STURM RUGER & CO INC
10-Ks and 10-Qs
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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED
IN PROXY STATEMENT
SCHEDULE 14A
INFORMATION
Proxy Statement
Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Securities Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
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by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
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Filed by a Party other than the Registrant [_]
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[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
STURM, RUGER & COMPANY, INC.
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(Name of Registrant as
Specified In Its Charter)
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(Name of Person(s)
Filing Proxy Statement, if Other Than the Registrant)
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 28, 2010
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Stockholders of STURM, RUGER & COMPANY, INC. (the “Company”) will be held at the Trumbull
Marriott, 180 Hawley Lane, Trumbull, Connecticut 06611 on the 28th day of April, 2010 at 10:30 a.m. to consider
and act upon the following:
| 1. |
A proposal to
elect seven (7) Directors to serve on the Board of Directors for the
ensuing year;
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| 2. |
A proposal to
ratify the appointment of McGladrey & Pullen, LLP as the Company's
independent auditors for the 2010 fiscal year; and
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| 3. |
Any other business
as may properly come before the Annual Meeting or any adjournment or
postponement thereof.
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Only holders of record of Common Stock at the close of business on March
9, 2010 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 1 Lacey Place, Southport, Connecticut 06890.
The Company's Proxy Statement is
attached hereto.
| By Order of the Board of Directors | |
 |
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Leslie M.
Gasper
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Corporate
Secretary
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Southport, Connecticut
March 15, 2010
March 15, 2010
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. TO
ENSURE THAT YOUR VOTE IS RECORDED PROMPTLY, PLEASE VOTE YOUR PROXY AS SOON AS
POSSIBLE, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING. MOST SHAREHOLDERS HAVE
THREE OPTIONS FOR SUBMITTING THEIR VOTES PRIOR TO THE ANNUAL MEETING: (1) VIA
THE INTERNET, (2) BY TELEPHONE OR (3) BY REQUESTING AND RETURNING A PAPER PROXY
USING THE POSTAGE-PAID ENVELOPE PROVIDED. REGISTERED STOCKHOLDERS MAY VIEW OR
REQUEST THE PROXY MATERIALS AND VOTE THEIR PROXY AT WWW.INVESTORVOTE.COM OR BY TELEPHONE AT 1-800-652-8683. STOCKHOLDERS WHO HOLD THEIR SHARES
THROUGH A BROKERAGE ACCOUNT MAY VIEW OR REQUEST THE PROXY MATERIALS AND VOTE
THEIR PROXY AT WWW.PROXYVOTE.COM OR BY TELEPHONE AT 1-800-579-1639.
Table of
Contents
| Page | |||
| PROXY SOLICITATION AND VOTING INFORMATION | 1 | ||
| PROPOSAL NO. 1 – ELECTION OF DIRECTORS | 2 | ||
| DIRECTOR NOMINEES | 3 | ||
| THE BOARD OF DIRECTORS AND ITS COMMITTEES | 6 | ||
| Corporate Board Governance Guidelines | 7 | ||
| The Board’s Role In Risk Oversight | 7 | ||
| COMMITTEES OF THE BOARD | 8 | ||
| Audit Committee | 8 | ||
| Report of the Audit Committee | 9 | ||
| Compensation Committee | 10 | ||
| Nominating and Corporate Governance Committee | 11 | ||
| Executive Operations Committee | 13 | ||
| MEMBERSHIP AND MEETINGS OF THE BOARD AND ITS COMMITTEES | 14 | ||
| Membership and Meetings of the Board and its Committees Table | |||
| For Year 2009 | 14 | ||
| INDEPENDENT, NON-MANAGEMENT DIRECTORS | 15 | ||
| BOARD LEADERSHIP STRUCTURE | 15 | ||
| DIRECTOR AND COMMITTEE COMPENSATION | 16 | ||
| Directors’ Fees and Other Compensation | 16 | ||
| Directors' Compensation Table For Year 2009 | 17 | ||
| Directors’ Beneficial Equity Ownership | 18 | ||
| Independent Directors’ Outstanding Option Awards at Fiscal Year End 2009 Table | 18 | ||
| COMPENSATION DISCUSSION AND ANALYSIS | 19 | ||
| What is the Company's Philosophy Regarding Compensation and what are the Compensation Program | |||
| Objectives and Rewards? | 19 | ||
| What are the Company's Governance Practices Regarding Compensation? | 19 | ||
| What are the Company's Governance Practices Regarding Stock Awards? | 19 | ||
| What are the Elements of Compensation? | 20 | ||
| Why Does the Company Choose to Pay Each Element? | 20 | ||
| How Does the Company Determine the Amount/Formula for Each Element? | 21 | ||
| How are Salaries Determined? | 21 | ||
| How are Bonuses Determined? | 21 | ||
| How are Equity Compensation Awards Determined? | 22 | ||
| What are the Company’s Ongoing Plans for Plan-Based Equity Compensation? | 22 | ||
| How is the Chief Executive Officer's Performance Evaluated and Compensation Determined? | 22 | ||
i
Table of Contents
(continued)
| Page | |||
| What is the Chief Executive Officer’s Compensation History? | 23 | ||
| Does the Company Pay for Perquisites? | 23 | ||
| How Does the Company Evaluate its Compensation Program Risks? | 23 | ||
| EXECUTIVE COMPENSATION | 25 | ||
| Summary Compensation Table | 25 | ||
| All Other Compensation Table For Year 2009 | 27 | ||
| Grant Of Plan-Based Awards Table For Year 2009 | 28 | ||
| Outstanding Equity Awards At Fiscal Year End 2009 Table | 30 | ||
| Option Exercises And Stock Vested In 2009 Table | 31 | ||
| POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL | 32 | ||
| Payments on Change in Control | 32 | ||
| Covered Terminations and Severance Payments Pursuant to Change in Control Agreements | 32 | ||
| Change in Control Events and Severance Benefits Not Covered by the Severance Agreements | 32 | ||
| Change in Control Definition | 32 | ||
| Termination by Death or Disability | 33 | ||
| Termination by Retirement | 33 | ||
| Voluntary and Involuntary Termination | 33 | ||
| Retention and Transition Agreements | 33 | ||
| Potential And Actual Payments Under Severance Agreements Table | 34 | ||
| PENSION PLANS | 35 | ||
| 2009 Pension Benefits Table | 36 | ||
| PRINCIPAL STOCKHOLDERS AND BENEFICIAL OWNERSHIP | 37 | ||
| Principal Stockholder Table | 37 | ||
| Beneficial Ownership Table | 38 | ||
| SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 39 | ||
| CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS | 39 | ||
| PROPOSAL NO. 2 - RATIFICATION OF INDEPENDENT AUDITORS | 40 | ||
| Principal Accountants' Fees and Services | 40 | ||
| CODE OF BUSINESS CONDUCT AND ETHICS | 42 | ||
| STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2011 | 42 | ||
| STOCKHOLDER AND INTERESTED PARTY COMMUNICATIONS WITH THE BOARD OF | |||
| DIRECTORS | 42 | ||
| OTHER MATTERS | 43 | ||
ii
March 15, 2010
PROXY STATEMENT
Annual Meeting of
Stockholders of the Company to be held on April 28, 2010
PROXY SOLICITATION AND VOTING INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the “Board”) of Sturm, Ruger & Company,
Inc. (the “Company”) for use at the 2010 Annual Meeting of Stockholders (the
“Meeting”) of the Company to be held at 10:30 a.m. on April 28, 2010 at the
Trumbull Marriott, 180 Hawley Lane, Trumbull, Connecticut 06611 or at any
adjournment or postponement thereof for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement has
been posted and is available on the Securities and Exchange Commission (the
“SEC”) website at www.sec.gov and the Company’s website at www.ruger.com. In addition, registered stockholders may
view or request the proxy materials and vote their proxy at www.investorvote.com or by telephone at 1-800-652-8683, and
stockholders who hold their shares through a brokerage account may view or
request the proxy materials and vote their proxy at www.proxyvote.com or by telephone at 1-800-579-1639.
The mailing address of the principal
executive office of the Company is 1 Lacey Place, Southport, Connecticut 06890.
In accordance with rules established by the SEC that allow companies to
furnish their proxy materials over the Internet, on March 19, 2010 we are
mailing a Notice of Internet Availability of Proxy Materials instead of a paper
copy of our Proxy Statement and Annual Report on Form 10-K to our stockholders
who have not specified that they wish to receive paper copies of our proxy
materials. The Notice of Availability of Proxy Materials also contains
instructions on how to request a paper copy of our proxy materials, including
our Proxy Statement, Annual Report on Form 10-K and a form of proxy card. We
believe this process will allow us to provide our stockholders with the
information they need in a more timely, environmentally friendly and
cost-effective manner. All expenses in connection with the solicitation of these
proxies, which are estimated to be $60,000, will be borne by the Company. We
encourage our stockholders to contact the Company’s transfer agent,
Computershare Investor Services, LLC, or their stockbroker to sign up for
electronic delivery of proxy materials in order to reduce printing, mailing and
environmental costs.
If your 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).
The Company's Annual Report on Form 10-K for the year ended December 31,
2009, including financial statements, is enclosed herewith and has been posted
and is available on the SEC website at www.sec.gov and the Company’s website at www.ruger.com.
Only holders of Common Stock, $1.00 par value, of the Company (the
“Common Stock”) of record at the close of business on March 9, 2010 will be
entitled to vote at the Meeting. Each holder of record of the issued and
outstanding shares of voting Common Stock is entitled to one vote per share. As
of March 9, 2010, 19,111,650 shares of Common Stock were issued and outstanding
and there were no outstanding shares of any other class of stock. The
stockholders holding a majority of the issued and outstanding Common Stock,
either present in person or represented by proxy, will constitute a quorum for
the transaction of business at the Meeting.
In accordance with the Company's By-Laws and applicable law, the election
of Directors will be determined by a plurality of the votes cast by the holders
of shares present in person or by proxy and entitled to vote. Consequently, the
seven 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.
1
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 no effect as votes on the
election of Directors.
The affirmative vote of shares representing a majority of the shares
present and entitled to vote is required to ratify the appointment of McGladrey
& Pullen, LLP as the Company's independent auditors for the 2010 fiscal
year, which is also to be voted on at the Meeting, and to approve any other
matters properly presented 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.
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
Seven Directors will be elected at the Meeting, each to hold office until
the next Annual Meeting of Stockholders or until his successor is elected and
has qualified.
Background
Below is a discussion of certain events regarding the Board of Directors
and the Company’s management that have taken place since January 1, 2009, at
which time the members of the Board were Michael O. Fifer, John A. Cosentino,
Jr., C. Michael Jacobi, John M. Kingsley, Jr., Stephen T. Merkel, James E.
Service and Ronald C. Whitaker:
- On November 26, 2008, the Board
authorized the repurchase of up to $5 million of the Company’s Common Stock. Under this repurchase program,
the Company repurchased 2,400 shares at an average price of $6.03 during 2009. As of December
31, 2009, $4.7 million remained authorized and available for share repurchases, 19.0 million shares
remain outstanding, and 3.7 million shares remain in the Company’s treasury account. On February 1,
2010, the Board increased the authorization to repurchase shares from $4.7 million to $10 million of
the Company’s Common Stock.
- During 2009, John M. Kingsley, Jr.
and Stephen T. Merkel each announced their intention to retire as Company Directors and not stand for
reelection at the 2010 Annual Meeting of Stockholders.
- Following a search for additional Directors conducted by a professional placement firm at the Board’s request, Amir P. Rosenthal and Phillip C. Widman were elected to the Board of Directors effective January 4, 2010. On February 1, 2010, Messrs. Rosenthal and Widman were appointed to the Audit Committee of the Board.
2
DIRECTOR NOMINEES
The following table lists each nominee for Director and sets forth
certain information concerning each nominee's age, business experience, other
directorships and committee memberships in publicly-held corporations, current
Board committee assignments, and qualifications to serve on the Company’s Board
as of the date of this Proxy Statement. In addition to the information presented
below regarding each nominee’s specific experience, qualifications, attributes
and skills which led the Board to conclude that he should serve as a Director,
the Board also believes that all of our Director nominees have established
reputations of integrity, honesty and adherence to high ethical standards, and
have demonstrated a commitment of service to the Company, an appreciation of its
products and the Constitutional rights of American citizens to keep and bear
arms. Each nominee has effectively demonstrated business acumen and the ability
to exercise sound judgment in their individual careers and service on other
public boards and board committees, as applicable.
With the exception of Amir P. Rosenthal and Phillip C. Widman, all of the
seven nominees for Director listed below were elected at last year's Annual
Meeting. If no contrary instructions are indicated, proxies will be voted for
the election of the nominees for Director listed below. 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 the Board of Directors
of the Company.
Information about the number of shares of Common Stock beneficially owned
by each nominee appears under the “Beneficial Ownership Table”. See also
“Certain Relationships and Related-Party Transactions” in this Proxy
Statement.
| Name, | |
| Age, | Business Experience |
| First Became A | During the Past Five Years, |
| Director | Other Directorships, Current Committee Memberships and Board Qualifications |
|
James
E.
Service Age 79 Director since July, 1992 |
Admiral Service
has been the Chairman of the Board (non-executive) of the Company since
2006. He is a retired Vice Admiral of the United States Navy, and was the
Commander of the United States Naval Air Force, Pacific Fleet, from 1985
to 1987. Admiral Service is a former Director of Wood River Medical
Center, Ketchum, Idaho. Admiral Service currently serves as the Company’s
Nominating and Corporate Governance Committee Chair, and as a member of
the Compensation Committee and Executive Operations Committee. The Board
believes that Admiral Service’s significant Naval leadership experience,
knowledge of the firearms industry and its products and 18 years’ of
service on the Board, including four as its Chairman, qualify him to serve
on the Board of Directors.
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John A.
Cosentino, Jr. Age 60 Director since August, 2005 |
Mr. Cosentino has
been a partner of Ironwood Manufacturing Fund, LP since 2002, a Director
of Simonds Industries, Inc. since 2003, and the Chairman of North American
Specialty Glass, LLC since 2005. He was the Vice Chairman of Primary
Steel, LLC from 2005 to 2007, a partner of Capital Resource Partners, LP
from 2000 to 2001, and a Director in the following Capital Resource
Partners, LP portfolio companies: Spirit Brands from 1998 to 2006, Pro
Group, Inc. from 1999 to 2002, WPT, Inc. from 1998 to 2001, and Todd
Combustion, Inc. from 1997 to 1999. Mr. Cosentino is the former Vice
President-Operations of the Stanley Works, former President of PCI Group,
Inc., Rau Fastener, LLC., and Otis Elevator-North America, division of
United Technologies, former Group Executive of the Danaher Corporation,
and former Director of Integrated Electrical Services, Olympic
Manufacturing Company, and the Wiremold Company. Mr. Cosentino is
currently the Lead Director, Chairman of the Compensation Committee and Co-Chair of
the Executive Operations Committee and a member of the Company’s
Nominating and Corporate Governance Committee. The Board believes that Mr.
Cosentino’s extensive executive management, investment management and
board experience qualify him to serve on the Board of Directors.
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| Name, | |
| Age, | Business Experience |
| First Became A | During the Past Five Years, |
| Director | Other Directorships, Current Committee Memberships and Board Qualifications |
|
C.
Michael
Jacobi Age 68 Director since June, 2006 |
Mr. Jacobi has
been the President of Stable House 1, LLC, a private real estate
development company, since 1999. He served as the President, CEO and
Board member of Katy Industries, Inc. from 2001 to 2005, and is the former
President, CEO and Board member of Timex Corporation. Mr. Jacobi is a
member of the Boards of Directors and Audit committees chairman of the
Corrections Corporation of America (since 2000) and Webster Financial
Corporation (since 1993). He has been a member of the Board of Directors
and Audit committee of Kohlberg Capital Corporation since 2006, and was a
member of the Board of Directors of Invisible Technologies, Inc. from 2001
to 2006. Mr. Jacobi is a Certified Public Accountant. Mr. Jacobi is
currently the Chairman of the Company’s Audit Committee and Co-Chair of
the Executive Operations Committee and a member of the Nominating and
Corporate Governance Committee. The Board believes that Mr. Jacobi’s
extensive business, investment management, board experience and financial
expertise qualify him to serve on the Board of Directors.
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Amir
P.
Rosenthal Age 48 Director since January, 2010 |
Mr. Rosenthal has
been the Chief Financial Officer of Bauer Hockey, Inc. since 2008. From
2001 to 2008, he served in a variety of positions at Katy Industries,
Inc., including Vice President, Chief Financial Officer, General Counsel
and Secretary. From 1989 to 2001, Mr. Rosenthal served in a variety of
positions at Timex Corporation, including Treasurer, Counsel and Senior
Counsel, as well as Director and Chairman of Timex Watches Ltd. Mr.
Rosenthal is currently a member of the Company’s Audit Committee. The
Board believes that Mr. Rosenthal’s comprehensive business, legal and
financial expertise qualify him to serve on the Board of Directors.
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Ronald
C.
Whitaker Age 62 Director since June, 2006 |
Mr. Whitaker has
been the President and CEO of Hyco International since 2003, and a member
of its Board since 2001. He is a member of the Board and executive
committee of Strategic Distribution, Inc., and its President and CEO from
2000 to 2003. and Mr. Whitaker was the President and CEO of Johnson
Outdoors from 1996 to 2000, and CEO, President and Chairman of the Board
of Colt’s Manufacturing Co., Inc. from 1992 to 1995. He is a Board member
of Michigan Seamless Tube (since 2004), Group Dekko (since 2006), and
Pangborn Corporation (since 2006). He was a Board member of Precision
Navigation, Inc. from 2000 to 2003, Weirton Steel Corporation from 1994 to
2003 and Code Alarm from 2000 to 2002, and a Trustee of the College of
Wooster from 1997 through 2005. Mr. Whitaker is currently a member of the
Company’s Audit Committee and Nominating and Corporate Governance
Committee. The Board believes that Mr. Whitaker’s significant executive,
board and firearms industry experience, and his knowledge of the Company’s
products qualify him to serve on the Board of Directors.
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Phillip
C.
Widman Age 55 Director since January, 2010 |
Mr. Widman has
been the Senior Vice President and Chief Financial Officer of Terex
Corporation since 2002, and serves as a member of the management board of
Terex-Demag GMBH & Co. KG. He also serves as a Board and Nominating
and Governance Committee member, and as Audit Committee chair, of Lubrizol
Corp. Mr. Widman was the Executive Vice President and Chief Financial
Officer of Philip Services Corporation from 1998 to 2001. Mr. Widman is
currently a member of the Company’s Audit Committee. The Board believes
that Mr. Widman’s extensive business management, board and audit committee
experience, financial expertise and knowledge of shooting sports qualify
him to serve on the Board of Directors.
|
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Michael
O.
Fifer Age 52 Director since October, 2006 |
Mr. Fifer has been
Chief Executive Officer of the Company since September 25, 2006, and
President and Chief Executive Officer of the Company since April 23, 2008.
He was the Executive Vice President and President of Engineered Products
of Mueller Industries, Inc. from 2003 to 2006, President of North American
Operations of Watts Industries, Inc. from 1998 to 2002, and a member of the Board of Directors and
Audit, Compensation and Special committees of Conbraco Industries from
2003 to 2006. Mr. Fifer is as member of the Board of Governors of the
National Shooting Sports Foundation. The Board believes that Mr. Fifer’s
executive leadership and management experience and skills, including three
and one-half years of service as the CEO and President of the Company, and
his deep understanding of the Company and its products and the firearms
industry qualify him to serve on the Board of Directors.
|
4
More than a majority of the current Directors are “independent” under the
rules of the New York Stock Exchange, Inc. (“NYSE”). The Board has affirmatively
determined that none of Messrs. Cosentino, Jacobi, Rosenthal, Service, Whitaker
and Widman has or had a material relationship with the Company or any affiliate
of the Company, either directly or indirectly, as a partner, shareholder or
officer of an organization (including a charitable organization) that has a
relationship with the Company, and are therefore “independent” for such purposes
under the rules of the NYSE, including Rule 303A thereof.
Board of Director Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
EACH OF THE NOMINEES NAMED ABOVE.
5
| THE BOARD OF DIRECTORS AND ITS COMMITTEES |
The Board of Directors is committed to good business practice,
transparency in financial reporting and the highest level of corporate
governance. To that end, the Board of Directors and its committees continually
review the Company's governance policies and practices as they relate to the
practices of other public companies, specialists in corporate governance, the
rules and regulations of the SEC, Delaware law (the state in which the Company
is incorporated) and the listing standards of the NYSE. As a result of these
reviews, the Board has, over the past several years, among other things:
- Adopted a revised charter for the
Audit Committee;
- Adopted a charter for the
Compensation Committee;
- Established and adopted a charter
for the Nominating and Corporate Governance Committee;
- Adopted a Code of Business Conduct
and Ethics;
- Adopted Corporate Board Governance
Guidelines;
- Adopted a method by which
stockholders and other interested parties can send communications to the
Board;
- Adopted procedures for the
succession of the Chief Executive Officer;
- Adopted criteria for the selection
of new Directors;
- Caused the non-management
Directors of the Board to meet regularly in executive
sessions;
- Established a policy that stock
options or stock grants for employees: (i) will only be granted on the
fourth business day following
public quarterly filings of the Company’s Forms 10-K or 10-Q in order to allow
the investment markets adequate
time to analyze and react to recent financial results and (ii) will be issued
with an exercise price equal to
the mean of the highest and lowest market trading price of the Company’s stock
on the NYSE on the date of
grant;
- Established an insider trading
policy window for the Company and its Directors and officers beginning
on the fourth business day
following public quarterly filings of the Company’s Forms 10-K or 10-Q, and
ending on the earlier of the
thirtieth day thereafter, the end of the fiscal quarter or the development of
material non-public
information;
- Established a policy that the
maximum number of public boards on which a non-management Director may
serve is five, inclusive of the
Company’s Board of Directors;
- Established a policy requiring
that, upon a change in employment, a non-management Director submit a
letter of resignation to the Board for
its consideration;
- Established guidelines for minimum
stock ownership by Directors and officers;
- Established a policy that
Directors shall strive to remain aware of important corporate governance
issues and educated in good
corporate governance practices through participation in appropriate
conferences and seminars and
membership in associations such as the National Association of Corporate
Directors; and
- Established a policy that prohibits the re-pricing of stock options.
6
Corporate Board Governance Guidelines
The Company's corporate governance practices are embodied in the
Corporate Board Governance Guidelines. A copy of the Corporate Board Governance
Guidelines is posted on the Company's website at www.ruger.com and is available in print to any stockholder
who requests it by contacting the Corporate Secretary as set forth in
“STOCKHOLDER COMMUNICATIONS”
below.
The Company's business and affairs are under the direction of the Board
of Directors of the Company pursuant to the General Corporation Law of the State
of Delaware as in effect from time to time and the Company's By-Laws. Members of
the Board are kept informed of the Company's affairs through discussions with
the Company's executive officers, by careful review of materials provided to
them and by participating in meetings of the Board and the committees of the
Board.
The Board’s Role in Risk Oversight
The Board’s role in the oversight of risk management includes receiving
regular reports from senior management in areas of material risk to the Company,
including operational, financial, legal and regulatory, strategic, reputational
and industry-related risks. The full Board, or the appropriate Committee for
risks that fall within its purview, review and discuss these reports with the
goal of overseeing the identification, management and mitigation strategies for
these risks.
7
COMMITTEES OF THE BOARD
Audit Committee
In 2009, the members of the Audit Committee of the Board were C. Michael
Jacobi, John M. Kingsley, Jr., Ronald C. Whitaker and Stephen T. Merkel. On
February 1, 2010, Amir P. Rosenthal and Phillip C. Widman were appointed to the
Audit Committee. Mr. Jacobi serves as the Audit Committee Chairman. Each of
Messrs. Jacobi, Kingsley, Merkel, Rosenthal, Whitaker and Widman are considered
“independent” for purposes of service on the Audit Committee under the rules of
the NYSE, including Rule 303A thereof, and Rule 10A-3 of the Securities and
Exchange Act of 1934, as amended (the “Exchange Act”). All members of the Audit
Committee are financially literate and have a working familiarity with basic
finance and accounting practices. In addition, the Company has determined that
each of Messrs. Jacobi, Kingsley, Merkel, Rosenthal, Whitaker and Widman are
audit committee financial experts as defined by the SEC rules and regulations.
The Board has also affirmed that Mr. Jacobi's simultaneous service on more than
three audit committees, as noted in his business biography under “DIRECTOR
NOMINEES”, does not impair his ability to effectively serve on the Company's
Audit Committee.
The purpose of the Audit Committee is to provide assistance to the Board
in fulfilling its responsibility with respect to its oversight of: (i) the
quality and integrity of the Company's financial statements; (ii) the Company's
compliance with legal and regulatory requirements; (iii) the independent
auditor's qualifications and independence; and (iv) the performance of the
Company's internal audit function and independent auditors. In addition, the
Audit Committee prepares the report required by the SEC rules included in this
Proxy Statement.
The Audit Committee is governed by a written charter that has been
adopted by the Board. A copy of the Audit Committee Charter is posted on the
Company's website at www.ruger.com, and is available in print to any stockholder
who requests it by contacting the Corporate Secretary as set forth in
“STOCKHOLDER COMMUNICATIONS” below.
The Audit Committee held five meetings during 2009. All members of the
Audit Committee attended all meetings of the committee during their 2009 tenure.
The Annual Report of the Audit Committee is included in this Proxy Statement.
8
Report of the Audit
Committee*
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 Audit Committee reviewed and
discussed 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 on the conformity of those audited financial
statements with accounting principles generally accepted in the United States,
their judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the committee by Statement on Auditing Standards No. 61 (Codification of
Statements on Auditing Standards, AU § 380). In addition, the committee has
discussed with the independent auditors the auditors' independence from
management and the Company, and has received the written disclosures and the
letter from the independent auditors as required by PCAOB Ethics and
Independence Rule 3526, “Communication with Audit Committees Concerning
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 five meetings during
fiscal year 2009.
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, 2009 for filing with the Securities and Exchange
Commission.
| AUDIT COMMITTEE | |
| C. Michael Jacobi, Audit Committee Chairman | |
| John M. Kingsley, Jr. | |
| Stephen T. Merkel | |
| Amir P. Rosenthal | |
| Ronald C. Whitaker | |
| Phillip C. Widman | |
| February 20, 2010 | |
____________________
| * | The report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under either the Securities Act of 1933, as amended, or the Exchange Act (together, the "Acts"), except to the extent that the Company specifically incorporates such report by reference; and further, such report shall not otherwise be deemed to be "soliciting material" or "filed" under the Acts. |
9
Compensation Committee
In 2009, the members of the Compensation Committee of the Board were John
A. Cosentino, Jr., Stephen T. Merkel, James E. Service and John M. Kingsley, Jr.
Mr. Cosentino served as Compensation Committee Chairman. Each of Messrs.
Cosentino, Kingsley, Merkel and Service are considered “independent” for
purposes of service on the Compensation Committee under the rules of the NYSE,
including Rule 303A thereof.
The purposes of the Compensation Committee are: (i) discharging the
responsibilities of the Board with respect to the compensation of the Chief
Executive Officer of the Company, the other executive officers of the Company
and members of the Board; (ii) establishing and administering the Company's
cash-based and equity-based incentive plans; and (iii) producing an annual
report on executive compensation to be included in the Company's annual proxy
statement, in accordance with the rules and regulations of the NYSE and the SEC,
and any other applicable rules or regulations. The Compensation Committee has
the authority to form and delegate authority to one or more subcommittees, made
up of one or more of its members, as it deems appropriate from time to
time.
The Compensation
Committee is governed by a written charter that has been adopted by the Board. A
copy of the Compensation Committee charter is posted on the Company's website at
www.ruger.com, and is available
in print to any stockholder who requests it by contacting the Corporate
Secretary as set forth in “STOCKHOLDER COMMUNICATIONS”
below.
The Compensation Committee held four meetings during 2009. All members of
the Compensation Committee attended all meetings of the committee during their
2009 tenure. The annual Compensation Committee Report on Executive Compensation
is included in this Proxy Statement.
Compensation Committee Interlocks and Insider
Participation
During the 2009 fiscal year, none of the Company's executive officers
served on the board of directors of any entities whose directors or officers
serve on the Company's Compensation Committee. No current or past executive
officers of the Company serve on the Compensation Committee.
Compensation Committee Report on Executive Compensation *
The committee has reviewed and discussed with management the Compensation
Discussion & Analysis. In reliance on the reviews and discussions referred
to above, the committee recommended to the Board of Directors that the
Compensation Discussion & Analysis be included in this proxy statement.
| COMPENSATION COMMITTEE | |
| John A. Cosentino, Jr., Compensation Committee Chairman | |
| John M. Kingsley, Jr. | |
| Stephen T. Merkel | |
| James E. Service |
March 12, 2010
____________________
| * | The report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing of the Acts, except to the extent that the Company specifically incorporates such report by reference; and further, such report shall not otherwise be deemed to be "soliciting material" or "filed" under the Acts. |
10
Nominating and Corporate Governance Committee
In 2009, the members of the Nominating and Corporate Governance Committee
were James E. Service, John A. Cosentino, Jr., C. Michael Jacobi, and Ronald C.
Whitaker. Admiral Service served as Nominating and Corporate Governance
Committee Chairman. Each of Messrs. Cosentino, Jacobi, Service and Whitaker are
considered “independent” for purposes of service on the Nominating and Corporate
Governance Committee under the rules of the NYSE, including Rule 303A
thereof.
The Nominating and Corporate Governance Committee is responsible to the
Board for identifying, vetting and nominating potential Directors and
establishing, maintaining and supervising the corporate governance program. Some
of these responsibilities are discussed in more detail below.
The Nominating and Corporate Governance Committee is governed by a
written charter that has been adopted by the Board. The Nominating and Corporate
Governance Committee charter is posted on the Company's website at www.ruger.com, and is available in print to any stockholder
who requests it by contacting the Corporate Secretary as set forth in
“STOCKHOLDER COMMUNICATIONS” below.
The Nominating and Corporate Governance Committee held five meetings
during 2009. All members of the committee attended all meetings of that
committee during their 2009 tenure.
As required under its charter, the Nominating and Corporate Governance
Committee has adopted criteria for the selection of new Directors, including,
among other things, career specialization, technical skills, strength of
character, independent thought, practical wisdom, mature judgment and cultural,
gender and ethnic diversity. Functional skills considered important for
Directors to possess include experience as a chief executive or financial
officer or similar position in finance, audit, manufacturing, advertising,
military or government, and knowledge and familiarity of firearms and the
firearms industry. The committee will also consider any such qualifications as
required by law or applicable rule or regulation, and will consider questions of
independence and conflicts of interest. In addition, the following
characteristics and abilities, as excerpted from the Company's Corporate Board
Governance Guidelines, will be important considerations of the Nominating and
Corporate Governance Committee:
- Personal and professional ethics,
strength of character, integrity and values;
- Success in dealing with complex
problems or having excelled in a position of leadership;
- Sufficient education, experience,
intelligence, independence, fairness, ability to reason, practicality,
wisdom and vision to exercise
sound and mature judgment;
- Stature and capability to
represent the Company before the public and the stockholders;
- The personality, confidence and
independence to undertake full and frank discussion of the Company's
business assumptions;
- Willingness to learn the business
of the Company, to understand all Company policies and to make themselves aware of the Company's
finances;
- Willingness at all times to
execute their independent business judgment in the conduct of all
Company matters;
- Diversity of skills, attributes
and experience which augment the composition of the Board in execution of
its oversight responsibilities
to the benefit to the Company; and
- Cultural, gender and ethnic diversity.
The charter also grants the Nominating and Corporate Governance Committee
the responsibility to identify and meet individuals believed to be qualified to
serve on the Board and recommend that the Board select candidates for
directorships. The Nominating and Corporate Governance Committee's process for
identifying and evaluating nominees for Director, as set forth in the charter,
includes inquiries into the backgrounds and qualifications of candidates. These
inquiries include studies by the Nominating and Corporate Governance Committee
and may also include the retention of a professional search firm to be used to
assist it in identifying or evaluating candidates. The Nominating
and Corporate Governance Committee has previously retained the firms Boardbench,
LLC and Korn/Ferry International to assist in the search for qualified
Directors.
11
The
Nominating and Corporate Governance
Committee has a written policy, which states that it will consider Director
candidates recommended by stockholders. There is no difference in the manner in
which the Nominating and Corporate Governance Committee will evaluate nominees
recommended by stockholders and the manner in which it evaluates candidates
recommended by other sources. Shareholder recommendations for the nomination of
directors should set forth (a) as to each proposed nominee, (i) their name, age,
business address and, if known, residence address, (ii) their principal
occupation or employment, (iii) the number of shares of stock of the Company
which are beneficially owned by each such nominee and (iv) any other information
concerning the nominee that must be disclosed as to nominees in proxy
solicitations pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including such person’s written consent to be named as a
nominee and to serve as a director of the Company if elected); (b) as to the
shareholder giving the notice, (i) their name and address, as they appear on the
Company’s books, (ii) the number of shares of the corporation which are
beneficially owned by such shareholder and (iii) a representation that such
shareholder is a holder of record of stock of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
propose such nomination; and (c) as to the beneficial owner, if any, on whose
behalf the nomination is made, (i) the name and address of such person and (ii)
the class and number of shares of the Company which are beneficially owned by
such person. The Company may require any proposed nominee to furnish such other
information as it may reasonably require to determine the eligibility of a
proposed nominee to serve as a director of the Company, including a statement of
the qualifications of the candidate and at least three business references. All
recommendations for nomination of directors should be sent to the Corporate
Secretary, Sturm, Ruger & Company, Inc., 1 Lacey Place, Southport, CT 06890.
The Corporate Secretary will accept such recommendations and forward them to the
Chairman of the Nominating and Corporate Governance Committee. In order to be
considered for inclusion by the Nominating and Corporate Governance Committee as
a candidate at the Company's next Annual Meeting of Stockholders, stockholder
recommendations for director candidates must be received by the Company in
writing delivered or mailed by first class United States mail, postage prepaid,
no earlier than December 29, 2010 (120 days prior to the first anniversary of
this year’s Annual Meeting of Stockholders) and no later than January 28, 2011
(90 days prior to the first anniversary of this year’s Annual Meeting of
Stockholders).
The Company has not rejected any Director candidates put forward by a
stockholder or group of stockholders who beneficially owned more than 5% of the
Company's Common Stock for at least one year prior to the date of the
recommendation.
12
Executive Operations Committee
Effective August 1, 2006,
the Board established the Executive Operations Committee to collaborate with the
Company's executive team during the transition in the management of the Company,
and appointed John A. Cosentino, Jr. and C. Michael Jacobi as Co-Chairs and
James E. Service as a member of the Executive Operations Committee. The need to
continue the Executive Operations Committee is evaluated by the Board annually
and as a result of such evaluation and upon the recommendation of the Chief
Executive Officer, the committee’s continuance was extended by the Board through
April 28, 2010. The Board established the Executive Operations Committee's
responsibilities and roles as follows:
- To act as the Board's
representatives in providing advisory leadership to management as needed and
to ensure that all the expert
resources, experiences and skill sets of the Board are constructively deployed
in improving the business
performance of the Company;
- To establish and implement a
strategic business plan that enables the delivery of the growth and
profitability objectives of the
Company's stockholders;
- To develop and implement the Ruger
Business System, a robust, Company-wide business system based on “lean” principles and practices, designed to
become indelibly rooted and capable of sustaining itself beyond the tenure of the current management
team;
- To identify, recruit and develop
key executive and management level personnel needed to execute the
Company's strategic and operational
plans and to ensure a viable succession plan;
- To conduct ongoing oversight of
Company operations and business performance, including operations and
strategy deployment reviews with
executive management;
- To identify and explore major
initiatives, such as acquisition analyses, major new program proposals
and business opportunities;
and
- To ensure overall executive team effectiveness, collaboration and communication within management and with the Board.
The Executive Operations Committee held 12 meetings during 2009. All
members of the committee attended at least 75% of the meetings of the committee
during their 2009 tenure.
13
MEMBERSHIP AND MEETINGS OF THE BOARD AND ITS
COMMITTEES
In 2009, the members of the Board of Directors were James E. Service,
John A. Cosentino, Jr., C. Michael Jacobi, John M. Kingsley, Jr., Stephen T.
Merkel , Ronald C. Whitaker and Michael O. Fifer. Each then-current Director
attended all 2009 meetings of the Board and at least 75% of the meetings of its
Committees on which he served during his 2009 tenure. In addition, all
then-current members of the Company's Board attended the 2009 Annual Meeting of
Stockholders. It is the policy of the Company that attendance at all meetings of
the Board, all committee meetings, and the Annual Meeting of Stockholders is
expected, unless the Director has previously been excused by the Chairman of the
Board for good cause. Committee memberships and the number of meetings of the
full Board and its committees held during the fiscal year 2009 are set forth in
the table below. When feasible and appropriate, it is the practice of the Board
to hold its regular committee meetings in conjunction with the regular meetings
of the Board of Directors.
MEMBERSHIP AND MEETINGS OF THE BOARD AND ITS
COMMITTEES TABLE
FOR YEAR 2009 *
FOR YEAR 2009 *
| Nominating and | |||||
| Corporate | Executive | ||||
| Board of | Audit | Compensation | Governance | Operations | |
| Name | Directors | Committee | Committee | Committee | Committee |
| James E. Service | Chair | Member | Chair | Member | |
| John A. Cosentino, Jr. | Lead Director | Chair | Member | Co-Chair | |
| C. Michael Jacobi | Member | Chair | Member | Co-Chair | |
| John M. Kingsley, Jr. | Member | Member | Member | ||
| Stephen T. Merkel | Member | Member | Member | ||
| Ronald C. Whitaker | Member | Member | Member | ||
| Michael O. Fifer** | Member | ||||
| Total Number
of Meetings |
6 | 5 | 4 | 5 | 12 |
Notes to Membership and Meetings of the Board
and its Committees Table
*Excludes Amir P. Rosenthal and Phillip C. Widman, who were both
appointed to the Board on January 4, 2010 and to the Audit Committee on February
1, 2010.
** Non-independent Board member.
14
INDEPENDENT, NON-MANAGEMENT DIRECTORS
The independent,
non-management members of the Board meet regularly in executive sessions and
each such meeting is led by the independent, non-management Chairman of the
Board, or in his absence, a presiding independent, non-management Lead Director.
James E. Service has served as the non-executive Chairman of the Board since
February 24, 2006, and John A. Cosentino, Jr. has served as the Lead
Director since April 24, 2007.
Only independent, non-management
Directors served on any committees of the Board.
BOARD LEADERSHIP STRUCTURE
On April 24, 2007, the By-Laws were amended to require the Chairman of
the Board to be an independent, non-management Director who would preside at all
meetings of the Board, including meetings of the independent, non-management
Directors in executive session, which would generally occur as part of each
regularly scheduled Board meeting. The April 24, 2007 By-Law amendment also
provided that an independent, non-management Lead Director would be named to
preside at stockholder, Board and executive session meetings and to act as an
intermediary between the non-management Directors and management of the Company
when special circumstances exist or communication out of the ordinary course is
necessary, such as the absence or disability of the non-executive Chairman of
the Board. The separation of Chairman and Chief Executive Officer duties
recognizes the difference in the two roles: the Chairman of the Board leads the
Board of Directors as they provide guidance to and oversight of the CEO, while
the CEO is responsible for setting the strategic direction for the Company and
the day-to-day leadership and performance of the Company.
15
| DIRECTOR AND COMMITTEE COMPENSATION |
The Board believes that compensation for the Company’s independent
Directors should be a combination of cash and equity-based compensation. The
Directors and the Compensation Committee annually review Director compensation
utilizing published compensation studies. Any recommendations for changes are
made to the full Board by the Compensation Committee. In 2006 and 2007, as a
result of these reviews, the Directors’ fee structure was changed as described
below. The Directors’ fee structure has not changed since April 1, 2007.
Directors’ Fees and Other
Compensation
As of June 1, 2006, the Board approved a fee schedule whereby all
non-management independent Directors receive annual retainer compensation of
$75,000. The retainer compensation is paid as $50,000 in cash and $25,000 in
restricted stock. In addition to the annual retainer fees, the Board Chairman
receives $20,000, the Audit Committee Chairman receives $10,000 and the
Compensation Committee Chairman and the Nominating and Corporate Governance
Committee Chairman each receive $7,500. Payment for service on more than two
committees was discontinued effective January 1, 2007. As of August 1, 2006, the
Board established an Executive Operations Committee, as described above, and
established additional committee fees of $50,000 per year for this Committee's
Co-Chairs and $7,500 per year for its members.
On April 29, 2009, the date of the 2009 Annual Meeting, the independent
Directors received their annual awards of $25,000 of restricted stock, and the
vesting period for the restricted shares awarded in 2008 was satisfied.
Under the 2007 Stock Incentive Plan, options to purchase 20,000 shares of
the Company's Common Stock are granted to Directors when they are first elected
at an exercise price equal to the closing price on the date of award. These
options vest and become exercisable in four equal annual installments of 25% of
the total number of options awarded, beginning on the date of grant and on each
of the next succeeding three anniversaries thereafter. Until the April 24, 2007
ratification of the 2007 Stock Incentive Plan, these options were previously
granted under the 2001 Stock Option Plan for Non-Employee Directors.
Directors are covered under the Company's business travel accident
insurance policy for $300,000 while traveling on Company business, and are
covered under the Company's director and officer liability insurance policies
for claims alleged in connection with their service as a Director.
All Directors were reimbursed for
out-of-pocket expenses related to attendance at meetings.
16
DIRECTORS' COMPENSATION TABLE FOR YEAR 2009*
The following table
reflects the cash and equity compensation received during the 2009 fiscal year
by each independent, non-management Director who served on the Company's Board
and the committees of the Board. Please see “SUMMARY COMPENSATION TABLE” for
disclosure of Directors' fees paid to management Directors in the 2009 fiscal
year.
| Change in | ||||||||||||||
| Pension Value | ||||||||||||||
| Fees | and Nonqualified | |||||||||||||
| Earned or | Stock | Option | Deferred | All | Total Director | |||||||||
| Paid in | Awards | Awards | Compensation | Other | Compensation | |||||||||
| Name | Cash (1) | (2) | (3) | Earnings (4) | Compensation | (5) | ||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | |||||||||
| James E. Service | $85,000 | $25,000 | $110,000 | |||||||||||
| John A. | ||||||||||||||
| Cosentino, Jr. | $107,500 | $25,000 | $132,500 | |||||||||||
| C. Michael Jacobi | $110,000 | $25,000 | $135,000 | |||||||||||
| John M. Kingsley, | ||||||||||||||
| Jr. | $50,000 | $25,000 | $75,000 | |||||||||||
| Stephen T. | ||||||||||||||
| Merkel | 50,000 | $25,000 | $75,000 | |||||||||||
| Ronald C. | ||||||||||||||
| Whitaker | 50,000 | $25,000 | $75,000 | |||||||||||
| Total | $452,500 | $150,000 | $0 | $0 | $0 | $602,500 | ||||||||
Notes to Directors' Compensation
Table
*Excludes Amir P. Rosenthal and Phillip
C. Widman, who were each appointed to the Board on January 4, 2010.
| (1) | See “DIRECTOR'S FEES AND OTHER COMPENSATION” above. | ||
| (2) | Represents aggregate grant date dollar value of one-year-deferred restricted stock awards that were awarded to each non- management independent director on April 29, 2009 under the 2007 Stock Incentive Plan in accordance with the Director annual fee schedule approved June 1, 2006. The amount shown represent the full grant date fair value of the awards calculated in accordance with the provisions of FASB ASC 718, and are shown at the maximum value expected upon achievement of the time-based goals of the awards. | ||
| (3) | No options were awarded to Directors in 2009. Amir P. Rosenthal and Phillip C. Widman were each awarded 20,000 non-qualified stock options as of date of their election to Board on January 4, 2010 in accordance with the terms of the Company's 2007 Stock Incentive Plan. | ||
| (4) | This column represents the sum of the increased change in pension value in 2009 for each Director, and applies only to Directors who were former employees of the Company. Mr. Kingsley is the only Director who is a former employee of the Company. Mr. Kingsley's total change in pension value is related to his service as Executive Vice President of the Company from 1971 to 1996. Mr. Kingsley’s negative change in pension value, ($4,854), is not reportable in the table above. No Director received preferential or above-market earnings on deferred compensation (also see Note 5 below). The change in pension value is calculated based on a 5.75% discount rate, the 2000 Group Mortality Table, participant ages as of December 31, 2009, accrued benefits as of December 31, 2007, the date the Company’s qualified pension plans were “frozen”, and in the case of the SERP, a COLA assumption of 1.5% per year. See “PENSION PLANS” and the “PENSION BENEFITS TABLE” below for additional information, including the present value assumptions used in the calculation. | ||
| (5) | The Company's non-management Directors do not receive non-equity incentive plan compensation, pension or medical plan benefits or non-qualified deferred compensation. | ||
17
Directors’ Beneficial Equity Ownership
In 2006 the Board set a
minimum equity ownership requirement for independent, non-management Directors
of five times their annual base cash retainer of $50,000, to be achieved within
five years of the later of the date of adoption or the date of a Director's
election. As Directors are expected to hold a meaningful ownership position in
the Company, a significant portion of overall Director compensation is intended
to be in the form of Company equity. This has been partially achieved through
options granted to each independent Director under the 2001 Stock Option Plan
for Non-Employee Directors and through option grants and restricted stock awards
under the 2007 Stock Incentive Plan, which was approved at the 2007 Annual
Shareholders Meeting. The current amounts of Common Stock beneficially owned by
each Director may be found in the “BENEFICIAL OWNERSHIP TABLE”
below.
INDEPENDENT DIRECTORS’ OUTSTANDING OPTION
AWARDS AT FISCAL YEAR END 2009 TABLE
The following table sets forth outstanding option awards issued through
December 31, 2009 to the Company’s independent Directors under the 2001 Stock
Option Plan for Non-Employee Directors and 2007 Stock Incentive Plan. See
“BENEFICIAL OWNERSHIP TABLE” below for information regarding each Company
Director’s total beneficial ownership.
| Number of Securities | ||||||||||||||
| Underlying | ||||||||||||||
| Unexercised Options | ||||||||||||||
| (1) | ||||||||||||||
| Exer- | Unexer- | Option | ||||||||||||
| cisable | cisable | Exercise | Option | Option | ||||||||||
| Name of | (2) | (2) | Grant | Price (3) | Vesting | Expiration | ||||||||
| Independent Director | (#) | (#) | Date | ($) | Date | Date | ||||||||
| James E. Service | 20,000 | 0 | 1/5/2001 | $9.875 | 1/5/2004 | 1/5/2011 | ||||||||
| John A. Cosentino, Jr. | 20,000 | 0 | 8/1/2005 | $10.88 | 8/1/2008 | 8/1/2015 | ||||||||
| C. Michael Jacobi | 20,000 | 0 | 6/1/2006 | $6.15 | 6/1/2009 | 6/1/2016 | ||||||||
| John M. Kingsley, Jr. | 20,000 | 0 | 1/5/2001 | $9.875 | 1/5/2004 | 1/5/2011 | ||||||||
| Stephen T. Merkel | 20,000 | 0 | 6/1/2006 | $6.15 | 6/1/2009 | 6/1/2016 | ||||||||
| Ronald C. Whitaker | 20,000 | 0 | 6/1/2006 | $6.15 | 6/1/2009 | 6/1/2016 | ||||||||
| Total | 120,000 | 0 | ||||||||||||
Notes to Independent Directors’ Outstanding
Option Awards at Fiscal Year End Table
| (1) | Awards of options to purchase the Company's Common Stock represented in this table were granted pursuant to the Company's 1998 Stock Incentive Plan. | ||
| (2) | Options awarded to Independent Directors upon their date of election 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 and have a 10 year term. Amounts shown as exercisable or unexercisable reflect the vesting status of each Director’s options within 60 days of March 9, 2010. | ||
| (3) | This column represents the exercise price of awards of options to purchase the Company's Common Stock which exercise price was not less than the closing price on the grant date. | ||
18
| COMPENSATION DISCUSSION AND ANALYSIS |
What is the Company's Philosophy Regarding
Compensation and what are the Compensation Program Objectives and Rewards?
The Company's executive compensation program is designed to reward both
corporate and individual performance in an environment that reflects commitment,
responsibility and adherence to the highest standards of ethics and integrity.
Recognition of both individual contributions as well as overall business results
permits an ongoing evaluation of the relationship between the size and scope of
the Company's operations, its performance and its executive compensation.
The program's objectives are to attract, retain and motivate the
workforce that helps to ensure our future success, support a lean and flexible
business model culture and to help achieve overall business objectives in order
to provide our stockholders with a superior rate of return.
What are the Company's Governance Practices
Regarding Compensation?
| Stockholders: | The 2007 Stock Incentive Plan , which was approved by the stockholders at the Company's 2007 Annual Meeting, replaced all previous stock incentive plans. The Company does not have any stock plans that are not stockholder-approved. | |
| Board and Compensation Committee and Nominating and Corporate Governance Committee: |
The Compensation Committee and the Board determine the compensation of the Company's executive officers, including the individuals whose compensation is detailed in this Proxy Statement. The Compensation Committee, which is composed entirely of independent, non-management Directors, establishes and administers compensation programs and philosophies. The Compensation Committee ensures that stockholder-approved plans are administered in accordance with good governance practices and stockholder intent. The Compensation Committee is responsible for the recommendation of salaries, bonuses and long-term incentive compensation paid to executive officers, bonus pools for non-executive employees, retirement formulas for executive officers, deferred compensation plans, and any employment and change-in-control agreements. In addition, the performance of each executive officer is evaluated by the Nominating and Corporate Governance Committee and reported to the full Board. The full Board reviews the Compensation Committee and Nominating and Corporate Governance Committee reports and acts on recommendations of the Compensation Committee. | |
| Management: | The Chief Executive Officer's views regarding the performance and recommended compensation levels for the Company's executive officers are discussed with all of the non-management Directors. | |
What are the Company's Governance Practices
Regarding Stock Awards?
The use of equity compensation is a significant component of the
Company's overall compensation philosophy and is one that the Company plans to
continue. The Company's philosophy is built on the principles that equity
compensation should seek to align participants' actions and behaviors with
stockholders' interests, be market-competitive, and be able to attract, motivate
and retain the best employees, independent contractors and
Directors.
The Board has established the
following practices and policies regarding stock options and
grants:
- The Company's
policy for setting the timing of stock option grants does not allow executives
to have any role in choosing the
price of their options or other stock awards;
- The Company has
never “back dated” or re-priced options or other stock awards, and the 2007
Stock Incentive Plan
states that re-pricing of options is not allowed under the plan;
- Equity awards for employees shall be issued only on the fourth business day following the public quarterly filing of the Company’s Forms 10-K or 10-Q in order to allow the investment markets adequate time to
19
assimilate the current financial information, and will be valued at the
mean between the highest and lowest sales prices of the Company’s common stock on the NYSE on the date of
issue;
- Annual performance-based equity awards for executive officers and certain employees shall generally be approved at the first Board meeting of each year and shall be issued in quarterly increments on the fourth business day following the filing of the public quarterly filing of the Company’s Forms 10-K or 10-Q.
The Compensation Committee and the Board consider recommendations from
the Chief Executive Officer in establishing appropriate equity awards for
officers and employees. All equity awards have been and will continue to be
subject to the approval of the Compensation Committee and ratification by the
full Board. The Company's Corporate Secretary is responsible for issuing equity
awards upon their approval by the Compensation Committee and the full Board and
maintaining records of all equity awards issued, exercised or terminated in
accordance with the terms of the 1998 Stock Incentive Plan, 2001 Stock Option
Plan for Non-Employee Directors and the 2007 Stock Incentive Plan.
What are the Elements of Compensation?
The key elements of the Company's
executive compensation consist of:
| Cash Compensation: | Base salary and bonuses. | |
| Equity Compensation: | Pursuant to the Company's 2007 Stock Incentive Plan approved by the Company’s stockholders on April 24, 2007, which replaced all prior stock incentive plans, the Company may make grants of stock options, restricted stock, deferred stock and stock appreciation rights (“SARS”), any of which may or may not require the satisfaction of performance objectives. | |
| Retirement Benefits: | The Company offers its employees the opportunity to save money for retirement under a 401(k) plan. Additionally, the Company offers a Safe Harbor match to eligible participants in the 401(k) plan and supplemental discretionary contributions to the individual 401(k) Plan accounts of substantially all employees. | |
| Until December 31, 2007, the Company offered a tax-qualified defined-benefit Salaried Employee's Retirement Income Plan (the “Pension Plan”) to all salaried employees and a non-qualified defined-benefit Supplemental Executive Retirement Plan (the “SERP”) to one employee and two retired employees. In 2007, the Company’s Pension Plan was amended so that employees will no longer accrue benefits under it effective December 31, 2007. This action “froze” the benefits for all employees and prevented future hires from joining the plan, effective December 31, 2007. In 2007, the Company’s SERP was amended effective December 31, 2007 so that lump-sum payments of the benefits accrued were paid to the one employee and one of the two retiree participants. There are no current employees participating in the SERP. For further discussion, see “PENSION PLANS” below. | ||
| Health, Welfare
and Other Insurance Benefits: |
The Company offers the same health and welfare benefits to all salaried employees. These benefits include medical benefits, dental benefits, vision benefits, life insurance, salary continuation for short-term disability, long-term disability insurance, accidental death and dismemberment insurance and other similar benefits. Because these benefits are offered to a broad class of employees, the cost is not required by SEC rules to be included in the “SUMMARY COMPENSATION TABLE” below. Officers are covered under the Company's business travel accident insurance policy for ten times their base salary to a maximum of $5,000,000 while traveling at any time. Officers are also covered under the Company's director and officer liability insurance policies for claims alleged in connection with their service. | |
| Severance Agreements: |
The Company has a Severance Policy that covers all employees. In addition, the officers of the Company are offered specific severance agreements that provide severance benefits to them when their employment terminates as a result of a change in control or by the Company without cause. For further discussion, see “Potential Payments Upon Termination or Change in Control” below. | |
Why Does the Company Choose to Pay Each
Element?
The Company’s compensation and benefits programs are designed to fulfill
the Company's need to attract, retain and motivate the highly talented
individuals who will engage in the behaviors necessary to enable the Company to
achieve its
20
business objectives
while upholding our values in a highly competitive marketplace. The reasons for
each of the elements of compensation are:
- Base salaries and retirement and
welfare benefits are designed to attract and retain employees over
time;
- Performance-based incentive
bonuses, which are paid in cash or a combination of cash and deferred stock,
are designed to focus
executives and employees on important Company-wide performance
goals;
- Performance-based equity incentive
awards, including performance-based incentive awards of non-qualified
or incentive stock options,
SARS and restricted stock, deferred stock and restricted stock unit awards are
designed to focus executives
and employees on important Company-wide performance goals;
- Time-based equity incentive
awards, including non-qualified or incentive stock options, SARS and
restricted stock and deferred
stock awards are designed to retain executives and employees over time and to
focus them on the long-term
success of the Company, as reflected in increases to the Company's stock
prices over a period of several years, growth in its earnings per share and other measurements of corporate
performance; and
- Severance Agreements, which are designed to facilitate the Company's ability to attract and retain talented executives and encourage them to remain focused on the Company's business during times of corporate change.
As a result of the Company's equity and non-equity incentive plan awards,
a significant portion of the Company's executive compensation is linked directly
to 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.
How Does the Company Determine the
Amount/Formula for Each Element?
Generally, each element of compensation, including base salaries and
performance-based bonus and equity incentive opportunities, is evaluated
independently to determine whether it is competitive within the market as a
whole, and then the aggregate compensation is evaluated using publicly available
data to determine whether it is competitive and reasonable within the market as
a whole, as further described below.
How are Salaries Determined?
Salaries for executive officers are determined by considering historical
salaries paid by the Company to officers having certain duties and
responsibilities, by comparing those salaries to required market rates for
compensation of new executives being recruited to the company, and then
evaluating the current responsibilities of the officer’s position, the scope and
performance of the operations under their management and the experience and
performance of the individual.
In making its salary decisions, the Compensation Committee places its
emphasis on the particular executive's experience, responsibilities and
performance. No specific formula is applied to determine the weight of each
factor. The Compensation Committee has historically followed a policy of using
performance-based incentive bonus awards rather than base salary to reward
outstanding performance, and base salaries are not typically adjusted each year.
How are Bonuses Determined?
The Company offers quarterly profit sharing to all of its employees. The
amount of profit sharing is formula-based and is determined by the operating
results of the Company. All employees participate in it pro-rata based on their
actual base salary or hourly wage compensation paid during the quarter. The
percentage of earnings that is paid as quarterly profit-sharing is authorized by
the Board of Directors.
The Company offers an annual performance-based incentive bonus to all but
its most junior level of employees. The amount of annual performance-based
incentive bonus is determined by the operating results of the Company and the
nominal bonus opportunity authorized for each employee, expressed as a
percentage of that employee’s base salary or hourly wage compensation.
Individual bonus opportunities range from between 5% to 100% of each employee's
annual base salary or hourly wage compensation, and are based on the employee’s
level of responsibility. The annual performance-based incentive bonus program
and its annual performance goals are authorized by the Board of
Directors.
21
The Board of Directors authorizes the CEO to make discretionary bonus
awards to individual employees, with the aggregate of all such awards not to
exceed 10% of the target amount of the annual performance-based bonus program.
The CEO typically uses the results of the semi-annual bell-curve performance
review program to determine the eligibility of recipients of the annual CEO
Discretionary Awards. Amounts paid typically are approximately 5% of the
recipients’ base salary or hourly wage compensation.
The Board of Directors also authorizes discretionary awards from time to
time for executive officers in recognition of special performance.
How are Equity Compensation Awards Determined?
Equity compensation awards are given to key employees and officers of the
Company to align their long-term interests with those of the shareholders. In
2006 the Company adopted a practice whereby key new executives hired by the
Company would receive an award of stock options with time-based vesting, and
thereafter new Vice Presidents were granted 100,000 such options and the new
Chief Executive Officer was granted 400,000 such options upon hire.
The Company offers annual performance-based equity incentive awards to
officers and certain other senior or high-potential junior employees. From 2007
through the first quarter of 2009, these awards were in the form of stock
options that would vest only upon achievement of certain operating performance
goals. Subsequent to the first quarter of 2009, these awards were in the form of
restricted stock units that would vest only upon achievement of certain
operating performance goals. The amounts of these awards are based on a target
compensation value for each individual and are authorized by the Board of
Directors. The awards, and the performance goals, are authorized annually and
awarded in quarterly increments each quarter after the filing of the 10-K or
10-Q.
What are the Company’s Ongoing Plans for
Plan-Based Equity Compensation?
The Company intends to consider annually the grant of performance-based
equity awards for officers and certain other employees as described above. The
performance goals will likely vary from year to year and will be based on the
perceived needs of the business at the time of the award.
How is the Chief Executive Officer's
Performance Evaluated and Compensation Determined?
The Nominating and Corporate Governance Committee, the Compensation
Committees and the Board as a whole annually evaluate the performance and review
the compensation of the Chief Executive Officer utilizing a variety of criteria.
The job objectives established for the Chief Executive Officer are:
- To promote and require the highest
ethical conduct by all Company employees and demonstrate personal
integrity consistent with the
Company's Corporate Governance Guidelines.
- To establish, articulate and
support the vision for the Company that will serve as a guide for
expansion.
- To align physical, human,
financial and organizational resources with strategies.
- To communicate strategies and
alignment in a clear manner so that every employee understands their
personal role in the Company's
success.
- To establish a succession planning
process in order to select, coordinate, evaluate and promote the best
management team.
- To keep the Board informed on strategic and business issues.
Evaluation of the Chief Executive Officer's performance with regard to
these job objectives is rated on the following business skills and performance
achievement:
- Leadership: his ability to lead
the Company with a sense of direction and purpose that is well understood,
widely supported, consistently
applied and effectively implemented.
- Strategic Planning: his development of a long-term strategy, establishment of objectives to meet the expectations of stockholders, customers, employees and all Company stakeholders, consistent and timely progress toward strategic objectives and obtainment and allocation of resources consistent with strategic objectives.
22
- Financial Goals and Systems: his
establishment of appropriate and longer-term financial objectives, ability
to consistently achieve these
goals and ensuring that appropriate systems are maintained to protect assets
and control operations.
- Financial Results: his ability to
meet or exceed the financial expectations of stockholders, including
improvement in operating
revenue, cash flow, net income, capital expenditures, earnings per share and
share price.
- Succession Planning: his
development, recruitment, retention, motivation and supervision of an
effective senior management
team capable of achieving objectives.
- Human Resources: his ensuring
development of effective recruitment, training, retention and personnel
communication plans and programs to
provide and motivate the necessary human resources to achieve
objectives.
- Communication: his ability to
serve as the Company's chief spokesperson and communicate effectively
with stockholders and all
stakeholders.
- Industry Relations: his ensuring
that the Company and its operating units contribute appropriately to the
well-being of their communities
and industries, and representation of the Company in community and industry
affairs.
- Board Relations: his ability to work closely with the Board to keep them fully informed on all important aspects of the status and development of the Company, his implementation of Board policies, and his recommendation of policies for Board consideration.
The Chief Executive Officer's compensation levels are determined after
performance evaluations based on published compensation studies, the Chief
Executive Officer's demonstrated abilities and contributions to the success of
the Company, and the overall results of Company operations.
What is the Chief Executive Officer’s
Compensation History?
Michael O. Fifer joined the Company as Chief Executive Officer on
September 25, 2006, with an annual base salary of $400,000, an option award to
purchase 400,000 shares of the Company’s Common Stock under the 1998 Stock
Incentive Plan, a $75,000 guaranteed bonus for 2006, a 75% target annual bonus
opportunity, a one-time $250,000 restricted stock award to be issued under the
2007 Stock Incentive Plan, and reimbursement for temporary living, commuting and
relocation expenses with related tax gross-up. In both 2007 and 2008, Mr. Fifer
received performance-based option awards to purchase 40,000 shares of Common
Stock subject to vesting criteria as described above. In 2009, Mr. Fifer
received a performance-based equity award of stock options and restricted stock
units. The award included options to purchase 14,970 shares of Common Stock and
13,344 restricted stock units. Mr. Fifer’s target annual bonus opportunity was
increased to 100% of his base salary as of July 28, 2009. Mr. Fifer’s base
compensation was increased to $425,000 as February 1, 2010.
Does the Company Pay for Perquisites?
The Company believes in limited perquisites for its Directors and
executive officers. Perquisites include discounts on Company products, which are
available to all Company employees and Directors. The Company has a Relocation
Policy covering all employees based on their grade level that provides various
levels of temporary living and relocation expense reimbursements, payment of
related taxes, and the use of Company vehicles for business purposes. Temporary
living and relocation reimbursements and related tax payments for the Named
Executive Officers are disclosed in the “SUMMARY COMPENSATION TABLE” below.
How Does the Company Evaluate its Compensation
Program Risks?
The Compensation Committee evaluates
risk deriving from compensation programs, and does not believe that our
compensation program is reasonably likely to have a material adverse effect on
the Company for the following reasons:
- Executive compensation is
structured to consist of both fixed compensation, which provides a steady
income stream regardless of
stock price performance, and variable incentive compensation, which is
designed to reward both
short-term and long-term corporate performance. Fixed, base-salary
compensation is both market competitive and sufficient to make risk-taking to achieve a living wage
unnecessary. Short-term cash incentive compensation is awarded based on achievement of operating profit goals,
while significant weighting toward long-term cash and equity incentive compensation based on multi-year
operating performance targets discourages short-term risk-taking;
- Performance goals are applicable Company-wide to our executives and employees alike to encourage consistent behavior throughout the organization;
23
- Performance goals are set
appropriately to avoid targets that, if not achieved, would result in a large
percentage loss of
compensation;
- Incentive awards are capped under
the compensation program;
- Equity guidelines discourage
excessive risk taking by providing an incentive for executives to consider
the Company’s long-terms
interests, since a portion of their personal investment portfolio consists of
Company stock,
and
- The Company has strict internal controls over the measurement and calculation of performance goals, and all employees are required to receive annual compliance training under our Corporate Governance Guidelines, which covers, among other things, accuracy of books and records.
24
| EXECUTIVE COMPENSATION |
SUMMARY COMPENSATION TABLE
The following table summarizes total compensation paid or earned by the
Company's Name Executive Officers (those officers who served as Chief Executive
Officer or Chief Financial Officer during 2009, and the three other officers who
received the highest compensation in 2009) who served in such capacities during
2009.
|
Named
Executive Officer and Principal Position |
Year
|
Salary ($) |
Bonus (1) ($) |
Stock Awards (2) ($) |
Option Awards (3) ($) |
Non-Equity Incentive Plan Compensation (4) ($) |
Change in Pension Value and Non- qualified Deferred Compensation Earnings (5) ($) |
All Other Compen- sation (6) ($) |
Total ($) |
|||||||
| Michael O. | ||||||||||||||||
| Fifer | ||||||||||||||||
| President, | 2009 | $400,000 | $245,480 | $278,813 | $50,000 | $536,515 | $1,767 | $17,426 | $1,530,001 | |||||||
| Chief | 2008 | $400,000 | $0 | $86,900 | $172,800 | $278,501 | $0 | $16,376 | $954,577 | |||||||
| Executive | 2007 | $400,000 | $15,385 | $290,000 | $198,000 | $0 | $10,989 | $191,860 | $1,106,234 | |||||||
| Officer and | ||||||||||||||||
|
Director
|
||||||||||||||||
| Thomas A. | ||||||||||||||||
| Dineen | ||||||||||||||||
| Vice | 2009 | $225,000 | $87,210 | $102,012 | $18,750 | $201,383 | $6,812 | $17,270 | $658.437 | |||||||
| President, | 2008 | $221,875 | $0 | $24,073 | $64,800 | $82,143 | $0 | $16,625 | $409,516 | |||||||
| Treasurer | 2007 | $197,917 | $7,692 | $20,000 | $396,000 | $0 | $9,729 | $10,133 | $641,471 | |||||||
| and Chief | ||||||||||||||||
| Financial | ||||||||||||||||
| Officer | ||||||||||||||||
| Steven M. | ||||||||||||||||
| Maynard (7) | ||||||||||||||||
| Vice President | 2009 | $218,775 | $84,797 | $100,746 | $247,250 | $195,790 | $827 | $17,666 | $865,851 | |||||||
| of Lean | 2008 | $153,600 | $0 | $16,666 | $43,200 | $56,833 | $0 | $11,736 | $282,035 | |||||||
| Business | 2007 | $133,317 | $5,908 | $0 | $284,625 | $0 | $5,012 | $4,047 | $432,909 | |||||||
| Development | ||||||||||||||||
| Christopher | ||||||||||||||||
| J. Killoy | ||||||||||||||||
| Vice President | 2009 | $235,000 | $91,086 | $106,552 | $19,583 | $210,334 | $2,499 | $21,006 | $686,060 | |||||||
| of Sales and | 2008 | $230,625 | $0 | $25,023 | $64,800 | $85,400 | $0 | $21,472 | $427,320 | |||||||
| Marketing | 2007 | $200,000 | $7,692 | $20,000 | $74,250 | $0 | $9,923 | $9,710 | $321,575 | |||||||
| Thomas P. | ||||||||||||||||
| Sullivan | ||||||||||||||||
| Vice President | 2009 | $235,000 | $91,086 | $106,552 | $19.583 | $210,334 | $1,709 | $17,330 | $681,594 | |||||||
| of Newport | 2008 | $235,000 | $0 | $25,498 | $64,800 | $86,952 | $1,762 | $17,721 | $431,733 | |||||||
| Operations | 2007 | $235,000 | $9,038 | $23,500 | $74,250 | $0 | $6,333 | $40,831 | $388,952 | |||||||
25
Notes to Summary Compensation
Table
| (1) | This column represents discretionary bonuses awarded by the Board of Directors. 2009 amounts represent discretionary bonuses awarded to the Named Executive Officers in respect of the strong financial performance of the Company during 2009. | ||
| (2) | This column represents the full grant date fair value of stock awards to the Named Executives Officers in 2009, 2008 and 2007, calculated in accordance with the provisions of FASB ASC 718, and are shown at the maximum value expected upon achievement of the performance or time-based goals of the awards. 2007 amounts are for stock grants awarded to the Named Executive Officers, 2008 amounts are for Restricted Stock Units (“RSUs”) that were awarded in lieu of 25% of the 2008 performance-based cash bonus, and 2009 amounts are for RSUs awarded from two programs. The first set of 2009 RSUs were awarded in lieu of 15% of the 2009 discretionary and performance-based cash bonuses to the Named Executive Officers. These RSUs are subject to a three-year vesting period. The second set of 2009 RSUs were performance-based RSU awards issued in the second, third and fourth quarters of 2009 which were subject to achievement of performance goals. The performance criteria were met and the 2009 performance-based RSU awards vested as of March 2, 2010. See “OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2009 TABLE” below for further information regarding stock granted to each Named Executive Officer. | ||
| (3) | This column represents the full grant date fair value of stock options awarded to the Named Executives Officers in 2009, 2008 and 2007, calculated in accordance with the provisions of FASB ASC 718, and are shown at the maximum value expected upon achievement of the performance or time-based goals of the awards. The performance criteria were met and the 2007 and 2008 performance-based equity awards vested on April July 28, 2009. The performance criteria were met and the 2009 performance-based option awards issued in the first quarter of 2009 vested as of March 2, 2010. See Note 13 of the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2009 regarding assumptions underlying valuation of equity awards. Any estimate of forfeitures related to service-based vesting conditions are disregarded pursuant to the SEC Rules. See “OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2009 TABLE” below for further information regarding stock options and restricted stock units granted to each Named Executive Officer. | ||
| (4) | This column represents the non-equity portion of performance-based incentive payments made under the Company's 2009 Incentive Compensation Program, including the quarterly profit-sharing bonus and annual performance-based bonus. These amounts were calculated based on the results of the fiscal year in which they were earned, but some of these amounts were paid after the end of the fiscal year. Performance-based bonuses were not paid for 2007. | ||
| (5) | This column represents the increased change in pension value for each fiscal year for each of the named executives. Negative changes in pension value are not reportable in the above table. No named executive officer received preferential or above-market earnings on deferred compensation. The Company's pension plans were frozen, and no further benefit service was accrued, as of January 1, 2008. For 2009, the change in pension value is calculated based on a 5.75% discount rate, participant ages as of December 31, 2009, frozen accrued benefits as of December 31, 2007, the 2000 Group Mortality Table, and in the case of the SERP, a COLA assumption of 1.5% per year. See “PENSION PLANS” and the “PENSION BENEFITS TABLE” below for additional information. | ||
| (6) | This column represents: (i) relocation and temporary living and related tax gross-ups, if applicable, (ii) commuting allowance not subject to gross-up for taxes, (iii) taxable value of Company products received, (iv) taxable premiums paid by the Company for group term life insurance, and (v) Employer safe-harbor matching and supplemental discretionary contributions made under the Company’s 401(k) Plan. See “ALL OTHER COMPENSATION TABLE” below for additional information. | ||
| (7) | Steven M. Maynard was appointed Vice President of Lean Business Development on February 19, 2007. | ||
26
ALL OTHER COMPENSATION TABLE FOR YEAR
2009
|
Named Executive
Officers
|
Year
|
Relocation and Temporary Living and Related Tax Gross-Ups and Commuting Allowance ($) |
Taxable Value of Company Products Received ($) |
Taxable Premiums Paid by the Company for Group Term Life Insurance ($) |
Company Matching and Discretionary 401(k) Plan Contributions (1) ($) |
Total ($) |
|||||||||||||
| 2009 | $0 | $276 | $17,150 | $17,426 | |||||||||||||||
| Michael O. Fifer | 2008 | $0 | $276 | $16,100 | $16,376 | ||||||||||||||
| 2007 | $175,613 | (2) | $260 | $15,987 | $191,860 | ||||||||||||||
| 2009 | $120 | $17,150 | $17,270 | ||||||||||||||||
| Thomas A. Dineen | 2008 | $117 | $16,508 | $16,625 | |||||||||||||||
| 2007 | $108 | $10,025 | $10,133 | ||||||||||||||||
| 2009 | $516 | $17,150 | $17,666 | ||||||||||||||||
| Steven M. Maynard | 2008 | $276 | $11,460 | $11,736 | |||||||||||||||
| 2007 | $207 | $3,840 | $4,047 | ||||||||||||||||
| 2009 | $3,580 | (3) | $276 | $17,150 | $21,006 | ||||||||||||||
| Christopher J. Killoy | 2008 | $4,168 | (3) | $180 | $17,124 | $21,472 | |||||||||||||
| 2007 | $1,263 | (3) | $180 | $8,267 | $9,710 | ||||||||||||||
| 2009 | $0 | $180 | $17,150 | $17,330 | |||||||||||||||
| Thomas P. Sullivan | 2008 | $0 | $180 | $17,541 | $17,721 | ||||||||||||||
| 2007 | $31,251 | (4) | $180 | $9,400 | $40,831 | ||||||||||||||
Notes to All Other Compensation
Table
| (1) | Consists of matching contributions made under the Sturm, Ruger & Company, Inc. 401(k) Plan (the “401(k) Plan”), to the Named Executive Officers who participated in the 401(k) Plan, based on their deferrals for each 401(k) Plan year. For 2009 and 2008, also includes supplemental employer discretionary contributions made to all plan participants. | ||
| (2) | Consists of reimbursements for Mr. Fifer’s temporary living and relocation expenses in 2007 as follows: $65,038 for real estate closing costs, $30,000 for incidental relocation expenses, $6,801 for commuting and $73,774 for related tax gross-ups. | ||
| (3) | Consists of the taxable value of commuting allowance for Mr. Killoy at one-half the I.R.S. approved mileage rate and not subject to gross-up for taxes. | ||
| (4) | Consists of reimbursements for Mr. Sullivan’s temporary living and relocation expenses in 2007 as follows: $12,500 for temporary lodging, $10,255 for relocation costs and $8,496 for related tax gross-ups. | ||
27
GRANT OF PLAN-BASED AWARDS TABLE FOR YEAR
2009
The following table reflects estimated possible payouts under equity
incentive plans to the Named Executive Officers during the fiscal year 2009 from
the 2007 Stock Incentive Plan, consisting of performance-based option awards,
time-based option awards and restricted stock unit awards. The Company’s
non-equity incentive plan compensation is based on achievement of certain
financial performance goals for the fiscal year, and the cash portion is paid in
full in the year subsequent to the year in which earned. These amounts are
reported in the Summary Compensation Table, and are not included in this table
because no further payment is required or allowed pertaining to the
program.
|
Estimated
Future Payouts
under Equity Incentive Plan Awards |
All
Other
Stock Awards : |
All
Other
Option
Awards
(1)(2)
|
|||||||
|
Named
Executive Officers |
Grant
Date
|
Type
of Award
(1)(2)(3)(4) |
Threshold
(#)
|
Target
(#)
|
Max-
imum (#)
|
Number
of
Securities Underlying Stock
Granted
(#)
|
Number
of
Securities Underlying Options
Granted
(#)
|
Exercise
Price of Option
Awards
or
Base
Price
of
Stock
Awards(5)
($/Share)
|
Grant
Date Fair Value)(6) ($)
|
|
Michael
O.
Fifer |
3/2/09
|
Performance-
Based
Option
Award
(1)
|
14,970
|
$8.69
|
$50,000
|
||||
|
5/4/09
8/4/09
11/3/09
|
Performance-
Based
Restricted
Stock Unit
Awards
(2)
|
4,177
4,378
4,789
|
$11.97
$11.42
$10.44
|
$49,999
$49,997
$49,997
|
|||||
|
3/2/10
|
Restricted
Stock
Unit Award
(3)
|
16,347
|
$7.88
|
$128,820
|
|||||
|
Thomas
A.
Dineen |
3/2/09
|
Performance-
Based
Option
Award
(1)
|
5,614
|
$8.69
|
$18,750
|
||||
|
5/4/09
8/4/09
11/3/09
|
Performance-
Based
Restricted
Stock Unit
Awards
(2)
|
1,566
1,642
1,796
|
$11.97
$11.42
$10.44
|
$18,745
$18,752
$18,750
|
|||||
|
3/2/10
|
Restricted
Stock
Unit Award
(3)
|
5,807
|
$7.88
|
$45,765
|
|||||
|
Steven
M.
Maynard |
3/2/09
|
Performance-
Based
Option
Award
(1)
|
5,614
|
$8.69
|
$18,750
|
||||
|
5/4/09
8/4/09
11/3/09
|
Performance-
Based
Restricted
Stock Unit
Awards
(2)
|
1,566
1,642
1,796
|
$11.97
$11.42
$10.44
|
$18,745
$18,752
$18,750
|
|||||
|
3/2/10
|
Restricted
Stock
Unit Award
(3)
|
5,647
|
$7.88
|
$44,499
|
|||||
|
5/4/09
|
Time-Based
Option Award
(4)
|
50,000
|
$11.97
|
$167,000
|
|||||
|
Christopher
J.
Killoy
|
3/2/09
|
Performance-
Based
Option
Award
(1)
|
5,864
|
$8.69
|
$19,583
|
||||
|
5/4/09
8/4/09
11/3/09
|
Performance-
Based
Restricted
Stock Unit
Awards
(2)
|
1,636
1,715
1,876
|
$11.97
$11.42
$10.44
|
$19,583
$19,585
$19,585
|
|||||
|
3/2/10
|
Restricted
Stock
Unit Award
(3)
|
6,065
|
$7.88
|
$47,799
|
|||||
|
Thomas
P. Sullivan
|
3/2/09
|
Performance-
Based
Option
Award
(1)
|
5,864
|
$8.69
|
$19,583
|
||||
|
5/4/09
8/4/09
11/3/09
|
Performance-
Based
Restricted
Stock Unit
Awards
(2)
|
1,636
1,715
1,876
|
$11.97
$11.42
$10.44
|
$19,583
$19,585
$19,585
|
|||||
|
3/2/10
|
Restricted
Stock
Unit Award
(3)
|
6,065
|
$7.88
|
$47,799
|
|||||
28
Notes to Grant of Plan-Based Awards
Table
| (1) | Performance-based options awarded to the Named Executive Officers on March 2, 2009, which vested and became exercisable as of March 2, 2010, after the performance criteria were met. | ||
| (2) | Performance-based RSU awards made in quarterly tranches in 2009, each effective as of the fourth business day following the filing of the Form 10-K or 10-Q, which vested and were converted to an equivalent number of shares of Common Stock as of March 2, 2010. | ||
| (3) | RSUs awarded to the Named Executive Officers in lieu of 15% of their 2009 discretionary and performance-based cash bonuses, with the quantity calculated using a one-third discount to market based on the mean of the highest and lowest sales price of a share of Common Stock on the date of grant. These RSUs are subject to three year cliff-vesting. At the end of the vesting period, the Company will issue one share of Common Stock for each vested RSU. Cash dividends equivalent to those paid on the Company’s Common Stock, if any, will be credited to each Named Executive Officer’s account for non-vested RSUs and shall be paid in cash to such individual when such RSUs become vested under the terms of the applicable RSU Agreement. If the Named Executive Officer terminates employment for any reason before the RSUs vest, he will receive cash equal to (i) the number of RSUs multiplied by two-thirds, and then multiplied by the lesser of (ii) the mean sales price of a share of Common Stock on the date of grant or (iii) the mean sales price of a share of Common Stock on the date of termination. | ||
| (4) | Time-based options awarded to Named Executive Officers which vest and became exercisable in five equal annual installments of 20% of the total number of options awarded, beginning on the date of first anniversary of the date of grant and on each of the next succeeding four anniversaries thereafter and have a 10 year term. | ||
| (5) | Represents the per share exercise price of the stock options granted in 2009 as described in footnotes (1) and (2) above, which was the mean of the highest and lowest sales price of the Common Stock as of the date of grant, or the discounted base price of restricted stock units granted in 2010 to each named executive as described in footnote (3) above. Equity awards have never been re-priced and are not permitted to be re-priced under the terms of the 2007 Stock Incentive Plan. | ||
| (6) | Amounts shown for equity awards represent the total grant date fair value recognized for financial statement reporting purposes with respect to stock options and restricted stock units granted to the named executives in 2009 calculated in accordance with the provisions of FASB ASC 718, and are shown at the maximum value expected upon achievement of the performance or time-based goals of the awards. See Note 13 of the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2009 regarding assumptions underlying valuation of equity awards. Any estimate of forfeitures related to service-based vesting conditions are disregarded pursuant to the SEC Rules. | ||
29
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
2009 TABLE
The following table reflects outstanding
grants whose ultimate value is unknown and has not been realized (i.e.,
dependent on future results) for the Named Executive Officers. (For information
on stock options and grants made in 2009 to the Named Executive Officers, see
the “GRANTS OF PLAN-BASED AWARDS TABLE” above.)
|
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR END 2009 TABLE
|
|||||||||
|
Named
Executive Officer |
OPTION AWARDS
|
STOCK AWARDS
|
|||||||
|
Number of
Securities
Underlying
Unexercised
Options (1)
Exercisable
(#)
|
Number of
Securities
Underlying
Unexercised
Options (1)
Unexercisable
(#)
|
Equity
Incentive
Plan
Awards:
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of Shares
or Units
of Stock
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares
or Units
of Stock
That
Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares or
Units
That
Have Not
Vested
(2)
(#)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares or
Units
That
Have Not
Vested
(2)
($)
|
|
|
Michael
O.
Fifer |
240,000
|
160,000
|
$7.32
|
9/25/2016
|
|||||
|
40,000
|
$13.39
|
4/24/2017
|
|||||||
|
40,000
|
$8.23
|
4/28/2018
|
|||||||
|
14,970
|
$8.69
|
3/02/2019
|
|||||||
|
20,335
|
$86,900
|
||||||||
|
16,347
|
$128,820
|
||||||||
|
Thomas
A.
Dineen |
26,000
|
39,000
|
$13.39
|
4/24/2017
|
|||||
|
15,000
|
$13.39
|
4/24/2017
|
|||||||
|
15,000
|
$8.23
|
4/28/2018
|
|||||||
|
5,614
|
$8.69
|
3/02/2019
|
5,633
|
$24,073
|
|||||
|
5,807
|
$45,765
|
||||||||
|
Steven
M.
Maynard |
20,000
|
30,000
|
$13.39
|
4/24/2017
|
|||||
|
7,500
|
$13.39
|
4/24/2017
|
|||||||
|
10,000
|
$8.23
|
4/28/2018
|
|||||||
|
5,614
|
$8.69
|
3/02/2019
|
|||||||
|
10,000
|
40,000
|
$8.69
|
3/02/2019
|
||||||
|
3,899
|
$16,666
|
||||||||
|
5,647
|
$44,499
|
||||||||
|
Christopher
J. Killoy |
60,000
|
40,000
|
$10.46
|
11/27/2016
|
|||||
|
15,000
|
$13.39
|
4/24/2017
|
|||||||
|
15,000
|
$8.23
|
4/28/2018
|
|||||||
|
5,864
|
$8.69
|
3/02/2019
|
|||||||
|
5,856
|
$25,023
|
||||||||
|
6,065
|
$47,799
|
||||||||
|
Thomas
P.
Sullivan |
50,000
|
40,000
|
$6.85
|
8/14/2016
|
|||||
|
15,000
|
$13.39
|
4/24/2017
|
|||||||
|
15,000
|
$8.23
|
4/28/2018
|
|||||||
|
5,864
|
$8.69
|
3/02/2019
|
|||||||
|
5,967
|
$25,498
|
||||||||
|
6,065
|
$47,799
|
||||||||
Notes to Outstanding Equity Awards at Fiscal
Year End Table
| (1) | Amounts shown as exercisable or unexercisable reflect the vesting status of each individual’s options within 60 days of March 9, 2010. Time-based options awarded to Named Executives normally vest and became exercisable in five equal annual installments of 20% of the total number of options awarded, beginning on the date of first anniversary of the date of grant and on each of the next succeeding four anniversaries thereafter and have a 10 year term. Time-based options fully vest in the event of a Change in Control as defined in the applicable Stock Incentive Plan. |
30
| (2) | Amounts shown include RSUs that were awarded to the Named Executive Officers in lieu of 15% of their 2009 discretionary and performance-based cash bonus, and in lieu of 25% of their 2008 performance-based cash bonus. The 2009 and 2008 quantities of RSUs were calculated using a one-third discount to the mean of the highest and lowest sales price of a share of Common Stock on the date of grant. The RSUs are subject to three year cliff-vesting. At the end of the vesting period, the Company will issue one share of Common Stock for each vested RSU. RSUs fully vest in the event of a Change in Control, disability or retirement, as defined in the 2007 stock Incentive Plan, or in the event of death. If the Named Executive Officer terminates employment for any other reason, he will receive cash equal to (i) the number of RSUs multiplied by two-thirds, and then multiplied by the lesser of (ii) the mean sales price of a share of Common Stock on the date of grant or (iii) the mean sales price of a share of Common Stock on the date of termination. Amounts shown represent the full grant date fair value of the awards calculated in accordance with the provisions of FASB ASC 718, and are shown at the maximum value expected upon achievement of the time-based goals of the awards. |
OPTION EXERCISES AND STOCK VESTED IN 2009 TABLE
The following table sets forth the value of equity realized by the Named
Executive Officers upon exercise of vested options or the vesting of deferred
stock during 2009. (For further information on stock options and grants made in
2009 to the Named Executive Officers, see the “GRANTS OF PLAN-BASED AWARDS
TABLE” above.)
| Option Awards | Stock Awards (1) | |||
| Named
Executive Officer |
Number
of Shares Acquired on Exercise (#) |
Value Realized Upon Exercise ($) |
Number
of Shares Acquired Upon Vesting (#) |
Value Realized on Vesting $ |
| Michael O. Fifer | 13,344 | $157,726 | ||
| Thomas A. Dineen | 5,004 | $59,147 | ||
| Steven M. Maynard | 5,004 | $59,147 | ||
| Christopher J. Killoy | 5,227 | $61,783 | ||
| Thomas P. Sullivan (2) | 10,000 | $67,200 | 5,227 | $61,783 |
| Total | 10,000 | $67,200 | 33,806 | $399,586 |
Notes to Options Exercised and Stock Vested
Table
| (1) | Reflects acquisition of restricted stock awards granted in quarterly tranches in 2009 and which vested and were issued as of March 2, 2010 under the Company's 2007 Stock Incentive Plan. Amounts shown are the gross number of, and taxable fair market value of, the shares of Common Stock, acquired upon vesting of the RSUs. In accordance with the terms of the 2007 Stock Incentive Plan, certain of the Named Executive Officers receiving stock grants elected to receive “cashless” grants, whereby the taxes related to the acquisition of deferred stock were deducted from the gross amount of shares to which they were entitled. Mr. Maynard paid the taxes related to the acquisition of his stock grants in cash and received the full amount of his stock grants. In all cases, fractional shares were paid in cash. | ||
| (2) | Reflects Mr. Sullivan’s exercise of options to purchase Company’s Common Stock issued under the Company's 1998 Stock Incentive Plan on August 14, 2006 with an exercise price of $6.85 per share. Amounts shown are the gross number of, and the taxable fair market value of, the shares acquired upon exercise. Mr. Sullivan elected to make a “cashless” exercise, whereby the exercise price and taxes related to the exercise of options were deducted from the gross amount of shares to which he was entitled, with fractional shares were paid in cash. |
31
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE
IN CONTROL
Payments on Change in
Control
In the event of a potential change in control of the Company, it is
vitally important that executives be able to continue working in the best
interest of our stockholders. For that reason, the Company has entered into
severance agreements with the Named Executive Officers designed to provide
salary and medical benefit continuance in the event of the termination of his
employment under certain circumstances. The Company’s severance agreements are
not employment contracts and do not specify an employment term, compensation
levels or other terms or conditions of employment. There are also
change-in-control provisions in both the stock option and restricted stock
agreements.
Covered Terminations and Severance Payments
Pursuant to Change in Control Agreements
Each of the Named Executive Officers’ severance agreements provide for
the following severance benefits, if during the term of the agreement: (A) he is
terminated without cause or (B) there is a Change in Control and a subsequent
reduction of his salary or a diminution of his duties and thereafter he
terminates his employment within 90 days. In the situation described in clause
(A) above, he will receive a lump sum cash payment equal to 12 months of his
annual base salary, if employed for less than five years, or 18 months of his
annual base salary if employed for five or more years, and continued insurance
benefits. Mr. Fifer’s severance agreement provides for 18 months of his annual
base salary. In the situation described in clause (B) above, the Named Executive
Officer will receive a lump sum cash payment equal to 18 months of his annual
base salary and 100% of his target cash bonus and continued insurance benefits.
In both cases, such continued insurance benefits are to be paid to the Named
Executive Officer net of employee contributions for a period equal to the number
of months of severance pay.
In all cases, payment of severance benefits will be subject to the
six-month deferral requirements of under the IRS Tax Code Section 409A. All of
the severance agreements have a one-year term, subject to automatic renewal on
each anniversary of its date unless (A) the Named Executive Officer gives notice
of his intention to terminate his employment, or (B) the Company gives notice of
its intention not to renew the agreement at least one year in advance. The
amount of severance and benefits are generally determined based on competitive
market practices for executives at this level. The Compensation Committee also
takes into consideration that executives at this level generally require a
longer timeframe to find comparable jobs because there are fewer jobs at this
level in the market and often have a large percentage of their personal wealth
dependent on the status of the Company, given the fact that a large part of
their compensation is equity-based.
Change in Control Events and Severance
Benefits Not Covered by the Severance Agreements
The 1998 Stock Incentive Plan and 2007 Stock Incentive Plan provide for
accelerated vesting of stock awards that the executive has already received, not
for additional payments. The 1998 Stock Incentive Plan has a single trigger
component, the Change in Control event. If there is a Change in Control event,
the accelerated vesting of stock-based compensation will occur whether or not
the executive's employment is terminated. This further protects the executive
because it provides him or her with an opportunity to exercise and vote the
option shares as a stockholder. The 2007 Stock Incentive Plan also has a single
trigger change in control accelerated vesting component, which will apply
unless, in the case of a merger or acquisition of the Company by another
business entity, the surviving, continuing, or purchasing corporation assumes
the awards previously issued under that plan.
Change in Control Definition
Generally, under the Severance Agreements and the 1998 Stock Incentive
Plan and 2007 Stock Incentive Plan, a “Change in Control” will be deemed to have
occurred:
- When any person acquires a
significant percentage of the voting power of the Company (50% or more under
the 1998 Stock Incentive Plan,
and 25% or more under the 2007 Stock Incentive Plan);
- If a majority of the Board members
change, unless the new Directors are elected or nominated for election by
at least two-thirds of the
existing Board members;
- Upon the acquisition of the
Company; or
- Upon the liquidation or dissolution of the Company (with approval of the stockholders)
32
Termination by Death or Disability
In the event of death or disability, executives receive no payment other
than through life insurance or disability insurance available to salaried
employees generally. Under the 1998 Stock Incentive Plan, all options may be
exercised for 90 days after death or disability to the extent vested on the date
of such death or total disability. Under the 2007 Stock Incentive Plan, vested
options are exercisable in the case of death or disability within the greater
of: 30 days, or one-fourth of the length of time elapsed since the options first
vested to the date of termination. Under both plans, in no case can options be
exercised beyond the expiration date of the award.
In the event of termination by death or disability, the executive or his
or her estate will receive his or her bonus to the extent earned.
Termination by Retirement
Executives were eligible to participate in the Company's Pension Plan
until December 31, 2007, the effective date of the plan’s “freeze.” None of the
Named Executive Officers was eligible for normal retirement, and none of the
Named Executive Officers accrued service under the Pension Plan beyond December
31, 2007, the effective date of that plan’s “freeze” by the Company. Pension
benefits are described under “PENSION PLANS” below. In addition to the pension
benefits described below, when a retirement-eligible employee terminates
employment, his or her options awarded under the 1998 Stock Incentive Plan
expire 90 days after termination. Under the 2007 Stock Incentive Plan, vested
options awarded to the Named Executive Officers are exercisable in the case of
retirement within the greater of: 30 days, or one-fourth of the length of time
elapsed since the options first vested to the date of retirement. Under both
plans, in no case can options be exercised beyond the expiration date of the
award.
In the event of termination by
retirement, the executive will receive his or her bonus to the extent earned.
Voluntary and Involuntary Termination
The severance benefits for the Named Executive Officers include base
salary and medical insurance continuation in cases of termination without cause
for a minimum of 12 months and a maximum of 18 months. Mr. Fifer’s severance
agreement provides for 18 months of his annual base salary in the event of his
termination without cause. Under the 1998 Stock Incentive Plan, when a Named
Executive Officer terminates voluntarily before retirement, his stock options
expire 30 days after termination. Under the 2007 Stock Incentive Plan, vested
options awarded to the Named Executive Officers are exercisable in the case of
voluntary termination or involuntarily without cause within the greater of: 30
days, or one-fourth of the length of time elapsed since the options first vested
to the date of retirement. Under both plans, options cannot be exercised beyond
the expiration date of the award. Under both plans, in the case of termination
for cause, an employee's stock options terminate immediately.
If any employee voluntarily or involuntarily without cause terminates his
or her employment the employee, will receive his or her bonus to the extent
earned. If an employee is terminated for cause, any bonus is forfeited.
Retention and Transition Agreements
The Company may enter into retention or “transition” agreements from time
to time with executives who retire or voluntarily terminate their employment
with the Company in order to facilitate the management transition of the
executives’ areas of responsibility.
33
POTENTIAL AND ACTUAL PAYMENTS UNDER SEVERANCE
AGREEMENTS TABLE
The table below sets forth the terms and
estimated potential payments and benefits provided in each termination
circumstance for the Company's Named Executive Officers as of December 31, 2009.
The potential amounts shown in the table do not include payments and benefits to
the extent that they are provided on a non-discriminatory basis to the Company's
salaried employees generally.
| Continuation | ||||||||
| Number of Equity | of Medical | |||||||
| Severance | Bonus Payment | Awards- That | Retirement | Welfare | Aggregate | |||
| Named Executive Officers | Agreement | (1) | Vest (2)(3) | Benefits (4) | Benefits (5) | Payments(6) | ||
| ($) | ($) | (#) | ($) | ($) | ($) | |||
| Michael O. Fifer | ||||||||
| Change In Control | $600,000 | $600,000 | 196,682 | $0 | $16,882 | $1,216,882 | ||
| Termination without Cause | $600,000 | $0 | 0 | $0 | $16,882 | $616,882 | ||
| Retirement | n/a | $400,000 | 36,682 | $0 | $0 | $400,000 | ||
| Death or Disability | n/a | $400,000 | 36,682 | $0 | $0 | $400,000 | ||
| Thomas A. Dineen | ||||||||
| Change In Control | $337,500 | $219,375 | 50,440 | $0 | $16,882 | $573,757 | ||
| Termination without Cause | $337,500 | $0 | 0 | $0 | $16,882 | $354,582 | ||
| Retirement | n/a | $146,250 | 11,440 | $0 | $0 | $146,250 | ||
| Death or Disability | n/a | $146,250 | 11,440 | $0 | $0 | $146,250 | ||
| Steven M. Maynard | ||||||||
| Change In Control | $352,500 | $229,125 | 89,546 | $0 | $16,882 | $598,507 | ||
| Termination without Cause | $352,500 | $0 | 0 | $0 | $16,882 | $369,382 | ||
| Retirement | n/a | $152,750 | 9.546 | $0 | $0 | $152,750 | ||
| Death or Disability | n/a | $152,750 | 9.546 | $0 | $0 | $152,750 | ||
| Christopher J. Killoy | ||||||||
| Change In Control | $352,500 | $229,125 | 51,921 | $0 | $16,882 | $598,507 | ||
| Termination without Cause | $352,500 | $0 | 0 | $0 | $16,882 | $369,382 | ||
| Retirement | n/a | $152,750 | 11,921 | $0 | $0 | $152,750 | ||
| Death or Disability | n/a | $152,750 | 11,921 | $0 | $0 | $152,750 | ||
| Thomas P. Sullivan | ||||||||
| Change In Control | $352,500 | $229,125 | 52,032 | $0 | $16,882 | $598,507 | ||
| Termination without Cause | $352,500 | $0 | 0 | $0 | $16,882 | $369,382 | ||
| Retirement | n/a | $152,750 | 12,032 | $0 | $0 | $152.570 | ||
| Death or Disability | n/a | $152,750 | 12,032 | $0 | $0 | $152,750 | ||
Notes to Potential and Actual Payments Under
Severance Agreements Table
| (1) | The Bonus payment under Retirement or Death or Disability shall be prorated to the extent earned during the partial year prior to Retirement or Death or Disability. The amount show is the nominal bonus at 100% achievement of goals for a full 12 months. | |
| (2) | Includes number of options awarded under the Company’s 1998 and 2007 Stock Incentive Plans that have not yet vested. Also includes restricted stock unit awards subject to vesting. | |
| (3) | Under the 1998 Stock Incentive Plan, vested time-based options awarded to the Named Executive Officers are exercisable within 30 days of voluntary termination, or within 90 days of the earlier of the optionee's retirement, death or disability. Under the 2007 Stock Incentive Plan, vested time or performance-based options awarded to the Named Executive Officers are exercisable in the case of voluntary termination, involuntarily termination without cause, retirement, death, or disability within the greater of: 30 days, or one-fourth of the length of time elapsed since the options first vested to the date of termination. Under both plans, in the case of termination for cause, an employee's stock options terminate immediately. RSUs vest immediately in the event of death, disability or retirement. In the event of voluntary termination or involuntary termination without cause before vesting, the Named Executive Officer will receive cash equal to the number of RSUs multiplied by two-thirds, and then multiplied by the lesser of: (i) the mean sales price of a share of Common Stock on the date of grant, or (ii) the mean sales price of a share of Common Stock on the date of termination. In the event of a Change in Control under the 1998 Stock Incentive Plan, all options vest immediately. Under the 2007 Stock Incentive Plan, all options will vest if, in the case of a merger or acquisition of the Company by another business entity, the surviving, continuing, or purchasing corporation does not assume the awards previously issued under that plan. All RSUs vest immediately under the 2007 Stock Incentive Plan in the event of a Change in Control. | |
| (4) | No non-qualified retirement benefits are payable to the named executive officers. | |
| (5) | Includes continuation of health insurance coverage assuming family coverage for potential severance recipients, net of employee contributions. | |
| (6) | Aggregate payments exclude number of options or RSUs that vest. | |
34
PENSION PLANS
All employees, including the individuals named in the Summary
Compensation Table, are eligible to participate in the Company’s 401(k) Plan,
subject to IRS plan limits. The 401(k) Plan provides participation and immediate
vesting upon three months of service, a safe harbor match for all participants
and supplemental discretionary employer contributions for all eligible
employees. The individuals named in the Summary Compensation Table are eligible
to participate in the 401(k) Plan, subject to IRS plan limits.
Until January 1, 2008, all of the Company's salaried employees
participated in the Sturm, Ruger & Company, Inc. Salaried Employees'
Retirement Income Plan (the “Pension Plan”), a defined benefit pension plan,
which generally provides annual pension benefits at age 65 in the form
of a straight life annuity in an amount equal
to: 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 the participant's years of credited service up to a
maximum of 25 years.
On October 1, 2007, the Pension Plan was “frozen” by the Board of
Directors so that participants will no longer accrue additional service under
the plan after December 31, 2007. In lieu of continued benefit accruals under
the Pension Plan, as of January 1, 2008, the Company began making supplemental
discretionary contributions for all eligible employees under its 401(k) Plan in
addition to the safe harbor employer match contributed on behalf of eligible
401(k) Plan participants.
John M. Kingsley, Jr., a Director who retired as Executive Vice President
of the Company on December 31, 1996, and is retiring from the Board as of April
28, 2010, received $37,710 in benefits from the Pension Plan during 2009.
The Sturm, Ruger & Company, Inc. Supplemental Executive Retirement
Plan (the “SERP”) is a nonqualified supplemental retirement plan for certain
senior executives of the Company who have achieved the rank of Vice President or
above and who are selected by the Compensation Committee. No active employees
participated in the SERP in 2009.
The SERP generally provides an annual benefit beginning at age 65, the
normal retirement age under the SERP, based upon a participant’s completed years
of service with the Company as of such age. The maximum benefit under the SERP
is equal to 50% of the participant's average annual compensation, including base
pay, bonuses and other incentive compensation, up to $400,000. All SERP benefits
are reduced by the amount the participant is entitled to receive under the
Pension Plan, and are 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.
Pre-retirement death or disability benefits are also provided to plan
participants under the SERP.
As of February 1, 2008, Mr. Kingsley is the only participant in the SERP
and is in retired status. John M. Kingsley, Jr. received $154,536 in benefits
from the SERP during 2009.
35
2009 PENSION BENEFITS TABLE
The following table sets forth the
present value of pension benefits accrued by, and actual benefits paid in 2009
to the Named Executive Officers under the Salaried Employees' Retirement Income
Plan (the “Pension Plan”).
| Salaried Employees’ Retirement | |||||
| Income Plan (1) | |||||
| Present | |||||
| Value | |||||
| of | Payments | ||||
| Accumulated | During | ||||
| Named Executive | Credited Service (2) | Plan Benefit | Last Fiscal | ||
| Officers | (Years) | (3) | Year | ||
| ($) | ($) | ||||
| Michael O. Fifer | 1.3 | $11,686 | |||
| Thomas A. Dineen | 10.6 | $36,678 | |||
| Steven M. | |||||
| Maynard |
.9
|
$5,721
|
|||
| Christopher J. | |||||
| Killoy |
2.2
|
$16,103
|
|||
| Thomas P. | |||||
| Sullivan |
1.4
|
$10,487
|
|||
Notes to Pension Benefits
Table
| (1) | On October 1, 2007, the Board of Directors authorized the suspension of benefits, or “freeze,” of the Pension Plan effective January 1, 2008. | ||
| (2) | The maximum years of credited service under the Pension Plan. | ||
| (3) | The present value of accumulated benefits under the Pension Plan is calculated assuming a discount rate of 5.75%, the 2000 Group Annuity Mortality Table, the participant’s age as of December 31, 2009, and frozen accrued benefits as of December 31, 2007. | ||
36
| PRINCIPAL STOCKHOLDERS AND BENEFICIAL OWNERSHIP |
PRINCIPAL STOCKHOLDER TABLE
The following table sets forth as of
March 9, 2010 the ownership of the Company’s Common Stock by each person of
record or known by the Company to beneficially own more than 5% of such stock
| Amount and Nature of | |||
| Title of Class | Name and Address of Beneficial Owner | Beneficial Ownership | Percent of Class |
| Allianz Global Investors Management Partners | |||
| LLC680 Newport Center Drive, Suite 250 | |||
| Newport Beach, CA 92660 | |||
| Nicholas-Applegate Capital Management LLC | |||
| 600 West Broadway, Suite 2900 | |||
| San Diego, CA 92101 | |||
| Common Stock | 1,868,900 (1) | 9.8% | |
| Oppenheimer Capital LLC | |||
| 1345 Avenue of the Americas | |||
| New York, NY 10105 | |||
| NJF Investment Group LLC | |||
| 2100 Ross Avenue, Suite 700 | |||
| Dallas, TX 75201 | |||
| BlackRock Inc. | |||
| Common Stock | 40 East 52nd Street | 1,712,152 (2) | 8.96% |
| New York, NY 10022 | |||
| The Vanguard Group, Inc. | |||
| Common Stock | 100 Vanguard Boulevard | 1,131,935 (3) | 5.92% |
| Malvern, PA 19355 | |||
| Oppenheimer Funds, Inc. | |||
| Two World Financial Center | |||
| Common Stock | 225 Liberty Street | 1,042,821 (3) | 5.46% |
| New York, NY 10281 | |||
Notes to Principal
Stockholder Table
| (1) | Such information is as of December 31, 2009 and is derived exclusively from a Schedule 13G filed jointly by Allianz Global Investors Management Partners LLC, Nicholas-Applegate Capital Management LLC, Oppenheimer Capital LLC and NFJ Investment Group LLC on February 11, 2010. | ||
| (2) | Such information is as of December 31, 2009 and is derived exclusively from a Schedule 13G filed by BlackRock Inc. on January 29, 2010. | ||
| (3) | Such information is as of December 31, 2009 and is derived exclusively from a Schedule 13G filed by Vanguard Group Inc. on February 8, 2010. | ||
| (4) | Such information is as of December 31, 2009 and is derived exclusively from a Schedule 13G filed by Oppenheimer Funds Inc. on February 2, 2010. | ||
37
BENEFICIAL OWNERSHIP TABLE
The following table sets forth certain information as of March 9, 2010 as
to the number of shares of the Company’s Common Stock beneficially owned by each
Director, Named Executive Officer and all Directors and Named Executive Officers
of the Company as a group.
| Stock Options Currently | |||||||
| Beneficially | Exercisable or to | ||||||
| Owned Shares | Become Exercisable | Total Shares | |||||
| of Common | within 60 days after | Beneficially | Percent | ||||
| Stock (1) | March 9, 2010 | Owned (1) | of Class | ||||
| Name | (#) | (#) | (#) | (%) | |||
| Independent Directors: | |||||||
| James E. Service | 24,381 | 20,000 | 44,381 | * | |||
| John A. Cosentino, Jr. | 75,881 | 20,000 | 95,881 | * | |||
| C. Michael Jacobi | 16,881 | 20,000 | 36,881 | * | |||
| John M. Kingsley, Jr. | 11,041 | 20,000 | 31,041 | * | |||
| Stephen T. Merkel | 12,081 | 20,000 | 32,081 | * | |||
| Amir P. Rosenthal** | 0 | 5,000 | 5,000 | * | |||
| Ronald C. Whitaker | 18,881 | 20,000 | 38,881 | * | |||
| Phillip C. Widman ** | 9,000 | 5,000 | 14,000 | * | |||
| Named Executive Officers: | |||||||
| Michael O. Fifer (also a Director) | 66,669 | 334,970 | 401,639 | * | |||
| Thomas A. Dineen | 14,128 | 61,614 | 75,742 | * | |||
| Steven M. Maynard | 75,004 | 53,114 | 128,118 | * | |||
| Christopher J. Killoy | 4,198 | 95,864 | 100,062 | * | |||
| Thomas P. Sullivan | 8,248 | 85,864 | 94,112 | * | |||
| Directors and executive officers as a | |||||||
| group: (8 independent Directors, 1 | |||||||
| Director who is also an executive officer | 353,696 | 841,652 | 1,195,348 | 6.3% | |||
| and 7 other executive officers) | |||||||
Notes to Beneficial Ownership
Table
| * | Beneficial owner of less than 1% of the outstanding Common Stock of the Company. | |
|
**
|
Amir P. Rosenthal
and Phillip C. Widman were each appointed to the Board on January 4, 2010.
|
|
| (1) | Includes 2,024 shares of Common Stock granted on April 29, 2009 to each then-current Independent Director pursuant to the 2007 Stock Incentive Plan. These shares represent awards of restricted stock with a grant date fair value of $25,000 issued annually as part of the compensation for Independent Directors based on the mean of the high and low of the Common Stock on the date of grant. These shares are considered owned with risk of forfeiture until they vest on the date of the Company’s Annual Meeting next following the date of grant. |
38
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Exchange Act 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 SEC and NYSE. Officers, Directors and greater-than-10%
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of the
Section 16(a) report forms furnished to the Company and written representations
that no other reports were required, that with respect to the period from
January 1, 2009 through December 31, 2009, all such forms were filed in a timely
manner by the Company's officers, Directors and greater-than-10% beneficial
owners, with the exception of:
- a Form 4 for share acquisition by
Steven M. Maynard which was filed 57 days late;
- a Form 5 reporting an increase in
Thomas A. Dineen’s Common Stock ownership during 2009 as a result of his
broker’s automatic dividend reinvestment program, which was filed 18 days
late; and
- Forms 4 for restricted stock unit awards made to the Company’s officers in lieu of 25% of their 2008 performance-based bonus on February 3, 2009 which were filed on March 4, 2010. These restricted stock units convert to shares of Common Stock of the Company after a three-year cliff-vesting period. As these RSUs were viewed as having a substantial risk of forfeiture and a share amount that is dependent on future service of the officer, Forms 4 for these awards were not originally filed in 2009.
CERTAIN RELATIONSHIPS AND RELATED-PARTY
TRANSACTIONS
The Company's Board has a policy of monitoring and reviewing issues
involving potential conflicts of interest, and reviewing and approving all
related party transactions. There were no related-party transactions in 2009.
39
PROPOSAL NO. 2 - RATIFICATION OF INDEPENDENT
AUDITORS
McGladrey & Pullen, LLP has served as the Company’s independent
auditors since 2005. Subject to the ratification of the stockholders, the Board
of Directors has reappointed McGladrey & Pullen, LLP as the Company's
independent auditors for the 2010 fiscal year.
PRINCIPAL ACCOUNTANTS' FEES AND SERVICES
The following table summarizes the fees incurred by the Company for
professional services rendered by McGladrey & Pullen, LLP during fiscal
years 2009 and 2008.
| Principal Accountants’ Fees | ||||
| Fiscal 2009 Fees | Fiscal 2008 Fees | |||
| Audit Fees | $559,500 | $537,500 | ||
| Audit-Related Fees | $45,000 | $45,000 | ||
| Tax Fees | $13,100 | $16,650 | ||
| All Other Fees | $5,000 | $0 | ||
| Total Fees | $622,600 | $599,150 | ||
Audit Fees
Consist of fees billed for professional services rendered for the audit
of the Company's consolidated financial statements, the audit of internal
controls over financial reporting per Section 404 of the Sarbanes-Oxley Act and
the review of interim consolidated financial statements included in quarterly
reports.
Audit - Related Fees
Consist of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of the Company's
financial statements and are not reported under “Audit Fees.” These services
include audits of the Company's employee benefit and compensation
plans.
Tax Fees
Consist of fees billed for professional services for tax assistance,
including pre-filing reviews of original and amended tax returns for the Company
and tax audit assistance.
All Other Fees
Consists of fees billed for services rendered by McGladrey & Pullen,
LLP to the Company related to financial due diligence.
Policy on Audit Committee Pre-Approval of
Audit and Permissible Non-Audit Services of Independent Auditors
It is the policy of the Audit Committee to meet and review and approve in
advance, on a case-by-case basis, all engagements by the Company of permissible
non-audit services or audit, review or attest services for the Company to be
provided by the independent auditors, with exceptions provided for de minimus
amounts under certain circumstances as prescribed by the Exchange Act. The Audit
Committee may, at some later date, establish a more detailed pre-approval policy
pursuant to which such engagements may be pre-approved without a meeting of the
Audit Committee. Any request to perform any such services must be submitted to
the Audit Committee by the independent auditor and management of the Company and
must include their views on the consistency of such request with the SEC's rules
on auditor independence.
40
All of the services of McGladrey & Pullen, LLP described above under
“Audit-Related Fees” and “Tax Fees” were approved by the Audit Committee in
accordance with its policy on permissible non-audit services or audit, review or
attest services for the Company to be provided by its independent auditors, and
no such approval was given through a waiver of such policy for de minimus
amounts or under any of the other circumstances as prescribed by the Exchange
Act.
Representatives of McGladrey & Pullen, 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.
Board of Director Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE RATIFICATION OF MCGLADREY & PULLEN, LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
41
CODE OF BUSINESS CONDUCT AND ETHICS
The Board has adopted a “Code of Business Conduct and Ethics” as part of
the Company's Corporate Compliance Program, which governs the obligation of all
employees, executive officers and Directors of the Company to conform their
business conduct to be in compliance with all applicable laws and regulations,
among other things. The Code of Business Conduct and Ethics is posted on the
Company's website at www.ruger.com, and is available in print to any stockholder
who requests it by contacting the Corporate Secretary as set forth in
“STOCKHOLDER COMMUNICATIONS” below.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR 2011
To be considered for inclusion in the Proxy Statement distributed by the
Company in connection with next year's Annual Meeting of Stockholders,
stockholder proposals must be submitted in writing to the Company delivered or
mailed by first class United States mail, postage prepaid, no earlier than
December 29, 2010 (120 days prior to the first anniversary of this year’s Annual
Meeting of Stockholders), and no later than January 28, 2011 (90 days prior to
the first anniversary of this year’s Annual Meeting of Stockholders). Any
stockholder proposal to be considered at next year's Annual Meeting of
Stockholders, but not included in next year's Proxy Statement, must also be
submitted in writing to the Company by February 2, 2011.
Recommendations for nominees to stand for election as Directors at next
year's Annual Meeting of Stockholders must be received in writing delivered or
mailed by first class United States mail, postage prepaid, no earlier than
December 29, 2010 (120 days prior to the first anniversary of this year’s Annual
Meeting of Stockholders), and no later than January 28, 2011 (90 days prior to
the first anniversary of this year’s Annual Meeting of Stockholders) and include
the information as required under “THE BOARD OF DIRECTORS AND ITS COMMITTEES –
Nominating and Corporate Governance Committee” described above.
All stockholder proposals or Director nominations should be submitted to
Leslie M. Gasper, Corporate Secretary, Sturm, Ruger & Company, Inc., Lacey
Place, Southport, Connecticut 06890.
STOCKHOLDER AND INTERESTED PARTY
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board has adopted a method by which stockholders and interested
parties can send communications to the Board. Stockholders and interested
parties may communicate in writing any questions or other communications to the
Chairman or non-management Directors of the Board through the following methods:
- by contacting the Corporate
Secretary at Sturm, Ruger & Company, Inc., 1 Lacey Place, Southport, CT
06890;
- by telephone at (203) 259-7843,
extension 33224;
- by fax at (203) 256-3367;
or
- by calling the Company's corporate communications telephone “hotline” at 1-800-826-6762 or emailing the hotline at sturm-ruger@hotlines.com. These hotlines are monitored 24 hours a day, 7 days a week.
Stockholders or interested parties may also communicate in writing any
questions or other communications to the management Directors of the Board in
the same manner.
Stockholders may contact the Corporate Secretary at (203) 259-7843 or
Computershare Investor Services, LLC, which is the Company's stock transfer
agent, at (312) 360-5190 or www.computershare.com for questions regarding routine stockholder
matters.
42
OTHER MATTERS
Management of the Company does not intend to present any business at the
Meeting other than as set forth in Proposal 1 and 2 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, 2009,
including the financial statements and financial statement schedules. Such
requests may be directed to Leslie M. Gasper, Corporate Secretary, Sturm, Ruger
& Company, Inc., Lacey Place, Southport, Connecticut 06890.
|
BY ORDER OF THE BOARD OF
DIRECTORS
|
|
|
|
|
Leslie M.
Gasper
|
|
|
Corporate
Secretary
|
|
Southport, Connecticut
March 15, 2010
March 15, 2010
43
 |
|
|||
|
MR A SAMPLE
DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 |
||||
|
|
Electronic Voting
Instructions
|
|||
| You can vote by Internet or telephone! Available 24 hours a day, 7 days a week! |
||||
| Instead of mailing your proxy, you
may choose one of the two voting methods outlined below to vote your proxy. |
||||
| VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. | ||||
| Proxies submitted by the Internet or telephone must
be received by 1:00 a.m., Central Time, on April 28, 2010. |
||||
 |
Vote by Internet | |||
|
||||
 |
Vote by telephone | |||
| Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. |  |
|
||
| Annual Meeting Proxy Card | 1234 5678 9012 345 | |
| 6 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6 | ||
| A | Election of Directors — The Board of Directors unanimously recommends a Vote FOR the election of seven Directors: | ||
| 1. | Nominees: | For | Withhold | For | Withhold | For | Withhold | |||||||||||||||
| 01 | - | James E. Service | ¨ | ¨ | 02 | - | Michael O. Fifer | ¨ | ¨ | 03 | - | John A. Cosentino, Jr. | ¨ | ¨ | ||||||||
| 04 | - | C. Michael Jacobi | ¨ | ¨ | 05 | - | Amir P. Rosenthal | ¨ | ¨ | 06 | - | Ronald C. Whitaker | ¨ | ¨ | ||||||||
| 07 | - | Phillip C. Widman | ¨ | ¨ | ||||||||||||||||||
| B | Issues — The Board of Directors unanimously recommends a Vote FOR the following proposal: | ||
| For | Against | Abstain | |||||||||||||||||
| 2. | The ratification of the appointment of
McGladrey & Pullen, LLP as the Independent Auditors of the Company for the 2010 fiscal year. |
¨ | ¨ | ¨ | |||||||||||||||
| C | Non-Voting Items | ||
| Change of Address — Please print new address below. | |||
| |
|||
| D | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below | |||||
| 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. | ||||||
Date (mm/dd/yyyy) — Please print date below.
| / / |
Signature 1 — Please keep signature within the box.
Signature 2 — Please keep signature within the box.
| C 1234567890 | J N T |
|
1 U P X
|
0 2 5 0 1 9
1
|
|
6IF
YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE
PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE.6
|
| Proxy — STURM, RUGER & COMPANY, INC. |
LACEY PLACE, SOUTHPORT, CONNECTICUT
06890
This Proxy is Solicited on Behalf of the Board of
Directors
for the Annual Meeting of Stockholders to be held on April 28, 2010
for the Annual Meeting of Stockholders to be held on April 28, 2010
The undersigned
hereby appoints Michael O. Fifer 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 9, 2010 at the Annual Meeting of Stockholders to be held on
April 28, 2010 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 and “FOR” Proposal 2 and at their discretion on any
other matter that may properly come before the meeting. 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.)
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