<PAGE> 1
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
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
STURM, RUGER & COMPANY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) 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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] 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.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[STURM, RUGER & COMPANY, INC. LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1998
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Stockholders of STURM,
RUGER & COMPANY, INC. (the "Company") will be held at the Lake Sunapee Country
Club, 100 Country Club Lane, New London, New Hampshire 03257 on the 12th day of
May, 1998 at 10:30 a.m. for the purpose of considering and acting upon the
following:
1. The election of nine (9) Directors to serve for the ensuing year.
2. The approval of the selection of Ernst & Young LLP as the Company's
independent auditors for the 1998 fiscal year.
3. The transaction of such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only holders of record of Common Stock at the close of business on March
20, 1998 will be entitled to notice of and to vote at the meeting or any
adjournment or postponement thereof. The complete list of stockholders entitled
to vote at the Annual Meeting shall be open to the examination of any
stockholder, for any purpose germane to the Annual Meeting, during ordinary
business hours, for a period of 10 days prior to the Annual Meeting, at the
Company's offices located at 411 Sunapee Street, Newport, New Hampshire 03773.
By Order of the Board of Directors
/s/ LESLIE M. GASPER
--------------------------------------
Leslie M. Gasper
Corporate Secretary
Southport, Connecticut
March 27, 1998
All Stockholders are cordially invited to attend the meeting. If you do not
expect to be present, please date, mark and sign the enclosed form of Proxy and
return it to Harris Trust & Savings Bank, P.O. Box A3800, Chicago, Illinois
60690-9608. A postage-paid envelope is enclosed for your convenience.
<PAGE> 3
March 27, 1998
STURM, RUGER & COMPANY, INC.
LACEY PLACE, SOUTHPORT, CONNECTICUT 06490
PROXY STATEMENT
1998 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sturm, Ruger & Company, Inc. (the
"Company") for use at the 1998 Annual Meeting of Stockholders (the "Meeting") of
the Company to be held at 10:30 a.m. on May 12, 1998 at the Lake Sunapee Country
Club, 100 Country Club Lane, New London, New Hampshire 03257 or at any
adjournment or postponement thereof for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement and
enclosed proxy are first being sent to stockholders on or about March 27, 1998.
The mailing address of the principal executive office of the Company is
Lacey Place, Southport, Connecticut 06490.
If the enclosed proxy is signed and returned, it will be voted in
accordance with its terms. However, a stockholder of record may revoke his or
her proxy before it is exercised by (i) giving written notice to the Company's
Secretary at the Company's address indicated above, (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the Company's
Secretary at or before the Meeting, or (iii) attending the Meeting and voting in
person (although attendance at the Meeting will not, in and of itself,
constitute revocation of a proxy). All expenses in connection with the
solicitation of these proxies will be borne by the Company.
The Annual Report of the Company for the year ended December 31, 1997,
including financial statements, is enclosed herewith.
Only holders of Common Stock of record at the close of business on March
20, 1998 will be entitled to vote at the Meeting. Each holder of record of the
issued and outstanding shares of voting Common Stock, $1.00 par value, of the
Company (the "Common Stock") is entitled to one vote per share. As of March 20,
1998, 26,910,720 shares of Common Stock were issued and outstanding. The
stockholders holding a majority of the issued and outstanding Common Stock,
either present in person or represented by proxy, will constitute a quorum for
the transaction of business at the Meeting. Abstentions and broker non-votes
will be counted as being present at the Meeting, with the result that
abstentions and broker non-votes will have the same effect as votes against the
election of directors.
ELECTION OF DIRECTORS
Nine Directors will be elected at the Meeting, each to hold office until
the next Annual Meeting of Stockholders and until his successor is elected and
has qualified.
All of the nominees for Director were elected at the last Annual Meeting,
with the exception of Stephen L. Sanetti, who was elected to the Board of
Directors effective March 1, 1998 to fill the vacancy created following the
voluntary resignation of Gerald W. Bersett from the Board. If no contrary
instructions are indicated, proxies will be voted for the election of the
nominees for Director. Should any of the said nominees for Director not remain a
candidate at the time of the Meeting (a condition which is not now anticipated),
proxies solicited hereunder will be voted in favor of those nominees for
Director selected by management of the Company. Directors shall be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the Meeting and entitled to vote on the election of Directors.
1
<PAGE> 4
The following table sets forth certain information concerning each
nominee's age, principal occupation, other directorships in publicly-held
corporations and the number and percentage of shares of Common Stock of the
Company beneficially owned by such nominee as of February 1, 1998.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE SHARES
DURING THE PAST FIVE YEARS FIRST BECAME BENEFICIALLY PERCENT
NAME AGE AND OTHER DIRECTORSHIPS A DIRECTOR OWNED OF CLASS
---- --- -------------------------------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C>
William B. Ruger 81 Chairman of the Board, Chief January, 1949 4,814,896(1) 17.89%
Executive Officer and Treasurer.
President of the Company from
1949-1990.
William B. Ruger, Jr.(2) 58 Vice Chairman and Senior March, 1970 2,624,000(3) 9.75%
Executive Officer. Also
President and Chief Operating
Officer of the Company as of
March 1, 1998. Previously
President of the Company from
1991 to July 1995.
Stephen L. Sanetti 48 General Counsel of the Company March, 1998 32,002(4) *
since 1980. Vice President of
the Company since 1993. Director
of the Product Liability
Advisory Council, a non-profit
organization.
John M. Kingsley, Jr. 66 Director of the Company. Retired April, 1972 4,160 *
as Executive Vice President of
the Company effective December
31, 1996.
Townsend Hornor 71 Director of Nickerson Lumber Co. April, 1972 3,200 *
Stanley B. Terhune 72 Director and Consultant to the January, 1975 4,800(5) *
Company. Retired as Vice
President of the Company
effective January 31, 1992.
Richard T. Cunniff 75 President and Director of the December, 1986 10,500(6) *
Sequoia Fund, an investment
company registered under the
Investment Company Act of 1940.
President and principal of
Ruane, Cunniff & Co., Inc., an
investment adviser registered
under the Investment Advisers
Act of 1940.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE SHARES
DURING THE PAST FIVE YEARS FIRST BECAME BENEFICIALLY PERCENT
NAME AGE AND OTHER DIRECTORSHIPS A DIRECTOR OWNED OF CLASS
---- --- -------------------------------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Paul X. Kelley 69 Partner, J.F. Lehman & Company April, 1990 2,000(7) *
(private investments). Vice
Chairman, Cassidy & Associates,
Inc. (government relations) from
1989-1998. Commandant of the
Marine Corps and Member of the
Joint Chiefs of Staff from
1983-1987. Director of
AlliedSignal Inc. (aerospace,
automotive and engineered
materials), GenCorp., Inc.
(aerospace, automotive and
polymer products), Saul Centers
Inc. (real estate investment
trust), UST Inc. (tobacco
products and wine), and The
Wackenhut Corporation (security
services).
James E. Service 67 Consultant, PGGR/Russell Inc. July, 1992 800 *
(investment management).
Commander, U.S. Naval Air Force,
Pacific Fleet, from 1985-1987.
Director of Wood River Medical
Center, Ketchum, Idaho.
</TABLE>
- ---------------
* Beneficial owner of less than 1% of the outstanding Common Stock of the
Company.
(1) Includes 542,896 shares of Common Stock as to which Mr. Ruger is entitled to
direct the vote pursuant to a voting agreement.
(2) Son of William B. Ruger.
(3) Includes 1,824,000 shares of Common Stock held by a trust of which Mr.
Ruger, Jr. is a trustee. Mr. Ruger, Jr. has sole investment and voting
control with respect to such shares.
(4) Includes 2 shares held beneficially by Mr. Sanetti for his minor daughter
under the Uniform Gifts to Minors Act.
(5) Mr. Terhune owns 800 of the shares in joint tenancy with his wife. The
remaining 4,000 shares are held by Mr. Terhune as trustee of a revocable
trust for the benefit of Mr. Terhune and his spouse.
(6) Does not include 10,500 shares of Common Stock owned by Mr. Cunniff's wife
as to which Mr. Cunniff disclaims beneficial ownership. The Sequoia Fund, of
which Mr. Cunniff is the President, a director and a stockholder, owns
339,200 shares of Common Stock, as to which Mr. Cunniff also disclaims
beneficial ownership. Mr. Cunniff is also the President, a director and a
principal stockholder of Ruane, Cunniff & Co., Inc., which manages
discretionary accounts and which holds 303,567 shares of Common Stock. The
firm of Ruane, Cunniff & Co., Inc. is able to direct the sale or disposition
of the 303,567 shares; however, 27,300 shares may be voted by Ruane, Cunniff
& Co., Inc. and 276,267 shares may be voted only by their beneficial owners.
Mr. Cunniff disclaims beneficial ownership of such 303,567 shares.
(7) General Kelley owns 800 of the shares in joint tenancy with his wife.
3
<PAGE> 6
DIRECTOR COMPENSATION AND INFORMATION ABOUT
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company pays each Director who is not also an officer of the Company
$10,000 per year in fees for services as a member of the Board of Directors.
Each Director who is also an officer of the Company receives $6,000 per year in
fees. Each Director also receives an attendance fee of $500 per meeting and is
reimbursed for out-of-pocket expenses related to attendance at meetings. The
fees paid to a Director for his services as a member of the Board of Directors
do not include any compensation payable to such Director in connection with
service by such Director on any of the committees of the Board.
The Company does not have a nominating committee or a committee performing
a similar function. The function of a nominating committee is performed by the
entire Board of Directors.
In 1997, members of the Audit Committee were Townsend Hornor, Richard T.
Cunniff and William B. Ruger, Jr. The Audit Committee recommends the engagement
of the independent auditors, reviews the arrangement and scope of the audit and
considers comments made by the independent auditors. In addition to
out-of-pocket expenses related to attendance at meetings, Messrs. Hornor,
Cunniff and Ruger each received $1,000 for services rendered on such committee
in 1997. The Audit Committee held two meetings during 1997.
In 1997, the members of the Compensation Committee were William B. Ruger,
Richard T. Cunniff and James E. Service. Mr. Ruger is the Chairman of the Board,
Chief Executive Officer and Treasurer of the Company. The function of the
Compensation Committee is to fix the salaries and bonuses of the executive
officers of the Company. Except for out-of-pocket expenses related to attendance
at meetings, Messrs. Ruger, Cunniff, and Service did not receive compensation
for services rendered on such committee in 1997. The Compensation Committee did
not meet during 1997.
The Board of Directors held four meetings during 1997. All Directors
attended at least seventy-five percent (75%) of the aggregate of the total
number of meetings of the Board of Directors. All Directors attended all
meetings held by all committees of the Board on which each such Director served.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
compensation for calendar years 1997, 1996 and 1995 for the Company's Chief
Executive Officer and the four highest paid executive officers other than the
Chief Executive Officer whose salary and bonus exceed $100,000.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ----------------------
OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND SALARY(1) BONUS COMPENSATION(2) STOCK AWARDS COMPENSATION(3)
PRINCIPAL POSITION YEAR ($) ($) ($) ($) ($)
------------------ ---- --------- ------- --------------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William B. Ruger 1997 $ 332,500 $ 0 $ 0 $ 0 $ 4,512
Chairman of the Board 1996 333,000 0 0 0 4,512
of Directors, Chief 1995 333,000 0 0 0 4,512
Executive Officer,
Treasurer and Director
William B. Ruger, Jr. 1997 $ 199,000 120,000 $ 3,486 $ 0 $ 29,400
Vice Chairman, Senior 1996 198,000 150,000 $19,985 0 29,400
Executive Officer and 1995 198,000 100,000 19,985 0 29,400
Director(4)
Gerald W. Bersett 1997 $ 308,000 $80,000 $ 0 $124,125(6) $ 9,417(7)
President, Chief Operating 1996 301,500 80,000 0 137,438(6) 254,371(7)
Officer and Director(5) 1995 125,000 10,000 0 100,500(6) 15,109(7)
Stephen L. Sanetti 1997 $ 140,000 $80,000 $17,273 $ 0 $ 21,348
Vice President and 1996 140,000 95,000 16,994 0 21,348
General Counsel(8) 1995 140,000 66,000 16,994 0 21,348
Erle G. Blanchard 1997 $ 125,000 $50,000 $15,183 $ 0 $ 61,260(10)
Vice President and 1996 104,167 55,000 12,003 0 60,912(10)
Controller(9) 1995 28,500 0 0 0 0
</TABLE>
- ---------------
(1) Includes Directors' Fees.
(2) The amounts set forth in this column represent "gross-ups" for taxes
incurred on benefits received pursuant to the Company's Supplemental
Executive Profit Sharing Retirement Plan (the "Supplemental Plan").
(3) The amounts set forth in this column represent benefits received pursuant
to the Company's Salaried Employees' Profit Sharing Plan, Supplemental Plan
and taxable premiums paid by the Company for group term life insurance for
the named individuals, respectively, as follows: William B. Ruger, 1997 --
$0, $0 and $4,512, 1996 -- $0, $0 and $4,512, 1995 -- $0, $0 and $4,512;
William B. Ruger, Jr.,1997 -- $24,000, $4,500 and $900, 1996 -- $2,700,
$25,800 and $900, 1995 -- $2,700, $25,800 and $900; Gerald W. Bersett,
1997 -- $2,400, $0 and $900, 1996 -- $22,500, $0 and $900, 1995 -- $0, $0
and $192; Stephen L. Sanetti, 1997 -- $2,400, $18,600 and $348,
1996 -- $2,700, $18,300 and $348, 1995 -- $2,700, $18,300 and $348; Erle G.
Blanchard, 1997 -- $2,400, $16,350 and $576, 1996 -- $2,700, $12,925 and
$432, 1995 -- $0, $0 and $0.
(4) William B. Ruger, Jr. also assumed the position of President and Chief
Operating Officer as of March 1, 1998 following Gerald Bersett's voluntary
resignation.
(5) Gerald W. Bersett voluntarily resigned as President and Director of the
Company as of March 1, 1998. He joined the Company as President and Chief
Operating Officer on August 1, 1995, and became a Director on October 30,
1996.
(6) The amounts set forth in this column represent the fair market value as of
the date of grant of 6,000 shares of restricted Common Stock granted to
Gerald W. Bersett on each of August 23, 1995, August 2, 1996 and August 1,
1997 pursuant to an employment arrangement. As of December 31, 1997, the
aggregate fair market value of such shares was $335,250. On August 28,
1997, Mr. Bersett sold 6,000 shares of Common Stock no longer subject to
restriction. He sold the remaining 12,000 shares of restricted Common Stock
to the Company on February 12, 1998.
(7) The amounts set forth in this column for Gerald W. Bersett also include
imputed interest on three loans ($30,000 in 1995, $54,975 in 1996 and
$49,650 in 1997) made to Mr. Bersett by the Company, the
5
<PAGE> 8
taxable value of moving expenses, "gross-ups" for taxes related to moving
expenses, and non-taxable moving expenses reimbursed to Mr. Bersett,
respectively, as follows: 1997 -- $6,117, $0, $0 and $0, 1996- $3,262,
$133,686, $85,204 and $8,819, 1995 -- $608, $8,834, $0 and $5,475.
(8) Stephen L. Sanetti replaced Gerald W. Bersett as a Director on March 1,
1998, following Mr. Bersett's voluntary resignation.
(9) Erle G. Blanchard left the Company on March 31, 1995 as Vice President and
Controller-Newport, and returned as Vice President and Controller on March
1, 1996.
(10) The amounts set forth in this column for Mr. Blanchard include the taxable
value of moving expenses, "gross-ups" for taxes related to moving expenses,
and non-taxable moving expenses reimbursed to Mr. Blanchard, respectively,
as follows: 1997 -- $23,636, $18,298 and $0, 1996 -- $24,640, $20,097 and
$118, 1995 -- $0, $0, and $0.
BOARD COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
William B. Ruger, the Chairman of the Board, Chief Executive Officer and
Treasurer of the Company, has primary responsibility for setting the
compensation of executive officers. In making decisions in this regard, Mr.
Ruger considers such factors as the individual performance of the officer, the
time elapsed since the officer's last increase in compensation and the overall
performance of the Company. Despite the success of the Company over the past
three years, Mr. Ruger's salary has not been increased during that time period.
The Compensation Committee and the Board of Directors as a whole review Mr.
Ruger's determinations. Both the Committee and the Board give such
determinations great weight in formally setting executive compensation.
The Compensation Committee has not yet adopted a policy with respect to
qualification of executive compensation in excess of $1 million per individual
for deduction under Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder. The Compensation Committee currently
does not anticipate that the compensation of any executive officer during 1998
will exceed the limits of deductibility for 1998.
Compensation Committee
William B. Ruger
Richard T. Cunniff
James E. Service
6
<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
William B. Ruger, the Chairman of the Board, Chief Executive Officer and
Treasurer of the Company, serves on the Compensation Committee.
COMPANY STOCK PRICE PERFORMANCE
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
Sturm, Ruger & Company, Inc., Standard & Poors 500
and Value Line Recreation Index
(Performance Results Through 12/31/97)
<TABLE>
<CAPTION>
STURM, RUGER & COMPANY, INC. STANDARD & POORS 500 RECREATION
---------------------------- -------------------- ----------
<S> <C> <C> <C>
1992 100 100 100
1993 132.76 110.09 125.66
1994 158.21 111.85 123.48
1995 159.75 153.8 150.79
1996 235.37 189.56 169.05
1997 233.85 252.82 271.21
</TABLE>
Assumes $100 invested at the close of trading 12/92 in Sturm, Ruger & Company,
Inc. Common Stock, Standard & Poors 500, and Recreation Index.
*Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
The peer group in the above graph is the Value Line Recreation Industry.
This peer group replaces the peer group previously used by the Company for
purposes of the foregoing comparison (the Value Line Machine Tools Index) due to
the elimination of such prior peer group from reporting coverage by Value Line.
PENSION PLAN TABLE
ESTIMATED AMOUNTS OF ANNUAL PENSION PAYABLE FROM THE
PENSION PLAN FOR THE PARTICIPANT'S LIFE,
COMMENCING DURING 1997 AT AGE 65
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
HIGHEST 60-CONSECUTIVE-MONTH ----------------------------------------
AVERAGE ANNUALIZED BASE PAY 15 YEARS 20 YEARS 25 OR MORE YEARS
---------------------------- -------- -------- ----------------
<S> <C> <C> <C>
$75,000 $12,133 $16,178 $20,222
100,000 17,133 22,845 28,556
125,000 22,133 29,511 36,889
150,000 27,133 36,178 45,222
</TABLE>
All of the Company's salaried employees participate in the Sturm, Ruger &
Company, Inc. Salaried Employees' Retirement Income Plan (the "Pension Plan"),
which in general provides annual pension benefits at age 65 in an amount equal
to: (i) 1 1/3% of the participant's final average salary (highest
60-consecutive-month average annualized base pay during the last 120 months of
employment) less 0.65% of the participant's Social Security covered
compensation, multiplied by (ii) the participant's years of credited service up
to a maximum of 25 years.
The pensions listed in the table above are not subject to any offset or
deduction for Social Security or any other benefits.
As of December 31, 1997, William B. Ruger, Jr. had more than 25 years of
credited service, Gerald W. Bersett had two years of credited service, and
Stephen L. Sanetti and Erle G. Blanchard each had 17 years of
7
<PAGE> 10
credited service. An indication of the average annualized base pay under the
Pension Plan for these individuals can be found in the Salary column of the
Summary Compensation Table.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TABLE
ESTIMATED AMOUNTS OF ANNUAL PLAN BENEFIT
PAYABLE FROM THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR THE PARTICIPANT'S LIFE, COMMENCING DURING 1997 AT AGE 65
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
AVERAGE ANNUAL ----------------------------------------
COMPENSATION 15 YEARS 20 YEARS 25 OR MORE YEARS
- -------------- -------- -------- ----------------
<S> <C> <C> <C>
$125,000 $ 6,955 $ 14,577 $ 22,199
150,000 10,955 19,910 28,866
175,000 14,955 25,243 35,532
200,000 18,955 30,577 42,199
225,000 24,455 37,910 51,366
250,000 31,955 47,910 63,866
300,000 46,955 67,910 88,866
400,000 76,955 107,910 138,866
</TABLE>
The Sturm, Ruger & Company, Inc. Supplemental Executive Retirement Plan
(the "SERP") is a nonqualified supplemental retirement plan for certain senior
executives of the Company. Three of the executive officers who appear in the
Summary Compensation Table, William B. Ruger, Jr., Stephen L. Sanetti and Erle
G. Blanchard participate in the plan. The SERP provides an annual benefit
beginning at age 65 in an amount equal to 2% of the participant's average annual
compensation for each complete year of service with the Company up to a maximum
of 50% of such average compensation. The annual benefit is reduced by the amount
the participant is entitled to receive under the Pension Plan, and is further
reduced by the amount of Social Security benefit the participant is entitled to
receive commencing at age 65. The SERP benefit is payable as an annuity over the
life of the participant with 50% to continue for the life of the participant's
surviving spouse after the participant's death.
The average annual compensation shown in the above table includes the
participant's base pay, bonuses, and other compensation for the participant's
highest consecutive 36 months (or, if the participant's service was less than 36
months, then for the entire period of service) as reported under the Summary
Compensation Table, except that benefits received under the Salaried Employees'
Profit Sharing Plan and taxable premiums paid by the Company for group term life
insurance are excluded from the SERP compensation formula. The annual
compensation upon which the SERP benefit is calculated is limited to $400,000.
As of December 31, 1997, William B. Ruger, Jr. had more than 25 years of
credited service, and Stephen L. Sanetti and Erle G. Blanchard each had 17 years
of credited service. The estimated amounts presented above assume that the
participant attained age 65 in 1997.
John M. Kingsley, Jr., a Company Director who retired as Executive Vice
President of the Company on December 31, 1996, received $132,816 in benefits
from the SERP during 1997.
The SERP provides that in the event of a change in control of the Company,
participants in pay status shall be entitled to receive a lump-sum payment equal
to the present value of the participant's benefit. Those not in pay status shall
become fully vested and generally, if terminated within three years of a change
in control, become entitled to a lump-sum payment. The payment shall be computed
based upon the participant's average compensation and years of service with the
Company on the date of change in control (provided, however, that in the event
of a change in control, the participant's years of service with the Company for
purposes of computing the benefit amount shall not be less than ten). A change
in control is defined to mean the effective date of one of the following events:
(i) sale or exchange of substantially all of the capital stock of the Company;
(ii) sale of substantially all of the assets of the Company; (iii) sale of
substantially all of the capital stock of the Company owned of record and
beneficially by William B. Ruger and
8
<PAGE> 11
members of his family; or (iv) the merger or consolidation of the Company with
or into one or more other corporations; and, in each of such four cases, the
sale of stock or assets is to, or the exchange of stock is with, or the merger
or consolidation is with or into one or more persons, firms or corporations,
which does not own at least 10% of the capital stock of the Company.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of February 1, 1998 the ownership of
Common Stock by each person of record or known by the Company to own
beneficially more than 5% of such stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS
OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED PERCENT OF CLASS
------------------- ------------------------- ----------------
<S> <C> <C>
William B. Ruger 4,814,896(1) 17.89%
P.O. Box 447
Newport, NH 03773
William B. Ruger, Jr. 2,624,000(2) 9.75%
P.O. Box 293
Newport, NH 03773
</TABLE>
- ---------------
(1) Includes 542,896 shares of Common Stock as to which Mr. Ruger is entitled to
direct the vote pursuant to a voting agreement.
(2) Includes 1,824,000 shares of Common Stock held by a trust of which Mr.
Ruger, Jr. is a trustee. Mr. Ruger, Jr. has sole investment and voting
control with respect to such shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of February 1, 1998
as to the number of shares of Common Stock beneficially owned by the Chief
Executive Officer of the Company, each of the four most highly compensated
executive officers of the Company other than the Chief Executive Officer and all
Directors and executive officers of the Company as a group. See ELECTION OF
DIRECTORS above for such information with respect to each Director of the
Company.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER* SHARES BENEFICIALLY OWNED PERCENT OF CLASS
------------------------- ------------------------- ----------------
<S> <C> <C>
William B. Ruger 4,814,896(1) 17.89%
William B. Ruger, Jr. 2,624,000(2) 9.75%
Gerald W. Bersett(3) 12,000(4) **
Stephen L. Sanetti(5) 32,002(6) **
Erle G. Blanchard 5,000(7) **
All Directors and executive officers as a group (6
outside Directors, 3 Directors who are also executive
officers and 2 other executive officers) 7,512,958 27.91%
</TABLE>
- ---------------
* The address of each of the executive officers named in this Security
Ownership of Management table is c/o Sturm, Ruger & Company, Inc., Lacey
Place, Southport, Connecticut 06490.
** Beneficial owner of less than 1% of the outstanding Common Stock of the
Company.
(1) Includes 542,896 shares of Common Stock as to which Mr. Ruger is entitled to
direct the vote pursuant to a voting agreement.
(2) Includes 1,824,000 shares of Common Stock held by a trust of which Mr.
Ruger, Jr. is a trustee. Mr. Ruger, Jr. has sole investment and voting
control with respect to such shares.
(3) Mr. Bersett voluntarily resigned as President and Chief Operating Officer of
the Company effective March 1, 1998.
9
<PAGE> 12
(4) This amount reflects the sale of 6,000 shares of Common Stock no longer
subject to restriction by Mr. Bersett on August 28, 1997. Mr. Bersett sold
the remaining 12,000 shares of restricted Common Stock to the Company on
February 12, 1998.
(5) Mr. Sanetti replaced Mr. Bersett as a Director of the Company upon Mr.
Bersett's voluntary resignation effective March 1, 1998.
(6) Includes 2 shares held beneficially by Mr. Sanetti for his minor daughter
under the Uniform Gifts to Minors Act.
(7) Mr. Blanchard owns these shares in joint tenancy with his wife.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Officers, Directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
The Company has concluded, based solely on a review of the copies of the
Section 16(a) report forms furnished to the Company, that with respect to the
period from January 1, 1997 through December 31, 1997, all such forms were filed
in a timely manner by the Company's officers, Directors and greater than ten
percent beneficial owners.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 1997, Gerald W. Bersett, President, Chief Operating
Officer and Director of the Company until March 1, 1998, was indebted to the
Company in the amount of $134,625 for loans made to pay income taxes due from
Mr. Bersett in connection with the award of shares of restricted Common Stock to
Mr. Bersett in 1995, 1996 and 1997 pursuant to an employment arrangement. These
loans did not bear interest. These loans were repaid to the Company in full from
the proceeds of the sale of all of Mr. Bersett's shares of Common Stock to the
Company on February 12, 1998.
During 1997, the Company paid Newport Mills, of which William B. Ruger, Jr.
is the sole proprietor, $33,000 for storage rental. During 1997, the Company
also paid Mr. Ruger, Jr. $9,000 for the rental of office space owned by Mr.
Ruger, Jr. in Newport, New Hampshire.
Stanley B. Terhune, a Director and former Vice President of the Company,
serves as a consultant to the Company. For his services in this capacity, Mr.
Terhune receives $100 per hour and during 1997 received a total of $133,357,
including bonuses.
10
<PAGE> 13
APPROVAL OF INDEPENDENT AUDITORS
Ernst & Young LLP has served as the Company's independent auditors since
1967. Management recommends approval of the selection of this firm to act as
independent auditors for the 1998 fiscal year. During 1997, Ernst & Young LLP
performed various professional services in connection with its audit of the
financial statements of the Company, including services relating to filings with
the Securities and Exchange Commission, audits of certain employee benefit plan
financial statements, attendance at the Audit Committee meetings, and
consultation in connection with various business, accounting and tax matters. A
representative of Ernst & Young LLP will be present at the Meeting, will have
the opportunity to make a statement if he desires to do so, and is expected to
be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
In order to be included in the proxy materials for the Company's next
Annual Meeting of Stockholders, stockholder proposals must be received by the
Company on or before November 27, 1998.
OTHER MATTERS
Management of the Company does not intend to present any business at the
Meeting other than as set forth in Items 1 and 2 of the attached Notice of
Annual Meeting of Stockholders, and it has no information that others will
present any other business at the Meeting. If other matters requiring the vote
of the stockholders properly come before the Meeting, it is the intention of the
persons named in the proxy to vote the shares represented thereby in accordance
with their judgment on such matters.
The Company, upon written request, will provide without charge to each
person entitled to vote at the Meeting a copy of its Annual Report on Securities
and Exchange Commission Form 10-K for the year ended December 31, 1997,
including the financial statements and financial statement schedules. Such
requests should be directed to Leslie M. Gasper, Corporate Secretary, Sturm,
Ruger & Company, Inc., Lacey Place, Southport, Connecticut 06490.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ LESLIE M. GASPER
--------------------------------------
Leslie M. Gasper
Corporate Secretary
11
<PAGE> 14
PROXY PROXY
STURM, RUGER & COMPANY, INC.
LACEY PLACE, SOUTHPORT, CONNECTICUT 06490
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 12, 1998
The undersigned hereby appoints William B. Ruger, William B. Ruger, Jr.,
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 20, 1998 at the Annual
Meeting of Stockholders to be held on May 12, 1998 or any adjournment or
postponement thereof.
The proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted for the election of all directors and for Proposal 2. Please sign
exactly as name appears on other side of this proxy form.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSALS:
1. ELECTION OF NINE DIRECTORS
FOR / / WITHHOLD / / FOR ALL (EXCEPT NOMINEE(S) WRITTEN BELOW) / /
---------------------------------------------
Nominees: William B. Ruger, William B. Ruger, Jr., Stephen L. Sanetti, Richard
T. Cunniff, Townsend Hornor, Paul X. Kelley, John M. Kingsley, Jr., James E.
Service and Stanley B. Terhune.
2. Proposal to approve the appointment of Ernst & Young LLP as the
independent auditors of the Company for the 1998 fiscal year.
FOR / / AGAINST / / ABSTAIN / /
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be signed on reverse side.)
<PAGE> 15
STURM, RUGER & COMPANY, INC.
Dated: , 1998
------------------------------
Signature(s):
------------------------------
--------------------------------------------
When shares are held by joint tenants, both
should sign. When signing as an attorney, as
executor, administrator, trustee or
guardian, please give your full title as
such. If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY FORM PROMPTLY
USING THE ENCLOSED ENVELOPE.
