Shareholders on Wednesday voted to require firearms manufacturer Sturm Ruger to complete a report on the reputational and financial risks posed to the company by gun violence.
By February 2019, Sturm Ruger, which makes more guns annually than any other American company, must produce an assessment of how shootings in the United States could threaten its reputation and financial health. To create the report, the company will monitor incidents of violence involving its products and examine efforts to research and manufacture safer firearms.
Activists and industry experts believe this is the first successful shareholder activism campaign of its kind targeting a gun business, CNN Money reported.
The resolution passed Wednesday morning at the company’s annual shareholder meeting in Prescott, Arizona. CNBC reported that the investment management firm BlackRock, which owns the largest share of Ruger stock, voted in favor of the measure.
Members of the board said they would comply with the resolution, but, before it went to a vote, had urged shareholders not to approve the measure. “What the proposal does not and cannot do is force us to change our business,” CEO Christopher Killoy told the shareholders.
The proposal was submitted in January by the Sisters of the Holy Names of Jesus and Mary, an order of Roman Catholic nuns in Marylhurst, Oregon, who are part of a group of activist shareholders called the Northwest Coalition for Responsible Investment (NCRI).
The initiative was one of two campaigns by gun violence prevention activists aimed at Ruger’s shareholder meeting. A separate effort sought to remove board member Sandra Froman, but ultimately failed. The proposal had been backed by Amalgamated Bank, the Southern Poverty Law Center, the American Federation of Teachers, and other activist groups.
The nuns had on their side the two most important shareholder advisory firms in the country: Institutional Shareholder Services (ISS) and Glass Lewis. The companies assess corporate governance and long-term risk and advise investors in publicly traded companies on how to vote on proposals at shareholder meetings. In separate memos, both ISS and Glass Lewis endorsed the motion submitted by the nuns. Both advisory companies pointed to the recent bankruptcy proceedings of legacy gunmaker Remington as a cautionary example.
Remington, which manufactures the Bushmaster brand of AR-style rifles, has been troubled since 2012, when a gunman used one of its weapons to massacre 20 schoolchildren and six educators at the Sandy Hook Elementary School in Newtown, Connecticut. Remington’s owner, the private equity firm Cerberus Capital Management, sought to sell the company after the shooting, but could not find a buyer willing to look past the stigma of being associated with the murder of first-graders. This year the gunmaker entered bankruptcy when it could not make debt payments, but had a difficult time getting financing: most of the banks approached by Remington declined to work with the company.
Remington’s woes do not solely stem from the Sandy Hook shooting. It has been beset by lawsuits over faulty rifles, and largely missed out on the semiautomatic pistol boom fueled by the rise of concealed carry. Still, there’s no reason any other gunmaker might not run into similar reputational or financial troubles should its products be implicated in particularly gruesome violence, the advisory firms argue.
Ruger does not acknowledge these risks to shareholders in its filings with the Securities and Exchange Commission like the annual 10-K.
The Sisters of the Holy Names and their colleagues in the NCRI began looking into gun companies in 2017, said Sister Judy Byron.
“We own shares in Sturm Ruger and [Smith & Wesson parent company] American Outdoor Brands, and also Dick’s Sporting Goods,” she said in a phone interview. “We wrote to the companies last summer, and there was no response.” The group had not publicized its efforts at first, Byron said, “but after the Parkland shooting on February 14, the issue became much more timely.”