UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.              )

 

 

RED ROBIN GOURMET BURGERS, INC.
6312 South Fiddler’s Green Circle, Suite 200N
Greenwood Village, CO 80111
(303) 846-6000

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 31, 2007

To our Stockholders:

The annual meeting of stockholders of Red Robin Gourmet Burgers, Inc. will be held at 9:00 a.m. MDT, on Thursday, May 31, 2007, at our corporate headquarters, located at 6312 South Fiddler’s Green Circle, Suite 200N, Greenwood Village, Colorado 80111, for the following purposes:

1)              To elect two (2) Class II directors for three-year terms;

2)              To adopt the Company’s 2007 Performance Incentive Plan;

3)              To ratify the appointment of Deloitte & Touche LLP as the Company’s independent accountants for the fiscal year ending December 30, 2007; and

4)              To transact such other business as may properly come before the meeting.

Stockholders of record at the close of business on April 12, 2007 are entitled to notice of, and to vote at, the annual meeting or any postponement or adjournment thereof.

Your attention is directed to the accompanying proxy statement, which includes information about the matters to be considered at the annual meeting and certain other important information. We encourage you to carefully review the entire proxy statement.

We cordially invite you to attend the annual meeting. Whether or not you plan to attend, please sign and return the enclosed proxy as promptly as possible in the envelope enclosed for your convenience. Should you receive more than one proxy because your shares are registered in different names and addresses, each proxy should be signed and returned to assure that all your shares will be voted. Mailing your completed proxy card will not prevent you from voting in person at the meeting if you wish to do so.

Accompanying this notice and proxy statement is a copy of our 2006 Annual Report on Form 10-K.

By Order of the Board of Directors,

Dennis B. Mullen
Chairman and Chief Executive Officer

Greenwood Village, Colorado
April 26, 2007

TABLE OF CONTENTS

 

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RED ROBIN GOURMET BURGERS, INC.
6312 South Fiddler’s Green Circle, Suite 200N
Greenwood Village, CO 80111
(303) 846-6000

PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 31, 2007

The board of directors of Red Robin Gourmet Burgers, Inc. (the “Company”) is soliciting the enclosed proxy for use at our annual meeting of stockholders to be held on Thursday, May 31, 2007, beginning at 9:00 a.m. MDT, at our corporate headquarters, located at 6312 South Fiddler’s Green Circle, Suite 200N, Greenwood Village, Colorado 80111, and at any time and date to which the annual meeting may be properly adjourned or postponed. This Proxy Statement and the accompanying Notice of Annual Meeting of Stockholders describe the purpose of the annual meeting. Distribution of these proxy solicitation materials is scheduled to begin on or about April 26, 2007.

ABOUT THE MEETING

What is the purpose of the annual meeting?

At our annual meeting, stockholders will vote on the following three items of business:

1.                Election of two (2) Class II directors for three-year terms;

2.                Adoption of the Company’s 2007 Performance Incentive Plan;

3.                Ratification of the appointment of Deloitte & Touche LLP as our independent auditors for the fiscal year ending December 30, 2007.

You will also vote on such other matters as may properly come before the meeting or any postponement or adjournment thereof.

What are the Board’s recommendations?

Our board of directors recommends that you vote:

·       FOR election of each of the two (2) nominated directors (see Proposal 1);

·       FOR adoption of the Company’s 2007 Performance Incentive Plan (see Proposal 2); and

·       FOR ratification of the appointment of Deloitte & Touche LLP as our independent auditors for the fiscal year ending December 30, 2007 (see Proposal 3).

With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the board of directors or, if no recommendation is given, in their own discretion.

What shares are entitled to vote?

As of April 12, 2007, the record date for the meeting, we had 16,660,709 shares of common stock outstanding. Each share of our common stock outstanding on the record date is entitled to one vote on all items being voted on at the meeting. You can vote all the shares that you owned on the record date. These shares include: (1) shares held directly in your name as the stockholder of record, and (2) shares held for you as the beneficial owner through a stockbroker, bank or other nominee.

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What is the difference between holding shares as a stockholder of record and as a beneficial owner?

Most stockholders hold their shares through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.

Stockholder of Record.   If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered, with respect to those shares, the stockholder of record, and we are sending these proxy materials directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to the named proxy holder or to vote in person at the meeting. We have enclosed a proxy card for you to use.

Beneficial Owner.   If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you together with a voting instruction card. As the beneficial owner, you have the right to direct your broker, trustee or nominee how to vote and are also invited to attend the annual meeting.

Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a “legal proxy” from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting. Your broker, trustee or nominee has enclosed or provided voting instructions for you to use in directing the broker, trustee or nominee how to vote your shares.

Who may attend the meeting?

All stockholders as of the record date, or their duly appointed proxies, may attend the meeting. If you are not a stockholder of record but hold shares through a broker or nominee (i.e., in street name), you should provide proof of beneficial ownership on the record date, such as your most recent account statement prior to April 12, 2007, a copy of the voting instruction card provided by your broker, trustee or nominee, or other similar evidence of ownership. Registration and seating will begin at 8:30 a.m. Cameras, recording devices and other electronic devices will not be permitted at the meeting.

How may I vote my shares in person at the annual meeting?

Shares held in your name as the stockholder of record may be voted in person at the annual meeting. Shares held beneficially in street name may be voted in person only if you obtain a legal proxy from the broker, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the annual meeting, we recommend that you also submit your proxy or voting instructions prior to the meeting as described below so that your vote will be counted if you later decide not to attend the meeting.

How may I vote my shares without attending the annual meeting?

Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the meeting. If you are a stockholder of record, you may vote by submitting a proxy. If you hold shares beneficially in street name, you may vote by submitting voting instructions to your broker, trustee or nominee. For directions on how to vote, please refer to the instructions included on your proxy card or, for shares held beneficially in street name, the voting instruction card provided by your broker, trustee or nominee.

May I change my vote or revoke my proxy after I return my proxy card?

Yes. Even after you have submitted your proxy, you may change the votes you cast or revoke your proxy at any time before the votes are cast at the meeting by: (1) delivering a written notice of your

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revocation to our corporate secretary at our principal executive office, 6312 South Fiddler’s Green Circle, Suite 200N, Greenwood Village, Colorado 80111; or (2) executing and delivering a later dated proxy. In addition, the powers of the proxy holders will be suspended if you attend the meeting in person and so request, although attendance at the meeting will not by itself revoke a previously granted proxy.

What constitutes a quorum?

The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of our common stock outstanding as of the record date will constitute a quorum. There must be a quorum for any action to be taken at the meeting (other than an adjournment or postponement of the meeting). If you submit a properly executed proxy card, even if you abstain from voting, then your shares will be counted for purposes of determining the presence of a quorum. If a broker indicates on a proxy that it lacks discretionary authority as to certain shares to vote on a particular matter, commonly referred to as “broker non-votes,” those shares will still be counted for purposes of determining the presence of a quorum at the meeting.

What vote is required to approve each item?

Election of Directors.   In the election of directors, the two candidates will be elected by a plurality of affirmative votes.

Adoption of 2007 Performance Incentive Plan.   The affirmative vote of the majority of the outstanding shares of common stock present in person or by proxy will be required for approval.

Ratification of Deloitte & Touche LLP.   The affirmative vote of the majority of the outstanding shares of common stock present in person or by proxy will be required for approval.

A vote withheld for a nominee in the election of directors will have the same effect as a vote against the nominee. For purposes of determining whether any of the other proposals has received the requisite vote, where a stockholder abstains from voting, it will have the same effect as a vote against the proposal.

If you hold your shares beneficially in street name and do not provide your broker or nominee with voting instructions, your shares may constitute “broker non-votes.” Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owners and instructions are not given. Absent authority or specific instruction from the beneficial holder, shares held by brokerage firms and nominees will not be voted on proposal 2. In tabulating the voting result for any of the proposals expected to be presented at the meeting, shares that constitute broker non-votes will not be included in the vote totals, and therefore, will have no effect on the outcome of the vote of any of the proposals.

What does it mean if I receive more than one proxy card?

If you receive more than one proxy card, it means that you hold shares registered in more than one name or brokerage account. You should sign and return all proxies for each proxy card that you receive in order to ensure that all of your shares are voted.

How may I vote on each of the proposals?

In the election of directors, you may vote FOR any or all of the two nominees, or your vote may be WITHHELD with respect to any or all of the nominees. For the other matters, you may vote FOR or AGAINST each proposal, or you may indicate that you wish to ABSTAIN from voting on a proposal.

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Who will count the proxy votes?

Votes will be counted by our transfer agent, American Stock Transfer & Trust Company, which has been appointed to act as the inspector of election for the annual meeting.

How will voting on any other business be conducted?

We do not expect any matters to be presented for a vote at the meeting other than the matters described in this proxy statement. If you grant a proxy, either of the officers named as proxy holder, Dennis B. Mullen or Katherine L. Scherping or their nominee(s) or substitute(s), will have the discretion to vote your shares on any additional matters that are properly presented for a vote at the meeting. If a nominee is not available as a candidate for Class II director, the person named as the proxy holder will vote your proxy for another candidate nominated by our board of directors.

What rights of appraisal or similar rights of dissenters do I have with respect to any matter to be acted upon at the meeting?

No action is proposed herein for which the laws of the state of Delaware or our bylaws provide a right of our stockholders to dissent and obtain appraisal of or payment for such stockholders’ common stock.

How do I submit a stockholder proposal for consideration at next year’s annual meeting?

Proposals for Inclusion in Proxy Statement.   For your proposal or director nomination to be considered for inclusion in our proxy statement for next year’s meeting, your written proposal must be received by our corporate secretary at our principal executive office no later than December 22, 2007. If we change the date of next year’s meeting by more than 30 days from the date of this year’s meeting, then the deadline is a reasonable time before we begin to print and mail our proxy materials. You should also be aware that your proposal must comply with Securities and Exchange Commission (“SEC”) regulations regarding inclusion of stockholder proposals in company-sponsored proxy materials.

Proposals to be Addressed at Meeting (but not included in proxy statement).   In order for you to raise a proposal (including director nominations) from the floor during next year’s meeting, our corporate secretary must receive a written notice of the proposal no later than March 6, 2008 and no earlier than February 5, 2008, and it must contain the additional information required by our bylaws. All proposals received after March 6, 2008 will be considered untimely. You may obtain a complete copy of our bylaws by submitting a written request to our corporate secretary at our principal executive office. If we change the date of next year’s meeting by more than 30 days from the date contemplated at this year’s meeting, in order for the proposal to be timely, we must receive your written proposal at least 90 days before the date of next year’s meeting or no more than 10 days following the day on which the meeting date is publicly announced.

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STOCK OWNERSHIP OF CERTAIN PERSONS

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as indicated by footnote, and except for community property laws where applicable, the persons named in the tables below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. The percentage of beneficial ownership for each table is based on 16,660,709 shares of common stock outstanding as of April 12, 2007.

The following table sets forth information regarding beneficial owners of more than 5% of our common stock as of April 12, 2007 except for those named executive officers and directors who hold more than 5% of our common stock who are included in the subsequent table. All information is taken from or based upon ownership filings made by such persons with the SEC or upon information provided by such persons to the Company.

Stock Ownership of Certain Beneficial Owners

(1)          This disclosure is based on a Schedule 13G filed with the SEC on January 12, 2007. The address of this reporting person is 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606.

(2)          This disclosure is based on an amendment to Schedule 13G filed with the SEC on February 14, 2007. The Schedule 13G/A was filed on behalf of FMR Corp. and Edward C. Johnson 3d, Chairman of FMR Corp, with an address of 82 Devonshire Street, Boston, Massachusetts 02109. The Schedule 13G/A discloses that they had sole power to vote or direct the vote of 138,408 shares, and the sole power to dispose or to direct the disposition of 2,414,267 shares. These shares are beneficially owned through Fidelity Management and Research Company (2,275,859 shares, or 13.7%), Pyramis Global Advisors, LLC and Pyramis Global Advisors Trust Company, wholly owned subsidiaries of FMR Corp., and Fidelity International Limited, a partnership controlled by the Johnson family.

(3)          This disclosure is based on an amendment to Schedule 13G filed with the SEC on February 14, 2007. The address of this reporting person is 100 E. Pratt Street, Baltimore, Maryland 21202. At the time of filing, the reporting person reported being a registered investment advisor that has sole voting power over 157,500 shares and sole dispositive power over 1,576,750 shares.

(4)          This disclosure is based on a Schedule 13G filed with the SEC on February 14, 2007. The Schedule 13G was filed on behalf of Magnetar Financial LLC, Magnetar Capital Partners LP, Supernova Management LLC and Alec N. Litowitz. The address of these reporting persons is 1603 Orrington Avenue, 13th Floor, Evanston, Illinois 60201. At the time of filing, Magnetar Financial LLC reported being a registered investment adviser that has shared voting and dispositive power over 1,244,049 shares and each of the other parties reported having shared voting and dispositive power over 1,316,439 shares.

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(5)          This disclosure is based on a Schedule 13G filed with the SEC on February 8, 2007. The address of this reporting person is 500 Boylston Street, Boston, Massachusetts 02116.

(6)          This disclosure is based on an amendment to Schedule 13G filed with the SEC on February 12, 2007. The address of the reporting person is 1301 5th Avenue, Suite 3525, Seattle, Washington 98101.

(7)          This disclosure is based on a Schedule 13G filed by with the SEC on February 14, 2007. The address of the reporting person is 75 State Street, Boston Massachusetts 02109. At the time of filing, the reporting person reported being a registered investment advisor that has shared voting power over 882,400 shares and shared dispositive power over 991,200 shares.

Stock Ownership of Directors and Management

The following table contains information about the beneficial ownership (unless otherwise indicated) of our common stock as of April 12, 2007 by:

·       each of our directors, including the board’s nominees for re-election;

·       each executive officer named in the Summary Compensation Table; and

·       all directors and current executive officers as a group.

*                    Represents beneficial ownership of less than one percent (1.0%) of the outstanding shares of our common stock.

       (1) If a stockholder holds options or other securities that are exercisable or otherwise convertible into our common stock within 60 days of April 12, 2007, we treat the common stock underlying those securities as owned by that stockholder, and as outstanding shares when we calculate the stockholder’s percentage ownership of our common stock. However, we do not consider that common stock to be outstanding when we calculate the percentage ownership of any other stockholder.

       (2) Includes 101,875 shares of common stock subject to options exercisable within 60 days of April 12, 2007 and 22,000 shares of restricted stock subject to forfeiture restrictions that will lapse on December 31, 2007.

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       (3) Includes 10,313 shares of common stock subject to options exercisable within 60 days of April 12, 2007 and 1,000 shares of common stock held by Ms. Scherping’s husband.

       (4) Consists of 67,144 shares of common stock subject to options exercisable within 60 days of April 12, 2007.

       (5) Includes 53,685 shares of common stock subject to options exercisable within 60 days of April 12, 2007.

       (6) Includes 40,833 shares of common stock subject to options exercisable within 60 days of April 12, 2007. This disclosure also includes 50,000 shares of common stock subject to a prepaid forward sales contract.

       (7) Consists of 95,996 shares of common stock held by Mr. Woods in joint tenancy with his wife, 3,448 shares of common stock held by Mr. Woods’ minor children and 45,833 shares of common stock subject to options exercisable within 60 days of April 12, 2007.

       (8) Consists of 21,000 shares of common stock subject to options exercisable within 60 days of April 12, 2007.

       (9) Consists of 15,000 shares of common stock held by Mr. Harvey in joint tenancy with his wife and 10,000 shares of common stock subject to options exercisable within 60 days of April 12, 2007.

(10) Consists of 2,000 shares of common stock held directly by Mr. Howell, 400 shares of common stock held in trusts for the benefit of Mr. Howell’s children and 9,375 shares of common stock subject to options exercisable within 60 days of April 12, 2007.

(11) Includes 15,000 shares of common stock subject to options exercisable within 60 days of April 12, 2007.

(12) Includes 9,375 shares of common stock subject to options exercisable within 60 days of April 12, 2007.

(13) Includes 15,000 shares of common stock subject to options exercisable within 60 days of April 12, 2007.

(14) Includes 404,746 shares of common stock subject to options exercisable within 60 days of April 12, 2007.

Equity Compensation Plan Information

We maintain five equity-based compensation plans—the 1996 Stock Plan, the 2000 Stock Plan, the 2002 Stock Plan, the 2004 Performance Incentive Plan and the Employee Stock Purchase Plan. Our stockholders have approved each of these plans.

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The following table sets forth for our equity compensation plans in the aggregate, the number of shares of our common stock subject to outstanding options and rights under these plans, the weighted-average exercise price of outstanding options, and the number of shares remaining available for future award grants under these plans as of December 31, 2006 (in thousands, except exercise price data):

(1)          This amount consists of the number of options then outstanding under each of the following Plans:

 

(2)          Of the aggregate number of shares that remained available for future issuance, 247,453 shares were available for issuance under the Employee Stock Purchase Plan and 798,136 shares were available for issuance under the 2004 Performance Incentive Plan. Any shares subject to options granted under the Employee Stock Purchase Plan, the 1996 Stock Plan, the 2000 Stock Plan or the 2002 Stock Plan that are not exercised before they expire or are terminated will become available for additional award grants under the 2004 Performance Incentive Plan unless the 2007 Performance Incentive Plan is approved by the stockholders whereby the 2004 Performance Incentive Plan will terminate. No new awards may be granted under the 1996 Stock Plan, the 2000 Stock Plan or the 2002 Stock Plan.

PROPOSAL 1
ELECTION OF DIRECTORS

General

Our board of directors currently consists of seven directors. Our amended and restated certificate of incorporation provides for three classes of directors with staggered three-year terms. Class I currently consists of three directors whose terms expire at our 2009 annual meeting; Class II currently consists of two directors whose terms expire at this annual meeting; and Class III currently consists of two directors whose terms expire at our 2008 annual meeting.

Our board of directors has nominated Edward T. Harvey, Jr. and Gary J. Singer to continue to serve as our Class II directors. If re-elected, Mr. Harvey and Mr. Singer will continue to serve in office until our annual meeting in 2010 and until their successors have been duly elected and qualified, or until the earlier of their death, resignation or retirement.

Mr. Harvey and Mr. Singer have each consented to be named as a nominee in this proxy statement, and we expect that Mr. Harvey and Mr. Singer will be able to serve if elected. Should Mr. Harvey and Mr. Singer become unable or unwilling to accept his nomination for election, our board of directors can

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name a substitute nominee and the persons named in the proxy card, or their nominees or substitutes, will vote your shares for such substitute nominee unless an instruction to the contrary is written on your proxy card.

Directors and Nominees

Below, you can find the principal occupation and other information about each of the Class II directors and each of the other directors whose term of office will continue after the meeting.

Nominees for Term Ending Upon the 2010 Annual Meeting of Stockholders—Class II Directors

Edward T. Harvey, Jr., 59, joined the Company as a director in May 2000 and was appointed Lead Director in August 2005. From April 1990 to December 2003, he was a partner with Quad-C, a private equity investment firm located in Charlottesville, Virginia. From 1975 to April 1990, Mr. Harvey held various positions at W. R. Grace & Co., principally in corporate development, acquisitions and planning.

Gary J. Singer, 54, joined the Company as a director in June 1993. Since June 1977, Mr. Singer has been associated with the law firm of O’Melveny & Myers LLP, Newport Beach, California and has been a partner in the firm since 1985. Mr. Singer was appointed chair of the Company’s nominating and governance committee in October 2005.

Continuing Directors for Term Ending Upon the 2008 Annual Meeting of Stockholders—Class III Directors

Benjamin D. Graebel, 51, joined the Company as a director in September 2002. Mr. Graebel also currently serves as Vice Chairman of the Graebel Companies, Inc., a privately held transportation and relocation provider located in Denver, Colorado. Mr. Graebel joined the Graebel Companies in June 1979, and prior to his appointment as the Vice Chairman in 2003, Mr. Graebel held a variety of management positions, including Regional Vice President, President of the Moving and Storage group, Chief Operating Officer and Chief Executive Officer.

Dennis B. Mullen, 63, was appointed chief executive officer and chairman of the Company in August 2005 and has served as a director of the Company since December 2002. Mr. Mullen currently serves as a trustee of the Janus Investment Fund (since 1971, chairman since 2004), Janus Aspen Series (since 1993, chairman since 2004), Janus Adviser Series (since 2000, chairman since 2004) and Janus Capital Funds Plc (since 2004). In addition, Mr. Mullen serves on the nominating and governance and audit committees and as chairman of the investment oversight committee of the Janus Funds. Mr. Mullen has more than 30 years experience as a corporate executive in the restaurant industry, and has served as chief executive officer for several restaurant chains, including Cork & Cleaver Restaurants of Denver, Colorado; Pedro Verde’s Mexican Restaurants, Inc., of Boulder, Colorado; Garcia’s Restaurants, Inc., of Phoenix, Arizona; and BCNW, a franchise of Boston Chicken, Inc., in Seattle, Washington. Mr. Mullen started his professional career at PricewaterhouseCoopers and also served as the chief financial officer for Lange Ski Boots.

Continuing Directors for Term Ending Upon the 2009 Annual Meeting of Stockholders—Class I Directors

J. Taylor Simonton, 62, joined the Company as a director in September 2005. Mr. Simonton spent 35 years at PricewaterhouseCoopers LLP, including 23 years as an audit partner in the firm’s Accounting and Business Advisory Services practice before retiring in 2001. Until February 2007, Mr. Simonton served on the Board of Directors of Fischer Imaging Corporation, a public company that designed, manufactured and marketed specialty medical imaging systems, and served as its audit committee chair. Mr. Simonton was appointed chair of the Company’s audit committee in October 2005.

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James T. Rothe, 63, joined the Company as a director in October 2004. Mr. Rothe has served since January 2004 as Managing Director and co-founder of Roaring Fork Capital Management, LLC, which is the General Partner of Roaring Fork Capital SBIC, LP with offices in Colorado Springs and Denver, Colorado and Dallas, Texas. Mr. Rothe is a Trustee since January 1997 of the Janus Funds based in Denver, Colorado. Mr. Rothe is a Professor Emeritus of the College of Business at the University of Colorado at Colorado Springs where he served as Professor 1986-2004 and Dean of the College 1986-1994. Mr. Rothe was appointed chair of the Company’s compensation committee in January 2005.

Richard J. Howell, 64, joined the Company as a director in September 2005. Mr. Howell was an audit partner with Arthur Andersen LLP for over 25 years before retiring in 2002. Since January 2004, Mr. Howell has been an adjunct professor of auditing at the Cox School of Business at Southern Methodist University, and he served in a similar capacity from August 2002 to December 2003 at the Neely School of Business, at Texas Christian University. Mr. Howell is a trustee of the LKCM Funds, a group of mutual funds managed by Luther King Capital Management.

Required Vote

The two persons receiving the highest number of “FOR” votes from stockholders in the election of directors at the annual meeting will be elected.

Recommendation of the Board of Directors

Our board of directors recommends that you vote FOR the re-election of Mr. Harvey and Mr. Singer as Class II directors on our board of directors.

CORPORATE GOVERNANCE

Board Membership and Director Independence

Our board of directors has determined that each of Benjamin D. Graebel, Richard J. Howell, Edward T. Harvey, Jr., James T. Rothe, J. Taylor Simonton and Gary J. Singer qualifies as an independent director under rules promulgated by the SEC and The NASDAQ® Stock Market listing standards. Edward T. Harvey, Jr. serves as our Lead Director. There are no family relationships among any of our executive officers, directors or nominees for directors.

During the fiscal year 2006, the board of directors held eight meetings and acted by written consent one time. Each of our current directors attended at least 75% of the aggregate total of meetings of the board of directors and committees on which he served. The independent directors of the Company meet quarterly throughout the year and as necessary or appropriate in executive sessions at which members of management are not present.

The board of directors strongly encourages each of the directors to attend the annual meeting of stockholders. All of our directors attended our 2006 annual meeting.

Stockholder Communications with the Board of Directors

You may communicate with any director, the entire board of directors, the independent directors or any committee by sending a letter to the director, the board of directors, or the committee addressed to: Board of Directors, 6312 South Fiddler’s Green Circle, Suite 200N, Greenwood Village, CO 80111, or by sending an e-mail to: Board@redrobin.com. The Company’s chief legal officer will review all communications, categorize them, and forward them to the appropriate board member. Messages pertaining to administrative matters, ordinary business matters, personal grievances, and similar issues will be forwarded to the appropriate member of management.

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With respect to issues arising under the Company’s Code of Ethics, you may also communicate directly with the chair of the audit committee or the compliance officer in the manner provided in the Company’s Problem Resolution Policy and Whistleblower Procedure. Both the Code of Ethics and the Problem Resolution Policy and Whistleblower Procedure may be found on the Company’s website at: www.redrobin.com.

Committees of the Board of Directors

Our board of directors has established an audit committee, a compensation committee and a nominating and governance committee. The full text of all of the charters of the board committees is available on the Company’s website at www.redrobin.com.

Audit Committee.   The audit committee is currently comprised of J. Taylor Simonton (chair), Edward T. Harvey, Jr., and Richard J. Howell, and operates pursuant to a written charter. The audit committee oversees and reviews the preparation and disclosure of the Company’s consolidated financial statements and the preparation and filing of periodic financial reports, which include the requisite certifications by the chief executive officer and chief financial officer. The audit committee is also responsible for selecting and retaining the independent auditors; approving the budget for fees to be paid to the independent auditors for audit services and for appropriate non-audit services; overseeing the relationship between the Company and the independent auditors and acting as the board of directors’ primary avenue of communication with them; and selecting, retaining and overseeing the internal audit function of the Company. The audit committee’s responsibilities also include other matters as set forth in its charter.

As of the date of this proxy statement, Mr. Simonton, Mr. Harvey and Mr. Howell are “independent” in conformance with The NASDAQ® Stock Market listing standards.

The board also has determined that each of Mr. Simonton, Mr. Harvey and Mr. Howell is an “audit committee financial expert” as defined by rules adopted by the SEC. A discussion of the role of the audit committee is provided under “Audit Committee Report.”

The audit committee met 12 times in fiscal year 2006 and took action by unanimous written consent once.

Compensation Committee.   The compensation committee is currently comprised of James T. Rothe (chair), Edward T. Harvey, Jr. and Gary J. Singer, and operates pursuant to a written charter. The board has determined that each of the members of the compensation committee qualifies as an independent director as defined under The NASDAQ® Stock Market listing standards. Functions performed by the compensation committee include: developing and recommending to the board of directors an annual performance evaluation of our chief executive officer and other executive officers; approving salary and short-term and long-term incentive compensation programs for all senior executives; and reviewing and adopting employee benefit plans.

The specific nature of the compensation committee’s responsibilities as they relate to executive officers is set forth under “Compensation Discussion and Analysis.”

The compensation committee met 13 times in fiscal year 2006 and took action by unanimous written consent once.

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Nominating and Governance Committee.   The nominating and governance committee is currently comprised of Gary J. Singer (chair), Benjamin D. Graebel and Richard J. Howell, and operates pursuant to a written charter. The board has determined that each of the members of the nominating and governance committee qualifies as an independent director as defined under The NASDAQ® Stock Market listing standards. The nominating and governance committee identifies, evaluates and recommends to the board of directors candidates for appointment or election to the board, as appropriate. The committee meets annually during the fourth quarter to determine whether to recommend to the board to include the nomination of incumbent directors with expiring terms in the proxy statement. The committee meets at other times as needed to consider candidates to fill any vacancies that may occur. At least once a year, the committee considers whether the number of directors is appropriate for the Company’s needs and recommends to the board any changes in the number of directors, and reviews the performance of the board.

A stockholder may submit the name of a director candidate for consideration by the nominating and governance committee by writing to: Nominating and Governance Committee, Red Robin Gourmet Burgers, Inc., 6312 South Fiddler’s Green Circle, Suite 200N, Greenwood Village, CO 80111. The stockholder must submit the following information in support of the candidate: (a) the name and address of the stockholder recommending the candidate; (b) a representation that the stockholder recommending the candidate is a stockholder of record of the Company’s stock or other verification that the person recommending the candidate is a beneficial owner of the Company’s stock; (c) a description of any arrangement or understanding between the stockholder and the candidate and any other person or persons regarding the stockholder’s submission of the candidate’s name for consideration, and identifying such person or persons by name, address and affiliation with the stockholder, the candidate, and the Company, if any; (d) such other information regarding the candidate as the Company would be required to include in a proxy statement filed pursuant to the proxy rules of the SEC if the board were to nominate the candidate for election as a director or if the board were to appoint the candidate as a director; (e) the consent of the candidate to be identified to the board for consideration and to be identified in the proxy; and (f) the consent of the candidate to serve as a director if elected. The committee may refuse to consider any candidate for whom the stockholder fails to provide the information mentioned above.

In evaluating a director candidate, the nominating and governance committee will consider the candidate’s independence, character, corporate governance skills and abilities, business experience, training and education, commitment to performing the duties of a director, and other skills, abilities or attributes that fill specific needs of the board or its committees. The committee will use the same criteria in evaluating candidates suggested by stockholders as for candidates suggested by other sources.

The nominating and governance committee recommends director candidates for nomination to the board. The board determines which candidates to nominate or appoint, as appropriate, after considering the recommendation of the committee.

The nominating and governance committee met four times in fiscal year 2006.

Certain Relationships and Related Transactions

Transactions with Related Persons

Robert J. Merullo, the Company’s former senior vice president and chief concept officer, owns 7.0% of Mach Robin, LLC (Mach Robin) and related entities, which operate Red Robin® restaurants under franchise agreements. In addition, the Company’s former chief executive officer and beneficial owner of more than 5% of the Company’s common stock, owned approximately 31% of Mach Robin and related entities, which he sold in December 2006. The Company recognized royalty income from Mach Robin in the amounts of $1.1 million during 2006. In addition, Red Robin Restaurants of Canada, Ltd (RRRC), an

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entity controlled by Mach Robin, operates Red Robin® restaurants in two Canadian provinces under franchise agreements. The Company recognized royalty income from RRRC of $1.2 million during 2006.

Certain legal costs have been advanced to certain directors and current and former executive officers under indemnification agreements in connection with the Company’s previously announced SEC investigation and related lawsuits.

Review, Approval or Ratification of Transactions with Related Persons

The board of directors has recognized that transactions between the Company and certain related persons present a heightened risk of conflicts of interest. In order to ensure that the Company acts in the best interest of its stockholders, the Board has delegated the review and approval of related party transactions to the audit committee. Any related party transaction required to be disclosed in accordance with applicable SEC regulations must be reviewed and approved by the audit committee. In reviewing a proposed transaction, the audit committee must (i) satisfy itself that it has been fully informed as to the related party’s relationship and interest and as to the material facts of the proposed transaction and (ii) consider all of the relevant facts and circumstances available to the committee. After its review, the audit committee will only approve or ratify transactions that are fair to the Company and not inconsistent with the best interests of the Company and its stockholders.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on a review of the copies of such reports furnished to us and representations that no other reports were required, during fiscal year 2006, all of our officers, directors and greater than ten percent beneficial owners timely complied with all Section 16(a) filing requirements.

COMPENSATION DISCUSSION AND ANALYSIS

The following Compensation Discussion and Analysis describes the material elements of compensation for the named executive officers identified in the Summary Compensation Table below. As more fully described below, the compensation committee of the board of directors determines and approves the total direct compensation programs for our executive officers, including the named executive officers. Our chief executive officer, Dennis B. Mullen, recommends to the compensation committee the base salary, annual bonus and long-term compensation levels for the other named executive officers. The day-to-day design and administration of the Company’s health and welfare benefit plans applicable to employees and executive officers on a non-discriminatory basis are implemented generally by management. The compensation committee or the entire board of directors remains responsible for significant changes to or adoption of new employee benefit plans.

As described in more detail below, the principal elements our executive compensation program include base salary, annual bonus, long-term incentives including stock option and other equity awards and the ability to receive compensation on a deferred basis. The compensation committee periodically reviews data about the compensation of executives in the restaurant industry. Based on this review, we believe that the elements of our executive compensation program are similar to those offered by our industry competitors.

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General Executive Compensation Philosophy

The primary objectives of our executive compensation program are to attract and retain the best possible executive talent, to link annual and long-term cash and stock incentives to achievement of measurable corporate, restaurant unit and individual performance objectives, and to align executives’ incentives with stockholder value creation. To achieve these objectives, we utilize plans with a mix of short-term and long-term compensation that (a) are comparable to or competitive with the market, (b) encourage, recognize and reward individual performance, and (c) tie a portion of compensation to long-term Company performance goals. Our executive compensation philosophy includes criteria designed to support flexibility in setting elements of compensation for each individual based on objective factors, such as market levels, and subjective factors, including individual experience, performance and job responsibilities. The total annual cash compensation opportunities for executive officers, including base salary and annual cash bonuses, are intended to create aggregate executive cash compensation between the median and 75th percentile for comparable public casual dining restaurants in the restaurant industry with upside opportunity based on excellent performance. An individual’s total annual cash compensation is assessed using the above-described factors, and equity incentives are used to provide an upside tied to longer-term growth in stockholder value. Our executive compensation philosophy will continue to be reviewed annually by the compensation committee.

Base salaries are targeted at a level that will attract and retain qualified executives and motivate performance. Annual cash bonus awards are designed to focus an executive’s efforts on annual corporate and personal goals and to provide rewards for achievement of such goals. All corporate office employees, including executives, support staff, and regional managerial operational positions, are eligible for annual bonus awards. We have separate bonus compensation plans for restaurant level general managers.

While our annual bonus opportunity is intended to encourage and reward executives based on achievement of Company and personal performance goals, we believe performance-based compensation also drives creation of stockholder value in both the short and long terms. In addition, equity incentive awards are designed and earned to reward Company and personal performance over a longer period.

Outside Advisor

The compensation committee has retained Frederic W. Cook & Co. (Cook) for several years as an outside advisor since the Company has been public. The Company annually uses Cook to review its executive compensation program and broad-based equity compensation practices and assist in ongoing development of our executive compensation philosophy. Cook assisted the board of directors and the compensation committee with developing a competitive peer group of publicly traded U.S.-based restaurant companies of generally similar revenue and market cap size to which to compare compensation programs, and performed analyses of competitive performance and compensation levels. Cook meets individually with the members of the compensation committee and senior management to learn about our business operations and strategy as a public company, key performance metrics and targets, and the markets in which we compete. Cook then develops guidelines for executive compensation programs which are used by the compensation committee in its compensation deliberations.

Cook  periodically updates the peer group, reviews the competitive market, and provides suggestions for refining the compensation program to reflect our ongoing business strategy. The peer group restaurants selected compete with us in the casual dining segment of the dining industry and operate with similar metrics, markets and challenges. The peer group restaurants (“Peer Restaurants”) included the following for 2006: Applebees, BJ’s Restaurants, Brinker, California Pizza Kitchen, Cheesecake Factory, Landry’s Restaurant, Lone Star Steakhouse, McCormick & Schmicks, Morton’s, O’Charley’s, OSI Restaurant, P.F. Changs, Panera Bread, Rare Hospitality, Ruby Tuesday, and Ruth’s Chris Steak House. Cook also acts as an advisor to the compensation committee on individual compensation matters as they

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arise, such as the 2007 equity compensation grant to our chief executive officer. In 2006, in addition to its work for the compensation committee and with the compensation committee’s permission, Cook provided advice to management on the Company’s broad-based equity award budget and strategies.

Executive Compensation Components

Base Salary

Base salaries (paid in cash) for our executives are established based on the scope of their responsibilities, taking into account competitive market compensation paid by appropriate Peer Restaurants for similar positions. We review executive base salaries in comparison to salaries for executives in similar positions and with similar responsibilities at comparable companies. Base salaries are reviewed annually, and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance, experience and other criteria.

The compensation committee reviews the recommendations of the chief executive officer for base salaries for executive officers, including all of the named executive officers except for the chief executive officer, in January of each year. The chief executive officer proposes new base salary amounts based on his evaluation of individual performance and expected future contributions and a review of survey data provided by Cook to ensure competitive compensation against the external market, defined as the Peer Restaurants. Base salaries are considered by the compensation committee as a starting point for decisions regarding  total compensation together with other elements of compensation. Any other elements of the total compensation that are dependent on the determination of base salary, such as annual bonus, are expressed as percentages of base salary. The Company targets base salaries for executive officers including the chief executive officer generally near the median for Peer Restaurants.

Other than our chief executive officer, none of our named executive offices has an employment agreement that includes base salary terms. For 2006, Mr. Mullen’s compensation of $625,000 as chief executive officer was set forth in his employment agreement that was effective in August 2005. The Company increased Mr. Mullen’s base salary to $675,000 effective January 1, 2007 and subsequently amended and restated his employment agreement effective April 17, 2007. See page 19 for further discussion of Mr. Mullen’s agreement. Cook provided a comprehensive review of the Company’s compensation structure in place for 2006. The executive officer compensation for 2006 was compared to data from the annual proxies and subsequent disclosures of the Peer Restaurants as well as compensation surveys obtained by Cook from other compensation consultant groups. Base salaries for the executive officers, including the named executive officers, were generally compared to comparable positions or comparable pay rank. For 2006, executive salaries were determined to be at or below the median in the aggregate, but varied by position. Effective January 1, 2007, the Company increased the base salary of each of our named executive officers, a result of which was to better align their salaries with the median percentile of the Peer Restaurants. These increases ranged from 2.4% to 17.5% depending on position.

We offer to our named executive officers and certain others the option to receive all or a portion of their base salaries on a deferred basis under the Company’s Deferred Compensation Plan, discussed below.

Annual Performance-Based Incentive (Bonus)

The compensation committee utilizes the cash bonus program under the 2004 Performance Incentive Plan to link executive bonuses with Company performance. Receipt of the bonus awards may also be deferred under our Deferred Compensation Plan. While base salary is targeted generally near the median, bonuses are targeted higher than median to provide incentive for and to reward excellent performance. Together, base salary and target level bonuses are designed to result in total cash compensation above the

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median and up to the 75th percentile for total cash compensation paid by the Peer Restaurants, based on performance.

The payment amount, if any, of any bonus award is determined based on: (1) achievement by the Company of minimum, target and maximum EBITDA (earnings before interest, taxes, depreciation and amortization) levels and (2) attainment of individual performance goals set each year. The EBITDA budget and the minimum, target and maximum EBITDA levels and bonus funding percentages are formulated by management and submitted to the compensation committee. The compensation committee considers, among other things, bonus levels paid by the Peer Restaurants, market conditions and the advice of its compensation consultant. The compensation committee may adjust our EBITDA results for unusual, non-recurring or other items in the committee’s discretion, or may grant special bonuses on an individual or group basis in recognition of extraordinary achievements, or to address other special situations. The compensation committee generally reviews and establishes target annual bonus opportunities for executive officers early, usually in January or February of each year, based upon the approved budget and performance targets for the Company.

Typically, members of management from the regional director level through the chief executive officer are assigned target bonuses that are expressed as a percentage of their respective base salaries. In order to align bonus opportunity to creation of stockholder value, the target bonuses are further attributable to both Company EBITDA targets and individual performance with a 75% and 25% weighting, respectively. The Company believes that achievement of the Company’s overall performance goals should be weighted more heavily in the executive bonus calculation than individual goals since those individuals have a greater responsibility for the overall performance of the Company. Our annual incentive bonus plan for 2006 provided for a potential cash bonus, calculated as a percentage of an officer’s base salary ranging from 25% to 75%, 35% to 105%, and 40% to 120% for various named executive officers, to a range of 45% to 135% for the chief executive officer. These percentages and targets are set forth in the table below in more detail.

The officers receive their target bonuses (subject to the compensation committee’s discretion to negatively adjust bonuses for failure of officers to achieve pre-set personal objectives) if the Company achieves the targeted EBITDA. The bonus is graduated up or down if the Company exceeds or does not meet the targeted EBITDA budget. No bonuses are awarded if the minimum EBITDA levels are not met, and bonuses are capped at a specified percentage of an officer’s base salary that corresponds to the maximum prescribed EBITDA level. The compensation committee approves the annual incentive award for the chief executive officer and for each of the chief executive officer’s direct reporting officers based in part on the recommendation of the chief executive officer.

In 2006, the annual incentive bonus plan, measured as a percentage of salary, was above-median for the chief executive officer, the president and chief operating officer, the senior vice president and chief knowledge officer, and the senior vice president and chief development officer. The annual incentive bonus plan was consistent with the median for the chief financial officer.

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The annual bonus is calculated as a percentage of the annual bonus potential based on EBITDA performance multiplied by the base salary earnings in 2006. For 2006, the Company exceeded its target EBITDA level but fell short of the maximum EBITDA target. The compensation committee approved bonus payments for achievement of results based on a sliding scale between target and maximum EBITDA levels. The annual bonus award approved for each named executive officer was as follows:

 

In addition to the annual incentive bonus for 2006 based on achievement of EBITDA targets, the compensation committee granted a special bonus to certain employees, including non-executive officers and other employees, in connection with the special acquisition of 13 restaurants in Washington from the Company’s franchisee, Great Western Dining. The compensation committee approved a special bonus for each eligible employee. In determining the amount of such bonus, the compensation committee considered several factors, including the net contribution of the acquisition (after financing costs) to the Company’s 2006 earnings, the return on investment expected from the acquired restaurants, and the reasonableness of the special bonus as a percentage of the acquisition cost and as a percentage of the 2006 incentive bonus earned. The amount of the special bonus paid to each of the named executive officers was as follows:

 

The Company’s stockholders approved the 2004 Performance Incentive Plan in 2004, and bonuses provided under the 2004 Plan are intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code (and therefore deductible by the Company even if in excess of the $1,000,000 limit).

Long-Term Incentive Program

We believe that long-term improvement in the Company’s performance is achieved through an ownership culture that encourages long-term performance by our executive officers. We believe that long-term incentives encourage concentration of executives’ efforts on the behaviors within their control that they believe are necessary to ensure the long-term success of the Company, as reflected in increases to the Company’s stock prices over a period of several years, growth in its earnings per share and other elements.

The Company’s principal element of long-term incentives is the award of non-qualified stock options. The compensation committee believes that option grants naturally tie to the performance of the Company because the options require stock price improvement to become valuable. Non-qualified stock option awards vest based on continued employment. Under the typical vesting schedule, the stock options vest 25% on the first anniversary of the grant date. The remaining 75% vest in 36 substantially equal monthly

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installments, with the first installment vesting on the same day of the month following the month in which the first anniversary of the grant date occurs and on the same day of each of the 35 months thereafter.

In addition to stock options, the Company has granted, and may choose to grant, other types of equity awards, including restricted stock and restricted stock units.

Annual Non-qualified Stock Option Awards.   Stock option awards are granted annually to employees at the corporate home office, including executives, support staff and regional managerial operations personnel and to the general managers of our restaurants, pursuant to a matrix approved by the compensation committee. The matrix delineates the number of options that may be awarded by position and grade levels. Generally, these grants are made in February three business days following the release of our annual earnings results. The grant price is the market price of a share of the Company’s common stock at the close of market on the date of grant. The annual grant for employees, excluding executives, is made by the compensation committee, following the matrix and the recommendation of management. The compensation committee determines the annual grants for the executive officers, including the named executive officers. The annual grants are generally consistent with median for the Peer Restaurants for 2006, as well as over the past three years on average. The compensation committee also considers the cumulative total of equity ownership in determining these awards. Awards of stock options were made in February 2006 and February 2007 to approximately 320 and 420 employees, respectively, including non-executive employees at the corporate home office and general managers of our restaurants.

New Hire and Promotion Non-qualified Stock Option Awards.   We provide awards to new hires upon joining the company and awards granted at promotion into higher level positions within the Company. Awards of non-qualified stock options are granted to newly hired or promoted employees at the non-executive vice president level and lower positions based on the matrix approved by the compensation committee. The compensation committee has delegated to the chief executive officer the authority to make new hire and promotion option grants for this group of employees following the matrix.

For qualifying executives (certain vice presidents and above) who are newly hired or promoted, the compensation committee approves all grants at appropriate grant levels set forth in the matrix. Grants for all new hires or promotions are awarded monthly as of the first business day of the month following the date of hire or the first business day of the month following the date of promotion. The exercise price of these awards is the market close price as of the first business day of the month following the date of hire or promotion.

Restricted Stock.   While we have not historically made grants of restricted stock to our employees, we have in 2007, and may in the future, elect to make grants of restricted stock or restricted stock units to our senior executives or specific key employees. This decision to use restricted stock was made, in part, to provide an additional tool for our compensation programs. We also believe that grants of restricted stock align the interests of our executive officers with those of our stockholders and provide an incentive to our executive officers to build stockholder value while limiting the executive’s risk during a time when retention of our key talent is critical to our success. Moreover, restricted stock serves as an executive retention tool as it typically vests only if the executive remains with us for a certain period of time.

In 2006, none of the named executive officers received restricted stock awards or restricted stock units. However, in February 2007, in addition to his annual option grant, the Company granted 22,000 shares of restricted stock to our chief executive officer. The compensation committee approved this restricted stock grant after reviewing and evaluating the overall percentage of equity incentives held by our chief executive officer as compared to chief executive officers of the Peer Restaurants. Additionally, in connection with the amendment and restatement of Mr. Mullen’s employment agreement, the Company granted Mr. Mullen an additional 75,000 shares of restricted stock effective April 17, 2007.

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Employee Stock Purchase Plan

In June 2002, we adopted, and our stockholders approved, an Employee Stock Purchase Plan. Under the ESPP, eligible employees may voluntarily contribute a percentage of their salary, subject to limitations, to purchase common stock at a discounted price. In general, all of the Company’s officers and employees who have been employed by the Company for at least one year and who are regularly scheduled to work more than twenty hours per week are eligible to participate in this plan which operates in successive six-month periods commencing on each January 1 and July 1 of each fiscal year.

Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code under the Omnibus Budget Reconciliation Act of 1993 limits the deductibility of compensation over $1 million paid by a company to an executive officer. The policy of the compensation committee is to establish and maintain a compensation program that maximizes the creation of long-term stockholder value. The compensation committee attempts to generally structure most compensation approaches to ensure deductibility. However, the compensation committee reserves the right to adopt programs giving consideration to factors other than deductibility where the compensation committee believes stockholder interests are best served by retaining flexibility. In such cases, the compensation committee may consider various alternatives to preserving the deductibility of compensation payments and benefits to the extent reasonably practicable and to the extent consistent with its compensation objectives. As discussed above, performance bonuses are generally paid under the 2004 Plan and thus, are intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code. Accordingly, such amounts are deductible by the Company even if in excess of the $1 million statutory limit.

Employment and Other Agreements

Dennis B. Mullen.   The Company entered into an employment agreement with Mr. Mullen, our chief executive officer, effective August 11, 2005, and amended and restated the employment agreement effective April 17, 2007. The amended employment agreement provides for an employment term that expires on December 31, 2010. Pursuant to the terms of the original employment agreement, Mr. Mullen received an annual base salary at the rate of $625,000 for 2006, which was increased to $675,000 effective January 1, 2007 and is reflected in Mr. Mullen’s amended and restated employment agreement. Mr. Mullen’s annual salary is subject to annual review by the board of directors, provided that the annual base salary may not be reduced below $675,000 so long as Mr. Mullen serves as chief executive officer and chairman.

Mr. Mullen is eligible to participate in the Company’s annual incentive compensation plan. Mr. Mullen’s employment agreement provides certain other benefits, including a $1,000 per month car allowance and the right to participate in all savings, retirement, medical, welfare and insurance plans and programs to the same extent as other senior executive employees of the Company. In addition, the Company has agreed to pay or reimburse Mr. Mullen for travel expenses he incurs commuting from Arizona to the Company’s headquarters in Denver, Colorado. Prior to amendment of the agreement and effective for fiscal year 2006 and through the effective date of the amendment, the Company agreed to provide Mr. Mullen with the use of a furnished apartment or other comparable housing in Denver. Mr. Mullen’s commuting expenses are subject to periodic review for reasonableness by the chairman of the compensation committee. The Company’s chief financial officer reviews and reports Mr. Mullen’s expenses the compensation committee at least quarterly. Mr. Mullen may fly on charter or private aircraft to commute from Arizona to Denver, Colorado and otherwise for appropriate business use, subject in each case to his compliance with the Company’s expense reimbursement and non-commercial aircraft use policies. These expenses are reported below in the Summary Compensation Table and the accompanying explanatory notes and tables.

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The employment agreement contains confidentiality, non-compete and non-interference covenants from Mr. Mullen, including a two-year covenant not to complete with the Company and its subsidiaries in the casual dining restaurant business anywhere in North America and the territories of the U.S. in the Caribbean, including Puerto Rico.

Michael Woods.   We also have an employment agreement with Michael Woods, our senior vice president of franchise development, that we entered into in January 1997 and does not have a termination date. Mr. Woods’ agreement does not include base salary terms past its initial year. Pursuant to the agreement, if the Company terminates Mr. Woods without cause he is entitled to severance pay equal to his then current base salary payable in monthly installments for a one-year period.

Robert J. Merullo.   Robert J. Merullo served as our senior vice president and chief concept officer until the effective date of his consulting agreement with the Company, December 31, 2006. The consulting agreement provides that Mr. Merullo will devote 75% of his ordinary course business time to consult with the Company on food and beverage issues, research and development of new products and services, and purchasing issues, through December 31, 2007. Subsequently, he will provide services to Red Robin on an as-needed basis between January 1, 2008 and June 30, 2008. The agreement provides for a consulting fee of $12,500 per month for the initial period expiring on December 31, 2007. Thereafter, Mr. Merullo will be paid at the rate of $200 per hour for hours worked. Mr. Merullo will be reimbursed for reasonable travel and similar out of pocket expenses incurred in the performance of his services to the Company. Stock options previously awarded to Mr. Merullo will continue to vest and be exercisable as long as Mr. Merullo continues providing services under the consulting agreement. Mr. Merullo was paid a bonus in 2007 for services provided in 2006 as an employee and executive officer of the Company.

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Summary Compensation Table

The following table sets forth summary information concerning compensation awarded to, earned by, or accrued for services rendered to the Company in all capacities by our principal executive officer, principal financial officer, each of our three other most highly compensated executive officers who were serving as executive officers at the end of fiscal year 2006 and our former chief concept officer (collectively, the “named executive officers”), for the fiscal year 2006:

(1)          Mr. Merullo resigned as senior vice president and chief concept officer effective December 31, 2006.

(2)          2006 salary represents base salary and payment for vacation, holidays and sick days for 2006. Amounts shown are not reduced to reflect the named executive officers’ elections, if any, to defer receipt of salary into the Deferred Compensation Plan.

(3)          Amounts reported in this column represent a special bonus paid to the name executive officers in connection with the acquisition of 13 franchise restaurants from a franchisee in 2006. Other amounts considered to be bonus awards are paid to the named executive officers pursuant to the Company’s 2004 Performance Incentive Plan and are reported in the “Non-Equity Incentive Plan Compensation” column.

(4)          The number of options represent the value of annual option grants awarded in 2006. The value of the option grants was determined based on certain assumptions as discussed in footnote 15 to our financial statements included in our annual report on Form 10-K for the fiscal year ended December 31, 2006.

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(5)          The amount shown for each named executive officer in the “Non-Equity Incentive Plan Compensation” column is attributable to an award under the 2004 Performance Incentive Plan earned in fiscal year 2006, but paid in 2007.

(6)          Amounts in the “All Other Compensation” column consist of the following payments we paid to or on behalf of the named executive officers:

(a)             All executives and certain other employees receive monthly car allowances.

(b)            Meal discounts are provided to executives and valued based on the average cost of goods and labor. The amount reflects actual usage by the named executive officers of the meal discounts.

(c)             Long term disability insurance is provided to certain executives paid by the Company. The value represented above is based on the premium paid by the Company.

(d)            Mr. Mullen, chief executive officer, commuted to the Company’s headquarters in Denver, Colorado from his home in Arizona eight times in 2006. Pursuant to his employment agreement with the Company, the Company has agreed to pay or reimburse Mr. Mullen for travel expenses he incurs commuting from Arizona to the Company’s headquarters, from time to time and to provide Mr. Mullen with the use of a furnished apartment or other comparable housing in Denver.

(e)             Pursuant to his employment agreement, the Company provides Mr. Mullen with use of a furnished apartment in Denver and reimburses him for certain utility expenses. The expenses are as follows:

 

(f)              Amounts paid to Mr. Mullen represent tax gross ups for taxes on commuting and relocation/housing compensation paid to Mr. Mullen identified in the commuting expenses and housing columns.

(g)             Amounts paid to Mr. Brighton represent tax gross ups paid to Mr. Brighton in 2006 related to compensation paid to Mr. Brighton in 2005.

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Grants of Plan-Based Awards

The following “Grants of Plan-Based Awards” table provides additional information about stock option awards and equity and non-equity incentive plan awards granted to our named executive officers during fiscal 2006.

(1)           In January 2006, the compensation committee made each named executive officer eligible for an annual bonus payment for 2006 performance under the 2004 Performance Incentive Plan. In January 2007, the compensation committee granted the named executive officers cash bonus awards under the 2004 Performance Incentive Plan for 2006 performance. The factors considered by the compensation committee in determining the awards are discussed in “Compensation Discussion and Analysis—Annual Performance-Based Incentive (Bonus)”.

(2)           We did not grant any equity awards other than non-qualified stock options in 2006. Options issued pursuant to the Company’s 2004 Performance Incentive Plan vest 25% on the first anniversary date of issuance and the balance vest pro-rata on a monthly basis over the following 36-month period. Options are exercisable for ten years from the date of issuance, subject to continuing employment or service with the Company as defined in the 2004 Performance Incentive Plan and certain other conditions.

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Outstanding Equity Awards at 2006 Fiscal Year-End

(1)          These options were issued to Mr. Mullen for his service as a non-employee director prior to his appointment as chief executive officer in August 2005 and vested in full June 2, 2006.

(2)          These options vest pro rata 1/24th each month over a 24-month period that began September 25, 2005 and vest in full on August 25, 2007.

(3)          These options vest 25% on the first anniversary date of issuance with the balance vesting pro rata on a monthly basis over the following 36-month period and in full on February 22, 2010.

(4)          These options vest 25% on the first anniversary date of issuance with the balance vesting pro rata on a monthly basis over the following 36-month period and in full on June 17, 2009.

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(5)          These options vested fully on October 23, 2004.

(6)          These options vested fully on January 29, 2007.

(7)          These options vest 25% on the first anniversary date of issuance with the balance vesting pro rata on a monthly basis over the following 36-month period and in full on January 28, 2008.

(8)          These options vest 25% on the first anniversary date of issuance with the balance vesting pro rata on a monthly basis over the following 36-month period and in full on June 2, 2008.

(9)          These options vest 25% on the first anniversary date of issuance with the balance vesting pro rata on a monthly basis over the following 36-month period and in full on April 14, 2009.

(10) These options vest 25% on the first anniversary date of issuance with the balance vesting pro rata on a monthly basis over the following 36-month period and in full on September 1, 2009.

Options Exercised and Stock Vested

None of the named executive officers exercised options during 2006.

Nonqualified Deferred Compensation

The following table shows information about the amount of contributions, earnings and balances for each named executive officer under the Company’s Nonqualified Deferred Compensation Plan as of December 31, 2006.

(1)           The Company does not make any contributions to the Nonqualified Deferred Compensation Plan. The “Executive Contributions” column includes amounts that were also reported as either “Salary” or “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table on page 21. These amounts, as well as amounts in the “Aggregate Balance at Last Fiscal Year-End” column that represent salary or bonus that were reported in the Summary Compensation Tables for prior years, are quantified below.

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