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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act ofEXCHANGE ACT OF 1934

Filed by the Registrant  þ☑

Filed by a Party other than the Registrant  ¨☐

Check the appropriate box:

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 the appropriate box)

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

AND

PROXY STATEMENT 2020

Notice of 20202023 Annual Shareholders Meeting

You are cordially invited to attend the 2023 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, 2022, were first sent or given to our shareholders on or about April 28, 2023.

LIFEWAY FOODS, INC.

6431 Oakton Street

Morton Grove, Illinois 60053

PROXY STATEMENT

2020

2023 ANNUAL MEETING OF SHAREHOLDERS

October 16, 2020June 15, 2023

Table of Contents

1.       INFORMATION ABOUT THE ANNUAL MEETING

General

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 20202023 Annual Meeting of Shareholders to be held on Friday, October 16, 2020, at 2:00 p.m., Central Time,(together with any postponements, adjournments or at any adjournmentother delays thereof, (thethe “Annual Meeting”). Due to the public health impact of the coronavirus outbreak (COVID-19) and toTo support the health and well-being of our employees and shareholders, the Annual Meeting will be held in a virtual meeting format only at the following website: www.meetingcenter.io/294667986.meetnow.global/MA2G2XN. You will not be able to attend the Annual Meeting physically.

To participate in the Meeting, visit www.meetingcenter.io/294667986meetnow.global/MA2G2XN and enter the password and control information included in your proxy card or Notice of Internet Availability of Proxy Materials. Online check-in will begin at 1:30 p.m., Central Time. Please allow time for online check-in procedures.

We planWhy am I receiving these materials?

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

Your vote is very important. Please sign, date and return the proxy card delivered to send ayou with the Notice of Internet Availability of Proxy Materials (the “Notice”) to our shareholders instead of paper copies of our Proxy Statement and 2019 Annual Report to Stockholders. The Notice, which is expected to be mailed to stockholders onin the postage-paid envelope provided, or about September 3, 2020, containsuse the telephone or Internet voting instructions on how to access our materials on the Internet, as well as instructions on obtaining a paper copy of the proxy materials. Thecard or Notice isof 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 a form for voting and presents only an overview oflimit your right to change your vote or to attend the proxy materials.Annual Meeting.

What Amam I Voting On?voting on?

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

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

The Board recommends that you vote your shares:

Who Can Vote?can vote?

Holders of our common stock, par value $.01 per share (the “Common Stock”), as of the close of business on April 17, 2023 (the “Record Date”), may vote at the Annual Meeting. As of the Record Date, there were 14,644,762 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?

How Can I Vote My Securities?

Shareholders of Record. Shareholders of record at the close of business on August 17, 2020 (the “Record Date”)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 stockholdershareholder of record with respect to those shares. If you are a record holder, the Notice isyour proxy materials are being sent to you directly by our transfer agent. Please carefully consider the information contained in this Proxy Statement and, whether or not you plan to attend the Annual Meeting. If you are a stockholdershareholder of record, you may vote your shares in one of the following ways:

	To vote THROUGH THE INTERNET, go to www.investorvote.com/LWAY to complete an electronic proxy card. You will be asked to provide the control information from the enclosed proxy card. Your Internet vote must be received by 11:59 p.m., Central Time on June 14, 2023 to be counted.
	To vote BY PHONE, call 1-800-652-VOTE (8683) and follow the pre-recorded instructions. You will be asked to provide the control information from the enclosed proxy card. Your telephone vote must be received by 11:59 p.m., Eastern Time on June 14, 2023 to be counted.
	To vote BY MAIL, sign, date and return your proxy card promptly to be received no later than June 14, 2023, 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.
	To vote IN PERSON, after you join the meeting, click on the link “Cast your vote” provided on the virtual meeting platform and follow the prompts provided. You will be asked to provide the control information from the Notice.
	To vote THROUGH THE INTERNET, to go www.investorvote.com/LWAY to complete an electronic proxy card. You will be asked to provide the control information from the Notice. Your Internet vote must be received by 11:59 p.m., Central Time on October 15, 2020 to be counted.
	To vote BY PHONE, call 1-800-652-VOTE (8683) and follow the pre-recorded instructions. You will be asked to provide the control information from the Notice. Your telephone vote must be received by 11:59 p.m., Central Time on October 15, 2020 to be counted.
	To vote BY MAIL mark, sign and return your proxy card promptly, if you requested printed copiesor Notice of the proxy materials, so that we can be assuredInternet Availability 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.Proxy Materials.

For our

Beneficial Shareholders:Shareholders. The method of voting by proxy differs for shares held as a record holder and shares held beneficially through another holder of record (sometimes referred to as holding shares in “street name”). If you hold your shares of Common Stock in street name (meaning your shares are held of recordin a brokerage account or by a broker, bank or other nominee),nominee, then you will receive voting instructions from that holderare considered the beneficial owner of record. Ifshares held in street name, and this proxy statement was forwarded to you wishby your broker, bank or other nominee, which is considered the shareholder of record with respect to those shares. As a beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote the shares held in personyour account by following the instructions that your broker, bank or other nominee sent to you. As a beneficial owner, you are also invited to attend the Annual Meeting. However, because you are not the shareholder of record, you may not vote these shares at the meeting,Annual Meeting by ballot unless you must obtain a legal proxy“legal proxy” from your broker, bank or other nominee giving you the holderright to vote the shares.

What is the quorum requirement for the Annual Meeting?

A quorum is the minimum number of record of your shares andrequired to be present itor represented at the meeting.

Quorum; Abstentions; Broker Non-Votes

As ofAnnual Meeting for the Record Date, 15,604,480 shares of Lifeway’s Common Stock, no par value, were issuedmeeting to be properly held under the Company’s bylaws (as amended, the “Bylaws”) and outstanding. We have no other class of securities outstanding.Illinois law. A majority of the aggregate voting power 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”“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 (the “Votes Cast”) with respect to such matter. Abstentions andmatter (the “Votes Cast”). Broker Non-Votesnon-votes (i.e., shares of Common Stock held as of the Record Date by banks, brokers or other custodiansnominees 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 a particular proposal on which the broker has expressly not voted.that matter. Abstentions and Broker Non-Votes, therefore,broker non-votes, if any, will have no effect on proposals that require a plurality orand broker non-votes will have no effect on proposals that require a majority of Votes Cast for approval,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 will havewith respect to which the same effect as a vote “against” proposals requiring any percentagenominee holding those shares (i) has not received instructions from the beneficial owner of the outstanding voting securities for approval. Brokers do not have discretionary authorityshares to vote on the electionparticular 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 directors.record for beneficial owners do not have the discretion to vote on any of the proposals at the Annual Meeting unless they receive voting instructions from the beneficial owners of the shares.

The votes needed to approve each proposal are as follows:

Deadline for ReceiptWhat is the effect of Shareholder Proposals to be Presented at our 2020 Annual Meetinggiving a proxy?

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 our Proxy Statement to be issued in connection with the 2021 Annual Meeting of Shareholders, we must receive such shareholder proposals no later than December 31, 2020. Any such shareholder proposal submitted, including any accompanying supporting statement, may not exceed 500 words, per Rule 14a-8(d)Proxies are being solicited by and on behalf of the Exchange Act. All shareholder proposals must be made in writingBoard. The Board has designated our Chief Executive Officer (“CEO”), Julie Smolyansky, and addressedour Chief Financial Officer (“CFO”), Eric Hanson, and each or any of them, as proxies to Lifeway’s Secretary, c/o Lifeway Foods, 6431 Oakton St., Morton Grove, IL 60053.

Proxy Card and Revocabilityvote the shares of ProxyCommon Stock solicited on its behalf.

You may vote your proxy as described above under “How Can I Vote My Shares?”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 as follows:

NOTE: If you hold your shares through a broker in “street name,” your broker will not be allowed to vote on Proposal One unless you direct your broker as to such vote.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 and at any continuation, postponement or adjournment thereof.Meeting. The Board knows of no other items of business as of the date of this Proxy Statementproxy statement that will be presented for consideration at the Annual Meeting other than those described in this Proxy Statement. In addition, we did not receive any shareholder proposals or nominations on a timely basis, so no such matters may be brought to a vote at the Annual Meeting.proxy statement.

Can I change my vote or revoke my proxy?

Shareholder of Record. If you vote by proxy,are a shareholder of record, you may revoke that proxy orcan change your vote at any time before it is voted at the Annual Meeting. Shareholders of record mayor revoke your proxy by:

Street Name Shareholder. If you are a proxy or change their vote prior to the Annual Meeting by delivering a written notice of revocation, a duly executed proxy bearing a later date, or by attending the Annual Meeting and voting in person. Attending the Annual Meeting will not, by itself, revoke a proxy. Ifstreet name shareholder, then your shares are held in the name of abroker, bank broker, or other nominee can provide you maywith instructions on how to change or revoke your vote by submitting new voting instructions to your bank, broker, or other nominee.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).

Dissenters’ RightAm I entitled to dissenters’ right of Appraisalappraisal?

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.

AvailabilityHow 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 Proxy Materialsthese proxy materials. By signing, dating and Solicitation of Proxiesreturning 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 Notice and, if requested, this Proxy Statement, the accompanying Noticeproxy materials.

The original solicitation of Annual Meeting of Stockholders, the proxy card, and the Annual Report, which consists of the Company’s 2019 Form 10-K.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.

We may supplement the original solicitation of proxies by mail by certainCopies of our directors, executive officers,solicitation materials will also be made available upon request to brokers, banks and regular employees, without additional compensation, in person,other nominees to forward to the beneficial owners of the shares held of record by such brokers, banks or by telephone, e-mail, or facsimile. We will not pay any additional compensationother nominees. The Company expects to directors, executive officers, or regular employees for such services. We may 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 the solicitation materialsmaterial to thosesuch 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 approved bycalled “householding,” which the SEC called “householding.”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 the annualour 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 postage 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 not 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 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 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 2024 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 2024 annual meeting of shareholders (the “2024 Annual Meeting”), we must receive such shareholder proposals no later than December 31, 2023. 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 March 17, 2024. All shareholder proposals and proxy solicitation notices must be made in writing and addressed to Lifeway Foods, Inc., 6431 Oakton St., Morton Grove, IL 60053, (847) 967-1010.Attn: Corporate Secretary.

AttendingThe 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 2024 Annual Meeting,

To participate 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 Meeting, visit www.meetingcenter.io/294667986Bylaws. To be timely, a shareholder’s written notice must be received by our Corporate Secretary at our principal executive offices no earlier than February 16, 2024, and enter the password and control information included in your Notice of Internet Availability of Proxy Materials. Online check-in will begin at 1:30 p.m., Central Time. Please allow time for online check-in procedures.

no later than March 17, 2024.

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, Julie Smolyansky.

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.       PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING

PROPOSAL ONE: ELECTION OF DIRECTORS

The Board currently consists of eight (8) directors, all of whom have been nominated for re-election. Each nominee has consented to being named as a nominee for election as a director and has agreed to serve if elected. Ludmila Smolyansky (“Ms. L. Smolyansky”) has been nominated for election to the Board pursuant to that certain Settlement Agreement, dated July 27, 2022, by and among the Company, Ms. L. Smolyansky and Edward Smolyansky, as amended on November 7, 2022, which requires that the Board shall take all necessary actions to nominate, submit to shareholders, recommend and solicit proxies for (in a manner no less favorable than its solicitation on behalf of other nominees of the Board) Ms. L. Smolyansky for re-election as director. At the Annual Meeting, directors will be elected to serve a term of office expiring at the 20212024 Annual Meeting of Shareholders or until their successors are elected and duly qualified, subject, however, to their prior death, disability, resignation, retirement, disqualification, or removal from office.qualified.

Shareholders and their proxies are being asked to vote on these eight (8) persons nominated for the Board:

PROPOSAL TWO: RATIFY MAYER HOFFMAN McCANN P.C.GRANT THORNTON AS OUR INDEPENDENT AUDITOR FOR FISCAL YEAR 20192023

At a meeting held on August 7, 2020,March 23, 2023, Lifeway’s Audit and Corporate Governance Committee unanimously recommended the reappointmentappointment of Mayer Hoffman McCann P. C.Grant Thornton LLP (“MHM”Grant Thornton”) as our independent registered public accounting firm for the fiscal year ending December 31, 2020.2023. The Board considers the selection of MHMGrant Thornton to be in the best interests of Lifeway and our shareholders. While the Audit and Corporate Governance 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 Audit and Corporate Governance Committee first engaged MHMGrant Thornton on September 12, 2015,December 6, 2022 and MHMGrant Thornton has been our independent registered public accounting firm since that date for periods ending after December 31, 2014.that date. A representative of MHMGrant 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.

Change in Auditor

Mayer Hoffman McCann P.C. (“MHM”) had been engaged as the Company’s independent registered public accounting firm since 2015 and, as previously disclosed, on June 8, 2022, MHM notified the Company that it would not stand for re-election. MHM audited our financial statements for our fiscal year ended December 31, 2021 and December 31, 2020, and reviewed the fiscal quarters ended March 31, 2022, June 30, 2022 and September 30, 2022, which were prepared in accordance with U.S. GAAP. Upon the completion of MHM’s audit and reviews for such periods, MHM’s engagement was completed.

As previously disclosed, on December 6, 2022, the Audit and Corporate Governance Committee approved the engagement of Grant Thornton as the Company’s registered public accounting firm for the Company’s fiscal year ending December 31, 2022.

As previously reported, on April 29, 2022, the Audit and Corporate Governance Committee of the Board of Directors of the Company, after discussion with management and MHM, concluded that the Company’s previously issued (i) audited consolidated financial statements for the year ended December 31, 2020, and (ii) unaudited consolidated financial statements for the periods ended March 31, 2020, June 30, 2020, September 30, 2020, March 31, 2021, June 30, 2021, and September 30, 2021 (collectively, the “Affected Periods”) should be restated and no longer relied upon due to material errors in the recording of deferred income taxes related to indefinite-lived intangible assets associated with the 2009 acquisition of Fresh Made, Inc. The error resulted in a $1.18 million understatement of both deferred income tax liabilities and goodwill of as of January 1, 2020, but had no impact on the Company’s liquidity or cash position. The Company restated the audited consolidated financial statements for the Affected Periods (collectively the “Restatement”) and corrected the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its 2021 Form 10-K.

Ratification

The approval of the ratification of the appointment of MHMGrant Thornton as our independent auditors for the fiscal year ending December 31, 20202023 requires the affirmative vote of a majority of the Votes Cast. If the shareholders fail to ratify the selection, the Audit and Corporate Governance Committee may, but is not required to, reconsider whether to retain MHM.Grant Thornton. Even if the selection is ratified, the 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 and MHM for services rendered with respect to fiscal years 2022 and 2021, respectively, 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.”

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, and 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”) even though the last shareholder vote on the “Frequency of Say on Pay” recommended a Say on Pay Vote every three years. 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 Commitment: Pay for Performance

We know that our investors favor compensation plans for our executives tied to specific performance measures that incentivize long-term performance and value creation. In 2019, only 52.5% of the votes cast supported our Say on Pay Proposal. Shareholders we spoke to after our 2019 Say on Pay Proposal requested increased independent control of compensation, in particular for individuals related to any executive officer or director, and increased independent oversight of our compensation practices more generally. We listened and implemented changes previously reported. In 2022, 95.6% of the votes cast on the Say on Pay proposal were cast for approval, on a non-binding advisory basis, the compensation paid to our named executive officers in 2021.

Following last year’s annual meeting, we have continued to review and improve our compensation related processes and procedures. Some of those changes are set forth below

AtAs further discussed, under “Consent by Danone to Equity Issuances,” Lifeway, we are committedmembers of the Smolyansky family, and Danone signed a Shareholders’ Agreement dated October 1, 1999. Under this Agreement, as amended, Danone must give its consent to four ideals: using only all-natural, hormone-certain issuances of Common Stock.

To date, Danone has not provided consent to issuances of equity as compensation to Julie Smolyansky. The Compensation Committee does not believe it is in the best interest of the shareholders to use cash in lieu of equity to compensate Named Executive Officers, regardless of who they are. The Company and GMO-free ingredients, global philanthropy, environmental responsibility,the Compensation Committee have attempted to reach an agreement with Danone to amend the Shareholders' Agreement and local farming sustainability. We believe that strong and effective corporate governancecome to terms over what, if any, equity awards Danone would consent to. The Compensation Committee continues to review what is the foundationappropriate equity and non-equity incentive awards to our CEO. As part of our effortsbenchmarking and analysis process, the Compensation Committee determined that Lifeway’s peers, as well as numerous other publicly traded corporations led by founders and/or controlling shareholders, make such awards to pursue these idealstheir named executive officers and create(even when such named executive officers also hold substantial or controlling stakes in those companies). In the past we have converted equity awards that could not be issued to cash based on the fair market value of the shares at the time of conversion. However, the Compensation Committee has not recommended such conversion for 2020, 2021 and 2022 grants and we continue to search for a meaningful impactresolution that will allow us to utilize equity compensation.

The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the overall compensation of our named executive officers. This vote is advisory only and is not binding on the Company or the Board. Although the vote is non-binding, our Board values the opinions of our shareholders and the Board, and the Compensation Committee will consider the outcome of the vote when making future compensation decisions for our named executive officers.

Accordingly, we ask our shareholders to vote in our world.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 2023 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission.”

3.       CORPORATE GOVERNANCE AT LIFEWAY

Our shareholders elect the Board, of Directors, 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 section:Directors”:

Key Governance Policies

Strong Clawback Policy

To help support accountability among our management team, the Board has adopted a specific clawback policy. Ourpolicy 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 March 24, 2023 and applies to incentive compensation that is approved, awarded or granted to executive officers and other senior executives who participate in our Omnibus Plan are subject to this comprehensive policy.on or after that date. 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 seektake other remedial and recover action, as determined by the Board to recover payments of incentive-based compensation awards, after considering the methods, costs, and benefits of doing so. Lifeway notifies each person receiving incentive-based compensation awards that the Board may elect to recover some or all of those awards if the performance results that led to an incentive payment are later subject to a restatement or other adjustment that would reduce the size of that payment. The Board or Committee may also seek recovery of up to the entire amount of any incentive compensation awarded during a period where a covered participant committed a significant legal or compliance violation.such excess amounts. 

Executive and Director Stock Ownership and Holding Policy

ToThe Company has in place a stock ownership and holding policy to better align the interests of the our executive officers and independentnon-employee directors with the interests of stockholdersshareholders and further promote our commitment to sound corporate governance, in 2018, ourwhich the Board adopted a stock ownership and holding policy, which it administers, interprets, and construes.

Under the policy, our executive officers are required to own Lifeway Common Stock valued at 100%200% of their annual base salary. 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 with this minimum level each January 1^st (for executive officers) or July 1^st (for directors). 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^st and July 1^st. 

The policy also requires each independentnon-employee director to own Lifeway Common Stock valued at 100%200% of the annual retainer payable to such director. The policy provides that if Lifeway awards shares to independentnon-employee directors, those directors must retain 50% of all net shares (post tax) that vest until the director meets the minimum share ownership requirement and 25% of all such net shares thereafter. This individual minimum level is then recalculated each year when an independenta non-employee director is elected or re-elected to the Board. Our policy requires independentnon-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^st and July 1^st.

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.

During fiscal year 2019,2022, Ms. Julie Smolyansky and Mr. Smolyansky satisfied the executive officer stock ownership requirements, and Mr. Hanson and Ms. Feldman and Mr. Hass were progressing toward attaining their applicable requirements. Ms. Levy, Ms. McWhorter, Mr. Bernardi andScher, Mr. Sikar and Ms. Ludmila Smolyansky satisfied the independentnon-employee director ownership requirements during fiscal year 2019,2022, and Mr. Scher wasDalto and Mr. Sanchez were progressing toward attaining histhe applicable requirement. Ms. Levy and Ms. McWhorter were not appointed as directors until February 11, 2020 and June 26, 2020, respectively.requirements.

The ownership levels of our named executive officers and directors are set forth in Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related StockholderShareholder Matters” 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 and Rule 10b5-1 Sales Plans

Consistent with our Corporate Governance Guidelines, we have an insider trading policy that prohibits our officers, directors, and certain other employees and persons from engaging in, among other things, short sales; hedging of stock ownership positions; trading in options, puts, calls, or other derivative instruments relating to Lifeway’s common stock; or buying Lifeway common stock on margin. Our policy also prohibits pledging Lifeway’s common stock as collateral for a loan without prior approval of Lifeway’s designated compliance officer and the Board of Directors.Board. Our insider trading policy does permit our officers, directors, and employees to enter into trading plans complying with Rule 10b5-1 under the Exchange Act.

4.       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.

Since 2002 and until 2022, we have maintained separate positions of Chairperson of the Board and Chief Executive Officer, and, sinceOfficer. Our Chairperson of the Board is currently our CEO. In 2018 we established the position in 2018,of Lead Independent Director. 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, the chairperson of the Audit and Corporate Governance Committee also serves as the Board’s Lead Independent Director. TheIf our Chairperson is not independent, as is currently the case, the Lead Independent Director presides over meetings of independent directors.directors, and fulfills certain functions of the Chairperson instead of the Chairperson. The Chairperson (or the Lead Independent Director if the Chairperson is not an independent director) may provide input on the design of the board itself, and may require Board consideration of, and the Board may override the CEO on, any risk matters. Periodically, our Audit and Corporate Governance Committee assesses these roles and the board leadership structure to ensure the interests of the Company and its stockholders are best served.

Currently, LudmilaJulie Smolyansky serves as Chairperson of the Board, Julie Smolyansky asBoard. She is also our Chief Executive Officer, andOfficer. Jason Scher asis our Lead Independent Director. These positions are distinct and can be workable for leaders have an excellent working relationship and offer Lifewaywith a complementary array of skills, knowledge, and abilities. We believe that our leadership structure, with a separate Chiefan Executive Officer, Chairperson of the Board and a Lead Independent Director, is optimal for us because it allocates authority, responsibility, and oversight among management and key Board members. The Board believes having CEO serve in both capacities allows her to more effectively execute the Company's strategic initiatives and business plans and confront its challenges. A combined Chairperson and CEO structure provides the Company with decisive and effective leadership with clearer accountability to our stockholders and customers. The combined role is both counterbalanced and enhanced by the effective oversight and independence of our Board and the independent leadership provided by our Lead Independent Director.

Lead Independent Director Responsibilities

In addition to roles discussed above, the Lead Independent Directors’ responsibilities, include, among other things:

Board Composition

Our Board believesis committed to diversity of experience, gender, race and ethnicity, and seek to ensure that there is diversity of thought among our directors. Our Board believes that its directors should be of a diverse group of individuals who have broad experience and the ability to exercise sound business judgment. The Company believes that diversity of thought stems from many factors including professional experience, life experience, socio-economic background, gender, race, ethnicity, religion, skill set, and geographic representation. The Company believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge, abilities, and shareholder and community representation that will allow the board to fulfill its responsibilities.

In August 2021, the SEC approved a Nasdaq Stock Market proposal to adopt new listing rules relating to board diversity and disclosure. As approved by the SEC, the new Nasdaq listing rules require all Nasdaq listed companies to disclose consistent, transparent diversity statistics regarding their boards of directors. The rules also require most Nasdaq listed companies to have, or explain why they do not have, at least two diverse directors, including one who self-identifies as female and one who self identifies as either an under-represented minority or LGBTQ+. The Board Diversity Matrix below presents the board’s diversity statistics in the format prescribed by the Nasdaq rules.

The Board seeks to include members with diverse backgrounds, skills, and experience, including appropriate financial and other expertise relevant to our business. The Board’s current composition demonstrates our success in building such a group:

*Additionally, one director disclosed that they are permanently disabled and one director disclosed that they are a former Ukrainian refugee.

Information About Our Nominees

LUDMILA SMOLYANSKY was appointed as a Director by the Board to fill a vacancy created by an increase of the maximum number of Directors up to seven and unanimously elected as the Chairperson of the Board in November 2002. Mrs. Smolyansky has been the operator of several independent delicatessen and gourmet food distributorship businesses, and imported food distributorships, and been a leading force in the health food market for over 40 years. Mrs. Smolyansky and Michael Smolyansky founded Lifeway and Mrs. Smolyansky served as our General Manager. In 2010, Mrs. Smolyansky retired as a Lifeway employee. She has continued to serve Lifeway as its Chairperson of the Board and as a full-time consultant since 2011. Mrs. Smolyansky devotes as much time as necessary to Lifeway’s business and currently holds no other directorships in any other reporting company. Mrs. Smolyansky is the mother of Julie Smolyansky (the President, Chief Executive Officer, and a Director of the Company) and Edward Smolyansky (the Chief Operating Officer and a Director of the Company).

Mrs. Smolyansky brings many years of food industry experience, historical perspective, and operational expertise to the Board. As Chairperson of the Board, Mrs. Smolyansky guides the Board in analyzing our strategic development. She brings to bear her historical knowledge of our business and industry to advise the Board on what strategies have been and can be successful and why. Mrs. Smolyansky’s business acumen allows her to lead the Board in long-term strategic planning. Her significant consumer products experience and international food industry background provide her with a broad understanding of the operational, financial, and strategic issues facing public companies like ours. In addition, as a founder and pioneer in cultured dairy, Mrs. Smolyansky has been a recognized leader in the organic and natural products industry for decades. Her in-depth knowledge about Lifeway, other manufacturers, and distributors and retailers across varying channels of distribution make her well qualified for service on our Board.

JULIE SMOLYANSKY was appointed as a Director and elected President and Chief Executive Officer of Lifeway by the Board of Directors to fill the vacancies in those positions created by the death of her father, Michael Smolyansky, in June 2002. She was appointed as Secretary effective as of January 1, 2020. She is a graduate with a bachelor’s degree from the University of Illinois at Chicago. Prior to her appointment, Ms. Smolyansky spent six years as Lifeway’s Director of Sales and Marketing. Ms. Smolyansky also served as Lifeway’s Chief Financial Officer and Treasurer from 2002 to 2004. Under her leadership, Lifeway has brought its products into the mainstream, boosted annual revenues tenfold, and expanded distribution throughout the United States, Mexico, the UK,United Kingdom, and Ireland, as well as portions of Central and South America and the Caribbean. She has been named to Fortune Business’s ‘40 under 40,’ Fortune’s 55 Most Influential Women on Twitter and Fast Company’s Most Creative People in Business 1000. She holds no other directorships in any other reporting company. Ms. Smolyansky is the daughter of Ludmila Smolyansky (the Chairperson of the Board)(Director), and brothersister of Edward Smolyansky (the(Former Chief Operating Officer and a Director of the Company). Ms. Smolyansky’sThe Smolyansky family maintains a controlling interest in the Company, and the Board believes it is appropriate to provide for continuity of the representation of the Smolyansky family on the Board as a component of ourLifeway’s succession planning strategy. Ms. Smolyansky has served as Chairperson of the Board since August 2022.

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; companyCompany 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.

EDWARD SMOLYANSKYJC DALTO was elected as a Director of the Company in June 2017August 2022. He has over 30 years of experience in the agriculture and is Lifeway’s Chief Operating Officer.food and beverage industries. In 2000, Mr. Smolyansky was appointedDalto 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 FinancialExecutive 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 Accounting Officerzero fossil-based plastic packaging by 2025, and Treasurer of Lifeway in November 2004 and appointednet zero carbon emissions by 2030. From October 2022 through present Mr. Dalto has served as the Chief OperatingExecutive Officer of Savencia Fromage & Dairy, Americas. Mr. Dalto serves on the boards of directors of Milkaut S.A., Argentina. Mr. Dalto has extensive experience in de-commoditizing agri-business derived foods and Secretarydrinks into added-value, functional, nutritional, health and wellness products, and has executed on sustainable and profitable growth business models in 2012. He resigned his titles as Chief Financial Officer on January 1, 2016previous roles. Mr. Dalto previously attended the Buenos Aires Institute of Technology and as Chief Accounting Officer on August 8, 2016. Mr. Smolyansky retained his title of Chief Operating Officer whenhas post-graduate degrees from the Board appointed Mr. Hanson as Treasurer and Mr. Haas as Secretary on October 4, 2019. He also served as Lifeway’s Controller from June 2002 until 2004. He received his bachelor’s degree in finance from Loyola University of Chicago in December 2001. He holds no other directorships in any other reporting company. Mr. Smolyansky is the brother of President, CEO and Secretary, Julie Smolyansky,Michigan and the son of Lifeway’s Chairperson of the Board, Ludmila Smolyansky.London Business School. Mr. Smolyansky’s family maintainsDalto is also a controlling interestcertified Professional Coach from Integral Coaching Canada and has organized and led campaigns leading to Global Environmental Change in the Company, and the Board believes it is appropriate to provide for continuity of the representation of the Smolyansky family on the Board as a component of our succession planning strategy.Latin America.

Mr. Smolyansky brings to the Board over fifteen years of extensive financialDalto’s has deep industry, brand management and operationsgrowth experience in the dairy and consumer packagedconsumer-packaged goods industries, which makes himsector. His business insights as a valuable contributorBoard member will provide significant value to the Board. Under his operational leadership, Lifeway has successfully integrated several strategic acquisitionsbrand and successfully ledsupport the development of both manufacturing processesLifeway mission to grow profitably, sustainably and products.consciously and make Mr. 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; brand marketing; operations; mergers, acquisitions and divestitures; competitive product positioning; history; company culture; and all other aspects of Lifeway’s operations. As the Chief Operating Officer and former Chief Financial Officer of a publicly traded company, Mr. Smolyansky brings experience working with the investor community and financial institutions. In addition, as a member ofDalto well qualified for service on our founding family, Mr. Smolyansky is a recognized leader in the dairy and probiotic products industry with an in-depth knowledge of manufacturers, distributors, and retailers across all our channels of distribution.

Board.

POL SIKAR has served as a Lifeway director since our inception in February 1986. He holds a master’s degree from the Odessa State Institute of Civil Engineering in Russia. For more than 40 years, he has been President and a major shareholder of Montrose Glass & Mirror Co., a company providing glass and mirror products to the wholesale and retail trade in the greater Chicago area. Mr. Sikar devotes as much time as necessary to the business of the Company and currently holds no other directorships in any other reporting company.

Mr. Sikar brings a historical perspective to the Board along with executive and entrepreneurial experiences that provide Lifeway with insights into operational and strategic planning, and financial matters. His longtime service and institutional knowledge about Lifeway provide him with a broad understanding of the operational, financial, and strategic issues facing public companies like ours. His executive, operational, and financial experience make him well qualified for service on our Board.

RENZO BERNARDIJODY LEVY was elected as a director of Lifeway to fill a vacancy on the Board on February 11, 2020. Ms. Levy is an entrepreneur, having founded many different types of companies. She has also acted as chief executive officer of companies at all stages of development from inception to operating with $200mm in 1994. Mr. Bernardiannual revenue. In 2013, Ms. Levy founded World Waters, LLC, the parent company of WTRMLN WTR and served as its Creative Director and Chief Executive Officer from founding until the company’s sale in 2020. Ms. Levy is currently the Presidentchief executive officer and foundera director of Renzo & Sons, Inc.Summit Group Endeavors LLC (since January 2021) and Summit Series LLC (since September 2020), related companies that produce annual ideas conference for the thought leaders of our time. Since January 2021, Ms. Levy has also been a dairydirector of Summit Junto LLC, an entity related to Summit Group Endeavors LLC and food serviceSummit Series LLC, which produces global events. In 2020, Ms. Levy founded, and has since served as chief executive officer of LabElymental, a company whichthat helps people get healthy and happy, and NeroPraxis, a mind repatterning meditation app. As chief executive officer of companies at all stages of development, Ms. Levy has lead all departments within a company and understands the department functions and the intersection among them and how to optimize, manage and scale corporate efficiency and production. Ms. Levy has been a partner in, businessand advisor to, GEM&BOLT Mezcal since 1969 (formerly, Renzo-Milk Distribution Systems). He2014. She also served as a director of Pinata, a company that offers a system for data driven task management for work, from 2017 to 2019. Ms. Levy has nearly 50 yearsa Bachelor of experience inArts from School of the dairy distribution industry. Mr. Bernardi is a graduateArt Institute of Instituto Tecnico E Commerciale of Macomer, Sardinia. Mr. BernardiChicago. Ms. Levy devotes as much time as necessary to theLifeway business of the Company and currently holds no other directorships in any other reporting company.

Mr. Bernardi brings nearly half a centuryMs. Levy’s breadth of experience in the dairy industry, with a focus on dairy supplymanufacturing, marketing and distribution, along with historical perspective and executive and entrepreneurial experiences to the Board. His background provides Lifeway with insights into operational and strategic planning, andsale of consumer packaged goods, specifically health foods, as well as her financial matters. His longtime service and institutionalexpertise, depth of knowledge about Lifeway provide himall aspects of manufacturing companies and her leadership experience make her well qualified to be a member of our Board.

DORRI MCWHORTER was elected as a Director of the Company in August 2020. Ms. McWhorter became CEO of YMCA Chicago in 2021. From 2013 until 2021, Ms. McWhorter was the CEO of YWCA Metropolitan Chicago transforming the organization from a traditional social service organization to 21st Century social enterprise. Increasing impact and organizational sustainability, YWCA Metropolitan Chicago’s operating budget quadrupled. The organization has been an active contributor to many critical initiatives across the region, and under Ms. McWhorter’s leadership, YWCA Metropolitan Chicago expanded its service footprint to 10 new locations, completed seven mergers and acquisitions, implemented paid family leave and developed a retirement plan to include retirement options for thousands of childcare providers and small business owners. Ms. McWhorter led the effort to develop an exchange-traded fund (ETF) for women’s empowerment (NYSE: WOMN) in partnership with Impact Shares, which is the first non-profit investment advisor to develop an ETF product. Ms. McWhorter is a 2019 Inductee in the Chicago Innovation Hall of Fame. Ms. McWhorter is also a Certified Public Accountant (CPA). Prior to joining the YWCA, she was a partner at Crowe Horwath, LLP, one of the largest accounting firms in the U.S. She also held senior positions with Snap-on Incorporated and Booz Allen Hamilton.

Ms. McWhorter serves on the boards of directors of William Blair Funds and Skyway Concession Company (Chicago Skyway), NexPoint Capital, and LanzaTech Global Inc. (NASDAQ: LNZA). She is also active in the accounting profession and serves on the Financial Accounting Standards Advisory Council and having served as a member of the Board of Directors of the American Institute of Certified Public Accountants (AICPA) and 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 received 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.

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 operational, financial, and strategic issues facing publichealth related companies like ours. His executive, operational,Her industry and financial experience particularly in the dairy industry, make himher well qualified for service on our Board.

PERFECTO SANCHEZ was elected as a Director of the Company in August 2022. He is a West Point graduate and decorated U.S Army Veteran with two combat tours to Iraq. He started his corporate career at Kraft Heinz, where he launched MiO Liquid Water Enhancer, which grossed over $100 million in its first year and is regarded as one of Kraft’s most successful innovations to date. In 2013, Mr. Sanchez joined Danone where he led portfolio strategy and trade finance for over half of the dairy portfolio and then ultimately went on to lead the Danone Waters Customer Marketing Team for North America. In 2014, Mr. Sanchez launched his own marketing consulting firm called Keep The Change, a growth consulting initiative with a purpose. At Keep The Change, Mr. Sanchez serves as the chief executive officer and head of growth. He and his team build social impact initiatives across a myriad of different sectors from working with local governments to billion-dollar startups. Mr. Sanchez currently serves on the board of directors at TechTarget Inc. (Nasdaq: TTGT), a publicly traded company, and as an Advisor at International Crisis Group and Build in Tulsa. He is also an Ambassador of Mission Blue, a global coalition aimed at protecting marine life.

Mr. Sanchez’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. Sanchez well qualified for service on our Board.

Jason Scher, Director

JASON SCHER was elected as a Director of the Company to fill a vacancy on the Board of Directors in July 2012. Mr. Scher is a principal at JAMP, LLP, an angel investment fund. From 2016 to present Mr. Scher has been a principleprincipal investor and advisor focused on early-stage companies.  From 2004 until 2016, Mr. Scher was the Chief Operating Officer of Vosges Haut-Chocolat, a leading manufacturer of super premium chocolate and confections in the US. From 2006 to 2018 he was a Managing Member of South Shore Developers Group, a real estate development company focused on affordable housing in the Chicago Area. From 2000 to 2004, Mr. Scher was a principal in RP3 Development, a New York based construction management and development company that performed work nationwide. Prior to that, Mr. Scher was employed by COSI Sandwich Bar in their real estate and construction group. Mr. Scher devotes as much time as necessary to the business of the Company and currently holds no other directorships in any other reporting company.

Mr. Scher brings manufacturing, financial and strategic experience to the Board, including a record of operational excellence in the food industry, and strategic experience across multiple industries from real estate to retail to the Board. In addition, he has advised a private company board; been an operational, team, and project leader; and served as a senior executive for nearly twenty years. His experience has provided him with a broad understanding of the operational, financial, and strategic issues facing public companies like ours. His industry, operational, and financial experience makes him well qualified for service on our Board.

Pol Sikar, Director

Jody Levy was appointedPOL SIKAR has served as a Lifeway director of Lifeway to fillsince our inception in February 1986. He holds a vacancy onmaster’s degree from the Board on February 11, 2020. Ms. Levy, is the founder, Creative Director and Chief Executive Officer of World Waters, LLC, the parent company of WTRMLN WTR and also a partner in, and advisor to, various brands including GEM&BOLT Mezcal, Bulletproof, Thrive Market, Parsley Health, The WELL, Inscape, Pinata and more. Ms. Levy has a Bachelor of Arts from School of the ArtOdessa State Institute of Chicago. Ms. LevyCivil Engineering in Russia. For more than 40 years, he has been President and a major shareholder of Montrose Glass & Mirror Co., a company providing glass and mirror products to the wholesale and retail trade in the greater Chicago area. Mr. Sikar devotes as much time as necessary to Lifewaythe business of the Company and currently holds no other directorships in any other reporting company.

Ms. Levy’s breadthMr. Sikar brings a historical perspective to the Board along with executive and entrepreneurial experiences that provide Lifeway with insights into operational and strategic planning, and financial matters. His longtime service and institutional knowledge about Lifeway provide him with a broad understanding of the operational, financial, and strategic issues facing public companies like ours. His executive, operational, and financial experience in manufacture, marketing and sale of consumer packaged goods, specifically health foods, and her financial expertise and business experience as investor and as Chief Financial Officer make her a valuable addition tohim well qualified for service on our Board.

Ms. McWhorter isLUDMILA SMOLYANSKY was appointed as a Director by the CEOBoard to fill a vacancy created by an increase of the YWCA Metropolitan Chicago, a social enterprise which includes an e-commerce platform, YShop.orgmaximum number of Directors up to seven and health platform, WomensHealthExchange.org. Dorri is a CPA by background and her experience includes partner at Crowe Horwath (2008-2013) and head of internal audit at Snap-on Tools (2006-2007). Dorri is an independent board director of William Blair Funds (since 2019) and a board director and Audit Committee Chairperson of Skyway Concession Company (since 2018). Dorri isunanimously elected as the 2020 Chairperson of the Board in November 2002. Ludmila Smolyansky has been the operator of Directorsseveral independent delicatessen and gourmet food distributorship businesses, and imported food distributorships, and been a leading force in the health food market for over 40 years. Michael Smolyansky, her husband, founded Lifeway and Ms. L. Smolyansky served as our General Manager. In 2010, Ms. L. Smolyansky retired as a Lifeway employee. She continued to serve Lifeway as its Chairperson of the Illinois CPA Society. DorriBoard until August 2022 and served as a consultant to Lifeway from 2011 until January 2022. Ludmila Smolyansky currently holds a BBAno other directorship in Accounting from Universityany other reporting company. She is the mother of Wisconsin – Madison and MBA from Kellogg SchoolJulie Smolyansky (the Chief Executive Officer of Management at Northwestern University.the Company).

Ms. Dorri’s breadth of experience in health platforms, and her financial and accounting expertise and business experience as Chief Financial Officer make her a valuable addition to our Board. In addition, Ms. McWhorterL. Smolyansky has been an operational, team,nominated for election to the Board pursuant to that certain Settlement Agreement, dated July 27, 2022, by and project leader;among the Company, Ms. L. Smolyansky and servedEdward Smolyansky, as amended on November 7, 2022, which requires that the Board shall take all necessary actions to nominate, submit to shareholders, recommend and solicit proxies for (in a senior executive, board member and community leader for over twenty years. Her experience has provided her with a broad understandingmanner no less favorable than its solicitation on behalf of other nominees of the financial,Board) Ms. L. Smolyansky for re-election as director. Ms. L. Smolyansky brings many years of food industry experience, historical perspective, and strategic issues facing health related companies like ours.operational expertise to the Board. Her industry and financial experience makesknowledge qualified her well qualified for service on our Board.

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. Bernardi,Dalto, Ms. Levy, Ms. McWhorter, Mr. Sanchez, Mr. Scher and Mr. Sikar and Ms. McWhorter, 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.

TheEach of the Audit and Corporate Governance Committee and the Compensation Committee is composed solely of independent directors. In addition, the Board and the Audit and Corporate Governance Committeeeach 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 Audit and Corporate Governance Committeeeach 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 in an uncontested election must be elected by a majority of the Votes Cast at the Annual Meeting in an uncontested election, or by a plurality of the Votes Cast at the Annual Meeting 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 (1)(i) the failure to receive the required vote at the annual meeting at which they face election or re-election and (2)(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 Audit and Corporate Governance 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 Audit and Corporate Governance 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. During the 20202023 fiscal year, the Board intends to hold at least four regularly scheduled meetings 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, 20192022 (the “Last Fiscal Year”), the Board held eight Board13 meetings. Except for Renzo Bernardi, who attended five of eight Board meetings, and Jason Scher who was recovering from illness attended four of eight Board meetings and 2 of 8 ACGC meetings, allAll directors standing for re-election who served on the Board during the Last Fiscal Year attended at least 75% of the total number of meetings of the Board and of the committees of the Board on which they served in the Last Fiscal Year.Year except for Mr. Dalto. Mr. Dalto joined the Board on August 31, 2022 with prior obligations conflicting with certain of the Board’s previously scheduled meetings.

Pursuant to our Corporate Governance Guidelines, the Board expects attendance by Directors at Lifeway’s annual meetings. Five of our current directors attended the 2022 Annual Meeting of Shareholders Each of the directors standingnominated for re-election who served on the Board during the Last Fiscal Year attended the 2019 Annual Meeting of Shareholders and each of the nomineesthis year currently intends to attend this 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, itsthe Audit and Corporate Governance Committee and individual directorsthe 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 budget and financial forecasts, and how Lifeway’s performance aligns with our strategy and goals. The Board looks to the focused expertise of its Audit and Corporate Governance Committee and Compensation Committee to inform its oversight.

The Board’s Risk Oversight

The Board of Directors 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 Audit and Corporate Governance Committee or the Compensation Committee is responsible for oversight of specific risk topics. For example, the Audit and Corporate Governance 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.exposures and the Compensation Committee manages the risk that compensation incentivizes the desired outcomes and goals of the Company.

Our management team regularly reports to the Board and its committees to discuss short-term, intermediate-term and long-term risks, including liquidity risk, compliance risk, operational risk, reputational risk, strategic and business risk and ESG risk (including, but not limited to, climate change risk). These reports assist in the Board’s oversight of risk management and the ongoing evaluation of management controls. As discussed below, our Audit and Corporate Governance Committee and Compensation Committee each oversee certain areas of risk management. Each committee consists entirely of independent directors and provides regular reports to the Board regarding matters reviewed at their committee meetings. The committees meet regularly in executive sessions with members of senior management with regard to our risk management processes, controls, talent and capabilities. The Board believes that these meetings help promote an effective ongoing risk dialogue between the Board and management.

As highlighted in detail below, the Board also has oversight responsibility of risks relating to Lifeway’s compensation policies and practices. At each regular meeting, or more frequently as needed, the Board considers reports from management and the Audit and Corporate GovernanceCompensation Committee that provide detail on risk management issues and management’s response. Lifeway believes that its leadership structure promotes effective Board oversight of risk management because management provides the Board, directly and through the Audit and Corporate Governance Committee, the information necessary to appropriately monitor, evaluate, and assess our overall risk management.

Our Board’s Audit and Corporate Governance 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 Audit and Corporate GovernanceCompensation Committee, in 2019 and through May 2020 and the Board’s independent directors, the Board dischargeddischarges its responsibilities related to compensation of Lifeway’s executive officers and administers our incentivecash 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.

In 2019,2022, the Audit and Corporate GovernanceCompensation Committee engaged the Lockton CompaniesAon Consulting, Inc. (“Lockton”AON”) as its independent compensation consultant to advise it on executive officer, senior management and director compensation matters. As part of its engagement in 2019,2022, the Audit and Corporate Governance Committee directed LocktonAON to work with our General Counsel, our Human Resourceshuman resources department and other members of management to obtain information necessary for LocktonAON to evaluate compensation of executive officers, senior management and directors.

The Audit and Corporate GovernanceCompensation Committee tasked LocktonAON with developing a compensation strategy for 20202022 built on Lockton’sAON’s and the Audit and Corporate GovernanceCompensation Committee’s prior work and reflects the compensation philosophy described above. Previously, in 2018, Locktonthis proxy statement. AON reviewed our comparative peer group with management and the Compensation Committee and suggested several refinements to it, which the Audit and Corporate GovernanceCompensation Committee approved. Lockton selected companies primarily focused on food/beverage manufacturing or agribusiness based on net sales, market capitalization, recent and anticipated growth, and similarity of management structure.Additional information about peer group selection can be found in “Compensation Overview.”

Using the refined peer group, LocktonAON analyzed the peer group’s comparative total direct compensation practices and mix of pay against Lifeway’s executive officer total direct compensation practices generally as well as for fiscal year 2019 and proposed recommendations regarding the amount and mix of base and incentive compensation to be delivered to our executive officers, senior management team and directors for fiscal year 2020.2022.

During 2019, Lockton2022, Aon performed no other services for Lifeway. The Audit and Corporate GovernanceCompensation Committee believed that there was no conflict of interest based on any prior relationship with Lockton.AON. In reaching this conclusion, the Audit and Corporate GovernanceCompensation Committee considered the factors set forth in the SEC and Nasdaq rules regarding compensation advisor independence.

Lockton’s engagement was terminated in the first quarter of 2020. The newly formed Compensation Committee is undergoing a process to identify and engage a new independent compensation consultant to assist in a review of the compensation philosophy described above and the compensation strategies, structures and amounts for 2020 and to propose changes it determines to be beneficial to the goals of the Company as well as developing a compensation strategy for 2021 and beyond.

The Board’s Director Nominations Oversight

Led by the Audit and Corporate Governance Committee and the Board’s independent directors, the Board selects and evaluates qualified candidates for election or appointment to the Board, including by identifying individuals qualified to become Board members and members of Board committees; nominates director nominees for the next annual meeting of shareholders or for appointment to vacancies on the Board; and identifies individuals to serve as our executive officers.

There are no specific minimum qualifications that the Board believes that a director nominee must meet. However, the Board 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 Board considers diversity together with other factors considered when evaluating candidates but does not have a specific diversity requirement.

The Board meets in advance of each of Lifeway’s annual meetings of shareholders to identify and evaluate the skills and characteristics of each potential nominee for election as one of our directors. The Board reviews the candidates in accordance with the skills and qualifications set forth in its Corporate Governance Guidelines and by Nasdaq rules. The Board evaluates all director candidates in the same manner, regardless of whether a shareholder or some other source recommends them.

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

Both theThe Board and the Audit and Corporate Governance Committee havehas 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 Audit and Corporate Governance Committee and/or the Board on data protection and cybersecurity matters from senior members of our information technology department, legal 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.

Board Committees

Controlled Company Exemption

Because Ludmila Smolyansky, Julie Smolyansky, and Edward Smolyansky, acting as a group, (the “Smolyansky family”) beneficially own a majority of Lifeway’s outstanding Common Stock, we qualify as a “controlled company” pursuant to Nasdaq Listing Rule 5615. We believe that having the Smolyansky family as a significant part of a long-term-focused, committed, and engaged stockholder base provides us with an important strategic advantage, particularly in a business with a mature, well-recognized brand. We desire to remain independent and family-controlled, and we believe the Smolyansky family shares these interests. As a controlled company, we are exempt from the requirements to have separate, independent compensation and nominating committees; a majority of independent directors on our Board; or independent directors comprising a majority of the Board select nominees for director or determine the compensation of its officers.

As a result of our use of the controlled company exemption, our corporate governance practices differ from those of non-controlled companies, which are subject to all of the Nasdaq corporate governance requirements. Specifically, while we continue to maintain a majority of independent directors on the Board and to ensure that a committee of those independent directors select director nominees and determine the compensation of our officers, we have not, in the past, maintained separate compensation or nominating committees. In May, 2020, the Board of Directors formed a separate Compensation Committee and adopted a Compensation Committee Charter. Mr. Scher and Ms. Levy were appointed as members of the newly constituted Compensation Committee. In the event we cease to be a controlled company, we will be required to comply with all of the corporate governance standards under Nasdaq’s rules, subject to applicable transition periods.

Audit and Corporate Governance Committee

To eliminate unnecessary redundancies in our independent committee structure given the size of our company and Board, and in reliance on the controlled company exemptions described above, we have chosen to combine our audit and nominating committees into an Audit and Corporate Governance Committee (ACG Committee).Committee. The ACGAudit and Corporate Governance Committee, which is a separate and independent committee comprised of a majority of the Board’s independent directors, fulfills the Board’s delegated audit and nominating duties as a single, integrated committee. The ACG Committee also fulfilled the function of a Compensation Committee until May 2020 when the Board of Directors formed a Compensation Committee.

All members of the Audit and Corporate Governance Committee are independent directors, as defined in the applicable rules for companies traded on Nasdaq. The Board of Directors has adopted a written charter for the Audit and Corporate Governance Committee. The Board and the Audit and Corporate Governance Committee most recently reviewed the charter in August 2020 and do so at least annually.

The Audit and Corporate Governance Committee consisted of Messrs. Sikar and Scher in 2019, as well as now-former director George Sent. Mr. Sent was the Chairperson of the Committee and Lead Independent Director until January 24, 2020. Mr. Scher replaced Mr. Sentserves as athe Chairperson of the Audit and Corporate Governance Committee and Lead Independent Director on January 24, 2020 and Ms. Levy, replacedMs. McWhorter, Mr. SentSanchez and Mr. Sikar serve as a membermembers of the Audit and Corporate Governance Committee on February 11, 2020.Committee.

The Board has determined that each member of the ACGAudit and Corporate Governance 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 and Ms. McWhorter 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.

The ACG Committee held eight meetings in 2019.

During our fiscal year ended December 31, 2022, the Audit and Corporate Governance OversightCommittee held 14 meetings (including regularly scheduled and special meetings).

Audit and Corporate Governance

The ACGAudit and Corporate Governance 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 ACGAudit and Corporate Governance 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 ACGAudit and Corporate Governance Committee, and not management. The ACGAudit and Corporate Governance 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 Audit and Corporate Governance Committee is responsible for the review and oversight of all related party transactions and other potential conflict of interest situations between and among Lifeway and its officers, directors, employees, and principal shareholders. The ACGAudit and Corporate Governance 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 ACGAudit and Corporate Governance 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 ACGAudit and Corporate Governance Committee also provides oversight to management when Lifeway conducts succession planning or searches for individuals to serve as executive officers.

The Audit and Corporate Governance Committee does not have specific minimum qualifications that it believes that a director nominee must meet. However, the ACGAudit and Corporate Governance 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 ACGAudit and Corporate Governance Committee considers diversity together with other factors considered when evaluating candidates but does not have a specific diversity requirement.

The ACGAudit and Corporate Governance Committee meets in advance of each of our annual meetings of shareholders to identify and evaluate the skills and characteristics of each director candidate for nomination for election as a director. The Audit and Corporate Governance Committee reviews the candidates in accordance with the skills and qualifications set forth in the ACGAudit and Corporate Governance Committee Charter and the rules of the SEC and Nasdaq. The Audit and Corporate Governance Committee evaluates all director nominees on the same basis, regardless of whether the nominee is recommended by a director, management, or a shareholder.

Executive and Non-Employee Director Compensation Committee

Finally, as discussed in more detail inThe Compensation Committee is a standing committee of the Board. The Compensation DiscussionCommittee’s principal purposes are to review and Analysis below, in 2019approve corporate goals and through May 2020 the ACG Committee also discharged the Board’s responsibilities relatedobjectives relevant to compensation of Lifeway’s executive officers, senior executives,the Company’s Named Executive Officers (as defined below), make recommendations regarding compensation for non-employee directors and non-employee directors. The ACG Committee administered ouradminister the Company’s incentive and equity compensation plans. The ACGCompensation Committee’s objectives and philosophy with respect to the fiscal 2022 executive compensation program, and the actions taken by the Compensation Committee in fiscal 2022 with respect to the compensation of our Named Executive Officers, are described below in “Compensation Overview.”

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

Mr. Scher serves as the Chairperson of the Compensation Committee and Ms. Levy and Ms. McWhorter serve as members of the Compensation Committee.

The ACGBoard has determined each member of the Compensation Committee was empowered to engage independent compensation consultants to advise it on executive and non-employee director compensation matters. These independent consultants, and any other outside advisors that the ACG Committee elected to engage, reported directly to the ACG Committee,is “independent” as defined by applicable SEC rules and the ACGlisting standards of NASDAQ. During our fiscal year ended December 31, 2022, the Compensation Committee had the sole power to terminate or replace its independent compensation consultant or other advisors at any time.held five meetings (including regularly scheduled and special meetings). 

Committee Interlocks and Insider Participation

During fiscal year 2019,2022, the Audit and Corporate GovernanceCompensation Committee consisted of Messrs.Mr. Scher, Sikar,Ms. Levy and Sent or Lee. Effective January 11, 2019, Mr. Sent replaced Mr. Lee on the Committee.Ms. McWhorter. None of these members was, at any time during fiscal year 2019,2022, or at any previous time, a Lifeway officer or employee.

None of Lifeway’s executive officers served as a member of the board of directors or compensation committee of any other entity that has one or more of its executive officers serving as a member of Lifeway’s Board. No member of the Audit and Corporative GovernanceCompensation Committee has or had any relationship with us requiring disclosure under Item 404 of Securities and Exchange CommissionSEC Regulation S-K.

Fiscal Year 20192022 Director Compensation

The table below describes the cash and stock award portions of the annual retainer earned or paid to each non-employee director who served in fiscal year 2019. While directors receive annual retainers based on the June-to-June Board service year, the table below reflects payments made during fiscal year 2019. Ms.2022. Julie Smolyansky and Mr. Edward Smolyansky received no compensation for her service as directors.director. We have excluded themher from the table because we fully describe theirher compensation in the “Named Executive Officer Compensation”“NEO Summary Compensation for Fiscal Years 2022 and 2021” section.