1, 1999 (as amended, the “Stockholders’ Agreement”), by and among the Company, Danone Foods, Inc., Michael Smolyansky, Ludmila Smolyansky, Julie Smolyansky and Edward Smolyansky (without contesting or admitting its validity) except that, among other things, Danone’s consent will not be required for the Company to issue bona fide equity-based compensation to members of our management (excluding Julie Smolyansky, her immediate family and their affiliates) so long as the grants are on market terms and are approved by the Company’s Compensation Committee (a majority of which must be made up of the New Independent Board Members). The Company’s Compensation Committee is now able to use equity compensation for members of management (other than Julie Smolyansky, her immediate family and their affiliates) and members of our Board as is customary and market standard for publicly traded companies and as recommended by the Compensation Committee’s compensation consultant. The Compensation Committee believes that using equity compensation further aligns management and the Board’s interests with the shareholders and provides appropriate incentive to management based on Company performance tied to the strategic goals of the Company. As part of our benchmarking and analysis process, the Compensation Committee determined that Lifeway’s peers, as well as most, if not all, other publicly traded corporations use equity-based compensation as part of the compensation package for its CEOs and other managers, including publicly traded companies led by founders and/or controlling shareholders (even when such named executive officers also hold substantial or controlling stakes in those companies). The Compensation Committee, relying on market analysis of CEO and CFO compensation by the Compensation Committee’s compensation consultant, determined that the 2025 compensation total value of each of the NEO’s compensation, as well as the amount of cash salary and cash and equity-based incentives that could be earned based on Company performance that made up each of the NEOs’ total compensation, was reasonable in relation to the market for similarly situated NEOs. Going forward, as a result of the Cooperation Agreement, the Company will be able to compensate our CFO in accordance with market standards and pay to him the total value of his compensation package, based on Company performance during the relevant performance periods, using a mix of equity and cash as established by the Compensation Committee. However, our agreement under the Cooperation Agreements prevents us from issuing equity-based compensation to Julie Smolyansky, her immediate family and their affiliates, limiting the methods by which we can compensate our CEO. In order to pay Ms. Smolyansky the total value of her 2025 compensation package, or to provide similar value in the future, the Company will be required to pay the cash value of any previously issued equity compensation when and if earned and vested. In 2026, the Compensation Committee structured CEO compensation such that the total value of potential compensation remained the same as the CEO’s total potential compensation as set in 2025, consisting of base salary, a short term performance based cash award, a long term performance based award (“2026 Long Term Performance Based Award”) and a time based vesting award (“2026 Time Based Vesting Award” and, together with the 2026 Long Term Performance Based Award, the “2026 Awards”). However, as a result of our contractual requirements, instead of issuing equity-based awards in the form of RSUs and PSUs as the 2026 Awards, the Compensation Committee issued cash-based awards subject to the same performance thresholds and vesting timing that are applicable to the equity-based awards other employees of the Company received in 2026 and would have been applicable to the CEO’s equity-based awards if the Company was able to issue such awards. If Danone consents to the settlement in equity of the 2026 Awards or any previously issued equity-based awards or such consent is no longer required under the Cooperation Agreement, the Compensation Committee maintains discretion to settle all such awards in cash, whole shares of common stock or a combination of the two. Our Compensation Committee will continue to seek Danone’s consent to use equity-based compensation as part of our CEO’s compensation package and the compensation of any employees in Ms. Smolyansky’s immediately family who would otherwise receive equity-based compensation based on their responsibilities and achievement and performance thresholds by the Company. In addition to Danone, our independent directors together with our CEO, our CFO and other members of management, as needed, offered to meet with each shareholder we contacted. Approximately 73.6% of our outstanding common stock is beneficially owned by Julie Smolyansky, our CEO, Ludmila Smolyansky, Edward Smolyansky, Danone and Divisadero Street Capital Management, LP (“Divisadero”). Given the Company’s ownership structure and prior discussions with Danone as well as the public filings of Edward and Ludmila Smolyansky, our outreach is focused on Divisadero and a group of unaffiliated institutional and long-term shareholders. Six shareholders (other than Danone, executive officers or directors of the Company and shareholders who are related our executive officers and directors) who in the aggregate held approximately 13% of our outstanding common stock, met with the Company in 2025 to discuss executive compensation. Jason Scher, Chair of the Compensation Committee and, until we appointed an independent Chair of the Board in October 2025, our Lead Independent Director, led these discussions, with our CEO, CFO and other members of management, as necessary, joining the calls. Except for a request for confirmation that executive compensation is set by independent directors which the Company confirmed as set forth below, these shareholders expressed no concerns or made any requests regarding executive compensation. During our shareholder outreach, shareholders noted the Company’s strong performance. Below is a list of concerns and questions set out by the shareholders we spoke to and the Company’s response.

  6. Information About Nominees

    Information About Nominees

  7. The Board’s Compensation Oversight

    The Board’s Compensation Oversight Led by the Compensation Committee, the Board discharges its responsibilities related to compensation of Lifeway’s executive officers and administers our cash and equity incentive compensation plans. The Board also evaluates non-employee director compensation. In addition, the Board is responsible for conducting a periodic risk evaluation of Lifeway’s compensation practices, policies, and programs. The Compensation Committee engaged Aon’s Human Capital Solutions practice, a division of Aon plc (“Aon”), an independent compensation consultant, to conduct a comprehensive review and analysis of our executive officer and non-employee director compensation programs and to make recommendations for compensation related to fiscal 2025. Aon does not perform any other work for the Company. The Compensation Committee reviews the independence of Aon in light of SEC rules and Nasdaq listing standards regarding compensation consultants. The Compensation Committee has reviewed the level of services provided to Lifeway by Aon and does not believe the services give rise to a conflict of interest or compromise Aon’s independence in advising the Compensation Committee in 2025. The Compensation Committee tasked Aon with reviewing its compensation strategy for 2025 built on Aon’s and the Compensation Committee’s prior work and reflects the compensation philosophy described in this proxy statement. Aon also reviewed our comparative peer group with management and the Compensation Committee and suggested several refinements to it, which the Compensation Committee approved. Additional information about peer group selection can be found in “Compensation Overview.” Using the refined peer group, Aon analyzed the peer group’s comparative total direct compensation practices and mix of pay against Lifeway’s executive officer total direct compensation practices generally and proposed recommendations regarding the amount and mix of base and incentive compensation to be delivered to our executive officers and senior management team for fiscal year 2025. The same peer group was used by Aon to assess the competitiveness of compensation for the non-employee directors. During 2025, Aon performed no other services for Lifeway. The Compensation Committee believed that there was no conflict of interest based on any relationship with Aon. In reaching this conclusion, the Compensation Committee considered the factors set forth in the SEC and Nasdaq rules regarding compensation advisor independence.

  8. Fiscal Year 2025 Director Compensation

    Fiscal Year 2025 Director Compensation The table below describes the cash and stock award portions of the annual retainer earned or paid to by each non-employee director who served in fiscal year 2025. Julie Smolyansky received no compensation for her service as director. We have excluded her from the table because we fully describe her compensation in the “NEO Summary Compensation for Fiscal Years 2025 and 2024” section. Rachel Drori and Andee Harris joined the Board in October 2025 and Kirk Chartier and Susan Hultquist joined the Board in November 2025.

  9. Fiscal Year 2025 Director Compensation

    | Name | Fees Earned in Cash (1) ($) | Stock Awards (2)(3) ($) | All Other Compensation ($) | Total ($) | | Kirk Chartier | 4,488 | 60,000 | | 64,488 | | J.C. Dalto(4) | 52,500 | 60,000 | – | 112,500 | | Rachel Drori | 7,826 | 60,000 | – | 67,826 | | Andee Harris | 10,000 | 60,000 | – | 70,000 | | Susie Hultquist | 4,488 | 60,000 | – | 64,488 | | Dorri McWhorter | 75,443 | 60,000 | – | 135,443 | | Jason Scher(4) | 98,500 | 60,000 | – | 158,500 | | Jody Levy(5) | 54,935 | – | – | 54,935 | | Perfecto Sanchez(6) | 70,489 | – | – | 70,489 | | Pol Sikar(7) | 62,615 | – | – | 62,615 |

  10. Fiscal Year 2025 Director Compensation

    | (1) Annual fees and committee fees are paid to directors quarterly in arrears. The annual fee schedule applicable during Fiscal Year 2025 was unchanged from the schedule applicable in 2024 and is as follows: |

  11. Non-Employee Director Fee Schedule

    | Annual Cash Retainer | $45,000 | | Annual Equity Compensation | $60,000 | | Audit Committee Chair Retainer | $12,500(a) | | Audit Committee Member Retainer | $12,500 | | Compensation Committee Chair Retainer | $10,500(a) | | Compensation Committee Member Retainer | $10,500 |

  12. Stock Awards Detail

    | Name | Vested Stock Award ($) | Restricted Stock Unit Award ($) | Total ($) | | Kirk Chartier | – | 60,000 | 60,000 | | J.C. Dalto | – | 60,000 | 60,000 | | Rachel Drori | – | 60,000 | 60,000 | | Andee Harris | – | 60,000 | 60,000 | | Susie Hultquist | – | 60,000 | 60,000 | | Dorri McWhorter | – | 60,000 | 60,000 | | Jason Scher | – | 60,000 | 60,000 |

  13. Certain Relationships and Related Party Transactions

    | Threshold PSUs | Target PSUs | Maximum PSUs | Target Value | | 1,019 | 2,038 | 3,057 | $50,000 |

  14. Information about Current Directors and Executive Officers

    Information about Current Directors and Executive Officers Information about Kirk Chartier, JC Dalto, Rachel Drori, Andee Harris, Susie Hultquist, Dorri McWhorter, Jason Scher, Julie Smolyansky can be found above in the section “Information about our Nominees.”

  15. Compensation Overview

    The tables that follow this Compensation Overview contain specific data about the compensation earned by our NEOs for fiscal 2024 and 2025. The discussion below is intended to help readers understand the detailed information provided in the compensation tables and put that information into the context of our overall executive compensation program. Our Compensation Committee assists our Board by discharging responsibilities relating to the compensation of our executive officers, including our NEOs. The Compensation Committee currently has responsibility over certain matters relating to the competitive compensation of our executive officers and directors as well as matters relating to equity-based plans. Our Compensation Committee is composed solely of independent directors. Current members of our Compensation Committee are Mr. Scher, Mr. Chartier and Ms. Hultquist. Each member of our Compensation Committee is independent, in accordance with the criteria of independence set forth the Nasdaq Listing Rules and the Securities Exchange Act of 1934. We believe that their independence from management allows the members of the Compensation Committee to provide unbiased consideration of performance reviews, peer group data, and various elements that could be included in an executive compensation program for which the Compensation Committee is responsible. We believe that independent directors are able to apply independent judgment about which elements best achieve our compensation objectives. Shareholder Engagement The shareholder advisory votes on say on pay decreased from 58.5% in 2024 to 53.3% in 2025. The Compensation Committee, along with the Board of Directors and the Company’s management were disappointed with the outcome and took it seriously. In order to gain a better understanding of our shareholders’ perspectives on our executive compensation program and any other shareholder concerns, during 2025 and through the Record Date in 2026, we carried out a campaign of engagement with shareholders described below. As previously disclosed by the Company in its filings with the SEC, the Company has discussed executive compensation and other matters with Danone. As a result of those discussions, the Company entered into the Cooperation Agreement with Danone pursuant to which we and Danone agreed to comply with the terms of the Stockholders’ Agreement (without contesting or admitting its validity) except that, among other things, Danone’s consent will not be required for the Company to issue bona fide equity-based compensation to members of our management (excluding Julie Smolyansky, her immediate family and their affiliates) so long as the grants are on market terms and are approved by the Company’s Compensation Committee (a majority of which must be made up of the New Independent Board Members). The Company’s Compensation Committee is now able to use equity compensation for members of management (other than Julie Smolyansky, her immediate family and their affiliates) and members of our Board as is customary and market standard for publicly traded companies and as recommended by the Compensation Committee’s compensation consultant. The Compensation Committee believes that using equity compensation further aligns management and the Board’s interests with the shareholders and provides appropriate incentive to management based on Company performance tied to the strategic goals of the Company. As part of our benchmarking and analysis process, the Compensation Committee determined that Lifeway’s peers, as well as most, if not all, other publicly traded corporations use equity-based compensation as part of the compensation package for its CEOs and other managers, including publicly traded companies led by founders and/or controlling shareholders (even when such named executive officers also hold substantial or controlling stakes in those companies). The Compensation Committee, relying on market analysis of CEO and CFO compensation by the Compensation Committee’s compensation consultant, determined that the 2025 compensation total value of each of the NEO’s compensation, as well as the amount of cash salary and cash and equity-based incentives that could be earned based on Company performance that made up each of the NEOs’ total compensation, was reasonable in relation to the market for similarly situated NEOs. Going forward, as a result of the Cooperation Agreement, the Company will be able to compensate our CFO in accordance with market standards and pay to him the total value of his compensation package, based on Company performance during the relevant performance periods, using a mix of equity and cash as established by the Compensation Committee. However, our agreement under the Cooperation Agreements prevents us from issuing equity-based compensation to Julie Smolyansky, her immediate family and their affiliates, limiting the methods by which we can compensate our CEO. In order to pay Ms. Smolyansky the total value of her 2025 compensation package, or to provide similar value in the future, the Company will be required to pay the cash value of any previously issued equity compensation when and if earned and vested. In 2026, the Compensation Committee structured CEO compensation such that the total value of potential compensation remained the same as the CEO’s total potential compensation as set in 2025, consisting of base salary, a short term performance based cash award, a long term performance based award (“2026 Long Term Performance Based Award”) and a time based vesting award (“2026 Time Based Vesting Award” and, together with the 2026 Long Term Performance Based Award, the “2026 Awards”). However, as a result of our contractual requirements, instead of issuing equity-based awards in the form of RSUs and PSUs as the 2026 Awards, the Compensation Committee issued cash-based awards subject to the same performance thresholds and vesting timing that are applicable to the equity-based awards other employees of the Company received in 2026 and would have been applicable to the CEO’s equity-based awards if the Company was able to issue such awards. If Danone consents to the settlement in equity of the 2026 Awards or any previously issued equity-based awards or such consent is no longer required under the Cooperation Agreement, the Compensation Committee maintains discretion to settle all such awards in cash, whole shares of common stock or a combination of the two. Our Compensation Committee will continue to seek Danone’s consent to use equity-based compensation as part of our CEO’s compensation package and the compensation of any employees in Ms. Smolyansky’s immediate family who would otherwise receive equity-based compensation based on their responsibilities and achievement and performance thresholds by the Company. In addition to Danone, our independent directors together with our CEO, our CFO and other members of management, as needed, offered to meet with each shareholder we contacted. Approximately 73.6% of our outstanding common stock is beneficially owned by Julie Smolyansky, our CEO, Ludmila Smolyansky, Edward Smolyansky, Danone and Divisadero. Given the Company’s ownership structure and prior discussions with Danone as well as the public filings of Edward and Ludmila Smolyansky, our outreach is focused on Divisadero and a group of unaffiliated institutional and long-term shareholders.

  16. Compensation Overview

    | • | revised and approved the peer group companies; | | • | reviewed the Company’s contractual obligations that impact the Company’s compensation practices, including the Cooperation Agreement, the Amended and Restated Employment Agreement, dated December 23, 2024, between the Company and Julie Smolyansky (the “Smolyansky Employment Agreement”) and the Employment Agreement by and between the Company and Eric Hanson, dated as of January 18, 2019 (the “Hanson Employment Agreement”); and |

  17. Compensation Overview

    The Compensation Committee is authorized to retain and terminate, without Board or management approval, the services of an independent compensation consultant to provide advice and assistance. The Compensation Committee has the sole authority to approve the consultant’s fees and other retention terms. The Chairperson of the Compensation Committee reviews, negotiates, and executes any engagement letters with compensation consultants engaged by the Compensation Committee. All compensation consultants will report directly to the Compensation Committee. Role of our Compensation Consultant The Compensation Committee engaged Aon, an independent compensation consultant, to conduct a comprehensive review and analysis of our executive officer and non-employee director compensation programs and to make recommendations for compensation related to fiscal 2025. Aon does not perform any other work for the Company. The Compensation Committee reviews the independence of Aon in light of SEC rules and Nasdaq listing standards regarding compensation consultants. The Compensation Committee has reviewed the level of services provided to Lifeway by Aon and does not believe the services give rise to a conflict of interest or compromise Aon’s independence in advising the Compensation Committee in 2025. Using data from a refined peer group and general industry data for comparable companies that are included in proprietary third-party surveys, Aon analyzed the comparative total direct compensation practices and mix of pay against Lifeway’s executive officer total direct compensation practices generally and proposed recommendations regarding the amount and mix of base and incentive compensation to be delivered to our executive officers and senior management team for fiscal year 2025. The refined peer group was used by Aon to assess the competitiveness of compensation for the non-employee directors. The Committee’s Process for Setting Executive Compensation Benchmarking and Analysis To set total compensation guidelines, the Compensation Committee reviewed market data of companies that are comparable to Lifeway and that it believed compete with Lifeway for executive talent, business, and capital. The Committee reviewed both specific data from public proxy filings from peer group companies and general industry data for comparable companies that are included in proprietary third-party surveys. In assessing the compensation for Lifeway’s executives, the Committee considered market information available through public proxy filings and through Aon’s Global Compensation Databases. Aon is a leading executive compensation consulting practice. The Committee, together with Aon, review the gathered data for each of our NEOs and other key executive positions based on the scope of each employee’s responsibilities at Lifeway as compared to responsibilities of equivalent positions within companies included in the peer group. Since Lifeway is somewhat smaller, on average, in terms of revenue than the peer group, regression analysis was utilized to size-adjust the compensation data to Lifeway’s revenue scope of each NEO role. The Committee believed that it was necessary to consider this market data in making compensation decisions to attract, retain, and motivate talent. The Committee has also determined that, absent extraordinary circumstances, the Company’s human resources department and an independent compensation consultant will undertake a compensation marketplace analysis of executive compensation annually. In selecting peer organizations, the Committee generally considered the following screening criteria:

  18. Compensation Overview

    Our Peers The Compensation Committee, with the help of its independent compensation consultant, reviews and updates the Company’s peer group every year to ensure it still reflects an appropriate mix of mid-cap food, beverage, and natural wellness companies of similar size, complexity, and geographic reach. Since company profiles, market capitalization, and industry conditions change over time, the Committee believes that an annual review is essential to keep benchmarking data relevant. This process helps ensure that Lifeway’s executive compensation remains competitive in the consumer packaged goods industry and aligns with shareholder interests. For the 2025 Compensation Assessment, we removed The Alkaline Water Company Inc., Reed’s Inc., Rocky Mountain Chocolate Factory, Inc. and S&W Seed Co. and included Beyond Meat, Inc. and The Vita Coco Company, Inc. The peer group, as modified, consisted of the following companies:

  19. Compensation Overview

    | Peer group used for fiscal year 2025 compensation planning | | | • Alico, Inc. • Beyond Meat, Inc. • Bridgford Foods Corp. • Celsius Holdings, Inc. • Coffee Holding Co., Inc. • Crimson Wine Group, Ltd. • e.l.f. Beauty, Inc. • Farmer Bros Co. • Freshpet, Inc. • Laird Superfood, Inc. | • LifeVantage Corp. • Limoneira Co. • Mama’s Creations, Inc • MGP Ingredients Inc. • Natural Alternatives International, Inc. • Tootsie Roll Industries, Inc. • The Vita Coco Company, Inc. • Village Farms International, Inc. • Willamette Valley Vineyards, Inc. • Zevia PBC |

  20. Compensation Overview

    The actual compensation paid to each named executive officer for 2025 are set forth below this Compensation Overview in the Summary Compensation Table in the column entitled “Salary.” 2025 Annual Incentive Program For 2025, the target annual incentive opportunities for our NEOs were adjusted modestly to better align with market median levels for comparable roles, and to increase the portion of total direct compensation delivered through performance-based pay. For fiscal 2025, our NEOs were eligible to receive annual cash incentive awards based on achievement of a targeted Adjusted EBITDA (as defined below) goal and a minimum Net Revenue threshold (the floor), each set by the compensation committee. For purposes of the annual incentive, EBITDA may be adjusted to account for non-recurring or non-operational expenses such as, but not limited to, stock-based compensation, gain/loss on sale of equipment, and gain/loss on investments prior to payment of bonuses to employees (“Adjusted EBITDA”). Adjusted EBITDA is calculated using a consistent, objective methodology, with only limited non-recurring adjustments. The Compensation Committee set the minimum threshold Net Revenue goal (floor) that had to be achieved in order for any bonus to be funded for 2025 at $160 million, increased from the $145.0 million floor established in 2024. The Compensation Committee set the target Net Revenue level for 2025 at $170.0 million, increased from the $150.0 million target net revenue target in 2024. Actual Net Revenue in 2025 was $212.5 million, exceeding the 2025 minimum and target thresholds and actual net revenue in 2024 of $186.8 million. Once the Net Revenue funding trigger was met, if the targeted level of Adjusted EBITDA was also met as determined by the Compensation Committee, the target cash bonus was paid. Performance above target results in a payout of a higher percentage of salary. Performance below target results in a lower bonus payout, or no payout if the minimum threshold (floor) of Adjusted EBITDA or Net Revenue was not met. 100% of the annual incentive award is based on financial performance of the Company. The table below shows, for each NEO who received an award, the target and maximum annual incentive award, the threshold, target, stretch and maximum expectation with respect to Adjusted EBITDA financial performance and the actual bonus payout for 2025. The minimum, target, stretch and maximum performance thresholds were increased to $17.1 million, $19.0 million, $22.8 million and $28.5 million, respectively, in 2025 from $15.3 million, $17.0 million, $20.4 million and $25.5 million, respectively, in 2024. Actual Adjusted EBITDA in 2025 was $32.6 million, exceeding the 2025 maximum performance threshold for 2025 and actual Adjusted EBITDA in 2024 of $28.3 million. The financial goals used to determine NEO bonus funding are identical to those used to fund bonuses for other bonus-eligible officers. The award calculation is linearly interpolated for achievement between goal levels.

  21. Compensation Overview

    Actual Adjusted EBITDA performance was approximately 72% above target, resulting in actual cash incentives above target as well for each NEO. Actual award payments were 200% of target. The Compensation Committee determined this level of annual cash incentive was earned based on achieving the maximum performance level set for the fiscal year. The Compensation Committee believes Adjusted EBITDA is a transparent and accurate way to measure the Company’s performance because it reflects non-recurring or non-operational expenses such as stock-based compensation, gain/loss on sale of equipment, and gain/loss on investments, while taking into account the impact of the concentration of ownership of our stock and the contractual constraints on the methods of compensating our employees. The use of Net Revenue aligns with expansion through introduction of new products and growth of existing products ensuring our leaders are accountable for driving long term profitability and sustainability of the Company. Long Term Incentive Plan On August 31, 2022, the Company’s shareholders approved and we maintain the Lifeway Foods, Inc. 2022 Omnibus Incentive Plan (the “2022 Omnibus Plan”). The 2022 Omnibus Plan provides eligible participants (including our NEOs) the opportunity to participate in equity programs which incentivize them to work towards the long-term performance goals of Lifeway. We believe that a mix of restricted stock units (“RSUs”) and performance share units (“PSUs”) function as a compelling incentive and retention tool as well as motivation to achieve challenging goals and high performance for a multiple year period. For fiscal 2025, the total long-term incentive opportunity at target is awarded using two vehicles:

  22. Compensation Overview

    | • | 2/3 PSUs — Cliff vests at the end of the 3-year measurement period (i.e., 12/31/2027), and do not vest during the 3-year measurement period. The PSU’s only vest and become issuable to the employee after the end of the 3-year measurement period based on the achievement of performance goals for 3-year Cumulative Revenue and 3-year Cumulative Adjusted EBITDA as and when determined by the Compensation Committee. | | • | 1/3 RSUs — Vests annually on grant date anniversary (i.e., 3/28/26, 3/28/27 and 3/28/28). |

  23. Compensation Overview

    | NEO | Threshold PSUs | Target PSUs | Maximum PSUs | Target Value | | Julie Smolyansky (1) | 10,191 | 20,383 | 30,574 | $500,000 | | Eric Hanson | 2,228 | 4,457 | 6,685 | $109,333 |

  24. Compensation Overview

    PSUs were calculated by dividing the award value by the fair market value on the date the award was approved. RSUs As described in further detail in the Outstanding Equity Awards at Fiscal Year End Table and related footnotes below this Compensation Overview, the following table sets forth restricted stock unit (“RSU”) awards granted under the 2022 Omnibus Plan to our NEOs in 2025 as part of our long-term incentive plan,

  25. Compensation Overview

    | NEO | RSUs | $ Value | | Julie Smolyansky (1) | 10,191 | $250,000 | | Eric Hanson | 2,228 | $54,666 |

  26. Compensation Overview

    The number of RSUs awarded in 2025 was calculated by dividing the award value by the fair market value on the date the award was approved. One third of the RSUs awarded in 2025 will vest on March 28, 2026, March 28, 2027 and March 28, 2028, subject to the NEO’s continued employment through the applicable vesting date and are to be paid no later than March 15 in the year after the year in which such RSUs vested. Discretionary Bonus The Company awarded one time discretionary bonuses to select employees, including our Chief Financial Officer, in recognition of those employees’ extraordinary efforts during negotiations related to an unsolicited acquisition offer by Danone. These employees worked extended hours to support significant due diligence and related activities critical to the Company’s response while also performing their responsibilities and duties with respect to the ongoing operations and growth of the Company. The bonuses were reviewed by the Company’s independent compensation consultant, Aon, and approved by the Compensation Committee, consistent with the Company’s pay for performance philosophy and governance practices. Eric Hanson’s one time discretionary bonus was $50,000. Perquisites and Benefits Perquisites We provide executive officers and other key managers with limited perquisites and other personal benefits not otherwise available to all employees that the Compensation Committee believes are reasonable and consistent with our overall compensation program and philosophy. These benefits are provided to enable us to attract and retain these executive officers and key managers. The Compensation Committee periodically reviews the levels of these perquisites provided to our executive officers together with management and the relevant Committee’s independent compensation consultant. Of these benefits, the most significant ongoing benefit is providing our NEOs automobile related benefits due to their extensive travel in exploring, planning, and implementing the expansion of Lifeway’s product distribution, overseeing production at our facilities and in supporting and developing the Lifeway brand and sales, as applicable. We do not provide additional compensation or bonuses to cover, reimburse, or otherwise “gross-up” any income tax owed on this compensation. Benefits Our executive officers, including NEOs, are eligible for health, dental, vision, life insurance, short- and long-term disability insurance, and 401(k) benefits to the same extent and subject to the same conditions as all other salaried employees at Lifeway. Our executive officers, including NEOs, may also claim executive health examination expenses each year, subject to a cap designed to cover a majority of the program fees (but not any associated medical expenses) for such executive health programs available in the Chicago, Illinois area. We treat this health examination expense as taxable compensation and provide a tax gross-up to encourage the use of this benefit by our executive officers. Our NEOs also receive certain internet and telecommunications services allowances. Accounting and Tax Considerations Our Compensation Committee may take into consideration the accounting and tax treatment of the compensation and benefit arrangements for our Named Executive Officers. These considerations are in addition to those described above that were material to the pay decisions for the most recent fiscal year. While the Compensation Committee considers the deductibility of awards as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible by us for tax purposes.

  27. NEO Summary Compensation for Fiscal Years 2024 and 2025

    | Summary Compensation Table | | | | | | | | Name and Principal Position(s) | Year | Salary ($) | Stock Awards (1) ($) | Nonequity incentive plan compensation ($) | All Other Compensation (2) ($) | Total ($) | | Julie Smolyansky | | | | | | | | Chief Executive Officer, | 2025 | 1,000,000 | 750,000 | 1,600,000 | 39,132 | 3,389,132 | | President and Secretary | 2024 | 1,000,000 | 750,000 | 1,600,000 | 2,022,124 | 5,372,124 | | Eric Hanson | | | | | | | | Chief Financial and | 2025 | 410,000 | 164,000 | 287,000 | 87,462 | 948,462 | | Accounting Officer, | 2024 | 390,000 | 156,000 | 273,000 | 27,000 | 846,000 | | Treasurer | | | | | | |

  28. Pay Versus Performance

    Pay Versus Performance The following table sets forth certain information concerning the relationship between compensation actually paid to Lifeway’s Chief Executive Officer (“PEO”) and its other NEOs and the financial performance of the Company during fiscal years 2023, 2024 and 2025.

  29. Pay Versus Performance

    | Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (3) | Average Summary Compensation Table Total for Non-PEO NEOs (2) | Average Compensation Actually Paid to Non-PEO NEOs (3) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return | Net Income (in 000’s) | | 2025 | 3,389,132 | 2,908,459 | 948,462 | 856,614 | $97.70 | 13,859 | | 2024 | 5,372,124 | 10,081,103 | 808,607 | 1,484,854 | $184.94 | 9,025 | | 2023 | 3,372,200 | 5,119,250 | 772,732 | 990,756 | $241.62 | 11,367 |

  30. Pay Versus Performance

    | (1) Julie Smolyansky was our principal executive officer ("PEO") for each of the years shown. |

  31. Pay Versus Performance

    | (2) The non-PEO NEOs for each of 2023 and 2024 were Eric Hanson and Amy Feldman and the non-PEO NEO for 2025 was Eric Hanson. |

  32. Pay Versus Performance

    | (3) The table below details amounts deducted and added to calculate Average Compensation Actually Paid to the PEO and non-PEO NEOs.: |

  33. Pay Versus Performance

    | | 2025 | | | | | | PEO $ | | Average of NEOs $ | | | Total Compensation per Summary Compensation Table (SCT) | 3,389,132 | | 948,462 | | | Less: Value of Stock Award Reported in SCT | (750,000 | | (164,000 | | | Plus: Year-End Fair Value of Outstanding and Unvested Equity Awards Granted in Covered Year | 740,808 | (A) | 161,978 | (A) | | Plus: Fair Value for Equity Awards Granted and Vested During the Covered Year | – | | – | | | Plus: Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | (106,760 | )(B) | (21,472 | )(B) | | Plus: Change in Fair Value of Prior Year Equity Awards that Vested this Year | (364,720 | | (68,353 | | | “Compensation Actually Paid”" for Year Shown | 2,908,459 | | 856,614 | |

  34. Pay Versus Performance

    | (A) Includes target PSUs that may be earned under the Company’s 2025 long term incentive program. Such PSUs may be earned after the end of a three-year performance period based on the achievement of performance goals over such three-year performance period. Actual PSUs earned cannot be determined until after the completion of the performance period. | | (B) Includes an estimate of PSUs that may be earned under the Company’s 2023 long term incentive program and the Company’s 2024 long term incentive program. Such PSUs may be earned after the end of a three-year performance period based on the achievement of performance goals over such three-year performance period. Actual PSUs earned cannot be determined until after the completion of the performance period. |

  35. Compensation Actually Paid and Cumulative TSR

    Compensation Actually Paid and Cumulative TSR As demonstrated by the following graph, the amount of compensation actually paid to the Company’s NEOs as a group is aligned with the Company’s cumulative total shareholder return (“TSR”) over the three years presented in the table.

  36. Compensation Actually Paid and Net Income

    Compensation Actually Paid and Net Income The following graph depicts the relationship between the average amount of compensation actually paid to the Company’s NEOs as a group and the Company’s net income over the three years presented in the table.

  37. Outstanding Equity Awards at Fiscal Year End

    Outstanding Equity Awards at Fiscal Year End The following table provides information regarding each unexercised stock option and unvested restricted stock award held by our NEOs as of December 31, 2025.

  38. Outstanding Equity Awards at Fiscal Year End

    | | Stock awards | | | | | Name | Number of shares or units of stock that have not vested (#)(1) | Market value of shares of units of stock that have not vested ($)(2) | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)(3) | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)(2) | | Julie Smolyansky | 34,440(4) | $834,481 | 193,624 | $4,691,510 | | Eric Hanson | 7,142(5) | $173,051 | 39,442 | $995,680 |

  39. Outstanding Equity Awards at Fiscal Year End

    | (1) Represents time-based restricted stock awards pursuant to Lifeway’s 2022 Omnibus Plan. | | (2) The market values of these stock awards are calculated by multiplying the number of unvested/unearned shares held by the applicable NEO by the closing price of our common stock on December 31, 2025, the last trading day of our fiscal year, which was $24.23. | | (3) Performance share units will vest as soon as practicable after the end of the three-year performance period at the time that the Compensation Committee determines the number of PSUs earned by the applicable participant based on the performance metrics met. Numbers presented represent the number of target units. For further discussion of performance metrics, see “Long Term Incentive Plan” above. | | (4) Of such shares, 6,070 vested on January 10, 2026 and 108,426 vested on March 6, 2026 but have not yet been settled; 3,397 will vest on March 28, 2026, 12,111 will vest on June 16, 2026; 6,068 will vest on January 10, 2027, 3,397 will vest on March 28, 2027 and 3,397 will vest on March 28, 2028. Pursuant to the Cooperation Agreement, Danone’s consent will not be required for the Company to issue bona fide equity-based compensation to members of management (excluding Ms. Smolyansky, her immediate family and their affiliates) so long as the grants are on market terms and are approved by the Company’s Compensation Committee (a majority of which must be New Independent Board Members). Accordingly, Ms. Smolyansky’s equity awards may not be settled in equity and will instead be settled in cash in accordance with the terms of her award agreements unless consented to by Danone or Danone’s right to so consent to equity issuances by the Company terminates. Danone’s right to consent to issuances of Company equity terminates when Danone owns fewer than 761,438 shares of the Company’s outstanding common stock (as adjusted for any reverse stock split or similar recapitalization). | | (5) Of such shares, 1,263 vested on January 10, 2026; 743 will vest on March 28, 2026, 2,390 will vest on June 16, 2026; 1,261 will vest on January 10, 2027, 743 will vest on March 28, 2027 and 742 will vest on March 28, 2028. |