2015 Performance

JLL delivered overall excellent performance for 2015. The Company’s full-year 2015 fee revenue reached a record $5.2 billion, a 17% increase over 2014, led primarily by a 26% increase in Project & Development Services, a 25% increase in Capital Markets & Hotels, and a 16% increase in LaSalle. Fee revenue growth was not only broad-based by service line, but also geographically, with double-digit year-over-year percentage growth in all four business segments.

Each of JLL’s three Real Estate Services operating segments contributed to the results by increasing both its revenue and its operating income over the prior year, in each case in local currency:

  • Fee revenue for the Americas was $2.4 billion, an increase of 16% from 2014. Revenue growth was broad-based as all service lines produced year-over-year increases greater than 10%. The primary revenue growth drivers for the segment in 2015 were Capital Markets & Hotels, up 25%, Project & Development Services, up 20%, and Leasing, up 14%, as compared to 2014. Operating income was $251.1 million for 2015, compared with $219.4 million in 2014, up 19%.
  • EMEA’s full-year fee revenue was $1.4 billion, an increase of 20% from 2014. Revenue growth was driven by Capital Markets & Hotels, up 29%, and Project & Development Services, up 38%, as compared to 2014. Growth in the region for the year overall was broad-based, led by the U.K., Germany, France, and the Middle East and North Africa. Operating income was $145.5 million for 2015, compared with $120.8 million for 2014, up 38%. Adjusted EBITDA was $172.7 million for 2015, compared with $144.6 million in 2014, up 36%.
  • Asia Pacific fee revenue grew to $969 million in 2015, an increase of 17% from 2014. Revenue growth was driven by Project & Development Services, up 25%, Property & Facility Management, up 17%, and Leasing, up 13%, as compared to 2014. Growth in the region for the year was led by Japan and India. Operating income was $87.2 million for 2015, compared with $84.2 million for 2014, up 18%. Adjusted EBITDA was $102.7 million for 2015, compared with $97.5 million for 2014, up 19%.

LaSalle, our investment management business that constitutes our fourth operating segment, posted total revenue for 2015 of $467 million, up 20% in local currency from 2014. Advisory fees were $242.9 million for 2015, up 10% from 2014. Also included in LaSalle’s total segment revenue were incentive fees of $123.5 million, driven by mature funds primarily in Asia Pacific and Europe taking advantage of the capital markets environment to liquidate real estate holdings near the end of their stated investment periods. LaSalle’s equity earnings for 2015 were $70.1 million, a 50% increase as compared to 2014, driven by gains recognized from dispositions of legacy investments and from increases in asset values of investments. Operating income was $157.6 million for 2015, compared with $132.0 million for 2014, up 27%. In 2015, LaSalle's capital raising momentum continued with $5.0 billion in new equity commitments. Assets under management were $56.4 billion as of December 31, 2015, compared with $53.6 billion as of December 31, 2014.

In 2015, we completed 20 new acquisitions that expanded our capabilities in ten different countries. We maintained our balance sheet for growth, reflecting the Company’s strong cash generation. We also improved our investment grade credit rating to BBB+ (stable outlook) with S&P and to Baa2 (positive outlook) with Moody’s.

Also during 2015, JLL continued to win numerous awards that reflected the quality of the services it provides to our clients, the integrity of its people and its desirability as a place to work, including awards recognizing its (1) superior service to clients, (2) ethics program and corporate governance, (3) outsourcing capabilities, (4) consultancy capabilities, (5) “best place to work” environment and (6) environmental and energy management work for clients.

The following table illustrates the three-year relationship between company performance and the compensation of our President and Chief Executive Officer. We selected earnings per share and adjusted net income because of their high correlation with creating shareholder value.

(1) Adjusted net income, as applied by the Committee in the determination of the compensation of Named Executive Officers, represents net income attributable to common shareholders excluding certain significant restructuring and acquisition charges, at its discretion.

(2) Represents total direct compensation earned for year indicated, which will be different from the Summary Compensation Table for certain timing reasons indicated in the notes to the Table.

Return to shareholders

Total shareholder return (TSR) for 2015, including the reinvestment of dividends, was 7.0%. JLL has consistently delivered value to shareholders over the past five years, with an annualized return of 17.3% versus an S&P 500 return of 10.3%, both with the reinvestment of dividends. A $1,000 investment in JLL’s common stock on December 31, 2010 would have grown more than a similar investment in the S&P 500 index, in each case with the reinvestment of dividends.

Highlights of compensation committee actions

The Summary Compensation Table indicates the specific amounts we paid to the Named Executive Officers in respect of their 2015 performance. Highlights from the decisions the Committee made include the following:

Base salaries

  • We increased base salaries for three of our Named Executive Officers. Messrs. Jacobson, O’Brien and Ulbrich had an increase in base salary to USD $400,000. This is the first increase in base salaries in six years and was based on external benchmarking.

Annual incentives

  • Global EBITDA, LaSalle Operating Income, Americas Operating Income, and EMEA Operating Income were all above target, while Asia Pacific Operating Income was below target. The Committee awarded $25.3 million in total for the Annual Incentive Plan. The awards were 114% of funding target and we delivered them in cash.

Long-term incentives

  • Performance on EBITDA, Relative TSR and the 2020 measures were all at or above target. The Committee awarded $9.6 million in total under the GEB’s Long-Term Incentive Plan (GEB LTIP). The awards were 103% of funding target. With the exception of Mr. Jacobson, we issued the awards in time-vested restricted stock units (RSUs), which vest ratably over 3 years. Mr. Jacobson’s award under the GEB LTIP was deferred and notionally invested in LaSalle’s total assets under management in order to align his compensation with the investment performance that LaSalle produces for its clients. In addition to the GEB LTIP, Mr. Jacobson also received an award of $1,159,000 for the LaSalle Long-Term Incentive Plan (LaSalle LTIP).

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