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Pandora Cries Poor as Executives Get Filthy Rich

Tickers in this article: P

NEW YORK (TheStreet) -- The other day Pandora announced that its longtime CTO Tom Conrad would leave the company in three months.

That prompted me to run the numbers on Conrad's options-related riches.

Since April 2012, Conrad has generated proceeds of $43,332,556 mainly by exercising his Pandora employee stock options (I calculated the total proceeds from 50 automatic sales between April 2012 and mid-March 2014).

Please forgive me if that number's off by a couple million or so. It's difficult to keep all the transactions in order as I scan them and do the math on Conrad's insider roster at Yahoo! Finance.

The data reveals something of a startling double standard at Pandora. It's so mind-boggling that I moved through the calculations multiple times just to ensure they were in the ballpark.

How could a company have the audacity to lavish stock options on its executives as it's embroiled in a fight where its main argument is We can't afford to pay you this much? That's the height of arrogance, God awful PR or a mix of both.

For the record, I spot-checked my figures at the SEC Website, where you too can view Pandora's party like it's 1999 insider transaction data.

I should also note -- $43,332,556 represents Conrad's gross proceeds from his many sales of Pandora stock. But when you consider his typical cost bases (16 cents per share, 34 cents per share and, for a relatively small number of options, up to $13.26 per share), the gross isn't far from the net. And, of course, Conrad pays taxes -- as far I know -- on those proceeds so he doesn't receive the entire windfall noted above.

Using the same timeframe, methods and similar disclaimers for Pandora co-founder and former Chief Strategy Officer Tim Westergren, I came up with proceeds of $22,544,500. While he showed more restraint -- or just didn't receive as sweet a deal as Conrad -- $22 million and change in gross proceeds isn't anything to spew at.

We could conduct the same calculations for other Pandora executives and directors and come up with equally-as-mind-blowing numbers.

I've never been opposed to executives getting rich on stock options. It's pointless to cry about the practice. The SEC doesn't seem to care so why should I. That's the height of apathy, I know, but you've got to pick your battles in this life or you risk ending up like Billy Joel's Angry Young Man.

And I've never been one to cry a river for musicians and a record industry that claims Pandora's ripping them off. I tend to agree with Pandora -- the music industrial complex focuses too squarely on royalties, ignoring how the exposure Pandora provides and the data it collects can help market and monetize music in unprecedented and prolific ways.

But what rubs me the wrong away is that, as Conrad, Westergren and others enrich themselves as individuals, they cry poor speaking on behalf of Pandora the company. For years now, Pandora has held exposure and data out as carrots while stopping way short of using these things to diversify its business and benefit the music industry.