Pandora CEO Joseph Kennedy will get about $8.5 million — a year’s pay and a year’s worth of stock and options — even if he is fired, according to a recent SEC disclosure.
If Kennedy experiences an “involuntary termination,” the disclosure says, he will receive the following:
- One year’s salary.
- Prorated bonus payments.
- COBRA healthcare benefits.
- Career services.
- 12 months’ of vested stock and options.
Executive compensation is notoriously difficult to calculate, so until Pandora discloses its 2011 executive compensation in its proxy form sometime next spring it is hard to say exactly what Kennedy would walk away with if the board decided it didn’t like him any more. Pandora’s investor relations people didn’t immediately return a call requesting clarification.
Last year, however, Kennedy made $504,000 in compensation, $325,000 of which was his base salary. That sounds modest (for a CEO) but he also owned 4.3 million shares, or 2.71 per cent of the company before the IPO. That stake is worth $27 million if Pandora is valued at $1 billion. (It’s currently valued higher than that, at a market cap of $1.65 billion).
In 2012, Kennedy’s base pay is set to rise to $400,000. If you add that into the previous calculation of his involuntary termination jackpot (see page 108), it comes to about $8.5 million in cash and stock. He gets more than $10 million if the company is sold. The new deal offers him six more months’ salary when he leaves than the previous one did.
How did Kennedy obtain this pay-for-failure package? By amazing coincidence, he is also the chairman of Pandora’s board and he served on the board’s 2011 compensation committee (see page 97).
His executive team get slightly less generous severance benefits. CFO Steven Cakebread, CTO Thomas Conrad, general counsel Delida Costin and chief revenue officer John Trimble only get 6 months’ compensation if they’re fired.
If Pandora is acquired, Kennedy gets 18 months’ pay and his team get a year’s pay.
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