Compensation and Human Resources Committee

Charter of the Compensation and Human Resources Committee

I. Committee Purpose

The principal purposes of the Compensation and Human Resources Committee (the “Committee”) are to (i) review and approve Arbitron Inc.’s (the “Company”) corporate goals and objectives with respect to the compensation of the Board of Directors (the “Board”), chief executive officer (the “CEO”), and executive officers other than the CEO; (ii) evaluate the CEO’s performance in light of those goals and objectives, and, either as a Committee or together with the Company’s other independent directors (as directed by the Board), determine and approve the appropriate level and structure of the CEO’s compensation, based on this evaluation; (iii) recommend to the Board appropriate methods and rates of non-employee director compensation; (iv) approve the compensation of executive officers other than the CEO; (v) recommend to the Board for approval incentive and equity-based compensation plans; (vi) produce an annual Committee report for inclusion in the Company’s annual meeting proxy statement as required by rules of the Securities and Exchange Commission (the “SEC”); and (vii) review and approve for inclusion in the Company’s annual meeting proxy statement or Annual Report on Form 10-K, as the case may be, the “Compensation Discussion and Analysis” section relating to executive compensation as required by the SEC. The Committee shall also assist the Board in management development and succession planning, and assess the adequacy of the Company’s human resources principles and philosophy.

II. Committee Composition

The Committee shall consist of at least three members of the Board. All members of the Committee shall meet the independence requirements of the New York Stock Exchange as in effect from time to time and the Company’s Corporate Governance Guidelines. Members of the Committee shall also qualify as "non-employee directors" within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended.

The Board shall designate the chairperson of the Committee, provided that if the Board does not so designate a chairperson, the members of the Committee, by a majority vote, may designate a chairperson.

The Board, upon the recommendation of the Nominating and Corporate Governance Committee, shall appoint members of the Committee. Any vacancy on the Committee shall be filled by majority vote of the Board, and no member of the Committee shall be removed except by majority vote of the Board in accordance with the Company’s bylaws.

The compensation of the Committee members shall be as determined by the Board.

III. Committee Responsibilities and Duties

Committee Structure and Performance. With respect to matters of Committee performance and structure, the Committee shall:
1. Review, as necessary, but at least annually, the Committee’s structure, membership, member qualifications and operations, and recommend to the Board the adoption of any changes the Committee believes necessary or desirable.
2. Have the authority to form and delegate authority to one or more subcommittees consisting of at least two members as it deems appropriate from time to time under the circumstances.
3. Have the authority to conduct or authorize investigations into any matters within the scope of its responsibilities as it shall deem appropriate, including the authority to request any officer, employee, or advisor of the Company to meet with the Committee or any advisors engaged by the Committee.
4. Conduct an annual review and self-evaluation of the performance of the Committee.
5. Periodically review and reassess the adequacy of this Charter and recommend any proposed changes to the Board for approval.
6. Have such other duties as may be delegated from time to time by the Board.
Compensation. With respect to matters of compensation of the Board, executive officers, other executives and key employees of the Company, the Committee shall:
1. Determine and approve, either as a Committee or together with the Company’s other independent directors (as directed by the Board), the appropriate level and structure of compensation for the CEO, and assist the board governance and nomination processes, as appropriate, with CEO evaluations. This includes reviewing and approving corporate goals and objectives relevant to the CEO’s compensation and evaluation of the CEO’s performance and compensation in light of these goals and objectives. In determining the long-term-incentive component of the CEO’s compensation, the committee should consider, among other factors, the Company’s performance and relative shareholder return, the value of similar incentive awards to chief executive officers at comparable companies, and the awards given to the CEO in past years.
2. Have the sole authority to retain, compensate and terminate advisers to assist it in performing any of its responsibilities, including independent legal, accounting, actuarial, compensation and other consultants. The Committee is empowered, without further action by the Board, to cause the Company to pay the compensation of such advisors as established by the Committee.
3. Review and assess the compensation policies, practices and structures for the Company’s executive officers.
4. Review management’s recommendations for, and approve the compensation of executive officers other than the CEO, including for each executive officer who is not a “named executive officer” under rules prescribed by the SEC for compensation disclosure in the Company’s annual meeting proxy statement, any types or amounts of compensation that would be reported as compensation in the Company’s annual meeting proxy statement filed with the SEC if the executive officer were a named executive officer.
5. Periodically review and make recommendations to the Board with respect to non-employee director compensation.
6. Oversee the evaluation of the Company’s senior executives. In conjunction with the Audit Committee in the case of the evaluation of the senior financial management, the Committee shall determine the nature and frequency of the evaluation and the persons subject to the evaluation, supervise the conduct of the evaluation and prepare assessments of the performance of the Company’s senior executives, to be discussed periodically with the Board.
7. Periodically review and make recommendations to the Board with respect to incentive-based compensation and equity-based plans that are subject to approval by the Board. In addition, in the case of any plans or amendments adopted pursuant to an exemption from the shareholder approval requirements of Section 303A.08 of the NYSE Listed Company Manual, the Committee, or a majority of the Company’s independent directors, shall approve such plans or amendments. The Company will notify the NYSE in writing of its reliance on an exemption from the shareholder approval requirement.
8. Exercise all rights, authority and functions of the Board under all of the Company’s stock option, stock incentive, employee stock purchase and other equity-based plans, including without limitation, the authority to interpret the terms thereof, to grant options thereunder and to make stock awards thereunder; provided, however, that, except as otherwise expressly authorized to do so by a compensatory plan, this Charter or a resolution of the Board, the Committee shall not be authorized to amend any such plan. To the extent permitted by applicable law and the provisions of a given equity-based plan, and consistent with the requirements of applicable law and such equity-based plan, the Committee may delegate to one or more executive officers of the Company the power to grant options or other stock awards pursuant to such equity-based plan to employees of the Company or any subsidiary of the Company who are not directors or executive officers of the Company. The Committee, or a majority of the Company’s independent directors, shall approve all equity compensation grants that are made in reliance on an exemption from the shareholder approval requirements of Section 303A.08 of the NYSE Listed Company Manual.
9. With respect to awards to executive officers under any equity-based incentive compensation plan, determine the executive officers to whom such awards will be granted, make all decisions regarding the timing, pricing, amount and other terms of such awards and approve such awards; with respect to such awards to other executives and key personnel, to the extent consistent with the terms of the equity-based plan, the Committee may delegate to the CEO the authority to determine such equity-based awards.
10. Approve the terms of award agreements under any equity-based or other incentive compensation plan.
11. Approve the material terms of employment offers for executive officers of the Company and other key employees; review and approve employment agreements and severance plans and agreements for executive officers and other key employees.
12. Review, assess and approve the benefits program designed and developed for executive officers of the Company. The scope of this function includes only those retirement, health, and other benefit plans unique to the executive personnel of the Company. Review, assess and approve any other perquisites to be provided to executive officers or directors of the Company.
13. Review and discuss annually with management the Company’s “Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K (the “CD&A”). The Committee shall consider annually whether it will recommend to the Board that the CD&A be included in the Company’s Annual Report on Form 10-K, proxy statement on Schedule 14A or information statement on Schedule 14C.
14. Prepare the annual Committee report required by Item 407(e)(5) of Regulation S-K.
Executive Resource Planning. With respect to other matters involving executive personnel, the Committee shall:
1. Review the processes for managing executive succession, diversity and development, and the results of those processes, including:
  1. Recommending to the Board the election of executive officers;
  2. Reporting and making recommendations to the Board regarding adequacy of executive resource development;
  3. Recommending to the Board successors to the executive officers; and
  4. Monitoring the recruitment, development and promotion of candidates expected by the CEO to assume top-tier positions within the next five years as well as other high-potential candidates, with an emphasis on candidates from diverse backgrounds.
Human Resource Principles and Philosophy. The Committee shall serve as a resource to the chief human resources officer of the Company for advice and counsel, as requested, on issues of human resource policy and strategy. The Committee shall assess the adequacy of the Company’s human resource principles and philosophy, including:
1. Issues and changes in strategic human resource policy.
2. The sponsorship of an environment that enables all Company personnel to achieve their full potential.
3. The implementation of the Company’s human resource principles and philosophy in the business units of the Company.
4. The human resource values developed to guide the Company and maintain its reputation as an employer.
Report to Board of Directors. The Committee shall maintain minutes of its meetings and shall regularly report to the Board.
Meetings of the Committee. The Committee shall meet on a regularly scheduled basis at least two times per year, or more frequently as circumstances may dictate. The Committee may also act by unanimous written consent in lieu of a meeting. Meetings of the Committee may be called by the chairperson of the Committee or by the CEO.

Effective Date: February 20, 2007

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