Andrew C. Florance
COSTAR GROUPAbout Andrew C. Florance
Founder, President & CEO of CoStar Group since 1987; age 61; BA (Economics), Princeton. Under his leadership, CoStar delivered 55 consecutive quarters of double‑digit revenue growth through 2024, with FY2024 revenue $2.74B (+11% y/y), net income $139M, adjusted EBITDA $241M, and $250M net new bookings; commercial info/marketplace businesses ran at a 43% profit margin in 2024 . Strategic highlights include the Homes.com launch (now the #2 residential marketplace by traffic), acquisition of Matterport (Feb 2025), and Visual Lease (Nov 2024) to extend product and data moats . Board leadership is separated: independent Board Chair (Louise Sams) and Florance as CEO/director; executive sessions of independent directors are held regularly .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| CoStar Group, Inc. | Founder, President & CEO | 1987–present | Scaled from start-up to market leader; >30 acquisitions across six countries; expanded into US, UK, EU, Canada, APAC; led IPO (1998) and platform expansion across CoStar, LoopNet, Apartments.com, Homes.com . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Virginia Commonwealth University | Board of Visitors | n/a | Higher education governance . |
| American Real Estate Society | Board of Directors | n/a | Industry body oversight . |
| Management Leadership for Tomorrow | Governing Board | n/a | Talent pipeline and DEI . |
| National Cathedral | Cathedral Chapter (Member) | n/a | Non-profit governance . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 971,962 | 997,000 | 1,000,000 |
| All Other Compensation ($) | 372,828 | 583,961 | 201,110 (401k $13,800; aircraft personal use $119,535; housing allowance $48,000; recognition trip $6,840 + tax gross‑up $5,619; LTD premiums) |
| Director Pay (as employee director) | — | — | Employee directors receive no additional board fees |
Performance Compensation
- Philosophy and mix: At least 80% of NEO target comp is performance‑based; 2024 equity mix targeted at ~45% annual performance‑based RS, 15% options, 40% long‑term performance shares (3‑yr revenue + relative TSR modifier vs S&P 500) .
Annual Cash Incentive (2024 performance, paid 2025)
| Item | Structure |
|---|---|
| Corporate metric | EBITDA (threshold/target/max set vs 2024 budget reflecting residential investments) |
| CEO weighting | Corporate 100% (no individual goals) |
| CEO target | 150% of salary (threshold 75%, max 300%) |
| Actual payout | 300% of salary = $3,000,000 (corporate metric 200% achievement) |
Annual Performance‑Based Restricted Stock (granted 2024 for 2023 results)
| Item | Detail |
|---|---|
| Metric | 2023 Net Income vs adjusted target; achievement 110.26% → 200% payout |
| CEO award | $14.4M; 178,000 shares granted (avg 4Q23 price $80.94) |
| Vesting | 3 equal annual tranches on Mar 1, 2025/2026/2027 (RSUs) |
Stock Options (2024 grant)
| Item | Detail |
|---|---|
| CEO option value/shares | $2.4M; 90,500 options |
| Strike/vesting/term | $82.47; vests ratably over 3 years; 10‑year term |
Long‑Term Performance Shares (2024–2026 cycle)
| Item | Detail |
|---|---|
| Metric | 3‑year cumulative revenue; TSR modifier ±20% vs S&P 500 |
| CEO target/max | Target value $6.4M; max value $15.36M; max 189,840 shares at grant calibration |
Recently Settled Performance Cycle
| Cycle | Target Revenue | Actual/TSR | Payout example |
|---|---|---|---|
| 2021–2023 | $6,416M | Actual $6,581M; TSR 8.0% at 23rd percentile S&P 500 | CEO vested 62,400 shares (160% of target, rounded basis) |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 2,860,189 shares; <1% of outstanding (421,762,323 shares) |
| Breakdown (as of 4/1/2025) | Includes 1,300,499 options exercisable within 60 days; 953,647 restricted shares subject to vesting |
| Unvested equity at 12/31/2024 | 321,356 time‑based restricted shares ($23.0M); 440,640 max unearned performance shares ($31.5M) |
| Unvested in‑the‑money options | 33,800 shares intrinsic value ~$145,340 at $71.59 price (12/31/2024) |
| Upcoming vesting (illustrative) | 32,234 RS vest 3/1/2025; 92,200 RS vest 2/15/2025 and 2/15/2026; 178,000 RSUs vest in equal thirds on 3/1/2025–2027 |
| 2024 equity activity | Options exercised: 0; stock vested: 170,073 shares ($14.39M) |
| Ownership guidelines | CEO 6x base salary; all executives compliant as of 12/31/2024 |
| Hedging/pledging | Prohibited for directors/officers; no exceptions; no current director/officer has pledged shares |
| Clawback | Dodd‑Frank/Nasdaq compliant clawback covering current/former officers for 3‑year lookback on restatements |
Employment Terms
| Provision | Detail |
|---|---|
| Agreement | CEO employment agreement; auto‑renews annually unless 3‑month notice |
| Non‑compete | In effect during employment and through second anniversary post‑termination |
| Termination without cause or for good reason | One year base salary, bonus for year of termination, immediate vesting of all unvested stock options; 180‑day post‑termination option exercise window |
| Change‑of‑control economics (illustrative) | If CoC and CEO terminates within one year for good reason as of 12/31/2024: ~$58.70M total (includes $1.0M salary, $3.0M 2024 bonus, ~$54.55M unvested equity at $71.59) |
| Equity plan CoC feature | Under 2016 Plan, upon CoC, options vest and RS restrictions lapse unless awards are assumed/substituted |
| 280G excise tax gross‑up | Provided under CEO employment agreement (legacy provision since 1998) |
Board Governance
- Role and independence: Florance serves as CEO and director; not independent. Board Chair is independent (Louise S. Sams) and committee membership is fully independent; post‑refresh Audit: Hill (Chair), Brunner, Glaser, Sams; Compensation: Musslewhite (Chair), Berisford, Brunner; Nominating & Governance: Sams (Chair), Glaser, McCarthy .
- Executive sessions of independent directors occur at Board meetings without management present .
- Directors who are employees receive no separate board compensation .
Say‑on‑Pay & Shareholder Feedback
- 2024 say‑on‑pay support ~92%; ongoing investor outreach through conferences/roadshows and investor day; no program changes made specifically in response to the 2024 vote given high support .
Compensation Structure Analysis
- Pay-for-performance alignment: Distinct metrics across programs (annual cash: EBITDA; annual PBRS: net income; LTI PSUs: 3‑yr cumulative revenue with relative TSR), with at least 80% of CEO/NEO comp performance‑based .
- Peer benchmarking: Target equity between 50th–75th percentile vs peer data; Willis Towers Watson advises committee; refreshed peer set annually .
- Risk controls: Independent comp consultant; formal risk assessment concluded programs do not create material adverse risk; robust stock ownership, anti‑hedging/pledging, and clawback policies .
Performance & Track Record (select indicators)
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Income ($M) | 227.1 | 292.6 | 369.5 | 374.7 | 138.7 (investment year) |
| EBITDA ($M) | 406.1 | 565.0 | 582.7 | 389.8 | 123.0 |
| Revenue ($B) | — | — | — | — | 2.74 (Company disclosure) |
- Strategy execution: Homes.com scaled to 110M avg monthly unique visitors in 4Q24; Apartments.com surpassed $1.1B revenue; CoStar core at $1.0B; acquisitions (Matterport, Visual Lease) expand data and software footprint .
- TSR context: Value of $100 investment at 12/31/2019 grew to $119.66 by 12/31/2024 (company TSR measure used in Pay‑vs‑Performance) .
Related Party Transactions and Red Flags
- 2024 related party transactions: None .
- Hedging/pledging: Prohibited; none outstanding for directors/officers .
- 280G excise tax gross‑up: Legacy provision for CEO remains (shareholder‑unfriendly feature) .
Equity Vesting Schedules and Insider Selling Pressure
- Near‑term vesting over 2025–2027: multiple tranches including 178,000 RSUs vesting in thirds (Mar 1, 2025–2027); additional blocks vest on Feb 15, 2025/2026 and Mar 1/15, 2025–2026; these dates could create episodic liquidity windows but policy bars hedging/pledging .
- 2024 activity: No option exercises; stock vesting of 170,073 shares ($14.39M) indicates realized equity without option selling pressure in 2024 .
Compensation Peer Group (2024 reference set)
Akamai, ANSYS, Autodesk (2025 addition), DocuSign (2025 addition), Equifax, FactSet, Fair Isaac, Gartner, MSCI, Paycom, PTC, TransUnion, Tyler Technologies, VeriSign, Verisk, Workday; peer targets generally 50th–75th percentile .
Employment Details & Severance/CoC Economics (Illustrative)
| Scenario (as of 12/31/2024) | CEO Estimated Benefits |
|---|---|
| Termination by company without cause or resignation for good reason (non‑CoC) | ~$4.15M (salary year + 2024 bonus + in‑the‑money unvested options acceleration) |
| CoC + termination within one year (good reason) | ~$58.70M (salary year + 2024 bonus + acceleration of unvested equity) |
| Death/Disability | Pro‑rated option vesting for year and pro‑rated bonus |
Investment Implications
- Alignment: Very high equity exposure (large unvested RS/PSU inventory; stringent ownership/anti‑hedge policies) supports long‑term alignment; say‑on‑pay support strong (92%) .
- Execution: Multi‑year metrics (revenue + relative TSR) and separated board leadership indicate governance discipline; Homes.com and acquisitions are tangible growth vectors, though 2024 margin compression reflects step‑up investment .
- Retention/overhang: Significant scheduled vesting through 2027 is a retention lever but creates periodic supply; 280G gross‑up is a governance blemish to monitor in future renegotiations .
- Trading signals: Watch vesting dates (Mar 1/Feb 15) for potential insider sale windows; note 2024 saw zero CEO option exercises and policy bars pledging/hedging, reducing forced‑sale risk .