ZILLOW GROUP, INC. (Form: 8-K, Received: 04/28/2015 16:21:19)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 23, 2015

ZILLOW GROUP, INC.

(Exact name of registrant as specified in its charter)


Washington	001-36853	47-1645716
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

1301 Second Avenue, Floor 31, Seattle, Washington		98101
(Address of principal executive offices)		(Zip Code)

(206) 470-7000

https://twitter.com/zillowgroup

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On April 23, 2015, Zillow Group, Inc. (the “Company”) entered into a letter agreement (the “Letter Agreement”) with Greg M. Schwartz, the Company’s Chief Revenue Officer, which describes the terms of Mr. Schwartz’s annual incentive cash-based bonus opportunities. The Letter Agreement is subject to the terms of the Zillow, Inc. Amended and Restated 2011 Incentive Plan, as amended and/or restated from time to time and as assumed by the Company.

Pursuant to the Letter Agreement, Mr. Schwartz is eligible to receive for fiscal year 2015:

•

Total Revenue Bonus . A target bonus of $50,000 semi-annually based on the Company’s total revenue generated during the first half and the second half of the fiscal year in relation to pre-established revenue objectives approved by the compensation committee of the board of directors of the Company (the “Compensation Committee”). No amount will be paid with respect to a six-month period if the revenue objective is not achieved for such period. The bonus payouts will increase on a straight percentage basis to the extent that revenue generated exceeds the revenue objective for such period.

•

Agent Revenue Bonus . A target bonus of $25,000 semi-annually based on agent revenue, which includes revenue from Zillow Premier Agent and Trulia agent products, generated during the first half and the second half of the fiscal year in relation to pre-established revenue objectives approved by the Compensation Committee. No amount will be paid with respect to a six-month period if the revenue objective is not achieved for such period. The bonus payouts will increase on a straight percentage basis to the extent that revenue generated exceeds the revenue objective for such period.

•

Other Real Estate Revenue Bonus . A target bonus of $25,000 semi-annually based on other real estate revenue, which includes revenue generated by Rentals, StreetEasy, and Diverse Solutions, generated during the first half and the second half of the fiscal year in relation to pre-established revenue objectives approved by the Compensation Committee. No amount will be paid with respect to a six-month period if the revenue objective is not achieved for such period. The bonus payouts will increase on a straight percentage basis to the extent that revenue generated exceeds the revenue objective for such period.

Payment of any bonus under the Letter Agreement is subject to Mr. Schwartz’s continued employment or service to the Company on a full-time basis through the last day of each applicable performance period. The terms of the Letter Agreement supersede the letter agreement dated June 16, 2014 by and between Mr. Schwartz and Zillow, Inc., except to the extent that any terms of the prior agreement must survive in order to the give proper effect to their intent.

The foregoing description of the Letter Agreement is qualified in its entirety by reference to the full text of the Letter Agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties. Statements containing words such as “may,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “project,” “will,” “projections,” “estimate,” or similar expressions constitute forward-looking statements. Such forward-looking statements are subject to significant risks and uncertainties, and actual results may differ materially from the results anticipated in the forward-looking statements. Differences may result from actions taken by the Compensation Committee, as well as from risks and uncertainties beyond the Company’s control. Additional factors that could cause results to differ materially from those anticipated in forward-looking statements can be found under the caption “Risk Factors” in Zillow, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 and in the Company’s other filings with the Securities and Exchange Commission. Except as may be required by law, Zillow Group does not intend, nor undertake any duty, to update this information to reflect future events or circumstances.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.


Exhibit Number		Description

10.1		Letter Agreement dated April 23, 2015 by and between Zillow Group, Inc. and Greg M. Schwartz.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Dated: April 28, 2015	ZILLOW GROUP, INC.

	By:	/s/ KATHLEEN PHILIPS
	Name: Kathleen Philips
	Title: Chief Operating Officer and Chief Legal Officer

EXHIBIT INDEX


Exhibit Number		Description

10.1		Letter Agreement dated April 23, 2015 by and between Zillow Group, Inc. and Greg M. Schwartz.

Exhibit 10.1

April 23, 2015

Mr. Greg M. Schwartz

Zillow Group, Inc.

1301 Second Ave., Floor 31

Seattle, WA 98101

Dear Greg:

This letter agreement (“ Agreement ”) is entered into by and between you and Zillow Group, Inc., a Washington corporation (the “ Company ”), effective as of January 1, 2015 (the “ Effective Date ”).

1. Purpose. The purpose of this Agreement is to set forth the terms and conditions governing your opportunity to earn annual cash-based awards based on achievement of identified revenue measures described below. The bonus opportunities granted under this Agreement are intended to be cash-based awards under Section 12 of the Zillow, Inc. Amended and Restated 2011 Incentive Plan, as amended and/or restated from time to time and as assumed by the Company (the “ Plan ”).

2. Term. This Agreement is effective as of the Effective Date and shall remain in effect until the earlier of its termination by the Compensation Committee of the Board of Directors (the “ Compensation Committee ”), subject to Section 9 hereof, or your termination of employment or service with the Company (the “ Term ”). This Agreement does not guarantee your employment, the terms of which continue to be governed by your employment agreement with the Company.

3. Elements of the Bonus Opportunity. You will be eligible to earn annual cash bonuses (each, a “ Bonus ”) in the amounts and based on achievement of the performance metrics and during the performance periods set forth below:

Total Revenue Bonus: You will be eligible to receive a $50,000 semi-annual Bonus based on targeted Company total revenue during the applicable performance periods (“ Total Revenue ”). Total Revenue will be calculated under U.S. generally accepted accounting principles except as otherwise provided herein. The Compensation Committee will annually approve Total Revenue targets for each of the performance periods January 1 through June 30 and July 1 through December 31. No amount will be paid with respect to a six-month period if the Total Revenue target is not achieved for such period. The amount of the Bonus for a six-month period will increase on a straight percentage basis to the extent Total Revenue exceeds Total Revenue target. Any Bonus payments will be calculated and paid as soon as practicable following completion of the applicable six-month period but in any event by no later than 74 days after completion of such period.

Agent Revenue Bonus: You will be eligible to receive a $25,000 semi-annual Bonus based on targeted Agent Revenue during the applicable performance periods. “ Agent Revenue ” will be calculated as revenue from Zillow Premier Agent and Trulia agent products. The Compensation Committee will annually approve the targeted Agent Revenue for each of the performance periods January 1 through June 30 and July 1 through December 31. No amount will be paid with respect to a

six-month period if the revenue target is not achieved for such period. The amount of the Bonus for a six-month period will increase on a straight percentage basis to the extent that generated revenue exceeds target. Any Bonus payment will be calculated and paid as soon as practicable after the end of the applicable six-month period but in any event by no later than 74 days after completion of such period.

Other Real Estate Revenue Bonus: You will be eligible to receive a $25,000 semi-annual Bonus based on targeted other real estate revenue (i.e., revenue generated by Rentals, StreetEasy, and Diverse Solutions) during the applicable performance periods. The Compensation Committee will annually approve the targeted other real estate revenue for each of the performance periods January 1 through June 30 and July 1 through December 31. No amount will be paid with respect to a six-month period if the revenue target is not achieved for such period. The Bonus payment for a six-month period will increase on a straight percentage basis to the extent that generated revenue exceeds target. Any Bonus payment will be calculated and paid as soon as practicable after the end of the applicable six-month period but in any event by no later than 74 days after completion of such period.

Calculation of Revenue and Compensation Committee Certification. For each of the performance metrics set forth above, the following will be excluded from the calculation of the applicable revenue measure: (a) revenue generated by Market Leader; (b) fair value-based purchase accounting adjustments for deferred revenue (if any). At the conclusion of a performance period and prior to the payment of any Bonus for a performance period, the Compensation Committee will certify in writing the extent to which the performance goals applicable for the performance period were achieved or exceeded, the final amount of the Bonus payable to you with respect to such period, and any other material terms.

Continued Employment. Payment of any Bonus under this Agreement is subject to your continued employment or service to the Company on a full-time basis through the last day of each applicable performance period (i.e., the six-month period over which performance for a Bonus payout is measured). Bonuses will be paid in cash in a single, lump sum payment, subject to applicable payroll taxes and tax withholding.

Dollar Limitations. The total Bonus payouts under this Agreement shall not exceed $2,000,000 in any calendar year.

4. Recoupment. In the event that revenue upon which a Bonus was calculated is determined to have been overstated as a result of your misconduct, you will be required to reimburse the Company for any Bonus payment received based upon such revenue and will not be eligible to receive any Bonus payment otherwise accrued but unpaid based upon such revenue. Recoupment of any Bonus shall otherwise be required to the extent required by applicable law or the terms of a Company’s clawback policy, as then in effect and as it may be amended from time to time (the “ Policy ”), to the extent that the Policy applies to such Bonus.

5. Assignment. This Agreement is personal to you and cannot be assigned by you. All of the terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

6. Administration. The Compensation Committee will administer this Agreement. You understand that the Compensation Committee may adjust revenue targets or other terms set forth herein as a result of acquisitions, divestitures, or other extraordinary events or conditions during a calendar year. Subject to the last sentence of this Section 6, the Compensation Committee further may adjust the Bonus amounts set forth in Section 3 of this Agreement for calendar years 2016 and beyond, in its discretion. Any determinations made by the Compensation Committee with respect to this Agreement and any payouts thereunder will be final and binding on you. Notwithstanding anything to the contrary in this Agreement, in the event the Compensation Committee specifies that bonus opportunities for a performance period under this Agreement are governed by Section 16 of the Plan, the Compensation Committee shall have the power to administer this Agreement in a manner intended to ensure that this Agreement satisfies all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code and any successor provision thereto.

7. Applicable Law. This Agreement will in all respects, including all matters of construction, validity and performance, be governed by, and construed and enforced in accordance with, the laws of the State of Washington, without regard to any rules governing conflicts of laws.

8. No Trust or Fund. Each Bonus that may become payable under this Agreement will be paid solely from the general assets of the Company. Nothing in this Agreement should be construed to create a trust or to establish or evidence your claim of any right to payment of a Bonus other than as an unsecured general creditor with respect to any payment to which you may be entitled.

9. Amendment. The Compensation Committee reserves the right to unilaterally amend, modify or terminate this Agreement at any time, except that any such amendment (other than amendments or adjustments permitted by Section 6 of this Agreement and, for the avoidance of doubt, Section 16 of the Plan), modification or termination may not, without your written consent, materially adversely affect your rights with respect to any six-month period for which the Compensation Committee has previously approved revenue targets pursuant to Section 3 of this Agreement. Notwithstanding the foregoing, the Compensation Committee may amend this Agreement at any time as it deems necessary or desirable to avoid adverse tax consequences under Section 409A of the Internal Revenue Code of 1986, as amended.

10. Entire Agreement. This Agreement, on and as of the Effective Date, constitutes the entire agreement between the Company and you with respect to the subject matter hereof, and all prior or contemporaneous oral or written communications, understandings or agreements between the Company and you with respect to such subject matter (including, without limitation, the Letter Agreement dated June 16, 2014 by and between you and the Company (the “ 2014 Letter Agreement ”)) are hereby superseded in their entirety, except as otherwise provided herein. For the avoidance of doubt, the 2014 Letter Agreement shall be deemed terminated as of the Effective Date, provided, however, that those provisions of the 2014 Letter Agreement that must survive in order to give proper effect to their intent shall survive such termination. This Agreement may be executed in counterparts.

11. Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

IN WITNESS WHEREOF , the parties have executed and entered into this Agreement as of the date first set forth above.


GREG M. SCHWARTZ				ZILLOW GROUP, INC.

/s/ Greg M. Schwartz				/s/ Kathleen Philips
				Print name: Kathleen Philips
				Title: Chief Operating Officer and Chief Legal Officer