Chief financial officer Naveen Chopra will take over as interim CEO during the search for a permanent replacement for Westergren, said the Oakland, California-based company.
Westergren, Pandora's co-founder, succeeded Brian McAndrews as the firm's CEO in March a year ago.
A Pandora rep declined to comment. The company had 31.6 million subscribers at the end of Q1 of 2017, and expects to add 1.3 million paying subscribers in 2017.
Licensing costs have been an on-going issue for the service and it has struggled to expand its reach outside of the U.S. Pandora has also felt significant pressure from the rise of on-demand streaming services like Spotify and Apple Music.
Westergren's departure comes after Pandora agreed to a $480 million investment from SiriusXM, which entitled the satellite radio service to choose three new members of Pandora's board of directors and a new board chairman. "With "digital radio" at the core of our business, and both "Plus" and "Premium" as new, integral parts of our arsenal, Pandora now has all of the tools necessary to capitalize on this opportunity". Pandora sold a 19-percent stake of itself to Sirius XM earlier this month.
The stock climbed in trading Monday following reports that CEO and co-founder Tim Westergren was stepping down. The electric carmaker has increased its credit lines by $800 million as it prepares to start production on its upcoming Model 3 sedan.
There has also been chatter that Verizon would be interested in buying a stake in Pandora.
After Westergren's return as CEO in March, the company launched a new $10 a month on-demand music service which lets users select the songs they want to hear, copying what Spotify and Apple Music already offers. Live Nation instead began working with Pandora rival Spotify to provide a similar partnership that gave the ticketing giant access to Spotify's 100 million global listeners.