(28)	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 Interest in Newmark Holdings). 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 aggregate number of shares of Class A common stock of Newmark, of which 50.0 million is registered, that may be delivered or cash-settled pursuant to awards granted during the life of the Newmark Equity Plan.

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 in Newmark Holdings).

(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, whereby 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 is equal to a BGC Holdings limited partnership interest multiplied by an amount calculated in accordance with the BGC Holdings limited partnership agreement the distribution ratio, divided by an amount, as of March 31, 2018, is one-for-one, subject to adjustment, by which a Newmark Holdings limited partnership interest can be exchanged for a number of shares of Newmark Class A common stock (the “exchange ratio”).

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 December 31, 2017		64,708,915
Redeemed/exchanged units		(353,054	)
Forfeited units		(18,233	)
Balance at March 31, 2018		64,337,628

A summary of the activity of the number of share-equivalent limited partnership units and post IPO grants of Newmark LPU’s held by Newmark employees in Newmark Holdings is as follows:

	Number of Units
Balance at December 31, 2017		29,413,143
Granted		3,767,619
Redeemed/exchanged units		(160,479	)
Forfeited units		(8,288	)
Balance at March 31, 2018		33,011,995

As of March 31, 2018 and December 31, 2017, Newmark employees had 64.3 million and 64.7 million BGC Holdings limited partnership units outstanding, respectively. In addition, there were 33.0 million and 29.4 million limited partnership units in Newmark Holdings outstanding as of March 31, 2018 and December 31, 2017, respectively. As a result of the Newmark IPO and the related Separation and Distribution Agreement, BGC Holdings limited partnership units can only be exchanged into BGC Class A common stock with a number of Newmark Holdings limited partnership units equal to a BGC Holdings limited partnership unit multiplied by the distribution ratio and divided by the exchange ratio. Certain standalone BGC Holdings limited partnership units that do not have corresponding Newmark Holdings limited partnership units, may only become exchangeable into Class A common stock once the Distribution has occurred (see Note 2—Limited Partnership Interests in BGC Holdings and Newmark Holdings for further details on the Separation and Distribution Agreement Additionally, during the three months ended March 31, 2018, Newmark also has issued 3.8 million Newmark Holdings limited partnership units that are redeemable for Newmark Class A common stock.

During the three months ended March 31, 2018, BGC granted exchangeability on 1.5 million and 0.7 million limited partnership units in BGC Holdings and Newmark Holdings, respectively. During the three months ended March 31, 2017 BGC granted exchangeability on 0.6 million limited partnership units in BGC Holdings to Newmark employees. For the three months ended March 31, 2018 and 2017 Newmark incurred compensation expense of $21.7 million and $6.0 million, respectively related to the exchangeability granted in each period. For the three months ended March 31, 2018, there was no expense related to grants of exchangeability on limited partnership units in Newmark Holdings.

As of March 31, 2018 and December 31, 2017, the number of share-equivalent limited partnership units exchangeable into shares of BGC’s Class A common stock at the discretion of the unit holder was 17.2 million and 12.3 million, respectively. The number of share-equivalent limited partnership units exchangeable into shares of BGC Class A common stock as of March 31, 2018 represent 17.2 million limited partnership units in BGC Holdings and 8.1 million limited partnership units in Newmark Holdings exchangeable together into 17.2 million shares of BGC Class A common stock. Due to the change in the exchange ratio during the first quarter of 2018 there are 0.7 million standalone BGC units as of March 31, 2018 that are exchangeable into BGC Class A common stock contingent upon the Newmark spinoff. The number of share-equivalent limited partnership units exchangeable into shares of BGC Class A common stock as of December 31, 2017 represented 12.3 million and 5.6 million of limited partnership units in BGC Holdings and Newmark Holdings, respectively, exchangeable together into 12.3 million shares of BGC Class A common stock.

As of March 31, 2018, the notional value of the limited partnership units with a post-termination pay-out amount held by executives and non-executive employees, awarded in lieu of cash compensation for salaries, commissions and/or discretionary or guaranteed bonuses, was approximately $139.2 million. The number of outstanding limited partnership units with a post-termination pay-out represent 13.8 million limited partnership units in BGC Holdings and 6.3 million limited partnership units in Newmark Holdings, of which approximately 6.6 million units in BGC Holdings and 3.0 million units in Newmark Holdings were unvested. As of March 31, 2018, the aggregate estimated fair value of these limited partnership units was approximately $28.6 million. In addition, beginning January 1, 2018, the Company began granting standalone limited partnership units in Newmark Holdings to Newmark employees. As of March 31, 2018, the notional value of the limited partnership units with a post-termination pay-out amount held by executives and non-executive employees, awarded in lieu of cash compensation for salaries, commissions and/or discretionary or guaranteed bonuses, was approximately $21.6 million. The number of outstanding limited partnership units with a post-termination pay-out represent 1.5 million limited partnership units in Newmark Holdings, of which approximately 1.1 million units in Newmark Holdings were unvested. As of March 31, 2018, the aggregate estimated fair value of these limited partnership units was approximately $2.1 million. As of December 31, 2017, the notional value of the limited partnership units with a post-termination pay-out amount held by executives and non-executive employees, awarded in lieu of cash compensation for salaries, commissions and/or discretionary or guaranteed bonuses, was approximately $232.9 million. The number of outstanding limited partnership units with a post-termination pay-out as of December 31, 2017 was approximately 23.4 million, of which approximately 13.2 million were unvested. As of December 31, 2017, the number of outstanding limited partnership units with a post-termination pay-out represent 23.4 million and 10.6 million of limited partnership units in BGC Holdings and Newmark Holdings, respectively, of which approximately 13.2 million and 6.0 million units in BGC Holdings and Newmark Holdings, respectively, were unvested. As of December 31, 2017, the aggregate estimated fair value of these limited partnership units was approximately $39.2 million.

Certain of the limited partnership units with a post-termination pay-out have been granted in connection with Newmark’s acquisitions. As of March 31, 2018 and December 31, 2017, the aggregate estimated fair value of these acquisition related limited partnership units was $6.7 million and $14.3 million, respectively. The liability for such acquisition-related limited partnership units is included in “Other long term liabilities” on Newmark’s unaudited condensed consolidated balance sheets.

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 $(8.7) million and $5.8 million three months ended March 31, 2018 and 2017, respectively. These are included in “Compensation and employee benefits” 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 $4.1 million and $4.6 million for the three months ended March 31, 2018 and 2017, respectively. This expense is included within “Allocations of net income and grant of exchangeability to limited partnership units” in Newmark’s unaudited condensed consolidated statements of operations.

(b)

Restricted Stock Units

A summary of the activity associated with RSUs in BGC is as follows:

Balance at December 31, 2017	346,538		$	9.56	1.85
Delivered units	(95,773	)		9.17
Forfeited units	(9,470	)		9.95
Balance at March 31, 2018	241,295		$	9.67	1.69

The fair value of RSUs awarded to employees and directors is determined on the date of grant based on the market value of BGC’s 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 both employees and directors RSUs. Each RSU is settled in one share of BGC’s Class A common stock upon completion of the vesting period. Future RSU awards will be settled in one share of Newmark Class A common stock upon completion of the vesting period.

During the three months ended March 31, 2017, BGC granted 0.3 million, of RSUs with aggregate estimated grant date fair values of $2.8 million to employees and directors of Newmark. 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.

As of March 31, 2018 and December 31, 2017, the aggregate estimated grant date fair value of outstanding RSUs was $2.3 million and $3.3 million, respectively.

Compensation expense related to RSUs, before associated income taxes, was approximately $0.3 million and $0.3 million for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018 there was approximately $2.5 million total unrecognized compensation expense related to unvested 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 March 31, 2018 and 2017 were $1.1 million and $0.2 million, respectively. As of March 31, 2018 and December 31, 2017, the total liability for the deferred cash compensation awards was $0.6 million and $0.4 million, respectively, and is included in “Accounts payable and accrued expenses” in Newmark’s unaudited condensed consolidated balance sheets.