At Sturm Ruger Annual Meeting, Activist Investors Push For 'Smart Gun' Products
At Sturm Ruger’s annual shareholder meeting in New London, N.H., Wednesday, the gun manufacturer defended its business model and rejected a push to unseat two board members.
In recent years Ruger, which is based in Connecticut and employs approximately 1,000 people at a facility in Newport, N.H., has been targeted by so-called activist investors who buy shares in publicly traded companies and then attempt to change internal policies.
Led by several faith-based groups who are members of the Interfaith Center on Corporate Responsibility, those investors are pushing the company to reduce the risk of gun violence, in part, by developing “smart gun” products that can’t fire without an owner’s fingerprint or other unlocking feature.
Ruger CEO Christopher Killoy responded during the meeting that rolling out a line of these weapons would be a financial loser.
“While people think there is often a great market for 'smart guns,' or user-authorized technology, we are not seeing it,” he said.
The company’s decision to not pursue smart guns frustrated Colleen Scanlon, an activist investor with Catholic Health Initiatives, which is based in Colorado, where a school shooting on Tuesday killed one student and injured others.
“We find management’s decision dangerously short sighted. It ignores a significant business opportunity, as well as one of the most promising prospects for reducing gun violence,” Scanlon told shareholders.
Last year, Scanlon and other faith-based activist investors successfully persuaded Ruger shareholders to adopt a resolution requiring the company to produce a report investigating the viability of smart guns and how the company assesses risks related to gun violence.
This year, the activist group failed in its efforts to remove two members of the board of directors, including Chairman Michael Jacobi and Sandra Froman, who served as NRA president in the mid 2000s.
Ruger did appear receptive, however, to another demand of activists: that the company meaningfully engage in conversations with faith-based shareholders, who have criticized Ruger’s refusal to meet.
Earlier this week, the gun maker released its first quarter earnings which showed a 13-percent decline in net sales from a year ago. The company points to an industry-wide slump in firearms sales since 2016.
Activists argue that the company could shore up its financial situation by being an industry leader in gun safety.
“The risks posed by escalating gun violence are increasingly damaging in our opinion to both reputation and financial viability,” said Laura Krausa, who represents Adrian Dominican Sisters, an order of nuns who own Ruger shares.
Killoy, Ruger’s CEO, pushed back against any criticisms that the company wasn’t putting the safety of its products at the forefront.
“I think the way we conduct ourselves is very professional, very ethical, and there’s nothing we’re ashamed of, as far as how we do business,” he said. “We take our reputational risk very seriously, but again, we are in the gun business.”