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. )
Filed by the Registrant
[X]
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Filed by a Party other than
the Registrant [ ]
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Check the appropriate
box:
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[ ]
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Preliminary Proxy
Statement
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[ ]
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Soliciting Material Under Rule
14a-12
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[ ]
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Confidential, For Use of
the
Commission Only (as permitted
by Rule 14a-6(e)(2))
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[X]
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Definitive Proxy
Statement
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[ ]
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Definitive Additional
Materials
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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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Payment of Filing Fee (Check
the appropriate box):
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[X]
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No fee required.
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[
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Fee computed on
table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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Title of each class of
securities to which transaction applies:
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Aggregate number of
securities to which transaction applies:
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Per unit price or
other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
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4)
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Proposed maximum
aggregate value of transaction:
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Fee paid previously
with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
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1)
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Amount previously
paid:
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2)
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Form, Schedule or Registration
Statement No.:
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3)
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Filing Party:
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4)
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Date Filed:
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March 15, 2012
Dear Fellow Stockholders:
You are
cordially invited to attend the 2012 Annual Meeting of Stockholders of Sturm,
Ruger & Company, Inc. to be held at 9:00 a.m. on May 2, 2012 at The Common
Man Inn, 21 Water Street, Claremont, NH 03743. Details of the business to be
conducted at the meeting are given in the attached Notice of Annual Meeting and
Proxy Statement.
The Board of Directors looks forward to joining you at the 2012 Annual
Meeting.
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STURM, RUGER &
COMPANY, INC.
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Michael O. Fifer
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President and Chief Executive
Officer
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NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
MAY 2, 2012
NOTICE IS
HEREBY GIVEN THAT
the Annual Meeting of
Stockholders of
STURM, RUGER & COMPANY,
INC.
(the Company) will be held at The
Common Man Inn, 21 Water Street, Claremont, NH 03743 on the 2
nd
day
of May, 2012 at 9:00 a.m. to consider and act upon the following:
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1.
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A proposal to elect
seven (7) Directors to serve on the Board of Directors for the ensuing
year;
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2.
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A proposal to ratify
the appointment of McGladrey & Pullen, LLP as the Companys
independent auditors for the 2012 fiscal year;
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3.
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An advisory vote on
the compensation of the Companys Named Executive Officers;
and
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4.
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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 13, 2012 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 Companys offices located
at 411 Sunapee Street, Newport, New Hampshire 03773.
The Companys Proxy Statement is attached hereto.
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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,
2012
ALL
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. YOUR VOTE IS IMPORTANT. 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
AT WWW.ENVISIONREPORTS.COM/RGR OR BY CALLING 1-800-641-4276, AND MAY VOTE THEIR PROXY AT
WWW.ENVISIONREPORTS.COM/RGR
OR
BY CALLING 1-800-652-8683. STOCKHOLDERS WHO HOLD THEIR SHARES THROUGH A BROKERAGE ACCOUNT MAY VIEW OR REQUEST THE PROXY MATERIALS
AT
WWW.PROXYVOTE.COM
OR BY CALLING 1-800-579-1639, AND MAY VOTE THEIR PROXY AT
WWW.PROXYVOTE.COM
OR BY CALLING 1-800-454-8683.
PLEASE REVIEW THE PROXY MATERIALS BEFORE VOTING YOUR SHARES.
Table of Contents
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Page
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Proxy Solicitation And
Voting Information
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1
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List Of Proposals And Recommendations Of The
Board Of Directors
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2
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Proposal No. 1 Election
Of Directors
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3
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Director Nominees
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3
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The Board Of Directors And
Its Committees
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6
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Corporate
Governance Guidelines And Code Of Business Conduct And Ethics
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6
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The Boards Role In Risk
Oversight
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Independent, Non-Management Directors
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Board Leadership
Structure
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Membership And Meetings Of The Board And Its Committees Table For Year
2011
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Committees Of The
Board
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Audit
Committee
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Report Of The Audit
Committee
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Compensation Committee
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Compensation Committee
Report On Executive Compensation
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Nominating And Corporate Governance Committee
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Risk Oversight
Committee
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Director Compensation
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Directors Fees And
Other Compensation
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Directors Compensation Table For Year 2011
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Directors and Executive
Officers Beneficial Equity Ownership
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Beneficial Ownership Of Directors And
Management Table
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Section 16(A) Beneficial
Ownership Reporting Compliance
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Certain Relationships And Related-Party
Transactions
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Principal
Stockholders
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Proposal No. 2 - Ratification Of Independent
Auditors
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Principal Accountants
Fees And Services
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Proposal No. 3 Advisory Vote On
Compensation Of Named Executive Officers
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Compensation Discussion
And Analysis
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What Is The Companys
Philosophy Regarding Compensation And What Are The Compensation
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Program Objectives And Rewards?
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What Are The Companys
Governance Practices Regarding Compensation?
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What Are The Companys
Governance Practices Regarding Stock Awards?
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What Are The Elements Of
Compensation?
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i
Table of Contents
(continued)
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Page
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Why
Does The Company Choose To Pay Each Element?
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How Does The Company
Determine The Amount/Formula For Each Element?
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How Are
Salaries Determined?
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How Are Bonuses And
Profit Sharing Determined?
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How Are
Equity Compensation Awards Determined?
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What Are The Companys
Ongoing Plans For Plan-Based Equity Compensation?
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How Is
The Chief Executive Officers Performance Evaluated And Compensation
Determined?
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What Is The Chief
Executive Officers Compensation?
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Comparison Of Cumulative Total Return Table
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Does The Company Pay For
Perquisites?
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How
Does The Company Evaluate Its Compensation Program Risks?
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Executive Compensation
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2011
Target Compensation Table
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2011 Incentive
Compensation Pre-Determined Goals Table
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2011
Summary Compensation Table
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Summary All Other
Compensation Table
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Grants
Of Plan-Based Awards
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Outstanding Equity
Awards At Fiscal Year End 2011 Table
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Option
Exercises And Stock Vested In 2011 Table
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Potential Payments Upon Termination Or Change In
Control
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Payments On Change In Control
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Covered Terminations And
Severance Payments Pursuant To Change In Control Agreements
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Change
In Control Events And Severance Benefits Not Covered By The Severance
Agreements
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Change In Control
Definition
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Termination By Death Or Disability
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Termination By
Retirement
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Voluntary And Involuntary Termination
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Retention And Transition
Agreements
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Potential And Actual Payments Under Severance Agreements Table
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Pension Plans
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2011
Pension Benefits Table
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Stockholder Proposals And Director Nominations For
2013
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Stockholder And Interested Party
Communications With The Board Of Directors
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Other Matters
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ii
March 15, 2012
PROXY STATEMENT
Annual Meeting of Stockholders of the
Company to be held on May 2, 2012
PROXY SOLICITATION
AND VOTING INFORMATION
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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 2012 Annual Meeting of Stockholders (the Meeting) of
the Company to be held at 9:00 a.m. on May 2, 2012 at The Common Man Inn, 21
Water Street, Claremont, NH 03743 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 Companys website at
www.ruger.com
. In addition, registered
stockholders may view or request the proxy materials at
www.envisionreports.com/RGR
or by calling 1-800-641-4276, and may vote
their proxy at
www.envisionreports.com/RGR
or by calling 1-800-652-8683.
Stockholders who hold their shares through a brokerage account may view or
request the proxy materials at
www.proxyvote.com
or by calling
1-800-579-1639, and may vote their proxy at
www.proxyvote.com
or by
calling 1-800-454-8683. Please review the proxy materials before voting your
shares.
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 23, 2012 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 Companys 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 Companys Secretary at the
Companys address indicated above, (ii) duly executing a subsequent proxy
relating to the same shares and delivering it to the Companys 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 Companys Annual Report on Form 10-K for the year ended December 31,
2011, including financial statements, is enclosed herewith and has been posted
and is available on the SEC website at
www.sec.gov
and the Companys
website at
www.ruger.com
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Only holders of Common Stock, $1.00 par value, of the Company (the
Common Stock) of record at the close of business on March 13, 2012 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 13, 2012, 19,145,937 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.
1
In accordance
with the Companys By-Laws and applicable law, with respect to Proposal 1, 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
only with respect to Proposal No. 2. 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. With
respect to Proposals 2 and 3, 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 Companys independent auditors
for the 2011 fiscal year, and to approve the advisory vote on executive
compensation. This also applies to any other matters properly presented at the
Meeting, whereby stockholder voting will indicate the relative preference among
the choices presented on an advisory basis. 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.
LIST OF PROPOSALS
AND RECOMMENDATIONS OF THE BOARD OF
DIRECTORS
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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.
Board of Director
Recommendation
The Board of Directors recommends a vote
FOR
each of the named nominees.
PROPOSAL NO. 2 RATIFICATION OF
INDEPENDENT AUDITORS
McGladrey & Pullen, LLP has served as the Companys independent
auditors since 2005. Subject to the ratification of the Companys stockholders,
the Board of Directors has reappointed McGladrey & Pullen, LLP as the
Companys independent auditors for the 2012 fiscal year.
Board of Directors
Recommendation
The Board of Directors recommends a vote
FOR
the ratification of McGladrey
& Pullen, LLP as the Companys independent auditors.
PROPOSAL NO. 3 SAY ON
PAY
The Company shall seek an advisory vote on executive
compensation.
Board of Directors
Recommendation
The Board of Directors recommends a vote
FOR
approval of the
pay-for-performance compensation policies and practices employed by the
Compensation Committee, as described in the Compensation Discussion and Analysis
and the tabular disclosure regarding Named Executive Officer compensation in
this Proxy Statement.
2
PROPOSAL NO. 1
ELECTION OF DIRECTORS
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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.
Board of Directors
Recommendation
The Board of Directors recommends a vote
FOR
each of the nominees named below.
DIRECTOR NOMINEES
The following table lists each nominee for Director and sets forth
certain information concerning each nominees age, business experience, other
directorships and committee memberships in publicly-held corporations, current
Board committee assignments, and qualifications to serve on the Companys Board
as of the date of this Proxy Statement. In addition to the information presented
below regarding each nominees 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.
All of the seven nominees for Director listed below were elected at last
years Annual Meeting. 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.
Name,
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Age,
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Business Experience
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First Became
A
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During the Past Five Years,
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Director
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Other Directorships, Current Committee Memberships
and Board Qualifications
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C.
Michael
Jacobi
Age 70
Director
since
June, 2006
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Mr. Jacobi has been the non-executive Chairman of the Board of
Directors since 2010. 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 has been a member of the Boards of Directors and
Audit Committee Chairman of the Corrections Corporation of America since
2000. He has been a member of the Board of Directors of Webster Financial
Corporation since 1993, served as a member of its Audit Committee from
1993 (including as Audit Committee chair from 1996) to 2011, and became a
member of its Compensation Committee in 2011. 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 Board and a member
of the Compensation Committee. The Board believes that Mr. Jacobis
extensive business, investment management, board experience and financial
expertise qualify him to serve on the Board of
Directors.
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3
Name,
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Age,
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Business Experience
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First Became
A
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During the Past Five Years,
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Director
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Other Directorships, Current Committee
Memberships and Board Qualifications
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John
A.
Cosentino, Jr.
Age
62
Director since
August, 2005
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Mr. Cosentino has been a partner of
Ironwood Manufacturing Fund, LP since 2002, a Director of Simonds
Industries, Inc. since 2003, the Chairman of North American Specialty
Glass, LLC since 2005, a Director of the Bilco Company since 2010, and a
Director of Whitcraft LLC since 2011. 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 Vice Chairman of the Board, Chairman of the Compensation
Committee and a member of the Companys Audit Committee. The Board
believes that Mr. Cosentinos extensive executive management, investment
management and board experience qualify him to serve on the Board of
Directors.
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James
E.
Service
Age 81
Director
since
July, 1992
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Admiral Service has been Chairman
Emeritus since 2010, and was non-executive Chairman of the Board of the
Company from 2006 to 2010. 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 a member of the Companys Nominating and Corporate Governance
Committee and Compensation Committee. The Board believes that Admiral
Services significant leadership experience, knowledge of the firearms
industry and its products and 20 years of service on the Board, including
four as its Chairman, qualify him to serve on the Board of
Directors.
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Amir
P.
Rosenthal
Age 50
Director
since
January, 2010
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Mr. Rosenthal has been the Chief
Financial Officer of Bauer Performance Sports Ltd. 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 Chairman of the Companys Risk Oversight Committee
and a member of the Companys Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee. The Board believes that Mr.
Rosenthals comprehensive business, legal and financial expertise qualify
him to serve on the Board of Directors.
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Ronald
C.
Whitaker
Age 64
Director
since
June, 2006
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Mr. Whitaker served as the President
and CEO of Hyco International from 2003, and as a member of its Board from
2001, until his retirement in July, 2011. In July 2011, he joined the
Board of Global Brass and Copper Company, Inc., and serves as the chair of
its Compensation Committee and as a member of its Audit Committee. Mr.
Whitaker has been a Board member of Panghorn Corporation since 2006 and
serves as the chair of its Compensation Committee. He was a member of the
Board and executive committee of Strategic Distribution, Inc., and was its
President and CEO from 2000 to 2003. Mr. Whitaker was the President and
CEO of Johnson Outdoors from 1996 to 2000, and CEO, President and Chairman
of the Board of Colts Manufacturing Co., Inc. from 1992 to 1995. He is a
former Board member of Firearms Training Systems, Group Decco, Michigan
Seamless Tube, Precision Navigation, Inc., Weirton Steel Corporation and
Code Alarm, and a former Trustee of the College of Wooster. Mr. Whitaker
is currently the Chairman of the Nominating and Corporate Governance
Committee and a member of the Companys Audit Committee and Risk Oversight
Committee. The Board believes that Mr. Whitakers significant executive,
board and firearms industry experience, and his knowledge of the Companys
products qualify him to serve on the Board of
Directors.
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4
Name,
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Age,
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Business Experience
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First Became
A
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During the Past Five Years,
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Director
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Other Directorships, Current Committee Memberships
and Board Qualifications
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Phillip
C.
Widman
Age 57
Director
since
January, 2010
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Mr. Widman has been the Senior Vice President and Chief Financial
Officer of Terex Corporation since 2002. He served as a Board and
Nominating and Governance Committee member, and as Audit Committee chair,
of Lubrizol Corp from November 2008 until September 2011. Mr. Widman was
the Executive Vice President and Chief Financial Officer of Philip
Services Corporation from 1998 to 2001. Mr. Widman is currently Chairman
of the Companys Audit Committee and a member of the Risk Oversight
Committee. The Board believes that Mr. Widmans 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 54
Director
since
October, 2006
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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 a member of the Board of Governors of the
National Shooting Sports Foundation. The Board believes that Mr. Fifers
executive leadership and management experience and skills, including five
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.
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Board of Directors
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 Companys 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.
Corporate Board Governance Guidelines
and Code of Business Conduct and Ethics
The Companys
corporate governance practices are embodied in the Corporate Board Governance Guidelines. In addition, the Company has adopted
a Code of Business Conduct and Ethics 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. Copies of
the Corporate Board Governance Guidelines and Code of Business Conduct and Ethics are posted on the Companys website at
www.ruger.com
and are available in print to any stockholder who requests it by contacting the Corporate Secretary as set
forth in STOCKHOLDER COMMUNICATIONS below.
The Boards Role in Risk
Oversight
The Boards role in the oversight of risk management includes receiving
regular reports from the Risk Oversight Committee and senior management in areas
of material risk to the Company, including operational, financial, legal and
regulatory, strategic, reputational and industry-related risks. The Risk
Oversight Committee and the full Board review and discuss these reports with the
goal of overseeing the identification, management and mitigation strategies for
these risks.
Independent, Non-Management
Directors
More than a majority of the current Directors, including each member that
serves on any committee of the Board, 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.
The independent, non-management members of the Board meet regularly in
executive sessions and each such meeting is led by the independent,
non-executive Chairman of the Board, or in his absence, the independent,
non-management Vice-Chairman and Lead Director. C. Michael Jacobi has served as
the non-executive Chairman of the Board since April 28, 2010, and John A.
Cosentino, Jr. has served as the Vice Chairman since April 28, 2010 and as the
Lead Director since April 24, 2007.
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 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. 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. On
April 28, 2010, the Board amended the By-Laws to create the position of
Vice-Chairman, who assumes the duties of Lead Director as outlined
above.
6
Membership and Meetings of the Board
and Its Committees
In 2011, the
members of the Board were C. Michael Jacobi, John A. Cosentino, Jr., James E.
Service, Amir P. Rosenthal, Ronald C. Whitaker, Phillip C. Widman and Michael O.
Fifer.
Each Director attended all 2011 meetings of the Board, with the exception
of Amir P. Rosenthal, who did not attend one meeting of the Board with the prior
permission of the Chairman, and at least 75% of the meetings of the Committees
on which they served during their 2011 tenure. In addition, all members of the
Companys Board attended the 2011 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 2011 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.
Each
Committee is governed by a written charter that has been adopted by the Board. A copy of each Committees Charter is posted
on the Companys 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.
MEMBERSHIP AND MEETINGS OF THE BOARD
AND ITS COMMITTEES TABLE
FOR YEAR 2011
|
|
|
|
Nominating and
|
|
|
|
|
|
Corporate
|
|
|
Board of
|
Audit
|
Compensation
|
Governance
|
Risk Oversight
|
Name
|
Directors
|
Committee
|
Committee
|
Committee
|
Committee
|
C. Michael
Jacobi
|
Chairman
|
|
Member
|
|
|
John A.
Cosentino, Jr.
|
Vice Chairman
|
Member
|
Chair
|
|
|
James E.
Service
|
Chairman Emeritus
|
|
Member
|
Member
|
|
Amir P.
Rosenthal
|
Member
|
Member
|
|
Member
|
Chair
|
Ronald C.
Whitaker
|
Member
|
Member
|
|
Chair
|
Member
|
Philip
C. Widman
|
Member
|
Chair
|
|
|
Member
|
Michael O.
Fifer
|
Member
|
|
|
|
|
Total
Number of
Meetings
|
4
|
4
|
4
|
2
|
4
|
7
COMMITTEES OF THE
BOARD
Audit Committee
In 2011, the
members of the Audit Committee of the Board were Phillip C. Widman, John A.
Cosentino, Jr., Amir P. Rosenthal and Ronald C. Whitaker. Mr. Widman serves as
Chairman of the Audit Committee. All members of the Audit Committee 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. Cosentino, Jacobi, Rosenthal,
Whitaker and Widman are audit committee financial experts as defined by the SEC
rules and regulations.
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 Companys financial statements; (ii) the Companys
compliance with legal and regulatory requirements; (iii) the independent
auditors qualifications and independence; and (iv) the performance of the
Companys 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 held four meetings during 2011. All members of the
Audit Committee attended all meetings of the committee during their 2011 tenure,
with the exception of Amir P. Rosenthal, who did not attend one meeting of the
Audit Committee with the prior permission of the Audit Committee Chair. 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.
McGladrey & Pullen, LLP is the independent registered public
accounting firm appointed by the Company, and ratified by the Companys
stockholders on April 27, 2011, to serve as the Companys independent auditors
for the 2011 fiscal year. The Audit 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 Companys 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 Audit Committee also has
considered whether McGladrey & Pullen, LLPs provision of non-audit services
to the Company is compatible with the independent public accounting firms
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 Companys internal controls, and the overall quality of
the Companys financial reporting. The committee held four meetings during
fiscal year 2011.
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, 2011 for filing with the Securities and Exchange
Commission.
The Audit Committees responsibility is to monitor and oversee the audit
and financial reporting processes. However, the members of the Audit Committee
are not practicing certified public accountants or professional auditors and
rely, without independent verification, on the information provided to them and
on the representations made by management, and the report issued by the
independent registered public accounting firm.
AUDIT COMMITTEE
|
|
Phillip C. Widman, Audit Committee
Chairman
|
John A. Cosentino, Jr.
|
Amir P. Rosenthal
|
Ronald C.
Whitaker
|
March 5,
2012
_________________________
*
|
|
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 2011, the
members of the Compensation Committee of the Board were John A. Cosentino, Jr.,
C. Michael Jacobi, and James E. Service. Mr. Cosentino serves as Chairman of the
Compensation Committee. On February 14, 2012, the Board appointed Amir P.
Rosenthal as a member of the Compensation Committee.
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 Companys
cash-based and equity-based incentive plans; and (iii) producing an annual
report on executive compensation to be included in the Companys 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 held four meetings during 2011. All members of
the Compensation Committee attended at least 75% of all meetings of the
committee during their 2011 tenure. The annual Compensation Committee Report on
Executive Compensation is included in this Proxy Statement.
Compensation Committee Interlocks and
Insider Participation
During the 2011 fiscal year, none of the Companys executive officers
served on the board of directors of any entities whose directors or officers
serve on the Companys 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
|
C. Michael Jacobi
|
James E. Service
|
Amir P.
Rosenthal
|
March 12, 2012
_________________________
*
|
|
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 2011, the
members of the Nominating and Corporate Governance Committee of the Board were
Ronald C. Whitaker, Amir P. Rosenthal and James E. Service. Mr. Whitaker serves
as Chairman of the Nominating and Corporate Governance Committee.
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 held two meetings
during 2011. All members of the committee attended all meetings of that
committee during their 2011 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 Companys 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 Companys
business assumptions;
-
Willingness to learn the business of the Company,
to understand all Company policies and to make
themselves aware of the Companys 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 Committees 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 persons 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 Companys 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 need 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 Companys 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 January 2, 2013 (120 days
prior to the first anniversary of this years Annual Meeting of Stockholders)
and no later than February 2, 2013 (90 days prior to the first anniversary of
this years 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
Companys Common Stock for at least one year prior to the date of the
recommendation.
Risk Oversight Committee
In 2011, the members of the Risk Oversight Committee were Amir P.
Rosenthal, Ronald C. Whitaker and Phillip C. Widman. Amir P. Rosenthal serves as
Chairman of the Risk Oversight Committee.
The Board established the Risk Oversight Committee in 2010 to collaborate
with the Companys executive team in assisting the Board in fulfilling its
responsibility with respect to the Companys enterprise risk management
oversight. The Risk Oversight Committees responsibilities and roles are as
follows:
-
To monitor all enterprise risk. In doing so, the
Committee recognizes the responsibilities delegated to other
committees of the Board, and understands that the other
committees of the Board may emphasize specific
risk monitoring through their respective activities.
-
To receive, review and discuss 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.
-
To discuss with management the Companys major
risk exposures and the steps management has taken
to monitor and control such exposures, including the Companys risk
assessments and risk management
policies.
-
To study or investigate any matter of interest or
concern that the Committee deems appropriate.
The Risk Oversight Committee held four meetings during 2011. All members
of the committee attended all of the meetings of the committee during their 2011
tenure.
12
The Board
believes that compensation for the Companys 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 2010, as a result of these reviews, the
Directors fee structure was changed as described below.
Directors Fees and Other
Compensation
As of April 28, 2010, the Board approved a fee schedule whereby
non-management independent Directors receive annual retainer compensation as
follows: Chairman of the Board $140,000; Vice Chairman of the Board $130,000;
all others $100,000. The retainer compensation is paid as 2/3 in cash and 1/3 in
one-year restricted stock. In addition to the annual retainer fees, all
non-management independent Directors annually receive long-term equity
compensation of $50,000 paid in the form of $33,333 of three-year-restricted
stock units at a one-third discount to market.
On April 27, 2011, the date of the 2011 Annual Meeting, the independent
Directors received their awards of restricted stock, and the vesting period for
the one-year restricted shares awarded for their service during the period of
April 28, 2010 to April 27, 2011 was satisfied.
Under the 2007 Stock Incentive Plan, options to purchase 20,000 shares of
the Companys Common Stock were granted to Directors upon joining the Board 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. On April
28, 2010, the Board of Directors eliminated such awards altogether for future
new Directors.
Directors are covered under the Companys business travel accident
insurance policy for $1,000,000 while traveling on Company business, and are
covered under the Companys director and officer liability insurance policies
for claims alleged in connection with their service as a Director.
All Directors were reimbursed for reasonable out-of-pocket expenses
related to attendance at meetings.
13
DIRECTORS COMPENSATION TABLE FOR
YEAR 2011
The following table reflects the
compensation received during the 2011 fiscal year by each independent Director.
Please see SUMMARY COMPENSATION TABLE for disclosure of Directors fees paid
to management Directors in the 2011 fiscal year.
|
|
Number of
|
|
|
|
Fees
|
Shares
|
|
|
|
Earned
or
|
Underlying
|
Stock
|
|
|
Paid
in
|
Stock
|
Awards
|
Total
Director
|
|
Cash
(1)
|
Awards
(1)
|
(2)
|
Compensation
(3)
|
Name
|
($)
|
(#)
|
($)
|
($)
|
C. Michael
Jacobi
|
$93,332
|
4,106
|
$96,667
|
$190,000
|
John A.
Cosentino, Jr.
|
$86,667
|
3,965
|
$93,333
|
$180,000
|
James E.
Service
|
$66,667
|
3,540
|
$83,333
|
$150,000
|
Amir P.
Rosenthal
|
$66,667
|
3,540
|
$83,333
|
$150,000
|
Ronald C.
Whitaker
|
$66,667
|
3,540
|
$83,333
|
$150,000
|
Phillip
C. Widman
|
$66,667
|
3,540
|
$83,333
|
$150,000
|
Notes to Directors Compensation
Table
|
(1)
|
|
See DIRECTORS FEES AND OTHER
COMPENSATION above.
|
|
|
|
(2)
|
|
Represents aggregate grant date
dollar value of non-qualified equity awards made to each non-management
independent director on May 2, 2011 under the 2007 Stock Incentive Plan in
accordance with the Director annual fee schedule approved on April 28,
2010. The 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.
|
|
|
|
(3)
|
|
The Companys non-management
Directors do not receive non-equity incentive plan compensation, pension
or medical plan benefits or non-qualified deferred
compensation.
|
14
Directors and Executive Officers
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
Directors 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 the annual deferred
equity awards under the 2007 Stock Incentive Plan. In 2007 the Board also set a
minimum equity ownership requirement for the Companys Chief Executive Officer
of three times his base salary, and for the Companys Vice Presidents of two
times their base salary, to be achieved within five years of their appointment.
The current amounts of Common Stock beneficially owned by each Director and
Named Executive Officer may be found in the BENEFICIAL OWNERSHIP TABLE
below.
BENEFICIAL OWNERSHIP OF DIRECTORS AND
MANAGEMENT TABLE
The following table sets forth certain information as of March 13, 2012
as to the number of shares of the Companys Common Stock beneficially owned by
each Director, Named Executive Officer and all Directors and Executive Officers
of the Company as a group.
|
|
|
|
|
|
|
|
|
Stock Options
Currently
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable or to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficially Owned
|
|
|
Become Exercisable
|
|
|
Total Shares
|
|
|
|
|
|
|
|
|
|
|
|
Shares of Common
|
|
|
within 60 days after
|
|
|
Beneficially
|
|
|
Percent
|
|
|
|
|
|
Stock
|
|
|
March 13, 2012
|
|
|
Owned
|
|
|
of Class
|
|
|
Name
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(%)
|
|
|
Independent Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Michael
Jacobi
|
|
|
|
26,570
|
|
|
|
|
0
|
|
|
|
|
26,570
|
|
|
|
|
*
|
|
|
|
|
John A. Cosentino, Jr.
|
|
|
|
38,077
|
|
|
|
|
0
|
|
|
|
|
38,077
|
|
|
|
|
*
|
|
|
|
|
James E. Service
|
|
|
|
19,123
|
|
|
|
|
0
|
|
|
|
|
19,123
|
|
|
|
|
*
|
|
|
|
|
Amir P. Rosenthal
|
|
|
|
8,961
|
|
|
|
|
15,000
|
|
|
|
|
23,961
|
|
|
|
|
*
|
|
|
|
|
Ronald C.
Whitaker
|
|
|
|
27,234
|
|
|
|
|
20,000
|
|
|
|
|
47,234
|
|
|
|
|
*
|
|
|
|
|
Phillip C. Widman
|
|
|
|
17,961
|
|
|
|
|
15,000
|
|
|
|
|
32,961
|
|
|
|
|
*
|
|
|
|
|
Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael O. Fifer (also a
Director)
|
|
|
|
253,923
|
|
|
|
|
0
|
|
|
|
|
253,923
|
|
|
|
|
1.3
|
%
|
|
|
|
Thomas A. Dineen
|
|
|
|
36,279
|
|
|
|
|
13,000
|
|
|
|
|
49,279
|
|
|
|
|
*
|
|
|
|
|
Christopher J.
Killoy
|
|
|
|
44,127
|
|
|
|
|
0
|
|
|
|
|
44,127
|
|
|
|
|
*
|
|
|
|
|
Mark T. Lang
|
|
|
|
14,505
|
|
|
|
|
100,864
|
|
|
|
|
115,369
|
|
|
|
|
*
|
|
|
|
|
Thomas P.
Sullivan
|
|
|
|
60,250
|
|
|
|
|
0
|
|
|
|
|
60,250
|
|
|
|
|
*
|
|
|
|
|
Directors and executive
officers as
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a group: (6 independent
Directors,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Director who is also an
executive
|
|
|
|
638,015
|
|
|
|
|
186,864
|
|
|
|
|
824,879
|
|
|
|
|
4.3
|
%
|
|
|
|
officer and 7 other executive
officers)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to Beneficial Ownership
Table
|
*
|
|
Beneficial owner of less than 1% of the outstanding
Common Stock of the Company.
|
15
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of
the Exchange Act requires the Companys officers and Directors, and persons who
own more than ten percent of a registered class of the Companys 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 Companys 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, 2011 through December 31, 2011, all such forms were filed in a timely
manner by the Companys officers, Directors and greater-than-10% beneficial
owners.
CERTAIN RELATIONSHIPS AND
RELATED-PARTY TRANSACTIONS
The Companys 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
2011.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of March 13, 2012 the ownership of the
Companys 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
|
|
|
|
Beneficial
Ownership (1)
|
Percent of
Class
|
Title of Class
|
Name and Address of Beneficial
Owner
|
(#)
|
(%)
|
|
|
|
|
|
The
London Company
|
|
|
Common Stock
|
1801 Bayberry Court, Suite 301
|
1,519,568
|
7.94%
|
|
Richmond, VA 23226
|
|
|
|
|
|
|
|
|
|
|
|
Black Rock Inc.
|
|
|
Common Stock
|
40 East 52
nd
Street
|
1,461,232
|
7.63%
|
|
New York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
Allianz Global Investors Capital LLC
|
|
|
|
600
West Broadway, Suite 2900
|
|
|
|
San
Diego, CA 92101
|
|
|
Common Stock
|
|
1,120,949
|
5.85%
|
|
NJF
Investment Group LLC
|
|
|
|
2100 Ross Avenue, Suite 700
|
|
|
|
Dallas, TX 75201
|
|
|
|
|
|
|
|
|
|
|
|
The Vanguard Group, Inc.
|
|
|
Common Stock
|
100 Vanguard Boulevard
|
1,115,624
|
5.83%
|
|
Malvern, PA 19355
|
|
|
|
|
|
|
Common Stock
|
Renaissance Technologies LLC
Renaissance Technologies
Holding Corporation
800 Third Avenue
New York, NY 10022
|
1,096,500
|
5.73%
|
Notes to Principal Stockholder
Table
|
(1)
|
|
Such information is as
of December 31, 2011 and is derived exclusively from Schedules 13G or
Schedules 13G/A filed by the named beneficial owners on or before February
15, 2012.
|
16
PROPOSAL NO. 2 -
RATIFICATION OF INDEPENDENT AUDITORS
|
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 2011 and
2010.
Principal Accountants Fees
|
|
|
2011
|
2010
|
Audit
Fees
|
$582,000
|
|
|
$581,000
|
|
Audit-Related Fees
|
$47,000
|
|
|
$45,000
|
|
Tax
Fees
|
$14,000
|
|
|
$13,100
|
|
All Other Fees
|
$0
|
|
|
$32,000
|
|
Total
Fees
|
$643,000
|
|
|
$671,100
|
|
Audit Fees
Consist of fees billed for professional services rendered for the audit
of the Companys 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 Companys
financial statements and are not reported under Audit Fees. These services
include audits of the Companys 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
Consist of fees billed for services rendered by McGladrey & Pullen,
LLP related to miscellaneous matters including financial due diligence and
internal audit assistance.
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 SECs rules
on auditor independence.
All of the services of McGladrey & Pullen, LLP related to the
Audit-Related Fees, Tax Fees and All Other Fees described above 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.
17
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 Companys independent auditors.
PROPOSAL NO. 3
ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE
OFFICERS
|
The recently enacted Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, or the Dodd-Frank Act, enables stockholders to vote to
approve, on an advisory (nonbinding) basis, the compensation of the Companys
executive officers as disclosed in this Proxy Statement in accordance with
applicable SEC rules. This vote, commonly known as a say-on-pay vote, provides
stockholders with the opportunity to express their views on our executive
officers compensation. The vote is not intended to address any specific item of
our executive compensation, but rather the overall compensation of the Companys
executive officers and the philosophy, policies and practices described in this
Proxy Statement.
As described in the section of this Proxy Statement entitled
Compensation Discussion and Analysis, our executive compensation program is
designed to attract, retain, and motivate talented individuals with the
executive experience and leadership skills necessary for us to increase
stockholder value by driving long-term growth in revenue and profitability. We
seek to provide executive compensation that is competitive with companies that
are similar to the Company. We also seek to provide near-term and long-term
financial incentives that reward well-performing executives when strategic
corporate objectives designed to increase long-term stockholder value are
achieved. We believe that executive compensation should include base salary,
cash incentives and equity awards. We also believe that our executive officers
base salaries should be set at competitive levels relative to comparable
companies, and cash and equity incentives should generally be set at levels that
give executives the opportunity to achieve above-average total compensation
reflecting above-average company performance. In particular, our executive
compensation philosophy is to promote long-term value creation for our
shareholders by rewarding improvement in selected financial metrics, and by
using equity incentives. Please see our Compensation Discussion and Analysis
and related compensation tables for detailed information about our executive
compensation programs, including information about the fiscal 2011 compensation
of our executive officers.
Text of Resolution:
RESOLVED, that the Companys
stockholders approve, on an advisory basis, the compensation of the Named
Executive Officers, as disclosed in the Companys Proxy Statement for the 2012
Annual Meeting of Stockholders pursuant to the compensation disclosure rules of
the Securities and Exchange Commission, including the Compensation Discussion
and Analysis, the 2011 Summary Compensation Table and the other related tables
and disclosure.
The say-on-pay vote is advisory, and therefore not binding on the
Company, our Board of Directors, or the Compensation Committee of the Board of Directors. Our Board of Directors
and Compensation Committee value the opinions of our stockholders and to the
extent there is any significant vote against the executive officer compensation
as disclosed in this Proxy Statement, we will consider our stockholders
concerns and the Compensation Committee will evaluate whether any actions are
necessary to address those concerns.
Board of Directors
Recommendation
The Board of Directors recommends a vote
FOR
approval of the
pay-for-performance compensation policies and practices employed by the
Compensation Committee, as described in the Compensation Discussion and Analysis
and the tabular disclosure regarding Named Executive Officer compensation in
this Proxy Statement.
18
COMPENSATION
DISCUSSION AND ANALYSIS
|
What is the Companys Philosophy
Regarding Compensation and what are the Compensation Program Objectives and
Rewards?
The Companys
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 Companys operations, its performance and its executive
compensation.
The programs
objectives are to attract, retain and motivate a workforce that helps to ensure
our future success, to 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 Companys Governance
Practices Regarding Compensation?
Stockholders:
|
|
The 2007 Stock Incentive Plan, which was
approved by the stockholders at the Companys 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 Companys
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
Officers views regarding the performance and recommended compensation
levels for the Companys executive officers are discussed with all of the
non-management
Directors.
|
What are the Companys Governance
Practices Regarding Stock Awards?
The use of equity compensation is a significant component of the
Companys overall compensation philosophy and is one that the Company plans to
continue. The Companys 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 Companys 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;
-
The Company began utilizing Restricted Stock Units
(RSUs), rather than stock options, for substantially
all equity awards effective in April, 2009.
19
-
Equity awards for employees shall be issued only
on the fourth business day following the public quarterly
filing of the Companys Forms 10-K or 10-Q in order to allow
the investment markets adequate time to
assimilate the current financial information, and will be valued at the
mean between the highest and lowest
sales
prices of the Companys 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 on the fourth business day following the
public filing of the Companys Forms 10-K.
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 for the Named Executive Officers have been and will continue
to be subject to the approval of the Compensation Committee and ratification by
the full Board. The Companys Corporate Secretary is responsible for issuing
equity awards upon their approval and maintaining records of all equity awards
issued, exercised or terminated in accordance with the terms of the applicable
stock incentive plan. As of December 31, 2011, all equity awards issued under
the 1998 Stock Incentive Plans have been exercised or terminated in accordance
with the terms of that plan.
What are the Elements of
Compensation?
The key elements of the Companys executive compensation consist
of:
Cash
Compensation:
|
Base salary, bonuses and profit
sharing.
|
|
|
Equity
Compensation:
|
Pursuant to the Companys 2007 Stock
Incentive Plan approved by the Companys 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 Employees 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 Companys
Pension Plan was amended so that employees will no longer accrue benefits
under it after 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 Companys 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 Companys 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 Companys 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.
|
20
Why Does the Company Choose to Pay Each
Element?
The Companys
compensation and benefits programs are designed to fulfill the Companys need to
attract, retain and motivate the highly talented individuals who will engage in
the behaviors necessary to enable the Company to achieve its 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 and profit
sharing, 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 stock options or 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 stock options and restricted stock unit 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 Companys 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 Companys ability to attract and retain talented
executives
and encourage them to remain focused
on the Companys business during times of corporate change.
As a result of the Companys equity and non-equity incentive plan awards,
a significant portion of the Companys 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.
In 2011 and 2012, the Compensation Committee also utilized benchmarking
reports prepared by Towers Watson, an independent consulting group, to analyze
the compensation of the Companys Named Executive Officers. The reports
discussed how the Companys executive compensation program compared with those
of peer companies on base salary, target bonus, long-term incentives and total
direct compensation. Peers included other publicly held companies in the
firearms industry and companies with revenue between $100 million to $500
million. As a result of these analyses, the Compensation Committee concluded
that the total direct compensation of its executives is competitive and reflects
the individual and joint accomplishments of its executives on behalf of the
Company.
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, by comparing
those salaries to recruiting offers made to the Companys executives by
competitors, and then evaluating the current responsibilities of the officers
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 executives 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.
21
How are Bonuses and Profit Sharing
Determined?
The Company
offers 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. The amount of earnings that is paid quarterly as
profit-sharing is authorized by the Board of Directors, but is typically 15% of
Adjusted Operating Profit (AOP) after accrual for all bonuses and profit
sharing. AOP is a non-GAAP measure of operating profit adjusted to eliminate the
impact of LIFO income or expense, overhead and direct labor rate changes, excess
and obsolete inventory reserve changes, and other income or expenses that we
believe are related to longer periods of time, such as frozen defined benefit
plan expense or product recalls.
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 employees base salary or hourly wage compensation.
Individual bonus opportunities range from between 2.5% to 95% of each employees
annual base salary or hourly wage compensation, and are based on the employees
level of responsibility. The annual performance-based incentive bonus program
and its annual performance goals are authorized by the Board of Directors. In
2011, all Company employees had the same performance goal.
The Board of Directors authorizes the CEO to make discretionary bonus
awards to individual non-executive employees, with the aggregate of all such
awards not to exceed 10% of the 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.
The Board of Directors also authorizes discretionary awards from time to
time for executive officers in recognition of special performance. No
discretionary awards were made to the Named Executive Officers for
2011.
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 in
2011 were awarded in quarterly increments each quarter after the public filing
of the 10-K or 10-Q. In February 2011, the Board of Directors added a second
trigger, a 3-year time-based vesting requirement, in addition to the
performance-based trigger for vesting for annual performance-based equity awards
granted in 2011 and beyond.
In 2011, the Board of Directors authorized the issuance of long-term
retention awards to certain key officers of the Company to align their long-term
interests with those of the shareholders, and to mitigate recruiting efforts by
competitors. These awards were in the form of restricted stock units that would
cliff vest on December 31, 2015.
What are the Companys 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.
22
How is the Chief Executive Officers
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 Companys 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 Companys 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 Officers 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.
-
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
Companys 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.
23
The Chief
Executive Officers compensation levels are determined after performance
evaluations based on published and commissioned compensation studies, the Chief
Executive Officers demonstrated abilities and contributions to the success of
the Company, and the overall results of Company operations.
What is the Chief Executive Officers
Compensation?
Prior to March 1, 2011, Mr. Fifers target annual compensation was a base
salary of $425,000, a performance-based bonus of $403,750, a profit sharing
target of $34,480, a performance-based equity award in the form of restricted
stock units valued at $212,500 at the time of grant, and other fringe benefit
compensation of $17,150. Mr. Fifers total target annual compensation was
$1,092,880, and Mr. Fifers actual compensation for 2010 was $1,292,040.
Effective March 1, 2011, the Board of Directors increased Mr. Fifers target
annual compensation to a base salary of $500,000, a performance-based bonus of
$475,000, a profit sharing target of $51,000, a performance-and-time-based
equity award in the form of restricted stock units valued at $375,000 at the
time of grant, and other compensation of $17,150. Mr. Fifers current total
target annual compensation is $1,418,150. In addition, the Board of Directors
awarded Mr. Fifer a long-term retention grant of 150,000 restricted stock units,
with a grant date fair value of $2,712,000, that cliff-vest on December 31,
2015. In 2012, the Board of Directors awarded Mr. Fifer a long-term retention
grant of 50,000 restricted stock units, with a grant date fair value of
$2,158,500, that cliff-vest on December 31, 2016. For 2011, Mr. Fifers actual
compensation was $4,522,102, and was 23 times the average compensation of the
Companys full-time employees excluding Mr. Fifer.
The Board of Directors increased Mr. Fifers compensation based on
analysis of competitive compensation at other publicly reporting companies,
including competitors Smith & Wesson Holding Corporation and Freedom Group,
Inc. and the achievement of superior returns for the Companys shareholders
since he joined the Company on September 25, 2006. The graph below shows the
Companys total return since December 31, 2006 as compared to total returns for
the S&P 500 Index and Smith & Wesson.
COMPARISON OF CUMULATIVE TOTAL
RETURN*
Sturm, Ruger & Company,
Inc., Standard & Poors 500 Index, and Smith & Wesson Holding
Corporation
(Performance Results from December 31, 2006 through December 31,
2011)
Assumes $100 invested at the close of
trading December 31, 2006 in Sturm, Ruger & Company, Inc. Common Stock,
Standard & Poors 500, Value Line Recreation Index and Smith & Wesson
Holding Corporation.
*Cumulative total return assumes
reinvestment of dividends. Source: Value Line Publishing LLC
Factual material is obtained from sources
believed to be reliable, but the publisher is not responsible for any errors or
omissions contained herein.
24
Does the Company Pay for
Perquisites?
The Company
believes in limited perquisites for its Directors and executive officers.
Perquisites generally 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
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;
-
Cash incentive awards are reviewed by the
Compensation Committee if the achievement exceeds 150% of
the target. In addition, approval of the Board of Directors
is required prior to the payment of any incentive
compensation;
-
Equity guidelines discourage excessive risk taking
by providing an incentive for executives to consider the
Companys long-term 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.
25
The following table summarizes the 2011
target cash and equity compensation approved by the Board of Directors for each of the executive officers named in the
Summary Compensation Table.
2011 TARGET COMPENSATION
TABLE
|
Cash Compensation
|
Equity Compensation
|
|
|
|
|
Named
|
|
|
|
|
|
Performance-
|
|
|
|
|
|
|
Executive
|
|
|
|
|
|
Based
|
|
Performance
|
|
|
|
|
Officer
and
|
|
|
|
|
|
Non-Equity
|
|
Based
Stock
|
All
Other
|
|
|
|
Principal
|
|
|
Profit
|
Compensation
|
Option
|
Award
|
Compensation
|
Total
Target
|
Position
|
Salary
|
Bonus
|
Sharing
|
Opportunity
|
Awards
|
Opportunity
|
(1)
|
Compensation
|
Michael O.
|
|
|
|
|
|
|
|
|
|
|
|
|
Fifer
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
|
$500,000
|
$0
|
|
$51,000
|
|
$475,000
|
$0
|
$375,000
|
$17,150
|
|
$1,418,150
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer and
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A.
|
|
|
|
|
|
|
|
|
|
|
|
|
Dineen
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice
|
$250,000
|
$0
|
|
$25,500
|
|
$152,500
|
$0
|
$125,000
|
$17,150
|
|
$570,150
|
|
President,
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher J.
|
|
|
|
|
|
|
|
|
|
|
|
|
Killoy
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President
|
$300,000
|
$0
|
|
$30,600
|
|
$185,000
|
$0
|
$200,000
|
$17,150
|
|
$732,750
|
|
of Sales and
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark T. Lang
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Vice
|
$275,000
|
$0
|
|
$28,100
|
|
$166,250
|
$0
|
$180,000
|
$17,150
|
|
$666,500
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas P.
|
|
|
|
|
|
|
|
|
|
|
|
|
Sullivan
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President
|
$250,000
|
$0
|
|
$25,500
|
|
$152,500
|
$0
|
$125,000
|
$17,150
|
|
$570,150
|
|
of Newport
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to Target Compensation
Table
|
(1)
|
|
Represents maximum
employer matching contributions made under the Companys 401(k) Plan.
Actual All Other Compensation received may include additional fringe
benefit items as shown in the SUMMARY ALL OTHER COMPENSATION TABLE
below.
|
26
2011 INCENTIVE COMPENSATION
PRE-DETERMINED GOALS TABLE
The following
table summarizes the pre-determined incentive compensation goals for 2011
approved by the Board of Directors for the Named Executive Officers.
|
Goals
|
Achievement
|
|
Performance-
|
|
|
|
|
|
Based
|
Performance-
|
|
Performance-
|
Performance-
|
|
Non-Equity
|
Based
Stock
|
|
Based
|
Based Stock
|
|
Compensation
|
Award
|
|
Non-Equity
|
Award
|
|
Opportunity
|
Opportunity
|
Actual
|
Compensation
|
Achievement
|
Profit Sharing
|
(1)
|
(2)
|
Results
|
Achievement
|
(2)
|
Pro-rata share
|
AOP of
$35
million
|
AOP of
$45.7
million
|
AOP of
$63.8
million
|
183%
|
100%
|
Notes to Incentive Compensation
Pre-Determined Goals Table
|
(1)
|
|
Adjusted Operating Profit AOP
is a non-GAAP measure of operating profit adjusted to eliminate the impact
of LIFO income or expense, overhead and direct labor rate changes, excess
and obsolete inventory reserve changes, and other income or expenses that
we believe are related to other or longer periods of time, such as frozen
defined benefit plan expense or product recalls. AOP is the criteria used
to determine goals and achievement under the Companys incentive
compensation program.
|
|
|
|
(2)
|
|
In 2011, the stock award
opportunity included a performance-based vesting trigger of achievement of
AOP of $45.7 million and a three-year time-based vesting trigger. In 2012,
the Board of Directors determined that the performance-based vesting
trigger was achieved in 2011, and the three-year time-based vesting
trigger will be satisfied on March 1, 2014.
|
27
2011 SUMMARY COMPENSATION
TABLE
The following
table summarizes total compensation paid or earned by the Companys Named
Executive Officers during 2011.
|
|
Cash Compensation
|
Equity Compensation
|
|
|
|
|
|
|
|
|
|
Performance-
|
Performance-
|
|
Time-
|
|
|
Named
|
|
|
|
|
|
|
Based
|
Based
Stock
|
Performance-
|
Based
|
All
|
|
Executive
|
|
|
|
|
|
Profit
|
Non-Equity
|
Option
|
Based
Stock
|
Stock
|
Other
|
|
Officer
and
|
|
|
|
|
|
Sharing
|
Compensation
|
Awards
|
Awards
|
Awards
|
Compensation
|
|
Principal
|
|
Salary
|
Bonus
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
Total
|
Position
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
Michael O.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fifer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President,
|
2011
|
$487,500
|
|
$0
|
|
$80,737
|
$846,592
|
|
$0
|
|
|
$375,000
|
|
$2,712,000
|
$20,273
|
$4,522,102
|
Chief
|
2010
|
$422,917
|
|
$0
|
|
$48,166
|
$588,192
|
|
$0
|
|
|
$212,500
|
|
$0
|
$20,265
|
$1,292,040
|
Executive
|
2009
|
$400,000
|
|
$245,480
|
|
$52,015
|
$484,500
|
|
$50,000
|
|
|
$278,813
|
|
$0
|
$19,193
|
$1,530,001
|
Officer and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dineen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice
|
2011
|
$250,000
|
|
$0
|
|
$41,216
|
$278,770
|
|
$0
|
|
|
$125,000
|
|
$882,750
|
$28,951
|
$1,606,687
|
President,
|
2010
|
$247,917
|
|
$0
|
|
$28,211
|
$217,770
|
|
$0
|
|
|
$81,250
|
|
$0
|
$26,172
|
$601,320
|
Treasurer
|
2009
|
$225,000
|
|
$87,210
|
|
$29,258
|
$172,125
|
|
$18,750
|
|
|
$102,012
|
|
$0
|
$24,082
|
$658,437
|
and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Killoy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President
|
2011
|
$293,750
|
|
$0
|
|
$48,612
|
$332,925
|
|
$0
|
|
|
$200,000
|
|
$1,808,000
|
$23,940
|
$2,707,227
|
of Sales and
|
2010
|
$248,750
|
|
$0
|
|
$28,329
|
$218,503
|
|
$0
|
|
|
$81,250
|
|
$0
|
$22,992
|
$599,824
|
Marketing
|
2009
|
$235,000
|
|
$91,086
|
|
$30,559
|
$179,775
|
|
$19,583
|
|
|
$106,552
|
|
$0
|
$23,505
|
$686,060
|
Mark T.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lang
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Vice
|
2011
|
$271,875
|
|
$0
|
|
$44,914
|
$298,192
|
|
$0
|
|
|
$180,000
|
|
$904,000
|
$17,666
|
$1,716,647
|
President
|
2010
|
$248,750
|
|
$0
|
|
$28,329
|
$218,503
|
|
$0
|
|
|
$81,250
|
|
$0
|
$18,285
|
$595,117
|
|
2009
|
$234,128
|
|
$90,748
|
|
$30,442
|
$179,108
|
|
$19,583
|
|
|
$106,375
|
|
$0
|
$17,426
|
$677,810
|
Thomas P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sullivan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President
|
2011
|
$250,000
|
|
$0
|
|
$41,216
|
$278,770
|
|
$0
|
|
|
$125,000
|
|
$882,750
|
$20,204
|
$1,597,940
|
of Newport
|
2010
|
$248,750
|
|
$0
|
|
$28,329
|
$218,503
|
|
$0
|
|
|
$81,250
|
|
$0
|
$20,229
|
$597,061
|
Operations
|
2009
|
$235,000
|
|
$91,086
|
|
$30,559
|
$179,775
|
|
$19,583
|
|
|
$106,552
|
|
$0
|
$19,039
|
$681,594
|
Notes to Summary Compensation
Table
|
(1)
|
|
See Compensation
Discussion and Analysis section titled, How are Bonuses and Profit
Sharing Determined? for an explanation of how the amount of profit
sharing is determined and then allocated amongst recipients.
|
|
|
|
(2)
|
|
See 2011 TARGET
COMPENSATION TABLE and 2011 INCENTIVE COMPENSATION PRE-DETERMINED GOALS
TABLE above for further information regarding the Named Executive
Officers performance-based compensation.
|
|
|
|
(3)
|
|
This column represents
the full grant date fair value of stock options awarded to the Named
Executives Officers 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.
|
|
|
|
(4)
|
|
See Note 13 of the
consolidated financial statements in the Companys Annual Report on Form
10-K for the year ended December 31, 2011 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 2011 TABLE below
for further information regarding stock options and restricted stock units
granted to each Named Executive Officer.
|
28
|
(5)
|
|
Time-based long-term
retention awards issued in 2011 subject to continued employment until, and
cliff vesting as of, December 31, 2015.
|
|
|
|
(6)
|
|
See SUMMARY ALL OTHER
COMPENSATION TABLE below for additional
information.
|
SUMMARY ALL OTHER COMPENSATION
TABLE
|
|
Change
in
|
|
|
|
|
|
|
|
Pension Value
|
Relocation
and
|
|
Taxable
|
|
|
|
|
and Non-
|
Temporary
|
|
Premiums
|
Company
|
|
|
|
qualified
|
Living
and
|
|
Paid by
the
|
Matching
and
|
|
|
|
Deferred
|
Related
Tax
|
Taxable
Value
|
Company
|
Discretionary
|
|
|
|
Compensation
|
Gross-Ups
and
|
of
Company
|
for
Group
|
401(k)
Plan
|
|
Named
|
|
Earnings
|
Commuting
|
Products
|
Term
Life
|
Contributions
|
|
Executive
|
|
(1)
|
Allowance
|
Received
|
Insurance
|
(2)
|
Total
|
Officer
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
Michael O. Fifer
|
2011
|
|
$2,847
|
|
$0
|
$0
|
$276
|
$17,150
|
$20,273
|
|
2010
|
|
$1,980
|
|
$0
|
$859 (3)
|
$276
|
$17,150
|
$20,265
|
|
2009
|
|
$1,767
|
|
$0
|
$0
|
$276
|
$17,150
|
$19,193
|
Thomas A.
Dineen
|
2011
|
|
$11,681
|
|
$0
|
$0
|
$120
|
$17,150
|
$28,951
|
|
2010
|
|
$8,043
|
|
$0
|
$859 (3)
|
$120
|
$17,150
|
$26,172
|
|
2009
|
|
$6,812
|
|
$0
|
$0
|
$120
|
$17,150
|
$24,082
|
Christopher J. Killoy
|
2011
|
|
$4,066
|
|
$2,448 (4)
|
$0
|
$276
|
$17,150
|
$23,940
|
|
2010
|
|
$2,822
|
|
$1,885 (4)
|
$859 (3)
|
$276
|
$17,150
|
$22,992
|
|
2009
|
|
$2,499
|
|
$3,580 (4)
|
$0
|
$276
|
$17,150
|
$23,505
|
Mark T. Lang
|
2011
|
|
$0
|
|
$0
|
$0
|
$516
|
$17,150
|
$17,666
|
|
2010
|
|
$0
|
|
$0
|
$859 (3)
|
$276
|
$17,150
|
$18,285
|
|
2009
|
|
$0
|
|
$0
|
$0
|
$276
|
$17,150
|
$17,426
|
Thomas P. Sullivan
|
2011
|
|
$2,778
|
|
$0
|
$0
|
$276
|
$17,150
|
$20,204
|
|
2010
|
|
$1,932
|
|
$0
|
$859 (3)
|
$288
|
$17,150
|
$20,229
|
|
2009
|
|
$1,709
|
|
$0
|
$0
|
$180
|
$17,150
|
$19,039
|
Notes to All Other Compensation
Table
|
(1)
|
|
This column represents
the increased change in pension value for each fiscal year for each of the
named executives. Negative changes in pension value are not reportable in
the above table. No named executive officer received preferential or
above-market earnings on deferred compensation. The Companys pension
plans were frozen, and no further benefit service was accrued, as of
January 1, 2008. For 2011, the change in pension value is calculated based
on a 4.75% discount rate, participant ages as of December 31, 2011, frozen
accrued benefits as of December 31, 2007 and the IRS 2011 Combined Static
Mortality Table. See PENSION PLANS and the PENSION BENEFITS TABLE
below for additional information.
|
|
|
|
(2)
|
|
Consists of matching
contributions made under the Companys 401(k) Plan to the Named Executive
Officers who participated in the 401(k) Plan, based on their deferrals for
each 401(k) Plan year. Also includes supplemental employer discretionary
contributions made to all plan participants.
|
|
|
|
(3)
|
|
Represents the taxable
value of Company products received by each Named Executive Officer for
purposes of their product training in 2010.
|
|
|
|
(4)
|
|
Consists of the
taxable value of commuting allowance for Mr. Killoy at one-half the I.R.S.
approved mileage rate and not subject to gross-up for
taxes.
|
29
GRANTS OF PLAN-BASED
AWARDS
The following
Grants of Plan Based Awards table accompanies the Summary Compensation Table and
provides additional detail regarding grants of incentive-plan based equity
awards made in 2011.
|
|
|
|
|
|
Exercise
|
|
|
|
|
Performance-
|
|
|
Price
of
|
|
|
|
|
Based
|
Time-Based
|
Option
|
|
|
|
|
Restricted
|
Restricted
|
Awards
or
|
|
|
|
|
Stock
Unit
|
Stock
Unit
|
Base
Price
|
|
|
Named
|
|
Awards
|
Awards
|
of
Stock
|
Grant
Date
|
Executive
|
Grant
|
(1)
|
(2)
|
Awards
(3)
|
Fair Value
(4)
|
Officer
|
Date
|
(#)
|
(#)
|
($/Share)
|
($)
|
|
3/1/11
|
|
|
150,000
|
|
$18.08
|
$2,712,000
|
|
|
3/1/11
|
5,185
|
|
|
|
$18.08
|
$93,750
|
|
Michael O. Fifer
|
5/2/11
|
3,983
|
|
|
|
$23.54
|
$93,750
|
|
|
8/2/11
|
3,387
|
|
|
|
$27.68
|
$93,750
|
|
|
11/8/11
|
2,838
|
|
|
|
$33.03
|
$93,750
|
|
|
5/2/11
|
|
|
37,500
|
|
$23.54
|
$882,750
|
|
|
3/1/11
|
1,728
|
|
|
|
$18.08
|
$31,250
|
|
Thomas A.
Dineen
|
5/2/11
|
1,328
|
|
|
|
$23.54
|
$31,250
|
|
|
8/2/11
|
1,129
|
|
|
|
$27.68
|
$31,250
|
|
|
11/8/11
|
946
|
|
|
|
$33.03
|
$31,250
|
|
|
3/1/11
|
|
|
100,000
|
|
$18.08
|
$1,808,000
|
|
|
3/1/11
|
2,765
|
|
|
|
$18.08
|
$50,000
|
|
Christopher J. Killoy
|
5/2/11
|
2,124
|
|
|
|
$23.54
|
$50,000
|
|
|
8/2/11
|
1,806
|
|
|
|
$27.68
|
$50,000
|
|
|
11/8/11
|
1,514
|
|
|
|
$33.03
|
$50,000
|
|
|
3/1/11
|
|
|
50,000
|
|
$18.08
|
$904,000
|
|
|
3/1/11
|
2,489
|
|
|
|
$18.08
|
$45,000
|
|
Mark T. Lang
|
5/2/11
|
1,912
|
|
|
|
$23.54
|
$45,000
|
|
|
8/2/11
|
1,626
|
|
|
|
$27.68
|
$45,000
|
|
|
11/8/11
|
1,362
|
|
|
|
$33.03
|
$45,000
|
|
|
5/2/11
|
|
|
37,500
|
|
$23.54
|
$882,750
|
|
|
3/1/11
|
1,728
|
|
|
|
$18.08
|
$31,250
|
|
Thomas P. Sullivan
|
5/2/11
|
1,328
|
|
|
|
$23.54
|
$31,250
|
|
|
8/2/11
|
1,129
|
|
|
|
$27.68
|
$31,250
|
|
|
11/8/11
|
946
|
|
|
|
$33.03
|
$31,250
|
|
Notes to Grant of Plan-Based Awards
Table
|
(1)
|
|
RSU awards made in
quarterly tranches in 2011 with both performance-based and three-year
cliff vesting triggers. See 2011 TARGET COMPENSATION TABLE and 2011
INCENTIVE COMPENSATION PRE-DETERMINED GOALS TABLE above for further
information regarding the Named Executive Officers performance-based RSU
compensation.
|
|
|
|
(2)
|
|
Time-based long-term
retention awards issued in 2011 subject to continued employment until, and
cliff vesting as of, December 31, 2015.
|
|
|
|
(3)
|
|
The base price of the
quarterly performance-based RSU awards described in footnote (1) above was
the mean of the highest and lowest sales price of the Common Stock as of
the date of grant.
|
|
|
|
(4)
|
|
Amounts shown
represent the total grant date fair value 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
Companys Annual Report on Form 10-K for the year ended December 31, 2011
regarding assumptions underlying valuation of equity awards. Any estimate
of forfeitures related to service-based vesting conditions are disregarded
pursuant to the SEC Rules.
|
30
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR END 2011 TABLE
The following
table reflects outstanding equity grants as of December 31, 2011 for the Named
Executive Officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
2011 TABLE
|
|
OPTION AWARDS
|
STOCK AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Equity
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
Plan
|
|
|
|
|
|
|
|
|
|
Market
|
Plan
|
Awards:
|
|
|
|
|
|
|
|
|
Number
|
Value
|
Awards:
|
Market
|
|
|
|
|
|
|
|
|
of
|
of
|
Number
|
or Payout
|
|
|
|
|
|
|
|
|
Shares
|
Shares
|
of
|
Value of
|
|
|
|
|
|
|
|
|
or Units
|
or Units
|
Unearned
|
Unearned
|
|
Number of
|
Number of
|
Equity
|
|
|
|
of Stock
|
of Stock
|
Shares or
|
Shares or
|
|
Securities
|
Securities
|
Incentive
|
|
|
|
That
|
That
|
Units
|
Units
|
|
Underlying
|
Underlying
|
Plan
|
|
|
|
Have
|
Have
|
That
|
That
|
|
Unexercised
|
Unexercised
|
Awards:
|
Option
|
|
Not
|
Not
|
Have Not
|
Have Not
|
Named
|
Options (1)
|
Options (1)
|
Unearned
|
Exercise
|
Option
|
Vested
|
Vested
|
Vested
|
Vested
|
Executive
|
Exercisable
|
Unexercisable
|
Options
|
Price
|
Expiration
|
(2)
|
(2)
|
(3)
|
(3)
|
Officer
|
(#)
|
(#)
|
(#)
|
($)
|
Date
|
(#)
|
($)
|
(#)
|
($)
|
|
|
|
|
|
|
|
|
|
|
20,335
|
|
$86,900
|
Michael
O.
|
|
|
|
|
|
|
|
|
|
16,347
|
|
$128,820
|
Fifer
|
|
|
|
|
|
|
|
15,393
|
$375,000
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
$2,712,000
|
|
|
|
|
|
|
13,000
|
|
$13.39
|
|
4/24/2017
|
|
|
|
|
|
Thomas
A.
|
|
|
|
|
|
|
|
|
|
5,633
|
|
$24,073
|
Dineen
|
|
|
|
|
|
|
|
|
|
5,807
|
|
$45,765
|
|
|
|
|
|
|
|
|
5,131
|
$125,000
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
$882,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,855
|
|
$25,023
|
Christopher
J.
|
|
|
|
|
|
|
|
|
|
6,065
|
|
$47,799
|
Killoy
|
|
|
|
|
|
|
|
8,209
|
$200,000
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
$1,808,000
|
|
|
|
|
80,000
|
|
20,000
|
|
$7.97
|
|
3/03/2018
|
|
|
|
|
|
|
15,000
|
|
|
|
$8.23
|
|
4/28/2018
|
|
|
|
|
|
|
5,864
|
|
|
|
$8.69
|
|
3/02/2019
|
|
|
|
|
|
Mark T.
Lang
|
|
|
|
|
|
|
|
|
|
4,980
|
|
$21,283
|
|
|
|
|
|
|
|
|
|
|
6,043
|
|
$47,622
|
|
|
|
|
|
|
|
|
7,389
|
$180,000
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
$904,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,966
|
|
$25,498
|
Thomas P.
|
|
|
|
|
|
|
|
|
|
6,065
|
|
$47,799
|
Sullivan
|
|
|
|
|
|
|
|
5,131
|
$125,000
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
$882,750
|
|
|
|
Notes to Outstanding Equity Awards at
Fiscal Year End Table
|
(1)
|
|
Amounts shown as
exercisable or unexercisable reflect the vesting status of each
individuals options within 60 days of March 13, 2012. 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.
|
|
|
|
(2)
|
|
Amounts shown include
performance-based RSUs awarded in 2011 with both a performance trigger and
a three-year time-based trigger. In 2012, the performance-based trigger
was determined by the Board of Directors to have been achieved in 2011,
and the awards will therefore vest on March 1, 2014. Also includes
time-based long-term retention
|
31
|
|
|
awards subject to
continued employment until, and cliff-vesting as of, December 31, 2015.
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.
|
|
|
|
(3)
|
|
Amounts shown include
RSUs awarded to the Named Executive Officers in lieu of 25% of their 2008
performance-based cash bonus, and in lieu of 15% of their 2009
discretionary and performance-based cash bonus. The RSUs are subject to
three year cliff-vesting. 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. Under these awards, the Company will issue
one share of Common Stock for each vested RSU at the end of the vesting
period. 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. The 2008
performance-based RSUs vested and were issued on February 3, 2012. 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
2011 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 2011.
(For further information on stock options and grants made in 2011 to the Named
Executive Officers, see the GRANTS OF PLAN-BASED AWARDS TABLE
above.)
|
Option Awards
|
Stock
Awards
|
|
Number
of
|
|
Number
of
|
|
|
Shares
|
Value
|
Shares
|
Value
|
|
Acquired
|
Realized
|
Acquired
|
Realized
|
|
on
|
Upon
|
Upon
|
Upon
|
|
Exercise
|
Exercise
|
Vesting
|
Vesting
|
Named
Executive
|
(1)
|
(2)
|
(1)
|
(2)
|
Officer
|
(#)
|
($)
|
(#)
|
($)
|
Michael O.
Fifer
|
254,970
|
$4,396,009
|
|
|
Thomas
A. Dineen
|
87,614
|
$975,545
|
|
|
Christopher J.
Killoy
|
135,864
|
$1,988,444
|
|
|
Mark T.
Lang
|
0
|
$0
|
|
|
Thomas P.
Sullivan
|
125,864
|
$2,783,216
|
|
|
Total
|
604,312
|
$10,143,214
|
0
|
$0
|
Notes to Options Exercised and Stock
Vested Table
|
(1)
|
|
The amounts shown
represent the aggregate gross number of shares acquired by the Named
Executive Officers upon the exercising of stock options and/or the vesting
of stock awards. The Named Executive Officers may opt to make cashless
exercises or conversions, whereby the exercise price and withholding taxes
related to the exercise or issuance are paid with shares based on the
closing price of the Common Stock on the exercise or
issuance.
|
|
|
|
(2)
|
|
The amounts shown
represent the aggregate dollar amount realized by the Named Executive
Officers upon the exercising of stock options and/or the vesting of stock
awards. The aggregate dollar amount realized upon the exercise of stock
options is calculated by determining the difference between the closing
price of the Common Stock at exercise and the exercise price of the
options. The aggregate dollar amount realized upon the vesting of stock
awards is calculated by multiplying the number of shares of stock vested
by the closing price of the Common Stock on the vesting
date.
|
32
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 Companys 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. Fifers 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 2007 Stock Incentive Plan provides for accelerated vesting of stock
awards that the executive has already received, not for additional payments. The
2007 Stock Incentive Plan 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 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 (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).
33
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 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. In no case can options be exercised beyond the expiration date of
the award. Subject to the terms of the award agreement, performance-based
restricted stock unit awards that have met the performance-based trigger and
retention awards will become issuable in the event of disability or
death.
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 Companys Pension Plan
until December 31, 2007, the effective date of the plans 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 plans freeze by the Company. Pension
benefits are described under PENSION PLANS below. 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. In no case can options be exercised beyond the expiration
date of the award. Subject to the terms of the award agreement,
performance-based restricted stock unit awards that have met the
performance-based trigger will become issuable in the event of retirement.
Retention awards will be forfeited in the event of retirement before their
vesting date.
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. Fifers severance
agreement provides for 18 months of his annual base salary in the event of his
termination without cause. 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. Options cannot be exercised beyond the expiration date of
the award. In the case of termination for cause, an employees stock options
terminate immediately. Performance-based restricted stock unit awards will
terminate upon the date of voluntary or involuntary termination, whether or not
the award has met the performance-based trigger. In the case of involuntary
termination without cause, retention awards will be issuable based on the number
of days of service elapsed since the award date divided by the number of days
from the award date to the full vesting date.
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.
34
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 Companys Named Executive Officers as of
December 31, 2011. 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 Companys salaried employees
generally.
|
|
|
|
|
|
|
Continuation
|
|
|
|
|
|
|
|
Number
of Equity
|
of
Medical
|
|
|
|
Severance
|
Bonus
Payment
|
Awards-
That
|
Welfare
|
Aggregate
|
|
Agreement
|
(1)
|
Vest
(2)
|
Benefits
(3)
|
Payments
(4)
|
Named Executive Officer
|
($)
|
($)
|
(#)
|
($)
|
($)
|
Michael O. Fifer
|
|
|
|
|
|
|
|
|
|
|
Change In Control
|
$750,000
|
|
$750,000
|
|
202,075
|
|
$27,514
|
|
$1,527,514
|
|
Termination without Cause
|
$750,000
|
|
$0
|
|
0
|
|
$27,514
|
|
$777,514
|
|
Retirement
|
n/a
|
|
$500,000
|
|
52,075
|
|
$0
|
|
$500,000
|
|
Death or Disability
|
n/a
|
|
$500,000
|
|
202,075
|
|
$0
|
|
$500,000
|
|
Thomas A.
Dineen
|
|
|
|
|
|
|
|
|
|
|
Change In Control
|
$375,000
|
|
$247,500
|
|
67,071
|
|
$27,514
|
|
$650,014
|
|
Termination without Cause
|
$375,000
|
|
$0
|
|
0
|
|
$27,514
|
|
$402,514
|
|
Retirement
|
n/a
|
|
$165,000
|
|
16,571
|
|
$0
|
|
$165,000
|
|
Death or
Disability
|
n/a
|
|
$165,000
|
|
67,071
|
|
$0
|
|
$165,000
|
|
Christopher J. Killoy
|
|
|
|
|
|
|
|
|
|
|
Change In Control
|
$450,000
|
|
$300,000
|
|
120,129
|
|
$27,514
|
|
$777,514
|
|
Termination without Cause
|
$450,000
|
|
$0
|
|
0
|
|
$27,514
|
|
$477,514
|
|
Retirement
|
n/a
|
|
$200,000
|
|
20,129
|
|
$0
|
|
$200,000
|
|
Death or Disability
|
n/a
|
|
$200,000
|
|
120,129
|
|
$0
|
|
$200,000
|
|
Mark T. Lang
|
|
|
|
|
|
|
|
|
|
|
Change In Control
|
$412,500
|
|
$270,000
|
|
108,412
|
|
$27,514
|
|
$710,014
|
|
Termination without Cause
|
$412,500
|
|
$0
|
|
0
|
|
$27,514
|
|
$440,014
|
|
Retirement
|
n/a
|
|
$180,000
|
|
18,412
|
|
$0
|
|
$180,000
|
|
Death or
Disability
|
n/a
|
|
$180,000
|
|
108,412
|
|
$0
|
|
$180,000
|
|
Thomas P. Sullivan
|
|
|
|
|
|
|
|
|
|
|
Change In Control
|
$375,000
|
|
$247,500
|
|
54,662
|
|
$27,514
|
|
$650,014
|
|
Termination without Cause
|
$375,000
|
|
$0
|
|
0
|
|
$27,514
|
|
$402,514
|
|
Retirement
|
n/a
|
|
$165,000
|
|
17,162
|
|
$0
|
|
$165,000
|
|
Death or Disability
|
n/a
|
|
$165,000
|
|
54,662
|
|
$0
|
|
$165,000
|
|
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 Companys 2007 Stock Incentive Plans that have
not yet vested. Also includes restricted stock unit awards subject to
vesting.
|
|
|
|
(3)
|
|
Includes continuation
of health insurance coverage assuming family coverage for potential
severance recipients, net of employee contributions.
|
|
|
|
(4)
|
|
Aggregate payments
exclude number of options or RSUs that vest.
|
35
PENSION PLANS
All employees,
including the individuals named in the Summary Compensation Table, are eligible
to participate in the Companys 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 Companys 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 participants final
average salary (highest 60-consecutive-month average annualized base pay during
the last 120 months of employment) less 0.65% of the participants Social
Security covered compensation, multiplied by the participants 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.
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 2011.
The SERP generally provides an annual benefit beginning at age 65, the
normal retirement age under the SERP, based upon a participants completed years
of service with the Company as of such age. The maximum benefit under the SERP
is equal to 50% of the participants average annual compensation, including base
pay, bonuses and other incentive compensation, up to $400,000. All SERP benefits
are reduced by the amount the participant is entitled to receive under the
Pension Plan, and are further reduced by the amount of Social Security benefit
the participant is entitled to receive commencing at age 65. The SERP benefit is
payable as an annuity over the life of the participant, with 50% to continue for
the life of the participants surviving spouse after the participants death.
Pre-retirement death or disability benefits are also provided to plan
participants under the SERP.
36
2011 PENSION BENEFITS
TABLE
The following
table sets forth the present value of pension benefits accrued by, and actual
benefits paid in 2011 to the Named Executive Officers under the Pension
Plan.
|
|
|
|
Salaried Employees Retirement Income
Plan
|
|
|
|
|
|
|
|
|
|
Present
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Payments
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
During
|
|
|
|
|
|
|
|
|
|
Plan
Benefit
|
|
|
Last
Fiscal
|
|
|
Named
Executive
|
|
Credited Service
(1)
|
|
|
(2)
|
|
|
Year
|
|
|
Officers
|
|
(Years)
|
|
|
($)
|
|
|
($)
|
|
|
Michael O. Fifer
|
|
|
1.3
|
|
|
|
|
$
|
16,514
|
|
|
|
0
|
|
|
Thomas A. Dineen
|
|
|
10.6
|
|
|
|
|
$
|
56,402
|
|
|
|
0
|
|
|
Christopher J. Killoy
|
|
|
2.2
|
|
|
|
|
$
|
22,991
|
|
|
|
0
|
|
|
Mark T. Lang
|
|
|
0
|
|
|
|
|
|
$0
|
|
|
|
0
|
|
|
Thomas P. Sullivan
|
|
|
1.4
|
|
|
|
|
$
|
15,197
|
|
|
|
0
|
|
Notes to Pension Benefits
Table
|
(1)
|
|
The maximum years of
credited service earned under the Pension Plan, which was frozen as of
January 1, 2008.
|
|
|
|
(2)
|
|
The present value of
accumulated benefits under the Pension Plan is calculated assuming a
discount rate of 4.75%, the IRS 2011 Combined Static Mortality Table, the
participants age as of December 31, 2011, and frozen accrued benefits as
of December 31, 2007, the date authorized by the Board for the suspension
of benefits under the Pension Plan.
|
37
STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS FOR 2013
To be considered
for inclusion in the Proxy Statement distributed by the Company in connection
with next years 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 January 2, 2013 (120 days prior to
the first anniversary of this years Annual Meeting of Stockholders), and no
later than February 2, 2013 (90 days prior to the first anniversary of this
years Annual Meeting of Stockholders). Any stockholder proposal to be
considered at next years Annual Meeting of Stockholders, but not included in
next years Proxy Statement, must also be submitted in writing to the Company by
February 6, 2013.
Recommendations for nominees to stand for election as Directors at next
years Annual Meeting of Stockholders must be received in writing delivered or
mailed by first class United States mail, postage prepaid, no earlier than
January 2, 2013 (120 days prior to the first anniversary of this years Annual
Meeting of Stockholders), and no later than February 2, 2013 (90 days prior to
the first anniversary of this years 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 Companys corporate communications
telephone hotline at 1-800-826-6762 or via the hotlines
website at
www.ruger.alertline.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 Companys stock transfer
agent, at (312) 360-5190 or
www.computershare.com
for questions regarding
routine stockholder matters.
38
OTHER MATTERS
Management of the
Company does not intend to present any business at the Meeting other than as set
forth in Proposal 1, 2 and 3 of the attached Notice of Annual Meeting of
Stockholders, and it has no information that others will present any other
business at the Meeting. If other matters requiring the vote of the stockholders
properly come before the Meeting, it is the intention of the persons named in
the proxy to vote the shares represented thereby in accordance with their
judgment on such matters.
The Company, upon written request, will provide without charge to each
person entitled to vote at the Meeting a copy of its Annual Report on Securities
and Exchange Commission Form 10-K for the year ended December 31, 2011,
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,
2012
39
IMPORTANT ANNUAL MEETING
INFORMATION
|
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 May 2,
2012.
|
|
|
Vote by
Internet
|
|
Go to
www.envisionreports.com/RGR
|
|
Or scan the QR code with your
smartphone
|
|
|
Follow the steps outlined on the secure
website
|
|
|
|
|
|
Vote by
telephone
|
|
Call toll free 1-800-652-VOTE (8683) within the USA, US
territories & Canada on a touch tone telephone
|
|
Follow the instructions provided by the recorded
message
|
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
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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 - C. Michael
Jacobi
|
o
|
o
|
|
02 - John A. Cosentino,
Jr.
|
o
|
o
|
|
03 - James E.
Service
|
|
o
|
o
|
|
|
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|
04 - Amir P. Rosenthal
|
o
|
o
|
|
05 - Ronald C.
Whitaker
|
o
|
o
|
|
06 - Phillip C.
Widman
|
|
o
|
o
|
|
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|
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|
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|
|
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|
|
07 - Michael O. Fifer
|
o
|
o
|
|
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|
B
|
Issues The Board of
Directors unanimously recommends a Vote FOR proposals 2 and
3.
|
|
|
|
|
|
|
|
For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
For
|
Against
|
Abstain
|
2.
|
The ratification of
the appointment of McGladrey & Pullen, LLP as the Independent Auditors
of the Company for the 2012 fiscal year.
|
|
o
|
o
|
o
|
|
3.
|
An advisory vote on the
compensation of the Companys Named Executive Officers.
|
o
|
o
|
o
|
|
|
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|
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|
Any other business as
may properly come before the Annual Meeting or any adjournment or
postponement thereof.
|
|
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|
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.
|
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|
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
|
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 May
2, 2012
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 13, 2012 at the
Annual Meeting of Stockholders to be held on May 2, 2012 or any adjournment or
postponement thereof.
The proxy when properly executed will
be voted in the manner directed herein by the undersigned stockholder. If no
direction is made, this proxy will be voted FOR the election of all Directors,
FOR Proposal 2 and 3 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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