XML 93 R24.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

EMPLOYEE BENEFIT PLANS | 12 Months Ended
--- | ---
Dec. 31, 2019
Compensation Related Costs [Abstract] |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANSStock Incentive Plans In April 2007, the Company’s Board of Directors adopted the CoStar Group, Inc. 2007 Stock Incentive Plan (as amended, the “2007 Plan”), subject to stockholder approval, which was obtained on June 7, 2007. In April 2016, the Company’s Board of Directors adopted the CoStar Group, Inc. 2016 Stock Incentive Plan (as amended, the “2016 Plan”), subject to stockholder approval, which was obtained on June 9, 2016. All shares of common stock that were authorized for issuance under the 2007 Plan that, as of June 9, 2016, remained available for issuance under the 2007 Plan (excluding shares subject to outstanding awards) were rolled into the 2016 Plan and, as of that date, no shares of common stock were available for new awards under the 2007 Plan. The 2007 Plan continues to govern unexercised and unexpired awards issued under the 2007 Plan prior to June 9, 2016. The 2007 Plan provided for the grant of stock options, restricted stock, restricted stock units and stock appreciation rights to officers, directors and employees of the Company and its subsidiaries. Stock options granted under the 2007 Plan could be incentive or non-qualified, and except in limited circumstances related to a merger or other acquisition, the exercise price for a stock option may not be less than the fair market value of the Company’s common stock on the date of grant. The vesting period of the options, restricted stock and restricted stock unit grants under the 2007 Plan was determined by the Board of Directors or a committee thereof and was generally three to four years. In some cases, vesting of restricted stock awards under the 2007 Plan is subject to performance conditions. Upon the occurrence of a Change of Control, as defined in the 2007 Plan, all outstanding unexercisable options and restricted stock grants under the 2007 Plan immediately become exercisable. The 2016 Plan provides for the grant of stock options, restricted stock, restricted stock units, and stock appreciation rights to officers, directors and employees of the Company and its subsidiaries. Stock options granted under the 2016 Plan may be non-qualified or may qualify as incentive stock options. Except in limited circumstances related to a merger or other acquisition, the exercise price for an option may not be less than the fair market value of the Company’s common stock on the date of grant. The vesting period for each grant of options, restricted stock, restricted stock units and stock appreciation rights under the 2016 Plan is determined by the Board of Directors or a committee thereof and is generally three to four years, subject to minimum vesting periods for restricted stock and restricted stock units of at least one year. In some cases, vesting of awards under the 2016 Plan may be based on performance conditions. The Company has issued and/or reserved the following shares of common stock for issuance under the 2016 Plan: (a) 1,450,000 shares of common stock, plus (b) 815,464 shares of common stock that were authorized for issuance under the 2007 Plan that, as of June 9, 2016, remained available for issuance under the 2007 Plan (not including any Shares that were subject as of such date to outstanding awards under the 2007 Plan), and (c) any shares of common stock subject to outstanding awards under the 2007 Plan as of June 9, 2016, that on or after such date cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent they are exercised for or settled in vested and nonforfeitable shares). Unless terminated sooner, the 2016 Plan will terminate in June 2026, but will continue to govern unexercised and unexpired awards issued under the 2016 Plan prior to that date. Approximately 2 million shares were available for future grant under the 2016 Plan as of December 31, 2019. At December 31, 2019, there was approximately $82 million of unrecognized compensation cost related to stock incentive plans, net of estimated forfeitures, which the Company expects to recognize over a weighted-average-period of 2.5 years. Stock Options Option activity was as follows:
| Number of Shares |  | Range of Exercise Price |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contract Life (in years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2016 | 440,158 |  |  | $36.48 - $201.04 |  | $ | 132.08 |  |  |  |  |
Granted | 95,500 |  |  | $204.91 |  | $ | 204.91 |  |  |  |  |
Exercised | (81,815 | ) |  | $36.48 - $201.04 |  | $ | 83.07 |  |  |  |  |
Outstanding at December 31, 2017 | 453,843 |  |  | $36.73 - $204.91 |  | $ | 156.24 |  |  |  |  |
Granted | 82,500 |  |  | $342.13 |  | $ | 342.13 |  |  |  |  |
Exercised | (177,299 | ) |  | $36.73 - $204.91 |  | $ | 125.16 |  |  |  |  |
Canceled or expired | (14,768 | ) |  | $182.75 - $342.13 |  | $ | 261.20 |  |  |  |  |
Outstanding at December 31, 2018 | 344,276 |  |  |  |  | $ | 212.28 |  |  |  |  |
Granted | 48,300 |  |  | $398.15 |  | $ | 398.15 |  |  |  |  |
Exercised | (116,918 | ) |  | $54.51 - $342.13 |  | $ | 159.52 |  |  |  |  |
Outstanding at December 31, 2019 | 275,658 |  |  | $54.51 - $398.15 |  | $ | 267.23 |  |  | 6.98 |  | $ | 91,262 |
Exercisable at December 31, 2017 | 278,239 |  |  | $36.73 - $201.04 |  | $ | 130.91 |  |  |  |  |
Exercisable at December 31, 2018 | 185,405 |  |  | $54.51 - $204.91 |  | $ | 165.31 |  |  |  |  |
Exercisable at December 31, 2019 | 147,620 |  |  | $102.16 - $342.13 |  | $ | 210.96 |  |  | 5.84 |  | $ | 57,180 |
The aggregate intrinsic value is calculated as the difference between (i) the closing price of the common stock at the end of the period and (ii) the exercise prices of the underlying awards, multiplied by the shares underlying options as of the end of the period that had an exercise price less than the closing price on that date. Options to purchase 116,918, 177,299, and 81,815, shares were exercised during the years ended 2019, 2018 and 2017, respectively. The aggregate intrinsic value of options exercised, determined as of the date of option exercise, was approximately $40 million, $45 million and $13 million for the years ended December 31, 2019, 2018 and 2017, respectively. The weighted-average grant date fair value of each option granted during the years ended December 31, 2019, 2018 and 2017 using the Black-Scholes option-pricing model was $115.17, $101.02 and $59.06, respectively. The Company estimated the fair value of each option granted on the date of grant using the Black-Scholes option-pricing model, using the assumptions in the following table:
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
Dividend yield | 0 | % |  | 0 | % |  | 0 | %
Expected volatility | 27 | % |  | 28 | % |  | 28 | %
Risk-free interest rate | 2 | % |  | 3 | % |  | 2 | %
Expected life (in years) | 5 |  |  | 5 |  |  | 5 |
The expected dividend yield is determined based on the Company's past cash dividend history and anticipated future cash dividend payments. The Company has never declared or paid any dividends on its common stock and does not anticipate paying any dividends on its common stock during the foreseeable future, but intends to retain any earnings for future growth of its business. Expected volatility is calculated based on historical volatility of the daily closing price of the Company's common stock over a period consistent with the expected life of the options granted. The risk-free interest rate is based on the U.S. Treasury rate with terms similar to the expected life of the options granted. The expected life for the options is determined based on multiple factors, including historical employee behavior patterns of exercising options and post-employment termination behavior as well as expected future employee option exercise patterns. The following table summarizes information regarding options outstanding at December 31, 2019:
|  | Options Outstanding |  | Options Exercisable
Range of Exercise Price |  | Number of Shares |  | Weighted-Average Remaining Contractual Life (in years) |  | Weighted- Average Exercise Price |  | Number of Shares |  | Weighted- Average Exercise Price
$102.16 - $142.45 |  | 3,522 |  |  | 3.19 |  | $ | 102.16 |  |  | 3,522 |  |  | $ | 102.16 |
$142.46 - $188.22 |  | 36,600 |  |  | 6.19 |  | $ | 182.75 |  |  | 36,600 |  |  | $ | 182.75 |
$188.23 - $197.37 |  | 32,200 |  |  | 5.17 |  | $ | 193.69 |  |  | 32,200 |  |  | $ | 193.69 |
$197.38 - $202.98 |  | 33,600 |  |  | 4.16 |  | $ | 201.04 |  |  | 33,600 |  |  | $ | 201.04 |
$202.99 - $273.52 |  | 52,135 |  |  | 7.16 |  | $ | 204.91 |  |  | 23,066 |  |  | $ | 204.91 |
$273.53 - $370.14 |  | 69,301 |  |  | 8.16 |  | $ | 342.13 |  |  | 18,632 |  |  | $ | 342.13 |
$370.15 - $398.15 |  | 48,300 |  |  | 9.10 |  | $ | 398.15 |  |  | — |  |  | $ | — |
|  | 275,658 |  |  |  |  | $ | 267.23 |  |  | 147,620 |  |  | $ | 210.96 |
Restricted Stock Awards The Compensation Committee of the Board of Directors of the Company historically approved grants of restricted common stock to employees and directors of the Company that vest over a specific service period and to executive officers that vest based on the achievement of certain performance conditions, primarily, the achievement of a three-year cumulative revenue goal established at the grant date, and are subject to forfeiture in the event the foregoing performance condition is not met by the end of each respective three-year period. These awards support the Company’s goals of aligning executive incentives with long-term stockholder value and ensuring that executive officers have a continuing stake in the long-term success of the Company. The vesting of restricted common stock is subject to continuing employment requirements. Certain performance-based restricted common stock awards are also subject to a market condition such that the actual number of shares that vest at the end of the respective three-year period is determined based on the Company’s achievement of performance goals and an established Company specific TSR factor relative to the Russell 1000 Index over the same three-year performance period. At the end of the three-year performance period, if the performance condition is achieved at or above the pre-established threshold, the number of shares earned is further adjusted by a TSR payout percentage, which ranges between 80% and 120%, based on the Company’s TSR performance relative to that of the Russell 1000 Index over the respective three-year period. The Company granted a total of 36,364, 26,160, and 32,160 shares of performance-based restricted common stock during the years ended December 31, 2019, 2018 and 2017, respectively. The Company estimates the fair value of its equity awards with both a performance and market condition on the date of grant using a Monte-Carlo simulation valuation model. This pricing model uses multiple simulations to evaluate the probability of achieving the market condition to calculate the fair value of the awards. Expense is only recorded for awards that are expected to vest, net of estimated forfeitures. The assumptions used to estimate the fair value of awards with both a performance and a market condition were as follows:
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
Dividend yield | 0 | % |  | 0 | % |  | 0 | %
Expected volatility | 27 | % |  | 28 | % |  | 28 | %
Risk-free interest rate | 2 | % |  | 2 | % |  | 2 | %
Expected life (in years) | 3 |  |  | 3 |  |  | 3 |
Weighted-average grant date fair value | $ | 398.15 |  |  | $ | 342.13 |  |  | $ | 218.59 |
The expected dividend yield is determined based on the Company's past cash dividend history and anticipated future cash dividend payments. The Company has never declared or paid any dividends on its common stock and does not anticipate paying any dividends on its common stock during the foreseeable future, but intends to retain any earnings for future growth of its business. Expected volatility is calculated based on historical volatility of the daily closing price of the common stock of the companies within the Russell 1000 Index over a period consistent with the expected life of the performance-based restricted common stock awards with a market condition. The risk-free interest rate is based on the U.S. Treasury rate with terms similar to the expected life of the performance-based restricted common stock awards with a market condition. The expected life is consistent with the performance measurement period of the performance-based restricted common stock awards with a market condition. As of December 31, 2019, the Company determined that it was probable that the performance goals associated with restricted stock awards with performance and market conditions granted during 2019, 2018 and 2017 would be met by their forfeiture dates. The Company recorded a total of approximately $8 million, $5 million and $5 million of stock-based compensation expense related to restricted stock awards with a market condition for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, the Company expects to record an aggregate stock-based compensation expense of approximately $11 million for restricted stock awards with a market condition over the periods 2020, 2021 and 2022. The following table presents unvested restricted stock awards activity for the year ended December 31, 2019:
| Restricted Stock Awards — without Market Condition |  | Restricted Stock Awards — with Market Condition
| Number of Shares |  | Weighted-Average Grant Date Fair Value per Share |  | Number of Shares |  | Weighted-Average Grant Date Fair Value per Share
Unvested restricted stock awards at December 31, 2018 | 304,161 |  |  | $ | 272.95 |  |  | 76,320 |  |  | $ | 193.44 |
Granted | 115,722 |  |  | $ | 456.51 |  |  | 36,000 |  |  | $ | 429.63 |
Vested | (134,361 | ) |  | $ | 241.65 |  |  | (23,040 | ) |  | $ | 184.97 |
Canceled | (18,303 | ) |  | $ | 315.39 |  |  | — |  |  | $ | — |
Unvested restricted stock awards at December 31, 2019 | 267,219 |  |  | $ | 365.27 |  |  | 89,280 |  |  | $ | 290.87 |
Restricted Stock Units The following table presents unvested restricted stock units activity for the year ended December 31, 2019:
| Number of Units |  | Weighted-Average Grant Date Fair Value per Share
Unvested restricted stock units at December 31, 2018 | 852 |  |  | $ | 228.86 |
Granted | 413 |  |  | $ | 459.41 |
Vested | (411 | ) |  | $ | 221.08 |
Canceled | — |  |  | $ | — |
Unvested restricted stock units at December 31, 2019 | 854 |  |  | $ | 344.10 |
Management Stock Purchase Plan The Board of Directors adopted the Company’s Management Stock Purchase Plan in December 2017 with the intent of providing selected key employees of the Company and its subsidiaries, including the Company's executive officers, the opportunity to defer a portion of their cash incentive compensation and to align management and stockholder interests through awards of Deferred Stock Units (“DSUs”) under the MSPP and awards of Matching RSUs issued under the Company 2016 Plan. Under this plan, participants are permitted to elect to defer up to 100% of their annual incentive bonus or commissions earned during the year by submitting an irrevocable election in accordance with Section 409A of the Internal Revenue Code, as amended. On the date the incentive bonus or commission would otherwise be paid in cash (typically during the following calendar year), the Company awards the participant DSUs representing the number of shares of common stock with an aggregate fair market value on that date equal to the amount of compensation elected to be deferred under the MSPP. On the same date the DSUs are awarded, the participant receives a grant of Matching RSUs covering the number of shares of common stock equal up to 100% of the DSUs granted. The expense related to the DSUs is recognized on a straight-line basis during the period that the related incentive bonus or commission is earned. The stock-based compensation expense for 7,441 DSUs awarded during 2019 was fully recognized as of December 31, 2018. The expense related to the Matching RSUs is recognized over the four years vesting period following the grant date. The following tables presents the RSU activity for the year ended December 31, 2019:
| Number of Matching RSU Shares |  | Weighted-Average Grant Date Fair Value per Share
Unvested MSPP restricted stock units at December 31, 2018 | — |  |  | $ | — |
Granted | 7,441 |  |  | 469.13 |
Vested | — |  |  | — |
Canceled | (275 | ) |  | 469.13 |
Unvested MSPP restricted stock units at December 31, 2019 | 7,166 |  |  | $ | 469.13 |
Employee 401(k) Plan The Company maintains a 401(k) Plan (the “401(k)”) as a defined contribution retirement plan for all eligible employees. The 401(k) provides for tax-deferred contributions of employees’ salaries, limited to a maximum annual amount as established by the IRS. In addition to the traditional 401(k), effective January 1, 2015, eligible employees have the option of making an after-tax contribution to a Roth 401(k) plan or a combination of both. In 2019, 2018 and 2017, the Company matched 100% of employee contributions up to a maximum of 4% of total compensation. Amounts contributed to the 401(k) by the Company to match employee contributions for the years ended December 31, 2019, 2018 and 2017 were approximately $12 million, $12 million and $10 million, respectively. The Company had no administrative expenses in connection with the 401(k) plan for the years ended December 31, 2019, 2018 and 2017, respectively. Employee Pension Plan The Company maintains a Group Personal Pension Plan (the “Plan”) for all eligible employees in the Company’s U.K. offices. The Plan is a defined contribution plan. Employees are eligible to contribute a portion of their salaries, subject to a maximum annual amount as established by Her Majesty's Revenue and Customs. In 2019, 2018 and 2017, the Company's matching contribution was based on the percentage contributed by the employee, up to a maximum of 6% of total compensation. Amounts contributed to the Plan by the Company to match employee contributions for the years ended December 31, 2019, 2018 and 2017, were approximately $0.6 million, $0.5 million and $0.4 million, respectively. Registered Retirement Savings Plan As of January 1, 2015, the Company introduced a registered retirement savings plan (“RRSP”) for all eligible employees in the Company’s Canadian offices. In 2017, 2016 and 2015, the Company matched 100% of employee contributions up to a maximum of 4% of total compensation. Amounts contributed to the RRSP by the Company to match employee contributions for the years ended December 31, 2019, 2018 and 2017 were approximately $70 thousand, $58 thousand and $43 thousand, respectively. Employee Stock Purchase Plan As of August 1, 2006, the Company introduced an Employee Stock Purchase Plan (“ESPP”), pursuant to which eligible employees participating in the plan authorize the Company to withhold specified amounts from the employees’ compensation and use the withheld amounts to purchase shares of the Company's common stock at 90% of the market price. Participating employees are able to purchase common stock under this plan during each offering period. An offering period begins the second Saturday before each of the Company’s regular pay dates and ends on each of the Company’s regular pay dates. On June 3, 2015, the Company’s stockholders approved an amendment to the ESPP to increase the number of shares available for purchase under the ESPP by 100,000 shares. On September 14, 2015, the Company registered the issuance of these additional shares under the ESPP pursuant to the registration statement filed September 14, 2015. There were 51,584 and 65,174 shares available for purchase under the ESPP as of December 31, 2019 and 2018, respectively, and approximately 13,590 and 14,848 shares of the Company’s common stock were purchased under the ESPP during 2019 and 2018, respectively.

X
- References No definition available. + Details
Name: | us-gaap_CompensationRelatedCostsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration