June 6, 2007
Former Red Robin CEO Settles SEC Case over Improper Expenses
Michael J. Snyder, former CEO of Red Robin Gourmet Burgers, Inc., settled an SEC enforcement action over his receiving reimbursements from the company for personal travel, entertainment, and meal expenses. According to the SEC Litigation Release (here):
The Commission's complaint alleges that, during 2002, 2003 and 2004, Snyder incurred personal travel expenses of roughly $1.2 million for charter jet travel, and hotel and dinner expenses. The Complaint further alleges that Snyder submitted expense reports and invoices to Red Robin for payment of these personal expenses, misrepresenting that a business purpose existed for the charter jet trips and hotel and dinner expenses, failing to report the presence of personal guests on the trips, and failing to accurately report the destinations of the charter flights.
According to Red Robin's 2005 proxy statement (here), Snyder's compensation for those years was approximately $700,000, $955,000, and $1,060,000, so his personal expenses of $1.2 million were a significant portion of his overall compensation. Snyder settled the case by agreeing to a director and officer bar and will pay a $250,000 civil penalty. Snyder retired from Red Robin in August 2005, and the company's 8-K (here) filed regarding his resignation stated that "Mr. Snyder will reimburse the Company in full for certain expenses determined to be inconsistent with Company policies or lacking sufficient documentation." It's not clear where he incurred the meal expenses, and it seems a bit odd that the CEO of a restaurant chain would run up a tab at other eateries. (ph)
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