WWW.EXFILE.COM, INC. -- 888-775-4789 -- LIFEWAY FOODS, INC. -- DEF 14A
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
Proxy
Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
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the Registrant þ
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Preliminary
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Confidential,
for Use of the Commission Only (as permitted by
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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LIFEWAY
FOODS, INC.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
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LIFEWAY
FOODS, INC.
6431 W.
OAKTON
MORTON
GROVE, IL 60053
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 19, 2009
TO OUR
SHAREHOLDERS:
You are
invited to be present either in person or by proxy at the Annual Meeting of
Shareholders of Lifeway Foods, Inc., an Illinois corporation (the “Company”), to
be held at the Holiday Inn North Shore, 5300 West Touhy Avenue, Skokie, Illinois
60077, on June 19, 2009 at 2:00 p.m. local time (the “Meeting”), to consider and
act upon the following:
1.
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The
election of six Directors to serve until the next meeting or until their
successors are duly elected and qualified.
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2.
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The
ratification of the appointment of Plante & Moran, PLLC, as
independent auditors for the next fiscal year.
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3.
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The
transaction of such other business as may properly come before the Meeting
or any adjournments thereof.
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Only
shareholders of Common Stock of record at the close of business on May 22, 2009
will be entitled to notice of and to vote at the Meeting. The stock transfer
books of the Company will remain open.
WE INVITE
EACH OF YOU TO ATTEND THE MEETING. IF YOU CANNOT ATTEND, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENVELOPE PROVIDED. NO
STAMP IS NECESSARY IF MAILED IN THE UNITED STATES.
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BY
ORDER OF THE BOARD OF DIRECTORS
Ludmila
Smolyansky
Chairperson
of the Board
Skokie,
Illinois
June 5,
2009
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LIFEWAY
FOODS, INC.
PROXY
STATEMENT
PROCEDURAL
MATTERS
THIS
PROXY STATEMENT IS FURNISHED TO THE SHAREHOLDERS OF LIFEWAY FOODS, INC., AN
ILLINOIS CORPORATION (THE “COMPANY” or “LIFEWAY”), IN CONNECTION WITH THE
SOLICITATION OF PROXIES BY AND ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY TO BE VOTED AT THE ANNUAL MEETING OF SHAREHOLDERS (THE “MEETING”) TO BE
HELD AT 2:00 P.M., LOCAL TIME, ON JUNE 19, 2009, OR AT ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
Shareholders
of record of Common Stock of the Company at the close of business on May 22,
2009 (the “Record Date”), will be entitled to notice of and to vote at the
Meeting. The Meeting will be held at the Holiday Inn North Shore, 5300 West
Touhy Avenue, Skokie, Illinois 60077. Proxies received prior to the Meeting will
be voted in accordance with the instructions contained in the proxy and, if no
choice is specified, will be voted in favor of each nominee for Director named
in this Proxy Statement and in favor of each other proposal set forth in this
Proxy Statement. A shareholder who signs and returns the enclosed proxy may
revoke it at any time before it is voted by a written revocation delivered to
any of the proxy holders named therein, by submitting another valid proxy
bearing a later date or by attending the Meeting and voting in person.
Beneficial owners wishing to vote at the Meeting who are not shareholders of
record on the Company’s books (e.g., persons holding in street name) must bring
to the Meeting a Power of Attorney or proxy in their favor signed by the holder
of record in order to be able to vote.
SOLICITATION
OF PROXIES
This
Proxy Statement and the form of proxy are first being mailed to the shareholders
beginning approximately June 5, 2009. All of the costs and expenses
in connection with the solicitation of proxies with respect to the matters
described herein will be borne by the Company. In addition to solicitation of
proxies by mail, the directors, officers and investor relations staff (who will
receive no compensation therefore in addition to their regular remuneration) of
the Company named herein may solicit the return of proxies by telephone,
telegram or personal interview. As of this date, the Company has retained
Computershare Investor Services (“Computershare”), an outside firm, to solicit
proxies solely from individual shareholders of record and to print proxy notices
and other related materials. The services provided by Computershare to the
Company are expected to cost approximately $6,000. The Company has also retained
Automatic Data Processing, Inc. (“ADP”), at an approximate cost of $3,000, to
contact banks, brokerage houses and other custodians, nominees and fiduciaries
with requests to forward copies of the proxy materials to their respective
principals and to request instructions for voting the proxies. The expenses of
such banks, brokerage houses and other custodians, nominees and fiduciaries in
connection therewith are covered by the estimated fee to be paid by the Company
to ADP. Action may be taken on the business to be transacted at the Meeting on
the date specified in the Notice of Meeting or on any date or dates to which
such Meeting may be adjourned.
VOTING OF
PROXIES
A form of
proxy is enclosed for use at the Meeting if a shareholder is unable to attend in
person. Each proxy may be revoked at any time thereafter by writing to the
Secretary of the Company prior to the Meeting, by execution and delivery of a
subsequent proxy, or by attendance and voting in person at the Meeting, except
as to any matter or matters upon which, prior to such revocation, a vote shall
have been cast pursuant to the authority conferred by such proxy. Shares
represented by a valid proxy which if received pursuant to this solicitation and
not revoked before it is exercised, will be voted as provided on the proxy at
the Meeting or at any adjournment or adjournments thereof.
VOTING
SECURITIES AND VOTE REQUIRED
Only
holders of the 16,815,920 shares of Common Stock, no par value per share, of
record outstanding at the close of business on May 22, 2009 (the “Record Date”),
will be entitled to vote at the Meeting. Each holder of Common
Stock is
entitled to one vote for each share held by such holder. The presence, in person
or by proxy, of the holders of a majority of the outstanding shares of Common
Stock is necessary to constitute a quorum at the Meeting. Under the rules of the
Securities and Exchange Commission (the “SEC”), boxes and a designated blank
space are provided on the proxy card for shareholders to mark if they wish to
withhold authority to vote for one or more nominees for Director and for
Proposal 2. Votes withheld in connection with the election of one or more of the
nominees for Director or Proposal 2 will be counted as votes cast against such
individuals or Proposal 2 and will be counted toward the presence of a quorum
for the transaction of business. If no direction is indicated, the proxy will be
voted for the election of the nominees for Director and for Proposal 2. The form
of proxy provides for withholding of votes with respect to the election of
Directors and a shareholder present at the Meeting also may abstain with respect
to such election.
ANNUAL
REPORT ON FORM 10-K
This
Proxy Statement is accompanied by the Company’s Annual Report on Form 10-K, for
the fiscal year ended December 31, 2008, as amended (the “Annual Report”).
Shareholders are referred to the Annual Report for information concerning the
Company’s business and operations, but the Annual Report is not part of the
proxy soliciting materials.
PROPOSAL
1: ELECTION OF DIRECTORS
Six
Directors are to be elected at the Meeting. The Company’s Board has a maximum
number of Directors equal to seven, however the Company has determined to
intentionally keep one seat vacant at this time. Directors will be elected at
the Meeting to serve until the next annual meeting of shareholders of the
Company or until each of their successors shall be duly elected and qualified.
As noted, unless otherwise indicated thereon, all proxies received will be voted
in favor of the election of each of the six nominees of the Board named below as
Directors of the Company. Should any of the nominees not remain a candidate for
election at the date of the Meeting (which contingency is not now contemplated
or foreseen by the Company), proxies solicited thereunder will be voted in favor
of those nominees who do remain candidates and may be voted for substitute
nominees elected by the Board. The six nominees receiving the highest number of
affirmative votes of the shares present or represented and entitled to be voted
for them shall be elected as Directors. Votes withheld from any Director are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business, but have no other legal effect under Illinois
law. Each of the nominees (other than Gustavo Carlos Valle) is
currently serving as a Director of the Company.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE TO ELECT THE DIRECTORS NOMINATED HEREIN TO SERVE
AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A
SHAREHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
The names
of the nominees and certain information with regard to each nominee
follows:
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NAME
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AGE
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TITLE
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Ludmila
Smolyansky
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58
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Director
and Chairperson of the Board of Directors
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Julie
Smolyansky
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33
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CEO,
President, and Director
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Pol
Sikar
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60
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Director
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Renzo
Bernardi
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56
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Director
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Gustavo
Carlos Valle
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45
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Director
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Julie
Oberweis
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34
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Director
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NOMINEES
FOR ELECTION AS DIRECTORS
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. For more than
20 years, Mrs. Smolyansky has been the operator of several independent
delicatessen, gourmet food distributorship businesses and imported food
distributorships. In 2002, prior to the commencement of her tenure as a
Director, she was hired by the Company as its General Manager.
Mrs. Smolyansky
devotes as much time as necessary to the business of the Company and currently
holds no other directorships in any other reporting company.
Mrs. Smolyansky is the mother of Julie Smolyansky (the President, Chief
Executive Officer (CEO), and a Director) and Edward P. Smolyansky (the Company
Treasurer and Chief Financial and Accounting Officer).
JULIE
SMOLYANSKY was appointed as a Director, and elected President, CEO, CFO and
Treasurer of the Company 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 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 the Company’s Director of Sales and Marketing. She currently holds no
other directorships in any other reporting company. Ms. Smolyansky is the
daughter of Ludmila Smolyansky, the Chairperson of the Board. In 2004, Ms.
Smolyansky resigned as CFO and Treasurer and Edward Smolyansky,
Ms. Smolyansky’s brother, was appointed to such positions.
POL SIKAR
has been a Director of the Company since its inception in February 1986. He
is a graduate with a Master’s degree from the Odessa State Institute of Civil
Engineering in Russia. For more than 11 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 holds no other directorships in any other reporting
company.
RENZO
BERNARDI has been a Director of the Company since 1994. Mr. Bernardi is the
president and founder of Renzo & Sons, Inc., a Dairy and Food Service
Company which has been in business since 1969 (formerly, Renzo-Milk Distribution
Systems). He has over 30 years of experience in the dairy distribution
industry. Mr. Bernardi is a graduate of Instituto Teonico E Commerciale of
Macomer, Sardinia. Mr. Bernardi holds no other directorships in any other
reporting company.
GUSTAVO
CARLOS VALLE is an Argentinian citizen and was appointed President and CEO of
the Dannon Company, Inc. effective April 1, 2009. Mr. Valle joined
Danone Argentina in 1996 as Vice President Finance where he became CEO of
Danone Waters Argentina in 2002. Two years later, he was appointed CEO of
Danone Brazil. Mr. Valle graduated in Economics from Buenos Aires
University in Argentina. Mr. Valle holds no other directorships in
any other reporting company. Mr. Valle has been designated by DS Waters LP (as
the related successor to The Dannon Company, Inc.) (“Dannon”) to be its
representative to the Board in accordance with the terms of that certain
Stockholder’s Agreement, as amended, between the Company and
Dannon.
JULIE
OBERWEIS has served as a director of the Company since June 2006.
Ms. Oberweis is the co-founder and CFO of Stratigent, LLC, a web analytics
consulting company. Prior to Stratigent, she worked in investment consulting at
Cambridge Associates as well as at Ritchie Capital. She currently
sits on the board of Oberweis Group, Inc., the holding company of Oberweis
Dairy, and the DuPage Childrens Museum. Julie holds a degree in finance from the
University of Illinois and is a Chartered Financial Analyst
(CFA) charterholder. Ms. Oberweis holds no other directorships
in any other reporting company.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)
of the Securities and Exchange Act of 1934 requires the Company’s Officers and
Directors, and persons who own more than 10% of a registered class of the
Company’s equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors, and greater than 10% shareholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on its review of copies of such
reports received or representations from certain reporting persons, the Company
believes that, during the year ended December 31, 2008, other than the
filings listed below, all other Section 16(a) filing requirements applicable to
its officers, Directors and 10% shareholders were timely met. Those filings
were:
(1) Edward
Smolyansky reported one transaction on each of three Form 4s late; (2) Julie
Smolyansky reported one transaction on one Form 4 late; and (3) Ludmila
Smolyansky reported one transaction on one Form 4 late.
BOARD AND
COMMITTEE MEETINGS
During
2008, the Company’s Board of Directors held five regular meetings (the Company’s
annual meeting of shareholders and Directors and two quarterly meetings). In
2008, four of six Directors attended the Company’s annual meeting. Each director
attended at least 75% of all meetings of our board of directors and committees
on which he or she served that were held during 2008. Shareholders of
the Company may send communications to the Board of Directors via the Company’s
Investor Relations department, which makes such communications available to the
Directors as appropriate, to LIFEWAY FOODS, INC., 6431 W. OAKTON, MORTON GROVE,
IL 60053, telephone (847) 967-1010, fax (847) 967-6558. The Investor
Relations department can be reach via email at: [email protected].
The
Company’s Audit Committee (the “Audit Committee”) consists of Mr. Sikar,
Ms. Oberweis and Mr. Bernardi, each of whom has an understanding of finance
and accounting and is able to read and understand fundamental financial
statements. Audit Committee members are appointed by the full
Board.
The
functions of the Audit Committee are to review the Company’s internal controls,
accounting policies and financial reporting practices; to review the financial
statements, the arrangements for and scope of the independent audit, as well as
the results of the audit engagement; to review the services and fees of the
independent auditors, including pre-approval of non-audit services, the
auditors’ independence; and recommend to the Board of Directors for its approval
and for ratification by the shareholders the engagement of the independent
auditors to serve the following year in examining the accounts of the Company.
No member of the Audit Committee is a “financial expert,” as defined in
Item 407 of Regulation S-K. The Board examined the qualifications of
its Audit Committee members and determined that the present members of the Audit
Committee were sufficiently capable of performing the duties of the Audit
Committee in 2008 without being “financial experts” within the definition
provided in Item 407 of Regulation S-K promulgated by the
SEC.
The Board
of Directors does not have a standing nominating committee, compensation
committee or any committees performing similar functions. As there are only six
Directors currently serving on the Board, it is the view of the Board that all
Directors should participate in the process for the nomination and review of
potential Director candidates and for the review of the Company’s executive pay
practices. Accordingly, Julie Smolyansky, Ludmila Smolyansky, Renzo Bernardi,
Pol Sikar, Julie Oberweis, together with Juan Carlos Dalto, who has served on
the Board since 2004, but has indicated his intent to not stand for re-election
at the annual meeting, all participate in the nominating process, in the review
of executive employment contracts and in review of the Company’s executive
compensation practices. It is the view of the Board that the participation of
all Directors in the duties of nominating and compensation committees ensures
not only as comprehensive as possible a review of Director candidates and
executive compensation, but also that the views of independent, employee, and
shareholder Directors are considered.
The Board
does not have any formal policy regarding the consideration of director
candidates recommended by shareholders; any recommendation would be considered
on an individual basis. The Board believes this is appropriate due to the lack
of such recommendations made in the past, and its ability to consider the
establishment of such a policy in the event of an increase of such
recommendations. The Board welcomes properly submitted recommendations from
shareholders and would evaluate shareholder nominees in the same manner that it
evaluates a candidate recommended by other means. Shareholders may submit
candidate recommendations by mail to LIFEWAY FOODS, INC., 6431 W. OAKTON, MORTON
GROVE, IL 60053. With respect to the evaluation of director nominee candidates,
the Board has no formal requirements or minimum standards for the individuals
that it nominates. Rather, the Board considers each candidate on his or her own
merits. However, in evaluating candidates, there are a number of factors that
the Board generally views as relevant and is likely to consider, including the
candidate’s professional experience, his or her understanding of the business
issues affecting the Company, his or her experience in facing issues generally
of the level of sophistication that the Company faces, and his or her integrity
and reputation. With respect to the identification of nominee candidates, the
Board has not developed a formalized process. Instead, its members and the
Company’s senior management have recommended candidates whom they are aware of
personally or by reputation.
During
2008 through the date of this Proxy Statement, Ludmila Smolyansky, Julie
Smolyansky and Edward Smolyansky collectively controlled more than 50% of the
voting power of our Common Stock. See “Security Ownership of Certain Beneficial
Owners and Management,” below. Consequently, we are a “controlled company”
under
applicable Nasdaq rules. Under these rules, a “controlled company” may elect not
to comply with certain Nasdaq corporate governance requirements, including
requirements that: (i) a majority of the board of directors consist of
independent directors; (ii) director nominees be selected or recommended for
selection by a majority of the independent directors or by a nominating
committee composed solely of independent directors; and (iii) compensation of
officers be determined or recommended to the board of directors by a majority of
its independent directors or by a compensation committee that is composed
entirely of independent directors. We have elected to use each of
these exemptions.
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit
Committee assists the Board of Directors in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing, internal
control and financial reporting practices of the Company. Currently, the Audit
Committee consists of Mr. Sikar, Ms. Oberweis and Mr. Bernardi, each
of whom are independent directors in accordance with federal securities laws and
the Nasdaq listing standards. These are the Company’s only
independent directors. The Chairperson of the Audit Committee is
Renzo Bernardi. Each of the Audit Committee members has an
understanding of finance and accounting and is able to read and understand
fundamental financial statements. To the extent Company employees are aware of
any financial irregularities, the Audit Committee has been designated to receive
such information in a confidential manner.
The Audit
Committee reviewed and discussed the audited financial statements for the fiscal
year ended December 31, 2008 with the Company’s management and the
independent auditors, Plante & Moran, PLLC (“Plante”). Additionally, the
Audit Committee discussed with Plante matters as required by the Statement of
Auditing Standards No. 61, which included Plante’s judgments as to the
quality not just the acceptability of the financial statements, changes in
accounting policies and sensitive accounting estimates.
Plante
provided the Audit Committee with written disclosures and a letter required by
Independence Standards Board Standard No. 1 (“ISB Standard No. 1”).
ISB Standard No. 1 requires (i) Plante to disclose in writing all
relationships between Plante and related entities and the Company and its
related entities, in Plante’s professional judgment, that may reasonably be
thought to bear on independence; (ii) confirm that, in Plante’s
professional opinion, they are independent of the Company within the meaning of
the federal securities laws and (iii) discuss Plante’s independence with
the Audit Committee. The Audit Committee discussed with Plante its independent
status.
The Audit
Committee amended and restated its written charter governing its actions
effective December 17, 2003. The Audit Committee reviews and reassesses the
charter annually. The Company is required to attach the charter as an appendix
to the Company’s proxy statement every three years and last filed the charter
with its proxy statement for the 2008 annual meeting.
Based on
the Audit Committee’s review of the year-end audited financial statements and
the various discussions noted above, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Company’s Annual Report on Form 10-K, as amended, for the fiscal year ended
December 31, 2008.
The Audit
Committee:
Pol
Sikar
Julie
Oberweis
Renzo
Bernardi, Chairperson
AUDIT
COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit
Committee comprised of Mr. Sikar. Ms. Oberweis and Mr. Bernardi,
pre-approved Plante as the Company’s independent auditor for the year-ended
December 31, 2008 and has adopted the following guidelines regarding the
engagement of the Company’s independent auditor to perform services for the
Company:
For audit
services (including statutory audit engagements as required under local country
laws), the independent auditor will provide the Audit Committee with an
engagement letter during the January-March quarter of each year
outlining
the scope of the audit services proposed to be performed during the fiscal year.
If agreed to by the Audit Committee, this engagement letter will be formally
accepted by the Audit Committee at its first or second quarter
meeting.
The
independent auditor will submit to the Audit Committee for approval an audit
services fee proposal after acceptance of the engagement letter.
For
non-audit services, Company management will submit to the Audit Committee for
approval (during the second or third quarter of each fiscal year) the list of
non-audit services that it recommends the Audit Committee engage the independent
auditor to provide for the fiscal year. Company management and the independent
auditor will each confirm to the Audit Committee that each non-audit service on
the list is permissible under all applicable legal requirements. In addition to
the list of planned non-audit services, a budget estimating non-audit service
spending for the fiscal year will be provided. The Audit Committee will approve
both the list of permissible non-audit services and the budget for such
services. The Audit Committee will be informed routinely as to the non-audit
services actually provided by the independent auditor pursuant to this
pre-approval process.
To ensure
prompt handling of unexpected matters, the Audit Committee delegates to either
member thereof the authority to amend or modify the list of approved permissible
non-audit services and fees. Either member will report action taken to the Audit
Committee at the next Audit Committee meeting.
The
independent auditor must ensure that all audit and non-audit services provided
to the Company have been approved by the Audit Committee. The Chief Financial
Officer is responsible for tracking all independent auditor fees against the
budget for such services and report at least annually to the Audit
Committee.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
Name
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Year
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Salary
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Bonus
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Stock
Awards (5)
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All
other Comp. (6)
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Total
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Julie
Smolyansky, CEO and President (1)
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2008
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$
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247,038
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$
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20,000
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$
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42,050
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$
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20,288
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$
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329,376
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2007
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$
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166,153
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$
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22,500
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$
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17,325
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$
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23,334
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$
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229,312
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Edward
Smolyansky, CFO Chief Accounting Officer, Treasurer and Controller and CEO
and President of Fresh Made Dairy, Inc. (2)
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2008
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$
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276,884
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$
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40,000
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$
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42,050
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$
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11,900
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$
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370,831
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|
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2007
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$
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178,461
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$
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22,500
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$
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17,325
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$
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11,838
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$
|
230,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ludmila
Smolyansky, Chairman (3)
|
|
|
2008
|
|
|
$
|
190,076
|
|
|
$
|
50,000
|
|
|
|
—
|
|
|
$
|
8,400
|
|
|
$
|
248,476
|
|
|
|
|
2007
|
|
|
$
|
162,807
|
|
|
$
|
55,000
|
|
|
|
—
|
|
|
$
|
5,600
|
|
|
$
|
223,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Val
Nikolenko, Vice President of Operations and Secretary (4)
|
|
|
2008
|
|
|
$
|
114,035
|
|
|
$
|
12,000
|
|
|
$
|
5,030
|
|
|
$
|
14,021
|
|
|
$
|
145,086
|
|
|
|
|
2007
|
|
|
$
|
110,832
|
|
|
$
|
10,000
|
|
|
$
|
2,887
|
|
|
$
|
13,813
|
|
|
$
|
137,532
|
|
NOTES TO SUMMARY
COMPENSATION TABLE
|
|
|
(1)
|
|
The
Board appointed Julie Smolyansky as the CEO, CFO, President and Treasurer
of the Company on
|
|
|
|
|
|
June 10, 2002.
Until that date and since September 21, 1998 she had been Director of
Sales and Marketing of the Company. Since November 2004,
Ms. Smolyansky has served solely as CEO and
President.
|
|
|
|
(2)
|
|
The
Board appointed Edward Smolyansky as the CFO, Chief Accounting Officer and
Controller of the Company in November 2004.
|
|
|
|
(3)
|
|
The
Company approves, on an annual basis, the payment to Ludmila Smolyansky of
salary and bonus as other compensation for continuing advisory services to
the Company, and in light of her extensive experience. Ludmila Smolyansky
devotes as much time as necessary to the business of the
Company.
|
|
|
|
(4)
|
|
The
Board appointed Val Nikolenko as the Vice President of Operations and
Secretary of the Company in December 1993.
|
|
|
|
(5)
|
|
The
terms of the stock awards are described below under Employee Consultants
and Service Providers Benefit Plan.
|
|
|
|
(6)
|
|
Represents
the Company’s portion of the matching contributions to the Company’s
401(k) plan on behalf of the Named Executive Officer, Julie Smolyansky
($4,500 for 2008 and $7,546 for 2007); Edward Smolyansky ($8,100 for 2008
and $8,038 for 2007); Val Nikolenko ($5,041 for 2005 and $4,833 for 2007)
and (ii) the following amounts related to personal usage of automobiles
leased by the Company, and related insurance and fuel, for 2007 and 2008,
(x) for Julie Smolyansky, $11,988 of lease payments, $2,000 of insurance
premiums and $1,800 of fuel, (y) for Edward Smolyansky, $2,000 of
insurance premiums and $1,800 of fuel, and (z) for Val Nikolenko, $7,080
of lease payments, $1,000 of insurance premiums and $1,800 of
fuel.
|
Outstanding
Equity Awards At Fiscal Year-End
|
Stock Awards
|
Name
|
Number of Shares or Units of
Stock That Have Not Vested
|
Market Value of Shares or Unites
of
Stock That Have Not
Vested
|
Julie
Smolyansky
|
2,500
|
$22,450
|
Edward
Smolyansky
|
2,500
|
$22,450
|
Ludmila
Smolyansky
|
—
|
—
|
Val
Nikolenko
|
250
|
$ 2,245
|
The terms
of the stock awards are described below under Employee, Consultants and Service
Providers Benefit Plan.
Director
Compensation
Name
|
|
Fees
Earned or Paid in Cash
|
|
Total
|
Pol
Sikar
|
|
$
|
2,000
|
|
|
$
|
2,000
|
|
Renzo
Bernardi
|
|
$
|
2,000
|
|
|
$
|
2,000
|
|
Julie
Oberweis
|
|
$
|
2,000
|
|
|
$
|
2,000
|
|
During
2008, each outside (non-employee) director was compensated at the rate of $500
per non-annual meeting attended. Neither any employee director (Ludmila
Smolyansky and Julie Smolyansky) nor any Director serving as the nominee of
Dannon (Juan Carlos Dalto) was compensated as a Director during
2008.
As other
compensation for continuing advisory services to the Company, and in light of
her extensive experience, the Company approved the payment to Ludmila Smolyansky
of a salary of $190,076 and a bonus of $50,000 in 2008. Ludmila Smolyansky
devotes as much time as necessary to the business of the Company.
EMPLOYMENT
CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Julie
Smolyansky has an employment agreement (the “Employment Agreement”) with the
Company pursuant to which she serves as Chief Executive Officer. Pursuant to the
Employment Agreement, Ms. Smolyansky is entitled to an annual base salary and an
annual bonus subject to such incentive bonus targets and plans which the Company
may adopt from time to time. The Company has not currently set any such targets
in advance or adopted any such plans. In lieu thereof, the Board of Directors
determines Ms. Smolyansky’s salary and bonus on an annual basis
concurrently with determining amounts for other executive officers. In the event
that (a) Ms. Smolyansky is terminated other than for Cause (as defined
therein) or (b) Ms. Smolyansky terminates her employment for Good
Reason (as defined therein) or death, then Ms. Smolyansky is entitled to a
lump sum payment consisting of (y) twice her then-current base salary and
(z) the aggregate of the annual bonus for which she is then eligible under
the Employment Agreement and any such plans.
|
(2)
|
EMPLOYEE,
CONSULTANTS AND SERVICE PROVIDERS BENEFIT
PLAN
|
On
June 9, 1995, the Company filed a registration statement on Form S-8 with
the Securities and Exchange Commission in connection with the “Lifeway Foods,
Inc. Consulting and Services Compensation Plan” (the “Plan”) covering 1,200,000,
as adjusted, shares of its Common Stock. The Plan was adopted by the Company on
June 5, 1995.
Pursuant
to such Plan, the Company may issue common stock or options to purchase common
stock to certain consultants, service providers, and employees of the
Company. There were a total of approximately 936,000 shares eligible
for issuance under the Plan at December 31, 2008 and 2007. The option
price, number of shares, grant date, and vesting terms are determined at the
discretion of the Company’s Board of Directors.
As of
December 31, 2007 and 2008, there were no stock options outstanding or
exercisable.
On June
13, 2008, Lifeway’s Board of Directors approved awards of an aggregate amount of
10,500 shares to be awarded under its Employee and Consulting Services and
Compensation Plan to certain key employees and consultants for services rendered
to the Company. The stock awards were made on June 13, 2008 and vest ratably
over a one year period. The expense for the awards is measured as of July 1,
2008 at $11.87 per share for 10,500 shares, or a total stock award expense of
$124,635. This expense will be recognized as the stock awards vest in 12 equal
portions of $10,386, or 875 shares per month for one year.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information known to the Company regarding
the beneficial ownership of the Company’s Common Stock, the Company’s only
outstanding class of securities, as of May 15, 2009 by (a) each shareholder
known by the Company to be the beneficial owner of more than five percent of the
Company’s Common Stock, (b) each of the Company’s directors and nominees
for director, (c) each of the Company’s executive officers named in the
Summary Compensation Table above and (d) all executive officers and
directors of the Company as a group. The shareholders listed below have sole
voting and investment power except as noted.
|
|
|
|
|
Name
and Address of Beneficial Owner (1)
|
|
Amount
and Nature of Beneficial Ownership of Common
Stock
|
|
Percent
Owned Beneficially and of Record (2)
|
Ludmila
Smolyansky
|
|
7,531,322
|
|
44.8%
|
Julie
Smolyansky
|
|
541,060
|
|
3.2%
|
Edward
Smolyansky
|
|
340,946
|
|
2.0%
|
Renzo
Bernardi
|
|
14,900
|
|
*
|
Juan
Carlos Dalto (3)
|
|
0
|
|
*
|
Julie
Oberweis
|
|
0
|
|
*
|
Gustavo
Carlos Valle (3)
|
|
0
|
|
*
|
Val
Nikolenko
|
|
5,000
|
|
*
|
Directors
and Officers of the Company as a Group (eight persons in
total)
|
|
8,433,228
|
|
50.1%
|
DS
Waters, LP
|
|
3,454,756
|
|
20.5%
|
NOTES TO BENEFICIAL
OWNERSHIP TABLE
|
|
|
(1)
|
|
With
the exception of Gustavo Carlos Valle, Juan Carlo Dalto and DS Waters, LP,
the address for all Directors and shareholders listed in this table is
6431 Oakton St., Morton Grove, IL 60053. The address for Gustavo Carlos
Valle, Juan Carlos Dalto and DS Waters, LP is 100 Hillside Avenue, White
Plains, NY 10603-2861.
|
|
|
|
(2)
|
|
Based
upon 16,819,920 shares of Common Stock outstanding as of May 15,
2009.
|
|
|
|
(3)
|
|
Mr.
Valle and Mr. Dalto are also officers of The Dannon Company, Inc., which
is an affiliate of DS Waters, LP.
|
|
|
|
PROPOSAL
2: RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board
has designated the firm of Plante, as independent auditors of the Company for
the next fiscal year. The Audit Committee and the Company have been advised by
Plante that neither it nor any member or associate of such firm has any
relationship with the Company or with any of its affiliates other than as
independent accountants and auditors.
REQUIRED
VOTE
An
affirmative vote of the holders of a majority of the shares of Common Stock
issued and outstanding is required for ratification of the appointment of
Plante. Abstentions and broker non-votes are considered shares of stock present
in person or represented by proxy at the Meeting and entitled to vote and are
counted in determining the number of votes necessary for a majority. An
abstention will therefore have the practical effect of voting against
ratification of the appointment because it represents one fewer vote for
ratification of the appointment. In the event that ratification of the
appointment of Plante as the independent public accountants for the Company is
not obtained at the Meeting, the Board of Directors will reconsider its
appointment.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE RATIFICATION OF THE APPOINTMENT OF
PLANTE & MORAN, PLLC AS THE INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR
(ENDING DECEMBER 31, 2009), AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN
FAVOR THEREOF UNLESS A SHAREHOLDER HAS INDICATED OTHERWISE ON THE
PROXY.
During
the two most recent fiscal years, there have been no disagreements with Plante
on matters of accounting principles or practices, financial statement
disclosure, auditing scope or procedure, or any reportable event.
Representatives
of Plante are not expected to be present at the Meeting.
AUDIT
FEES
In 2008
and 2007, Plante, billed Lifeway approximately $153,550 and $151,000,
respectively, for professional services rendered for the audit of Lifeway’s
annual financial statements and review of financial statements included
in
Lifeway’s Forms 10-Q or services that are normally provided in connection with
statutory and regulatory filings or engagements in 2007 and 2008.
AUDIT-RELATED
FEES
None.
TAX
FEES
No
professional services were rendered by Plante to Lifeway regarding tax advice,
tax compliance and tax planning during 2007 and 2008.
ALL OTHER
FEES
No other
fees were billed to Lifeway by Plante during 2007 and 2008 other than those
described in this report.
No hours
expended by Plante in its engagement to audit Lifeway’s financial statements for
the most recent fiscal year were attributable to work performed by persons other
than Plante’s full-time permanent employees. The Audit Committee has approved
100% of all services performed by Plante for Lifeway and disclosed
above.
OTHER
MATTERS
The Board
of Directors knows of no other business to come before the meeting. If, however,
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares represented thereby in
accordance with their best judgment.
SHAREHOLDER
PROPOSALS
Any
proposal that a shareholder may desire to present to the Company’s 2010 Annual
Meeting of Shareholders must be received in writing by Val Nikolenko, the
Secretary of the Company, on or before January 26, 2010, in order to be
considered for possible inclusion in the Company’s proxy materials relating to
such meeting.
UNTIMELY
SHAREHOLDER PROPOSALS
Any
shareholder proposals received by the Company after January 26, 2010 shall
be considered an untimely proposal. The Company, in its sole discretion, may
consider untimely proposals for possible inclusion in its 2010 Annual Meeting
proxy materials if such untimely proposals are received on or before April 6,
2010. Any untimely shareholder proposals received after April 6, 2010 shall not
be considered for possible inclusion in the Company’s 2010 Annual Meeting proxy
materials.
AVAILABILITY
OF PROXY MATERIALS
A copy of
Lifeway’s Annual Report on Form 10-K accompanies this Proxy Statement. Such
Annual Report is not a part of the proxy solicitation materials. Upon receipt of
a written request, Lifeway will furnish to any shareholder, without charge, an
additional copy of such Annual Report (without exhibits). Upon request and
payment of $0.10 (ten cents) per page, copies of any exhibit to such Annual
Report will also be provided. Any such written request should be directed to
Lifeway’s Secretary at 6431 West Oakton, Morton Grove, IL 60053 or (847)
967-1010.
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL SHAREHOLDER MEETING TO BE HELD ON
JUNE 19, 2009: THE PROXY STATEMENT AND THE ANNUAL REPORT ARE AVAILABLE AT
https://materials.proxyvote.com/531914. DIRECTIONS TO THE ANNUAL MEETING OF
SHAREHOLDERS ARE AVAILABLE UPON REQUEST DIRECTED TO LIFEWAY’S SECRETARY AT 6431
WEST OAKTON, MORTON GROVE, IL 60053 OR (847) 967-1010.
|
BY
ORDER OF THE BOARD OF DIRECTORS
Ludmila
Smolyansky
Chairperson
of the Board
June
5, 2009
|
LIFEWAY
FOODS, INC. PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD AT THE HOLIDAY INN NORTH SHORE, 5300 WEST
TOUHY AVENUE, SKOKIE, ILLINOIS, FRIDAY, JUNE 19, 2009, AT 2:00 P.M. LOCAL
TIME.
The
undersigned hereby appoints Ludmila Smolyansky or Julie Smolyansky, with full
power of substitution, as proxy to vote the Common Stock of the undersigned in
Lifeway Foods, Inc. at the above Annual Meeting and at any adjournment
thereof.
THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS HEREIN SPECIFIED. IF A CHOICE
IS NOT SPECIFIED, SUCH SHARES WILL BE VOTED FOR PROPOSALS 1 and 2.
1.
|
|
Election
of Directors:
|
|
|
|
|
|
Nominees:
Ludmila Smolyansky, Julie Smolyansky, Pol Sikar, Renzo Bernardi, Gustavo
Carlos Valle and Julie Oberweis:
|
|
|
|
|
|
o FOR
o
WITHHELD
|
|
|
|
|
|
For,
except vote withheld from the following nominees:
|
2.
|
|
Ratification
of Plante & Moran, PLLC, as independent auditors:
|
|
|
|
|
|
o FOR
o AGAINST
o
ABSTAIN
|
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
|
|
|
|
|
|
SIGNATURE
|
|
DATED
|
|
|
|
|
|
|
SIGNATURE
(IF JOINTLY OWNED)
|
|
PRINT
NAME
|
|
|
|
|
|
|
PRINT
NAME (IF JOINTLY OWNED)
|
|
|
NOTE:
This Proxy must be signed exactly as your name appears hereon. Executors,
administrators, trustees, etc. should give full title as such. If the signer is
a corporation, please sign full corporate name by duly authorized
officer.