In 1977, David Allan Coe wrote a song Johnny Paycheck recorded. It instantly became the anthem for the working man. Especially one who was tired of seeing his sweat go toward making someone else rich.
The song title? “Take This Job and Shove It.” It’s a song with a title that sums up the whole story from the first C chord through the G7/F chorus. At that point in my life, it suited my life, too.
If Senator Elizabeth Warren gets her way, what began as the working man’s lament to bad bosses, incompetent supervisors and thankless labor might well be rerecorded and entitled “A CEO’s Resignation Letter to the Board of Directors”.
The Massachusetts Senator wants to make it a federal crime for corporate executives to “negligently permit or fail to prevent violations of the law at their company.” As nearly as I can tell, knowledge of the said offense wouldn’t be required to prove “negligence”.
Sen. Warren wants first-time offenders to serve a year in jail, with three year terms in the hoosegow for any subsequent offenses - all for the crimes of others. To make it less offensive, she’s proposing the law only apply to companies with more than $1 billion in annual revenue.
She’s conflating stirring up class envy by using “size”, but that’s a topic for another time. It is worth noting that she’s ignoring a bit of basic law: crime by definition, is harm intentionally done. It’s why every crime violates the law, but not every violation of the law is a crime.
Nonetheless, this “prominent scholar in bankruptcy law”is willing to overlook that small detail- if it allows her to punish CEOs for, well, being CEOs. If, by extension, that liability also attached to elected officials, making them liable for the acts of their aides, political agents and fundraisers, she might be a little more reluctant to suggest such a fundamental change in the law.
If Sen. Warren’s measure miraculously passed, CEOs would instantly join dodo birds and carrier pigeons on the extinct species list. Fortunately, her purpose isn’t to pass useful legislation, it’s designed to somehow signal her identification with the struggles of the working class.
Yep, going into the National Rifle Association’s Annual Meetings & Exhibits later this week in Indianapolis, Indiana, it’s once-again time for the annual anti-gun“virtue signaling” by politicians. And the pointedly anti-NRA “reporting” from the local and national media.
Fortunately, most of it will culminate with a series of predictable interviews with the 7-12 protesters who will “gather en masse” in Indianapolis to call for “something to be done about gun violence.”
That’s their anti-gun movement’s time-tested euphemism for “let’s see if we can’t come up with something that will finally get rid of the millions of pesky law-abiding gun owners we don’t like.”
Senator Warren’s just the first to get her licks in.
Bank on the 3,213 other Democratic candidates for President to chime in between now and the final NRA sessions on Sunday. And prepare for the usual wailing and gnashing of teeth from the mainstream as both President Trump and Vice President Pence make appearances in Indianapolis.
It’s Mr. Trump’s third consecutive appearance, so you’ll read, hear or see something to the effect that his speech is “what has become an annual pilgrimage to pledge loyalty to the gun lobby” somewhere before it’s all over.
Snark aside, there are real threats to the firearms industry that will be topics of discussion apart from the general membership sessions. They’re genuine threats; loosely tied to the concept of “virtue signaling.”
In February, we reported on the “book reports” a group of activist investors pushed through at Ruger and American Outdoor Brands (Smith & Wesson’s parent company) following the 2018 Parkland school shooting.
Those shareholder resolutions compelled both Ruger and American Outdoor Brands to create comprehensive report on the “risks facing its business.”
The companies responded with extensive reports that, essentially, told dissidents the companies “understood their concerns” - but the companies were in the gun business, had been for many years, understood the inherent risks, and were doing their jobs- which included assessing - and mitigating- the risks facing their businesses.
Both companies responded appropriately. AOB even went so far as to issue guidance for investor interactions with them going forward.
One of the points required a recognition of the fact the gun business was essential to the DNA of the company. It was strongly implied that investors who didn’t want to be in the gun business might look elsewhere for investment opportunities.
That didn’t go well with several in the dissident groups, among them the Sisters of the Holy Name of Jesus and Mary (a/k/a “the sisters of eternal misery” at companies in which they’ve made their activist presence known).
The sisters are part of the “interfaith Center on Corporate Responsibility” (ICCR) which joined Majority Action (a group that The Motley Fool investment site describes as “a platform that ‘empowers individuals and groups to organize for progressive causes’”) in calling for the Ruger/AOB “book reports”.
Now it appears they’re trying for a “second bite at the apple” at Ruger (NYSE: RGR).
They’re calling for shareholders to withhold their votes for Ruger’s board chairman Michael Jacobi and BoD member Sandra Froman.
Let’s be clear: their call will have no impact on the nominations. They’re running unopposed, and under a plurality vote, a single “yes” vote is enough to elect -everyone.
It’s a symbolic gesture, but this time two of the major investment groups who joined them in (quietly) supporting their 2018 resolution are keeping quiet.
The goal, I’m told, is to possibly influence Ruger’s board going forward, and, to show the dissidents’ hatred of the NRA.
According to sources with direct knowledge of the groups, the dissidents are trying to make a case that the NRA sometimes works against the best interests of the firearms industry. If they can make that case, they’ll try to stop Ruger’s future contributions to the NRA. Over the past three years, those contributions have been estimated at $10 million.
They’re also contending that Sandra Froman’s being on the NRA Board creates a clear conflict of interest.
For the record, this isn’t a move anyone -on either side of “the gun debate” thinks will succeed. What both sides can agree on is that it’s both time-consuming and expensive to deal with.
Connecticut’s recent Supreme Court decision allowing a lawsuit against Remington, makers of the Bushmaster rifle used in the Sandy Hook shootings to go forward in direct contradiction of protections were presumed in the federal Protection of Lawful Commerce in Firearms Act and a plethora of new gun control measures recently introduced at the local and state levels present enough real issues for gun companies to deal with.
And those threats exist for all companies, not just publicly-held ones.
Activist investors, it seems, aren’t nearly so concerned about investment as they are about activism. Were I an investor in either Ruger or AOB (I’m not), I’d be looking for ways to eliminate - or penalize - activists’ negative influence on my investments.
Maybe it’s time for investors to clarify - or correct- fellow investors’ “goals and objectives.”
Bet you won’t hear that anywhere else this week. We’re heading to Indianapolis bright and early tomorrow, and our goal is simple: we’ll keep you posted.
—Jim Shepherd
