Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. ISS Proxy Analysis & Benchmark Policy Voting Recommendations American Outdoor Brands Corp. Key Takeaways CEO pay declined significantly, as annual incentive awards were not earned for 2018 performance and the value of long-term incentive awards fell by approximately 50 percent. Equity awards are majority performanceconditioned, and previously granted performance shares were not earned. Support for the shareholder proposal requesting a report on steps the company has taken to mitigate the harm associated with its products is warranted, as the information would help shareholders assess management's oversight of related risks and opportunities. Agenda & Recommendations Meeting Type: Annual Meeting Date: 25 September 2018 Record Date: 2 August 2018 Meeting ID: 1261086 NASDAQ: AOBC Index: Russell 3000 Sector: Leisure Products GICS: 25202010 Primary Contacts Suzan W. Herczeg Enver Fitch - ESG Suzan.W.Herczeg@issgovernance.com Policy: United States Incorporated: Nevada, USA Item Code Proposal Board Rec. ISS Rec. MANAGEMENT PROPOSALS 1.1 M0201 Elect Director Barry M. Monheit FOR FOR 1.2 M0201 Elect Director Robert L. Scott FOR FOR 1.3 M0201 Elect Director Anita D. Britt FOR FOR 1.4 M0201 Elect Director Robert H. Brust FOR FOR 1.5 M0201 Elect Director P. James Debney FOR FOR 1.6 M0201 Elect Director John B. Furman FOR FOR 1.7 M0201 Elect Director Gregory J. Gluchowski, Jr. FOR FOR 1.8 M0201 Elect Director Michael F. Golden FOR FOR 1.9 M0201 Elect Director Mitchell A. Saltz FOR FOR 1.10 M0201 Elect Director I. Marie Wadecki FOR FOR 2 M0550 Advisory Vote to Ratify Named Executive Officers' Compensation FOR FOR 3 M0101 Ratify Deloitte & Touche LLP as Auditors FOR FOR AGAINST FOR SHAREHOLDER PROPOSALS 4 S0725 Report on Gun Violence Shading indicates that ISS recommendation differs from Board recommendation  Items deserving attention due to contentious issues or controversy Report Contents Financial Highlights Corporate Governance Profile Board Profile Compensation Profile Governance QualityScore 3 4 5 6 7 Vote Results Meeting Agenda and Proposals Equity Ownership Profile Additional Information 8 9 23 23 * ISS Environmental and Social QualityScore is newly introduced for 2018 and is based on company disclosure and transparency practices. © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Material Company Updates Item Summary Board and Executive Updates On Sept. 19, 2017, Deana McPherson was appointed as chief accounting officer, in addition to her existing roles as VP & corporate controller. Jeffrey Buchanan (EVP, CFO, chief administrative officer & treasurer) ceased to serve as principal accounting officer. On Dec. 8, 2017, Matthew Buckingham resigned from his position as SVP, Firearms Division, to pursue other interests. P. James Debney (president and CEO) assumed Buckingham's duties. On Feb. 5, 2018, Anita Britt was appointed as a director. Publication Date: 7 September 2018 Page 2 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Financial Highlights Company Description: American Outdoor Brands Corporation designs, manufactures, and sells firearms worldwide. STOCK PRICE PERFORMANCE TOTAL SHAREHOLDER RETURNS 250% Company TSR (%) 200% GICS 2520 TSR (%) 150% Russell 3000 TSR (%) 3 Yr -9.55 5 Yr 4.61 7.52 3.32 6.99 13.05 10.20 12.75 Source: Compustat. As of last day of company FY end month: 04/30/2018 100% COMPANY SNAPSHOT 50% Market Cap (M) 0% -50% -100% May-13 1 Yr -50.34 512.7 Closing Price 9.43 Annual Dividend 0.00 52-Week High May-14 May-15 May-16 May-17 May-18 20.81 52-Week Low 8.32 Shares Outstanding (M) American Outdoor Brands Corp. MSCI ACWI: Leisure Products (GICS: 252020) Russell 3000 54.37 Average daily trading volume (prior mo)* 831.60 As of August 2, 2018 (All currency in USD) * Trading Volume in thousands of shares FINANCIAL & OPERATIONAL PERFORMANCE Historical Performance (FY ending) All currency in USD 4/2014 4/2015 4/2016 4/2017 Compared to Peers (Compustat FY*) – 2017 4/2018 SRI JOUT Stoneridge, Inc. MBUU MOV GRC Revenue (M) Net Income (M) EBITDA (M) 627 552 723 903 607 824 Johnson Outdoors, Inc. 491 282 568 The GormanRupp Co. 379 89 50 94 128 20 45 35 28 -15 27 171 125 196 259 80 96 59 48 77 61 EPS (USD) EPS Y/Y Growth (%) Profitability 1.51 0.92 1.72 2.29 0.37 1.61 3.56 1.59 -0.66 1.02 21 -39 87 33 -84 -42 160 57 N/A 7 Pretax Net Margin (%) EBITDA Margin (%) Return on Equity (%) Return on Assets (%) ROIC (%) Leverage 22 14 20 21 3 6 10 17 7 10 27 23 27 29 13 12 12 17 14 16 53 26 31 33 5 19 15 58 -3 8 23 10 15 16 3 8 10 13 -2 7 33 13 20 21 3 12 15 27 -3 8 Debt/Assets Debt/Equity Cash Flows 27 36 28 28 28 23 0 24 4 0 61 91 57 55 50 53 0 109 5 0 90 115 169 124 62 79 46 36 55 43 -63 -186 -32 -244 -42 -109 -58 -9 -84 -10 Earnings Operating (M) Investing (M) Financing (M) Net Change (M) Valuation & Performance Malibu Boats, Inc. Movado Group, Inc. -59 45 12 -10 -32 41 -12 -20 -21 -12 -32 -27 149 -130 -13 16 -23 7 -41 22 10.20 16.20 12.70 9.70 29.70 14.20 20.60 16.30 N/A 30.60 Price/Earnings 74.83 -3.16 46.86 1.47 -50.34 29.23 103.38 114.16 14.91 2.47 Annual TSR (%) Source: Compustat. *Note: Compustat standardizes financial data and fiscal year designations to allow for meaningful comparison across companies. Compustat data may differ from companies' disclosed financials and does not incorporate non-trading equity units. Peers shown here represent closest industry peers drawn from those peers used in ISS’ pay-for-performance analysis. See www.issgovernance.com/policy-gateway/company-financials-faq/ for more information. Publication Date: 7 September 2018 Page 3 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Corporate Governance Profile BOARD & COMMITTEE SUMMARY SHAREHOLDER RIGHTS SUMMARY Independence Members Meetings Full Board 70% 10 8 Audit 100% 4 5 Compensation 100% 4 7 Nominating 100% 4 4 Chairman classification Separate chair/CEO Independent lead director Voting standard Plurality carveout for contested elections Resignation policy Total director ownership (000 shares) Total director ownership (%) Percentage of directors owning stock Number of directors attending < 75% of meetings Number of directors on excessive number of outside boards Average director age Average director tenure Percentage of women on board Independent Yes N/A Majority Yes Yes 1,199 2.2 100% 0 Controlled company Classified board Dual-class stock Vote standard for mergers/acquisitions Vote standard for charter amendment Vote standard for bylaw amendment Shareholder right to call special meetings Material restrictions on right to call special meetings Shareholder right to act by written consent Cumulative voting Board authorized to issue blank-check preferred stock Poison pill Proxy Access No No No Majority 90% Majority No N/A No No Yes No No 0 65 years 11 years 20% Director tenure 0 5 10 15 20 Publication Date: 7 September 2018 25 Page 4 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Board Profile (after upcoming meeting) Director Independence & Affiliations EXECUTIVE DIRECTORS Item Name On Ballot P. James 1.5 Debney Affiliation CEO Independence Classification Company ISS NonIndependent Executive Director Attend Gen- Age Tenure Term <75% der Ends Outside Boards M 50 7 2019 CEO Key Committees Audit Comp Nom Gov 0 NON-EXECUTIVE DIRECTORS Item Name On Ballot 1.1 Barry Monheit 1.3 Affiliation Independence Classification Company ISS Attend Gen- Age Tenure Term <75% der Ends Outside Boards CEO Key Committees Audit Comp Nom Gov Independent Independent M 71 14 2019 1 Anita Britt Independent Independent F 55 0* 2019 1 F 1.4 Robert Brust Independent Independent M 75 7 2019 0 CF 1.6 John Furman Independent Independent M 74 14 2019 0 F 1.7 Gregory Gluchowski Jr. Independent Independent M 53 3 2019 1 1.8 Michael Golden Former CEO Independent NonIndependent M 64 13 2019 2 1.9 Mitchell Saltz Former CEO, Other Independent NonIndependent M 65 19 2019 2 1.2 Robert Scott Vice Chair Independent Independent M 72 18 2019 0 1.10 I. Marie Wadecki Independent Independent F 69 16 2019 1 Chair Shaded cells indicate that company and ISS independence classifications differ. *Indicates director not previously submitted to shareholders for election. M M M M M M C C C M F M M M = Member C = Chair F = Financial Expert Director Notes  Michael Golden Michael Golden served as President and CEO until September 2011. (Source: DEF14A, 8/17/18, p. 8.)  Mitchell Saltz 1) Mitchell Saltz is a company founder. 2) Saltz served as CEO until December 2003. 3) The company leases 3,000 square feet of office space in Scottsdale, AZ, which is a requirement contained in the company's Dec. 5, 2003 severance agreement entered into with Saltz in connection with his resignation as an executive officer. (Source: DEF14A, 8/17/18, pp. 8, 9, 59.) 1) Robert Scott served in various executive positions in the company and wholly-owned subsidiary, Smith & Wesson Corp., most recently as president, until December 2002. 2) Scott served as a consultant until February 2006. (Source: DEF14A, 8/17/18, p. 6.) Robert Scott Publication Date: 7 September 2018 Page 5 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Director Employment, Compensation & Ownership Name Primary Employment Outside Boards Total Compensation* Shares Held 60-day Options Total Barry Monheit Prof Director Quest Resource Holding Corp. 207,000 54,662 20,000 74,662 Voting Power (%) <1 P. James Debney ** 385,409 160,667 546,076 1.00 Anita Britt CEO, President American Outdoor Brands Corp. Prof Director 121,633 5,549 0 5,549 <1 Robert Brust Retired 180,000 8,526 0 8,526 <1 John Furman Consultant 192,500 22,834 40,000 62,834 <1 Gregory Gluchowski Jr. Michael Golden Other 177,708 19,566 0 19,566 <1 156,188 268,931 10,000 278,931 <1 Mitchell Saltz Financial Services 210,000 69,328 0 69,328 <1 Robert Scott Other 224,450 62,862 30,000 92,862 <1 I. Marie Wadecki Prof Director 186,000 41,100 0 41,100 <1 Prof Director Delta Apparel, Inc. Milacron Holdings Corp. Trex Company, Inc., Quest Resource Holding Corp. Quest Resource Holding Corp., VirTra, Inc. Quest Resource Holding Corp. *Local market currency **For executive director data, please refer to Executive Pay Overview. Compensation Profile EXECUTIVE PAY OVERVIEW Executive Title P. Debney J. Buchanan President and Chief Executive Officer Executive Vice President, Chief Financial Officer, Chief Administrative Officer, and Treasurer President, Outdoor Products & Accessories Division Senior Vice President, General Counsel, Chief Compliance Officer, and Secretary Senior Vice President, Manufacturing Services Division ISS Selected Peer Group Company Defined Peers B. Murphy R. Cicero M. Smith Median CEO Pay Base Salary Bonus & Non-equity Incentives Restricted Stock Option Grant Total 734 403 Change in Pension, Deferred Comp, All Other Comp 46 50 0 0 1,487 533 0 0 2,267 986 283 15 160 304 0 763 340 26 0 304 0 670 340 23 0 304 0 667 727 812 48 58 622 768 1,229 1,545 0 0 3,094 3,897 Source: ISS. Pay in $thousands. Total pay is sum of all reported pay elements, using ISS' Black-Scholes estimate for option grant-date values. Note: Median total pay will not equal sum of pay elements medians. Company Defined Peers are as disclosed. More information on ISS’ peer group methodology at www.issgovernance.com/policy-gateway/us-compensation-policy-guidance/. Publication Date: 7 September 2018 Page 6 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 OPTION VALUATION ASSUMPTIONS For CEO's last FY Grant* Volatility (%) Dividend Yield (%) Term (yrs) Risk-free Rate (%) Grant date fair value per option Grant Date Fair Value ($ in 000) CEO PAY MULTIPLES Company N/A N/A N/A N/A N/A N/A ISS N/A N/A N/A N/A N/A N/A Compared to 2nd highest active executive Average active NEO ISS peer median Company peer median Median of employees* (CEO Pay Ratio) Multiple 2.30 2.94 0.73 0.58 43 *As disclosed by the company. The company disclosed the median compensation of all employees to be $51,911. *The CEO did not receive stock option grants in the last fiscal year. CEO TALLY SHEET CEO CEO tenure at FYE: Present value of all accumulated pension: Value of CEO stock owned (excluding options): P. Debney 6.5 years N/A $3,634,407 Potential Termination Payments Involuntary termination without cause: $2,083,265 Termination after a change in control: $4,880,821 Source: DEF14A Dilution & Burn Rate DILUTION American Outdoor Brands Corp. Peer group median Peer group weighted average Peer group 75th percentile BURN RATE Dilution (%) 11.96 7.72 3.72 12.00 Dilution is the sum of the total amount of shares available for grant and outstanding under options and other equity awards (vested and unvested) expressed as a percentage of total basic common shares outstanding as of the record date. The dilution figure typically excludes employee stock purchase plans (ESPPs) and 401(k) shares. The underlying information for the company is based on the company's equity compensation table in the most recent proxy statement or 10-K. 1-year 3-year average Non-Adjusted (%) 0.94 1.00 Adjusted (%) 1.89 1.99 Burn rate equals the number of shares granted in each fiscal year, including stock options, restricted stock (units), actual performance shares delivered under the long-term incentive plan or earned deferred shares, to employees and directors divided by weighted average common shares outstanding. The adjusted burn rate places a premium on grants of full-value awards using a multiplier based on the company's annual volatility. Publication Date: 7 September 2018 Page 7 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Board Structure Management of Environmental Risks and Opportunities Human Rights Compensation Carbon and Climate Labor, Health, and Safety Shareholder Rights Natural Resources Stakeholders and Society Audit & Risk Oversight Waste and Toxicity Product Safety, Quality, and Brand Governance Scores As Of: Sep. 7, 2018 Last Data Profile Update: Sep. 7, 2018 Environmental and Social Scores As Of: Sep. 7, 2018 Last Data Profile Update: Sept. 7, 2018 ISS Governance QualityScore is derived from publicly disclosed data and reporting on company governance disclosure, risk and performance. ISS Environmental and Social QualityScore is based on company disclosure and transparency practices. Scores indicate decile rank among relative index, region (Governance QualityScore), or industry group (Environmental and Social QualityScore). Scores are calculated at each pillar by summing the factor scores in that pillar. Not all factors and not all subcategories have equal weight. For more information on ISS Governance QualityScore, visit www.issgovernance.com/solutions/qualityscore/governance. For questions, please contact: QualityScore@issgovernance.com. For more information on ISS-Ethix Environmental and Social QualityScore, visit www.issgovernance.com/solutions/qualityscore/environmental-social. For questions, please contact: ESGHelpdesk@Issethix.com. Vote Results ANNUAL MEETING SEPTEMBER 19, 2017 Proposal 1.1 Elect Director Barry M. Monheit 1.2 Elect Director Robert L. Scott 1.3 Elect Director Robert H. Brust 1.4 Elect Director P. James Debney 1.5 Elect Director John B. Furman 1.6 Elect Director Gregory J. Gluchowski, Jr. 1.7 Elect Director Michael F. Golden 1.8 Elect Director Mitchell A. Saltz 1.9 Elect Director I. Marie Wadecki 2 Advisory Vote to Ratify Named Executive Officers' Compensation 3 Advisory Vote on Say on Pay Frequency3 4 Ratify Deloitte & Touche LLP as Auditors Board Rec ISS Rec Disclosed Result Pass Pass Pass Pass Pass Pass Pass Pass Pass Pass Support Including Abstains (%)1 97.3 96.6 99.0 98.8 97.5 98.9 96.5 97.3 96.7 96.4 Support Excluding Abstains (%)2 97.3 96.6 99.0 98.8 97.5 98.9 96.5 97.3 96.7 96.7 For For For For For For For For For For For For For For For For For For For For One Year For One Year For Annual Pass 83.9 97.4 85.3 97.9 Shaded results reflect a majority of votes cast FOR shareholder proposal or AGAINST management proposal or director election 1Support Including Abstains is defined as %FOR/(For + Against + Abstain), as expressed as a percentage. 2Support Excluding Abstains is defined as %FOR/(For + Against), as expressed as a percentage, provided if different from For + Against + Abstain. 3Reflects the voting option that received the highest number of votes cast. Voting options included Annual, Biennial, Triennial, or Abstain. Publication Date: 7 September 2018 Page 8 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Meeting Agenda & Proposals Items 1.1-1.10. Elect Directors FOR VOTE RECOMMENDATION A vote FOR the director nominees is warranted. BACKGROUND INFORMATION Policies: Board Accountability Board Responsiveness Director Competence Director Independence Election of Directors ISS Categorization of Directors Vote No campaigns Vote Requirement: The company has adopted a majority vote standard (of shares cast) for the election of directors with a plurality carve-out for contested elections and has a director resignation policy in its governance guidelines. Discussion Please see the Board Profile section above for more information on director nominees. No significant issues are highlighted at this time. Publication Date: 7 September 2018 Page 9 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Item 2. Advisory Vote to Ratify Named Executive Officers' Compensation FOR VOTE RECOMMENDATION A vote FOR this item is recommended. The misalignment between pay and performance is mitigated by the degree of performance-based incentives, both long and short term. Annual payouts were forfeited when the threshold goal was not met, and the value of the CEO's long-term incentive awards declined significantly year-over-year. In addition, previously granted performance shares were forfeited when the threshold goal was not met, consistent with recent share price underperformance. BACKGROUND INFORMATION Policies: Advisory Votes on Executive Compensation Vote Requirement: Majority of votes cast (abstentions and broker non-votes not counted) Executive Compensation Analysis COMPONENTS OF PAY ($ in thousands) CEO Peer Median CEO P. Debney 2018 Change Base salary 734 Deferred comp & pension All other comp Bonus 7.3% 0 46 -41.8% 0 Non-equity incentives Restricted stock Option grant Total 0 -100.0% 1,487 P. Debney P. Debney 2017 2016 2018 2018 684 609 727 1,365 0 0 0 0 79 85 36 114 0 0 0 160 1,684 1,827 489 0 -49.2% 2,929 2,686 1,229 1,447 0 0 0 0 -57.8% 5,376 5,207 3,094 3,086 0 2,267 Other NEOs % of Net Income 11.3% 15.3% % of Revenue 0.4% 0.5% Non-Performance-Based Pay Elements (CEO) Key perquisites ($) Auto: 12,000; Life Insurance: 7,068 Key tax gross-ups on perks ($) None Value of accumulated NQDC* ($) 24,204 Present value of all pensions ($) N/A Years of actual plan service N/A Additional years credited service N/A *Non-qualified Deferred Compensation Disclosed Benchmarking Targets Base salary None Disclosed Target short-term incentive None Disclosed Target long-term incentive (equity) None Disclosed Publication Date: 7 September 2018 Page 10 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Target total compensation Meeting Date: 25 September 2018 Meeting ID: 1261086 None Disclosed Blank Severance/Change-in-Control Arrangements (CEO unless noted) Contractual severance arrangement Individual Contract Non-CIC estimated severance ($) 2,083,265 Change-in-Control Severance Arrangement Cash severance trigger* Double trigger Cash severance multiple 2 times Cash severance basis Base Salary + Average Bonus Treatment of equity Vest only upon employment termination Excise tax gross-up* No Estimated CIC severance ($) 4,880,821 *All NEOs considered Compensation Committee Communication & Responsiveness Disclosure of Metrics/Goals Annual incentives Yes Long-term incentives Yes Pay Riskiness Discussion Process discussed? Yes Material risks found? No Risk Mitigators Clawback policy* Yes CEO stock ownership guideline 3X Stock holding period requirements Stock options/Restricted Stock: 12 months *Must apply to cash as well as equity incentives and at least all NEOs. Pledging/Hedging of Shares Anti-hedging policy Company has a robust policy Anti-pledging policy Company has a robust policy Compensation Committee Responsiveness MSOP vote results (F/F+A) 2017: 96.7%; 2016: 97.6%; 2015: 98.1% Frequency approved by shareholders Annual with 85.3% support Frequency adopted by company Annual (most recent frequency vote: 2017) Repricing History Repriced/exchanged underwater options last FY? No Blank Publication Date: 7 September 2018 Page 11 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Pay for Performance Evaluation PAY-FOR-PERFORMANCE QUANTITATIVE SCREEN The pay-for-performance quantitative screen uses four measures that together evaluate the alignment of CEO pay and company performance. The screen measures alignment over multiple time horizons, on both an absolute and relative basis, using multiple performance measures. The screen is designed to identify outlier companies that demonstrate a significant quantitative misalignment over time. Measure Relative Degree of Alignment Multiple of Median Absolute Pay-TSR Alignment Initial Quantitative Concern Financial Performance Assessment Overall Quantitative Concern Result -64 0.73 9 High -10.8 High RELATIVE DEGREE OF ALIGNMENT MULTIPLE OF MEDIAN The chart plots percentiles of the annualized 3-year performance and pay rankings for the company () and ISS' derived peers (). The gray band generally indicates alignment Pay in $thousands. The gray band represents 25th to 75th percentile of CEO pay of ISS' selected peer group, and the blue line represents the 50th percentile. Performance 100% CEO total pay is 0.73 times the median of peers. 50% - 0% 0% 50% 2,000 4,000 6,000 8,000 10,000 100% Pay ABSOLUTE PAY-TSR ALIGNMENT FINANCIAL PERFORMANCE ASSESSMENT CEO granted pay trends versus value of a $100 investment made on the first day of the five-year period. Blue boxes indicate the company's quartile rankings compared to ISS' selected peer group in the applicable measure/metric, measured over three years. The leftmost box indicates bottom quartile and rightmost box indicates top quartile. $6,000 Pay 2.0000 TSR Measure $5,000 1.5000 $4,000 Pay 1.0000 $3,000 $2,000 $1,000 $- 2014 Indexed TSR CEO 2015 2016 Metrics (ranked by weight) Long-Term Performance 0.0000 ROIC 16.2 Return on Assets 12.5 Return on Equity 24.4 EBITDA Growth -13.1 2017 2018 4,686 1,927 5,207 5,376 2,267 166.96 161.54 262.13 242.55 125.75 P. James P. James P. James P. James P. James Debney Debney Debney Debney Debney Publication Date: 7 September 2018 Weighted Performance 0.5000 2014 2015 2016 2017 2018 Pay ($000) Quartile Ranking vs. Peers Quartile Ranking vs. Peers Page 12 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 ISS Selected (13) Shared (11) CompanyDisclosed (9) PEER GROUP SIZE CIRCOR International, Inc. InterDigital, Inc. Johnson Outdoors, Inc. Malibu Boats, Inc. Nautilus, Inc. Stoneridge, Inc. Vera Bradley, Inc. Albany International Corp. ESCO Technologies, Inc. Infinera Corp. Oxford Industries, Inc. RBC Bearings, Inc. Sturm, Ruger & Co., Inc. Acushnet Holdings Corp. iRobot Corp. La-Z-Boy, Inc. Simpson Manufacturing Co., Inc. Universal Electronics, Inc. Fox Factory Holding Corp. JAKKS Pacific, Inc. Lydall, Inc. Marine Products Corp. Perry Ellis International, Inc. The Gorman-Rupp Co. Callaway Golf Co. Gentherm, Inc. Movado Group, Inc. Plantronics, Inc. Standex International Corp. Ethan Allen Interiors, Inc. Kate Spade & Co. LLC Shutterfly, Inc. Steven Madden Ltd. Size (by revenue) of the ISS, company and overlap peer groups. The gray area represents 0.4 - 2.5 times the company’s revenue. Size as multiple of target ISS AND COMPANY PEER GROUPS 3 2 1 0 American Outdoor Brands Corp. ISS Only Shared Company Only The shaded area represents the overlap group of companies that are in both ISS’ comparison group and the company's disclosed CEO compensation benchmarking peer group. Excludes company peers for which financial data is not available. For more information on the ISS peer group methodology, visit https://www.issgovernance.com/policy-gateway/votingpolicies/ Data for ISS’ pay-for-performance tests are sourced from proxy disclosures for pay and from Compustat for TSR and financial performance. For more information on ISS' quantitative pay-for-performance evaluation, visit https://www.issgovernance.com/policy-gateway/voting-policies/ Short-Term Cash Incentives Short-term Incentives FY 2018 (P. Debney) CEO STI Opportunities STI targets ($) STI targets (calculated) FY 2017 (P. Debney) Target Maximum Target Maximum ND ND ND ND N/A N/A N/A N/A STI targets (as disclosed) 100% of base salary ISS peer median 100% of base salary Company peer median 100% of base salary FY 2018 (P. Debney) Actual Payouts ($) FY 2017 (P. Debney) Amount % of base salary Amount % of base salary Bonus 0 0 0 0 Non-equity incentive 0 0 1,683,952 246 Total Bonus + Non-equity 0 0 1,683,952 246 Blank1 Publication Date: 7 September 2018 Page 13 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Performance Provisions Metric Form Weight Threshold Target Maximum Actual Adjusted EBITDAS Absolute 50% ND $195.988 M 149.5% of target Not achieved Revenue Absolute 50% ND $836.193 M 113.4% of target Not achieved Adjusted EBITDAS hurdle* Absolute ND ND 81.3% of Adjusted EBITDAS target ND ND STI performance metrics/goals *Failure to reach the hurdle metric of at least 81.3% of the Adjusted EBITDAS target ($159.4 million) results in no bonus payments, regardless of the achievement of the revenue or individual performance metrics (individual performance metrics apply to NEO Cicero only). Blank spa ce 1 Other Short-Term Incentive Factors Discretionary bonus?* No Future performance metrics Not disclosed *Based on the Bonus column in the SCT; per SEC rules, amounts disclosed in this column were not based on pre-set goals. Blank8 Long-Term Incentives CEO's last FY LTI target (%) None disclosed NEOs' last FY award types Performance-based stock, Time-based stock Metric Most recent performance metrics/goals Threshold Target Maximum Relative performance of Equals the Exceeds the Exceeds the relative common stock vs. relative relative performance of the Russell 2000 Index performance of performance of the RUT by 10 points or (RUT) the RUT RUT by five points more Count=1 S&P 500 is FALSE Long-Term Equity Grants FY 2018 CEO Equity Awards FY 2017 Shares (#) % shares* Value ($)* % value Shares (#) 63,700 48 707,707 48 63,700 48 1,394,393 48 0 0 0 0 0 0 0 0 Performance shares 70,100 52 778,811 52 70,100 52 1,534,489 52 Performance Options 0 0 0 0 0 0 0 0 Time-based shares Standard options Total Equity 133,800 1,486,518 133,800 Time-based equity vesting RSUs: One-fourth per year Perf. measurement period Three years (FY18-FY20) followed by one-year vesting CEO equity pay mix (by value)* Performance-conditioned: 52.4%; Time-based: 47.6% % shares* Value ($)* % value 2,928,882 *Performance shares, if any, are counted and valued at target. Publication Date: 7 September 2018 Page 14 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Executive Summary Evaluation Component Level of Concern Non-Performance-Based Pay Elements Low Peer Group Benchmarking Low Severance/CIC Arrangements Low Comp Committee Communication/Responsiveness Pay for Performance Evaluation Key Reason Low Medium P4P Misalignment with Mitigating Factors ISS Recommendation: FOR Pay for Performance Analysis ISS’ quantitative screen yields a High concern level, indicating a misalignment between CEO pay and company performance. ISS’ qualitative review, which closely examines the compensation program to identify factors that reinforce or mitigate the quantitative misalignment, indicates the following: OVERVIEW Total CEO pay decreased 57.8 percent amid negative financial performance. The company's TSR underperformed against its four-digit GICS peers and the broader Russell 3000 Index over the previous one-, three-, and five-year periods. Financial results compared to the prior reporting period generally declined. Revenue, net income, EBITDA, EPS, and profitability metrics all decreased year-over-year. Total CEO compensation decreased to $2.27 million in FY18 compared to $5.38 million in FY17, primarily due to the loss of annual incentives after a failure to achieve targets and the reduction in equity grant value due to lower share price. ANNUAL COMPENSATION   STI determination is performance-based Incentives were not paid out after performance goals were not achieved  Actual performance results not disclosed Incentive payouts primarily based on pre-set financial goals. As in the prior year, the NEO annual cash incentives for FY18 were based on revenue and adjusted EBITDAS goals, with variable weightings on company and divisionlevel performance based on the NEO's position. The CEO's incentive only considers company-wide performance and was equally based on the two factors mentioned. In addition, if a hurdle goal for company-wide adjusted EBITDAS, set at 81.3 percent of target or approximately $159.4 million, is not met, no incentive payouts are made to any NEO regardless of revenue or individual performance. Hurdle goals are similarly set for segment-level adjusted EBITDAS performance, at different percentages, for NEOs responsible for division performance. The company-wide adjusted EBITDAS hurdle goal in FY18 was set lower than the FY17 hurdle of 83.7 percent of target or $175.8 million; the FY18 target for adjusted EBITDAS was also set lower than the previous year's target. The FY18 target for revenue was set higher than the 2017 target, but below GAAP revenue of $904 million for FY17. No annual incentives were paid out in FY18. The NEOs' target incentives in FY18 ranged from 65 to 100 percent of base salary, with a cap of 300 percent of the target percentage, subject to continued employment. The CEO's target opportunity remained unchanged from the previous year, at 100 percent of base salary. Since the adjusted EBITDAS hurdle was not met at the company-wide level, none of the NEOs received annual incentives in FY18. Actual performance for the adjusted EBITDAS metric was not disclosed. One discretionary bonus paid to an NEO. NEO Murphy, who was appointed as president of the Outdoor Products and Accessories division after the start of FY18, was the only executive officer to receive a cash bonus in FY18. This $160,000 discretionary award was "in recognition of the expansion of the nature and scope of his job functions and responsibilities and his subsequent strong performance in leading the growth and profitability of that division," according to the proxy. Publication Date: 7 September 2018 Page 15 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 LONG-TERM COMPENSATION   Majority of LTI is performance-based Previously-granted equity was forfeited after goals were not achieved A majority of regular equity awards are performance-conditioned. As in previous years, the company granted 52 and 48 percent of its long-term incentives in the form of performance shares (PSUs) and RSUs, respectively. PSUs are earned based on the relative performance of the company's stock to the Russell 2000 Index (RUT), with a target performance of five points above that mark. If less than equivalent performance is achieved, no PSUs will be earned; if equivalent performance is achieved, then 38 percent of the targeted PSUs will be earned and vest. The maximum number of PSUs that can be earned for achievement of at least ten points above the RUT is 200 percent of target PSUs. The maximum number of shares that can be delivered with respect to the FY18 PSU awards is limited to a dollar value (as of the vesting date) of 600 percent of the grant date value. Shares earned after the three-year performance cycle then vest for an additional year. Number of shares granted in FY18 was unchanged, although their value is almost half of FY17. The number of shares included in the equity awards to each NEO in FY18 were the same as the prior year, except for NEO Murphy, who received a new hire grant in FY17. However, while the number of shares remained constant, the value of the RSUs and PSUs in FY18 was 49.2 percent lower than in FY17. Previously granted PSUs were forfeited. The PSUs previously awarded in FY15 completed their three-year performance period at the end of FY18 without achieving threshold performance. The company's stock price declined 32.83 percent over the three-year performance period compared to the RUT's 23.32 percent appreciation. Since the company's stock price trailed the RUT by 56.14 percent, none of the PSUs granted to the NEOs in FY15 were earned. Conclusion The NEOs' annual incentives are entirely performance based and the long-term incentives are primarily performance-based. The annual incentives were forfeited for FY18 after the company failed to achieve the adjusted EBITDAS performance hurdle. In addition, the company awarded the same number of performance-based shares in FY18 as it had in previous years, despite the approximately 49 percent decline in share price between FY17 and FY18 grant dates. The combination of these factors resulted in the CEO's compensation decreasing by more than half year-over-year. While the quantitative analysis indicates a pay and performance misalignment, it is mitigated by the high degree of performance-based incentive requirements, and by incentive program results that are consistent with the company's recent underperformance. As such, support for this proposal is warranted. Publication Date: 7 September 2018 Page 16 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Item 3. Ratify Deloitte & Touche LLP as Auditors Meeting Date: 25 September 2018 Meeting ID: 1261086 FOR VOTE RECOMMENDATION A vote FOR this proposal to ratify the auditor is warranted. BACKGROUND INFORMATION Policies: Auditor Ratification Vote Requirement: Majority of votes cast (abstentions not counted) Discussion AUDIT FIRM INFORMATION The board recommends that Deloitte & Touche LLP be reappointed as the company's independent audit firm. Audit firm name Audit firm since (as disclosed) Audit opinion for the last fiscal year Term to serve if reappointed Deloitte & Touche LLP 2014 Unqualified 1 year FEES PAID DURING THE LAST FISCAL YEAR Audit firm name Fees currency Deloitte & Touche LLP USD Total fees paid to the audit firm 1,012,500 Audit fees 1,012,500 Audit-related fees 0 Total transaction-related fees 0 Total tax fees 0 Other fees 0 Total non-audit fees* 0 Total non-audit fees as a percentage of total fees 0.0% *Total non-audit fees include other fees, tax advice fees, and certain transaction-related fees. Non-audit fees will also include any tax-related fees not identified as tax compliance or tax preparation. The auditor's report contained in the annual report is unqualified, meaning that in the opinion of the auditor, the company's financial statements are fairly presented in accordance with generally accepted accounting principles. Analysis This request to ratify the auditor does not raise any exceptional issues, as the auditor is independent, there are no non-audit fees, and there is no reason to believe the auditor has rendered an inaccurate opinion or engaged in poor accounting practices. Publication Date: 7 September 2018 Page 17 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Item 4. Report on Gun Violence FOR VOTE RECOMMENDATION A vote FOR this proposal is warranted as additional information on the company's policies and practices to mitigate harm from its products would help shareholders assess management's oversight of related risks and opportunities. Vote Requirement: Majority of votes cast (abstentions and broker non-votes not counted) Discussion PROPOSAL The Sisters of the Holy Names of Jesus and Mary, U.S.-Ontario and several other faith-based investors have submitted a precatory proposal requesting that the company issue a report on steps it has taken to mitigate the harm associated with its gun products. Specifically, the proposal states: "RESOLVED: Shareholders request the Board of Directors issue a report by February 8, 2019, at reasonable expense and excluding proprietary information, on the company’s activities related to gun safety measures and mitigation of harm associated with gun products, including the following:  Evidence of monitoring of violent events associated with products produced by the company.  Efforts underway to research and produce safer guns and gun products.  Assessment of the corporate reputation and financial risks related to gun violence in the U.S." PROPONENTS' STATEMENT In their supporting statement, the proponents assert that gun violence is a public health crisis in the U.S. and could cause financial and reputational risks to the company. According to recent research cited by the proponents, gun homicides are up 12 percent and gun injuries up 50 percent year-after-year from 2014-2017. Another study estimated that 55 million out of approximately 242 million American adults own guns, and that 3 percent of the population own half the total number of guns in the country. Furthermore, according to research from the New England Journal of Medicine, living in a home with guns increased the risk of homicide by 40-170 percent and the risk of suicide by 90-460 percent. The proponents state that despite it being such a contentious issue, a recent Quinnipiac Poll has found that public support for sensible gun policy is at an all-time high. The filers cite a report that shows that American Outdoor Brands products have been used in five mass shootings since 1984, responsible for killing 43 people and wounding 80 more. The proponents state that smart gun technology exists, and it could significantly reduce accidental shootings and suicides. The proponents also cite evidence that 70 percent of Americans would be willing to buy a smart gun. BOARD'S STATEMENT In its opposing statement, the board argues that the preparation of a report as requested by the proponent would be unnecessary and redundant, given that the company already discloses the reputational and financial risks of being a firearms manufacturer in its Annual Report on Form 10-K. The board states that the proposal's request that the company monitor the illegal use of its firearms would be "ineffective in preventing such misuse," and is "not realistic or feasible." The board says that the company works closely with the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) to help trace firearms used in crimes by providing it with information on "whether [the company] made the firearm, when it was made, to whom in [its] distribution channel [it] sold the firearm, and when [it] sold it." The board states that the company has a long history of promoting safe use of firearms and that its firearms have innovative safety features. The board disagrees with the proponent's claim that certain smart gun Publication Date: 7 September 2018 Page 18 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 technology could reduce accidental shootings and suicides, and states that, according to a 2013 National Institute of Justice study, the technology is not fully developed. The board notes that according to a McKeon & Associates survey in 2013, 81 percent of those surveyed, "would not likely be willing to or would not purchase a smart gun." The board also states that it is opposed to laws in effect today that would ban all firearms other than smart guns, if and when that technology becomes available. For these reasons, the board says that the company does not invest in R&D for smart gun technology. The board asserts that the company is not a technology company, and is "notwell situated to identify, hire, and train personnel with the requisite knowledge and expertise to invent and develop" smart gun technology. Lastly, the board believes that the proponent has filed this proposal mainly to seek an "alternate, and inappropriate, forum to advance its political and social narrative," that certain firearms should be banned or further regulated. BACKGROUND AND RECENT SHAREHOLDER ACTIVISM For an update on the most recent shareholder activism around environmental and social issues, refer to ISS' 2018 Proxy Season Review - U.S. Environmental and Social Issues Report (requires login to ISS Link). This is the first year that American Outdoor Brands has received this proposal. The same proposal was submitted at Sturm, Ruger & Co. this year and received 68.8 percent shareholder support. Gun Violence in the U.S. America's gun violence makes it an outlier among developed countries. According to a Pew Center study, about 40 percent of Americans either own a gun or live in a home with guns. According to a recent study, Americans experience 31 percent of mass shootings although they make up about 5 percent of the world’s population. Studies also show that gun homicide rates are 25 times higher in the U.S. than in other developed countries, and that gun-related suicides are eight times higher in the U.S. than in other developed countries. The 2008 Supreme Court decision in District of Columbia v. Heller clarified that "the Second Amendment protects a personal right to keep and bear arms for lawful purposes, most notably for self-defense within the home." However, Justice Antonin Scalia, writing for the court, wrote that the right is not unlimited and federal appeals courts have upheld the right of states to ban particular types of guns, such as "AR-15-style weapons." No American gun manufacturer produces a smart gun system. One of the reasons for that is a law passed in New Jersey in 2002 requiring that once a smart gun is sold anywhere in the country, within three years, all gun shops in the state must sell only smart guns. At least one American gun manufacturer, in fact the predecessor of American Outdoor Brands, took steps to develop smart gun technology in the early part of this century and was rebuffed by a boycott from angry customers organized by the National Rifle Association. Some after-market products are being developed that could limit a gun's use in certain places or by a person who is not its owner. Most guns used in mass shootings were obtained legally. Some studies have shown that most guns used in criminal assaults were not purchased legally, but little data exists on how those guns were acquired. After the Parkland, Florida shooting, and the resulting movement led by the students of the school where the shooting took place, a number of state laws have been passed restricting access to firearms and related products.  Oregon tightened a law banning people convicted of stalking or domestic violence from buying or owning a gun.  Rhode Island followed in the steps of Connecticut, California, and other states by passing a "Red Flag" law that makes it easier to keep guns out of the hands of people "who could pose significant threats to public safety."  Florida passed a law that imposes a mandatory three-day waiting period to buy a gun, bans bump stocks, and raises the age to buy a rifle to 21.  Washington passed a law banning the sale and use of bump stocks that make guns operate like an automatic weapon.  Vermont passed legislation mandating background checks before firearms sales. Publication Date: 7 September 2018 Page 19 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Slide Fire Solutions, the inventor and maker of bump stocks, announced on April 18 that it would be shutting down production. However, the company's website directs customers to RW Arms which currently sells "Slide Fire" and "Bump Fire Systems" bump stocks. Bump stocks came under increased public scrutiny since the accessory was used in a 2017 mass shooting in Las Vegas that killed 58 and injured many others. In a March 2, 2018 press release, global investment management corporation BlackRock discussed its approach to companies that manufacture and distribute civilian firearms. BlackRock believes that responsible policies and practices are critical to the long-term prospects of manufacturers and retailers of civilian firearms. BlackRock announced that it had reached out to the major publicly traded civilian firearms manufacturers and retailers to engage in a discussion of their business practices. Analysis AMERICAN OUTDOOR BRANDS' RELATED DISCLOSURES On its Investor Overview webpage, the company provides its response to the questions raised in BlackRock's Letter dated March 1, 2018 related to the company's strategy for managing risks related to manufacturing civilian firearms. The company's response includes the following:  Managing risks associated with manufacturing firearms for civilian use: The company states that the Second Amendment "confers a fundamental right, expressly provided in the Bill of Rights, to keep and bear arms," and that the company believes in its right to, "manufacture firearms that meet the needs and requirements of those who have the Constitutionally-protected right to own them." The company states that accordingly, it does not believe there are reputational or financial risks to the company from manufacturing firearms, apart from the risks reported in the Risk Factors section of its Form 10-K. The company iterates that a) it participates actively in one of the most heavily regulated industries in the country, b) it engages in responsible business practices, and c) it has legal and compliance teams to help mitigate risks associated with its business.  Monitoring the illegal use of its products: The company states that calls for it to monitor the illegal use of its firearms are misguided, since doing so would be "ineffective in preventing such misuse." The company states that such monitoring is "not realistic or feasible." The company says that it works closely with the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), to help trace firearms used in crimes, by providing it with information on "whether [the company] made the firearm, when it was made, to whom in [its] distribution channel [it] sold the firearm, and when [it] sold it." The company says that it does not have in its records any information on who may have purchased one of its firearms at retail, or in any other subsequent transaction. The company believes that the best way to stop the criminal misuse of its firearms is to enforce the existing laws and strengthen efforts to prosecute those who break them.  Promoting the legal and safe use of firearms: The company believes that effective solutions exist to address the misuse and to promote the safe and legal use of firearms. The company a) supports greater enforcement of current laws, b) supports fixing the National Criminal Instant Background Check system, and c) supports and promotes the safe use of firearms. The company discusses several initiatives it has through the National Shooting Sports Foundation (NSSF) that involve promoting firearm safety. These include "Project Childsafe," "Operation Secure Store," and "Own It? Respect It. Secure It."  Safety through technology: The company states that it is not opposed to the development of "authorized user recognition," also known as "smart gun" technology. The company states that it is opposed to legislation that would require the use of such technology. The company says that this technology is not yet proven to be safe and reliable. It goes on to say that, according to "a 2013 National Institute of Justice review, the technology has not been fully developed and a safe and reliable product incorporating the technology is not available today." The company states that one of the main concerns with the technology is "the determination as to what happens when the battery dies or other elements of the technology fail. A person relying on a firearm to protect his or her life, or the life of a loved one, does not have the liberty of rebooting the device, recharging the battery, removing a glove, or drying his or her hands." The Publication Date: 7 September 2018 Page 20 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 company brings up several questions regarding the use of such technology. It asks, "Does the technology default to preventing the firearm from functioning at a time the owner needs it to save his or her life? Alternatively, does it default to allowing the firearm to be fired, thereby creating the potential situation where a loaded firearm is then accessible to an unauthorized user, such as a child, because the owner relied upon the technology that has failed?" The company argues that these questions raise product liability concerns for firearm manufacturers. The company states that it does not invest in R&D in this area because it is a manufacturing company, and not a technology company. It believes it does not have the necessary knowledge and expertise. On its Investor Overview webpage, the company also provides information on safety initiatives it supports though the NSSF, such as the "FixNICS" program to improve reporting to the National Instant Criminal Background Check System and "Project ChildSafe," which promotes firearms safety and education and helps distribute gun locks through local law enforcement agencies. The company also participates in an initiative called Operation Secure Store through the NSSF, which collaborates with the ATF to combat burglaries of federal firearms licensees. On this webpage the company provides an NSSF Fact Sheet on Authorized User Recognition (Smart Gun) Technology which highlights the same points the company makes regarding smart guns in its response to BlackRock's letter discussed above. American Outdoor Brands Form 10-K In its most recent Form 10-K, under Risk Factors, the company states that there could be possible changes to existing legislation relating to the regulation of firearms, or the enactment of new legislation that seeks to "restrict the makeup of a firearm, including limitations on magazine capacity; mandate the use of certain technologies in a firearm; remove existing legal defenses in lawsuits; or ban the sale and, in some cases, the ownership of various types of firearms and accessories" as a risk factor. The company says that if such restrictions occur, it could be "difficult, expensive, or even impossible to comply with them, impeding new product development and distribution of existing products." As a result, the company says that such restrictions could have a material adverse effect on its business, operations and financial condition. It also states that the company is currently involved in several lawsuits, including "a lawsuit involving a municipality and several product liability lawsuits," and notes that, "an unfavorable outcome or prolonged litigation could harm [its] business." The company states that its products expose it to "potential product liability, warranty liability, and personal injury claims, as well as litigation relating to the use or misuse of [its] products." The company states that liability insurance is expensive and at times may be difficult or impossible to obtain. It says that if the company "sustains significant losses or makes significant insurance claims, our ability to obtain future insurance coverage at commercially reasonable rates could be materially adversely affected." CORPORATE EARNINGS CALL In the company's most recent earnings call, P. James Debney, American Outdoor Brands Corporation President and CEO, asserts that the report requested by proponents of this proposal is not feasible, and will do nothing to make communities safer. He argues that the proposal appears to be an effort by the proponents to further their anti-gun agenda versus addressing the problem of keeping communities safe. He asserts that the proponents are "misusing the proxy process" to advance their own political agenda, and "to disrupt the lawful sale of [the company's] products and destroy stockholder value." He states that the company believes in the second amendment rights of Americans, and that "the issues relating to those rights should be debated and decided in our legislatures, not anyone’s Annual Meeting of Stockholders." PROXY MEMO The proponents have issued a proxy memo in support of the proposal. They argue that gun manufacturers are under increased scrutiny given the recent series of mass shootings, which could negatively impact their business if they do not take meaningful action to mitigate risks. The proponents state that the company's failure to report on its monitoring of violent incidents associated with its products "presents human rights risks that will threaten its social license to operate and long-term viability." They say that they view monitoring as a core component of good Publication Date: 7 September 2018 Page 21 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 corporate governance, and that risk assessment and management are essential responsibilities of the board. The proponents believe that "aggregated information from gun manufacturers could inform focused strategies to prevent violence associated with firearms." Further, the proponents believe that given regulatory and reputational risks and growing public demand for safer guns, "the development of safer firearms may be critical to ensuring the long-term sustainability of the business and further, present a leadership and growth opportunity for [the company]." The proponents cite a recent American Journal of Public Health report that has found that "59% of Americans and 43% of gun owners were willing to purchase a childproof gun." They state that a market for childproof guns exist, and they believe that "strategic and revenue opportunities outweigh any engineering or investment issues the company might face in being one of the first manufacturers to bring a smart, less deadly gun to market." The proponents also say that aside from the business case, there is a "moral imperative" to research gun safety innovations if there is the potential to save lives. CONCLUSION The proponents request that the company report on efforts underway to research or produce safer guns and evidence of its monitoring of violent events associated with its products. The company discloses information on several initiatives it has through the NSSF regarding promoting the legal and safe use of firearms, such as FixNICS and Project ChildSafe, and it states that it provides information to the ATF to help trace firearms used in crimes. However, the company does not conduct any research into so-called "smart guns," or disclose any monitoring of violent events in which the company's products are used. Due to the nature of its business, the company faces regulatory, market and legal risks, oversight of which is the responsibility of its Board of Directors. 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. Moreover, monitoring by the board of violent activity associated with the company's products and of public perceptions of the company's stated positions on gun laws and policies could help mitigate potential damage to the company's reputation among lawabiding gun owners and other members of the public. Although there is a risk that being the first company to market a smart gun or taking a stance in favor of further regulations could lead to a backlash among a segment of American Outdoor Brands' customer base, the proposal does not go so far as to call for the company to produce smart guns or other specific products; nor does it call for the company to endorse regulations. Rather, the proposal seeks concrete evidence that the board is properly assessing risks to the company's long-term viability. Therefore, this proposal warrants shareholder support. Publication Date: 7 September 2018 Page 22 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 Equity Ownership Profile Type Common Stock Votes per share 1.00 Ownership - Common Stock BlackRock Fund Advisors The Vanguard Group, Inc. Invesco Advisers, Inc. Dimensional Fund Advisors LP Millennium Management LLC Credit Suisse Securities (USA) LLC (Broker) SSgA Funds Management, Inc. Two Sigma Investments LP Polar Asset Management Partners, Inc. Point72 Asset Management LP F&C Asset Managers Ltd. Northern Trust Investments, Inc. Cooper Creek Partners Management LLC Charles Schwab Investment Management, Inc. Davidson Kempner Capital Management LP DEBNEY P JAMES Geode Capital Management LLC Weiss Multi-Strategy Advisers LLC BNP Paribas Arbitrage SNC Morgan Stanley Smith Barney LLC (Private Banking) Number of Shares 6,497,340 4,467,493 2,472,094 2,444,518 1,350,054 1,206,478 1,015,680 930,522 885,828 805,600 768,131 650,930 616,690 592,568 561,967 538,634 536,483 479,129 451,318 421,511 Issued 54,384,399 % of Class 11.95 8.22 4.55 4.50 2.48 2.22 1.87 1.71 1.63 1.48 1.41 1.20 1.13 1.09 1.03 0.99 0.99 0.88 0.83 0.78 © 2018 Factset Research Systems, Inc. All Rights Reserved. As of: June 30, 2018 Additional Information Meeting Location Meeting Time Shareholder Proposal Deadline Solicitor Security IDs Virtual-Only Meeting: www.virtualshareholdermeeting.com/AOBC2018 12:00 p.m. EDT April 19, 2019 Morrow Sodali LLC. 02874P103(CUSIP), 831756101(CUSIP) Publication Date: 7 September 2018 Page 23 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894 Report generated by subodh.mishra@issgovernance.com. Unauthorized distribution of this report is prohibited. American Outdoor Brands Corp. (AOBC) POLICY: United States Meeting Date: 25 September 2018 Meeting ID: 1261086 ISS’ experienced research team provides comprehensive proxy analyses and complete vote recommendations for approximately 40,000 meetings annually in around 117 markets worldwide. With a team of more than 370 research and/or data professionals, fluent in 25 languages, ISS covers every holding within a client’s portfolio in both developed and emerging markets. Our Research Analysts are located in financial centers worldwide, offering local insight and global breadth. Research office locations include Berlin, Brussels, London, Manila, Paris, San Francisco, Sydney, Singapore, Tokyo, Toronto, and Rockville, Maryland. ISS has long been committed to engagement and transparency. There are several long-established channels for engaging with ISS, outlined at http://www.issgovernance.com/contact/faqs-engagement-on-proxy-research/. In addition to these long-established channels, investors and issuers and other market constituents can submit comments, concerns and feedback to the ISS Feedback Review Board through www.issgovernance.com/frb. The issuer that is the subject of this analysis may have purchased self-assessment tools and publications from ISS Corporate Solutions, Inc. (formerly known as ISS Corporate Services, Inc. and referred to as "ICS"), a wholly-owned subsidiary of ISS, or ICS may have provided advisory or analytical services to the issuer in connection with the proxies described in this report. These tools and services may have utilized preliminary peer groups generated by ISS’ institutional research group. No employee of ICS played a role in the preparation of this report. If you are an ISS institutional client, you may inquire about any issuer's use of products and services from ICS by emailing disclosure@issgovernance.com. This proxy analysis and vote recommendation has not been submitted to, nor received approval from, the United States Securities and Exchange Commission or any other regulatory body. While ISS exercised due care in compiling this analysis, it makes no warranty, express or implied, regarding the accuracy, completeness or usefulness of this information and assumes no liability with respect to the consequences of relying on this information for investment or other purposes. In particular, the research and voting recommendations provided are not intended to constitute an offer, solicitation or advice to buy or sell securities nor are they intended to solicit votes or proxies. ISS is an independent company owned by entities affiliated with Genstar Capital ("Genstar"). ISS and Genstar have established policies and procedures to restrict the involvement of Genstar and any of Genstar’s employees in the content of ISS' analyses. Neither Genstar nor their employees are informed of the contents of any of ISS' analyses or recommendations prior to their publication or dissemination. The issuer that is the subject of this proxy analysis may be a client of ISS or ICS, or the parent of, or affiliated with, a client of ISS or ICS. One or more of the proponents of a shareholder proposal at an upcoming meeting may be a client of ISS or ICS, or the parent of, or affiliated with, a client of ISS or ICS. None of the sponsors of any shareholder proposal(s) played a role in preparing this report. ISS may in some circumstances afford issuers, whether or not they are clients of ICS, the right to review draft research analyses so that factual inaccuracies may be corrected before the report and recommendations are finalized. Control of research analyses and voting recommendations remains, at all times, with ISS. ISS makes its proxy voting policy formation process and summary proxy voting policies readily available to issuers, investors and others on its public website: http://www.issgovernance.com/policy. Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. Publication Date: 7 September 2018 Page 24 Copyright © 2018 Institutional Shareholder Services Inc. All Rights Reserved. This proxy analysis and the information herein may not be reproduced or disseminated in whole or in part without prior written permission from ISS. 167894