search

The Real Deal Logo

Trending

Lawmakers reach sweeping housing deal with “good cause eviction,” new 421aLawmakers reach sweeping housing deal with “good cause eviction,” new 421aRent board’s 4% hike will “plunge” buildings into distress: landlordsRent board’s 4% hike will “plunge” buildings into distress: landlordsHousing deal could rescue Halletts North, other stalled projectsHousing deal could rescue Halletts North, other stalled projectsSL Green, Vornado kick in $100M to extend 280 Park loanSL Green, Vornado kick in $100M to extend 280 Park loan
Commercial
New York

Lutnick gets $20M bonus after Newmark’s record year

Questions arise on brokerage’s earnings call over board’s independence

Howard Lutnick (Getty, iStock, Photo illustration by Priyanka Modi)
Howard Lutnick (Getty, iStock, Photo illustration by Priyanka Modi)

Newmark chairman Howard Lutnick was rewarded with a $20 million bonus as the brokerage he spun off in 2017 saw its best year on record.

Newmark reported net income of $744.5 million last year, up from a little more than $70 million in 2020, according to the company’s year-end financial statements. Annual revenue and earnings were the highest in the company’s history.

The brokerage received an $850 million windfall last year as a result of some financial engineering by Lutnick as he prepared it for its December 2017 IPO: The Wall Street veteran seeded the brokerage with hundreds of millions of dollars worth of shares his BGC Partners had acquired in Nasdaq Incorporated.

To date, those shares have been worth $1.5 billion to Newmark.

Read more

Company president Barry Gosin said the $20 million bonus was due to the “superior financial results” Lutnick had delivered and the value he created in the Nasdaq transaction.

Sign Up for the undefined Newsletter

Analysts on the call were skeptical.

Raymond James’ Patrick O’Shaughnessy questioned the independence of Newmark’s board of directors, which he said is “significantly smaller” than normal and stacked with members who lack experience in real estate but have long-standing ties to Lutnick.

“Why should public shareholders have confidence in the governance abilities of Newmark’s board?” he asked.

Gosin countered that the board members are “real people that have real knowledge of business and are commercial and they’re independent,” adding that the company plans to expand its board with an additional seat this year.

He said Lutnick intends to buy Newmark shares with the after-tax portion of his bonus.

Lutnick, 60, announced in October that he has “highly treatable” non-Hodgkin’s lymphoma. He has been CEO of Cantor Fitzgerald since 1991 and became chairman in 1996. BGC Partners, formed in 2004 as a spinoff of Cantor Fitzgerald’s brokerage business, acquired Newmark in 2011.

Tags
Newmark