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Compensation
 9 Months Ended
Sep. 30, 2022
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 Holdings 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 115.0 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, 2022, awards with respect to 76.9 million shares have been granted and 323.1 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 0.9365 as of September 30, 2022).

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,
 2022202120222021
Issuance of common stock and exchangeability expenses$33,330 $14,414 $69,188 $298,202 
Allocations of net income to limited partnership units and FPUs (1)
4,875 13,167 12,808 38,092 
Limited partnership units amortization181 2,323 5,214 (32,056)
RSU amortization5,702 4,059 15,764 11,505 
Equity-based compensation and allocations of net income to limited partnership units and FPUs$44,088 $33,963 $102,974 $315,743 
(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, December 31, 202118,419,613 8,663,930 
Issued11,734,955 10,330 
Redeemed/exchanged units(599,184)(1,161,440)
Forfeited units/other(245,349)(60,511)
September 30, 202229,310,035 7,452,309 
Total exchangeable units outstanding(2):
December 31, 20212,468,443 3,456,479 
September 30, 20227,526,254 3,472,610 
(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, 2022, there were 3.9 million partnership units in Newmark Holdings outstanding, of which 1.6 million units were exchangeable, and 5.8 million partnership units in BGC Holdings outstanding, of which 3.1 million were exchangeable. As of December 31, 2021, there were 4.2 million partnership units in Newmark Holdings outstanding, of which 1.3 million units were exchangeable, and 6.8 million partnership units in BGC Holdings outstanding, of which 3.1 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). Subsequent to the Spin-Off, there are remaining partners who hold limited partnership interests in Newmark Holdings who are BGC employees, and there are remaining partners who hold limited partnership interests in BGC Holdings who are Newmark employees. These limited partnership interests represent interests that were held prior to the Newmark IPO or were distributed in connection with the Separation. Following the Newmark IPO, employees of Newmark and BGC received limited partnership interests in Newmark Holdings and BGC Holdings, respectively. As a result of the Spin-Off, as the existing limited partnership interests in Newmark Holdings held by BGC employees and the existing limited partnership interests in BGC Holdings held by Newmark employees are exchanged/redeemed, the related capital can be contributed to and from Cantor, respectively. The compensation expenses under GAAP related to the limited partnership interests are based on the company where the partner is employed. Therefore, compensation expenses related to the limited partnership interests of both Newmark and BGC but held by a Newmark employee are recognized by Newmark. However, the Newmark Holdings limited partnership interests held by BGC employees are included in the Newmark share count and the BGC Holdings limited partnership interests held by Newmark employees are included in the BGC share count.

A summary of the BGC Holdings and Newmark Holdings limited partnership units held by Newmark employees is as follows:
 Newmark
Units		BGC
Units
Regular units27,994,887 7,370,392 
Preferred Units1,315,148 81,917 
Balance, September 30, 202229,310,035 7,452,309 
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,
 2022202120222021
BGC Units23,451 2,324,626 114,570 13,960,614
Newmark Units4,263,257 305,636 7,132,116 32,392,989
Total4,286,708 2,630,262 7,246,686 46,353,603 

    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,
 2022202120222021
Issuance of common stock and exchangeability expenses$33,330 $14,321 $71,211 $302,764 
    
    Limited partnership units with a post-termination payout held by Newmark employees are as follows (dollars in thousands):
September 30, 2022December 31, 2021
Notional Value(1)
$146,762 $116,717 
Estimated fair value of the post-termination payout(2)
$40,076 $38,516 
Outstanding limited partnership units in BGC Holdings44,928 105,302 
Outstanding limited partnership units in Newmark Holdings13,272,736 11,691,406 
Outstanding limited partnership units in Newmark Holdings - unvested6,136,233 5,980,996 
(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,
 2022202120222021
Limited partnership units amortization$181 $2,323 $5,214 $(32,056)
    
The grant of exchange rights of HDU's to Newmark employees are as follows (in thousands):
September 30, 2022December 31, 2021
Notional Value$7,222 $12,836 
Estimated fair value of limited partnership units (1)
$7,013 $12,558 
(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,
 2022202120222021
Issuance of common stock and exchangeability expenses$— $93 $(2,023)$(4,562)

During the three and nine months ended September 30, 2022, Newmark employees were granted 1.3 million and 3.0 million N Units, 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, 2022, 2.5 million and 7.4 million N Units vested and were 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, 202110,646,797 $7.75 $82,494 5.698,013 $3.80 $31 2.17
Granted2,913,572 9.71 28,290 — — — 
Settled units (delivered shares)(2,196,903)7.64 (16,792)(2,638)3.69 (10)
Forfeited units(642,009)7.74 (4,967)— — — 
Balance, December 31, 202110,721,457 $8.30 $89,025 4.965,375 $3.85 $21 1.16
Granted2,045,344 14.56 29,779 4,191 4.28 17 
Settled units (delivered shares)(2,033,920)8.03 (16,342)(2,638)3.69 (10)
Forfeited units(307,885)9.90 (3,048)— — — 
Balance, September 30, 202210,424,996 $9.54 $99,414 4.656,928 $4.17 $28 2.27
(1)Beginning January 1, 2018, Newmark began granting stand-alone Newmark RSUs to Newmark employees with the awards vesting ratably over a 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,
 2022202120222021
RSU amortization$5,702 $4,059 $15,764 $11,505 

As of September 30, 2022, there was $94.8 million total unrecognized compensation expense related to unvested Newmark RSUs.

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