GREENWOOD VILLAGE Colo. Red Robin Gourmet Burgers Inc. is looking for a new chief executive to replace Dennis Mullen under a deal struck with activist investors, according to a securities filing by the restaurant company on Friday.
The deal with Clinton Group Inc. and Spotlight Advisors LLC, who together hold about 7.8 percent of Red Robin common stock, included an agreement by Red Robin’s board of directors to create a committee “responsible for identifying, interviewing, negotiating with and recommending for hire a new chief executive officer.” Shareholders will be updated if a new CEO isn’t found by the end of 2010.
Red Robin, which operates 366 casual-dining restaurants and franchises another 133 restaurants, ended 2009 with a 3-percent decline in revenue to $841 million, reflecting the opening of 20 new restaurants as well as a same-store sales drop of 11.1 percent at corporate stores. Its operating profit fell 13.6 percent and the company’s net income fell 35 percent to $17.6 million, or $1.14 per share.
As part of the agreement with investors, Red Robin also agreed to add three executives to its board of directors.
Pattye Moore, the recently appointed independent board chair for Red Robin, said the addition of three members would help enhance governance and aid the company’s long-term strategy.
“This succession process is a continuation of Red Robin’s ongoing succession planning,” Moore said in a statement. “While we have formed a succession committee, the process is the responsibility of the entire board and will be done in a thoughtful and timely manner. This has been an ongoing process, and Dennis Mullen is under contract through December 2012, so we look forward to a seamless transition when we find a great candidate.”
The executives set to be added to the board include Robert Aiken, Lloyd Hill and Stuart Oran.
Aiken is the former president and chief executive of distributor U.S. Foodservice. Prior to joining U.S. Foodservice, where he was named chief executive in 2007, he had been an executive at several food processing and distribution companies.
Hill was chief executive and board chairman of Applebee’s International Inc. at the time of his retirement in September 2006. Hill joined the casual-dining company in 1994 and helped grow the system into the world’s largest casual-dining chain, with nearly 1,900 restaurants in 49 states and 17 countries. In 2005, Hill was named Operator of the Year by his peers at the Multi-Unit Foodservice Operators conference, presented by Nation’s Restaurant News.
Oran, managing member of Roxbury Capital Group LLC and co-founder of Bond Street Holdings LLC, has served on the boards of many companies, including Wendy’s International Inc. During his board tenure at Wendy’s, Oran was a member of the Strategic Planning Committee, responsible for developing strategy, reinvigorating the brand and refining the company’s marketing focus.
Red Robin will propose that shareholders approve a majority voting standard for uncontested director elections at its 2010 annual meeting. The board of directors has approved an amendment to Red Robin’s equity incentive plan to prohibit option repricings and option cash tender offers without shareholder approval.
“We appreciate the board’s swift and thoughtful response to our concerns on behalf of all shareholders,” Gregory P. Taxin, managing member of Spotlight said in a statement. “We believe the changes [Red Robin] is announcing É lay the foundation for future success and growth and for the creation of significant shareholder value.”
Contact Mark Brandau at [email protected].
