exv10w4






EXHIBIT 10.4




Arbitron Inc.

Performance Cash Award Program




	 	 	 

	Purpose

	 	Arbitron Inc., a Delaware corporation (the
“Company”), wishes to motivate, reward, and retain
key employees of the Company and its subsidiaries.
To further these objectives, the Company hereby
sets forth this Arbitron Inc. Performance Cash
Award Program (the “Program”), effective as of
___, 2010, to provide Participants with
incentives (“Individual Award Opportunities”) to
earn performance-based bonus awards (“Awards”), in
accordance with Section 162(m) (“Section 162(m)”)
of the Internal Revenue Code of 1986 (the “Code”).
(All references to “Section 162(m)” or any other
Code provision include successor provisions,
related regulations, and amendments.) The Program
provides structure for making a “Performance Award”
as an “Other Stock Based Award” or as otherwise
permitted under the Arbitron Inc. 2008 Equity
Compensation Plan, as amended (the “Equity Plan,”
which defines the preceding two terms).
	 
	 	 
	Participants

	 	During each Performance Period, the Compensation
and Human Resources Committee of the Company’s
Board of Directors (the “Committee” of the “Board”)
may designate some or all of the key employees of
the Company (including those of any subsidiary,
operating unit, or division) as eligible for
Individual Award Opportunities under this Program.
“Participants” are persons the Committee designates
who have not been paid all amounts, if any, due
them under the Program. The Committee will
designate the Participants in the Program for each
Performance Period within the Applicable Period,
except as Section 162(m) permits a later
designation. Eligible individuals are Participants
only with respect to Performance Periods for which
the Committee designates them for participation
under the Program.
	 
	 	 
	Administrator

	 	The Program’s administrator will be the Committee.
The Committee will have exclusive authority under
this Program to make Awards and establish and
determine satisfaction of Performance Goals. The
Committee may satisfy this requirement through (i)
providing that persons who are not “outside
directors” for purposes of Section 162(m) cannot
vote on an issue, (ii) allowing those persons to
abstain from voting, or (iii) creating a
subcommittee of qualifying outside directors to
take action with respect to this Program.
	 
	 	 
	 

	 	The Committee is responsible for the general operation and
administration of the Program and for carrying out its provisions






 









 






	 	 	 

	 

	 	and has full discretion in interpreting and administering the
provisions of the Program. Subject to the express provisions of the
Program, the Committee may exercise such powers and authority of the
Board as the Committee may find necessary or appropriate to carry out
its functions. The Committee will exercise its powers under the
Program in a manner that preserves the Company’s Federal income tax
deduction for payments made under the Program, in accordance with the
requirements of Section 162(m), to the maximum practical extent.
	 
	 	 
	General
Responsibilities
of the 
Committee

	 	Subject to the terms of the Program and after taking into account
the recommendations of the Company’s Chief
Executive Officer, for each Performance Period the Committee
will:






	 	 	 	 	 

	 

	 	 	 	determine any bonus pool award opportunities available,
	 
	 	 	 	 
	 

	 	 	 	designate the individuals who will be Participants in the

Program,
	 
	 	 	 	 
	 

	 	 	 	establish each Participant’s Individual Award Opportunity,
	 
	 	 	 	 
	 

	 	 	 	define “Performance Measures” (as defined in the Equity
Plan), Performance Goals and other Award terms and conditions
for each Participant,
	 
	 	 	 	 
	 

	 	 	 	determine and certify the Award amounts earned, based on
actual performance as compared to the Performance Goals,
	 
	 	 	 	 
	 

	 	 	 	determine and make permitted Negative Discretion Adjustments
to Awards otherwise earned, and
	 
	 	 	 	 
	 

	 	 	 	decide whether, under what circumstances, and subject to what
terms, Awards will be paid on a deferred basis (including
automatic deferrals at the Committee’s election or elective
deferrals at the election of Participants) when and as
permitted by Section 409A of the Code (“Section 409A.”)






	 	 	 

	 

	 	Unless the Program otherwise expressly provides, all designations,
determinations, interpretations, and other decisions made under or
with respect to the Program and all Awards made under the Program are
within the sole and absolute discretion of the Committee and will be
final, conclusive and binding on all persons, including the Company,
Participants, and Beneficiaries or other persons having or claiming
any rights under the Program.






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	Performance
Period

	 	A “Performance Period” is a period for which Performance Goals
are set and during which performance is to be measured to determine whether a Participant is entitled to
payment of an Award under the Program. A Performance Period may coincide with one or more complete or
partial fiscal years of the Company and may overlap. The initial Performance Period (the “Initial
Period”) will be the three fiscal year period beginning January 1, 2010 and ending on December 31, 2012.
	 
	 	 
	Applicable
Period

	 	The “Applicable Period” with respect to any Performance Period
means a period beginning on or before the first day of the Performance Period and ending no later than the
earlier of (i) the 90th day of the Performance Period or (ii) the date on which 25% of the Performance
Period has been completed.
	 
	 	 
	 

	 	Any action required under the Program to be taken within the
Applicable Period may be taken at a later date only if the provisions
of Section 162(m) or the regulations thereunder are modified, or are
interpreted by the Internal Revenue Service, to permit such later
date. In such event, the definition of the Applicable Period under
this Program will be treated as amended accordingly.
	 
	 	 
	Performance Goals

	 	The Committee will, within the Applicable Period, set
one or more  “Performance Goals” for a Performance Period for each
Participant, and/or each group of Participants,
and/or each bonus pool (if any), based on the
achievement of specified Performance Measures.
	 
	 	 
	 

	 	In all cases, Performance Goals are to be set in a manner that will
satisfy any applicable requirements under Treas. Reg. §
1.162-27(e)(2) (as amended from time to time). Such requirements
include requirements that achieving Performance Goals be
‘substantially uncertain’ at the time that they are established, that
Performance Goals be defined in such a way that a third party with
knowledge of the relevant facts could determine whether and to what
extent the Goals have been met, and such a third party could
determine the maximum amount of the resulting Award payable (subject
to the Committee’s right to make Negative Discretion Adjustments).
The Performance Goals are specified for the Initial Period on Exhibit
I to this Program.
	 
	 	 
	Individual
Award
Opportunities

	 	“Individual Award Opportunity” means a Participant’s
opportunity to earn an Award for a given Performance Period,
based on the achievement of the Participant’s Performance Goals. The Committee will establish each
Participant’s Individual Award






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	 	Opportunity, within the Applicable Period, for each Performance
Period.
	 
	 	 
	 

	 	An Individual Award Opportunity may be expressed in a number of
shares and then determined to be the value consistent with that
number, as of the date of the Award (an Other Stock-Based Award) but
may be expressed in dollars or may be based on a formula that is
consistent with the provisions of the Program. The Individual Award
Opportunity is not influenced by a change in the price of Arbitron
common stock after the grant date. If Individual Award Opportunities
are expressed in terms of shares of any bonus pool, the shares of
such bonus pool designated for Individual Award Opportunities may not
exceed 100% of the pool for any Performance Period.
	 
	 	 
	Limitation on
Awards

	 	Notwithstanding any other provision of this Program, the
maximum Award payable under the Program to any individual Participant in any single fiscal year will be
$2 million (or such larger number as the Company’s stockholders may approve with respect to the Equity
Plan).
	 
	 	 
	Negative
Discretion
Adjustments

	 	The Committee’s powers include the power to make “Negative
Discretion Adjustments,” which are adjustments that eliminate or
reduce (but not increase) an Award otherwise payable to a Participant for a Performance Period. No
Negative Discretion Adjustment may cause an Award to fail to qualify as “performance based compensation”
under Section 162(m).
	 
	 	 
	Payment
of Awards

	 	Subject to the limitations set forth in this section, Awards
determined under the Program for a Performance Period will be paid to Participants in cash. Awards will
be paid in a lump sum as soon as practicable following the end of the Performance Period to which the
Awards apply and as provided in the Awards, but, in any event during the calendar year following the end
of the Performance Period, except as provided in the Awards with respect to prior cessations of
employment.
	 
	 	 
	          Certification

	 	No Award will be paid unless and until the Committee, based on the
Company’s audited financial results for such Performance Period (as prepared and
reviewed by the Company’s independent public accountants), has certified in the manner
prescribed under applicable regulations the extent to which the Performance Goals for
the Performance Period have been satisfied and has made its decisions regarding the
extent of any Negative Discretion Adjustment of Awards.






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	          Deferral

	 	The Committee may specify that a portion of the Award for any given
Performance Period will be paid on a deferred basis, in accordance with any Award
payment rules the Committee may establish and announce for the Performance Period, in a
manner compliant with Section 409A.
	 
	 	 
	          Continued
             Employment


	 	The Committee may require that Participants for a Performance
Period must still be employed as of end of the Performance Period and/or
as of the later date that the Awards for the Performance Period are announced to be
eligible for an Award for the Performance Period. Any such requirement must be
established and announced within the Applicable Period, and may be subject to such
exceptions as the Committee may specify within the Applicable Period.
	 
	 	 
	Forfeiture
or Proration

	 	Within the Applicable Period and subject to the Committee
certification required for payment of Awards, the Committee may adopt such forfeiture, proration, or
other rules as it deems appropriate, in its sole and absolute discretion, regarding the impact on
Awards of (i) a Participant’s death, Disability, voluntary termination of employment, termination of
employment by the Company and its subsidiaries other than for Cause, or termination of employment by
the Company and its subsidiaries for Cause, (ii) a “Reorganization Event” or (iii) a “Change in
Control Event” (as the latter two terms are defined in the Equity Plan). The rules for the Initial
Period are set forth on Exhibit I.
	 
	 	 





	 	 	 	 	 

	          Employment 
          Termination


	 	 	 	“Termination of employment” means the time when the
employer-employee or other service-providing relationship between the
Participant and the Company and its Subsidiaries ends for any reason. The Committee, in
its sole discretion, will determine all questions of whether particular terminations or
leaves of absence are terminations of employment. If and to the extent Section 409A
requires, a termination of employment will mean a “separation from service” as defined
in Section 409A.
	 
	 	 	 	 
	          Disability

	 	 	 	“Disability” means a Participant’s disability such as would entitle him
or her to receive disability income benefits pursuant to the long-term disability plan
of the Company or Subsidiary then covering the Participant or, if no such plan exists
or is applicable to the Participant, his or her permanent and total disability within
the meaning of Section 22(e)(3) of the Code; provided, however, that the disability
must also comply with the requirements of Treas. Reg. § 1.409A-3(i)(4).






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	          Cause

	 	 	 	“Cause” will have the meaning set forth in any employment or other agreement
or policy applicable to the Participant or, if no such agreement or policy exists, will
mean (i) dishonesty, fraud, misrepresentation, theft, embezzlement or injury or
attempted injury, in each case related to the Company or any Subsidiary, (ii) any
unlawful or criminal activity of a serious nature, (iii) any breach of duty, habitual
neglect of duty or unreasonable job performance, or (iv) any material breach of any
employment, service, confidentiality or noncompete agreement entered into with the
Company or any Subsidiary.
	 
	 	 	 	 
	          Retirement

	 	 	 	“Retirement” means the termination (other than for Cause or by reason of
death or Disability) of a Participant’s employment or other service on or after the
date on which the Participant has attained the age of 55 and has completed 10 years of
continuous service to the Company or any Subsidiary (such period of service to be
determined in accordance with the retirement/pension plan or practice of the Company or
Subsidiary then covering the Participant, provided that if the Participant is not
covered by any such plan or practice, the Participant will be treated as covered by the
Company’s plan or practice for purposes of this determination).






	 	 	 

	Clawback

	 	If the Board or the Committee determines, in its sole discretion, that a
Participant engaged in fraud or misconduct as a result of which or in connection with which
the Company is required to or decides to restate its financials, the Committee may, in its
sole discretion, impose any or all of the following, to which each Participant agrees by
accepting the Award:






	 	 	 	 	 

	 

	 	 	 	Immediate expiration of the Award, whether vested or not, if
granted within the first 24 months after issuance or filing
of any financial statement that is being restated (the
“Recovery Measurement Period”); and
	 
	 	 	 	 
	 

	 	 	 	Payment or transfer to the Company of the amount in payment
under an Award that consists of the greater of (i) the value
of the Award on the date granted if during the Recovery
Measurement Period and (ii) the value of Award paid during
the Recovery Measurement Period. The Committee may impose a
different determination of the value in its sole discretion.






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	 	 	 	This remedy is in addition to any other remedies that the
Company may have available in law or equity.
	 
	 	 	 	 
	 

	 	 	 	Payment is due in cash or cash equivalents within 10 days
after the Committee provides notice to a Participant that it
is enforcing this clawback. Payment will be calculated on a
gross basis, without reduction for taxes or commissions. The
Company may, but is not required to, accept retransfer of
shares (where applicable) in lieu of cash payments.






	 	 	 

	Other
Plans

	 	A Participant in this Program may not also participate in the
Company’s general bonus plans during any Performance Period if such participation would cause an Award under
this Program to fail to qualify as “performance based” under Section 162(m).
	 
	 	 
	 

	 	Awards will not be treated as compensation for purposes of any other
compensation or benefit plan, program, or arrangement of the Company
or any subsidiary unless and except to the extent that the Board or
the Committee determines in writing.
	 
	 	 
	 

	 	The adoption of this Program may not be construed as limiting the
power of the Board or the Committee to adopt such other incentive
arrangements as either may otherwise deem appropriate.
	 
	 	 
	Legal 
Compliance 

	 	The Company will not make payments of Awards until all
applicable requirements imposed by Federal and state laws, rules, and regulations, and by any applicable
regulatory agencies, have been fully met. No provision in the Program or action taken under it authorizes
any action that Federal or state laws otherwise prohibit.
	 
	 	 
	 

	 	The Program is intended to conform with all provisions of Section
162(m) and Treas. Reg. § 1.162-27 to the extent necessary to allow
the Company a Federal income tax deduction for Awards as “qualified
performance based compensation.”
	 
	 	 
	 

	 	Notwithstanding anything in the Program to the contrary, the
Committee must administer the Program, and Awards may be granted and
paid, only in a manner that conforms to such laws, rules, and
regulations. To the extent permitted by applicable law, the Program
will be treated as amended to the extent necessary to conform to such
laws, rules, and regulations.
	 
	 	 
	Tax Withholding

	 	The Company may make all appropriate provisions for the withholding of Federal, state, and local taxes
imposed with respect to Awards, which provisions may vary with the time and manner of payment.






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	Nontransfer
of Rights

	 	Except as and to the extent the law requires, or as the Program
expressly provides, a Participant’s rights under the Program may not be assigned, pledged, or
otherwise transferred in any way, whether by operation of law or otherwise or through any legal or
equitable proceedings (including bankruptcy), by the Participant to any person.
	 
	 	 
	Beneficiary
Designations

	 	Each Participant may designate in a written form filed with the
Committee (or another designated recipient) the person or persons (the “Beneficiary” or
“Beneficiaries”) to receive the amounts (if any) payable under the Program if the Participant dies
before the Award payment date for a Performance Period. A Beneficiary designation filed under this
section will not be considered a prohibited transfer of rights.
	 
	 	 
	 

	 	A Participant may change a Beneficiary designation at any time
without the Beneficiary’s consent (unless otherwise required by law)
by filing a new written Beneficiary designation with the Committee.
A Beneficiary designation will be effective only if the Company is in
receipt of the designation before the Participant’s death.
	 
	 	 
	 

	 	If no effective Beneficiary designation is made, the beneficiary of
any amounts due will be the Participant’s estate.
	 
	 	 
	Amendment or
Termination
of Program

	 	Subject to the limitations set forth in this
section, the Board or the
Committee may amend, suspend, or terminate the
Program at any
time, without the consent of the Participants or
their Beneficiaries.
	 
	 	 
	 

	 	Without the Participant’s written consent, no amendment or
termination may materially adversely affect the Award rights (if any)
of any already designated Participant for a given Performance Period
once the Committee has announced the Participant designations and
Performance Goals for such Performance Period.
	 
	 	 
	 

	 	The Board or the Committee may make any amendments necessary to
comply with applicable regulatory requirements, including Section
162(m) and regulations thereunder.
	 
	 	 
	Limitations on 
Liability

	 	No member of the Committee and no other
individual acting as a
director, officer, other employee or agent of the
Company will be liable to any Participant, former
Participant, spouse, Beneficiary, or any other
person for any claim, loss, liability, or expense
incurred in connection with the Program. No
member of the Committee will be liable for any
action or determination (including, but limited
to, any decision not to act) made in good faith
with respect to the Program or any Award under
the Program.






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	 	The Company will indemnify and hold harmless each member of the
Committee, director, officer, other employee, or agent of the Company
to whom it or another has delegated or does delegate any duty or
power relating to the administration or interpretation of the
Program, against any cost or expense (including attorneys’ fees) or
liability (including any sum paid in settlement of a claim with the
Board’s approval) arising out of any act or omission to act
concerning this Program unless arising out of such person’s own fraud
or bad faith.
	 
	 	 
	No Employment
Contract

	 	Nothing contained in this Program constitutes an employment
contract between the Company and the Participants. The Program does not give any Participant any
right to be retained in the Company’s employ, nor does it enlarge or diminish the Company’s right
to end the Participant’s employment or other relationship with the Company.
	 
	 	 
	Applicable Law;
Venue;
Jurisdiction;
Jury Trial

	 	The laws of the State of Maryland (other than its choice of law
provisions) govern this Program and its interpretation.
Except as an applicable arbitration agreement provides otherwise,
any action, suit or other legal proceeding arising under or relating
to any provision of this Program must be commenced only in a court of the State of Maryland (or,
if appropriate, a federal court located within the State of Maryland), and the Company and each
Participant consents to the jurisdiction of such a court. With respect to any such court action,
the Company and each Participant hereto (a) submits to the personal jurisdiction of such courts;
and (b) waive any requirement (whether imposed by statute, rule of court, or otherwise) with
respect to personal jurisdiction, inconvenient forum, or service of process.
	 
	 	 
	 

	 	TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE COMPANY AND EACH
PARTICIPANT WAIVES, AND COVENANTS THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING ARISING IN WHOLE
OR IN PART UNDER OR IN CONNECTION WITH THIS PROGRAM, WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, THE PARTIES AGREE THAT ANY PARTY MAY FILE
A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND
BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THEIR RIGHTS TO TRIAL BY JURY IN
ANY PROCEEDING WHATSOEVER BETWEEN






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	 	THEM RELATING TO THIS AGREEMENT OR TO ANY OF THE MATTERS CONTEMPLATED
UNDER THIS PROGRAM OR RELATING TO THE PARTICIPANT’S EMPLOYMENT.
	 
	 	 
	ERISA Treatment

	 	The Company intends that the Program be exempt from regulation under the Employee Retirement Income
Security Act of 1974 (“ERISA ”). The Company, Board, and Committee must at all times interpret and
administer the Program in a manner consistent with that exemption.
	 
	 	 
	Unfunded;
Unsecured

	 	This Program will at all times be entirely unfunded and no
provisions will at any time be made with respect to segregating assets of the Company for payment of
any benefits hereunder. Additionally, nothing contained herein may be construed as giving a
Participant, his or her beneficiary, or any other person, any equity or other interest of any kind in
any assets of the Company or creating a trust of any kind or a fiduciary relationship of any kind
between the Company and any such person. As to any claim for any unpaid amounts under this Program, a
Participant, his or her beneficiary, and any other person having a claim for payment will be unsecured
creditors.
	 
	 	 
	Section 409A

	 	The Program is intended to comply with the requirements of Section 409A and must be construed
consistently with that section. Notwithstanding anything in the Program to the contrary, if the Award
would make payment in connection with a Participant’s “separation from service” within the meaning of
Section 409A, as determined by the Company), and if (x) the Participant is then a “specified employee”
within the meaning of Section 409A at the time of such separation from service (as determined by the
Company, by which determination the Participant, in accepting the Award, agrees to be bound) and (y)
the payment of the Award would result in the imposition of additional tax under Section 409A if
distributed to the Participant within the six month period following his or her separation from
service, then the distribution under such Award will not be made until the earlier of (i) the date six
months and one day following the date of your separation from service or (ii) the 10th day after his
or her date of death, and will be made within 30 days thereafter. Neither the Company nor any
Participant will have the right to accelerate or defer the delivery of any payment except to the
extent specifically permitted or required by Section 409A. In any event, the Company makes no
representations or warranty and will have no liability to Participants or any other person, if any
provisions of or distributions under this Program are determined to constitute deferred compensation
subject to Section 409A but not to satisfy the conditions of that section.






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Arbitron Inc.

Performance Cash Award Program

Exhibit I




Initial Period Performance Goals and Forfeiture Rules




[Performance Goals as determined by the Committee]




	 	 	 

	Termination

	 	If a Participant’s employment ends during a Performance Period, any Award applicable to that
Performance Period will immediately expire without payment, unless the employment cessation is due
to death, Disability, or Retirement. If employment ends because of death, Disability, or
Retirement, the Participant will receive payment when active Participants are paid, based on
satisfaction of the Performance Goals, and with the payment prorated by the portion of the
Performance Period that preceded employment termination over the total Performance Period. These
forfeiture rules will apply to future Performance Periods until the Committee changes them
prospectively.
	 
	 	 
	Effect of a
Substantial
Corporate Change

	 	At a Change in Control Event or Reorganization Event (together a
“Substantial Corporate Change”), outstanding Awards will
convert into restricted cash awards that vest on the third anniversary of the Award date (assuming
continued employment).
	 
	 	 
	 

	 	The value of the restricted cash award would depend upon the timing
of the Substantial Corporate Change:






	 	 	 	 	 

	 

	 	 	 	If the Substantial Corporate Change occurs during months 1
through 18 of the Performance Period, the Award will convert
into restricted cash based on the Target Payout (as specified
in the applicable Award Agreement).
	 
	 	 	 	 
	 

	 	 	 	If the Substantial Corporate Change occurs during months
19-36 of the Performance Period, the Award will convert into
restricted cash based on performance to-date (if measurable)
or to the Target Payout if performance is not measurable.






	 	 	 

	 

	 	Vesting accelerates on unvested Awards if a Participant is terminated
without Cause or, where applicable, resigns for Good Reason during
the 24 month period following a Substantial Corporate Change.







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