Exhibit 10.25

 

GRAPHIC [g206851koi001.jpg]

 

September 11, 2013

 

Brian McAndrews

1000 Second Avenue, Suite 3700

Seattle WA 98104

 

Re:                             Employment Offer

 

Dear Brian:

 

On behalf of Pandora Media, Inc. (the “Company”), we are pleased to offer you
the position of President and Chief Executive Officer, reporting to the
Company’s Board of Directors (the “Board”). This letter agreement sets forth the
terms and conditions of your employment with the Company (“Agreement”) if you
accept and commence such employment.  Please understand that this offer, if not
accepted, will expire on September 11, 2013.

 

1.                                      Responsibilities; Duties. You are
expected to begin work on September 11, 2013 (the “Start Date”).  You will be
appointed to the Company’s Board as its Chairman on the Start Date. You are
required to faithfully and conscientiously perform your assigned duties and to
diligently observe all your obligations to the Company.  Recognizing that you
have pre-existing professional obligations to wind down, we understand that you
may need to provide part-time services until October 7, 2013. Thereafter, you
agree to devote your full business time and efforts, energy and skill to your
employment at the Company, and you agree to apply all your skill and experience
to the performance of your duties and advancing Company’s interests.  The
foregoing shall not preclude you from engaging in civic, charitable or religious
activities or, with the prior consent of the Board, from serving on the boards
of directors of companies that are not competitors to the Company, as long as
the activities do not interfere or conflict with your responsibilities to or
your ability to perform your duties hereunder.  Your current status as a member
of the board of directors of the companies set forth on Schedule I hereto is
expressly permitted so long as it does not create competitive or fiduciary
conflicts.  During your employment with the Company, you may not perform
services as an employee or consultant of any other competitive organization and
you will not assist any other person or organization in competing with the
Company or in preparing to engage in competition with the business or proposed
business of the Company.  You shall comply with and be bound by Company’s
operating policies, procedures, and practices from time to time in effect during
your employment.  You agree that upon termination of your employment with the
Company for any reason, you will be deemed to have resigned from the Board
unless otherwise mutually agreed by both you and the Company.

 

2.                                      Compensation.  In consideration for
rendering services to the Company during the term of your employment and
fulfilling your obligations under this Agreement, you will be eligible to
receive the benefits set forth in this Agreement.

 

a.                                Base Salary.  In this exempt full-time
position, you will earn an annualized base salary of $500,000 (prorated for any
partial pay period that occurs during the term of your employment), subject to
applicable tax withholdings.  Your salary will be payable pursuant to the
Company’s regular payroll policy.  The Compensation Committee of the Board will
review your base salary annually.

 

b.                                Performance Bonus.  Beginning with the
Company’s 2014 fiscal year, you will be eligible to participate in the Company’s
bonus or incentive compensation plan that the Company adopts for each fiscal
year.  Your target bonus under the Company’s bonus or incentive compensation
plan will be 100% of your then current base salary.  The actual bonus amount
paid will be determined in the sole and absolute discretion of the Company’s
Compensation Committee and will be subject to the terms and conditions of any
bonus or

 

--------------------------------------------------------------------------------

 

incentive compensation plan that the Company adopts each year.  Except for the
signing bonus described in Subpart 2.e, below, nothing hereunder shall be
construed or interpreted as a guarantee for you to receive any bonuses or
incentive compensation.

 

c.                                 Business Expenses.  The Company shall, upon
submission and approval of written statements and bills in accordance with the
then regular procedures of the Company, pay or reimburse you for any and all
necessary, customary and usual expenses incurred by you while traveling for or
on behalf of the Company, and any and all other necessary, customary or usual
expenses (including entertainment) incurred by you for or on behalf of the
Company in the normal course of business, as determined to be appropriate by the
Company.  It is your responsibility to review and comply with the Company’s
business expense reimbursement policies.

 

d.                                Relocation and Legal Expenses.  Your primary
work location will be the Company’s headquarters.  As a result, the Company
shall pay reasonable and customary expenses for your relocation to California in
an aggregate amount not to exceed $75,000.  These include moving expenses for
you and your family’s household goods, airfare and lodging expenses for you and
your family and, if necessary, commuting and temporary living expenses for you
and your family for up to six months.  In addition, the Company will reimburse
you for reasonable legal fees incurred in connection with negotiating and
reviewing this letter up to a maximum of $25,000.

 

e.                                 Signing Bonus.  You will receive a signing
bonus of $150,000, payable in a lump-sum as soon as practicable (but in no event
later than ten (10) business days) following the Start Date, subject to
applicable tax withholdings.

 

3.                                      Employee Benefits.  You will be eligible
to participate in any employee benefit plans or programs maintained or
established by the Company including, but not limited to, paid time off, group
health benefits, life insurance, dental plan, and other benefits made available
generally to employees, subject to eligibility requirements and the applicable
terms and conditions of the plan or program in question and the determination of
any committee administering such plan or program.  You will receive four weeks
of paid time off per year to be administered pursuant to the Company’s
applicable policy.  The Company shall reimburse you for the cost of monthly
reserved underground parking near its office.  You will be asked to sign an
Indemnification Agreement with the Company and be subject to the terms and
conditions thereof.

 

4.                                      Severance.  You will be entitled to
severance and change in control benefits as provided in the Pandora Media Inc.
Executive Severance and Change of Control Policy As of December 7, 2011
(“Severance Policy”), as modified herein, which Severance Policy, as modified
below, is incorporated herein.  You will be an “Eligible Officer” under the
Severance Policy and be subject to and benefit from the terms and conditions
thereof, except as modified below.  For the avoidance of doubt, in the event of
any conflict between this Agreement and the Severance Policy, this Agreement
shall control.

 

a.  Section 2. Amendment Or Termination of the Policy and Section 8(c),
Exclusive Discretion, shall not apply. Your rights and obligations under the
Severance Policy and this Agreement may not be modified unless mutually agreed
to by you and the Company in writing.

 

GRAPHIC [g206851koi002.jpg]

 

2

--------------------------------------------------------------------------------

 

b.  Section 3. Eligibility For Severance Benefits Under The Policy, Subpart c
shall be replaced with the following:

 

All benefits that an Eligible Officer may be or become entitled to under this
Policy will terminate immediately if the Eligible Officer, at any time,
materially violates any proprietary information or confidentiality obligation to
the Company thereby causing injury to the Company.

 

c.  Section 4.  Section 4 shall be renamed “Severance Benefits upon Involuntary
Termination” and a new subsection (b) is added to Section 4 that reads as
follows:

 

(b)                             In the event that an Eligible Officer incurs a
Separation from Service by reason of an Involuntary Termination, a Change of
Control is under consideration at the time of the Eligible Officer’s Termination
Date, and a Change of Control occurs within 60 days following the Termination
Date, the Eligible Officer shall be entitled to the following payments and
benefits (which, for the avoidance of doubt, will be in addition to the payments
and benefits set forth in Section 4(a)):

 

(i)                                     a cash payment equal to six (6) times
such Eligible Officer’s monthly base salary in effect on the Termination Date,
paid in a lump sum within 10 days following the later of the effectiveness of
the Release and the date of the Change of Control; provided that if a payment
that is subject to execution of the Release could be made in more than one
taxable year, payment shall be made in the later taxable year;

 

(ii)                                  a cash payment equal to the Eligible
Officer’s annual target bonus prorated to the Termination Date, reduced by the
amount, if any, that has actually been paid prior to the Change of Control under
Section 4(a)(ii), paid in a lump sum within 10 days following the later of the
effectiveness of the Release and the date of the Change of Control; provided
that if a payment that is subject to execution of the Release could be made in
more than one taxable year, payment shall be made in the later taxable year;
provided further that the amount of such payment and any payment under
Section 4(a)(ii) shall not, in the aggregate, exceed the Eligible Officer’s
annual target bonus prorated to the Termination Date; and

 

(iii)                               accelerated vesting, effective on the later
of the effective date of the Release and immediately prior to the Change of
Control, of all outstanding Equity Awards held by the Eligible Officer as of the
Termination Date.

 

d.  Section 6. Definitions, Subpart (ii) shall be replaced with the following:

 

“Cause” means the occurrence of any of the following events: (i) your willful
failure to substantially perform your duties or follow the reasonable and lawful
instructions of the Board; provided, that you will be allowed to cure any such
failure within thirty (30) days of delivery to you by the Board of a written
demand for performance, which will specifically identify the manner in which the
Board believes that you have not substantially performed your duties; (ii) your
intentional misconduct, or gross negligence in performing your duties that
materially injures the Company, monetarily or otherwise; (iii) your conviction
of, or pleading guilty or nolo contendere to, any felony; or (iv) your material
breach of this or any other agreement with the Company, which, if curable, is
not cured within thirty (30) days of delivery to you by the Board of written
notice explaining your presumed breach in reasonable detail.

 

3

--------------------------------------------------------------------------------

 

e.  Section 6. Definitions, Subpart (iii) shall be replaced with the following:

 

“Good Reason” means your resignation from employment after the occurrence of one
of the following events without your written consent: (A) a material reduction
of your base salary which is not part of a broad cost-cutting effort; for the
avoidance of doubt, the reduction of your base salary by more than ten percent
(10%) in any twelve (12) month period shall be deemed a material reduction for
purposes of this clause (A); (B) any requirement that you engage in any illegal
or unethical conduct, after you have given the Company 30 days’ notice and
opportunity to cure; (C) any material breach by the Company of this Agreement or
any other material service agreement between you and the Company, in each case
which you have notified the Board in writing; (D) a relocation of your principal
place of employment by more than fifty (50) miles; or (E) a material reduction
in your duties and responsibilities; provided that in any event, you notify the
Company of the event constituting Good Reason within 90 days and give the
Company 30 days to cure (to the extent capable of cure), and then you resign
within 30 days thereafter.  The parties intend that a resignation for Good
Reason will be treated as an “involuntary separation from service” in accordance
with Treasury Regulation Section 1.409A-1(n)(2)(i), and the Company covenants
and agrees to treat any such resignation in a manner consistent with such
intention.

 

f. Section 7(b) Section 409A. A new subsection (vi) is added to
Section 7(b) that reads as follows:

 

In the event accelerated vesting of Company RSUs (or any other equity-based
awards that are structured to qualify for the short-term deferral exception
described in Treasury Regulation Section 1.409A-1(b)(4)) is subject to execution
of the Release and settlement of such equity-based awards could be made in more
than one taxable year, settlement shall be made in the later taxable year;
provided that, in no event, shall settlement of such awards occur later than two
and one-half months following the calendar year in which the Termination Date
occurs.  For the avoidance of doubt, upon any Involuntary Termination or Change
of Control Termination, any unvested Equity Awards shall cease vesting
immediately on the Termination Date but shall not terminate until the date on
which it is determined whether the Eligible Officer is eligible to receive
accelerated vesting hereunder; provided that, following an Involuntary
Termination, if a Change of Control does not occur within 60 days following the
Termination Date, any remaining unvested Equity Awards that did not accelerate
as a result of such Involuntary Termination shall terminate immediately.

 

5.                                      Equity Grants.  In connection with the
commencement of your employment, you will receive the following equity grants
subject to the terms of the Company’s equity plan:

 

a.                                      Stock options (the “Options”) to
purchase 1,500,000 shares of the Company’s common stock with an exercise price
equal to the fair market value on the date of the grant.  The Options will vest
and become exercisable over a total of five years at the rate of 20% of the
total number of shares on the twelve (12) month anniversary of your Start Date
and 1/60th of the total number of shares each month thereafter, subject to your
continued service with the Company on each such vesting date.  The Options and
any other stock options granted to you by the Company will include a 12-month
post-termination exercise period (but in no event beyond the maximum expiration
date of the option) in the event your continued service with the Company
terminates for any reason.

 

4

--------------------------------------------------------------------------------

 

b.                                      Restricted stock units (the “RSUs”)
representing the right to receive an aggregate of 500,000 shares of the
Company’s common stock, of which (i) 400,000 RSUs will vest in five equal annual
installments on each August 15 starting in 2014 through 2018 and (ii) 100,000
RSUs will vest in four equal annual installments on each August 15 starting in
2014 through 2017; provided that any vesting will be subject to your continued
service with the Company on each such vesting date.

 

6.                                      At-Will Employment.  Your employment
with the Company will be on an “at will” basis, meaning that either you or the
Company may terminate your employment at any time without notice and for any
reason or no reason, without further obligation or liability.  Further, your
continued employment as well as your participation in any benefit programs does
not assure you of continuing employment with the Company.  The Company also
reserves the right to modify or amend the terms of its employee benefit plans at
any time for any reason.  This policy of at-will employment is the entire
agreement as to the duration of your employment.

 

7.                                      Pre-employment Conditions.

 

a.                                      Confidentiality Agreement.  Your
acceptance of this offer and commencement of employment with the Company is
contingent upon the execution, and delivery to an officer of the Company, of the
Company’s Confidential Information and Invention Assignment Agreement, a copy of
which is enclosed for your review and execution (the “Confidentiality
Agreement”), prior to or on your Start Date.

 

b.                                      Right to Work.  For purposes of federal
immigration law, you will be required to provide to the Company documentary
evidence of your identity and eligibility for employment in the United States. 
Such documentation must be provided to us no later than your Start Date, or our
employment relationship with you may be terminated.

 

8.                                      No Conflicting Obligations. You
understand and agree that by accepting this offer of employment, you represent
to the Company that performance of your duties to the Company and the terms of
this Agreement and the Confidentiality Agreement will not breach any other
agreement (written or oral) to which you are a party (including without
limitation, current or past employers) and that you have not, and will not
during the term of your employment with the Company, enter into any oral or
written agreement which may result in a conflict of interest or may otherwise be
in conflict with any of the provisions of this Agreement, the Confidentiality
Agreement or the Company’s policies.  You are not to bring with you to the
Company, or use or disclose to any person associated with the Company, any
confidential or proprietary information belonging to any former employer or
other person or entity with respect to which you owe an obligation of
confidentiality under any agreement or otherwise.  The Company does not need and
will not use such information.  Also, we expect you to abide by any obligations
to refrain from soliciting any person employed by or otherwise associated with
any former employer and suggest that you refrain from having any contact with
such persons until such time as any non-solicitation obligation expires.  To the
extent that you are bound by any such obligations, you must inform the Company
immediately prior to accepting this Agreement.

 

9.                                      General Obligations.  As an employee,
you will be expected to adhere to the Company’s standards of professionalism,
loyalty, integrity, honesty, reliability and respect for all.  Please note that
the Company is an equal opportunity employer.  The Company does not permit, and
will not tolerate, the unlawful discrimination or harassment of any employees,
consultants, or related third parties on the basis of sex, race, color,
religion, age, national origin or ancestry, marital status, veteran status,
mental or physical disability or medical condition, sexual orientation,
pregnancy, childbirth or related medical condition, or any other status
protected by applicable law.  Any questions regarding this EEO statement should
be directed to

 

5

--------------------------------------------------------------------------------

 

Human Resources.

 

10.                               Termination Obligations.

 

a.                                      You agree that all property, including,
without limitation, all equipment, proprietary information, documents, books,
records, reports, notes, contracts, lists, computer disks (and other
computer-generated files and data), and copies thereof, created on any medium
and furnished to, obtained by, or prepared by you in the course of or incident
to your employment, belongs to the Company and shall be returned to the Company
promptly upon any termination of your employment, or sooner if so requested by
the Company.

 

b.                                      Upon your termination of your employment
with the Company for any reason, if applicable, you will resign in writing (or
be deemed to have resigned) from all other offices and directorships then held
with the Company or any affiliate of the Company, unless otherwise agreed with
the Company.

 

11.                               Miscellaneous Terms.

 

a.                                      Entire Agreement. This Agreement,
together with the Severance Policy, as modified herein, your Indemnification
Agreement, Attachment A (the Confidentiality Agreement), set forth the entire
terms of your employment with the Company (other than the equity plan and
applicable form of award agreements) and supersede any prior representations or
agreements, whether written or oral.

 

b.                                      Governing Law. This Agreement will be
governed by the laws of California, without regard to its conflict of laws
provisions.  This Agreement may not be modified or amended except by a written
agreement, signed by an authorized representative of the Company.

 

c.                                       Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which shall together constitute one and the same instrument.

 

d.                                      Severability. Nothing contained in this
Agreement shall be construed as requiring the commission of any act contrary to
law, and wherever there is any conflict between any provision of this Agreement
and any present or future statute, law, ordinance or regulation contrary to
which the parties have no legal right to contract, the latter shall prevail, but
in such event, any provision of this Agreement thus affected shall be curtailed
and limited only to the extent necessary to bring it within the requirements of
the law.  In the event that any part, article, paragraph or clause of this
Agreement shall be held to be indefinite or invalid, the entire Agreement shall
not fail on account thereof, and the balance of the Agreement shall continue in
full force and effect.

 

e.                                       Waiver and Amendment.  Failure or delay
of either party to insist upon compliance with any provision hereof will not
operate as, and is not to be construed as, a waiver or amendment of such
provision or the right of the aggrieved party to insist upon compliance with
such provision or to take remedial steps to recover damages or other relief for
noncompliance.  Any express waiver of any provision of this Agreement will not
operate and is not to be construed as a waiver of any subsequent breach, whether
occurring under similar or dissimilar circumstances.  No provision of this
Agreement may be amended or waived, unless such amendment or waiver is agreed to
in writing, signed by you and by a duly authorized representative of the Board.

 

6

--------------------------------------------------------------------------------

 

f.                                        Section 409A.  The parties intend that
this Agreement and the payments and other benefits provided hereunder be exempt
from the requirements of Section 409A of the Internal Revenue Code of 1986 and
all regulations, rulings, and other guidance issued thereunder, all as amended
and in effect from time to time (“Section 409A”) to the maximum extent possible,
whether pursuant to the short-term deferral exception described in Treasury
Regulation Section 1.409A-1(b)(4) or otherwise.  To the extent Section 409A is
applicable to this Agreement (and such payments and benefits), the parties
intend that this Agreement and such payments and benefits comply with
Section 409A.  Notwithstanding any other provision of this Agreement to the
contrary, this Agreement shall be interpreted, operated, and administered in a
manner consistent with such intentions.  Without limiting the generality of the
foregoing, to the extent any expense reimbursement or the provision of any
in-kind benefit under this Agreement is determined to be subject to
Section 409A, the amount of any such expense eligible for reimbursement, or the
provision of any in-kind benefit, in one calendar year shall not affect the
expenses eligible for reimbursement in any other taxable year, in no event shall
any expenses be reimbursed after the last day of the calendar year following the
calendar year in which you incurred the expenses, and in no event shall any
right to reimbursement or the provision of any in-kind benefit be subject to
liquidation or exchange for another benefit.

 

We are all delighted to be able to extend you this offer and look forward to
working with you.  To indicate your acceptance of the Company’s offer, please
sign and date this Agreement in the space provided below and return it to me,
along with a signed and dated original copy of the Confidentiality Agreement,
prior to the expiration date specified in the opening paragraph of this
Agreement.

 

 

Very truly yours,

 

 

 

PANDORA MEDIA, INC.

 

 

 

 

 

By:

/s/ Delida Costin

 

 

Name: Delida Costin

 

 

Title: General Counsel

 

ACCEPTED AND AGREED:

 

I have read this offer and agree to accept employment with Company under the
terms set forth in this Agreement.

 

Brian McAndrews

 

 

 

/s/ Brian McAndrews

 

Signature

 

 

 

September 11, 2013

 

Date

 

 

7

--------------------------------------------------------------------------------

 

Schedule I

 

List of Approved Board Memberships

 

GrubHub Seamless

The New York Times Co.

AppNexus (Board membership approved through a transition period to end no later
than October 7, 2014.  Limited, non-board advisory service approved thereafter.)

 

8

--------------------------------------------------------------------------------

 

Attachment A

 

Confidential Information and Invention Assignment Agreement

 

9

--------------------------------------------------------------------------------