Response to ISS Report on American Outdoor Brands Corporation
On September 7, 2018, ISS issued its Proxy Analysis & Benchmark Policy Voting Recommendation, or ISS Report, related to the
annual meeting of stockholders of American Outdoor Brands Corporation. We are extremely disappointed in ISS recommendation that the shareholder proposal warrants shareholder support. That proposal would require us to issue a report on our gun
safety measures and activities to mitigate harm associated with gun violence as well as the associated reputational risks to us. As explained more fully below, ISS recommendation is based on misinformation, a misunderstanding of how the
firearms industry operates, and, most especially, a misplaced reliance on the true motives behind proponents proposal.
Proponent
requests that we monitor violent events associated with our firearms and implies that such monitoring would somehow make our communities safer and reduce criminal behavior. As explained in our opposition statement in our definitive proxy statement
and in additional proxy materials filed with the SEC, or opposition statements, such monitoring is not possible since our firearms are lawfully sold to federally licensed distributors, large retailers, and cooperative buying groups. We do not
transfer our firearms to
end-consumers
and have no way of monitoring or impacting the criminal misuse of our firearms. According to ATF reported data, as of 2017, the average time elapsed from the first sale
of a firearm to recovery in a crime was 9.30 years. We have no accurate or reliable means of tracing the chain of use, retail distribution, or ownership of any of our firearms after they are initially sold by us. Even Glass Lewis, in its Proxy Paper
issued on September 4, 2018, recognized that it is unreasonable to assume that the Company can monitor violent events associated with our products with any level of accuracy. Moreover, even if we could monitor such
criminal behavior, it would do nothing to reduce the societal misuse and criminal violence associated with the illegal use of firearms as proponent concedes in its exempt solicitation filed on August 22, 2018. Such monitoring, even if feasible,
which it is not, would also do nothing to help mitigate potential damage to the companys reputation among
law-abiding
owners and other members of the public as the ISS Report erroneously
suggests without any support.
Proponent next proposes we report on our efforts to produce safer firearms and, in particular,
so-called
smart gun technology. ISS supports this proposal on the mistaken belief that there is reason to believe that smart gun technology could be employed to make guns safer in the U.S. and that
any engineering problems could be overcome if there was a market for the product. Nothing could be further from the truth. As we explained in our opposition statements, smart gun technology is not commercially available today or reliable, and,
in fact, could potentially cause more injuries, not less. If the opposite were true, it would be used
extensively
by law enforcement agencies since it was originally designed for that purpose. Not one law enforcement agency uses such
technology. Moreover, as stated in our opposition statements, we do not invest in R&D for smart gun technology so there is nothing further to report. And the fact that there is no market for the product, as ISS concedes, should put the issue to
rest. Why would any manufacturer invest significant capital to produce a product it cant sell? It is remarkable that ISS is substituting its judgment for ours on what firearms we should develop, market, and sell to our customers.