Business Context and Reporting Period
This Form 8-K Current Report was filed by Newmark Group, Inc. on February 10, 2023. The filing discloses the execution of an amended and restated employment agreement with Barry Gosin, the Company's Chief Executive Officer. The agreement is effective as of February 10, 2023, and replaces prior agreements dated December 1, 2017.
Key Financial Metrics and Compensation Structure
The filing details a comprehensive compensation package for Mr. Gosin covering calendar years 2022 through 2025. The agreement structures total annual compensation at up to $12,500,000 per year, comprised of the following components:
- Base Salary: $1,000,000 annually.
- Cash Bonus: $1,500,000 annually, payable in connection with the year-end compensation review process.
- Equity Award: An upfront advance award of 1,145,475 Newmark Holdings non-exchangeable non-distribution earning partnership units (NPSUs) per year. This award is valued at $10,000,000 annually, calculated based on the stock price of $8.73 on February 10, 2023.
The filing does not provide general company-wide financial metrics such as revenue, profit, cash flow, or debt levels, as this report focuses exclusively on executive compensation.
Material Changes and Vesting Conditions
The primary material change is the extension of Mr. Gosin's employment term through at least 2024, with provisions for continuous extension until terminated by either party. The equity component (NPSUs) is subject to specific performance and service conditions:
- Conversion Conditions: NPSUs convert to partnership units (PSUs) in four equal tranches starting April 1, 2023, contingent upon the Company earning at least $10,000,000 in gross revenues in the applicable calendar quarter and Mr. Gosin remaining employed in good standing.
- Exchangeability: Converted PSUs become exchangeable in increments over time, contingent on continued employment. If Mr. Gosin remains employed through December 31, 2025, 75% of the aggregate PSUs become exchangeable, with the remainder vesting between 2026 and 2029.
Outlook, Risks, and Termination Provisions
The agreement includes significant provisions regarding termination and change of control, which represent potential financial liabilities for the Company:
- Termination Without Cause: Mr. Gosin is entitled to his salary through the remainder of the term, unpaid cash bonuses, and redemption or exchange of non-exchangeable partnership units over three years.
- Change of Control: Defined as a loss of control by Cantor Fitzgerald, L.P. or Howard W. Lutnick. In the event of a Change of Control followed by termination without Cause within three years, Mr. Gosin is entitled to a lump-sum payment of $12,500,000 plus medical benefits and accelerated vesting of partnership units.
- Non-Compete and Non-Solicit: Mr. Gosin is restricted from competing with the Company for two years post-employment and from soliciting employees for five years. During the non-compete period, he is entitled to receive $83,333.33 per month, provided he does not breach the agreement.
Investor Verification Checklist
- Verify the total potential cash and equity liability associated with the $12.5 million annual compensation package over the 2022-2025 term.
- Confirm the Company's ability to meet the $10,000,000 quarterly gross revenue threshold required for NPSU conversion.
- Assess the impact of the $12,500,000 lump-sum severance provision in the event of a Change of Control followed by termination without Cause.
- Review the attached Exhibit 10.1 for the full legal text of the employment agreement and specific definitions of "Cause" and "Change of Control."