Red Robin Gourmet Burgers Inc. chief executive Michael Snyder isn’t the first high-ranking business leader to become entangled in controversy surrounding aircraft use and spending accounts.
Some of the biggest business scandals in recent years have involved – at least to some degree – personal spending of company funds by top executives.
“This sort of thing happens in companies that have very lax policies on corporate spending, and that could mean they are lax in other areas as well,” said Dan Sweeney, a founder of the Center for Corporate Change, a Colorado-based group of business leaders and academicians who study the causes of unethical behavior.
Snyder’s surprise departure from Red Robin followed an internal investigation determining his aircraft use and spending was “inconsistent with company policies or that lacked sufficient documentation.”
To reimburse the Greenwood Village- based hamburger restaurant chain, Snyder agreed to pay an undisclosed amount.
Aircraft use, in particular, has been at the center of other recent scandals:
Adelphia founder John Rigas and his two sons used the company’s three jets as their family taxi service, the government contended in its case against the three men.
In one case, when the Christmas tree the family flew to a niece was deemed unsuitable, it was picked up by a corporate jet and replaced with another.
Tyco chief executive Dennis Koz lowski allegedly tried to curry favor with an analyst by allowing him to travel on a company jet.
Enron executives used the company’s corporate fleet to jet off on lavish shopping sprees and international vacations.
Company executives also used company and chartered planes for travel during golf’s Masters Tournament.
“The company’s hangars and planes became a high-altitude playground for the company’s big shots,” author Robert Bryce wrote in “Pipe Dreams: Greed, Ego, and the Death of Enron.”
A statement issued by Red Robin indicated that Snyder’s travel was by chartered planes rather than corporate jets. A company spokesman Friday declined to elaborate on the expenses or what part of the company’s policy they violated.
In addition to Snyder – whose departure was called a retirement by the company – Red Robin senior vice president James McCloskey also resigned. McCloskey had served as the company’s chief financial officer until June.
Sweeney wasn’t familiar with the shake-up at Red Robin but said corporate expense accounts can be easily abused if the company isn’t keeping a close watch on things.
“If a company has lax policies and lax reporting, then it’s just too easy to take advantage of it. It’s a nice perk to take advantage of a corporate jet rather than go to the airport and wait in line to be stuck in seat 18F,” he said.
On Friday – the first trading day after the announcement of the management changes and a warning that the company may miss analysts’ profit expectations – Red Robin shares slumped $14.24 a share to $45.55, shaving off nearly a quarter of the company’s market value.
Shareholders traded 9.9 million shares Friday, or 42 times the average daily trading volume.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
