MESSAGE FROM OUR FOUNDER AND CHIEF EXECUTIVE OFFICER

Stockholder feedback is integral to the success of the Company, and we will continue to proactively engage with our stockholders to enhance our understanding and respond to stockholders’ perspectives and needs. We take great pride in our ability to not only deliver value to our stockholders but to build a business that positively impacts our employees, clients, customers and communities.

We appreciate your continued support and investment in CoStar Group.

Sincerely,

 

		ANDREW C. FLORANCE Founder, Chief Executive Officer, President and Director

NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS

THURSDAY, JUNE 8, 2023  |  10:00 A.M., EASTERN TIME

Exclusively online at www.virtualshareholdermeeting.com/CSGP2023

Review your proxy statement and vote in one of three ways:

Internet   Visit the website on your proxy card

By Telephone   Call the telephone number on your proxy card

By Mail   Sign, date and return your proxy card in the enclosed envelope

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 8, 2023: The Notice of Meeting and this Proxy Statement, as well as our Annual Report to Stockholders (the “2022 Annual Report”), are available on our corporate website at http://investors.costargroup.com/financials. We are furnishing proxy materials to some of our stockholders through the Internet instead of through the mail. On or about April 27, 2023, we mailed to stockholders as of the record date a Notice of Internet Availability of Proxy Materials (the “Notice”). The Notice tells you how to access this Proxy Statement and our 2022 Annual Report, as well as how to submit your proxy over the Internet. If you received the Notice and would still like to receive a printed copy of our proxy materials, please follow the instructions in the Notice.

TABLE OF CONTENTS

GLOSSARY OF TERMS

The following abbreviations or acronyms used in this Proxy Statement are defined below:

OUR

VALUES

Financial Results

(1) Adjusted EBITDA is a non-GAAP measure. See Appendix A for a reconciliation of Adjusted EBITDA to Net Income and for a discussion of management’s use of non-GAAP measures and other operating metrics.

ESG Highlights

ESG continues to be a priority for us. In 2022, we calculated the Company’s baseline greenhouse gas emissions for the first time and plan to complete the CDP Questionnaire for the first time this summer. In February 2023, we published our second annual ESG report. This year’s ESG report has enhanced human capital disclosures showing excellent diversity, employee engagement and retention statistics. Subsequent to publishing our ESG report, we have engaged with stockholders to discuss the ESG report and their feedback on our ESG and climate-related efforts. Based on feedback and encouragement from our valued, long-term investors, we plan to continue efforts to manage our climate risks and impacts and reduce our GHG emissions.

*Due to more than 30 million unique virtual tours of properties on CoStar Group platforms in 2022, which avoided the need for in-person visits. Based on a conservative estimate of a 10-mile round trip and EPA estimated emissions of an average passenger vehicle.

**Using U.S. EPA estimate for GHG emissions from a typical passenger vehicle. Our fleet drove over 2 million miles in 2022.

Proposals to be Voted on and Board Voting Recommendations

Corporate Governance Highlights

		BOARD STRUCTURE AND INDEPENDENCE   •  Our Board reflects diversity in skills, experience and backgrounds, including diversity of gender and race.   •  All directors are independent except for our CEO.   •  Executive sessions of the independent directors are held at Board meetings without management present.   •  All of our directors are elected annually by our stockholders; we do not have a classified or staggered Board.
		BOARD OVERSIGHT     •  Our Board oversees the Company’s strategy and annual business plan and risk management.   •  Our Board oversees ESG matters, including climate-related matters.   •  Our Audit Committee oversees the integrity of the Company’s financial statements.   •  Our Audit Committee oversees the Company’s cybersecurity risk profile.   •  Our Compensation Committee oversees risk in compensation policies and practices.
		STOCKHOLDER RIGHTS     •  The holders of 25% of our issued and outstanding shares entitled to vote can request a special meeting.   •  We have a majority voting standard for the election of directors in uncontested elections.   •  Our governance documents do not contain provisions requiring a supermajority stockholder vote on any issue.   •  We do not maintain a stockholder rights plan or “poison pill.”   •  We adopted a proxy access right for holders of 3% or more of our common stock for at least three years to nominate a specified number of directors for inclusion in the proxy statement for our annual meeting of stockholders.
		CORPORATE GOVERNANCE PRACTICES   •  We prohibit hedging and pledging transactions in our securities by directors and officers.   •  We engage with our stockholders to solicit their feedback, including regarding corporate governance, and have taken actions to implement their feedback.   •  We have adopted share ownership requirements for directors and officers.   •  We have a clawback policy for cash and equity awards in the event of certain financial restatements.   •  We adopted a Code of Business Conduct and Ethics for directors, officers and employees.

Our Board of Directors

The below summarizes information about our director nominees and their Board committee assignments. Our director nominees possess a range of diverse skills, experiences, backgrounds, and viewpoints that we believe are essential to an effective Board. Detailed information about each director nominee’s qualifications, skills, experiences, and expertise can be found beginning on page 13.

2023 Director Nominees

		NAME		AGE(1)		DIRECTOR SINCE		OTHER PUBLIC COMPANY BOARDS		AC		CC		NCGC
		Andrew C. Florance Founder, President, and Chief Executive Officer, CoStar Group, Inc.		59		1987		0
		Michael R. Klein Chairman, CoStar Group, Inc.; Vice Chairman, Tutor Perini Corporation		80		1987		1				☐		🌑
		Michael J. Glosserman Trustee, JBG Smith Properties		77		2008		1		🌑				🌑
		John W. Hill Founder and Chief Executive Officer, J Hill Group		68		2012		0		☐
		Laura Cox Kaplan Adjunct Professor, American University; former Principal, PricewaterhouseCoopers		53		2016		0						🌑
		Robert W. Musslewhite Chief Executive Officer, Definitive Healthcare Corp		53		2019		1
		Christopher J. Nassetta Chief Executive Officer and President, Hilton Worldwide Holdings Inc.		60		2002		1				🌑		☐
		Louise S. Sams Former EVP & General Counsel, Turner Broadcasting System, Inc.		65		2019		2		🌑

(1) Age as of April 1, 2023    AC = Audit Committee    CC = Compensation Committee    NCGC = Nominating and Corporate Governance Committee

🌑Member     ☐Chair

Director Experience Highlights

Our directors have a diversity of skills and experiences, including some or significant experience in the following:

		COMMERCIAL REAL ESTATE				PUBLIC COMPANY                         GOVERNANCE				GLOBAL BUSINESS
		FINANCIAL ACCOUNTING AND REPORTING				LEGAL, PUBLIC POLICY, AND REGULATORY				BUSINESS DEVELOPMENT AND M&A
		TALENT MANAGEMENT                         AND EXECUTIVE COMPENSATION				MARKETING AND SALES				RISK MANAGEMENT
		SENIOR MANAGEMENT AND LEADERSHIP				CYBERSECURITY AND DATA PRIVACY				ESG AND CLIMATE

_⬛  VERY SKILLED/EXPERIENCED        _⬛  SOME SKILL/EXPERIENCE        _⬛  NO EXPERIENCE

Board Composition

Executive Compensation Highlights

Our Compensation Committee has designed our executive compensation program to closely align executive compensation with Company performance and stockholder interests. The Compensation Committee achieves this alignment by allocating the majority of our executive officers’ target compensation to performance-based incentive compensation. In particular, we grant performance-based equity awards that directly link the value of annual equity awards to financial performance measures and the value of long-term equity awards to multi-year financial performance and TSR. The primary elements of our 2022 executive compensation program and the portions of such executive compensation that are performance-based are highlighted below.

Stockholder Engagement

As part of our investor outreach, our management continues to regularly communicate with our investor base about the Company’s plans and associated investments. Management communicated with investors throughout the year through quarterly press releases and conference calls that were recorded and made available on the Company’s website, as well as by participating in hundreds of in-person meetings and presentations at investor conferences. The Company also conducted hundreds of additional investor telephone calls throughout the year. The Company actively communicates and discusses with investors our progress towards stated strategic initiatives, including corporate governance and ESG initiatives, as well as expected investments and the rationale and expected returns on those investments. In 2022, our management engaged with stockholders as follows:

COSTAR GROUP, INC.

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON THURSDAY, JUNE 8, 2023

The Board of Directors (the “Board”) of CoStar Group, Inc. (“CoStar,” “CoStar Group,” “we,” “our,” “us,” or the “Company”) solicits your proxy for use at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held at 10:00 a.m., Eastern Time, on Thursday, June 8, 2023, and at any adjournment or postponement of the Annual Meeting. The Annual Meeting will be held online only as a live webcast via the internet at www.virtualshareholdermeeting.com/CSGP2023. The webcast replay of the Annual Meeting will be made available in the Investor section of CoStar Group’s website after completion of the Annual Meeting and remain available for a period of time following the call.

We are mailing the Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders eligible to vote at the Annual Meeting on or about April 27, 2023. If you are a registered stockholder, to be admitted to the Annual Meeting, you will need to enter the 16-digit control number found on your Notice or proxy card. If your shares are held in brokerage accounts and your voting instruction form or the Notice indicates that you may vote those shares through the http://www.proxyvote.com website, then you may be admitted to the Annual Meeting using the 16-digit control number indicated on that voting instruction form or the Notice. Otherwise, stockholders who hold their shares in brokerage accounts should contact their bank, broker or other nominee (preferably at least five days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in or vote at the Annual Meeting. Only stockholders as of the record date or their proxies are permitted to attend the Annual Meeting online.

The Annual Meeting will include a question and answer session, and stockholders may submit questions appropriate to our business during the Annual Meeting. Questions may be submitted during the Annual Meeting through www.virtualshareholdermeeting.com/CSGP2023. Questions pertinent to meeting matters that comply with the meeting rules of conduct will be answered during the question and answer session, subject to time constraints. However, we reserve the right to exclude questions that are not pertinent to meeting matters, irrelevant to the business of the Company, derogatory or in bad taste, or relate to pending or threatened litigation, personal grievances or are otherwise inappropriate. Questions that are substantially similar may be grouped and answered once to avoid repetition. If there are any questions pertinent to meeting matters that cannot be answered during the meeting due to time constraints, management expects to post answers to those questions on the “Investor Relations” section of the Company’s website at http://investors.costargroup.com as soon as practicable after the meeting.

We encourage you to access the Annual Meeting 15 minutes before it begins to avoid any delay from technical issues. If you encounter technical issues accessing the virtual Annual Meeting, you can contact the technical support number posted on the log on page at www.virtualshareholdermeeting.com/CSGP2023.

Proposal 1

ELECTION OF DIRECTORS

The Board has currently fixed the number of directors constituting the Board at eight. At the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated the eight current directors for reelection, all of whom were last elected at the 2022 Annual Meeting of Stockholders.

Each director elected at the Annual Meeting will serve until the next Annual Meeting of Stockholders or until his or her successor is elected and qualified. We know of no reason why any nominee would be unable to serve. If any nominee becomes unable to serve prior to the Annual Meeting, the Board may reduce the size of the Board or designate substitute nominees, and proxies that do not withhold authority to vote for directors will be voted for such substitute nominees. In no event may proxies be voted for a greater number of persons than the number of nominees named. We did not receive any stockholder nominations for directors in connection with the Annual Meeting.

		THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE DIRECTOR NOMINEES

Board Composition

Our Nominating and Corporate Governance Committee reviews and assesses with the Board the Board’s membership criteria. These criteria include independence, judgment, integrity, ability to commit sufficient time and attention to the activities of the Board, absence of potential conflicts with the Company’s interests, business experience, skills and background, including an understanding of and experience with real estate, information services and technology industries, and finance and marketing expertise.

In addition, the Nominating and Corporate Governance Committee evaluates the composition of the Board to assess the skills and experience that are currently represented on the Board, as well as the skills and experience that the Nominating and Corporate Governance Committee believes the Board will find valuable in the future, given the Company’s current standing and strategic plans. This evaluation enables the Nominating and Corporate Governance Committee to assess its effectiveness at achieving these Board membership objectives.

We expect that our Board members will have a diverse portfolio of skills, experiences and backgrounds and that each will contribute to the composition of the Board so that collectively, the Board will possess the necessary skills, experience and background to oversee our business and affairs in light of the Company’s current standing and strategic plans. Below is a list of key skills and experience that our directors bring to our Board that we consider important in light of our current business and structure.

DIRECTOR SKILLS/EXPERIENCE

Industry / Commercial Real Estate: Experience in the real estate, information services and technology industries areas is valuable in understanding our growth and development efforts, as well as the market segments in which we operate.

Public Company Governance: Experience with reporting obligations, investor interaction, public company governance, knowledge and understanding of governance planning, and experience in encouraging management accountability and protecting stockholder interests.

Global Business: Broad exposure to companies or organizations that have a significant global presence, including developing and managing business in markets around the world.

Financial Accounting and Reporting: Experience in accounting or financial reporting, including understanding of internal controls; experience in overseeing such reporting and controls.

Legal, Public Policy, and Regulatory: Expertise in compliance with applicable governmental regulations; experience in legal and regulatory matters, and corporate compliance and ethics policies; experience in managing the effects of government policies and regulations.

Business Development and M&A: Expertise in and understanding of business development, strategic planning, and implementation; experience in leading strategy discussion at the board level; experience with developing and implementing strategies for growth, including mergers and acquisitions and divestitures.

Talent Management and Executive Compensation: Broad experience in executive development, performance, and compensation; experience with HR processes and strategies and efforts to attract, motivate, and retain candidates for key positions; experience in talent development, including developing diversity, equity, and inclusion in workforce.

Marketing and Sales: Experience with enhancing sales in existing markets; experience in developing new products and services and markets for growth; experience in marketing communication, brand strategy development, and advertising.

Risk Management: Experience in the management of critical business and/or legal risk; understanding of risk management functions, including risk identification/classification, crisis management and similar functions; ability to think strategically about risk and provide oversight and advice relating to risk.

Senior Management and Leadership: Experience as chief executive officer, president, chairman, or at similar leadership position in a large company or other large organization.

Cybersecurity and Data Privacy: Experience in overseeing and managing cybersecurity and data privacy risks; history of leadership roles in cybersecurity risk management; degrees, certifications, or other background in cybersecurity.

ESG and Climate: Experience in overseeing and managing ESG practices and initiatives; skills and knowledge in climate-related strategic planning, risk mitigation, and management; ability to provide oversight and advice relating to climate-related risks.

    VERY SKILLED/EXPERIENCED                         SOME SKILL/EXPERIENCE

Our commitment to progressive and representative governance is a reflection of our belief that Company leadership has a particular responsibility to live up to the corporate social responsibility goals. Our Principles of Corporate Governance ensure that when identifying, screening, recruiting and recommending candidates to the Board, the Nominating and Corporate Governance Committee is committed to including in each search qualified candidates who reflect diverse backgrounds, including diversity of gender and race/ethnicity. The current composition of our Board is as follows:

Board Diversity Matrix (as of April 1, 2023)

Board Evaluation Process

The Nominating and Corporate Governance Committee identifies nominees for director, and considers recommendations from other members of the Board, officers and employees of CoStar and other sources that the Nominating and Corporate Governance Committee deems appropriate, which may include professional search firms. The Nominating and Corporate Governance Committee will also consider Board nominees suggested by stockholders if such recommendations are submitted timely, and include the required information specified in our By-Laws, as described under “Stockholder Proposals and Nominations for Directors for the 2024 Annual Meeting of Stockholders” below. The Company may require any proposed nominee to furnish other information as reasonably required to determine eligibility to serve as a director of the Company, including information regarding the proposed nominee’s independence. There is no difference in the manner by which the Nominating and Corporate Governance Committee evaluates prospective nominees for director based on the source from which the individual was first identified.

When evaluating nominees for director, the Nominating and Corporate Governance Committee considers, among other things, an individual’s business experience and skills, background, independence, judgment, integrity and ability to commit sufficient time and attention to the activities of the Board, as well as the absence of any potential conflicts with the Company’s interests. If the nominee is a director standing for reelection, that individual’s past contribution, engagement and commitment to CoStar are also considered. The Nominating and Corporate Governance Committee evaluates the totality of the merits of each prospective nominee that it considers and does not establish minimum qualifications or attributes. Candidates are evaluated within the context of the perceived needs of the Board as a whole, so that the members of the Board, collectively, will possess the necessary skills, experience and background. While the Nominating and Corporate

Governance Committee does not have a formal policy with respect to diversity, it believes that it is important that Board members represent diverse viewpoints and seeks to achieve a diversity of occupational and personal backgrounds on the Board. Accordingly, the Nominating and Corporate Governance Committee is committed to including diverse candidates whenever conducting a search for new Board members. The Nominating and Corporate Governance Committee assesses the effectiveness of its approach toward maintaining and encouraging diversity on the Board through ongoing, informal feedback from Board members.

Director Nominees

Board Leadership Structure

Currently, Mr. Klein, an independent director, serves as Chairman of the Board, and Mr. Florance serves as CEO and director. The Board does not have a policy regarding the separation of the roles of CEO and Chairman of the Board, as the Board believes it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board at the particular time. The Board believes the advisability of having separate or combined chairman and CEO positions is dependent upon the strengths of the individual or individuals that hold these positions and the most effective means of leveraging their strengths to lead the Board, set Board agendas, and identify and oversee key issues in light of the challenges and circumstances facing the Company, which may change over time. During a period in which the chairman and CEO positions are combined, a Lead Director would be appointed from our independent directors. Our stockholders would be notified of a combination of the chairman and CEO roles promptly upon the Board’s decision to do so.

The Board has determined that this leadership structure currently is in the best interest of the Company’s stockholders. This structure provides a greater role for the independent directors in overseeing the Company and in setting agendas and establishing Board priorities and procedures and it also permits our CEO to focus on managing the Company’s day-to-day operations. Our Chairman’s responsibilities include:

The Board’s Role in Risk Oversight

One of the Board’s functions is oversight of risk management, which is administered both through the full Board and through Board committees that oversee specific risks, as described below.

The Company faces a variety of risks, including macroeconomic risks, such as inflation, economic downturns, or recession; business-specific risks related to the Company’s strategic position, operations, financial structure, legal and regulatory compliance and corporate governance; and event-specific risks, such as natural disasters, pandemics or wars. The Company believes that an effective risk management system should:

The Board encourages management to promote a corporate culture that incorporates risk management into the Company’s corporate strategy and day-to-day operations. Management is responsible for identifying risk and risk controls related to significant business activities and developing programs and recommendations to determine the sufficiency of risk identification, the balance of potential risk to potential reward, and the appropriate manner in which to control risk.

Management, typically the Chief Financial Officer (CFO) or General Counsel, periodically discusses with the Board or appropriate Board committee the significant voluntary and involuntary risks that the Company faces and how the Company is seeking to control risk if and when appropriate. When appropriate, other members of management provide information to the Board or appropriate Board committees with respect to a specific area of potential risk and how the Company manages or seeks to control the identified risk. The Audit Committee reviews the Company’s cybersecurity risk profile and is informed about the Company’s cybersecurity risk program in periodic presentations by the Company’s Chief Technology Officer. This program provides the Board with an overview of the cybersecurity risks and threats landscape as well as the Company’s risk posture. In some cases, as with risks related to product or service acceptance, risk oversight is addressed as part of the full Board’s engagement with the CEO and management. In other cases, a Board committee is responsible for oversight of specific risk topics, in which case management meets directly with the Board committee. For example, the Audit Committee oversees issues related to internal control over financial reporting and auditor independence, and the Compensation Committee oversees the assessment of risks related to the Company’s compensation policies and programs applicable to officers and employees, as discussed in greater detail below. The Board also works with the Company’s management to assess, analyze and address the most likely areas of future risk for the Company. In February 2023, the Company released its second ESG Report, underscoring its commitment to building a foundation of responsible business strategies that drive value for its people, communities, and stockholders through positive ESG practices. In March 2023, the Board formally adopted oversight over ESG matters, including climate-related issues, and committed to considering ESG-related matters at least annually. The Company’s management anticipates regularly reviewing the ESG Report and providing periodic updates to the Board.

Risk Assessment in Compensation Programs

Management assesses the Company’s executive and broad-based compensation and benefits programs to determine if the programs’ provisions and operations encourage or create undesired or unintentional risk of a material nature. The Compensation Committee also engaged its independent compensation consultant to assess the Company’s executive compensation program. The risk assessment evaluated potential risk factors from three primary perspectives:

The Compensation Committee reviews all compensation programs, but is focused on the programs with variability of payout, with the ability of a participant to directly affect payout and the controls on participant action and payout. The Company supports the use of base salary, performance-based compensation and retirement plans that are generally uniform in design and operation throughout the Company. In most cases, the compensation policies and practices are centrally designed and administered, and are substantially identical throughout the Company, except that sales personnel are also eligible to receive sales commissions depending upon performance. Programs may differ by country due to variations in local laws and customs.

Based on the foregoing, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond our ability to effectively identify and manage significant risks; are compatible with effective internal controls and our risk management practices; and are supported by the Compensation Committee’s oversight and administration of executive compensation programs.

Board Committees

AUDIT COMMITTEE
		4    Meetings        in 2022		2022 Members   •  Michael J. Glosserman •  John W. Hill (Chair) •  Louise S. Sams		Independence   Each member of the committee is independent and financially literate.		Audit Committee Financial Expert   Each of Mr. Glosserman, Mr. Hill, and Ms. Sams meets the requirements defined in SEC rules.
Role and Responsibilities   The Audit Committee assists the Board in fulfilling its oversight responsibilities as to accounting policies, internal controls, the outside auditor’s qualifications, independence and performance, compliance with legal and regulatory requirements, audit activities and reporting practices of the Company. The Audit Committee also produces the report of the Audit Committee included in this Proxy Statement. The Audit Committee operates under a written charter adopted by the Board and reviewed annually by the Audit Committee. This charter is available in the “Leadership” section of the Company’s website under Governance Documents at http://investors.costargroup.com/leadership.

COMPENSATION COMMITTEE
		2   Meetings       in 2022		2022 Members   •  Michael R. Klein (Chair) •  Christopher J. Nassetta		Independence   Each member of the committee is independent.
Role and Responsibilities   The Compensation Committee operates under a written charter adopted by the Board and reviewed annually by the Compensation Committee. This charter is available in the “Leadership” section of the Company’s website under Governance Documents at http://investors.costargroup.com/leadership. The Compensation Committee discharges the Board’s responsibilities relating to compensation of the Company’s executive officers and directors, and produces the Compensation Committee report on executive compensation included in this Proxy Statement. In addition, the Board has designated the Compensation Committee as the Administrator of the 2016 Plan, ESPP, MSPP, and the Company’s cash incentive plan.
Compensation Committee Interlocks and Insider Participation   Messrs. Klein and Nassetta, each a non-employee director, served on the Compensation Committee during fiscal year 2022. Mr. Klein serves as the Chairman of the Board of the Company. None of the members of the Compensation Committee during fiscal year 2022 were officers or employees of the Company during or prior to fiscal year 2022 or had any relationship that is required to be disclosed as a transaction with a related person. During 2022, none of the Company’s executive officers served as a director or compensation committee member of any entity with an executive officer who served as a director or Compensation Committee member of the Company.

Corporate Governance Overview

Principles of Corporate Governance

The Board, based on the recommendation of the Nominating and Corporate Governance Committee, adopted the Company’s Principles of Corporate Governance, which direct our Board’s actions with respect to, among other things, Board composition, director membership criteria, composition of the Board’s standing committees, and the Board’s performance evaluations. Our Principles of Corporate Governance provide that, when identifying, screening, recruiting and recommending candidates to the Board, the Nominating and Corporate Governance Committee is committed to including in each search (whether conducted in-house or with the assistance of a third-party search firm) qualified candidates who reflect diverse backgrounds, including diversity of gender and race. The Company’s Principles of Corporate Governance can be found in the “Leadership” section of the Company’s website under Governance Documents.

Majority Voting Standard

In a non-contested election, directors are elected by a majority of votes cast by stockholders (i.e., if the number of votes cast for the nominee’s election exceeds the number of votes cast against the nominee’s election). A non-contested election is an election where the number of nominees does not exceed the number of directors to be elected. In a contested election, the director nominees who receive the plurality of votes cast are elected as directors. Under the plurality standard, the number of persons equal to the number of vacancies to be filled who receive more votes than other nominees are elected to the Board, regardless of whether they receive a majority of votes cast. An election is considered contested under our By-Laws if there are more nominees than positions on the Board to be filled at the meeting of stockholders as of the fifth day prior to the date on which we file our definitive proxy statement with the SEC.

Meeting Attendance

Directors are expected to attend all meetings of the Board and the committees on which they serve. During 2022, the Board held five meetings. The Audit, Compensation, and Nominating and Corporate Governance Committees held four meetings, two meetings, and one meeting, respectively, in 2022. During 2022, each director attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings held by each committee of the Board on which the director served, during the period in which the director so served.

We encourage, but do not require, directors to attend the Annual Meetings of Stockholders. In 2022, one director attended the Annual Meeting of Stockholders.

Executive Sessions

Executive sessions of independent directors enable the Board to discuss matters, such as strategy, CEO and senior management performance and compensation, and board effectiveness, without management present. Any director may request additional executive sessions of independent directors. During 2022, our independent directors met in executive session at 75% of our regularly scheduled Board meetings.

Proxy Access

Our By-Laws allow eligible stockholders to propose director nominees for inclusion in the proxy statement in addition to the nominees proposed by the Board. The proxy access By-Law permits stockholders owning 3% or more of our common stock for at least three years, to nominate candidates for election to our Board. The number of candidates that may be so nominated is limited to the greater of two or the largest whole number that does not exceed 20% of our Board. The number of stockholders who may aggregate their shares to meet the 3% ownership threshold is limited to 20. The stockholder(s) and nominee(s) must also satisfy the other requirements contained in our By-Laws.

Director Independence

The Board has determined that Messrs. Klein, Glosserman, Hill, Nassetta, Musslewhite, and Mses. Kaplan and Sams are each independent as defined under Rule 5605(a)(2) of the Nasdaq listing rules. In assessing directors’ independence, the Board took into account certain transactions, relationships, and arrangements involving some of the directors and concluded that such transactions, relationships, and arrangements did not impair the independence of the relevant director. As part of this determination, the Board received information regarding Mr. Klein’s position as a trustee of the Shakespeare Theatre Company, a non-profit organization, and Mr. Hill’s position as an emeritus trustee of the Shakespeare Theatre Company. The Company expensed contributions to the Shakespeare Theatre Company of $100,000 in 2020, $100,000 in 2021, and $50,000 in 2022, which amounts are less than five percent of the consolidated gross annual revenues of the Shakespeare Theatre Company for those years. In addition, the Board considered that (1) Mr. Nassetta serves as an executive officer of a company that subscribes to the Company’s services and from which the Company purchased services, and (2) Mr. Glosserman serves as a trustee of a company that subscribes to the Company’s services. In each such case, the payments received by the Company were less than one percent of the Company’s consolidated gross annual revenues in each of the last three fiscal years. In addition, the payments from the Company to Mr. Nassetta’s company were less than one percent of the consolidated gross annual revenues of such company in each of the last three fiscal years. Further, the services provided by the Company to and received from Mr. Nassetta’s company and the company for which Mr. Glosserman serves as trustee, are on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances.

Stockholder Communications with the Board

Stockholders may communicate with our Board by sending written correspondence to CoStar Group, Inc., Attention: Corporate Secretary, 1331 L Street N.W., Washington, DC 20005. The Corporate Secretary opens and retains a copy of the contents of such correspondence and promptly forwards such correspondence to the Chairman of the Nominating and Corporate Governance Committee and, if addressed to a particular committee or Board member, to that committee’s Chairman or such Board member. The Corporate Secretary, together with the Chairman of the Nominating and Corporate Governance Committee and his duly authorized agents, are responsible for collecting and organizing stockholder communications. Absent a conflict of interest, the Chairman of the Nominating and Corporate Governance Committee is responsible for evaluating the materiality of each stockholder communication and determining which stockholder communications will be presented to the full Board, individual directors or other appropriate body.

Director Compensation

The Compensation Committee annually reviews director compensation for service on the Board and its committees and recommends director compensation and any changes to such compensation to the Board for approval. The Board annually reviews and approves director compensation based on the recommendations of the Compensation Committee. Directors who are also employees of the Company do not receive any additional compensation for service on the Board. The charts below show the percentage of our Chairman’s and all other directors’ compensation that is paid in cash as compared to stock to align their interests with those of our stockholders, and the table following shows the compensation we paid in 2022 to our non-employee directors.

2022 Director Compensation

Director Stock Ownership Policy

Under the Company’s Director Stock Ownership Policy, each non-employee director is required to own shares of the Company’s common stock with a value equal to five times the annual, standard director cash retainer. Newly appointed directors are required to meet the ownership requirement on or before the first December 31st following the fifth anniversary of the date of their appointment to the Board. The current directors all currently meet this ownership requirement.

The number of shares of unvested restricted stock held by each non-employee director as of December 31, 2022 is shown above by footnote to the 2022 Director Compensation table.

Certain Relationships and Transactions

Review and Approval of Related Person Transactions

The Board recognizes that Interested Transactions (as defined below) can present potential or actual conflicts of interest and create the appearance that Company decisions are based on considerations other than the best interests of the Company and its stockholders. The Board has delegated authority to the Audit Committee to review and approve Interested Transactions, and the Audit Committee has adopted written procedures as detailed below for the review, approval, or ratification of Interested Transactions.

An “Interested Transaction” is any transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness), or any series of similar transactions, arrangements or relationships, in which (a) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (b) the Company or any of its subsidiaries is a participant, and (c) any Related Party (as defined below) has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). An Interested Transaction does not include a transaction in which a Related Party has an indirect interest solely as a result of being (1) a director or a less than 10% beneficial owner of an equity interest in another entity, or both, or (2) a limited partner in a partnership in which the Related

Party has an interest of less than 10%. A “Related Party” is any (a) person who is or was (since the beginning of the Company’s last fiscal year, even if they do not presently serve in that role) an executive officer, director or nominee for election as a director of the Company, (b) greater than 5% beneficial owner of the Company’s outstanding common stock, or (c) Immediate Family Member of any of the foregoing. An “Immediate Family Member” includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons and daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s home (other than a tenant or employee).

The Audit Committee will review all of the material facts of all Interested Transactions and either approve or disapprove of the entry into the Interested Transaction, subject to a limited list of enumerated transactions that are deemed to be pre-approved as described in the Interested Transactions policy. In determining whether to approve an Interested Transaction, the Audit Committee will take into account, among other factors it deems appropriate, whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the Related Party’s interest in the transaction.

Related Person Transactions

None of our executive officers or directors engaged in or had a direct or indirect material interest in any transactions with us during fiscal year 2022 that are required by SEC rules to be disclosed in this Proxy Statement.

Executive Officers

Below is biographical information about each of our current executive officers as defined by the Exchange Act, including ages as of April 1, 2023.

Proposal 2

RATIFICATION OF THE APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee approved the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2023. As a matter of good corporate governance, the Board is asking stockholders to ratify this appointment. If stockholders do not ratify this appointment, the Audit Committee may reconsider such appointment and consider other accounting firms.

Ernst & Young LLP has served as the independent registered public accounting firm for the Company, its subsidiaries, and its predecessors since 1994. A representative from Ernst & Young LLP is expected to attend the Annual Meeting, and will have the opportunity to make a statement and to respond to appropriate questions.

		THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2023

Ernst & Young LLP Fees and Services

For the years ended December 31, 2021 and 2022, Ernst & Young LLP billed CoStar the fees set forth below, including expenses, in connection with services rendered to CoStar:

Audit Committee Pre-Approval Policy

The Audit Committee’s policy is that all audit and non-audit services provided by CoStar’s independent registered public accounting firm shall either be approved before the independent registered public accounting firm is engaged for the particular services or shall be rendered pursuant to pre-approval procedures established by the Audit Committee. These

services may include audit services and permissible audit-related services, tax services and other services. Pre-approval spending limits for services to be performed by CoStar’s independent registered public accounting firm are established on an annual (for audit services) or periodic (for permissible non-audit services) basis, detailed as to a particular service or category of services to be performed. Any audit or non-audit service fees that may be incurred by CoStar that fall outside the pre-approved limits must be reviewed and approved by the Chairperson of the Audit Committee or the Audit Committee as a whole prior to the performance of services. CoStar’s independent registered public accounting firm reports to the Audit Committee on a quarterly basis on all services rendered by the independent registered public accounting firm that were pre-approved and all fees paid to the independent registered public accounting firm for such services since the previous quarter’s Audit Committee meeting. The Audit Committee may revise its pre-approval spending limits and policies at any time.

All fees paid to the independent registered public accounting firm in 2022 were pre-approved by the Audit Committee, and therefore no services were approved after the services were rendered pursuant to the “de minimis” exception established by the SEC for the provision of non-audit services.

Report of the Audit Committee

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process. The Company’s independent registered public accounting firm is responsible for expressing an opinion on the conformity of the Company’s audited consolidated financial statements to generally accepted accounting principles.

In this context, the Audit Committee has:

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, for filing with the SEC.

By the Audit Committee

of the Board of Directors

John W. Hill, Chairman

Michael J. Glosserman

Louise S. Sams

Proposal 3

ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION

(SAY-ON-PAY)

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and Rule 14a-21 under the Exchange Act, we request that our stockholders cast a non-binding, advisory vote to approve the compensation of our NEOs identified in the section titled “Compensation Discussion and Analysis” set forth below in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our NEOs’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this proxy statement.

We urge stockholders to read the “Compensation Discussion and Analysis” section of this Proxy Statement, which describes in detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the 2022 Summary Compensation Table and other related compensation tables and narrative accompanying the “Compensation Discussion and Analysis” in this Proxy Statement, which provide detailed information on the compensation of our NEOs. The Compensation Committee and the Board of Directors believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in achieving our goals and that the compensation of our NEOs reported in this Proxy Statement has supported and contributed to the Company’s recent and long-term success.

We are asking stockholders to approve the following advisory resolution at the Annual Meeting:

RESOLVED, that the stockholders of CoStar Group, Inc. approve, on a non-binding, advisory basis, the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the 2022 Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2023 Annual Meeting of Stockholders.

This advisory resolution is non-binding on the Board and the Compensation Committee. Although non-binding, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program. At the 2022 Annual Meeting, approximately 74% of the votes cast were for approval of the “say-on-pay” advisory vote.

		THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION

Proposal 4

ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES TO

APPROVE EXECUTIVE COMPENSATION

In accordance with the Dodd-Frank Act, we request that our stockholders cast a non-binding, advisory vote regarding the frequency with which we should include in future annual proxy statements a stockholder advisory vote to approve the compensation of our NEOs. In addition to providing stockholders with the opportunity to cast a say-on-pay vote on the compensation of our NEOs, we are asking stockholders to vote on whether future advisory votes to approve executive compensation should occur every one year, two years or three years.

After careful consideration and review of our past practice, the Board has determined that holding an advisory vote to approve NEO compensation annually is the most appropriate policy for the Company at this time, and recommends that stockholders vote for “1 YEAR” as the recommended frequency for future advisory votes to approve NEO compensation. While the Company’s NEO compensation programs are designed to promote a long-term connection between pay and performance, the Board recognizes that NEO compensation disclosures are made annually. Holding an annual advisory vote to approve executive compensation provides the Company with more direct and immediate feedback on our compensation disclosures. However, stockholders should note that because the advisory vote to approve NEO compensation occurs well after the beginning of the compensation year, and because the different elements of our NEO compensation programs are designed to operate in an integrated manner and to complement one another, in many cases it may not be appropriate or feasible to change our NEO compensation programs in consideration of any one year’s advisory vote on NEO compensation by the time of the following year’s annual meeting of stockholders. An annual advisory vote to approve NEO compensation also is consistent with the Company’s practice of having all directors elected annually and annually providing stockholders the opportunity to ratify the Audit Committee’s appointment of independent auditors.

Stockholders will be able to specify one of four choices for this proposal on the proxy card: 1 year, 2 years, 3 years, or abstain. Stockholders are not voting to approve or disapprove the Board’s recommendation. We understand that our stockholders may have different views as to what is an appropriate frequency for advisory votes to approve executive compensation, and we will carefully review the voting results on this proposal. At the 2017 Annual Meeting, when we last held a vote on the frequency for advisory votes to approve executive compensation, approximately 95% of the votes cast were for “1 year.” This advisory vote on the frequency of future advisory votes to approve executive compensation is non-binding on the Board. Notwithstanding the Board’s recommendation and the outcome of the stockholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.

		THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR 1 YEAR FOR THE FREQUENCY OF THE STOCKHOLDER ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Our Compensation Discussion and Analysis describes our executive compensation programs and compensation decisions for our NEOs for 2022. Our Compensation Committee is responsible for reviewing our executive compensation program and for reviewing and approving the compensation arrangements for our NEOs. Our NEOs for 2022 were:

Executive Compensation Program Objectives

Our Compensation Committee is responsible for designing and maintaining the Company’s executive compensation program consistent with the objectives below. The Company’s executive compensation program seeks to:

Executive Compensation Policies and Practices

Below we highlight certain key characteristics of our executive compensation practices that we believe align executive compensation with stockholder interests and promote good governance.    

		Purpose				Compensation Program/Policy

Pay for Performance

Our executive compensation program is designed to hold our executives accountable for corporate results over the short and long term, and to reward them for successful execution. As a result, a substantial portion of our executives’ overall compensation is tied to performance. The charts below illustrate the percentage of 2022 compensation (based on target award opportunities) that was performance-based, including cash incentives, restricted stock, the value of which was determined based on performance in the prior fiscal year (2021), long-term performance shares and options, and the percentage that is fixed, consisting solely of base salary.

The Compensation Committee links executive compensation to the attainment of challenging goals. Cash compensation includes payments under our executive annual cash incentive plan that are based on Company performance relative to operational goals as well as individual performance. Equity-based compensation is used to align executive compensation with the long-term interests of our stockholders, including a focus on increasing the Company’s TSR both on an absolute and a relative basis.

2022 Business Highlights

2022 was another strong year for CoStar. We outperformed our financial targets, while making considerable progress advancing our strategy. During the year, we launched new capabilities in CoStar and Apartments in addition to completing our platform integration of Ten-X. We also expanded internationally as we launched Apartments.com in Canada and LoopNet in both Canada and the United Kingdom. Importantly, we have laid the foundation for future growth in residential real estate by introducing an agent directory and collaboration tools towards our goal of building the best residential real estate portal in the United States. We made these investments while concurrently delivering 12% year-over-year revenue growth and a 24% year-over-year increase in earnings per share for 2022.

We continue to invest in our future and, as a result, we have achieved 12 consecutive years of double-digit revenue growth. Our 2022 product advancements were augmented by investments in our sales personnel to support the increased demand for our products. Our accomplishments over the years have been recognized and, in 2022, we celebrated our inclusion in the S&P 500. We have strong liquidity, ending 2022 with $5.0 billion of cash and cash equivalents compared to $1.0 billion of debt carrying 2.8% annual interest and a maturity in 2030.

(1) Adjusted EBITDA is a non-GAAP measure. See Appendix A for a reconciliation of Adjusted EBITDA to Net Income and for a discussion of management’s use of non-GAAP measures and other operating metrics.

Elements of Compensation

Each year, the Compensation Committee approves a compensation arrangement for each of the Company’s NEOs that specifies the NEO’s (i) base salary, (ii) annual cash incentive (bonus) potential based on a percentage of base salary subject to achievement of individual and/or corporate goals, and (iii) equity awards, including the annual performance-based restricted stock that is granted based on achievement of prior year corporate goals and stock options, both of which are subject to service-based vesting conditions, as well as performance-based restricted stock that vests based on achievement of predetermined, objective goals over a multi-year period.

The following table summarizes each of these elements of our compensation program, as well as how each element is set and is linked to performance.

Performance Measures and Time Horizons

We use a combination of performance measures and service-based vesting conditions to foster and reward performance. The following chart summarizes the relevant performance measures and time frames used for our variable pay elements.

2022 Base Salaries

Base salaries provide a minimum, fixed level of cash compensation for the NEOs. Salary levels of the executive officers are reviewed annually by the Compensation Committee. In establishing salary levels, the Compensation Committee considers each executive’s individual responsibilities and performance, prior base salary and total compensation, the pay levels of similarly situated executives within the Company, market data on base salary and total compensation levels, including Willis Towers Watson peer group and survey data, and current market conditions.

In 2022, the Compensation Committee conducted its annual review of NEO salaries and adjusted the base salaries of our NEOs between 4%-8% to bring them in line with our peer group. Following the Compensation Committee’s review and adjustment (effective February 2022), the NEO salaries were as follows:

2022 Annual Cash Incentive Awards

The Compensation Committee administers an annual cash incentive program under which our NEOs may earn a cash incentive bonus based on a fixed target percentage of base salary during the fiscal year if individual and corporate performance objectives for the fiscal year are achieved. At the beginning of each year, the Compensation Committee establishes individual goals for each NEO, other than the Chief Executive Officer, based upon recommendations from our Chief Executive Officer, as well as Company financial goals that apply to all NEOs that are based upon recommendations from our Chief Executive Officer and our Chief Financial Officer. The Compensation Committee determines the target percentages of base pay for each NEO based on market and competitive conditions, peer company practices, and internal pay equity considerations. The Compensation Committee also determines the weighting of the various individual and Company financial goals, based upon position and functional accountability and responsibility, as well as recommendations from our Chief Executive Officer. The target percentages and weighting of the various individual and Company financial goals may vary among the NEOs and are subject to change from year to year. After the completion of each year, the Compensation Committee reviews individual and Company performance to determine the extent to which the goals were achieved and the actual cash bonuses to be paid to the NEOs.

In the Compensation Committee’s view, the use of annual performance-based cash incentive bonuses creates a direct link between executive compensation and individual and corporate performance. Therefore, the annual performance-based cash incentive bonus is generally divided into two components, one tied to corporate performance and one tied to individual performance. As discussed in greater detail below, the Compensation Committee sets a threshold, target and maximum award for the corporate performance objectives. The annual performance-based cash incentive bonus provides each NEO with the potential to earn awards up to two times the amount of their target award value for exceptional performance as measured against metrics and goals, each of which is discussed below. If the maximum is achieved, the NEOs receive 200% credit for the corporate performance portion of the award. If the target is achieved, the NEOs receive 100% credit for the corporate performance portion of the award. If the threshold level of corporate performance is not reached, the NEO does not receive any amount in respect of that portion of the award. Achievement of the individual performance goals are subjective, and executives can receive between 0% and 200% credit for that portion of the award.

In February 2022, the Compensation Committee set the weighting of the various individual and Company financial goals, and the threshold, target, and maximum annual cash incentive awards for all NEOs based upon the NEO’s individual responsibilities, competitive practices, and internal pay equity considerations. The following table shows each NEO’s 2022 potential cash incentive award values at threshold, target and maximum, expressed as a percentage of his or her base salary.

Individual Performance Goals and Achievement

At the beginning of each year, the Compensation Committee establishes individual goals for each NEO other than the CEO. After the completion of each year, the Compensation Committee reviews individual performance to determine the extent to

which the goals were achieved. The determination as to whether the individual performance goals have been achieved is subjective and executives can receive between 0% and 200% credit for that portion of the award. The applicable 2022 individual performance goals set by the Compensation Committee for each NEO other than the CEO and percentage of such goals achieved for each NEO are summarized in the table below.