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Mandatory Service Companies Institutional Shareholder Services (ISS) and Glass Lewis Claim American brands in the open air (NASDAQ: AOBC) investors to follow the example of those to Sturm, Ruger (NYSE: RGR) and force management to write a report stating that management is monitoring the acts of armed violence in the country and the risks they pose to the company.
American Outdoor Brands – former Smith & Wesson – is holding its annual meeting on September 25, and a number of militant health and religion groups have jointly submitted a question to shareholders for approval. At the beginning of the year, a similar effort was made at Ruger.
Source of the image: Getty Images.
Request a report
The vote asks the company to do three things:
- Monitor violent events in which Smith & Wesson products are used.
- Prove that the firearms manufacturer is working to produce safer firearms and related products.
- To assess the risks to the reputation of gunsmiths and the financial well-being of gun violence in the United States.
In a report released by ISS, the Corporate Governance Group approved the proposal as a way to prove that the American Outdoor Brands Board of Directors keeps in mind the long-term risks of gun violence.
Reuters reported that the ISS concluded: "There is reason to believe that smart firearms technology could be used to make guns safer in the United States and that any technical problem could be solved if it existed. a market for the product. Smart guns use technology to ensure that the weapon is in the hands of its owner before it is fired.
The proxy company Peer Glass Lewis also supports the issue in front of shareholders.
The company objects
Like Ruger before her, American Outdoor Brands rejects the idea that she should do any of these things, saying that the only goal of the shareholders who asked the question on the ballot is to "implement [their] an anti-firearms agenda politically motivated by the misuse of the surrogate mechanism. "
American Outdoors claims to sell to distributors and large retailers, not the public, and it would be difficult, if not impossible, to trace all the crimes involving one of its weapons. And, according to the society, even if it were possible, it would have nothing to do with armed violence.
Source of the image: Getty Images.
Moreover, smart gun technology is not reliable and the manufacture of such weapons could increase the liability of the manufacturer if technology, for example, prevents the use of the weapon when It is necessary to save a life or allow an unauthorized person to prevent this, according to the company. The company also pointed out that despite the technology originally designed for law enforcement, no police department is using it.
The gun maker points out that he already identifies the risks related to his reputation and his finances in his annual report.
Institutional support
In May, activist shareholders managed to convince the majority of Ruger shareholders to have the company create a similar report, which is due to be released in February. ISS and Glass Lewis supported this proposal, as did an investment firm Black rock, which is the largest institutional shareholder of the Ruger share with nearly 3.2 million shares, or about 19% of outstanding shares.
Institutional investors hold 88% of Ruger's shares but only 63% of those of American Outdoor Brands. BlackRock is also the largest shareholder of American Outdoor with 6.7 million shares, or about 12% of the total. This remains important but would require a greater number of shareholders.
In a March 6 response to BlackRock, American Outdoor Brands wrote:
… we also believe that the first line of action must be to enforce existing laws, address the challenges of acute mental illness in our society and improve the NICS background check system. The solution is not to take political action that negatively impacts our business, our employees, our industry, our shareholders, the economies we support and, significantly, the rights of our law-abiding customers, but not Leads to no increase in public security.
Vanguard is the second largest institutional investor in both gunsmiths, but his position on the proposals has not been revealed. It holds 4.5 million shares of American Outdoor, accounting for 8% of the total.
A different result?
Sturm, Ruger's CEO, Chris Killoy, accepted the investors vote, saying that "the shareholders have spoken," but he went on to stress that "what the proposal can not and should not do, and protected by the Constitution. "
Even if American Outdoor Brands definitely feel the same, it is possible that the result is very different from that of Sturm, as Ruger did.
First, the Ruger meeting was held in a hotel and an activist representative appeared and appealed to the shareholders; The meeting of American Outdoor is an online event only. (This is the second year that the weapons manufacturer has organized the annual meeting in this way.) And as noted above, institutional investors hold a smaller proportion of equity securities. American Outdoor, making it a little more difficult to compile favorable votes. The meeting is also farther from the shot of the Parkland School, while the Ruger event was more contemporary and the emotions were more raw.
The firearms industry is rebounding strongly, with American Outdoor posting surprisingly strong first quarter results at the end of last month. A year ago, losses were affected by earnings, and investors may not be in the mood to reverse a recovery that is just beginning.
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