April 24, 2020 Dear Stockholder: You are cordially invited to participate in the 2020 Annual Meeting of Stockholders of CoStar Group, Inc., to be held at 10:00 a.m., Eastern Daylight Time, on Wednesday, June 3, 2020 (the “Annual Meeting”). We have adopted a virtual format for the Annual Meeting this year following guidance from global and U.S. health authorities to help limit the spread of the novel coronavirus, or COVID-19. The virtual Annual Meeting will consist of a live webcast. Stockholders can participate from any geographic location with Internet connectivity. You may listen, vote and submit questions during the Annual Meeting via the Internet at www.virtualshareholdermeeting.com/CSGP2020. More information regarding how you can participate in the virtual Annual Meeting is provided in the Proxy Statement. A webcast replay of the Annual Meeting’s audio will be available on the investor relations page of our website after the Annual Meeting. At the Annual Meeting, you will be asked to (1) elect the eight directors named in the Proxy Statement, (2) ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2020, and (3) approve, on an advisory basis, CoStar Group, Inc.’s executive compensation. The accompanying Notice of 2020 Annual Meeting of Stockholders and Proxy Statement describe these matters in more detail. The Board of Directors recommends that you vote in favor of each of the director nominees and the other proposals. Important Notice Regarding the Availability of Proxy Materials for the 2020 Annual Meeting of Stockholders To Be Held on June 3, 2020: The Proxy Statement and our 2019 Annual Report are available at http://investors.costargroup.com/financials. Whether or not you plan to attend the virtual Annual Meeting, please vote your shares as promptly as possible. Your participation will help to ensure the presence of a quorum at the meeting and save CoStar the extra expense associated with additional solicitation. Sincerely, ANDREW C. FLORANCE Founder, Chief Executive Officer, President and Director COSTAR GROUP, INC. April 24, 2020 NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD WEDNESDAY, JUNE 3, 2020 The 2020 Annual Meeting of Stockholders (the “Annual Meeting”) of CoStar Group, Inc. (“CoStar”, “we” or the “Company”) will be held online at www.virtualshareholdermeeting.com/CSGP2020 at 10:00 a.m., Eastern Daylight Time, on Wednesday, June 3, 2020, for the following purposes: 1. To elect the eight directors named in the Proxy Statement to hold office until the next Annual Meeting of Stockholders, or until their respective successors are elected and qualified; 2. To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020; 3. To approve, on an advisory basis, the Company’s executive compensation; and 4. To transact any other business properly presented before the Annual Meeting. The Board of Directors has fixed Wednesday, April 8, 2020, as the record date for determining stockholders entitled to receive notice of and to vote at the Annual Meeting (or any adjournment or postponement of it). Only stockholders of record at the close of business on that date are entitled to notice of and to vote at the Annual Meeting. CoStar’s list of registered stockholders as of April 8, 2020 will be available for inspection for the 10 days prior to the Annual Meeting. If you want to inspect the registered stockholder list, please email Sarah Spray, Vice President of Investor Relations at [email protected] to schedule an appointment. In addition, the list of registered stockholders will also be available during the Annual Meeting through the meeting website for those stockholders who choose to attend. You may listen, vote, submit questions and view the list of registered stockholders during the Annual Meeting via the Internet at www.virtualshareholdermeeting.com/CSGP2020. We have worked to offer the same ability to participate as previously provided during our past in-person annual meetings. INTERNET AVAILABILITY We are furnishing proxy materials to some of our stockholders through the Internet instead of through the mail. On or about April 24, 2020, we mailed to stockholders as of the record date a Notice Regarding the Availability of Proxy Materials (the "Notice"). The Notice tells you how to access this Proxy Statement and our 2019 Annual Report on Form 10-K, 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. WE INVITE YOU TO PARTICIPATE IN THE ANNUAL MEETING, BUT WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING ONLINE, PLEASE VOTE YOUR SHARES AS SOON AS POSSIBLE. By Order of the Board of Directors, JAYE S. CAMPBELL General Counsel and Secretary NOTICE: Brokers are not permitted to vote on the election of directors or advisory resolution to approve executive compensation without instructions from the beneficial owner, as discussed in more detail in the Proxy Statement. If your shares are held through a brokerage firm, bank or other nominee, they will not be voted on these matters unless you affirmatively vote your shares in one of the ways described in the Notice. Table of Contents PROXY STATEMENT 1 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 1 STOCKHOLDER MEETING TO BE HELD ON JUNE 3, 2020 OUTSTANDING SECURITIES, VOTING RIGHTS AND QUORUM 1 PROXY VOTING AND REVOCATION 2 Item 1 – ELECTION OF DIRECTORS 4 Board Composition 4 Nominees for the Board of Directors 5 Nominees’ Business Experience, Qualifications and Directorships 6 Item 2 – RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC 10 ACCOUNTING FIRM Item 3 – ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION 11 OTHER MATTERS 12 STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTORS FOR THE 2021 ANNUAL 12 MEETING ADDITIONAL INFORMATION 12 Corporate Governance Matters 12 Board Meetings and Committees 15 Report of the Audit Committee 17 Director Compensation 18 Director Stock Ownership Policy 18 Executive Officers and Key Employees 20 Stock Ownership Information 23 Equity Compensation Plan Information 24 Compensation Committee Interlocks and Insider Participation 25 Compensation Committee Report 25 COMPENSATION DISCUSSION AND ANALYSIS 26 Executive Summary 26 Business Overview 26 Executive Compensation Plan and Performance Highlights 28 2019 Variable Compensation Drivers and Outcomes 28 2019 Stockholder Outreach and Say on Pay Response 32 Highlights of the Executive Compensation Program 33 Executive Compensation Practices 34 Executive Compensation Program Objectives 35 Determining Executive Compensation 35 Elements of Compensation 38 Performance Measures and Time Horizons 39 2019 Base Salaries 39 2019 Annual Cash Incentive Program 40 2019 Annual Cash Incentive Awards 43 Equity Incentive Compensation 44 Target Equity Incentive Awards Granted in 2019 47 2018 Performance-Based Restricted Stock Awards Granted in 2019 48 2019 Multi-Year Performance Shares 49 2019 Stock Option Awards 50 Target Equity Incentive Awards Granted in 2020 51 2019 Performance-Based Restricted Stock Awards Granted in 2020 52 Management Stock Purchase Plan 53 Compensation Decision Process 54 Other Compensation Policies and Practices 55 Executive Stock Ownership Policy 55 Equity Grant Practices 55 Recoupment (or “Clawback”) Policy 55 Anti-Hedging Policies 55 Termination and Change of Control Payments 55 Policy on Deductibility of Compensation 56 EXECUTIVE COMPENSATION TABLES AND DISCUSSION 57 Summary Compensation Table 57 Grants of Plan-Based Awards for Fiscal Year 2019 59 NARRATIVES TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED 61 AWARDS TABLE Employment Agreements and Arrangements 61 Chief Executive Officer Employment Agreement 61 Equity Awards 61 Outstanding Equity Awards at 2019 Fiscal Year-End 62 Option Exercises and Stock Vested for Fiscal Year 2019 63 Nonqualified Deferred Compensation for Fiscal Year 2019 63 Potential Payments Upon Termination or Change of Control 64 CEO Pay Ratio Disclosure 68 Certain Relationships and Related Transactions 69 Other Information 70 A-1 APPENDIX A – PROXY CARD COSTAR GROUP, INC. PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, JUNE 3, 2020 The Board of Directors (the “Board”) of CoStar Group, Inc. (“CoStar”, “we” 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 Daylight Time, on Wednesday, June 3, 2020, and at any adjournment or postponement of the Annual Meeting. The Annual Meeting will be held online as a live webcast via the internet at www.virtualshareholdermeeting.com/CSGP2020. 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 Regarding the Availability of Proxy Materials (the “Notice”) to our stockholders eligible to vote at the Annual Meeting on or about April 24, 2020. To be admitted to the Annual Meeting, you will need to enter the control number found on your Notice, proxy card or voting information form. 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