Gun safety activists prepare to put their power behind shareholder voting at Sturm Ruger
- Some groups are threatening to withhold votes for a Sturm Ruger director because they claim her presence on the board makes the gun maker too close to the National Rifle Association.
- The upcoming shareholder meeting will also be the first test of a shareholder proposal to have gun makers report on the risks to their reputations and finances.
- Proxy advisory services have recommended shareholders vote in favor of the board members but support the shareholder proposal, which the company's board recommends voting against.
Next week, activist shareholders will make their first attempt at shaking up the gun industry using their votes instead of just their voices.
One big campaign is against an NRA-connected director on the board of Sturm Ruger & Co., one of the nation's largest gun makers. Groups are threatening to withhold their votes for Sandra Froman's renomination as director to the board, where she has been a member since 2015. Froman has been a director of the National Rifle Association for 26 years and was its president from 2005 to 2007.
Amalgamated Bank, which describes itself as promoting socially responsible causes, wants Sturm Ruger to agree to a list of demands involving gun safety and sales practices by this Friday or it says it will withhold its vote for Froman. The company, it says, is too closely tied to the NRA.
The relationship between Sturm and the NRA "may inhibit the ability of your company's Board to accurately evaluate the risks the company faces," Amalgamated's CEO, Keith Mestrich, wrote in a letter to the company last month. "The NRA plays a key role in shaping the gun industry's response to calls for gun control measures, opposing even incremental changes and common sense reforms supported by a majority of gun owners."
Sturm Ruger's meeting comes just days after the NRA holds its annual meeting this weekend in Dallas, where Vice President Mike Pence is among the scheduled speakers.
A Sturm Ruger spokesman didn't return a call for comment. And a request to Froman for comment, made by way of an NRA spokesman, also wasn't returned.
Another community group, Majority Action, is organizing retail investors to push big fund companies like BlackRock and Vanguard, Sturm Ruger's biggest shareholders, to assert their voting power. The group organized about six weeks ago, seeing now as a crucial moment for changing the gun industry.
"We were looking at how you enable everyday investors to access the levers of power when it comes to holding companies accountable," said James Rucker, its co-founder, who is on the board of directors of the Southern Poverty Law Center.
But even before these recent demands, controversy was certain to erupt at Sturm Ruger's meeting, scheduled to take place May 9 at a resort in Arizona thousands of miles from its Connecticut headquarters. The company has a factory in the area.
Wednesday's vote will be the first test this year of a proposal by a faith-based shareholder group urging the nation's gun industry to act after recent extreme examples of gun violence.
Specifically, that proposal, backed by the Northwest Coalition for Responsible Investment, asks gun makers like Sturm Ruger to prepare a report about the financial and reputational risks associated with their business. The coalition plans to introduce a similar proposal on the proxy of American Outdoor Brands, which typically holds its meetings in the fall.
Two major shareholder voting advisory firms, Institutional Shareholder Services and Glass Lewis, have thrown their support behind the coalition's proposal, Sturm Ruger's board, on the other hand, is advising shareholders to vote against it. "We believe that firearms safety is a laudable and appropriate goal," it said in the proxy. "However, we also believe that adequate safety practices and procedures are available."
BlackRock said in a note to clients in March that it is time to take action on gun violence, adding it could use its position as a large shareholder to vote against boards and management and back shareholder proposals management doesn't like. But it won't comment about how it plans to vote its 2.8 million shares next week.
Several companies connected to the gun industry have changed their policies in recent weeks in response to the upswell of protests after a shooting in a Florida high school in February left 17 people dead. Major retailers such as Walmart and Dick's Sporting Goods put limits on gun sales, and banks like Citigroup said it would restrict gun sales by business partners.
Fund managers like BlackRock and State Street said they would start a dialogue with gun makers about what they are doing to promote safety. BlackRock has even rolled out new funds that specifically remove stocks of gun makers and sellers.
Amalgamated wants the gun maker to publicly endorse universal background checks, funding for government to to crack down on illegal distribution, and funding for government research into gun safety and public health. They also want a commitment to responsible distribution contracts, monitoring of distribution chains and investments in gun safety technology and commercialization.
Froman, 68, is a lawyer and long-time gun industry supporter. The Southern Poverty Law Center found her name in a 2014 member directory of a secretive ultra-conservative group called the Council for National Policy. Tax forms from 2015 and 2016 filed by that organization list her as treasurer.
The year she became president of the NRA, the gun lobby won a crucial legal battle in the form of a new law limiting liability claims against gun makers. That same year, a donor program for the NRA launched and, as reported by Bloomberg in 2012, took in nearly $15 million from gun-related companies.
Froman has pointed to Smith & Wesson's decision in 2000 to voluntarily comply with certain gun safety measures as its downfall. Grassroots gun supporters forced the company into bankruptcy after it made that "deal with the devil," she has said.
"The grass roots is a powerful force that the government can't control and can't fight," she said in a speech in 2011 to a group that supports knife ownership. "Just look at what's happened with the rise of the Tea Party movement. Most of the battles that NRA has won have been won by sheer political power."
The NRA is said to be the subject of fresh scrutiny about its ties to a Russian government official recently sanctioned by the U.S. That official, Alexander Torshin, is a lifetime NRA member, CNN reported Friday.
One of Torshin's former aides, Maria Butina, the founder of the Russian group "Right to Bear Arms," was hosted by Froman as part of the annual NRA Women's Leadership luncheon in 2014. Butina posted a photo of the two on her blog back then, calling Froman a "legendary woman."
Everytown for Gun Safety, a gun safety group that began as an organization founded by former New York major Michael Bloomberg, also details the NRA's connections to Russians, including Torshin and Butina, on its website.
The proxy advisory services have advised shareholders to vote in favor of all the of the directors nominated to Sturm Ruger's board, including Froman. ISS did note that Sturm Ruger has a contract with the NRA for some of its promotional and advertising activities and paid the group $800,000 last year.