The chief executive and former chief financial officer of Greenwood Village-based Red Robin Gourmet Burgers Inc. have stepped down following an investigation into travel and entertainment expenses, the company said Thursday.
Red Robin, which operates 275 restaurants, simultaneously named a new chief, Dennis B. Mullen, and also warned that its third-quarter and full-year profit may fall short of analysts’ expectations. Shares of the restaurant chain fell 16 percent on the news.
CEO Michael Snyder left the company following a probe into his use of chartered aircraft, travel and entertainment expenses, according to a company statement. His departure is being treated as a retirement. Senior vice president James McClos key, who until recently served as CFO, resigned.
Dwayne Chambers, vice president of marketing for Red Robin, declined to provide a specific reason for McCloskey’s departure. He also declined to comment beyond the company’s statement.
Red Robin’s board convened an investigation into Snyder’s spending after identifying expenses that it said were inconsistent with company policies or lacked sufficient documentation.
The company has notified the U.S. Securities and Exchange Commission of the investigation and said Snyder has agreed to reimburse the company for the expenses. The company did not specify the amount that would be reimbursed.
Following Snyder’s departure, Red Robin named Mullen, a board member since 2002 and a trustee at Janus Capital Group Inc., as chairman and CEO.
It also appointed Eric Houseman as president and chief operating officer and Todd Brighton as senior vice president and chief development officer. Katherine Scherping replaced McCloskey as CFO in June.
The company will take a charge of $1.8 million, or 11 cents a share, for stock-option payments to Snyder and McCloskey. Red Robin shares fell $9.89 to $49.90 in after-hours trading on Nasdaq. The announcement was made after the market closed. The stock rose 46 cents to $59.79 earlier in the day.
The company is forecasting earnings of 28 cents to 30 cents a share in the third quarter ending Oct. 2. Profit was expected to be 49 cents, the average estimate of 12 analysts surveyed by Thomson Financial. Red Robin said full-year earnings would be $1.64 to $1.67 a share, missing the average estimate of $1.79 by 12 analysts in a Thomson Financial survey.
Bloomberg News contributed to this report.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
