Committee. Each member of the Committee qualifies as “independent” in accordance with the published listing requirements of Nasdaq. The Committee is responsible for reviewing and approving all compensation arrangements for our executive officers and for administering the Newmark Holdings, L.P. Participation Plan, which we refer to as the “Participation Plan,” our Long-Term Incentive Plan, which we refer to as the “Equity Plan” and our Incentive Bonus Compensation Plan, which we refer to as our “Incentive Plan.” The Committee operates pursuant to a Compensation Committee Charter, which is available at
http://www.ngkf.com/home/esg/governance.aspx
under the heading “Independent Compensation Committee,” or upon written request from us free of charge. The Committee held 11 meetings during the year ended December 31, 2019.
During 2019, all directors attended 100% of the total number of meetings of the Board of Directors and the committees of which he or she was a member.
Our Board of Directors does not have a separate nominating committee or committee performing similar functions and does not have a nominating committee charter. As a result, all directors participate in the consideration of director nominees that are recommended for selection by a majority of the independent directors in accordance with the published listing requirements of Nasdaq. Our Board believes that such participation of all directors is appropriate given the size of our Board and the level of participation of our independent directors in the nomination process. Our Board will also consider qualified director candidates identified by a member of senior management or by a stockholder. However, it is our general policy to
re-nominate
qualified incumbent directors and, absent special circumstances, our Board will not consider other candidates when a qualified incumbent consents to stand for
re-election.
A stockholder wishing to submit a recommendation for a director candidate should follow the instructions set forth in this Amendment under the section below “Communications with Our Board of Directors.”
Our Board of Directors considers the following minimum criteria when reviewing a director nominee: director candidates must (1) have the highest character and integrity, (2) be free of any conflict of interest which would violate applicable laws or regulations or interfere with the proper performance of the responsibilities of a director, (3) possess substantial and significant experience which would be of particular importance in the performance of the duties of a director, (4) have sufficient time available to devote to our affairs in order to carry out the responsibilities of a director and (5) have the capacity and desire to represent the best interests of our stockholders. In addition, our Board considers as one factor among many the diversity of director candidates, which may include diversity of skills and experience as well as geographic, gender, age and ethnic diversity. Our Board does not, however, have a formal policy with regard to the consideration of diversity in identifying director candidates. Our Board screens candidates, does reference checks and conducts interviews, as appropriate. Our Board does not evaluate nominees for director any differently because the nominee is or is not recommended by a stockholder.
With respect to qualifications of the members of the Board of Directors, the Board generally values broad business experience and independent business judgment in the financial, real estate or in other fields of each member. Specifically, Mr. Snow is qualified based on his experience in the financial services industry and his general business experience. Ms. Bauer is qualified based on her depth of experience in both the technology and government sectors. Mr. Cervinka is qualified as a result of his general business, financial and management experience, in particular in the real estate industry. Mr. McIntyre is qualified as a result of his extensive experience in the commercial real estate industry and general business experience. Each of Ms. Bauer and Messrs. Cervinka, Snow and McIntyre is additionally qualified as a result of his or her status as an “audit committee financial expert.”
Our Board of Directors has determined that in light of Mr. Lutnick’s control of the stockholder vote of the Company through his control of Cantor, having a separate Chairman of the Board and principal executive officer is not efficient or appropriate for us. Additionally, our Board does not have a lead independent director for the same reason.
We believe that we and our stockholders are best served by having Mr. Lutnick serve as Chairman of the Board and as our principal executive officer. Mr. Lutnick’s role as Chairman, which combines the roles of Chairman of the Board and principal executive officer, promotes unified leadership and direction for our Board of Directors and executive management, and it allows for a single, clear focus for the chain of command to execute our strategic initiatives and business plans. Our strong and independent Board effectively oversees our management and provides vigorous oversight of our business and affairs and any proposed related party transactions. Our Board is composed of independent, active and effective directors. Four of our five directors meet the independence qualifications in accordance with the published listing requirements of Nasdaq and the SEC and our Board’s standards for determining director independence. Mr. Lutnick is the only member of executive management who is also a director. Requiring that the Chairman of the Board be an independent director is not necessary to ensure that our Board provides independent and effective oversight of our business and affairs. Such oversight is maintained through the composition of our Board, the strong leadership of our independent directors and board committees and our highly effective corporate governance structures and processes.
In order to comply with the published listing standards of Nasdaq, the Board of Directors has resolved that it will schedule and/or provide opportunities during at least two meetings per year in which the independent directors will meet without the presence of Mr. Lutnick.
The Board of Directors has not adopted any specific policy with respect to the attendance of directors at the Annual Meetings of Stockholders of the Company. At the 2019 Annual Meeting of Stockholders, held on September 24, 2019, all of the Company’s directors were in attendance.
Communications with Our Board of Directors
Stockholders may contact any member of our Board of Directors, including to recommend a candidate for director, by addressing their correspondence to the director, c/o Newmark Group, Inc., 125 Park Avenue, New York, NY 10017, Attention: Corporate Secretary. Our Corporate Secretary will forward all such correspondence to the named director.
The Board’s Role in Risk Oversight
Risk oversight is an integral part of Board of Directors and Committee deliberations throughout the year. The Audit Committee oversees the management of our enterprise risk management program, and it annually reviews an assessment prepared by management of the critical risks facing us, their relative magnitude and management’s actions to mitigate these risks.
Our management has implemented an enterprise risk management program to enhance our existing processes through an integrated effort to identify, evaluate and manage risks that may affect our ability to execute our corporate strategy and fulfill our business objectives. The activities of the enterprise risk management program entail the identification, prioritization and assessment of a broad range of risks (e.g., strategic, operational, cybersecurity, financial, legal/regulatory, reputational and market) and the formulation of plans to mitigate their effects.
Our Board of Directors generally discusses cybersecurity and information security risks annually with the Chief Technology Officer and other relevant technology and security personnel.
Similarly, in designing and implementing our executive compensation program, the Compensation Committee takes into consideration our operating and financial objectives, including our risk profile, and considers executive compensation decisions based in part on incentivizing our executive officers to take appropriate business risk consistent with our overall goals and risk tolerance.
Non-executive
brokers, managers and other professionals are generally compensated based upon production or commissions, which may involve committing to certain transactions. These transactions may expose the Company to risks by individual employees, who are motivated to increase production. While we have in place management oversight and risk management policies, there is an inevitable conflict of interest between our compensation structure and certain brokerage, transactional, or similar risks on a portion of our businesses.
In connection with the separation, interests in Newmark Holdings were distributed to holders of interests in BGC Holdings in proportion to such interests of BGC Holdings held by such holders immediately prior to the separation. Due to such distribution, any BGC Holdings-related interest or unit that existed as of December 13, 2017 also included 0.454545 of a Newmark Holdings-related interest or unit, as applicable, and any redemption or exchange of a BGC Holdings-related interest or unit prior to the
Spin-Off
must also have included the redemption or exchange of the associated ratable portion of a Newmark Holdings-related interest or unit. This 0.454545 figure was based on what the distribution ratio would have been had the
Spin-Off
occurred immediately following the Newmark IPO.
As a result of the separation, and due to the fact that (i) certain BGC awards granted pursuant to the BGC compensation plans prior to the separation became, upon the separation, awards of interests in both BGC Holdings and Newmark Holdings, when we refer generally to partnership units that may be awarded as part of compensation (i.e., NPSUs, PSUs, PPSUs, LPUs and PLPUs), we are referring to such units as may be awarded under both the BGC compensation plans and the Newmark Compensation Plans, and when we refer to specific awards, we are referring to awards under the Newmark Compensation Plans, unless otherwise indicated.
COMPENSATION DISCUSSION AND ANALYSIS
Our principal executive officer for 2019 was our Chairman, Howard W. Lutnick. Our other three most highly compensated executive officers for 2019 were Barry M. Gosin, Stephen M. Merkel and Michael J. Rispoli. As noted above, prior to our IPO, we did not have a Board of Directors or a Compensation Committee. As such, compensation decisions prior to December 2017, including decisions with respect to 2017 salaries, were made by the BGC board of directors and the BGC compensation committee, in the case of Mr. Lutnick, who is also an executive officer of BGC, and in the case of Messrs. Gosin, James R. Ficarro (our former Chief Operating Officer) and Rispoli, compensation decisions were made by Mr. Lutnick. However, 2017
year-end
compensation was determined and approved by our Compensation Committee in early 2018. For 2018 and 2019, executive compensation was determined and approved by our Compensation Committee for all executive officers. Mr. Merkel’s compensation is not included for 2018 because he became an executive officer in January 2019.
For 2018 and 2019, after the separation, the compensation determined and approved by our Compensation Committee for Newmark matters for Messrs. Lutnick, Gosin, Rispoli, Ficarro (for 2018) and Merkel (for 2019) is reflected in full below. In each case compensation includes salary, other cash compensation and
non-cash
compensation. In 2017, Messrs. Lutnick and Ficarro received compensation for their services to our business and to other businesses of BGC Partners and its affiliates. Mr. Lutnick spent approximately 50% of the time he dedicated to BGC on matters relating to the Company (referred to herein as “Newmark matters”), Messrs. Gosin and Rispoli spent 100% of their full business time on Newmark matters, and Mr. Ficarro spent approximately 90% of his full business time on Newmark matters in 2017 and through November 2018. Given the proportion of time Messrs. Lutnick and Ficarro dedicated to Newmark matters prior to the separation, for purposes of this item, including the compensation discussion and analysis, Mr. Lutnick’s compensation represented approximately 50% of the compensation he received from BGC and Mr. Ficarro’s compensation represented approximately 90% of his total compensation he received from BGC for their 2017
year-end
compensation, and approximately 95% through November 2018. The compensation of Messrs. Gosin and Rispoli is reflected in full below, as each of them dedicated the majority of his time to Newmark matters. Our financial statements for 2017 reflect each executive’s compensation in a manner consistent with the allocation historically made by BGC Partners, which has resulted in generally the reflection of: (i) for Mr. Lutnick, 50% of his compensation paid by BGC Partners; (ii) for Messrs. Gosin and Rispoli, 100% of their compensation; and (iii) for Mr. Ficarro, 90% of his compensation.
The following compensation discussion and analysis describes the material elements of our executive compensation program for 2019, including aspects of our executive compensation program which were designed and implemented by the Compensation Committee of our Board of Directors in December 2019 and March 2020, at which time 2019
year-end
compensation decisions with respect to each of our executive officers were reviewed and approved. References below to Compensation Committee decisions in 2017 made prior to our IPO refer to decisions made by the BGC compensation committee, whereas references below to Compensation Committee decisions made after the completion of our IPO, refer to decisions made by our Compensation Committee.
Our executive compensation program, which is under the direction and control of our Compensation Committee, is designed to integrate compensation with the achievement of our short- and long-term business objectives and to assist it in attracting, motivating and retaining the highest quality executive officers and rewarding them for superior performance. Different components of our executive compensation program are geared to short- and longer-term performance, with the goal of increasing stockholder value over the long-term.
We believe that the compensation of our executive officers should reflect their success in attaining key corporate objectives, such as growth or maintenance of market position, success in attracting and retaining qualified brokers and other professionals, increasing or maintaining revenues and/or profitability, developing new products and marketplaces, completing acquisitions, dispositions, restructurings, and other value-enhancing transactions and integrating any such transactions, as applicable, meeting established goals for operating earnings, earnings per share and increasing the total return for stockholders, including stock price and/or dividend increases, and maintaining and developing customer relationships and long-term competitive advantage. Such objectives may also include ability to respond to extraordinary events and manage the business under changing health, environmental, microeconomic and financial circumstances.
We also believe that executive compensation should also reflect achievement of individual managerial objectives established for specific executive officers at the beginning of the fiscal year as well as reflect specific achievements by such individuals over the course of the year, such as development of specific products or customer relationships or executing or integrating specific acquisitions, dispositions and other strategic arrangements. We further believe that specific significant events led by executives, including acquisitions, dispositions and other significant transactions, should also be given significant weight. We believe that the performance of our executives in managing our Company, and in the provision of services to our operating partnerships and subsidiaries, considered in light of general economic and specific company, industry and competitive conditions, should be the basis for determining their overall compensation.
Our policy is generally that the compensation of our executive officers should not be based on the short-term performance of our Class A common stock, whether favorable or unfavorable, since we believe that the price of our Class A common stock will, in the long-term, reflect our overall performance and, ultimately, our management by our executives. Long-term stock performance is reflected in executive compensation through the grant of various equity and partnership awards as described below.
Our Compensation Committee is aware that certain of our executive officers, including Messrs. Lutnick and Merkel, also receive compensation from our affiliates, including Cantor and BGC Partners, for services rendered to each of them, but it generally does not specifically review the nature or amount of such compensation. Messrs. Lutnick’s and Merkel’s overall compensation from BGC Partners is reviewed and approved by the compensation committee of the BGC Partners board of directors and not by our Compensation Committee.
None of our executive officers has received any compensation for serving on our Board of Directors or on the board of directors of BGC Partners.
Overview of Compensation and Processes
For 2019, executive compensation was composed of the following principal components: (i) a base salary, which is designed to retain talented executive officers and contribute to motivating, retaining and rewarding individual performance; (ii) an incentive bonus award that is intended to tie financial rewards to the achievement of the Company’s short- or longer-term performance objectives; and (iii) an incentive program that is designed to promote the achievement of short- and long-term performance goals and to align the long-term interests of executive officers with those of stockholders through the grant of awards. In all cases, performance objectives and goals relate to the performance of our executives at the Company and in the provision of services to our operating partnerships and subsidiaries.
From time to time, we may also restructure the existing partnership, equity and compensation arrangements of our executive officers as described below. We may also adopt various policies related to or in addition to such restructurings, including with respect to the grant of exchange rights, other monetization of awards, and the acceleration of the lapse of restrictions on restricted stock.
From time to time, we have also used employment agreements, change of control agreements, and other arrangements, including some with specified target or guaranteed bonus components, and discretionary bonuses to attract, motivate and retain talented executives. These specific arrangements with the executive officers are summarized below.
Our Compensation Committee approves, and recommends to our Board of Directors, that it approve the salaries, bonuses and other compensation of our executive officers. In addition, the Committee approves grants to executive officers under and otherwise administers our Incentive Plan, our Equity Plan and our Participation Plan.
From time to time, the Compensation Committee has engaged a compensation consultant in connection with its compensation decisions. With respect to 2019, Korn Ferry (which we refer to as the “Advisor”) advised the Committee. The Committee retained the Advisor to provide surveys and other information with respect to pay practices and compensation levels at the Company’s peer group and other companies, and the Committee discussed with the Advisor all compensation arrangements for 2019. While the Committee
does take into consideration such peer data, the Committee does not attempt to benchmark executive compensation against any level, range, or percentile of compensation paid at any other companies, does not apply any specific measures of internal or external pay equity in reaching its conclusions, and does not employ tally sheets, wealth accumulation, or similar tools in its analysis. The Committee considered whether the Advisor had any conflicts of interest in advising the Committee. The Committee considered whether the Advisor had been providing services of any other nature to the Company; the amount of fees received from the Company by the Advisor; the policies and procedures adopted by the Advisor that have been designed to prevent conflicts of interest; whether any business or personal relationships existed between the consultants employed by the Advisor who worked on Company matters and any member of the Committee; whether any business or personal relationship existed between such consultants and any of our executive officers; and whether the Advisor or such consultants hold any of our Class A common stock. The Advisor also provides services to the compensation committee of the board of directors of BGC Partners from time to time. Upon evaluating such considerations, the Committee found no conflicts of interest in the Advisor advising the Committee.
Our policy for allocating between currently paid short- and long-term compensation is designed to ensure adequate base compensation to attract and retain talented executive officers, while providing incentives to maximize long-term value for our Company and our stockholders. Cash compensation is provided in the form of base salary to meet competitive salary norms and reward superior performance on an annual basis, and in the form of bonuses and awards for achievement of specific short-term goals or in the discretion of the Compensation Committee. Equity and partnership awards reward superior performance against specific objectives and long-term strategic goals and assist in retaining executive officers and aligning their interests with those of our Company and our stockholders. From time to time, we may provide additional equity or partnership awards on a periodic basis to reward superior performance, which awards may provide further long-term retention opportunities.
Base salaries for the following year are generally set for our executive officers at the
year-end
meetings of the Compensation Committee or in the early part of the applicable year. At these meetings, the Committee also approves incentive bonuses under the Incentive Plan and any discretionary bonuses and grants of equity and partnership awards under our Equity Plan and the Participation Plan to our executive officers.
At or around the
year-end
Compensation Committee meetings, our Chairman, Mr. Lutnick, makes compensation recommendations to the Committee with respect to the other executive officers. Such executive officers are not present at the time of these deliberations. With respect to its determination of the Chairman’s compensation, the Committee shall consider such information received from the Chairman as it deems necessary or appropriate. The Committee deliberates separately in executive sessions with the Advisor as to all executive officers other than Mr. Lutnick in the presence of Mr. Lutnick, and separately in executive sessions with the Adviser as to all executive officers, including Mr. Lutnick. The Committee may accept or adjust Mr. Lutnick’s recommendations and makes the sole determination of the compensation of all of our executive officers. The Committee reviews and evaluates, at least annually, the performance and leadership of Mr. Lutnick as Chairman. Based upon the results of this evaluation, and input from the Advisor, the Committee reviews and approves Mr. Lutnick’s compensation.
During the first quarter of each fiscal year, the practice of our Compensation Committee is to establish annual incentive performance goals for all executive officers under the Incentive Plan, with the Committee retaining negative discretion to reduce or withhold any bonuses earned at the end of the year. All executive officers in office at that time are eligible to participate in the Incentive Plan. In all cases, such performance goals relate to the performance of our executive officers at the Company and in the provision of services to our operating partnership and subsidiaries.
We provide long-term incentives to our executive officers through the grants of limited partnership units under the Participation Plan and exchange rights or cash settlement awards in connection with such partnership units and restricted stock and other equity grants under the Equity Plan. In addition, executive officers may receive a portion of their Incentive Plan bonuses in equity or partnership awards, rather than cash, with the number of awards determined by reference to the market price of a share of our Class A common stock on the date that the award is granted or such other date that awards to executive officers are made generally. Grants under our Equity Plan and our Participation Plan have vesting provisions that are time-based, rather than performance-based, vesting schedules, although both plans are flexible enough to provide for performance-based awards. Our Compensation Committee has also established quarterly incentive performance goals as described below.
In designing and implementing our executive compensation program, our Compensation Committee considers our operating and financial objectives, including our risk profile, and the effect that our executive compensation decisions will have on encouraging our executive officers to take an appropriate level of business, operational and market risk consistent with our overall goal of enhancing long-term stockholder value. In particular, the Committee considers those risks identified in our risk factors and the known trends and uncertainties identified in our management discussion and analysis, and considers how our executive compensation program serves to achieve its operating, financial and other strategic objectives while at the same time mitigating any incentives for executive officers to engage in excessive risk-taking to achieve short-term results that may not be sustainable in the long-term.
Until
non-exchangeable
units are made exchangeable into a share of Class A common stock or exchanged for cash at the discretion of the Committee, they are generally forfeitable for any reason, subject to certain exceptions. We believe this incentivizes performance.
Our executive officers have much of their personal net worth in a combination of our equity-based awards and
non-exchangeable
and exchangeable limited partnership units. Messrs. Lutnick, Gosin, Merkel and Rispoli hold limited partnership units in Newmark Holdings. Mr. Lutnick holds additional partnership interests in Cantor, which, through its and CFGM’s ownership of shares of our Class B common stock, owns 57.7% of the total voting power of the outstanding Newmark common stock as of December 31, 2019. Mr. Merkel also holds additional partnership interests in Cantor.
While we do not have a general compensation recovery or “clawback” policy, and do not require our executive officers to meet general share ownership or hold-through-retirement requirements, our Compensation Committee believes that the extremely retentive nature of the NPSUs, PSUs and similar partnership units, which may be redeemed for zero at any time by the Committee, provides extraordinary discretion and superior clawback power to the Committee.
Section 162(m) of the U.S. Internal Revenue Code of 1986, which we refer to as the “Code,” eliminates a corporation’s tax deduction in a given year for payments to certain executive officers in excess of $1,000,000. We do not currently expect that decisions relating to compensation will be significantly impacted by Section 162(m) matters on a going forward basis. The Committee retains negative discretion to reduce or withhold performance-based compensation to our executive officers, including after taking into consideration changing business conditions or the executive officer’s individual performance.
Our management and our Compensation Committee recognize that we are subject to certain Financial Accounting Standards Board and SEC guidance on share-based awards and other accounting charges with respect to the compensation of the executive officers and other employees. However, management and the Committee do not believe that these accounting charges should necessarily determine the appropriate types and levels of compensation to be made available. Where material to the Committee’s decisions, these accounting charges will be described in our compensation discussion and analysis, compensation tables and related narratives.
Our Compensation Committee may grant equity and partnership awards to executive officers in a variety of ways under the Equity Plan and the Participation Plan, including restricted stock, exchange rights, cash settlement awards and other equity grants under the Equity Plan and
non-exchangeable
limited partnership unit awards under the Participation Plan. Grants of such awards may have different accounting treatment and may be reported differently in the compensation tables and related narratives depending upon the type of award granted and how and when it is granted.
For U.S. GAAP purposes, a compensation charge is recorded on PSUs and similar limited partnership units if and when an exchange right is granted to such units to acquire shares of Class A common stock, and the charge is based on the market price of Class A common stock on the date on which the exchange right is granted, regardless of when such exchange occurs. Additionally, when the exchange actually occurs, a U.S. federal income tax deduction is generally allowed equal to the fair market value of a share of Class A common stock on the date of exchange.
For U.S. GAAP purposes, a compensation charge is recorded on PSUs and similar limited partnership units if and when an exchange right is granted relating to the right to exchange such units into HDUs or similar limited partnership units, and the charge is based on the market price of Class A common stock on the date on which the exchange right is granted, regardless of whether such exchange occurs. Additionally, when the exchange actually occurs, a U.S. federal income tax deduction is generally allowed equal to the fair market value of a share of Class A common stock on the date of exchange.
For U.S. GAAP purposes, if shares of restricted stock granted are not subject to continued employment or service with us or any of our affiliates or subsidiaries, even if they are subject to compliance with our customary
non-compete
obligations, the grant-date fair value of the restricted stock will be expensed on the date of grant.
Newmark Equity Plan and Participation Plan
In connection with our IPO in December 2017, we established the Equity Plan and the Incentive Plan, under which the Compensation Committee of our Board of Directors may pay compensation in the form of cash, shares of our common stock or other equity-based awards, to our directors, executive officers or other officers or employees. We also maintain the Participation Plan, under which the Committee may award Newmark Holdings interests to our directors, executive officers or other officers or employees. Prior to the IPO, our executive officers received awards under the BGC compensation plans.
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stock price, dividends and/or total stockholder return;
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pre-tax
or
after-tax
earnings per share;
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pre-tax
or
after-tax
operating earnings per share;
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strategic business criteria, consisting of one or more objectives based on meeting specified revenue, market penetration, or geographic business expansion goals, cost targets, and goals relating to acquisitions or divestitures, or any combination thereof.
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The actual Incentive Plan bonus paid to any given participant at the end of a performance period is based upon the extent to which the applicable performance goals for such performance period are achieved, subject to the exercise of negative discretion by the Compensation Committee, and may be paid in cash or in equity or partnership awards. These awards also serve as incentives for future performance and retention.
In addition, from time to time, our Compensation Committee may provide for target or guaranteed bonuses in employment or other agreements in order to attract and retain talented executives, or may grant ad hoc discretionary bonuses when an executive officer is not eligible to participate in the Incentive Plan award opportunities for that performance period or when it otherwise considers such bonuses to be appropriate. Such bonuses may also be paid in cash or in equity or partnership awards.
Incentive Plan Bonus Goals for 2019
In the first quarter of 2019, our Compensation Committee determined that Messrs. Lutnick, Gosin, Rispoli and Merkel, our executive officers for 2019, would be participating executives for 2019 in our Incentive Plan.
For 2019, our Compensation Committee used the same performance criteria for all the executive officers and set individual bonus opportunities for 2019 equal to the maximum value allowed for each individual pursuant to the terms of the Incentive Plan (i.e., $25 million), provided that (i) the Company achieved operating profits or adjusted earnings annually for 2019, as calculated on substantially the same basis as in the Company’s 2018
year-end
earnings release, or (ii) the Company achieved improvement or percentage growth in gross revenue or total transaction volumes for any product annually for 2019 as compared annually to 2018 over any of its peer group members or industry measures, as reported in the Company’s 2019 earnings release, in each case calculated on substantially the same basis as in the Company’s 2018 earnings release, and compared to the most recently available peer group information or industry measures, (each of which we refer to as a “Performance Goal”) in each case subject to any appropriate corporate adjustment to reflect stock splits, reverse stock splits, mergers, spin-offs or any other extraordinary corporate transactions in accordance with the Bonus Plan, the Incentive Plan and the Participation Plan, as applicable.
The Compensation Committee determined that the payment of any such amount may be in the form of cash, shares of Class A common stock, limited partnership units, or other equity or partnership awards permitted under the Equity Plan, the Participation Plan or otherwise. The Compensation Committee, in its sole and absolute discretion, retained the right to reduce the amount of any Incentive Plan bonus payment based upon any factors it determines, including whether and the extent to which the Performance Goals or any other corporate, as well as individual, performance objectives have been achieved.
Incentive Plan Bonuses and Other Bonuses Awarded for 2019
On March 2, 2020, having determined that the Performance Goals established in the first quarter of 2019 had been met for 2019, our Compensation Committee made awards, effective as of April 1, 2020, to the participating executive officers for 2019 under our Incentive Plan. The awards were granted using a stock price of $10.11 on such award date, and adjusted by the then current 0.9461 exchange ratio, and provided a combination of short and long-term incentives that align the Company’s financial performance with its executive compensation. In addition to short-term cash compensation awarded to certain executives, the Committee awarded significant portions of its 2019 compensation to all executives in the form of long-term partnership units. These units are eligible for partnership distributions, if any, in the current period, which are tied to the Company’s current and future earnings and may rise and
Mr. Gosin received commissions in 2018 in the amount of $104,893 payable in connection with brokerage transactions. This amount was paid in the form of $10,486 in cash and 6,482
non-exchangeable
Newmark Holdings PSUs.
Incentive Plan Bonus Goals for 2020
In the first quarter of 2020, the Compensation Committee determined that Messrs. Lutnick, Gosin, Merkel and Rispoli, our current executive officers, would be participating executives for 2020 in the Incentive Plan. For 2020, the Committee established performance criteria for all executive officers and set a bonus for 2020 equal to the maximum value allowed for each individual pursuant to the terms of the Incentive Plan (i.e., $25 million), provided that (i) the Company achieves operating profits or adjusted earnings annually for 2020, as calculated on substantially the same basis as in the Company’s 2019
year-end
earnings release, or (ii) the Company achieves improvement or percentage growth in gross revenue or total transaction volumes for any product annually for 2020 as compared to 2019 over any of our peer group members or industry measures, as reported in its 2020 earnings release, in each case calculated on substantially the same basis as in its 2019 earnings release, and compared to the most recently available peer group information or industry measures, in each case, subject to any appropriate corporate adjustment to reflect stock splits, reverse stock splits, mergers, spin-offs or any other extraordinary corporate transactions in accordance with the Incentive Plan, Equity Plan and the Participation Plan, as applicable. As each of the Company’s executive officers also provides services to certain of our operating partnerships and subsidiaries, potential bonuses for 2020 are also on behalf of all such operating partnerships and subsidiaries, as may be applicable.
The Compensation Committee determined that the payment of any such amount may be in the form of cash, shares of Class A common stock, limited partnership units or other equity or partnership awards permitted under the Equity Plan, the Participation Plan or otherwise. The extent determined to reflect the portion of an executive officer’s compensation related to services performed for a particular subsidiary or affiliate as noted above, the cost of compensation awarded under any of the Compensation Plans shall be borne by such subsidiary or affiliate. The Committee, in its sole and absolute discretion, retained the right to reduce the amount of any Incentive Plan bonus payment based upon any factors it determines, including whether and the extent to which Performance Goals or any other corporate, as well as individual, performance objectives have been achieved. The Committee further retains discretion to authorize bonuses and other awards to the participating executives regardless of whether or not such bonuses and awards are tax deductible under tax law in effect at the time of such bonuses and awards.
Equity Plan and Participation Plan Awards
It is the Compensation Committee’s general policy to award restricted stock, exchange rights, awards that are repurchased for cash, which we refer to as “cash settlement awards,” and other equity or partnership awards to executive officers in order to align their interests with those of our long-term investors and to help attract and retain qualified individuals. Our Equity Plan permits the Committee to grant restricted stock, stock options, stock appreciation rights, deferred stock such as RSUs, bonus stock, performance awards, dividend equivalents and other stock-based awards, including to provide exchange rights for shares of our Class A common stock and cash settlement awards relating to Newmark Holdings limited partnership units. Our Participation Plan provides for the grant or sale of Newmark Holdings limited partnership units. The total number of Newmark Holdings limited partnership units issuable under the Participation Plan will be determined from time to time by our Board of Directors, provided that exchange rights or cash settlement awards relating to units may only be granted pursuant to other stock-based awards granted under our Equity Plan. Partnership units in Newmark Holdings (other than NPSUs) are entitled to participate in preferred or quarterly partnership distributions from Newmark Holdings and (other than preferred units and NPSUs) are eligible to be made exchangeable for shares of our Class A common stock. We view these incentives as an effective tool in motivating, rewarding and retaining our executive officers.
Our Compensation Committee retains the right to grant a combination of forms of such awards under our Equity Plan and our Participation Plan to executive officers as it considers appropriate or to differentiate among executive officers with respect to different types of awards. The Committee has also granted authority to Mr. Lutnick, our Chairman, to grant awards to
non-executive
officer employees of the Company under the Equity Plan and Participation Plan and to establish
sub-plans
for such persons.
In addition, our executive officers and other employees may also be offered the opportunity to purchase limited partnership units. The Compensation Committee and Mr. Lutnick will have the discretion to determine the price of any purchase right for partnership units, which may be set at preferential or historical prices that are less than the prevailing market price of our Class A common stock.
Our Compensation Committee has also established special quarterly award opportunities under our Equity Plan for the grant of exchange rights and/or cash settlement awards under the Equity Plan relating to outstanding
non-exchangeable
limited partnership units awarded under the Participation Plan. The Committee established specified performance goals for the quarter similar to the
annual opportunities under the Incentive Plan. In each case, such quarterly award opportunities are subject to the Committee’s determination of whether such goals have been met and the Committee’s exercise of negative discretion. Although the quarterly performance goals were met with respect to all four quarters of 2019, the Committee elected not to grant any quarterly awards or exchange rights under our Equity Plan.
Equity and partnership awards to executive officers that are in payment of the Incentive Plan or discretionary bonuses are typically granted annually in conjunction with the Compensation Committee’s review of company and individual performance of executive officers, although interim grants may be considered and approved from time to time. The Committee’s annual review generally takes place at
year-end
meetings, which are generally held in the first quarter of each year, although the reviews may be held at any time and from time to time throughout the year. From time to time, grants to executive officers may be made on a
mid-year
or other basis in the event of business developments, changing compensation requirements or other factors, in the discretion of the Committee.
Our policy is generally to award
year-end
grants to executive officer recipients by the end of the calendar year or shortly thereafter, with grants to
non-executive
employees occurring closer to the end of the first quarter of the following year. Grants, if any, to newly hired employees are effective on the first day of the quarter following the employee’s first day of employment. In addition, from time to time the Company may offer compensation enhancements or modifications to employees that it does not offer to its executive officers.
The exercise price of all stock options is set at the closing price of our Class A common stock on the NASDAQ Global Select Market on the date of grant. As discussed above, with respect to limited partnership units and other equity or partnership awards, grants may be made based on a dollar value, with the number of units or shares determined by reference to the market price of our Class A common stock on the date of grant, or based on a specified number of awards.
NPSU Grants and Related Replacement and Exchange Right Grants
Previous BGC Partners Grants Attributable to Newmark
During each of 2015, 2016 and 2017, the BGC compensation committee made additional discretionary awards of BGC Holdings NPSUs to Mr. Lutnick. The equity compensation discussed below reflects only those amounts BGC attributed to Mr. Lutnick’s services performed for Newmark and excludes the amounts attributable to his services performed on matters for BGC Partners and its affiliates (other than us), and represents a percentage (i.e., 50%) of the total amount awarded by BGC in connection with the performance of his duties during those times.
The BGC compensation committee granted the following BGC Holdings NPSUs to Mr. Lutnick and replaced such BGC Holdings NPSUs with other partnership units in 2017:
On January 1, 2016, 1,000,000 of Mr. Lutnick’s BGC Holdings NPSUs were replaced by 550,000
non-exchangeable
BGC Holdings PSUs and 450,000 BGC Holdings PPSUs (with a determination price of $9.81 per BGC Holdings PPSU), which represented 25% of his May 2014 and January 2015 BGC Holdings NPSU awards.
2015 Year-End Compensation
. On February 24, 2016, in connection with the 2015
year-end
compensation process, the BGC compensation committee granted 750,000 BGC Holdings NPSUs to Mr. Lutnick. Replacement of BGC Holdings NPSUs with
non-exchangeable
BGC Holdings PSUs/PPSUs for Mr. Lutnick was determined to be (i) 25% per year with respect to BGC Holdings NPSUs granted in 2016; and (ii) 25% of the previously awarded to BGC Holdings NPSUs currently held by Mr. Lutnick based upon the original issuance date (the first 25% having already been replaced); provided that, with respect to all of the foregoing, such future replacements were subject to the approval of the BGC compensation committee (with such approval process amended in 2017 as described below). The grant of exchange rights with respect to such to BGC Holdings PSUs/PPSUs will be determined in accordance with BGC Partners’ practices when determining discretionary bonuses or awards, and any grants of exchangeability shall be subject to the approval of the BGC compensation committee.
2016 Year-End Compensation.
On January 31, 2017, in connection with the 2016
year-end
compensation process, certain previous awards of BGC Holdings NPSUs vesting on January 1, 2017 were replaced with
non-exchangeable
BGC Holdings PSUs/PPSUs for Mr. Lutnick, effective January 1, 2017, with the determination price of each BGC Holdings PPSU based on the closing price of Class A common stock on December 30, 2016, which was $10.23. As a result, effective as of January 1, 2017, 593,750 BGC Holdings NPSUs of Mr. Lutnick were cancelled and replaced with 427,500
non-exchangeable
BGC Holdings PSUs and 166,250
non-exchangeable
BGC Holdings PPSUs.
In January 2017, the requirement of further approval of the BGC compensation committee to replace Mr. Lutnick’s BGC Holdings NPSUs was amended and changed into the requirement that BGC, inclusive of its affiliates thereof, earn, in aggregate, at least $5 million in gross revenues in the calendar quarter in which the applicable award of
non-exchangeable
BGC Holdings PSUs/PPSUs is to be granted, and such executive remaining an employee or member of an affiliate of BGC and having complied at all times with his applicable employment or membership agreement and the limited partnership agreement of BGC Holdings as of the applicable grant date.
With respect to all of such awards, any grant of exchange rights with respect to any of Mr. Lutnick’s BGC Holdings PSUs/PPSUs issued in replacement of BGC Holdings NPSUs will be determined in accordance with BGC Partners’ practices when determining discretionary bonuses or awards, and any grants of exchangeability shall be subject to the approval of the BGC compensation committee. In addition, upon the signing of any agreement that would result in a “Change in Control” (as defined in the Change of Control Agreement entered into by Mr. Lutnick), (1) any BGC Holdings NPSUs held by Mr. Lutnick shall be replaced by exchangeable BGC Holdings PSUs/PPSUs (i.e., such BGC Holdings PSUs shall be exchangeable for shares of Class A common stock and BGC Holdings PPSUs shall be exchangeable for cash), and (2) any
non-exchangeable
BGC Holdings PSUs/PPSUs held by Mr. Lutnick shall become immediately exchangeable, which exchangeability may be exercised in connection with such “Change in Control.”
As of April 1, 2020, Mr. Lutnick had no BGC Holdings NPSUs outstanding attributable to his Newmark compensation.
Replacement and Exchange Right Grants
From time to time, the Compensation Committee generally approves monetization of previously issued and outstanding units and shares in order to provide liquidity to the executives in accordance with applicable tax and accounting rules, taking into consideration the retentive impact of the remaining units held by the executives. The 2019 monetizations are described below were approved by the Compensation Committee in order to provide liquidity to the executives in accordance with applicable tax and accounting rules, taking into consideration the retentive impact of the remaining units held by the executives. The February modifications generally reduced the cash paid, were less dilutive and considered by the Compensation Committees to be retentive.
On December 19, 2019, the Compensation Committee approved the right to (i) convert 552,483
non-exchangeable
Newmark Holdings PSUs held by Mr. Lutnick into 515,577 HDUs using the exchange ratio of 0.9332 (which, based on the closing price of the Class A common stock of $13.61 per share on such date, had a value of $7,017,000); and (ii) exchange for cash 602,463 Newmark Holdings
non-exchangeable
PPSUs held by Mr. Lutnick (which had an average determination price of $13.25 per unit) for a payment of $7,983,000 for taxes when (i) is exchanged. To date, Mr. Lutnick has not exercised this right to exchange, no cash has been given to Mr. Lutnick and he has not sold any shares in connection with these rights. PPSUs are not included in our fully-diluted share count.
On December 19, 2019, the Compensation Committee approved the right to (i) convert 443,872
non-exchangeable
Newmark Holdings PSUs held by Mr. Gosin into 414,221 HDUs using the exchange ratio of 0.9332 (which, based on the closing price of the Class A common stock of $13.61 per share on such date, had a value of $5,637,548); and (ii) exchange for cash 539,080 Newmark Holdings
non-exchangeable
PPSUs held by Mr. Gosin (which had an average determination price of $9.947 per unit) for a payment upon such exchange of $5,362,452 for taxes when (i) is exchanged.
On December 19, 2019, the Compensation Committee approved the right to (i) convert 5,846
non-exchangeable
Newmark Holdings PSUs held by Mr. Rispoli into 5,456 HDUs using the exchange ratio of 0.9332 (which, based on the closing price of the Class A common stock of $13.61 per share on such date, had a value of $74,250); and (ii) exchange for cash 4,917 Newmark Holdings
non-exchangeable
PPSUs held by Mr. Rispoli (which had an average determination price of $12.355 per unit) for a payment of $60,750 for taxes when (i) is exchanged.
On February 22, 2019 the BGC Compensation Committee approved (i) the redemption of 90,000 BGC Holdings PPSUs at the Determination Price of $6.26 per PPSU and redemption of 110,000 BGC Holdings PSUs for zero; (ii) issuance of 93,560 shares of BGC Class A Common Stock at $6.26 per share, which is less applicable taxes and withholdings; (iii) the redemption of 40,909 Newmark Holdings PPSUs at the Determination Price of $10.70 per PPSU and redemption of 50,000 Newmark Holdings PSUs for zero; and (iv) issuance of 42,864 shares of Newmark Class A Common Stock at $10.26 per share, which is less applicable taxes and withholdings. The aggregate value of $2,192,108 was allocated 50% to BGC and 50% to Newmark based on the allocation methodology for Mr. Merkel.
On December 19, 2019, the Compensation Committee approved the cancellation of 145,464
non-exchangeable
Newmark Holdings PSUs held by Mr. Merkel, and the cancellation of 178,179
non-exchangeable
PPSUs (which had an average determination price of $10.61 per unit). Additionally, on December 19, 2019, Mr. Merkel exchanged 4,222 already exchangeable Newmark Holdings PSUs held by him in exchange for 3,940 shares of Class A common stock. These transactions resulted in Mr. Merkel being issued a total of 132,429 shares of Class A common stock. On that same day, the Company purchased Mr. Merkel’s 132,429 shares issued pursuant to the above on the closing price on the date of approval, which was $13.61, for total net proceeds of approximately $1,802,359.
Our Compensation Committee did not make any awards of NPSUs to our executive officers in 2017.
On February 22, 2019, the Compensation Committee granted 500,000 Newmark Holdings NPSUs and 500,000 Newmark Holdings NNPSUs effective April 1, 2019 to Mr. Lutnick. These units will become
non-exchangeable
Newmark Holdings PSUs and PPSUs (based on the Determination Price of $10.05 per unit) ratably over 4 years (on each anniversary) as follows:
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•
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Replacement of NPSUs with PSUs: On or about each April 1 of 2020, 2021, 2022, and 2023, the Company shall grant Mr. Lutnick an aggregate award of 125,000
non-exchangeable
PSUs in replacement of 125,000 of the above NPSUs, provided that (i) the Company, inclusive of its affiliates, earns, in aggregate, at least $5 million in gross revenues in the calendar quarter in which the applicable award of PSUs is to be granted and (ii) except in the event of death prior to the applicable grant date, Mr. Lutnick remains an employee of the Company or an affiliate thereof and has at all times remained in compliance with the Newmark Holdings Limited Partnership Agreement. Pursuant to this grant, on April 1, 2020 the Company granted Mr. Lutnick an aggregate award of 125,000
non-exchangeable
PSUs in replacement of 125,000 NPSUs.
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•
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Replacement of NPPSUs with PPSUs: On or about each April 1 of 2020, 2021, 2022, and 2023, the Company shall grant Mr. Lutnick an aggregate award of 125,000
non-exchangeable
PPSUs in replacement of 125,000 of the above NPPSUs (which, upon replacement, shall be cancelled and no longer exist), provided that (i) the Company, inclusive of its affiliates, earns, in aggregate, at least $5 million in gross revenues in the calendar quarter in which the applicable award of PPSUs is to be granted and (ii) except in the event of death prior to the applicable grant date, Mr. Lutnick remains an employee of the Company or an affiliate thereof and has at all times remained in compliance with the Newmark Holdings Limited Partnership Agreement. Pursuant to this grant, on April 1, 2020 the Company granted Mr. Lutnick an aggregate award of 125,000
non-exchangeable
PPSUs in replacement of 125,000 NPPSUs.
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Standing Policy for Mr. Lutnick
In March 2018, our Compensation Committee and Audit Committee approved a standing policy that gives Mr. Lutnick the same right, subject to certain conditions, to accept or waive opportunities that have previously been offered, or that may be offered in the future, to other executive officers to (i) participate in any opportunity to monetize or otherwise provide liquidity with respect to some or all of their
non-exchangeable
limited partnership units; (ii) to accelerate the lapse of or eliminate any restrictions on transferability with respect to shares of restricted stock; or (iii) to participate in transactions that monetize and/or provide liquidity of equity or partnership awards granted to other executive officers, including the right to exchange
non-distribution
earning units such as NPSUs into distribution-earning units such as PSUs, or convert preferred units such as PPSUs into regular,
non-preferred
units, such as PSUs, based upon the highest percentage of distribution earning awards and in the same proportion of regular to preferred units held by another executive.
The policy provides generally that Mr. Lutnick shall be treated no less favorably than, and in proportion to, any other executive officer with respect to the change, right or modification of equity or partnership awards, which include, but are not limited, to opportunities (i) to have
non-exchangeable
units redeemed or replaced by other
non-exchangeable
units; (ii) to have
non-exchangeable
units received upon such replacement redeemed by Newmark Holdings for cash, or, with the concurrence of Cantor, granted exchange rights for shares of Newmark’s Class A common stock; (iii) to accelerate the lapse of or eliminate any restrictions on transferability with respect to restricted shares of Class A common stock; and (iv) to replace
non-distributing
units with distributing units and replace preferred units with
non-preferred
units. The policy may also include exchange of units into HDUs or other units with a capital account and the cancellation or redemption of
non-exchangeable
units and the issuance of new shares or units.
Under the policy, Mr. Lutnick shall have the right to accept or waive in advance some or all of the foregoing offers of opportunities that we may offer to any other executive officer. In each case, Mr. Lutnick’s right to accept or waive any opportunity offered to him to participate in any such opportunity shall be cumulative (and, accordingly, Mr. Lutnick would again have the right to accept or waive the opportunity to participate with respect to such portion previously waived if and when any additional opportunity is offered to any executive officer) and shall be equal to the greatest proportion of outstanding units and the greatest percentage of shares of restricted stock with respect to which any other executive officer has been or is offered with respect to all of such opportunities. This policy may result in grants to him of exchange rights/cash settlement awards, grants of HDUs or other units with a capital account, the cancellation or redemption of
non-exchangeable
units and the issuance of new shares or units, or the acceleration of the lapse of restrictions on transferability of shares restricted stock owned by him if a future triggering event under the policy occurs.
On December 19, 2019, under the Newmark standing policy, the Compensation Committee granted exchange rights and/or monetization rights with respect to rights available to Mr. Lutnick. Mr. Lutnick elected to waive such rights
one-time
with such future opportunities to be cumulative. The number of Mr. Lutnick’s units for which he waived exchange rights or other monetization rights is 2,635,462
non-exchangeable
Newmark Holdings PSUs, inclusive of the PSUs receiving an HDU conversion right and all of Mr. Lutnick’s remaining 933,819
non-exchangeable
Newmark Holdings PPSUs with an aggregate determination amount of $13,248,788 at that time, inclusive of the PPSUs receiving an HDU conversion right.
In December 2010, as amended in 2013, and as further amended in 2017, the BGC audit committee and the BGC compensation committee approved a standing policy, substantially on the same terms as the standing policy approved by our Compensation Committee described above, that gives Mr. Lutnick the same right, subject to certain conditions, to accept or waive opportunities that have previously been offered, or that may be offered in the future, to other BGC executive officers to participate in any opportunity to monetize or otherwise provide liquidity with respect to some or all of their
non-exchangeable
limited partnership units or to accelerate the lapse of or eliminate any restrictions on transferability with respect to shares of restricted stock.
On January 31, 2017, under the BGC standing policy, the BGC compensation committee granted exchange rights with respect to rights available to Mr. Lutnick with respect to some of his
non-exchangeable
BGC Holdings PSUs/PPSUs. Mr. Lutnick elected to waive such rights as a
one-time
waiver that is not cumulative. Also pursuant to the policy, the BGC compensation committee further approved a grant to Mr. Lutnick of 325,000
non-exchangeable
BGC Holdings PSUs, of which 162,500
non-exchangeable
BGC Holdings PSUs, or 50%, were attributable to his approximate time spent on Newmark matters, in replacement of 325,000 of his BGC Holdings NPSUs, of which 162,500 BGC Holdings NPSUs, or 50%, were attributable to his approximate time spent on Newmark matters, and a grant of 1,661,600
non-exchangeable
BGC Holdings PSUs, of which 830,800
non-exchangeable
BGC Holdings PSUs, or 50%, were attributable to his approximate time spent on Newmark matters, in replacement of his 1,661,600
non-exchangeable
BGC Holdings PPSUs, of which 830,800 BGC Holdings PPSUs, or 50%, were attributable to his approximate time spent on Newmark matters, for an aggregate total of 1,986,600
non-exchangeable
BGC Holdings PSUs, of which 993,300 BGC Holdings PSUs, or 50%, were attributable to his approximate time spent on Newmark matters. Such transactions were effective as of January 1, 2017 and represented all of the rights available to Mr. Lutnick at such time.
In addition, on February 16, 2018, under the BGC standing policy, the BGC compensation committee granted exchange rights with respect to rights available to Mr. Lutnick with respect to all of his
non-exchangeable
BGC Holdings PSUs/PPSUs (other than those issued in connection with 2017
year-end
compensation). Mr. Lutnick elected to waive such rights as a
one-time
waiver with future opportunities to exchange to be cumulative. In addition, under the BGC standing policy, all of Mr. Lutnick’s remaining BGC Holdings NPSUs were cancelled and replaced with BGC Holdings PSUs/PPSUs, effective as of January 1, 2018 due to Mr. Lutnick having had the right to make all of his partnership units exchangeable under the BGC standing policy. Following this transaction, the number of Mr. Lutnick’s units for which he waived exchangeability was 8,400,683
non-exchangeable
BGC Holdings PSUs and 1,437,292
non-exchangeable
BGC Holdings PPSUs with future opportunities to exchange to be cumulative, of which approximately 4,200,342
non-exchangeable
BGC Holdings PSUs and 718,646
non-exchangeable
BGC Holdings PPSUs, respectively, or 50%, were attributable to his approximate time spent on Newmark matters. Also pursuant to the policy, the BGC compensation committee further approved a grant of 1,137,626
non-exchangeable
BGC Holdings PSUs and a grant of 474,495
non-exchangeable
BGC Holdings PPSUs to Mr. Lutnick, in replacement of 1,612,121 of his BGC Holdings NPSUs, of which approximately 568,813
non-exchangeable
BGC Holdings PSUs and a grant of 237,248
non-exchangeable
BGC Holdings PPSUs, respectively, or 50%, were attributable to his
approximate time spent on Newmark matters, effective as of January 1, 2018, which were all of the rights available to him at such time. As described above, the foregoing transactions shall also apply to the ratable portion of Newmark Holdings units that Mr. Lutnick held in association with such BGC Holdings NPSUs and BGC Holdings PSUs/PPSUs.
From time to time, we may provide certain of our executive officers with perquisites and other personal benefits that we believe are reasonable. While we do not view perquisites as a significant element of our executive compensation program, we believe that they can be useful in attracting, motivating and retaining the executive talent for which we compete. From time to time, these perquisites might include travel, transportation and housing benefits. We believe that these additional benefits may assist our executive officers in performing their duties and provide time efficiencies for them in appropriate circumstances, and it may consider their use in the future. All present or future practices regarding executive officer perquisites will be subject to periodic review and approval by our Compensation Committee.
Mr. Gosin receives the use of a car and driver in connection with Mr. Gosin’s duties as an executive officer. In 2019, such personal benefits had an aggregate incremental cost of approximately $118,653.
We offer medical, dental, life insurance and short and long term disability insurance and a 401(k) plan to all employees on a
non-discriminatory
basis. Medical insurance premiums are charged to employees at varying levels based on total cash compensation.
Post-Employment Compensation
We do not currently provide pension arrangements or post-retirement health coverage for our employees, although we may consider such benefits in the future.
Our executive officers are generally eligible to participate in a 401(k) contributory defined contribution plan, which we refer to as the “Deferral Plan.” Pursuant to the Deferral Plan, all U.S. eligible employees, including our executive officers, are provided with a means of saving for their retirement. We currently do not match any of our employees’ contributions to our Deferral Plan.
Nonqualified Deferred Compensation
We do not provide any nonqualified deferred compensation plans to its employees, although we may consider such benefits in the future.
Represents 2018 right to monetize certain units granted to Mr. Lutnick in 2014, 2015 and 2016. The $7,529,510 amount in column (e) for Mr. Lutnick for 2018 represents the fair value of (i) the right to exchange 175,243 nonexchangeable BGC Holdings PSUs held by Mr. Lutnick into 175,243
non-exchangeable
BGC Holdings partnership units with a capital account (HDUs) (which, based on the closing price of the BGC Class A common stock of $6.20 per share on the date such right was given, had a value of $1,086,507); and (ii) the right to exchange for cash 817,640 BGC Holdings nonexchangeable PPSUs held by Mr. Lutnick (which had an average determination price of $7.88 per unit) for a payment of $6,443,003 in cash for taxes when the foregoing PPSUs are exchanged. These PSUs and PPSUs were granted to Mr. Lutnick in exchange for certain NPSUs received by Mr. Lutnick in 2014, 2015 and 2016.
In addition, Mr. Lutnick was granted the right to exchange 956,531 nonexchangeable BGC Holdings PSUs into 956,531
non-exchangeable
partnership units with a capital account (HDUs) (which, based on the closing price of the BGC Class A common stock of $6.20 per share on the date such right was granted, had a value of $5,930,492) and the right to exchange for cash 221,583 BGC Holdings nonexchangeable PPSUs held by Mr. Lutnick (which had an average determination price of $6.95 per unit) for a payment of $1,540,002 for taxes when the foregoing PPSUs are exchanged. These PSUs and PPSUs were issued to Mr. Lutnick at full notional value in connection with prior
year-end
compensation grants under the BGC Incentive Plan. To date, Mr. Lutnick has not exercised this right to exchange and has not sold any shares in connection with these rights. PPSUs are not included in our fully-diluted share count. For Mr. Lutnick, column (e) does not include the BGC Holdings NPSUs granted to him in 2017. Of the BGC Holdings NPSUs issued to Mr. Lutnick in 2017 that are attributable to the approximate amount of time Mr. Lutnick spent on Newmark matters, 22,783 of such BGC Holdings NPSUs were previously cancelled and replaced by 22,783 BGC Holdings PSUs and 1,604 BGC Holdings PPSUs (having a determination price of $9.15). The remaining 1,149,854 BGC Holdings units (along with applicable Newmark Holdings units) which were redeemed and cancelled were BGC Holdings PSUs and PPSUs which had been issued to Mr. Lutnick at full notional value in connection with prior
year-end
compensation grants under the BGC Incentive Plan.
In addition, for Mr. Lutnick, column (e) does not include the 500,000 Newmark NPSUs granted to him in 2019 and the 750,000 BGC Holdings NPSUs granted to him in 2016 because NPSUs do not represent a right to acquire shares of Class A common stock and they had no grant date fair value for accounting purposes.
Of the 2,000,000 BGC Holdings NPSUs granted to Mr. Lutnick in 2014, (i) 1,000,000 were in 2015 replaced by a total of 550,000
non-exchangeable
BGC Holdings PSUs and 450,000
non-exchangeable
BGC Holdings PPSUs; and (ii) 500,000 were in 2016 replaced by 360,000
non-exchangeable
BGC Holdings PSUs and 140,000
non-exchangeable
BGC Holdings PPSUs.
Of the 2,000,000 BGC Holdings NPSUs granted to Mr. Lutnick in 2015, (i) in 2016, 500,000 were replaced by 275,000
non-exchangeable
BGC Holdings PSUs and 225,000
non-exchangeable
BGC Holdings PPSUs, and (ii) in 2017, 500,000 were replaced by 360,000
non-exchangeable
BGC Holdings PSUs and 140,000
non-exchangeable
BGC Holdings PPSUs.
Of the 750,000 BGC Holdings NPSUs granted to Mr. Lutnick in 2016, in 2017, 187,500 were replaced by 135,000
non-exchangeable
BGC Holdings PSUs and 52,500
non-exchangeable
BGC Holdings PPSUs.
On February 16, 2018, pursuant to the BGC’s standing policy for Mr. Lutnick, all of Mr. Lutnick’s remaining BGC Holdings NPSUs were cancelled and replaced with BGC Holdings PSUs and BGC Holdings PPSUs as follows: 568,813
non-exchangeable
BGC Holdings PSUs and 237,248
non-exchangeable
BGC Holdings PPSUs, in replacement of 806,061 BGC Holdings NPSUs, effective as of January 1, 2018. With respect to the replacement of BGC Holdings NPSUs in 2018, such replacement also applied to the ratable portion of the Newmark Holdings interests or units held in association with such replaced BGC Holdings NPSUs.
In addition, on December 19, 2019, the Compensation Committee approved the right to (i) convert 552,483
non-exchangeable
Newmark Holdings PSUs held by Mr. Lutnick into 515,577 HDUs using the exchange ratio of 0.9332 (which, based on the closing price of the Class A common stock of $13.61 per share on such date, had a value of $7,017,000); and (ii) exchange for cash 602,463 Newmark Holdings
non-exchangeable
PPSUs held by Mr. Lutnick (which had an average determination price of $13.25 per unit) for a payment of $7,983,000 for taxes when (i) is exchanged. To date, Mr. Lutnick has not exercised this right to exchange, no cash has been given to Mr. Lutnick and he has not sold any shares in connection with these rights. PPSUs are not included in our fully-diluted share count. Column (e) does not include any of the foregoing units because they had been previously granted in partial payment of prior years’ bonuses at full notional value.
(5)
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For Mr. Gosin, column (e) does not include any of the following units, because these units had been previously granted in partial payment of prior
year-end
annual bonuses, commissions or base salary as
non-exchangeable
awards at full notional value: (i) in March 2018, 52,293 BGC Holdings APSUs, 1,146,696 BGC Holdings PSUs and 51,011 BGC Holdings PPSUs were made exchangeable. With respect to the grant of exchangeability that occurred in 2018, such grant of exchangeability also applied to the ratable portion of the Newmark Holdings interests or units held in association with such
non-exchangeable
BGC Holdings APSUs, BGC Holdings PSUs and BGC Holdings PPSUs, as applicable.
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For Mr. Gosin, column (e) also does not include the fair value of the 642,261
non-exchangeable
Newmark Holdings PSUs which on March 12, 2018 were redeemed and cancelled in exchange for issuing to Mr. Gosin $10.0 million of Newmark’s Class A common stock, less applicable taxes and withholdings, based on the price of $15.57 per share, which was the closing price of our Class A common stock on that date, resulting in the issuance to Mr. Gosin of 327,746 shares of our Class A common stock at full notional value in connection with such prior
year-end
compensation grants.
On December 31, 2018, the Compensation Committee approved the monetization of 1,909,188 BGC Holdings PSUs held by Mr. Gosin and 264,985 BGC Holdings PPSUs (which had an average determination price of $4.2625 per unit), which transactions had an aggregate value of $11,000,000. On February 6, 2019, the Compensation Committee approved a modification which consisted of the following: (i) the right to exchange 1,592,016
non-exchangeable
HDUs (which, based on the closing price of the BGC Class A common stock of $6.20 per share on such date, had a value of $9,870,501); and (ii) the right to exchange for cash 264,985 BGC Holdings
non-exchangeable
PPSUs held by Mr. Gosin, (which had an average determination price of $4.2625 per unit), for a payment of $1,129,499 in cash for taxes when such PSUs are exchanged for HDUs. To date, Mr. Gosin has not exercised this right to exchange. Column (e) also does not include the fair value of grants of exchange rights mentioned above that were awarded at full notional value of $2,305,100 in connection with prior
year-end
compensation grants.
On December 19, 2019, the Compensation Committee approved the right to (i) convert 443,872
non-exchangeable
Newmark Holdings PSUs held by Mr. Gosin into 414,221 HDUs using the exchange ratio of 0.9332 (which, based on the closing price of the Class A common stock of $13.61 per share on such date, had a value of $5,637,548); and (ii) exchange for cash 539,080 Newmark Holdings
non-exchangeable
PPSUs held by Mr. Gosin (which had an average determination price of $9.947 per unit) for a payment upon such exchange of $5,362,452 for taxes when (i) is exchanged. Column (e) does not include any of the foregoing units because they had been previously granted in partial payment of prior years’ bonuses at full notional value.
(6)
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For Mr. Rispoli, column (e) does not include any of the following units, because these units had previously been granted in partial payment of prior years’ annual bonuses at full notional value: (i) on April 2, 2018, 17,211
non-exchangeable
BGC Holdings PSUs, and 14,082
non-exchangeable
BGC Holdings PPSUs, of which 9,381 BGC Holdings PPSUs have a determination price of $9.07 per unit and 4,701 BGC Holdings PPSUs have a determination price of $11.40 per unit,
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For Mr. Gosin, column (b) represents 1,438,597 exchangeable Newmark Holdings PSUs, 443,872
non-exchangeable
PSU-H
units, 60,873 exchangeable Newmark Holdings SPUs and 92,464 exchangeable Newmark Holdings APSUs held as of December 31, 2019.
For Mr. Rispoli, column (b) represents 17,081 exchangeable Newmark Holdings PSUs, 5,846
non-exchangeable
PSU-H
units, and 436 exchangeable Newmark Holdings SPUs held as of December 31, 2019.
These exchangeable Newmark Holdings PSUs and Newmark Holdings APSUs were issued in connection with the Separation and Distribution Agreement and may be exchanged at any time on a 1:0.9461 basis (based on the exchange ratio as of April 14, 2020) for shares of Newmark’s Class A common stock, subject to adjustment and the terms of the Separation and Distribution Agreement. As of December 31, 2019, the closing market price of a share of Class A common stock was $13.45.
Non-exchangeable
Newmark Holdings PSUs, NPSUs or Newmark Holdings APSUs held as of December 31, 2019 that are eligible to be granted exchange rights into Newmark Class A common stock were as follows: Mr. Lutnick, 4,043,984 units; Mr. Gosin, 1,042,702 units; Mr. Rispoli, 37,581 units; and Mr. Merkel, 80,570 units. These
non-exchangeable
Newmark Holdings PSUs/NPSUs/APSUs were issued in connection with the Separation and Distribution Agreement.
As of December 31, 2019, Messrs. Gosin, Rispoli and Mr. Merkel did not hold any
non-exchangeable
Newmark Holdings NPSUs that are eligible to be replaced by
non-exchangeable
Newmark Holdings PSUs/PPSUs, which in turn would be eligible to be granted exchange rights for shares of Newmark Class A common stock or cash.
(2)
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Column (c) does not include
non-exchangeable
Newmark Holdings PPSUs held as of December 31, 2019 because they did not represent a right to acquire our Class A common stock. As of December 31, 2019, the
non-exchangeable
Newmark Holdings PPSUs held by the named executive officers were as follows: Mr. Lutnick, 1,433,819 units; Mr. Gosin, 539,080 units; and Mr. Rispoli, 39,240 units.
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Option Exercises and Stock Vested
During 2019, Newmark had no outstanding stock options, no options were exercised by any of the named executive officers and no stock vested for any of the named executive officers.
Potential Payments upon Termination and Change in Control
The following table provides information regarding the estimated amounts payable to the named executive officers listed below, upon either termination or continued employment if such change in control had occurred on December 31, 2019 under their change in control and other agreements, described below, in effect on December 31, 2019. For Mr. Gosin, we have reflected 100% of the amounts he would be paid on a termination of his employment without “cause,” because the payments would have been the same whether or not a change in control of BGC Partners or Newmark had occurred. Messrs. Merkel and Rispoli are not eligible for additional benefits upon termination or a change in control. All amounts are determined, where applicable, using the $13.45 closing market price of our Class A common stock as of December 31, 2019, and the exchange ratio of 1:0.940 as of December 31, 2019 to the extent applicable in accordance with SEC rules. As of April 27, 2020, such price was $3.85 per share, and the exchange ratio was 0.9461. All amounts, including estimated vesting of equity compensation and tax
gross-up
payments, are subject to the specific terms and conditions set forth in the applicable change in control or other agreements and applicable law:
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Earned but
Unpaid
Commissions
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Vesting of
Equity
Compensation
($)
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Welfare
Benefit
Continuation
($)
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Tax Gross-
Up
Payment
($)
(6)
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Termination of Employment in connection with a Change in Control(1)
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Extension of Employment in connection with a Change in Control
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Termination of Employment without Cause Prior to a Change in Control(2)
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(4)
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(5)
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Termination of Employment without Cause in connection with a Change in Control(3)
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(4)
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(5)
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Any Termination of Employment
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(5)
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(1)
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Upon a change in control at December 31, 2019, Mr. Lutnick would have had the right to receive (i) replacement of any partnership units ineligible for exchange rights with new partnership units eligible for such exchange rights, (ii) grants of immediately exchangeable exchange rights into stock or cash, as applicable, with respect to any
non-exchangeable
limited partnership units (including those replacement units described in clause (i)); and (iii) the immediate lapse of any restrictions on transferability of any shares of restricted stock held by him at such time.
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At December 31, 2019, Mr. Lutnick held 4,596,467 of such
non-exchangeable
non-preferred
Newmark Holdings limited partnership units including PSUs,
PSU-Hs
and NPSUs. Based on the closing price of the Newmark’s Class A common stock of $13.45 on December 31, 2019 and the exchange ratio of 1:0.940 as of December 31, 2019, the aggregate value of the shares and cash underlying such grants would have been $58,113,131.
As of December 31, 2019, Mr. Lutnick held 1,433,819
non-exchangeable
Newmark Holdings PPSUs,
PPSU-Hs
and PNPSUs. Based upon the applicable determination price of each grant of the foregoing Newmark Holdings units, the cash value underlying such exchange rights would have been $18,273,788.
With regard to the above Newmark Holdings
PSU-Hs,
Mr. Lutnick has the right from Newmark to exchange 552,483
non-exchangeable
Newmark
PSU-Hs
into 515,577
non-exchangeable
Newmark HDU partnership units (which, based on the closing price of the Newmark Class A common stock of $13.61 per share on the grant date, had a value of $7,017,000) and exchange for cash 602,463 Newmark
non-exchangeable
PPSU-Hs
(which had an average determination price of $13.2506 per unit), for a payment of $7,983,000 for taxes when such
PSU-Hs
are exchanged into HDUs.
As of December 31, 2019, Mr. Lutnick did not hold any shares of our restricted stock. In each case, the units exclude any units subject to redemption for zero or for cash in accordance with applicable agreements. See “—Change in Control Agreements”.
(2)
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Upon a termination of Mr. Gosin’s employment without cause, any unvested compensatory partnership units held by Mr. Gosin would vest immediately. At December 31, 2019, Mr. Gosin had no unvested partnership units. See “—Employment Agreements” below.
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(3)
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Upon a change in control at December 31, 2019, any PSUs held by Mr. Gosin in Newmark Holdings and BGC Holdings as of such date would have been immediately exchangeable into restricted shares of Class A common stock of Newmark or BGC, as applicable, transferable ratably over the first through third anniversaries of the Change in Control, subject to certain conditions. Mr. Gosin also has this right with respect to any PSUs that he then holds in BGC Holdings in the event of a change of control of BGC Partners under the terms of his agreement with BGC Holdings. See “—Change in Control Agreements”. Newmark would have borne the expense of each of the above transactions if they had occurred, including with respect to the
non-exchangeable
BGC Holdings PSUs held by Mr. Gosin.
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At December 31, 2019, Mr. Gosin held 1,486,573 of such
non-exchangeable
Newmark Holdings PSU,
PSU-H
and APSU units. Based on the closing price of our Class A common stock of $13.45 on December 31, 2019 and the exchange ratio of 1:0.940 as of December 31, 2019, the value of the shares underlying such grants of exchange rights would have been $18,794,749. With respect to the above Newmark Holdings
PSU-Hs,
Mr. Gosin has the right from Newmark to exchange 443,872
non-exchangeable
Newmark
PSU-Hs
into 414,221
non-exchangeable
Newmark HDU partnership units (which, based on the closing price of the Newmark Class A common stock of $13.61 per share on the grant date, had a value of $5,637,548) and exchange for cash 539,080 Newmark
non-exchangeable
PPSU-Hs
(which had an average determination price of $9.9474 per unit), for a payment of $5,362,452 for taxes when such
PSU-Hs
are exchanged into HDUs.
At December 31, 2019, Mr. Gosin held 3,677,213 of
non-exchangeable
BGC Holdings PSU and
PSU-H
units. Based on the closing price of BGC Class A common stock of $5.94 on December 31, 2019, the value of the shares underlying such grants of exchange rights would have been $21,842,645. With respect to the above BGC Holdings
PSU-Hs,
Mr. Gosin has the right from BGC to exchange 1,592,016
non-exchangeable
BGC
PSU-Hs
into 1,592,016
non-exchangeable
BGC HDU partnership units (which, based on the closing price of the BGC Class A common stock of $6.20 per share on the grant date, had a value of $9,870,499), and exchange for cash 264,985 BGC
non-exchangeable
PPSU-Hs
(which had an average determination price of $4.2625 per unit), for a payment of $1,129,499 for taxes when such
PSU-Hs
are exchanged for HDUs. Newmark already has taken a GAAP
non-cash
and
non-tax-deductible
compensation charge for such BGC Holdings
PSU-Hs
and
PPSU-Hs.
At December 31, 2019, Mr. Gosin held 82,680 shares of Newmark restricted stock.
(4)
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On December 1, 2019, Mr. Gosin’s base salary was $1,000,000, payable in cash.
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(5)
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Following a termination of Mr. Gosin’s employment for any reason, he would be eligible to receive a monthly cash payment equal to $83,333 in exchange for his
non-compete
for up to 24 months; provided that the Company may elect to release Mr. Gosin from his
non-compete
and cease making such payments at any time. If the Company elected to enforce Mr. Gosin’s
non-compete
for the full
24-month
period, the value of such payment would be $2,000,000.
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(6)
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Mr. Lutnick is also entitled to a tax
gross-up
for excess parachute payments, if any, that would be due in respect of the impact a change in control would have on certain of his outstanding partnership units as stated in footnote (1). The aggregate
tax-gross
up payment upon a termination of employment in connection with a change of control is $49,452,007 when calculated based upon the equity compensation in footnote (1), base salary, bonus, and welfare benefit continuation as of December 31, 2019. The aggregate
tax-gross
up payment upon an extension of employment in connection with a change of control is $45,516,971 when calculated based upon the equity compensation in footnote (1), base salary, bonus, and welfare benefit continuation as of December 31, 2019. The
tax-gross
up payments above would be reduced to $23,397,095 and $19,462,059, respectively, if the value of the regular
(non-preferred)
Newmark Holdings units included in the
tax-gross
up calculation was based on Newmark’s closing stock price of $3.85 on April 27, 2020 and adjusted for the exchange ratio of 0.9461.
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Change in Control Agreements
On December 13, 2017, Mr. Lutnick entered into a Change of Control Agreement with us (which we refer to as the “Change of Control Agreement”) providing that, upon a change in control, all stock options, RSUs, restricted stock, and other awards based on shares of our Class A common stock held by him immediately prior to such change in control shall vest in full and become immediately exercisable, and all limited partnership units in Newmark Holdings shall, if applicable, vest in full and be granted immediately exchangeable exchange rights for shares of our Class A common stock. The Change of Control Agreement also contains provisions relating to the continuation of medical and life insurance benefits for two years following termination or extension of employment, as applicable.
The Incentive Plan is administered by our Compensation Committee. The Committee has broad administrative authority to, among other things, designate participants, establish performance goals and performance periods, determine the timing of the payment of bonuses, and interpret and administer the Incentive Plan.
Participants in the Incentive Plan for any given performance period may include any of our key employees, including those of our subsidiaries, operating units and divisions, who is designated as a participant for such period by the Committee. The participants in the Plan for any given performance period will be designated by the Committee, in its sole discretion, before the end of the 90th day of such performance period or the date on which 25% of such performance period has been completed (which we refer to as the “Applicable Period”). This determination may vary from period to period. Bonuses paid under the Plan may be made in the form of cash, shares of our Class A common stock or other stock-based awards under our Equity Plan, or partnership unit awards under the Participation Plan.
Within the Applicable Period, our Compensation Committee will specify the applicable performance criteria and targets to be used under the Incentive Plan for such performance period. These performance criteria may vary from participant to participant and will be based on one or more of the following measures: (i)
pre-tax
or
after-tax
net income; (ii)
pre-tax
or
after-tax
operating income; (iii) gross revenue; (iv) profit margin; (v) stock price, dividends and/or total stockholder return; (vi) cash flow(s); (vii) market share; (viii)
pre-tax
or
after-tax
earnings per share; (ix)
pre-tax
or
after-tax
operating earnings per share; (x) expenses; (xi) return on equity; or (xii) strategic business criteria consisting of one or more objectives based upon meeting specified revenue, market penetration or geographic business expansion goals, cost targets and goals relating to acquisitions or divestitures, or any combination thereof. These performance criteria or goals may be: (a) expressed on an absolute or relative basis, including comparisons to the performance of other companies; (b) based on internal targets; (c) based on comparisons with prior performance; and (d) based on comparisons to capital, stockholders’ equity, shares outstanding, assets or net assets. The determination of whether any performance goal is satisfied will be made in accordance with GAAP, to the extent relevant, without regard to extraordinary items, changes in accounting, unless the committee determines otherwise, or nonrecurring acquisition expenses and restructuring charges, including various charges related to the merger. However, in connection with any goal that is based on operating income or operating earnings, the calculation may be made on the same basis as reflected in a release of earnings for a previously completed period, as specified by the Committee. For example, an income-based performance measure could be expressed in a number of ways, such as net earnings per share or return on equity, and with reference to meeting or exceeding a specific target, or with reference to growth above a specified level, such as a prior year’s performance or current or previous peer group performance. The Incentive Plan provides that the achievement of such goals must be substantially uncertain at the time they are established, and bonus opportunities are subject to the Committee’s right to reduce the amount of any bonus payable as a result of such performance, as discussed below.
The bonus opportunity for each participant may be expressed as a dollar-denominated amount or by reference to a formula, such as a percentage share of a bonus pool to be created under the Incentive Plan or a multiple of annual base salary. If a pool approach is used, the total bonus opportunities represented by the shares designated for the participants may not exceed 100% of the pool. In all cases, our Compensation Committee has the sole discretion to reduce (but not to increase) the actual bonuses paid under the Incentive Plan. The actual bonus paid to any given participant at the end of a performance period will be based on the extent to which the applicable performance goals for such performance period are achieved, as determined by the committee. The maximum bonus payable under the Incentive Plan to any one individual in any one calendar year will be $25 million.
Our Board of Directors may at any time amend or terminate the Incentive Plan, provided that (i) without the participant’s written consent, no such amendment or termination may adversely affect the bonus rights (if any) of any already designated participant for a given performance period once the participant designations and performance goals for such performance period have been announced; and (ii) our Board will be authorized to make any amendments necessary to comply with applicable regulatory requirements, including, without limitation, Section 162(m) of the Code, to the extent applicable. Amendments to the Incentive Plan will require stockholder approval only if required under Section 162(m) of the Code or other applicable law or regulation.
Material Federal Income Tax Consequences of Our Incentive Plan
The following is a brief description of the federal income tax consequences generally arising with respect to bonuses paid under the Incentive Plan. This discussion is intended for the information of our stockholders and not as tax guidance to individuals who may participate in the Incentive Plan. This summary does not address the effects of other federal taxes or taxes imposed under state, local or foreign tax laws.
Subject to certain exceptions Section 162(m) of the Code disallows a publicly held corporation’s federal income tax deduction in excess of $1,000,000 for compensation paid to its chief executive officer and certain of its other most highly compensated named executive officers.
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the annual total compensation of the median employee was $81,514;
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the annual total compensation of the Chairman, as reported in the Summary Compensation Table, was $5,500,000; and
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•
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the ratio of the annual total compensation of the Chairman to the median employee of the Company was approximately 67 to 1.
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Compensation of Directors
Directors who are also our employees do not receive additional compensation for serving as director. Effective upon the completion of our IPO as of December 2017, the compensation schedule for our
non-employee
directors was as follows:
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an annual cash retainer of $100,000,
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an annual stipend for the chair of our Compensation Committee of $15,000, and
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an annual stipend for the chair of our Audit Committee of $25,000.
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On April 27, 2020, our independent directors volunteered to forego 15% of their annual cash retainer effective immediately until December 31, 2020.
We also pay each
non-employee
director $2,000 for each meeting of our Board of Directors and $1,000 for each meeting of a committee of our Board actually attended, whether in person or by telephone. Under our policy, none of our
non-employee
directors is to be paid more than $3,000 in the aggregate for attendance at meetings held on the same date.
Non-employee
directors may also receive additional per diem fees for services as a director at the rate of $1,000 per day, with a limit of $5,000 per matter, for additional time spent on Board or Committee matters as directed from time to time by our Board.
Non-employee
directors also are reimbursed for all
out-of-pocket
expenses incurred in attending meetings of our Board or its Committees on which they serve.
In addition to the cash compensation described above, under our current policy, upon the appointment or initial election of a
non-employee
director, we will grant to each
non-employee
director RSUs equal to the value of shares of our Class A common stock that could be purchased for $70,000 at the closing price of our Class A common stock on the trading date of the appointment or initial election of the
non-employee
director (rounded down to the next whole share). These RSUs will vest equally on each of the first two anniversaries of the grant date, provided that the
non-employee
director is a member of our Board of Directors at the opening of business on such dates.
Thereafter, we expect to annually grant to each
non-employee
director RSUs equal to the value of shares of our Class A common stock that could be purchased for $50,000 on the date of his or her
re-election
in consideration for services provided. These RSUs will vest equally on each of the first two anniversaries of the grant date, provided that the
non-employee
director is a member of our Board at the opening of business on such dates.
The table below summarizes the compensation paid to our
non-employee
directors for the year ended December 31, 2019:
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(b)
Fees
Earned
or Paid
in Cash
($)
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(e)
Non-Equity
Incentive Plan
Compensation
($)
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(f)
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
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(g)
All Other
Compensation
($)
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(1)
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Howard Lutnick, our Chairman, is not included in this table as he is an employee of our Company and thus received no compensation for his services as director. The compensation received by Mr. Lutnick as an employee of our Company is shown in the Summary Compensation Table. This table includes compensation paid with respect to 2019.
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(2)
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Reflects the grant date fair value of RSUs granted on September 24, 2019 to each of Messrs. Cervinka and Snow and Ms. Bauer. More information with respect to the calculation of these amounts is included in the footnotes to our consolidated financial statements included in Item 8 of our Annual Report on Form
10-K.
On September 24, 2019, each of Messrs. Cervinka and Snow and Ms. Bauer was granted 5,291 RSUs. As of December 31, 2019, Mr. Cervinka had 10,008 RSUs outstanding; Mr. Snow had 7,548 RSUs outstanding and Ms. Bauer had 10,008 RSUs outstanding.
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(3)
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No options were granted to
non-employee
directors in 2019. As of December 31, 2019, none of the
non-employee
directors had any options outstanding.
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(4)
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Mr. McIntyre joined the board of directors of the Company effective January 1, 2020 and therefore did not receive compensation for the year ended December 31, 2019.
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