Key Insights

• CoStar Group to hold its Annual General Meeting on 6th of June
• Total pay for CEO Andy Florance includes US$997.0k salary
• The overall pay is 2,397% above the industry average
• CoStar Group's EPS grew by 6.9% over the past three years while total shareholder loss over the past three years was 5.3%

As many shareholders of CoStar Group, Inc. (NASDAQ:CSGP) will be aware, they have not made a gain on their investment in the past three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 6th of June. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Comparing CoStar Group, Inc.'s CEO Compensation With The Industry

According to our data, CoStar Group, Inc. has a market capitalization of US$34b, and paid its CEO total annual compensation worth US$29m over the year to December 2023. Notably, that's an increase of 50% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$997k.

For comparison, other companies in the American Real Estate industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$1.2m. Accordingly, our analysis reveals that CoStar Group, Inc. pays Andy Florance north of the industry median. Furthermore, Andy Florance directly owns US$99m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 26% of total compensation represents salary, while the remainder of 74% is other remuneration. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Andy Florance as compared to non-salary compensation over the one-year period examined. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

CoStar Group, Inc.'s Growth

Over the past three years, CoStar Group, Inc. has seen its earnings per share (EPS) grow by 6.9% per year. Its revenue is up 12% over the last year.

We think the revenue growth is good. And, while modest, the EPS growth is noticeable. Although we'll stop short of calling the stock a top performer, we think the company has potential. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has CoStar Group, Inc. Been A Good Investment?

Since shareholders would have lost about 5.3% over three years, some CoStar Group, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

CoStar Group prefers rewarding its CEO through non-salary benefits. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for CoStar Group that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.