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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
 
 
Filed by the Registrant ☒       Filed by a Party other than the Registrant ☐
(Check the appropriate box):
 
Preliminary Proxy Statement
 
Confidential, For Use Of The Commission Only (As Permitted By Rule
14a-6(e)(2))
 
Definitive Proxy Statement
 
Definitive Additional Materials
 
Soliciting Material Pursuant to
§240.14a-12
BGC Group, Inc.
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
 
No fee required.
 
Fee paid previously with preliminary materials.
 
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules
14a-(6)(i)(1)
and
0-11.
 
 
 


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LOGO

September 28, 2023

Dear Stockholder:

It is my pleasure to inform you that our 2023 Annual Meeting of Stockholders (the “Annual Meeting”) of BGC Group, Inc. will be conducted online on November 14, 2023, commencing at 10:00 a.m. (Eastern Time). This is the first annual meeting following the closing of the Corporate Conversion (as discussed in the accompanying Proxy Statement) of our predecessor company, BGC Partners, Inc. (“BGC Partners”), on July 1, 2023. See “Compensation Discussion and Analysis – Corporate Conversion Compensation Matters” and “Certain Relationships and Related Transactions, and Director Independence – Corporate Conversion” in the accompanying Proxy Statement for more information. References in the accompanying Proxy Statement to periods prior to the Corporate Conversion refer to BGC Partners, for which we are the successor entity.

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 4 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 October 2, 2023, 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, 2022 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, 2023; (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.

 

Sincerely,
LOGO
Howard W. Lutnick
Chairman of the Board of Directors

 


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BGC Group, Inc.

499 Park Avenue

New York, New York 10022

Notice of 2023 Annual Meeting of Stockholders

NOTICE IS HEREBY GIVEN that our 2023 Annual Meeting of Stockholders will be held on November 14, 2023 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, 2023;

 

  (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 September 18, 2023 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 4 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/BGC2023.

By Order of the Board of Directors,

 

LOGO

CAROLINE A. KOSTER

Corporate Secretary

September 28, 2023

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


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TABLE OF CONTENTS

 

     Page  

PROXY STATEMENT

     1  

INFORMATION ABOUT VOTING

     2  

PROPOSAL 1—ELECTION OF DIRECTORS

     6  

INFORMATION ABOUT OUR DIRECTORS

     6  

INDEPENDENCE OF DIRECTORS

     9  

MEETINGS AND COMMITTEES OF OUR BOARD OF DIRECTORS

     9  

NOMINATING PROCESS

     11  

CORPORATE GOVERNANCE GUIDELINES

     12  

EXECUTIVE SESSIONS

     13  

ANNUAL MEETINGS

     13  

COMMUNICATIONS WITH OUR BOARD OF DIRECTORS

     13  

THE BOARD’S ROLE IN RISK OVERSIGHT

     13  

SUCCESSION PLANNING

     14  

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF BGC GROUP, INC. FOLLOWING THE CORPORATE CONVERSION

     14  

ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICIES AND PRACTICES (ESG / SUSTAINABILITY)

     15  

STOCKHOLDER ENGAGEMENT

     25  

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

     26  

EXECUTIVE COMPENSATION INFORMATION

     28  

COMPENSATION DISCUSSION AND ANALYSIS

     30  

EXECUTIVE COMPENSATION

     57  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     77  

REPORT OF THE AUDIT COMMITTEE OF OUR BOARD OF DIRECTORS

     81  

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

     83  

AUDIT COMMITTEE’S PRE-APPROVAL POLICIES AND PROCEDURES

     83  

PROPOSAL 2 – RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     83  

PROPOSAL 3 – APPROVAL OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION

     84  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

     86  

EXPENSES OF SOLICITATION

     138  

2024 STOCKHOLDER PROPOSALS

     138  

CERTAIN MATTERS RELATING TO PROXY MATERIALS AND ANNUAL REPORTS

     138  

DELINQUENT SECTION 16(a) REPORTS

     138  

CODE OF ETHICS AND WHISTLEBLOWER PROCEDURES

     139  

MISCELLANEOUS

     139  

 


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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 2023 Annual Meeting of Stockholders (the “Annual Meeting”) of BGC Group, Inc. (“BGC Group”) to be held on November 14, 2023, and at any adjournment or postponement thereof, for the purposes set forth in the accompanying Notice of 2023 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/BGC2023. The Annual Report for the fiscal year ended December 31, 2022 (the “2022 Annual Report”) for our predecessor entity, BGC Partners, Inc. (“BGC Partners”), accompanies this Proxy Statement. This Proxy Statement and the accompanying proxy card are being mailed to stockholders beginning on or about October 2, 2023.

EXPLANATORY NOTE RELATING TO OUR CORPORATE CONVERSION FROM BGC PARTNERS ON JULY 1, 2023

On July 1, 2023, we, 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 “Compensation Discussion and Analysis – Corporate Conversion Compensation Matters” and “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 NOVEMBER 14, 2023:

On or about October 2, 2023, 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 October 31, 2023 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.

 

1


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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.”

 

  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

September 18, 2023 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 386,974,014 shares of our Class A common stock and 109,452,953 shares of our Class B common stock, for a total of 496,426,967 shares of our Common Equity, outstanding and entitled to vote, with a Total Voting Power of 1,481,503,544 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.

 

2


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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.

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, which shares must be present online or represented by proxy during the Annual Meeting.

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 votes cast. With respect to Proposals 2 and 3, the affirmative vote of the holders of a majority of the Total Voting Power present online or represented by proxy at the Annual Meeting and 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 the same effect on the votes as votes against 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 the same effect as votes against this proposal.

 

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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, September 18, 2023, 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/BGC2023 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 November 14, 2023. The meeting will begin promptly at 10:00 a.m. (Eastern Time) on November 14, 2023.

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 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.

If you want to submit your question during the meeting, log into the virtual meeting platform at www.virtualshareholdermeeting.com/BGC2023, 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, 2023, 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 2022 Annual Report, which includes BGC Partners’ Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) that was previously filed with the Securities and Exchange Commission (the “SEC”) and that includes its 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,

 

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including the 2022 Annual Report, which includes the 2022 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, Phone: (212) 610-2200, Attention: Corporate Secretary. 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

 

Name

 

Age

 

Director

Since

  

Biographies

Howard W. Lutnick   62   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 CF Group Management, Inc. (“CFGM”), the managing general partner of Cantor. Mr. Lutnick has also been a director of Satellogic, Inc. (“Satellogic”), the only non-affiliate of ours for which Mr. Lutnick serves as a director, since January 2022. 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 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 from April 2020 until

 

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Name

 

Age

 

Director

Since

  

Biographies

       consummation of its business combination with Satellogic in January 2022; and as the Chairman and Chief Executive Officer of CF Acquisition Corp. VI from April 2020 until consummation of its business combination with Rumble Inc. in September 2022. Currently, Mr. Lutnick has served as the Chairman and Chief Executive Officer of CF Acquisition Corp. IV since January 2020, CF Acquisition Corp. VII since July 2020 and CF Acquisition Corp. VIII since July 2020, all of which are SPACs. 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.
Linda A. Bell   64   2013    Dr. Bell has been a director of our Company, and prior to the Corporate Conversion, BGC Partners, since July 2013. Dr. Bell has served as the Provost and Dean of Faculty at Barnard College, Columbia University since 2012, where she is also 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.
David P. Richards   71   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 UK governing body of the Motor Sports Association and in June 2022 was appointed as a Member of the Board of Trustees at the FIA Foundation, an international charity focused on issues in the automotive world. Mr. Richards has been a director of Phytome Life Sciences, a U.K. plant-based medical research company, since August 2019. 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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Name

 

Age

 

Director

Since

  

Biographies

Arthur U. Mbanefo   56   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 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. He is an advisory board member of the non-profit Room to Read in both London and New York. Mr. Mbanefo graduated with a BSc with Honours from Loughborough University. He is also a Fellow Chartered Accountant.
William Addas   63   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. 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 votes cast via the internet, by telephone or by mail or represented by proxy at the Annual Meeting 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 15 meetings during the year ended December 31, 2022. In addition to meetings, our Board and its committees reviewed and acted upon matters by unanimous written consent from time to time. During 2022, 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. Mbanefo who missed three meetings during the year ended December 31, 2022 due to personal family matters. In addition to regular committee meetings which are indicated below, the independent directors of the Board of BGC Partners held 13 joint or special project committee meetings in 2022.

During 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, replacing former director William Moran in April 2022. Former directors Stephen Curwood and William Moran were members of the Audit Committee during 2022. Messrs. Curwood and Moran departed the Board on December 30, 2022 following the 2022 annual meeting of stockholders (the “2022 Annual Meeting”). 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

 

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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 policy, including the establishment of procedures with respect to the receipt, retention and treatment of complaints received by us regarding accounting, internal controls and auditing matters, and the anonymous submission by employees of complaints involving questionable accounting or auditing matters. The Committee held 13 meetings during the year ended December 31, 2022.

During 2022, our Audit Committee engaged Ernst & Young LLP (“Ernst & Young”) to be our Auditors for the year ending December 31, 2022. Ernst & Young was also approved to perform reviews of each of our quarterly financial reports for the year ending December 31, 2022, 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, replacing Mr. Curwood in April 2022. Messrs. Moran and Curwood were members of the Compensation Committee during 2022. Messrs. Curwood and Moran departed the Board on December 30, 2022 following the 2022 Annual Meeting. 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”) and the BGC Group, Inc. Incentive Bonus Compensation Plan (the “BGC Group 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 – Corporate Conversion Compensation Matters” 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 6 meetings during the year ended December 31, 2022.

 

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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, replacing Mr. Curwood on December 30, 2022. Mr. Curwood departed the Board on December 30, 2022 following the 2022 Annual Meeting. 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 was formed in April 2021. The Committee held 5 meetings during the year ended December 31, 2022.

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 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.

 

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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            

Chairman of the Board

Our Board has determined that in light of Mr. Lutnick’s control of the vote of our Company through his control of Cantor, having a separate Chairman of the Board and 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 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

 

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stockholder engagement, including with respect to ESG matters. The Board reviews these principles and other aspects of governance annually. The 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 2022 Annual Meeting, held on December 30, 2022, 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.

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 generally discusses cybersecurity and information security risks annually with the Chief Information Officer and the Chief Information Security Officer.

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.

 

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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 and retention of leaders required for the changing business landscape and to lead future business lines. At the business and departmental levels, managers discuss and identify potential talent, opportunities for employee growth, successors, and future leaders.

Board of Directors and Executive Officers of BGC Group, Inc. Following the Corporate Conversion

Following the Corporate Conversion, the directors and officers of BGC Group remained the same as those of BGC Partners immediately prior to the Corporate Conversion, except for Mr. Laguerre, who departed the Board immediately prior to the Corporate Conversion, and Mr. Addas, who joined the Board following the Corporate Conversion. Please refer to “Compensation Discussion and Analysis – Corporate Conversion Compensation Matters” for additional information on the impact of the Corporate Conversion on the compensation of our executive officers, and “Certain Relationships and Related Transactions, and Director Independence – Corporate Conversion” for more information on the Corporate Conversion.

 

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICIES AND PRACTICES (ESG / SUSTAINABILITY)

Environmental, Social and Governance (“ESG”) / Sustainability Information

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.

In April 2021, we established a Board-level ESG Committee to provide 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. Set forth below is a discussion of many of our ESG and sustainability policies and practices. These are our values in action.

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 are also committed to equal opportunity, diversity and other policies and practices designed to fulfill our commitment to social and human capital development. 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.

 

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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.

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 have established vaccination requirements in accordance with applicable laws, including time-off for vaccines, coverage for COVID-19 testing and enhanced sick leave. We continue to offer employee assistance programs and additional avenues for mental health consultation and wellness. We continue to take significant steps to protect our employees and encourage them all to get vaccinated.

Performance-Based and Highly Retentive Compensation Structure

Virtually all of our executives and front-office employees have equity stakes in the Company and its subsidiaries and generally receive grants of deferred equity as part of their compensation. As of July 31, 2023, our employees, executive officers and directors owned approximately 23% of our equity, on a fully diluted basis.

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, 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 periods which in most cases are largely dependent upon continued service and are highly retentive.

Prior to the Corporate Conversion, we issued 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 sale 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. These loans provide incentives and promote retention. 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 repayable in the timeframes outlined in the underlying agreements.

Retentive Nature of Equity Awards

We consider our RSUs 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.

 

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We do not currently have a formal general compensation recovery or “clawback” policy for our executive officers and others. Accordingly, we do not require additional share ownership or hold-through-retirement thresholds.

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 we expect will result in the 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.

UK 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 Network of Women 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,

 

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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.

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 employees’ understanding 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 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’s unique way of creating something positive and life-affirming from the tragedy has raised over $200 million since inception. 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.

 

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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.

Our Environmental Focus, Environmental Markets and Sustainable Business Practices

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 establish a 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.

 

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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 Hedging 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;

 

•  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;

 

•  The ability of our Board to require the 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 are implementing additional 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 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 September 28, 2023. 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 Current Directors

   5
Gender:    Male    Female    Non-Binary    Gender
Undisclosed

Number of directors based on gender identity

   4    1    —     — 

Number of directors who identify in any of the categories below:

African American or Black

   1    —     —     — 

Alaskan Native or American Indian

   —     —     —     — 

Asian

   —     —     —     — 

Hispanic or Latinx

   —     —     —     — 

Native Hawaiian or Pacific Islander

   —     —     —     — 

White

   3    1    —     — 

Two or More Races or Ethnicities

   —     —     —     — 

LGBTQ+

   — 

Undisclosed

   — 

Whistleblower Complaint and Investigation Procedures for Accounting, Internal Controls, Auditing Matters and Employment and Labor Practices

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.

 

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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 Procedures for Accounting, Internal Controls, Auditing Matters and Employment and Labor Practices.”

Code of Business Conduct and Ethics and Professional Integrity

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 and Professional Integrity.” In 2021, we adopted a global anti-bribery and corruption policy. See “Compliance and Anti-Financial Crime Policy and Bribery and Corruption” below.

Compliance and Anti-Financial Crime Policy and Bribery and Corruption

We are committed globally to our policy regarding anti-money laundering and anti-financial crime, including anti-bribery and corruption, counter-terrorism financing and anti-fraud. Further information on this policy can be found on our website at the following link: www.bgcg.com/esg/governance under the heading “Compliance & Anti-Financial Crime Program.” We are committed to compliance and training regarding all relevant laws, rules, and regulations designed to combat bribery and corruption, including, but not limited to, the UK Bribery Act of 2010 and the U.S. Foreign Corrupt Practices Act of 1977. Further information on this policy can be found on our website at the following link: www.bgcg.com/esg/governance under the heading “Compliance & Anti-Financial Crime Program.”

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” in this Proxy Statement.

Global Anti-Bribery and Corruption Policy

In 2021, we implemented a 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 the following link: www.bgcg.com/esg/governance under the heading “Global Anti-Bribery and Corruption Policy.”

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.

 

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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.

Cyber-Security and Informational Security Program

We are committed on a global basis to combating the global threat of cyber-attacks and to securing our business through our information security programs to operate with confidence, through a deep understanding of cyber-security risks, vulnerabilities, mitigations, and threats. We have a global cyber-security program applicable to all subsidiaries and business lines. We conduct periodic internal and external vulnerability audits and assessments and penetration testing and provide periodic cyber-security training to employees. Further information on this program can be found on our website at the following link: www.bgcg.com/esg/governance under the heading “Cyber-Security and Informational Security Program.”

Data Privacy Policy

We have a global data privacy policy 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 the following link: www.bgcg.com/esg/governance under the heading “Data Privacy Policy.”

Hedging Policy

We have a policy with respect to hedging of 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. 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. 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 restrictions.

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

 

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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.

 

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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 250 investor and analyst interactions in 2022.

In 2022 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.

 

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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.

 

 

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Jason W. Hauf, 54, 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, 65, 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.

 

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EXECUTIVE COMPENSATION INFORMATION

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 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 us 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, par value $0.01 per share, of BGC (“Class B common stock”) (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 may receive or have 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. Long Term Incentive Plan (the “Newmark Equity Plan”), the Newmark Group, Inc. Incentive Bonus Compensation Plan (the “Newmark Incentive Plan”), and the Newmark Holdings, L.P. Participation Plan (collectively, with the Newmark Equity Plan and 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 in this Proxy Statement refer generally to BGC Holdings units and refer specifically to Newmark Holdings units where applicable.

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. During Steven Bisgay’s service as BGC

 

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Partners’ Chief Financial Officer, until June 6, 2022, he also had duties at Cantor and was paid compensation from Cantor in addition to his BGC 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 as directors of BGC or Newmark.

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, are 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 are 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.

Compensation set forth below for Messrs. Lutnick and Merkel for 2020, 2021 and 2022 is for BGC Partners on a stand-alone basis. The discussion below primarily relates to the compensation decisions by the BGC Compensation Committee and all references below are to the BGC Compensation Committee unless specifically noted. For more detailed information regarding the executive compensation of Newmark on a stand-alone basis, see the proxy statement for Newmark’s 2023 Annual Meeting of Stockholders, filed with the SEC on August 16, 2023.

 

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COMPENSATION DISCUSSION AND ANALYSIS

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 pursuant to which BGC Partners became a wholly owned subsidiary of BGC Group. To the extent statements in Compensation Discussion and Analysis and Executive Compensation, below, relate to compensation philosophy or the calculation or issuance of compensation or awards to “BGC,” “we,” “our,” “us,” or the “Company’s” directors and executive officers, such statements refer to BGC Partners prior to the closing of the Corporate Conversion, effective at 12:02 am Eastern Time on July 1, 2023, and to BGC Group on a going forward basis following the closing of the Corporate Conversion. See below and “Certain Relationships and Related Transactions, and Director Independence – Corporate Conversion” for more information on the Corporate Conversion.

References to, and to awards made under, the Incentive Plan and Equity Plan prior to the closing of the Corporate Conversion refer to, and to awards made under, the BGC Partners Incentive Plan and BGC Partners Equity Plan, respectively. References to, and to awards made under, the Incentive Plan and Equity Plan following the closing of the Corporate Conversion and on a going forward basis refer to, and to awards made under, the BGC Group Incentive Plan and BGC Group Equity Plan, respectively. See “– Corporate Conversion Compensation Matters” for more information on the impact of the Corporate Conversion on the BGC Group Compensation Plans.

Corporate Conversion Compensation Matters

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 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 will be 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 will be 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 under 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.”

 

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Please refer to “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 “—Equity Plan and Participation Awards—BGC Group Equity Plan” for more information on the BGC Group Equity Plan.

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 “— Bonus Compensation” 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 “— Historical 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 “— Standing Policy for Mr. Lutnick Following the Corporate Conversion” for more information.

 

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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. The shares that were or will be issued with respect to these assumed and substitute awards denominated below in shares of BGC Group Class A common stock reduced or will reduce the number of shares available for issuance pursuant to future equity-based awards under the BGC Group Equity Plan.

 

Name and Position

   Assumed
RSUs
(BGC Group
Class A
common
stock)(2)
    Assumed
RSAs
(BGC Group
Class A
common
stock)(2)
     Substitute
RSUs
(BGC Group
Class A
common
stock)(3)
    Substitute
RSAs
(BGC Group
Class A
common
stock)(4)
    Substitute Tax
Account
Awards (Cash)
($)(5)
 

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 “— Historical 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.

 

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(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 generating at least $5 million in revenue for the quarter in which the vesting occurs. See “—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 18, 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 will vest on March 14, 2024, provided that Mr. Windeatt remains employed through such vesting date, and subject to other obligations as set forth in the applicable award agreement.

(8)

These substitute cash Tax Account awards relate to the substitute RSUs described in footnote (6), and will be settled for cash to cover withholding taxes paid when the related RSUs vest. See “—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 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.

(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 “—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.

Structure Before and After the Corporate Conversion

Pre-Corporate Conversion Structure of BGC Partners, Inc. as of June 30, 2023

The diagram below reflects the ownership structure of BGC Partners and BGC Holdings as of June 30, 2023 and prior to the Corporate Conversion.

 

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LOGO

The diagram reflects the following activity of BGC Class A common stock and BGC Holdings partnership unit activity from January 1, 2023 through June 30, 2023 as follows: (a) 16.1 million shares of BGC Class A common stock issued for vested N Units; (b) 2.4 million shares of BGC Class A common stock issued for vested RSUs; (c) an aggregate of 4.3 million limited partnership units granted by BGC Holdings; (d) 10.7 million shares of BGC Class A common stock repurchased by BGC Partners; (e) 2.8 million shares of Class A common stock issued by BGC Partners under its acquisition shelf Registration Statement on Form S-4 (Registration No. 333-169232), of which there were no shares remaining available for issuance under such Registration Statement as of June 30, 2023, and 2.3 million shares of Class A common stock issued by BGC Partners under its acquisition shelf Registration Statement on Form S-4 (Registration No. 333-233761) but not the 17.7 million of such shares remaining available for issuance by BGC Partners under such Registration Statement as of June 30, 2023; (f) 0.5 million limited partnership units forfeited; (g) 0.7 million limited partnership units related to prior period adjustments; (h) 0.8 million limited partnership units for vested N Units; and (i) 20 thousand shares issued by BGC Partners under its Dividend Reinvestment and Stock Purchase Plan (“DRIP”) Registration Statement (Registration No. 333-173109), but not the 9.2 million of such shares remaining available for issuance by BGC Partners under the DRIP Registration Statement as of June 30, 2023.

 

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Post-Corporate Conversion Structure of BGC Group, Inc. as of August 31, 2023

The diagram below reflects our ownership structure as of August 31, 2023, following the Corporate Conversion. The diagram does not reflect certain ownership of BGC Group as follows: (a) 26.6 million shares of BGC Group Class A restricted common stock as these are not entitled to receive any dividends (included for voting power of BGC Group); (b) 12.1 million assumed RSUs; (c) 46.5 million substitute RSUs converted from former partners’ units in BGC Holdings; (d) RSU Tax Accounts associated with certain RSUs; (e) 7.1 million RSUs; (f) 5.7 million contingent shares issued in exchange for former partners’ units in BGC Holdings; and (f) 0.8 million contingent shares issued in exchange for acquisition units.

 

LOGO

 

*

Percentage includes restricted shares issued in exchange for former partners’ units in BGC Holdings.

The diagram reflects the BGC Class A common stock and BGC Holdings partnership unit activity from January 1, 2023 through June 30, 2023 as described above under the heading “—Pre-Corporate Conversion Structure of BGC Partners, Inc. as of June 30, 2023.” In addition, the diagram reflects the following activity of BGC Class A common stock, BGC Class B common stock, and BGC Holdings partnership unit activity from July 1, 2023 through August 31, 2023 as follows: (a) 64.0 million shares of BGC Class B common stock issued to Cantor in exchange for Cantor’s 64.0 million BGC Holdings partnership units; (b) 5.8 million shares of restricted BGC Class A common stock issued for limited partnership interests; (c) 15.8 million shares of BGC Class B common stock distributed by Cantor in satisfaction of its remaining deferred share distribution obligations pursuant to distribution rights provided to certain current and former partners of Cantor; (d) the restrictions released on 6.2 million shares of BGC Class A common stock; (e) 0.4 million shares of BGC Class A common stock which were converted from 0.4 million shares of Class B common stock distributed by Cantor in satisfaction of its remaining deferred share distribution obligations pursuant to distribution rights provided to certain current and former partners of Cantor; (f) 4.6 million shares of BGC Class A common stock repurchased by us; (g) 0.8 million shares of BGC Class A common stock issued for vested RSUs; (h) 0.4 million shares of

 

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BGC Class A common stock issued for contingent shares issued in exchange for acquisition units; and (i) 0.3 million shares of BGC Class A common stock issued for contingent shares issued in exchange for former partners’ units in BGC Holdings. No shares of Class A common stock were issued by us under our acquisition shelf Registration Statement on Form S-4 (Registration No. 333-233761) between July 1, 2023 and August 31, 2023; 17.7 million of such shares remain available for issuance by us under such Registration Statement. Also, an immaterial number of shares of Class A common stock were issued by us under our DRIP Registration Statement (Registration No. 333-173109) between July 1, 2023 and August 31, 2023; 9.2 million of such shares remain available for issuance by us under the DRIP Registration Statement..

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 short- and longer-term performance, with the goal of increasing stockholder value over the long term.

We believe the compensation of our executive officers should reflect their success in attaining key corporate objectives, such as growth or maintenance of market position, success in attracting and retaining qualified brokers and other professionals, increasing or maintaining revenues and/or profitability, developing new products and marketplaces, completing acquisitions, dispositions, restructurings, and other value-enhancing transactions and integrating any such transactions, as applicable, meeting established goals for operating earnings, earnings per share and increasing the total return for stockholders, including stock price and/or dividend increases, and maintaining and developing customer relationships and long-term competitive advantage. Such objectives may also include the ability to respond to extraordinary events and manage the business under changing health, environmental and financial circumstances. Although the vote is advisory and non-binding on the Board, the Compensation Committee considers the results of the “say-on-pay” vote.

Executive compensation should also reflect achievement of 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.

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 and, historically, partnership, awards, as described below.

Historically, our compensation philosophy and structure has been based on the use of cash and partnership units. However, following the Corporate Conversion, the equity portion of our compensation structure will no longer be based upon the issuance of partnership units and we will instead shift to the use of equity awards issued under the Equity Plan in order to incentivize and retain our employees, executive officers, and directors, such as RSUs.

Our Board and our Compensation Committee initially determined that Messrs. Lutnick, Merkel, Windeatt, and Bisgay were our executive officers for 2022. On June 6, 2022, Mr. Hauf became Chief Financial Officer and an executive officer. Mr. Bisgay resigned as Chief Financial Officer on that date and no longer serves as an executive officer.

 

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Overview of Compensation and Processes

For 2022, 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 and Participation 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. Going forward, our compensation philosophy is generally expected to remain the same, except that following the Corporate Conversion, the equity portion of our compensation structure will no longer be based upon the issuance of partnership units and we will instead shift to the use of equity awards issued under the Equity Plan.

From time to time, we may also restructure the existing compensation arrangements of our executive officers, as described below. We may also adopt various policies related to or in addition to such restructurings, including with respect to the 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 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, the Equity Plan and, prior to the Corporate Conversion, the Participation Plan.

From time to time, our Compensation Committee has engaged a compensation consultant in connection with its compensation decisions. With respect to 2022, 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 2022. For 2022, the Committee and the Advisor also reviewed additional pay for performance considerations and metrics and other measures including GAAP and non-GAAP financial results, results of certain businesses such as Fenics, growth in margins, front-office productivity, catalyst transactions, acquisitions, 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 2022. The Committee also reviewed various tax and other considerations with respect to the monetization of executive partnership units, including in connection with the Corporate Conversion. 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. 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

 

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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.

Our policy for allocating between currently paid short- and long-term compensation is designed to ensure adequate base compensation to attract and retain talented executive officers, while providing incentives to maximize long-term value for our Company and our stockholders. Cash compensation is provided in the form of base salary to meet competitive salary norms and reward superior performance on an annual basis, and in the form of bonuses and awards for achievement of specific short-term goals or in the discretion of the Compensation Committee. Equity and partnership awards 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 (and partnership awards prior to the Corporate Conversion) under our Equity Plan (and the Participation Plan prior to the Corporate Conversion) to our executive officers.

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 shall consider 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. 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.

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.

Prior to the Corporate Conversion, we provided long-term incentives to our executive officers through grants of limited partnership interests under the Participation Plan and exchange rights or cash settlement awards in connection with such partnership units and RSAs, RSUs and other equity grants under our Equity Plan. In addition, prior to the Corporate Conversion executive officers may have received a portion of their Incentive Plan bonuses in equity or partnership awards, rather than cash, with the number of awards determined by reference to the market price of a share of our Class A common stock on the date that the award was granted or such other date that awards to executive officers are made generally. Historically, grants under our Equity Plan and the Participation Plan that have had vesting provisions have had time-based, rather than performance-based, vesting schedules, although both plans are flexible enough to provide for performance-based awards. Going forward, the equity portion of our compensation structure will no longer be based upon the issuance of partnership units and we will instead shift to the use of equity awards issued under the Equity Plan.

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

 

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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 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.

In attempting to strike this 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 (or, prior to the Corporate Conversion, partnership awards), rather than cash, and to include restrictions on vesting, resale and forfeiture in any such equity (or, prior to the Corporate Conversion, partnership awards).

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. 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. Traditionally, the Committee generally has not granted options and equity-based awards such as RSUs to executives and has emphasized instead these flexible and retentive limited partnership units; however, following the Corporate Conversion the Committee expects to shift to the use of equity awards issued under the Equity Plan for future grants. The Committee granted NPSUs, along with PSUs/PPSUs, and LPUs/PLPUs, provided as long-term incentives to executive officers, which awards were generally coupled with performance-based grants of exchange rights and cash settlement awards. Going forward, following the Corporate Conversion, the Committee may issue RSUs, RSAs, options, and other forms of compensation, in future grants.

NPSUs have no value for accounting or other purposes at the time of grant, do not participate in quarterly partnership distributions, are not allocated any items of profit or loss and are 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.

 

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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 has 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.

Executive officers also received PPSUs in the U.S. or PLPUs in the U.K. These units are preferred limited partnership units that may be 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 have 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 may evolve 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.

 

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In 2022, our executive officers held much of their personal net worth in a combination of our equity-based awards, and in non-exchangeable and exchangeable limited partnership units. In 2022, Messrs. Lutnick, Merkel, Bisgay, Windeatt and Hauf held limited partnership units in BGC Holdings. Messrs. Lutnick, Merkel, and Bisgay 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 RSUs and RSAs that are substitutes for the non-exchangeable limited partnership units of BGC Holdings that they held prior to the Corporate Conversion.

Following the Corporate Conversion, the equity portion of our compensation structure will no longer be based upon the issuance of partnership units and we will instead shift to the use of equity awards issued under the Equity Plan in order to incentivize and retain our employees, executive officers, and directors, such as RSUs.

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 grants under our Equity Plan.

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.

For U.S. GAAP purposes, 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.

 

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Retentive Nature of Equity Awards

We consider our RSUs 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.

We do not currently have a formal general compensation recovery or “clawback” policy for our executive officers and others. Accordingly, we do not require additional share ownership or hold-through-retirement thresholds.

Consideration of Peer Data for 2022

As part of its compensation process, the Compensation Committee considered the year-on-year growth of various financial metrics as of the year ended December 31, 2022, which represented the latest public financial information available at the time, as compared with the average growth of these same metrics for BGC’s traditional public peers (e.g., TP ICAP and Tradition) compared to the prior year. These metrics included total consolidated revenue, year-to-date share price change, and other financial measures including GAAP and non-GAAP financial results, results of certain businesses such as Fenics and growth in margins and growth of valuable data, software and post-trade businesses which outpaced industry peers over the same time frame. Further, as BGC continues to automate and convert more of its voice/hybrid revenue base to higher margin, technology-driven Fenics revenue, the Committee also considered the year-on-year growth of total Fenics revenue for the same period, 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 certain areas of growth in specific metrics and products exceeded the comparable growth rate for revenue for certain products, total execution and data software and post-trade. Performance data, both financial and market data, are often reviewed by the Committee as presented by management and by the Advisor.

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, 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., Cowen, Inc., 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 2022 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

 

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received certain equity-based compensation directly from Newmark. For 2022, Mr. Lutnick spent at least 50% of his working time on BGC matters, Mr. Merkel spent at least 40% of his working time on BGC matters, and Mr. Windeatt spent 100% of his working time on Company matters. During his service as Chief Financial Officer of the Company until June 6, 2022, Mr. Bisgay devoted approximately 80% of his working time to BGC matters, and beginning on the date of his appointment as Chief Financial Officer of the Company on June 6, 2022, Mr. Hauf has spent all of his working time on BGC matters. Messrs. Lutnick, Merkel, Windeatt and Hauf have spent 40%, 30%, 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/Payments for 2022

Base salary and similar cash payment rates for 2022 were established in March 2022 by our Compensation Committee for all of our executive officers. In setting the base rates for 2022, the Committee considered the qualifications, experience and responsibilities of our executive officers. The BGC base rates for 2022 were continued at $1,000,000 for Messrs. Lutnick and Merkel, $600,000 for Mr. Bisgay, although his actual salary for his role as Chief Financial Officer through June 5, 2022 was $320,548, and £600,000 (approximately $782,880 as of March 14, 2022) for Mr. Windeatt. Mr. Hauf’s annual base salary of $600,000 was set in June 2022 when he became Chief Financial Officer, and his actual salary received in 2022 was $344,083.

Base Salaries/Payments for 2023

Base salary and similar cash payment 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 BGC base rates for 2023 were continued at $1,000,000 for Messrs. Lutnick and Merkel. The BGC base 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 “Compensation Discussion and Analysis – Employment Agreements and Deeds of Adherence” for more information. The BGC base rate for Mr. Hauf from $600,000 in 2022 to $700,000 in 2023 in connection with his additional financial efforts and responsibilities.

Bonus Compensation

Notwithstanding the elimination of the exception to the $1,000,000 limit on deductibility for qualified performance-based compensation under Section 162(m) of the Code pursuant to the Tax Cuts and Jobs Act of 2017, we 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;

 

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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 or partnership 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.

Incentive Plan Bonus Guidelines for 2022

In March 2022, our Compensation Committee determined that Messrs. Lutnick, Merkel, Windeatt and Bisgay would be participating executives for 2022 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. Following his appointment as Chief Financial Officer on June 6, 2022, our Compensation Committee determined that Mr. Hauf would be a participating executive for 2022 in our Incentive Plan.

For 2022, the Compensation Committee used the same performance criteria for all executive officers and set a bonus for 2022 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 2022, as calculated on substantially the same basis as the Company’s financial results press release for 2021, or (ii) the Company achieved improvement or percentage growth in gross revenue or total transaction volumes for any product for 2022 as compared to 2021 over any of its peer group members or industry measures, as reported in the Company’s 2022 financial results press release, in each case calculated on substantially the same basis as

 

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in the Company’s financial results press release for 2021 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, limited partnership units or other equity or partnership awards permitted under our Equity Plan, the Participation 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 2022

On April 18, 2023, having determined that the Performance Goals established in the first quarter of 2022 had been met for 2022, our Compensation Committee made awards to the participating executive officers for 2022 under our Incentive Plan. The awards were granted using a stock price of $4.59 with respect to Messrs. Howard Lutnick Stephen Merkel, Jason Hauf, Steve Bisgay, and Sean Windeatt and provided a combination of short- and long-term incentives that align the Company’s financial performance with its executive compensation. In addition to short-term cash compensation awarded to certain executives, the Committee awarded significant portions of its 2022 compensation to all executives in the form of long-term partnership units. All of such 2022 partnership awards were forfeitable in the event that any such executive was to leave the Company and compete or otherwise violate applicable partnership obligations. Most units were eligible for partnership distributions which were tied to the Company’s current and future earnings. The units awards were issued as non-exchangeable unit awards that may be made exchangeable into the Company’s common stock at the Committee’s discretion, thus incentivizing future performance by aligning it with the Company’s stock price and performance.

In making its year-end bonus determination for 2022, the Committee considered both 2022 performance and future strategic positioning, the improvements in stock price and catalyst transactions, as well as the Company’s financial performance as a whole and results in various businesses, particularly Fenics, including as compared to peers. The impact of any of these measures during 2023 or beyond may materially impact the value of current and previous partnership awards, thus aligning the interests of the executives with those of our stockholders. These awards were also expected to incentivize our executive officers with respect to future performance and encourage ongoing contributions to our business.

The specific awards to our executive officers were as follows:

 

   

Mr. Lutnick’s 2022 award consisted of an aggregate BGC bonus of $12,000,000 paid $2,000,000 in current cash compensation and $10,000,000 in a long-term partnership award represented by 1,416,122 non-exchangeable BGC Holdings PSUs and 762,527 non-exchangeable BGC Holdings PPSUs at $4.59 per unit. This long-term unit award was intended to align Mr. Lutnick’s compensation with the Company’s earnings and, over time, in the event such units became exchangeable, its stock performance with respect to the PSUs. The bonus for Mr. Lutnick is $1 million higher than what Mr. Lutnick was awarded with respect to calendar year 2021. The Committee focused on Mr. Lutnick’s efforts in historic catalyst transactions and strategic guidance and emphasis on positioning the Company for expected future results and the results of our business in increasing Mr. Lutnick’s Incentive Plan award for the year.

 

   

Mr. Merkel’s BGC 2022 award of $1,000,000 for 2022 was paid $500,000 in current cash compensation and $500,000 paid in a long-term partnership award represented by 54,466

 

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non-exchangeable BGC Holdings NPSU-CVs at $4.59 per unit and 54,466 non-exchangeable BGC Holdings NPPSU-CVs at $4.59 per unit. The BGC standalone bonus for 2022 awarded to Mr. Merkel is $250,000 higher than what Mr. Merkel was awarded with respect to calendar year 2021. In awarding Mr. Merkel a 2022 bonus under the Incentive Plan, the Committee considered his role in managing legal and regulatory issues during the year, his strategic guidance and overall leadership of the Company’s complex business, legal and regulatory matters in 2022.

 

   

Mr. Windeatt’s 2022 award of £1,700,000 ($2,113,440 as of April 18, 2023) was paid (i) £250,000 in current cash compensation; (ii) £1,158,000 in a long-term partnership award represented by 40,625 non-exchangeable BGC Holdings NLPU-CVs and 36,026 non-exchangeable BGC Holdings NPLPU-CVs at $4.59 per unit, as well as 154,046 BGC Holdings LPU-NEWs, and 82,948 BGC Holdings PLPU-NEWs at $4.59 per unit, as described below, which were scheduled to have certain exchange rights beginning April 18, 2025 upon certain terms and conditions; and (iii) £292,000 representing 20% of a previously issued grant award to Mr. Windeatt in connection with his contract extension on November 5, 2020, represented by 91,685 non-exchangeable BGC Holdings LPUs and 49,369 non-exchangeable BGC Holdings PLPUs at $2.84 per unit. The 2022 bonus for Mr. Windeatt is £500,000 higher than what Mr. Windeatt was awarded with respect to calendar year 2021. In determining the specific 2022 Incentive Plan bonus for Mr. Windeatt, the Committee considered his increased responsibilities and duties including management of brokerage relationships and brokers, and the Company’s financial performance.

 

   

Mr. Hauf’s 2022 award of $650,000 was paid (i) $337,500 in current cash compensation; (ii) $62,500 in a long-term partnership award represented by 6,808 non-exchangeable BGC Holdings NPSU-CVs at $4.59 per unit and 6,808 non-exchangeable BGC Holdings NPPSU-CVs; and (iii) $250,000 attributed to Mr. Hauf’s previously issued BGC Holdings PSUs / PPSUs award effective July 1, 2022 in connection with Mr. Hauf’s sign-on bonus. In determining the specific 2022 Incentive Plan bonus for Mr. Hauf, the Committee considered his strong efforts in managing the financial reporting function and problem-solving and strategy. Mr. Hauf’s 2022 award represents an award for the portion of the year he served as Chief Financial Officer of the Company beginning on June 6, 2022.

 

   

Mr. Bisgay’s aggregate 2022 award of $534,247 was paid $346,192 in current cash compensation and $188,055 in a long-term partnership award represented by 20,485 non-exchangeable BGC Holdings NPSU-CVs and 20,485 non-exchangeable BGC Holdings NPPSU-CVs at $4.59 per unit. In determining the specific 2022 Incentive Plan bonus for Mr. Bisgay, the Committee noted his responsibilities and duties with respect to financial reporting and treasury matters for the portion of the year in which he served and efforts to acclimate his successor. Mr. Bisgay’s 2022 award represents an award for the portion of the year he served as Chief Financial Officer of the Company until June 6, 2022.

Mr. Windeatt’s 2022 year-end New BGC Holdings NLPU and NPLPU awards (also called “NLPU-NEW” and “NPLPU-NEW” units) had the following features in accordance with Mr. Windeatt’s membership in the U.K. Partnership: (a) their effective grant date was April 18, 2023 for future exchange right eligibility purposes and (b) they were scheduled to become exchangeable or exchanged for (in the case of NLPU-NEWs, for shares of our Class A common stock, or in the case of NPLPU-NEWs, the determination amount) as of April 18, 2025 or as soon as practicable thereafter; provided that, as of such exchangeability date: (a) Mr. Windeatt remains a member in good standing of the U.K. Partnership and has complied at all times with his then-current Deed of Adherence with the U.K. Partnership, the BGC Holdings Partnership Agreement, and all other agreements with BGC Holdings or an affiliate thereof, and (b) 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 to his performance evaluation(s) and adherence to regulatory obligations, compliance requirements, and applicable laws. The NLPU-NEWs and NPLPU-NEWs reflect the revised design and terms of the U.K. Partnership structure generally based on current tax guidance.

 

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For all compensation that relied upon converting U.S. dollars into pounds, the Company’s records of the GBP FX exchange rate on April 18, 2023, the date that our Compensation Committee approved the 2022 year-end compensation, was used. Such exchange rate was 1.2432 USD to 1 GBP.

In making its bonus determinations for 2022, our Compensation Committee considered the pay practices of the Company’s peer group and other companies, including a compensation survey prepared by, and advice from, the Advisor. In particular, it also considered the revenue and earnings performance of the Company as a whole and specific businesses, including Fenics, margin improvements and specific factors as compared to peers’ strategic positioning, the Company’s stock price, individual management and contributions toward achievement of strategic goals and overall financial and operating results. These awards were also expected to incentivize our executive officers with respect to future performance and encourage ongoing contributions to management, our results and our existing and future businesses.

In 2022, the Incentive Plan cash bonus for Messrs. Lutnick, Merkel, Windeatt, Hauf, and Bisgay as a percentage of the overall total compensation paid to them by BGC was approximately 15.38%, 25.0%, 10.87%, 33.95% and 40.5%, respectively.

Incentive Plan Bonus Guidelines for 2023

In April 2023, our Compensation Committee determined that Messrs. Lutnick, Merkel, Windeatt and Hauf, our executive officers, would be participating executives for 2023 in our Incentive Plan. For 2023, the 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 achieves operating profits or Adjusted Earnings for 2023, as calculated on substantially the same basis as the Company’s financial results press release for 2022, or (ii) the Company achieves improvement or percentage growth in gross revenue or total or net transaction volumes for any product for 2023 as compared to 2022 over any of its peer group members or other 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 other 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, including the Corporate Conversion. Following the Corporate Conversion, such guidelines are in effect with respect to BGC Group in accordance with the Incentive Plan and the Equity Plan, as applicable, or any applicable successor plan of BGC Group. As each of the Company’s executive officers also provides services to certain of our operating partnerships and subsidiaries, potential bonuses for 2023 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 establish 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. The Committee further retains discretion to authorize bonuses and other awards to the participating executives regardless of whether or not such bonuses and awards are tax deductible under tax law in effect at the time of such bonuses and awards.

Equity Plan and Participation Plan Awards

It is the Compensation Committee’s general policy to award 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

 

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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.

Prior to the Corporate Conversion, the Participation Plan provided for the grant or sale of BGC Holdings limited partnership units. 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. Partnership units in BGC Holdings (other than NPSUs and NLPUs) were entitled to participate in preferred or quarterly partnership distributions from BGC Holdings and (other than Preferred Units and NPSUs and NLPUs) were eligible to be made exchangeable for shares of Class A common stock. We viewed these incentives as an effective tool in motivating, rewarding and retaining our executive officers.

Our Compensation Committee retains the right to grant a combination of forms of such awards under our Equity Plan 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, to grant awards to non-executive officer employees of our Company under the Equity Plan and to establish sub-plans for such persons.

Prior to the Corporate Conversion, our executive officers and other employees were offered the opportunity to purchase limited partnership units. The Compensation Committee and Mr. Lutnick held the discretion to determine the price of any purchase right for partnership units, which was set using a preferential or historical prices that are less than the prevailing market price of our Class A common stock.

Following the Corporate Conversion, the Participation Plan was terminated and the Compensation Committee has indicated that it expects to focus on the grant of equity-based and cash compensation under the BGC Group Equity Plan going forward.

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 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.

 

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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 August 31, 2023, 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 489.8 million shares of BGC Class A common stock.

Timing of Awards

Equity awards (and prior to the Corporate Conversion, partnership 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. From time to time, grants to executive officers may be made on a mid-year or other basis in the event of business developments, changing compensation requirements or other factors, in the discretion of the Committee.

Our policy 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. As discussed above, with respect to limited partnership units prior to the Corporate Conversion and other equity 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.

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 shall 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.

 

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2020 Unit Redemptions and Exchanges

Effective as of January 1, 2020, consistent with the schedule previously approved by the Compensation Committee, 18,750 BGC Holdings NPSUs and 8,521 Newmark Holdings NPSUs held by Mr. Windeatt were cancelled and replaced by 12,188 non-exchangeable BGC Holdings LPUs and 6,563 non-exchangeable BGC Holdings PLPUs at a determination price of $5.94 per unit, 5,541 non-exchangeable Newmark Holdings LPUs, and 2,984 non-exchangeable Newmark Holdings PLPUs at a determination price of $12.64.

On March 2, 2020, consistent with the schedule previously approved by the Compensation Committee, the Compensation Committee approved the grant of exchange rights to Mr. Merkel with respect to 110,000 non-exchangeable PSUs and 90,000 non-exchangeable PPSUs (at an average determination price of $5.6757 per unit). The Compensation Committee also approved the grant of exchange rights to Mr. Merkel with respect to an additional 250,065 non-exchangeable BGC Holdings PSUs and 175,568 non-exchangeable BGC Holdings PPSUs (at an average determination price of $5.6757 per unit). These additional exchange rights involved units that were the subject of previous dollar-denominated awards under the Incentive Bonus Plan reported in column (g) of the Summary Compensation Table at full notional value. On March 20, 2020, the Company repurchased 185,300 of such 360,065 exchangeable BGC Holdings PSUs at the average price of shares of Class A common stock sold under the Company’s controlled equity offering from March 10, 2020 to March 13, 2020 less 1% (approximately $4.0024 per limited partnership interest, for an aggregate purchase price of approximately $741,644) and redeemed 122,579 of such 265,568 exchangeable BGC Holdings PPSUs for $661,303, for an aggregate payment of $1,402,947. On July 30, 2020, the Company redeemed the remaining 174,765 exchangeable BGC Holdings LPUs held by Mr. Merkel at the price of $2.76, the closing price of our Class A common stock on July 30, 2020. In connection with the redemption of the 174,765 exchangeable BGC Holdings LPUs on July 30, 2020, 142,989 exchangeable BGC Holdings PLPUs were redeemed for $846,182.

On March 2, 2020, the Compensation Committee approved the grant of exchange rights to Mr. Windeatt with respect to 519,725 non-exchangeable BGC Holdings LPUs and 97,656 non-exchangeable BGC Holdings PLPUs (at the average determination price of $6.6128 per unit). On August 5, 2020, the Company redeemed 436,665 exchangeable BGC Holdings LPUs held by Mr. Windeatt at the price of $2.90, the closing price of our Class A common stock on August 5, 2020. In connection with the redemption of the 436,665 exchangeable BGC Holdings LPUs, 96,216 exchangeable BGC Holdings PLPUs were redeemed for $637,866 for taxes. In connection with the redemption, 20,849 exchangeable BGC Holdings LPUs and 1,440 exchangeable BGC Holdings PLPUs were redeemed for zero (at an average determination price of $5.4971 per unit) upon exchange in connection with Mr. Windeatt’s U.K. Partnership status.

Effective April 1, 2020, consistent with the schedule previously approved by the Compensation Committee, 100,000 BGC Holdings NLPUs and 45,455 Newmark Holdings NLPUs held by Mr. Windeatt were cancelled and replaced by 100,000 non-exchangeable BGC Holdings LPUs and 45,455 non-exchangeable Newmark Holdings LPUs.

On August 5, 2020, the Compensation Committee approved the grant of exchange rights to Mr. Windeatt with respect to 40,437 non-exchangeable BGC Holdings LPUs and 21,774 non-exchangeable BGC Holdings PLPUs (at the average determination price of $6.6128 per unit). On August 5, 2020 the Company redeemed these 40,437 exchangeable BGC Holdings LPUs held by Mr. Windeatt at the price of $2.90, the closing price of our Class A common stock on August 5, 2020. In connection with the redemption of these 40,437 exchangeable BGC Holdings LPUs, the 21,774 exchangeable BGC Holdings PLPUs were redeemed for $136,305 for taxes.

In addition to the foregoing, on August 6, 2020, Mr. Windeatt was granted exchange rights with respect to 43,890 non-exchangeable Newmark Holdings LPUs that were previously granted to Mr. Windeatt. Additionally, Mr. Windeatt was granted the right to exchange for cash 17,068 non-exchangeable Newmark Holdings PLPUs held by Mr. Windeatt. As these Newmark Holdings LPUs and PLPUs were previously non-exchangeable, the Company took a transaction charge of $381,961 upon grant of exchangeability. On August 6, 2020, Newmark

 

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redeemed the 40,209 Newmark Holdings exchangeable LPUs held by Mr. Windeatt for an amount equal to the closing price of Newmark’s Class A common stock on August 6, 2020 ($4.16) multiplied by 37,660 (the amount of shares of Newmark’s Class A common stock the 40,209 Newmark Holdings LPUs were exchangeable into based on the exchange ratio at August 6, 2020). In connection with the redemption of these 40,209 exchangeable Newmark Holdings LPUs, 15,637 exchangeable Newmark Holdings PLPUs were redeemed for $194,086 for taxes. In connection with the redemption, 3,681 exchangeable Newmark Holdings LPUs and 1,431 exchangeable Newmark Holdings PLPUs were redeemed for zero upon exchange in connection with Mr. Windeatt’s U.K. Partnership status.

2021 Unit Redemptions and Exchanges

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;

 

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(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.

2022 Unit Redemptions and Exchanges

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 (and it was expected that 91,685 BGC Holdings NLPUs and 49,369 NLPUs would be converted in each of 2023, 2024 and 2025).

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 “— Historical Standing Policy for Mr. Lutnick.”

See “—Corporate Conversion Compensation Matters—Compensation Actions Taken In Connection with the Corporate Conversion” and “—Historical 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.

Historical Standing Policy for Mr. Lutnick

In December 2010, as amended in 2013, our Audit Committee and Compensation Committee approved a standing policy that gives Mr. Lutnick the same right, subject to certain conditions, to accept or waive opportunities offered to other executive officers to participate in any opportunity to monetize or otherwise

 

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provide liquidity with respect to some or all of their non-exchangeable limited partnership units or to accelerate the lapse of or eliminate any restrictions on transferability with respect to shares of restricted stock. In January 2017, the policy was further amended to include recent executive awards such as transactions that monetize and/or provide liquidity of equity or partnership awards granted to executive officers, including the right to exchange non-distribution earning units such as NPSUs into distribution earning units such as PSUs, or convert preferred units such as PPSUs into regular, non-preferred units, such as PSUs, based upon the highest percentage of distribution earning awards and in the same proportion of regular to preferred units held by another executive.

The policy provided generally that Mr. Lutnick shall be treated no less favorably than, and in proportion to, any other executive officer with respect to the change, right or modification of equity or partnership awards, which include, but are not limited to, opportunities (i) to have non-exchangeable units redeemed or replaced by other non-exchangeable units; (ii) to have non-exchangeable units received upon such replacement redeemed by BGC Holdings for cash, or, with the concurrence of Cantor, granted exchange rights for shares of Class A common stock; (iii) to accelerate the lapse of or eliminate any restrictions on transferability with respect to restricted shares of Class A common stock; and (iv) to replace non-distributing units with distributing units and replace preferred units with non-preferred units. The policy could also include exchange of units into HDUs or other units with a capital account and the cancellation or redemption of non-exchangeable units and the issuance of new shares or units.

Under the policy, Mr. Lutnick had the right to accept or waive in advance some or all of the foregoing offers of opportunities that we offered 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 was 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 was offered to any other executive officer) and was equal to the greatest proportion of outstanding units and the greatest percentage of shares of restricted stock with respect to which any other executive officer was offered with respect to all of such opportunities. This policy could result in grants to him of exchange rights/cash settlement awards, grants of HDUs or other units with a capital account, the cancellation or redemption of non-exchangeable units and the issuance of new shares or units, or the acceleration of the lapse of restrictions on transferability of shares of restricted stock owned by him if a future triggering event under the policy occurred.

On March 2, 2020, 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 is 8,055,781 non-exchangeable BGC Holdings PSUs and 1,678,326 non-exchangeable BGC Holdings PPSUs with an aggregate determination amount of $11,508,700.

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,

 

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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 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.

Standing Policy for Mr. Lutnick Following the Corporate Conversion

On July 1, 2023, in connection with the Corporate Conversion, the Board of Directors and Audit Committee of BGC Group approved an updated 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

 

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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.

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 August 31, 2023, Mr. Lutnick’s balance under the standing policy was zero.

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.

 

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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.

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 in this Proxy Statement 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 in this Proxy Statement.

Dated: September 28, 2023

 

THE COMPENSATION COMMITTEE
Linda A. Bell, Chair
David P. Richards
Arthur U. Mbanefo
William Addas (joined Compensation Committee July 1, 2023)

 

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EXECUTIVE COMPENSATION

Summary Compensation Table

 

(a)

Name and

Principal

Position

 

(b)

Year

   

(c)

Salary($)

   

(d)

Bonus
($)

   

(e)

Equity
Awards
(Related
to Prior
Periods)
($)(2)

   

(f)

Option
Awards
($)

   

(g)

Non-Equity
Incentive Plan
Compensation
($)(3)

   

(h)

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)

   

(i)

All Other
Compensation
($)

   

(j)

Total ($)

 

Howard W. Lutnick,

    2022 (1)      1,000,000       —        —        —        12,000,000       —        —        13,000,000  

Chairman of the Board of

    2021 (1)      1,000,000       —        7,831,243       —        11,000,000       —        —        19,831,243  

Directors and Chief Executive Officer

    2020 (1)      1,000,000       —        —        —        11,000,000       —        —        12,000,000  

Stephen M. Merkel,

    2022 (1)      1,000,000       —        —        —        1,000,000       —        —        2,000,000  

Executive Vice President

and General Counsel

    2021 (1)      1,000,000       —        —        —        750,000       —        —        1,750,000  
    2020 (1)      1,000,000       —        530,400       —        750,000       —        —        2,280,400  

Sean A. Windeatt,

    2022 (1)      745,920       —        —        —        2,113,440       —        —        2,859,360  

Chief Operating Officer(4)

    2021 (1)      782,880       —        334,695       —        1,565,760       —        —        2,683,335  
    2020 (1)      685,000       —        378,319       —        1,781,000       —        —        2,844,319  

Jason W. Hauf

    2022 (1)      344,083       —        —        —        650,000       —        —        994,083  

Chief Financial Officer(5)

                 

Steven Bisgay,

    2022 (1)      320,548       —        —        —        534,247       —        —        854,795  

Former Chief Financial Officer(6)

    2021 (1)      750,000       —        —        —        1,250,000       —        —        2,000,000  
   

 

2020

 

(1) 

 

    750,000       —        —        —        1,250,000       —        —        2,000,000  

 

(1)

The awards represented in column (g) for 2021 for Mr. Lutnick were made on December 21, 2021 and reflected a stock price of $4.57 per share, and for Mr. Merkel, Mr. Windeatt and Mr. Bisgay, the awards represented in column (g) for 2021 were made on March 14, 2022 and reflected a stock price of $4.33 per share. The awards represented in column (g) for 2020 were made on April 8, 2021 and reflected a stock price of $5.38 per share. The awards represented in column (g) for 2022 were made on April 18, 2023 and reflected a stock price of $4.59 per share.

(2)

The 2021 amount under column (e) for Mr. Lutnick of $7,831,243 represents: (i) the aggregate fair value of the redemption of 1,713,620 BGC Holdings PSUs for zero; and (ii) the issuance of 1,713,620 shares of BGC Class A common stock at $4.57 per share. These shares were issued to Mr. Lutnick in connection with his December 2021 monetization of long-term incentive awards originally issued to Mr. Lutnick in 2016 in the form of NPSUs, which were not previously included in column (g) at full notional value. Mr. Lutnick has not sold these shares.

The 2021 amount in column (e) for Mr. Windeatt of $334,695 represents the fair value of 62,211 exchangeable BGC Holdings LPUs held by

Mr. Windeatt, repurchased by the Company at a price of $5.38 per unit, for an aggregate of $334,695. These LPUs were granted to Mr. Windeatt in exchange for certain long-term incentive awards in the form of NLPUs granted to Mr. Windeatt in 2017, which were not previously included in column (g) at full notional value.

 

 

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In February 2019, Mr. Lutnick was granted the right to exchange 876,852 non-exchangeable BGC Holdings PSUs into 876,852 non-exchangeable partnership units with a capital account (HDUs) (which, based on the closing price of the BGC Class A common stock of $6.20 per share on February 6, 2019, had a value of $5,436,482) and the right to exchange for cash 203,125 BGC Holdings non-exchangeable PPSUs held by Mr. Lutnick (which had an average determination price of $6.95 per unit) for a payment of $1,411,720 for taxes when the foregoing PPSUs are exchanged. These PSUs and PPSUs were issued to Mr. Lutnick in connection with prior year-end compensation grants under the BGC Incentive Plan and were for the applicable period. Mr. Lutnick exercised his right to exchange these units in December 2021, and Mr. Lutnick has not sold any shares in connection with these rights.

The 2020 amount under column (e) for Mr. Merkel of $530,400 represents the aggregate fair value of: (i) the redemption of 90,000 BGC Holdings PPSUs at the determination price of $2.52 per PPSU and the redemption of 110,000 BGC Holdings PSUs for zero; and (ii) the issuance of 110,000 shares of BGC Class A common stock at $2.76 per share, the closing price of BGC Class A common stock on July 30, 2020. All of the units were the result of a March 2019 contractual grant of BGC Holdings PSUs/PPSUs.

The 2020 amount under column (e) for Mr. Windeatt of $378,319 represents the aggregate fair value of: 15,238 exchangeable BGC Holdings PLPUs held by Mr. Windeatt that were redeemed at the determination price of $6.1184 per PLPU and 76,973 exchangeable BGC Holdings LPUs that were redeemed for $2.90 per unit (the August 5, 2020 closing price of BGC Class A common stock) and 1,316 exchangeable BGC Holdings LPUs and 512 exchangeable PLPUs held by Mr. Windeatt that were redeemed for zero in connection with Mr. Windeatt’s U.K. Partnership status, plus 6,137 Newmark LPUs made exchangeable by the Committee on August 5, 2020, and exchanged for 5,748 Newmark shares at $4.16 per share on August 6, 2020 based on the exchange ratio of 0.9366 and 2,387 Newmark PLPUs with a determination price of $15.90 which were made exchangeable by the Committee on August 5, 2020.

Column (e) does not include certain compensatory grants of BGC Holdings units described below because such grants did not represent a right to acquire shares of BGC Class A common stock and had no grant date fair value for accounting purposes. Column (e) also does not include certain monetizations of BGC Holdings units described below that would otherwise be included in column (e) because the BGC Holdings units involved were the subject of previous dollar-denominated awards under the Incentive Plan reported in column (g) of the Summary Compensation Table at full notional value.

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. Column (e) does not include the fair value of these grants of exchange rights because each of those LPUs and PLPUs was originally granted to Mr. Windeatt in partial payment of bonuses awarded to him under the BGC Incentive Plan for prior years and reflected in column (g) of the table for each of those prior years at their full notional dollar values.

On March 2, 2020, the Committee authorized redeeming a sufficient number of BGC Holdings PNLPU-NEW units held by Mr. Windeatt at the appropriate time each year to permit him to fund his tax liability for his BGC Holdings NLPU-NEW and PNLPU-NEW awards in accordance with the UK Partnership structure. Pursuant to this authorization, 45,143 of Mr. Windeatt’s PNLPU-NEW units issued effective April 1, 2020 were redeemed for a cash payment based upon $4.84 per unit, to fund his tax liability due in January 2021 for the BGC Holdings NLPU-NEW and PNLPU-NEW awards issued effective April 1, 2020.

On March 2, 2020, consistent with the schedule previously approved by the Compensation Committee, the Compensation Committee approved the grant of exchange rights to Mr. Merkel with respect to 110,000

 

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non-exchangeable PSUs and 90,000 non-exchangeable PPSUs (at an average determination price of $5.6757 per unit). The Compensation Committee also approved the grant of exchange rights to Mr. Merkel with respect to an additional 250,065 non-exchangeable BGC Holdings PSUs and 175,568 non-exchangeable BGC Holdings PPSUs (at an average determination price of $5.6757 per unit).On March 20, 2020, the Company repurchased 185,300 of such 360,065 exchangeable BGC Holdings PSUs at the average price of shares of Class A common stock sold under the Company’s controlled equity offering from March 10, 2020 to March 13, 2020 less 1% (approximately $4.0024 per limited partnership interest, for an aggregate purchase price of approximately $741,644) and redeemed 122,579 of such 265,568 exchangeable BGC Holdings PPSUs for $661,303, for an aggregate payment of $1,402,947. On July 30, 2020, the Company redeemed the remaining 174,765 exchangeable BGC Holdings LPUs held by Mr. Merkel at the price of $2.76, the closing price of our Class A common stock on July 30, 2020. In connection with the redemption of the 174,765 exchangeable BGC Holdings LPUs on July 30, 2020, 142,989 exchangeable BGC Holdings PLPUs were redeemed for $846,182. Column (e) does not include the fair value of these grants of exchange rights because each of those LPUs and PLPUs was originally granted to Mr. Merkel in partial payment of bonuses awarded to him under the BGC Incentive Plan for prior years and reflected in column (g) of the table for each of those prior years at their full notional dollar values.

On March 2, 2020, the Compensation Committee approved the grant of exchange rights to Mr. Windeatt with respect to 519,725 non-exchangeable BGC Holdings LPUs and 97,656 non-exchangeable BGC Holdings PLPUs (at the average determination price of $6.6128 per unit). On August 5, 2020, the Company redeemed 436,665 exchangeable BGC Holdings LPUs held by Mr. Windeatt at the price of $2.90, the closing price of our Class A common stock on August 5, 2020. In connection with the redemption of the 436,665 exchangeable BGC Holdings LPUs, 96,216 exchangeable BGC Holdings PLPUs were redeemed for $637,866 for taxes. In connection with the redemption, 20,849 exchangeable BGC Holdings LPUs and 1,440 exchangeable BGC Holdings PLPUs were redeemed for zero (at an average determination price of $5.4971 per unit) upon exchange in connection with Mr. Windeatt’s U.K. Partnership status. Additionally, on August 5, 2020, the Compensation Committee approved the grant of exchange rights to Mr. Windeatt with respect to 40,437 non-exchangeable BGC Holdings LPUs and 21,774 non-exchangeable BGC Holdings PLPUs (at the average determination price of $6.6128 per unit). On August 5, 2020 the Company redeemed these 40,437 exchangeable BGC Holdings LPUs held by Mr. Windeatt at the price of $2.90, the closing price of our Class A common stock on August 5, 2020. In connection with the redemption of these 40,437 exchangeable BGC Holdings LPUs, the 21,774 exchangeable BGC Holdings PLPUs were redeemed for $136,305 for taxes. In addition to the foregoing, on August 6, 2020, Mr. Windeatt was granted exchange rights with respect to 43,890 non-exchangeable Newmark Holdings LPUs that were previously granted to Mr. Windeatt. Additionally, Mr. Windeatt was granted the right to exchange for cash 17,068 non-exchangeable Newmark Holdings PLPUs held by Mr. Windeatt. As these Newmark Holdings LPUs and PLPUs were previously non-exchangeable, the Company took a transaction charge of $381,961 upon grant of exchangeability. On August 6, 2020, Newmark redeemed the 40,209 Newmark Holdings exchangeable LPUs held by Mr. Windeatt for an amount equal to the closing price of Newmark’s Class A common stock on August 6, 2020 ($4.16) multiplied by 37,660 (the amount of shares of Newmark’s Class A common stock the 40,209 Newmark Holdings LPUs were exchangeable into based on the exchange ratio at August 6, 2020). In connection with the redemption of these 40,209 exchangeable Newmark Holdings LPUs, 15,637 exchangeable Newmark Holdings PLPUs were redeemed for $194,086 for taxes. In connection with the redemption, 3,681 exchangeable Newmark Holdings LPUs and 1,431 exchangeable Newmark Holdings PLPUs were redeemed for zero upon exchange in connection with Mr. Windeatt’s U.K. Partnership status. On April 8, 2021, the Compensation Committee 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. Column (e) does not include the fair value of these grants of exchange rights because each of those LPUs and PLPUs was originally granted to Mr. Windeatt in partial payment of bonuses awarded to him under the BGC Incentive Plan for prior years and reflected in column (g) of the table for each of those prior years at their full notional dollar values.

 

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(3)

The amounts in column (g) reflect the bonus awards to the named executive officers under our Incentive Plan.

For 2022, Mr. Lutnick’s Incentive Plan bonus for BGC was $12,000,000 paid $2,000,000 in cash and $10,000,000 in a partnership award represented by 1,416,122 non-exchangeable BGC Holdings PSUs and 762,527 non-exchangeable BGC Holdings PPSUs at $4.59 per unit; Mr. Merkel’s Incentive Plan bonus was $1,00,000 paid $500,000 in cash and $500,000 in a partnership award represented by 54,466 non-exchangeable BGC Holdings NPSU-CVs and 54,466 non-exchangeable BGC Holdings NPPSU-CVs at $4.59 per unit; Mr. Windeatt’s Incentive Plan bonus was $2,113,440 (£1,700,000) paid $310,800 (£250,000) in cash and $1,439,626 (£1,158,000) in the form of 40,625 non-exchangeable BGC Holdings NLPU-CVs and 36,026 non-exchangeable BGC Holdings NPLPU-CVs at $4.59 per unit, as well as 154,046 non-exchangeable BGC Holdings LPU-NEWs and 82,948 BGC Holdings PLPU-NEWs at $4.59 per unit, which were scheduled to have certain exchange rights beginning April 18, 2025 upon certain conditions, and $363,014 (£292,000) attributed to Mr. Windeatt’s previously issued BGC Holdings NLPU / NPLPU award effective January 1, 2021 based upon the expectation of including $400,000 of the January 1, 2021 award as part of Mr. Windeatt’s annual compensation for calendar years 2020 through 2024; Mr. Bisgay’s Incentive Plan bonus was $534,247 paid $346,192 in cash and $188,055 in a partnership award represented by 20,485 non-exchangeable BGC Holdings NPSU-CVs and 20,485 non-exchangeable BGC Holdings NPPSU-CVs at $4.59 per unit; and Mr. Hauf’s Incentive Plan bonus was $650,000 paid $337,500 in cash and $62,500 in a partnership award represented by 6,808 non-exchangeable BGC Holdings NPSU-CVs and 6,808 non-exchangeable BGC Holdings NPPSU-CVs at $4.59 per unit and $250,000 attributed to Mr. Hauf’s previously issued BGC Holdings PSUs / PPSUs award effective July 1, 2022 in connection with Mr. Hauf’s sign-on bonus.

For 2021, Mr. Lutnick’s Incentive Plan bonus for BGC was $11,000,000 paid $2,000,000 in cash and $9,000,000 in a partnership award represented by 1,280,088 non-exchangeable BGC Holdings PSUs and 689,278 non-exchangeable BGC Holdings PPSUs at $4.57 per unit; Mr. Merkel’s Incentive Plan bonus was $750,000 paid $0 in cash and $750,000 in a partnership award represented by 86,605 non-exchangeable BGC Holdings NPSU-CVs and 86,605 non-exchangeable BGC Holdings NPPSU-CVs at $4.33 per unit; Mr. Windeatt’s Incentive Plan bonus was $1,565,760 (£1,200,000) paid $287,056 (£220,000) in cash and $1,278,704 (£980,000) in the form of 25,234 non-exchangeable BGC Holdings NLPU-CVs and 22,378 non-exchangeable BGC Holdings NPLPU-CVs at $4.33 per unit, as well as 103,812 non-exchangeable BGC Holdings LPU-NEWs and 55,899 BGC Holdings PLPU-NEWs at $4.33 per unit, which were scheduled to have certain exchange rights beginning March 14, 2024 upon certain conditions and $381,002 (£292,000) attributed to Mr. Windeatt’s previously issued BGC Holdings NLPU / NPLPU award effective January 1, 2021 based upon the expectation of including $400,000 of the January 1, 2021 award as part of Mr. Windeatt’s annual compensation for calendar years 2020 through 2024; and Mr. Bisgay’s Incentive Plan bonus was $1,250,000 paid $750,000 in cash and $500,000 in a partnership award represented by 57,737 non-exchangeable BGC Holdings NPSU-CVs and 57,737 non-exchangeable BGC Holdings NPPSU-CVs at $4.33 per unit.

For 2020, Mr. Lutnick’s Incentive Plan bonus for BGC was $11,000,000 paid $2,000,000 in cash and $9,000,000 in a partnership award represented by 1,087,361 non-exchangeable BGC Holdings PSUs and 585,502 non-exchangeable BGC Holdings PPSUs; Mr. Merkel’s Incentive Plan bonus was $750,000 paid $312,500 in cash and $437,500 in a partnership award represented by 40,660 non-exchangeable BGC Holdings NPSUs and 40,660 non-exchangeable BGC Holdings NPPSUs; Mr. Windeatt’s Incentive Plan bonus was $1,781,000 (£1,300,000) paid $102,750 (£75,000) in cash and $1,278,210 (£933,000) in the form of 21,324 non-exchangeable BGC Holdings NLPUs and 18,910 non-exchangeable BGC Holdings NPLPUs as well as 128,279 non-exchangeable BGC Holdings LPU-NEWs which had certain exchange rights beginning April 1, 2023 and 69,073 BGC Holdings PLPU-NEWs, and $400,000 (£292,000) attributed to Mr. Windeatt’s previously issued BGC Holdings NLPU / NPLPU award effective January 1, 2021 based upon the expectation of including $400,000 of the January 1, 2021 award as part of Mr. Windeatt’s annual compensation for calendar years 2020 through 2024; and Mr. Bisgay’s Incentive Plan bonus was $1,250,000 paid $1,025,000 in cash and $225,000 in a partnership award represented by 20,911 non-exchangeable BGC Holdings NPSUs and 20,911 non-exchangeable BGC Holdings NPPSU.

 

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(4)

For 2022, Mr. Windeatt’s base salary was £600,000 and the $745,920 base salary reflected in the table was calculated using an exchange rate of 1.2432, which was the exchange rate in effect as of April 18, 2023. For 2021, Mr. Windeatt’s base salary was £600,000, and the $782,880 base salary reflected in the table was calculated using an exchange rate of 1.30, which was the exchange rate in effect as of March 14, 2022. For 2020, Mr. Windeatt’s base salary was £500,000, and the $685,000 base salary reflected in the table was calculated using an exchange rate of 1.37, the exchange rate in effect as of April 8, 2021.

 

(5)

Mr. Hauf started as Chief Financial Officer of the Company on June 6, 2022. The amount reflected in column (c) for Mr. Hauf for 2022 is Mr. Hauf’s actual (not annualized) paid amount.

 

(6)

Mr. Bisgay served as Chief Financial Officer of the Company until June 6, 2022. The amount reflected for 2022 are Mr. Bisgay’s actual (not annualized) paid amount.

Grants of Plan-Based Awards

The following table shows all grants of plan based awards to the named executive officers in 2022:

 

(a)

 

(b)

   

(c)

   

(d)

   

(e)

   

(f)

   

(g)

   

(h)

   

(i)

   

(j)

   

(k)

   

(l)

 
          Estimated Possible Payouts     Estimated Future Payouts Under    

All Other
Grant

Awards:
Number of
Shares of
Stock or

Units (#)

   

All Other
Option

Awards:
Number of
Securities
Underlying

Options (#)

   

Exercise

or Base
Price of
Option
Awards

($/Sh)

   

Grant Date

Fair Value
of Stock
and Option

Awards ($)

 
Name   Grant
Date
    Under Non-Equity Incentive
Plan Awards
    Equity Incentive
Plan Awards
 
  Threshold     Target     Maximum     Threshold     Target    

Maximum

 
  ($)     ($)     ($)(1)     (#)     (#)     (#)  

Howard W. Lutnick

    —        —        —        25,000,000       —        —        —        —        —        —        —   

Stephen M. Merkel

    —        —        —        25,000,000       —        —        —        —        —        —        —   

Sean A. Windeatt

    —        —        —        25,000,000       —        —        —        —        —        —        —   

Jason W. Hauf

    —        —        —        25,000,000       —        —        —        —        —        —        —   

Steven Bisgay

    —        —        —        25,000,000       —        —        —        —        —        —        —   

 

(1)

The amounts in column (e) reflect the maximum possible individual payment under our Incentive Plan. During 2022, there were no specific minimum and target levels under the Incentive Plan. The $25,000,000 maximum amount was the maximum annual amount available for payment to any one executive officer under the Incentive Plan for 2022, and our Compensation Committee retained negative discretion to award less than this amount. Actual amounts paid to each named executive officer for 2022 are set forth in column (g) of the Summary Compensation Table.

 

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Outstanding Equity Awards at Fiscal Year End

None of the named executive officers held any unexercised options as of December 31, 2022. The following table shows all equity awards for services to the registrant held by each of the named executive officers as of December 31, 2022:

 

   

Option Awards

   

Grant Awards

 

(a)

Name

 

(b)

Number

of Securities

Underlying

Unexercised

Options/

Exchangeable

Units

Exercisable/

Exchangeable

(#)(1)

   

(c)

Number of

Securities

Underlying

Unexercised

Options/

Exchangeable

Units

Unexercisable/

Unexchangeable

(#)(2)

   

(d)

Equity

Incentive

Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options (#)

   

(e)

Option

Exercise

Price

($)(1)

   

(f)

Option

Expiration

Date

   

(g)

Number

of

Shares

or Units

of

Stock

That

Have

Not

Vested

(#)

   

(h)

Market

Value

of

Shares

or

Units

of

Stock

That

Have

Not

Vested

   

(i)

Equity

Incentive

Plan

Awards:

Number

of

Unearned

Shares,

Units or

Other

Rights

That

Have Not

Vested

(#)

   

(j)

Equity

Incentive

Plan

Awards:

Market

or Payout

Value of

Unearned

Shares,

Units or

Other

Rights

That

Have Not

Vested

($)

 

Howard W. Lutnick

    520,380       —        —        —        —        —        —        —        —   

Stephen M. Merkel

    —        —        —        —        —        —        —        —        —   

Sean A. Windeatt

    —        —        —        —        —        —        —        —        —   

Jason Hauf

    —        —        —        —        —        —        —        —        —   

Steven Bisgay

    —        —        —        —        —        —        —        —        —   

 

(1)

Column (b) represents 520,380 exchangeable BGC Holdings PSUs held by Mr. Lutnick as of December 31, 2022. These exchangeable BGC Holdings units were exchangeable on a 1:1 basis for shares of BGC’s Class A common stock. As of December 30, 2022, the closing market price of a share of our Class A common stock was $3.77. Column (b) does not include 1,474,930 BGC Holdings HDUs held by Mr. Lutnick as a result of converting PSUs with HDU conversion rights into HDUs.

Non-exchangeable BGC Holdings PSUs or LPUs held as of December 31, 2022 that were eligible to be granted exchange rights into our Class A common stock were as follows: Mr. Lutnick: 9,916,605 BGC Holdings PSUs; Mr. Merkel: 74,896 BGC Holdings PSUs and 8,132 PSU-CVs; Mr. Windeatt: 568,308 BGC Holdings LPUs, 4,265 BGC Holdings LPU-CVs and 232,091 BGC Holdings LPU-NEWs; Mr. Bisgay: 39,788 BGC Holdings PSUs and 4,182 BGC Holdings LPU-CVs; Mr. Hauf: 37,092 BGC Holdings PSUs.

BGC Holdings NPSUs/NLPUs held as of December 31, 2022 that were eligible to be replaced by non-exchangeable BGC Holdings PSUs/PPSUs or LPUs/PLPUs, which in turn would be eligible to be granted exchange rights for shares of our Class A common stock or cash, were as follows: Mr. Merkel: 119,133 BGC Holdings NPSU-CVs; Mr. Windeatt: 275,055 BGC Holdings NLPUs and 42,293 BGC Holdings NLPU-CVs; and Mr. Bisgay: 74,465 BGC Holdings NPSU-CVs.

 

(2)

Column (c) does not include (i) 689,278 non-exchangeable BGC Holdings PPSUs held by Mr. Lutnick as of December 31, 2022; (ii) 124,972 non-exchangeable BGC Holdings PLPU-NEWs, 37,506 PNLPU-CVs, 3,782 PLPU-CVs, 148,106 BGC Holdings PNLPUs and 144,474 BGC Holdings PLPUs held by Mr. Windeatt as of December 31, 2022; (iii) 8,132 non-exchangeable BGC Holdings PPSU-CVs and 119,133 non-exchangeable BGC Holdings NPPSU-CVs held by Mr. Merkel as of December 31, 2022; (iv) 39,788 non-exchangeable BGC Holdings PPSUs, 74,465 NPPSU-CVs and 4,182 non-exchangeable BGC

 

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  Holdings PPSU-CVs held by Mr. Bisgay as of December 31, 2022; and (v) 37,092 non-exchangeable BGC Holdings PPSUs held by Mr. Hauf as of December 31, 2022, because they did not represent a right to acquire shares of our Class A common stock.

Option Exercises and Stock Vested

During 2022 no options were exercised by and no stock vested for any of the named executive officers.

Potential Payments upon Change in Control

The following table provides information regarding the estimated amounts payable to the named executive officers listed below, upon either termination or continued employment if such change in control had occurred on December 31, 2022 under their change in control and other agreements, described below, in effect on December 31, 2022 (including NPSUs granted and Incentive Plan and other bonuses and commissions paid during and with respect to the year ended December 31, 2022). The amounts are determined, where applicable, using the $3.77 closing market price of our Class A common stock as of December 31, 2022 in accordance with SEC rules. All amounts, including estimated vesting of equity compensation and tax gross-up payments, are subject to the specific terms and conditions set forth in the applicable change of control or other agreements and applicable law:

 

Name   

Base

Salary ($)

    Bonus ($)     Vesting of
Equity
Compensation
($)(1)
    

Consultancy
Fees

($)(2)

    

Welfare
Benefit
Continuation

($)

     Tax
Gross-Up
Payment
($)(3)
     Total ($)  

Howard W. Lutnick

                  

Termination of Employment by Mr. Lutnick

     2,000,000       24,000,000       —         —         109,475        —         26,109,475  

Extension of Employment

     1,000,000       12,000,000       —         —         109,475        —         13,109,475  

Termination of Employment by the Company within 3 years

     1,000,000       12,000,000       —         —            —         13,000,000  

Stephen M. Merkel

                  

Termination of Employment by Mr. Merkel

     2,000,000       2,000,000       —         —         100,049        —         4,100,049  

Extension of Employment

     1,000,000       1,000,000       —         —         100,049        —         2,100,049  

Termination of Employment by the Company within 3 years

     1,000,000       1,000,000       —         —         —         —         2,000,000  

Sean A. Windeatt

                  

Termination of Employment

     1,491,840 (4)      4,226,880 (4)      —         248,640        19,817        —         5,987,177  

Extension of Employment

     745,920 (4)      2,113,440 (4)      —         —         —         —         2,859,360  

Termination of Employment not in connection with a Change in Control

     —        —        —         248,640        —         —         248,640  

 

(1)

Upon a change in control at December 31, 2022, Messrs. Lutnick, and Merkel would have had the right to receive (i) replacement of any partnership units ineligible for exchange rights with new partnership units

 

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  eligible for such exchange rights, (ii) grants of immediately exchangeable exchange rights (into stock or cash, as applicable) with respect to any non-exchangeable limited partnership units (including those replacement units described in clause (i)); and (iii) the immediate lapse of any restrictions on transferability of any shares of restricted stock held by them at such time. Upon a change in control at December 31, 2022, Mr. Windeatt would have the right to receive (ii) and (iii) above.

At December 31, 2022, Messrs. Lutnick, Merkel and Windeatt held the following numbers of such BGC Holdings non-exchangeable non preferred partnership units (PSUs or LPUs, LPU-NEWs, PSU-Hs, NPSUs/NLPUs, NPSU-CVs and NLPU-CVs that would be replaced with PSUs or LPUs): Mr. Lutnick: 9,916,605 units; Mr. Merkel: 202,161 units; and Mr. Windeatt: 1,122,012 units. Based on the closing price of the BGC Class A common stock of $3.77 on December 30, 2022, the aggregate value of the shares and cash underlying such grants for each such person would have been as follows: Mr. Lutnick: $37,385,601; Mr. Merkel: $762,147; and Mr. Windeatt: $4,229,985. The foregoing does not include Mr. Lutnick’s 1,474,930 HDUs which have a capital account associated of $9,144,567.

At December 31, 2022, Messrs. Lutnick, Merkel and Windeatt held the following numbers of non-exchangeable BGC Holdings NPPSUs/NPPSU-CVs/PPSUs/PPSU-Hs/PLPUs/PLPUs-NEWs/PNLPU-CVs or PNLPUs: Mr. Lutnick: 689,278 BGC Holdings PPSUs, Mr. Merkel: 127,265 non-exchangeable BGC Holdings PPSU-CVs/NPPSU-CVs; Mr. Windeatt: 458,840 non-exchangeable BGC Holdings PNLPUs/PLPUs/PLPUs-NEWs/PNLPU-CVs. Based on the applicable determination price of each grant of the BGC holdings NPPSUs/NPPSU-CVs/PPSUs/PPSU-Hs/PLPUs/PLPU-NEWs/PNLPU-CVs or PNLPUs, as applicable, the cash value underlying such exchange rights would have been $3,150,000 with respect to the non-exchangeable BGC Holdings PPSUs for Mr. Lutnick, $593,750 with respect to the non-exchangeable BGC Holdings NPPSU-CVs/PPSU-CVs for Mr. Merkel; and $1,740,870 with respect to the non-exchangeable BGC Holdings PLPUs/PNLPUs/PNLPU-CVs/PLPU-NEWs/PNLPU-NEWs for Mr. Windeatt.

In each case, the units exclude any units subject to redemption for zero or for cash in accordance with applicable agreements. See “—Change in Control Agreements” below.”

As of December 31, 2022, Messrs. Lutnick, Merkel and Windeatt did not hold any shares of BGC restricted stock.

With respect to a number of the non-exchangeable BGC Holdings PSUs, non-exchangeable BGC Holdings PPSUs, non-exchangeable BGC Holdings NPSUs, non-exchangeable BGC Holdings LPUs and/or non-exchangeable BGC Holdings PLPUs issued prior to December 13, 2017, the ratable portion of the remaining Newmark Holdings units held by Mr. Windeatt in association with the foregoing units would be added to such executive’s above amount to the extent applicable and in accordance with his arrangement. Based upon Mr. Windeatt’s remaining holdings as of December 31, 2022, this would include 325,127 non-exchangeable Newmark Holdings LPUs (which, at the December 31, 2022 Newmark Class A common stock price of $7.97 as adjusted by an exchange ratio of 0.9303, had a value of $2,410,651), and 30,285 PLPUs with a determination amount of $278,174. BGC would have borne the expense of the above Newmark Holdings transactions if they had occurred.

 

(2)

Mr. Windeatt is entitled to receive consulting fees in the event of a termination of his membership in the U.K. Partnership as described below.

 

(3)

Mr. Lutnick is also entitled to a tax gross-up for excess parachute payments, if any, that would be due in respect of the impact a change in control would have on certain of his outstanding partnership units as stated in footnote (1). The aggregate tax-gross up payment upon a termination of employment in connection with a change of control is $38,891,469 when calculated based upon the equity compensation in footnote (1), base salary, bonus, and welfare benefit continuation as of December 31, 2022. The aggregate tax-gross up payment upon an extension of employment in connection with a change of control is $4,651,528 when calculated based upon the equity compensation in footnote (1), base salary, bonus, and welfare benefit continuation as of December 31, 2022.

 

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Mr. Merkel is also entitled to a tax gross-up for excess parachute payments, if any, that would be due in respect of the impact a change in control would have on certain of his outstanding partnership units as stated in footnote (1). There is no aggregate tax-gross up payment upon either a termination of employment, or upon an extension of employment, in connection with a change of control due when calculated based upon the equity compensation in footnote (1), base salary, bonus, and welfare benefit continuation as of December 31, 2022.

 

(4)

For 2022, Mr. Windeatt received £600,000 in salary and his bonus was £1,700,000. The $745,920 salary and $2,113,440 bonus reflected in the table were calculated using an exchange rate of 1.2432, the exchange rate in effect as of April 18, 2023. In addition, in the event that Mr. Windeatt remains a member in the U.K. Partnership on the second anniversary of the change of control as described below, Mr. Windeatt will receive an additional payment equal to the payment he received at the time of the change of control.

Change in Control Agreements

On August 3, 2011, each of Messrs. Lutnick and Merkel entered into an amended and restated Change in Control Agreement with us, which we refer to as the “Change in Control Agreements,” providing that, upon a change in control, all stock options, RSUs, restricted stock, and other awards based on shares of Class A common stock held by them immediately prior to such change in control shall vest in full and become immediately exercisable, and all limited partnership units in BGC Holdings shall, if applicable, vest in full and be granted immediately exchangeable exchange rights for shares of Class A common stock. The amended and restated Change in Control Agreements also clarify the provisions relating to the continuation of medical and life insurance benefits for two years following termination or extension of employment, as applicable.

Under the Change in Control Agreements, if a change in control of the Company occurs (which will occur in the event that Cantor or one of its affiliates ceases to have a controlling interest in us) and Mr. Lutnick or Mr. Merkel elects to terminate his employment with us, such executive officer will receive in a lump sum in cash an amount equal to two times his annual base salary and the annual bonus paid or payable by us for the most recently completed year, including any bonus or portion thereof that has been deferred, and receive medical benefits for two years after the termination of his employment (provided that, if Mr. Lutnick or Mr. Merkel becomes re-employed and is eligible to receive medical benefits under another employer-provided plan, the former medical benefits will be secondary to the latter). If a change in control occurs and Mr. Lutnick or Mr. Merkel does not so elect to terminate his employment with us, such executive officer will receive in a lump sum in cash an amount equal to his annual base salary and the annual bonus paid or payable for the most recently completed fiscal year, including any bonus or portion thereof that has been deferred, and receive medical benefits, provided that in the event that, during the three-year period following the change in control, such executive officer’s employment is terminated by us (other than by reason of his death or disability), he will receive in a lump sum in cash an amount equal to his annual base salary and the annual bonus paid or payable for the most recently completed fiscal year, including any bonus or portion thereof that has been deferred. The Change in Control Agreements further provide for certain tax gross-up payments, provide for no duty of Mr. Merkel or Mr. Lutnick to mitigate amounts due by seeking other employment and provide for payment of legal fees and expenses as a result of any dispute with respect to the Change in Control Agreements. The Change in Control Agreements further provide for indemnification of Mr. Lutnick and Mr. Merkel in connection with a challenge thereof. In the event of death or disability, or termination in the absence of a change in control, such executive officer will be paid only his accrued salary to the date of death, disability, or termination. The Change in Control Agreements are terminable by the Company upon two years’ advance notice on or after April 1, 2018.

Following the Corporate Conversion, the Change in Control Agreements BGC Partners entered into with Messrs. Lutnick and Merkel were assumed by BGC Group, with such modifications thereto as were necessary to reflect the Corporate Conversion (but not with any changes to the benefits provided thereunder).

 

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Employment Agreements and Deeds of Adherence

Beginning December 2012, many of our senior members of staff in the U.K. (including Mr. Windeatt) became members of the U.K. Partnership. Mr. Windeatt continues to serve as an executive officer, though it is intended that the majority of his day-to-day activities will be performed as a member of the U.K. Partnership.

As members of the U.K. Partnership, members render services to us as partners following their execution of Deeds of Adherence to the U.K. Partnership. Members receive Allocated Monthly Advance Drawings, which we refer to as “Drawings,” which are comparable to the salary payments under prior employment agreements, and are eligible for discretionary allocations of the U.K. Partnership’s profits. Prior to the Corporate Conversion, the members could use their discretionary profit allocations to acquire partnership units in BGC Holdings. Any such Drawings or allocations, as well as any equity or partnership grants, are or were subject to the direction and control of our Compensation Committee and, in the case of allocations and equity or partnership grants, are or were made under the Incentive Plan, the Equity Plan, or the Participation Plan. The employment contract of a U.K. employee is terminated upon them becoming a member of the U.K. Partnership and their outstanding PSUs redeemed.

In connection with their participation in the U.K. Partnership, U.K. members were issued BGC Holdings NLPU-NEWs and BGC Holdings NPLPU-NEWs. The U.K. Partnership is intended to improve the flexibility of our operating model in the U.K. and also to make certain benefits available to us and the relevant individuals from a U.K. employment, tax and regulatory perspective. Our Compensation Committee continues to review the performance and determine the compensation of the U.K. executive officers under its compensation philosophy and processes.

Sean A. Windeatt Agreements

Mr. Windeatt originally had a standard employment agreement with BGC Brokers pursuant to which he was initially paid £200,000 per year. His base salary was raised to £275,000 as of January 1, 2010, £325,000 as of January 1, 2011, £375,000 ($582,750 as of January 1, 2012), £400,000 ($663,000 as of January 1, 2014), £500,000 ($685,000 as of March 1, 2019) and £600,000 ($822,000 as of January 1, 2021). He was also eligible for discretionary and Incentive Plan, Equity Plan and Participation Plan awards.

On December 31, 2012, Mr. Windeatt’s employment with BGC Brokers terminated, and he executed a deed of adherence as a member of the U.K. Partnership. Effective January 22, 2014, Mr. Windeatt executed an amended and restated deed of adherence to the U.K. Partnership (the “Windeatt Deed”). On November 5, 2020, Mr. Windeatt executed a Deed of Amendment (the “2020 Deed of Amendment”) with the U.K. Partnership which amends the Windeatt Deed, dated January 22, 2014, between Mr. Windeatt and the U.K. Partnership and the Deed of Amendment, dated February 24, 2017, between Mr. Windeatt and the U.K. Partnership (together, the “Deed”).

The Deed states that Mr. Windeatt may (i) not compete with the U.K. Partnership or its affiliates or solicit clients or counterparties of the U.K. Partnership or any affiliate for 24 months after his termination, and (ii) not solicit members or employees of the U.K. Partnership or any affiliate to leave their employment of or to discontinue the supply of his or her services to the U.K. Partnership or any affiliate for 24 months after his termination.

Effective February 24, 2017, Mr. Windeatt executed a deed of amendment to the Windeatt Deed (the “Windeatt Amendment”). The Compensation Committee approved the Windeatt Amendment and a related letter agreement, dated February 24, 2017 (the “Windeatt Letter Agreement”), providing for a grant to Mr. Windeatt of 400,000 BGC Holdings NPSUs (the “Windeatt 2017 NPSUs”) and 100,000 BGC Holdings LPUs, effective as of January 1, 2017.

As described above, on or about each April 1 of 2018 through 2021, pursuant to the Windeatt Letter Agreement, the Partnership granted an aggregate award of 100,000 non-exchangeable BGC Holdings LPUs in

 

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replacement of 100,000 of the Windeatt 2017 NPSUs, provided that (i) the Company, inclusive of all affiliates thereof, earns, in aggregate, at least $5 million in gross revenues in the calendar quarter in respect of which the applicable award of LPUs is to be granted, and (ii) except in the event of Mr. Windeatt’s death prior to the applicable grant date, Mr. Windeatt remains a member in the U.K. Partnership and has complied at all times with the Windeatt Deed (as amended) and Partnership Agreement, as of the applicable grant date. The LPUs were subject to customary adjustments due to membership in the U.K. Partnership upon their exchange or redemption (e.g., 9.75% cancellation/forfeiture upon exchange).

In the event of a change of control of the U.K. Partnership (which will occur if the Company is no longer controlled by Cantor or a person or entity controlled by, controlling or under common control with Cantor), the individual or entity that acquires control would have the option to either extend the term of Mr. Windeatt’s membership in the U.K. Partnership for a period of three years from the date the change of control took effect (if the remaining term of the Windeatt Deed at the time of the change of control is less than three years), or to terminate Mr. Windeatt’s membership. If the membership period is extended, Mr. Windeatt will be entitled to receive an amount equal to his aggregate profit allocation for the most recent full 12-month financial period (£600,000) in salary and any bonus paid) in addition to any other allocation that Mr. Windeatt would have been entitled to under the Deed. In addition, in the event that Mr. Windeatt remains a member in the U.K. Partnership on the second anniversary of the change of control (unless he is not engaged on such date solely as a result of termination by the continuing company under circumstances that constitute a fundamental breach of contract by it) and has not materially breached the Windeatt Deed, Mr. Windeatt will receive an additional payment equal to the payment he received at the time of the change of control. If Mr. Windeatt’s membership is terminated, he is entitled to receive two times his aggregate profit allocation under the Windeatt Deed for the most recent full financial period in full and final settlement of all claims.

In each case, Mr. Windeatt will receive full vesting and immediate exchangeability of all options, RSUs, restricted stock, and, if prior to the Corporate Conversion, LPUs, PLPUs and any other BGC Holdings partnership units held by Mr. Windeatt at the time of the change of control (but excluding certain units that were are granted solely for the purpose of participation in BGC Holdings quarterly distributions and will be redeemed for zero and unless otherwise provided in the applicable award agreement and including any such awards or units issued to him in connection with or related to such change in control) into either shares of Company Class A common stock or cash to the extent that any partnership units, such as PLPUs, cannot be exchanged into shares. Mr. Windeatt is also entitled to a continuation of benefits (e.g., health insurance) for two years and a pro rata discretionary profit allocation for the year of termination.

In the event of a change of control of the U.K. Partnership while Mr. Windeatt was providing substantial services to the Company or an affiliate thereof (the date such event takes effect, the “Windeatt Change of Control”), then (i) prior to the Corporate Conversion, the Partnership would grant exchangeable LPUs in replacement of any of the Windeatt 2017 NPSUs then held by Mr. Windeatt, and any such non-exchangeable BGC Holdings LPUs then held by Mr. Windeatt would become exchangeable for shares of the Company’s Class A common stock as follows, and (ii) following the Corporate Conversion, the vesting period for Mr. Windeatt’s RSUs and RSAs as follows: (a) in a lump sum following the third anniversary of the Windeatt Change of Control if Mr. Windeatt continuously provides substantial services (as an employee, member, partner, consultant or otherwise) to the Company, any of the individual(s) or entity(ies) which acquire(s) control of the Company (the “Windeatt Controller”), or any affiliate thereof for the three years after the Windeatt Change of Control, or (b) ratably on or about the first through third anniversaries following the Windeatt Change of Control if the Windeatt Controller permanently terminates Mr. Windeatt’s services in all capacities to the Company, the Windeatt Controller, and all affiliates thereof prior to the third anniversary of the Windeatt Change of Control (provided that, in the event of a termination between the first and third anniversaries of the Windeatt Change of Control, the portion of the payment attributed to the anniversary(ies) that passed prior to such termination shall be delivered in a lump sum following such termination, with the outstanding portion to be delivered in accordance with the remaining anniversary(ies)). These rights were subject to compliance by Mr. Windeatt of certain terms and conditions set forth in the applicable agreements, including not engaging in Competitive

 

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Activity (as such term is defined under the Partnership Agreement) at any time prior to the applicable grant of exchangeability. The grant of exchangeability with respect to such LPUs and the acceleration of the vesting with respect to such RSUs and RSAs would be determined in accordance with the Company’s practices when determining discretionary bonuses or awards, and any grants of exchangeability or acceleration of vesting would be subject to the approval of the Compensation Committee.

Under the 2020 Deed of Amendment, Mr. Windeatt’s membership in the U.K. Partnership was extended from a minimum initial period of up to and including March 31, 2024 to September 30, 2025 (the “Initial Period”). In addition, under the 2020 Deed of Amendment, commencing October 1, 2023, either party could terminate the Deed by giving written notice to the other party at least twenty-four months prior to the expiration of the Initial Period (which is an increase from twelve months). Mr. Windeatt’s membership, unless terminated earlier in accordance with the terms of the Deed, would continue following September 30, 2025 on the same terms and conditions set forth in the Deed until written notice to terminate was provided and the 24-month notice period expires.

Under the 2020 Deed of Amendment, Mr. Windeatt reports directly to the Chairman and/or Chief Executive Officer of the Company or his designate.

Pursuant to the 2020 Deed of Amendment, Mr. Windeatt was also entitled to an increase in drawings from an aggregate amount of £500,000 per year to an aggregate amount of £600,000 per year (£50,000 per month) effective January 1, 2021, which was to be reviewed by the Compensation Committee annually. Mr. Windeatt was also eligible for additional allocations of the U.K. Partnership’s profits, subject to the approval of the Compensation Committee.

In connection with and in consideration for Mr. Windeatt’s execution of the 2020 Deed Amendment, on November 5, 2020, the Company granted Mr. Windeatt 458,425 non-exchangeable, non-earning BGC Holdings NLPUs and 246,844 non-exchangeable non-earning BGC Holdings NPLPUs, which were determined by dividing $2,000,000 by $2.84 (which was the volume-weighted average price per share of BGC Class A common stock for the ten trading-day period covering the nine trading days immediately prior to, and the trading day of, November 5, 2020).

On July 12, 2023, Mr. Windeatt executed a Deed of Amendment (the “2023 Deed of Amendment”) with the U.K. Partnership which amends the Deed. Under the 2023 Deed of Amendment, Mr. Windeatt’s membership in the U.K. Partnership was extended from the Initial Period of up to and including September 30, 2025 to December 31, 2028. In addition, under the 2023 Deed of Amendment, commencing January 1, 2027, either party may terminate the Deed by giving written notice to the other party at least 24 months prior to the expiration of the Initial Period. Mr. Windeatt’s membership, unless terminated earlier in accordance with the terms of the Deed, will continue following December 31, 2028 on the same terms and conditions set forth in the Deed until written notice to terminate is provided and the 24-month notice period expires.

Pursuant to the 2023 Deed of Amendment, Mr. Windeatt is also entitled to an increase in drawings from an aggregate amount of £600,000 per year to an aggregate amount of £700,000 per year (£58,333.33 per month) effective January 1, 2023, which shall be reviewed by the Compensation Committee annually. Mr. Windeatt is also eligible for additional allocations of the U.K. Partnership’s profits, subject to the approval of the Compensation Committee.

In connection and in consideration for Mr. Windeatt’s execution of the 2023 Deed of Amendment, on July 10, 2023 the Company 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.

 

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In addition, the Compensation Committee approved a separate consultancy agreement between Mr. Windeatt and the U.K. Partnership dated February 24, 2017, under which Mr. Windeatt will be paid a fee of £8,333.33 per month (£100,000 per year) for his services, commencing upon the termination of his membership in the U.K. Partnership until the earlier of two years following such termination or such time as the U.K. Partnership chooses to terminate the engagement (the “Windeatt Consultancy Agreement”). The Windeatt Consultancy Agreement subjects Mr. Windeatt to substantially the same two-year restrictive covenants as in the Windeatt Deed subsequent to his consultancy termination.

2022 CEO Pay Ratio

The following information contains the relationship of the median annual total compensation of employees and independent contractors and brokers of BGC and its subsidiaries to the annual total compensation of Mr. Lutnick, the Chief Executive Officer and Chairman of the Board of Directors.

For 2022, we used the same median employee we used in 2021 as permitted by the SEC. Our median employee was a Production Support staff member in the United Kingdom. There has been no change in organizational structure, employee demographics or any employee compensation arrangements that would significantly affect our ability to use the previously identified median employee for this disclosure.

The pay ratio for the annual total compensation of the median employee to the CEO was calculated for the 2022 fiscal year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K and the pay ratio was determined to be as follows:

 

   

the annual total compensation of the median employee of the Company (other than the CEO) was $135,305

 

   

the annual total compensation of the CEO, as reported in the Summary Compensation Table, was $13,000,000; and

 

   

the ratio of the annual total compensation of the CEO to the median employee of the Company was approximately 96 to 1.

 

 

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Pay Versus Performance
We are required by SEC rules to disclose information regarding the relationship between compensation actually paid to Howard W. Lutnick, our principal executive officer (“PEO”) and NEOs other than the PEO (the
“non-PEO
NEOs”) and the financial performance of the Company. The following table sets forth additional compensation information for Howard W. Lutnick, our Chief Executive Officer (CEO), who serves as PEO, and the
non-PEO
NEOs, along with total stockholder return (“TSR”), net income, and the “Company Selected Measure,” which we have selected as Total Revenues, each for fiscal years 2020, 2021 and 2022. The amounts set forth below under the headings “Compensation Actually Paid to PEO” and “Average Compensation Actually Paid to
Non-PEO
NEOs” have been calculated in a manner consistent with Item 402(v) of Regulation
S-K.
Footnote 5 below sets forth the adjustments from the Total Compensation for the PEO and Average Total Compensation for the
non-PEO
NEOs reported in the Summary Compensation Table to arrive at the values presented for compensation actually paid for each of the fiscal years shown.
 
                           
Value of Initial Fixed $100
       
   
Summary
         
Average
Summary
Compensation
   
Average
Compensation
         
Peer Group
             
Year
 
Compensation
Table Total
for PEO
1
   
Compensation
Actually Paid
to PEO 
1
   
Table Total
for
Non-PEO

NEOs
2
   
Actually Paid
to
Non-PEO

NEOs
2
   
Total
Shareholder
Return
   
Total
Shareholder
Return
   
Net Income
(in thousands)
   
Total
Revenue
(in thousands)
 
(a)
 
(b)
   
(c)
   
(d)
   
(e)
   
(f)
   
(g)
   
(h)
   
(i)
 
2022
  $ 13,000,000     $ 13,098,272
5
 
  $ 2,236,079     $ 2,323,476
5
 
  $ 67.06     $ 72.01     $ 58,867     $ 1,795,302  
2021
  $ 19,831,245     $ 19,926,553
5
 
  $ 2,144,445     $ 2,189,041
5
 
  $ 81.86     $ 62.62     $ 153,488     $ 2,015,364  
2020
  $ 12,000,000     $ 12,156,610
5
 
  $ 2,847,239     $ 2,906,417
5
 
  $ 69.85     $ 74.23     $ 50,918     $ 2,056,761  
 
1
The PEO was Mr. Lutnick during all periods presented.
2
The
non-PEO
NEOs in fiscal year 2022 consisted of Messrs. Merkel, Windeatt, Hauf and Bisgay. Mr. Bisgay served as Chief Financial Officer of the Company until June 6, 2022, and Mr. Hauf began serving as Chief Financial Officer on that date. When calculating the average compensation for the
non-PEO
NEOs in fiscal year 2022, the portion of the year that each of Messrs. Bisgay and Hauf served as Chief Financial Officer was included in the denominator of such calculation, such that the two of them together were collectively treated as one NEO. The
non-PEO
NEOs in fiscal year 2021 consisted of Messrs. Merkel, Windeatt, and Bisgay, who each served for the entirety of the year. The
non-PEO
NEOs in fiscal year 2020 consisted of Messrs. Merkel, Windeatt, Bisgay, and Lynn. Mr. Lynn served as President of the Company until October 1, 2020, when he became Vice Chairman of the Company and no longer served as an executive officer. Accordingly, when calculating the average compensation for the
non-PEO
NEOs in fiscal year 2020, Mr. Lynn’s compensation for the entire year is included, as he continued his service to the Company after ceasing to be an executive officer. When calculating Mr. Windeatt’s portion of the average compensation for the
non-PEO
NEOs for each fiscal year, his portion was calculated using the applicable exchange rate as set forth in the notes to the Summary Compensation Table.
3
The peer group consists of Compagnie Financière Tradition SA and TP ICAP plc. The returns of the peer group companies have been weighted according to their U.S. dollar stock market capitalization for purposes of arriving at a peer group average. TSR is calculated as the cumulative total stockholder return, on a gross dividend reinvestment basis, of $100 invested in shares of each of the Company and the peer group on December 31, 2019.
4
The Company selected Total Revenues to be the most important financial performance measure that is not otherwise required to be disclosed in the table above used by the Company to link compensation actually paid to its NEOs for the most recently completed fiscal year to its performance. While Total Revenues was chosen for this table, our executive compensation programs use a balanced portfolio of measures to drive short and long-term objectives aligned with our strategy and shareholder interests as further described in our Compensation Discussion and Analysis above.
 
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5
For each year, “Compensation Actually Paid to PEO” in column (c) and “Average Compensation Actually Paid to
Non-PEO
NEOs” in column (e) reflect the following adjustments from Total Compensation amounts reported in the Summary Compensation Table (all amounts are averages for the
non-PEO
NEOs):
 
Adjustments to Determine Compensation Actually Paid to PEO
  
2022
    
2021
    
2020
 
Deduction for change in actuarial present value of accumulated benefit under all defined benefit and actuarial pension plans reported in the Summary Compensation Table
     —         —         —   
Increase for aggregate of service cost and prior service cost for all defined benefit and actuarial pension plans reported in the Summary Compensation Table
     —         —         —   
Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table
     —       ($  7,831,243      —   
Deduction for amounts reported under the “Option Awards” column in the Summary Compensation Table
     —         —         —   
Increase for fair value of stock and option awards granted during year that are outstanding and unvested as of
year-end
     —         —         —   
Increase/deduction for change in fair value as of
year-end
(from prior
year-end)
of stock and option awards granted in any prior year that were outstanding and unvested as of
year-end
     —         —         —   
Increase for fair value as of vesting date of stock and option awards granted and vested in the same year
     —         —         —   
Increase/deduction for change in fair value as of vesting date (from prior
year-end)
of stock and option awards granted in any prior year for which all vesting conditions were satisfied during year or at
year-end
     —       $ 7,831,243        —   
Deduction for fair value as of prior
year-end
of stock and option awards granted in any prior year that were forfeited during year
     —         —         —   
Increase for dollar value of any dividends or other earnings paid on stock or option awards in the year prior to the vesting date that are not otherwise included in total compensation for the year
   $ 98,272      $ 95,308      $ 156,610  
  
 
 
    
 
 
    
 
 
 
Total Adjustments
   $ 98,272      $ 95,308      $ 156,610  
  
 
 
    
 
 
    
 
 
 
 
71

Adjustments to Determine Compensation Actually Paid to PEO
  
2022
    
2021
    
2020
 
Deduction for change in actuarial present value of accumulated benefit under all defined benefit and actuarial pension plans reported in the Summary Compensation Table
     —         —         —   
Increase for aggregate of service cost and prior service cost for all defined benefit and actuarial pension plans reported in the Summary Compensation Table
     —         —         —   
Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table
     —       ($ 111,565    ($ 418,239
Deduction for amounts reported under the “Option Awards” column in the Summary Compensation Table
     —         —         —   
Increase for fair value of stock and option awards granted during year that are outstanding and unvested as of
year-end
     —         —         —   
Increase/deduction for change in fair value as of
year-end
(from prior
year-end)
of stock and option awards granted in any prior year that were outstanding and unvested as of
year-end
     —         —         —   
Increase for fair value as of vesting date of stock and option awards granted and vested in the same year
     —         —         —   
Increase/deduction for change in fair value as of vesting date (from prior
year-end)
of stock and option awards granted in any prior year for which all vesting conditions were satisfied during year or at
year-end
     —       $ 111,565      $ 418,239  
Deduction for fair value as of prior
year-end
of stock and option awards granted in any prior year that were forfeited during year
     —         —         —   
Increase for dollar value of any dividends or other earnings paid on stock or option awards in the year prior to the vesting date that are not otherwise included in total compensation for the year
   $ 87,397      $ 44,596      $ 59,178  
Total Adjustments
   $ 87,397      $ 44,596      $ 59,178  
 
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Analysis of the Information Presented in the Pay Versus Performance Table
While we utilize several performance measures to align executive compensation with Company performance, not all of those measures are presented in the Pay Versus Performance table set forth above. Moreover, we generally seek to incentivize long-term performance, and therefore we do not specifically align our performance measures with compensation that is actually paid (as computed in accordance with SEC rules) for a particular year. In accordance with Item 402(v) of Regulation
S-K,
we are providing the following descriptions of the relationships between (1) compensation actually paid to our PEO and average compensation actually paid to our
non-PEO
NEOs and (2) the Company’s performance with respect to TSR, net income and Total Revenues, our Company Selected Measure:
TSR. The graphs below show the relationship between (1) compensation actually paid to our PEO and the average of compensation actually paid to our
non-PEO
NEOs and our cumulative TSR and (2) our cumulative TSR and peer group TSR, over the three fiscal years ended December 31, 2022.
Compensation Actually Paid vs TSR
 
 
LOGO
TSR vs Peer TSR
 
 
LOGO
 
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Net Income. The graph below shows the relationship between compensation actually paid to our PEO and the average of the compensation actually paid to our
non-PEO
NEOs and net income, as reported in our consolidated financial statements, over the three fiscal years ended December 31, 2022.
Compensation Actually Paid vs Net Income
 
 
LOGO
Company Selected Measure. The graph below shows the relationship between compensation actually paid to our PEO and the average of the compensation actually paid to our
non-PEO
NEOs and our Total Revenues over the three fiscal years ended December 31, 2022.
Compensation Actually Paid vs Total Revenues (Company Selected Measure)
 
 
LOGO
 
 
74

Performance Measures Tabular List
The table below lists our most important performance measures, including the Company Selected Measure, used to link compensation actually paid for our NEOs to Company performance for the fiscal year ended December 31, 2022. The performance measures included in this table are not ranked by relative importance.
 
Performance Measures
Total Revenues
Total Fenics Revenues
Pre-tax
Adjusted Earnings
Data, Software & Post-Trade Growth
Catalyst Transactions and Hires, Acquisitions, and Strategy Development
Compensation of Directors
Directors who are also our employees do not receive additional compensation for serving as director. The compensation schedule for our
non-employee
directors is as follows: the annual cash retainer is $100,000, the annual stipend for the chair of our Compensation Committee is $15,000, the annual stipend for the chair of our Audit Committee is $25,000 and the annual stipend for the chair of our ESG Committee is $15,000. We also pay $2,000 for each meeting of our Board and $1,000 for each meeting of a committee of our Board actually attended, whether in person or by telephone. Additional fees may be paid for service on special ad hoc committees from time to time. Under our policy, none of our
non-employee
directors is paid more than $3,000 in the aggregate for attendance at meetings held on the same date. Only one meeting of our Board and Committees shall occur on each calendar day for which payment shall be provided.
Non-employee
directors may also receive additional per diem fees for services as a director at the rate of $1,000 per day, with a limit of $5,000 per matter, for additional time spent on Board or Committee matters as directed from time to time by the Board, including interviewing candidates and participating in the Company’s diversity recruiting program initiatives.
Non-employee
directors also are reimbursed for all
out-of-pocket
expenses incurred in attending meetings of our Board or committees of our Board on which they serve. In addition, at the end of the third quarter 2023 each
non-employee
director will also receive a
one-time
payment of $10,000 for reviewing, establishing, and reconstituting the corporate policies, records and procedures and applicable agreements for the Company in connection with the Corporate Conversion.
In addition to the cash compensation described above, under our current policy, upon the appointment or initial election of a
non-employee
director, we grant to such
non-employee
director RSUs equal to the value of shares of our Class A common stock that could be purchased for $70,000 at the closing price of our Class A common stock on the trading date of the appointment or initial election of the
non-employee
director (rounded down to the next whole share). These RSUs vest equally on each of the first two anniversaries of the grant date, provided that the
non-employee
director is a member of our Board at the opening of business on such dates.
Thereafter, we annually grant to each
non-employee
director RSUs equal to the value of shares of our Class A common stock that could be purchased for $50,000 on the date of his or her
re-election
in consideration for services provided. These RSUs will vest equally on each of the first two anniversaries of the grant date, provided that the
non-employee
director is a member of our Board at the opening of business on such dates.
 
75

The table below summarizes the compensation paid to our
non-employee
directors for the year ended December 31, 2022:
 
(a)
Name (1)
  
(b)
Fees Earned
or Paid in
Cash ($)
    
(c)
Stock
Awards
($)(2)
    
(d)
Option
Awards
($)(3)
    
(e)
Non-Equity

Incentive Plan
Compensation
($)
    
(f)
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)
    
(g)
All Other
Compensation
($)
    
(h)(4)(5)
Total ($)
 
Linda A. Bell
Director
     171,000        50,000        —         —         —         —         221,000  
David P. Richards
Director
     156,000        50,000        —         —         —         —         206,000  
Arthur U. Mbanefo
Director
     221,750        50,000        —         —         —         —         271,750  
Stephen T. Curwood
Former Director
     168,000        —         —         —         —         —         168,000  
William J. Moran
Former Director
     159,250        —         —         —         —         —         159,250  
 
(1)
Howard W. Lutnick, our Chairman of the Board of Directors and Chief Executive Officer, is not included in this table as he is an employee of our Company and thus received no compensation for his services as director. The compensation received by Mr. Lutnick as an employee of our Company is shown in the Summary Compensation Table. This table includes compensation paid with respect to 2022, including payments for 2022 that were made in January 2023. Messrs. Curwood and Moran departed the Board and Committees on December 30, 2022 following the 2022 Annual Meeting.
(2)
Reflects the grant date fair value of RSUs granted on December 30, 2022 to each of Messrs. Richards and Mbanefo and Dr. Bell. More information with respect to the calculation of these amounts is included in the notes to the consolidated financial statements included in the 2022 Form
10-K.
In 2022, each of Messrs. Mbanefo and Richards and Dr. Bell was granted 13,263 RSUs. As of December 31, 2022, Mr. Richards and Dr. Bell each had 13,263 RSUs outstanding and Mr. Mbanefo had 19,673 RSUs outstanding.
(3)
No options were granted to
non-employee
directors in 2022. As of December 31, 2022, none of the
non-employee
directors had any options outstanding.
(4)
Mr. Laguerre served on the Board of BGC Partners from January 2023 to June 2023 and is not reflected in the above table.
(5)
Mr. Addas joined the Board of BGC Group as of July 2023 and is not reflected in the above table.
Compensation Committee Interlocks and Insider Participation
During 2022, the Compensation Committee of our Board consisted of Dr. Bell and Messrs. Richards and Mbanefo. Former directors Moran and Curwood, both of whom departed the Board and Committee on December 30, 2022 following the 2022 Annual Meeting, also served on the Committee during 2022. All the members who served on our Compensation Committee during 2022 were independent directors. No member of the Committee had any relationship with the Company during 2022 pursuant to which disclosure would be required under applicable SEC rules. With the exception of Mr. Lutnick, our Chief Executive Officer and Chairman of the Board of Directors, during 2022, none of our executive officers served as a member of the board of directors or the compensation committee, or similar body, of a corporation where any of its executive officers served on our Compensation Committee or on our Board. Mr. Lutnick serves on the board of directors of Newmark, but does not serve on Newmark’s Compensation Committee.
 
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information, as of August 31, 2023, with respect to the beneficial ownership of our Common Equity by: (i) each stockholder, or group of affiliated stockholders, that we know owns more than 5% of any class of our outstanding capital stock, (ii) each of our named executive officers, (iii) each of our directors and (iv) the executive officers and directors as a group. Unless otherwise indicated in the footnotes, the principal address of each of the stockholders, executive officers and directors identified below is located at 499 Park Avenue, New York, NY 10022. Shares of our Class B common stock are convertible into shares of our Class A common stock at any time in the discretion of the holder on a one-for-one basis. Accordingly, a holder of Class B common stock is deemed to be the beneficial owner of an equal number of shares of our Class A common stock for purposes of this table.

Prior to July 2, 2023, Cantor had distributed to its current and former partners an aggregate of 20,850,346 shares of BGC Partners Class A common stock in satisfaction of obligations to such current and former partners, consisting of 19,372,639 shares in satisfaction of its remaining deferred share distribution obligations pursuant to distribution rights provided to certain current and former partners of Cantor on April 1, 2008, receipt of which had been deferred by those partners entitled to receive such shares (the “April 2008 distribution rights shares”) and 1,477,707 shares in connection with Cantor’s payment of previous quarterly partnership distributions, receipt of which had been deferred by those partners entitled to receive such shares (the “February 2012 distribution rights shares”). Prior to July 2, 2023, Cantor was still obligated to distribute to its current and former partners an aggregate of 15,756,625 shares of BGC common stock, consisting of 13,999,105 April 2008 distribution rights shares and 1,757,520 February 2012 distribution rights shares. On July 2, 2023, Cantor distributed an aggregate of 15,756,625 shares of BGC Group Class B common stock (the “July 2023 distribution shares”) to satisfy the remaining April 2008 distribution rights shares and February 2012 distribution rights shares. 15,350,824 of the July 2023 distribution shares remained Class B common stock in the hands of the recipient, and 405,801 of such shares converted into an equivalent number of shares of Class A common stock in the hands of the recipient pursuant to the terms of BGC Group’s Amended and Restated Certificate of Incorporation (our “Certificate of Incorporation”). Accordingly, Cantor has satisfied all obligations to deliver shares of our common stock to satisfy the April 2008 distribution rights shares and February 2012 distribution rights shares.

As a result of the distributions of the July 2023 distribution shares, Mr. Lutnick received an aggregate of 15,308,777 July 2023 distribution shares, directly or through entities that he has sole or shared control over, including CFGM, KBCR Management Partners, LLC (“KBCR”), for which Mr. Lutnick is the managing member, LFA LLC (“LFA”), for which Mr. Lutnick is the managing member, and a trust for the benefit of descendants of Mr. Lutnick and his immediate family, of which Mr. Lutnick’s spouse, Ms. Allison Lutnick, is one of two trustees and Mr. Lutnick has limited powers to remove and replace such trustees (the “Trust”). Mr. Lutnick received 8,973,721 July 2023 distribution shares directly; KBCR received 2,335,967 July 2023 distribution shares; CFGM received 2,210,872 July 2023 distribution shares; the Trust received 1,610,182 July 2023 distribution shares; and LFA received 178,035 July 2023 distribution shares. The distribution of these distribution rights shares is reflected in the direct and indirect ownership of Mr. Lutnick in the table below.

 

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     Class B
Common Stock
     Class A
Common Stock
 
Name    Shares      %      Shares      %  

5% Beneficial Owners(1):

  

Cantor Fitzgerald, L.P.(2)

     93,340,477 (3)       85.3 (4)       93,340,477 (5)       19.4 (6) 

CF Group Management, Inc.

     96,313,001 (7)       88.0 (4)       96,313,001 (8)       19.9 (9) 

The Vanguard Group(1)

     —         —         32,775,445        8.4  

BlackRock, Inc.(1)

     —         —         23,297,796        6.0  

Executive Officers and Directors(1):

           

Executive Officers

  

Howard W. Lutnick

     109,405,906 (10)       100.0 (4)       127,845,424 (11)       25.7 (12) 

Stephen M. Merkel

     —         —         187,070 (13)       *  

Sean A. Windeatt

     —         —         873,247 (14)       *  

Jason Hauf

     —         —         —         *  

Directors

           

Linda A. Bell

     —         —         16,810 (15)       *  

David P. Richards

     —         —         44,705 (16)       *  

Arthur U. Mbanefo

     —         —         18,151 (17)       *  

William Addas

     —         —         —         *  

All executive officers and directors as a group (8 persons)

     109,405,906        100.0        128,985,407        25.9 (18) 

 

 

*

Less than 1%.

(1)

Based upon information supplied by directors, executive officers and 5% beneficial owners in filings under Sections 13(d), 13(g), and 16(a) of the Exchange Act. The address of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.

(2)

Cantor has pledged to a financial institution, pursuant to a Put and Pledge Agreement, dated as of July 21, 2017, 10,000,000 shares of our Class A common stock in connection with a loan program established for certain employees and partners of Cantor and its affiliates. On November 23, 2018, those Class A shares were converted into 10,000,000 shares of our Class B common stock and remain pledged in connection with the partner loan program.

(3)

Consists of 93,340,477 shares of our Class B common stock held directly.

(4)

Percentage based on 109,452,953 shares of our Class B common stock outstanding as of August 31, 2023.

(5)

Consists of 93,340,477 shares of our Class A common stock acquirable upon conversion of 93,340,477 shares of our Class B common stock held directly.

(6)

Percentage based on (i) 387,899,344 shares of our Class A common stock outstanding as of August 31, 2023, and (ii) 93,340,477 shares of our Class A common stock acquirable upon conversion of 93,340,477 shares of our Class B common stock.

(7)

Consists of (i) 2,972,524 shares of our Class B common stock held by CFGM, (ii) 93,340,477 shares of our Class B common stock held by Cantor. CFGM is the managing general partner of Cantor.

(8)

Consists of (i) 2,972,524 shares of our Class A common stock acquirable upon conversion of 2,972,524 shares of our Class B common stock held by CFGM, and (ii) 93,340,477 shares of our Class A common stock acquirable upon conversion of 93,340,477 shares of our Class B common stock held by Cantor.

(9)

Percentage based on (i) 387,899,344 shares of our Class A common stock outstanding as of August 31, 2023, (ii) 93,340,477 shares of our Class A common stock acquirable upon conversion of 93,340,477 shares of our Class B common stock held by Cantor, and (iii) 2,972,524 shares of our Class A common stock acquirable upon conversion of 2,972,524 shares of our Class B common stock held by CFGM.

(10)

Mr. Lutnick’s holdings consists of:

 

  (i)

8,973,721 shares of our Class B common stock held directly;

 

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  (ii)

2,972,524 shares of our Class B common stock held by CFGM;

 

  (iii)

93,340,477 shares of our Class B common stock held by Cantor;

 

  (iv)

1,610,182 shares of our Class B common stock held by the Trust;

 

  (v)

2,335,967 shares of our Class B common stock held by KBCR, by virtue of Mr. Lutnick being the managing member of KBCR, which is a non-managing General Partner of Cantor; and

 

  (vi)

173,035 shares of our Class B common stock held by LFA.

 

(11)

Mr. Lutnick’s holdings consist of:

 

  (i)

5,033,338 shares of our Class A common stock held directly;

 

  (ii)

617,067 shares of our Class A common stock held in Mr. Lutnick’s 401(k) account (as of August 31, 2023);

 

  (iii)

12,137,935 shares of our Class A common stock held in various trust, retirement and custodial accounts consisting of (A) 8,457,493 shares held in Mr. Lutnick’s personal asset trust, of which he is the sole trustee, (B) 2,012,514 shares held in Mr. Lutnick’s GRAT IV account, of which he is the sole trustee, (C) 783,670 shares held by the Trust, (D) 289,124 shares held in a Keogh retirement account for Mr. Lutnick, (E) 539,328 shares held by trust accounts for the benefit of Mr. Lutnick and members of his immediate family, (F) 34,453 shares held in other retirement accounts, (G) 20,325 shares held in custodial accounts for the benefit of certain members of Mr. Lutnick’s family under the Uniform Gifts to Minors Act, and (H) 1,028 shares held in other retirement accounts for the benefit of Mr. Lutnick’s spouse;

 

  (iv)

2,972,524 shares of our Class A common stock acquirable upon conversion of 2,972,524 shares of our Class B common stock held by CFGM;

 

  (v)

93,340,477 shares of our Class A common stock acquirable upon conversion of 93,340,477 shares of our Class B common stock held by Cantor;

 

  (vi)

8,973,721 shares of our Class A common stock acquirable upon conversion of 8,973,721 shares of our Class B common stock held directly;

 

  (vii)

1,610,182 shares of our Class A common stock acquirable upon conversion of 1,610,182 shares of our Class B common stock held by the Trust;

 

  (viii)

2,335,967 shares of our Class A common stock acquirable upon conversion of 2,335,967 shares of our Class B common stock held by KBCR;

 

  (ix)

173,035 shares of our Class A common stock acquirable upon conversion of 173,035 shares of our Class B common stock held by LFA;

 

  (x)

600,938 shares of our Class A common stock owned of record by KBCR; and

 

  (xi)

50,240 shares of our Class A common stock owned of record by LFA.

 

(12)

Percentage based on (i) 387,899,344 shares of our Class A common stock outstanding as of August 31, 2023, (ii) 93,340,477 shares of our Class A common stock acquirable upon conversion of 93,340,477 shares of our Class B common stock held by Cantor, (iii) 2,972,524 shares of our Class A common stock acquirable upon conversion of 2,972,524 shares of our Class B common stock held by CFGM, (iv) 8,973,721 shares of our Class A common stock acquirable upon conversion of 8,973,721 shares of our Class B common stock held by Mr. Lutnick, (v) 1,610,182 shares of our Class A common stock acquirable upon conversion of 1,610,182 shares of our Class B common stock held by the Trust, (vi) 2,335,967 shares of our Class A common stock acquirable upon conversion of 2,335,967 shares of our Class B common stock held by KBCR, and (vii) 173,035 shares of our Class A common stock acquirable upon conversion of 173,035 shares of our Class B common stock held by LFA.

 

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(13)

Mr. Merkel’s holdings consist of (i) 136,891 shares of our Class A common stock held directly, (ii) 43,921 shares of our Class A common stock held in Mr. Merkel’s 401(k) account (as of August 31, 2023) and (iii) 6,258 shares of our Class A common stock held in trusts for the benefit of Mr. Merkel’s immediate family, of which Mr. Merkel’s spouse is the sole trustee.

(14)

Mr. Windeatt’s holdings consist of 474,808 unrestricted shares of our Class A common stock held directly, and 398,439 restricted shares of our Class A common stock held directly. As described under “Certain Relationships and Related Transactions, and Director Independence – Stock Repurchase Program,” on, September 21, 2023, Mr. Windeatt sold 474,808 unrestricted shares of Class A common stock to BGC Group.

(15)

Dr. Bell’s holdings consist of 16,810 shares of our Class A common stock held directly.

(16)

Mr. Richards’ holdings consist of 44,705 shares of our Class A common stock held directly.

(17)

Mr. Mbanefo’s holdings consist of (i) 11,740 shares of our Class A common stock held directly, and (ii) 6,411 shares of our Class A common stock receivable pursuant to 6,411 RSUs held directly.

(18)

Percentage based on (i) 387,899,344 shares of our Class A common stock outstanding as of August 31, 2023, (ii) 93,340,477 shares of our Class A common stock acquirable upon conversion of 93,340,477 shares of our Class B common stock held by Cantor, (iii) 2,972,524 shares of our Class A common stock acquirable upon conversion of 2,972,524 shares of our Class B common stock held by CFGM, (iv) 8,973,721 shares of our Class A common stock acquirable upon conversion of 8,973,721 shares of our Class B common stock held by Mr. Lutnick, (v) 2,335,967 shares of our Class A common stock acquirable upon conversion of 2,335,967 shares of our Class B common stock held by KBCR, (vi) 1,610,182 shares of our Class A common stock acquirable upon conversion of 1,610,182 shares of our Class B common stock held by the Trust, (vii) 173,035 shares of our Class A common stock acquirable upon conversion of 173,035 shares of our Class B common stock held by LFA, and (viii) 6,411 shares of our Class A common stock receivable pursuant to 6,411 RSUs held directly by Mr. Mbanefo.

Equity Compensation Plan Information as of December 31, 2022

 

    

Number of Securities to
be issued upon exercise
of outstanding
restricted stock units,
options, warrants and
rights

(a)

    

Weighted average exercise
price of outstanding options,
warrants, and rights

(b)

    

Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))

(c)

 

Equity Plan (approved by security holders)

     13,828,831      $ 4.06        128,009,534  

Equity compensation plans not approved by security holders

     —         —         —   

Total

     13,828,831      $ 4.06        128,009,534  

 

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REPORT OF THE AUDIT COMMITTEE OF OUR BOARD OF DIRECTORS

The Audit Committee of the Board of Directors is made up solely of independent directors, as defined under applicable Nasdaq Stock Market and SEC rules, and it operates under a written Charter adopted by the Board and the Committee. The composition of the Committee, the attributes of its members and its responsibilities, as reflected in its Charter, are intended to be in accordance with applicable requirements for corporate audit committees. The Committee reviews and assesses the adequacy of its Charter on an annual basis. A copy of the Audit Committee Charter is available on the Company’s website at www.bgcg.com/esg/governance under the heading “Independent Audit Committee,” or upon written request from the Company free of charge.

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; and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. The Company’s Auditors are responsible for performing an independent audit of the Company’s annual consolidated financial statements, and a review of its quarterly consolidated financial statements, in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”), and an independent audit of the Company’s internal control over financial reporting and on the effectiveness of such control.

The Audit Committee has the sole authority to appoint or replace the Auditors and is directly responsible for the oversight of the scope of the Auditors’ role and the determination of its compensation.

Although each of Messrs. Richards, Mbanefo and Addas has experience that qualifies him as an audit committee financial expert, none of the Audit Committee members are currently professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management and the Auditors, nor can the Committee certify that the Auditors are “independent” under applicable rules. The Committee serves a board-level oversight role, in which it provides advice, counsel and direction to management and the Auditors on the basis of the information it receives, discussions with management and the Auditors, and the experience of the Committee’s members in business, financial and accounting matters.

The Audit Committee has an annual agenda that includes reviewing the Company’s financial statements, internal control and audit matters as well as related party transactions. The Committee meets each quarter with management and the Auditors to review the Company’s interim financial results before the publication of the Company’s quarterly financial results press releases, and periodically in executive sessions. Management’s and the Auditors’ presentations to and discussions with the Committee cover various topics and events that may have significant financial impact and/or are the subject of discussions between management and the Auditors.

In accordance with Audit Committee policy and the requirements of law, all services to be provided by the Auditors and their affiliates are subject to pre-approval by the Committee. This includes audit services, audit-related services, and any tax services and other services. In addition, the Committee regularly evaluates the performance and independence of the Auditors. Accordingly, the Committee has reviewed and pre-approved all services provided by Ernst & Young subsequent to the firm’s engagement in 2008.

In fulfilling its responsibilities, the Audit Committee has met and held discussions with management and Ernst & Young regarding the fair and complete presentation of the Company’s financial results. The Committee has discussed significant accounting policies applied by the Company in its financial statements, as well as alternative treatments. The Committee has met to review and discuss BGC Partners’ annual audited and quarterly consolidated financial statements for the fiscal year ended December 31, 2022 (including the disclosures contained in the BGC Partners’ Annual Report on Form 10-K filed with the SEC under the heading “Item 8 – Financial Statements and Supplementary Data” and Quarterly Reports on Form 10-Q filed with the SEC under the heading “Item 1 – Financial Statements (unaudited)”) with management and Ernst & Young. The Committee also reviewed and discussed with management, the internal auditors and Ernst & Young BGC Partners’ compliance with Section 404 of the Sarbanes-Oxley Act, namely, management’s annual report on the BGC Partners’ internal control over financial reporting.

 

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The Audit Committee has discussed with Ernst & Young the matters required to be discussed by Statement on Auditing Standards No. 1301, “Communication with Audit Committees” (AS 1301), as modified or supplemented. In addition, the Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young required by applicable requirements of the PCAOB regarding the communications of Ernst & Young with the Audit Committee concerning independence and has discussed with Ernst & Young the firm’s independence from the Company and its management, including all relationships between the firm and the Company. The Audit Committee also has considered whether the provision of permitted non-audit services by Ernst & Young is compatible with maintaining the firm’s independence.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board approved, the inclusion of the audited financial statements of BGC Partners in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 1, 2023.

Dated: September 28, 2023

THE AUDIT COMMITTEE
Arthur U. Mbanefo, Chair
Linda A. Bell
David P. Richards
William Addas (joined Audit Committee July 1, 2023)

 

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

The following table sets forth the aggregate fees incurred by us for audit and other services rendered by Ernst & Young during the years ended December 31, 2022 and 2021:

 

     Year Ended December 31,  
     2022      2021  

Audit fees

   $ 8,711,579      $ 8,653,282  

Audit-related fees

     96,600        96,500  

Tax fees

     3,150,032        3,290,068  

All other fees

     —         —   

Total

   $ 11,958,211      $ 12,039,85  

“Audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of the financial statements and internal control over financial reporting, including audit fees for the Company’s employee benefit plan. “Tax fees” are fees for tax compliance, tax advice and tax planning, and “all other fees” are fees for any services not included in the other categories.

AUDIT COMMITTEE’S PRE-APPROVAL POLICIES AND PROCEDURES

During 2022, our Audit Committee specifically approved the appointment of Ernst & Young to be our independent auditors for the year ended December 31, 2022. Ernst & Young was also approved to perform reviews of our quarterly financial reports within the year ended December 31, 2022 and certain other audit-related services such as accounting consultations. Pursuant to our Audit Committee Charter, the Audit Committee will pre-approve auditing services, internal control-related services and permitted non-audit services to be performed for us by our independent auditors, as set forth in the Audit Committee Charter.

PROPOSAL 2— RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has approved the appointment of Ernst & Young as our independent registered public accounting firm for fiscal year ending December 31, 2023. We are asking stockholders to ratify the appointment of Ernst & Young as our independent registered public accounting firm at the Annual Meeting. Representatives of Ernst & Young are expected to participate in the Annual Meeting. They will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

Our Amended and Restated Bylaws do not require that the stockholders ratify the appointment of Ernst & Young as our independent auditors for fiscal year 2023. However, we are submitting the appointment of Ernst & Young to the stockholders for ratification as a matter of good corporate practice. If the stockholders do not ratify the appointment, the Board and the Audit Committee will re consider the appointment. Even if the appointment of Ernst & Young is ratified, the Audit Committee retains the discretion to appoint a different independent auditor at any time if it determines that such a change is in the best interests of the Company and its stockholders. At this time, the Board and the Audit Committee believe that the continued retention of Ernst & Young to serve as our independent auditors is in the best interest of the Company and its stockholders.

VOTE REQUIRED FOR APPROVAL

The affirmative vote of the holders of a majority of the Total Voting Power present in person or represented by proxy at the Annual Meeting and entitled to vote is required to approve this proposal to ratify the appointment of Ernst & Young. Abstentions will have the same effect as a vote against the proposal.

 

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RECOMMENDATION OF OUR BOARD OF DIRECTORS AND AUDIT COMMITTEE OUR BOARD OF DIRECTORS AND AUDIT COMMITTEE RECOMMEND THAT ALL

STOCKHOLDERS VOTE “FOR”

THE RATIFICATION OF ERNST & YOUNG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2023.

PROPOSAL 3—APPROVAL OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Board is committed to sound compensation governance and recognizes the interest of stockholders in executive compensation matters. On an annual basis, we provide our stockholders with an opportunity to cast an advisory vote to approve the compensation of our named executive officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and narratives of this Proxy Statement.

This stockholder advisory vote will not be binding on the Company, the Board, or the Compensation Committee. Nevertheless, the Board and the Compensation Committee will take into account the outcome of the stockholder advisory vote when making future executive compensation decisions.

As discussed in our Compensation Discussion and Analysis, our executive compensation program, which is under the direction and control of our Compensation Committee, is designed to integrate our executive compensation with the achievement of our short- term 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 short-term and longer-term performance, with the goal of increasing stockholder value over the long term.

We believe that the compensation of our executive officers should reflect their success in attaining key corporate objectives, such as growth or maintenance of market position, success in attracting and retaining qualified brokers and other professionals, increasing or maintaining revenues and/or profitability, developing new products and marketplaces, completing acquisitions, dispositions, restructurings, and other value-enhancing transactions and integrating any such transactions, as applicable, meeting established goals for operating earnings, earnings per share and increasing the total return for stockholders, including stock price and dividend increases, and maintaining and developing customer relationships and long-term competitive advantage. We also believe that executive compensation should reflect achievement of individual managerial objectives established for specific executive officers at the beginning of the fiscal year as well as reflect specific achievements by such individuals over the course of the year. We further believe that specific significant events led by executives, including acquisitions, dispositions and other significant transactions, should be given significant weight. We believe that the performance of our executives in managing our Company, considered in light of general economic and specific Company, industry and competitive conditions, should be the basis for determining their overall compensation.

We also believe that the compensation of our executive officers should not generally be based on the short-term performance of our Class A common stock, whether favorable or unfavorable, but rather 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. We believe that the long-term performance of our stock is reflected in executive compensation through the grant of awards. Prior to the Corporate Conversion, these awards included limited partnership units and related exchange rights and cash settlement awards, RSAs, RSUs, and other equity and partnership awards. Following the Corporate Conversion, the equity portion of our compensation structure will no longer be based upon the issuance of partnership units and we will instead shift to the use of equity awards including RSAs and RSUs.

Stockholders are encouraged to read our Compensation Discussion and Analysis in this Proxy Statement for more detailed information about our executive compensation program and how it reflects our philosophy and is linked to our performance. The non-binding stockholder advisory vote on executive compensation is not intended

 

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to address any specific component of our executive compensation program; rather, the vote relates to the overall compensation of our named executive officers, as described in this Proxy Statement in accordance with the compensation disclosure rules of the SEC.

We will ask our stockholders to approve the following resolution at the Annual Meeting:

RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narratives.

VOTE REQUIRED FOR APPROVAL

The affirmative vote of the holders of a majority of the Total Voting Power present in person or represented by proxy at the Annual Meeting and entitled to vote is required to approve the resolution. Abstentions will have the same effect as a vote against the proposal, but broker non-votes will have no effect on the vote. However, the stockholder vote on executive compensation is advisory and, therefore, not binding on the Company, the Board of Directors, or the Compensation Committee. Nevertheless, the Board and the Committee will take into account the outcome of the stockholder advisory vote when making future executive compensation decisions.

RECOMMENDATION OF OUR BOARD OF DIRECTORS

AND COMPENSATION COMMITTEE

OUR BOARD OF DIRECTORS AND COMPENSATION COMMITTEE RECOMMEND THAT ALL STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE RESOLUTION.

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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 pursuant to which BGC Partners became a wholly owned subsidiary of BGC Group. To the extent statements below refer to “BGC,” “we,” “our,” “us,” or the “Company’s” directors and executive officers, such statements refer to BGC Partners prior to the closing of the Corporate Conversion, effective at 12:02 am Eastern Time on July 1, 2023, and to BGC Group on a going forward basis following the closing of the Corporate Conversion. See below and “Compensation Discussion and Analysis – Corporate Conversion Compensation Matters” for more information on the Corporate Conversion.

Review, Approval and Ratification of Transactions with Related Persons

The general policy of our Company and our Audit Committee is that all material transactions with a related party, including transactions with Cantor or Newmark, the relationship between us and Cantor or Newmark and agreements with related parties, as well as all material transactions in which there is an actual, or in some cases, perceived, conflict of interest, including repurchases of Class A common stock or, historically, purchases of BGC Holdings limited partnership interests or other equity interests in our subsidiaries, including from Cantor or our executive officers (see “—Stock Repurchase Program”), are subject to prior review and approval by our Audit Committee, which will determine whether such transactions or proposals are fair and reasonable to our stockholders. In general, potential related party transactions are identified by our management and discussed with the Audit Committee at Audit Committee meetings. Detailed proposals, including, where applicable, financial and legal analyses, alternatives and management recommendations, are provided to the Audit Committee with respect to each issue under consideration and decisions are made by the Audit Committee with respect to the foregoing related-party transactions after opportunity for discussion and review of materials. When applicable, the Audit Committee requests further information and, from time to time, requests guidance or confirmation from internal or external counsel or auditors. Our policies and procedures regarding related party transactions are set forth in our Audit Committee Charter and Code of Ethics, both of which are publicly available on our website at www.bgcg.com/esg/governance/ under the headings “Independent Audit Committee” and “Code of Business Conduct and Ethics and Professional Integrity,” respectively. Related party transactions with Newmark are also reviewed by the Newmark board and its audit committee under their own policies.

Corporate Conversion

On July 1, 2023, pursuant to the Corporate Conversion Agreement, 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 made pursuant to the Corporate Conversion Agreement which was approved by the Board of Directors of BGC Partners, at the recommendation of the Joint Committee. The Joint Committee was advised by independent financial and legal advisors selected by the Joint Committee. Houlihan Lokey, Inc., as financial advisor, provided a fairness opinion to the Joint Committee.

The Corporate Conversion was effected pursuant to the terms of the Corporate Conversion Agreement dated as of November 15, 2022 by and among BGC Group, BGC Partners, BGC Holdings, BGC GP, LLC, a Delaware limited liability company and general partner of BGC Holdings, BGC Partners II, Inc., a Delaware corporation and wholly owned subsidiary of BGC Group (“Merger Sub 1”), BGC Partners II, LLC, a Delaware limited

 

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liability company and wholly owned subsidiary of BGC Group (“Merger Sub 2”), BGC Holdings Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of BGC Holdings (“Holdings Merger Sub”), and, solely for the purposes of certain provisions therein, Cantor.

Effective as of 12:01 a.m., Eastern Time, on July 1, 2023, BGC Holdings reorganized from a Delaware limited partnership into a Delaware limited liability company through a merger with and into Holdings Merger Sub (the “Holdings Reorganization Merger”), with Holdings Merger Sub continuing as a direct subsidiary of BGC Partners. Effective as of 12:02 a.m., Eastern Time, on July 1, 2023, Merger Sub 1 merged with and into BGC Partners (the “Corporate Merger”), with BGC Partners continuing as a direct subsidiary of BGC Group. At the same time, Merger Sub 2 merged with and into Holdings Merger Sub (together with the Holdings Reorganization Merger and the Corporate Merger, the “Corporate Conversion Mergers”), with Holdings Merger Sub continuing as a subsidiary of BGC Group. As a result of the Corporate Conversion Mergers, BGC Partners and BGC Holdings became wholly owned subsidiaries of BGC Group.

In the Holdings Reorganization Merger, each unit of BGC Holdings outstanding as of immediately prior to the Holdings Reorganization Merger was converted into a substantially equivalent equity interest in Holdings Merger Sub.

In the Corporate Merger, each share of Class A common stock, par value $0.01 per share, of BGC Partners and each share of Class B common stock, par value $0.01 per share, of BGC Partners outstanding was converted into one share of Class A common stock, par value $0.01 per share, of BGC Group and one share of Class B common stock, par value $0.01 per share, of BGC Group, respectively.

As a result of the Corporate Conversion, on July 1, 2023:

 

   

64.0 million units of BGC Holdings held by Cantor (“Cantor units”), including 5.7 million Cantor units purchased on June 30, 2023 as described under “—Second Amended and Restated BGC Holdings Limited Partnership Agreement—Cantor’s Right to Purchase Exchangeable BGC Holdings Limited Partnership Interests Upon Redemption or Exchange of BGC Holdings Founding Partner Interests,” were converted into shares of BGC Group Class B common stock, subject to the terms and conditions of the Corporate Conversion Agreement, provided that a portion of the 64.0 million shares of BGC Group Class B common stock issued to Cantor will exchange into BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000 in shares of BGC Group Class A or B common stock in connection with certain acquisition transactions prior to the seventh anniversary of the Corporate Conversion;

 

   

BGC Group assumed all BGC Partners RSUs and RSAs outstanding as of June 30, 2023; and

 

   

non-exchangeable limited partnership units of BGC Holdings were converted into equity awards denominated in cash, restricted stock and/or RSUs of BGC Group, each as further set forth in the Corporate Conversion Agreement. BGC Group granted 38.6 million RSAs, 47.8 million RSUs, and $123.1 million of RSU Tax Accounts upon the conversion of the non-exchangeable shares of Holdings Merger Sub.

In connection with the Corporate Conversion on July 1, 2023, the BGC Holdings limited partnership agreement was terminated. There were no limited partnership units of BGC Holdings remaining after the Corporate Conversion was completed.

Please refer to “Compensation Discussion and Analysis—Structure Before and After the Corporate Conversion” for diagrams of the Company’s organizational structure before and after the Corporate Conversion.”

 

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Amendment to the BGC Group Certificate of Incorporation and Bylaws

In connection with the Corporate Conversion on July 1, 2023, BGC Group amended and restated its certificate of incorporation to reflect an increase in the authorized shares of BGC Group Class A common stock to 1,500,000,000; an increase in the authorized shares of BGC Group Class B common stock to 300,000,000; and a provision providing for exculpation to officers of BGC Group pursuant to Section 102(b)(7) of the Delaware General Corporation Law. Additionally, BGC Group amended and restated its bylaws to adopt a provision providing that Delaware courts shall be the exclusive forum for certain matters.

Assumption of Intercompany 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 agreements and arrangements with related parties, with such modifications thereto as necessary to reflect the Corporate Conversion. Pursuant to the foregoing authorization, any existing agreements and arrangements between BGC Partners and any executive officer, director or affiliate of BGC Partners were generally assumed unchanged by BGC Group, other than making BGC Group a party thereto, or as otherwise described below.

Second Amended and Restated BGC Holdings Limited Partnership Agreement

The following is a historical description of the BGC Holdings limited partnership agreement and interests in BGC Holdings prior to the Corporate Conversion. In connection with the Corporate Conversion, the BGC Holdings limited partnership agreement was terminated, BGC Holdings was merged into the surviving entity Holdings Merger Sub and the former limited partners of BGC Holdings, including Cantor, now participate in the economics of the BGC OpCos through BGC Group, which the BGC OpCos are wholly owned subsidiaries of. See “– Corporate Conversion” for more information.

On December 13, 2017, the Amended and Restated BGC Holdings Partnership Agreement was amended and restated to include prior standalone amendments and to make certain other changes related to the Separation. The Second Amended and Restated BGC Holdings Partnership Agreement, among other things, reflects changes resulting from the division in the Separation of BGC Holdings into BGC Holdings and Newmark Holdings among other things, including:

 

   

an apportionment of the existing economic attributes (including, among others, capital accounts and post-termination payments) of each BGC Holdings limited partnership unit outstanding immediately prior to the Separation (a “legacy BGC Holdings unit”) between such legacy BGC Holdings unit and the 0.4545 of a Newmark Holdings limited partnership unit issued in the Separation in respect of such legacy BGC Holdings unit (a “legacy Newmark Holdings unit”), based on the relative value of BGC and Newmark as of after the Newmark IPO; and

 

   

a right of the employer of a partner (whether it be Newmark or BGC) to determine whether to grant exchangeability with respect to legacy BGC Holdings units or legacy Newmark Holdings units held by such partner.

The Second Amended and Restated BGC Holdings Partnership Agreement also removes certain classes of BGC Holdings units that are no longer outstanding and permits the general partner of BGC Holdings to determine the total number of authorized BGC Holdings units. The Second Amended and Restated BGC Holdings Limited Partnership Agreement was approved by our Audit Committee.

On March 10, 2023, BGC Holdings entered into the Second Amendment (the “LPA Amendment”) to the Second Amended and Restated BGC Holdings Partnership Agreement. The LPA Amendment revises certain

 

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restrictive covenants pertaining to the “Partner Obligations” and “Competitive Activity” provisions in the Second Amended and Restated BGC Holdings Partnership Agreement. Specifically, the LPA Amendment (i) reduces the length of the post-termination period during which a partner must refrain from soliciting or doing business with customers, soliciting employees, engaging in a “Competing Business,” or otherwise refraining from harming the partnership; and (ii) revises the scope of the non-compete under the “Partner Obligations” and “Competitive Activity” provisions in the Second Amended and Restated BGC Holdings Limited Partnership Agreement to cover “Competing Businesses” (as defined therein) for which a partner performed the same or similar services and (a) involving a product, product line or type, or service of a “Protected Affiliate” (as defined therein) within a specific geographic area, (b) involving a “Client” or a “Client Representative” (each as defined therein) of a Protected Affiliate, or (c) for which the likely disclosure of confidential information is inevitable. The LPA Amendment was approved by our Board of Directors and Audit and Compensation Committees.

Management

BGC Holdings was managed by its general partner. Through ownership of the general partner of BGC Holdings, BGC Partners held the BGC Holdings general partnership interest and the BGC Holdings special voting limited partnership interest, which entitled BGC Partners to control BGC Holdings and to remove and appoint the general partner of BGC Holdings.

Under the BGC Holdings limited partnership agreement, BGC Partners, as the BGC Holdings general partner, managed the business and affairs of BGC Holdings. However, Cantor’s consent was required for amendments to the BGC Holdings limited partnership agreement, to decrease distributions to BGC Holdings limited partners to less than 100% of net income received by BGC Holdings (other than with respect to selected extraordinary items as described above), to transfer any BGC U.S. OpCo or BGC Global OpCo partnership interests beneficially owned by BGC Holdings and to take any other actions that may have adversely affected Cantor’s exercise of its co-investment rights to acquire BGC Holdings limited partnership interests, its right to purchase BGC Holdings founding partner interests and its right to exchange the BGC Holdings exchangeable limited partnership interests. Cantor’s consent was also required in connection with transfers of BGC Holdings limited partnership interests by other limited partners and the issuance of additional BGC Holdings limited partnership interests outside of the Participation Plan. As described below under “—Exchanges,” BGC Holdings founding partner interests were only exchangeable if Cantor so determined.

Any working partner interests that were issued were not exchangeable with BGC Partners unless otherwise determined by BGC Partners with the written consent of a BGC Holdings exchangeable limited partnership interest majority in interest, in accordance with the terms of the BGC Holdings limited partnership agreement.

As described below under “—Exchanges,” the employee-owned partnership interests were only exchangeable for BGC Partners’ Class A common stock in accordance with the terms and conditions of the grant of such interests, which terms and conditions were determined by the BGC Holdings general partner with the written consent of the BGC Holdings exchangeable limited partnership interest majority in interest, in accordance with the terms of the BGC Holdings limited partnership agreement.

The BGC Holdings limited partnership agreement also provided that BGC Holdings, in its capacity as the general partner of each of BGC U.S. OpCo and BGC Global OpCo, required Cantor’s consent to amend the terms of the BGC U.S. OpCo or BGC Global OpCo limited partnership agreements or take any other action that may have interfered with Cantor’s exercise of its co-investment rights to acquire BGC Holdings limited partnership interests (and the corresponding investment in BGC U.S. OpCo and BGC Global OpCo by BGC Holdings) or its rights to exchange the BGC Holdings exchangeable limited partnership interests. Founding/working partners and limited partnership unit holders did not have any voting rights with respect to their ownership of BGC Holdings limited partnership interests, other than limited consent rights concerning amendments to the terms of the BGC Holdings limited partnership agreement.

 

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Classes of Interests in BGC Holdings

As of December 31, 2022, BGC Holdings had the following outstanding interests:

 

   

a general partnership interest, which was held indirectly by BGC Partners;

 

   

BGC Holdings exchangeable limited partnership interests, which were held by Cantor;

 

   

BGC Holdings founding partner interests, which are limited partnership interests held by founding partners;

 

   

BGC Holdings REU and AREU interests, which are limited partnership interests held by REU and AREU partners;

 

   

a special voting limited partnership interest, which was held by BGC Partners and which entitled it to remove and appoint the general partner of BGC Holdings;

 

   

BGC Holdings working partner interests held by working partners;

 

   

BGC Holdings RPU and ARPU interests, which are types of working partner interests held by RPU and ARPU partners;

 

   

BGC Holdings PSI, PSE, APSI, PSU, APSU, HDUs, U.K. LPUs and N Units, which are types of working partner interests held by PSI, PSE, APSI, PSU, APSU, HDU, U.K. LPU and N Unit partners. HDUs are LPUs with capital accounts, which are liability awards recorded in “Accrued compensation” in our consolidated statements of financial condition. N Units are non-distributing partnership units that may not be allocated any item of profit or loss and may not be made exchangeable into shares of our Class A common stock. Which units may include NREUs, NPREUs, NLPUs, NPLPUs, NPSUs, and NPPSUs. Certain of these non-distribution-earning units become distribution earning units at the rate of 20% a year if certain employment conditions are met (internally designated by a “-CV” (e.g., NPSU-CVs, NPPSU-CVs));

 

   

Certain BGC LPUs and New PLPUs which are not entitled to distributions while non-exchangeable and that have certain employment-related conditions to exchangeability; and

 

   

Preferred Units (“Preferred Units”), which are working partner units that may be awarded to holders of, or contemporaneous with the grant of, PSUs, PSIs, PSEs, LPUs, REUs, RPUs and AREUs and which carry the same name as the underlying unit, with the insertion of an additional “P” to designate them as Preferred Units.

REU, AREU, RPU, ARPU, PSI, PSU, APSU, PSE, LPU, NPSU, NREU, NPREU, NLPU, NPLPU, NPPSU, HDU, LPU-NEW and PLPU-NEW and Preferred Unit interests are collectively referred to as “limited partnership units.”

For a description of the exchange rights and obligations, see “—Exchanges” below. No BGC Holdings founding partner interests were issued after the BGC separation. The BGC Holdings founding/ working partner interests held by founding/ working partners are designated in various classes, reflecting in general the terms of classes of units that the founding partners previously held in Cantor. See “—Distributions— Classes of Founding/Working Partner Interests.”

Any authorized but unissued BGC Holdings units may be issued:

 

   

pursuant to the BGC separation, or as otherwise contemplated by the BGC separation agreement or the BGC Holdings limited partnership agreement;

 

   

to Cantor and members of the Cantor group, in connection with a reinvestment in BGC Holdings;

 

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with respect to BGC Holdings founding/working partner interests, to an eligible recipient, which means any limited partner or member of the Cantor group or any affiliate, employee or partner thereof, in each case as directed by a BGC Holdings exchangeable limited partner majority in interest (provided that such person or entity is not primarily engaged in a business that competes with BGC Holdings or its subsidiaries);

 

   

as otherwise agreed by us, as general partner, and a BGC Holdings exchangeable limited partner interest majority in interest;

 

   

pursuant to the Participation Plan;

 

   

to any then-current founding/working partner or limited partnership unit holder pursuant to the BGC Holdings limited partnership agreement;

 

   

to any BGC Holdings partner in connection with a conversion of an issued unit and interest into a different class or type of unit and interest; and

 

   

to Cantor in the event of a termination or bankruptcy of a founding/working partner or limited partnership unit holder or the redemption of a founding/working partner interest or limited partnership unit pursuant to the BGC Holdings limited partnership agreement.

Exchanges

In connection with the Separation, Newmark Holdings interests and units were distributed to holders of BGC Holdings interests and units in proportion to such interests and units of BGC Holdings held by such holders immediately prior to the Separation. Prior to the Spin-Off, unless otherwise agreed by BGC, with respect to legacy BGC Holdings units and legacy Newmark Holdings units, to the extent such units were exchangeable, in order to make an exchange for a share of BGC common stock, a holder had to have exchanged both one legacy BGC Holdings unit and a certain number of legacy Newmark Holdings units as set forth in the BGC Holdings limited partnership agreement, in order to have received one share of BGC common stock.

The BGC Holdings limited partnership interests held by Cantor were generally exchangeable with BGC Partners for BGC Class B common stock (or, at Cantor’s option or if there were no additional authorized but unissued shares of BGC Class B common stock, BGC Class A common stock) on a one-for-one basis (subject to customary anti-dilution adjustments). As of December 31, 2022, Cantor held an aggregate of 57,605,410 BGC Holdings exchangeable limited partnership interests.

The BGC Holdings limited partnership interests that Cantor transferred to founding partners in connection with the redemption of its limited partnership interests in Cantor at the time of the BGC separation were not exchangeable with BGC Partners unless (1) Cantor reacquired such interests from BGC Holdings upon termination or bankruptcy of the founding partners or redemption of their units (which it had the right to do under certain circumstances), in which case such interests were exchangeable with BGC Partners for Class A common stock or Class B common stock as described above or (2) Cantor determined that such interests could be exchanged by such founding partners with BGC Partners for Class A common stock, generally on a one-for-one basis (subject to customary anti-dilution adjustments), on terms and conditions that were determined by Cantor, provided that the terms and conditions of such exchange could not in any way diminish or adversely affect BGC Partners’ rights or rights of its subsidiaries (it being understood that an obligation by BGC Partners to deliver shares of Class A common stock upon exchange would not be deemed to diminish or adversely affect the rights of BGC Partners or its subsidiaries) (which exchange of certain interests Cantor expected to permit from time to time). Once a BGC Holdings founding partner interest became exchangeable, such founding partner interest was automatically exchanged for BGC Partners’ Class A common stock.

In particular, the BGC Holdings founding partner interests that Cantor provided were exchangeable with BGC Partners for its Class A common stock on a one-for-one basis (subject to customary anti-dilution adjustments from time to time), in accordance with the terms of the BGC Holdings limited partnership agreement.

 

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Further, BGC Partners provided exchangeability for partnership units under other circumstances in connection with compensation, acquisitions and investments.

Notwithstanding the foregoing, to the extent that legacy BGC Holdings units and legacy Newmark Holdings units were not exchangeable as of immediately after the Separation, the determination of whether to grant an exchange right with respect to such legacy BGC Holdings units and legacy Newmark Holdings units will be made as follows:

 

   

If the legacy BGC Holdings units and legacy Newmark Holdings units are held by an employee of the BGC group providing services solely to the BGC group, then BGC Partners shall make such determination;

 

   

If the legacy BGC Holdings units and legacy Newmark Holdings units are held by an employee of the Newmark group providing services solely to the Newmark group, then Newmark shall make such determination; and

 

   

If the legacy BGC Holdings units and legacy Newmark Holdings units are held by an employee of the BGC group, the Newmark group or the Cantor group providing services to both the BGC group and the Newmark group, then BGC Partners shall make such determination to the extent that the grant of the exchange right relates to compensation for services by such employee to the BGC group, and Newmark shall make such determination to the extent that the grant of the exchange right relates to compensation for services by such employee to the Newmark group. Grants of exchangeability may be made at any time in the discretion of the relevant service recipient, and future grant practices may differ from prior practices, including without limitation in connection with performance achievement, changes in incentive arrangements, accounting principles, and tax laws (including deductibility of compensation) and other applicable laws.

BGC Partners also provided for exchangeability of certain working partner units without a capital account for other working partner units with a capital account in connection with compensatory arrangements.

BGC Holdings Exchangeable Limited Partnership Interests

Any working partner interests that were issued were not exchangeable with BGC Partners unless it otherwise determined with the written consent of a BGC Holdings exchangeable limited partnership interest majority in interest, in accordance with the terms of the BGC Holdings limited partnership agreement.

The limited partnership units were only exchangeable for Class A common stock in accordance with the terms and conditions of the grant of such limited partnership units, which terms and conditions were determined in BGC Partners’ sole discretion, as the general partner of BGC Holdings, with the written consent of the BGC Holdings exchangeable limited partnership interest majority in interest with respect to the grant of any exchange right, in accordance with the terms of the BGC Holdings limited partnership agreement.

The one-for-one exchange ratio between BGC Holdings units and Class B common stock and Class A common stock was not adjusted to the extent that BGC Partners have made a dividend, subdivision, combination, distribution or issuance to maintain the BGC Partners ratio pursuant to a reinvestment by BGC Partners or its subsidiaries pursuant to its reinvestment right.

Upon BGC Partners’ receipt of any BGC Holdings exchangeable limited partnership interest or BGC Holdings founding partner interest, or BGC Holdings limited partnership unit that was exchangeable, pursuant to an exchange, such interest being so exchanged ceased to be outstanding and was automatically and fully cancelled, and such interest was automatically designated as a BGC Holdings regular limited partnership interest, had all rights and obligations of a holder of BGC Holdings regular limited partnership interests and ceased to be designated as a BGC Holdings exchangeable interest or BGC Holdings founding partner interest, BGC Holdings REU interest or BGC Holdings working partner interest that was exchangeable, and would not be exchangeable.

 

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With each exchange, BGC Partners’ indirect interest in BGC U.S. OpCo and BGC Global OpCo was proportionately increased, because immediately following an exchange, BGC Holdings redeemed the BGC Holdings unit so acquired for the BGC U.S. OpCo limited partnership interest and the BGC Global OpCo limited partnership interest underlying such BGC Holdings unit. The acquired BGC U.S. OpCo limited partnership interest and BGC Global OpCo limited partnership interest was appropriately adjusted to reflect the impact of certain litigation matters and the intention of the parties to the BGC Holdings limited partnership agreement for BGC Holdings (and not BGC Partners) to realize the economic benefits and burdens of such potential claims.

In addition, upon a transfer of a BGC Holdings exchangeable limited partnership interest that was not permitted by the BGC Holdings limited partnership agreement (see “—Transfers of Interests” below), such interest ceased to be designated as a BGC Holdings exchangeable limited partnership interest and was automatically designated as a regular limited partnership interest.

In the case of an exchange of an exchangeable limited partnership interest or a founding partner interest (or portion thereof), the aggregate capital account of the BGC Holdings unit so exchanged equaled a pro rata portion of the total aggregate capital account of all exchangeable limited partnership units and founding partner units then outstanding, reflecting the portion of all such exchangeable limited partnership units and founding partner units then outstanding represented by the units so exchanged. The aggregate capital account of such exchanging partner in such partner’s remaining exchangeable limited partnership units and/or founding partner units were reduced by an equivalent amount. If the aggregate capital account of such partner was insufficient to permit such a reduction without resulting in a negative capital account, the amount of such insufficiency was satisfied by reallocating capital from the capital accounts of the exchangeable limited partners and the founding partners to the capital account of the units so exchanged, pro rata based on the number of units underlying the outstanding exchangeable limited partnership interests and the founding partner interests or based on other factors as determined by a BGC Holdings exchangeable limited partnership interest majority in interest.

In the case of an exchange of an REU interest or working partner interest or portion thereof, the aggregate capital account of the BGC Holdings units so exchanged equaled the capital account of the REU interest or working partner interest (or portion thereof), as the case may be, represented by such BGC Holdings units.

BGC Partners agreed to reserve, out of its authorized but unissued BGC Partners Class B common stock and BGC Partners Class A common stock, a sufficient number of shares of BGC Partners Class B common stock and BGC Partners Class A common stock solely to effect the exchange of all then outstanding BGC Holdings exchangeable limited partnership interests, the BGC Holdings founding/working partner interests, if exchangeable, and BGC Holdings limited partnership units, if exchangeable, into shares of BGC Partners Class B common stock or BGC Partners Class A common stock pursuant to the exchanges (subject, in the case of BGC Partners Class B common stock, to the maximum number of shares authorized but unissued under BGC Partners’ Restated Certificate of Incorporation (its “certificate of incorporation”) as then in effect) and a sufficient number of shares of BGC Partners Class A common stock to effect the exchange of shares of BGC Partners Class B common stock issued or issuable in respect of exchangeable BGC Holdings limited partnership interests. BGC Partners agreed that all shares of BGC Partners Class B common stock and BGC Partners Class A common stock issued in an exchange was duly authorized, validly issued, fully paid and non-assessable and was free from pre-emptive rights and free of any encumbrances.

Distributions

The profit and loss of BGC U.S. OpCo and BGC Global OpCo were generally allocated based on the total number of BGC U.S. OpCo units and BGC Global OpCo units outstanding, other than in the case of certain litigation matters, the impact of which was allocated to the BGC U.S. OpCo and BGC Global OpCo partners who were members of the BGC Holdings group as described in “—Second Amended and Restated Limited Partnership Agreements of BGC U.S. OpCo and BGC Global OpCo.” The profit and loss of BGC Holdings were generally allocated based on the total number of BGC Holdings units outstanding, other than the impact of

 

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certain litigation matters, which were allocated to the BGC Holdings partners who were members of the Cantor group, or who were founding/working partners or limited partnership unit holders. The minimum distribution for each RPU interest was $0.005 per quarter, provided that, with respect to a BGC legacy unit, the minimum distribution was apportioned between the BGC legacy unit on one hand and the Newmark legacy unit on the other hand, based on the relative value of BGC and Newmark, such that the sum of the minimum distribution for such BGC legacy unit and Newmark legacy unit immediately following the distribution equaled $0.005 with respect to each quarter. For the avoidance of doubt, the distribution provisions of the BGC Holdings limited partnership agreement did not apply to holders of APSUs, AREUs, ARPUs, NLPUs, NPLPUs, NPPSUs, NPREUs, NPSUs and NREUs.

BGC Holdings distributed to holders of the BGC Holdings limited partnership interests (subject to the allocation of certain litigation matters, to BGC Holdings partners who were members of the Cantor group, or who were founding/working partners or who were limited partnership unit holders (and not to BGC Partners)):

 

   

with respect to partners who were members of the Cantor group and the founding/working partners, on or prior to each estimated tax due date (the 15th day of each April, June, September and December in the case of a partner that was not an individual, and the 15th day of each April, June, September and January in the case of a partner who was an individual), such partner’s estimated proportionate quarterly tax distribution for such fiscal quarter; and

 

   

as promptly as practicable after the end of each fiscal quarter, an amount equal to the excess, if any, of (a) the net positive cumulative amount allocated to such partner’s capital account pursuant to the BGC Holdings limited partnership agreement, over (b) the amount of any prior distributions to such partner.

Pursuant to the terms of the BGC Holdings limited partnership agreement, distributions by BGC Holdings to its partners were not decreased below 100% of net income received by BGC Holdings from BGC U.S. OpCo and BGC Global OpCo (other than with respect to selected extraordinary items with respect to founding/working partners or limited partnership unit holders, such as the disposition directly or indirectly of partnership assets outside of the ordinary course of business) unless BGC Partners determined otherwise, subject to Cantor’s consent (as the holder of the BGC Holdings exchangeable limited partnership interest majority in interest). The BGC Holdings general partner, with the consent of Cantor, as the holder of the BGC Holdings exchangeable limited partnership interest majority in interest, may have directed BGC Holdings to distribute all or part of any amount distributable to a founding/working partner or a limited partnership unit holder in the form of a distribution of publicly traded shares, including shares of any capital stock of any other entity if such shares were listed on any national securities exchange or included for quotation in any quotation system in the United States, which BGC Partners referred to as “publicly traded shares,” or in other property.

In addition, the BGC Holdings general partner, with the consent of Cantor, as holder of a majority of the BGC Holdings exchangeable limited partnership interests, in its sole and absolute discretion, may have directed BGC Holdings, upon a founding/working partner’s or a limited partnership unit holder’s death, retirement, withdrawal from BGC Holdings or other full or partial redemption of BGC Holdings units, to distribute to such partner (or to his or her personal representative, as the case may be) a number of publicly traded shares or an amount of other property that the BGC Holdings general partner determined was appropriate in light of the goodwill associated with such partner and his, her or its BGC Holdings units, such partner’s length of service, responsibilities and contributions to BGC Holdings and/or other factors deemed to be relevant by the BGC Holdings general partner. Any such distribution of publicly traded shares or other property to a partner as described in the prior sentence resulted in a net reduction in such partner’s capital account and adjusted capital account, unless otherwise determined by the BGC Holdings general partner in its sole and absolute discretion, provided that any gain recognized as a result of such distribution did not affect such partner’s adjusted capital account, unless otherwise determined by both the BGC Holdings general partner and Cantor.

The BGC Holdings limited partnership agreement, however, provided that any and all items of income, gain, loss or deduction that resulted from certain specified items allocated entirely to the capital accounts of the

 

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limited partnership interests in BGC U.S. OpCo and BGC Global OpCo held by BGC Holdings were allocated entirely to the capital accounts of BGC Holdings limited partnership interests held by its founding/working partners, its limited partnership unit holders and Cantor as described below under “—Second Amended and Restated Limited Partnership Agreements of BGC U.S. OpCo and BGC Global OpCo—Distributions.” In addition, in the discretion of the BGC Holdings general partner, distributions with respect to selected extraordinary transactions, as described below, may have been withheld from the founding/working partners and the limited partnership unit holders and distributed over time subject to the satisfaction of conditions set by BGC Partners, as the general partner of BGC Holdings, such as continued service to BGC Partners. See “—Redemption of BGC Holdings Founding/Working Partner Interests and Limited Partnership Interests.” These distributions that may have been withheld related to income items from non-recurring events, including, without limitation, items that would have been considered “extraordinary items” under GAAP and recoveries with respect to claims for expenses, costs and damages (excluding any recovery that did not result in monetary payments to BGC Holdings) attributable to extraordinary events that affected BGC Holdings (such events may have included, unless otherwise determined by the BGC Holdings general partner, any disposition, directly or indirectly (including deemed sales), of capital stock of any affiliate owned by BGC Holdings, whether or not recurring in nature). The BGC Holdings general partner may have also deducted from these withheld amounts all or a portion of any extraordinary expenditures from non-recurring events that it determined were to be treated as extraordinary expenditures, including, without limitation, any distribution or other payment (including a redemption payment) to a BGC Holdings partner, the purchase price or other cost of acquiring any asset, any other non-recurring expenditure of BGC Holdings, items that would have been considered “extraordinary items” under GAAP, and expenses, damages or costs attributable to extraordinary events affecting BGC Holdings (including actual, pending or threatened litigation). Any amounts that were withheld from distribution and forfeited by the founding/working partners and the limited partnership unit holders with respect to such extraordinary transactions were distributed to Cantor in respect of the BGC Holdings limited partnership interests held by Cantor.

No partner may have charged or encumbered its BGC Holdings limited partnership interest or otherwise subjected such interest to any encumbrance, except those created by the BGC Holdings limited partnership agreement. However, a BGC Holdings exchangeable limited partner may have encumbered its BGC Holdings exchangeable limited partnership interest in connection with any bona fide bank financing transaction.

Classes of Founding/Working Partner Interests and Limited Partnership Units

Founding/working partners held five classes of BGC Holdings units underlying such partner’s BGC Holdings founding partner interests and BGC Holdings working partner interests, respectively: High Distribution, High Distribution II, High Distribution III, High Distribution IV, and Grant. In addition, there were separate classes of working partner interests called RPUs, PSUs, and PSIs and there were limited partnership units called REUs. In addition, effective April 1, 2011, five new units were created. AREUs, ARPUs, APSUs and APSI were identical in all respects to existing REUs, RPUs, PSU and PSI, respectively, except that (i) until any related distribution conditions specified in the applicable award agreement were met, if ever, only net losses were allocable with respect to such units; and (ii) no distributions were made until such distribution conditions were met. The other new unit created in 2011, the PSE, was identical in all respects to existing PSUs, except that (x) PSEs required minimum distributions of no less than $0.015 per fiscal quarter; and (y) such distributions may have been delayed for up to four quarters in the discretion of the General Partner of BGC Partners’ Partnership; provided that, with respect to a BGC legacy unit that is a PSE, the minimum distribution was apportioned between such BGC legacy unit on one hand and the related Newmark legacy unit on the other hand, based on the relative value of BGC and Newmark, such that the sum of the minimum distribution for such BGC legacy unit and Newmark legacy unit immediately following the distribution equaled $0.015 with respect to each quarter. Further, effective December 17, 2012, a new unit was created, the LPU, which was identical in all respects to the existing PSU, except that the LPU was available for issuance only to members of a certain U.K. limited liability partnership. In addition, on November 6, 2013, the Preferred Units were created as discussed above. Also, on May 9, 2014, the NPSUs were created as discussed above.

 

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The term “limited partnership units” Was generally used to refer to REUs, AREUs, RPUs, ARPUs, PSUs, APSUs, PSIs, APSIs, PSEs, LPUs, NPSUs, NREUs, NPREUs, NLPUs, NPLPUs, NPPSUs or the Preferred Unit equivalents of such limited partnership units as described above.

In general, the rights and obligations of founding/working partners with respect to their BGC Holdings units were similar, but not identical, to the rights and obligations of the founding partners, as limited partners in Cantor with respect to their Cantor units. Each class of BGC Holdings units held by founding/working partners generally entitled the holder to receive a pro rata share of the distributions of income received by BGC Holdings. See “—Distributions” below. High Distribution II and High Distribution III units differ from High Distribution units, however, in that holders of High Distribution II and High Distribution III units paid at their original issuance, or the original issuance of their predecessor interests in Cantor, only a portion (generally approximately 20% in the case of High Distribution II Units and 14.3% in the case of High Distribution III Units) of the amount that would have been paid by a holder of a High Distribution unit as of that date, with the remaining amount (increased by a stated rate), which we referred to as a “HD II Account Obligation” or “HD III Account Obligation,” as applicable, paid, on a stated schedule (generally four years in the case of High Distribution II units and seven years in the case of High Distribution III units). With respect to High Distribution II Units and High Distribution III Units issued in redemption of similar units in Cantor, the applicable HD II Account Obligation or HD III Account Obligation was paid to Cantor rather than to BGC Holdings. High Distribution IV units differed from High Distribution units in that holders of High Distribution IV units were entitled to receive an additional payment following redemption, as described in “—Redemption of BGC Holdings Founding/Working Partner Interests and Limited Partnership Units.” Grant Units and Matching Grant Units differed from the other classes of BGC Holdings units in the calculation and the compensatory tax treatment of amounts payable upon redemption of such units.

With respect to the limited partnership units, each grant of REUs or AREUs had associated with it an “REU post-termination amount” or an “AREU post-termination amount” which represented an amount payable to the REU or AREU holder upon redemption of such units. A partner’s entitlement to the REU or AREU post-termination amount vested ratably over three years or according to such schedule as determined by BGC Holdings at the time of the grant. In lieu of paying all or a portion of the REU or AREU post-termination amount, BGC Holdings may have caused the REUs or AREUs held by a redeemed partner to be automatically exchanged for shares of BGC Partners Class A common stock at the applicable exchange ratio.

The value of such shares may have been more or less than the applicable post-termination amount. These payments of cash and/or shares were conditioned on the former REU or AREU holder not violating his or her partner obligations or engaging in any competitive activity prior to the date such payments are made, and were subject to reduction if any losses are allocated to such REUs or AREUs. From time to time, the terms of specific grants of REUs or AREUs varied, which variations may have included limitations on the income or distributions and may have also provided for exchangeability at an identified time or upon the occurrence of certain conditions. RPUs and APSUs had similar features to existing REU and AREU interests except that (i) they provided for a minimum distribution of $0.005 per quarter and (ii) they provided that if BGC Holdings were to be dissolved, the obligation to provide post-termination payments to terminated partners holding RPUs or ARPUs was cancelled. PSUs, APSUs, PSIs, PSEs and APSIs were similar to REUs, AREUs, RPUs and ARPUs, respectively, except that they did not have post-termination payments. Preferred Units were entitled solely to the Preferred Distribution and, similarly, did not have post-termination payments. NPSUs were identical to PSUs except that they were not entitled to participate in partnership distributions, were not allocated any items of profit or loss and were not made exchangeable into shares of BGC Partners’ Class A common stock, but may have been converted into PSUs or PPSUs in the sole discretion of the General Partner of our Partnership. The N Units were identical to their underlying units except that they were not entitled to participate in partnership distributions, were not allocated any items of profit or loss and were not made exchangeable into shares of BGC Partners’ Class A common stock, but may have been converted into the underlying unit in the sole discretion of the General Partner of the Partnership and subjected to the approval of the Compensation Committee.

 

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Partner Obligations

Each of the founding/working partners and each of the limited partnership unit holders was subject to certain partner obligations, which BGC Partners referred to as “partner obligations.” The partner obligations constituted an undertaking by each of the founding/working partners and each of the limited partnership unit holders that they had a duty of loyalty to BGC Holdings and that, during the period from the date on which a person first became a partner through the applicable specified period following the date on which such partner ceased, for any reason, to be a partner, not to, directly or indirectly (including by or through an affiliate):

 

   

breach a founding/working partner’s or limited partnership unit holder’s, as the case may be, duty of loyalty to BGC Holdings, through the two-year period following the date on which such partner ceases, for any reason, to be a founding/working partner or limited partnership unit holder;

 

   

while a founding/working partner or limited partnership unit holder and through the six (6)-month anniversary of the termination of such founding/working partner or limited partnership unit holder, engage in, represent in any way, or be connected with (as partner, director, officer, employee, consultant, or active participant, in each case, other than on a de minimis basis) any activity, practice or act with a competing business (as defined below) if: (1) it involves a Client or Client Representative (as defined in Second Amended and Restated BGC Holdings Partnership Agreement) and a service that is the same or similar to a service the partner provided for a Protected Affiliate (as defined in the Second Amended and Restated BGC Holdings Partnership Agreement); or (2) it involves (y) a product, product line or type, or service of a Protected Affiliate (including any for which it took substantial steps to offer prior to the termination of such partner), and (z) a service that is the same or similar to a service the founding/working partner or limited partnership unit holder provided for a Protected Affiliate within a geographic market covering where the founding/working partner or limited partnership unit holder and/or the Protected Affiliate provided services or had responsibilities and/or within a 100-mile radius of any Client, Client Representative, Protected Affiliate, or Partner while a Partner; or (3) the Partner had substantial confidential information of the BGC Holdings or a Protected Affiliate and the disclosure of such information to the Competing Business is likely to be inevitable;

 

   

while a founding/working partner or limited partnership unit holder and through the six (6)-month anniversary of the termination of such founding/working partner or limited partnership unit holder, solicit any of the customers of a Protected Affiliate for purposes of engaging in a competing business;

 

   

while a founding/working partner or limited partnership unit holder and through the first (1st)-year anniversary of the termination of such founding/working partner or limited partnership unit holder, induce such customers or their employees to reduce their volume of business with, terminate their relationship with, or otherwise adversely affect their relationship with, a Protected Affiliate;

 

   

while a founding/working partner or limited partnership unit holder and through the second (2nd)-year anniversary of the termination of such founding/working partner or limited partnership unit holder, solicit, induce, or influence, or attempt to solicit, induce, or influence, any person who was an employee, member, partner, or consultant of a Protected Affiliate or an affiliate to terminate his/her/their employment or association with any such Protected Affiliate or affiliate or hire, employ, engage (including as a consultant or partner), or otherwise enter into a Competing Business with any such person;

 

   

while a founding/working partner or limited partnership unit holder and through the fourth (4th)-year anniversary of the termination of such founding/working partner or limited partnership unit holder, make or participate in the making of (including through the limited

 

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partner’s or any of its affiliates’ respective agents and representatives) any comments to the media (print, broadcast, electronic or otherwise) that are disparaging regarding BGC Partners or the senior executive officers of BGC Partners or are otherwise contrary to the interests of BGC Partners as determined by the BGC Holdings general partner in its sole and absolute discretion;

 

   

except as permitted with respect to corporate opportunities and fiduciary duties in the BGC Holdings limited partnership agreement (see “—Corporate Opportunity; Fiduciary Duty” below) take advantage of, or provide another person with the opportunity to take advantage of, a BGC Partners “corporate opportunity” (as such term would apply to BGC Holdings if it were a corporation) including opportunities related to intellectual property, which for this purpose requires granting BGC Partners a right of first refusal to acquire any assets, stock or other ownership interest in a business being sold by any partner or affiliate of such partner if an investment in such business would constitute a “corporate opportunity” (as such term would apply to BGC Holdings if it were a corporation), that has not been presented to and rejected by BGC Partners or that BGC Partners rejects but reserves for possible further action by BGC Partners in writing, unless otherwise consented to by the BGC Holdings general partner in writing in its sole and absolute discretion; or

 

   

otherwise take any action to harm, that harms or that reasonably could be expected to harm, BGC Partners for a two-year period following the date on which a founding/working partner or a limited partnership unit holder, as the case may be, ceases, for any reason, to be a founding/working partner or a limited partnership unit holder, as the case may be, including any breach of its confidentiality obligations.

A founding/working partner or limited partnership unit holder is considered to have engaged in a “competitive activity” if such partner (including by or through his, her or its affiliates), during the applicable restricted period, engages in one of the following activities, which we collectively refer to as the “competitive activities”:

 

  (1)

at any time while a founding/working partner or limited partnership unit holder and through the second (2nd)-year anniversary of the termination of such partner, directly or indirectly, or by action in concert with others, solicits, induces, or influences, or attempts to solicit, induce or influence, any other partner, employee, member, partner or consultant of Cantor, BGC Partners or any member of the Cantor group or affiliated entity to terminate their employment or other business arrangements with Cantor, BGC Partners or any member of the Cantor group or affiliated entity, or to engage in any competing business (as defined below) or hires, employs, engages (including as a consultant or partner) or otherwise enters into a competing business with any such person;

 

  (2)

at any time while a founding/working partner or limited partnership unit holder and through the second (2nd)-year anniversary of the termination of such partner, solicits any of the customers of Cantor, BGC Partners or any member of the Cantor group or affiliated entity (or any of their employees), induces such customers or their employees to reduce their volume of business with, terminate their relationship with or otherwise adversely affect their relationship with, Cantor, BGC Partners or any member of the Cantor group or affiliated entity; or

 

  (3)

at any time while a founding/working partner or limited partnership unit holder and through the second (2nd)-year anniversary of the termination of such partner, engages in, represents in any way, or is connected with (as partner, director, officer, employee, consultant, or active participant, in each case, other than on a de minimis basis) any activity, practice or act with a Competing Business if: (1) it involves a Client or Client Representative and a service that is the same or similar to a service the founding/working partner or limited partnership unit holder provided for a Protected Affiliate; (2) it involves (y) a product, product line or type, or service of a Protected Affiliate (including any for which it took substantial steps to offer prior to the termination of such founding/working partner or limited

 

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  partnership unit holder), and (z) a service that is the same or similar to a service the founding/working partner or limited partnership unit holder provided for a Protected Affiliate within a geographic market covering where the Partner and/or the Protected Affiliate provided services or had responsibilities and/or within a 100-mile radius of any Client, Client Representative, Protected Affiliate, or founding/working partner or limited partnership unit holder while a founding/working partner or limited partnership unit holder; or (3) the founding/working partner or limited partnership unit holder had substantial confidential information of the Cantor, BGC Partners or any member of the Cantor group or affiliated entity and the disclosure of such information to the Competing Business is likely to be inevitable.

Notwithstanding anything to the contrary, and unless Cantor determined otherwise, none of such partner obligations applied to any founding/working partner or limited partnership unit holder that was also a Cantor Company. “Cantor Company” means Cantor or any of its affiliates (other than, if applicable, BGC and any of BGC Partners’ subsidiaries, or Newmark and its subsidiaries). Such partners were exempt from these partner obligations.

The determination of whether a founding/working partner or limited partnership unit holder had breached his or her partner obligations was made in good faith by the BGC Holdings general partner in its sole and absolute discretion, which determination was final and binding. If a founding/working partner or a limited partnership unit holder breached his, her or its partner obligations, then, in addition to any other rights or remedies that the BGC Holdings general partner may have had, and unless otherwise determined by the BGC Holdings general partner in its sole and absolute discretion, BGC Holdings redeemed all of the units held by such partner for a redemption price equal to their base amount, and such partner had no right to receive any further distributions, or payments of cash, stock or property, to which such partner otherwise might have been entitled.

Any founding/working partner or limited partnership unit holder, as the case may have been, that breached his or her partner obligations was required to indemnify BGC Holdings for and pay any resulting attorneys’ fees and expenses, as well as any and all damages resulting from such breach. In addition, upon breach of the BGC Holdings limited partnership agreement by or the termination or bankruptcy of a founding/working or a limited partnership unit holder, as the case may have been, that was subject to the partner obligations, or if any such partner owed any amount to BGC Holdings or to any affiliated entity or failed to pay any amount to any other person with respect to which amount BGC Holdings or any affiliated entity was a guarantor or surety or was similarly liable (in each case whether or not such amount was due and payable), BGC Holdings had the right to set off the amount that such partner owed to BGC Holdings or any affiliated entity or any such other person under any agreement or otherwise and the amount of any cost or expense incurred or projected to be incurred by BGC Holdings in connection with such breach, such termination or bankruptcy or such indebtedness (including attorneys’ fees and expenses and any diminution in value of any BGC Holdings assets and including in each case both monetary obligations and the fair market value of any non-cash item and amounts not yet due or incurred) against any amounts that it owed to such partner under the BGC Holdings limited partnership agreement or otherwise, or to reduce the capital account, the base amount and/or the distributions (quarterly or otherwise) of such partner by any such amount.

A founding/working partner or a limited partnership unit holder, as the case may be, would become a terminated partner upon (a) the actual termination of the employment of such partner, so that such partner was no longer an employee of BGC U.S. OpCo, BGC Global OpCo or any affiliated entity, with or without cause by the employer, by such partner or by reason of death, (b) the termination by the BGC Holdings general partner, which may have occurred without the termination of a partner’s employment, of such partner’s status as a partner by reason of a determination by the BGC Holdings general partner that such partner breached the BGC Holdings limited partnership agreement or that such partner ceased to provide substantial services to BGC Holdings or any affiliated entity, even if such cessation was at the direction of BGC Holdings or any affiliated entity or (c) ceasing to be a partner for any reason. With respect to a corporate or other entity partner, such partner would also be considered terminated upon the termination of the beneficial owner, grantor, beneficiary or trustee of such partner.

 

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A founding/working partner or a limited partnership unit holder, as the case may have been, would have become a bankrupt partner upon (a) making an assignment for the benefit of creditors, (b) filing a voluntary petition in bankruptcy, (c) the adjudication of such partner as bankrupt or insolvent, or the entry against such partner of an order for relief in any bankruptcy or insolvency proceeding; provided that such order for relief or involuntary proceeding was not stayed or dismissed within 120 days, (d) the filing by such partner of a petition or answer seeking for himself, herself or itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any bankruptcy statute, law or regulation, (e) the filing by such partner of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of that nature or (f) the appointment of or seeking of the appointment of (in each case by any person) a trustee, receiver or liquidator of it or of all or any substantial part of the properties of such founding/working partner. With respect to a corporate founding/working partner, bankruptcy would have also included the occurrence of any of the foregoing events with respect to the beneficial owner of the majority of the stock of such partner. Notwithstanding the foregoing, no event constituted a bankruptcy of a founding/working partner or limited partnership unit holder, as the case may have been, unless the BGC Holdings general partner so determined in its sole and absolute discretion.

Redemption of BGC Holdings Founding/Working Partner Interests and Limited Partnership Units

Unlike the BGC Holdings limited partnership interests held by Cantor, the classes of BGC Holdings limited partnership interests held by founding partners, working partners and limited partnership unit holders (in each case, to the extent such interests had not become exchangeable) were subject to purchase and redemption by BGC Holdings in the following circumstances (subject to Cantor’s right to purchase such interests from BGC Holdings as described in “—Cantor’s Right to Purchase Exchangeable BGC Holdings Limited Partnership Interests Upon Redemption or Exchange of BGC Holdings Founding Partner Interests”):

 

   

except as otherwise agreed to by each of the BGC Holdings general partners, the BGC Holdings exchangeable limited partners (by a majority in interest of the BGC Holdings exchangeable limited partnership interests) and the applicable founding partner, upon any termination or bankruptcy of a founding partner (or the termination or bankruptcy of the beneficial owner of the stock or other ownership interest of any such founding partner that was a corporation or other entity), BGC Holdings would purchase and redeem from such founding partner or his, her or its representative, and such founding partner or his, her or its representative would sell to BGC Holdings, all of the founding partner interests held by such founding partner (and, with the consent of the BGC Holdings general partner and Cantor, BGC Holdings may have assigned its right to purchase such founding partner interests to another partner); and

 

   

except as otherwise agreed to by each of the BGC Holdings general partners and the applicable working partner or limited partnership unit holder, as the case may have been, upon (1) any termination or bankruptcy of a working partner or limited partnership unit holder, as the case may have been (or the termination or bankruptcy of the beneficial owner of the stock or other ownership interest of any such working partner or limited partnership unit holder that was a corporation or other entity) or (2) an election of the BGC Holdings general partner for any reason or for no reason whatsoever, BGC Holdings would purchase and redeem from such working partner or his, her or its representative, and such working partner or his, her or i