UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE
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Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Filed by the Registrant |
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Filed by a Party other than the Registrant |
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(Check the appropriate box):
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Preliminary Proxy Statement |
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Confidential, For Use Of The Commission Only (As Permitted By Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
BGC Group, Inc.
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
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No fee required. |
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Fee paid previously with preliminary materials. |
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-(6)(i)(1) and 0-11. |
August 2, 2024
Dear Stockholder:
It is my pleasure to inform you that our 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of BGC Group, Inc. will be conducted online on September 16, 2024, commencing at 10:00 a.m. (Eastern Time). Our Board of Directors will once again conduct the Annual Meeting as a virtual meeting because it believes that a virtual meeting will enable increased stockholder accessibility, while improving meeting efficiency and reducing costs. Stockholders will be able to listen, vote, and submit questions from their home or any remote location with Internet connectivity. Information on how to participate in the Annual Meeting can be found on page 3 of the accompanying Proxy Statement.
This year, we are taking advantage of the Securities and Exchange Commission rule that allows companies to provide their stockholders with access to proxy materials on the Internet. On or about August 2, 2024 we will begin mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders informing them that our accompanying Proxy Statement, Annual Report for the fiscal year ended December 31, 2023 and voting instructions are available online. As more fully described in that Notice, all stockholders may choose to access our proxy materials on the Internet or may request to receive paper copies of the proxy materials. This allows us to conserve natural resources and reduces the costs of printing and distributing the proxy materials, while providing our stockholders with access to the proxy materials in a fast and efficient manner.
During the Annual Meeting, you will be asked to consider and vote upon (i) the election of five directors; (ii) a vote on the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024; (iii) an advisory vote on executive compensation; and (iv) such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.
Whether or not you are able to participate in the Annual Meeting, it is important that your shares be represented. Please vote your shares using the Internet or the designated toll-free telephone number, or by completing and returning by mail the enclosed proxy or voting instruction card. Please refer to the section entitled “Voting Via the Internet, by Telephone, or by Mail” on page 2 of the accompanying Proxy Statement for a description of these voting methods.
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Sincerely, |
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Howard W. Lutnick |
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Chairman of the Board of Directors |
BGC Group, Inc.
499 Park Avenue
New York, New York 10022
Notice of 2024 Annual Meeting of Stockholders
NOTICE IS HEREBY GIVEN that our 2024 Annual Meeting of Stockholders will be held on September 16, 2024 commencing at 10:00 a.m. (Eastern Time), for the following purposes:
(1) To elect five (5) directors to hold office until the next Annual Meeting and until their successors are duly elected and qualified;
(2) To hold a vote on the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024;
(3) To hold an advisory vote on executive compensation; and
(4) To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.
Only holders of record of our Class A common stock or our Class B common stock at the close of business on July 22, 2024 are entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof. If you plan to participate in the Annual Meeting, see the instructions under “Participating in the Annual Meeting” beginning on page 3 of the accompanying Proxy Statement. Stockholders will be able to listen, vote, and submit questions from their home or from any remote location that has Internet connectivity. See the instructions for voting under “Voting Via the Internet, by Telephone, or by Mail” beginning on page 2 of the accompanying Proxy Statement. There will be no physical location for stockholders to attend. Stockholders may only participate online by logging in at www.virtualshareholdermeeting.com/BGC2024.
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By Order of the Board of Directors, |
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CAROLINE A. KOSTER |
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Corporate Secretary |
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August 2, 2024 |
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO PARTICIPATE IN THE ANNUAL MEETING, PLEASE VOTE AS PROMPTLY AS POSSIBLE USING THE INTERNET, THE DESIGNATED TOLL-FREE TELEPHONE NUMBER
OR BY COMPLETING AND RETURNING BY MAIL THE ENCLOSED PROXY OR VOTING INSTRUCTION CARD
TABLE OF CONTENTS
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BGC Group, Inc.
499 Park Avenue
New York, New York 10022
PROXY STATEMENT
This Proxy Statement is being furnished in connection with the solicitation of proxies by and on behalf of our Board of Directors for use at the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of BGC Group, Inc. (“BGC Group”) to be held on September 16, 2024 and at any adjournment or postponement thereof, for the purposes set forth in the accompanying Notice of 2024 Annual Meeting of Stockholders. There will be no physical location for stockholders to attend. Stockholders may only participate online by logging in at www.virtualshareholdermeeting.com/BGC2024. Our Annual Report for the fiscal year ended December 31, 2023 (the “2023 Annual Report”), accompanies this Proxy Statement. This Proxy Statement and the accompanying proxy card are being mailed to stockholders beginning on or about August 2, 2024.
EXPLANATORY NOTE RELATING TO OUR CORPORATE CONVERSION FROM BGC PARTNERS ON JULY 1, 2023
On July 1, 2023, we, BGC Partners, Inc., our predecessor entity (“BGC Partners”) and BGC Holdings, L.P. (“BGC Holdings”), along with certain other entities, completed our conversion from an Up-C to a “Full C-Corporation” through a series of mergers and related transactions (the “Corporate Conversion”), pursuant to a Corporate Conversion Agreement dated as of November 15, 2022 (the “Corporate Conversion Agreement”), simplifying our organizational structure. As a result of the Corporate Conversion, BGC Group became the public holding company for, and successor to, BGC Partners, and its Class A common stock began trading on the Nasdaq Global Select Market, in place of BGC Partners’ Class A common stock, under the ticker symbol “BGC” at market open on July 3, 2023. After completion of the Corporate Conversion, the former stockholders of BGC Partners and the former limited partners of BGC Holdings now participate in the economics of the BGC businesses through BGC Group.
Except as otherwise indicated or the context otherwise requires, as used herein, the terms the “Company,” “BGC,” “we,” “our,” and “us” refer to: (i) following the closing of the Corporate Conversion, effective at 12:02 am Eastern Time on July 1, 2023, BGC Group and its consolidated subsidiaries, including BGC Partners; and (ii) prior to the closing of the Corporate Conversion, BGC Partners and its consolidated subsidiaries. References to Class A common stock and Class B common stock refer to the Class A common stock and Class B common stock, respectively, of: (i) following the closing of the Corporate Conversion, BGC Group; and (ii) prior to the closing of the Corporate Conversion, BGC Partners. See “Certain Relationships and Related Transactions, and Director Independence — Corporate Conversion” for more information.
IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 16, 2024:
On or about August 2, 2024, we will begin mailing a notice, called the Notice of Internet Availability of Proxy Materials, to our stockholders advising them that this Proxy Statement, the 2023 Annual Report and voting instructions can be accessed over the Internet at www.proxyvote.com. You may then access these materials over the Internet, or you may request that a printed copy of the proxy materials be sent to you. If you want to receive a paper or e-mail copy of these proxy materials, you must request one over the Internet at www.proxyvote.com, by calling toll free 1-800-579-1639, or by sending an e-mail to sendmaterial@proxyvote.com. There is no charge to you for requesting a copy. Please make your request for a copy on or before September 1, 2024 to facilitate timely delivery. If you previously elected to receive our proxy materials electronically, these materials will continue to be sent via e-mail unless you change your election.
If you have not done so already, please help us protect the environment by signing up for electronic delivery for all future proxies and related materials. It takes just five easy steps:
1. Go to www.proxyvote.com.
2. Type in the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, on your proxy card or on the instructions that accompanied your proxy materials and click “Submit.”
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3. On the right side, click “Sign up for E-delivery under” “Go Paperless.”
4. Fill out your email address, create a PIN, and click “Next.”
5. Review the Description of Service and click “Enroll in E-Delivery.”
INFORMATION ABOUT VOTING
Who Can Vote
July 22, 2024 has been fixed as the record date (the “Record Date”) for the determination of the stockholders entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof. Only holders of record as of the close of business on that date of shares of our Class A common stock, $0.01 par value per share (the “Class A common stock”), or of our Class B common stock, $0.01 par value per share (the “Class B common stock”), are entitled to notice of and to vote at the Annual Meeting. Our Class A common stock and our Class B common stock will vote together as a single class on all matters to come before the Annual Meeting and are sometimes collectively referred to herein as our “Common Equity.”
Each share of our Class A common stock entitles the holder thereof to one vote per share on each matter presented to stockholders for approval at the Annual Meeting. Each share of our Class B common stock entitles the holder thereof to 10 votes per share on each matter presented to stockholders for approval at the Annual Meeting. The collective voting power represented by the shares of our Class A common stock and our Class B common stock issued and outstanding on the Record Date is referred to as the “Total Voting Power.” On the Record Date, there were 378,411,296 shares of our Class A common stock and 109,452,953 shares of our Class B common stock, for a total of 487,864,249 shares of our Common Equity, outstanding and entitled to vote, with a Total Voting Power of 1,472,940,826 votes.
Howard Lutnick, directly and through his control of Cantor Fitzgerald, L.P. (“Cantor”) and its Managing General Partner, CF Group Management, Inc. (“CFGM”), controls a majority of our Total Voting Power.
Voting Via the Internet, by Telephone, or by Mail
Stockholders of Record
If your shares are registered directly in your name with the Company’s transfer agent, Equiniti Trust Company, LLC, you are considered the “stockholder of record” of those shares and these proxy materials are being sent directly to you by the Company. If you are a stockholder of record, you can vote your shares in one of two ways: either by proxy or online during the Annual Meeting. If you choose to vote by proxy, you may do so by using the Internet (please visit www.proxyvote.com and follow the instructions), or by calling the designated toll-free number, 1-800-690-6903, or by completing and returning by mail the proxy card enclosed with this proxy statement. Whichever method you use, each valid proxy received in time will be voted during the Annual Meeting in accordance with your instructions.
Beneficial Owners of Shares Held in Street Name
If your shares are held in a securities brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of shares held in street name, and these proxy materials are being forwarded to you by your broker, bank or nominee, who is considered the stockholder of record of those shares. As a beneficial owner, you have the right to direct your broker, bank or nominee on how to vote the shares held in your account. You may also vote using the Internet. Please visit www.proxyvote.com and follow the instructions from your broker, bank or nominee describing the available processes for voting your stock in the voting instruction card.
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Revocation of Proxies
A stockholder’s voting on the Internet or by telephone or by completing and returning a proxy or voting instruction card will not affect such stockholder’s right to participate in the Annual Meeting and to vote during such time. Any stockholder who votes on the Internet or by telephone or submits an executed proxy or voting instruction card has a right to revoke the proxy at any time before it is voted by taking any of the following actions:
• advising Caroline A. Koster, our Corporate Secretary, in writing of such revocation;
• changing the stockholder’s vote on the Internet or by telephone;
• executing a later-dated proxy or voting instruction card which is delivered prior to the Annual Meeting; or
• participating in the Annual Meeting online and voting during such time.
Participation in the Annual Meeting will not in and of itself constitute revocation of a proxy.
Quorum
The required quorum for the transaction of business at the Annual Meeting is a majority of the Total Voting Power entitled to vote at the meeting, which shares must be present in person or represented by proxy during the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement.
Broker Non-Votes
If you are a beneficial owner whose shares are held by a broker, bank or other nominee, you must instruct the broker, bank or nominee how to vote your shares. If you do not provide voting instructions, your shares will not be voted on proposals on which brokers do not have discretionary authority. This is called a “broker non-vote.”
Required Vote
With respect to Proposal 1, directors are elected by a plurality of the Total Voting Power present in person or represented by proxy and entitled to vote. With respect to Proposals 2 and 3, the affirmative vote of the majority of the Total Voting Power voted by stockholders entitled to vote on each of those Proposals is required. Withheld votes will have no effect on the vote on Proposal 1, and abstentions will have no effect on the votes on Proposals 2 and 3. Broker non-votes will have no effect on the votes on Proposals 1 and 3. Additionally, there will not be broker non-votes with regard to Proposal 2 as it is a routine matter pursuant to which brokers may exercise discretionary voting authority. Thus, your broker or nominee may vote on your behalf with regard to Proposal 2, whether or not you provide voting instructions. Shares not voted in the discretion of your broker or nominee will have no effect on the vote on this proposal.
Participating in the Annual Meeting
You are entitled to participate in the Annual Meeting only if you were a BGC Group stockholder of record or a beneficial owner of shares of our Class A common stock or our Class B common stock as of the close of business on the Record Date, July 22, 2024, or you hold a valid proxy for the Annual Meeting. Our Annual Meeting will be a completely virtual meeting. There will be no physical meeting location. The meeting will be conducted only via live webcast.
To participate in the Annual Meeting, visit www.virtualshareholdermeeting.com/BGC2024 or www.ir.bgcg.com and enter the 16-digit control number included on your proxy card or on the voting instruction card that accompanied your proxy materials. You may begin to log into the meeting platform beginning at 9:45 a.m. (Eastern Time) on September 16, 2024. The meeting will begin promptly at 10:00 a.m. (Eastern Time) on September 16, 2024.
The virtual meeting platform is fully supported across browsers (Edge, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of the applicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting.
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If you want to submit your question during the meeting, log into the virtual meeting platform at www.virtualshareholdermeeting.com/BGC2024, type your question into the “Ask a Question” field and click “Submit.” Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints. Questions regarding personal matters, including those related to employment, individual transactions, product or service issues, or other matters not relevant to investors generally, are not pertinent to meeting matters and therefore will not be answered.
Voting Procedures for Deferral Plan Participants
Pursuant to the trust agreement governing our BGC Group, Inc. Deferral Plan for Employees of BGC Group, Inc., Cantor Fitzgerald, L.P. and Their Affiliates (the “Deferral Plan”), the trustee of our Deferral Plan will not, except as otherwise required by law, vote shares of our Class A common stock held in the trust as to which the trustee has not received voting instructions from Deferral Plan participants.
Other Information
Unless specified otherwise, the proxies will be voted FOR the election of all the nominees to serve as our directors, FOR the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024, and FOR the approval, on an advisory basis, of the resolution on executive compensation. In the discretion of the proxy holders, the proxies will also be voted for or against such other matters as may properly come before the Annual Meeting. Management is not aware of any other matters to be presented for action at the Annual Meeting.
Our principal executive offices are located at 499 Park Avenue, New York, NY 10022, and our telephone number is (212) 610-2200.
This Proxy Statement is accompanied by the 2023 Annual Report, which includes our Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”) that was previously filed with the Securities and Exchange Commission (the “SEC”) and that includes our audited financial statements. We file reports, proxy statements and other information with the SEC. These filings are available to the public from the SEC website at www.sec.gov. In addition, our website at www.bgcg.com provides ongoing information about the Company, including the 2023 Annual Report, which includes the 2023 Form 10-K, and other documents filed by us and our predecessor company, BGC Partners, with the SEC. To obtain documents from us, please direct requests in writing or by telephone to BGC Group, Inc., 499 Park Avenue, 3rd Floor, New York, NY 10022, Attention: Corporate Secretary; Phone: (212) 610-2200. We will send you the requested documents without charge; however, a reasonable fee will be charged for exhibits that you request.
The information contained on, or that may be accessed through, our websites or other websites referenced herein is not part of, and is not incorporated into, this Proxy Statement.
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PROPOSAL 1 — ELECTION OF DIRECTORS
Our Board of Directors (the “Board” or the “Board of Directors”) is currently composed of five members. Our Board, upon recommendation of our independent directors, has nominated five persons for election as directors at the Annual Meeting. All of the nominees are currently members of our Board. Information with respect to the five nominees for election as directors is set forth below. All of the nominees are to be elected at the Annual Meeting and to serve until their successors are duly elected and qualified. All of the nominees listed below are expected to serve as directors if they are elected. If any nominee should decline or be unable to accept such nomination or to serve as a director (an event which our Board does not now expect), our Board reserves the right to nominate another person or to vote to reduce the size of our Board. In the event another person is nominated, the proxy holders intend to vote the shares to which the proxy relates for the election of the person nominated by our Board. There is no cumulative voting for directors.
Information about our Directors
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Howard W. Lutnick |
63 |
1999 |
Mr. Lutnick is the Chairman of our Board of Directors and the Chief Executive Officer of our Company, positions in which he has served us or our predecessor, BGC Partners, from June 1999 to the present. Mr. Lutnick joined Cantor in 1983 and has served as President and Chief Executive Officer of Cantor since 1992 and as Chairman since 1996. Mr. Lutnick also served as President of Cantor from 1991 until 2017. Mr. Lutnick is the Executive Chairman of Newmark Group, Inc. (“Newmark”) and has been the principal executive officer of Newmark since 2016. In addition, Mr. Lutnick also holds offices at and provides services to various other affiliates of Cantor and provides services to our and Newmark’s operating partnerships and subsidiaries, including BGC Partners, L.P. (“BGC U.S. OpCo”), BGC Global Holdings, L.P. (“BGC Global OpCo”), and Newmark Partners, L.P. (“Newmark OpCo”). In addition, Mr. Lutnick is the Chief Executive Officer, President, sole shareholder and a director of CFGM, the managing general partner of Cantor. Mr. Lutnick is a member of the board of directors of the Horace Mann School, the board of directors of the National September 11 Memorial & Museum, and the board of directors of the Partnership for New York City. In addition, Mr. Lutnick also served as the Chairman and Chief Executive Officer of CF Finance Acquisition Corp., a special purpose acquisition company (“SPAC”), from October 2015 until consummation of its business combination with GCM Grosvenor, Inc. (“GCM Grosvenor”) in November 2020; as the Chairman and Chief Executive Officer of CF Finance Acquisition Corp. II, a SPAC, from September 2019 until consummation of its business combination with View, Inc. in March 2021; as the Chairman and Chief Executive Officer of CF Finance Acquisition Corp. III, a SPAC, from March 2016 until consummation of its business combination with AEye, Inc. in August 2021; as the Chairman and Chief Executive Officer of CF Acquisition Corp. V, a SPAC, from April 2020 until consummation of its business combination with Satellogic, Inc., the only non-affiliate of ours for which Mr. Lutnick serves as a director, in January 2022; as the Chairman and Chief Executive Officer of CF Acquisition Corp. VI, a SPAC, from April 2020 until consummation of its business combination with Rumble Inc. in September 2022; and as the Chairman and Chief Executive Officer of CF Acquisition Corp. VIII, a SPAC, from July 2020 until consummation of its business combination with XBP Europe, Inc. in November 2023. |
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Currently, Mr. Lutnick has served as the Chairman and Chief Executive Officer of CF Acquisition Corp. VII since July 2020, which is a SPAC. Additionally, Mr. Lutnick has served as Chairman and Chief Executive Officer of Cantor Fitzgerald Income Trust, Inc. (formerly known as Rodin Global Property Trust, Inc.), which is a non-traded real estate investment trust, or REIT, since February 2017. Mr. Lutnick received an undergraduate degree from Haverford College. |
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Linda A. Bell |
65 |
2013 |
Dr. Bell has been a director of our Company, and prior to the Corporate Conversion, BGC Partners, since July 2013. Dr. Bell is currently the Claire Tow Professor of Economics and Provost Emerita of Barnard College, Columbia University. Previously she has served as the Provost and Dean of Faculty at Barnard College, Columbia University since 2012, where she also was the Claire Tow Professor of Economics. Prior to joining Barnard, Dr. Bell was the Provost and John B. Hurford Professor of Economics at Haverford College from 2007 to 2012 and a member of the faculty since 1992. Prior to her tenure at Haverford, Dr. Bell held visiting faculty appointments at Stanford University; the University of California, San Diego; the John F. Kennedy School of Government at Harvard University; and the Woodrow Wilson School of Public Administration at Princeton University and has taught at the Leonard N. Stern School of Business at New York University. Dr. Bell has also served as a research fellow at the Institute for the Study of Labor (IZA) in Bonn, Germany since 2003, and as a senior consultant for the labor practice group of the National Economic Research Associates since 2006. Dr. Bell holds a Ph.D. in Economics from Harvard University. |
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David P. Richards |
72 |
2017 |
Mr. Richards has been a director of our Company, and prior to the Corporate Conversion, BGC Partners, since December 2017. Mr. Richards is the Chairman of Prodrive Holdings Ltd., a British motorsport and advanced engineering group, a position in which he has served since the firm’s founding in 1984. He previously served as Chairman of Aston Martin Lagonda Ltd., a British manufacturer of luxury sports cars, from 2007 until 2013, and as a non-executive director of BGC European GP Limited from May 2009 until June 2017. Mr. Richards currently serves in the role of Chairman of the U.K. governing body of the Motor Sports Association. In December 2023, Mr. Richards was appointed as Chairman of the Board of Trustees at the FIA Foundation, an international charity focused on issues in the automotive world. Mr. Richards previously served as a director of Phytome Life Sciences, a U.K. plant-based medical research company from 2019 to 2023. In the 2005 Queen’s New Year’s Honours, Mr. Richards was made a Commander of the British Empire (“CBE”) for his services to motorsport. Mr. Richards attended Brynhyfryd School in North Wales followed by five years of articles with a Liverpool firm of chartered accountants. He holds honorary doctorates and fellowships from the Universities of Wales, Coventry, Warwick and Cranfield. |
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Arthur U. Mbanefo |
57 |
2021 |
Mr. Mbanefo has been a director of our Company, and prior to the Corporate Conversion, BGC Partners, since October 2021. Since January 2023, Mr. Mbanefo has been the Managing Partner of Phoenix Merchant Partners LP, a merchant banking and private credit business, where he previously served in the same role from September 2019 until February 2020. From February 2020 to June 2022, Mr. Mbanefo was the Chief Investment Officer and Head of Principal Business and Asset Management for ORIX Corporation USA, the U.S. subsidiary of ORIX Corporation, a publicly owned, Tokyo-based international financial services company. In this role, he led investments across private equity, private credit and real estate, with a focus on the U.S. middle market. He was also an Advisory Director of the Board of ORIX Corporation USA. Mr. Mbanefo served as the Chief Investment Officer of Barclays Bank PLC from March 2017 until June 2019 where he was responsible for all the investment of the balance sheet of Barclays Bank PLC across corporate and investment banking, markets, pension and asset management, cards and payments. Prior to this role, he was a Head of Markets at Barclays from September 2015 to February 2017 and a Managing Director at the firm in various market leadership roles from May 2009 to September 2015. Prior to Barclays, Mr. Mbanefo served as Chief Investment Officer and Chief Executive Officer of two alternative investment management firms. In addition, since May 23, 2022, he has been the Chairman of the advisory board of Datatailr Inc., a financial and data analytics and development firm, and since September 1, 2022, he has been a senior adviser to Banyan LLC, an e-commerce data solutions firm. Mr. Mbanefo graduated with a BSc with Honours from Loughborough University. He is also a Fellow Chartered Accountant. |
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William Addas |
64 |
2023 |
Mr. Addas has been a director of our Company since July 2023, following the closing of the Corporate Conversion. From 2008 to 2023, Mr. Addas held numerous senior positions at BofA Securities, Inc., including Co-Head of Global Financial Institutions Group from 2021 to 2023, Co-Head of Americas Financial Institutions Group from 2019 to 2021, and Head of Specialty Finance from 2018 to 2019. From 2003 to 2008, he was a Managing Director and Head of Financial Technology and Specialty Finance at Deutsche Bank. From 2005 to 2006, he served on the board of Delta Financial Corp., a residential mortgage company. From 1996 to 2003, he was a Managing Director at Credit Suisse and Donaldson, Lufkin & Jenrette, a U.S. investment bank. From 1993 to 1996, he served as a Director of NatWest Markets Securities, a U.S. based broker-dealer. From 1984 to 1992, he practiced as an attorney at Manatt, Phelps, Phillips, Rothenberg and Tunney, where he was an Associate and later a Partner, and Wasserstein Perella, where he was an Associate. Mr. Addas holds a Bachelor of Arts from Brandeis University, and a Juris Doctor from the George Washington University Law School. |
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VOTE REQUIRED FOR APPROVAL
The five nominees receiving a plurality of the Total Voting Power present in person or represented by proxy and entitled to vote on the election of directors will be elected as directors. Withheld votes and broker non-votes will have no effect on the election of directors.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
OUR BOARD OF DIRECTORS RECOMMENDS THAT ALL STOCKHOLDERS VOTE “FOR” THE ELECTION OF EACH OF THE FIVE NOMINEES FOR DIRECTOR.
Independence of Directors
Our Board has determined that each of Dr. Bell and Messrs. Richards, Mbanefo and Addas qualifies as an “independent director” in accordance with the published listing requirements of the Nasdaq Stock Market LLC (“Nasdaq”). The Nasdaq independence definition consists of a series of objective tests, including that the director is not an officer or employee of ours and has not engaged in various types of business dealings with us. In addition, as further required by Nasdaq rules, our Board has made a subjective determination with respect to each independent director that no relationships exist which, in the opinion of our Board, would interfere with the exercise of independent judgment by each such director in carrying out the responsibilities of a director. In making these determinations, our Board has reviewed and discussed information provided by the individual directors and us with regard to each director’s business and personal activities as they may relate to us and our management, including participation on any boards of other organizations in which other members of our Board are members.
Meetings and Committees of Our Board of Directors
Our Board held 17 meetings during the year ended December 31, 2023. In addition to meetings, our Board and its committees reviewed and acted upon matters by unanimous written consent from time to time. During 2023, each independent director attended 100% of the total number of meetings of the Board and the committees of which he or she was a member, except Mr. Richards who attended over 90% of the total number of meetings of the Board and over 80% of the total number of meetings of the committees of which he was a member. In addition to regular committee meetings which are indicated below, the independent directors of the Board of BGC Group held 5 joint or special project committee meetings in 2023.
Former director Martin Laguerre served on the Board of BGC Partners from January 2023 to June 2023. Mr. Addas joined the Board of BGC Group in July 2023.
Audit Committee
Our Board has an Audit Committee. The members of the Committee are currently Dr. Bell and Messrs. Richards, Mbanefo and Addas, all of whom qualify as “independent” in accordance with the published listing requirements of Nasdaq. Mr. Mbanefo serves as chair. Mr. Laguerre joined the Audit Committee on January 25, 2023 and departed on June 30, 2023. Mr. Addas joined the Audit Committee on July 1, 2023. The members of the Committee also each qualify as “independent” under special standards established by the SEC for members of audit committees, and the Committee includes at least two members who are determined by our Board to also meet the qualifications of an audit committee financial expert in accordance with the SEC rules. Each of Messrs. Richards, Mbanefo and Addas is an independent director who has been determined to be an audit committee financial expert. The Committee operates pursuant to an Audit Committee Charter, which is available at www.bgcg.com/esg/governance under the heading “Independent Audit Committee” or upon written request from BGC free of charge.
Our Audit Committee selects our independent registered public accounting firm (our “Auditors”), consults with our Auditors and with management with regard to the adequacy of our financial reporting, internal control over financial reporting and the audit process and considers any permitted non-audit services to be performed by our Auditors. The Committee also approves all related party transactions, oversees the management of our enterprise risk management program, oversees compliance with our Code of Business Conduct and Ethics (the “Code of Ethics”), and administers our Whistleblower Complaint and Investigation Policy (“Whistleblower Policy”), including the establishment of procedures with respect to the receipt, retention and treatment of complaints received by us
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regarding accounting, internal controls and auditing matters, and the anonymous submission by employees of complaints involving questionable accounting or auditing matters. The Committee held 44 meetings during the year ended December 31, 2023.
During 2023, our Audit Committee engaged Ernst & Young LLP (“Ernst & Young”) as our Auditors for the year ending December 31, 2023. Ernst & Young was also approved to perform reviews of each of our quarterly financial reports for the year ending December 31, 2023, and certain other audit-related services such as accounting consultations. Pursuant to our Audit Committee Charter, the Committee will pre-approve audit services, internal control-related services and permitted non-audit services (including the fees and other terms thereof) to be performed for us by Ernst & Young, as set forth in the Audit Committee Charter.
Compensation Committee
Our Board has a Compensation Committee. The members of the Committee are currently Dr. Bell and Messrs. Richards, Mbanefo and Addas, all of whom are independent directors. Each member of the Committee qualifies as “independent” in accordance with the published listing requirements of Nasdaq. Dr. Bell serves as chair. Mr. Laguerre joined the Compensation Committee on January 25, 2023 and departed on June 30, 2023. Mr. Addas joined the Compensation Committee on July 1, 2023.
The Compensation Committee is responsible for reviewing and approving all compensation arrangements for our executive officers and for administering the BGC Group, Inc. Long Term Incentive Plan (the “BGC Group Equity Plan” or the “Equity Plan”) and the BGC Group, Inc. Incentive Bonus Compensation Plan (the “BGC Group Incentive Plan” or the “Incentive Plan,” and together with the BGC Group Equity Plan, the “BGC Group Compensation Plans”). Prior to the Corporate Conversion, the BGC Partners Compensation Committee was responsible for reviewing and approving all compensation arrangements for our executive officers and for administering the BGC Partners, Inc. Eighth Amended and Restated Long Term Incentive Plan (the “BGC Partners Equity Plan”), the BGC Partners, Inc. Incentive Bonus Compensation Plan (the “BGC Partners Incentive Plan”) and the BGC Holdings Participation Plan (the “Participation Plan,” and together with the BGC Partners Equity Plan and BGC Partners Incentive Plan, the “BGC Partners Compensation Plans,” and the BGC Partners Compensation Plans together with the BGC Group Compensation Plans, the “BGC Compensation Plans”). See “Compensation Discussion and Analysis — Historical Events and their Impact on Our Compensation — Corporate Conversion Overview and Impact on BGC Group Compensation Structure” for more information on the impact of the Corporate Conversion on the BGC Partners Compensation Plans and the BGC Group Compensation Plans.
The Compensation Committee operates pursuant to a Compensation Committee Charter, which is available at www.bgcg.com/esg/governance under the heading “Independent Compensation Committee” or upon written request from BGC free of charge. The Committee held 14 meetings during the year ended December 31, 2023.
ESG Committee
Our Board also has an Environmental, Social and Governance (“ESG”) Committee. The members of the Committee are currently Dr. Bell and Messrs. Richards, Mbanefo and Addas, each of whom is an independent director. Mr. Mbanefo serves as chair. Mr. Laguerre joined the ESG Committee on January 25, 2023 and departed on June 30, 2023. Mr. Addas joined the ESG Committee on July 1, 2023. Each member of the Committee qualifies as “independent” in accordance with the published listing requirements of Nasdaq. The Committee is responsible for working with management to review ESG initiatives and procedures appropriate to the Company, to provide periodic reviews of ESG practices and policies, to review management’s current ESG strategy to ensure the Company engages in appropriate practices and technologies and to otherwise make recommendations on these matters to the full Board. The Committee operates pursuant to an Environmental, Social and Governance Committee Charter, which is available at www.bgcg.com/esg/governance under the heading “Independent Environmental, Social and Governance Committee,” or upon written request from us free of charge. The Committee held 5 meetings during the year ended December 31, 2023.
Nominating Process
All directors participate in the consideration of director nominees recommended for selection by a majority of the independent directors as defined by the published listing requirements of Nasdaq. Accordingly, our Board does not have a separate nominating committee or committee performing similar functions and does not have
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a nominating committee charter. Our Board believes that such participation of all directors is appropriate given the size of our Board and the level of participation of all 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 herein under the section below entitled “Communications with Our Board of Directors.”
Qualification Criteria and Diversity
Our Board 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, the Board considers as one factor among many the diversity of Board candidates, which may include diversity of gender, age and ethnicity. See “— Environmental, Social and Governance Policies and Practices (ESG/Sustainability) — Board Diversity Matrix.” The Board also considers diversity of skills and experience, as well as geographic background. 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, the Board generally values the broad business experience and independent business judgment in the financial services or in other fields of each member. Specifically, Dr. Bell is qualified based on her experience as a university academic manager, as an academic researcher and professor in economics, and as a former director of a fully electronic exchange. Mr. Richards is qualified based on his global business experience and his status as an audit committee financial expert. Messrs. Mbanefo and Addas are qualified as a result of their broad experience in the financial services industry, their general business experience, and their status as audit committee financial experts.
The director qualifications matrix below summarizes some of the key attributes that the Board has identified as particularly valuable to the effective oversight of the Company and the execution of the Company’s corporate strategy. This director qualifications matrix is not intended to be an exhaustive list of each of the director’s skills or contributions to the Board.
|
Skills and Experience |
Bell |
Lutnick |
Richards |
Mbanefo |
Addas |
|||||
|
Business Operations |
X |
X |
X |
X |
X |
|||||
|
Finance/Accounting |
X |
X |
X |
X |
X |
|||||
|
Risk Management |
X |
X |
X |
X |
||||||
|
Global Business |
X |
X |
X |
X |
X |
|||||
|
Human Capital Management |
X |
X |
X |
|||||||
|
M&A |
X |
X |
X |
|||||||
|
Other Public Company Board Service and Governance |
X |
X |
||||||||
|
Environmental |
X |
X |
X |
X |
X |
|||||
|
Global Financial Markets |
X |
X |
X |
X |
||||||
|
Brokerage |
X |
X |
X |
|||||||
|
Regulatory |
X |
X |
||||||||
|
Innovation and Strategy |
X |
X |
X |
X |
X |
|||||
|
Ethics and Integrity |
X |
X |
X |
X |
X |
|||||
|
Senior Leadership/CEO |
X |
X |
X |
X |
X |
|||||
|
Technology/Information Security |
X |
X |
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Chairman of the Board
Our Board has determined that in light of Mr. Lutnick’s control of the stockholder vote of our Company through his control of Cantor, having a separate Chairman of the Board and Chief Executive Officer (“CEO”) is not efficient or appropriate for our Company. Additionally, our Board does not have a lead independent director for the same reasons.
We believe that the Company and its stockholders are best served by having Mr. Lutnick, our Chief Executive Officer, serve as Chairman of the Board. Mr. Lutnick’s combined role as Chairman of the Board and Chief Executive Officer promotes unified leadership and direction for our Board 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 current 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 at the Company 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.
Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines that provide the framework for the governance of the Company. The Corporate Governance Guidelines address, among other things, the composition and structure of the Board, including membership criteria, independence standards and limits on other directorships, duties and responsibilities of directors, meeting procedures, committees of the Board, executive officer leadership development and stockholder engagement, including with respect to ESG matters. The Board reviews these principles and other aspects of governance annually. The Corporate Governance Guidelines are available at www.bgcg.com/esg/governance under the heading “Corporate Governance Guidelines” or upon written request from the Company free of charge.
Executive Sessions
In order to comply with Nasdaq rules, the Board has resolved that it will continue to 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.
Annual Meetings
The Corporate Governance Guidelines provide that each member of the Board is expected to attend Annual Meetings of stockholders of the Company. At the 2023 Annual Meeting, held on November 14, 2023, all of the Company’s directors were in attendance.
Communications with Our Board of Directors
Stockholders may contact any member of our Board, including to recommend a candidate for director, by addressing their correspondence to the director, c/o BGC Group, Inc., 499 Park Avenue, New York, NY 10022, 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 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 monitor and mitigate these risks.
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Our management 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 and information security, financial, legal/regulatory, credit, reputational and market) and the formulation of plans to mitigate their effects.
Our Board and the Audit Committee receive periodic reports regarding the Company’s cybersecurity and information security risks from the Chief Information Security Officer (“CISO”) and the Chief Information Officer (“CIO”). Material events and updates related to such risks are reported to the full Board and Audit Committee annually and on an ad hoc basis where warranted, including based on the level of materiality of any cybersecurity incidents as determined by the incident reporting and escalation process led by our CISO and CIO. Our processes are regularly evaluated by internal and external experts, with the results of those reviews reported to senior management and, where appropriate, the Board and Audit Committee.
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 our 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 trading, transactional, or similar risks for a portion of our businesses.
Succession Planning
From time to time, the Board discusses succession planning, including our consideration of succession strategy, the impact of any potential absence due to illness or leave of certain key executive officers or employees, as well as competing demands on the time of certain of our executive officers who also provide services to Cantor, Newmark, and various other ventures and investments sponsored by Cantor. Our Board also discusses from time to time, as part of its succession planning, engagement and encouragement of future business leaders and the process of introducing directors to leaders in our business lines. The Board may also discuss short-term succession in the event that certain of the senior executive officers should, on an interim or unexpected basis, become temporarily unable to fulfill their duties. The Board also considers hiring, promotion and retention of leaders required for the changing business landscape and to lead future business lines and may also encourage current leaders to develop expertise in additional areas or business lines. At the business and departmental levels, managers discuss and identify potential talent, opportunities for employee growth, successors, and future leaders.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICIES AND PRACTICES (ESG/SUSTAINABILITY)
We believe that our ESG policies and practices will create sustainable long-term value for BGC, our stockholders and other stakeholders, our clients and our employees while also helping us mitigate risks, reduce costs, protect brand value, and identify market opportunities.
Our Board-level ESG Committee provides oversight with respect to our ESG and sustainability policies and practices. The ESG Committee charter may be found on our website at www.bgcg.com/esg/governance under the heading “Independent Environmental, Social and Governance Committee.” With the Board’s and the ESG Committee’s oversight, we are embedding social and human capital, employment, environmental, sustainability, charitable and corporate governance policies and practices into our corporate strategy, compensation, disclosure, and goals to maintain and advance long-term stockholder value.
For more information about these topics, new and evolving initiatives and specific examples of policies and practices, see our website at www.bgcg.com/esg and “Additional ESG/Sustainability Information” below. Unless the context indicates otherwise, references in this ESG and sustainability section to our “employees” include our professionals who are independent contractors.
Our Fundamental Values
BGC is an organization built on strong values, employee engagement and ownership. At our core, we are committed to our employees by providing an opportunity to participate in our success. We believe that by cultivating a dynamic mix of people and ideas, we enrich the performance of our business, the experience of our increasingly diverse employee base and the dynamism of the communities in which we operate. We value hard work, innovation, superior client service, strong ethics and governance, equal opportunities, and philanthropy. These values are woven into our corporate culture. We believe these values foster sustainable, profitable growth. We strive to be exemplary corporate citizens and honor high ethical principles in our interactions with other businesses, our employees and the communities in which we live and work. We take corporate social responsibility and sustainability seriously: we want to contribute to the common good.
Human Capital and Social Policies and Practices
We are committed to our people, our stockholders and the community as a whole. We have a variety of programs to incentivize and support our employees, from employee ownership to comprehensive benefits and training. We have a passionate commitment to charity.
Attracting and Retaining the Best Talent
Our recruitment, promotion and compensation processes are designed to enable us to treat employees fairly, and our compensation decisions are differentiated based on performance. Our success depends on our ability to attract and retain talented, productive and skilled brokers and technologists and other employees to transact with our customers in a challenging and regulated environment that is experiencing ever-increasing competition for talent. We are investing in creating a diverse, inclusive and incentivized work environment where our people can deliver their best work every day.
Talent remains at the core of who we are as a company, and we remain committed to having a culture built around inclusion which we expect will increase the diversity of our workforce. We continue to work to enhance our ability to attract, develop and retain top talent with an emphasis on increasing opportunities for representation of traditionally underrepresented groups at all levels of the organization, encompassing people early in their careers and experienced personnel, and hiring, retention, and development initiatives with a focus on diversity and inclusion. Our goal is to build an even more successful organization that more closely reflects our client bases and the population at large.
Retention Measures
To facilitate the retention of our employees, we have maintained our flexible work arrangements, where appropriate, made compensation adjustments, and provided additional benefits, including a 401(k) match for many of our U.S. support employees.
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We have taken significant measures to develop a safe work environment for all employees which is conducive to work in our office locations, particularly for front-office brokers and revenue generating employees, subject to applicable state and local regulatory requirements. We have established a more flexible hybrid approach in many instances for non-revenue generating roles or for roles which are not office dependent, where appropriate. We continue to offer employee assistance programs and additional avenues for mental health consultation and wellness.
Performance-Based and Highly Retentive Compensation Structure
Many of our key brokers, salespeople, managers, technology professionals and other front office professionals have a substantial amount of their own capital invested in our business, aligning their interests with our stockholders. We believe that our emphasis on equity-based compensation promotes recruitment, motivation of our brokers and employees and alignment of interest with shareholders. All of our executives have equity stakes in the Company and generally receive grants of deferred equity as part of their compensation. We believe that by having investments in us, our executives and key brokers and other employees feel a sense of responsibility for the health and performance of our business and have a strong incentive to maximize our revenues and profitability. As of March 31, 2024, our employees, executive officers and directors owned approximately 8% of our equity. See the organizational chart under “Part I, Financial Information — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Our Organizational Structure” in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024, filed with the SEC on May 9, 2024, for more information.
We currently issue restricted stock units (“RSUs”) and, in the case of certain U.K. employees who held partnership units prior to the Corporate Conversion, have issued restricted stock awards (“RSAs”), as well as other forms of equity-based compensation, to provide liquidity to our employees, to align the interests of our employees and management with those of common stockholders, to help motivate and retain key employees, and to encourage a collaborative culture that drives cross-selling and revenue growth. These awards contain extended vesting schedules which we consider to be highly retentive and that vary based upon compensation level and role, which in most cases are largely dependent upon continued service.
Prior to the Corporate Conversion, we issued BGC Holdings limited partnership units, as well as other forms of unit-based compensation, including grants of exchangeability of limited partnership units into shares of BGC Class A common stock and grants of shares of our restricted stock, to motivate and retain key employees. These limited partnership units, which could be redeemed at any time for zero, were subject to forfeiture if the non-compete, confidentiality or non-solicit provisions of the Second Amended and Restated BGC Holdings Limited Partnership Agreement, as amended (the “Partnership Agreement” or the “BGC Holdings limited partnership agreement”), related to these awards were violated, were also extremely retentive. In addition, prior to the Corporate Conversion, we paid amounts due to a partner upon termination of service over a number of years in order to ensure compliance with partner obligations.
We also enter into various agreements with certain of our employees whereby these individuals receive loans which may be either wholly or in part repaid from proceeds of the sales of the employees’ shares of BGC Class A common stock (or, prior to the Corporate Conversion, agreements with partners in BGC Holdings whereby they received loans that could be repaid from the distributions that these individuals received on some or all of their limited partnership units) or may be forgiven over a period of time. We believe that these loans incentivize and promote retention of our employees. From time to time, the Company may also enter into agreements with employees to grant bonus and salary advances or other types of loans. These advances and loans are payable in the timeframes outlined in the underlying agreements.
Retentive Nature of Equity Awards
We consider our RSUs and RSAs to be highly retentive due to the vesting and forfeiture provisions relating to these awards, which have long-term vesting provisions conditioned upon, among other things, continued service through the vesting date.
Compensation Recovery/Clawback Policy
The Company has adopted a compensation recovery policy (“Clawback Policy”) for its executive officers effective as of December 1, 2023, with retroactive applicability to October 2, 2023. The Clawback Policy applies to compensation received by the Company’s executive officers that results from the attainment of a financial reporting
14
measure based on or derived from financial information (“Incentive-Based Compensation”). The Clawback Policy provides for recovery of Incentive-Based Compensation received by a covered person in the event of an accounting restatement due to material noncompliance with financial reporting requirements that is in excess of the Incentive-Based Compensation that such person would have received based upon the restated financial reporting measure. The Clawback Policy applies to Incentive-Based Compensation and not to compensation that is purely discretionary or based on subjective goals or goals unrelated to financial reporting measures.
Employee Diversity, Inclusion and Equal Opportunity
We believe that by cultivating a dynamic mix of people and ideas, we improve the performance of our business and enrich the experience of our employees. We are committed to equal opportunity, diversity and other policies and practices that seek to further our development of a diverse and inclusive workplace. We consider all qualified applicants for job openings and promotions without regard to race, color, religion or belief, sex, sexual orientation, gender identity or reassignment, national origin or ancestry, age, disability, service in the armed forces, pregnancy or maternity, familial status, marriage and civil partnership, genetic information or any other characteristic that has no bearing on the ability of employees to do their jobs well. We continue to develop initiatives to support these values.
U.K. Women in Finance Charter
In the U.K., we have signed up to HM Treasury’s Women in Finance Charter, which commits signatory firms to set percentage targets to increase the proportions of women in senior roles and publicly report on their progress in seeking to meet these targets. We have also rolled out organizational Core Values (Integrity, Commitment and Opportunity) and appointed Culture Champions in the U.K., as well as further initiatives which seek to embed these values and drive an enhanced culture across our workforce.
Employee Resource Groups
In order to incentivize and enable our employees to grow both professionally and personally, we build employee resource groups. A number of initiatives across our geographic regions are in place to promote our corporate values and foster greater diversity and inclusion. Examples include a range of early career work experiences and internship programs focusing on diverse talent, mentorship programs, and initiatives to foster women’s leadership.
The Network of Women — The Network of Women (“NOW”) program supports the recruitment, development and retention of women across our organization. NOW strives to offer a variety of opportunities and tools to help our employees make new professional contacts, find mentors, and develop their careers with the goal of advancing our business reputation. These events and activities also provide opportunities for our members to support one another through a valuable exchange of experiences, advice and best practices for career success.
As an organization dedicated to economic growth, opportunity, integrity, and commitment, we seek to empower women within BGC and within the communities we affect and serve as a business. The work of our long-standing NOW is a key driving force in accomplishing this goal.
The Rising Professionals League — The Rising Professionals League (“RPL”) was introduced to build upon the legacy of Cantor Fitzgerald by inspiring early career professionals to grow professionally and socially while promoting a cohesive environment and positively impacting the community. RPL strives to instill a strong sense of inclusion and belonging for early career professionals through a variety of opportunities that promote professional development and support the community through acts of thoughtful service.
Employee Engagement, Communication, Management and Leadership Training and Development
We are investing in our employees’ long-term development and engagement by delivering training and development programs and fostering a culture where our people can thrive and maximize their potential. We require annual regulatory and mandatory training in anti-money laundering and anti-crime, global sanctions, ethics, cyber-security and harassment prevention, among other topics. We also provide or support periodic job-specific and other developmental training for our employees so they can maximize their potential, as well as a tuition reimbursement program for eligible employees.
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We provide virtual and in-person leadership training to managers on topics including management effectiveness, communication skills, interview skills and delivering effective performance evaluations, managing diverse teams and other topics. This training is supplemented by a library of online training courses that managers and employees have access to on a number of topics to assist them in their career development and, if applicable, management skills. Our individual business lines offer ongoing learning and development opportunities tied to deepening the understanding of the subject matter expertise of their professionals. We also have intern and early career programs throughout the year in various parts of our business.
Our success depends on our employees’ understanding of how their work and engagement contribute to our strategy, culture, values, and regulatory environment. We use various channels to facilitate open and direct communication, including internal calls and meetings with employees, training and policy updates, employee resource groups such as NOW and RPL, and social and family outings and events. We have also rolled out organizational Core Values (Integrity, Commitment and Opportunity) appointed Culture Champions in our London office and implemented other initiatives which seek to embed these values and drive an enhanced culture across our workforce.
Charitable Policies and Practices
Beyond our own business, we have a passionate commitment to community service and charity. One way to give back to those communities is through volunteering and fundraising. At BGC, we have partnered with various organizations, such as Crossroads Community Services, NYC Parks, and Samaritan Village, to create opportunities for employees to volunteer and give back to local communities. We have also partnered with Cents Ability to launch a financial literacy program which benefits high school-level students in the New York metropolitan area.
Global Charity Day
Never has our relationship with our people and others been so evident as on September 11, 2001. Following the devastating attack on our headquarters at the World Trade Center on that day, our Chairman and CEO, Howard Lutnick, and our surviving employees and our affiliates created The Cantor Fitzgerald Relief Fund (“Cantor Relief Fund”) to take care of the families of the 658 colleagues and friends who perished on that day. We and our affiliates committed 25% of profits for five years and committed to pay for 10 years of healthcare for the families of those we lost.
Since 2001, that commitment to people has never faltered. Once a year, on the September 11th anniversary, BGC and its affiliates, in conjunction with the Cantor Relief Fund, commemorate these 658 friends and colleagues, and 61 Eurobrokers employees, who perished on September 11, 2001. We host an annual Charity Day, where we donate our global revenue to the Cantor Relief Fund, which distributes these funds to over 150 charities worldwide. Charity Day is a unique way of creating something positive and life-affirming from the tragedy. For more information on Charity Day, please visit www.bgcg.com/charity-day.
In 2021, we marked the 20-year anniversary of the loss of our colleagues with a 20th anniversary Charity Day event honoring our legacy of charitable and community work and reminding others to “Never forget; Give back.”
Additionally, BGC currently matches 100% of individual employee donations to the Cantor Relief Fund made in September of each year up to $5,000 per individual employee. Employees have the option of designating a bona fide charity as the beneficiary of the donation and the match.
Disaster Relief and Volunteer Time Off
We also support victims of disasters because we were there once and understand that feeling all too well. Over the years, Cantor Relief Fund volunteers, along with some of our employee volunteers, have supported schools and communities devastated by natural disasters. Our volunteers often travel to those in need. For more information on the Cantor Relief Fund and its mission to deliver financial aid to people facing disasters around the world, please visit www.cantorrelief.org.
As part of these values in action, we offer a Volunteer Time Off program to support individual employee volunteerism in the communities in which they work and live. All full and part-time regular employees are eligible to utilize one paid workday (whole day or two half-days) each calendar year to volunteer with bona fide charitable organizations of their choice.
Additional charitable initiatives are in effect from time to time.
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Our Environmental Focus and Environmental Markets
We are focused on the environment and recognize the importance of treating our natural resources with the greatest respect so that they are available to future generations. As a responsible business operating within financial services, we are actively aware of climate change and other major issues affecting the environment. Our philosophy is that long-term change in the way in which we use energy, and our collective impact on the environment, cannot happen without the involvement of the world’s capital markets.
Sustainable Business Practices
We aim to be a leading broker for the transition to a green economy, and we believe BGC Environmental Brokerage Services is a leader in the world’s environmental and green energy markets. Our Environmental Brokerage Services business, established in 2011, provides expert innovative carbon offset solutions and advice to the world’s green energy markets, from transactions and financing to technology and consulting. For decades, we have helped clients worldwide navigate complex financial requirements in order to achieve their environmental initiatives, thereby supporting our clients’ efforts to meet their emission reduction goals through the provision of brokerage services.
In 2023, we announced the launch of our Weather Derivatives business, expanding BGC’s brokerage business into the weather and climate space. The Weather Derivatives business helps market participants analyze climate-related risks and mitigate their financial exposure. We are providing liquidity to these increasingly important markets as the role of weather and climate change impacts the way risk is managed. The launch of this business highlights BGC’s commitment to expand and explore new opportunities across the global energy and commodities space.
For more information on BGC Environmental Brokerage Services, please visit www.bgcebs.com.
Workplace Strategies
In our workplaces, we are studying how to make our own contribution to state, national and global environmental initiatives and require the same of our vendors and suppliers when doing business with us. As part of this, we are considering how to minimize our future carbon footprint when planning office renovations and will continue to focus our attention in the near term on methods of reducing our greenhouse gas emissions, increasing use of renewable energy, conserving water, and reducing waste generation.
BGC supports sustainable business practices and is focused on the steps necessary to continue developing our sustainability program internally as we focus on our own energy usage. We believe it is our responsibility to improve energy efficiency and reduce energy consumption to protect the environment through continuous improvement of our energy use practices and increased scrutiny on the energy efficiency of the buildings we utilize for our space. We intend to continue to work on these initiatives.
For more information about these initiatives as they evolve, visit our website at www.bgcg.com/esg/environmental.
Corporate Governance Policies and Practices
Our commitment to good corporate governance policies and practices is demonstrated by our Corporate Governance Guidelines, our rigorous Code of Ethics, the charters of the Audit, Compensation and ESG Committees of our Board, our Policy on Hedging (“Hedging Policy”), our pre-clearance procedures for trades by employees in our securities, our Clawback Policy, and our other corporate governance policies and practices. Some highlights of our corporate governance policies and practices include the following:
• Independence of a substantial majority of the members of the Board;
• Only independent directors serve on each committee;
• Annual independence review of independent outside directors;
• Diverse array of personal characteristics and professional experience of the Board, with independent directors (and Audit and Compensation Committees) consisting of 25% women and 25% persons identifying as ethnically diverse; Audit Committee is chaired by an ethnically diverse independent director and Compensation Committee is chaired by a female independent director;
17
• Consideration of factors including diversity of gender, age, ethnicity, skills, experience and geographic background in considering director candidates;
• Strict ethical and other criteria for membership on the Board;
• Annual election of each member of the Board — we do not have a classified (“staggered”) Board;
• Annual evaluation of the performance of our Chief Executive Officer;
• Procedures for establishing and disseminating agendas and materials for meetings of the Board and its committees in advance;
• Periodic executive sessions of independent directors;
• Detailed processes and review of all related party transactions and required approval by independent directors;
• Access of the Board and its committees to management and ability to retain outside independent advisors;
• Prohibitions against trading while in possession of material, non-public information;
• Prohibitions against hedging;
• Clawback Policy for Incentive-Based Compensation;
• The ability of our Board to accept the required resignation of a director who fails to obtain a majority vote for election;
• No stockholder rights plan or other “poison pill” or similar anti-takeover device;
• A prohibition on personal loans to directors and executive officers;
• Requirement for directors to inform the Board of changes in their principal job responsibilities;
• Limits on the service of directors and executive officers on other public company boards;
• Director orientation and continuing education;
• Annual self-assessments of the performance of our Board and its committees and individual directors;
• Annual review of our corporate governance policies and practices;
• Strict procedures and enforcement of our ethical standards and our conflict of interest policies, including our robust Whistleblower Policy — completely confidential and with a whistleblower hotline available 24/7;
• Diversified mix of cash and short-and long-term equity awards designed to be highly retentive and risk appropriate, and to align the interests of our executive officers with those of our stockholders;
• Executive officers holding much of their personal net worth in our and our affiliates’ equity;
• Robust global annual review and oversight of Code of Ethics responses;
• Succession planning and management development of executive officers and potential senior managers having significant responsibility for business areas;
• Annual stockholder say-on-pay votes;
• Annual ratification of the appointment of our independent registered public accounting firm; and
• Our Board-level ESG Committee.
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Business Continuity and Resiliency
We have begun implementing sustainability policies and practices to protect the continuity of our businesses and operations to maintain and advance long-term stockholder value. These policies and practices include disaster recovery and crisis management protocols to minimize the impact of health emergencies, including global pandemics, and natural or other disasters, such as Hurricane Sandy and the September 11, 2001 terrorist attacks, on our operations. We maintain three concurrent data centers in the United States and three data centers in the United Kingdom, providing backup of our computer systems and capacity for our employees to work remotely during crises. These policies and practices have enabled our employees to maintain a high level of performance while working in offices or remotely during the COVID-19 pandemic or other global events in compliance with relevant rules and regulations in applicable jurisdictions and in preservation of the health, safety and welfare of our workforce.
Board Diversity Matrix
The table below provides certain highlights of the composition of our Board members as of August 2, 2024. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Listing Rule 5605(f).
|
Board Size: |
||
|
Total Number of Directors |
5 |
|
|
Gender: |
Male |
Female |
Non-Binary |
Gender |
||||
|
Number of directors based on gender identity |
4 |
1 |
— |
— |
||||
|
Number of directors who identify in any of the categories below: |
||||||||
|
African American or Black |
— |
— |
— |
— |
||||
|
Alaskan Native or American Indian |
— |
— |
— |
— |
||||
|
Asian |
— |
— |
— |
— |
||||
|
Hispanic or Latinx |
— |
— |
— |
— |
||||
|
Native Hawaiian or Pacific Islander |
— |
— |
— |
— |
||||
|
White |
3 |
1 |
— |
— |
||||
|
Two or More Races or Ethnicities |
1 |
— |
— |
— |
||||
|
LGBTQ+ |
— |
|||||||
|
Undisclosed |
— |
|||||||
Whistleblower Complaint and Investigation Policy
We have a policy regarding reporting of complaints about accounting, internal controls, employment and labor practices, auditing matters, or questionable financial practices. The policy is designed to provide a channel of communication for employees and others who have concerns about our conduct or any of our directors or employees. Complaints are treated seriously and handled expeditiously. Any person may submit a complaint to our independent outside law firm through a dedicated hotline and email account available 24 hours a day, 7 days a week. Complaints that are accounting or financial in nature (“Accounting Complaints”) will be handled by the chair of our Audit Committee and/or by our General Counsel, Corporate Secretary or designee.
Employees submitting an Accounting Complaint need not provide their names or other personal information, and reasonable efforts will be used to conduct the investigation that follows from an Accounting Complaint from an employee in a manner that protects the confidentiality and anonymity of the employee submitting the complaint.
Employees are reminded of the Whistleblower Policy at least annually and information is provided in more than a dozen local languages. We honor a culture of investigation, confidentiality and non-retaliation. Persons submitting complaints in good faith will not be subject to retaliation and the policy does not prohibit other actions protected under applicable law. Our Whistleblower Policy is publicly available on our website at www.bgcg.com/esg/governance under the heading “Whistleblower Complaint and Investigation Policy.”
19
Code of Business Conduct and Ethics
Our corporate values and strong policies and procedures regarding ethics, conflicts of interests, related party transactions and similar matters are contained in our Code of Ethics. This commitment applies to members of our Board, executive officers, other officers and our other covered employees globally. The Code of Ethics and its training modules are circulated in multiple local languages, and training and certifications are conducted annually worldwide using our online training platform. Annual written certifications are required. Potential violations and disclosures globally are reviewed annually by executive management and escalated to the Audit Committee. Director and executive officer disclosures are reviewed by the Audit Committee on an annual basis. The Code of Ethics is available on our website at www.bgcg.com/esg/governance/ under the heading “Code of Business Conduct and Ethics.”
Compliance and Anti-Financial Crime Program Policy Statement
We are committed globally to our policy regarding anti-money laundering and anti-financial crime, including anti-bribery and corruption, counter-terrorism financing, anti-fraud and anti-market abuse. We are also committed to compliance and training regarding all relevant laws, rules, and regulations designed to combat bribery and corruption. Further information on this policy can be found on our website at the following link: www.bgcg.com/esg/governance under the heading “Compliance and Anti-Financial Crime Program Policy Statement.”
In addition, our Code of Ethics provides that we will not enter into a business relationship or engage in an activity if we know or have reasonable grounds to suspect that a business relationship or activity is connected with or facilitates bribery or corruption. It is the responsibility of each person covered under the Code of Ethics to comply with applicable anti-bribery and corruption laws. Persons covered under the Code of Ethics are required to report any suspicions of bribery or corruption to the Compliance Officer or, as appropriate, to the Audit Committee or the Board, or in accordance with our Whistleblower Policy. For more information on our Code of Ethics and Whistleblower Policy, see the section entitled “Code of Ethics and Whistleblower Procedures” herein.
Global Anti-Bribery and Corruption Policy Statement
We have a specific global policy to combat bribery and corruption through a clear set of policies and procedures outlining anti-bribery and corruption standards, procedures and annual employee training. The policy specifically defines “Bribery and Corruption” and provides for management and Board oversight. Further information on this policy can be found on our website at www.bgcg.com/esg/governance under the heading “Global Anti-Bribery and Corruption Policy Statement.”
Annual Risk Evaluation and Board-Level Risk Oversight
The Board of Directors meets at least annually with our senior risk officer to review and evaluate our enterprise risk framework, risk management policies and practices, credit and risk mitigation policies and practices, and other related issues.
Focus on Our Internal Control Environment
As described more fully in its charter, the primary function of the Audit Committee is to assist the Board of Directors in its general oversight of the Company’s financial reporting, internal control over financial reporting and audit process. Management is responsible for the preparation, presentation and integrity of the Company’s financial statements; accounting and financial reporting principles; internal control over financial reporting; disclosure controls; and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. In particular, our overall control environment is a focal point for our management, the Audit Committee and the Board. With this focus and with the oversight of the Audit Committee and the Board, management has taken steps to further enhance our overall control environment.
Cybersecurity Program Policy Statement
We are committed to combating the global threat of cyberattacks and to securing our business through our information security programs to operate with confidence, through a deep understanding of cybersecurity risks, vulnerabilities, mitigations, and threats. These processes are managed by our cybersecurity team headed by our CISO and supported by our business continuity teams. We conduct periodic internal and external vulnerability
20
audits and assessments and penetration testing and provide periodic cybersecurity training to employees. Further information on these processes can be found on our website at www.bgcg.com/esg/governance under the heading “Cybersecurity Program Policy Statement.” Further information on our cybersecurity risk management strategy and the role of our Board and management in cybersecurity matters can be found in Part I, Item 1C, Cybersecurity of the 2023 Form 10-K.
Data Privacy Program Policy Statement
We have a global data privacy policy statement applicable to all subsidiaries and business lines. We are committed to conducting our business in line with the right to privacy set forth in the Universal Declaration of Human Rights (Article 12). As such, we are committed to handling personal data responsibly and recognize the privacy rights of persons involved in our business dealings. Our policy provides a mechanism for data subjects to raise concerns about personal data and privacy as well as a right of access to personal information, rights to correct or amend such information and the right to request deletion of such personal information. Further information on this program can be found on our website at www.bgcg.com/esg/governance under the heading “Data Privacy Program Policy Statement.”
Hedging Policy and Pre-Clearance Procedures
We have a Hedging Policy with respect to equity securities issued by BGC (collectively, “Company Equity Securities”). In this regard, we prohibit our directors, officers, and employees, including leased employees, brokers and independent contractors, from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engaging in transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of Company Equity Securities held by such persons, except with the explicit approval of our Audit Committee or its designees. For avoidance of doubt, Cantor and its affiliated entities or any securities issued by such entities other than the Company are not covered under the Hedging Policy.
Additionally, we have pre-clearance procedures and processes for trades in Company Equity Securities that all our directors, executive officers, and other designated insiders and employees, including leased employees, brokers and independent contractors must follow. Under these procedures and processes, such persons’ trades are subject to pre-clearance through our legal and compliance department. Directors and executive officers are also required to advise management in advance of entering into any SEC Rule 10b5-1 trading plans or similar plans in accordance with applicable law.
Additional ESG/Sustainability Information
To learn more about our policies and practices and our continuing efforts related to Human Capital Management, ESG and sustainability matters, please refer to the ESG and sustainability section of our website at www.bgcg.com/esg and to our periodic reports filed under the Exchange Act for further information. You may also find our Corporate Governance Guidelines, Code of Ethics, the charters of the committees of our Board of Directors, Hedging Policy, Environmental Policy, information about our charitable initiatives and other ESG and sustainability policies and practices on our website.
The information contained on, or that may be accessed through, our websites or other websites referenced herein, is not part of, and not incorporated into, this document.
21
STOCKHOLDER ENGAGEMENT
Our Board and management value the opportunity to engage with our stockholders and gain insight year-round on their views on a broad range of topics, including our strategy, financial performance, executive compensation, corporate governance, human capital management, including diversity and inclusion, and environmental and social goals. Our Board receives reporting on feedback from investors and stockholder voting results. In addition, our management routinely engages with investors at conferences and other forums. We also speak with proxy advisors to discuss, and receive feedback on, our governance practices and executive compensation programs. Feedback from investors informs our Board’s ongoing review of governance and compensation matters.
In recent years, we have also enhanced our engagement strategy through:
• Information available on our website including SEC alerts, more detailed financial and operational disclosures in our investor presentations and supplemental Excel tables; and
• Investor meetings, analyst and investor days, and conferences, including over 300 investor and analyst interactions in 2023.
In 2023 we reached out to institutions who collectively represented the majority of our shares held by active investors. These interactions covered topics including industry trends, business trends and strategy, capital allocation, geographic and business line expansion, our recruitment and retention policies, key drivers of our growth, ESG, corporate governance matters, board composition and diversity, our executive compensation program, and ways to enhance our disclosures. We also periodically engage a third-party research firm to conduct anonymous surveys of our top institutional owners and the broader investment community to solicit candid feedback on these and other issues.
We look forward to further expanding our communication with stockholders and will continue to consider their views and perspectives, as appropriate, in making governance decisions and establishing strategic direction for the Company going forward.
22
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Our executive officers are appointed annually by our Board and serve at the discretion of our Board. In addition to Mr. Lutnick, our Chief Executive Officer, who also serves as a member of the Board, our executive officers, their respective ages and positions and certain other information with respect to each of them are as follows:
Sean A. Windeatt, 50, has been our, and prior to the Corporate Conversion, BGC Partners’, Chief Operating Officer since January 2009, and was BGC Partners’ Interim Chief Financial Officer from December 2018 until December 31, 2019. Mr. Windeatt was Executive Managing Director and Vice President of BGC Partners from 2007 to 2009 and served as a Director of Cantor Fitzgerald International from 2004 to 2007. Mr. Windeatt also provides services to our operating partnerships and subsidiaries. Mr. Windeatt also served as a Business Manager and member of the finance department of Cantor Fitzgerald International from 1997 to 2003.
Jason W. Hauf, 55, has been our, and prior to the Corporate Conversion, BGC Partners’, Chief Financial Officer since June 6, 2022. Prior to his time at the Company, Mr. Hauf was at Exos Technology and Financial Partners, a private firm specializing in financial services for B2B institutional finance starting in 2017, and where he served as Managing Director and Chief Financial Officer from 2018 to 2022. Prior to his time at Exos, Mr. Hauf was Managing Director and Chief Financial Officer at Royal Bank of Scotland, Corporate and Institutional Banking Division, Americas and Vice President of AIG Financial Products Corp. He began his career at Coopers & Lybrand, where he was a Manager. Mr. Hauf holds a B.S. in Accounting from the University of Delaware.
Stephen M. Merkel, 66, has been our, and prior to the Corporate Conversion, BGC Partners’, Executive Vice President and General Counsel since September 2001 and was BGC Partners’ Senior Vice President, General Counsel and Secretary from June 1999 to September 2001. Mr. Merkel was BGC Partners’ Secretary from September 2001 until January 2019. Mr. Merkel served as a director of BGC Partners from September 2001 until October 2004. Mr. Merkel has been Executive Managing Director, General Counsel and Secretary of Cantor since December 2000 and was Senior Vice President, General Counsel and Secretary of Cantor from May 1993 to December 2000. He joined Cantor in 1993 and oversees all legal and compliance functions. Mr. Merkel has been Executive Vice President, Chief Legal Officer of Newmark since January 2019 and was its Corporate Secretary from December 2017 to January 2019. Mr. Merkel also holds offices at and provides services to various other affiliates of Cantor and provides services to our operating partnerships and subsidiaries, including BGC U.S. OpCo, BGC Global OpCo and Newmark OpCo. Mr. Merkel also served as the Executive Vice President, General Counsel and Secretary of CF Finance Acquisition Corp. from October 2015 until consummation of its business combination with GCM Grosvenor in November 2020. Prior to joining Cantor, Mr. Merkel was Vice President and Assistant General Counsel at Goldman Sachs & Co. From September 1985 to January 1990, Mr. Merkel was an associate with the law firm of Paul, Weiss, Rifkind, Wharton & Garrison. Mr. Merkel is a founding board member of the Wholesale Markets Brokers’ Association, Americas. Mr. Merkel graduated with a B.A. magna cum laude from the University of Pennsylvania and received his law degree from the University of Michigan School of Law.
23
EXECUTIVE COMPENSATION INFORMATION
HISTORICAL EVENTS AND THEIR IMPACT ON OUR COMPENSATION
Corporate Conversion from BGC Partners On July 1, 2023
EXPLANATORY NOTE RELATING TO OUR CORPORATE CONVERSION FROM BGC PARTNERS ON JULY 1, 2023
On July 1, 2023, BGC Group, BGC Partners, and BGC Holdings, along with certain other entities, completed the Corporate Conversion. To the extent statements in Compensation Discussion and Analysis and Executive Compensation, below, relate to compensation philosophy and to awards made under the Incentive Plan and Equity Plan prior to the closing of the Corporate Conversion, such statements refer to BGC Partners. To the extent statements relate to compensation philosophy and to awards under the Incentive Plan and Equity Plan following the closing of the Corporate Conversion and on a going forward basis, and to awards made under the BGC Group Incentive Plan and BGC Group Equity Plan, such statements refer to BGC Group.
Corporate Conversion Overview and Impact on BGC Group Compensation Structure
On July 1, 2023, BGC Partners completed the Corporate Conversion to a Full C-Corporation in order to reorganize and simplify its organizational structure. As a result of the Corporate Conversion, BGC Group became the public holding company for, and successor to, BGC Partners, and its Class A common stock began trading on Nasdaq, in place of BGC Partners’ Class A common stock, under the ticker symbol “BGC.” Upon completion of the Corporate Conversion, the former stockholders of BGC Partners and the former limited partners of BGC Holdings now participate in the economics of the BGC businesses through BGC Group. The Corporate Conversion was approved by the Board of Directors of BGC Partners on the unanimous recommendation of the independent Joint Committee of the Board of Directors of BGC Partners, composed of the Audit Committee and Compensation Committee sitting jointly, and by the stockholders of BGC Partners on June 27, 2023.
In connection with the Corporate Conversion, our compensation structure was changed from a structure based on cash and partnership units in BGC Holdings to a structure based on cash and equity awards in BGC Group. Upon the closing of the Corporate Conversion, the Participation Plan was terminated and the BGC Holdings limited partnership agreement was terminated. Going forward, the BGC Group Equity Plan became the sole vehicle for granting equity-based incentive compensation. Accordingly, we no longer use partnership units in BGC Holdings to compensate our employees and other service providers, and all of our equity-based compensation awards are granted under the BGC Group Equity Plan, including those awarded in payment of bonuses under the BGC Group Incentive Plan.
Upon the close of the Corporate Conversion, all equity-based awards and cash tax account awards (“Tax Accounts”) outstanding under the BGC Partners Equity Plan were assumed by BGC Group as awards under the BGC Group Equity Plan with the same terms and conditions that were applicable prior to the Corporate Conversion. All outstanding BGC Holdings limited partnership units, including those held by our executive officers as set forth below, were substituted with awards under the BGC Group Equity Plan, with terms and conditions as set forth in the Corporate Conversion Agreement. The details of these assumed and substitute awards are set forth below under “— Compensation Actions Taken in Connection with the Corporate Conversion.”
See “Certain Relationships and Related Transactions, and Director Independence — Corporate Conversion” for additional information on the Corporate Conversion.
BGC Group Equity Plan Following Corporate Conversion
In connection with the Corporate Conversion, BGC Group assumed and adopted the BGC Partners Equity Plan, as amended and restated as the BGC Group Equity Plan, to effectuate the assumption of or substitution for certain outstanding awards in the Corporate Conversion, as well as to grant equity-based and cash compensation following the Corporate Conversion to advance the interests of BGC Group and its stockholders by providing a means to attract, retain, motivate and reward directors, officers, employees, consultants and other service providers of BGC Group. The BGC Group Equity Plan was approved by the BGC Partners board of directors and the compensation committee of the BGC Partners board of directors, as well as the shareholders of BGC Partners on June 27, 2023. See “Compensation Discussion and Analysis — Equity Plan Awards — BGC Group Equity Plan” for more information on the BGC Group Equity Plan.
24
BGC Group Incentive Plan, BGC Group Deferral Plan and BGC Holdings Participation Plan Following the Corporate Conversion
Following the Corporate Conversion, BGC Group assumed and adopted the BGC Partners Incentive Plan, as amended and restated as the BGC Group Incentive Plan, and the BGC Partners Deferral Plan, as amended and restated as the BGC Group Deferral Plan, each providing a means to attract, retain, motivate and reward employees, consultants and other service providers of BGC Group going forward. See “Compensation Discussion and Analysis — Incentive Plan Awards” for more information regarding our Incentive Plan.
Following the Corporate Conversion, the BGC Holdings limited partnership agreement was terminated, and the Participation Plan, which was in effect prior to the Corporate Conversion, was terminated.
Standing Policy and Redemptions and Exchanges for Messrs. Merkel and Lutnick
In December 2010, as amended in 2013 and in 2017, the Audit Committee and the Compensation Committee approved a standing policy that gave Mr. Lutnick the same right, subject to certain conditions, to accept or waive opportunities offered to other executive officers to monetize or otherwise provide liquidity with respect to some or all of their limited partnership units of BGC Holdings or to accelerate the lapse of or eliminate any restrictions on equity awards, and provided generally that Mr. Lutnick would be treated no less favorably than, and in proportion to, any other executive officer with respect to the change, right or modification of partnership or equity awards. Mr. Lutnick historically has elected to waive his right to participate in most such opportunities under the standing policy.
In connection with the Corporate Conversion, on May 18, 2023 the BGC Partners compensation committee approved the redemption of all of the non-exchangeable BGC Holdings units held by Mr. Stephen Merkel at that time. In connection with the Corporate Conversion and, as a result of the monetization event for Mr. Merkel, on May 18, 2023 Mr. Lutnick elected to exercise in full his monetization rights regarding his non-exchangeable BGC Holdings units under the standing policy, which he had previously waived in prior years, and to exchange his exchangeable BGC Holdings units for shares of Class A common stock. As a result of the various transactions on May 18, 2023, on that date, Messrs. Merkel and Lutnick no longer held any limited partnership units of BGC Holdings. See “Compensation Discussion and Analysis — Standing Policy for Mr. Lutnick” for more information.
On July 1, 2023, in connection with the Corporate Conversion, the Board of Directors and Audit Committee of BGC Group approved the assumption and adoption of the standing policy, as amended to apply to all equity-related awards that may be granted to Mr. Lutnick by BGC Group under the BGC Group Equity Plan. See “Compensation Discussion and Analysis — Standing Policy for Mr. Lutnick” for more information.
25
Compensation Actions Taken in Connection with the Corporate Conversion
In connection with the Corporate Conversion, certain of the following executive officers, the executive officers as a group, the non-executive directors as a group, and the non-executive officer employees and service providers as a group of BGC Partners held outstanding awards (other than exchangeable rights) under the BGC Partners Equity Plan or non-exchangeable partnership unit awards under the Participation Plan that were assumed or replaced by substitute awards under the BGC Group Equity Plan as a result of the Corporate Conversion. The assumed and substitute awards issued under the BGC Group Equity Plan at the closing of the Corporate Conversion are detailed in the table below.
|
Name and Position |
Assumed |
Assumed |
Substitute |
Substitute |
Substitute Tax |
||||||||||
|
Mr. Lutnick, Chief Executive Officer and Chairman(1) |
— |
|
— |
— |
|
— |
|
$ |
— |
|
|||||
|
Mr. Merkel, Executive Vice President and General Counsel(1) |
— |
|
— |
— |
|
— |
|
$ |
— |
|
|||||
|
Mr. Windeatt, Chief Operating Officer |
— |
|
— |
930,547 |
(6) |
398,439 |
(7) |
$ |
1,292,575 |
(8) |
|||||
|
Mr. Hauf, Chief Financial Officer |
— |
|
— |
43,900 |
(9) |
— |
|
$ |
156,249 |
|
|||||
|
Executive Group |
— |
|
— |
974,447 |
|
398,439 |
|
$ |
1,448,824 |
(10) |
|||||
|
Non-Executive Director Group |
62,193 |
(11) |
— |
— |
|
— |
|
$ |
— |
|
|||||
|
Non-Executive Officer Employee and Service Provider Group |
12,224,374 |
|
4,982,463 |
46,830,010 |
|
38,211,794 |
|
$ |
121,670,595 |
|
|||||
|
Total |
12,286,567 |
|
4,982,463 |
47,804,457 |
|
38,610,233 |
|
$ |
123,119,419 |
|
|||||
____________
(1) As a result of the May 18, 2023 redemption and exchange transactions described under “Compensation Discussion and Analysis — Standing Policy for Mr. Lutnick,” all of the outstanding partnership units held by Messrs. Lutnick and Merkel were redeemed on that date, and neither held any partnership units at the closing of the Corporate Conversion.
(2) Assumed RSUs and RSAs consist of BGC Group Equity Plan awards relating to BGC Partners RSUs and RSAs that were outstanding immediately prior to closing of the Corporate Conversion. In each case, such assumed BGC Group RSUs and RSAs have the same terms and conditions as were applicable to the BGC Partners awards to which they relate.
(3) Substitute RSUs consist of BGC Group Equity Plan awards that replaced certain non-exchangeable BGC Holdings limited partnership units, including Grant Units, HD-Units, REUs, RPUs, PSUs, PSIs, PSEs, NPSU-CVs, and NPSUs. The terms of the substitute RSUs vary depending upon the type of limited partnership unit that they replaced, in accordance with the terms of the Corporate Conversion Agreement.
(4) Substitute RSAs consist of BGC Group Equity Plan awards that replaced certain non-exchangeable BGC Holdings limited partnership units, including LPU-NEWs, LPUs, NLPU-CVs, NLPU-NEWs, NLPUs, PLPUs, and NPLPUs. The terms of the substitute RSAs vary depending upon the type of limited partnership unit that they replaced, in accordance with the terms of the Corporate Conversion Agreement.
(5) Substitute cash Tax Account awards consist of BGC Group Equity Plan awards that replaced certain non-exchangeable BGC Holdings Preferred Units, including PPSUs, PPSIs, PPSEs, PREUs, PRPUs, NPPSU-CVs, and NPPSUs. The terms of the substitute cash Tax Account awards vary depending upon the type of Preferred Unit that they replaced, in accordance with the terms of the Corporate Conversion Agreement.
(6) Consists of (i) 673,570 RSUs that will vest on July 1, 2033, provided that Mr. Windeatt remains employed through such vesting date, and (ii) 256,977 RSUs that will vest on July 1, 2033, provided that Mr. Windeatt remains employed through such vesting date, and contingent upon BGC Group and its affiliates generating at least $5 million in revenue for the quarter in which the vesting occurs. See “Compensation Discussion and Analysis —2023 Actions Regarding Outstanding Awards” for discussion of the accelerated vesting of certain of these RSUs on July 12, 2023.
(7) Consists of (i) 239,990 RSAs that will vest on April 1, 2025, provided that Mr. Windeatt remains employed through such vesting date, and subject to other obligations as set forth in the applicable award agreement, and (ii) 158,449 RSAs that vested on April 1, 2024.
(8) These substitute cash Tax Account awards relate to the substitute RSUs described in footnote (6) and are settled for cash to cover withholding taxes paid when the related RSUs vest. See “Compensation Discussion and Analysis —2023 Actions Regarding Outstanding Awards” for discussion of the accelerated vesting of certain of these substitute Tax Account awards on July 12, 2023.
(9) Consists of (i) 6,808 RSUs which will vest on July 1, 2033, provided that Mr. Hauf remains employed through such vesting date, and contingent upon BGC Group and its affiliates generating at least $5 million in revenue for the quarter in which the vesting occurs, and (ii) 37,092 RSUs which will vest on July 1, 2033, provided that Mr. Hauf remains employed through such vesting date.
26
(10) These substitute cash Tax Account awards relate to the substitute RSUs described in footnote (9) and will be settled for cash to cover withholding taxes paid when the related RSUs vest.
(11) Consists of assumed RSUs held by Dr. Bell and Messrs. Mbanefo and Richards. Mr. Laguerre departed the BGC Partners board immediately before the closing of the Corporate Conversion. In connection with his departure from the BGC Partners board, the vesting of Mr. Laguerre’s 16,335 RSUs was accelerated immediately before the closing of the Corporate Conversion.
Assumption of Employment Agreements and Compensation Arrangements Following the Corporate Conversion
On July 1, 2023, in connection with BGC Group as successor entity of BGC Partners following the Corporate Conversion, the Board of Directors and Audit Committee of BGC Group approved the assumption of BGC Partners’ previously approved employment agreements, change of control agreements, retention agreements, and other arrangement, with such modifications thereto as necessary to reflect the Corporate Conversion. Please refer to “Compensation Discussion and Analysis — Change in Control Agreements,” “Executive Compensation — Potential Payments Upon Change in Control — Change in Control Agreements” and “Executive Compensation — Potential Payments Upon Change in Control — Employment Agreements and Deeds of Adherence” for more information.
Historical Discretionary and Retentive Partnership Opportunities Prior to the Corporate Conversion
Prior to the Corporate Conversion, to incentivize executive officers and hold them accountable to stockholders, our Compensation Committee used a variety of highly retentive partnership units issued under the Participation Plan. The total number of BGC Holdings limited partnership units issuable under the Participation Plan was determined from time to time by our Board, provided that exchange rights or cash settlement awards relating to units were only granted pursuant to other stock-based awards granted under our Equity Plan. These partnership awards were granted as a tax-efficient, strongly retentive, and risk-appropriate means to align the interests of the executive officers with those of our long-term stockholders. For executive officers, these grants included NPSUs, along with PSUs and PPSUs for our U.S.-based executives and LPUs and PLPUs for our U.K.-based executives who have executed deeds of adherence to BGC Services (Holdings) LLP, a U.K. limited liability partnership (the “U.K. Partnership”). The Committee believed that the features of the units, coupled with the discretion of the Committee to grant the right of partnership distributions, exchangeability into shares of Class A common stock and various liquidity opportunities, created effective incentive awards for our executives. Until such units were made exchangeable into a share of Class A common stock or exchanged for cash or, in some cases, made exchangeable into another partnership unit with a capital account such as an HDU, at the discretion of the Committee, these units were generally forfeitable for any reason, subject to certain exceptions. We believe this incentivized performance given that except for certain units purchased by the partners, these partnership units were able to be redeemed for zero by the Committee at its discretion while in non-exchangeable form.
NPSUs had no value for accounting or other purposes at the time of grant, did not participate in quarterly partnership distributions, were not allocated any items of profit or loss and were not exchangeable into shares of Class A common stock. Grants of NPSU awards were highly discretionary and provided additional flexibility for the Compensation Committee to determine the timing and circumstances of replacing such units with units that earn partnership distributions and any rights to exchange such units for shares of Class A common stock or cash. NPSUs have generally been granted to our executives in the event of business developments, changing compensation requirements or other factors, or in connection with execution of long-term employment arrangements.
From time to time, our Compensation Committee replaced an NPSU with a non-exchangeable PSU or HDU in the U.S. or an LPU in the U.K. A non-exchangeable PSU may also have been replaced with a non-exchangeable HDU. A non-exchangeable PSU that has been granted the right to convert into a non-exchangeable HDU is referred to as a “PSU-H,” and a non-exchangeable PPSU that has been granted the right to be converted into cash upon conversion of the underlying PSU-H into an HDU is referred to as a “PPSU-H.” PSUs/LPUs participated in quarterly partnership distributions, but otherwise had no value for accounting purposes and were not exchangeable into shares of Class A common stock until such exchange rights were granted by the Committee. HDUs had a stated capital account and were valued based upon such capital account which is initially based on the closing trading price of Class A common stock at the time the HDU right was granted. HDUs participated in quarterly partnership distributions and were not exchangeable into shares of Class A common stock unless such exchange rights were granted by the Committee.
27
Executive officers also received PPSUs in the U.S. or PLPUs in the U.K. These units were preferred limited partnership units awarded to holders of, or contemporaneously with the grant of, PSUs or LPUs, respectively. PPSUs were entitled to a preferred distribution of net profits of BGC Holdings but otherwise were not entitled to participate in quarterly distributions. PPSUs/PLPUs could not be made exchangeable into shares of Class A common stock and could only be exchanged for cash, at the determination price on the date of grant, in connection with an exchange of PSUs, LPUs or HDUs, respectively, and therefore were not included in our fully diluted share count. PPSUs/PLPUs were utilized to provide a mechanism for issuing fewer aggregate share equivalents than traditionally issued in connection with our compensation to have a lesser overall impact on our fully diluted share count. The ratio of the grant of PPSUs/PLPUs to traditional units (e.g., PSUs/LPUs) approximated the compensatory tax rate applicable in the relevant country jurisdiction of the partner recipient. The determination price used to exchange PPSUs/PLPUs for cash was determined by the Compensation Committee on the date of the grant of such unit and was based on a closing trading price of Class A common stock identified by the Committee on such date.
Prior to the Corporate Conversion and commencing with respect to the 2020 year-end compensation cycle, the executive officers received NPSUs, NPPSUs, NLPUs or, NPLPUs that were non-distribution earning initially and converted to distribution earning units 20% per year provided that the Company, inclusive of its affiliates, earned, in aggregate, at least $5,000,000 in gross revenues, and the executive officer met certain service conditions, for the calendar quarter in which the conversion is to occur. These units are designated with “— CV” following the unit type for internal purposes.
Executive officers in the U.K. also received certain LPUs (“LPU-NEWs”) and PLPUs (“PLPU-NEWs”) or certain non-distribution earnings NLPUs (“NLPU-NEWs”) and non-distribution earning NPLPUs (“NPLPU-NEWs”) that had certain employment-related conditions to the grant of exchangeability.
Over time, as compensation goals were met and our executives were awarded other incentives, the Compensation Committee from time to time chose, in its sole discretion, to grant an exchange right with respect to a PSU/LPU, thereby creating a potential liquidity event for the executive and creating value for accounting purposes. The life cycle of these units, as they evolved from NPSUs to shares of Class A common stock, provided the Committee and the Board with superior opportunities to retain and incentivize executives and employees in a tax-efficient and discretionary manner.
Until non-exchangeable units were made exchangeable into a share of Class A common stock or otherwise monetized at the discretion of the Committee, they were generally forfeitable for any reason, subject to certain exceptions. We believe this incentivized performance prior to the Corporate Conversion.
Effective January 1, 2021, the Compensation Committee awarded 458,425 NLPUs and 246,844 NPLPUs to Mr. Windeatt, with the expectation of attributing twenty percent (20%) of such award, valued at £292,000, to compensation for each of 2020, 2021, 2022, 2023 and 2024. On March 14, 2022, the Committee approved the conversion of twenty percent (20%) of such NLPUs and NPLPUs into non-exchangeable BGC Holdings LPUs and PLPUs for each of calendar years 2020 through 2024. As a result, because such award was included for calendar years 2020 and 2021, forty percent (40%) of such award was converted in 2022. Prior to the Corporate Conversion, it was expected that 91,685 BGC Holdings NLPUs and 49,369 NLPUs would be converted in each of 2023, 2024 and 2025. As a result of the Corporate Conversion, Mr. Windeatt received RSUs and RSU Tax Accounts in substitution for these units. When determining Mr. Windeatt’s compensation for 2020, 2021, 2022 and 2023, the Compensation Committee attributed £292,000 of compensation to him for each fiscal year in connection with such award.
Historical Information Regarding Newmark IPO, Separation Transaction and Spin-Off and Its Effect on BGC’s Compensation
On December 19, 2017, BGC Partners’ former subsidiary Newmark completed its initial public offering (the “IPO”). Through the following series of transactions prior to and following the completion of the Separation (as defined below) and the IPO, Newmark became a separate publicly traded company. Prior to the closing of the IPO, on December 13, 2017, BGC Partners, BGC Holdings, BGC U.S. OpCo, Newmark, Newmark Holdings, L.P. (“Newmark Holdings”), Newmark OpCo and, solely for certain provisions listed therein, Cantor and BGC Global OpCo entered into the Separation and Distribution Agreement (such agreement, as amended from time to time, the “Original Separation and Distribution Agreement”). Pursuant to the Original Separation and Distribution Agreement, BGC, BGC Holdings and BGC U.S. OpCo and their respective subsidiaries (other than the Newmark
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group (defined below), the “BGC group”) transferred to Newmark, Newmark Holdings and Newmark OpCo and their respective subsidiaries (the “Newmark group”) the assets and liabilities of the BGC group relating to BGC’s real estate services business (such series of transactions that resulted in the transfer are herein referred to as the “Separation”).
In connection with the Separation, Newmark Holdings limited partnership interests, Newmark Holdings founding partner interests, Newmark Holdings working partner interests and Newmark Holdings limited partnership units were distributed to holders of BGC Holdings limited partnership interests, BGC Holdings founding partner interests, BGC Holdings working partner interests and BGC Holdings limited partnership units in proportion to such interests of BGC Holdings held by such holders immediately prior to the Separation. As holders of BGC Holdings limited partnership units, the executive officers of the Company received units of Newmark Holdings in connection with the Separation of Newmark.
On November 30, 2018, BGC Partners completed its distribution (the “Spin-Off”) of all of the shares of Class A common stock and Class B common stock of Newmark held by BGC to BGC Partners’ stockholders as of the close of business on November 23, 2018 through a special pro rata stock dividend pursuant to which shares of Newmark’s Class A common stock held by BGC were distributed to holders of the Class A common stock of BGC and shares of Newmark’s Class B common stock held by BGC were distributed to holders of the Class B common stock of BGC (which holders of Class B common stock of BGC were Cantor and another entity controlled by BGC Partners’ CEO, Howard W. Lutnick). Following the Spin-Off, BGC no longer held any shares of Newmark.
As a result of the Separation and Spin-Off, and due to the fact that (i) certain BGC awards granted pursuant to the BGC Partners Compensation Plans prior to the Separation became, upon the Separation, awards of interests in both BGC and Newmark entities and (ii) prior to the Spin-Off, (a) certain awards granted pursuant to the BGC Partners Compensation Plans were previously exchangeable for interests in Newmark and (b) certain executives received awards under the Newmark Compensation Plans (as defined below), 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 Partners Compensation Plans, prior to the Corporate Conversion, and the Newmark Group, Inc. Incentive Bonus Compensation Plan (the “Newmark Incentive Plan”), and the Newmark Holdings, L.P. Participation Plan (with the Newmark Incentive Plan, the “Newmark Compensation Plans”). When we refer to specific awards, we are referring to awards under the BGC Compensation Plans, unless otherwise indicated. The partnership transactions described herein refer generally to BGC Holdings units and refer specifically to Newmark Holdings units where applicable.
U.S. generally accepted accounting principles (“GAAP”) compensation charges for all compensation paid by Newmark to Messrs. Lutnick and Merkel, including units and other equity awards acquired by them as a result of the Separation and Spin-Off, were taken by Newmark and appear in the Newmark compensation disclosures because such compensation relates to the issuer for which the services are rendered. Conversely, GAAP compensation charges with respect to compensation relating to Newmark units and other equity awards acquired by the other BGC executive officers (and by BGC’s independent directors) as a result of the Separation and Spin-Off were taken by BGC and appear in the BGC compensation disclosures because such executive officers (and independent directors) provide services to BGC and not to Newmark.
The Compensation Committee is aware that certain of our executive officers, including Messrs. Lutnick and Merkel, also receive compensation from our affiliates, including Cantor and/or Newmark, but it generally does not specifically review the nature or amount of such compensation. The portion of Messrs. Lutnick’s and Merkel’s compensation paid directly by Newmark is reviewed and approved by the compensation committee of the Newmark board of directors. Beginning in 2019, after completion of the Spin-Off, the BGC Partners’ Compensation Committee did not review the nature or amount of any compensation received by Mr. Lutnick or Mr. Merkel as compensation for services provided to Newmark.
None of our executive officers has received any compensation for serving our Board of Directors or on the board of directors of Newmark.
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COMPENSATION DISCUSSION AND ANALYSIS
Background
The following Compensation Discussion and Analysis describes the material elements of our executive compensation program for 2023, including aspects of our executive compensation program which were designed and implemented by the Compensation Committee in March 2024, at which time 2023 year-end compensation decisions with respect to each of our executive officers were reviewed and approved.
Our principal executive officer for 2023 was our Chief Executive Officer, Howard W. Lutnick, and our principal financial officer for 2023 was our Chief Financial Officer, Jason Hauf. Our other two executive officers for 2023 were Sean Windeatt and Stephen M. Merkel.
For 2021, 2022 and 2023, the compensation determined and approved by our Compensation Committee for BGC matters before and after our Corporate Conversion for Messrs. Lutnick, Hauf, Windeatt, and Merkel is reflected in full below. In each case compensation includes salary, other cash compensation and non-cash compensation.
Compensation Philosophy
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 us 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 shorter- and longer-term performance, with the goal of increasing stockholder value over the long term.
In determining the compensation of our executive officers, our Compensation Committee considers a variety of factors, both qualitative and quantitative, consistent with our overall goals. Our objectives include a program that reflects the retentive effect of the payment of appropriate compensation for each executive officer, the pay practices of the Company’s peer group and other companies, the Company’s financial performance as a whole and the performance of various business lines, including as compared to peer data, and the Company’s and the executives’ success in meeting corporate objectives including attracting and retaining qualified brokers and professionals, market position, revenue and profitability and other financial criteria, strategic growth and business positioning, and objectives for long-term competitive advantage. While many of our brokers and other professionals are paid commissions, the compensation received by our executive officers is not typically specifically tied to mathematical formula-based performance targets. Unless compensation is specifically set forth in an applicable employment agreement, the compensation of our most senior control officers under our program is determined based on a holistic review of all relevant compensation factors by the Compensation Committee with no particular weighting toward any specific metric or other factor. Such compensation factors may also include the ability to respond to extraordinary events and manage the business under changing financial, global, health, environmental and other circumstances. Further, although the vote is advisory and non-binding on the Board, the Compensation Committee considers the results of the “say-on-pay” vote.
We also believe that executive compensation should reflect the achievement of any individual managerial objectives established for specific executive officers. Specific significant events led by executives, including acquisitions, dispositions and other significant transactions, should also be given significant weight. 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.
In designing and implementing our executive compensation program, our Compensation Committee considers our Company’s operating and financial objectives, including our risk profile, and the effect that its 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 risks and known trends and uncertainties, including those identified in our public filings, and considers how our executive compensation program serves to achieve our operating, financial and other strategic objectives while at the same time mitigating any incentives for our executive officers to engage in
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excessive risk-taking to achieve short-term results that may not be sustainable in the long term. Our Committee may also consider specific performance measures or grants based on specific events including catalyst transactions or significant acquisitions or particular strategic efforts, hires or transactions. The Committee generally reviews these objectives and goals and makes its decisions with no particular weighting toward any specific metric or other factor.
Although reviewed by the Committee, 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 stock will, in the long term, reflect our overall performance and, ultimately, the management of our Company by our executives. Long-term stock performance is reflected in executive compensation through the grant of various equity awards, as described below.
Overview of Compensation and Processes
For 2023, executive compensation was composed of the following principal components: (i) a base salary, which was designed to retain talented executive officers and contribute to motivating, retaining and rewarding individual performance; (ii) an incentive bonus award under our Incentive Plan, that was intended to tie financial rewards to the achievement of our short- or longer-term performance objectives; and (iii) an incentive program under our Equity Plan, which was designed to promote the achievement of short- and long-term performance goals, and to align the long-term interests of our executive officers with those of our 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 compensation arrangements of our executive officers. We may also adopt various policies related to or in addition to such restructurings, including with respect to the acceleration of the lapse of restrictions on restricted stock or acceleration of the vesting of RSUs. We may also issue potential extraordinary grants to executive officers which could be based on performance measures, including stock price increase or other measures to be specified.
From time to time, we have also used employment agreements, change of control agreements, retention agreements, and other arrangements, including some with specified target or guaranteed bonus components, and extraordinary bonuses to attract, motivate and retain talented executives. Any such specific current arrangements with our executive officers are summarized below.
Our Compensation Committee, with the assistance where appropriate of special project committees or advisors, approves and recommends to our Board 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 the Incentive Plan and the Equity Plan.
From time to time, our Compensation Committee has engaged a compensation consultant in connection with its compensation decisions. With respect to 2023, Korn Ferry (the “Advisor”) advised the Committee. The Committee retained the Advisor to provide surveys, information, and other assistance with respect to pay practices and compensation levels at our peer group and other companies, and the Committee discussed with the Advisor all compensation arrangements for 2023. For 2023, the Committee and the Advisor also reviewed pay for performance considerations and metrics and other measures including GAAP and non-GAAP financial results, results of certain businesses such as Fenics, progress with respect to strategic transactions, growth in margins, front-office productivity, catalyst transactions, acquisitions, market share, total assets, and strategy and management responsibility, challenges and risk management, and other specific line items and measures in order to review additional performance metrics. The Committee reviewed the Company’s total revenues as a key performance measure for 2023. The Committee and the Advisor reviewed additional performance metrics for 2024, including the market penetration of the Company’s products and businesses in new geographies or markets, strategic acquisitions, joint ventures, and dispositions, and strategic hires or retention of key employees in competitive market conditions and considered various discretionary factors. The Committee reviewed this data with no particular weighting toward any specific metric or other factor. While the Committee does take into consideration such peer data and percentiles, the Committee does not attempt solely to benchmark our 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.
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Our Compensation Committee considered whether the Advisor had any conflicts of interest in advising the Committee. In doing so, the Committee considered whether the Advisor had been providing services of any other nature to us; the amount of fees received from us 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 is also providing similar services to Newmark. Upon evaluating such considerations, the Committee found no conflicts of interest in the Advisor advising the Committee.
In attempting to strike an appropriate balance, our Compensation Committee seeks to provide our executive officers with an appropriately diversified mix of fixed and variable cash and non-cash compensation opportunities, time-based and performance-based awards, and short- and long-term incentives. In particular, our performance-based bonuses under our Incentive Plan have focused on a mix of Company-wide and product-specific operating and financial metrics, in some cases based upon our absolute performance and in other cases based upon our performance relative to our peer group or other companies. In addition, our Incentive Plan award opportunities provide for the exercise of considerable negative discretion by the Committee to reduce, but not increase, amounts granted to our executive officers under the Incentive Plan, and to take individual as well as corporate performance into account in exercising that discretion. Further, the Committee retains the discretion to pay out any amounts finally awarded under the Incentive Plan in equity, rather than cash, and to include restrictions on vesting, resale and forfeiture in any such equity.
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 awards have traditionally rewarded 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 awards on a periodic basis to reward superior performance, which awards may provide further long-term retention incentives.
Base salaries for the following year are generally set for our executive officers at year-end meetings of our Compensation Committee or in the early part of the applicable year. At these meetings, the Committee also approves the incentive bonuses under our Incentive Plan and any discretionary bonuses for executive officers and grants of equity awards under our Equity Plan to our executive officers.
We provide long-term incentives to our executive officers through grants of equity awards which include RSAs, RSUs and other equity grants under our Equity Plan, 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 was granted or such other date that awards to executive officers are made generally. Historically, grants under our Equity Plan that have had vesting provisions have had time-based, rather than performance-based, vesting schedules, although the plan is flexible enough to provide for performance-based awards.
At or around the year-end or first quarter Compensation Committee meetings, our Chairman of the Board and Chief Executive Officer, 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 Chief Executive Officer’s compensation, the Committee considers such information received from the Chief Executive Officer as it deems necessary or appropriate. The Committee deliberates on compensation decisions with respect to all executive officers other than Mr. Lutnick in the presence of Mr. Lutnick, and separately in executive sessions with the Advisor as to all executive officers, including Mr. Lutnick, outside of the presence of 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 Chief Executive Officer. Based upon the results of this evaluation, and input from the Advisor, the Committee reviews and approves Mr. Lutnick’s compensation.
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During or around the first quarter of each fiscal year, it has been the practice of our Compensation Committee to establish annual incentive performance goals or guidelines for 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. In all cases, such performance measures relate to the performance of our executive officers at the Company and in the provision of services to our operating partnerships and subsidiaries. All executive officers in office at that time are eligible to participate in the Incentive Plan.
Timing of Awards
Equity awards to our executive officers that are in payment of Incentive Plan or discretionary bonuses are typically granted annually in conjunction with our Compensation Committee’s review of Company and individual performance of our 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. 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 in recent years has generally been to award year-end grants to executive officer recipients by the end of the calendar year or in the quarter 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 exercisable equity-based compensation is set at the closing price of our Class A common stock on Nasdaq on the date of grant. With respect to limited partnership units prior to the Corporate Conversion and other equity-based awards in general, grants were 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.
Equity Plan Awards
It is the Compensation Committee’s general policy to award RSUs and other equity awards (or partnership awards prior to the Corporate Conversion) to our 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, prior to the Corporate Conversion, to provide exchange rights for shares of our Class A common stock and cash settlement awards relating to BGC Holdings limited partnership units.
Our Compensation Committee retains the right to grant a combination of forms of such awards under our Equity 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 of the Board and Chief Executive Officer, and certain other members of our management to grant awards to non-executive officer employees of our Company under the Equity Plan and to establish sub-plans for such persons.
BGC Group Equity Plan
Under the BGC Group Equity Plan, individual awards may take the form of (i) stock options, including incentive stock options, which we refer to as “ISOs”; (ii) stock appreciation rights (“SARs”); (iii) RSAs, consisting of shares of our Class A common stock that are subject to restrictions on transferability and other possible restrictions, including forfeiture based upon the failure to satisfy employment-related or other restrictions; (iv) deferred stock, representing the right to receive shares of our stock in the future, such as RSUs; (v) bonus stock and awards in lieu of cash compensation, including in payment of bonuses under any incentive plan of BGC Partners or any successor plan; (vi) dividend equivalents, consisting of a right to receive cash, other awards or other property equal in value to dividends paid with respect to a specified number of shares of our stock; (vii) other stock-based awards, consisting of awards denominated or payable in, or the value of which is based in whole or in part upon
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the market or book value of, BGC Group Class A common stock; or (viii) cash awards, whether or not the value of which is based, in whole or in part, by reference to the market or book value of BGC Group Class A common stock. The grant price at which shares of BGC Group Class A common stock may be acquired pursuant to the exercise of stock options and SARs under the BGC Group Equity Plan may not be less than 100% of the fair market value of the shares of stock covered by such grant on the date of grant, measured at the closing market price of BGC Group Class A common stock on such date. Dividend equivalents may be paid, distributed or accrued in connection with any award issued under the BGC Group Equity Plan, including RSUs, whether or not vested, and under the BGC Group Equity Plan, an RSA agreement may provide that a participant waives any right to dividends. Awards granted under the BGC Group Equity Plan are generally not assignable or transferable, except by the laws of descent and distribution, unless permitted by the Compensation Committee or its designee.
The BGC Group Equity Plan provides for a maximum of 600 million shares of BGC Class A common stock that may be delivered or cash settled pursuant to the exercise or settlement of awards granted under the plan. As of July 15, 2024, after consideration of awards outstanding under the BGC Group Equity Plan, the BGC Group Equity Plan would allow for the grant of future awards relating to 455.0 million shares of BGC Class A common stock.
Retentive Nature of Equity Awards
We consider our RSUs to be highly retentive due to the long-term vesting and forfeiture provisions relating to these awards. These awards contain extended vesting schedules which we consider to be highly retentive and that vary based upon compensation level and role, which in most cases are largely dependent upon continued service.
In 2023, our executive officers held much of their personal net worth in a combination of our equity-based awards in addition to stock held outright. In 2023, Messrs. Lutnick, Merkel, Windeatt and Hauf held RSUs and Mr. Windeatt held RSAs. Messrs. Lutnick and Merkel held additional partnership interests in our parent Cantor. Messrs. Lutnick, Merkel and Windeatt held limited partnership interests in Newmark Holdings following the Separation. As a result of the Corporate Conversion, our executive officers no longer hold any limited partnership units of BGC Holdings; however, Messrs. Hauf and Windeatt hold equity awards that are substitutes for the non-exchangeable limited partnership units of BGC Holdings that they held prior to the Corporate Conversion. As a result of the May 18, 2023 redemption and exchange transactions described under “— Standing Policy for Mr. Lutnick,” all of the outstanding partnership units held by Messrs. Lutnick and Merkel were redeemed on that date, and neither held any partnership units at the closing of the Corporate Conversion.
Tax and Accounting Treatment
Section 162(m) of the U.S. Internal Revenue Code of 1986 (the “Code”) eliminates a corporation’s tax deduction in a given year for payments to certain executive officers in excess of $1,000,000. 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 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 our executive officers and other employees. However, our 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.
Prior to the Corporate Conversion, the BGC Partners Compensation Committee granted equity and partnership awards to our executive officers in a variety of ways under the BGC Partners Compensation Plans, including restricted stock, RSUs, exchange rights, cash settlement awards, options and other equity grants under the BGC Partners 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. Going forward, our Compensation Committee may grant equity awards to our executive officers in a variety of ways under the BGC Group Compensation Plans, including RSUs, RSAs, cash awards, options and other equity awards under our Equity Plan. Grants of such awards may have different accounting and tax treatments and may be reported differently in the compensation tables and related narratives depending on the type of award granted and how and when it is granted.
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For U.S. GAAP purposes, a compensation charge is recorded on PSUs, LPUs 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 our 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 our Class A common stock on the date of exchange. In relation to this, prior to the Corporate Conversion there were certain LPUs in which a compensation charge is recorded ratably over the awards’ stated vesting schedule using the grant-date fair value. These LPUs vested into exchangeable units or Class A shares.
If shares of restricted stock granted are not subject to continued employment or service with us or any affiliate or subsidiary of ours, 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.
Furthermore, equity-based compensation expense recognized under U.S. GAAP during the period, for equity-based awards with a stated vesting schedule, is based on the value of the portion of equity-based payment awards that is ultimately expected to vest. The grant-date fair value of equity-based awards with a stated vesting schedule is amortized to expense ratably over the awards’ vesting periods. As this equity-based compensation expense recognized in the Company’s Consolidated Statements of Operations is based on awards ultimately expected to vest, it is reviewed for estimated forfeitures. Further, forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In cases where actual forfeitures change original forfeiture assumptions, then an adjustment to previously recognized compensation cost and the related deferred tax asset will be recorded. In addition, equity-based compensation for LPU awards with no stated vesting schedule is recognized at fair value on the date the award is granted exchangeability or is redeemed in connection with the issuance of shares of common stock.
For tax purposes, a U.S. federal income tax deduction is generally allowed on RSUs and restricted stock when the vesting occurs. The tax deduction for RSUs and restricted stock generally is measured as the restrictions lapse (i.e., as the employee vests in the award). At that time, the Company will determine if there is any excess tax benefit or deficiency by reference to the current stock price in relation to the grant date fair value.
Compensation Recovery/Clawback Policy
The Company has adopted a Clawback Policy for its executive officers effective as of December 1, 2023, with retroactive applicability to October 2, 2023. The Clawback Policy applies to Incentive-Based Compensation. The Clawback Policy provides for recovery of Incentive-Based Compensation received by a covered person in the event of an accounting restatement due to material noncompliance with financial reporting requirements that is in excess of the Incentive-Based Compensation that such person would have received based upon the restated financial reporting measure. The Clawback Policy applies to Incentive-Based Compensation and not to compensation that is purely discretionary or based on subjective goals or goals unrelated to financial reporting measures.
2023 Compensation Actions Taken by the Compensation Committee
The compensation approved by our Compensation Committee and paid to our executive officers for 2023 is described in full in our Summary Compensation Table herein and the footnotes thereto. Below are descriptions of the various considerations and actions taken by our Compensation Committee for the determination of year-end compensation for our executive officers.
Consideration of Peer Data for 2023 and Other Factors
As part of its compensation process, in addition to qualitative and strategic factors, the Compensation Committee considered various peer, financial and market metrics by reviewing the latest public financial information available at the time as compared with the disclosed growth of these same metrics for BGC’s traditional public peers, Compagnie Financière Tradition SA and TP ICAP Group plc, compared to the prior year. These metrics included total consolidated revenue, year-to-date share price change, and other financial measures including financial results, results of certain businesses such as Fenics, changes in margins and growth of our Data, Network and Post-trade businesses. The Committee also reviewed the year-on-year growth of the Company’s inter-dealer broker market share as compared
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to its peers over the same time frame. Further, the Committee also considered the year-on-year growth of total Fenics revenue as compared with the average total revenue growth for publicly listed trading platforms (e.g., Tradeweb and MarketAxess) and certain exchanges like CME over the same time frame. The data indicated that growth in margins, growth in Data, Network and Post-trade revenues, growth in inter-dealer broker market share and front office productivity per employee each outpaced industry peers over the time periods presented.
Performance data, including both financial and market data, are often reviewed by the Committee as presented by management and by the Advisor. As part of its compensation process, the Committee reviewed this peer data broadly and as part of its mix of factors, with no particular weighting toward any specific metric or other factor. Further, as discussed under “— Overview of Compensation and Processes,” while we use market data from peer companies as a reference point for evaluating our executive compensation program among other qualitative and quantitative factors, we do not benchmark against any specific compensation level or metric.
Base Salary
Our executive officers receive base salaries or similar cash payments intended to reflect their skills, expertise and responsibilities. Subject to any applicable employment or other agreements, such payments and subsequent adjustments, if any, will be reviewed and approved by our Compensation Committee annually, based on a variety of factors, which may include, from time to time, a review of relevant salaries of executives at our peer group of companies and others and each executive officer’s individual performance for the prior year, including each executive officer’s experience and responsibilities.
We generally establish base pay at levels comparable to our peer group and other companies which employ similarly skilled personnel, including CME Group, Inc., Compagnie Financière Tradition SA, Evercore Inc., Houlihan Lokey, Inc., Interactive Brokers Group, Inc., Intercontinental Exchange, Inc., Lazard Ltd., LPL Financial Holdings Inc., MarketAxess Holdings, Inc., Nasdaq, Inc., Oppenheimer Holdings Inc., Piper Sandler Companies, Raymond James Financial, Inc., The Charles Schwab Corporation, Stifel Financial Corp., TP ICAP Group plc, Tradeweb Markets Inc. and Virtu Financial, Inc. While we determine these levels by reviewing publicly available information with respect to our peer group of companies and others, we have not traditionally engaged in benchmarking against a certain market percentile or otherwise, either individually or in aggregate.
For each of the executive officers, in 2023 the Company allocated and paid an appropriate portion of their cash and equity-based compensation in respect of their approximate time spent on BGC matters and specifically allocated such compensation to BGC, as appropriate and applicable. In addition, Mr. Lutnick and Mr. Merkel received certain equity-based compensation directly from Newmark. Messrs. Lutnick, Merkel, Windeatt and Hauf have spent approximately 50%, 35%, 100% and 100% of their working time, respectively, on BGC matters in 2023, although these percentages may vary during 2024 depending on business developments at BGC, Newmark, Cantor or any of our or Cantor’s affiliates.
Base Salaries for 2023
Annual base salary rates for 2023 were established at a meeting in April 2023 by the BGC Partners Compensation Committee, based on the continuing qualifications, experience and responsibilities of our executive officers, and were carried over for BGC Group as part of the Corporate Conversion. The base salary rates for 2023 were continued at $1,000,000 for Messrs. Lutnick and Merkel. The base salary rate for Mr. Windeatt increased from £600,000 in 2022 to £700,000 in 2023 (approximately $870,240 as of April 18, 2023) in connection with his additional responsibilities and duties related to broker management and the execution of the 2023 Deed of Amendment (as defined below). See “— Employment Agreements and Deeds of Adherence” for more information. The base salary rate for Mr. Hauf increased from $600,000 in 2022 to $700,000 in 2023 in connection with his additional financial efforts and responsibilities.
Base Salaries for 2024
Annual base salary rates for 2024 were established in March 2024 by our Compensation Committee for all of our executive officers. In setting the base rates for 2024, the Committee considered the qualifications, experience and responsibilities of our executive officers. The base salary rates for 2024 were continued at $1,000,000 for Messrs. Lutnick and Merkel, $700,000 for Mr. Hauf, and £700,000 (approximately $896,000 as of March 7, 2024) for Mr. Windeatt.
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Incentive Plan Awards
We generally intend to award performance-based compensation in the form of bonuses to our executive officers, including pursuant to the Incentive Plan. The Compensation Committee believes that such performance-based compensation appropriately aligns the interests of our executive officers with the interests of our stockholders.
With respect to each performance period, our Compensation Committee specifies the applicable performance criteria and targets to be used under the Incentive Plan for that performance period. These performance criteria, which may vary from participant to participant, will be determined by the Committee and may be based upon one or more of the following performance measures and may be expressed on an absolute and/or relative basis and on a GAAP or non-GAAP basis:
• pre-tax or after-tax net income;
• pre-tax or after-tax operating income;
• total or gross revenues or similar items;
• profit, earnings or other margins;
• stock price, dividends and/or total stockholder return;
• EBITDA measures;
• cash flow(s);
• market share;
• pre-tax or after-tax earnings per share;
• pre-tax or after-tax operating earnings per share;
• expenses;
• return on investment or equity;
• environmental, social, and governance, sustainability, or similar criteria; or
• strategic business criteria, consisting of one or more objectives based upon meeting specific revenue, market penetration, or geographic business expansion goals, cost targets and goals relating to acquisitions or divestitures or any combination thereof or similar objectives or criteria as determined by the Compensation Committee.
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 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 awards.
In connection with the Corporate Conversion, BGC Group assumed and adopted the BGC Partners Incentive Plan, as amended and restated as the BGC Group Incentive Plan. In connection with such amendment and restatement, certain modifications were made to reflect the Corporate Conversion and to update and clarify certain matters, including removing the references to the Participation Plan, which was terminated in connection with the Corporate Conversion; removing the provisions previously related to Section 162(m) of the Code; broadening and modernizing the scope of performance goals under the plan; clarifying that the plan is unfunded; and clarifying that awards under the plan will be binding on successors of BGC Group.
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Incentive Plan Bonus Goals for 2023
In April 2023, our Compensation Committee determined that Messrs. Lutnick, Merkel, Windeatt and Hauf would be participating executives for 2023 in our Incentive Plan. In the case of our U.K.-based executive officer, Mr. Windeatt, the bonus award opportunities are governed by the Incentive Plan and administered by the Committee.
For 2023, the Compensation Committee used the same performance criteria for all executive officers and set a bonus for 2023 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 distributable earnings for 2023, as calculated on substantially the same basis as the Company’s financial results press release for 2022, or (ii) the Company achieved improvement or percentage growth in gross revenue or total transaction volumes for any product for 2023 as compared to 2022 over any of its peer group members or industry measures, as reported in the Company’s 2023 financial results press release, in each case calculated on substantially the same basis as in the Company’s financial results press release for 2022 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, the Equity Plan and the Participation Plan, as applicable, each of which we refer to as a “Performance Goal.”
The Compensation Committee determined that the payment of any such amount may be in the form of cash, shares of our Class A common stock, other equity awards permitted under our Equity Plan or otherwise. 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 the Performance Goals or any other corporate, as well as individual, performance objectives have been achieved.
Incentive Plan Bonuses Awarded for 2023
On March 7, 2024, having determined that the Performance Goals established in the first quarter of 2023 had been met for 2023, our Compensation Committee made awards to the participating executive officers for 2023 under our Incentive Plan, with some adjustments by the Compensation Committee on March 22, 2024. The equity awards were granted using a stock price of $8.43 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 the participating executives, the Committee awarded significant portions of its 2023 compensation to the participating executives in the form of equity awards, which included RSUs and RSUs-LLP in the case of Mr. Windeatt. The approval and issuance of the equity awards was effective April 1, 2024.
In making its bonus determinations for 2023, our Compensation Committee considered various qualitative and quantitative compensation factors, including the Performance Goals, the retentive effect of the payment of appropriate compensation for each executive officer, and the Company’s financial performance as a whole and the performance of various business lines, including as compared to peer data. The impact of any of these measures during 2023 or beyond may materially impact the value of current and previous equity awards, thus aligning the interests of the executive officers with those of our stockholders. The Compensation Committee also considered the pay practices of the Company’s peer group and other companies, including a compensation survey prepared by, and advice from, the Advisor. By choosing to pay a portion of each executive’s award in equity, the Compensation Committee expects to incentivize our executive officers with respect to future performance and encourage ongoing contributions to management, our results and our existing and future businesses. The specific Incentive Plan awards to our executive officers were as follows:
• Mr. Lutnick’s 2023 award consisted of an aggregate bonus of $14,000,000 and was paid (i) $3,000,000 in current cash compensation and (ii) $11,000,000 in a long-term award of 1,304,864 RSUs, granted using a stock price of $8.43 and which vest ratably one-fifth (1/5th) on each of the first (1st) through fifth (5th) anniversaries of the grant date provided he is still substantially providing services to BGC on each vesting date, and contingent upon BGC and its affiliates generating at least $5 million in revenue for the quarter in which the vesting occurs. The aggregate value of the bonus for Mr. Lutnick is $2,000,000 higher than what Mr. Lutnick was awarded with respect to calendar year 2022. In making this discretionary award, the Committee focused on Mr. Lutnick’s leadership efforts and strategic guidance and emphasis on positioning the Company for expected future results and the results of various business metrics.
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• Mr. Merkel’s 2023 award consisted of an aggregate bonus of $1,300,000 and was paid (i) $650,000 in current cash compensation and (ii) $650,000 paid in a long-term award of 77,106 RSUs, granted using a stock price of $8.43 and which vest ratably one-fifth (1/5th) on each of the first (1st) through fifth (5th) anniversaries of the grant date provided he is still substantially providing services to BGC on each vesting date, and contingent upon BGC and its affiliates generating at least $5 million in revenue for the quarter in which the vesting occurs. The aggregate value of the bonus for Mr. Merkel is $300,000 higher than what Mr. Merkel was awarded with respect to calendar year 2022. In making this discretionary award, the Committee considered his role in managing legal and regulatory issues during the year, his guidance on regulatory and other matters and overall leadership of business, legal and regulatory matters in 2023.
• Mr. Windeatt’s 2023 award consisted of an aggregate bonus of £1,758,000 ($2,251,822 as of March 7, 2024) and was paid (i) £500,000 in current cash compensation; and (ii) £1,258,000 in two long-term awards as follows: (x) 60,095 RSUs, granted using a stock price of $8.43 and which vest ratably one-fifth (1/5th) on each of the first (1st) through fifth (5th) anniversaries of the grant date provided he is still substantially providing services to BGC on each vesting date, and contingent upon BGC and its affiliates generating at least $5 million in revenue for the quarter in which the vesting occurs and (y) 131,053 RSUs-LLP, granted using a stock price of $8.43 and which vest April 1, 2027 provided he still remains a member in good standing of the U.K. Partnership on the vesting date and has complied at all times with his then-current Deed of Adherence with the U.K. Partnership and all other agreements with BGC and its affiliates, that U.K. Partnership senior management has reasonably determined that he has at all times satisfactorily performed his duties for the U.K. Partnership, taking into account, inter alia, as applicable, his performance evaluation(s) and adherence to regulatory obligations, compliance requirements, and applicable laws, and contingent upon BGC and its affiliates generating at least $5 million in revenue for the quarter in which the vesting occurs. The RSUs-LLP reflect the revised design and terms of the U.K. Partnership structure generally based on current tax guidance. The aggregate value of the bonus for Mr. Windeatt is £350,000 higher than what Mr. Windeatt was awarded with respect to calendar year 2022. In making this discretionary award, the Committee considered his responsibilities and duties including management of brokerage relationships and brokers, and the Company’s financial performance. See also “Historical Events and their Impact on Our Compensation — Historical Discretionary and Retentive Partnership Opportunities Prior to the Corporate Conversion” for more information regarding other amounts attributed to compensation for 2023 by the Compensation Committee.
• Mr. Hauf’s 2023 award of $650,000 was paid (i) $312,500 in current cash compensation; (ii) $337,500 in a long-term award of 40,036 RSUs granted using a stock price of $8.43 and which vest ratably one-fifth (1/5th) on each of the first (1st) through fifth (5th) anniversaries of the grant date provided he is still substantially providing services to BGC on each vesting date, and contingent upon BGC and its affiliates generating at least $5 million in revenue for the quarter in which the vesting occurs. In making this discretionary award, the Committee considered his strong efforts in managing the financial reporting function and problem-solving and strategy.
For all compensation that relied upon converting U.S. dollars into pounds, the GBP FX exchange rate on March 7, 2024, the date that our Compensation Committee approved the 2023 year-end compensation, was used, which was 1.2809 USD to 1 GBP.
In 2023, the Incentive Plan cash bonus for Messrs. Lutnick, Merkel, Windeatt, and Hauf as a percentage of the overall total compensation paid to them by BGC was approximately 20%, 28.26%, 20.34%, and 23.15%, respectively.
Incentive Plan Bonus Goals for 2024
In March 2024, our Compensation Committee determined that Messrs. Lutnick, Merkel, Windeatt and Hauf, our executive officers, would be participating executives for 2024 in our Incentive Plan. For 2024, the Committee used the same performance criteria for all executive officers and set a bonus for 2024 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 2024, as calculated on substantially the same basis as in the Company’s earnings release for the fiscal year ended December 31, 2023, (ii) the Company achieves
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improvement or percentage growth in gross revenue or total or net transaction volumes for any product for 2024 as compared to 2023 over any of its peer group members or other industry measures, as reported in the Company’s earnings release for the fiscal year ended December 31, 2024, in each case calculated on substantially the same basis as in the Company’s 2023 earnings release and compared to the most recently available peer group information or other industry measures, (iii) the Company increases its market penetration for any product or business into any new market or geography in 2024 as compared to 2023, (iv) the Company achieves the successful execution in 2024 of any material, significant, accretive, or strategic acquisition, entry into any joint venture, or disposition of any business or asset, (v) the Company achieves in 2024 the strategic hire or retention of key personnel in competitive market conditions, or (vi) the Company achieves in 2024 other strategic or significant performance as recognized by the Compensation Committee in its sole discretion (collectively, the “2024 Performance Goals”).
The 2024 Performance Goals, in each case, are expected to be reviewed by the Compensation Committee with no particular weighting toward any specific 2024 Performance Goal or other factor and are subject to any appropriate corporate adjustment to reflect stock splits, reverse stock splits, mergers, spin offs or any other extraordinary corporate transactions. As each of the Company’s executive officers also provides services to certain of our operating partnerships and subsidiaries, potential bonuses for 2024 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, or other equity awards permitted under our Equity Plan. The extent determined to reflect the portion of an executive officer’s compensation related to services performed for a particular subsidiary, entity or affiliate, as noted above, the cost of compensation awarded under any of the BGC Group Compensation Plans shall be borne by such operating partnership or entity. The Committee, in its sole and absolute discretion, retains 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 2024 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.
Change in Control Agreements
Prior to the Corporate Conversion, upon the signing of any agreement that would result in a “Change in Control” (as defined in the Amended and Restated Change in Control Agreements entered into by Messrs. Lutnick and Merkel and the applicable Deeds of Adherence entered into by Mr. Windeatt), (1) any NPSUs held by the foregoing executives would be replaced by exchangeable PSUs/PPSUs or LPUs/PLPUs (i.e., such PSUs and LPUs would be exchangeable for shares of Class A common stock and PPSUs and PLPUs would be exchangeable for cash), and (2) any non-exchangeable BGC Holdings PSUs/PPSUs and LPUs/PLPUs held by the foregoing executives would become immediately exchangeable, which exchangeability could be exercised in connection with such “Change in Control,” except that, with respect to (1) and (2), 9.75% of Mr. Windeatt’s LPUs/PLPUs would be deemed to be redeemed for zero in proportion to such exchanges of LPUs/PLPUs in accordance with the customary LPU/PLPU structure. See “Executive Compensation — Potential Payments Upon Change in Control — Change in Control Agreements” and “Executive Compensation — Potential Payments Upon Change in Control — Employment Agreements and Deeds of Adherence” for more information.
The entry into the Corporate Conversion Agreement and completion of the Corporate Conversion was not a “Change in Control” as defined in the Amended and Restated Change in Control Agreements entered into by Messrs. Lutnick and Merkel and the applicable Deeds of Adherence entered into by Mr. Windeatt. In connection with the Corporate Conversion, the Change in Control Agreements we entered into with Messrs. Lutnick and Merkel were assumed by BGC Group, with such modifications thereto as necessary to reflect the Corporate Conversion.
Presently, upon the signing of any agreement that would result in a “Change in Control” (as defined in the Amended and Restated Change in Control Agreements entered into by Messrs. Lutnick and Merkel and the applicable Deeds of Adherence entered into by Mr. Windeatt), unless otherwise provided in the applicable award agreement, all stock options, RSUs, and other awards based on shares of the Company’s Class A Common Stock and Class B Common Stock, as well any associated Tax Accounts would vest in full and become immediately exercisable, as applicable. See “Executive Compensation — Potential Payments Upon Change in Control — Change in Control Agreements” and “Executive Compensation — Potential Payments Upon Change in Control — Employment Agreements and Deeds of Adherence” for more information.
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Transactions with Executive Officers and Directors
From time to time, the Compensation Committee generally approves the acceleration of the vesting of RSUs or other awards or other repurchase or monetization transactions (and prior to the Corporate Conversion, the monetization of previously issued and outstanding partnership units) in order to provide liquidity to the executives, taking into consideration the retentive impact of the remaining awards held by the executives.
2021 Actions Regarding Outstanding Awards
On February 22, 2021, the Compensation Committee approved the grant to Mr. Windeatt of 123,713 exchange rights with respect to 123,713 non-exchangeable LPUs that were previously granted to Mr. Windeatt on February 22, 2019. The resulting 123,713 exchangeable LPUs were immediately exchangeable by Mr. Windeatt for an aggregate of 123,713 shares of BGC Class A common stock. Additionally, the Compensation Committee approved the right to exchange for cash 28,477 non-exchangeable PLPUs held by Mr. Windeatt, for a payment of $178,266 for taxes when the LPU units were exchanged.
Effective April 1, 2021, consistent with the schedule previously approved by the Compensation Committee, 100,000 BGC Holdings NLPUs and 45,454 Newmark Holdings NLPUs held by Mr. Windeatt were cancelled and replaced by 100,000 non-exchangeable BGC Holdings LPUs and 45,454 non-exchangeable Newmark Holdings LPUs.
On April 8, 2021, the Compensation Committee approved the repurchase by the Company of the remaining 62,211 exchangeable BGC Holdings LPUs held by Mr. Windeatt that were granted exchangeability on March 2, 2020, at the price of $5.38, the closing price of Class A common stock on April 8, 2021.
On April 8, 2021, the Compensation Committee also approved the repurchase by the Company on April 23, 2021 of 123,713 exchangeable BGC Holdings LPU-NEWs held by Mr. Windeatt at the price of $5.65, which was the closing price of our Class A common stock on April 23, 2021, and the redemption of 28,477 exchangeable BGC Holdings PLPU-NEWs held by Mr. Windeatt for $178,266, less applicable taxes and withholdings.
On April 28, 2021, the Compensation Committee approved the repurchase by the Company on April 29, 2021 of 108,350 exchangeable BGC Holdings PSUs held by Mr. Merkel at the price of $5.29, which was the closing price of our Class A common stock on April 29, 2021, and the redemption of 101,358 exchangeable BGC Holdings PPSUs held by Mr. Merkel for $575,687 for tax purposes.
On December 21, 2021, pursuant to the approval of the Compensation Committee: (i) 90,366 non-exchangeable BGC Holdings PSUs held by Mr. Merkel were redeemed for zero, and 90,366 shares of BGC Class A common stock were issued to Mr. Merkel, and (ii) 149,301 of Mr. Merkel’s non-exchangeable BGC Holdings PPSUs were redeemed for a cash payment of $555,990 for taxes.
On December 21, 2021, Mr. Lutnick exercised his pre-existing conversion and redemption rights to (i) convert his 376,651 non-exchangeable PSU-Hs into 376,651 non-exchangeable BGC Holdings HDUs with a capital account of $2,339,000 and redeem his 463,969 non-exchangeable PPSU-Hs associated with such PSU-Hs for a tax payment of $2,661,000, and (ii) redeem his 425,766 exchangeable BGC Holdings PPSUs for a tax payment of $1,525,706. In addition to the foregoing, on December 21, 2021, Mr. Lutnick accepted and exercised certain of his monetization rights under the BGC standing policy, as described below.
Pursuant to the Newmark Compensation Committee’s authorization on June 28, 2021, in connection with Mr. Lutnick’s participation in Newmark’s equity program in connection with his service to Newmark, the following BGC Holdings transactions occurred:
(i) the exchange of 520,380 exchangeable BGC Holdings PSUs into 520,380 shares of BGC Class A common stock, and $1,525,705 paid to Mr. Lutnick pursuant to the redemption of his exchangeable BGC Holdings PPSUs;
(ii) the redemption of 88,636 non-exchangeable BGC Holdings PSUs pursuant to Mr. Lutnick’s rights under his existing standing policy, and the issuance of 88,636 shares of BGC Class A common stock; and
(iii) the conversion of 1,131,774 non-exchangeable BGC Holdings PSU-Hs into 1,131,774 non-exchangeable BGC Holdings HDUs and $7,983,000 paid to Mr. Lutnick pursuant to the redemption of Mr. Lutnick’s BGC Holdings PPSUs with H-Rights.
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2022 Actions Regarding Outstanding Awards
On March 14, 2022, the Compensation Committee approved the conversion of Mr. Windeatt’s 183,370 non-exchangeable BGC Holdings NLPUs into 183,370 non-exchangeable BGC Holdings LPUs and 98,738 non-exchangeable BGC Holdings NPLPUs into 98,738 non-exchangeable BGC Holdings PLPUs with a determination amount of $2.84 per unit. On March 14, 2022, the Committee approved the conversion of twenty percent (20%) of Mr. Windeatt’s 458,425 NLPUs and 246,844 NPLPUs into non-exchangeable BGC Holdings LPUs and PLPUs for each of calendar years 2020 through 2025. As a result, because such award was included for calendar years 2020 and 2021, forty percent (40%) of such award was converted in 2022.
Pursuant to the terms of the “NEW” awards previously approved by the Compensation Committee and issued to Mr. Windeatt in March 2020, Mr. Windeatt’s 135,514 non-exchangeable BGC Holdings LPU-NEWs and 27,826 non-exchangeable PLPU-NEWs (at the average determination price of $4.84 per unit) became exchangeable on March 2, 2022. On August 11, 2022, the Company repurchased 135,514 exchangeable BGC Holdings LPU-NEWs held by Mr. Windeatt at the price of $4.08 per unit, which was the closing price of our Class A common stock on August 11, 2022, and redeemed 27,826 exchangeable PLPU-NEWs held by Mr. Windeatt for $134,678, less applicable taxes and withholdings.
2023 Actions Regarding Outstanding Awards
On April 1, 2021, the Compensation Committee granted Mr. Windeatt 128,279 non-exchangeable BGC Holdings LPUs. Pursuant to the exchange rights schedule of the grant, on April 1, 2023, the 128,279 non-exchangeable BGC Holdings LPUs became immediately exchangeable. On June 8, 2023, the Company repurchased all of Mr. Windeatt’s 128,279 exchangeable BGC Holdings LPUs at a price of $4.79 per unit, which was the closing price of a share of our Class A common stock on June 8, 2023.
On May 18, 2023, all of Messrs. Merkel’s and Lutnick’s BGC Holdings LPUs were redeemed or exchanged. See “— Standing Policy for Mr. Lutnick.”
See “Historical Events and their Impact on Our Compensation — Compensation Actions Taken in Connection with the Corporate Conversion” and “— Standing Policy for Mr. Lutnick” for a discussion of the treatment of partnership unit awards held by our executive officers in connection with the Corporate Conversion.
On July 10, 2023, the Compensation Committee approved accelerating the vesting of 720,509 of the Company’s RSUs held by Mr. Windeatt (calculated based upon the closing price of the Company’s Class A common stock on July 10, 2023 which was $4.45) and the vesting of $780,333 of the RSU Tax Account held by Mr. Windeatt. Such RSUs and RSU Tax Account amount vested on July 12, 2023, and the total value of this transaction was approximately $3,986,600.
Standing Policy for Mr. Lutnick
BGC Group Standing Policy
On July 1, 2023, in connection with the Corporate Conversion, the Board of Directors and Audit Committee of BGC Group approved the BGC Group standing policy, which provides Howard W. 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 any other BGC Group executive officer to participate in (i) any opportunity to monetize or otherwise provide liquidity with respect to some or all of his BGC Group equity awards, or to accelerate the lapse of or eliminate any restrictions on transferability with respect to shares of BGC Group Class A common stock, as well as (ii) any opportunity to change or modify the terms of any equity interest or awards of BGC Group.
Under the policy, 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 awards, which include but are not limited to, opportunities (i) to have stock, RSUs, restricted stock or other equity or similar grants or replaced by other stock or equity; (ii) to have stock awards, RSUs or equity received upon such replacement redeemed by BGC Group for cash; (iii) to accelerate the lapse of or eliminate any restrictions on transferability with respect to RSUs, restricted shares, equity grants or any similar stock or equity awards of Class A common stock; and (iv) to replace non-distributing equity units with distributing equity and replace any preferred equity with non-preferred equity. The policy may also include vesting or exchange of equity and the issuance of new shares, RSUs, RSAs, equity grants or any stock or equity awards.
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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 the Company 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 other executive officer) and shall be equal to the greatest percentage of shares of stock, RSUs, RSAs, equity grants or any similar stock or equity awards in BGC Group 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 vesting or the issuance of new shares or units, equity awards or similar awards in BGC Group, or the acceleration of the lapse of restrictions on transferability of shares of stock, RSUs, restricted stock or other equity or similar interests owned by him if a future triggering event under the policy occurs.
As of July 15, 2024, Mr. Lutnick’s balance under the standing policy was zero.
Historical BGC Partners Standing Policy prior to the Corporate Conversion
In December 2010, as amended in 2013 and in 2017, the BGC Partners Audit Committee and Compensation Committee approved a standing policy that gave Mr. Lutnick the same right, subject to certain conditions, to accept or waive opportunities offered to other executive officers to monetize or otherwise provide liquidity with respect to some or all of their limited partnership units of BGC Holdings or to accelerate the lapse of or eliminate any restrictions on equity awards, and provided generally that Mr. Lutnick would be treated no less favorably than, and in proportion to, any other executive officer with respect to the change, right or modification of partnership or equity awards. The description of the standing policy prior to the Corporate Conversion was generally consistent with the existing policy except that it included partnership units, which are no longer outstanding following the Corporate Conversion. Mr. Lutnick historically has elected to waive his right to participate in most such opportunities under the standing policy.
On April 8, 2021, under the BGC standing policy, our Compensation Committee granted exchange rights with respect to rights available to Mr. Lutnick. Mr. Lutnick elected to waive such rights one-time with such future opportunities to exchange to be cumulative. The number of Mr. Lutnick’s units for which he waived exchangeability was 9,918,304 non-exchangeable BGC Holdings PSUs/PSU-Hs and 2,221,289 non-exchangeable BGC Holdings PPSUs/PPSU-Hs with an aggregate determination amount of $15,166,255.
The Compensation Committee’s approval of monetization of certain of Mr. Merkel’s non-exchangeable BGC holdings on December 21, 2021 as described above triggered Mr. Lutnick’s cumulative rights under the BGC standing policy. On December 21, 2021, Mr. Lutnick accepted and exercised his rights pursuant to the BGC standing policy for the following transactions only: (i) redemption of 1,486,003 non-exchangeable BGC Holdings PPSUs for a tax payment of $8,645,800, for which he had previously waived his right; (ii) redemption of 453,893 non-exchangeable BGC Holdings PPSUs for tax payment of $2,206,003, for which he received the right on December 21, 2021; and (iii) redemption of 2,011,731 non-exchangeable BGC Holdings PSUs for zero and delivery of 2,011,731 shares of BGC Class A common stock, based upon the closing BGC Class A common stock price of $4.57 per share, for which he had previously waived his right. Other than accepting the foregoing, Mr. Lutnick elected to waive his rights under the BGC standing policy one-time, with such future opportunities to exercise his rights to be cumulative, with respect to 7,392,805 non-exchangeable BGC Holdings PSUs.
On March 14, 2022, pursuant to the terms of the “NEW” awards previously approved by our Compensation Committee and issued to Mr. Windeatt effective March 2, 2020, such “NEW” awards became exchangeable which triggered Mr. Lutnick’s right under the standing policy. Mr. Lutnick elected to waive such rights one-time with such future opportunities to exchange to be cumulative. The number of Mr. Lutnick’s units for which he waived exchangeability was 7,616,800 non-exchangeable BGC Holdings PSUs, which was also the balance as of December 31, 2022.
In connection with the Corporate Conversion, on May 18, 2023 the BGC Partners Compensation Committee approved the redemption of all of the non-exchangeable BGC Holdings units held by Mr. Stephen Merkel at that time. On May 18, 2023, Mr. Merkel’s 148,146 NPSU-CVs, 33,585 PSU-CVs, and 74,896 PSUs were redeemed for zero and an aggregate of 256,627 shares of Class A common stock were granted to Mr. Merkel, and 148,146
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NPPSU-CVs with a total determination amount of $681,250 and 33,585 PPSU-CVs with a total determination amount of $162,500 were redeemed for an aggregate cash payment of $843,750. After deduction of shares of BGC Partners Class A common stock to satisfy applicable tax withholding through the surrender of shares of BGC Partners Class A common stock valued at $4.61 per share, Mr. Merkel received 196,525 net shares of Class A common stock
Since Mr. Lutnick had previously repeatedly waived his rights under the standing policy, as of May 18, 2023 his rights had accumulated for 7,879,736 non-exchangeable PSUs, and 103,763 non-exchangeable PPSUs with a determination amount of $474,195. Due to the May 18, 2023 monetization of all of Mr. Merkel’s then-remaining non-exchangeable BGC Holdings units, on such date Mr. Lutnick received additional incremental monetization rights for his then-remaining 3,452,991 non-exchangeable PSUs, and 1,348,042 non-exchangeable PPSUs with a determination amount of $6,175,805.
In connection with the Corporate Conversion and, as a result of the monetization event for Mr. Merkel, on May 18, 2023 Mr. Lutnick elected to exercise in full his monetization rights under the standing policy, which he had previously waived in prior years. All of the non-exchangeable BGC Holdings units that Mr. Lutnick held at that time were monetized as follows: 11,332,727 PSUs were redeemed for zero and 11,332,727 shares of Class A common stock were granted to Mr. Lutnick, and 1,451,805 PPSUs with an aggregate determination amount of $6,650,000 were redeemed for an aggregate cash payment of $6,650,000. After deduction of applicable tax withholding through the surrender of shares of BGC Partners Class A common stock valued at $4.61 per share, Mr. Lutnick received 5,710,534 net shares of Class A common stock.
On May 18, 2023, Mr. Lutnick also exchanged his then-remaining 520,380 exchangeable PSUs for 520,380 shares of Class A common stock. After deduction of applicable tax withholding through the surrender of shares of BGC Partners Class A common stock valued at $4.61 per share, Mr. Lutnick received 232,610 net shares of Class A common stock. In addition, on May 18, 2023, Mr. Lutnick’s then-remaining 1,474,930 non-exchangeable HDUs were redeemed for a cash capital account payment of $9,148,000, $2.1 million of which was paid by BGC Partners with the remainder paid by Newmark Group, Inc. As a result of the various transactions on May 18, 2023 described above, on May 18, 2023, Mr. Lutnick no longer held any limited partnership units of BGC Holdings.
Perquisites
Historically, from time to time, we have provided 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 do 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, particularly for executives who live overseas and travel frequently to our other office locations. 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 we 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. The perquisites and other personal benefits, if any, provided to such executive officers generally have not had an aggregate incremental cost to us per individual that exceeds $10,000.
We offer medical, dental, and life insurance, 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 certain of our employees at varying levels based on total cash compensation, and all of our executive officers were charged at the maximum contribution level in light of their compensation. Certain of our executive officers living in London have in the past received certain additional private medical benefits.
Post-Employment Compensation
Pension Benefits
We do not currently provide pension arrangements or post-retirement health coverage for our employees in the U.S., although we may consider such benefits in the future. For our employees in the U.K., other than executives who are members of the U.K. Partnership, we provide a pension arrangement as required by law.
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Retirement Benefits
Our executive officers in the U.S. are generally eligible to participate in our 401(k) contributory defined contribution plan, which we refer to as our “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 executive officers’ contributions to our Deferral Plan.
Nonqualified Deferred Compensation
We do not provide any nonqualified deferred compensation plans to our employees, although we may consider such benefits in the future.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis, which we refer to as the “CD&A,” set forth herein with management of the Company and, based on such review and discussions, the Compensation Committee recommended to the Company’s Board of Directors that the CD&A be included herein.
Dated: August 2, 2024
|
THE COMPENSATION COMMITTEE |
||
|
Linda A. Bell, Chair |
||
|
David P. Richards |
||
|
Arthur U. Mbanefo |
||
|
William Addas |
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EXECUTIVE COMPENSATION
Summary Compensation Table
|
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
||||||||||
|
Howard W. Lutnick, |
2023 |
1,000,000 |
— |
2,044,535 |
— |
14,000,000 |
|
— |
— |
17,044,535 |
|||||||||
|
Chairman of the Board of Directors and Chief Executive Officer |
2022 |
1,000,000 |
— |
— |
— |
12,000,000 |
|
— |
— |
13,000,000 |
|||||||||
|
2021 |
1,000,000 |
— |
7,831,243 |
— |
11,000,000 |
|
— |
— |
19,831,243 |
||||||||||
|
|
|||||||||||||||||||
|
Stephen M. Merkel, |
2023 |
1,000,000 |
— |
— |
— |
1,300,000 |
|
— |
— |
2,300,000 |
|||||||||
|
Executive Vice President and General Counsel |
2022 |
1,000,000 |
— |
— |
— |
1,000,000 |
|
— |
— |
2,000,000 |
|||||||||
|
2021 |
1,000,000 |
— |
— |
— |
750,000 |
|
— |
— |
1,750,000 |
||||||||||
|
|
|||||||||||||||||||
|
Sean A. Windeatt, |
2023 |
896,630 |
— |
1,220,725 |
— |
2,251,822 |
(6) |
— |
420,002 |
4,789,179 |
|||||||||
|
Chief Operating Officer(5) |
2022 |
745,920 |
— |
— |
— |
2,113,440 |
|
— |
— |
2,859,360 |
|||||||||