Sturm Ruger Shareholders Adopt Measure Backed by Gun Control Activists
Posted May 9, 2018 3:04 p.m. EDT
Sturm Ruger, one of the country’s largest firearms makers, had urged shareholders for weeks to reject a proposal from a group of Roman Catholic nuns demanding more transparency from the company on whether it planned to develop safer products and monitor the ones already in circulation.
But when the votes were counted at the company’s annual meeting on Wednesday, a majority of investors sided with the nuns.
Ruger, which makes a variety of weapons, including a style of rifle often used in mass shootings, must now produce a report by February on how it tracks violence associated with its firearms, what kind of research it is conducting related to so-called smart gun technology and its assessment of the risks that gun-related crimes pose to the company’s reputation and finances.
The vote was a rebuke to the company’s leaders and victory for gun-control activists who had prepared the resolution. But the chief executive, Christopher J. Killoy, played down the impact of the measure’s passage.
“This proposal requires Ruger to prepare a report,” Killoy told shareholders after the vote was announced. “That’s it, a report. It cannot force us to change our business, which is lawful and constitutionally protected.”
The Ruger meeting was the first chance for activist shareholders to confront a publicly held American gunmaker since 17 people died in Parkland, Florida, in a school shooting in February.
Shareholder approval of the proposal faced long odds, but activists had prepared for months to challenge Ruger. They plan to raise similar issues at other shareholder meetings this year.
Ruger did not support the proposal, which was submitted by 11 members of the Interfaith Center on Corporate Responsibility, a shareholder advocacy organization that included health care networks and several groups of nuns. The company said in a public filing that “the intentional criminal misuse of firearms is beyond our control.”
But Institutional Shareholder Services, an advisory firm, backed the proposal, describing it as a push for “concrete evidence that the board is properly assessing risks to the company’s long-term viability.”
On a separate front, Amalgamated Bank, an institutional investor and retail bank that promotes social justice issues, had worked with other groups that have tried to convince major Ruger shareholders like BlackRock and Vanguard that the company’s close ties to the National Rifle Association had exposed it to risk.
Amalgamated said Tuesday that it would withhold its vote to reappoint Sandra Froman, the only woman on the Ruger board, to the seat she has held since 2015.
Froman won re-election on Wednesday.
Froman, a lawyer, has served on the NRA’s board since 1992 and was its president from 2005 to 2007. She helped organize a breakfast at the NRA’s annual meeting in Dallas this month, where President Donald Trump and Vice President Mike Pence spoke.
In a letter sent to Ruger last month, Amalgamated’s chief executive, Keith Mestrich, said Froman’s connections to the gun group “may inhibit objective assessment and management of the risks” that Ruger faced.
Ruger has contracted with the NRA for some of its promotional and advertising activities and has made more than $9 million in payments to the group over the last two years, according to public filings.
Froman did not respond to requests for comment.
Ruger is based in Southport, Connecticut, but held its shareholder meeting at a hotel a short drive from one of its factories in Arizona.
Ruger has faced previous pressure to open up. In 2016, New York’s public advocate asked the Securities and Exchange Commission to look into allegations that Ruger had misled investors and failed to properly disclose its reputational and liability risks.
“This is not the first time this has happened, though there’s a little more intensity now,” said Brian G. Rafn, a principal at Morgan Dempsey Capital Management, referring to calls for changes in the gun industry. “This is a very, very polarized time, with everyone lining up on either side of the fence.”