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Compensation | 6 Months Ended
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Jun. 30, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Compensation |
(30) | Compensation
Newmark’s Compensation Committee may grant various equity-based awards to employees of Newmark, including restricted stock units, limited partnership units and exchange rights for shares of Newmark’s Class A common stock upon exchange of Newmark limited partnership units (See Note 2 — Limited Partnership Interests). On December 13, 2017, as part of the Separation, the Newmark Group, Inc. Long Term Incentive Plan (the “Newmark Equity Plan”) was approved by Newmark’s sole stockholder, BGC, for Newmark to issue up to 400.0 million shares of Class A common stock of Newmark, of which 50.0 million are registered, that may be delivered or cash-settled pursuant to awards granted during the life of the Newmark Equity Plan. As of June 30, 2019, awards with respect to 15.7 million shares have been granted and 384.3 million shares are available for future awards. Prior to the Separation, BGC’s Compensation Committee granted various equity-based awards to employees of Newmark, including restricted stock units, limited partnership units and exchange rights for shares of BGC’s Class A common stock upon exchange of BGC’s limited partnership units (See Note 2 — Limited Partnership Interests).
| a) | Limited Partnership Units
As a result of the Separation, limited partnership interests in Newmark Holdings were distributed to the holders of limited partnership interests in BGC Holdings. Each holder of BGC Holdings limited partnership interests at that time held a BGC Holdings limited partnership interest and a corresponding Newmark Holdings limited partnership interest, which was equal to a BGC Holdings limited partnership interest multiplied by an amount calculated in accordance with the BGC Holdings limited partnership agreement, the contribution ratio, divided by an amount, as of June 30, 2019, was 0.9495 (the exchange ratio), by which a Newmark Holdings limited partnership interest could be exchanged for a number of shares of Newmark Class A common stock. A summary of the activity associated with limited partnership units held by Newmark employees in BGC Holdings is as follows:
|  | Number of Units |
Balance at January 1, 2018 |  |  | 64,708,915 |
Granted |  |  | 2,872,825 |
Redeemed/exchanged units |  |  | (5,650,292 | )
Forfeited units |  |  | (60,479 | )
Balance at December 31, 2018 |  |  | 61,870,969 |
Granted |  |  | 270,515 |
Redeemed/exchanged units |  |  | (1,938,794 | )
Forfeited units |  |  | (2,083,897 | )
Balance at June 30, 2019 |  |  | 58,118,793 |
A summary of the activity of the number of share-equivalent limited partnership units and post-IPO grants of Newmark limited partnership units held by Newmark employees in Newmark Holdings is as follows:
|  | Number of Units |  |
Balance at January 1, 2018 |  |  | 29,413,143 |
Granted |  |  | 19,141,943 |
Redeemed/exchanged units |  |  | (3,793,351 | )
Forfeited units |  |  | (28,248 | )
Balance at December 31, 2018 |  |  | 44,733,487 |
Granted |  |  | 10,746,929 |
Redeemed/exchanged units |  |  | (880,960 | )
Forfeited units/Other |  |  | 4,846,170 |
Balance at June 30, 2019 |  |  | 59,445,626 |
As of June 30, 2019 and 2018, Newmark employees held 58.1 million and 61.9 million BGC Holdings limited partnership units, respectively. In addition, there were 59.4 million and 44.7 million limited partnership units in Newmark Holdings outstanding as of June 30, 2019 and 2018, respectively. The 29.4 million limited partnership units outstanding as of December 31, 2017, represent the share equivalent of BGC Holdings held by Newmark employees. During the three months ended June 30, 2019, BGC granted exchangeability on 233 thousand and 24 thousand limited partnership units in BGC Holdings and Newmark Holdings held by Newmark employees, respectively. During the six months ended June 30, 2019, BGC granted exchangeability on 292 thousand and 54 thousand limited partnership units in BGC Holdings and Newmark Holdings held by Newmark employees, respectively. During the three months ended June 30, 2018, BGC granted exchangeability on 5.0 million and 2.2 million limited partnership units in BGC Holdings and Newmark Holdings held by Newmark employees, respectively. During the six months ended June 30, 2018, BGC granted exchangeability on 6.7 million and 3.3 million limited partnership units in BGC Holdings and Newmark Holdings, respectively. For the three and six months ended June 30, 2019, Newmark incurred compensation expense of $2.6 million and $3.2 million, respectively, related to the exchangeability granted in each period. For the three and six months ended June 30, 2018, Newmark incurred compensation expense of $60.3 million and $82.1 million, respectively, related to the exchangeability granted in each period. In addition, during the three months ended June 30, 2019, Newmark redeemed zero units in BGC Holdings and 1 thousand units in Newmark Holdings and in turn directly issued Newmark employees an equivalent amount of BGC or Newmark shares, respectively. Newmark incurred an expense of $7 thousand relating to this activity, which is included within “Equity-based compensation and alloca ti ons of net income to limited partnership units and FPUs” in Newmark’s unaudited condensed consolidated statement of operations. As of June 30, 2019, and December 31, 2018, the number of share-equivalent BGC limited partnership units exchangeable into shares of BGC’s Class A common stock at the discretion of the unit holder was 25.8 million and 26.0 million, respectively. The number of share-equivalent Newmark limited partnership units exchangeable into shares of Newmark’s Class A common stock at the discretion of the unit holder was 10.3 million and 9.3 million for the three months ended June 30, 2019, and year ended December 31, 2018, respectively. As of June 30, 2019, the notional value of the BGC limited partnership units with a post-termination pay-out amount held by Newmark employees, awarded in lieu of cash compensation for salaries, commissions and/or discretionary or guaranteed bonuses, was approximately $83.8 million. The number of outstanding limited partnership units with a post-termination pay-out represented 7.5 million limited partnership units in BGC Holdings and 4.7 million limited partnership units in Newmark Holdings, of which approximately 2.3 million units in BGC Holdings and 2.1 million units in Newmark Holdings were unvested. As of June 30, 2019, the aggregate estimated fair value of these limited partnership units was approximately $26.6 million. As of December 31, 2018, the notional value of the limited partnership units with a post-termination pay-out amount held by Newmark employees, awarded in lieu of cash compensation for salaries, commissions and/or discretionary or guaranteed bonuses, was approximately $92.7 million. As of December 31, 2018, the number of outstanding limited partnership units with a post-termination pay-out represented 8.4 million and 3.8 million of limited partnership units in BGC Holdings and Newmark Holdings, respectively, of which approximately 3.3 million and 1.5 million units in BGC Holdings and Newmark Holdings were unvested, respectively. As of December 31, 2018, the aggregate estimated fair value of these limited partnership units was approximately $22.6 million. In addition, beginning January 1, 2018, Newmark began granting standalone limited partnership units in Newmark Holdings to Newmark employees. As of June 30, 2019, the notional value of the limited partnership units with a post-termination pay-out amount held by Newmark employees, awarded in lieu of cash compensation for salaries, commissions and/or discretionary or guaranteed bonuses, was approximately $120.9 million. The number of outstanding limited partnership units with a post-termination pay-out represent 10.0 million limited partnership units in Newmark Holdings, of which approximately 7.1 million units in Newmark Holdings were unvested. As of June 30, 2019, the aggregate estimated fair value of these limited partnership units was approximately $14.7 million. During 2019, Newmark began granting conversion rights on outstanding limited partnership units in BGC Holdings and Newmark Holdings to Newmark employees with a post-termination payout as well as the option to convert the limited partnership units to a capital balance within BGC Holdings or Newmark Holdings. As of June 30, 2019, the notional value of these limited partnership units held by Newmark employees, awarded in lieu of cash compensation for salaries, commissions and/or discretionary or guaranteed bonuses, was approximately $20.7 million which is included in “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in Newmark’s unaudited condensed consolidated statement of operations. The number of outstanding limited partnership units represent 1.2 million units in BGC Holdings and 1.7 million units in Newmark Holdings. As of June 30, 2019, the aggregate estimated fair value of these limited partnership units was approximately $19.0 million which is included in “Accrued compensation” in Newmark’s unaudited condensed consolidated balance sheets. During the three and six months ended June 30, 2019, Newmark employees received 7.6 million N Units that are excluded from the table above, since these units are not considered share-equivalent LPUs and are not included in the fully diluted share count. The N Units granted during the period remain unvested. Upon vesting, which occurs if the revenue threshold is met, the N Units are converted to LPUs at which time, the issuance of LPUs would be reflected as a share-equivalent grant in the table above. Compensation expense related to limited partnership units with a post-termination pay-out amount is recognized over the stated service period. These units generally vest between three and five years from the date of grant. Newmark recognized compensation expense/(benefit), before associated income taxes, related to these limited partnership units that were not redeemed of $24.0 million and $1.8 million for the three months ended June 30, 2019 and 2018, respectively. Newmark recognized compensation expense/(benefit), before associated income taxes, related to these limited partnership units that were not redeemed of $30.3 million and $(6.9) million for the six months ended June 30, 2019 and 2018, respectively. These are included in “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in Newmark’s unaudited condensed consolidated statements of operations. Certain limited partnership units generally receive quarterly allocations of net income, which are cash distributed on a quarterly basis and generally contingent upon services being provided by the unit holders. The allocation of income to limited partnership units was $11.6 million and $4.6 million for the three months ended June 30, 2019 and 2018, respectively, and $17.9 million and $8.8 million for the six months ended June 30, 2019 and 2018, respectively. This expense is included within “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in Newmark’s unaudited condensed consolidated statements of operations.
| (b) | Restricted Stock Units
A summary of the activity associated with RSUs in BGC held by Newmark employees is as follows:
|  | Restricted Stock Units |  |  | Weighted- Average Grant Date Fair Value |  |  | Weighted- Average Remaining Contractual Term (Years) |
Balance at January 1, 2018 |  |  | 346,538 |  |  | $ | 9.56 |  |  |  | 1.85 |
Granted |  |  | 3,439 |  |  |  | 7.64 |  |  |  |  |
Settled units (delivered shares) |  |  | (147,006 | ) |  |  | 9.17 |  |  |  |  |
Forfeited units |  |  | (34,296 | ) |  |  | 10.01 |  |  |  |  |
Balance at December 31, 2018 |  |  | 168,675 |  |  |  | 9.77 |  |  |  | 0.98 |
Granted |  | — |  |  |  |  |  |  |  |  |
Settled units (delivered shares) |  |  | (84,984 | ) |  |  | 9.29 |  |  |  |  |
Forfeited units |  |  | (9,862 | ) |  |  | 9.94 |  |  |  |  |
Balance at June 30, 2019 |  |  | 73,829 |  |  | $ | 10.30 |  |  |  | 0.70 |
A summary of the activity associated with RSUs in Newmark held by Newmark employees is as follows:
|  | Restricted Stock Units |  |  | Weighted- Average Grant Date Fair Value |  |  | Weighted- Average Remaining Contractual Term (Years) |
Balance at January 1, 2018 |  |  | — |  |  | $ | — |  |  |  | — |
Granted |  |  | 264,532 |  |  |  | 13.54 |  |  |  |  |
Settled units (delivered shares) |  |  | (8,109 | ) |  |  | 13.36 |  |  |  |  |
Forfeited units |  |  | (36,536 | ) |  |  | 13.71 |  |  |  |  |
Balance at December 31, 2018 |  |  | 219,887 |  |  |  | 13.52 |  |  |  | 2.28 |
Granted |  |  | 2,191,303 |  |  |  | 7.53 |  |  |  |  |
Settled units (delivered shares) |  |  | (55,669 | ) |  |  | 13.89 |  |  |  |  |
Forfeited units |  |  | (28,859 | ) |  |  | 11.30 |  |  |  |  |
Balance at June 30, 2019 |  |  | 2,326,662 |  |  | $ | 7.56 |  |  |  | 4.69 |
Beginning January 1, 2018, Newmark began granting stand-alone Newmark RSUs to Newmark employees. The fair value is determined on the date of grant based on the market value of Newmark Class A common stock in the same fashion as described above, and the awards vest ratably over the two- to four-year vesting period into shares of Newmark Class A common stock. The fair value of Newmark RSUs awarded to Newmark employees is determined on the date of grant based on the market value of Newmark Class A common stock (adjusted if appropriate based upon the award’s eligibility to receive dividends), and is recognized, net of the effect of estimated forfeitures, ratably over the vesting period. Newmark uses historical data, including historical forfeitures and turnover rates, to estimate expected forfeiture rates for RSUs. Each RSU is settled into one share of Newmark Class A common stock upon completion of the vesting period. During the six months ended June 30, 2019 and 2018, BGC granted zero and 0.2 million of RSUs to Newmark employees with aggregate estimated grant date fair value of zero and $2.9 million, respectively. These RSUs were awarded in lieu of cash compensation for salaries, commissions and/or discretionary or guaranteed bonuses. RSUs granted to these individuals generally vest over a two- to four-year period. During the six months ended June 30, 2019 and 2018, Newmark granted 2.2 million and 0.2 million of Newmark RSUs with aggregate estimated grant date fair value of $16.5 million and $2.9 million, respectively. These RSUs were awarded in lieu of cash compensation for salaries, commissions and/or discretionary or guaranteed bonuses. RSUs granted to these individuals generally vest over a two- to eight-year period. As of June 30, 2019 and 2018, the aggregate estimated grant date fair value of outstanding BGC RSUs was $0.8 million and $2.1 million, respectively. As of June 30, 2019 and 2018, the aggregate estimated grant date fair value of outstanding Newmark RSUs was $18.4 million and $2.9 million, respectively. Compensation expense related to BGC RSUs, before associated income taxes, was approximately $0.2 million in each of the three months ended June 30, 2019 and 2018, respectively. Compensation expense related to Newmark RSUs, before associated income taxes, was approximately $1.0 million and $1.8 million for the three and six months ended June 30, 2019, respectively. As of June 30, 2019, there was approximately $17.6 million total unrecognized compensation expense related to unvested Newmark RSUs and approximately $1.0 million total unrecognized compensation expense related to unvested BGC RSUs. Newmark may pay certain bonuses in the form of deferred cash compensation awards, which generally vest over a future service period. The total compensation expense recognized in relation to the deferred cash compensation awards for the three months ended June 30, 2019 and 2018 were $0.2 million and $0.4 million, respectively. As of June 30, 2019, and December 31, 2018, the total liability for the deferred cash compensation awards was $1.1 million and $1.5 million, respectively, and is included in “Other long-term liabilities” in Newmark’s unaudited condensed consolidated balance sheets. (See Note 27 — Related Party Transactions for compensation related matters for the transfer of CCRE employees to Newmark).

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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