Unearthed: Pandora executives cashing out millions in stock

At same time, lobbying to gut royalties to musicians

Volume 113, No. 1January, 2013

While Pandora continues to lobby lawmakers to slash royalty payments to thousands of musicians and labels, top company management at the Wall Street giant have cashed out company stock worth over $40 million since Pandora’s $235 million IPO in June 2011, according to financial documents analyzed by investigators for the organization musicFirst, with some transactions occurring as recently as Oct 1. Additionally, these top executives were also paid $11.8 million by the company in fiscal year 2012 according to its own proxy statement.  (Pandora founder Tim Westergren is not listed among the five top executives, but has cashed out stock worth over $9 million since the IPO.)
Nearly five years ago, Pandora negotiated discounted royalty rates with music industry organization SoundExchange, subsequently codified into law in the Webcaster Settlement Act. At the time, Pandora praised the deal and exclaimed to its listeners “the royalty crisis is over!”
Pandora is now a publicly traded company on Wall Street, valued at over $1.4 billion as of Oct. 31, and boasting “record” revenues to shareholders, and asking Congress to enact the so-called “Internet Radio Fairness Act” which once again seeks to lower the rates it must pay artists and labels – this time while its executives continue to make millions.
“Pandora has the gall to complain about the fraction of a penny they pay artists for use of our music – without which Pandora couldn’t exist – while Pandora’s top executives have been busy compensating themselves to the tune of millions of dollars per year in salary, bonuses, and stock option grants,” said AFM President Ray Hair. “These guys seem to have no problem exploiting the artists and musicians who give their hearts and souls to creating the music that is the lifeblood of Pandora’s service. We can only hope Congress will see Pandora’s latest attempt to weasel out of the royalty agreement for what it is: an unfair act of pure greed.”
“While Westergren and Pandora stuff one pocket with stock option cash they turn the other pocket inside out to Congress, cry poor and demand a handout from working class musicians,” said musicFirst Coalition Executive Director Ted Kalo. “It’s breathtaking, disingenuous and patently unfair. With a 1.8 billion market cap and a $235 million IPO, we are hopeful Congress will see through this charade.”