HOLD Domain

The Intelligent Investor

Jason Pellegrino was due to start at Domain in late August. Assuming the former head of Google in Australasia is still employed on new year’s eve, he’ll receive $500,000 in cash. Two years after he commences he’ll receive $2 million worth of Domain shares.

Pellegrino’s long-term incentive – paid on top of his salary and sign-on bonuses – will depend on the achievement of performance hurdles based on total shareholder return over a threeyear period. If Pellegrino fails to generate more than 10% a year in total shareholder return by June 2021, then he won’t receive any of his long-term incentive.

It’s been unsettling to hear rumours of cultural issues at Domain in the wake of the former CEO Antony Catalano’s January resignation. Domain has also recently made a number of staff redundant, including the managing director of Domain Victoria, who was reportedly close to Catalano.

Consistent with weakening auction clearance rates in Sydney, yearly list-

ings to the end of May were up 20%, while days on market have risen from 31 to 43. This has been good news for Domain over the past financial year. It met market expectations of around $115 million in earnings before interest, tax, depreciation and amortisation (EBITDA) when it reported its fullyear results in August.

The 2019 financial year might be a little more troublesome. Higher-priced houses in Sydney have been particularly weak – and this segment is where Domain’s market share is strongest. James Greenhalgh is a senior analyst at Intelligent Investor, owned by InvestSMART Group. Disclosure: Staff members may own the security mentioned in this article.