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Compensation
 9 Months Ended
Sep. 30, 2020
Share-based Payment Arrangement [Abstract]  
Compensation Compensation
Newmark’s Compensation Committee may grant various equity-based awards to employees of Newmark, including RSUs, restricted stock, limited partnership units and shares of Newmark Class A common stock upon exchange or redemption of Newmark limited partnership units (see Note 2 — “Limited Partnership Interests in Newmark Holdings and BGC 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 then sole stockholder, BGC, for Newmark to issue up to 400.0 million shares of Newmark Class A common stock, of which 65.0 million are registered, that may be delivered or cash-settled pursuant to awards granted during the life of the Newmark Equity Plan. As of September 30, 2020, awards with respect to 28.2 million shares have been granted and 371.8 million shares are available for future awards. Upon vesting of RSUs, issuance of restricted stock and exchange or redemption of limited partnership units, Newmark generally issues new shares of its Class A common stock.

Prior to the Separation, BGC’s Compensation Committee granted various equity-based awards to employees of Newmark, including RSUs, restricted stock, limited partnership units and exchange rights for shares of BGC Class A common stock upon exchange of BGC Holdings limited partnership units (see Note 2 — “Limited Partnership interests in Newmark Holdings and BGC Holdings”).

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 0.4545 of a corresponding Newmark Holdings limited partnership interest.

The exchange ratio is the number of shares of Newmark common stock that a holder will receive upon exchange of one Newmark Holdings exchangeable unit (the exchange ratio was initially one, but is subject to adjustment as set forth in the Separation and Distribution Agreement and was 0.9373 as of September 30, 2020).
Newmark incurred compensation expense related to Class A common stock, limited partnership units and RSUs held by Newmark employees as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Issuance of common stock and exchangeability expenses$13,243 $17,499 $21,668 $39,671 
Allocations of net income to limited partnership units and FPUs (1)
29,221 32,496 30,753 50,410 
Limited partnership units amortization4,902 5,239 12,808 16,618 
RSU amortization3,404 1,413 9,315 3,172 
Equity-based compensation and allocations of net income to limited partnership units and FPUs$50,770 $56,647 $74,544 $109,871 
(1)Certain limited partnership units receive quarterly allocations of net income and are generally contingent upon services being provided by the unit holders, including the Preferred Distribution.

(a)    Limited Partnership Units
    A summary of the activity associated with limited partnership units held by Newmark employees is as follows:
 Newmark UnitsBGC Units
Balance, January 1, 201944,733,487 (1)61,870,969 
Issued13,813,204 319,586 
Redeemed/exchanged units(2,487,885)(3,938,134)
Forfeited units/other4,742,046 (2,198,720)
Balance, December 31, 201960,800,852 56,053,701 
Issued6,811,808 1,064,781 
Redeemed/exchanged units(1,798,651)(2,217,536)
Forfeited units/other(82,945)(40,451)
September 30, 2020(2)
65,731,064 54,860,495 
Total exchangeable units outstanding(2):
December 31, 201910,108,598 24,692,695 
September 30, 202010,017,066 25,047,827 
(1)Includes the pre-IPO Newmark employees share-equivalent limited partnership units in BGC Holdings.
(2)The Limited Partnership table above also includes partnership units issued for consideration for acquisitions. As of September 30, 2020, there were 5.2 million partnership units in Newmark Holdings outstanding, of which 2.0 million units were exchangeable, and 9.2 million partnership units in BGC Holdings outstanding, of which 4.5 million were exchangeable. As of December 31, 2019, there were 5.3 million partnership units in Newmark Holdings outstanding, of which 1.4 million units were exchangeable, and 9.5 million partnership units in BGC Holdings outstanding, of which 2.9 million were exchangeable.

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 limited partnership units held by Newmark employees is as follows:
 Newmark
Units		BGC
Units
Regular units61,301,972 53,247,827 
Preferred Units4,429,092 1,612,668 
Balance, September 30, 202065,731,064 54,860,495 
A summary of units held by Newmark employees redeemed in connection with the issuance of Newmark or BGC Class A common stock (at the current exchange ratio) or granted exchangeability for Newmark or BGC Class A common stock is as follows:
Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
BGC Units34,893 87,566 225,725 379,191 
Newmark Units25,419 63,594 194,072 208,969 
Total60,312 151,160 419,797 588,160 
    
    Compensation expense related to the issuance of Newmark or BGC Class A common stock and grants of exchangeability on Newmark Holdings and BGC Holdings limited partnership units to Newmark employees is as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Issuance of common stock and exchangeability expenses$125 $— $2,606 $2,719 
    
    Limited partnership units with a post-termination payout held by Newmark employees are as follows (dollars in thousands):
 September 30, 2020December 31, 2019
Notional Value(1)
$257,517 $261,025 
Estimated fair value of the post-termination payout(2)
$62,992 $51,378 
Outstanding limited partnership units in BGC Holdings5,265,878 6,251,816 
Outstanding limited partnership units in BGC Holdings - unvested1,008,934 1,508,510 
Outstanding limited partnership units in Newmark Holdings18,904,604 17,097,639 
Outstanding limited partnership units in Newmark Holdings - unvested9,268,547 9,357,822 
(1)Beginning January 1, 2018, Newmark began granting stand-alone limited partnership units in Newmark Holdings to Newmark employees.
(2)Included in “Other long-term liabilities” on the accompanying unaudited condensed consolidated balance sheets. Liability balance also includes $6.8 million of post-termination units issued as consideration for acquisition.

Compensation expense related to limited partnership units held by Newmark employees with a post-termination pay-out amount is recognized over the stated service period. These units generally vest between three and seven years from the date of grant. Newmark recognized compensation expense related to these limited partnership units that were not redeemed as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Limited partnership units amortization$4,902 $5,239 $12,808 $16,618 

    During the three and nine months ended September 30, 2020, Newmark granted conversion rights to Newmark employees on 0.5 million outstanding limited partnership units in BGC Holdings and 3.0 million outstanding limited partnership units in Newmark Holdings. During the three months ended September 30, 2019, Newmark granted conversion rights to Newmark employees on 0.6 million outstanding limited partnership units in BGC Holdings and 1.6 million outstanding limited partnership units in Newmark Holdings, and during the nine months ended September 30, 2019, Newmark granted conversion rights to Newmark employees on 1.8 million outstanding limited partnership units in BGC Holdings and 3.3 million outstanding limited partnership units in Newmark Holdings. Granting conversion rights gives the employee the option to convert the limited partnership units to HDUs with a capital balance within BGC Holdings or Newmark Holdings. Generally, HDUs are not considered share-equivalent limited partnership units and are not in the fully diluted share count. The grant of conversion rights to Newmark employees are as follows (in thousands):
 September 30, 2020December 31, 2019
Notional Value$206,851 $194,995 
Estimated fair value of limited partnership units (1)
$199,149 $182,800 
(1)Included in “Other long-term liabilities” on the accompanying unaudited condensed consolidated balance sheets.
Compensation expense related to these limited partnership units held by Newmark employees was as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Issuance of common stock and exchangeability expenses$13,118 $17,499 $19,062 $36,952 

During the three and nine months ended September 30, 2020, Newmark employees were granted 1.3 million and 3.5 million N Units, respectively, that are excluded from the table above, since these units are not considered share-equivalent limited partnership units and are not included in the fully diluted share count. The N Units do not receive quarterly allocations of net income and remain unvested. Upon vesting, which occurs if the certain thresholds are met, the N Units are converted to equivalent limited partnership units that receive quarterly certain income distributions and can be granted exchange rights or redeemed at a later date, at which time these N Units would be reflected as a share-equivalent grant in the tables above. During the three and nine months ended September 30, 2020, 0.9 million and 2.4 million N Units respectively, vested and converted into distribution earning limited partnership units and were therefore included in the fully diluted share count.

(b)     Restricted Stock Units
    A summary of the activity associated with Newmark and BGC RSUs held by Newmark employees is as follows (fair value amount in thousands):
Newmark RSUs(1)
BGC RSUs(2)
 Restricted
Stock
Units		Weighted-
Average
Grant Date
Fair Value
Per Share		Fair
Value
Amount		Weighted-
Average
Remaining
Contractual
Term (Years)		Restricted
Stock
Units		Weighted-
Average
Grant Date
Fair Value
Per Share		Fair
Value
Amount		Weighted-
Average
Remaining
Contractual
Term (Years)
Balance, January 1, 2019219,887 $13.52 $2,973 2.28168,675 $9.77 $1,619 0.98
Granted4,766,611 7.42 35,344 — — — 
Settled units (delivered shares)(109,007)11.70 (1,275)(107,820)9.38 (1,011)
Forfeited units(193,920)8.67 (1,681)(14,048)10.02 (141)
Balance, December 31, 20194,683,571 $7.55 $35,361 5.6946,807 $9.97 $467 0.25
Granted6,748,717 $8.28 $55,904 7,912 $3.69 $29 
Settled units (delivered shares)(895,909)$7.90 $(7,080)(45,544)$9.95 $(453)
Forfeited units(156,190)$7.98 $(1,246)(1,153)$10.62 $(12)
Balance, September 30, 202010,380,189 $7.99 $82,939 5.918,022 $3.81 $31 2.42
(1)Beginning January 1, 2018, Newmark began granting stand-alone Newmark RSUs to Newmark employees with the awards vesting ratably over the two- to eight-year vesting period into shares of Newmark Class A common stock.
(2)    RSUs granted to these individuals generally vest over a two to four year period.

The fair value of Newmark and BGC RSUs held by Newmark employees is determined on the date of grant based on the market value (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 for one share of BGC or Newmark Class A common stock, as applicable, upon completion of the vesting period.

Compensation expense related to Newmark and BGC RSUs are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
RSU amortization$3,404 $1,413 $9,315 $3,172 

As of September 30, 2020, there was $79.0 million total unrecognized compensation expense related to unvested Newmark RSUs.
(c)    Deferred Compensation
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 was $0.1 million and $0.3 million for the three and nine months ended September 30, 2020, respectively, and $0.2 million and $0.6 million for the three and nine months ended September 30, 2019, respectively. As of September 30, 2020 and December 31, 2019, the total liability for the deferred cash compensation awards was $1.2 million and $1.5 million, respectively, and is included in “Other long-term liabilities” on the unaudited condensed consolidated balance sheets.

See Note 27 — "Related Party Transactions" for compensation related matters for the transfer of CCRE employees to Newmark.