Edward Smolyansky Denounces Firing at Lifeway Foods (NASDAQ: LWAY), Urges Board to Return Equity to Employees

Rhea-AI Summary

Lifeway Foods (NASDAQ: LWAY) faces internal turmoil as Edward and Ludmila Smolyansky, who own 28% of shares, protest the dismissal of Amy Feldman, Senior Executive VP of Sales, on February 28, 2025. The firing occurs amid controversy over CEO Julie Smolyansky's recent compensation package, including a $2 million cash bonus and 283,337 shares valued at $6.5 million, representing 94% of the company's 2024 net income.

The share award is currently under litigation due to lack of required consent from major investor Danone North America. Edward and Ludmila Smolyansky demand

• Transparency regarding Feldman's termination
• Rescission of CEO's share award
• Distribution of equity to employees
• Release of Q1 2025 financial reports

The Smolyanskys have submitted a full slate of Board nominees for the 2025 Annual Meeting, pushing for leadership changes and improved governance.

Positive

• None.

Negative

• Senior EVP of Sales Amy Feldman, key strategist, was terminated
• CEO awarded $8.5M compensation (94% of 2024 net income) without proper authorization
• Ongoing litigation over unauthorized share issuance to CEO
• Revenue growth reportedly declining
• Employee morale reportedly declining
• Corporate governance issues with major investor Danone excluded from decisions

Insights

Corporate Governance Expert

This proxy battle at Lifeway Foods reveals serious governance concerns that investors should carefully monitor. Edward and Ludmila Smolyansky, 28% shareholders, are directly challenging management decisions following the termination of a key executive who led the company's growth strategy. The timing of this firing - shortly after CEO Julie Smolyansky received a $2 million cash bonus and stock awards worth approximately $6.5 million - raises significant red flags.

Most concerning is that this CEO compensation package allegedly represents 94% of Lifeway's 2024 net income and was reportedly issued without required consent from Danone North America, resulting in ongoing litigation. Such outsized executive rewards amid claims of declining revenue growth could signal governance dysfunction.

The Smolyanskys' proxy contest and board nominations represent a formal escalation that typically disrupts company operations and creates uncertainty. Their demands for transparency around the termination, rescission of the CEO's share award, and immediate release of Q1 financials suggest deep mistrust in current leadership practices.

For the company to resolve this conflict, the board must address these governance challenges transparently. Contested elections often lead to operational challenges, management distraction, legal expenses, and potential leadership changes that will affect Lifeway's strategic execution regardless of outcome.

Financial Analyst

The proxy fight at Lifeway Foods exposes concerning financial allocation priorities that present material risks to investors. The core issue centers on executive compensation: CEO Julie Smolyansky's $8.5 million total package ($2 million cash bonus plus $6.5 million in equity) allegedly equals 94% of the company's entire 2024 net income.

This extraordinary compensation ratio raises questions about board oversight and capital allocation discipline. For context, S&P 500 CEOs typically receive compensation packages representing a much smaller percentage of company profits. Such disproportionate executive rewards can signal governance weaknesses that often correlate with underperformance.

The claim that this equity award violated required consent procedures with Danone (a major shareholder) compounds the governance concern, as evidenced by resulting litigation. Meanwhile, the termination of the Sales EVP, described as the architect of the company's growth strategy, creates execution risk at a time when shareholders allege declining revenue momentum.

Edward Smolyansky's demand for releasing preliminary Q1 2025 figures suggests concern about potentially deteriorating financial performance that isn't yet visible to the market. The ongoing proxy contest will create additional legal and administrative costs while distracting management from operational execution - all factors that could pressure margins in coming quarters.

CHICAGO, April 8, 2025 /PRNewswire/ -- Edward Smolyansky, who, together with Ludmila Smolyansky, beneficially owns 4,163,141 shares of common stock (approximately 28% of outstanding shares), today issued a statement in response to the recent dismissal of Amy Feldman, Senior Executive Vice President of Sales at Lifeway Foods (NASDAQ: LWAY) and key architect of the company's renewed vision and revitalized strategy, known internally as "Lifeway 2.0."

Lifeway Foods abruptly eliminated Feldman's senior leadership position on February 28, 2025, despite Feldman being widely credited for developing Lifeway's modern sales and growth strategy. Feldman was one of only three officers of the company at the time of her termination. Her removal sends a chilling signal to employees and shareholders alike.

"Terminating Amy Feldman at this critical time is not just poor judgment — it's a direct blow to the teams she led and the vision she helped build," said Edward Smolyansky. "This is a textbook example of retaliation and consolidation of power under a leadership team that continues to disregard the talent and effort behind Lifeway's success."

The firing comes just weeks after the Board awarded CEO Julie Smolyansky a $2 million cash bonus and 283,337 shares of stock, with a grant date value of approximately $6.5 million¹, an award equaling over 94% of the company's 2024 net income. Those shares were issued without securing required consent from Danone North America, Lifeway's largest outside investor, and have become the subject of ongoing litigation.¹

Now, in the wake of Feldman's removal, Edward and Ludmila are calling for immediate corrective action from the Board, including:

1. A transparent explanation of the rationale behind the decision to terminate Amy Feldman and whether the Board was consulted or aware of the decision in advance.
2. A full rescission of the recent share award to CEO Julie Smolyansky and the transfer of that equity to Lifeway's employees through a transparent, rank-and-file equity incentive plan.
3. An immediate end to the anti-shareholder, anti-employee culture that continues to erode the foundation that Lifeway was built upon.
4. An immediate release of Lifeway's preliminary Q1 2025 financial reports to provide transparency and restore investor confidence.

"We've now seen Lifeway remove the largest outside investor from the table, strip the company of its most effective sales leader, and reward insiders with millions — all while the company's revenue growth and morale continue to decline," said Edward Smolyansky. "This is not leadership. This is self-preservation masquerading as management."

Edward and Ludmila Smolyansky recently submitted a full slate of Board nominees for election at the 2025 Annual Meeting and continue to advocate for meaningful leadership change. Their preliminary proxy statement, filed with the Securities and Exchange Commission on March 28, 2025, outlines their case for new leadership, improved governance, and a renewed focus on long-term shareholder and employee value.

"For any Lifeway employee wondering what's next: we see you, we support you, and we will not stop fighting for a company culture that respects and rewards your contribution."

For more information about the 2025 Lifeway Foods Proxy Campaign, follow Edward Smolyansky on LinkedIn and visit FreeLifeway.com, which provides information about the nomination letter and associated SEC filings.

¹Based on the December 19, 2024 closing price of $22.90 per share.

 

View original content:https://www.prnewswire.com/news-releases/edward-smolyansky-denounces-firing-at-lifeway-foods-nasdaq-lway-urges-board-to-return-equity-to-employees-302423770.html

SOURCE Edward and Ludmila Smolyansky

FAQ

What led to the controversy at Lifeway Foods (LWAY) in April 2025?

The controversy arose from the termination of SVP Sales Amy Feldman and CEO Julie Smolyansky's $8.5M compensation package, which included shares issued without Danone's required consent.

How much of Lifeway Foods (LWAY) do Edward and Ludmila Smolyansky own?

They beneficially own 4,163,141 shares, representing approximately 28% of outstanding shares.

What is the value of CEO Julie Smolyansky's contested 2024 compensation package at LWAY?

The package includes a $2M cash bonus and 283,337 shares worth $6.5M, totaling $8.5M - equal to 94% of 2024 net income.

What actions are the Smolyanskys demanding from Lifeway Foods (LWAY) board?

They demand transparency about Feldman's firing, rescission of CEO's share award, employee equity distribution, and release of Q1 2025 financials.

What corporate governance changes are proposed for Lifeway Foods (LWAY) in 2025?

The Smolyanskys submitted a full slate of Board nominees for the 2025 Annual Meeting to implement leadership changes and improve governance.