EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (this “ Agreement ”) is made
March 2, 2009 by and between Arbitron Inc., a Delaware
corporation (the “ Company ”), and
Dr. Robert Henrick, an individual (“ you
”) (and, together, “ Parties
”).
NOW THEREFORE, in
consideration of your acceptance of employment, the Parties agree
to be bound by the terms contained in this Agreement as
follows:
1.
Engagement . Beginning on a mutually satisfactory date
no later than April 6, 2009 (the “ Effective
Date ”), the Company will employ you as Executive
Vice President, Customer Solutions. You will report directly to the
President and Chief Executive Officer. You will be responsible for
research methods and product management. You will at all times
comply with all policies of the Company then in effect.
2.
Commitment. During and throughout the Employment Term
(as defined in Section 3 below), you must devote substantially
all of your full working time and attention to the Company. During
the Employment Term, you must not engage in any employment,
occupation, consulting or other activity for direct or indirect
financial remuneration unless approved by the President and Chief
Executive Officer and/or the Board of Directors of the Company (the
“ Board ”); provided ,
however , that you may, subject to compliance with the
notice and consent requirements set forth in the Company’s
Corporate Governance Policies and Guidelines, (i) serve in any
capacity with any professional, community, industry, civic
(including governmental boards), educational or charitable
organization, (ii) serve on for-profit entity board(s) having
obtained prior consent and written approval from the Board’s
Nominating and Corporate Governance Committee, (iii) subject
to the Company’s policies applicable to all employees, make
investments in other businesses and manage your and your
family’s personal investments and legal affairs and
(iv) carry out the occasional transition duties you have with
the Johns Hopkins University Applied Physics Lab for up to
12 months following the Effective Date; provided that
any such activities described in clauses (i)-(iv) above do not
materially interfere with the discharge of your duties to the
Company. You will perform your services under this Agreement at the
Company’s headquarters in Columbia, Maryland.
3.
Employment Term . You are an at-will employee. Your
employment with the Company under this Agreement will begin on the
Effective Date and will continue until your employment terminates
(such employment period, the “ Employment Term
”).
4.
Cash and Stock Compensation .
(a)
Base Salary. During your employment hereunder, you
will receive a base salary at a monthly rate of $31,250,
annualizing to $375,000 (“ Base Salary
”). The Company will pay your Base Salary in accordance with
the Company’s regular payroll practices. The
President and
Chief Executive Officer will review your Base Salary no less
frequently than annually. If increased, the increased Base Salary
will become the Base Salary for all purposes of this Agreement.
Your Base Salary will not be decreased without your written
consent.
(b)
Incentive Bonus. Upon meeting the applicable
performance criteria established by the Company’s
Compensation and Human Resources Committee of the Board (the
“ Compensation Committee ”) in its sole
discretion, you will be eligible to receive an annual incentive
bonus (the “ Annual Bonus ”) for a given
fiscal year of the Company targeted at an amount equal to 50% of
your Base Salary in effect at the beginning of such fiscal year
(“ Target Bonus ”). For performance
exceeding such applicable performance criteria in the sole judgment
of the Compensation Committee, the Annual Bonus will be increased
to an amount in excess of the Target Bonus up to a maximum of 150%
of your Base Salary in effect at the beginning of such fiscal year,
which additional bonus amount the Compensation Committee will
determine in its sole discretion. The Annual Bonus, if any, will be
paid when other executives receive their bonuses under comparable
arrangements but, in any event, between January 1 and April 30
of the year following the year with respect to which it is
earned.
(c)
Compensatory Stock Awards. Subject to the
Compensation Committee’s approval, on or as soon as
administratively practicable following the Effective Date, the
Company will grant you an equity award to be valued at $1,300,000
on the date of grant, with the award divided by value into
(i) 75% stock options, and (ii) 25% restricted stock
units, with respect to the Company’s common stock, par value
$0.50 (the “ Common Stock ”). The value
for the options will be determined using the Company’s
standard Black-Scholes assumptions applied as of the date of grant
and the value for the restricted stock units will be determined by
dividing the target value for the restricted stock units by the
Common Stock’s fair market value on the date of grant. The
equity grants will either be under a Company equity plan or under a
special arrangement for you (in any case, referred to as a “
Stock Plan ”). Assuming continued employment,
the options under the grant will vest in equal amounts on an annual
basis over a three year period following the date of grant
(beginning with one-third on the first anniversary), and otherwise
will contain the Company’s customary terms and conditions for
such grants, except as modified by this Agreement. Assuming
continued employment, the restricted stock units under the grant
will vest in equal amounts on an annual basis over a four year
period following the date of grant (beginning with 25% on the first
anniversary) and otherwise will contain the Company’s
customary terms and conditions for such grants, except as modified
by this Agreement. The Compensation Committee at its sole
discretion will consider the grant of additional compensatory stock
awards to you.
(a)
Employee Welfare and Retirement Plans. You will, to
the extent eligible, be entitled to participate at a level
commensurate with your position in all employee welfare benefit and
retirement plans and programs the Company provides to its
executives in accordance with Company policies. You will be covered
under the Company’s Director and Officer liability insurance
policy, to the same extent as other officers.
(b)
Business Expenses. Upon submission of appropriate
documentation in accordance with its policies, the Company will
promptly pay, or reimburse you, for all reasonable business
expenses that you incur in performing your duties under this
Agreement, including, but not limited to, travel, entertainment,
professional dues and subscriptions, as long
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as such
expenses are reimbursable under the Company’s policies. Any
payments or expenses provided in this Section 5(b) will be paid in
accordance with Section 7(c).
(c)
Paid Time Off. You will be entitled to paid time off
in accordance with the standard written policies of the Company
with regard to executives.
6. Termination of At-Will Employment.
(a)
General . Subject in each case to the provisions of
this Section 6, nothing in this Agreement interferes with or
limits in any way the Company’s right to terminate your
employment at any time, for any reason or no reason, with or
without notice, and nothing in this Agreement confers on you any
right to continue in the Company’s employ. If your employment
ceases due to death or for any other reason or for no reason, you
will be entitled to receive (in addition to any compensation and
benefits you are entitled to receive under Section 6(b) or 6(c)
below): (i) any earned but unpaid Base Salary through and
including the date of termination of your employment, (ii) any
earned but unpaid Annual Bonus, (iii) unreimbursed business
expenses in accordance with the Company’s policies; and
(iv) any amounts or benefits to which you are then entitled
under the terms of the benefit plans then sponsored by the Company
in accordance with their terms (and not accelerated to the extent
acceleration does not satisfy Section 409A of the Internal
Revenue Code of 1986, as amended (“
Section 409A ” of the “
Code ”)). Notwithstanding any other provision
in this Agreement to the contrary, any severance benefits to which
you may be entitled will be provided exclusively through the terms
of this Section 6 of this Agreement.
(b)
Termination Without Cause; Resignation for Position
Diminishment. If, during the Employment Term, the Company
terminates your employment without Cause (defined below) or you
resign as a result of Position Diminishment (defined below), you
will be entitled to the following severance benefits:
(i)
Cash Severance . Except as provided in Section 6(c),
the Company will pay to you in cash (i) an amount equal to
1.75 times your Base Salary on an annualized basis, paid in equal
installments over a 12 month period following the Effective
Release Date (as defined below) in accordance with the
Company’s standard payroll policies and procedures and in a
manner not inconsistent with Section 7 hereof. Payment will
cease if subsequent employment is obtained prior to the end of the
12 month period.
(ii)
Benefits . The Company will also pay the full cost of the
health care premiums otherwise payable by you upon your election of
health care continuation coverage for yourself and your qualified
beneficiaries as provided under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“ COBRA ”)
until the earlier of 12 months or your ceasing to qualify for
COBRA coverage (such as by obtaining subsequent
coverage).
(iii)
Release . To receive any severance benefits provided for
under this Agreement or otherwise, you must deliver to the Company
of a general release of claims on the form the Company provides,
which must become irrevocable within 60 days following the
date of your termination of employment. Benefits will be paid or
commence no later than 30 days after such release becomes
effective; provided, however ,
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that if the
last day of the 60 day period for an effective release falls
in the calendar year following the year of your date of
termination, the severance payments will be paid or commence no
earlier than January 1 of such subsequent calendar year. The date
on which your release of claims becomes effective is the “
Effective Release Date .” You must continue to
comply with the covenants under Sections 8 and 9 below to
continue to receive severance benefits.
(iv)
“ Position Diminishment ” means (i) a
change in your reporting responsibilities, titles, duties, or
offices as in effect as of the Effective Date (or, for purposes of
Section 6(c), as in effect immediately before a Change of
Control), or any removal of you from, or any failure to re-elect
you to, any of such positions, that has the effect of materially
diminishing your responsibility, duties, or authority, (ii) a
relocation of your principal place of employment to a location more
than 25 miles from its then current location and that increases the
distance from your primary residence by more than 25 miles, or
(iii) a material reduction in your Base Salary. You may only
resign as a result of a Position Diminishment if you
(x) provide notice to the Company within 90 days
following the Date of Position Diminishment that you consider the
Position Diminishment to be grounds to resign; (y) provide the
Company a period of 30 days to cure the Position Diminishment,
and (z) actually cease employment, if the Position
Diminishment is not cured, by the six month anniversary following
the effective date of the Position Diminishment.
(c)
Change of Control . If, within 12 months
following a Change of Control, your employment ends on a
termination without Cause or you resign for Position Diminishment,
in addition to the compensation and benefits described in
Section 6(b)(ii) above (but in lieu of the compensation under
Section 6(b)(i) and subject to the release required under
Section 6(b)(iii)), the Company will pay to you in cash an
amount equal to 2.625 times your Base Salary on an annualized
basis, paid in equal installments over a 12 month period
following the Effective Release Date in accordance with the
Company’s standard payroll policies and procedures and in a
manner not inconsistent with Section 7 hereof. Payment will
cease if subsequent employment is obtained prior to the end of the
12 month period In addition, any outstanding equity
compensation awards will fully and immediately vest and, as
applicable, become exercisable, provided that the Board will have
the right to suspend exercises or sales with respect to such equity
compensation pending satisfaction of the release requirement, and
provided that the vesting will not accelerate the distribution of
shares underlying equity awards if such acceleration would trigger
taxation under Section 409A(a)(1)(B). The treatment in this
Section 6(c) applies notwithstanding any contrary provisions in the
Stock Plan or any award agreement. For the purpose of this
Agreement, “ Change of Control ”
means:
(i)
consummation of a merger or consolidation to which the Company is a
party if the individuals and entities who were stockholders of the
Company immediately before the effective date of such merger or
consolidation have beneficial ownership (as defined in Rule 13d-3
under the Exchange Act) of less than 50% of the total combined
voting power for election of directors of the surviving Company
immediately following the effective date of such merger or
consolidation; or
(ii)
the direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) in the aggregate of
securities of the Company
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representing
51% or more of the total combined voting power of the
Company’s then issued and outstanding securities by any
person or entity, or group of associated persons or entities acting
in concert; provided, however, that for purposes hereof, any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company will not constitute a Change of Control;
or
(iii)
the direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) in the aggregate of
securities of the Company representing 25% or more of the total
combined voting power of the Company’s then issued and
outstanding securities by any person or entity, or group of
associated persons or entities acting in concert if such
acquisition is not approved by the Board before any such
acquisition; provided , however , that for purposes
hereof, any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company will not constitute a Change of Control;
or
(iv)
consummation of the sale of the properties and assets of the
Company, substantially as an entirety, to any person or entity
which is not a wholly-owned subsidiary of the Company;
or
(v)
the liquidation of the Company is consummated; or
(vi)
a change in the composition of the Board at any time during any
consecutive 24-month period such that the Continuity Directors
cease for any reason to constitute at least a 70 % majority of the
Board. For purposes of this clause, “ Continuity
Directors ” means those members of the Board who
either (A) were directors at the beginning of such consecutive
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