# EDGAR Filing Document

**Accession Number:** 0000814586
**File Stem:** 0001683168-26-003375
**Filing Date:** 2026-4
**Character Count:** 195891
**Document Hash:** c99dfaa45c07568284910b1e4e158a81
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001683168-26-003375.hdr.sgml**: 20260430

**ACCESSION NUMBER**: 0001683168-26-003375

**CONFORMED SUBMISSION TYPE**: DEF 14A

**PUBLIC DOCUMENT COUNT**: 22

**CONFORMED PERIOD OF REPORT**: 20260617

**FILED AS OF DATE**: 20260430

**DATE AS OF CHANGE**: 20260430

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Lifeway Foods, Inc.
- **CENTRAL INDEX KEY:** 0000814586
- **STANDARD INDUSTRIAL CLASSIFICATION:** DAIRY PRODUCTS [2020]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 363442829
- **STATE OF INCORPORATION:** IL
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** DEF 14A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-42398
- **FILM NUMBER:** 26926417

**BUSINESS ADDRESS:**
- **STREET 1:** 6431 W OAKTON
- **CITY:** MORTON GROVE
- **STATE:** IL
- **ZIP:** 60053
- **BUSINESS PHONE:** 847-967-1010

**MAIL ADDRESS:**
- **STREET 1:** 6431 W OAKTON
- **CITY:** MORTON GROVE
- **STATE:** IL
- **ZIP:** 60053

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** LIFEWAY FOODS INC
- **DATE OF NAME CHANGE:** 19920703

?xml version='1.0' encoding='ASCII'? LIFEWAY FOODS, INC. DEF 14A

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**SCHEDULE 14A**

**PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES**

**EXCHANGE ACT OF 1934**

**Filed by the Registrant** ☑

**Filed by a Party other than the Registrant** ☐

**Check the appropriate box:**

---

| | |
|:---|:---|
| ☐ | **Preliminary Proxy Statement** |
| ☐ | **Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))** |
| ☑ | **Definitive Proxy Statement** |
| ☐ | **Definitive Additional Materials** |
| ☐ | **Soliciting Material Pursuant to 240.14a-12** |

---

**LIFEWAY FOODS, INC.**

**(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 all boxes that apply):

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| | |
|:---|:---|
| ☑ | No fee required. |
| ☐ | Fee paid previously with preliminary materials. |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |

---

**NOTICE OF ANNUAL MEETING OF SHAREHOLDERS**

**AND**

**PROXY STATEMENT** 

**Notice of 2026 Annual Shareholders Meeting**

You are cordially invited to attend the 2026 Annual Meeting of Shareholders (together with any postponements, adjournments or other delays thereof, the "Annual Meeting") of Lifeway Foods, Inc. (the "Company").

The proxy statement, accompanying proxy card, and the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, were first sent or given to our shareholders on or about April 30, 2026.

---

| | | |
|:---|:---|:---|
| **Date** | June 17, 2026 | June 17, 2026 |
| **Time** | 11:00 A.M. Central Time | 11:00 A.M. Central Time |
| **Place** | The virtual Annual Meeting can be accessed via the internet by visiting www.virtualshareholdermeeting.com/LWAY2026. To attend the virtual Annual Meeting, you must be a shareholder on the record date. You will be able to participate in the Annual Meeting by visiting www.virtualshareholdermeeting.com/LWAY2026 and entering your 16-digit control number found on your proxy card or voting instruction form. Beneficial shareholders who do not have a 16-digit control number should follow the instructions provided on the voting instruction form provided by your broker, bank, or other nominee. Beneficial holders that wish to vote at the meeting must obtain a legal proxy from their bank, broker, or other nominee prior to the meeting. You will need to have an electronic image (such as a pdf file or scan) of the legal proxy with you if you are voting at the meeting and submit it through the "Ask a Question" box.<br>Participation in the meeting is limited due to the capacity of the host platform and access to the meeting will be accepted on a first-come, first-served basis once electronic entry begins. Electronic entry to the meeting will begin at 10:45 A.M. Central Time and the meeting will begin promptly at 11:00 A.M. Central Time. If you encounter difficulties accessing the virtual meeting, please call the technical support number that will be posted at www.virtualshareholdermeeting.com/LWAY2026. | The virtual Annual Meeting can be accessed via the internet by visiting www.virtualshareholdermeeting.com/LWAY2026. To attend the virtual Annual Meeting, you must be a shareholder on the record date. You will be able to participate in the Annual Meeting by visiting www.virtualshareholdermeeting.com/LWAY2026 and entering your 16-digit control number found on your proxy card or voting instruction form. Beneficial shareholders who do not have a 16-digit control number should follow the instructions provided on the voting instruction form provided by your broker, bank, or other nominee. Beneficial holders that wish to vote at the meeting must obtain a legal proxy from their bank, broker, or other nominee prior to the meeting. You will need to have an electronic image (such as a pdf file or scan) of the legal proxy with you if you are voting at the meeting and submit it through the "Ask a Question" box.<br>Participation in the meeting is limited due to the capacity of the host platform and access to the meeting will be accepted on a first-come, first-served basis once electronic entry begins. Electronic entry to the meeting will begin at 10:45 A.M. Central Time and the meeting will begin promptly at 11:00 A.M. Central Time. If you encounter difficulties accessing the virtual meeting, please call the technical support number that will be posted at www.virtualshareholdermeeting.com/LWAY2026. |
| **Record date** | April 20, 2026. Only shareholders of record at the close of business on the Record Date are entitled to receive notice of, and to vote at, the Annual Meeting. | April 20, 2026. Only shareholders of record at the close of business on the Record Date are entitled to receive notice of, and to vote at, the Annual Meeting. |
| **Proxy voting** | **Your vote is important.** Whether or not you plan to attend the Annual meeting, we urge you to submit your proxy via the Internet, QR code of by mail as soon as possible. | **Your vote is important.** Whether or not you plan to attend the Annual meeting, we urge you to submit your proxy via the Internet, QR code of by mail as soon as possible. |
| **Items of**<br> **business** | 1. | To elect seven (7) members of Lifeway's Board of Directors (the "Board") to serve until the 2027 Annual Meeting of Shareholders (or until successors are elected and qualified). |
|  | 2. | To ratify Grant Thornton LLP as our independent auditor for fiscal year 2026. |
|  | 3. | To approve, by non-binding advisory vote, executive compensation. |
|  | 4 | To transact such other business as may properly come before the meeting or any postponement or adjournment thereof. |

---

The Board strongly recommends that you vote "**FOR**" the election of the Board's nominees, "**FOR**" Proposal Two and "**FOR**" Proposal Three.

---

| |
|:---|
| **By Order of the Board of Directors** |
| /s/ Dorri McWhorter |
| **Dorri McWhorter** |
| Chairperson |
| April 30, 2026 |

---

**IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL**

**MEETING TO BE HELD ON June 17, 2026**

The proxy statement, the accompanying proxy card, and the Annual Report on Form 10-K for the fiscal year ended December 31, 2025 are available free of charge at www.proxyvote.com. Information on this website, other than this proxy statement, is not a part of this proxy statement.

Please sign, date and promptly return the enclosed proxy card in the envelope provided, or submit your proxy and voting instructions over the Internet or by QR code by following the instructions on the enclosed proxy card, so that you may be represented at the Annual Meeting.

\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*

The accompanying proxy statement provides a detailed description of the business to be conducted at the Annual Meeting. We urge you to read the accompanying proxy statement, including the appendices, carefully and in their entirety.

If you have any questions concerning the business to be conducted at the Annual Meeting, would like additional copies of the proxy statement or if you need assistance voting your shares, please contact the Secretary of the Company, Julie Smolyansky at (847) 967-1010.

**LIFEWAY FOODS, INC.**

**6431 West Oakton Street**

**Morton Grove, Illinois 60053**

**_________________________________**

**PROXY STATEMENT**

**_________________________________**

**2026 ANNUAL MEETING OF SHAREHOLDERS**

**June 17, 2026**

**Table of Contents** 

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| | | |
|:---|:---|:---|
| **1.** | [**INFORMATION ABOUT THE ANNUAL MEETING**](#def_001) | **1** |
| **2.** | [**PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING**](#def_002) | **7** |
|  | [**PROPOSAL ONE: ELECTION OF DIRECTORS**](#def_003) | **7** |
|  | [**PROPOSAL TWO: RATIFY GRANT THORNTON AS OUR INDEPENDENT AUDITOR FOR FISCAL YEAR 2026**](#def_004) | **8** |
|  | [**PROPOSAL THREE: NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION**](#def_005) | **8** |
| **3.** | [**CORPORATE GOVERNANCE AT LIFEWAY**](#def_006) | **11** |
| **4.** | [**LIFEWAY'S BOARD OF DIRECTORS**](#def_007) | **13** |
| **5.** | [**NAMED EXECUTIVE OFFICER COMPENSATION**](#def_008) | **26** |
| **6.** | [**OWNERSHIP OF COMMON STOCK BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**](#def_009) | **45** |
| **7.** | [**AUDIT MATTERS**](#def_010) | **47** |
| **8.** | [**OTHER MATTERS**](#def_011) | **49** |

---

i

**1.&nbsp;&nbsp;&nbsp;&nbsp; INFORMATION ABOUT THE ANNUAL MEETING**

---

| | |
|:---|:---|
| **Date** | June 17, 2026 |
| **Time** | 11:00 A.M. Central Time |
| **Place** | The virtual Annual Meeting can be accessed via the internet by visiting www.virtualshareholdermeeting.com/LWAY2026. To attend the virtual Annual Meeting, you must be a shareholder on the record date. You will be able to participate in the Annual Meeting by visiting www.virtualshareholdermeeting.com/LWAY2026 and entering your 16-digit control number found on your proxy card or voting instruction form. Beneficial shareholders who do not have a 16-digit control number should follow the instructions provided on the voting instruction form provided by your broker, bank, or other nominee. Beneficial holders that wish to vote at the meeting must obtain a legal proxy from their bank, broker, or other nominee prior to the meeting. You will need to have an electronic image (such as a pdf file or scan) of the legal proxy with you if you are voting at the meeting and submit it through the "Ask a Question" box.<br>Participation in the meeting is limited due to the capacity of the host platform and access to the meeting will be accepted on a first-come, first-served basis once electronic entry begins. Electronic entry to the meeting will begin at 10:45 A.M. Central Time and the meeting will begin promptly at 11:00 A.M. Central Time. If you encounter difficulties accessing the virtual meeting, please call the technical support number that will be posted at www.virtualshareholdermeeting.com/LWAY2026. |

---

The enclosed proxy is solicited by the Board of Directors (the "Board") of LIFEWAY FOODS, INC. ("Lifeway," "we," "us," or the "Company") for use at Lifeway's 2026 Annual Meeting of Shareholders (together with any postponements, adjournments or other delays thereof, the "Annual Meeting").

**Why am I receiving these materials?**

This proxy statement and the accompanying proxy card are furnished in connection with the solicitation of proxies by the Board for use at the Annual Meeting.

**Your vote is very important.** Please sign, date and return the proxy card delivered to you with the Notice of Internet Availability of Proxy Materials in the postage-paid envelope provided, or use the Internet or QR code voting instructions on the proxy card or Notice of Internet Availability of Proxy Materials, even if you plan to attend the Annual Meeting. If you hold your shares in an account at a broker, bank or other nominee, follow the instructions provided by your nominee to vote your shares. Voting your shares by proxy ensures that if you are unable to attend the Annual Meeting, your shares will be voted at the Annual Meeting. Voting now will not limit your right to change your vote or to attend the Annual Meeting.

**What am I voting on?**

You will be entitled to vote on the following proposals at the Annual Meeting:

☐ To elect seven (7) members of the Board to serve until the 2027 Annual Meeting of Shareholders (or until successors are elected and qualified) (Proposal One);

☐ To ratify Grant Thornton LLP as our independent auditor for fiscal year 2026 (Proposal Two); and

☐ To approve, by non-binding advisory vote, executive compensation (Proposal Three).

**How does the Board recommend that I vote on these proposals?**

The Board recommends that you vote your shares:

☐ "**FOR**" the election of the director nominees named in this proxy statement (which nominees are Kirk Chartier, Juan Carlos (JC) Dalto, Rachel Drori, Andee Harris, Susie Hultquist, Dorri McWhorter, Julie Smolyansky);

☐ "**FOR**" the ratification of Grant Thornton LLP as our independent auditor for fiscal year 2026 (Proposal Two); 

☐ "**FOR**" the approval, by non-binding advisory vote, executive compensation (Proposal Three);

**Who can vote?**

Holders of our common stock, par value $.01 per share (the "Common Stock"), as of the close of business on April 20, 2026 (the "Record Date"), may vote at the Annual Meeting. As of the Record Date, there were 15,281,888 shares of Common Stock outstanding. Each share of Common Stock is entitled to one vote on each matter properly brought before the Annual Meeting. Shareholders are not permitted to cumulate votes with respect to the election of directors. We do not have any outstanding shares of preferred stock.

**YOUR VOTE IS VERY IMPORTANT. PLEASE SUBMIT YOUR PROXY EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING.**

**How can I vote my shares?**

*Shareholders of Record*. Shareholders of record at the close of business on the Record Date are entitled to notice of and to vote at the Annual Meeting. Each holder of record of Common Stock is entitled to one vote for each share of Common Stock held as of the Record Date.

If your shares are registered directly in your name with our transfer agent, you are considered a shareholder of record with respect to those shares. If you are a record holder, your proxy materials are being sent to you directly by our transfer agent. If you are a shareholder of record, you may vote your shares in <u>one</u> of the following ways:

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| | |
|:---|:---|
| ![https:\|\|www.sec.gov\|Archives\|edgar\|data\|814586\|000168316819001251\|image_005.jpg](image_001.jpg) | To vote **THROUGH THE INTERNET**, go to www.proxyvote.com to complete an electronic proxy card. You will be asked to provide the control information from the enclosed proxy card or voting instruction form. Your Internet vote must be received by 10:59 P.M., Central Time on June 16, 2026 to be counted. |
| ![](image_002.jpg) | Your proxy card or voting instruction form may also include a QR code for voting via your mobile phone. Your vote by mobile phone must be received by 10:59 P.M., Central Time on June 16, 2026 to be counted. |
| ![https:\|\|www.sec.gov\|Archives\|edgar\|data\|814586\|000168316819001251\|image_007.jpg](image_003.jpg) | To vote **BY MAIL**, sign, date and return your proxy card promptly to be received no later than June 16, 2026, so that we can be assured of having a quorum present at the Annual Meeting and so that your shares may be voted in accordance with your wishes, even if you later decide to attend the Annual Meeting. |
| ![https:\|\|www.sec.gov\|Archives\|edgar\|data\|814586\|000168316819001251\|image_004.jpg](image_004.jpg) | To vote **IN PERSON**, after you join the meeting, you can click on the link "Vote" provided on the virtual meeting platform and follow the prompts provided. You will be asked to provide the control information on your proxy card or voting instruction form. |

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*Beneficial Shareholders*. The method of voting by proxy differs for shares held beneficially through another holder of record (sometimes referred to as holding shares in "street name"). If your shares are held in a brokerage account or by a broker, bank or other nominee, then you are considered the beneficial owner of shares held in street name, and this proxy statement was forwarded to you by your broker, bank or other nominee, which is considered the shareholder of record with respect to those shares. You may submit your voting instructions to the record holder using the voting instruction form. The record holder will then vote your shares in accordance with your voting instructions.

If you hold shares in street name and do not provide your broker with specific voting instructions on Proposals 1 and 3, which are considered non-routine matters, your broker does not have the authority to vote on those proposals.

Proposal 3 is considered to be a "routine" matter. Accordingly, if you hold your shares in street name and do not provide voting instructions to your broker, bank, or other nominee that holds your shares, your broker, bank, or other nominee has discretionary authority to vote your shares on this proposal. However, it is possible that a broker may choose not to exercise discretionary authority with respect to Proposal 3. In that case, if you do not instruct your broker how to vote with respect to Proposal 3, your broker may not vote with respect to such proposal.

If you hold your shares in street name, you can only vote online during the virtual Annual Meeting if you have a legal proxy from the record holder (the broker, bank, or other nominee that holds your shares) assigning its voting authority to you. Please promptly contact the record holder that holds your shares for instructions on how to obtain a legal proxy if you intend to vote by ballot during the virtual Annual Meeting. You will need to have an electronic image (such as a pdf file or scan) of the legal proxy with you if you are voting at the meeting and submit it through the "Ask a Question" box.

*Holding shares in multiple accounts:* Certain of our shareholders hold their shares in more than one account and may receive separate proxy cards or voting instruction forms for each of those accounts. To ensure that all of your shares are represented at the Annual Meeting, we recommend that you submit every proxy card or voting instruction form you receive.

**What should I know about attending the Annual Meeting?**

To attend the virtual Annual Meeting, you must be a shareholder on the record date. At the virtual Annual Meeting, you will be able to listen to the meeting live, submit questions, and vote online.

You will be able to participate in the Annual Meeting by visiting www.virtualshareholdermeeting.com/LWAY2026 and entering the same 16-digit control number found on your proxy card or voting instruction form. Beneficial shareholders who do not have a 16-digit control number should follow the instructions provided on the voting instruction form provided by your broker, bank, or other nominee. Beneficial holders that wish to vote at the meeting must obtain a legal proxy from their bank, broker, or other nominee prior to the meeting. You will need to have an electronic image (such as a pdf file or scan) of the legal proxy with you if you are voting at the meeting and submit it through the "Ask a Question" box.

Participation in the meeting is limited due to the capacity of the host platform and access to the meeting will be accepted on a first-come, first-served basis once electronic entry begins. Electronic entry to the meeting will begin at 10:45 A.M. Central Time and the meeting will begin promptly at 11:00 A.M. Central Time. If you encounter difficulties accessing the virtual meeting, please call the technical support number that will be posted at www.virtualshareholdermeeting.com/LWAY2026.

Even if you plan to participate in the Annual Meeting, we recommend that you vote by proxy prior to the Annual Meeting so that your vote will be counted if you later decide not to participate in the Annual Meeting.

**What is the quorum requirement for the Annual Meeting?**

A quorum is the minimum number of shares required to be present or represented at the Annual Meeting for the meeting to be properly held under the Company's bylaws (as amended, the "Bylaws") and Illinois law. A majority of the outstanding shares of Common Stock as of the Record Date must be present, in person or by proxy, at the Annual Meeting in order to have the required quorum for the transaction of business. If the aggregate voting power of the shares of Common Stock present, in person and by proxy, at the Annual Meeting does not constitute the required quorum, we may adjourn the Annual Meeting to a subsequent date for the purpose of obtaining a quorum.

**How many votes are needed for approval of each proposal?**

Shares of Common Stock that are voted "FOR," "WITHHOLD," "ABSTAIN" or "AGAINST," as applicable, on a matter are treated both as being present for purposes of establishing a quorum and as shares entitled to vote at the Annual Meeting with respect to such matter (the "Votes Cast"). Broker non-votes (i.e., shares of Common Stock held as of the Record Date by banks, brokers or other nominees as to which the beneficial owners have given no voting instructions) will be counted for purposes of determining the presence or absence of a quorum for the transaction of business on a matter, but will not be counted for purposes of determining the number of Votes Cast with respect to that matter. Abstentions, Withhold and broker non-votes, if any, will have no effect on proposals that require a plurality and broker non-votes will have no effect on proposals that require a majority of Votes Cast for approval.

Broker non-votes result from shares that are held by a bank, broker or other nominee that are represented at the Annual Meeting, but with respect to which the nominee holding those shares (i) has not received instructions from the beneficial owner of the shares to vote on the particular proposal and (ii) does not have discretionary voting power with respect to the particular proposal. Whether a bank, broker, or other nominee has authority to vote shares that it holds is determined by stock exchange rules. Banks, brokers and other nominees holding shares of record for beneficial owners do not have the discretion to vote on any of the proposals at the Annual Meeting except Proposal 3 unless they receive voting instructions from the beneficial owners of the shares.

The votes needed to approve each proposal are as follows:

☐ **Proposal One**: Each director is elected by the affirmative vote of a majority of the Votes Cast.

☐ **Proposal Two**: Requires the affirmative vote of a majority of the Votes Cast for approval.

☐ **Proposal Three**: Requires the affirmative vote of a majority of the Votes Cast for approval.

**What is the effect of giving a proxy?**

Proxies are being solicited by and on behalf of the Board. The Board has designated our Chief Executive Officer ("CEO"), Julie Smolyansky, and our Chief Financial Officer ("CFO"), Eric Hanson, and each or any of them, as proxies to vote the shares of Common Stock solicited on its behalf.

You may vote your proxy as described above. As a shareholder of record, if you submit your proxy, but do not specify how you want your shares to be voted, your shares will be voted by the proxy holders named in the enclosed proxy in accordance with the recommendation of the Board.

In their discretion, the proxy holders named in the proxy are also authorized to vote on any other matters that may properly come before the Annual Meeting. The Board knows of no other items of business as of the date of this proxy statement that will be presented for consideration at the Annual Meeting other than those described in this proxy statement.

**Can I change my vote or revoke my proxy?**

*Shareholder of Record.* If you are a shareholder of record, you can change your vote or revoke your proxy by:

· entering a new vote by Internet or QR code (subject to the applicable deadlines for each method as set forth above);

· completing and returning a later-dated proxy card, which must be received prior to the Annual Meeting;

· delivering a written notice of revocation, which must be received prior to the Annual Meeting, to our Corporate Secretary at Lifeway Foods, Inc., 6431 West Oakton St., Morton Grove, IL 60053, Attention: Corporate Secretary; or

· attending and voting by ballot at the Annual Meeting (although attendance at the Annual Meeting will not, by itself, revoke a proxy).

*Street Name Shareholder.* If you are a street name shareholder, then your broker, bank or other nominee can provide you with instructions on how to change or revoke your proxy. Please note that if your shares are held of record by a bank, broker, or other nominee, and you decide to attend and vote at the Annual Meeting, your vote in person at the Annual Meeting will not be effective unless you present a legal proxy issued in your name from the record holder (your bank, broker, or other nominee).

**Am I entitled to dissenters' right of appraisal?**

Under Illinois General Corporation Law and Lifeway's Certificate of Incorporation, shareholders are not entitled to any appraisal or similar rights of dissenters with respect to any of the proposals to be acted on at the Annual Meeting.

**How are proxies solicited for the Annual Meeting and who is paying for such solicitation?**

The Board is soliciting proxies for use at the Annual Meeting by means of these proxy materials. By signing, dating and returning the proxy card, or by submitting your proxy over the Internet or by telephone using the instructions in this proxy statement, you are authorizing the persons named as proxies to vote your shares at the Annual Meeting as you have instructed.

Lifeway will bear the entire cost of solicitation of proxies for the Annual Meeting, including the cost of preparing, printing and distributing the proxy materials.

The original solicitation of proxies may be supplemented by solicitation by telephone, electronic communications or other means by our directors, director nominees, officers or employees. No additional compensation will be paid to these individuals for any such services, although we may reimburse such individuals for their reasonable out-of-pocket expenses in connection with such solicitation.

Copies of our solicitation materials will also be made available upon request to brokers, banks and other nominees to forward to the beneficial owners of the shares held of record by such brokers, banks or other nominees. The Company expects to reimburse brokerage firms, banks, custodians, and other persons representing beneficial owners of shares of Common Stock for their reasonable out-of-pocket expenses in forwarding solicitation material to such beneficial owners.

**I share an address with another shareholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?**

We have adopted a procedure called "householding," which the Securities and Exchange Commission (the "SEC") has approved. Under this procedure, multiple shareholders who share the same last name and address will receive only one copy of our proxy materials and the Annual Report, unless they notify us that they wish to continue receiving multiple copies. We have undertaken householding to reduce our printing costs, mailing costs and fees. If you currently receive multiple copies of the proxy materials at the same address and wish to opt in to householding, or if you currently do <u>not</u> receive multiple copies and wish to opt out of householding, you may notify us in writing or by telephone. Lifeway will also promptly deliver an additional copy of the proxy materials to any shareholder who requests one. Any such request should be directed to Lifeway's Corporate Secretary at the following address and telephone number.

Lifeway Foods, Inc.

6431 West Oakton St.

Morton Grove, IL 60053

Tel: (847) 967-1010

Attention: Corporate Secretary

Street name shareholders may contact their broker, bank or other nominee to request information about householding.

**Where can I find the voting results of the Annual Meeting?**

We will disclose voting results on a Current Report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K, then we will file a Form 8-K to publish preliminary results and will provide the final results in an amendment to the Form 8-K as soon as they become available.

**What is the deadline to propose actions for consideration at the Company's 2027 annual meeting of shareholders or to nominate individuals to serve as directors?**

In order for any shareholder proposal submitted pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to be included in the Company's proxy statement to be issued in connection with the Company's 2027 annual meeting of shareholders (the "2027 Annual Meeting"), we must receive such shareholder proposals no later than December 31, 2026. Any such shareholder proposal submitted, including the accompanying supporting statement, may not exceed 500 words, per Rule 14a-8(d) of the Exchange Act. In addition, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company's nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 19, 2027. All shareholder proposals and proxy solicitation notices must be made in writing and addressed to Lifeway Foods, Inc., 6431 West Oakton St., Morton Grove, IL 60053, Attn: Corporate Secretary.

The Bylaws also establish an advance notice procedure for shareholders who wish to present a proposal or nominate a director at an annual meeting, but do not seek to include the proposal or director nominee in our proxy statement. In order to be properly brought before 2027 Annual Meeting, a shareholder must provide timely written notice to the Company's Corporate Secretary, at the principal executive offices of the Company, and any such proposal or nomination must constitute a proper matter for shareholder action. The written notice must contain the information specified in the Bylaws. To be timely, a shareholder's written notice must be received by our Corporate Secretary at our principal executive offices no earlier than February 18, 2027, and no later than March 20, 2027.

**Who should I contact if I have questions?**

If you have additional questions about the election of directors, other matters to be voted on at the Annual Meeting, this proxy statement or the Annual Meeting, or if you need assistance voting your shares, please contact Secretary of the Company at the following address and telephone number:

Lifeway Foods, Inc.

6431 West Oakton St.

Morton Grove, IL 60053

Tel: (847) 967-1010

Attention: Corporate Secretary

**THE BOARD RECOMMENDS VOTING "FOR" THE ELECTION OF THE BOARD'S NOMINEES, "FOR" PROPOSAL TWO AND "FOR" PROPOSAL THREE USING THE ENCLOSED PROXY CARD.**

**2.&nbsp;&nbsp;&nbsp;&nbsp; PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING**

**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:

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Name** | **Age** | <br> **Director<br> since** | **Occupation** | **ACG 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 |  |

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

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The Board of Directors recommends that you vote **"FOR"** the election of each of the nominees.

**<u>Cooperation Agreement – Board Refreshment</u>**

On September 30, 2025, the Company and the Danone North America PBC ("Danone") entered into a Cooperation Agreement (the "Cooperation Agreement").

Pursuant to the Cooperation Agreement, the Company agreed, among other things, to hold the Annual Meeting on or before June 30, 2026 and that the Board would nominate for election at the Annual Meeting a slate consisting of the New Independent Directors (as defined in the Cooperation Agreement), the Additional Independent Director (as defined in the Cooperation Agreement and, collectively with the New Independent Directors, the "New Independent Board Members") and no more than three current directors, and to not nominate Mr. Scher for re-election at the Annual Meeting. Danone agreed to vote all of the shares of Common Stock it beneficially owns in favor of the Board's slate if nominated in accordance with the Cooperation Agreement.

**PROPOSAL TWO: RATIFY GRANT THORNTON AS OUR INDEPENDENT AUDITOR FOR FISCAL YEAR 2024**

Lifeway's Audit and Corporate Governance Committee of the Board (the "ACG Committee") approved the appointment of Grant Thornton LLP ("Grant Thornton") as our independent registered public accounting firm for the fiscal year ending December 31, 2026. The Board considers the selection of Grant Thornton to be in the best interests of Lifeway and our shareholders. While the ACG Committee is responsible for the appointment, compensation, retention, termination, and oversight of the independent auditor, we are requesting, as a matter of good corporate governance, that shareholders ratify that selection. Our ACG Committee first engaged Grant Thornton on December 6, 2022 and Grant Thornton has been our independent registered public accounting firm since that date for periods ending after that date. A representative of Grant Thornton is expected to be present at the Annual Meeting and will have an opportunity to make a statement, if desired, and respond to appropriate questions.

<u>Ratification</u>

The approval of the ratification of the appointment of Grant Thornton as our independent auditors for the fiscal year ending December 31, 2026 requires the affirmative vote of a majority of the Votes Cast. If the shareholders fail to ratify the selection, the ACG Committee may, but is not required to, reconsider whether to retain Grant Thornton. Even if the selection is ratified, the ACG Committee in its discretion may direct the appointment of a different registered independent accountant at any time during the year if the Committee and Board determine that such a change would be in the best interest of Lifeway and its shareholders.

For information regarding audit and other fees billed by Grant Thornton, see the section of this proxy statement entitled "Fees of Independent Registered Public Accounting Firm and Audit Committee Report—Fees Billed by Independent Registered Public Accounting Firm."

The Board of Directors recommends that you vote **"FOR"** the ratification of our independent auditor.

**PROPOSAL THREE: NON-BINDING advisory vote on executive compensation**

We believe that both Lifeway and its shareholders benefit from sound corporate governance and compensation policies. As part of our obligations under Section 14A of the Exchange Act. As part of our good corporate governance and overall shareholder outreach efforts, our Board has determined to provide annual opportunities for our shareholders to cast advisory votes on the compensation of our named executive officers (commonly referred to as a "Say on Pay Proposal") following the recommendation of our shareholders at our 2025 Annual Meeting. Our Board believes that both Lifeway and its shareholders will benefit from more frequent shareholder input on Say on Pay.

We are asking our shareholders to approve, on a non-binding advisory basis, the compensation paid to our named executive officers as described in the Compensation Overview section of this proxy statement. Our Board and the Compensation Committee value the opinions expressed by our shareholders and will consider the results of this say-on-pay vote when evaluating our executive compensation program in the future.

**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.

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| | |
|:---|:---|
| **What we heard** | **How we responded** |
| Shareholders asked about production capacity, the Wisconsin expansion (including expected capacity additions and financing), and new product innovation. | We addressed these topics using publicly available information to provide appropriate context regarding our strategy, including our approach to capacity expansion, capital allocation, and funding. We also conveyed that the Company has a defined plan to support these initiatives, consistent with our disclosure obligations.<br>|
| Shareholders primarily focused on questions regarding the Company's evaluation of the potential acquisition proposal by Danone in 2024 and further updates to related matters in 2025, including the role of the Board, use of advisors, and overall process. | We addressed these topics using publicly available information to explain that the Board, with the support of independent financial and legal advisors, conducted a thorough and disciplined evaluation of the potential transaction and related matters. We communicated that the Board was actively engaged in a formal review process and that management was supporting the Board by responding to diligence requests and continuing to operate the business in the ordinary course. <br>|
| One shareholder asked the Company to confirm certain corporate governance processes and procedures were in place. Specifically, with respect to compensation, the shareholder asked whether executive compensation was set by independent directors. | The Company was able to confirm that all corporate governance processes and procedures inquired about were in place, including that all compensation of officers and vice presidents of the Company as well as family members of any executive officer or directors, was set by the Compensation Committee which has been and continues to be made up solely of independent directors.<br>|

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The Compensation Committee will continue to review how to appropriately compensate our CEO and our Chief of Staff who is the spouse of our CEO without issuing equity compensation in accordance with the terms of the Cooperation Agreement.

The Company intends to continue its shareholder outreach program going forward.

**The Say-on-Pay vote is an advisory, non-binding vote on the overall compensation of our named executive officers, rather than on any specific element. Although the vote is not binding on the Company or the Board, we value our shareholders' views, and the Board and Compensation Committee will consider the outcome when making future executive compensation decisions.**

Accordingly, we ask our shareholders to vote in favor of the following resolution:

"RESOLVED, that the Company's shareholders approve, on a non-binding, advisory basis, the compensation of the named executive officers, as disclosed in the Company's proxy statement for the 2026 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission."

The Board of Directors recommends that you vote **"FOR"** approving the compensation of our named executive officers.

**3.&nbsp;&nbsp;&nbsp;&nbsp; CORPORATE GOVERNANCE AT LIFEWAY**

Our shareholders elect the Board, whose primary responsibility is to foster Lifeway's long-term health, growth, success, and financial condition, consistent with its fiduciary duty to our shareholders. The Board serves as our ultimate decision-making body, except for those matters reserved to or shared with the shareholders. The Board establishes broad corporate policies and oversees the members of senior management, who are charged by the Board with conducting Lifeway's business.

In addition, the Board oversees these general areas of governance, as outlined in more detail in the section entitled "Lifeway's Board of Directors":

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| | |
|:---|:---|
| **Audit and<br> Finance** | Integrity of financial reporting; internal controls over financial reporting and disclosure controls; internal and external audit; cybersecurity; legal and regulatory compliance; risk assessment and management |
| **Compensation** | Pay-for-performance compensation structure development; executive compensation and benefits; peer group analysis; succession plans; non-employee director compensation |
| **Governance** | Board and committee effectiveness; director qualification; shareholder engagement, governance framework; governance/corporate structure |
| **Policy and <br> Regulatory** | Social responsibility; government relations activity; company policy; regulatory policy; legal and regulatory compliance; shareholder engagement |

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**Key Governance Policies**

**Clawback Policy**

To help support accountability among our management team, the Board has adopted a specific clawback policy which provides for the forfeiture and recoupment of certain executive compensation in the event of a required accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws. This policy is effective as of November 9, 2023 and applies to incentive compensation that is approved, awarded or granted to executive officers on or after October 2, 2023. Under it, the Board or the Compensation Committee will, subject to certain limited exceptions, recover the excess of the incentive compensation received by the executive officer based on erroneous data over the incentive compensation that would have been received by the executive officer had it been based on the restated results.

In addition, if an executive officer has engaged in intentional misconduct that the Company determines, in its sole discretion, contributed to the award or payment of incentive compensation to them that is greater than would have been paid or awarded in the absence of misconduct, the Company may take other remedial and recover action, as determined by the Board to recover such excess amounts.

**Executive and Director Stock Ownership and Holding Policy**

The Company has in place a stock ownership and holding policy to better align the interests of our executive officers and non-employee directors with the interests of shareholders and further promote our commitment to sound corporate governance, which the Board administers, interprets, and construes.

Under the policy, our executive officers are required to own Lifeway Common Stock valued at 200% of their annual base salary. Unless an executive officer has satisfied his or her applicable minimum ownership level, the executive officer is required to retain an amount equal to 50% of the net shares received as the result of the exercise, vesting, or payment of any equity awards granted to him or her. Thereafter, executive officers are required to (i) retain 25% of all such net shares, and (ii) continuously own sufficient numbers of shares to satisfy the minimum ownership requirement once attained, for so long as they remain executive officers. The individual minimum level for each executive officer is initially calculated using the executive officer's base salary as of the date the person is first appointed as an executive officer. The Board recalculates and evaluates compliance on each January 1<sup>st</sup>.

The policy also requires each non-employee director to own Lifeway Common Stock valued at 200% of the annual Board retainer payable to such director. The policy provides that if Lifeway awards shares to non-employee directors, those directors must retain 50% of all shares that vest until the director meets the minimum share ownership requirement and 25% of all such net shares thereafter. Our policy requires non-employee directors to whom we award shares to continuously own sufficient numbers of those shares to satisfy the requirements once attained for so long as they remain members of our Board. The Board recalculates and evaluates compliance on each January 1<sup>st</sup>.

Shares that count toward satisfaction of the stock ownership requirements for executive officers and directors include the following: (i) vested shares held outright or beneficially owned by the executive officer or director, regardless of how acquired; (ii) vested shares held by the spouse or dependent children of the executive officer or director; (iii) vested shares held in trust for the economic benefit of the executive officer or director, or the spouse or dependent children of the executive officer or director; (v) vested shares held in a 401(k), IRA, or other retirement plan. The following do not count towards satisfaction of the stock ownership guidelines: (i) unvested shares of any type; (ii) shares subject to pledge as collateral for a loan or in a margin account; (iii) unexercised stock options (whether vested or unvested); and (iv) vested incentive performance awards that are settled in cash rather than equity.

Exceptions to these share ownership and holding requirements may be made at the discretion of the Board if compliance would create severe hardship or prevent an executive officer or director from complying with a court order, such as part of a divorce settlement. The Board expects these instances will be rare. If an exception is granted in whole or in part, the Board will, in consultation with the affected executive officer or director, develop an alternative stock ownership guideline for that individual that reflects both the intention of the policy and that individual's circumstances.

As of January 1, 2026, Ms. Smolyansky and Mr. Hanson satisfied the executive officer stock ownership requirements. Each of our non-employee directors satisfied the non-employee director ownership requirements as of January 1, 2026 except for Rachel Drori and Andee Harris who were appointed to the Board on October 29, 2025 and Kirk Chartier and Susie Hultquist who were appointed to the Board on November 26, 2025, and are progressing toward attaining applicable requirements.

The ownership levels of our named executive officers and directors are set forth in "6. Ownership of Common Stock by Certain Beneficial Owners and Management" below. The stock ownership and holding policy described above prescribes the amount and length of time executives or directors have to hold their stock after exercise or vesting.

**Insider Trading Policy**

We have adopted an insider trading policy and procedures governing the purchase, sale, and other dispositions of our securities by directors, officers, and employees that we believe are reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards. Our insider trading policy states, among other things, that our directors, officers, and employees are prohibited from trading in such securities while in possession of material, nonpublic information. Our directors, officers and certain employees likely to obtain material nonpublic information on a regular basis (collectively, "Pre-Clearance Persons") are also prohibited from engaging in, among other things, short sales, hedging of stock ownership positions, trading in options, puts, calls, or other derivative instruments relating to our common stock, buying our common stock on margin or pledging Lifeway's common stock as collateral for a loan without prior approval of the majority of the Company's Board's disinterested independent directors and provided that no pledge of Company securities will be approved if the number of Company securities so pledged, when taken together in the aggregate with any other pledged Company securities of such person, exceed the lesser of (x) 10% of Company's securities beneficially owned by such person and (y) 1% of the then outstanding securities of the Company.

**4.&nbsp;&nbsp;&nbsp;&nbsp; LIFEWAY'S BOARD OF DIRECTORS**

**Board Leadership Structure**

The Board believes that our shareholders are best served if the Board retains flexibility to decide what leadership structure works best for us under our current facts and in our current circumstances. After each Annual Meeting, the Board reviews, considers and appoints a Chairperson of the Board (the "Chairperson").

Commencing in 2022 and until October, 2025, our Chairperson of the Board was our CEO. Our CEO has primary responsibility for our day-to-day leadership and strategic direction, and our Chairperson facilitates oversight of management, promotes communication among management and between management and the Board, and sets and maintains Board culture. Pursuant to Board policy, if the Chairperson of the Board is not an independent director, the chairperson of the ACG Committee serves as the Board's Lead Independent Director and is responsible for certain functions of the Chairperson that require independence, including without limitation, presiding over meetings of independent directors, providing input on the design of the Board itself, requiring Board consideration of, and the Board may override the CEO on, any risk matters, acting where an executive Chairperson may have a conflict of interest, and overseeing communications and relations between our Board, our CEO, and other members of senior management. Periodically, our ACG Committee assesses these roles and the Board leadership structure to ensure the interests of the Company and its shareholders are best served.

Ms. McWhorter, an independent director under Nasdaq rules who is not a member of management or the Smolyansky family, currently serves as our Chairperson. Our independent Chairperson is now responsible for the functions previously performed by our Lead Independent Director.

**Information About Nominees** 

**Kirk Chartier, Director** 

KIRK CHARTIER was elected as a Director of the Company in November 2025. Mr. Chartier has 30 years of experience leading marketing and strategy development of financial services companies. Since 2013, Mr. Chartier has served as Chief Marketing Officer or Chief Strategy Officer of Enova International, Inc. (NYSE: ENVA), a high-growth financial services firm, where he is responsible for global strategy, public affairs, and corporate development and participates in meetings of Enova's Board. From 2010-2011 Mr. Chartier served as Executive Vice President and Chief Marketing Officer at optionsXpress, another high-growth financial services firm, where he was responsible for global sales and marketing and observed and advised the optionXpress's board and played a key leadership role in the sale of optionXpress to The Charles Schwab Corporation for $1B in 2011. Mr. Chartier also served in the U.S. Marines, in both leadership and crisis management capacities. Mr. Chartier received a BA from College of the Holy Cross, a BS from WPI and an MBA from Syracuse University.

**Key Attributes, Experience and Skills:**

Mr. Chartier's deep marketing and strategy development experience, as well as his experience in finance, M&A, and his experience advising a public company board of directors will support Lifeway's mission to grow profitably and continue to assess and develop ongoing strategy making him well qualified to serve on our Board.

**Juan Carlos ("JC") Dalto, Director** 

JC DALTO was elected as a Director of the Company in August 2022. He has over 30 years of experience in the agriculture and food and beverage industries. Since 2022, Mr. Dalto has served as Chief Executive Officer of Savencia Fromage & Dairy, Americas. In 2000, Mr. Dalto became the CEO of Danone in Portugal, in 2002 the President and CEO of Danone in Italy, and in 2004 the Chairman, President and CEO of Danone North America - The Dannon Company, Inc. He has gone on to hold Director, Country/Regional President and CEO positions at numerous international corporations, such as Danone, The Pillsbury Company, Kraft Foods and Stonyfield Farm. From 2012 to 2015, Mr. Dalto served as Chief Executive Officer of JDE Brazil (formerly, D.E. Master Blenders 1753). From 2017 to 2020, Mr. Dalto served as Chief Executive Officer of Savencia Fromage & Dairy Latin America. Mr. Dalto served as the President of Dole Sunshine Company - Dole Packaged Foods LLC, Americas from January 2021 through September 2022, where he worked on a movement toward zero fruit loss and zero fossil-based plastic packaging by 2025, and net zero carbon emissions by 2030. Mr. Dalto serves on the boards of directors of Milkaut S.A., Argentina and previously served on the board of directors of Blue Star Foods Corp. Mr. Dalto has extensive experience in de-commoditizing agri-business derived foods and drinks into added-value, functional, nutritional, health and wellness products, and has executed on sustainable and profitable growth business models in his previous roles. Mr. Dalto previously attended the Buenos Aires Institute of Technology and has post-graduate degrees from the University of Michigan and the London Business School. Mr. Dalto is also a certified Professional Coach from Integral Coaching Canada and has organized and led campaigns leading to Global Environmental Change in Latin America.

**Key Attributes, Experience and Skills:**

Mr. Dalto's has deep industry, brand management and growth experience in the consumer-packaged goods sector. His business insights as a Board member will provide significant value to the Lifeway brand and support the Lifeway mission to grow profitably, sustainably and consciously and make Mr. Dalto well qualified for service on our Board.

**Rachel Drori, Director**

RACHEL DRORI was elected as a Director of the Company in October 2025. As founder and CEO of Daily Harvest from 2014 to 2024, and Chairman of the Board of Daily Harvest from 2014 to 2025, Ms. Drori led the company's strategy through multiple phases of explosive growth—building partnerships with more than 200 farms, scaling manufacturing capacity to nine plants, and conducting diligence on potential M&A targets. Amid unprecedented economic and social disruptions—including the collapse of two banks, pandemic-era supply-chain breakdowns, and shifting consumer lifestyles—she implemented a capital-efficient strategy that restructured funding and debt while proactively addressing logistics and labor challenges. She built Daily Harvest into a model-disrupting healthy frozen-foods brand and service that quickly became the category leader and ultimately grew to over $1 billion in enterprise value. As consumer needs evolved, she expanded into retail, club, and natural-channel distribution, unlocking a new growth path for the brand. In addition to creating the company's strategic and brand vision, product offering, operational infrastructure, and go-to-market strategy, she raised $120 million across five rounds of funding from angel, VC, and PE investors, including a number of entertainment and sports luminaries. In 2025, Ms. Drori was instrumental in facilitating the successful acquisition of Daily Harvest by Chobani, marking a strong outcome for the brand, its shareholders, and its mission.

A core pillar of Ms. Drori's leadership at Daily Harvest was embedding environmental and social impact into the company's DNA. She spearheaded ESG initiatives that championed biodiversity, regenerative agriculture, and farmer livelihoods, serving as a founding partner of The Almond Project and forging partnerships with California Certified Organic Farmers (CCOF) and American Farmland Trust (AFT).

Prior to founding Daily Harvest, Ms. Drori spent a decade in marketing leadership at Four Seasons Hotels & Resorts, American Express, and Gilt Groupe / Jetsetter.

She is an Advisor to Melitas Ventures which invests in early-stage, better-for-you consumer companies. She also advises a portfolio of early- and growth-stage startups on board governance, strategic relationships, organizational development, supply-chain strategy, marketing efficiency, and AI implementation.

Ms. Drori received a BA from the University of Pennsylvania and an MBA from Columbia University.

Ms. Drori's experience founding, building, and selling a health food business will provide significant value to the Lifeway brand, support the Lifeway mission to grow profitably, sustainably and consciously and provide additional Board expertise evaluating strategic alternatives for the Company. Her valuable experience and expertise make Ms. Drori well qualified for service on our Board.

**Andee Harris, Director**

ANDEE HARRIS was elected as a Director of the Company in October 2025. Ms. Harris has served as CEO of Crisis Prevention Institute since August 2025. She has over 30 years of extensive experience in technology and professional services across diverse sectors, including: Financial Services, Healthcare, CPG, Consumer Tech and Industrials. From 2020 through 2025 Ms. Harris served as CEO of Challenger Sales Inc., a premier sales training and enablement platform. Ms. Harris established herself as a dynamic commercial leader with strategic acumen and ability to scale businesses. In September 2024, Ms. Harris achieved her third successful exit as CEO when she sold Challenger Sales Inc. to its largest competitor, delivering substantial returns to investors. Prior to her role at Challenger, she was CEO at HighGround Software, culminating in one of Chicago's most significant tech exits to Vista Private Equity in 2018.

Ms. Hariss serves on the boards of Pavion, a leading fire safety and security company (since 2021), Assisi Pet Care, a European supplier of natural pet treats and pet food (since 2023), Vertex, a professional services firm providing expert witnesses for matters involving construction, design, compliance, regulatory, contracts and environmental (ESG) certification (since 2024), and Condata, the industry leader in freight post-audit technologies (since 2024). Ms. Harris has served on compensation, audit, technology and governance committees. She has participated in oversight of major ERP integration, brand repositioning and succession planning and implementation.

Ms. Harris also serves as an Adjunct Lecturer at the Kellogg School of Management, imparting her entrepreneurial insights in the course "Launching and Leading Startups." Ms. Harris is known for her innovative approach, connecting data and people to clear pathways for success. She has been recognized by Crain's Chicago Business, The Woodmark Foundation and numerous CEO publications for her expertise in market share growth, business development, multi- channel marketing, and revenue management.

Ms. Harris received her BA in Organizational Studies from the University of Michigan.

**Key Attributes, Experience and Skills:**

ANDEE HARRIS' experience leading and overseeing multiple companies through growth and acquisition will provide significant value to the Lifeway brand and support the Lifeway mission to grow profitably, sustainably and consciously and make Ms. Harris well qualified for service on our Board.

**Susie Hultquist, Director** 

SUSIE HULTQUIST was elected as a Director of the Company in November 2025. Ms. Hultquist is the CEO of Spokin, the world's largest food allergy platform, which she founded in 2015. From 2000-2015, she managed a $2 billion consumer-sector portfolio at Columbia Wanger Asset Management, overseeing global retail brands. Prior to that, Ms. Hultquist worked for Bank of America as a distressed debt investor and at Continental Illinois Venture Capital as a private equity associate. She brings insights gained from analyzing public company board corporate governance and oversight and public company strategy and performance. From her experience Ms. Hultquist gained deep consumer, data, and governance expertise at the intersection of consumer brand strategy, technology, and health. Ms. Hultquist received her MBA from the University of Chicago Booth School of Business and her B.S. from the University of Illinois Urbana-Champaign.

**Key Attributes, Experience and Skills:**

Ms. Hultquist's experience, knowledge and investor driven perspective as well as knowledge of public company corporate governance and the healthy for you food, wellness, and consumer sectors will help the Company drive long-term value for shareholders, will buttress the Lifeway mission to grow profitably, sustainably and consciously and make her well qualified for service on our Board.

**Dorri McWhorter, Chairperson of the Board**

DORRI MCWHORTER was elected as a Director of the Company in August 2020 and appointed as Chairperson of the Board in November 2025. Since June 2025, Ms. McWhorter has served as President and CEO of the Executives' Club of Chicago, an organization that runs programs for Chicago area business leaders. Prior to joining the Executives' Club, Ms. McWhorter served as President and CEO of YMCA of Metropolitan Chicago from 2021 to 2025, increasing revenue by nearly 50%, launching groundbreaking partnerships with Nike and Peloton, and collaborating with the West Side community to open the first new YMCA in more than two decades. From 2013 until 2021, Ms. McWhorter was the CEO of YWCA Metropolitan Chicago transforming the organization into a 21st Century social enterprise. At YWCA, she scaled operations across 10 new locations, increased the operating budget by 300%, and launched a retirement plan for childcare providers and small business owners. Ms. McWhorter also led a novel effort to develop an exchange-traded fund (ETF) for women's empowerment (NYSE: WOMN) in partnership with Impact Shares. At its first eligible measurement date, WOMN ranked in the top quartile of Morningstar U.S. Large Blend category. Prior to taking on leadership roles in the social enterprise sector, she was a partner at Crowe LLP, one of the largest accounting firms in the U.S.

Ms. McWhorter serves on the boards of directors of William Blair Funds, Skyway Concession Company, LLC (Chicago Skyway), NexPoint Capital, Inc. and LanzaTech Global Inc. (NASDAQ: LNZA) and on the boards of trustees of seven funds in the Highland and NexPoint Fund Complex. She previously served on the board of directors of Green Thumb Industries Inc. She is also active in the accounting profession, having served on the Financial Accounting Standards Advisory Council, as a member of the Board of Directors of the American Institute of Certified Public Accountants (AICPA), and as a past Chairperson of the Board of Directors for the Illinois CPA Society. Ms. McWhorter also serves as Co-Chair of the Advisory Board of the First Women's Bank.

Ms. McWhorter's leadership is featured in the 2023 documentary Uncharitable, and she is deeply engaged in civic life through board service with Common Impact, Social Current, the Chicago Council on Global Affairs, Civic Consulting Alliance, the Civic Federation, the Chicago Center for Arts and Technology, and Hope Chicago. She holds a BBA from the University of Wisconsin–Madison, an MBA from Northwestern University's Kellogg School of Management, and an Honorary Doctor of Humane Letters from Lake Forest College.

**Key Attributes, Experience and Skills:**

Ms. McWhorter's breadth of experience in health platforms, and her financial and accounting expertise and business experience as Chief Executive Officer make her a valuable addition to our Board. In addition, Ms. McWhorter has been an operational, team, and project leader; and served as a senior executive, board member and community leader for over twenty years. Her experience has provided her with a broad understanding of the financial, and strategic issues facing health related companies like ours. Her industry and financial experience make her well qualified for service on our Board.

**Julie Smolyansky, Chief Executive Officer, President, Secretary and Director**

**Key Attributes, Experience and Skills:**

Ms. Smolyansky brings to the Board over twenty years of extensive experience in the dairy and consumer packaged goods industries including advertising; marketing and communications; public relations; digital, social, and event marketing; and consumer insights. Ms. Smolyansky provides the Board with unique perspectives and invaluable, in-depth knowledge of Lifeway, including strategic growth opportunities; personnel; relationships with key customers and suppliers; competitive product positioning; history; Company culture; and all other aspects of Lifeway's operations. As the Chief Executive Officer of a publicly traded company, Ms. Smolyansky brings experience working with the investor community and financial institutions. In addition, as a member of our founding family, Ms. Smolyansky is a recognized and prominent visionary and leader in the dairy and probiotic products industry with an in-depth knowledge of manufacturers, distributors, and retailers across all of our channels of distribution.

**Director Independence**

At least annually and in connection with any individuals being nominated to serve on the Board, the Board reviews the independence of each director or nominee and affirmatively determines whether each director or nominee qualifies as independent. The Board believes that shareholder interests are best served by having a number of objective, independent representatives on the Board. A majority of the current Board, consisting of Mr. Chartier, Mr. Dalto, Ms. Drori, Ms. Harris, Ms. Hultquist, Ms. McWhorter, and Mr. Scher are "independent directors" as defined in the listing standards of Nasdaq and none of them have relationships to Lifeway that are material to that director's ability to be independent from management in connection with the duties of a board member.

Each of the ACG Committee and the Compensation Committee is composed solely of independent directors. In addition, the Board and each committee have complete and open access to any member of management and the authority to retain independent legal, financial, and other advisors as they deem appropriate without consulting or obtaining the approval of any member of management. The Board and each committee also hold regularly scheduled executive sessions of only independent directors to promote discussion among the independent directors and assure independent oversight of management.

**Voting for Directors; Director Resignation Policy**

Each director must be elected by a majority of the Votes Cast at the Annual Meeting in an uncontested election, or by a plurality in a contested election. If any nominee is not available for election at the time of the Annual Meeting (which we do not anticipate), the proxy holders named in the proxy, unless specifically instructed otherwise in the proxy, will vote for the election of such other person as the existing Board may recommend, unless the Board decides to reduce the number of our directors.

Consistent with our Bylaws, under our Board's policy, any director in an uncontested election who fails to be elected must offer to tender his or her resignation to the Board. The Board nominates for election or re-election as director, and fills director vacancies with, only those candidates who agree to tender their irrevocable resignations upon (i) the failure to receive the required vote at the annual meeting at which they face election or re-election and (ii) Board acceptance of such resignation.

If an incumbent director fails to receive the required vote for re-election in an uncontested election, the Board and the ACG Committee will act on an expedited basis to determine whether to accept the director's resignation and will submit such recommendation for prompt consideration by the Board. The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. The ACG Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director's resignation.

**Board Meetings and Attendance**

The Board typically meets at least quarterly and holds special meetings when necessary. The Board intends to hold at least four regularly scheduled meetings each fiscal year and the independent directors serving on the Board intend to meet in executive session (i.e., without the presence of any non-independent directors or management) immediately following at least two regularly scheduled Board meetings. During the fiscal year ended December 31, 2025 (the "Last Fiscal Year"), the Board held 17 meetings. All directors standing for re-election who served on the Board during the Last Fiscal Year attended or participated in 75% or more of the total number of meetings of the Board from which such director was not recused, and the total number of meetings of all committees on which such director served (in each case held during such director's relevant period of service).

Pursuant to our Corporate Governance Guidelines, the Board expects attendance by Directors at Lifeway's annual meetings. All of our current directors who were Board members at the time of the 2025 Annual Meeting of Shareholders (the "2025 Annual Meeting") attended the 2025 Annual Meeting. Each of the directors nominated for re-election this year currently intends to attend the 2026 Annual Meeting.

**Board Oversight**

Shareholders elect the Board to oversee management and to serve shareholders' long-term interests. Management is responsible for executing strategy, fulfilling our mission, maintaining our corporate culture, creating innovative, healthy probiotic products, establishing accountability and the "tone at the top," and managing risk. The CEO and CFO together manage compliance risk, and provide regular updates to the Audit and Corporation Governance Committee regarding compliance risks. The Board maintains an active dialogue with management to align our strategy with our goals, manage risk, and help identify key business opportunities in an ever-changing business environment. To support that dialogue, the Board, the ACG Committee and the Compensation Committee have access to, meet with, and engage our management team, subject matter experts inside and outside Lifeway, our internal audit function, our auditors, and other external experts and advisors.

At Board and Committee meetings during each year, the Board assesses our business objectives, trends in our business and our markets, policy and regulatory objectives and developments, our financial forecasts, and how Lifeway's performance aligns with our strategy and goals. The Board looks to the focused expertise of its ACG Committee and Compensation Committee to inform its oversight.

**The Board's Risk Oversight**

The Board recognizes that although management is responsible for identifying and managing day-to-day risk, the Board and each of its directors play a critical role in the oversight of that risk. The Board implements its risk oversight responsibilities by having management and other advisors provide appropriate briefings and informational sessions on the significant risks that Lifeway faces and how we are seeking to control risk. In some cases, the ACG Committee or the Compensation Committee is responsible for oversight of specific risk topics. For example, the ACG Committee has oversight responsibility of our internal audit function and risks associated with financial accounting and audits, internal control over financial reporting, and major financial risk exposures and the Compensation Committee manages the risk that compensation incentivizes the desired outcomes and goals of the Company.

The Board oversees the Company's risk management including understanding the risks the Company faces and what steps management is taking to manage those risks, as well as understanding what level of risk is appropriate for the Company. The Board's role in the Company's risk oversight process includes receiving regular updates from members of senior management and committees of the Board on areas of material risk to the Company, including operational, financial, legal and regulatory, human resources, employment, and strategic risks.

Our Board's ACG Committee also oversees policies relating to significant ESG and sustainability matters, and periodically receive updates from the Company's management regarding significant ESG and sustainability undertakings. Additionally, ESG risks, including climate risk, are included in our risk oversight framework and climate-related risks are currently managed as part of our risk management process.

**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.

**The Board's Management Succession Planning Oversight**

One of our Board's principal duties is to review management succession planning. The Board reviews its management succession plans annually and plans for the development, retention, and replacement of executive officers, including the Chief Executive Officer and Chief Financial Officer. Additionally, the Board oversees the risks and exposures associated with management succession planning. Our Board believes that the directors and Lifeway's executive officers should collaborate on succession planning and that the entire Board should be involved in the critical aspects of the management succession planning process, including establishing selection criteria that reflect our business strategies, identifying and developing internal candidates to ensure the continuity of our culture, and making key management succession decisions.

Management succession is discussed by the Board in regular meetings and in executive sessions of the Board as appropriate. Directors can become familiar with potential successors for key management positions through various means, including regular organization and talent reviews, presentations to the Board, and informal meetings.

**The Board's Cybersecurity Oversight**

The Board has oversight of risks related to data protection and cybersecurity. Cybersecurity protection is vital to maintaining our operations and the trust of our business and supply chain partners, as well as the general public that buys our products. We must secure our own manufacturing and information technology infrastructure, as well as our sensitive data, from failures, breaches, or cyber incidents. This oversight includes reports to the Board on data protection and cybersecurity matters from senior members of our information technology department and internal audit function. The topics covered by these reports include risk management strategies, data protection, ongoing risk mitigation activities, cybersecurity strategy, and governance structure.

**Annual Board and Committee Evaluations**

Each year, as required by our Corporate Governance Guidelines and as part of the Board's oversight responsibilities, our Board and its Committees conduct evaluations to assess their effectiveness and adherence to the Lifeway's Code of Ethics, Code of Conduct, Corporate Governance Guidelines, policies adopted by the Board, and committee charters, and to identify opportunities to improve Board and committee performance.

*Board evaluation* – Each Director is given the opportunity to provide an annual evaluation of the performance of the Board and each of its members. The aggregate results are reported to the Board. The report includes an assessment of the Board's compliance with our Code of Conduct and Code of Ethics, corporate governance guidelines, and policies adopted by the Board, and identification of areas in which the Board could improve its performance.

*Committee evaluations* – Each Committee member is given the opportunity to provide an annual performance evaluation and reports the results to the Board. Each report includes an assessment of the committee's compliance with our Code of Ethics, corporate governance guidelines, policies adopted by the Board, the committee's charter, and identification of areas in which the committee could improve its performance.

**ACG Committee**

To eliminate unnecessary redundancies in our independent committee structure given the size of our company and Board, we have chosen to combine our audit and nominating committees into an ACG Committee. The ACG Committee, comprised of certain of the Board's independent directors, fulfills the Board's delegated audit and nominating duties as a single, integrated committee.

In 2025, Mr. Scher served as the Chairperson of the ACG Committee and, while the Chairperson of the Board was not independent, Lead Independent Director Jody Levy, Pol Sikar and Perfecto Sanchez, each a former member of the Board and Ms. McWhorter served as members of the ACG Committee in 2025. Ms. Levy resigned from the Board in October 2025. Mr. Sikar was removed from the ACG Committee in October 2025. Mr. Sanchez resigned from the Board in November 2025. Ms. Harris was appointed as a member of the ACG Committee in November 2025.

The Board has determined that each member of the ACG Committee (1) is "independent" as defined by applicable SEC rules and the listing standards of Nasdaq, (2) has not participated in the preparation of our financial statements or those of any of our current subsidiaries at any time during the past three years, and (3) is able to read and understand fundamental financial statements, including a balance sheet, income statement, and cash flow statement. In addition, the Board determined that Mr. Scher, Ms. McWhorter, Ms. Harris and Mr. Kirk are financially literate and financially sophisticated, as those terms are defined under the rules of Nasdaq, and were "audit committee financial experts," as defined by applicable SEC rules.

During our fiscal year ended December 31, 2025, the ACG Committee held 7 meetings (including regularly scheduled and special meetings).

*Audit and Corporate Governance*

 

The ACG Committee oversees the adequacy and effectiveness of our internal controls and meets with Lifeway's internal and independent auditors to review these internal controls and to discuss other financial reporting matters. The ACG Committee is also responsible for the selection, appointment, compensation, and oversight of both our independent auditors and our internal audit function. Our internal audit function reports directly to the ACG Committee, and not management. The ACG Committee reviews the financial reporting and accounting principles and standards and the audited financial statements to be included in the annual report. It also reviews the quarterly financial results and related disclosures. Additionally, the ACG Committee is responsible for the review and oversight of all related party transactions and other potential conflict of interest situations between and among the Company and its officers, directors, employees, and principal shareholders. The ACG Committee relies on the expertise and knowledge of management, our internal auditor, and our independent auditor in carrying out these oversight responsibilities.

 

 

 

 

*Director Nominations*

The ACG Committee selects, evaluates, and recommends to the Board qualified candidates for election or appointment to the Board, including by identifying individuals qualified to become Board members and members of Board committees; and recommending to the Board director nominees for the next annual meeting of shareholders or for appointment to vacancies on the Board. The ACG Committee also provides oversight to management when the Company conducts succession planning or searches for individuals to serve as executive officers.

The ACG Committee does not have specific minimum qualifications that it believes that a director nominee must meet. However, the ACG Committee believes that director candidates should, among other things, possess high degrees of integrity and honesty; have literacy in financial and business matters; have no material affiliations with our direct competitors, suppliers, or vendors; and preferably have experience in our business and other relevant business fields (for example, finance, accounting, law and banking). As a matter of policy, the ACG Committee considers diversity together with other factors when evaluating candidates but does not have a specific diversity requirement.

**Compensation Committee**

The Compensation Committee is a standing committee of the Board. The Compensation Committee's principal purposes are to review and approve corporate goals and objectives relevant to compensation of the Company's Named Executive Officers (as defined below), make recommendations regarding compensation for non-employee directors and administer the Company's incentive and equity compensation plans. The Compensation Committee's objectives and philosophy with respect to the fiscal 2025 executive compensation program, and the actions taken by the Compensation Committee in fiscal 2025 with respect to the compensation of our Named Executive Officers, are described below in "Compensation Overview."

The Compensation Committee also is responsible for evaluating and making recommendations to the Board regarding non-employee director compensation. In addition, the Compensation Committee is responsible for conducting an annual risk evaluation of the Company's compensation practices, policies and programs.

Mr. Scher served as the Chairperson of the Compensation Committee and Ms. Levy and Ms. McWhorter served as members of the Compensation Committee in 2025. Ms. Levy resigned from the Board in October 2025. Ms. McWhorter resigned from the Compensation Committee in December 2026 at which time Ms. Hultquist and Mr. Kirk were appointed to serve as a members of the Compensation Committee.

During our fiscal year ended December 31, 2025, the Compensation Committee held 8 meetings (including regularly scheduled and special meetings).

**Director Recommendations by Shareholders**

Consistent with the Board's Corporate Governance Guidelines, the Board will consider any candidates recommended by shareholders on the same basis that it considers recommendations from other sources. The recommendation must, at a minimum, include evidence of the shareholder's ownership of Lifeway stock, along with the candidate's name and qualifications for service as a Board member, and a document signed by the candidate indicating the candidate's willingness to serve, if elected. The Board and our ACG Committee will evaluate such recommendations in accordance with the ACG Committee's charter, the Bylaws and the director nominee criteria described above. In considering a candidate submitted by shareholders, the Board will take into consideration the needs of the Board and the qualifications of the candidate. Nevertheless, just as with recommendations from other sources, the Board may choose not to consider an unsolicited recommendation if no vacancy exists on the Board and/or the Board does not perceive a need to increase number of directors on the Board.

**Committee Interlocks and Insider Participation**

During fiscal year 2025, the Compensation Committee consisted of Mr. Scher, Ms. McWhorter (until her resignation from the Committee in December 2025), Ms. Levy (until her resignation from the Board in October 2025), Mr. Chartier and Ms. Hultquist each of whom was appointed to the Compensation Committee in December 2025. None of these members was, at any time during fiscal year 2025, or at any previous time, a Lifeway officer or employee.

In June 2025, Ms. McWhorter became the chief executive officer of the Executives' Club of Chicago. Ms. Smolyansky was a member of the board of the Executives' Club of Chicago prior to Ms. McWhorter's hiring and through her resignation from that board in October 2025. Ms. Smolyansky had no role in hiring Ms. McWhorter nor any role in setting compensation for the Executives' Club of Chicago's officers and employees. No disclosure is required pursuant Item 404 of Regulation S-K.

**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.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Fees Earned<br> in Cash (1)**<br> **($)** | **Stock Awards**<br> **(2)(3)<br> ($)** | **All Other<br> Compensation<br> ($)** | **Total<br> ($)** |
| Kirk Chartier | 4488 | 60000 |  | 64488 |
| J.C. Dalto(4) | 52500 | 60000 |  | 112500 |
| Rachel Drori | 7826 | 60000 |  | 67826 |
| Andee Harris | 10000 | 60000 |  | 70000 |
| Susie Hultquist | 4488 | 60000 |  | 64488 |
| Dorri McWhorter | 75443 | 60000 |  | 135443 |
| Jason Scher(4) | 98500 | 60000 |  | 158500 |
| Jody Levy(5) | 54935 |  |  | 54935 |
| Perfecto Sanchez(6) | 70489 |  |  | 70489 |
| Pol Sikar(7) | 62615 |  |  | 62615 |

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(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:

**Non-Employee Director Fee Schedule**

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| | |
|:---|:---|
| Annual Cash Retainer | $45000 |
| Annual Equity Compensation | $60000 |
| Audit Committee Chair Retainer | $12500 (a) |
| Audit Committee Member Retainer | $12500 |
| Compensation Committee Chair Retainer | $10500 (a) |
| Compensation Committee Member Retainer | $10500 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Chairperson of each Committee receives the applicable chairperson retainer in addition to the applicable committee member retainer.

(2) Amounts set forth herein represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.

(3) Details about the amounts in the "Stock Awards" column are set forth in the table below. All of the restricted stock awards to each non-employee director set forth below vested or will vest on December 30, 2026.

**Stock Awards Detail**

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Vested Stock<br> Award<br> ($)** | **Restricted**<br> **Stock Unit<br> Award<br> ($)** | **Total<br> ($)** |
| Kirk Chartier | – | 60000 | 60000 |
| J.C. Dalto | – | 60000 | 60000 |
| Rachel Drori | – | 60000 | 60000 |
| Andee Harris | – | 60000 | 60000 |
| Susie Hultquist | – | 60000 | 60000 |
| Dorri McWhorter | – | 60000 | 60000 |
| Jason Scher | – | 60000 | 60000 |

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(4) Mr. Scher and Mr. Dalto deferred all compensation that would have been paid to him in fiscal year 2025 pursuant to the Company's 2022 Non-Employee Director Plan.

(5) Ms. Levy resigned from the Board in October 2025.

(6) Mr. Sanchez resigned from the Board in November 2025.

(7) Mr. Sikar ceased to be a member of the Board on December 29, 2025.

**Certain Relationships and Related Party Transactions**

Jason Burdeen, Julie Smolyansky's spouse, is employed by the Company as the Company's Chief of Staff. Mr. Burdeen does not have an employment agreement. In 2025, Mr. Burdeen's total compensation was $438,800, including (i) a base salary of $250,000, (ii) a short-term incentive cash bonus award of $125,000, based on satisfaction of the Board's pre-established performance goals, (iii) $50,000 discretionary bonus in recognition of extraordinary efforts during negotiations related to an unsolicited acquisition offer by Danone (iii) an auto allowance of $10,200, (iv) an internet/telecommunication allowance of $3,600, (v) 1,019 restricted stock units ("RSUs") awarded on March 28, 2025, of which 340 will vest on March 28, 2026, 340 will vest on March 28, 2027, and 339 will vest on March 28, 2028, contingent on Mr. Burdeen's continued employment on each vesting date, and (vi) performance share units ("PSUs") awarded on March 28, 2025 which may be earned at the end of a three-year performance period based on the achievement of performance goals with respect to Cumulative Revenue and Cumulative Adjusted EBITDA, both weighted equally.

The pre-established PSU thresholds, targets and maximum thresholds for each of the financial metrics is not disclosed as disclosing the long-term targets for those metrics prospectively would give substantial insight into the Company's confidential, forward-looking strategies, and could therefore place the Company and its shareholders at a competitive disadvantage.

Each metric has a threshold, target and maximum performance achievement level and associated payout. If our performance meets or exceeds the performance threshold, then a varying number of shares from the threshold (50% of the target number of shares) up to the maximum (150% of the target number of shares) may be earned. No shares are earned if the performance threshold is not met.

The PSUs vest and become issuable to the employee at the end of the three-year performance measurement period. Employees forfeit their PSUs if they are not employed at the time the PSUs are awarded and issued.

The following table sets forth the PSU awards granted under the 2022 Omnibus Plan (as defined below) to Mr. Burdeen in 2025 as part of our long term incentive program at each of the threshold, target and maximum thresholds.

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| | | | |
|:---|:---|:---|:---|
| **Threshold PSUs** | **Target PSUs** | **Maximum PSUs** | **Target Value** |
| 1019 | 2038 | 3057 | $50000 |

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PSUs were calculated by dividing the award value by the fair market value on the date the award was approved.

The Compensation Committee is responsible for determining and approving Mr. Burdeen's compensation annually.

The Company and Danone entered into the Cooperation Agreement with Danone pursuant to which we and Danone agreed to comply with the terms of 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).

Pursuant to the Cooperation Agreement, the Company also agreed, among other things, to hold the Annual Meeting on or before June 30, 2026 and that the Board would nominate for election at the Annual Meeting a slate consisting of the New Independent Board Members and no more than three current directors, and to not nominate Mr. Scher for re-election at the Annual Meeting. Danone agreed to vote all of the shares of Common Stock it beneficially owns in favor of the Board's slate if nominated in accordance with the Cooperation Agreement.

We have determined that there were no related party transactions in excess of $120,000 since January 1, 2025, or currently proposed, involving Lifeway except as discussed above.

**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."

**Eric Hanson, Chief Financial Officer and Treasurer**

**Age:** 51

**Executive Officer Since:** 2018

ERIC HANSON is our Chief Financial and Accounting Officer and Treasurer. Mr. Hanson has served as our Chief Accounting Officer since 2018, prior to which he served as the Company's Controller beginning in 2016. Prior to joining Lifeway, he served as Director of External Reporting for The Azek Company in Skokie, Illinois from 2014 through July 2016; and as Audit Manager for Deloitte & Touche, LLP in Chicago, Illinois from 2012 through 2014. He also held various senior financial positions with Crowe Horwath from 2003 through 2012 and has over 20 years of financial reporting experience. Mr. Hanson holds a Bachelor of Science in Finance from the University of Illinois and an MBA from Northwestern University's Kellogg School of Management.

**Communication with the Board**

Lifeway's annual meeting of shareholders provides an opportunity each year for shareholders to ask questions of, or otherwise communicate directly with, members of the Board on appropriate matters. At any time, shareholders who wish to contact the Board or any committee of the Board, or any individual director or group of directors may do so by sending such written communications to:

Corporate Secretary

c/o Legal Department

Lifeway Foods, Inc.

6431 West Oakton St.

Morton Grove, IL 60053

The Corporate Secretary will collect and organize any copies of written communications that we receive and provide them to the Board or the relevant director unless the Corporate Secretary or Assistant Secretary's determines that they are inappropriate for submission to the intended recipient(s). Examples of shareholder communications that would be considered inappropriate for submission to the Board include, without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to Lifeway's business, or communications that relate to improper or irrelevant topics. The Corporate Secretary or Assistant Secretary or their designees may analyze and prepare a response to the information contained in communications received and may deliver a copy of the communication to other Lifeway employees or agents who are responsible for analyzing or responding to complaints or requests. Communications concerning possible director nominees submitted by any of our shareholders will be forwarded to the independent directors of the Board.

**Director Recommendations by Shareholders**

Consistent with the Board's Corporate Governance Guidelines, the Board will consider any candidates recommended by shareholders on the same basis that it considers recommendations from other sources. The recommendation must, at a minimum, include evidence of the shareholder's ownership of Lifeway stock, along with the candidate's name and qualifications for service as a Board member, and a document signed by the candidate indicating the candidate's willingness to serve, if elected. The Board and our ACG Committee will evaluate such recommendations in accordance with the ACG Committee's charter, the Bylaws and the director nominee criteria described above. In considering a candidate submitted by shareholders, the Board will take into consideration the needs of the Board and the qualifications of the candidate. Nevertheless, just as with recommendations from other sources, the Board may choose not to consider an unsolicited recommendation if no vacancy exists on the Board and/or the Board does not perceive a need to increase number of directors on the Board.

**Website Access to Corporate Governance Documents**

We have adopted a Code of Conduct applicable to all members of the Board, executive officers, and employees and a Code of Ethics applicable to all members of the Board and executive officers, including our principal executive officer, principal financial officer and principal accounting officer. Our Corporate Governance Guidelines, the Code of Conduct, the Code of Ethics, committee charters, and other corporate governance documents are available on our available on our website at www.lifewaykefir.com. Information contained on the website is not incorporated by reference in, or considered part of, this proxy statement. We intend to disclose on our website any amendments to, or any waivers under, the Code of Ethics that are required to be disclosed by the rules of the SEC or Nasdaq.

**5.&nbsp;&nbsp;&nbsp;&nbsp; NAMED EXECUTIVE OFFICER COMPENSATION**

**Compensation Overview**

Although SEC rules do not require smaller reporting companies to include a Compensation Discussion and Analysis in their Form 10-K or proxy statement, Lifeway believes that additional information beyond that required by smaller reporting companies is beneficial to shareholders. Accordingly, we have elected to voluntarily disclose additional information in order to provide shareholders with information regarding current executive compensation.

This Compensation Overview explains our overall compensation philosophy, describes the material components of our executive compensation programs, and details the determinations made by the Board and our Compensation Committee for the compensation awarded to the Company's Chief Executive Officer and its two other most highly compensated individuals who were serving as executive officers at the end of the last fiscal year, for services rendered in all capacities during the last fiscal year (the "Named Executive Officers" or "NEOs") for fiscal 2025. Our NEOs as of December 31, 2025 were:

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Age** | **Officer<br> since** | **Title** |
| Julie Smolyansky | 50 | 2002 | Chief Executive Officer, President and Secretary |
| Eric Hanson | 51 | 2018 | Chief Financial and Accounting Officer and Treasurer |

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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.

 

*<u>Shareholder Engagement</u>*

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.

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 Chairperson 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. These shareholders expressed no concerns or made any requests regarding executive compensation except for one shareholder who asked whether executive compensation was set by independent directors which the Company confirmed. During our shareholder outreach, shareholders noted the Company's strong performance.

The Compensation Committee will continue to review how to appropriately compensate our CEO and our Chief of Staff who is the spouse of our CEO without issuing equity compensation in accordance with the terms of the Cooperation Agreement.

The Company intends to continue its shareholder outreach program going forward.

*<u>Executive Compensation Philosophy</u>*

Our compensation program for executive officers is designed to attract and retain talented employees and to motivate achievement of both our long-term and short-term goals and align compensation with long-term shareholder value. Our executive compensation program reflects our successful track record. We believe that the design and governance of our compensation program supports, and aligns executive officers with, the business strategy and the overall goal to continue sustainable growth of net sales, profitability, and return on invested capital on an annual and long-term basis 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. Our entry into the Cooperation Agreement removes some of those contractual constraints. However, we are unable to use equity-based compensation for certain employees. The Compensation Committee will continue to monitor changes in our shareholder consolidation and contractual arrangements and adjust the objectives and measures for future compensation setting accordingly.

Training and retaining our employees allow for a smooth transition of the workload and responsibilities of any manager who leaves the Company. Past departures of members of our management team are limited and when they have occurred have caused no issues for production, distribution, or sales of our products. We consider, among other factors, our specific challenges, and achievements along with our financial performance and growth when evaluating executive officer compensation.

Our executive compensation program is based on the following objectives:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Balancing compensation program elements and levels that attract and motivate talented executives with forms of compensation that are performance-based and/or aligned with shareholder interests and the promotion of growth in Lifeway business and value;

· Setting target total direct compensation (base salary, annual incentives, and long-term incentives) and related performance requirements for executives by reference to compensation ranges for peer group companies that are similarly situated to Lifeway; and

· Appropriately adjusting total direct compensation to reflect the performance of each executive over time (as reflected in individual annual goals) as well as our annual and long-term business performance (as reflected in various corporate financial performance goals).

*<u>Role of the Compensation Committee</u>*

Pursuant to the powers granted to the Compensation Committee in its charter, the Compensation Committee reviews the then current compensation for executive officers, compensation processes, the then current compensation philosophy of the Company, the companies that comprised our peer group and reports and advice from our compensation consultants. Based on these reviews, the Compensation Committee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· 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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· after adjustments to the composition of the Compensation Committee so that a majority of members were New Independent Directors, the newly constituted Compensation Committee reviewed outstanding compensatory awards granted to employees of the Company and members of the Board and compensation committee advice about the same.

· adjusted compensation setting processes to ensure compensation practices and procedures account for objective market data.

The Compensation Committee reviews our compensation design and philosophy on an annual basis to ensure that our executive compensation program continues to evolve to support our strategy and objectives and aligns with our shareholders' interests. In 2025, the Compensation Committee reviewed our compensation design and maintained a strong performance orientation through the annual and long-term incentives including both RSUs and PSUs. Subject to certain provisions of employment agreements between the Company and NEOs (as described below in "Employment agreements, severance, and change-in-control arrangements between Lifeway and Named Executive Officers) and provisions of the 2022 Omnibus Plan and applicable award agreements (as described below under "Omnibus Plan Change of Control Provisions"), PSUs granted in 2025 will only be paid if the Company meets financial goals over the next three fiscal years and the awardee is employed on the vesting date in 2028.

The Compensation Committee followed the below process and practices as closely as possible when setting executive compensation levels:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The Compensation Committee reviews and adjusts base salaries, if necessary, based on its review of the competitive analysis prepared by Aon, changes in title and/or job responsibilities, results of performance reviews and/or changes in our performance or financial condition, and other factors discussed in this Compensation Overview, including input from management.

· Incentive compensation for executive officers is approved by the Compensation Committee for each fiscal year. After the end of the relevant fiscal year for which incentive compensation was set, the Compensation Committee certifies Lifeway's achievement of financial performance goals, if met, for that prior fiscal year and determines the level of incentive compensation awards for its executive officers earned based on such achievement, if any.

· Pursuant to its charter, the Compensation Committee has been delegated all Board authority to review performance of, and set the base salary and incentive awards for, employees and consultants who are family members of any director or executive officer of the Company, including Julie Smolyansky. In accordance with its charter, the Compensation Committee reviews performance and recommends for Board approval the base salary and incentive awards for each other executive officer, including Mr. Hanson, and vice presidents other than those who are family members of a director or executive officer for whom authority is specifically delegated to the Compensation Committee.

· Separate from the corporate goals which provide performance measures for incentive awards, the Compensation Committee may from time to time establish individual performance goals and objectives for each executive officer. Such goals and objectives, if and when established, would be tracked by the human resources department, which would then provide additional information to the Compensation Committee when reviewing individual responsibilities and performance. The Compensation Committee's compensation consultant's input and recommendations related to such arrangements are sought as well. The Compensation Committee then determines the performance goals and objectives for the current fiscal year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The Compensation Committee also has the discretion to make equity-based and cash-based grants under the 2022 Omnibus Plan (as defined below) to eligible individuals for purposes of compensation, retention, or promotion, and in connection with commencement of employment.

· The Compensation Committee has the authority to delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees as the Compensation Committee may deem appropriate in its sole discretion.

· In December 2025, Ms. McWhorter resigned as a member of the Compensation Committee and Mr. Chartier and Ms. Hultquist were appointed as members of the Compensation Committee, after which New Independent Directors constituted a majority of the Compensation Committee. The newly constituted Compensation Committee reviewed outstanding compensatory awards previously granted to employees of the Company and members of the Board and compensation committee advice about the same.

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.

 

*<u>Role of our Compensation Consultant</u>*

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.

*<u>The Committee's Process for Setting Executive Compensation</u>*

*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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Industry;

· Revenue;

· Market capitalization; and

· Whether the company is representative of the labor market for executive talent for Lifeway.

*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:

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

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In consultation with Aon, the Compensation Committee found this peer group representative of an appropriate executive labor market and pay benchmarking perspective. While this analysis informed the decisions of the Compensation Committee and was a reference point on the range of compensation opportunities, the Compensation Committee did not tie executive officer compensation to specific market percentiles.

*Other Factors*

In making determinations regarding executive officer compensation, in addition to benchmarking, the Compensation Committee considered several other factors such as our financial performance and financial condition, individual executive performance, tenure, expertise, the importance of the role, potential for future contributions, and comparative pay levels among the members of the senior executive team, as well as input of the compensation consultant and, subject to conformity with independent analyses of all other information by the Compensation Committee, and, other than with respect to Julie Smolyansky, management recommendations. The Compensation Committee typically followed most of these recommendations; however, the Compensation Committee has sole authority for the final compensation determination and may have set total compensation and incentive opportunities below, at, or above median amounts.

*<u>The 2025 Compensation Program Design</u>*

<u>Elements of Compensation</u>

For the year ended December 31, 2025, the compensation for our named executive officers generally consisted of a base salary, cash bonus opportunities, and equity awards. These elements (and the amounts of compensation opportunity under each element) were selected because we believe they are market prevalent and competitive elements of compensation and necessary to help us retain our executive talent and attract new executive talent when necessary. We believe that our 2025 compensation program also incentivizes our employees to achieve challenging goals and a high level of performance despite many external economic factors that may impact total company performance.

Specifically, the Company believes that EBITDA is the primary focus for driving growth at the Company's current stage, both in terms of short-term and long-term growth, with revenue growth and retention of key personnel as additional components of long-term growth. To that end, the Compensation Committee felt the best strategy for incentivizing growth and more closely linking executives' experiences to those of shareholders was to use Adjusted EBITDA in both programs, and to use net revenue and continued employment as additional components of our long-term incentive program. However, the Compensation Committee continually evaluates which factors are most key for growth and will adjust metric selection when appropriate and with a clear rationale.

Below is a more detailed summary of the current executive compensation program as it relates to our NEOs.

*Base Salaries*

The NEOs receive a base salary to compensate them for the services they provide to us. The base salary payable to each named executive officer is intended to provide a competitive, fixed component of compensation reflecting the executive's skill set, experience, role, and responsibilities. The salaries of the NEOs are summarized below.

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| | | | |
|:---|:---|:---|:---|
| **NEO** | **2024 Base Salary** | **2025 Base Salary** | **% Change in Base Salary** |
| Julie Smolyansky | $1000000 | $1000000 | 0% |
| Eric Hanson | $390000 | $410000 | 5.1% |

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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.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Financial Performance (Adjusted EBITDA in thousands)** | **Financial Performance (Adjusted EBITDA in thousands)** | **Financial Performance (Adjusted EBITDA in thousands)** | **Financial Performance (Adjusted EBITDA in thousands)** | **Actual Performance (in thousands)** |
| | Minimum | Target | Stretch | Maximum | Adjusted EBITDA |
| | $17100 | $19000 | $22800 | $28500 | $32636 |
| **NEO** | **Cash Award at Financial Performance Level (in thousands)** | **Cash Award at Financial Performance Level (in thousands)** | **Cash Award at Financial Performance Level (in thousands)** | **Cash Award at Financial Performance Level (in thousands)** | **Actual Award (in thousands)** |
| Julie Smolyansky | $400 | $800 | $1250 | $1600 | $1600 |
| Eric Hanson | $73.8 | $143.5 | $225.5 | $287 | $287 |

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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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· 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).

The value of the Long-Term Incentive target opportunity amount awarded is converted to a number of potential PSU's and a fixed number of RSU's at the Company's closing stock price on the grant date.

<u>PSUs</u>

Our Compensation Committee made annual grants of PSUs to our NEOs and certain other members of senior management. The PSUs entitle the participants in the plan to earn shares of common stock upon the attainment of certain performance goals over the three-year performance period.

PSUs are earned after the end of a three-year performance period based on the achievement of performance goals with respect to Cumulative Revenue and Cumulative Adjusted EBITDA, both weighted equally, as and when determined by the Compensation Committee. The performance measures are selected after taking into account the impact of the concentration of ownership of our stock and the contractual constraints on the methods of compensating our employees. Our entry into the Cooperation Agreement removes some of those contractual constraints. However, we are unable to use equity-based compensation for certain employees. The Compensation Committee will continue to monitor changes in our shareholder consolidation and contractual arrangements and adjust the objectives and measures for future compensation setting accordingly. The pre-established thresholds, targets and maximum thresholds for each of the financial metrics is not disclosed as disclosing the long-term targets for those metrics prospectively would give substantial insight into the Company's confidential, forward-looking strategies, and could therefore place the Company and its shareholders at a competitive disadvantage.

Each metric has a threshold, target and maximum performance achievement level and associated payout. If our performance meets or exceeds the performance threshold, then a varying number of shares from the threshold (50% of the target number of shares) up to the maximum (150% of the target number of shares) may be earned. No shares are earned if the performance threshold is not met.

The PSUs vest and become issuable to the employee at the end of the three-year performance measurement period. Employees forfeit their PSUs if they are not employed at the time the PSUs are awarded and issued. The PSUs are to be paid no later than March 15 in the year after the year in which such RSUs vested.

The following table sets forth the PSU awards granted under the 2022 Omnibus Plan to our NEOs in 2025 as part of our long term incentive program at each of the threshold, target and maximum thresholds.

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| | | | | |
|:---|:---|:---|:---|:---|
| **NEO** | **Threshold PSUs** | **Target PSUs** | **Maximum PSUs** | **Target Value** |
| Julie Smolyansky (1) | 10191 | 20383 | 30574 | $500000 |
| Eric Hanson | 2228 | 4457 | 6685 | $109333 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) 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 two or more of the 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).

PSUs were calculated by dividing the award value by the fair market value on the date the award was approved.

<u>RSUs</u>

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,

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| | | |
|:---|:---|:---|
| **NEO** | **RSUs** | **$ Value** |
| Julie Smolyansky (1) | 10191 | $250000 |
| Eric Hanson | 2228 | $54666 |

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(1) 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 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).

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.

*<u>Discretionary Bonus</u>*

 

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.

*<u>Perquisites and Benefits</u>*

*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.

*<u>Accounting and Tax Considerations</u>*

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.

 

**Information About Our Executive Team**

Information about Julie Smolyansky can be found in above in the section "Information about our Nominees." Information about the rest of our executive team can be found above in the section "Information about Current Directors and Executive Officers."

**NEO Summary Compensation for Fiscal Years 2024 and 2025**

The following table sets forth certain information concerning compensation received by Lifeway's NEOs, consisting of our Chief Executive Officer and the two other most highly paid executive officers for services rendered in all capacities during fiscal year 2024 and 2025.

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|:---|:---|:---|:---|:---|:---|:---|
| **Summary Compensation Table** | **Summary Compensation Table** | **Summary Compensation Table** | **Summary Compensation Table** | **Summary Compensation Table** | **Summary Compensation Table** | **Summary Compensation Table** |
| **Name and Principal Position(s)** | **Year** | **Salary**<br> **($)** | **Stock<br> Awards**<br> **(1) ($)** | **Nonequity incentive plan compensation ($)** | **All Other Compensation (2) ($)** | **Total**<br> **($)** |
| **Julie Smolyansky** |  |  |  |  |  |  |
| *Chief Executive Officer,* | 2025 | 1000000 | 750000 | 1600000 | 39132 | 3389132 |
| *President and Secretary* | 2024 | 1000000 | 750000 | 1600000 | 2022124 | 5372124 |
| **Eric Hanson** |  |  |  |  |  |  |
| *Chief Financial and* | 2025 | 410000 | 164000 | 287000 | 87462 | 948462 |
| *Accounting Officer,* | 2024 | 390000 | 156000 | 273000 | 27000 | 846000 |
| *Treasurer* |  |  |  |  |  |  |

---

______________________

(1) Stock Awards are grants of shares with performance-based or time-based vesting requirements made pursuant to the 2022 Omnibus Plan. The amounts reported in this column represent the grant date fair value of such awards consistent with the estimate of aggregate compensation cost, at target levels, to be recognized in accordance with FASB ASC Topic 718 over the service period for the stock awards granted for the relevant fiscal year.

(2) Details about "All Other Compensation" are set forth in the table below.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **All Other Compensation Details** | **All Other Compensation Details** | **All Other Compensation Details** | **All Other Compensation Details** | **All Other Compensation Details** | **All Other Compensation Details** | **All Other Compensation Details** |
| **Name and Principal Position(s)** | **Year** | **Retirement Plan Contributions (A) ($)** | **Auto**<br> **Allowance**<br> **(B) ($)** | **All Other Perks** <br> **($)** | **Other** <br> **($)** | **Total**<br> **($)** |
| **Julie Smolyansky** |  |  |  |  |  |  |
| *Chief Executive* | 2025 | 16535 | 5176 | 17420 (C) |  | 39132 |
| *Officer, President and* | 2024 | 13200 | 5324 | 3600 (D) | 2000000 (E) | 2022124 |
| *Secretary* |  |  |  |  |  |  |
| **Eric Hanson** |  |  |  |  |  |  |
| *Chief Financial and* | 2025 | 15766 | 10200 | 11496 (C) | 50000 (F) | 87462 |
| *Accounting Officer,* | 2024 | 13200 | 10200 | 3600 (D) |  | 27000 |
| *Treasurer* |  |  |  |  |  |  |

---

(A) Consists of Lifeway's matching contributions to the Lifeway Foods Inc. 401(k) Profit Sharing Plan and Trust on behalf of the NEO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Consists of personal use of vehicle taxable compensation for Ms. Smolyansky and auto allowance for Mr. Hanson.

(C) Consists of internet/telecommunications and comprehensive executive physical examination allowances.

(D) Consists of internet/telecommunications services allowance.

(E) Consists of CEO retention bonus.

(F) Consists of CFO discretionary bonus in recognition of extraordinary efforts during negotiations related to an unsolicited acquisition offer by Danone.

**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.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Year** | **Summary Compensation Table Total for PEO <br> (1)** | **Compensation Actually Paid to PEO <br> (3)** | **Average Summary Compensation Table Total for Non-PEO NEOs <br> (2)** | **Average Compensation Actually Paid to Non-PEO NEOs <br> (3)** | **Value of Initial Fixed $100 Investment Based on Total Shareholder Return** | **Net Income<br> (in 000's)** |
| 2025 | 3389132 | 2908459 | 948462 | 856614 | $97.70 | 13859 |
| 2024 | 5372124 | 10081103 | 808607 | 1484854 | $184.94 | 9025 |
| 2023 | 3372200 | 5119250 | 772732 | 990756 | $241.62 | 11367 |

---

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

&nbsp;&nbsp;&nbsp;&nbsp;(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.

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

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| | | |
|:---|:---|:---|
|  | **2025** | **2025** |
|  | **PEO<br> $** | **Average of NEOs<br> $** |
| Total Compensation per Summary Compensation Table (SCT) | 3389132 | 948462 |
| Less: Value of Stock Award Reported in SCT | (750000) | (164000) |
| Plus: Year-End Fair Value of Outstanding and Unvested Equity Awards Granted in Covered Year | 740808 (A) | 161978 (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 | (106760)(B) | (21472)(B) |
| Plus: Change in Fair Value of Prior Year Equity Awards that Vested this Year | (364720) | (68353) |
| "Compensation Actually Paid"" for Year Shown | 2908459 | 856614 |

---

(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.

**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.

**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.

![](image_006.jpg)

**Employment agreements, severance, and change-in-control arrangements between Lifeway and Named Executive Officers**

Julie Smolyansky serves Lifeway pursuant the Smolyansky Employment Agreement, pursuant to which the Ms. Smolyansky serves as Chief Executive Officer of the Company and is responsible for such duties as are commensurate with her position and office as may from time to time be reasonably assigned to her by the Board, including without limitation, the responsibilities of President and Secretary of the Company. Pursuant to the Smolyansky Employment Agreement, Ms. Smolyansky is entitled to receive a base salary of $1,000,000 per year, subject to annual review, and will also be eligible for an annual bonus upon the achievement of applicable performance targets set by the Compensation Committee and subject to such other terms and conditions of the Company's annual bonus program as in effect from time to time, with an annual bonus opportunity, at target, equal to 80% of the Executive's then effective annual base salary. She is also eligible to participate in the 2022 Omnibus Incentive Plan, subject to the terms of the 2022 Omnibus Incentive Plan, as determined by the Compensation Committee, in its sole discretion. Pursuant to the Smolyansky Employment Agreement, Ms. Smolyansky will also receive an annual grant under the 2022 Omnibus Incentive Plan with a target value equal to 75% of the Executive's then effective annual base salary, and to the extent the Company is unable to deliver shares upon the vesting of any such grant in accordance with its terms, the Company shall pay to the Executive cash in an amount equal to the value of the vested shares (and in lieu of the vested shares) at the time of such vesting. The Company may review and adjust (but not downward) the base salary from time to time, based upon her performance. Ms. Smolyansky's base salary was $1,000,000 in 2025 and $1,000,000 in 2024. The term of the Smolyansky Employment Agreement ends upon the Ms. Smolyansky's death or Disability (as defined in the Smolyansky Employment Agreement) or upon termination by Ms. Smolyansky or the Company at any time.

Upon termination of the Smolyansky Employment Agreement (i) by the Company without Cause (as defined in the Smolyansky Employment Agreement) or by the Executive for Good Reason (as defined in the Smolyansky Employment Agreement), provided in each case that the Company receives from the Ms. Smolyansky a general release of claims against the Company and its subsidiaries, affiliates, shareholders, directors, officers, employees, agents, successors, and assigns (the "Release") within 60 days following termination, or (ii) as a result of the Ms. Smolyansky's death,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp; the Company shall pay Ms. Smolyansky an amount (the "Severance Pay") equal to the sum of (I) two times her base salary, at the rate in effect immediately prior to such termination of employment, plus (II) an amount equal to two times the greater of her target annual bonus for the year in which the termination of employment occurs or her highest bonus for the two years preceding the termination of employment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp; unless otherwise provided for in the 2022 Omnibus Incentive Plan or any award agreement, any and all outstanding equity awards previously granted to the Executive that remain unearned, unvested, or otherwise unpaid ("Equity Awards"), and which remain outstanding immediately prior to the date of termination of the Executive's employment, shall remain outstanding and shall immediately become vested in full upon the Release becoming irrevocable.

If within the one month prior to or 12 months following a Change in Control (as defined in the Smolyansky Employment Agreement), the Ms. Smolyansky's employment is terminated by the Company without Cause or by the Executive for Good Reason (a "CIC Termination of Employment"), the Executive is entitled to (i) the Severance Pay (although at a rate of three times, rather than two times, her base salary and the greater of her target annual bonus for the year in which the termination of employment occurs or her highest bonus for the two years preceding the termination of employment), (ii) any unearned performance awards, which shall be earned and fully vested based on the higher of actual or target performance as of the Change of Control date, and (iii) any and all other Equity Awards, which shall remain outstanding and shall immediately become vested in full upon the Release becoming irrevocable.

The Smolyansky Employment Agreement contains several restrictive covenants to the benefit of the Company, including a two-year non-competition provision and a two-year non-solicitation provision. Upon a CIC Termination of Employment, the Company shall pay the Executive an amount equal to the value of the non-competition obligations (the "Non-Competition Payment"), as determined by an unrelated third party that is in the business of valuing non-competition payments. The Severance Pay shall count toward the Non-Competition Payment, and all costs for obtaining and defending the valuation shall be borne by the Company.

The Employment Agreement also clarifies that the Company is the sole owner of all intellectual property made or conceived by the Executive arising out of the Executive's employment by the Company, except that the Executive owns and retains all rights in respect of The Kefir Cookbook. The Executive also granted the Company a royalty-free license to utilize The Kefir Cookbook and the contents for its marketing purposes.

Eric Hanson serves Lifeway pursuant to an employment agreement dated as of November 19, 2018. The agreement renews automatically for successive terms of one year on January 1, unless pursuant to the agreement it is terminated earlier or the Board or Compensation Committee gives timely notice of non-renewal. Mr. Hanson's base salary was $410,000 in 2025 and $390,000 in 2024. His base salary is subject to annual review by the Compensation Committee and the Board. Pursuant to his employment agreement, Mr. Hanson is also eligible for certain cash, equity, and other incentive awards based on the satisfaction of the Board's pre-established performance goals. In 2025 and 2024, the Board set bonus targets for him in compliance with the 2022 Omnibus Incentive Plan. Lifeway may terminate Mr. Hanson's employment for any lawful reason, with or without Cause, and Mr. Hanson may resign for or without Good Reason (each as defined in his employment agreement).

Pursuant to the employment agreement with Mr. Hanson, upon Non-Renewal, termination without Cause, or by his resignation with Good Reason (as defined in his employment agreement), Mr. Hanson will be entitled to certain payments and benefits shown in the tables below. Receipt of any severance amounts under his employment agreement is conditioned on execution of an enforceable general release of claims in a form satisfactory to Lifeway.

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| | | | |
|:---|:---|:---|:---|
|  | **Non-Renewal** | **Termination without Cause or Resignation for Good Reason** | **Termination for Cause or Resignation Without Good Reason** |
| *Base Salary* | Three months after termination date | The remainder of the term or 6 months, whichever is greater | Through termination date |
| *Bonus Payments* | Greater of (i) bonus for fiscal year of termination date and (ii) bonus paid for fiscal year prior to termination date | Greater of (i) bonus for fiscal year of termination date and (ii) bonus paid for fiscal year prior to termination date |  |
| *Outstanding Equity Awards* | Vested but unsettled outstanding equity awards | Accelerated vesting of all outstanding equity awards | Vested but unsettled outstanding equity awards |
| *Health Insurance* | Company-paid COBRA premiums through the earliest of (i) three calendar months after termination date, (ii) the date executive becomes eligible for group health insurance through another employer, or (iii) the date executive ceases to be eligible for COBRA coverage | Company-paid COBRA premiums through the earliest of (i) six calendar months after termination date, (ii) the date executive becomes eligible for group health insurance through another employer, or (iii) the date executive ceases to be eligible for COBRA coverage |  |
| *Financial Services or Transition-Related* |  | $10000 |  |

---

**2022 Omnibus Plan Change of Control Provisions** 

Unless otherwise provided in an award agreement or otherwise determined by the Compensation Committee, upon a Change of Control (as defined in the 2022 Omnibus Plan) the following shall occur:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· For awards other than performance awards, a Replacement Award (that is, an award with a value and terms that are at least as favorable as the outstanding award) may be issued;

· For awards other than performance awards, if a Replacement Award is not issued and the Company's common stock ceases to be publicly traded after the Change of Control, such awards shall be immediately vested and/or exercisable upon such Change of Control;

· For unearned performance awards, the award shall be (i) earned on a pro-rata basis at the higher of actual or target performance and (ii) measured as of the end of the calendar quarter before the Change of Control date or, if the award is stock-price based, as of the effective date of the Change of Control;

· For earned but unvested performance awards, the award shall be immediately vested and payable as of the Change of Control; and

· For awards other than performance awards, if the Company's common stock continues to be publicly traded after a Change of Control, such awards shall continue under their applicable terms, unless otherwise determined by the Compensation Committee.

Notwithstanding the forgoing, in the case of awards other than performance awards, the Compensation Committee may cancel such awards, and the award holders shall receive shares or cash equal to the difference between the amount shareholders receive for their shares and the purchase price per share, if any, under the award.

If, in connection with a change in control, a Participant's payment of any awards will cause the Participant to be liable for federal excise tax levied on certain "excess parachute payments," then either (i) all payments otherwise due; or (ii) the reduced payment amount to avoid an excess parachute payment, whichever will provide the Participant with the greater after- tax economic benefit taking into account any applicable excise tax, shall be paid to the Participant. In no event will any Participant be entitled to receive any kind of gross-up payment or reimbursement for any excise taxes payable in connection with Change of Control payments.

Capitalized terms used in this section but not defined herein have the meanings assigned to them in the 2022 Omnibus Plan.

There are no other agreements with the NEOs that provide for payments in connection with resignation, retirement, termination of employment, or change in control other than the employment agreements described above.

**Non-Employee Director Equity and Deferred Compensation Plan**

Unless otherwise determined by the Plan Administrator in connection with a grant, a change in control shall have the following effects on outstanding awards:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· On a change in control in which a Director receives a replacement award with a value and terms that are at least as favorable as the Director's outstanding awards (a "Replacement Award"), the Director's outstanding awards shall remain outstanding subject to the terms of the Replacement Award.

· On a change in control in which the Company's shares cease to be publicly traded, the Director's outstanding awards shall become immediately vested unless the Director receives Replacement Awards.

· On a change in control in which the Company's shares continue to be public traded, a Director's outstanding awards shall remain outstanding and be treated as Replacement Awards.

Notwithstanding the forgoing, the 2022 Plan Administrator may determine that any or all outstanding awards granted under the 2022 Directors Plan will be canceled and terminated upon a change in control, and that in connection with such cancellation and termination, the Director shall receive for each RSU subject to such award, a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities equivalent to such cash payment) equal to the consideration received by shareholders of the Company for a share of common stock in such change in control.

Capitalized terms used in this section but not defined herein have the meanings assigned to them in the 2022 Non-Employee Director Plan.

There are no other agreements with the directors that provide for payments in connection with resignation, retirement, termination of service, or change in control.

**Equity Compensation Plans**

The following table sets forth certain information, as of December 31, 2025, regarding the shares of Lifeway's common stock authorized for issuance under our 2015 Omnibus Plan, our 2022 Omnibus Plan and our 2022 Non-Employee Director Plan.

---

| | | | |
|:---|:---|:---|:---|
| **Plan category** | **(a)**<br> **Number of securities to be issued upon exercise of outstanding options, warrants and rights** | **(b)**<br> **Weighted-average exercise price of outstanding options, warrants and rights** | **(c)**<br> **Number of securities remaining available for**<br> **future issuance under equity compensation plans (excluding securities reflected in column (a))** |
| **Equity compensation plans approved by security holders** | 13150 | $9.57 | 2986864 |
| **Equity compensation plans not approved by security holders** | – | – | – |
| **Total** | 13150 | $9.57 | 2986864 |

---

On March 29, 2016, Lifeway filed a registration statement on Form S-8 with the SEC in connection with the 2015 Omnibus Plan covering 3,500,000 shares of our common stock. The 2015 Omnibus Plan has since been terminated for future issuances and replaced by our 2022 Omnibus Plan. A total of 13,150 options to purchase common stock remain awarded and unexercised under the 2015 Omnibus Plan which will remain in place until all such awards are terminated or exercised.

Our shareholders adopted the 2022 Omnibus Plan at our annual meeting of shareholders on August 31, 2022. Pursuant to the 2022 Omnibus Plan, we may issue common stock, options to purchase common stock, stock appreciation rights, restricted stock, restricted stock units, performance share units, performance shares, cash-based awards and other stock-based awards to our employees. The Compensation Committee has the discretion to determine the option price, number of shares, grant date, and vesting terms of awards granted under the 2022 Omnibus Plan. On May 24, 2023, the Company filed a registration statement on Form S-8 with the SEC in connection with the 2022 Omnibus Plan covering 3,247,855 shares of our common stock. A total of 2,604,569 shares were eligible for award under the 2022 Omnibus Plan as of December 31, 2025.

Our shareholders adopted the 2022 Non-Employee Director Equity and Deferred Compensation Plan at our annual meeting of shareholders on August 31, 2022, as amended by Amendment No. 1 approved by the Board on June 7, 2024 (the "2022 Director Plan"). Pursuant to the 2022 Director Plan, we may issue restricted stock units to our non-employees Directors. The Board has the discretion to determine the number of restricted stock units granted, grant date, and vesting terms of awards granted under the 2022 Director Plan. The Company filed a registration statement on Form S-8 with the SEC in connection with the 2022 Director Plan covering 500,000 shares of our common stock. A total of 382,295 shares were eligible for award under the 2022 Director Plan as of December 31, 2025.

**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.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Stock awards** | **Stock awards** | **Stock awards** | **Stock awards** | **Stock awards** |
| <br>**Name** | **Number of shares or units of stock that have not vested**<br> **(#)(1)** |  | **Market value of shares of units of stock that have not vested**<br> **($)(2)** | **Equity**<br> **incentive**<br> **plan awards: Number of**<br> **unearned**<br> **shares, units or other rights that have not vested**<br> **(#)(3)** | **Equity**<br> **incentive**<br> **plan awards: Market or payout value of**<br> **unearned**<br> **shares, units or other rights that have not vested**<br> **($)(2)** |
| **Julie Smolyansky** | 34440 | (4) | $834481 | 193624 | $4691510 |
| **Eric Hanson** | 7142 | (5) | $173051 | 39442 | $995680 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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.

**Delinquent Section 16(a) Reports**

Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who beneficially own more than 10% of Lifeway's Common Stock to file reports of ownership and changes in ownership with the SEC and to furnish us with copies of all such reports they file. Based on our review of the copies of such forms that we received, or written representations from certain reporting persons, we believe that none of our directors, executive officers, or persons who beneficially own more than 10% of Lifeway's Common Stock failed to comply with Section 16(a) reporting requirements in the fiscal year ended December 31, 2025, with the exception of Julie Smolyansky, who had one late Form 4 filings reporting one transaction late, Andee Harris, who had one late Form 3, Susie Hultquist who had one late Form 3, and Ludmila Smolyansky who had one late Form 4, reporting one transaction late.

**6.&nbsp;&nbsp;&nbsp;&nbsp; Ownership of Common Stock by Certain Beneficial Owners and Management**

**Security Ownership of Certain Beneficial Owners and Management**

As of the Record Date, Lifeway's directors and Named Executive Officers beneficially own, directly or indirectly, in the aggregate, approximately 18.58% of its outstanding Common Stock. These shareholders have significant influence over our business affairs, with the ability to control matters requiring approval by our shareholders including election of directors and matters such as approvals of mergers or other business combinations.

The following table sets forth, as of April 20, 2026, certain information with respect to the beneficial ownership of the Common Stock for (i) each person, or group of affiliated persons, known by Lifeway to beneficially own more than 5% of the outstanding shares of our Common Stock, (ii) each of our directors, (iii) each of our Named Executive Officers, and (iv) all of our directors and executive officers as a group.

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| | | | |
|:---|:---|:---|:---|
|  | **Shares Beneficially Owned (b)** | **Shares Beneficially Owned (b)** | **Shares Beneficially Owned (b)** |
| **Name and Address (a)** | **Number (c)** |  | **Percent** |
| **Directors, Nominees and Named Executive Officers** |  |  |  |
| Julie Smolyansky | 2678767 | (d) | 17.52% |
| Kirk Chartier | 857 | (e) | \* |
| Juan Carlos ("JC") Dalto | 12113 | (f) | \* |
| Rachel Drori | 0 |  | \* |
| Andee Harris | 873 | (g) | \* |
| Susie Hultquist | 0 |  | \* |
| Dorri McWhorter | 25936 |  | \* |
| Jason Scher | 80875 | (h) | \* |
| Eric Hanson | 59884 | (i) | \* |
| All directors and executive officers as a group (9 persons) | 2859305 | (d)-(i) | 18.58% |
| **5% Holders** |  |  |  |
| Danone North America PBC <br> 1 Maple Avenue <br> White Plains, NY 10605 | 3454756 | (j) | 22.61% |
| Edward Smolyansky <br> 1219 N. Wells St. <br> Chicago, IL 60610 | 2927632 | (k) | 19.61% |
| Ludmila Smolyansky <br> C/o Edward Smolyansky <br> 1219 N. Wells St. <br> Chicago, IL 60610 | 807823 | (l) | 5.29% |
| Divisadero Street Capital Management, LP<br> 3480 Main Highway, Suite 204<br> Miami, FL 33133 | 1347635 | (m) | 8.82% |

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____________

\* Less than 1%

(a) Unless otherwise indicated, the business address of each person or entity named in the table is c/o Lifeway Foods, Inc., 6431 West Oakton St., Morton Grove, IL 60053.

(b) Applicable percentage of ownership is based on 15,281,888 shares of Common Stock outstanding as of the Record Date. Beneficial ownership is determined in accordance with SEC rules and includes voting and investment power with respect to shares. Shares of Common Stock subject to options, warrants, or other convertible securities exercisable within 60 days after the Record Date are deemed outstanding for computing the percentage ownership of the person holding such options, warrants, or other convertible securities, but are not deemed outstanding for computing the percentage of any other person. Except as otherwise noted, the named beneficial owner has the sole voting and investment power with respect to the shares of Common Stock shown. The information in this table is based solely on statements in filings with the SEC or other information made available to the Company that is deemed reliable.

(c) 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) or directors 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). 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).

(d) Includes (i) 22,216 shares held by Ms. Smolyansky on behalf of minor children, (ii) 5,122 shares held by Ms. Smolyansky's spouse, (iii) 500,000 shares held by Smolyansky Family Holdings, LLC (the "Smolyansky LLC") of which Ms. Smolyansky beneficially owns 50%, (iv) 12,111 shares underlying RSUs previously awarded to Ms. Smolyansky and her spouse that will vest within 60 days of the Record Date and may be settled in common stock if Danone consents to such issuance or such consent is no longer required and (v) 118,719 shares of underlying RSUs and PSUs previously issued to Ms. Smolyansky and her spouse which have vested but have not been settled and may be settled in common stock if Danone consents to such issuance or such consent is no longer required. .

(e) Includes 857 shares of common stock underlying phantom stock which represents compensation that has been deferred and may be issued within 60 days of the Record Date if Mr. Chartier ceases to be a director.

(f) Includes 7,362 shares of common stock underlying phantom stock which represents compensation that has been deferred and may be issued within 60 days of the Record Date if Mr. Dalto ceases to be a director.

(g) Includes 873 shares of common stock underlying phantom stock which represents compensation that has been deferred and may be issued within 60 days of the Record Date if Ms. Harris ceases to be a director

(h) Includes 80,874 shares of common stock underlying phantom stock which represents compensation that has been deferred and may be issued within 60 days of the Record Date if Mr. Scher ceases to be a director.

(i) Includes 2,390 shares underlying previously awarded RSUs which will
vest within 60 days of the Record Date.

(j) Danone North America PBC has sole voting and sole dispositive power with regard to 3,454,756 shares of Common Stock. Danone North America PBC is a wholly owned subsidiary of Danone S.A. Danone S.A., by virtue of its relationship to Danone North America PBC, may be deemed to indirectly beneficially own (as that term is defined in Rule 13d-3 under the Act) the shares of Common Stock which Danone North America PBC directly beneficially owns. Danone S.A. disclaims beneficial ownership of such shares of Common Stock for all other purposes. Information presented is based on the Schedule 13D/A Amendment No. 6 filed with the SEC by Danone S.A. on November 15, 2024.

(k) Includes (i) 500,000 shares held by Smolyansky Family Holdings, LLC (the "Smolyansky LLC") of which Mr. Smolyansky beneficially owns 50% and (i) 1,233,333 shares held by the Edward Smolyansky Trust 2/2/16, (iii) 100,000 shares held by Mr. Smolyansky on behalf of a minor child. Mr. Smolyansky shares the power to vote and dispose of the shares held by the Smolyansky LLC with Julie Smolyansky and (iv) 75,000 shares held by The Ludmila and Edward Smolyansky Family Foundation, of which the Mr. Smolyansky and his spouse are directors. Information presented is based on the Schedule 13D/A Amendment No. 21 filed with the SEC by Edward Smolyansky and Ludmila Smolyansky on February 6, 2025 (the "E. and L. Smolyansky Schedule 13D/A"), the Form 4 filed with the SEC by Mr. Smolyansky on March 19, 2026 and information made available to the Company by Mr. Smolyansky.

(l) Includes (i) 732,823 shares held by the Ludmila Smolyansky Trust 2/1/05, of which Ms. L. Smolyansky is the trustee and (ii) 75,000 shares held by The Ludmila and Edward Smolyansky Family Foundation, of which the Ms. Ludmila Smolyansky is a director. Information presented is based on the E. and L. Smolyansky Schedule 13D/A, the Form 4 filed with the SEC by Ms. Ludmila Smolyansky on March 19, 2026 and information made available to the Company by Ms. Smolyansky.

(m) All of the securities reported are directly owned by advisory clients
 of Divisadero Street Capital Management, LP ("Divisadero Management"). None of those advisory clients, other than
 Divisadero Street Partners, L.P. ("Divisadero L.P."), may be deemed to beneficially own more than 5% of the Common
 Stock, no par value. The general partner of Divisadero Management is Divisadero Street Capital LLC ("Divisadero LLC"),
 of which William Zolezzi is the manager. Divsadero Street Partners GP, LLC ("Divisadero GP") is the general partner of
 Divisadero L.P., of which Divisadero LLC is its manager. Each of William Zolezzi and Divisadero LLC may be considered a
 control person. Each of Divisadero Management, Divisadero L.P., Divisadero LLC, Divisadero GP and William Zolezzi disclaims
 beneficial ownership of the reported securities except to the extent of his, her or its pecuniary interest therein. Information
 presented is based on the Schedule 13D/A Amendment No. 1 filed with the SEC by Divisadero on February 13, 2026.

**7.&nbsp;&nbsp;&nbsp;&nbsp; AUDIT MATTERS**

**AUDIT AND CORPORATE GOVERNANCE COMMITTEE**

AUDIT REPORT

The Board has the ultimate authority for effective corporate governance, including oversight of Lifeway's management. The ACG Committee assists the Board in fulfilling its responsibilities by overseeing, among other things, Lifeway's accounting and financial reporting processes (including the internal audit function), the audits of Lifeway's consolidated financial statements and internal control over financial reporting, the qualifications and performance of the independent registered public accounting firm engaged as Lifeway's independent auditor, and the performance and continued retention of Lifeway's internal auditor.

The ACG Governance Committee relies on the expertise and knowledge of management, the internal auditor, and the independent auditor in carrying out its oversight responsibilities. Management is responsible for the preparation, presentation, and integrity of Lifeway's consolidated financial statements, accounting and financial reporting principles, internal control over financial reporting, and disclosure controls and procedures designed to ensure compliance with accounting standards, applicable laws, and regulations. Together with Lifeway's internal auditor, management is also responsible for objectively reviewing and evaluating the adequacy, effectiveness, and quality of Lifeway's system of internal control. Lifeway's independent auditor, Grant Thornton, is responsible for performing an independent audit of the Company's consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States.

During fiscal year 2025, the ACG Committee fulfilled its responsibilities as set forth in its charter and further described above in the "Board Committees" section. The ACG Committee has reviewed and discussed with management, and the independent auditor, Lifeway's audited consolidated financial statements and related footnotes for the fiscal year ended December 31, 2025, and the independent auditor's report on those financial statements. Management represented to the ACG Committee that Lifeway's consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States. Grant Thornton presented the matters required to be discussed with the ACG Governance Committee by Public Company Accounting Oversight Board standards and Rule 2-07 of SEC Regulation S-X. This review included a discussion with management, the internal auditor, and the independent auditor of the quality (not merely the acceptability) of Lifeway's accounting principles, the reasonableness of significant estimates and judgments, and the disclosures in Lifeway's consolidated financial statements, including the disclosures relating to critical accounting policies.

Based on the reviews and discussions described above, the ACG Committee recommended to the Board that the audited consolidated financial statements be included in Lifeway's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 for filing with the SEC.

Respectfully Submitted,

**AUDIT AND CORPORATE GOVERNANCE COMMITTEE**

Jason Scher, Chairperson

Dorri McWhorter

Andee Harris

THE FOREGOING AUDIT AND CORPORATE GOVERNANCE COMMITTEE AUDIT REPORT SHALL NOT BE "SOLICITING MATERIAL" OR BE DEEMED FILED WITH THE SEC, NOR SHALL SUCH INFORMATION BE INCORPORATED BY REFERENCE INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT WE SPECIFICALLY INCORPORATE IT BY REFERENCE INTO SUCH FILING.

Fees Billed by Independent Registered Public Account Firm

The following table sets forth the fees for professional audit services rendered by Grant Thornton in connection with fiscal years ended December 31, 2025 and 2024 and fees billed for other services rendered by Grant Thornton during those periods:

**Fees Billed by Independent Registered Public Accounting Firm**

---

| | | |
|:---|:---|:---|
| **Type of Fees** | **2025** | **2024** |
| (1) Audit Fees | $479932 | $441388 |
| (2) Audit-Related Fees |  |  |
| (3) Tax Fees |  |  |
| (4) All Other Fees | – | – |
|  | $479932 | $441388 |

---

In the above table, in accordance with the SEC's definitions and rules, "audit fees" are fees Lifeway paid to its independent registered public accountant for professional services in connection with the audit of our consolidated financial statements for the fiscal years ended December 31, 2025 and 2024 included in Form 10-K, for the review of the unaudited financial statements included in Form 10-Qs within those fiscal years, and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements; "audit-related fees" are fees for work performed during those fiscal years for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements; "tax fees" are fees for work performed during those fiscal years for tax compliance, tax advice, and tax planning; and "all other fees" are fees for work performed during those fiscal years for any services not included in the first three categories. All of the services set forth in sections (1) through (4) above were approved by the ACG Committee in accordance with its charter.

For the fiscal years ended December 31, 2025 and 2024, we retained certain firms other than Grant Thornton for tax compliance, tax advice, tax planning and other accounting advice.

Pre-Approval of Audit and Non-Audit Services

Lifeway's ACG Committee has adopted policies and procedures for pre-approving all non-audit work performed by its auditors. The policy sets forth the procedures and conditions for both pre-approval of audit-related services to be performed by its auditors (assurance and related services that are reasonably related to the performance of the auditors' review of the financial statements or that are traditionally performed by the independent auditor) and specific pre-approval for all other services for the current fiscal year consistent with the SEC's rules on auditor independence. The ACG Committee is asked to pre-approve the engagement of the independent auditor and the projected fees for audit services for the current fiscal year during the first quarter of each year.

Unless a type of service has received general pre-approval, it will require specific pre-approval by the ACG Committee if it is to be provided by the auditors. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the ACG Committee. In determining whether to approve a particular audit or permitted non-audit service, the ACG Committee will consider, among other things, whether the service is consistent with maintaining the independence of the independent registered public accounting firm. The ACG Committee will also consider whether the independent registered public accounting firm is best positioned to provide the most effective and efficient service to us and whether the service might be expected to enhance our ability to manage or control risk or improve audit quality. Specifically, the ACG Committee has not pre-approved the use of Grant Thornton for non-audit services. There was no non-audit work performed by Grant Thornton for the fiscal years ended December 31, 2025 or December 31, 2024.

**8.&nbsp;&nbsp;&nbsp;&nbsp; OTHER MATTERS**

**Availability of Bylaws**

A copy of the Bylaws may be obtained by accessing our website at www.lifewaykefir.com and by accessing our filings on the SEC's website at www.sec.gov. You may also contact our Corporate Secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for making shareholder proposals and nominating director candidates.

**2025 Annual Report**

Our financial statements for our fiscal year ended December 31, 2025, are included in our Annual Report on Form 10-K, filed with the SEC on March 17, 2026, which we will make available to shareholders at the same time as this proxy statement. Our proxy materials and our annual report are posted on our website at www.lifewaykefir.com and are available from the SEC at its website at www.sec.gov. You may also obtain a copy of our annual report, free of charge, by sending a written request to Lifeway Foods, Inc., 6431 West Oakton Street, Morton Grove, Illinois 60053, Attention: Corporate Secretary.

Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement, and references to our website address in this proxy statement are inactive textual references only.

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