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Compensation | 12 Months Ended
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Dec. 31, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Compensation |
19. | Compensation
The Company’s compensation committee may grant various equity-based awards, including RSUs, restricted stock, stock options, LPUs and shares of BGC Class A common stock. Upon vesting of RSUs, issuance of restricted stock, exercise of stock options and redemption/exchange of LPUs, the Company generally issues new shares of BGC Class A common stock. On June 22, 2016, at the annual meeting of stockholders, the stockholders approved the Equity Plan to increase from 350 million to 400 million the aggregate number of shares of BGC Class A common stock that may be delivered or cash-settled pursuant to awards granted during the life of the Equity Plan. As of December 31, 2019, the limit on the aggregate number of shares authorized to be delivered allowed for the grant of future awards relating to 137.6 million shares. On June 6, 2017, at the annual meeting of stockholders, the Company’s stockholders approved the Incentive Plan. The Company incurred compensation expense related to Class A common stock, LPUs and RSUs as follows (in thousands):
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Issuance of common stock and exchangeability expenses |  | $ | 100,948 |  |  | $ | 150,147 |  |  | $ | 176,463 |
Allocations of net income1 |  |  | 20,491 |  |  |  | 38,352 |  |  |  | 51,008 |
LPU amortization |  |  | 36,708 |  |  |  | 11,359 |  |  |  | 1,194 |
RSU amortization |  |  | 7,465 |  |  |  | 5,212 |  |  |  | 4,576 |
Equity-based compensation and allocations of net income to limited partnership units and FPUs |  | $ | 165,612 |  |  | $ | 205,070 |  |  | $ | 233,241 |
1 | Certain LPUs generally receive quarterly allocations of net income and are generally contingent upon services being provided by the unit holders, including the Preferred Distribution.
Limited Partnership Units A summary of the activity associated with LPUs awarded to BGC employees is as follows (in thousands):
|  | BGC LPUs |  |  | Newmark LPUs2 |
Balance at December 31, 2016 |  |  | 50,835 |  |  |  | — |
Granted |  |  | 20,309 |  |  |  | 26,510 |
Redeemed/exchanged units |  |  | (7,283 | ) |  |  | — |
Forfeited units |  |  | (5,538 | ) |  |  | — |
Balance at December 31, 2017 |  |  | 58,323 |  |  |  | 26,510 |
Granted |  |  | 36,821 |  |  |  | 2,694 |
Redeemed/exchanged units |  |  | (14,908 | ) |  |  | (7,032 | )
Forfeited units |  |  | (507 | ) |  |  | (59 | )
Balance at December 31, 2018 |  |  | 79,729 |  |  |  | 22,113 |
Granted |  |  | 47,916 |  |  |  | 662 |
Redeemed/exchanged units |  |  | (21,110 | ) |  |  | (1,024 | )
Forfeited units |  |  | (4,128 | ) |  |  | (7,144 | )
Balance at December 31, 2019 |  |  | 102,407 |  |  |  | 14,607 |
2 | The Newmark LPUs were issued as part of the Separation.
The Limited Partnership Units table above includes both regular and Preferred Units. The Preferred Units are not entitled to participate in partnership distributions other than with respect to the Preferred Distribution (see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings” for further information on Preferred Units). A summary of the BGC Holdings and Newmark Holdings LPUs is as follows (in thousands):
|  | BGC LPUs |  |  | Newmark LPUs |
Regular Units |  |  | 70,831 |  |  |  | 10,418 |
Preferred Units |  |  | 31,576 |  |  |  | 4,189 |
Balance at December 31, 2019 |  |  | 102,407 |  |  |  | 14,607 |
Issuance of Common Stock and Exchangeability Expenses Compensation expense related to the issuance of BGC or Newmark Class A common stock and grants of exchangeability on BGC Holdings and Newmark Holdings LPUs to BGC employees is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Issuance of common stock and exchangeability expense |  | $ | 100,948 |  |  | $ | 150,147 |  |  | $ | 176,463 |
BGC LPUs held by a BGC employee may become exchangeable or redeemed for BGC Class A common stock on a one-for-one basis, and in Newmark LPUs held by a BGC employee may become exchangeable or redeemed for a number of shares of Newmark Class A common stock equal to the number of limited partnership interests multiplied by the then Exchange Ratio. As of December 31, 2019, the Exchange Ratio was 0.9400. A summary of the LPUs redeemed in connection with the issuance of BGC Class A common stock or Newmark Class A common stock (at the current exchange ratio) or granted exchangeability for BGC Class A common stock or Newmark Class A common stock (at the current exchange ratio) is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
BGC Holdings LPUs |  |  | 17,209 |  |  |  | 18,227 |  |  |  | 15,460 |
Newmark Holdings LPUs |  |  | 500 |  |  |  | 3,116 |  |  |  | 1,067 |
Total |  |  | 17,709 |  |  |  | 21,343 |  |  |  | 16,527 |
As of December 31, 2019 and 2018, the number of share-equivalent BGC LPUs exchangeable for shares of BGC Class A common stock at the discretion of the unit holder was 3.1 million and 3.9 million, respectively. As of December 31, 2019 and 2018, the number of Newmark LPUs exchangeable into shares of Newmark Class A common stock at the discretion of the unit holder (at the current exchange ratio) was 0.8 million and 1.4 million, respectively. LPU Amortization Compensation expense related to the amortization of LPUs held by BGC employees is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Stated vesting schedule |  | $ | 37,047 |  |  | $ | 7,475 |  |  | $ | 1,196 |
Post-termination payout |  |  | (339 | ) |  |  | 3,884 |  |  |  | (2 | )
LPU amortization |  | $ | 36,708 |  |  | $ | 11,359 |  |  | $ | 1,194 |
There are certain LPUs that have a stated vesting schedule and do not receive quarterly allocations of net income. These LPUs generally vest between two and five years from the date of grant. The fair value is determined on the date of grant based on the market value of an equivalent BGC Class A common stock (adjusted if appropriate based upon the award’s eligibility to receive quarterly allocations of net income), and is recognized as compensation expense, net of the effect of estimated forfeitures, ratably over the vesting period. A summary of the outstanding LPUs held by BGC employees with a stated vesting schedule that do not receive quarterly allocations of net income is as follows (in thousands):
|  | December 31, 2019 |  |  | December 31, 2018 |
BGC Holdings |  |  | 30,699 |  |  |  | 12,696 |
Newmark Holdings |  |  | 1,171 |  |  |  | 654 |
Aggregate estimated grant date fair value – BGC and Newmark Holdings |  | $ | 138,324 |  |  | $ | 61,595 |
As of December 31, 2019, there was approximately $88.4 million of total unrecognized compensation expense related to unvested LPUs with a stated vesting schedule that do not receive quarterly allocations of net income that is expected to be recognized over 1.93 years. Compensation expense related to LPUs with a post-termination pay-out amount, such as REUs, and/or a stated vesting schedule is recognized over the stated service period. These LPUs generally vest between two and five years from the date of grant. As of December 31, 2019, there were 1.2 million outstanding BGC LPUs with a post-termination payout, with a notional value of approximately $15.3 million and an aggregate estimated fair value of $10.0 million, and 0.1 million outstanding Newmark LPUs with a post-termination payout, with a notional value of approximately $1.0 million and an aggregate estimated fair value of $0.2 million. As of December 31, 2018, there were 0.3 million outstanding BGC LPUs with a post-termination payout, with a notional value of approximately $10.0 million and an aggregate estimated fair value of $4.8 million, and 0.2 million outstanding Newmark LPUs with a post-termination payout, with a notional value of approximately $1.0 million and an aggregate estimated fair value of $0.1 million. Restricted Stock Units Compensation expense related to RSUs held by BGC employees is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
RSU amortization |  | $ | 7,465 |  |  | $ | 5,212 |  |  | $ | 4,576 |
A summary of the activity associated with RSUs held by BGC employees is as follows (units and dollars in thousands):
|  | RSUs |  |  | Weighted- Average Grant Date Fair Value |  |  | Fair Value Amount |  |  | Weighted- Average Remaining Contractual Term (Years) |
Balance at December 31, 2016 |  |  | 1,261 |  |  | $ | 7.17 |  |  | $ | 9,039 |  |  |  | 1.61 |
Granted |  |  | 567 |  |  |  | 10.65 |  |  |  | 6,037 |  |  |  |  |
Delivered units |  |  | (635 | ) |  |  | 6.79 |  |  |  | (4,312 | ) |  |  |  |
Forfeited units |  |  | (130 | ) |  |  | 8.62 |  |  |  | (1,113 | ) |  |  |  |
Balance at December 31, 2017 |  |  | 1,063 |  |  | $ | 9.08 |  |  | $ | 9,651 |  |  |  | 1.63 |
Granted |  |  | 578 |  |  |  | 12.05 |  |  |  | 6,964 |  |  |  |  |
Delivered units |  |  | (553 | ) |  |  | 8.59 |  |  |  | (4,753 | ) |  |  |  |
Forfeited units |  |  | (159 | ) |  |  | 11.34 |  |  |  | (1,804 | ) |  |  |  |
Balance at December 31, 2018 |  |  | 929 |  |  | $ | 10.83 |  |  | $ | 10,058 |  |  |  | 1.75 |
Granted |  |  | 4,283 |  |  |  | 4.61 |  |  |  | 19,764 |  |  |  |  |
Delivered units |  |  | (464 | ) |  |  | 10.11 |  |  |  | (4,692 | ) |  |  |  |
Forfeited units |  |  | (270 | ) |  |  | 5.99 |  |  |  | (1,614 | ) |  |  |  |
Balance at December 31, 2019 |  |  | 4,478 |  |  | $ | 5.25 |  |  | $ | 23,516 |  |  |  | 2.50 |
The fair value of RSUs awarded to BGC employees and directors is determined on the date of grant based on the market value of BGC Class A common stock adjusted as appropriate based upon the award’s ineligibility to receive dividends. The compensation expense is recognized ratably over the vesting period, taking into effect estimated forfeitures. The Company uses historical data, including historical forfeitures and turnover rates, to estimate expected forfeiture rates for both employee and director RSUs. Each RSU is settled in one share of Class A common stock upon completion of the vesting period. For RSUs that vested during the years ended December 31, 2019 and 2018, the Company withheld shares valued at $0.5 million and $1.6 million to pay taxes due at the time of vesting. As of December 31, 2019, there was approximately $19.0 million of total unrecognized compensation expense related to unvested RSUs that is expected to be recognized over a weighted-average period of 2.50 years. Acquisitions In connection with certain of its acquisitions, the Company has granted certain LPUs and restricted stock units. As of December 31, 2019 and 2018, the aggregate estimated fair value of these acquisition-related LPUs and restricted stock units was $10.7 million and $3.6 million, respectively. The liability for such acquisition-related awards is included in “Accounts payable, accrued and other liabilities” on the Company’s consolidated statements of financial condition. Restricted Stock The Company has granted shares of restricted stock of under its Equity Plan. Such restricted shares are generally saleable by partners in five to ten years. Partners who agree to extend the length of their employment agreements and/or other contractual modifications sought by the Company are expected to be able to sell their restricted shares over a shorter time period. Transferability of the shares of restricted stock is not subject to continued employment or service with the Company or any affiliate or subsidiary of the Company; however, transferability is subject to compliance with BGC and its affiliates’ customary noncompete obligations. During the years ended December 31, 2019 and 2018, approximately 22 thousand BGC shares and 232 thousand BGC shares, respectively, were forfeited in connection with this clause. During the years ended December 31, 2019 and 2018, the Company released the restrictions with respect to 0.7 million and 1.1 million of such BGC shares issued to BGC employees, respectively. As of December 31, 2019 and 2018, there were 6.4 million and 7.6 million of such restricted BGC shares outstanding, respectively. Additionally, during the years ended December 31, 2019 and 2018, Newmark released the restrictions with respect to 0.3 million and 0.1 million, respectively, of restricted Newmark shares issued to BGC employees. Deferred Compensation The Company maintains a deferred cash award program, which provides for the grant of deferred cash incentive compensation to eligible employees. The Company 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 years ended December 31, 2019, 2018 and 2017 was $5.9 million, $4.7 million and $8.0 million respectively. As of December 31, 2019 and 2018, the total liability for the deferred cash compensation awards was $3.5 million and $3.5 million respectively, which is included in “Accrued compensation” on the Company’s consolidated statements of financial condition. Total unrecognized compensation cost related to deferred cash compensation, prior to the consideration of forfeitures, was approximately $4.6 million and is expected to be recognized over a weighted-average period of 2.17 years.

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