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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
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[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
Sturm, Ruger & Company, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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STURM, RUGER & COMPANY, INC.
SOUTHPORT, CONNECTICUT 06490 USA
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 3, 2001
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 3rd day of
May, 2001 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 ratify the 2001 Stock Option Plan for Non-Employee
Directors.
3. A proposal to approve the appointment of Ernst & Young LLP as the
Company's independent auditors for the 2001 fiscal year.
4. A Stockholder proposal.
5. 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, 2001 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.
By Order of the Board of Directors
/s/ Leslie M. Gasper
Leslie M. Gasper
Corporate Secretary
Southport, Connecticut
March 26, 2001
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.
3
March 26, 2001
STURM, RUGER & COMPANY, INC.
LACEY PLACE, SOUTHPORT, CONNECTICUT 06490
PROXY STATEMENT
2001 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 2001 Annual Meeting of Stockholders (the "Meeting") of
the Company to be held at 10:30 a.m. on May 3, 2001 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, 2001.
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, 2000,
including financial statements, is enclosed herewith.
Only holders of Common Stock of record at the close of business on March
15, 2001 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,
2001, 26,910,720 shares of Common Stock were issued and outstanding. 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.
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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.
With the exception of Erle G. Blanchard, who became a Director on October
24, 2000, 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, 2001.
BUSINESS EXPERIENCE FIRST SHARES PERCENT
DURING THE PAST FIVE YEARS AND BECAME A BENEFICIALLY OF
NAME AGE OTHER DIRECTORSHIPS DIRECTOR OWNED CLASS
- ---- --- ------------------------------ --------- ------------ -------
William B. Ruger 84 Chairman Emeritus. Retired as January, 4,272,000(1) 15.87%
Chairman of the Board, Chief 1949
Executive Officer and Treasurer on
October 24, 2000.
William B. Ruger, Jr.(2) 61 Chairman of the Board of Directors March, 6,996,000(1),(3) 26.00%
and Chief Executive Officer as of 1970
October 24, 2000. Prior thereto, Vice
Chairman, Senior Executive Officer
from July 18, 1995, and President and
Chief Operating Officer from March 1,
1998.
Erle G. Blanchard 54 Vice Chairman, President, Chief October, 87,000(4) *
Operating Officer and Treasurer as of 2000
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.
Stephen L. Sanetti 51 Vice Chairman, Senior Executive Vice March, 112,002(5) *
President and General Counsel as of 1998
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.
John M. Kingsley, Jr. 69 Director of the Neurological April, 9,160(6) *
Institute of New Jersey. Trustee of 1972
Brundge, Story and Rose Investment
Trust. Retired as Executive Vice
President of the Company on December
31, 1996.
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BUSINESS EXPERIENCE FIRST SHARES PERCENT
DURING THE PAST FIVE YEARS AND BECAME A BENEFICIALLY OF
NAME AGE OTHER DIRECTORSHIPS DIRECTOR OWNED CLASS
- ---- --- ------------------------------ --------- ------------ -------
Townsend Hornor 74 Director and Audit Committee member April, 8,200(7) *
of Nickerson Lumber Company. Chairman 1972
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.
Stanley B. Terhune 75 Consultant to the Company. Retired as January, 5,800(8) *
Vice President of the Company on 1975
January 31, 1992.
Richard T. Cunniff 78 Vice Chairman and Director of the December, 30,500(9) *
Sequoia Fund, an investment company 1986
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.
Paul X. Kelley 72 Partner, J.F. Lehman & Company April, 7,000(10) *
(private investments). Vice Chairman, 1990
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).
James E. Service 70 Consultant, Invesmart (investment July, 6,000(11) *
management). Commander, United States 1992
Naval Air Force, Pacific Fleet, from
1985 to 1987. Director of Wood River
Medical Center, Ketchum, Idaho from
1992 to 1996.
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* 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 Mr. Ruger, 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 100,000 shares
of Common Stock subject to options
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currently exercisable or which will become exercisable within 60 days of
February 1, 2001 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 80,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2001 under the 1998 Stock Incentive Plan.
(5) Includes 32,000 shares of Common Stock held directly by Mr. Sanetti and two
shares owned by Mr. Sanetti's daughter. Also includes 80,000 shares of
Common Stock options currently exercisable or which will become exercisable
within 60 days of February 1, 2001 under the 1998 Stock Incentive Plan.
(6) Includes 4,160 shares of Common Stock held directly by Mr. Kingsley. Also
includes 5,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2001 under the 2001 Stock Option Plan for Non-Employee Directors, subject
to stockholder approval.
(7) Includes 3,200 shares of Common Stock held directly by Mr. Hornor. Also
includes 5,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2001 under the 2001 Stock Option Plan for Non-Employee Directors, subject
to stockholder approval.
(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 5,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2001 under the 2001 Stock Option Plan for Non-Employee Directors, subject
to stockholder approval. 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 253,169 shares of Common Stock. The firm of Ruane,
Cunniff & Co., Inc. is able to direct the sale or disposition of the
253,169 shares; however, 30,200 shares may be voted by Ruane, Cunniff &
Co., Inc. and 222,969 shares may be voted only by their beneficial owners.
Mr. Cunniff disclaims beneficial ownership of such 253,169 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 5,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2001 under the 2001 Stock Option Plan for Non-Employee Directors, subject
to stockholder approval.
(11) Includes 1,000 shares of Common Stock held directly by Admiral Service.
Also includes 5,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2001 under the 2001 Stock Option Plan for Non-Employee Directors, subject
to stockholder approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES NAMED
ABOVE.
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DIRECTOR COMPENSATION AND INFORMATION ABOUT
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 2000, the Company paid each Director who was not also an officer of
the Company $13,000 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 2000, each Director also received an attendance fee of $500 per meeting
and was reimbursed for out-of-pocket expenses related to attendance at meetings.
The fees paid to a Director for his services as a member of the Board of
Directors during 2000 did not include any compensation payable to such Director
in connection with service by such Director on any of the committees of the
Board. On December 18, 2000, the Board of Directors voted to increase the fees
payable to non-officer Directors as of January 1, 2001 to $20,000 in annual
fees, $1,500 for each Board meeting attended, and $1,000 for each committee
meeting attended as a committee member. The Board also voted to adopt the 2001
Stock Option Plan for Non-Employee Directors, subject to shareholder approval,
described in this annual Proxy Statement.
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 2000, 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 $1,000 for services rendered on such Committee
in 2000. The Audit Committee held two meetings during 2000. 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. A copy of this charter is included in this annual Proxy Statement
as Exhibit A.
In 2000, 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. Except for out-of-
pocket expenses related to attendance at meetings, Messrs. Kelley, Cunniff and
Service did not receive compensation for services rendered on such committee in
2000. The Compensation Committee held one meeting during 2000. The "Compensation
Committee Report on Executive Compensation" is included in this annual Proxy
Statement.
The Board of Directors held four meetings during 2000. All Directors
attended at least seventy-five percent (75%) of the aggregate of the total
number of meetings of the Board of Directors. All Directors attended all
meetings held by all committees of the Board of Directors on which each such
Director served.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
compensation for calendar years 2000, 1999 and 1998 for the Company's Chief
Executive Officers and the three highest paid executive officers other than the
Chief Executive Officers whose salary and bonus exceed $100,000.
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------- ---------------------------------------
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDERLYING OTHER
COMPEN- STOCK OPTION COMPEN-
NAME AND SALARY(1) BONUS SATION(2) AWARDS AWARDS(3) SATION(4),(5)
PRINCIPAL POSITION YEAR $ $ $ $ # $
- ------------------ ---- --------- -------- --------- ---------- ---------- -------------
William B. Ruger................... 2000 $272,583 $ 0 $ 0 $ 0 0 $ 1,854
Chairman of the Board of 1999 333,000 0 0 0 0 5,482
Directors, 1998 333,000 0 0 0 0 8,829(6)
Chief Executive Officer, and
Treasurer to October 24, 2000.
Director.
William B. Ruger, Jr............... 2000 $265,813 $129,000 $10,203 $ 0 $ 0 $43,220
Chairman of the Board of 1999 233,500 125,000 7,553 0 0 35,502
Directors 1998 234,000 92,000 7,553 0 250,000 34,650
and Chief Executive Officer as of
October 24, 2000. Prior thereto,
Vice Chairman, Senior Executive
Officer and President. Director.
Erle G. Blanchard.................. 2000 $165,875 $ 79,000 $23,105 $ 0 0 $64,508(7)
Vice Chairman, President and 1999 140,000 75,000 17,273 0 0 70,728(7)
Treasurer as of October 24, 2000. 1998 140,000 49,000 17,273 0 200,000 72,024(7)
Prior thereto, Vice President and
Controller. Director.
Stephen L. Sanetti................. 2000 $202,167 $ 99,000 $27,047 $ 0 0 $30,154
Vice Chairman, Senior Executive 1999 183,000 95,000 22,148 0 0 26,816
Vice President and General 1998 181,500 72,000 22,148 0 200,000 26,598
Counsel as of October 24, 2000.
Prior thereto, Vice President and
General Counsel. Director.
Leslie M. Gasper................... 2000 $ 77,875 $ 26,000 $10,847 $ 0 0 $11,861
Corporate Secretary 1999 70,000 24,000 0 0 0 10,764
1998 63,125 32,981 0 0 50,000 9,781
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(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 stock options awarded
pursuant to the Company's 1998 Stock Incentive Plan. This plan was adopted
by the Board of Directors on October 28, 1998 and approved by the Company's
stockholders on May 13, 1999. No awards have been granted under the plan
since December 31, 1998.
(4) 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, 2000 --
$0, $0 and $1,854, 1999 -- $0, $0 and $3,492, 1998 -- $0, $0 and $4,512;
William B. Ruger, Jr., 2000 -- $25,500, $13,172 and $792 , 1999 -- $24,000,
$9,750 and $972, 1998 -- $24,000, $9,750 and $900; Erle G. Blanchard,
2000 -- $0, $24,881 and $276, 1999 -- $2,400, $18,600 and $426,
1998 -- $2,400, $18,600 and $576; Stephen L. Sanetti, 2000 -- $0, $29,125
and $276, 1999 -- $2,400, $23,850 and $369, 1998 -- $2,400, $23,850 and
$348; Leslie M. Gasper, 2000 -- $0, $11,681 and $180, 1999 -- $10,500, $0
and $264, 1998 -- $9,469, $0 and $312.
(5) 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
during 1999 and 2000, respectively, as follows: William B. Ruger, 2000 -- $0
and $0, 1999 -- $1,404 and $586; William B. Ruger, Jr., 2000 -- $2,650
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and $1,106, 1999 -- $550 and $230; Erle G. Blanchard, 2000 -- $497 and $256,
1999 -- $130 and $67; Stephen L. Sanetti, 2000 -- $497 and $256,
1999 -- $130 and $67; Leslie M. Gasper, 2000 -- $0 and $0, 1999 -- $0 and
$0.
(6) The amounts set forth in this column for William B. Ruger also include
$2,700 in taxable value and $1,617 in "gross-up" for taxes related to this
value, of a Company vehicle leased to Mr. Ruger during 1998.
(7) 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:
2000 -- $29,800 and $8,798, 1999 -- $32,721 and $16,384, 1998 -- $28,535 and
$21,913.
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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. The Company's Chief Executive Officer has primary responsibility for
determining the bonuses for the Company's executive 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
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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 OFFICERS' COMPENSATION
William B. Ruger's compensation while Chief Executive Officer did not
increase during the past three years despite the success of the Company during
that time period. Following Mr. Ruger's retirement and 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
February 7, 2001
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors for the year 2000 were those named above in the Compensation Committee
Report on Executive Compensation. No member of the Committee was at any time
during the year 2000 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.
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2000 OPTION GRANTS
The following table sets forth certain information regarding stock options
granted during 2000 under the 1998 Stock Incentive Plan by the Company to the
executive officers named in the Summary Compensation Table.
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED
INDIVIDUAL GRANTS INTEREST RATES
------------------------------------------------------- OF STOCK PRICE
NUMBER OF PERCENT OF APPRECIATION
SECURITIES TOTAL OPTIONS FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(3)
OPTIONS EMPLOYEES IN OR --------------
GRANTED(1) FISCAL YEAR BASE PRICE(2) EXPIRATION @5% @10%
NAME # % $/SHARE DATE $ $
- ---- ---------- ------------- ------------- ---------- ----- ------
William B. Ruger..................... 0 0.0% n/a n/a n/a n/a
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.
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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
2000 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 EXERCISABLE/UNEXERCISABLE
NAME # $ # #
- ---- ----------- -------- ------------------------- ----------------------------
William B. Ruger............. 0 $0.00 0/00 $0.00/0.00
William B. Ruger, Jr......... 0 0.00 100,000/150,000 0.00/0.00
Erle G. Blanchard............ 0 0.00 80,000/120,000 0.00/0.00
Stephen L. Sanetti........... 0 0.00 80,000/120,000 0.00/0.00
Leslie M. Gasper............. 0 0.00 20,000/ 30,000 0.00/0.00
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PROPOSAL NO. 2
2001 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
On December 18, 2000, the Board of Directors adopted the 2001 Stock Option
Plan for Non-Employee Directors (the "Plan"), subject to shareholder approval.
Pursuant to the Plan, the Non-Employee Directors of the Board (as defined below)
shall be awarded stock options. A maximum of 200,000 shares of Common Stock of
the Company are authorized for issuance with respect to awards granted under the
Plan. The material features of the Plan are described below.
The purpose of the Plan is to enable the Company to compensate those
members of the Board of Directors who are not otherwise serving as officers or
employees of the Company or any of its subsidiaries at the same time that they
are serving as members of the Board of Directors ("Non-Employee Members of the
Board"), and to provide incentives to such members, which incentives are linked
directly to increases in stockholder value and will therefore inure to the
benefit of all stockholders of the Company. The Plan is to be administered by a
committee of the Board of Directors (the "Committee").
The Plan provides for the award of non-qualified stock options
("Non-Qualified Stock Options"). A stock option entitles the holder thereof to
purchase shares of Common Stock from the Company at a fixed exercise price
established at the time the option is granted. The exercise price per share of
Common Stock shall be 100% of the fair market value of such share on the date of
the grant, and options under the Plan shall be exercisable (i) immediately as to
5,000 shares of Common Stock and (ii) on each of the first three anniversaries
of the date of grant as to 5,000 additional shares of Common Stock. Each option
under the Plan shall remain exercisable for 10 years from the date of grant.
Full payment of the option exercise price may be paid in cash or in such other
form as the Committee may approve, including shares of Common Stock valued at
their fair market value on the date of the option exercise. The fair market
value of the Common Stock as of March 1, 2001 was $9.99. No options may be
awarded more than ten years after the effective date of the Plan.
In addition, options to purchase no more than 20,000 shares of Common Stock may
be granted to any Non-Employee Member of the Board pursuant to the Plan.
The following is a summary of certain federal income tax consequences of
awards that may be made under the Plan. With respect to Non-Qualified Options:
(a) no federal taxable income should be recognized by the holder at the time the
option is granted; (b) upon exercise of the option, generally the holder
recognizes ordinary income in the amount by which the fair market value of the
acquired shares on the exercise date exceeds the exercise price; and (c) at
disposition, generally, any appreciation (or depreciation) after the date of
exercise is treated by the holder either as long-term or short-term capital gain
(or loss), depending on the length of time that the holder has held the shares.
Generally, the Company is entitled to an income tax deduction equal to the
amount of ordinary income included as compensation in the gross income of the
holder for the taxable year of the Company during which the holder recognizes
such income.
Under the Plan, each holder who has received an award will be required to
pay the Company (or otherwise make arrangements satisfactory to the Committee
for payment of) any federal, state, local or other taxes of any kind required by
law to be withheld with respect to any such award. The Company has the right to
deduct any such taxes from any payment of any kind otherwise due the holder.
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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, the closing price of a share of Common
Stock on the New York Stock Exchange on that date, subject to the approval of
the Plan by the stockholders of the Company. Such 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. In the event of any merger or
reorganization or other change in corporate structure affecting the Common
Stock, a substitution or adjustment shall be made.
A copy of the Plan is attached to this Proxy Statement as Exhibit B.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2.
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NEW PLAN BENEFITS
2001 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The following table sets forth the stock options which have been awarded,
subject to shareholder approval, under the 2001 Stock Option Plan for
Non-Employee Directors to each of the executives officers named in the Summary
Compensation Table, the Directors and nominees, and the categories of persons
listed.
NAME AND PRINCIPAL POSITION NUMBER OF STOCK OPTIONS
- --------------------------- -----------------------
William B. Ruger............................................ 0
Chairman of the Board of Directors, Chief Executive
Officer, and Treasurer to October 24, 2000. Director
William B. Ruger, Jr........................................ 0
Chairman of the Board of Directors and Chief Executive
Officer as of October 24, 2000. Prior thereto, Vice
Chairman, Senior Executive Officer and President. Director
Erle G. Blanchard........................................... 0
Vice Chairman, President and Treasurer as of October 24,
2000. Prior thereto, Vice President and Controller.
Director
Stephen L. Sanetti.......................................... 0
Vice Chairman, Senior Executive Vice President and General
Counsel as of October 24, 2000. Prior thereto, Vice
President and General Counsel. Director
Leslie M. Gasper............................................ 0
Corporate Secretary
John M. Kingsley, Jr. - Director............................ 20,000
Townsend Hornor - Director.................................. 20,000
Stanley B. Terhune - Consultant and Director................ 0
Richard T. Cunniff - Director............................... 20,000
Paul X. Kelley - Director................................... 20,000
James E. Service - Director................................. 20,000
Executive Group............................................. 0
Non-Executive Director Group................................ 100,000
Non-Executive Officer Employee Group........................ 0
14
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COMPANY STOCK PRICE PERFORMANCE
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
STURM, RUGER & COMPANY, INC., STANDARD & POORS 500 AND VALUE LINE RECREATION
INDUSTRY INDEX
(PERFORMANCE RESULTS THROUGH 12/31/00)
LINE CHART
Assumes $100 invested at the close of trading 12/95 in Sturm, Ruger &
Company, Inc. common stock, Standard & Poors 500, and Value Line Recreation
Industry Index.
- ---------------
* Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------
Sturm, Ruger & Company, Inc.................... 100.00 147.34 146.39 99.76 80.43 90.20
Standard & Poors 500........................... 100.00 123.25 164.38 211.07 253.87 225.81
Value Line Recreation Industry................. 100.00 112.11 179.86 217.39 279.70 287.79
The peer group in the above graph is the Value Line Recreation Industry.
15
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PENSION PLAN TABLE
ESTIMATED AMOUNTS OF ANNUAL PENSION PAYABLE FROM THE
SALARIED EMPLOYEES' RETIREMENT INCOME PLAN
FOR THE PARTICIPANT'S LIFE,
COMMENCING DURING 2000 AT AGE 65
YEARS OF CREDITED SERVICE
HIGHEST 60-CONSECUTIVE-MONTH ------------------------------
AVERAGE ANNUALIZED BASE PAY 15 YEARS 20 YEARS 25 YEARS
- ---------------------------- -------- -------- --------
75,000....$........ $11,549 $15,398 $19,248
100,000........... 16,549 22,065 27,581
125,000........... 21,549 28,731 35,914
150,000........... 26,549 35,398 44,248
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, 2000, William B. Ruger, Jr. had more than 25 years of
credited service, Erle G. Blanchard and Stephen L. Sanetti each had 20 years of
credited service, and Leslie M. Gasper had 24 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.
16
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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 2000 AT AGE 65
YEARS OF CREDITED SERVICE
------------------------------
AVERAGE ANNUAL COMPENSATION 15 YEARS 20 YEARS 25 YEARS
- --------------------------- -------- -------- --------
$125,000......... $ 6,255 $ 14,073 $ 21,890
150,000.......... 10,255 19,406 28,556
175,000.......... 14,255 24,739 35,223
200,000.......... 18,255 30,073 41,890
225,000.......... 22,555 35,806 49,056
250,000.......... 30,055 45,806 61,556
300,000.......... 45,055 65,806 86,556
400,000.......... 75,055 105,806 136,556
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, 2000, William B. Ruger, Jr. had more than 25 years
of credited service, and Erle G. Blanchard and Stephen L. Sanetti each had 20
years of credited service. The estimated amounts presented above assume that the
participant attained age 65 in 2000.
John M. Kingsley, Jr., a Company Director who retired as Executive Vice
President of the Company on December 31, 1996, received $135,036 in benefits
from the SERP during 2000.
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20
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.
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PRINCIPAL STOCKHOLDERS
The following table sets forth as of February 1, 2001 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 OWNED PERCENT OF CLASS
- ------------------- ------------------------- ----------------
William B. Ruger........................................ 4,272,000(1) 15.87%
P.O. Box 447
Newport, NH 03773
William B. Ruger, Jr.................................... 6,996,000(2) 26.00%
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 Holdings, L.P............................ 4,272,000(4) 15.87%
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 Mr. Ruger, 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 100,000 shares
of Common Stock subject to options currently exercisable or which will
become exercisable within 60 days of February 1, 2001 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.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of February 1, 2001
as to the number of shares of Common Stock beneficially owned by the Chief
Executive Officers of the Company, each of the three most highly compensated
executive officers of the Company other than the Chief Executive Officers, 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 OWNED PERCENT OF CLASS
- ------------------------- ------------------------- ----------------
William B. Ruger(1)..................................... 4,272,000(2) 15.87%
William B. Ruger, Jr.(3)................................ 6,996,000(4) 26.00%
Erle G. Blanchard....................................... 87,000(5) **
Stephen L. Sanetti...................................... 112,002(6) **
Leslie M. Gasper........................................ 20,049(7) **
All Directors and executive officers as a group (6
non-officer Directors, 4 Directors who were also
executive officers during 2000 and 1 other executive
officer).............................................. 7,281,771 27.06%
- ---------------
* 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) Retired as Chief Executive Officer on October 24, 2000.
(2) 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 Mr. Ruger, 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.
(3) Chief Executive Officer as of October 24, 2000.
(4) 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 100,000 shares
of Common Stock subject to options currently exercisable or which will
become exercisable within 60 days of February 1, 2001 under the 1998 Stock
Incentive Plan.
(5) 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 80,000 shares of Common Stock subject to options currently
exercisable or which will become exercisable within 60 days of February 1,
2001 under the 1998 Stock Incentive Plan.
(6) Includes 32,000 shares of Common Stock held directly by Mr. Sanetti and two
shares owned by Mr. Sanetti's daughter. Also includes 80,000 shares of
Common Stock options currently exercisable or which will become exercisable
within 60 days of February 1, 2001 under the 1998 Stock Incentive Plan.
(7) Includes 49 shares of Common Stock held under CT Gift to Minors act for the
benefit of Ms. Gasper's two minor daughters. Also includes 20,000 shares of
Common Stock options currently exercisable or which will become exercisable
within 60 days of February 1, 2001 under the 1998 Stock Incentive Plan.
20
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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.
The Company has concluded, based solely on a review of the copies of the
Section 16(a) report forms furnished to the Company, that with respect to the
period from January 1, 2000 through December 31, 2000, 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
Following William B. Ruger's retirement on October 24, 2000 as Chairman of
the Board of Directors and Chief Executive Officer, the Board of Directors
elected to retain Mr. Ruger's services as a consultant to the Company. For his
services in this capacity, Mr. Ruger receives $20,000 per month and during 2000
received a total of $46,000.
During 2000, the Company paid Newport Mills, of which William B. Ruger, Jr.
is the sole proprietor, $68,250 for storage rental. During 2000, the Company
also paid Mr. Ruger, Jr. $18,000 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 2000 received a total of $92,075,
including bonuses.
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REPORT OF THE AUDIT COMMITTEE
Under the guidance of a written charter adopted by the Board of Directors,
the Audit Committee (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 generally accepted accounting principles, 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 under
generally accepted auditing standards. 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 the
Independence Standards Board, 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 two meetings during fiscal
2000.
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, 2000
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
February 26, 2001
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25
PROPOSAL NO. 3
APPROVAL OF INDEPENDENT AUDITORS
Ernst & Young LLP has served as the Company's independent auditors since
1967. Subject to the ratification of the stockholders, the Board of Directors
has reappointed Ernst & Young LLP as the Company's independent auditors for the
2001 fiscal year.
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 2000 and the reviews of the Company's quarterly financial
statements for the year 2000 were $333,500.
AUDIT RELATED FEES
Ernst & Young LLP's aggregate fees, including expenses reimbursed, for
audit related services for the year 2000 were $39,500, and included audits of
certain employee benefit plan financial statements.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young LLP did not provide services related to financial information
systems design and implementation to the Company for the year 2000.
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 2000 were $18,000.
The Company's Audit Committee has considered whether the provision of the
non-audit related services provided by Ernst & Young LLP to the Company is
compatible with maintaining Ernst & Young LLP's independence.
Representatives of Ernst & Young 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. 3.
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26
PROPOSAL NO. 4
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 which
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 licenced 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 2001 annual meeting.
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27
SUPPORTING STATEMENT
This report could include, but not be limited to, a description of:
- Implementation 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. 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.
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 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.
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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. 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 RECOMMENDS A VOTE "AGAINST" PROPOSAL NO.
4.
26
29
STOCKHOLDER PROPOSALS FOR 2002
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 19, 2001.
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, 3 and 4 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, 2000,
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
27
30
EXHIBIT A
STURM, RUGER & COMPANY, INC.
AUDIT COMMITTEE CHARTER
ADOPTED APRIL 11, 2000
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.
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
- ---------------
(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.
A-1
31
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.
A-2
32
EXHIBIT B
STURM, RUGER & COMPANY, INC.
2001 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
(a) The name of this plan is the Sturm, Ruger & Company, Inc. 2001 Stock
Option Plan for Non-Employee Directors (the "Plan"). The purpose of the Plan is
to enable the Company (as defined below) to compensate Non-Employee Members of
the Board (as defined below) and to provide incentives to such members, which
incentives are linked directly to increases in stockholder value and will
therefore inure to the benefit of all stockholders of the Company.
(b) For purposes of the Plan, the following terms shall be defined as set
forth below:
(i) "Board" means the Board of Directors of the Company.
(ii) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto.
(iii) "Committee" means the Compensation Committee of the Board, or
any other committee the Board may subsequently appoint to administer the
Plan. The Committee shall be composed entirely of directors who meet the
qualifications referred to in Section 2 of the Plan. If at any time no
Committee shall be in office, then the functions of the Committee specified
in the Plan shall be exercised by the Board.
(iv) "Company" means Sturm, Ruger & Company, Inc., a corporation
organized under the laws of the State of Delaware, or any successor
corporation.
(v) "Fair Market Value" shall mean, with respect to Stock or other
property, the fair market value of such Stock or other property determined
by such methods or procedures as shall be established from time to time by
the Committee. Unless otherwise determined by the Committee in good faith,
the per share Fair Market Value of Stock of a particular date shall mean
(i) the closing sale price per share of Stock on the national securities
exchange on which the Stock is principally traded for the last preceding
date on which there was a sale of such Stock on such exchange, or (ii) if
the shares of Stock are then traded in an over-the-counter market, the
average of the closing bid and asked prices for the shares of Stock in such
over-the-counter market for the last preceding date on which there was a
sale of such Stock in such market, or (iii) if the shares of Stock are not
then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee, in its sole
discretion, shall determine.
(vi) "Non-Employee Members of the Board" shall mean those members of
the Board who are not otherwise serving as officers or employees of the
Company or any of its subsidiaries at the same time that they are serving
as members of the Board; provided, however, that notwithstanding the
foregoing, William B. Ruger shall not be deemed to be a Non-Employee Member
of the Board.
(vii) "Nonqualified Stock Option" means any Stock Option that is not
an "incentive stock option" within the meaning of Section 422 of the Code.
(viii) "Plan" has the meaning set forth in the first paragraph hereof.
(ix) "Securities Act" means the Securities Act of 1933, as amended.
(x) "Stock" means the Company's presently authorized common stock, par
value $1.00 per share, except as this definition may be modified pursuant
to Section 3 hereof to include shares which are substituted for, or
represent adjustments to, the Company's common stock, par value $1.00 per
share, or other Stock.
(xi) "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
B-1
33
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Committee of not less than two persons,
who shall be appointed by the Board and who shall serve at the pleasure of the
Board.
SECTION 3. STOCK SUBJECT TO PLAN; SUBSTITUTIONS AND ADJUSTMENTS.
The total number of shares of Stock reserved and available for issuance
under the Plan shall be 200,000. Such shares may consist, in whole or in part,
of authorized and unissued shares or treasury shares. In the event of any
merger, reorganization, consolidation, recapitalization, Stock dividend or other
change in corporate structure affecting the Stock, a substitution or adjustment
shall be made in (a) the aggregate number and kind of shares reserved and
available for issuance under the Plan and (b) the number and option price of
shares subject to outstanding stock Options granted under the Plan as may be
determined by the Committee, provided that the number of shares subject to any
award shall always be a whole number.
SECTION 4. ELIGIBILITY.
Each Non-Employee Member of the Board shall receive Nonqualified Stock
Options in accordance with the provisions of Section 5. In no event may any
Non-Employee Member of the Board receive an amount of stock hereunder upon the
exercise of non-qualified stock options of more than one percent of the stock
outstanding on the date hereof.
SECTION 5. STOCK OPTIONS.
(a) Stock Options shall be granted in the following manner:
(i) On January 1, 2001, each Non-Employee Member of the Board shall be
granted a Nonqualified Stock Option to purchase 20,000 shares of Stock; and
(ii) Each new Non-Employee Member of the Board who has not previously
been a Non-Employee Member of the Board during the term of the Plan shall
be granted, on the date he or she is elected to the Board during the term
of the Plan, a Nonqualified Stock Option to purchase 20,000 shares of
Stock.
(b) Stock Options granted under the Plan shall be subject to the terms and
conditions set forth below:
(i) The exercise price per share of Stock purchasable under such Stock
Options shall be 100% of the Fair Market Value of the Stock on the date of
grant.
(ii) Such options shall be exercisable commencing (A) immediately as
to 5,000 shares of Stock and (B) on each of the first three anniversaries
of the date of grant as to 5,000 additional shares of Stock, in each case
by payment in full of the exercise price in cash, certified or cashier's
check or delivery of Stock certificates endorsed in blank or accompanied by
executed stock powers with signatures guaranteed by a national bank or
trust company or a member of a national securities exchange. For these
purposes, the Stock shall be valued at the Fair Market Value on the date of
exercise. Payment of the exercise price with certificates evidencing shares
of Stock as provided above shall not increase the number of shares
available for the grant of Stock Options under the Plan.
(iii) Each Stock Option shall cease to be exercisable on the date that
is ten years following the date of grant.
(iv) The aggregate number of shares of Stock that may be granted to
any Non-Employee Member of the Board pursuant to the Plan may not exceed
20,000 shares.
(v) Except as provided in this Section 5(b)(v), Stock Options shall
not be transferable other than by will or the laws of descent and
distribution and shall be exercisable during the optionee's lifetime only
by the optionee or by the optionee's guardian or legal representative.
Subject to such administrative conditions as the Committee may prescribe,
an optionee may, upon providing written notice to the Committee or its
designee, elect to transfer, without consideration therefor, all or any
portion of the Stock Options granted to the optionee to members of his or
her "immediate family" (as defined below), to a
B-2
34
trust or trusts maintained solely for the benefit of the optionee and/or
the members of his or her immediate family, or to such other entities as
may be determined by the Committee (each, a "permissible transferee"). Any
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance that does not qualify as a permissible transfer under this
Section 5(b)(v) shall be void and unenforceable against the Plan and the
Company. For purposes of this Section 5(b)(v), the term "immediate family"
shall mean, with respect to a particular optionee, the optionee's spouse,
parents, children, stepchildren, legally adopted children and
grandchildren, and such other persons as may be determined by the
Committee. The terms of any Stock Option shall be binding upon the
beneficiaries, executors, administrators, heirs and successors of the
optionee and, as applicable, a permissible transferee hereunder. The
exercise of a Stock Option that is transferred pursuant to this Section
5(b)(v) and the shares of Stock acquired thereby shall be subject to the
applicable provisions of the Plan and to all applicable requirements of
law, including, but not limited to, to the extent applicable, the
registration requirements under the Securities Act. Upon any transfer of a
Stock Option, as provided in this Section 5(b)(v), the permissible
transferee with respect to such option shall be subject to the provisions
of the Plan that otherwise would apply to such option if it were still held
by the optionee. The Committee may further restrict the transferability of
such shares and require a legend to be endorsed on the certificates
representing the shares.
(vi) Each recipient of a Stock Option shall enter into a stock option
agreement with the Company, which agreement shall set forth, among other
things, the exercise price of the option, the term of the option and
provisions regarding exercisability of the option granted thereunder, which
provisions shall not be inconsistent with the terms set forth herein.
SECTION 6. AMENDMENT AND TERMINATION.
The Board may amend, alter, modify or discontinue the Plan at any time,
provided that the Board may not amend or alter the provisions of the Plan
relating to the amount, price and timing of awards more than once every six
months, other than to comport with changes in the Code, or the rules thereunder,
or the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder.
SECTION 7. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a recipient by the
Company, nothing contained herein shall give any such recipient any rights that
are greater than those of a general creditor of the Company.
SECTION 8. GENERAL PROVISIONS.
(a) The Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Delaware
without giving effect to the choice of law principles thereof.
(b) The obligation of the Company to sell or deliver shares with respect to
Stock Options granted under the Plan shall be subject to all applicable laws,
rules and regulations, including all applicable federal and state securities
laws, and the obtaining of all such approvals by governmental agencies as may be
deemed necessary or appropriate by the Committee. Moreover, each Stock Option is
subject to the requirement that, if at any time the Committee determines, in its
absolute discretion, that the listing, registration or qualification of shares
issuable pursuant to a Stock Option is required by any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of a Stock Option, or the issuance of shares thereunder, no
Stock Options shall be granted or shares issued, in whole or in part, unless
such listing, registration, qualification, consent or approval has been effected
or obtained, free of any conditions, as acceptable to the Committee. In the
event that the issuance or disposition of shares acquired pursuant to a Stock
Option is not covered by a then current registration statement under the
Securities Act and is not otherwise exempt from such registration, such shares
shall be restricted against transfer to the extent required by the Securities
Act or regulations thereunder, and the Committee may require the holder of a
Stock Option receiving shares pursuant to that
B-3
35
Stock Option, as a condition precedent to receipt of such shares, to make such
representations as the Committee deems appropriate, including, without
limitation, a representation to the Company in writing that the shares acquired
by such Stock Option holder are acquired for investment only and not with a view
to distribution.
(c) Each recipient of a Stock Option shall, no later than the date as of
which the value of a Stock Option first becomes includible in the gross income
of such recipient for federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of, any federal,
state, or local taxes at then-existing statutory rates. The obligations of the
Company under the Plan shall be conditional on such payment or arrangements and
the Company shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the recipient.
(d) No member of the Board or the Committee, nor any officer or employee of
the Company acting on behalf of the Board or the Committee, shall be personally
liable for any action, determination, or interpretation taken or made in good
faith with respect to the Plan, and all members of the Board or the Committee
and each and any officer or employee of the Company acting on their behalf
shall, to the extent permitted by law, be fully indemnified and protected by the
Company in respect of any such action, determination or interpretation.
SECTION 9. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is adopted by the Board.
SECTION 10. TERM OF PLAN.
No Stock Option shall be granted pursuant to the Plan on or after the tenth
anniversary of the effective date of the Plan, but Stock Options previously
granted may extend beyond that date.
B-4
36
DIRECTIONS TO THE
STURM, RUGER & COMPANY, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
THURSDAY, MAY 3, 2001 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.
37
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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 3, 2001
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, 2001 at the
Annual Meeting of Stockholders to be held on May 3, 2001 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" Proposals 2 and 3, and
"AGAINST" Proposal 4. 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 OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [ ]
[ ]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE:
1. FOR THE ELECTION OF TEN DIRECTORS -
Nominees: William B. Ruger, William B. Ruger, Jr.
Erle G. Blanchard, Stephen L. Sanetti, Richard T. Cunniff,
Townsend Hornor, Paul X. Kelley, John M. Kingsley, Jr.,
James E. Service and Stanley B. Terhune.
FOR ALL WITHHOLD ALL FOR ALL (Except Nominee(s) written below)
[ ] [ ] [ ] _____________________________________
2. FOR the ratification of the 2001 Stock Option Plan for Non-Employee
Directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. FOR the Proposal to approve the appointment of Ernst & Young LLP as the
independent auditors of the Company for the 2001 fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. AGAINST the Stockholder Proposal for a "Report on Gun Policies &
Procedures".
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated: ________________________________,2001
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.
- --------------------------------------------------------------------------------
38
- --------------------------------------------------------------------------------
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 3, 2001
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, 2001 at the
Annual Meeting of Stockholders to be held on May 3, 2001 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" Proposals 2 and 3, and
"AGAINST" Proposal 4. 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 OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [ ]
[ ]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE:
1. FOR THE ELECTION OF TEN DIRECTORS -
Nominees: William B. Ruger, William B. Ruger, Jr.
Erle G. Blanchard, Stephen L. Sanetti, Richard T. Cunniff,
Townsend Hornor, Paul X. Kelley, John M. Kingsley, Jr.,
James E. Service and Stanley B. Terhune.
FOR ALL WITHHOLD ALL FOR ALL (Except Nominee(s) written below)
[ ] [ ] [ ] _____________________________________
2. FOR the ratification of the 2001 Stock Option Plan for Non-Employee
Directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. FOR the Proposal to approve the appointment of Ernst & Young LLP as the
independent auditors of the Company for the 2001 fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. AGAINST the Stockholder Proposal for a "Report on Gun Policies &
Procedures".
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated: ________________________________,2001
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.
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