We wanted to make you aware of a joint filing by Majority Action and the Interfaith Center on Corporate Responsibility (ICCR) calling on shareholders of Sturm, Ruger & Co. (RGR) to withhold support from Chair Michael Jacobi and Director Sandra Froman due to RGR's refusal to engage on gun safety issues, risks to long-term shareholder value, or questions about board composition and potential conflicts.  The filing is at this link. 

In the wake of the 2018 Parkland, Florida massacre and public outcry for stricter firearm regulations, we have witnessed robust investor attempts to engage with firearms manufacturers asking how those companies are evaluating and navigating the myriad risks they face. In the first quarter of 2018, BlackRock reached out to Sturm, Ruger & Co. (RGR) and the other major publicly traded firearms firms to request the Company engage in dialogue with shareholders about policy and operational measures the Company could take to address risks to its business and to shareholder value. At the 2018 annual meeting, RGR shareholders passed a resolution calling on the Company to publish a report on its activities related to safety measures and mitigation of harm associated with Company products, with 68.8 percent of shares voted supporting the measure.

Since then, RGR’s response has been wholly inadequate, and as a result, we recommend that shareholders withhold support from Chair Michael Jacobi and Director Sandra Froman. Shareholders should consider the following:

·       RGR has experienced declining sales and profitability two years in a row, and saw -12.9% decline in total shareholder return since the November 2016 US election. The Company continues to pursue what we believe to be a short-termist strategy of “fear-based” sales to existing gun owners, rather than pursue alternatives that could provide competitive differentiation and improve long-term shareholder value, including potentially higher-margin, technology-driven, product safety innovation.

·       RGR’s report issued in response to the 2018 shareholder resolution failed to adequately respond to a number of key issues of concern. It did not acknowledge that the vast majority of gun owners support reasonable policies such as universal background checks, rejected the potential for developing additional safety features such as smart gun technology, and incorrectly claimed the Company cannot improve monitoring of the distribution, sale, and use of its products to enhance safety. Overall, RGR rejected any corporate responsibility for improving gun safety and mitigating the potential harm its products cause, effectively shutting down constructive dialogue.

·       Shareholders last year raised concerns about the background and extremist views of Director Sandra Froman. Froman is a leader of the National Rifle Association (“NRA”), which championed a campaign against gun manufacturer Smith & Wesson for pursuing technological and policy solutions to improved gun safety that nearly bankrupted the company in 2000. She has served as an officer on the Council for National Policy (“CNP”), a secretive organization active on gun policy issues; fellow CNP leaders have documented patterns of articulating extremist, neo-Confederate, anti-immigrant, and anti-Muslim views, among others. Froman’s leadership role in CNP was not disclosed to shareholders. Further, she has a troubling history of advocating for pseudoscientific racist views regarding the supposed genetic inferiority of African Americans. Since these concerns were raised, RGR re-nominated Froman to the board without disclosing her CNP role, addressing critical questions about her suitability for the board or explaining how the board manages potential conflicts of interest involving her.

These and additional issues raised in this letter pose questions that could be addressed through the kind of constructive shareholder dialogue that has improved sustainability and long-term value across many other industries. Unfortunately, instead of playing an independent role on behalf of shareholders, Jacobi has personally joined CEO Christopher J. Killoy in rejecting dialogue with shareholders concerned about gun safety. RGR has refused to even meet with its two largest shareholders, BlackRock and Vanguard, which hold a combined 28.2% of outstanding shares, according to the Company’s 2019 proxy statement.

Given RGR’s refusal to engage on the crucial issues laid out above, we are urging shareholders to withhold support for both the Chair of the Board, Michael Jacobi, and Director Sandra Froman.