Sturm Ruger Shareholders Adopt Measure Backed by Gun Control Activists
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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 guncontrol 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,” Mr. 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 gun maker since 17 people died in Parkland, Fla., 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 on 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.
Ms. Froman won re-election on Wednesday.
Ms.
Froman, a lawyer, has served on the N.R.A.’s board since 1992 and was
its president from 2005 to 2007. She helped organize a breakfast at the N.R.A.’s annual meeting in Dallas this month, where President Trump and Vice President Mike Pence spoke.
In a letter sent to Ruger
last month, Amalgamated’s chief executive, Keith Mestrich, said Ms.
Froman’s connections to the gun group “may inhibit objective assessment
and management of the risks” that Ruger faced.
Ruger
has contracted with the N.R.A. for some of its promotional and
advertising activities and has made over $9 million in payments to the
group over the last two years, according to public filings.
Ms. Froman did not respond to requests for comment.
Ruger
is based in Southport, Conn., 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.”
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