Item 5.02. Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 31, 2022, Lifeway Foods, Inc. (the “Company”),
adopted its 2022 Omnibus Incentive Plan (the “2022 Plan”) and its 2022 Non-Employee Director Equity and Deferred Compensation
Plan (the “2022 Director Plan”). The 2022 Plan and the 2022 Director Plan were approved by the Company’s Board of Directors
(the “Board”) on April 27, 2022 and by the Company’s stockholders on August 31, 2022.
2022 Plan
The 2022 Plan will be administered by the Compensation
Committee of the Board (the “Plan Administrator”). The Plan Administrator may select recipients to receive awards (“Participants”),
determine eligibility for awards and adopt such rules, regulations, forms, instruments, and guidelines for administering the 2022 Plan
as it may deem necessary or proper. The Plan Administrator’s authority shall include, but not be limited to, establishing all award
terms and conditions, including the terms and conditions set forth in award agreements, construing any ambiguous provision of the 2022
Plan or any award agreement, and, subject to shareholder or Participant approvals as may be required, adopting modifications and amendments
to the 2022 Plan or any award agreement. The 2022 Plan provides for the grant of nonqualified stock options, incentive stock options,
stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards and other
stock-based award. Awards granted under the 2022 Plan are generally subject to a minimum vesting period of at least one year. Awards may
be subject to cliff-vesting or graded-vesting conditions, with graded vesting starting no earlier than one year after the grant date.
The Plan Administrator may provide for shorter vesting periods in an award agreement for no more than five percent of the maximum number
of shares authorized for issuance under the 2022 Plan. The maximum aggregate number of shares of the Company’s common stock, par
value $.01 per share (the “Common Stock”) that may be issued under the 2022 Plan is 3,247,855 shares.
2022 Director Plan
The 2022 Director Plan will be administered by
the Company’s Chief Financial Officer (the “Director Plan Administrator”). Each non-employee director of the Company
is eligible to be a participant in the 2022 Director Plan until they no longer serve as a non-employee director. The 2022 Director Plan
provides for the grant of restricted stock units (“RSUs”), which will vest on such schedule as the Company, in its sole discretion,
shall determine. As of the date of each annual shareholder meeting (an “Annual Meeting”), the Company may grant each director
a number of RSUs for such year. Whether and how many RSUs the Company will grant to directors in any year is subject to the sole discretion
of the Company and shall in any event be subject to the 2022 Director Plan’s overall share limits. The maximum aggregate number
of shares of Common Stock that may be issued under the 2022 Directors Plan is 500,000 shares. The aggregate fair market value of shares
underlying RSU compensation that may be issued as RSU compensation to a director in any year shall not exceed $170,000. In addition to
the grant of RSUs, the 2022 Director Plan also provides for the deferral by participants of all or part of their cash compensation (in
10% increments) into a deferred cash account, and they may defer all or part of their cash and/or RSU compensation (in 10% increments)
into a deferred RSU account.
The foregoing description
of the 2022 Plan and the 2022 Director Plan, are qualified in their entirety by reference to the full text of the 2022 Plan and the 2022
Director Plan, which are attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.
Item 5.07. Submission
of Matters to a Vote of Security Holders.
On August 31, 2022, at
annual meeting of stockholders (the “Annual Meeting”) of the Company, we submitted five matters to a vote of securities holders.
Proxies for the Annual Meeting were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. The persons
named as proxies on the proxy card voted in the manner indicated on the submitted proxy card and there was no solicitation of proxies
in opposition to the nominees as listed in the proxy statement. All of the nominees were elected to the Board. Details of the voting are
provided below:
Proposal 1:
To
elect seven (8) members of the Company's Board of Directors to serve until the 2023 Annual Meeting of Shareholders (or until successors
are elected and qualified).
| NOMINEE |
FOR |
AGAINST |
ABSTAIN |
BROKER NON-VOTES |
| Juan Carlos Dalto |
12,628,289 |
28,255 |
3,448 |
0 |
| Jody Levy |
11,510,226 |
1,144,522 |
5,244 |
0 |
| Dorri McWhorter |
11,515,886 |
1,139,272 |
4,834 |
0 |
| Perfecto Sanchez |
12,411,478 |
245,030 |
3,484 |
0 |
| Jason Scher |
11,493,556 |
1,149,014 |
17,422 |
0 |
| Pol Sikar |
11,495,887 |
1,147,011 |
17,094 |
0 |
| Julie Smolyansky |
12,154,896 |
483,907 |
21,189 |
0 |
| Ludmila Smolyansky |
12,593,923 |
59,664 |
6,405 |
0 |
Proposal 2:
To approve,
by non-binding advisory vote, executive compensation.
| FOR: |
12,103,270 |
| AGAINST: |
553,834 |
| ABSTAIN: |
2,888 |
| BROKER NON-VOTES: |
0 |
Proposal 3:
To authorize
the Company’s 2022 Omnibus Incentive Plan.
| FOR: |
11,562,224 |
| AGAINST: |
1,093,183 |
| ABSTAIN: |
4,585 |
| BROKER NON-VOTES: |
0 |
Proposal 4:
To authorize
the Company’s 2022 Non-Employee Director Equity and Deferred Compensation Plan.
| FOR: |
12,128,546 |
| AGAINST: |
529,141 |
| ABSTAIN: |
2,305 |
| BROKER NON-VOTES: |
0 |
Proposal 5:
To
authorize issuance of common stock upon settlement of RSUs into which certain fiscal 2021 compensation of non-employee directors was converted.
| FOR: |
12,153,328 |
| AGAINST: |
492,608 |
| ABSTAIN: |
14,056 |
| BROKER NON-VOTES: |
0 |