SEC opens probe of ex-CEO of Red Robin

Inquiry focusing on travel, entertainment expenses

Rocky Mountain News

Friday, February 3, 2006

Red Robin Gourmet Burgers Inc. said Thursday that the U.S. Securities and Exchange Commission has opened a formal investigation into its ex-chief executive's travel and entertainment expenses.

Shares in the Greenwood Village-based restaurant chain fell as much as 9.8 percent after the close. The stock has struggled since reaching a 52-week high of $62.91.

The SEC's inquiry follows a previously announced internal probe into the use of chartered aircraft, travel and entertainment expenses by former CEO Michael Snyder, the company said in a statement Thursday. Red Robin notified the SEC of its internal investigation after it was completed last August.

Some of Snyder's expenses lacked documentation or violated company policy, Red Robin has said. In August, Snyder resigned and paid $1.25 million in reimbursement after the board revealed the results of its internal investigation.

News of the investigation comes less than a month after the company announced that it would miss its fourth-quarter earnings estimate by 20 percent and that it expects sales growth to be lower than previously announced, news that also sent shares downward.

Red Robin said Thursday that it has cooperated with the SEC and intends to continue answering the agency's questions under the formal investigation.

Separately, Red Robin said it's the subject of a class-action lawsuit in California related to an alleged failure to comply with California wage and hour regulations. The company said it has "meritorious defenses" against the allegations and intends to "vigorously" defend itself.

The company this month said it will open its 300th restaurant.