Lifeway Shareholder Lifts the Curtain on a 2023 Deposition and Urges Withhold Votes on Three Long‑Standing Directors

Shareholder releases deposition highlights and urges withhold votes

Edward Smolyansky, a shareholder in Lifeway Foods (LWAY), has made public excerpts from a 2023 sworn deposition and is asking other investors to withhold their votes from three longtime directors: Dorri McWhorter, Julie Smolyansky and Jason Scher. The move is meant to spotlight what Smolyansky describes as serious governance failures during Julie Smolyansky’s time as CEO and chair.

The release sets up a raw, public fight over board accountability ahead of a scheduled shareholder vote. For investors, the dispute raises two immediate questions: do the deposition excerpts show real, material governance risk, and could a withhold campaign change control or spur management changes that affect the company’s value?

How this proxy fight reached the public eye

Lifeway Foods (LWAY) is a small-cap food company known for its cultured dairy products. Its shareholder base combines family holders, long-term retail investors and some institutions. The company’s governance has been shaped by the founding family for years, with Julie Smolyansky a central figure as former CEO and chair.

The current flare-up traces back to governance disputes that surfaced internally and in filings. Edward Smolyansky — who has been an active dissident voice — obtained a sworn deposition from 2023 and is now deploying excerpts to build a case that the board failed in oversight. His public call to withhold votes targets three directors who he says represent the old guard and bear responsibility for lapses.

Shareholders will see the formal proxy materials and any board response before voting. In the meantime, the released deposition notes are forcing a fast public read of issues that would otherwise have stayed in legal papers.

What the deposition excerpts allege

The excerpts Edward Smolyansky released accuse the board and certain executives of poor decision-making and weak controls during a period of family-led management. The key themes in the excerpts are familiar in governance fights: potential conflicts of interest, inadequate oversight of related-party matters, spotty documentation of decisions, and a board culture that prioritized family control over independent scrutiny.

Specifically, the deposition passages allege examples where directors either failed to challenge management or lacked full visibility into decisions affecting the company. There are also passages that suggest communications were informal and that record-keeping did not meet what dissenting shareholders would expect for a publicly traded company.

It’s important to note the language matters: the excerpts present allegations and witness recollections rather than final findings. Still, when sworn testimony describes gaps in controls or oversight, investors see possible governance risk rather than mere personality clashes.

How shareholders should weigh the withhold recommendation

Smolyansky is urging investors to withhold their votes for Dorri McWhorter, Julie Smolyansky and Jason Scher. For investors and governance watchers, this is a clear attempt to either remove or embarrass a bloc of directors and force a board refresh.

There are practical consequences. A successful withhold campaign could reduce the board’s ability to claim shareholder endorsement, trigger resignations, or prompt negotiated changes such as expanded independence, new audit oversight, or even leadership shifts. Even without immediate removals, a visible withhold vote can raise costs for management: higher borrowing costs, distracted executives, and weaker investor sentiment.

From an investor’s point of view, this looks like elevated governance risk. If the deposition points to systemic oversight failures, that risk can translate to business risk — decisions made without adequate checks are likelier to cause operational problems or regulatory headaches down the line. For those reasons, withholding votes can be a proportional response when directors have presided over lapses; it sends a clear signal without requiring litigation.

How Lifeway and the legacy directors are likely to respond

The company and the named directors will almost certainly push back. Typical responses include characterizing the deposition excerpts as selective, disputing the interpretation of events, and emphasizing steps the board has already taken to improve oversight. Lifeway’s legal and investor-relations teams may stress that no regulator has found wrongdoing and that the board includes qualified members.

The board may also publish a letter to shareholders defending its record and highlighting governance practices it believes mitigate the concerns raised. Expect a legal posture focused on limiting reputational damage and a PR stance that stresses stability and continuity.

What to watch next: market moves and regulatory fallout

There are a few near-term things investors should watch. First, proxy advisory firms will review the deposition excerpts and the board’s response; their recommendations can sway institutional votes and change outcomes. Second, the company’s next filings may contain additional disclosures or rebuttals that clarify facts and timelines raised by the deposition.

Third, if the excerpts prompt complaints or formal inquiries, the SEC could take an interest in whether disclosures around related-party transactions or governance practices were adequate. That would raise the stakes materially and could lead to more sustained share-pressure.

For now, the market impact will hinge on how many large shareholders side with the withhold campaign and how aggressively the board responds. The stock’s near-term price moves will likely reflect the perceived probability of board change and the depth of the governance issues revealed by the deposition.

Bottom line: the deposited testimony has turned a private governance dispute into a public investor choice. For shareholders focused on risk, the excerpts raise enough questions that withholding votes from the named directors is a reasonable lever to demand clearer answers and firmer controls. The ultimate outcome — a quiet settlement, board turnover, or a failed revolt — will depend on institutional support and the board’s willingness to act quickly to restore investor confidence.

Sources

• prnewswire.com