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Sturm, Ruger & Co. Inc. Message Board

  • puzzled48 puzzled48 Mar 15, 2013 6:37 PM Flag

    Executive compensation, Part 1

    In order to decide whether executives are paid appropriately, it is necessary to take a look at the corporate performance under current management.

    Mr. Michael Fifer joined Sturm Ruger in September 2006. That year, corporate revenue was $167 million, and earnings were $1.1 million. The balance sheet at year-end 2006, showed Total Assets of $117 million, and the stockholder equity was $87 million. There was no long-term debt, a legacy of William Ruger Jr., who evidently didn't use any debt when he retired in February, 2006. The company had been pretty stagnant, no growth, so that revenues in 2006 were nearly identical with revenues in 2001, which amounted to $174 million. By 2006, income of $1.1 million was significantly less than 2001 income, which had been $13.5 million.

    Mr. Fifer rationalized costs, introduced LEAN manufacturing technique, and converted Ruger into a growth company, during his 7 years as CEO. He also terminated the defined benefit pension plan, which was not financially sound, and repurchased shares of stock at bargain prices, shrinking the share count from 26.9 million year-end 2005, to 19.0 million year-end 2008.

    Here are the income and revenue figures from 2001 to 2012:

    Revenues- ($million)
    2001- 174
    2002-162
    2003-148
    2004-146
    2005-155
    2006-167
    2007-156
    2008-181
    2009-271
    2010-255
    2011-329
    2012-491

    Net Income-($million)
    2001-13
    2002-8
    2003-12
    2004-5
    2005-0.8
    2006-1.1
    2007-10.3
    2008-8.7
    2009-27
    2010-28
    2011-40
    2012-71

    Overall, Ruger has become a fast growing technology company, and long-term debt has remained at zero. If a person had purchased a share in 2006, he would have paid only $7.32 per share. Today, shares trade at $54 each, so long-term shareholders became extremely wealthy.

    I'm sure majof shareholders, such as Mr. William Ruger Jr., were mightily pleased with corporate performance.

    Summarizing, it appears to me that Mr. Fifer has done an excellent job. Any comments?

    puzzled

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