UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

 

Filed by the Registrant þ

 

Filed by a Party other than the Registrant o

 

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o  Preliminary Proxy Statement

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ  Definitive Proxy Statement

o  Definitive Additional Materials

o  Soliciting Material pursuant to § 240.14a-12

 

BRAVO BRIO RESTAURANT GROUP, INC.

(Name of Registrant as Specified in its Charter)

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

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BRAVO BRIO RESTAURANT GROUP, INC.
777 Goodale Boulevard, Suite 100
Columbus, Ohio 43212

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 14, 2011

 

Dear Shareholder:

 

You are invited to attend the Annual Meeting of the Shareholders of Bravo Brio Restaurant Group, Inc., an Ohio corporation (the “Company”), which will be held on April 14, 2011 at 3 p.m., Eastern Daylight Time, at our Brio Polaris restaurant in Columbus, Ohio located at 1500 Polaris Parkway, Columbus, Ohio 43240 (the “Annual Meeting”), for the following purposes:

 

1) To elect three Class I directors, each to serve until the annual meeting of shareholders in 2013 and their respective successors have been duly elected and qualified.

 

2) To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 25, 2011.

 

3) To cast a non-binding advisory vote on the frequency of an advisory vote on executive compensation.

 

4) To cast a non-binding advisory vote on executive compensation.

 

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

 

Shareholders of record at the close of business on February 14, 2011 (“record date”) are entitled to notice of, and to vote at, this meeting and any adjournments or postponements thereof. For ten days prior to the meeting, a complete list of the shareholders entitled to vote at the meeting will be available for examination by any shareholder for any purpose relating to the meeting during ordinary business hours at our principal offices located at 777 Goodale Boulevard, Suite 100, Columbus, Ohio 43212.

 

Important Notice Regarding the Availability of Proxy Materials for Shareholders Meeting to be Held on April 14, 2011: The Proxy Statement and Proxy Card relating to the Annual Meeting of Shareholders and the Annual Report to Shareholders are available at www.investors.bbrg.com.

 

By Order of the Board of Directors,

 

Saed Mohseni

President and Chief Executive Officer

 

James J. O’Connor

Chief Financial Officer, Treasurer and Secretary

 

Columbus, Ohio
February 23, 2011

 

IMPORTANT: Please vote your shares via the proxy card by mail, you may mark, sign and date the proxy card and return it in the enclosed postage-paid envelope. If you attend the meeting, you may choose to vote in person even if you have previously voted your shares.

 

Table of Contents

 

 

The accompanying proxy is solicited by the Board of Directors of Bravo Brio Restaurant Group, Inc., an Ohio corporation (the “Company”), for use at its Annual Meeting of Shareholders to be held April 14, 2011, or any adjournment or postponement thereof (the “Meeting” or “Annual Meeting”), for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. The date of this Proxy Statement is February 23, 2011, the approximate date on which this Proxy Statement and the enclosed proxy were first sent or made available to shareholders.

 

This Proxy Statement and the accompanying proxy card are being mailed to owners of our common shares in connection with the solicitation of proxies by the Board of Directors for the 2011 Annual Meeting of Shareholders. This proxy procedure is necessary to permit all common shareholders, many of whom live throughout the United States and in foreign countries and are unable to attend the Annual Meeting, to vote. The Company will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes.

 

Electronic Access.  To access the Company’s Proxy Statement and annual report electronically, please visit the Company’s Investor Relations website at investors.bbrg.com or through our corporate website at www.bbrg.com. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this Proxy Statement. If you choose to access the proxy materials over the Internet, you are responsible for any Internet access charges you may incur.

 

Voting Securities.  Only shareholders of record as of the close of business on February 14, 2011, will be entitled to vote at the Meeting and any adjournment thereof. As of that date, there were 19,250,500 common shares of the Company, no par value per share, issued and outstanding, all of which are entitled to vote with respect to all matters to be acted upon at the Annual Meeting. Each holder of record as of that date is entitled to one vote for each share held. The Company’s Second Amended and Restated Regulations provide that the presence of a majority of all of the shares entitled to vote, whether present in person or represented by proxy, shall constitute a quorum for the transaction of business at the Meeting. Votes for and against, abstentions and “broker non-votes” will each be counted as present for purposes of determining the presence of a quorum.

 

Broker Non-Votes.  A broker non-vote occurs when a broker submits a proxy card with respect to shares held in a fiduciary capacity (typically referred to as being held in “street name”) but declines to vote on a particular matter because the broker has not received voting instructions from the beneficial owner. Under the rules that govern brokers who are voting with respect to shares held in street name, brokers have the discretion to vote such shares on routine matters, but not on non-routine matters. Routine matters include increases in the number of authorized common shares for general corporate purposes and ratification of the Company’s independent registered public accounting firm. NASDAQ Global Market Rule 2251 prohibits brokers from casting discretionary votes in any election of directors.

 

Voting of Proxies.  All valid proxies received prior to the meeting will be exercised. All shares represented by a proxy will be voted, and where a proxy specifies a shareholder’s choice with respect to any matter to be acted upon, the shares will be voted in accordance with that specification. If no choice is indicated on the proxy, the shares will be voted by one of the individuals named on the proxy card as recommended by the Board of Directors. If a shareholder wishes to give a proxy to someone other than those named on his or her proxy card, he or she should cross out those names and insert the name(s) of the person(s), not more than three, to whom he or she wishes to give such proxy. A shareholder giving a proxy has the power to revoke his or her proxy, at any time prior to the time it is exercised, by delivering to the Secretary of the Company a written instrument revoking the proxy or a duly executed proxy with a later date, or by attending the meeting and voting in person. A shareholder wanting to vote in person at the Annual Meeting and holding Company common shares in street name must obtain a proxy card from his or her broker and bring that proxy card to the Annual Meeting, together with a copy of a brokerage statement reflecting such share ownership as of the record date.

 

Board of Directors Recommendations.  The Board of Directors recommends a vote FOR each Class I director nominee, FOR ratification of the appointment of Deloitte & Touche LLP as the Company’s

independent registered public accounting firm, FOR a frequency of “three years” with respect to the non-binding advisory vote on executive compensation and FOR the non-binding resolution approving executive compensation as described in this Proxy Statement.

 

Our Second Amended and Restated Articles of Incorporation provide that our Board of Directors consists of not less than five nor more than 10 directors, with such exact number of directors being fixed by resolution of our Board of Directors. The Board of Directors currently consists of seven directors and is divided into two classes serving staggered two-year terms. At the Annual Meeting, the shareholders will elect three Class I directors to hold office until the annual meeting of shareholders in 2013 and until their respective successors have been duly elected and qualified, subject to their earlier death, resignation or removal.

 

The term of the current Class I directors expires at the Annual Meeting. Based on the recommendation of the Nominating and Corporate Governance Committee of our Board of Directors, our Board of Directors has nominated Messrs. Allen J. Bernstein, James S. Gulmi and Saed Mohseni to serve as Class I directors. Each nominee is currently serving as a Class I director and has indicated a willingness to continue serving as a director. The names and certain information about the director nominees and the continuing Class II directors are set forth below. There are no family relationships among any of our directors or executive officers.

 

Unless contrary instructions are given, the shares represented by a properly executed proxy will be voted “FOR” the election of Messrs. Bernstein, Gulmi and Mohseni. If any of the nominees should for any reason be unable or unwilling to serve at any time prior to the Meeting, the proxies will be voted for the election of such other person as a substitute nominee as our Board of Directors may designate in place of such nominee.

 

Required Vote

 

Because the upcoming Meeting will trigger the expiration of the terms of only three directors, proxies cannot be voted for more than three director nominees. The three candidates receiving the highest number of affirmative votes of the Company common shares entitled to vote at the Meeting will be elected Class I directors. Abstentions, “broker non-votes” and withheld votes will have no effect on the outcome of the vote.

 

Directors Standing for Election as Class I Directors

 

The name and age as of February 14, 2011 of each director nominee, his position with us, the year in which he first became a director and certain biographical information is set forth below:

 

 

Allen J. Bernstein has been a director of the Company since June 2006. Mr. Bernstein is the president of Endeavor Restaurant Group, Inc. He founded and served as chairman and chief executive officer of Morton’s Restaurant Group, Inc. from 1989 through 2005. He currently serves on the boards of directors of a number of public and privately held companies, including The Cheesecake Factory Incorporated, Caribbean Restaurants, LLC and as non-executive chairman of the board of directors of Perkins & Marie Callender’s, Inc. Previously, Mr. Bernstein served as a director on the boards of Charlie Brown’s Steakhouse, McCormick & Schmick’s Seafood Restaurants, Inc. and Dave & Busters, Inc. He also serves on the board of trustees of the American Film Institute. Mr. Bernstein brings over 20 years of restaurant industry experience to the Board of Directors, and among other skills and qualifications, his significant knowledge and understanding of the industry, specifically the upscale affordable segment. Additionally, Mr. Bernstein brings the knowledge and skills that come from significant experience in the restaurant industry, including at the senior executive and board level

of a number of other publicly traded companies. Mr. Bernstein earned a Bachelor of Business Administration degree in Marketing from the University of Miami.

 

James S. Gulmi has been a director of the Company since October 2010. Mr. Gulmi currently serves as the senior vice president, finance and chief financial officer and treasurer of Genesco Inc., a leading retailer of branded footwear, licensed and branded headwear and wholesaler of branded footwear. Mr. Gulmi joined Genesco Inc. in 1971 as a financial analyst and was appointed chief financial officer in 1986. Mr. Gulmi has served as Genesco Inc.’s senior vice president, finance, since 1996. Mr. Gulmi serves as a board or committee member of several nonprofit agencies, including The Community Foundation of Middle Tennessee, United Way of Metropolitan Nashville and Leadership Nashville. Mr. Gulmi brings more than 30 years of experience in corporate finance, strategic planning and leadership of complex organizations. Mr. Gulmi earned a Bachelor of Arts degree in Business from Baldwin Wallace College and a Master of Business Administration degree from Emory University.

 

Saed Mohseni joined the Company as Chief Executive Officer in February 2007 and assumed the additional role of President in September 2009. Mr. Mohseni has also served as a director of the Company since June 2006. Prior to joining us, Mr. Mohseni was the chief executive officer (January 2000-February 2007) and a director (2004-2007) of McCormick & Schmick’s Seafood Restaurants, Inc. Mr. Mohseni joined McCormick & Schmick’s in 1986 as a general manager. During his time at McCormick & Schmick’s, he also held the positions of senior manager (1988-1993), vice president of operations-California (1993-1997), and senior vice president of operations (1997-1999). Mr. Mohseni attended Portland State University and Oregon State University. Mr. Mohseni’s qualifications to serve on our Board of Directors include his knowledge of our company and the restaurant industry and his years of leadership at our company.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE DIRECTOR NOMINEES NAMED ABOVE.

 

Directors Not Standing for Election

 

The name and age as of February 14, 2011 of each Class II member of our Board of Directors (who are not standing for election at the Annual Meeting), his position with us, the year in which he first became a director and certain biographical information are set forth below:

 

 

Alton F. (“Rick”) Doody, III has been Chairman of the Board of Directors of the Company since its inception in 1987. Mr. Doody was our Chief Executive Officer from 1992 until February 2007 and our President from June 2006 until September 2009. Mr. Doody continues to remain employed in a non-executive officer capacity by the Company, primarily focusing on the development of our new restaurants. Mr. Doody also founded Lindey’s German Village, and was responsible for all facets of its management. Mr. Doody received a Bachelor of Sciences degree in Economics from Ohio Wesleyan University and has completed all the necessary coursework for a Master’s Degree from Cornell University in Restaurant/Hotel Management. Mr. Doody is a member of the Young Presidents Organization and the International Council of Shopping Center Owners and is a board member for the Cleveland Restaurant Association. Mr. Doody’s qualifications to serve on our Board of Directors include his knowledge of our company and the restaurant industry and his years of leadership at our company.

 

David B. Pittaway has been a director of the Company since June 2006. Mr. Pittaway is senior managing director, senior vice president and secretary of Castle Harlan, Inc., a private equity firm. He has been with Castle Harlan since 1987. Mr. Pittaway also has been vice president and secretary of Branford Castle, Inc., an investment company, since October, 1986. From 1987 to 1998, Mr. Pittaway was vice president, chief financial officer and a director of Branford Chain, Inc., a marine wholesale company, where he is now a director and

vice chairman. Previously, Mr. Pittaway was vice president of strategic planning and assistant to the president of Donaldson, Lufkin & Jenrette, Inc., an investment banking firm. Mr. Pittaway is also a member of the boards of directors of The Cheesecake Factory Incorporated, Morton’s Restaurant Group,, Inc. and Perkins & Marie Callender’s Inc. In addition, he is a director and co-founder of the Armed Forces Reserve Family Assistance Fund. Mr. Pittaway possesses in-depth knowledge and experience in finance and strategic planning based on his more than 20 years of experience as an investment banker and manager of Castle Harlan’s investing activities. Mr. Pittaway brings significant restaurant industry experience to the Board of Directors and, among other skills and qualifications, his significant knowledge and understanding of the industry and his experience serving as a director of a number of publicly traded companies in the restaurant industry. Mr. Pittaway received a Bachelor of Arts degree from the University of Kansas, a Juris Doctorate degree from Harvard Law School and a Master of Business Administration degree from Harvard Business School.

 

Harold O. Rosser II has served as a member of our Board of Directors since June 2006. In January 2011, Mr. Rosser founded Rosser Capital Partners Management L.P. an entity formed to sponsor a private investment fund specializing in investments in middle market consumer & retail companies as well as restaurants and other multiple-unit concepts. Prior to forming Rosser Capital Partners, Mr. Rosser was a managing director and a founder of Bruckmann, Rosser, Sherrill and Co. Management, L.P., a New York-based private equity firm where he worked from 1995 to 2010. From 1987 through 1995 Mr. Rosser was an officer at Citicorp Venture Capital. Prior to joining Citicorp Venture Capital, he spent 12 years with Citicorp/Citibank in various management and corporate finance positions. Mr. Rosser is also a member of the board of trustees of the Culinary Institute of America and the management committee of the New Canaan Society. Mr. Rosser formerly served as a director of several private and publicly traded companies and had led his respective firms’ investments in more than 16 restaurant companies over the past 20 plus years. His in-depth knowledge and experience in the restaurant and food service industry, coupled with his skills in corporate finance, strategic planning, leadership of complex organizations, and board practices of private and public companies, strengthen the Board’s collective qualifications, skills and experience. Mr. Rosser earned a Bachelor of Science degree from Clarkson University and attended Management Development Programs at Carnegie-Mellon University and the Stanford University Business School.

 

Fortunato N. Valenti has been a director of the Company since October 2010. Mr. Valenti currently serves as the chief executive officer of Patina Restaurant Group (formerly Restaurant Associates), a boutique restaurant and food service company. Mr. Valenti joined Restaurant Associates in 1968 as a management trainee and was appointed to the position of chief executive officer in 1994. From 2002-2007 Mr. Valenti served as a member of the board of directors of McCormick & Schmick’s Seafood Restaurants, Inc. and has served as a member of the boards of directors of public and private companies, including Real Mex Restaurants, Inc., Il Fornaio (America) Corporation and Papa Gino’s Inc. Mr. Valenti is also a member of the boards of directors of various non-profit organizations, including the Culinary Institute of America, NYC & Co. and City Meals on Wheels. Mr. Valenti brings significant restaurant industry experience to the Board of Directors, including significant experience at the senior executive and board level in both the upscale affordable and upscale dining segments. Mr. Valenti earned an Associates Degree from New York Community College.

 

The Audit Committee of the Board of Directors appointed Deloitte & Touche LLP as the independent registered public accounting firm to audit the consolidated financial statements of the Company for the fiscal year ending December 25, 2011. Deloitte & Touche LLP has audited our financial statements since 1998. A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting and will be provided the opportunity to make a statement if the representative desires to do so, and is expected to be available to respond to appropriate questions. Although action by the shareholders on this matter is not required, the Audit Committee and the Board of Directors believe it is appropriate to seek shareholder ratification of this selection

in light of the role played by the independent registered public accounting firm in reporting on the Company’s consolidated financial statements. If the appointment of Deloitte & Touche LLP as independent registered public accounting firm for fiscal 2011 is not ratified by shareholders, the adverse vote will be treated as a direction to the Audit Committee to consider a different independent registered public accounting firm for next year. However, because of the difficulty in making any substitution so long after the beginning of the current year, the appointment of Deloitte & Touche LLP for fiscal 2011 will stand, unless the Audit Committee finds other good reason for making a change. Even if this appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its shareholders.

 

Fees for Professional Services

 

The following table set forth aggregate fees billed to the Company for fiscal 2010 and fiscal 2009 by its independent registered public accounting firm, Deloitte & Touche LLP:

 

 

 

 

Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services Performed by the Independent Registered Public Accounting Firm

 

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the Company’s independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with such pre-approval. Notwithstanding the foregoing, pre-approval of the Audit Committee is not required for any non-audit service provided by Deloitte & Touche LLP with a quoted fee of less than $15,000.

 

Required Vote

 

The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ended December 25, 2011 requires the affirmative vote of a majority of the common shares that are present in person or by proxy and entitled to vote on the proposal at the Annual Meeting.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 25, 2011.

 

The Company is seeking the input of its shareholders on the frequency with which it will hold a non-binding advisory vote on the compensation of its named executive officers. In voting on this Proposal Number Three, shareholders may indicate their preference as to whether the advisory vote on the compensation of the Company’s named executive officers should occur (a) once every three years, (b) once every two years or (c) once every year.

 

It is the opinion of the Board of Directors that the frequency of the shareholder vote on the compensation of the Company’s named executive officers should be once every three years. The Company views the way it compensates its named executive officers as an essential part of its strategy to maximize the performance of the Company and deliver enhanced value to the Company’s shareholders. The Board believes that a vote every three years will permit the Company to focus on developing compensation practices that are in the best long-term interests of its shareholders. The Board believes that a more frequent advisory vote may cause the Company to focus on the short-term impact of its compensation practices to the possible detriment of the long-term performance of the Company.

 

You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstain from voting when you vote in response to the resolution set forth below.

 

“RESOLVED, that the option of once every one year, two years, or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold a shareholder vote to approve the compensation of the named executive officers, as disclosed pursuant to the Securities and Exchange Commission’s compensation disclosure rules (which disclosure shall include the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and disclosure).”

 

The option of one year, two years or three years that receives the highest number of votes cast by shareholders will be the frequency for the advisory vote on executive compensation that has been approved by shareholders. Although the results of this vote may impact how frequently the Company holds an advisory vote on executive compensation, this vote is not binding on the Company. The Board of Directors may decide, after considering the results of this vote, that it is in the best interests of the Company’s shareholders to hold the advisory vote on executive compensation on a different schedule than the option approved by the Company’s shareholders.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” A FREQUENCY OF THREE YEARS.

 

The Company is providing its shareholders with the opportunity to cast an advisory vote on the compensation of its named executive officers, as disclosed in the Compensation Discussion and Analysis section and accompanying tables beginning on page 11 of this Proxy Statement.

 

The Company’s goals for its executive compensation program are to (i) attract, motivate and retain outstanding individual named executive officers; (ii) reward named executive officers for attaining desired levels of profit and shareholder value; and (iii) align the financial interests of each named executive officer with the interests of our shareholders to encourage each named executive officer to contribute to our long-term performance and success. The Company believes that its executive compensation program achieves these goals. For a more detailed description of the Company’s financial results for fiscal year 2010, please see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in

the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2010, filed on February 17, 2011.

 

The Company is asking our shareholders to indicate their support for our named executive officer compensation as described in this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we will ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:

 

“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2011 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.”

 

As an advisory vote, this proposal is not binding upon the Company. However, to the extent that a significant percentage of votes are cast against the compensation of the Company’s named executive officers, the Company will determine whether any actions are necessary to address the concerns reflected in such votes.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE NON-BINDING RESOLUTION APPROVING EXECUTIVE COMPENSATION.

 

Director Independence

 

Our Board of Directors has undertaken a review of the independence of our directors and considered whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. We believe that Messrs. Bernstein, Gulmi and Valenti currently meet these independence standards.

 

Board Leadership Structure

 

The Board of Directors does not have a formal policy on whether the roles of Chief Executive Officer and Chairman of the Board of Directors should be separate. However, the Company has had separate individuals serve in those positions for several years. Since 2007, the Company’s Board of Directors has been led by Alton F. Doody, III, founder of the Company, as Chairman, and Saed Mohseni has served as the Company’s Chief Executive Officer. The Board of Directors has carefully considered its leadership structure and believes at this time that the Company and its shareholders are best served by having the positions of Chairman and Chief Executive Officer filled by different individuals. This allows the Chief Executive Officer to, among other things, focus on the Company’s day-to-day business, while allowing the Chairman to lead the Board of Directors in its fundamental role of providing advice and oversight of management. Further, the Board of Directors believes that its other structural features, including three independent directors and five non-employee directors on a board consisting of seven directors and key committees consisting wholly of independent directors, provide for substantial independent oversight of the Company’s management. However, the Board of Directors recognizes that depending on future circumstances, other leadership models may become more appropriate. Accordingly, the Board of Directors will continue to periodically review its leadership structure.

 

Risk Oversight

 

We face a number of risks, including market price risks in beef, seafood, produce and other food product prices, liquidity risk, reputational risk, operational risk and risks from adverse fluctuations in interest rates and inflation and/or deflation. Management is responsible for the day-to-day management of risks faced by our

company, while the Board of Directors currently has responsibility for the oversight of risk management. In its risk oversight role, the Board of Directors seeks to ensure that the risk management processes designed and implemented by management are adequate. The Board of Directors also reviews with management our strategic objectives which may be affected by identified risks, our plans for monitoring and controlling risk, the effectiveness of such plans, appropriate risk tolerance and our disclosure of risk. Our Audit Committee is responsible for periodically reviewing with management and independent auditors the adequacy and effectiveness of our policies for assessing and managing risk. The other committees of the Board of Directors also monitor certain risks related to their respective committee responsibilities. All committees report to the full Board of Directors as appropriate, including when a matter rises to the level of a material or enterprise level risk.

 

Board Committees

 

Our Board of Directors has established various committees to assist it with its responsibilities. Those committees are described below.

 

Audit Committee

 

The current Audit Committee members are Messrs. Bernstein, Gulmi and Valenti, with Mr. Gulmi serving as the Audit Committee’s chairman. The NASDAQ Global Market financial literacy standards require that each member of our Audit Committee be able to read and understand fundamental financial statements. In addition, the Company is required to disclose whether at least one member of our Audit Committee qualifies as an audit committee financial expert, as defined by Item 407(d)(5) of Regulation S-K promulgated by the SEC, and have financial sophistication in accordance with NASDAQ Global Market rules. Our Board of Directors has determined that Mr. Gulmi qualifies as an audit committee financial expert and is independent, as independence for audit committee members is defined by applicable NASDAQ Global Market rules.

 

The primary function of the Audit Committee is to assist the Board of Directors in the oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent registered public accountants’ qualifications and independence and the performance of our internal audit function and independent registered public accountants. The Audit Committee also prepares an audit committee report required by the SEC to be included in our proxy statements.

 

The Audit Committee fulfills its oversight responsibilities by reviewing the following: (i) the financial reports and other financial information provided by us to our shareholders and others; (ii) our systems of internal controls regarding finance, accounting, legal and regulatory compliance and business conduct established by management and the Board of Directors; and (iii) our auditing, accounting and financial processes generally. The Audit Committee’s primary duties and responsibilities are to:

 

 

The Audit Committee holds regular meetings at least four times each year and held six meetings in fiscal 2010. The Audit Committee reports the significant results of its activities to the Board of Directors at each regularly scheduled meeting of the Board of Directors.

 

Our Board of Directors has adopted a charter for the Audit Committee that complies with current federal and NASDAQ Global Market rules relating to corporate governance matters. Deloitte & Touche LLP is presently our independent registered accounting firm.

Nominating and Corporate Governance Committee

 

The current Nominating and Corporate Governance Committee members are Messrs. Bernstein, Rosser and Valenti, with Mr. Rosser serving as the Nominating and Corporate Governance Committee chairman. The Nominating and Corporate Governance Committee:

 

 

Our Board of Directors has adopted a charter for the Nominating and Corporate Governance Committee that complies with current federal and NASDAQ Global Market rules relating to corporate governance matters. Our Nominating and Corporate Governance Committee held one meeting in fiscal 2010.

 

Compensation Committee

 

The current Compensation Committee members are Messrs. Bernstein, Pittaway and Valenti, with Mr. Pittaway serving as the Compensation Committee chairman. The primary responsibility of the Compensation Committee is to develop and oversee the implementation of our philosophy with respect to the compensation of our executive officers and directors. In that regard, the Compensation Committee:

 

 

The Compensation Committee has the same authority with regard to all aspects of director compensation as it has been granted with regard to executive compensation, except that any ultimate decision regarding the compensation of any director is subject to the approval of our Board of Directors. The Compensation Committee held one meeting in fiscal 2010.

 

Our Board of Directors has adopted a charter for the Compensation Committee that complies with current federal and NASDAQ Global Market rules relating to corporate governance matters.

 

Compensation Committee Interlocks and Insider Participation

 

None of the members of the Compensation Committee currently is or has been at any time one of our officers or employees. None of our executive officers currently serves, or has served during the last completed fiscal year, as a member of the Board of Directors or Compensation Committee of any entity that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee.

 

Communications with Directors

 

Shareholders may communicate appropriately with any and all Company directors by sending written correspondence addressed as follows:

 

Bravo Brio Restaurant Group, Inc.
Attention: Board of Directors
c/o James J. O’Connor, Chief Financial Officer, Treasurer and Secretary
777 Goodale Boulevard, Suite 100
Columbus, Ohio 43212

 

The Company’s Secretary will forward such communication to the appropriate members of the Board of Directors.

 

Meeting Attendance

 

During fiscal 2010, the Board of Directors held seven meetings. Meetings include both in-person and telephonic meetings. No member of the Board of Directors attended fewer than 75% of the aggregate number of meetings of the Board of Directors and the committees on which he served. For information regarding committee meetings and composition, please see the section above entitled “Board Committees.”

 

The Company believes that the Annual Meeting of Shareholders is a good opportunity for the shareholders to meet and, if appropriate, ask questions of the Board of Directors. It is also a good opportunity for the members of the Board of Directors to hear any feedback the shareholders may share with the Company at the meeting. All directors are strongly encouraged to attend the Annual Meeting. The Company has not previously held an annual meeting of shareholders.

 

Executive Officers

 

The name and age as of February 14, 2011 of each executive officer of the Company, his position with us, the year in which he first became an executive officer and certain biographical information are set forth below:

 

 

Saed Mohseni is being considered for re-election to the position of Class I director of the Company. See “Director Nominees” for a discussion of Mr. Mohseni’s business experience.

James J. O’Connor joined the Company as Chief Financial Officer, Treasurer and Secretary in February 2007. For the six years prior to joining us, Mr. O’Connor held various senior level financial positions, including chief financial officer of the Wendy’s Brand, at Wendy’s International, Inc. From 1999 to 2000, Mr. O’Connor served as senior manager of financial reporting for Tween Brands. Mr. O’Connor previously served as a senior manager for PricewaterhouseCoopers LLP from 1985 until 1998. Mr. O’Connor earned a Bachelor of Sciences degree in Accounting and Finance from the Ohio State University.

 

Brian T. O’Malley was appointed Chief Operating Officer in October 2010 and previously served as Senior Vice President of Operations, BRIO from 2006 until October 2010. Mr. O’Malley joined the Company in 1996 as the General Manager of BRAVO! Dayton. Mr. O’Malley was promoted to District Partner in 1999, Director of Operations in 2000 and to Vice President of Operations in 2004. Prior to joining us, Mr. O’Malley was employed with Sante Fe Steakhouse, where he held positions as a general manager, director of training and regional manager. Mr. O’Malley earned a Bachelor of Sciences degree in Speech Communications and Hospitality Management from the University of Wisconsin-Stout.

 

Michael L. Moser served as Senior Vice President of Operations, BRAVO!, from 2006 until his retirement from the Company effective December 26, 2010. Mr. Moser is a classically trained chef who has over thirty years of experience in the restaurant industry. Mr. Moser joined the Company as a Vice President of Operations in August of 2004. Prior to joining us, Mr. Moser served as the chief operating officer of the Texas Land and Cattle Steak House, a privately held 24 unit restaurant company. From 1996 to 2001, Mr. Moser was chief operating officer of Romano’s Macaroni Grill. Prior to becoming chief operating officer, Mr. Moser served as director of operations and founding concept chef for creator Phillip Romano. Mr. Moser attended Wayne State University.

 

Ronald F. Dee has served as our Senior Vice President of Development since May 2007. For the year prior to assuming his current position, Mr. Dee served as our Director of Real Estate. Mr. Dee joined the Company in July of 2003. Prior to joining us, Mr. Dee was Vice President, Development with Darden Restaurants overseeing all Red Lobster brand development. Mr. Dee has over twenty years of real estate development experience in the restaurant/hospitality industry having also held senior management positions with Marriott International and Taco Bell Corp. Mr. Dee is an active member of the International Counsel of Shopping Center Owners. Mr. Dee attended the State University of New York at Buffalo.

 

This Proxy Statement, including the section entitled “Compensation Discussion and Analysis” set forth below, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based on our current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding actions to be taken in the future. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those set forth in the section on forward-looking statements and in the risk factors in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 26, 2010 and in our quarterly reports on Form 10-Q and current reports on Form 8-K as filed with the SEC.

 

Compensation Discussion and Analysis

 

This Compensation Discussion and Analysis (“CD&A”) provides an overview of our executive compensation program, together with a description of the material factors underlying the decisions that resulted in the compensation provided to our Chief Executive Officer, Chief Financial Officer and the other executive officers who were the highest paid during the fiscal year ended December 26, 2010 (collectively, the “named executive

officers”), as presented in the tables which follow this CD&A. This CD&A contains statements regarding our performance targets and goals. These targets and goals are disclosed in the limited context of our compensation program and should not be understood to be statements of management’s expectations or estimates of financial results or other guidance. We specifically caution investors not to apply these statements to other contexts.

 

Objective of Compensation Policy

 

The objective of the Company’s compensation policy is to provide a total compensation package to each named executive officer that will enable us to:

 

 

Overall, our compensation program is designed to reward individual and Company performance. As discussed further below, a significant portion of named executive officer compensation is comprised of a combination of annual cash bonuses, which reward annual Company and executive performance, and equity compensation, which rewards long-term Company and executive performance. We believe that by weighting total compensation in favor of the bonus and long-term incentive components of our total compensation program, we appropriately reward individual achievement while at the same time providing incentives to promote Company performance. We also believe that salary levels should be reflective of individual performance and therefore factor this into the adjustment of base salary levels each year.

 

Process for Setting Total Compensation

 

Generally, our overall compensation package for named executive officers is administered and determined by our Compensation Committee, comprised of a majority of independent non-employee directors. The Company sets annual base salaries, cash bonuses, and equity-based awards for each named executive officer at levels it believes are appropriate considering each named executive officer’s annual review, the awards and compensation paid to the named executive officer in past years, and progress toward or attainment of previously set personal and corporate goals and objectives, including attainment of financial performance goals and such other factors as the Compensation Committee deems appropriate and in our best interests and the best interests of our shareholders. These goals and objectives are discussed more fully below under the headings “Annual Bonus Compensation” and “Equity Compensation.”

 

The Compensation Committee may also, from time to time, consider recommendations from the Chief Executive Officer regarding total compensation for named executive officers. The Compensation Committee does not rely on predetermined formulas or a limited set of criteria when it evaluates the performance of the Chief Executive Officer and our other named executive officers. The Committee may accord different weight at different times to different factors for each named executive officer.

 

Elements of Compensation

 

Our compensation program for named executive officers consists of the following elements of compensation, each described in greater depth below:

 

 

The Company provides few personal benefits to named executive officers, and what personal benefits are provided are generally considered related to each named executive officer’s performance of his duties with the Company. The Company may also enter into employment agreements with named executive officers to provide severance benefits as a recruitment and retention mechanism. Currently, the Company is a party to employment agreements with Mr. Mohseni, entered into at the time of his hire in 2007, and with Mr. O’Connor, entered into upon the consummation of the Company’s initial public offering (the “IPO”) in 2010, each of which provides for severance benefits as described more fully under the heading “Potential Payments upon Termination or Change in Control,” below. Finally, named executive officers participate in the Company’s health and benefit plans, and are entitled to vacation and paid time off based on the Company’s general vacation policies.

 

Employment Agreement

 

The Company does not have any general policies regarding the use of employment agreements, but may, from time to time, enter into such a written agreement to reflect the terms and conditions of employment of a particular named executive officer, whether at the time of hire or thereafter. For example, the Company entered into an employment agreement with Mr. Mohseni at the time of his hire in order to attract Mr. Mohseni to transition from his role as a non-employee Board member to a full time chief executive officer. The Company viewed such a negotiated arrangement as a meaningful recruitment and retention mechanism for Mr. Mohseni. In addition, the Company entered into a written employment agreement with Mr. O’Connor in October 2010 upon completion of the IPO in order to continue to retain Mr. O’Connor as a member of the Company’s senior management team.

 

Base Salary

 

We pay base salaries because salaries are essential to recruiting and retaining qualified employees. Base salaries also create a performance incentive in the form of potential salary increases. Except with respect to Messrs. Mohseni and O’Connor, whose base salaries are set pursuant to their respective employment agreements, base salaries are initially set by the Compensation Committee. These salary levels are set based on the named executive officer’s experience and performance with previous employers and negotiations with individual named executive officers. Thereafter, the Compensation Committee may increase base salaries each year based on its subjective assessment of the Company’s and the individual executive officer’s performance and his or her experience, length of service and changes in responsibilities. Included in this subjective determination is Compensation Committee’s evaluation of the development and execution of strategic plans, the exercise of leadership, and involvement in industry groups. The weight given such factors by the Compensation Committee may vary from one named executive officer to another.

 

Mr. Mohseni’s employment agreement provides him with an annual base salary of $518,000. Mr. Mohseni’s base salary has not been modified since his hire in 2007. The Company determined, at the time of Mr. Mohseni’s hire, that a commitment to pay base salary to him at this level was necessary to recruit him to join the Company. Mr. O’Connor’s employment agreement provides him with an annual base salary of $206,000. The Company determined, at the time of the consummation of the IPO, that a commitment to pay base salary to him at this level was necessary to continue to retain him as a member of the Company’s senior management team.

 

The following table sets forth the base salaries for the named executive officers for the two most recent fiscal years.

 

In February 2011, the Compensation Committee made adjustments to the base salaries for the named executive officers as shown in the table below. The adjusted salaries will take effect on April 1, 2011.

 

 

Annual Bonus Compensation

 

In line with our strategy of rewarding performance, a significant part of the Company’s executive compensation philosophy is the payment of cash bonuses to named executive officers based on an annual evaluation of individual and Company performance, considering several factors as discussed below. Except with respect to Mr. Mohseni, whose target bonus is set at 30% of his base salary pursuant to his employment agreement, the Compensation Committee establishes target bonuses (the amount each named executive officer may receive if performance goals and objectives are met) for each named executive officer at the beginning of the fiscal year. The target bonuses are set at levels the Compensation Committee believes will provide a meaningful incentive to named executive officers to contribute to the Company’s financial performance.

 

In 2010, the Compensation Committee determined that each named executive officer’s bonus would be determined based primarily on the achievement of Company earnings before interest, taxes, depreciation and amortization plus the sum of asset impairment charges, pre-opening costs, management and board of director fees and expenses as well as certain non-cash adjustments, as defined in the credit agreement governing our senior credit facilities (Company EBITDA). For 2010, the Compensation Committee determined to pay bonuses at the target levels if Company EBITDA met or exceeded $42.0 million. Actual Company EBITDA for 2010 was $46.5 million. Although the EBITDA target established by the Compensation Committee for 2010 for the Company was achieved, the Compensation Committee exercised negative discretion to reduce the bonus amounts payable to certain employees, including Messrs. Moser and Dee. Such employees received an actual bonus award that was 80% of the target award. Additionally, the Compensation Committee in its discretion, elected to provide Mr. O’Connor with additional bonus compensation above his target award for his role in the successful completion of the IPO.

 

We use Company EBITDA, together with financial measures prepared in accordance with GAAP, such as revenue and cash flows from operations, to assess our historical and prospective operating performance and to enhance our understanding of our core operating performance. Additionally, we use Company EBITDA internally to evaluate the performance of our personnel and also as a benchmark to evaluate our operating performance or compare our performance to that of our competitors. The use of Company EBITDA as a performance measure permits a comparative assessment of our operating performance relative to our performance based on our GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies.

 

Target and actual bonuses for 2010 awarded to each of the named executive officers are set forth in the table below. The actual bonus amounts are also included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table, below.

 

In February 2011, the Compensation Committee established target bonus award thresholds for the named executive officers as set forth in the table below.

 

 

Equity Compensation

 

We pay equity-based compensation to our named executive officers because it provides a vital link between the long-term results achieved for our shareholders and the rewards provided to named executive officers, thereby ensuring that such officers have a continuing stake in our long-term success.

 

The Company adopted the Bravo Development, Inc. Option Plan (the “2006 Plan”) in order to provide an incentive to employees selected by the Board of Directors for participation. Pursuant to the 2006 Plan, we have 1,414,203 stock options outstanding that were granted between 2006 and 2009, including 717,479 options that have been granted to the named executive officers. In connection with the IPO, the Board of Directors determined, pursuant to the exercise of its discretion in accordance with the 2006 Plan, that upon the consummation of the IPO (i) each then outstanding option award under the 2006 Plan would be deemed to have vested in a percentage equal to the greater of 80.0% or the percentage of the option award already vested as of that date and, (ii) each then outstanding option award would be deemed 80.0% exercisable. Any unvested and/or unexercisable portion of each then outstanding option award was forfeited in accordance with the terms of the 2006 Plan. At December 26, 2010 all the outstanding options under the 2006 Plan were fully vested and immediately exercisable.

 

The following table sets forth the number of options granted to each of the named executive officers.

 

 

 

 

Bravo Brio Restaurant Group, Inc. Stock Incentive Plan

 

On October 6, 2010, our Board of Directors approved and, on October 18, 2010, our shareholders approved the Bravo Brio Restaurant Group, Inc. Stock Incentive Plan (the “Stock Incentive Plan”). The Stock Incentive Plan became effective on October 26, 2010 upon the completion of our IPO. In connection with the adoption of the Stock Incentive Plan, the Board of Directors terminated the 2006 Plan and no further awards will be granted under the 2006 Plan after such date. However, the termination of the 2006 Plan will not affect

awards outstanding under the 2006 Plan at the time of its termination and the terms of the 2006 Plan will continue to govern outstanding awards granted under the 2006 Plan. A summary of the Stock Incentive Plan and the 2006 Plan is provided below.

 

Summary of the Stock Incentive Plan

 

The purpose of the Stock Incentive Plan is to assist us and our subsidiaries in attracting and retaining valued employees, consultants and non-employee directors by offering them a greater stake in our success and a closer identity with us, and to encourage ownership of our common shares by such individuals. Our employees, consultants and members of our Board of Directors, as well as employees and consultants of our subsidiaries, are eligible to participate in the Stock Incentive Plan. The Stock Incentive Plan provides for the grant of stock options, restricted stock, restricted stock units, stock appreciation rights and other stock-based awards, collectively referred to as “awards.” Each award will vest 25% per year for four years.

 

The following table sets forth the number of restricted shares granted to each of the named executive officers during fiscal 2010, because Mr. Moser retired from the Company effective on December 26, 2010, he was not granted any restricted shares in 2010:

 

 

Severance and Transaction-Based Benefits

 

Except with respect to Mr. Mohseni and Mr. O’Connor, the Company does not have any agreements, plans or programs for the payment of severance to any named executive officers. However, as a recruitment incentive for Mr. Mohseni and also as a means for the Company to provide security to Mr. Mohseni and to Mr. O’Connor in the event of their termination of employment for reasons beyond their control or a change in the material terms of their employment without consent, the Company agreed to pay them severance benefits. Mr. Mohseni is entitled to two years of severance in the event of his termination of employment in limited circumstances and Mr. O’Connor’s employment agreement provides for the payment of two years of severance upon his termination of employment in limited circumstances.

 

Perquisites

 

In 2010, we provided certain personal-benefit perquisites to named executive officers as summarized below. The aggregate incremental cost to the Company of the perquisites received by each of the named executive officers in 2010 did not exceed $10,000 and accordingly, such benefits are not included in the Summary Compensation Table below.

 

Car Allowance.  The Company provided car allowances of $4,800 for Messrs. O’Malley and Moser in 2010. These allowances will be discontinued in 2011.

 

Complimentary Dining.  The Company provides the named executive officers with complimentary dining privileges at any of our restaurants. The Company views complimentary dining privileges as a meaningful benefit to our named executive officers as it is important for named executive officers to experience our product in order to better perform their duties for the Company.

General Benefits

 

The following are standard benefits offered to all eligible Company employees, including named executive officers.

 

Retirement Benefits.  The Company maintains a tax-qualified 401(k) savings plan. However, our named executive officers do not participate in our 401(k) savings plan.

 

Medical, Dental, Life Insurance and Disability Coverage.  Active employee benefits such as medical, dental, life insurance and disability coverage are available to all eligible employees, including our named executive officers.

 

Other Paid Time-Off Benefits.  We also provide vacation and other paid holidays to all employees, including the named executive officers, which our Compensation Committee has determined to be appropriate for a Company of our size and in our industry.

 

Tax and Accounting Considerations

 

U.S. federal income tax generally limits the tax deductibility of compensation we pay to our Chief Executive Officer and certain other highly compensated executive officers to $1.0 million in the year the compensation becomes taxable to the executive officers. There is an exception to the limit on deductibility for performance-based compensation that meets certain requirements. Although deductibility of compensation is preferred, tax deductibility is not a primary objective of our compensation programs. Rather, we seek to maintain flexibility in how we compensate our executive officers so as to meet a broader set of corporate and strategic goals and the needs of shareholders, and as such, we may be limited in our ability to deduct amounts of compensation from time to time. Accounting rules require us to expense the cost of our stock option grants. Because of option expensing and the impact of dilution on our shareholders, we pay close attention to, among other factors, the type of equity awards we grant and the number and value of the shares underlying such awards.

 

Summary Compensation Table

 

 

 

 

Grants of Plan Based Awards

 

 

 

 

Outstanding Equity Awards at December 26, 2010

 

 

 

 

 

Potential Payments upon Termination or Change in Control

 

Termination of Employment

 

With the exception of Mr. Mohseni and Mr. O’Connor, the Company does not have any agreements with the named executive officers that would entitle them to severance payments upon termination of employment.

 

Mr. Mohseni’s employment agreement provides him with two years of continued base salary following his termination of employment by the Company without cause or by him for good reason. For purposes of Mr. Mohseni’s employment agreement, “cause” generally means Mr. Mohseni’s fraud or dishonesty in connection with his duties to the Company, his failure to perform the lawful duties of his position, his conviction of a felony or plea of guilty or no contest to a charge or commission of a felony, or his commission of any act or violation of law that could reasonably be expected to bring the Company into material disrepute, and “good reason” generally means the Company’s reduction in Mr. Mohseni’s base salary, the failure of the Company to pay base salary or benefits under Mr. Mohseni’s employment agreement, the Company’s material reduction in Mr. Mohseni’s overall benefits (other than pursuant to a general reduction in benefits for the Company’s workforce) or a requirement that Mr. Mohseni relocate his principal place of employment more than 50 miles from Columbus, Ohio.

 

Mr. Mohseni’s right to severance is conditioned upon his refraining from competing with the Company for the two years following his termination of employment and compliance with confidentiality and nonsolicitation obligations under his employment agreement.

 

Assuming Mr. Mohseni’s employment was terminated by the Company without cause or by Mr. Mohseni for good reason on December 26, 2010, he would have received a total of approximately $1.0 million in severance under his employment agreement.

 

The Company also entered into an employment agreement with Mr. O’Connor in connection with the consummation of the IPO, which provides him with two years of continued base salary following his termination of employment by the Company without cause or by him with good reason. For purposes of Mr. O’Connor’s employment agreement, “cause” generally means Mr. O’Connor’s fraud or dishonesty in connection with his duties to the Company, his failure to perform the lawful duties of his position, his conviction of a felony or plea of guilty or no contest to a charge or commission of a felony, or his commission of any act or violation of law that could reasonably be expected to bring the Company into material disrepute, and “good reason” generally means, without the consent of Mr. O’Connor, a material diminution in Mr. O’Connor’s base salary, a material diminution in Mr. O’Connor’s authority, duties, or responsibilities, a material change in the geographic location at which Mr. O’Connor must perform the services, or any other action or inaction that constitutes a material breach by the Company of the employment agreement.

 

Mr. O’Connor’s right to severance is conditioned upon his refraining from competing with the Company for the two years following his termination of employment and compliance with confidentiality and nonsolicitation obligations under his employment agreements. Assuming Mr. O’Connor’s employment was terminated by the Company without cause or by Mr. O’Connor for good reason on December 26, 2010, he would have received a total of approximately $0.4 million in severance under his employment agreement.

 

Change in Control and Certain Corporate Transactions

 

In the event of a change in control, our Board of Directors may take any one or more of the following actions with respect to awards that are outstanding as of such change in control:

 

 

 

A change in control is generally defined under the Stock Incentive Plan as:

 

 

In the event that the Compensation Committee determines that any corporate transaction or event (such as a stock dividend, recapitalization, forward split or reverse split, reorganization, merger or consolidation) affects our common shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of the Stock Incentive Plan participants, the Compensation Committee will proportionately and equitably adjust the number and kind of shares which may be issued in connection with awards, the number and kind of shares issuable in respect of outstanding awards, the aggregate number and kind of shares available under the Stock Incentive Plan (on an aggregate, individual and/or award-specific basis) and the exercise price or grant price relating to any award or, if deemed appropriate, make provision for a cash payment with respect to any outstanding award. The Compensation Committee may also make adjustments in the terms and conditions of awards in recognition of unusual or nonrecurring events or in response to changes in applicable laws, regulations or accounting principles.

 

Director Compensation

 

In August 2010, then-current directors who were not employees of us, our subsidiaries or our private equity sponsors received an annual fee of $25,000. Directors do not receive any other fees for participating in meetings or otherwise providing services as non-employee directors.

 

From and after October 26, 2010, the date of the completion of the IPO, each independent director is paid a base annual retainer of $20,000. Independent directors also receive an annual retainer of $5,000 for each committee on which they sit, and the chair of the Audit Committee receives an additional annual retainer of $20,000.

The Company reimburses directors for their expenses involved in attending Board of Directors and committee meetings. The Company provides non-employee directors with complimentary dining privileges at any of its restaurants. The Company views complimentary dining privileges as a meaningful benefit to its non-employee directors as it is important for non-employee directors to experience its product in order to better perform their duties for the Company.

 

Director compensation for the year ended December 26, 2010 for our non-employee directors is set forth in the following table.

 

 

 

 

The following is the report of the Audit Committee with respect to the Company’s audited financial statements for the fiscal year ended December 26, 2010. The following Report of the Audit Committee shall not be deemed to be soliciting material nor shall such information be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act or under the Exchange Act, except to the extent that we specifically incorporate this information by reference. The following report shall not otherwise be deemed filed under the Securities Act or the Exchange Act.

 

The purpose of the Audit Committee is to assist the Board of Directors in its general oversight of the Company’s financial reporting, internal controls and audit functions. The Audit Committee operates pursuant to a charter. The Audit Committee’s charter describes in greater detail the full responsibilities of the Audit Committee and is available on the Company’s website at www.bbrg.com. Each of the members of the Audit Committee is independent for purposes of NASDAQ Global Market and SEC rules as they apply to audit committee members. In addition, the Board of Directors has determined that James S. Gulmi qualifies as an audit committee financial expert, as defined by the rules and regulations of the SEC, and has financial sophistication in accordance with NASDAQ Global Market rules.

 

The Audit Committee has reviewed and discussed the consolidated financial statements with management and Deloitte & Touche LLP, the Company’s independent registered public accounting firm. Management is responsible for the preparation, presentation and integrity of the Company’s financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Deloitte & Touche LLP is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States of America.

 

The Audit Committee has discussed with Deloitte & Touche LLP the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, “Communication with Audit Committees,” as adopted by the PCAOB in Rule 3200T, and PCAOB Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting That is Integrated with an Audit of Financial Statements.” In addition, Deloitte & Touche LLP has provided the Audit Committee with the written disclosures and the letter required by the Independence Standards Board Standard No. 1, as amended, “Independence Discussions with Audit Committees,” and the Audit Committee has discussed with Deloitte & Touche LLP the firm’s independence.

 

Based on its review of the consolidated financial statements and discussions with and representations from management and Deloitte & Touche LLP referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for fiscal 2010, for filing with the SEC.

 

The Audit Committee has selected the firm of Deloitte & Touche LLP as the independent registered public accounting firm to audit and report upon the Company’s financial statements for fiscal year 2011. In making this selection, the Audit Committee has considered whether Deloitte & Touche LLP’s provision of services other than audit services is compatible with maintaining independence.

 

In accordance with Audit Committee policy and the requirements of applicable law, the Audit Committee pre-approves all services to be provided by the Company’s independent registered public accounting firm. Pre-approval is required for audit services and audit-related services. In some cases, the full Audit Committee provides pre-approval for up to a year, related to a particular defined task or scope of work and subject to a specific budget. In other cases, a designated member of the Audit Committee may have delegated authority from the Audit Committee to pre-approve additional services, and such pre-approval is later reported to the full Audit Committee. Notwithstanding the foregoing, pre-approval by the Audit Committee is not required for any non-audit service provided by Deloitte & Touche LLP with a quoted fee of less than $15,000. See “Fees

for Professional Services” for more information regarding fees paid to Deloitte & Touche LLP for services related to fiscal 2010 and fiscal 2009.

 

AUDIT COMMITTEE

 

James S. Gulmi

Allen Bernstein

Fortunato N. Valenti

 

The following table sets forth certain information, as of February 14, 2011, with respect to the beneficial ownership of the Company’s common shares by:

 

 

In computing the number of common shares beneficially owned by a named person or group and the percentage ownership of that person or group, we deemed to be outstanding the number of common shares, if any, as to which the named person or group has the right to acquire beneficial ownership within 60 days of February 14, 2011. Shares that a person has the right to acquire are deemed to be outstanding for the purpose of computing the percentage ownership of that person, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

 

 

 

 

 

 

Procedures for Approval of Related Person Transactions

 

We do not have a formal written policy for review and approval of transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K. The Audit Committee of our Board of Directors is responsible for review, approval and ratification of “related person transactions” between us and any related person. Under SEC rules, a related person is an officer, director, nominee for director or beneficial holder of more than 5.0% of any class of our voting securities since the beginning of the last fiscal year or an immediate family member of any of the foregoing. Any member of the Audit Committee who is a related person with respect to a transaction under review will not be able to participate in the deliberations or vote on the approval or ratification of the transaction. However, such a director may be counted in determining the presence of a quorum at a meeting of the committee that considers the transaction.

 

Other than the arrangements described below and under “Compensation Discussion and Analysis,” since December 27, 2009, there has not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed $120,000 and in which any related person had or will have a direct or indirect material interest.

 

Reorganization Transactions

 

Immediately prior to the consummation of the Company’s IPO in October 2010, pursuant to an exchange agreement dated as of October 18, 2010 among the Company, Bravo Development Holdings LLC (“Holdings”), our majority shareholder at that time, and each of our then existing shareholders, the Company completed an exchange of each share of the Company’s then outstanding common stock and Series A preferred stock for our new common shares. An aggregate of 14,250,000 new common shares were issued by us in exchange for all shares of our outstanding Series A preferred stock and our outstanding common stock. Under the terms of the exchange agreement, each outstanding share of Series A preferred stock together with all accrued and undeclared dividends thereon was exchanged for approximately 117.9 new common shares and each outstanding share of common stock was exchanged for approximately 6.9 new common shares. After completion of the exchange, the Company had 7,234,370 and 7,015,630 common shares, no par value per share, outstanding as a result of the exchange of the Company’s outstanding common stock and Series A preferred stock, respectively. Following the exchange transactions and immediately prior to the consummation of our IPO, Holdings distributed the new common shares it received as part of the exchanges detailed above to its members on a pro rata basis in accordance with such members’ ownership interest in the units of Holdings. Following this distribution, Holdings was dissolved.

 

BRS Management Agreement

 

On the June 29, 2006, or the Effective Date, we entered into a management agreement with Bruckmann, Rosser, Sherrill & Co., Inc., or BRS Inc., pursuant to which BRS Inc. agreed to provide us certain advisory and consulting services relating to business and organizational strategy, financial and investment management and merchant and investment banking. This agreement was mutually terminated by the parties effective upon the consummation of our IPO in October 2010 and the payment by us of a $0.4 million termination payment. Under the terms of the management agreement, we agreed to pay BRS Inc. (i) in each of 2007 and 2008, an annual fee equal to the greater of $0.2 million and 0.75% of EBITDA, as defined in the management agreement, (ii) in 2009 and each following year, an annual fee equal to $0.8 million and (iii) a transaction fee in connection with each acquisition, divesture and public offering of equity securities in which we engaged (including our IPO), the amount of which varied depending on the size and type of transaction, plus, in each

case, reimbursement for all reasonable out-of-pocket expenses incurred by BRS Inc. We also agreed to indemnify BRS Inc. for any losses and liabilities arising out of its provision of services to us or otherwise related to its performance under the management agreement. For our fiscal years ended December 26, 2010, December 27, 2009 and December 28, 2008, we paid BRS Inc. or otherwise accrued $1.2 million, $0.8 million and $0.3 million, respectively, in management fees and expenses.

 

Castle Harlan Management Agreement

 

On the Effective Date, we also entered into a management agreement with Castle Harlan, Inc., or Castle Harlan, pursuant to which Castle Harlan agreed to provide us certain advisory and consulting services relating to business and organizational strategy, financial and investment management and merchant and investment banking. This agreement was also mutually terminated by the parties effective upon the consummation of our IPO in October 2010 and the payment by us of a $0.4 million termination payment. Under the terms of the management agreement, we agreed to pay Castle Harlan (i) in each of 2007 and 2008, an annual fee equal to the greater of $0.2 million and 0.75% of EBITDA, as defined in the management agreement, (ii) in 2009 and each following year, an annual fee equal to $0.8 million and (iii) a transaction fee in connection with each acquisition, divesture and public offering of equity securities in which we engaged (including our IPO), the amount of which varied depending on the size and type of transaction, plus in each case reimbursement for all reasonable out-of-pocket expenses incurred by Castle Harlan. We also agreed to indemnify Castle Harlan for any losses and liabilities arising out of its provision of services to us or otherwise related to its performance under the management agreement. For our fiscal years ended December 26, 2010, December 27, 2009 and December 28, 2008, we paid Castle Harlan or otherwise accrued $1.2 million, $0.8 million and $0.3 million, respectively, in management fees and expenses.

 

Securities Holders Agreement

 

On the Effective Date, we entered into a securities holders agreement among us, Holdings, Alton Doody and certain of our other shareholders. The securities holders agreement, among other things: (i) restricted the transfer of our equity securities and (ii) granted preemptive rights on issuances of our equity securities, subject to certain exceptions, including issuances pursuant to certain public equity offerings. The securities holders agreement was terminated upon the consummation of our IPO pursuant to the terms of the exchange agreement described above under “— Reorganization Transactions.”

 

New Investors Securities Holders Agreement

 

On the Effective Date, we entered into a new investors securities holders agreement among us, Holdings, certain of our named executive officers and certain of our other shareholders. The new investors securities holders agreement, among other things: (i) restricted the transfer of our equity securities, (ii) granted us a purchase option on our equity securities held by employee shareholders upon certain termination events, (iii) required each shareholder who was a party to the agreement to consent to a sale of our company if such sale is approved by Holdings, (iv) granted tag-along rights on certain transfers of our equity securities by any shareholder who was a party to the agreement and (v) granted preemptive rights on issuances of our equity securities, subject to certain exceptions, including issuances pursuant to certain public equity offerings. The new investors securities holders agreement was terminated upon the consummation of our IPO pursuant to the terms of the exchange agreement described above under “— Reorganization Transactions.”

 

Registration Rights Agreement

 

On the Effective Date, we entered into a registration rights agreement with substantially all of our then existing shareholders entitling them to certain rights with respect to the registration of their shares of common stock under the Securities Act. Shareholders who purchased shares in our IPO are not parties to the registration rights agreement. Under the registration rights agreement, certain holders of our common shares may demand that we file a registration statement under the Securities Act covering some or all of such holders’ shares. The registration rights agreement limits the number of demand registration requests the holders may require us to file to six; however, holders of at least a majority of our common shares issued to Bravo Development

Holdings LLC may require us to file an unlimited number of registration statements on Form S-3. In addition, certain holders of our common shares have certain “piggyback” registration rights. If we propose to register any of our equity securities under the Securities Act other than pursuant to a demand registration or specified excluded registrations, such holders may require us to include all or a portion of their common shares in the registration. Each shareholder party to the registration rights agreement has agreed not to effect any public sale or distribution of our securities for its own account during the ten day period prior to and during the 90 day period beginning on the effective date of a registration statement filed with the SEC. We have agreed not to effect any public sale or distribution of our securities (subject to certain exceptions) during the ten day period prior to and during the 90 day period beginning on the effective date of a registration statement filed with the SEC. All fees, costs and expenses of any registration effected pursuant to the registration rights agreement including all registration and filing fees, printing expenses, legal expenses will be paid by us.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires the Company’s executive officers, directors and persons who beneficially own more than 10% of the Company’s common shares to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms filed by such persons.

 

Based solely on the Company’s review of such forms furnished to the Company and written representations from certain reporting persons, the Company believes that all filing requirements applicable to the Company’s executive officers and directors were complied with and filed in a timely manner. Bravo Development Holdings LLC, a more than 10% shareholder of the Company during fiscal 2010, filed one late Form 3 with respect to the registration of our common shares in connection with our IPO.

 

Shareholder proposals may be included in the Company’s proxy materials for an annual meeting so long as they are provided to us on a timely basis and satisfy certain other conditions established by the SEC, including specifically under Rule 14a-8 of the Exchange Act. To be timely, a proposal to be included in the Company’s Proxy Statement must be received at the Company’s principal executive offices, addressed to the Company’s Secretary, not less than 120 calendar days before the date of the Company’s Proxy Statement released to shareholders in connection with the previous year’s annual meeting. Accordingly, for a shareholder proposal to be included in the Company’s proxy materials for the Company’s 2012 Annual Meeting of Shareholders, the proposal must be received at the Company’s principal executive offices, addressed to the Company’s Secretary, not later than the close of business on October 26, 2011.

 

In addition, the Company’s Second Amended and Restated Regulations require that the Company be given advanced notice of shareholder proposals containing nominations for election to the Board of Directors or other matters which shareholders wish to present for action at an annual meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the shareholder proposal included in the Proxy Statement and form of proxy/voting instruction card pursuant to the SEC’s rules. The Company’s Second Amended and Restated Regulations separately require that any shareholder proposal intended to be brought before the annual meeting of shareholders, including a proposal nominating one or more persons for election as directors, be received in writing by the Company’s Secretary at the address listed below not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting, this year being April 14, 2012; provided, however, that in the event that the date of the 2012 Annual Meeting is advanced by more than 20 days, or delayed by more than 70 days, from the first anniversary of the 2011 Annual Meeting, the notice must be received not earlier than 120 days prior to such meeting and not later than the close of business on the later of the 90th day prior to such meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. The Company’s Second Amended and Restated Regulations set forth certain informational requirements for shareholders’ nominations of directors and other proposals.

Shareholders must send such proposals to: James J. O’Connor, Chief Financial Officer, Treasurer and Secretary, Bravo Brio Restaurant Group, Inc., 777 Goodale Boulevard, Suite 100, Columbus, Ohio 43212.

 

At the date of this Proxy Statement, the only business which the Board of Directors intends to present or knows that others will present at the meeting is as set forth above. If any other matter or matters are properly brought before the meeting, or any adjournment thereof, it is the intention of the persons named in the accompanying form of proxy to vote the proxy on such matters in accordance with their best judgment.

 

Accompanying this Proxy Statement is our Annual Report to Shareholders for the fiscal year ended December 26, 2010, which includes our Annual Report on Form 10-K filed with the SEC. The Annual Report is not incorporated into this Proxy Statement and is not proxy soliciting material.

 

We make available on our website, www.bbrg.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after such documents are electronically filed with or furnished to the SEC. We will provide to any shareholder without charge, upon the written request of that shareholder, a copy of our Annual Report on Form 10-K (without exhibits), including financial statements, for the fiscal year ended December 26, 2010. Such requests should be addressed to: Bravo Brio Restaurant Group, Inc., 777 Goodale Boulevard, Suite 100, Columbus, Ohio 43212, (614) 326-7944 Attention: Investor Relations.

 

In the event there are not sufficient votes to approve any proposal incorporated in this Proxy Statement at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of proxies from holders of our common shares. Proxies that are being solicited by our Board of Directors grant discretionary authority to vote for any adjournment, if necessary. If it is necessary to adjourn the Annual Meeting, and the adjournment is for a period of less than 30 days, no notice of the time and place of the adjourned meeting is required to be given to the shareholders other than an announcement of the time and place at the Annual Meeting. A majority of the shares represented and voting at the Annual Meeting is required to approve the adjournment, regardless of whether there is a quorum present at that meeting.

 

To reduce the expense of delivering duplicate proxy materials to shareholders who may have more than one account holding Company common shares, but sharing the same address, we have adopted a procedure approved by the SEC called “householding.” Under this procedure, certain shareholders of record who have the same address and last name will receive only one copy of this Proxy Statement and related materials and, as applicable, any additional proxy materials that are delivered pursuant to a request by such shareholders until such time as one or more of these shareholders notifies us that they want to receive separate copies. This procedure reduces duplicate mailings and saves printing costs and postage fees, as well as natural resources. Shareholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.

 

If you received a householded mailing this year and you would like to have additional copies of the Company’s annual report and/or Proxy Statement if you requested such materials, mailed to you, or you would like to opt out of this practice for future mailings, please submit your request to Investor Relations via e-mail at investorrelations@bbrg.com, by mail to Investor Relations, Bravo Brio Restaurant Group, Inc., 777 Goodale Boulevard, Suite 100, Columbus, Ohio 43212 or call at (614) 326-9477. The Company will promptly send additional copies of the annual report and/or Proxy Statement and related materials, as applicable, upon

receipt of such request. You may also contact the Company if you received multiple copies of the annual report and/or the Proxy Statement and related materials and would prefer to receive a single copy in the future.

 

By Order of the Board of Directors,

 

Saed Mohseni

President and Chief Executive Officer

 

James J. O’Connor

Chief Financial Officer. Treasurer and Secretary

 

February 23, 2011

		Shareowner ServicesSM P.O. Box 64945 St. Paul, MN 55164-0945

TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE AND RETURN THIS PROXY CARD.

ò Please detach here ò

The Board of Directors Recommends a Vote FOR All Nominees and FOR Items 2 and 4, and 3 years for Item 3.

1.

Election of directors:

FOR

AGAINST

ABSTAIN

FOR

AGAINST

ABSTAIN

A.

Allen J. Bernstein

o

o

o

C.

Saed Mohseni

o

o

o

B.

James S. Gulmi

o

o

o

2.

Ratification of the appointment of Deloitte & Touche LLP as independent registered public accounting firm for the year ended 12/25/2011.

o

For

o

Against

o

Abstain

The Board of Directors recommends a vote for 3 years:

3.

To recommend, by non-binding vote, the frequency of a vote on executive compensation.

o

1 Year

o

2 Years

o

3 Years

o

Abstain

4.

Advisory vote for compensation of executive officers.

o

For

o

Against

o

Abstain

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD RECOMMENDS.

Address Change? Mark box, sign, and indicate changes below:

o

Date

Signature(s) in Box

Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy.

BRAVO BRIO RESTAURANT GROUP, INC.

ANNUAL MEETING OF SHAREHOLDERS

Thursday, April 14, 2011
3:00 p.m. Eastern Standard Time

Brio Polaris
1500 Polaris Parkway
Columbus, OH 43240

		Bravo Brio Restaurant Group, Inc. 777 Goodale Boulevard, Suite 100 Columbus, OH 43212		proxy

This proxy is solicited by the Board of Directors for use at the Annual Meeting on April 14, 2011.

The shares of stock you hold in your account or in a dividend reinvestment account will be voted as you specify on the reverse side.

If no choice is specified, the proxy will be voted “FOR” All Nominees and “FOR” Items 2 and 4, and 3 years for Item 3.

By signing the proxy, you revoke all prior proxies and appoint Saed Mohseni and James J. O’Connor, and each of them with full power of substitution, to vote your shares on the matters shown on the reverse side and any other matters which may come before the Annual Meeting and all adjournments.

See reverse for voting instructions.

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