Must be nice to be able to forget your salary–Paul Resnikoff of Digital Music News gets the scoop:
So let’s help Joe refresh his recollection.
According to the Securities and Exchange Commission, Joseph J. Kennedy, Pandora’s CEO, President and Board Chair Director) was recently granted Pandora stock options totaling 1.35 million shares at $10.63, or $14,350,500. Kennedy’s salary is $732,000 according to Yahoo! Finance.
As far as I can tell, Tim Westergren’s current salary is undisclosed (although his 2004 employment agreement is available), but we know he’s been selling some stock. $9,932,587 of stock so far to be precise.
Typically, we got a heap of sanctimony about struggling startups from former eMusic CEO and current Venrock VC David Pakman at the House IP Subcommittee hearing on Wednesday. I have to believe that David probably didn’t know about the salary disparity at Pandora. Some might praise Kennedy for holding off exercising his recent stock option grant, but with that eyepopping salary, it’s not like he’s bootstrapping. And we don’t know what shares Kennedy sold either in the IPO or pre-IPO. I can’t believe that the stock options Kennedy is sitting on is the only Pandora stock he’s ever had.
Paul Resnikoff’s reporting in Digital Music News turned up another nugget:
[Pandora] CTO Tom Conrad has taken a cool $13 million off the table, and the broader group of executives and investors have removed more than $70 million in cash in just over a year. By comparison, there’s almost no stock purchasing by this group: since going public, records show buys of just over $1 million.
So this points out one of the problems for Pandora–executive compensation. How is it that a company that makes no profit can afford to pay these astronomical salaries? If the company capped all the executive salaries at $150,000 a year, they’d probably be profitable. And frankly, given the large stock awards for this crew, you would think that their board would demand it.
Remember–Steve Jobs took a $1 salary.
But then Joe Kennedy’s stock is worth about $3 million less than it was when he started these IRFA shenanegans. All Pandora employees must be really grateful for how he’s handling the stock price.
UPDATE: Research has turned up an “investor offer” to purchase shares of Pandora stock from insiders pre-IPO. What this means in English is that when Pandora was still a private company (before their IPO) the venture capital firms that had already invested in Pandora increased their holdings of Pandora stock by purchasing vested shares of common stock from the top executives of the company. This is a little perk that is frequently extended by venture firms to the top executives in a company that the VCs have already invested in that is likely to go public. It let’s the executives “get a little liquidity”. Doesn’t that just sound groovy?
So in the case of Pandora, this happened in August of 2010–you know, when the “royalty crisis was over.”
Here’s the page (p. 113-114) from Amendment Number 6 to Pandora’s S-1 (the form you have to file with the SEC when a company “goes public” or registers it shares in an underwritten public offering of the company’s stock).
So what this means is that even though Joe Kennedy hasn’t exercised any of his newly minted stock options, he did “get a little liquid” to the tune of $2,515,979 back in the pre-IPO days of Pandora.
Oh, and so did Tim Westergren, he got $2,157,375.
Now–I don’t begrudge these guys their millions, I really don’t. But don’t come crying to the artists and songwriters and tell them how you just can’t survive when you’re playing Silicon Valley money games under the table.
Creators would like a little liquidity, too.
PS If you want to voice your opinion on IRFA, Senator Ron Wyden has a comment page on his Senate website click here.