SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Sturm, Ruger & Company, Inc.
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STURM, RUGER & COMPANY, INC.
SOUTHPORT, CONNECTICUT 06490 USA
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 2002
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Stockholders of STURM,
RUGER & COMPANY, INC. (the "Company") will be held at the Lake Sunapee Country
Club, 100 Country Club Lane, New London, New Hampshire 03257 on the 9th day of
May, 2002 at 10:30 a.m. to consider and act upon the following:
1. A proposal to elect ten (10) Directors to serve for the ensuing year;
2. A proposal to approve the appointment of KPMG LLP as the Company's
independent auditors for the 2002 fiscal year;
3. A Stockholder proposal; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Only holders of record of Common Stock at the close of business on March
15, 2002 will be entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof. The complete list of stockholders entitled
to vote at the Annual Meeting shall be open to the examination of any
stockholder, for any purpose germane to the Annual Meeting, during ordinary
business hours, for a period of 10 days prior to the Annual Meeting, at the
Company's offices located at 411 Sunapee Street, Newport, New Hampshire 03773.
The Company's Proxy Statement is attached hereto.
By Order of the Board of Directors
/s/ Leslie M. Gasper
-----------------------------
Leslie M. Gasper
Corporate Secretary
Southport, Connecticut
March 26, 2002
All Stockholders are cordially invited to attend the Annual Meeting. If you
do not expect to be present, please date, mark and sign the enclosed form of
Proxy and return it to Computershare Investor Services LLC, P.O. Box A3800,
Chicago, Illinois 60690-9608. A postage-paid envelope is enclosed for your
convenience.
March 26, 2002
STURM, RUGER & COMPANY, INC.
LACEY PLACE, SOUTHPORT, CONNECTICUT 06490
PROXY STATEMENT
2002 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sturm, Ruger & Company, Inc. (the
"Company") for use at the 2002 Annual Meeting of Stockholders (the "Meeting") of
the Company to be held at 10:30 a.m. on May 9, 2002 at the Lake Sunapee Country
Club, 100 Country Club Lane, New London, New Hampshire 03257 or at any
adjournment or postponement thereof for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement and
enclosed proxy are first being sent to stockholders on or about March 26, 2002.
The mailing address of the principal executive office of the Company is
Lacey Place, Southport, Connecticut 06490.
If the enclosed proxy is signed and returned, it will be voted in
accordance with its terms. However, a stockholder of record may revoke his or
her proxy before it is exercised by (i) giving written notice to the Company's
Secretary at the Company's address indicated above, (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the Company's
Secretary at or before the Meeting, or (iii) attending the Meeting and voting in
person (although attendance at the Meeting will not, in and of itself,
constitute revocation of a proxy). All expenses in connection with the
solicitation of these proxies will be borne by the Company.
The Annual Report of the Company for the year ended December 31, 2001,
including financial statements, is enclosed herewith.
Only holders of Common Stock of record at the close of business on March
15, 2002 will be entitled to vote at the Meeting. Each holder of record of the
issued and outstanding shares of voting Common Stock, $1.00 par value, of the
Company (the "Common Stock") is entitled to one vote per share. As of March 15,
2002, 26,910,720 shares of Common Stock were issued and outstanding and there
were no outstanding shares of any other class of stock. The stockholders holding
a majority of the issued and outstanding Common Stock, either present in person
or represented by proxy, will constitute a quorum for the transaction of
business at the Meeting. In accordance with the Company's by-laws and applicable
law, the election of Directors will be determined by a plurality of the votes
cast by the holders of shares present in person or by proxy and entitled to
vote. Consequently, the ten nominees who receive the greatest number of votes
cast for election as Directors will be elected. Shares present which are
properly withheld as to voting with respect to any one or more nominees, and
shares present with respect to which a broker indicates that it does not have
authority to vote ("broker non-votes") will be counted as being present at the
Meeting. However, these shares will not be counted as voting on the election of
Directors, with the result that such abstentions and broker non-votes will have
the same effect as votes against the election of Directors. The affirmative vote
of shares representing a majority of the shares present and entitled to vote is
required to approve each of the other proposals to be voted on at the Meeting.
Shares which are voted to abstain on these matters and broker non-votes will be
considered present at the Meeting but will not be counted as voting for these
matters, with the result that abstention and broker non-votes will have the same
effect as votes against the proposal.
1
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Ten Directors will be elected at the Meeting, each to hold office until the
next Annual Meeting of Stockholders and until his successor is elected and has
qualified.
All of the nominees for Director were elected at the last Annual Meeting.
If no contrary instructions are indicated, proxies will be voted for the
election of the nominees for Director. Should any of the said nominees for
Director not remain a candidate at the time of the Meeting (a condition which is
not now anticipated), proxies solicited hereunder will be voted in favor of
those nominees for Director selected by management of the Company. Directors
shall be elected by a plurality of the votes of the shares present in person or
represented by proxy at the Meeting and entitled to vote on the election of
Directors.
The following table sets forth certain information concerning each
nominee's age, principal occupation, other directorships in publicly-held
corporations and the number and percentage of shares of Common Stock of the
Company beneficially owned by such nominee as of February 1, 2002.
BUSINESS EXPERIENCE FIRST BECAME SHARES PERCENT
DURING THE PAST FIVE YEARS AND OTHER A DIRECTOR BENEFICIALLY OF
NAME AGE DIRECTORSHIPS OWNED Class
January,
William B. Ruger 85 Chairman Emeritus. Retired as Chairman 1949 4,272,000 (1) 15.87%
of the Board, Chief Executive Officer
and Treasurer on October 24, 2000.
Chairman of the Board of Directors and March,
William B. Ruger, Jr. 62 Chief Executive Officer as of October 1970 7,046,000(1),(3) 26.18%
(2) 24, 2000. Prior thereto, Vice
Chairman, Senior Executive Officer from
July 18, 1995, and President and Chief
Operating Officer from March 1, 1998.
Vice Chairman, President, Chief October,
Erle G. Blanchard 55 Operating Officer and Treasurer as of 2000 127,000 (4) *
October 24, 2000. Prior thereto, Vice
President and Controller from March 1,
1996. Previously Vice President and
Controller-Newport from March 11, 1993
to March 31, 1995.
Vice Chairman, Senior Executive Vice March,
Stephen L. Sanetti 52 President and General Counsel as of 1998 152,000 (5) *
October 24, 2000. Prior thereto, Vice
President and General Counsel from
March 11, 1993. Director of the
Product Liability Advisory Council, a
non-profit organization.
2
BUSINESS EXPERIENCE FIRST BECAME SHARES PERCENT
DURING THE PAST FIVE YEARS AND OTHER A DIRECTOR BENEFICIALLY OF
NAME AGE DIRECTORSHIPS OWNED CLASS
April,
John M. Kingsley, Jr. 70 Director of the Neurological Institute 1972 14,160 (6) *
of New Jersey. Trustee of Brundge,
Story and Rose Investment Trust.
Retired as Executive Vice President of
the Company on December 31, 1996.
April,
Townsend Hornor 75 Director and Audit Committee member of 1972 13,200 (7) *
Nickerson Lumber Company. Chairman of
The National Marine Life Center.
Former Senior Securities Analyst member
of Boston and New York Societies of
Securities Analysts. First Vice
President and general partner of White
Weld & Co., (investment bankers) 1952
to 1978. Former Director and Audit
Committee member of Kollmorgen Corp.
Former Director of Simon & Schuster,
Ealing Corp., and Endevco Corp. Trustee
or director of various charitable
organizations.
January,
Stanley B. Terhune 76 Consultant to the Company. Retired as 1975 5,800 (8) *
Vice President of the Company on
January 31, 1992.
December,
Richard T. Cunniff 79 Vice Chairman and Director of the 1986 35,500 (9) *
Sequoia Fund, an investment company
registered under the Investment Company
Act of 1940. Vice Chairman and
Principal of Ruane, Cunniff & Co.,
Inc., an investment advisor under the
Investment Advisers Act of 1940.
April,
Paul X. Kelley 73 Partner, J.F. Lehman & Company (private 1990 12,000 (10) *
investments). Vice Chairman, Cassidy &
Associates, Inc. (government relations)
from 1989 to 1998. Commandant of the
United States Marine Corps and member
of the Joint Chiefs of Staff from 1983
to 1987. Director of London Life
Reinsurance Company (reinsurance), Park
Place Entertainment Corporation
(gaming), Saul Centers, Inc. (real
estate investment trust), UST, Inc.
(tobacco products and wine), and the
Wackenhut Corporation (security
services).
July,
James E. Service 71 Consultant, Invesmart (investment 1992 11,000 (11) *
management). Commander, United States
Naval Air Force, Pacific Fleet, from
1985 to 1987. Director of Wood River
Medical Center, Ketchum, Idaho from
1992 to 1996.
3
* Beneficial owner of less than 1% of the outstanding Common Stock of the
Company.
(1) Includes 4,272,000 shares of Common Stock held in the name of Ruger
Business Holdings, L.P., of which Mr. Ruger is the sole limited partner and
Ruger Management, Inc. is the sole general partner. Ruger Management, Inc.
is collectively owned by William B. Ruger, Jr. and Carolyn Ruger Vogel (son
and daughter of William B. Ruger). Messrs. Ruger, Ruger, Jr. and Mrs. Vogel
have shared investment and voting control with respect to such 4,272,000
shares of Common Stock.
(2) Son of William B. Ruger.
(3) Includes 4,272,000 shares of Common Stock as disclosed in footnote (1)
above. Also includes 800,000 shares of Common Stock owned directly by Mr.
Ruger, Jr., and 1,824,000 shares of Common Stock held by a trust of which
Mr. Ruger, Jr. is a trustee. Mr. Ruger, Jr. has sole investment and voting
control with respect to such 2,624,000 shares. Also includes 150,000 shares
of Common Stock subject to options currently exercisable or which will
become exercisable within 60 days of February 1, 2002 under the 1998 Stock
Incentive Plan.
(4) Includes 7,000 shares of Common Stock held by Mr. Blanchard as trustee of a
revocable trust for the benefit of Mr. Blanchard and his spouse. Also
includes 120,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2002 under the 1998 Stock Incentive Plan.
(5) Includes 32,000 shares of Common Stock held directly by Mr. Sanetti. Also
includes 120,000 shares of Common Stock options currently exercisable or
which will become exercisable within 60 days of February 1, 2002 under the
1998 Stock Incentive Plan.
(6) Includes 4,160 shares of Common Stock held directly by Mr. Kingsley. Also
includes 10,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2002 under the 2001 Stock Option Plan for Non-Employee Directors.
(7) Includes 3,200 shares of Common Stock held directly by Mr. Hornor. Also
includes 10,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2002 under the 2001 Stock Option Plan for Non-Employee Directors.
(8) Includes 800 shares of Common Stock held by Mr. Terhune in joint tenancy
with his wife. Also includes 5,000 shares of Common Stock held by Mr.
Terhune as trustee of a revocable trust for the benefit of Mr. Terhune and
his wife.
(9) Includes 25,500 shares of Common Stock held directly by Mr. Cunniff. Also
includes 10,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2002 under the 2001 Stock Option Plan for Non-Employee Directors. Does not
include 25,500 shares of Common Stock owned by Mr. Cunniff's wife as to
which Mr. Cunniff disclaims beneficial ownership. Mr. Cunniff is the Vice
Chairman, a director and a principal stockholder of Ruane, Cunniff & Co.,
Inc., which manages discretionary accounts and which holds 145,144 shares
of Common Stock. The firm of Ruane, Cunniff & Co., Inc. is able to direct
the sale or disposition of the 145,144 shares; however, 8,800 shares may be
voted by Ruane, Cunniff & Co., Inc. and 136,344 shares may be voted only by
their beneficial owners. Mr. Cunniff disclaims beneficial ownership of such
145,144 shares.
(10) Includes 1,200 shares of Common Stock held directly by General Kelley and
800 shares held in joint tenancy by General Kelley and his wife. Also
includes 10,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2002 under the 2001 Stock Option Plan for Non-Employee Directors.
(11) Includes 1,000 shares of Common Stock held directly by Admiral Service.
Also includes 10,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2002 under the 2001 Stock Option Plan for Non-Employee Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES NAMED ABOVE.
4
DIRECTOR COMPENSATION AND INFORMATION ABOUT
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 2001, the Company paid each Director who was not also an officer of
the Company $20,000 in annual fees for services as a member of the Board of
Directors. Each Director who was also an officer received $6,000 in annual fees.
During 2001, each Director who was not also an officer of the Company received
an attendance fee of $1,500 per meeting, and each Director who was also an
officer received an attendance fee of $500 per meeting. All Directors were
reimbursed for out-of-pocket expenses related to attendance at meetings. Each
Director who was a member of any of the committees of the Board received $1,000
for each committee meeting attended.
On January 5, 2001, each current non-employee member of the Board was
granted a non-qualified stock option to purchase 20,000 shares of Common Stock
at an exercise price of $9.875 per share under the 2001 Stock Option Plan for
Non-Employee Directors, which was approved by the stockholders of the Company on
May 3, 2001. These options vest and become exercisable in four equal annual
installments of 25% of the total number of options awarded, beginning on the
date of grant and on each of the next succeeding three anniversaries thereafter.
The Company does not have a nominating committee or a committee performing
a similar function. The function of a nominating committee is performed by the
entire Board of Directors.
In 2001, the members of the Audit Committee were Townsend Hornor, Richard
T. Cunniff and Paul X. Kelley. The Audit Committee recommends the engagement of
the independent auditors, reviews the arrangement and scope of the audit and
considers comments made by the independent auditors. In addition to
out-of-pocket expenses related to attendance at meetings, Messrs. Hornor,
Cunniff and Kelley each received $4,000 for services rendered on such Committee
in 2001. The Audit Committee held four meetings during 2001. The "Report of the
Audit Committee" is included in this annual Proxy Statement. The Audit Committee
is governed by a written charter which was adopted by the Board of Directors on
May 11, 2000 and reaffirmed on May 3, 2001. A copy of this charter is included
in this annual Proxy Statement as Exhibit A.
In 2001, the members of the Compensation Committee were Paul X. Kelley,
Richard T. Cunniff and James E. Service. The function of the Compensation
Committee is to fix the salaries and bonuses of the executive officers of the
Company and the compensation of the Company's Directors. In addition to
out-of-pocket expenses related to attendance at meetings, Messrs. Kelley and
Cunniff each received $1,000, and Admiral Service received $0, for services
rendered on such committee in 2001. The Compensation Committee held one meeting
during 2001. The "Compensation Committee Report on Executive Compensation" is
included in this annual Proxy Statement.
The Board of Directors held four meetings during 2001. All Directors
attended at least seventy-five percent (75%) of the aggregate of the total
number of meetings of the Board of Directors. With the exception of Admiral
Service, who did not attend the Compensation Committee meeting, all Directors
attended all meetings held by all committees of the Board of Directors on which
each such Director served.
5
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION*
Overall Policy
The Company's executive compensation program is designed to reflect
both corporate performance and individual responsibilities and performance. The
Compensation Committee administers the Company's overall compensation strategy
in an attempt to relate executive compensation appropriately to the Company's
overall growth and success and to the executive's duties and demonstrated
abilities. The objectives of this strategy are to attract and retain the best
possible executives, to motivate these executives to achieve the Company's
business goals and to provide a compensation package that recognizes individual
contributions as well as overall business results. The Compensation Committee
and the Board of Directors as a whole have ultimate responsibility for executive
compensation.
These reviews permit an ongoing evaluation of the relationship between the
size and scope of the Company's operations, its performance and its executive
compensation. The Compensation Committee also considers the legal and tax effect
(including, without limitation, the effects of Section 162(m) of the Internal
Revenue Code of 1986, as amended) of the Company's executive compensation
program in order to provide the most favorable legal and tax consequences for
the Company and its executive officers.
The Compensation Committee determines the compensation of the Company's
executive officers, including the individuals whose compensation is detailed in
this proxy statement. The key elements of the Company's executive compensation
consist of base salary, annual bonus and stock options, as discussed below.
Base Salaries
Base salaries for executive officers are determined by considering
historical salaries paid by the Company to officers having certain duties and
responsibilities and then evaluating the current responsibilities of the
position, the scope of the operations under management and the experience of the
individual. Salary adjustments are determined by evaluating on an individual
basis new responsibilities of the executive's position, changes in the scope of
the operations managed, the performance of such operations, the performance of
the executive in the position and annual increases in the cost of living.
Annual Bonus
The Company's executive officers are eligible for an annual cash bonus.
Annual bonuses are determined on the basis of corporate performance. The most
significant corporate performance measure for bonus payments is earnings of the
Company. In determining annual bonuses, the Compensation Committee considers the
views of the Chief Executive Officer and discusses with him the appropriate
bonuses for all officers.
Stock Options
Under the Company's 1998 Stock Incentive Plan, stock options may be
granted to the Company's executive officers. The Compensation Committee sets
guidelines for the size of stock option awards
6
based on factors similar to those used to determine base salaries and annual
bonuses. Stock options are designed to align the interests of executives with
those of the stockholders.
Under the 1998 Stock Incentive Plan, stock options are typically granted
with an exercise price equal to the market price of the Company's common stock
on the date of grant and vest over time. This approach is designed to encourage
the creation of stockholder value over the long term since the full benefit of
the compensation package cannot be realized unless stock price appreciation
occurs over time.
Chief Executive Officer's Compensation
Following William B. Ruger, Jr.'s appointment as Chief Executive Officer
on October 24, 2000, the Compensation Committee reviewed Mr. Ruger, Jr.'s
compensation as well as the compensation of the Company's other executive
officers who had been assigned positions of increased responsibility. Based on
the Committee's recommendations as a result of this review, the Board of
Directors approved an increase to William B. Ruger, Jr.'s base salary from
$225,000 per year to $400,000. Prior to October 24, 2000, Mr. Ruger, Jr.'s base
salary had not increased since January 1, 1998.
Conclusion
Through the programs described above, a significant portion of the
Company's executive compensation is linked directly to individual and corporate
performance. The Compensation Committee intends to continue the policy of
linking executive compensation to corporate and individual performance,
recognizing that the ups and downs of the business cycle from time to time may
result in an imbalance for a particular period.
COMPENSATION COMMITTEE
Paul X. Kelley, Committee Chairman
Richard T. Cunniff
James E. Service
January 31, 2002
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors for the year 2001 were those named above in the Compensation Committee
Report on Executive Compensation. No member of the Committee was at any time
during the year 2001 or at any other time an officer or employee of the Company.
No executive officer of the Company has served on the board of directors or
compensation committee of any other entity that has or has had one or more
executive officers serving as a member of the Board of Directors.
* The report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under either the Securities Act of 1933, as
amended, or the Exchange Act (together, the "Acts"), except to the extent
that the Company specifically incorporates such report by reference; and
further, such report shall not otherwise be deemed filed under the Acts.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
compensation for calendar years 2001, 2000 and 1999 for the Company's Chief
Executive Officer and the three highest paid executive officers other than the
Chief Executive Officer whose salary and bonus exceed $100,000.
ANNUAL COMPENSATION LONG TERM COMPENSATION
OTHER ALL
ANNUAL OTHER
COMPEN- COMPEN-
NAME AND SALARY(1) BONUS SATION(2) SATION(3),(4)
PRINCIPAL POSITION YEAR $ $ $ $
---- --------- ---------- ---------- --------------
William B. Ruger, Jr. - 2001 $408,000 $ 52,000 $ 25,657 $ 60,792
Chairman of the Board of 2000 265,813 129,000 10,203 43,220
Directors and Chief Executive 1999 233,500 125,000 7,553 35,502
Officer as of October 24,
2000. Prior thereto, Vice
Chairman, Senior Executive
Officer and President.
Director.
Erle G. Blanchard - 2001 $283,000 $ 32,700 $ 30,677 $ 81,734 (5)
Vice Chairman, President, Chief 2000 167,500 79,000 23,105 64,508 (5)
Operating Officer and 1999 140,000 75,000 17,273 70,728 (5)
Treasurer as of October 24,
2000. Prior thereto, Vice
President and Controller.
Director.
Stephen L. Sanetti - 2001 $283,000 $ 39,000 $ 36,801 $ 41,526
Vice Chairman, Senior 2000 202,167 99,000 27,047 30,154
Executive Vice President and 1999 183,000 95,000 22,148 26,816
General Counsel as of
October 24, 2000. Prior
thereto, Vice President and
General Counsel. Director.
Leslie M. Gasper - 2001 $91,250 $ 10,800 $ 12,212 $ 13,868
Corporate Secretary 2000 77,875 26,000 10,847 11,861
1999 70,000 24,000 0 10,764
8
(1) Includes Director's Fees.
(2) The amounts set forth in this column represent "gross-ups" for taxes
incurred on benefits received pursuant to the Company's Supplemental
Executive Profit Sharing Plan (the "Supplemental Plan").
(3) The amounts set forth in this column represent benefits received pursuant
to the Company's Salaried Employees' Profit Sharing Plan, Supplemental
Plan, and taxable premiums paid by the Company for group term life
insurance for the named individuals, respectively, as follows: William B.
Ruger, Jr., 2001 - $25,500, $34,500 and $792, 2000 - $25,500, $13,172 and
$792 , 1999 - $24,000, $9,750 and $972; Erle G. Blanchard, 2001 - $0,
$41,250 and $436, 2000 - $0, $24,881 and $276, 1999 - $2,400, $18,600 and
$426; Stephen L. Sanetti, 2001 - $0, $41,250 and $276, 2000 - $0, $29,125
and $276, 1999 - $2,400, $23,850 and $369; Leslie M. Gasper, 2001 - $0,
$13,688 and $180, 2000 - $0, $11,681 and $180, 1999 - $10,500, $0 and $264.
(4) The amounts set forth in this column also include the taxable value and
"gross-ups" for taxes for Company products given to the named individuals
respectively, as follows: William B. Ruger, Jr., 2001 - $0 and $0, 2000 -
$2,650 and $1,106, 1999 - $550 and $230; Erle G. Blanchard, 2001 - $0 and
$0, 2000 - $497 and $256, 1999 - $130 and $67; Stephen L. Sanetti, 2001 -
$0 and $0, 2000 - $497 and $256, 1999 - $130 and $67; Leslie M. Gasper,
2001 - $0 and $0, 2000 - $0 and $0, 1999 - $0 and $0.
(5) The amounts set forth in this column for Erle G. Blanchard also include the
taxable value of moving expenses and "gross-ups" for taxes related to
moving expenses reimbursed to Mr. Blanchard, respectively, as follows: 2001
- $31,005 and $9,043, 2000 - $29,800 and $8,798, 1999 - $32,721 and
$16,384.
9
2001 OPTION GRANTS -
1998 STOCK INCENTIVE PLAN
The following table sets forth certain information regarding stock options
granted during 2001 under the 1998 Stock Incentive Plan by the Company to the
executive officers named in the Summary Compensation Table.
POTENTIAL REALIZABLE VALUE AT
INDIVIDUAL GRANTS ASSUMED INTEREST RATES OF
--------------------------------------------------------------- STOCK PRICE APPRECIATION FOR
NUMBER OF PERCENT OF OPTION TERM (3)
SECURITIES TOTAL OPTIONS -------------------------------
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN OR
GRANTED (1) FISCAL YEAR BASE PRICE(2) EXPIRATION @5% @10%
# % $/SHARE DATE $ $
NAME ---------------- -------------- ------------- ----------- --------- -----------------
William B. Ruger, Jr. 0 0.0% n/a n/a n/a n/a
Erle G. Blanchard 0 0.0% n/a n/a n/a n/a
Stephen L. Sanetti 0 0.0% n/a n/a n/a n/a
Leslie M. Gasper 0 0.0% n/a n/a n/a n/a
(1) All options vest in five equal annual installments.
(2) The exercise price is the closing price of the Common Stock as of the date
of grant.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed annual rates of share price appreciation mandated by
the Securities and Exchange Commission of 5% and 10% of the fair value of
the Common Stock on the date of grant of the options, compounded annually
from the date of the grant to the option expiration date. The gains shown
are net of the option exercise price, but do not include deductions for
taxes or other expenses associated with the exercise. Actual gains, if any,
are dependent upon the performance of the Common Stock and the date on
which the option is exercised. There can be no assurance that the values
reflected will be achieved.
10
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth certain information regarding stock options
granted under the 1998 Stock Incentive Plan which were exercised during Fiscal
2001 by executive officers of the Company named in the Summary Compensation
Table.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS AT
ACQUIRED ON VALUE FISCAL YEAR-END FISCAL YEAR-END
EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE (1) EXERCISABLE/UNEXERCISABLE (2)
NAME # $ # #
William B. Ruger, Jr. 0 $ 0.00 150,000 / 100,000 $ 6,375/$4,250
Erle G. Blanchard 0 0.00 120,000 / 80,000 5,100/3,400
Stephen L. Sanetti 0 0.00 120,000 / 80,000 5,100/3,400
Leslie M. Gasper 0 0.00 30,000 / 20,000 1,275/850
(1) Stock options awarded December 31, 1998 under the 1998 Stock Incentive Plan
at an exercise price of $11.9375 per share.
(2) Value is based on the difference between the closing price of the Common
Stock on December 31, 2001, $11.98, and the exercise price on the date of
grant.
11
PENSION PLAN TABLE
Estimated Amounts of Annual Pension Payable from the
Salaried Employees' Retirement Income Plan
for the Participant's Life,
HIGHEST 60-CONSECUTIVE-MONTH YEARS OF CREDITED SERVICE
AVERAGE ANNUALIZED BASE PAY 15 YEARS 20 YEARS 25 YEARS
$ 75,000 $ 11,372 $ 15,162 $ 18,953
100,000 16,372 21,829 27,286
125,000 21,372 28,496 35,620
150,000 26,372 35,162 43,953
All of the Company's salaried employees participate in the Sturm, Ruger &
Company, Inc. Salaried Employees' Retirement Income Plan (the "Pension Plan"),
which in general provides annual pension benefits at age 65 in an amount equal
to: (i) 1-1/3% of the participant's final average salary (highest
60-consecutive-month average annualized base pay during the last 120 months of
employment) less 0.65% of the participant's Social Security covered
compensation, multiplied by (ii) the participant's years of credited service up
to a maximum of 25 years.
The pensions listed in the table above are not subject to any offset or
deduction for Social Security or any other benefits.
As of December 31, 2001, William B. Ruger, Jr. and Leslie M. Gasper each
had more than 25 years of credited service, and Erle G. Blanchard and Stephen
L. Sanetti each had 21 years of credited service.
An indication of the average annualized base pay under the Pension Plan
for these individuals can be found in the Salary column of the Summary
Compensation Table.
12
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TABLE
Estimated Amounts of Annual Plan Benefit Payable from the
Supplemental Executive Retirement Plan
for the Participant's Life,
Commencing During 2001 at Age 65
YEARS OF CREDITED SERVICE
AVERAGE ANNUAL COMPENSATION 15 YEARS 20 YEARS 25 YEARS
$125,000 $ 5,196 $ 13,072 $ 20,948
150,000 9,196 18,406 27,615
175,000 13,196 23,739 34,282
200,000 17,196 29,072 40,948
225,000 21,196 34,406 47,615
250,000 28,196 43,739 59,282
300,000 43,196 63,739 84,282
400,000 73,196 103,739 134,282
The Sturm, Ruger & Company, Inc. Supplemental Executive Retirement Plan (the
"SERP") is a nonqualified supplemental retirement plan for certain senior
executives of the Company. Three of the executive officers who appear in the
Summary Compensation Table, William B. Ruger, Jr., Erle G. Blanchard and Stephen
L. Sanetti participate in the SERP. The SERP provides an annual benefit
beginning at age 65 in an amount equal to 2% of the participant's average annual
compensation for each complete year of service with the Company up to a maximum
of 50% of such average compensation. The annual benefit is reduced by the amount
the participant is entitled to receive under the Pension Plan, and is further
reduced by the amount of Social Security benefit the participant is entitled to
receive commencing at age 65. The SERP benefit is payable as an annuity over the
life of the participant, with 50% to continue for the life of the participant's
surviving spouse after the participant's death.
The average annual compensation shown in the above table includes the
participant's base pay, bonuses and other compensation for the participant's
highest consecutive 36 months of service (or, if the participant's service was
less than 36 months, then for the entire period of service) as reported in the
Summary Compensation Table, except that benefits received under the Salaried
Employees' Profit Sharing Plan and taxable premiums paid by the Company for
group term life insurance are excluded from the SERP compensation formula. The
annual compensation upon which the SERP benefit is calculated is limited to
$400,000. As of December 31, 2001, William B. Ruger, Jr. had more than 25 years
of credited service, and Erle G. Blanchard and Stephen L. Sanetti each had 21
years of credited service. The estimated amounts presented above assume that the
participant attained age 65 in 2001.
John M. Kingsley, Jr., a Company Director who retired as Executive Vice
President of the Company on December 31, 1996, received $139,200 in benefits
from the SERP during 2001.
13
The SERP provides that in the event of a change in control of the Company
participants in pay status shall be entitled to receive a lump-sum payment equal
to the present value of the participant's benefit. Those not in pay status shall
become fully vested and generally, if terminated within three years of a change
in control, become entitled to a lump-sum payment. The payment shall be computed
based upon the participant's average compensation and years of service with the
Company on the date of change in control (provided, however, that in the event
of a change in control, the participant's years of service with the Company for
purposes of computing the benefit amount shall not be less than ten). A change
in control is defined to mean the effective date of one of the following events:
(i) sale or exchange of substantially all of the capital stock of the Company;
(ii) sale of substantially all of the assets of the Company; (iii) sale of
substantially all of the capital stock of the Company owned of record and
beneficially held by William B. Ruger and members of his family; or (iv) the
merger or consolidation of the Company with or into one or more other
corporations; and, in each of such four cases, the sale of stock or assets is
to, or the exchange of stock is with, or the merger or consolidation is with or
into one or more persons, firms or corporations which does not own at least 10%
of the capital stock of the Company.
14
COMPANY STOCK PRICE PERFORMANCE
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
Sturm, Ruger & Company, Inc., Standard & Poor's 500 and Value Line Recreation
Industry Index
(Performance Results Through 12/31/01)
[TIMELINE BAR CHART]
Assumes $100 invested at the close of trading 12/96 in Sturm, Ruger & Company,
Inc. Common Stock, Standard & Poor's 500, and Value Line Recreation Industry
Index.
*Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
1996 1997 1998 1999 2000 2001
Sturm, Ruger & Company, Inc. 100.00 99.36 67.71 54.59 61.22 83.94
Standard & Poor's 500 100.00 133.23 171.07 205.77 184.90 160.79
Value Line Recreation Industry 100.00 160.43 193.90 249.48 256.69 363.72
The peer group in the above graph is the Value Line Recreation Industry.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of February 1, 2002 the ownership of
Common Stock by each person of record or known by the Company to own
beneficially more than 5% of such stock.
NAME AND ADDRESS
OF BENEFICIAL OWNER SHARES BENEFICIALLY PERCENT OF CLASS
OWNED
William B. Ruger 4,272,000(1) 15.87%
P.O. Box 447
Newport, NH 03773
William B. Ruger, Jr. 7,046,000(2) 26.18%
P.O. Box 293
Newport, NH 03773
Carolyn R. Vogel 5,022,000(3) 18.66%
P.O. Box 906
Harrisville, NH 03450
Ruger Business 4,272,000(4) 15.87%
Holdings, L.P.
Ruger Management, Inc.
Lacey Place
Southport, CT 06490
(1) Includes 4,272,000 shares of Common Stock held in the name of Ruger
Business Holdings, L.P., of which Mr. Ruger is the sole limited partner and
Ruger Management, Inc. is the sole general partner. Ruger Management, Inc.
is collectively owned by William B. Ruger, Jr. and Carolyn Ruger Vogel (son
and daughter of William B. Ruger). Messrs. Ruger, Ruger, Jr. and Mrs. Vogel
have shared investment and voting control with respect to such 4,272,000
shares of Common Stock.
(2) Includes 4,272,000 shares of Common Stock as disclosed in footnote (1)
above. Also includes 800,000 shares of Common Stock owned directly by Mr.
Ruger, Jr., and 1,824,000 shares of Common Stock held by a trust of which
Mr. Ruger, Jr. is a trustee. Mr. Ruger, Jr. has sole investment and voting
control with respect to such 2,624,000 shares. Also includes 150,000 shares
of Common Stock subject to options currently exercisable or which will
become exercisable within 60 days of February 1, 2002 under the 1998 Stock
Incentive Plan.
(3) Includes 4,272,000 shares of Common Stock as disclosed in footnote (1)
above. Also includes 750,000 shares of Common Stock owned directly by Mrs.
Vogel. Mrs. Vogel has sole investment and voting control with respect to
such 750,000 shares.
(4) Represents the 4,272,000 shares of Common Stock disclosed in footnote (1)
above.
16
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of February 1, 2002
as to the number of shares of Common Stock beneficially owned by the Chief
Executive Officer of the Company, each of the three most highly compensated
executive officers of the Company other than the Chief Executive Officer, and
all Directors and executive officers of the Company as a group. See ELECTION OF
DIRECTORS above for such information with respect to each Director of the
Company.
NAME OF BENEFICIAL OWNER* SHARES BENEFICIALLY PERCENT OF CLASS
OWNED
William B. Ruger, Jr. 7,046,000(1),(2) 26.18%
Erle G. Blanchard 127,000(3) **
Stephen L. Sanetti 152,000(4) **
Leslie M. Gasper 30,049(5) **
All Directors and executive 7,446,709 27.67%
officers as a group (6
non-officer Directors, 3
Directors who were also
executive officers during
2001 and 1 other executive
officer)
* The address of each of the executive officers named in this Security
Ownership of Management table is c/o Sturm, Ruger & Company, Inc., Lacey
Place, Southport, Connecticut 06490.
* *Beneficial owner of less than 1% of the outstanding Common Stock of the
Company.
(1) Includes 4,272,000 shares of Common Stock held in the name of Ruger
Business Holdings, L.P., of which William B. Ruger is the sole limited
partner and Ruger Management, Inc. is the sole general partner. Ruger
Management, Inc. is collectively owned by William B. Ruger, Jr. and Carolyn
Ruger Vogel (son and daughter of William B. Ruger). Messrs. Ruger, Ruger,
Jr. and Mrs. Vogel have shared investment and voting control with respect
to such 4,272,000 shares of Common Stock.
(2) Includes 4,272,000 shares of Common Stock as disclosed in footnote (1)
above. Also includes 800,000 shares of Common Stock owned directly by Mr.
Ruger, Jr., and 1,824,000 shares of Common Stock held by a trust of which
Mr. Ruger, Jr. is a trustee. Mr. Ruger, Jr. has sole investment and voting
control with respect to such 2,624,000 shares. Also includes 150,000 shares
of Common Stock subject to options currently exercisable or which will
become exercisable within 60 days of February 1, 2002 under the 1998 Stock
Incentive Plan.
(3) Includes 7,000 shares of Common Stock held by Mr. Blanchard as trustee of a
revocable trust for the benefit of Mr. Blanchard and his spouse. Also
includes 120,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2002 under the 1998 Stock Incentive Plan.
(4) Includes 32,000 shares of Common Stock held directly by Mr. Sanetti. Also
includes 120,000 shares of Common Stock options currently exercisable or
which will become exercisable within 60 days of February 1, 2002 under the
1998 Stock Incentive Plan.
(5) Includes 49 shares of Common Stock held under the CT Gift to Minors Act for
the benefit of Ms. Gasper's two minor daughters. Also includes 30,000
shares of Common Stock options currently exercisable or which will become
exercisable within 60 days of February 1, 2002 under the 1998 Stock
Incentive Plan.
17
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Officers, Directors and greater than ten
percent stockholders are required by Securities and Exchange Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of the
Section 16(a) report forms furnished to the Company and written representations
that no other reports were required, that with respect to the period from
January 1, 2001 through December 31, 2001, all such forms were filed in a
timely manner by the Company's officers, Directors and greater than ten percent
beneficial owners.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
William B. Ruger, Chairman Emeritus of the Board of Directors and former
Chief Executive Officer, serves as a consultant to the Company. For his
services in this capacity, Mr. Ruger receives $20,000 per month and during 2001
received a total of $240,000.
During 2001, the Company paid Newport Mills, of which William B. Ruger,
Jr. is the sole proprietor, $243,750 for storage rental. During 2001, the
Company also paid Mr. Ruger, Jr. $19,500 for the rental of office space
owned by Mr. Ruger, Jr. in Newport, New Hampshire.
Stanley B. Terhune, a Director and former Vice President of the Company,
serves as a consultant to the Company. For his services in this capacity, Mr.
Terhune receives $100 per hour and during 2001 received a total of $65,975,
including bonuses.
18
REPORT OF THE AUDIT COMMITTEE*
During fiscal 2001, Townsend Hornor, Richard T. Cunniff and Paul X. Kelley
served on the Audit Committee (the "Committee"), with Mr. Hornor serving as
Chairman. Each of Messrs. Hornor, Cunniff and Kelley is an "independent
director" as defined in Rule 4200(a)(15) of the National Association of
Securities Dealers, Inc. listing standards. Under the guidance of a written
charter adopted by the Board of Directors, the Committee oversees the Company's
financial reporting process on behalf of the Board of Directors. A copy of the
charter is included in this Proxy Statement as Exhibit A. Management has the
primary responsibility for the financial statements and the reporting process
including the systems of internal controls. In fulfilling its oversight
responsibilities, the Committee reviewed the audited financial statements in the
Annual Report with management including a discussion of the quality, not just
the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion of the conformity of those audited financial
statements with accounting principles generally accepted in the United States,
their judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Committee by Statement on Auditing Standards No. 61 (Communication with
Audit Committees). In addition, the Committee has discussed with the independent
auditors the auditors' independence from management and the Company including
the matters in the written disclosures required by Independence Standard Board
Standard No. 1 (Independence Discussions with Audit Committees), and considered
the compatibility of non-audit services with the auditors' independence.
The Committee discussed with the independent auditors the overall scope and
plans for their audit. The Committee met with the independent auditors, with and
without management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting. The Committee held four meetings during fiscal
2001.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended December 31, 2001
for filing with the Securities and Exchange Commission. The Committee and the
Board have also recommended, subject to shareholder approval, the selection of
the Company's independent auditors.
AUDIT COMMITTEE
Townsend Hornor, Committee Chairman
Richard T. Cunniff
Paul X. Kelley
March 26, 2002
* The report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under either the Securities Act of 1933, as
amended, or the Exchange Act (together, the "Acts"), except to the extent
that the Company specifically incorporates such report by reference; and
further, such report shall not otherwise be deemed filed under the Acts.
19
PROPOSAL NO. 2
APPROVAL OF INDEPENDENT AUDITORS
Effective August 27, 2001, the Audit Committee of the Company dismissed
Ernst & Young LLP and appointed KPMG LLP as its independent auditors. This
change was the result of an extensive search made at the request of the Audit
Committee to review the services and costs associated with the external audit
function. Subject to the ratification of the stockholders, the Board of
Directors has reappointed KPMG LLP as the Company's independent auditors for
the 2002 fiscal year.
Ernst & Young LLP's report on the Company's financial statements for the
past two years did not contain an adverse opinion, disclaimer of opinion, or
qualification or modification as to uncertainty, audit scope, or accounting
principles.
During the two most recent fiscal years and the subsequent interim period
preceding August 27, 2001, there have been no disagreements with Ernst & Young
LLP on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which, if not resolved to the
satisfaction of Ernst & Young LLP, would have caused it to make reference to
the subject matter of the disagreement in connection with its report.
The Company (or someone on its behalf) has not consulted KPMG LLP during
the two most recent fiscal years and the subsequent interim period preceding
August 27, 2001 regarding the application of accounting principles to a
specified transaction or the type of audit opinion that might be rendered on
the Company's financial statements.
Audit Fees
Ernst & Young LLP's aggregate fees, including expenses reimbursed, for
professional services rendered for the audit of the Company's financial
statements for 2001 and the reviews of the Company's quarterly financial
statements for the year 2001 to August 27, 2001 were $54,500.
KPMG LLP's aggregate fees, including expenses reimbursed, for professional
services rendered for the audit of the Company's financial statements for 2001
and the reviews of the Company's quarterly financial statements for the year
2001 from August 27, 2001 were $178,250.
Audit Related Fees
Ernst & Young LLP's aggregate fees, including expenses reimbursed, for
audit related services for the year 2001 to August 27, 2001 were $39,500, and
included audits of certain employee benefit plan financial statements.
KPMG LLP's aggregate fees, including expenses reimbursed, for audit related
services for the year 2001 from August 27, 2001 were $5,000.
20
Financial Information Systems Design and Implementation Fees
Ernst & Young LLP or KPMG LLP did not provide services related to financial
information systems design and implementation to the Company for the year 2001.
All Other Fees
Ernst & Young LLP's aggregate fees, including expenses reimbursed, for
services rendered to the Company other than for services described above, for
the year 2001 to August 27, 2001 were $37,500.
KPMG LLP's aggregate fees, including expenses reimbursed, for services
rendered to the Company other than for services described above, for the year
2001 from August 27, 2001 were $0.
The Company's Audit Committee has considered whether the provision of the
non-audit related services provided by Ernst & Young LLP and KPMG LLP to the
Company is compatible with maintaining the independence of each accounting
firm.
Representatives of KPMG LLP will be present at the Meeting, will have the
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2.
21
PROPOSAL NO. 3
STOCKHOLDER PROPOSAL
The Sinsinawa Dominicans, Inc. of River Forest, Illinois (hereinafter
referred to as the "Proponent"), which owns the requisite shares of Common
Stock for such purposes, has notified the Company that they intend to present
the following proposal at the Annual Meeting. The proposal as submitted, reads
as follows:
"STURM - RUGER REPORT ON GUN POLICIES & PROCEDURES
WHEREAS:
Violence in the United States has become a topic of debate and a major
concern for all;
30,000 Americans die annually by gunfire, including 4,000 children and
teenagers;
There are now some 190 million firearms in civilian hands; the Bureau of
Alcohol, Tobacco and Firearms estimates that approximately 4.3 million guns
were sold in the U.S. in 1997;
The debate and concern includes questions about the promotion and sale
of firearms by gun
manufacturers;
The Unites States leads the industrial world in firearms violence of all
types: homicides, suicides and unintentional deaths;
Most of this violence involves the use of handguns. On average, handguns
are used in nearly 70% of firearms suicides and 80% of firearm homicides;
Handguns are easily concealed, engineered for maximum lethality,
relatively inexpensive, and easy to acquire;
Sturm Ruger is the largest manufacturer of guns in the United States; in
its 50-year history, Sturm Ruger has built 16 million firearms that include
50 different models;
Gun manufacturers are not solely responsible for violence with firearms,
but do bear some responsibility to make efforts, wherever possible, to
prevent the misuse of their products;
Sturm Ruger, in its contracts for the year 2000, has stated that its
firearms should be supplied only to federally licensed firearms dealers
selling exclusively from their regular place of business;
THEREFORE, BE IT RESOLVED: Shareholders request the Board of Directors to
provide a comprehensive report on company policies and procedures aimed at
stemming the incidence of gun violence in the United States. The report,
prepared at reasonable cost and omitting proprietary information, would be
available to stockholders six months after the 2002 annual meeting.
22
SUPPORTING STATEMENT
This report could include, but not be limited to, a description of:
- Clarification of our company's contract instruction to
distributors not to sell Sturm Ruger weapons at gun shows or
through pawn shops;
- Recalls or retro-fits of products with safety related defects
causing death or serious injury to consumers, as well as
development of systems to identify and remedy these defects;
- Names and descriptions of products that are developed or are
being developed for a combination of higher caliber/maximum
capacity (which would yield maximum power) and greater
concealability;
- Our company's involvement in promotion campaigns that could be
construed as aimed at children or based on the development of
fear by the target audience.
We urge shareholder support for this resolution."
The Company will provide information to stockholders regarding the address
and number of shares of Common Stock held by the Proponent promptly upon
receipt of an oral or written request for such information.
POSITION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote "AGAINST" the above proposal. It
is virtually identical to the proposal submitted by the same proponent in 2001,
which received less than 6% of the votes cast on the proposal. The Company of
course does not condone violence involving any misuse of firearms, but we
believe that the intentional criminal misuse of firearms is beyond our control.
Further, we believe that the overall objectives of the proposal are already
being met.
Firearms safety has always been the Company's goal. Furthermore, as
shareholders who follow this Company well know, our commitment to firearms
safety and responsibility is sincere, long-standing, and effective. Firearms
accident claims with our products are at a twenty-five year low. Since this
proposal was overwhelmingly rejected by the shareholders last year, the
National Safety Council has reported that firearms accidents nationwide have
decreased 25% between 1999 and 2000, and their rate has dropped 67% since 1990.
According to the Council's report "Injury Facts - 2001 Edition":
"the numbers of homicide, suicide, and unintentional deaths by firearms
have decreased in each of the last five years. Compared to 1993, homicides
were down 35%, suicides were down 8%, and unintentional deaths decreased
43%."
23
Our high-quality firearms are engineered for safety, strength, reliability,
durability, and accuracy. We voluntarily limited the magazine capacity of our
firearms over a decade ago, well in advance of the 1994 Federal law. We do not
make "Saturday Night Specials" or "Assault Weapons". Our products employ
numerous safety devices appropriate to their designs. We have spent many
millions of dollars voluntarily offering new gun locks and free safety upgrades
to owners of our older products, including our "old model" single action
revolver safety conversion, which has been the most widespread industry firearm
safety program during the last twenty years. Our safety warnings appear in many
publications and on the radio, television and the Internet.
Our advertising and promotional material is designed to be product-oriented
and technical in nature. Our only advertising and promotion directed toward
younger shooters has been directly safety-related, and we do not run product
advertising in any youth-oriented publications or media. We do not engage in
any "fear-based advertising".
Since 1987, the Company has voluntarily shipped its pistols and revolvers
in lock boxes and with a padlock, and since 1999 has shipped its rifles and
shotguns with cable type locking devices. We are in the process of voluntarily
exchanging older locks for newer locks at no cost to our customers. In 2002, we
will begin utilizing gun locks which have been approved by the State of
California after the most rigorous testing of any state in the nation. Our
Distributor Terms and Conditions explicitly state that our firearms may only be
resold to bonafide federally licensed firearms dealers with a regular place of
commercial business. Since 1989, we have supported instantaneous electronic
background checks for all retail firearm purchases.
Like many companies, we receive proposals from well-meaning stockholders.
Many are commendable, and their objectives are often aligned with our values.
We share the goal of firearms safety raised by this proposal, but we believe
that there are appropriate safety practices and procedures in place. We will
address appropriately any future challenges. "Stemming the incidence of gun
violence in the United States", however, must remain first and foremost a law
enforcement issue.
THE BOARD OF DIRECTORS THEREFORE AGAIN RECOMMENDS A VOTE "AGAINST" PROPOSAL
NO. 3.
24
STOCKHOLDER PROPOSALS FOR 2003
In order to be included in the proxy materials for the Company's next Annual
Meeting of Stockholders, stockholder proposals must be received by the Company
on or before November 25, 2002.
OTHER MATTERS
Management of the Company does not intend to present any business at the
Meeting other than as set forth in Items 1, 2 and 3 of the attached Notice of
Annual Meeting of Stockholders, and it has no information that others will
present any other business at the Meeting. If other matters requiring the vote
of the stockholders properly come before the Meeting, it is the intention of
the persons named in the proxy to vote the shares represented thereby in
accordance with their judgment on such matters.
The Company, upon written request, will provide without charge to each
person entitled to vote at the Meeting a copy of its Annual Report on
Securities and Exchange Commission Form 10-K for the year ended December 31,
2001, including the financial statements and financial statement schedules.
Such requests should be directed to Leslie M. Gasper, Corporate Secretary,
Sturm, Ruger & Company, Inc., Lacey Place, Southport, Connecticut 06490.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Leslie M. Gasper
-----------------------------
Leslie M. Gasper
Corporate Secretary
Southport, Connecticut
March 26, 2002
25
EXHIBIT A
STURM, RUGER & COMPANY, INC.
AUDIT COMMITTEE CHARTER
ADOPTED APRIL 11, 2000
REAFFIRMED MAY 3, 2001
Organization
This charter governs the operations of the Audit Committee (the "Committee").
The Committee shall review and reassess the charter annually and obtain the
approval of the Board of Directors. The Committee shall be appointed by the
Board of Directors and shall comprise at least three Directors, each of whom
are independent of management and the Company. Members of the Committee shall
be considered independent if they have no relationship that may interfere with
the exercise of their independence from management and the Company. All
Committee members shall be financially literate (or shall become financially
literate within a reasonable period of time after appointment to the
Committee), and at least one member shall have accounting or related financial
management expertise. (1)
Statement of Policy
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the Board. In
so doing, it is the responsibility of the Committee to maintain free and open
communication between the Committee, independent auditors, and management of
the Company. In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities, and personnel of the Company and the power to retain
outside counsel, or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the Audit Committee is to oversee the Company's
financial reporting process on behalf of the Board and report the results of
their activities to the Board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible
for auditing those financial statements. The Committee in carrying out its
responsibilities believes its policies and procedures should remain flexible,
in order to best react to changing conditions and circumstances. The Committee
should take the appropriate actions to set the overall corporate "tone" for
quality financial reporting, sound business risk practices, and ethical
behavior.
1
The following shall be the principal recurring processes of the Audit Committee
in carrying out its oversight responsibilities. The processes are set forth as
a guide with the understanding that the Committee may supplement them as
appropriate.
- The Committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the Board and the Audit Committee, as representatives of
the Company's shareholders. The Committee shall have the ultimate
authority and responsibility to evaluate and, where appropriate, replace
the independent auditors. The Committee shall discuss with the auditors
their independence from management and the Company and the matters
included in the written disclosures required by the Independence
Standards Board. Annually, the Committee shall review and recommend to
the Board the selection of the Company's independent auditors, subject to
shareholder approval.
- The Committee shall discuss with the independent auditors the overall
scope and plans for their audit. Also, the Committee shall discuss with
management and the independent auditors the adequacy and effectiveness of
the accounting and financial controls, including the Company's system to
monitor and manage business risk, and legal and ethical compliance
programs. Further, the Committee shall have the opportunity to meet with
the independent auditors, with and without management present, to discuss
the results of their examinations.
- The Committee shall discuss with management, on an annual basis, the
overall plans and findings of its internal audit function. As the
internal audit function will be coordinated and carried out by members of
the Company's finance staff, the Committee is empowered to meet with any
member of the finance staff, with and without members of management
present, to discuss the results of their examinations.
- The Committee shall review the interim financial statements prior to the
filing of the Company's Quarterly Report on Form 10-Q when such review is
deemed necessary. Also, the Committee shall discuss the results of the
quarterly review and any other matters when such communication is deemed
appropriate. The chair of the Committee may represent the entire
Committee for the purposes of these reviews and discussions.
- The Committee shall review the financial statements to be included in the
Company's Annual Report on Form 10-K (or the annual report to
shareholders if distributed prior to the filing of Form 10-K). This
review will encompass the quality, not just acceptability, of accounting
principles, the reasonableness of significant judgments, and the clarity
of the disclosures in the financial statements. The Committee shall
discuss the results of the annual audit and any other matters required to
be communicated to the Committee by the independent auditors under
generally accepted auditing standards. Also, the Committee shall
recommend to the Board whether the audited financial statements should be
included in the Company's Annual Report on Form 10-K.
(1) The Board of Directors shall review each individual's qualifications upon
nomination to the Audit Committee to ensure that the "financial literacy"
and "accounting or related management expertise" criteria, when
applicable, are satisfied.
2
DIRECTIONS TO THE
STURM, RUGER & COMPANY, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
THURSDAY, MAY 9, 2002 AT 10:30 A.M.
AT THE
LAKE SUNAPEE COUNTRY CLUB
100 COUNTRY CLUB LANE
NEW LONDON, NEW HAMPSHIRE 03257
(603) 526-6040
FROM NEW YORK (APPROXIMATELY 5 HOURS BY CAR) -
1) Take Interstate 95 North to Interstate 91 North in New Haven,
Connecticut.
2) Follow I-91 through Massachusetts to Interstate 89 at White River
Junction, Vermont.
3) Take I-89 South to Exit 11. Turn left at end of ramp, go straight 1
-1/2 miles to 2nd flashing light. Fairway Motel and entrance to Lake
Sunapee Country Club is on the right.
4) Turn right into entrance; proceed approximately 1/4 mile to LAKE
SUNAPEE COUNTRY CLUB INN.
FROM BOSTON (APPROXIMATELY 1 3/4 HOURS BY CAR) -
1) Take Interstate 93 North from Boston to Interstate 89 North in
Concord, New Hampshire.
2) In Concord, take I-89 North to Exit 11. Turn right at end of ramp, go
straight 1 -1/2 miles to 2nd flashing light. Fairway Motel and
entrance to Lake Sunapee Country Club is on the right.
3) Turn right into entrance; proceed approximately 1/4 mile to LAKE
SUNAPEE COUNTRY CLUB INN.
FROM MANCHESTER AIRPORT (APPROXIMATELY 1 HOUR BY CAR) -
1) When leaving Manchester Airport, turn right onto Brown Street
(residential). Go right onto Route 293/101 East, then left to
Interstate 93 North toward Concord, New Hampshire.
2) In Concord, take Interstate 89 North to Exit 11. Turn right at end of
ramp, go straight 1 -1/2 miles to 2nd flashing light. Fairway Motel
and entrance to Lake Sunapee Country Club is on the right.
3) Turn right into entrance; proceed approximately 1/4 mile to LAKE
SUNAPEE COUNTRY CLUB INN.
PROXY PROXY
STURM, RUGER & COMPANY, INC.
LACEY PLACE, SOUTHPORT, CONNECTICUT 06490
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 9, 2002
The undersigned hereby appoints William B. Ruger, Jr., Erle G. Blanchard
and Leslie M. Gasper as Proxies, each with the full power to appoint his or her
substitute, and hereby authorizes them to represent and to vote, as designated
below, all the shares of Common Stock of Sturm, Ruger & Company, Inc. (the
"Company"), held of record by the undersigned on March 15, 2002 at the Annual
Meeting of Stockholders to be held on May 9, 2002 or any adjournment or
postponement thereof.
The proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted "FOR" the election of all directors, "FOR" Proposal 2, and "AGAINST"
Proposal 3. Please sign exactly as name appears on other side of this proxy
form.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY FORM PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
STURM, RUGER & COMPANY, INC.
PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY [X]
A. ELECTION OF DIRECTORS
1. The Board of Directors unanimously recommends a Vote FOR the election of
ten Directors:
FOR WITHHOLD FOR WITHHOLD
William B. Ruger [ ] [ ] Townsend Hornor [ ] [ ]
William B. Ruger, Jr. [ ] [ ] Paul X. Kelley [ ] [ ]
Erle G. Blanchard [ ] [ ] John M. Kingsley, Jr. [ ] [ ]
Stephen L. Sanetti [ ] [ ] James E. Service [ ] [ ]
Richard T. Cunniff [ ] [ ] Stanley B. Terhune [ ] [ ]
B. ISSUES
The Board of Directors unanimously recommends a Vote:
FOR AGAINST ABSTAIN
2. FOR The approval of the appointment of [ ] [ ] [ ]
KPMG LLP as the independent auditors
of the Company for the 2002 fiscal year.
FOR AGAINST ABSTAIN
3. AGAINST The Stockholder Proposal for a [ ] [ ] [ ]
"Report on Gun Policies and Procedures.
FOR AGAINST ABSTAIN
4. In their discretion, the Proxies are authorized [ ] [ ] [ ]
to vote upon such other business as may
properly come before the meeting.
Dated: , 2002
-------------------------------------
Signature(s):
-------------------------------------
When shares are held by joint tenants, both
should sign. When signing as an attorney, as
executor, administrator, trustee or
guardian, please give your full title as
such. If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.