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Compensation
 9 Months Ended
Sep. 30, 2023
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 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 $400.0 million were registered on Forms S-8 as of September 30, 2023. As of September 30, 2023, awards with respect to 90.5 million shares had been granted and 309.5 million shares were available for future awards under the Equity Plan. 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 0.9243 as of September 30, 2023.

As a result of a series of transactions prior to and in anticipation of the Corporate Conversion, all BGC Holdings units held by Newmark employees were redeemed or exchanged, in each case, for shares of BGC Class A common stock.

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,
 2023202220232022
Issuance of common stock and exchangeability expenses$19,121 $33,330 $53,601 $69,188 
Allocations of net income to limited partnership units and FPUs (1)
3,076 4,875 3,439 12,808 
Limited partnership units amortization1,532 181 9,762 5,214 
RSU amortization5,819 5,702 18,003 15,764 
Equity-based compensation and allocations of net income to limited partnership units and FPUs$29,548 $44,088 $84,805 $102,974 
(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 Holdings Units
BGC Holdings Units
Balance, January 1, 202218,419,613 8,663,930 
Issued15,402,041 25,032 
Redeemed/exchanged units(2,934,984)(3,169,063)
Forfeited units/other(198,716)(60,511)
Balance, December 31, 2022(1)
30,687,954 5,459,388 
Issued12,719,260 1,506 
Redeemed/exchanged units(1,999,907)(5,459,895)
Forfeited units/other(497,658)(999)
September 30, 2023 (2)
40,909,649 — 
Total exchangeable units outstanding(1):
December 31, 20227,861,359 2,654,749 
September 30, 2023 (2)
10,853,868 — 
(1)The Limited Partnership Units table above also includes partnership units issued as consideration for acquisitions. As of September 30, 2023, there were 3.2 million such partnership units in Newmark Holdings outstanding, of which 1.6 million units were exchangeable. As of December 31, 2022, there were 3.9 million such partnership units in Newmark Holdings outstanding, of which 1.5 million units were exchangeable, and 4.8 million such partnership units in BGC Holdings outstanding, of which 2.5 million were exchangeable.
(2)As of September 30, 2023, the total Limited Partnership Units included $2.0 million Newmark Preferred Units.

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 Newmark Holdings and BGC 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. Subsequent to the Spin-Off but prior to the closing of the Corporate Conversion, there were remaining partners who held limited partnership interests in BGC Holdings who are Newmark employees. These limited partnership interests represented 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 were exchanged/redeemed, the related capital could 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 were recognized by Newmark. However, the Newmark Holdings limited partnership interests held by BGC employees are included in the Newmark share count. The BGC Holdings limited partnership interests held by Newmark employees were included in the BGC share count until the Corporate Conversion.
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,
 2023202220232022
BGC Holdings Units
11,404 23,451 127,960 114,570 
Newmark Holdings Units
3,156,676 4,263,257 6,857,293 7,132,116 
Total3,168,080 4,286,708 6,985,253 7,246,686 

Compensation expense related to the issuance of Newmark or BGC Class A common stock and grants of exchangeability on Newmark Holdings and BGC Holdings (prior to the Corporate Conversion) limited partnership units to Newmark employees is as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Issuance of common stock and exchangeability expenses$19,121 $33,330 $53,601 $71,211 
    
    Limited partnership units with a post-termination payout held by Newmark employees are as follows (dollars in thousands):
September 30, 2023December 31, 2022
Notional Value$160,349 $144,045 
Estimated fair value of the post-termination payout(1)
$50,699 $42,706 
Outstanding limited partnership units in Newmark Holdings16,700,196 14,277,213 
Outstanding limited partnership units in Newmark Holdings - unvested1,180,996 2,155,668 
Outstanding limited partnership units in BGC Holdings— 44,928 
(1)Included in “Other long-term liabilities” on the accompanying unaudited condensed consolidated balance sheets.

Compensation expense related to limited partnership units held by Newmark employees with a post-termination pay-out amount is recognized over the service period. These units can vest for periods up to seven years from the grant date. 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,
 2023202220232022
Limited partnership units amortization$1,532 $181 $9,762 $5,214 
    
The grant of exchange rights of HDUs to Newmark employees are as follows (in thousands):
September 30, 2023December 31, 2022
Notional Value$1,258 $8,189 
Estimated fair value of limited partnership units (1)
$1,133 $8,065 
(1)Included in “Other long-term liabilities” on the accompanying unaudited condensed consolidated balance sheets.

During the three and nine months ended September 30, 2023, there was no compensation expense related to these limited partnership units held by Newmark employees.

During the three and nine months ended September 30, 2022, there was no compensation expense and ($2.0) million of compensation expense, respectively, related to these limited partnership units held by Newmark employees.
During the three and nine months ended September 30, 2023, Newmark employees were granted 5.2 million and 19.8 million N Units, respectively. During the three and nine months ended September 30, 2022, Newmark employees were granted 3.8 million and 9.9 million N Units, respectively. 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 while they remain unvested. Upon vesting, which occurs if certain thresholds are met, the N Units are subsequently 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. During the three and nine months ended September 30, 2023, 2.6 million and 8.9 million N Units, respectively, were converted into distribution earning limited partnership units. During the three and nine months ended September 30, 2022, 2.5 million and 7.4 million N Units, respectively, were converted into distribution earning limited partnership units.

(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, 202210,721,457 $8.30 $89,025 4.965,375 $3.85 $21 1.16
Granted3,350,516 12.15 40,710 4,191 4.28 18 
Settled units (delivered shares)(2,464,570)8.33 (20,526)(2,638)3.69 (10)
Forfeited units(343,541)10.11 (3,474)— — — 
Balance, December 31, 202211,263,862 $9.39 $105,735 4.756,928 $4.17 $29 1.62
Granted3,621,408 6.89 24,960 — — — 
Settled units (delivered shares)(2,173,527)8.99 (19,535)(2,045)4.05 (8)
Forfeited units(229,000)10.08 (2,309)— — — 
Balance, September 30, 202312,482,743 $8.72 $108,851 4.164,883 $4.22 $21 0.87
(1)Beginning January 1, 2018, Newmark began granting Newmark RSUs to Newmark employees with the awards vesting ratably over the two- to nine-year vesting period into shares of Newmark Class A common stock.
(2)    BGC RSUs generally vest over a two to three 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,
 2023202220232022
RSU amortization$5,819 $5,702 $18,003 $15,764 

As of September 30, 2023, there was $101.9 million total unrecognized compensation expense related to unvested Newmark RSUs.