Concerns Raised by Edward Smolyansky Regarding Lifeway Foods' Recent Decisions and Announcements

Edward Smolyansky, a significant stakeholder in Lifeway Foods, has recently issued a statement that sheds light on the company's troubling trajectory, focusing particularly on its amended 2024 Annual Report and concerning disclosures on executive compensation. Alongside his partner Ludmila Smolyansky, Edward controls about 27% of Lifeway's common stock, granting him a substantial voice in its management and governance. In his statement, he outlines several key issues that have raised eyebrows among investors and shareholders alike.

Possible Delay of the 2025 Annual Meeting of Shareholders

On March 13, 2024, Smolyansky presented a comprehensive list of Board nominees for Lifeway's upcoming Annual Meeting slated for 2025. Despite this, he expresses disappointment that the company has not yet filed a preliminary or definitive proxy statement indicating its own candidates. Edward raises concerns about potential delays in the shareholders’ meeting, fearing that the Board may attempt to postpone it beyond the legally stipulated date of June 2, 2025. He states, “The filing of the amended 2024 Annual Report and other steps taken recently by the Company suggest to me that the Board is planning to delay the 2025 Annual Meeting.” This situation is particularly alarming because it hints at a broader strategy by the Board to sidestep accountability, notably under the leadership of CEO and Chair Julie Smolyansky.

Smolyansky warns that such tactics would constitute further hostility toward shareholders, a group that is already grappling with doubts regarding the decisions made by the Board, particularly concerning the rejection of Danone's acquisition offer, which could have significantly benefited shareholders.

Exec Compensation and Governance Issues

Edward highlights an unsettling reality regarding the Board's recent compensation decisions. Notably, Julie Smolyansky received a massive $2 million retention bonus and a hefty equity grant of $6.5 million, without any apparent justification. Given that Lifeway experienced a 20.6% decline in earnings, such lavish rewards have raised eyebrows and led to accusations that the Board's actions prioritize executive interests over those of shareholders.

Moreover, Smolyansky criticizes the company’s reliance on an aggressive legal strategy aimed at suppressing dissent from its largest shareholders, including himself and his partner. Lifeway has launched several lawsuits against them, leading to questions surrounding governance and the responsible allocation of shareholder funds. Legal disputes, such as those involving former executives and a failed trade infringement suit against their new venture, Pure Culture Organics™, have only added to the turmoil, with prior claims being permanently barred from being refiled. Edward articulates frustration over what he perceives as frivolous and retaliatory legal actions, stating, “Every lawsuit filed against me has either been dismissed, dropped, or defeated.”

The Role of Leadership and Legal Oversight

Compounding the issues within Lifeway is the absence of an internal legal department following its disbandment in early 2020, which leaves the company dependent on external legal counsel for managing numerous litigations. This arrangement has raised concerns over the associated costs borne by shareholders without benefiting the company. Edward draws attention to Jason Burdeen, CEO Julie Smolyansky's husband, who has assumed control over legal matters despite lacking formal legal training. In 2024, Burdeen reportedly received a compensation package of $313,800, significantly up from the previous year, leading to concerns about the appropriateness of his bonus and his influence in the absence of a qualified legal department.

Moving Forward: Calls for Change

As the Lifeway Board appears to stall accountability, Edward and Ludmila Smolyansky remain resolute in their commitment to advancing the interests of shareholders. They are determined to prompt the Board to schedule the 2025 Annual Meeting and proceed with the necessary director elections without further delay. The ongoing situation adds an interesting dynamic for Lifeway shareholders, signaling potential upheaval in the company's leadership structure.

For additional updates on the upcoming proxy campaign and information related to Lifeway Foods, interested individuals can follow Edward Smolyansky on LinkedIn or visit FreeLifeway.com, where more details regarding the nomination letter and SEC filings are available.

As Lifeway Foods navigates these tumultuous waters, shareholders will be keen to see how the company responds to the ongoing scrutiny and whether they will take steps towards a governance model that truly reflects shareholder interests.