☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
35-2478370
|
|
(State or Other Jurisdiction of
|
(I.R.S. Employer
|
|
Incorporation or Organization)
|
Identification No.)
|
|
23975 Park Sorrento, Suite 400
Calabasas, California
|
91302
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
Common Stock, par value $0.0001 per share
|
MMI
|
New York Stock Exchange
|
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated
filer
|
☐ | Smaller reporting company | ☐ | |||
Emerging growth company
|
☐ |
Page | ||||
3 | ||||
4 | ||||
5 | ||||
7 | ||||
8 | ||||
29 | ||||
43 | ||||
44 | ||||
45 | ||||
45 | ||||
46 | ||||
46 | ||||
46 | ||||
46 | ||||
46 | ||||
September 30,
(Unaudited) |
December 31,
2019 |
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 173,112 | $ | 232,670 | ||||
Commissions receivable, net
|
6,846 | 5,003 | ||||||
Prepaid expenses
|
8,694 | 10,676 | ||||||
Income tax receivable
|
10,023 | 4,999 | ||||||
Marketable debt securities,
available-for-sale
|
169,513 | 150,752 | ||||||
Advances and loans, net
|
2,090 | 2,882 | ||||||
Other assets
|
3,013 | 3,185 | ||||||
|
|
|
|
|||||
Total current assets
|
373,291 | 410,167 | ||||||
Property and equipment, net
|
23,371 | 22,643 | ||||||
Operating lease
right-of-use
|
82,202 | 90,535 | ||||||
Marketable debt securities,
available-for-sale
2020 and December 31, 2019, respectively, and $0 allowance for credit losses) |
46,505 | 60,809 | ||||||
Assets held in rabbi trust
|
9,467 | 9,452 | ||||||
Deferred tax assets, net
|
15,839 | 22,122 | ||||||
Goodwill and other intangible assets, net
|
36,883 | 22,312 | ||||||
Advances and loans, net
|
104,248 | 66,647 | ||||||
Other assets
|
4,319 | 4,347 | ||||||
|
|
|
|
|||||
Total assets
|
$ | 696,125 | $ | 709,034 | ||||
|
|
|
|
|||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and other liabilities
|
$ | 10,601 | $ | 10,790 | ||||
Notes payable to former stockholders
|
— | 6,564 | ||||||
Deferred compensation and commissions
|
37,244 | 44,301 | ||||||
Operating lease liabilities
|
17,954 | 17,762 | ||||||
Accrued bonuses and other employee related expenses
|
10,238 | 22,388 | ||||||
|
|
|
|
|||||
Total current liabilities
|
76,037 | 101,805 | ||||||
Deferred compensation and commissions
|
33,921 | 45,628 | ||||||
Operating lease liabilities
|
57,002 | 63,155 | ||||||
Other liabilities
|
8,131 | 3,539 | ||||||
|
|
|
|
|||||
Total liabilities
|
175,091 | 214,127 | ||||||
|
|
|
|
|||||
Commitments and contingencies
|
— | — | ||||||
Stockholders’ equity:
|
||||||||
Preferred stock, $0.0001 par value:
|
||||||||
Authorized shares – 25,000,000; issued and outstanding shares – none at September 30, 2020 and December 31, 2019, respectively
|
— | — | ||||||
Common stock, $0.0001 par value:
|
||||||||
Authorized shares – 150,000,000; issued and outstanding shares – 39,376,477 and 39,153,195 at September 30, 2020 and December 31, 2019, respectively
|
4 | 4 | ||||||
Additional
paid-in
capital
|
110,625 | 104,658 | ||||||
Stock notes receivable from employees
|
— | (4 | ) | |||||
Retained earnings
|
407,454 | 388,271 | ||||||
Accumulated other comprehensive income
|
2,951 | 1,978 | ||||||
|
|
|
|
|||||
Total stockholders’ equity
|
521,034 | 494,907 | ||||||
|
|
|
|
|||||
Total liabilities and stockholders’ equity
|
$ | 696,125 | $ | 709,034 | ||||
|
|
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues:
|
||||||||||||||||
Real estate brokerage commissions
|
$
|
140,844 |
$
|
180,198 |
$
|
416,044 |
$
|
513,815 | ||||||||
Financing fees
|
15,620 | 16,013 | 43,674 | 47,487 | ||||||||||||
Other revenues
|
2,111 | 2,009 | 6,974 | 7,218 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenues
|
158,575 | 198,220 | 466,692 | 568,520 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses:
|
||||||||||||||||
Cost of services
|
99,707 | 124,147 | 287,207 | 343,682 | ||||||||||||
Selling, general and administrative
|
49,722 | 48,091 | 148,101 | 149,845 | ||||||||||||
Depreciation and amortization
|
2,606 | 1,910 | 7,822 | 5,674 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses
|
152,035 | 174,148 | 443,130 | 499,201 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income
|
6,540 | 24,072 | 23,562 | 69,319 | ||||||||||||
Other income (expense), net
|
1,615 | 2,573 | 4,224 | 9,067 | ||||||||||||
Interest expense
|
(199 | ) | (329 | ) | (695 | ) | (1,018 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before provision for income taxes
|
7,956 | 26,316 | 27,091 | 77,368 | ||||||||||||
Provision for income taxes
|
1,916 | 7,024 | 7,875 | 21,159 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
|
6,040 | 19,292 | 19,216 | 56,209 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income:
|
||||||||||||||||
Marketable debt securities,
available-for-sale:
|
||||||||||||||||
Change in net unrealized gains and losses
|
(30 | ) | 160 | 687 | 1,874 | |||||||||||
Less: reclassification adjustment for net losses (gains) included in other income (expense),
net |
8 | (23 | ) | 32 | (41 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net change, net of tax of $(7), $46, $246 and $617 for the three and nine months ended September 30, 2020 and 2019, respectively
|
(22 | ) | 137 | 719 | 1,833 | |||||||||||
Foreign currency translation (loss) gain, net of tax of $0 for each of the three and nine months ended September 30, 2020 and 2019
|
(214 | ) | 114 | 254 | (200 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other comprehensive (loss) income
|
(236 | ) | 251 | 973 | 1,633 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income
|
$ | 5,804 | $ | 19,543 | $ | 20,189 | $ | 57,842 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
||||||||||||
Earnings per share:
|
||||||||||||||||
Basic
|
$ | 0.15 | $ | 0.49 | $ | 0.49 | $ | 1.43 | ||||||||
Diluted
|
$ | 0.15 | $ | 0.49 | $ | 0.48 | $ | 1.42 | ||||||||
Weighted average common shares outstanding:
|
||||||||||||||||
Basic
|
39,681 | 39,441 | 39,617 | 39,383 | ||||||||||||
Diluted
|
39,727 | 39,550 | 39,676 | 39,527 |
|
|
Three Months Ended September 30, 2020
|
|
|||||||||||||||||||||||||||||||||
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional
Paid-In
Capital |
|
|
Stock Notes
Receivable From Employees |
|
|
Retained
Earnings |
|
|
Accumulated
Other Comprehensive Income (Loss) |
|
|
Total
|
|
|||||||||||||||
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
||||||||||||||||||||||||
Balance at June 30, 2020
|
—
|
|
|
$
|
—
|
|
|
|
39,328,017
|
|
|
$
|
4
|
|
|
$
|
108,308
|
|
|
$
|
—
|
|
|
$
|
401,414
|
|
|
$
|
3,187
|
|
|
$
|
512,913
|
|||
Net and comprehensive income (loss)
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,040
|
|
|
|
(236
|
)
|
|
|
5,804
|
|||
Stock-based award activity
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Stock-based compensation
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,383
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,383
|
|||
Shares issued pursuant to employee
purchase plan |
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|||
Issuance of common stock for vesting of restricted stock units
|
—
|
|
|
|
—
|
|
|
|
50,912
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|||
Issuance of common stock for unvested restricted stock awards
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|||
Shares withheld related to net share
settlement of stock-based awards |
—
|
|
|
|
—
|
|
|
|
(2,452
|
)
|
|
|
—
|
|
|
|
(66
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(66
|
)
|
||
Reduction of stock notes receivable from employees
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance as of September 30, 2020
|
—
|
|
|
$
|
—
|
|
|
|
39,376,477
|
|
|
$
|
4
|
|
|
$
|
110,625
|
|
|
$
|
—
|
|
|
$
|
407,454
|
|
|
$
|
2,951
|
|
|
$
|
521,034
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2019
|
|
|||||||||||||||||||||||||||||||||
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional
Paid-In
Capital |
|
|
Stock Notes
Receivable From Employees |
|
|
Retained
Earnings |
|
|
Accumulated
Other Comprehensive Income |
|
|
Total
|
|
|||||||||||||||
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
||||||||||||||||||||||||
Balance at June 30, 2019
|
—
|
|
|
$
|
—
|
|
|
|
39,090,861
|
|
|
$
|
4
|
|
|
$
|
100,098
|
|
|
$
|
(4
|
)
|
|
$
|
348,258
|
|
|
$
|
2,157
|
|
|
$
|
450,513
|
|
||
Net and comprehensive income
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,292
|
|
|
|
251
|
|
|
|
19,543
|
|
||
Stock-based award activity
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Stock-based compensation
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,114
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,114
|
|
||
Shares issued pursuant to employee stock purchase plan
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||
Issuance of common stock for vesting of restricted stock units
|
—
|
|
|
|
—
|
|
|
|
41,257
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||
Issuance of common stock for unvested restricted stock awards
|
—
|
|
|
|
—
|
|
|
|
2,264
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||
Shares withheld related to net share settlement of stock-based awards
|
—
|
|
|
|
—
|
|
|
|
(2,146
|
)
|
|
|
—
|
|
|
|
(70
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(70
|
)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance as of September 30, 2019
|
—
|
|
|
$
|
—
|
|
|
|
39,132,236
|
|
|
$
|
4
|
|
|
$
|
102,142
|
|
|
$
|
(4
|
)
|
|
$
|
367,550
|
|
|
$
|
2,408
|
|
|
$
|
472,100
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020
|
|
|||||||||||||||||||||||||||||||||
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional
Paid-In
Capital |
|
|
Stock Notes
Receivable From Employees |
|
|
Retained
Earnings |
|
|
Accumulated
Other Comprehensive Income |
|
|
Total
|
|
|||||||||||||||
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
||||||||||||||||||||||||
Balance at December 31, 2019
|
—
|
|
|
$
|
—
|
|
|
|
39,153,195
|
|
|
$
|
4
|
|
|
$
|
104,658
|
|
|
$
|
(4
|
)
|
|
$
|
388,271
|
|
|
$
|
1,978
|
|
|
$
|
494,907
|
|||
Cumulative effect of a change in accounting principle, net of tax
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(33
|
)
|
|
|
—
|
|
|
|
(33
|
)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at January 1, 2020, as adjusted
|
—
|
|
|
|
—
|
|
|
|
39,153,195
|
|
|
|
4
|
|
|
|
104,658
|
|
|
|
(4
|
)
|
|
|
388,238
|
|
|
|
1,978
|
|
|
|
494,874
|
|||
Net and comprehensive income
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,216
|
|
|
|
973
|
|
|
|
20,189
|
|||
Stock-based award activity
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Stock-based compensation
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,551
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,551
|
|||
Shares issued pursuant to employee
purchase plan |
—
|
|
|
|
—
|
|
|
|
15,923
|
|
|
|
—
|
|
|
|
371
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
371
|
|||
Issuance of common stock for vesting of restricted stock units
|
—
|
|
|
|
—
|
|
|
|
248,391
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|||
Issuance of common stock for unvested restricted stock awards
|
—
|
|
|
|
—
|
|
|
|
19,516
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|||
Shares withheld related to net share settlement of stock-based awards
|
—
|
|
|
|
—
|
|
|
|
(60,548
|
)
|
|
|
—
|
|
|
|
(1,955
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,955
|
)
|
||
Reduction of stock notes receivable from employees
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance as of September 30, 2020
|
—
|
|
|
$
|
—
|
|
|
|
39,376,477
|
|
|
$
|
4
|
|
|
$
|
110,625
|
|
|
$
|
—
|
|
|
$
|
407,454
|
|
|
$
|
2,951
|
|
|
$
|
521,034
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2019
|
|
|||||||||||||||||||||||||||||||||
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional
Paid-In
Capital |
|
|
Stock Notes
Receivable From Employees |
|
|
Retained
Earnings |
|
|
Accumulated
Other Comprehensive Income |
|
|
Total
|
|
|||||||||||||||
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
||||||||||||||||||||||||
Balance at December 31, 2018
|
—
|
|
|
$
|
—
|
|
|
|
38,814,464
|
|
|
$
|
4
|
|
|
$
|
97,458
|
|
|
$
|
(4
|
)
|
|
$
|
311,341
|
|
|
$
|
775
|
|
|
$
|
409,574
|
|||
Net and comprehensive income
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
56,209
|
|
|
|
1,633
|
|
|
|
57,842
|
|||
Stock-based award activity
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Stock-based compensation
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,040
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,040
|
|||
Shares issued pursuant to employee
purchase plan |
—
|
|
|
|
—
|
|
|
|
11,022
|
|
|
|
—
|
|
|
|
338
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
338
|
|||
Issuance of common stock for vesting of restricted stock units
|
—
|
|
|
|
—
|
|
|
|
366,476
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|||
Issuance of common stock for unvested restricted stock awards
|
—
|
|
|
|
—
|
|
|
|
12,806
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|||
Shares withheld related to net share
settlement of stock-based awards |
—
|
|
|
|
—
|
|
|
|
(72,532
|
)
|
|
|
—
|
|
|
|
(2,694
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,694
|
)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance as of September 30, 2019
|
—
|
|
|
$
|
—
|
|
|
|
39,132,236
|
|
|
$
|
4
|
|
|
$
|
102,142
|
|
|
$
|
(4
|
)
|
|
$
|
367,550
|
|
|
$
|
2,408
|
|
|
$
|
472,100
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, |
||||||||
2020 | 2019 | |||||||
Cash flows from operating activities
|
||||||||
Net income
|
$ | 19,216 | $ | 56,209 | ||||
Adjustments to reconcile net income to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
7,822 | 5,674 | ||||||
Amortization of
right-of-use
|
16,883 | 15,433 | ||||||
Credit loss expense
|
55 | 75 | ||||||
Stock-based compensation
|
7,551 | 7,040 | ||||||
Deferred taxes, net
|
6,050 | 3,829 | ||||||
Unrealized foreign exchange loss
|
276 | — | ||||||
Net realized gains on marketable debt securities,
available-for-sale
|
(180 | ) | (70 | ) | ||||
Other
non-cash
items
|
930 | 489 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Commissions receivable
|
(1,928 | ) | (1,368 | ) | ||||
Prepaid expenses
|
1,988 | (1,426 | ) | |||||
Advances and loans
|
(36,905 | ) | (20,379 | ) | ||||
Other assets
|
(1,087 | ) | (10,923 | ) | ||||
Accounts payable and other liabilities
|
(1,373 | ) | 103 | |||||
Income tax receivable/payable
|
(5,024 | ) | (12,272 | ) | ||||
Accrued bonuses and other employee related expenses
|
(12,145 | ) | (11,314 | ) | ||||
Deferred compensation and commissions
|
(17,593 | ) | (24,409 | ) | ||||
Operating lease liabilities
|
(13,504 | ) | (12,725 | ) | ||||
Other liabilities
|
702 | (19 | ) | |||||
|
|
|
|
|||||
Net cash used in operating activities
|
(28,266 | ) | (6,053 | ) | ||||
|
|
|
|
|||||
Cash flows from investing activities
|
||||||||
Acquisition of businesses, net of cash received
|
(11,821 | ) | — | |||||
Purchases of marketable debt securities,
available-for-sale
|
(179,221 | ) | (115,744 | ) | ||||
Proceeds from sales and maturities of marketable debt securities,
available-for-sale
|
175,226 | 143,638 | ||||||
Issuances of employee notes receivable
|
(243 | ) | (200 | ) | ||||
Payments received on employee notes receivable
|
90 | 28 | ||||||
Purchase of property and equipment
|
(5,412 | ) | (6,643 | ) | ||||
|
|
|
|
|||||
Net cash (used in) provided by investing activities
|
(21,381 | ) | 21,079 | |||||
|
|
|
|
|||||
Cash flows from financing activities
|
||||||||
Taxes paid related to net share settlement of stock-based awards
|
(1,955 | ) | (2,694 | ) | ||||
Proceeds from issuance of shares pursuant to employee stock purchase plan
|
371 | 338 | ||||||
Principal payments on notes payable to former stockholders
|
(6,564 | ) | (1,087 | ) | ||||
Principal payments on stock appreciation rights liability
|
(1,251 | ) | (185 | ) | ||||
Principal payments on contingent consideration
|
(420 | ) | — | |||||
|
|
|
|
|||||
Net cash used in financing activities
|
(9,819 | ) | (3,628 | ) | ||||
|
|
|
|
|||||
Effect of currency exchange rate changes on cash and cash equivalents
|
(92 | ) | — | |||||
|
|
|
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(59,558 | ) | 11,398 | |||||
Cash and cash equivalents at beginning of period
|
232,670 | 214,683 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period
|
$ | 173,112 | $ | 226,081 | ||||
|
|
|
|
|||||
|
|
|
||||||
Supplemental disclosures of cash flow information
|
||||||||
Interest paid during the period
|
$ | 1,208 | $ | 2,092 | ||||
|
|
|
|
|||||
Income taxes paid, net
|
$ | 6,849 | $ | 29,602 | ||||
|
|
|
|
1.
|
Description of Business and Basis of Presentation
|
2.
|
Accounting Policies and Recent Accounting Pronouncements
|
3.
|
Property and Equipment, Net
|
September 30,
2020 |
December 31,
2019 |
|||||||
Computer software and hardware equipment
|
$ | 29,704 | $ | 25,252 | ||||
Furniture, fixtures and equipment
|
23,309 | 23,468 | ||||||
Less: accumulated depreciation and amortization
|
(29,642 | ) | (26,077 | ) | ||||
|
|
|
|
|||||
$ | 23,371 | $ | 22,643 | |||||
|
|
|
|
4.
|
Operating Leases
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Operating lease cost:
|
||||||||||||||||
Lease cost
(1)
|
$ | 6,355 | $ | 6,148 | $ | 18,959 | $ | 18,163 | ||||||||
Variable lease cost
(2)
|
1,485 | 1,423 | 4,096 | 3,913 | ||||||||||||
Sublease income
|
(50 | ) | (68 | ) | (216 | ) | (199 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 7,790 | $ | 7,503 | $ | 22,839 | $ | 21,877 | |||||||||
|
|
|
|
|
|
|
|
(1)
|
Includes short-term lease cost and ROU asset amortization.
|
(2)
|
Primarily relates to common area maintenance, property taxes, insurance, utilities and parking.
|
September 30, 2020 | ||||
Remainder of 2020
|
$ | 5,382 | ||
2021
|
21,495 | |||
2022
|
15,998 | |||
2023
|
12,374 | |||
2024
|
10,211 | |||
Thereafter
|
15,514 | |||
|
|
|||
Total future minimum lease payments
|
80,974 | |||
Less imputed interest
|
(6,018 | ) | ||
|
|
|||
Present value of operating lease liabilities
|
$ | 74,956 | ||
|
|
Nine Months Ended
September 30, |
||||||||
2020 | 2019 | |||||||
Operating cash flow information:
|
||||||||
Cash paid for amounts included in the measurement of operating lease liabilities
|
$ | 15,566 | $ | 15,064 | ||||
Noncash activity:
|
||||||||
ROU assets obtained in exchange for operating lease liabilities
|
$ | 7,771 | $ | 17,806 | ||||
Tenant improvements owned by lessor related to ROU assets
(1)
|
$ | 949 | $ | 3,642 |
(1)
|
Reclassification from other assets current.
|
September 30, 2020 | December 31, 2019 | |||||||
Weighted average remaining operating lease term
|
4.70 years | 5.04 years | ||||||
Weighted average discount rate
|
3.2% | 3.8% |
5.
|
Investments in Marketable Debt Securities
|
September 30, 2020 | ||||||||||||||||||||
Amortized
Cost |
Allowance
for Credit Losses |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Fair
Value |
||||||||||||||||
Short-term investments:
|
||||||||||||||||||||
U.S. treasuries
|
$ | 93,425 | $ | — | $ | 216 | $ | — | $ | 93,641 | ||||||||||
U.S. government sponsored entities
|
37,721 | — | 19 | — | 37,740 | |||||||||||||||
Corporate debt
|
38,093 | — | 40 | (1 | ) | 38,132 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 169,239 | $ | — | $ | 275 | $ | (1 | ) | $ | 169,513 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Long-term investments:
|
||||||||||||||||||||
U.S. treasuries
|
$ | 3,396 | $ | — | $ | 293 | $ | — | $ | 3,689 | ||||||||||
U.S. government sponsored entities
|
1,233 | — | 36 | — | 1,269 | |||||||||||||||
Corporate debt
|
32,584 | — | 1,837 | (64 | ) | 34,357 | ||||||||||||||
ABS and other
|
7,033 | — | 189 | (32 | ) | 7,190 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 44,246 | $ | — | $ | 2,355 | $ | (96 | ) | $ | 46,505 | ||||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2019 | ||||||||||||||||
Amortized
Cost |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Fair
Value |
|||||||||||||
Short-term investments:
|
||||||||||||||||
U.S. treasuries
|
$ | 124,389 | $ | 196 | $ | (5 | ) | $ | 124,580 | |||||||
U.S. government sponsored entities
|
— | — | — | — | ||||||||||||
Corporate debt
|
26,128 | 44 | — | 26,172 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 150,517 | $ | 240 | $ | (5 | ) | $ | 150,752 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Long-term investments:
|
||||||||||||||||
U.S. treasuries
|
$ | 24,188 | $ | 235 | $ | — | $ | 24,423 | ||||||||
U.S. government sponsored entities
|
1,353 | 3 | (1 | ) | 1,355 | |||||||||||
Corporate debt
|
25,447 | 1,027 | (3 | ) | 26,471 | |||||||||||
ABS and other
|
8,480 | 93 | (13 | ) | 8,560 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 59,468 | $ | 1,358 | $ | (17 | ) | $ | 60,809 | ||||||||
|
|
|
|
|
|
|
|
September 30, 2020 | ||||||||||||||||||||||||
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Fair
Value |
Gross
Unrealized Losses |
Fair
Value |
Gross
Unrealized Losses |
Fair
Value |
Gross
Unrealized Losses |
|||||||||||||||||||
U.S. treasuries
|
$ | 5,051 | $ | — | $ | — | $ | — | $ | 5,051 | $ | — | ||||||||||||
Corporate debt
|
9,823 | (65 | ) | — | — | 9,823 | (65 | ) | ||||||||||||||||
ABS and other
|
1,143 | (25 | ) | 155 | (7 | ) | 1,298 | (32 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ | 16,017 | $ | (90 | ) | $ | 155 | $ | (7 | ) | $ | 16,172 | $ | (97 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 | ||||||||||||||||||||||||
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Fair
Value |
Gross
Unrealized Losses |
Fair
Value |
Gross
Unrealized Losses |
Fair
Value |
Gross
Unrealized Losses |
|||||||||||||||||||
U.S. treasuries
|
$ | 39,823 | $ | (5 | ) | $ | — | $ | — | $ | 39,823 | $ | (5 | ) | ||||||||||
U.S. government sponsored entities
|
— | — | 566 | (1 | ) | 566 | (1 | ) | ||||||||||||||||
Corporate debt
|
6,029 | (3 | ) | — | — | 6,029 | (3 | ) | ||||||||||||||||
ABS and other
|
1,971 | (13 | ) | — | — | 1,971 | (13 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ | 47,823 | $ | (21 | ) | $ | 566 | $ | (1 | ) | $ | 48,389 | $ | (22 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Gross realized gains
(1)
|
$ | 97 | $ | 58 | $ | 229 | $ | 117 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross realized losses
(1)
|
$ | (34 | ) | $ | — | $ | (49 | ) | $ | (47 | ) | |||||
|
|
|
|
|
|
|
|
(1)
|
Recorded in other income (expense), net in the condensed consolidated statements of net and comprehensive income. The cost basis of securities sold were determined based on the specific identification method.
|
September 30, 2020 | December 31, 2019 | |||||||||||||||
Amortized
Cost |
Fair Value |
Amortized
Cost |
Fair Value | |||||||||||||
Due in one year or less
|
$ | 169,239 | $ | 169,513 | $ | 150,517 | $ | 150,752 | ||||||||
Due after one year through five years
|
29,162 | 30,488 | 41,123 | 41,794 | ||||||||||||
Due after five years through ten years
|
10,307 | 11,136 | 12,813 | 13,467 | ||||||||||||
Due after ten years
|
4,777 | 4,881 | 5,532 | 5,548 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 213,485 | $ | 216,018 | $ | 209,985 | $ | 211,561 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average contractual maturity
|
1.7 years | 1.7 years |
6.
|
Acquisitions, Goodwill and Other Intangible Assets
|
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||
Gross
Carrying Amount |
Accumulated
Amortization |
Net Book
Value |
Gross
Carrying Amount |
Accumulated
Amortization |
Net Book
Value |
|||||||||||||||||||
Goodwill and intangible assets:
|
||||||||||||||||||||||||
Goodwill
|
$ | 24,319 | $ | — | $ | 24,319 | $ | 15,072 | $ | — | $ | 15,072 | ||||||||||||
Intangible assets
(1)
|
17,291 | (4,727 | ) | 12,564 | 9,050 | (1,810 | ) | 7,240 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ | 41,610 | $ | (4,727 | ) | $ | 36,883 | $ | 24,122 | $ | (1,810 | ) | $ | 22,312 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Total weighted average amortization period was 5.18 years and 4.37 years as of September 30, 2020 and December 31, 2019, respectively.
|
Nine Months Ended
September 30, |
||||||||
2020 | 2019 | |||||||
Beginning balance
|
$ | 15,072 | $ | 11,459 | ||||
Additions from acquisitions
|
9,247 | — | ||||||
Impairment losses
|
— | — | ||||||
|
|
|
|
|||||
Ending balance
|
$ | 24,319 | $ | 11,459 | ||||
|
|
|
|
September 30,
|
||||
Remainder of 2020
|
$ | 934 | ||
2021
|
2,857 | |||
2022
|
2,531 | |||
2023
|
2,476 | |||
2024
|
1,963 | |||
Thereafter
|
1,803 | |||
|
|
|||
$ | 12,564 | |||
|
|
7.
|
Selected Balance Sheet Data
|
Advances and
Loans |
Commissions
Receivable |
Total | ||||||||||
Beginning balance as of January 1, 2020
|
$ | 512 | $ | 32 | $ | 544 | ||||||
Credit loss expense
|
13 | 42 | 55 | |||||||||
Write-offs
|
(50 | ) | — | (50 | ) | |||||||
|
|
|
|
|
|
|||||||
Ending balance as of September 30, 2020
|
$ | 475 | $ | 74 | $ | 549 | ||||||
|
|
|
|
|
|
Advances and
Loans |
Commissions
Receivable |
Total | ||||||||||
Beginning balance as of January 1, 2019
|
$ | 514 | $ | — | $ | 514 | ||||||
Credit loss expense
|
75 | — | 75 | |||||||||
Write-offs
|
(185 | ) | — | (185 | ) | |||||||
|
|
|
|
|
|
|||||||
Ending balance as of September 30, 2019
|
$ | 404 | $ | — | $ | 404 | ||||||
|
|
|
|
|
|
Current |
Non-Current
|
|||||||||||||||
September 30,
2020 |
December 31,
2019 |
September 30,
2020 |
December 31,
2019 |
|||||||||||||
Mortgage servicing rights (“MSRs”), net of amortization
|
$ | — | $ | — | $ | 2,023 | $ | 2,002 | ||||||||
Security deposits
|
— | — | 1,406 | 1,345 | ||||||||||||
Employee notes receivable
(1)
|
177 | 65 | 321 | 323 | ||||||||||||
Customer trust accounts and other
|
2,836 | 3,120 | 569 | 677 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 3,013 | $ | 3,185 | $ | 4,319 | $ | 4,347 | |||||||||
|
|
|
|
|
|
|
|
(1)
|
Reduction of accrued bonuses and other employee related expenses in settlement of employee notes receivable were $0 and $60 for the nine months ended September 30, 2020 and 2019, respectively. See Note 9 – “Related-Party Transactions” for additional information.
|
Nine Months Ended
September 30, |
||||||||
2020 | 2019 | |||||||
Beginning balance
|
$ | 2,002 | $ | 2,209 | ||||
Additions
|
425 | 243 | ||||||
Amortization
|
(404 | ) | (413 | ) | ||||
|
|
|
|
|||||
Ending balance
|
$ | 2,023 | $ | 2,039 | ||||
|
|
|
|
Current |
Non-Current
|
|||||||||||||||
September 30,
2020 |
December 31,
2019 |
September 30,
2020 |
December 31,
2019 |
|||||||||||||
Stock appreciation rights (“SARs”) liability
(1)
|
$ | 2,162 | $ | 2,080 | $ | 16,493 | $ | 18,122 | ||||||||
Commissions payable to investment sales and financing professionals
|
33,166 | 40,235 | 10,996 | 20,818 | ||||||||||||
Deferred compensation liability
(1)
|
1,482 | 1,553 | 6,432 | 6,688 | ||||||||||||
Other
|
434 | 433 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 37,244 | $ | 44,301 | $ | 33,921 | $ | 45,628 | |||||||||
|
|
|
|
|
|
|
|
(1)
|
The SARs and deferred compensation liability become subject to payout as a result of a participant no longer being considered as a service provider. As a result of the retirement of certain participants, estimated amounts to be paid to the participants within the next twelve months have been classified as current.
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Increase in the carrying value of the assets held in the rabbi trust
(1)
|
$ | 434 | $ | 31 | $ | 170 | $ | 959 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Increase in the net carrying value of the deferred compensation obligation
(2)
|
$ | 388 | $ | 31 | $ | 88 | $ | 943 | ||||||||
|
|
|
|
|
|
|
|
(1)
|
Recorded in other income (expense), net in the condensed consolidated statements of net and comprehensive income.
|
(2)
|
Recorded in selling, general and administrative expense in the condensed consolidated statements of net and comprehensive income.
|
Non-Current
|
||||||||
September 30,
2020 |
December 31,
2019 |
|||||||
Deferred consideration
(1) (2)
|
$ | 3,472 | $ | 830 | ||||
Contingent consideration
(1) (2)
|
3,443 | 2,709 | ||||||
Other
|
1,216 | — | ||||||
|
|
|
|
|||||
$ | 8,131 | $ | 3,539 | |||||
|
|
|
|
(1)
|
The current portions of deferred consideration in the amounts of $1,880 and $560 as of September 30, 2020 and December 31, 2019, respectively, are included in accounts payable and other liabilities in the condensed consolidated balance sheets. The current portions of contingent consideration in the amounts of $1,240 and $678 as of September 30, 2020 and December 31, 2019, respectively, are included in accounts payable and other liabilities in the condensed consolidated balance sheets.
|
(2)
|
Deferred consideration in the aggregate amount of $1,401 as of December 31, 2019 was reclassified from contingent consideration during the nine months ended September 30, 2020 and of this amount, $560 and $841 pertained to the current and
non-current
portions, respectively.
|
8.
|
Notes Payable to Former Stockholders
|
9.
|
Related-Party Transactions
|
10.
|
Fair Value Measurements
|
• |
Level
1:
|
• |
Level
2:
|
• |
Level
3:
|
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||
Assets held in rabbi trust
|
$ | 9,467 | $ | — | $ | 9,467 | $ | — | $ | 9,452 | $ | — | $ | 9,452 | $ | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Cash equivalents
(1)
:
|
||||||||||||||||||||||||||||||||
Commercial paper and other
|
$ | 2,950 | $ | — | $ | 2,950 | $ | — | $ | 5,087 | $ | — | $ | 5,087 | $ | — | ||||||||||||||||
Money market funds
|
130,045 | 130,045 | — | — | 185,513 | 185,513 | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
$ | 132,995 | $ | 130,045 | $ | 2,950 | $ | — | $ | 190,600 | $ | 185,513 | $ | 5,087 | $ | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Marketable debt securities,
available-for-sale:
|
||||||||||||||||||||||||||||||||
Short-term investments:
|
||||||||||||||||||||||||||||||||
U.S. treasuries
|
$ | 93,641 | $ | 93,641 | $ | — | $ | — | $ | 124,580 | $ | 124,580 | $ | — | $ | — | ||||||||||||||||
U.S. government sponsored entities
|
37,740 | — | 37,740 | — | — | — | — | — | ||||||||||||||||||||||||
Corporate debt
|
38,132 | — | 38,132 | — | 26,172 | — | 26,172 | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
$ | 169,513 | $ | 93,641 | $ | 75,872 | $ | — |
$
|
150,752 | $ | 124,580 | $ | 26,172 | $ | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Long-term investments:
|
||||||||||||||||||||||||||||||||
U.S. treasuries
|
$ | 3,689 | $ | 3,689 | $ | — | $ | — | $ | 24,423 | $ | 24,423 | $ | — | $ | — | ||||||||||||||||
U.S. government sponsored entities
|
1,269 | — | 1,269 | — | 1,355 | — | 1,355 | — | ||||||||||||||||||||||||
Corporate debt
|
34,357 | — | 34,357 | — | 26,471 | — | 26,471 | — | ||||||||||||||||||||||||
ABS and other
|
7,190 | — | 7,190 | — | 8,560 | — | 8,560 | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
$ | 46,505 | $ | 3,689 | $ | 42,816 | $ | — | $ | 60,809 | $ | 24,423 |
$
|
36,386 | $ | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Liabilities:
|
||||||||||||||||||||||||||||||||
Contingent consideration
|
$ | 4,683 | $ | — | $ | — | $ | 4,683 | $ | 3,387 | $ | — | $ | — | $ | 3,387 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Deferred consideration
|
$ | 5,352 | $ | — | $ | 5,352 | $ | — | $ | 1,390 | $ | — | $ | 1,390 | $ | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Deferred compensation liability
|
$ | 7,914 | $ | 7,914 | $ | — | $ | — | $ | 8,241 | $ | 8,241 | $ | — | $ | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Included in cash and cash equivalents on the accompanying condensed consolidated balance sheets.
|
Nine Months Ended
September 30, |
||||||||
2020 | 2019 | |||||||
Beginning balance
(1)
|
$ | 3,387 | $ | 2,875 | ||||
Contingent consideration in connection with acquisitions
(2)
|
1,800 | — | ||||||
Change in fair value of contingent consideration
|
134 | (11 | ) | |||||
Payments of contingent consideration
|
(638 | ) | — | |||||
|
|
|
|
|||||
Ending balance
|
$ | 4,683 | $ | 2,864 | ||||
|
|
|
|
(1)
|
Beginning balance for 2020 reflects the reclassification of $1,401 from contingent consideration related to deferred consideration. See Note 7 – “Selected Balance Sheet Data – Other Liabilities” for additional information.
|
(2)
|
Contingent consideration in connections with acquisitions represents a noncash investing activity.
|
Fair Value at
September 30, 2020 |
|
Valuation Technique |
|
|
Unobservable inputs |
|
Range
(1)
|
|||||||||||||
Contingent consideration
|
$ | 4,683 |
|
Discounted cash flow |
|
|
Expected life of cash flows |
|
0.5-5.0 years
|
|
|
|
(2.0 years)
|
|
||||||
Discount rate |
|
4.1%-4.4%
|
|
|
|
(4.2%)
|
|
|||||||||||||
Probability of achievement |
|
62%-100.0%
|
|
|
|
(85.5%)
|
|
|||||||||||||
Fair Value at
December 31, 2019 |
|
Valuation Technique |
|
|
Unobservable inputs |
|
Range
(1)
|
|||||||||||||
Contingent consideration
|
$ | 3,387 |
|
Discounted cash flow |
|
|
Expected life of cash flows |
|
0.4-5.8
years
|
|
|
|
(2.4 years)
|
|
||||||
Discount rate |
|
3.6%-4.9%
|
|
|
|
(4.1%)
|
|
|||||||||||||
Probability of achievement |
|
33.0%-100.0%
|
|
|
|
(74.3%)
|
|
(1)
|
Unobservable inputs were weighted by the relative fair value of the instruments.
|
Fair Value at
September 30, 2020 |
|
Valuation Technique
|
|
|
|
Unobservable inputs
|
|
|
Range
(1)
|
|||||||
MSRs
|
$ | 2,296 |
|
|
Discounted cash flow |
|
|
|
Constant prepayment
|
|
|
0.0%-20.0% (
10.0
%)
|
||||
|
|
|
Constant default rate |
|
|
0.4%-5.1%
(1.5%)
|
||||||||||
|
|
|
Loss severity |
|
|
24.2%-50.0% (30.1%)
|
||||||||||
|
|
|
Discount rate |
|
|
10.0%-10.0%
(10.0%)
|
||||||||||
Fair Value at
December 31, 2019 |
Valuation Technique
|
|
Unobservable inputs
|
|
Range
(1)
|
|||||||||||
MSRs
|
$ | 2,204 |
|
Discounted cash flow |
|
|
Constant prepayment rates |
|
0.0%-20.0%
(10.0%)
|
|||||||
|
|
Constant default rate |
|
2.0%-2.0%
(2.0%)
|
||||||||||||
|
|
Loss severity |
|
40.0%-40.0%
(40.0%)
|
||||||||||||
|
|
Discount rate |
|
9.5%-9.7%
(9.7%)
|
(1)
|
Weighted average is based on the 10% constant prepayment rate scenario which the Company uses as the reported fair value.
|
11.
|
Stockholders’ Equity
|
12.
|
Stock-Based Compensation Plans
|
RSA Grants to
Non-employee
Directors |
RSU Grants
to Employees |
RSU Grants to
Independent Contractors |
Total |
Weighted-
Average Grant Date Fair Value Per Share |
||||||||||||||||
Nonvested shares at December 31, 2019
|
17,480 | 525,115 | 257,480 | 800,075 | $ | 33.91 | ||||||||||||||
Granted
|
19,516 | 306,008 | 83,738 | 409,262 | 32.88 | |||||||||||||||
Vested
|
(20,268 | ) | (164,091 | ) | (84,300 | ) | (268,659 | ) | 33.08 | |||||||||||
Transferred
|
— | (18,294 | ) | 18,294 | — | 33.67 | ||||||||||||||
Forfeited/canceled
|
— | (16,804 | ) | (7,230 | ) | (24,034 | ) | 34.84 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Nonvested shares at September 30, 2020
|
16,728 | 631,934 | 267,982 | 916,644 | 33.67 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Unrecognized stock-based compensation expense as of September 30, 2020
(1)
|
$ | 266 | $ | 18,779 | $ | 8,174 | $ | 27,219 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Weighted average remaining vesting period (years) as of September 30, 2020
|
0.59 | 3.74 | 3.31 | 3.58 | ||||||||||||||||
|
|
|
|
|
|
|
|
(1)
|
The total unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately 3.58 years.
|
September 30,
|
||||
2021
|
60,373 | |||
2022
|
281,193 | |||
|
|
|||
341,566 | ||||
|
|
Three Months
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
ESPP
|
$ | 62 | $ | 40 | $ | 145 | $ | 108 | ||||||||
RSAs –
non-employee
directors
|
120 | 157 | 493 | 481 | ||||||||||||
RSUs – employees
|
1,413 | 1,230 | 4,583 | 4,197 | ||||||||||||
RSUs – independent contractors
|
788 | 687 | 2,330 | 2,254 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 2,383 | $ | 2,114 | $ | 7,551 | $ | 7,040 | |||||||||
|
|
|
|
|
|
|
|
13.
|
Income Taxes
|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||||||||||||
Income tax expense at the federal statutory rate
|
$ | 1,671 | 21.0 | % | $ | 5,526 | 21.0 | % | $ | 5,689 | 21.0 | % | $ | 16,247 | 21.0 | % | ||||||||||||||||
State income tax expense, net of federal benefit
|
453 | 5.7 | % | 1,118 | 4.2 | % | 1,403 | 5.2 | % | 3,359 | 4.3 | % | ||||||||||||||||||||
Shortfall (windfall) tax benefits, net related to stock-based compensation
|
130 | 1.6 | % | 53 | 0.2 | % | 203 | 0.7 | % | (201 | ) | (0.2 | )% | |||||||||||||||||||
Change in valuation allowance
|
134 | 1.7 | % | 408 | 1.6 | % | 594 | 2.2 | % | 874 | 1.1 | % | ||||||||||||||||||||
Permanent and other items
(1)
|
(472 | ) | (5.9 | )% | (81 | ) | (0.3 | )% | (14 | ) | — | 880 | 1.1 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
$ | 1,916 | 24.1 | % | $ | 7,024 | 26.7 | % | $ | 7,875 | 29.1 | % | $ | 21,159 | 27.3 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Permanent items relate principally to compensation charges, qualified transportation fringe benefits, meals and entertainment and reversal of uncertain tax positions.
|
14.
|
Earnings per Share
|
Three Months
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Numerator (Basic and Diluted):
|
||||||||||||||||
Net income
|
$ | 6,040 |
$
|
19,292 |
$
|
19,216 |
$
|
56,209 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Denominator:
|
||||||||||||||||
Basic
|
||||||||||||||||
Weighted average common shares issued and outstanding
|
39,357 | 39,116 | 39,293 | 39,062 | ||||||||||||
Deduct: Unvested RSAs
(1)
|
(18 | ) | (17 | ) | (18 | ) | (21 | ) | ||||||||
Add: Fully vested DSUs
(2)
|
342 | 342 | 342 | 342 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted Average Common Shares Outstanding
|
39,681 | 39,441 | 39,617 | 39,383 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic earnings per common share
|
$ | 0.15 | $ | 0.49 | $ | 0.49 | $ | 1.43 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted
|
||||||||||||||||
Weighted Average Common Shares Outstanding from above
|
39,681 | 39,441 | 39,617 | 39,383 | ||||||||||||
Add: Dilutive effect of RSUs, RSAs & ESPP
|
46 | 109 | 59 | 144 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted Average Common Shares Outstanding
|
39,727 | 39,550 | 39,676 | 39,527 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per common share
|
$ | 0.15 | $ | 0.49 | $ | 0.48 | $ | 1.42 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Antidilutive shares excluded from diluted earnings per common share
(3)
|
696 | 425 | 719 | 325 | ||||||||||||
|
|
|
|
|
|
|
|
(1)
|
RSAs were issued and outstanding to the
non-employee
directors and have a
one-year
vesting term subject to service requirements. See Note 12 – “Stock-Based Compensation Plans” for additional information.
|
(2)
|
Shares are included in weighted average common shares outstanding as the shares are fully vested but have not yet been delivered. See Note 12 – “Stock-Based Compensation Plans” for additional information.
|
(3)
|
Primarily pertaining to RSU grants to the Company’s employees and independent contractors.
|
15.
|
Commitments and Contingencies
|
16.
|
Subsequent Events
|
• |
Properties priced less than $1 million;
|
• |
Private client market:
|
• |
Middle market:
|
• |
Larger transaction market:
|
Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||
2020 | 2019 | Change | ||||||||||||||||||||||||||||||||||
Real Estate Brokerage
|
Number | Volume | Revenues | Number | Volume | Revenues | Number | Volume | Revenues | |||||||||||||||||||||||||||
(in millions) | (in thousands) | (in millions) | (in thousands) | (in millions) | (in thousands) | |||||||||||||||||||||||||||||||
<$1 million
|
241 | $ | 156 | $ | 6,290 | 274 | $ | 173 | $ | 7,182 | (33 | ) | $ | (17 | ) | $ | (892 | ) | ||||||||||||||||||
Private client market ($1—<$10 million)
|
1,168 | 3,592 | 97,856 | 1,301 | 4,257 | 121,228 | (133 | ) | (665 | ) | (23,372 | ) | ||||||||||||||||||||||||
Middle market ($10—<$20 million)
|
70 | 945 | 17,643 | 109 | 1,466 | 25,997 | (39 | ) | (521 | ) | (8,354 | ) | ||||||||||||||||||||||||
Larger transaction market (
³
$20 million)
|
48 | 2,302 | 19,055 | 69 | 3,675 | 25,791 | (21 | ) | (1,373 | ) | (6,736 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
1,527 | $ | 6,995 | $ | 140,844 | 1,753 | $ | 9,571 | $ | 180,198 | (226 | ) | $ | (2,576 | ) | $ | (39,354 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||||||||||||||||||
2020 | 2019 | Change | ||||||||||||||||||||||||||||||||||
Real Estate Brokerage
|
Number | Volume | Revenues | Number | Volume | Revenues | Number | Volume | Revenues | |||||||||||||||||||||||||||
(in millions) | (in thousands) | (in millions) | (in thousands) | (in millions) | (in thousands) | |||||||||||||||||||||||||||||||
<$1 million
|
649 | $ | 410 | $ | 16,550 | 733 | $ | 474 | $ | 19,607 | (84 | ) | $ | (64 | ) | $ | (3,057 | ) | ||||||||||||||||||
Private client market ($1—<$10 million)
|
3,203 | 10,207 | 282,937 | 3,753 | 12,160 | 345,812 | (550 | ) | (1,953 | ) | (62,875 | ) | ||||||||||||||||||||||||
Middle market ($10—<$20 million)
|
204 | 2,785 | 51,902 | 312 | 4,234 | 76,521 | (108 | ) | (1,449 | ) | (24,619 | ) | ||||||||||||||||||||||||
Larger transaction market (
³
$20 million)
|
161 | 7,459 | 64,655 | 194 | 9,040 | 71,875 | (33 | ) | (1,581 | ) | (7,220 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
4,217 | $ | 20,861 | $ | 416,044 | 4,992 | $ | 25,908 | $ | 513,815 | (775 | ) | $ | (5,047 | ) | $ | (97,771 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
Real Estate Brokerage
|
2020 | 2019 | 2020 | 2019 | ||||||||||||
Average Number of Investment Sales Professionals
|
1,917 | 1,837 | 1,911 | 1,829 | ||||||||||||
Average Number of Transactions per Investment Sales Professional
|
0.80 | 0.95 | 2.21 | 2.73 | ||||||||||||
Average Commission per Transaction
|
$ | 92,236 | $ | 102,794 | $ | 98,659 | $ | 102,928 | ||||||||
Average Commission Rate
|
2.01 | % | 1.88 | % | 1.99 | % | 1.98 | % | ||||||||
Average Transaction Size (in thousands)
|
$ | 4,581 | $ | 5,460 | $ | 4,947 | $ | 5,190 | ||||||||
Total Number of Transactions
|
1,527 | 1,753 | 4,217 | 4,992 | ||||||||||||
Total Sales Volume (in millions)
|
$ | 6,995 | $ | 9,571 | $ | 20,861 | $ | 25,908 | ||||||||
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
Financing
(1)
|
2020 | 2019 | 2020 | 2019 | ||||||||||||
Average Number of Financing Professionals
|
82 | 98 | 86 | 103 | ||||||||||||
Average Number of Transactions per Financing Professional
|
5.39 | 5.01 | 15.13 | 13.23 | ||||||||||||
Average Fee per Transaction
|
$ | 33,531 | $ | 31,203 | $ | 31,607 | $ | 33,361 | ||||||||
Average Fee Rate
|
0.88 | % | 0.90 | % | 0.89 | % | 0.91 | % | ||||||||
Average Transaction Size (in thousands)
|
$ | 3,828 | $ | 3,460 | $ | 3,533 | $ | 3,685 | ||||||||
Total Number of Transactions
|
442 | 491 | 1,301 | 1,363 | ||||||||||||
Total Financing Volume (in millions)
|
$ | 1,692 | $ | 1,699 | $ | 4,597 | $ | 5,023 |
(1)
|
Operating metrics calculated excluding certain financing fees not directly associated to transactions.
|
Three Months
Ended September 30, 2020 |
Percentage
of Revenue |
Three Months
Ended September 30, 2019 |
Percentage
of Revenue |
Change | ||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Real estate brokerage commissions
|
$ | 140,844 | 88.8 | % | $ | 180,198 | 90.9 | % | $ | (39,354 | ) | (21.8 | )% | |||||||||||
Financing fees
|
15,620 | 9.9 | 16,013 | 8.1 | (393 | ) | (2.5 | )% | ||||||||||||||||
Other revenues
|
2,111 | 1.3 | 2,009 | 1.0 | 102 | 5.1 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total revenues
|
158,575 | 100.0 | 198,220 | 100.0 | (39,645 | ) | (20.0 | )% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||
Cost of services
|
99,707 | 62.9 | 124,147 | 62.6 | (24,440 | ) | (19.7 | )% | ||||||||||||||||
Selling, general and administrative
|
49,722 | 31.4 | 48,091 | 24.3 | 1,631 | 3.4 | % | |||||||||||||||||
Depreciation and amortization
|
2,606 | 1.6 | 1,910 | 1.0 | 696 | 36.4 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total operating expenses
|
152,035 | 95.9 | 174,148 | 87.9 | (22,113 | ) | (12.7 | )% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating income
|
6,540 | 4.1 | 24,072 | 12.1 | (17,532 | ) | (72.8 | )% | ||||||||||||||||
Other income (expense), net
|
1,615 | 1.0 | 2,573 | 1.4 | (958 | ) | (37.2 | )% | ||||||||||||||||
Interest expense
|
(199 | ) | (0.1 | ) | (329 | ) | (0.2 | ) | 130 | (39.5 | )% | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Income before provision for income taxes
|
7,956 | 5.0 | 26,316 | 13.3 | (18,360 | ) | (69.8 | )% | ||||||||||||||||
Provision for income taxes
|
1,916 | 1.2 | 7,024 | 3.6 | (5,108 | ) | (72.7 | )% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income
|
$ | 6,040 | 3.8 | % | $ | 19,292 | 9.7 | % | $ | (13,252 | ) | (68.7 | )% | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Adjusted EBITDA
(1)
|
$ | 12,229 | 7.7 | % | $ | 27,865 | 14.1 | % | $ | (15,636 | ) | (56.1 | )% | |||||||||||
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted EBITDA is not a measurement of our financial performance under U.S. generally accepted accounting principles (“U.S. GAAP”) and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, see
“Non-GAAP
Financial Measure.”
|
Nine Months
Ended September 30, 2020 |
Percentage
of Revenue |
Nine Months
Ended September 30, 2019 |
Percentage
of Revenue |
Change | ||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Real estate brokerage commissions
|
$ | 416,044 | 89.1 | % | $ | 513,815 | 90.4 | % | $ | (97,771 | ) | (19.0 | )% | |||||||||||
Financing fees
|
43,674 | 9.4 | 47,487 | 8.4 | (3,813 | ) | (8.0 | )% | ||||||||||||||||
Other revenues
|
6,974 | 1.5 | 7,218 | 1.2 | (244 | ) | (3.4 | )% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total revenues
|
466,692 | 100.0 | 568,520 | 100.0 | (101,828 | ) | (17.9 | )% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||
Cost of services
|
287,207 | 61.5 | 343,682 | 60.5 | (56,475 | ) | (16.4 | )% | ||||||||||||||||
Selling, general and administrative
|
148,101 | 31.7 | 149,845 | 26.3 | (1,744 | ) | (1.2 | )% | ||||||||||||||||
Depreciation and amortization
|
7,822 | 1.8 | 5,674 | 1.0 | 2,148 | 37.9 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total operating expenses
|
443,130 | 95.0 | 499,201 | 87.8 | (56,071 | ) | (11.2 | )% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating income
|
23,562 | 5.0 | 69,319 | 12.2 | (45,757 | ) | (66.0 | )% | ||||||||||||||||
Other income (expense), net
|
4,224 | 0.9 | 9,067 | 1.6 | (4,843 | ) | (53.4 | )% | ||||||||||||||||
Interest expense
|
(695 | ) | (0.1 | ) | (1,018 | ) | (0.2 | ) | 323 | (31.7 | )% | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Income before provision for income taxes
|
27,091 | 5.8 | 77,368 | 13.6 | (50,277 | ) | (65.0 | )% | ||||||||||||||||
Provision for income taxes
|
7,875 | 1.7 | 21,159 | 3.7 | (13,284 | ) | (62.8 | )% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income
|
$ | 19,216 | 4.1 | % | $ | 56,209 | 9.9 | % | $ | (36,993 | ) | (65.8 | )% | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Adjusted EBITDA
(1)
|
$ | 38,757 | 8.3 | % | $ | 83,040 | 14.6 | % | $ | (44,283 | ) | (53.3 | )% | |||||||||||
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted EBITDA is not a measurement of our financial performance under U.S. GAAP and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, see
“Non-GAAP
Financial Measure.”
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net income
|
$ | 6,040 | $ | 19,292 | $ | 19,216 | $ | 56,209 | ||||||||
Adjustments:
|
||||||||||||||||
Interest income and other
(1)
|
(889 | ) | (2,725 | ) | (4,090 | ) | (7,828 | ) | ||||||||
Interest expense
|
199 | 329 | 695 | 1,018 | ||||||||||||
Provision for income taxes
|
1,916 | 7,024 | 7,875 | 21,159 | ||||||||||||
Depreciation and amortization
|
2,606 | 1,910 | 7,822 | 5,674 | ||||||||||||
Stock-based compensation
|
2,383 | 2,114 | 7,551 | 7,040 | ||||||||||||
Non-cash
MSR activity
(2)
|
(26 | ) | (79 | ) | (312 | ) | (232 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA
(3)
|
$ | 12,229 | $ | 27,865 | $ | 38,757 | $ | 83,040 | ||||||||
|
|
|
|
|
|
|
|
(1)
|
Other includes net realized gains (losses) on marketable debt securities
available-for-sale.
|
(2)
|
Non-cash
MSR activity includes the assumption of servicing obligations.
|
(3)
|
The decrease in Adjusted EBITDA for the three and nine months ended September 30, 2020 compared to the same periods in 2019 is primarily due to a decrease in total revenues and a higher proportion of operating expenses compared to total revenues.
|
Nine Months Ended
September 30, |
||||||||
2020 | 2019 | |||||||
Net cash used in operating activities
|
$ | (28,266 | ) | $ | (6,053 | ) | ||
Net cash (used in) provided by investing activities
|
(21,381 | ) | 21,079 | |||||
Net cash used in financing activities
|
(9,819 | ) | (3,628 | ) | ||||
Effect of currency exchange rate changes on cash and cash equivalents
|
(92 | ) | — | |||||
|
|
|
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(59,558 | ) | 11,398 | |||||
Cash and cash equivalents at beginning of period
|
232,670 | 214,683 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period
|
$ | 173,112 | $ | 226,081 | ||||
|
|
|
|
Change in Interest Rates |
Approximate Change in Fair
Value of Investments Increase (Decrease) |
|||
2% Decrease
|
$ | 2,224 | ||
1% Decrease
|
$ | 1,528 | ||
1% Increase
|
$ | (2,383 | ) | |
2% Increase
|
$ | (4,765 | ) |
• |
Any impairment in value of our investments in marketable debt securities,
available-for-sale,
|
• |
A potential negative impact on the health of our employees and investment sales and financing professionals, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during a disruption.
|
• |
If significant portions of our workforce are unable to work effectively, including because of quarantines, facility closures, ineffective remote work arrangements or technology failures or limitations, our operations would be adversely impacted.
|
• |
If we need to raise additional capital through public or private debt or equity financings, strategic relationships or other arrangements, this capital might not be available to us in a timely manner, on acceptable terms, or at all due to various risks and uncertainties. Our failure to raise sufficient capital when needed could prevent us from, among other factors, to fund acquisitions or to otherwise finance our growth or operations. If we are not able to respond to and manage the impact of such events effectively, our business will be harmed.
|
Exhibit
No. |
Description
|
|
10.1*+ | Employment Agreement between the Company and Steven F. DeGennaro effective as of August 4, 2020 | |
31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1** | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101* |
The following financial statements from the Company’s Quarterly Report on Form
10-Q
for the quarter ended September 30, 2020, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Net and Comprehensive Income, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
|
|
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
*
|
Filed herewith.
|
**
|
Furnished, not filed.
|
+ |
Indicates management contract or compensatory plan.
|
Date: | November 9, 2020 | By: | /s/ Hessam Nadji | |||
Hessam Nadji
President and Chief Executive Officer
(Principal Executive Officer)
|
Date: | November 9, 2020 | By: | /s/ Steven F. DeGennaro | |||
Steven F. DeGennaro
Chief Financial Officer
(Principal Financial Officer)
|
Exhibit 10.1
EMPLOYMENT AGREEMENT
This Agreement is made effective the 4th day of August, 2020 (Effective Date) by and between Marcus & Millichap, Inc. (the Company) and Steven F. DeGennaro (Employee) with respect to the following:
A. |
The Parties desire to enter into an at-will Employment Agreement whereby the Employee will serve in the capacity of Executive Vice President and Chief Financial Officer, based in the Companys Headquarters, which is currently located in Calabasas, CA. |
B. |
The Parties agree that Employees employment shall be governed by the terms set forth herein, including the arbitration provision, the Employee Manual, and the Companys policies and procedures. |
THEREFORE, the Parties agree as follows:
1. |
Term of At-Will Employment. This Agreement shall be in effect commencing on August 4, 2020. The Company and Employee hereby agree that Employees employment with the Company is at-will. Either party may terminate this Agreement with or without cause. Such termination shall not prejudice any remedy which either party may have against the other at law, in equity, or under this Agreement. |
2. |
Designation and Duties. Commencing on August 17, 2020, Employee shall have the title of Executive Vice President and Chief Financial Officer. Subject to the control and direction of the Chief Executive Officer and/or the Board of Directors (or one of its Committees) , Employee shall serve as an officer of the Company, and shall be responsible for oversight of the Companys financial and accounting departments and activities, and other responsibilities as from time-to-time may be assigned by the Chief Executive Officer. Employee is not guaranteed, has not been promised, and has no expectation of any promotion or any other position with the Company other than the one stated in this Agreement. Employee shall serve the Company diligently and according to Employees best abilities in all respects, and generally do all things for the best interest of the Company as are usually done by persons occupying similar positions in similar businesses. |
3. |
Manner of Performance. Employee shall at all times faithfully, industriously, and to the best of Employees ability, experience, and talent, perform all duties that may be required of and from Employee, pursuant to the express and implicit terms hereof, to the reasonable satisfaction of the Company. Such duties shall be rendered at the above-mentioned premises and at such other place or places as the Company shall require or as the interests, needs, business, and opportunities of the Company shall require or make advisable. Employee acknowledges that Employee has received and has read a copy of the Companys Employee Policy Manual and Code of Ethics and agrees to abide by all terms and conditions, including all future amendments or modifications thereto. The Company reserves the right to amend and revise its policies at any time and from time to time. The Company will notify Employee of all such material changes. Employee agrees to read, comply with, and be bound by all such amendments, revisions and/or modifications. |
4. |
Compensation and Fringe Benefits. The compensation and fringe benefits to be received by Employee in consideration of the services to be rendered by Employee are set forth in Exhibit A attached hereto. The provisions of Exhibit A are incorporated into this Agreement by reference as if fully set forth herein. The Company reserves the right to cancel or change the employee benefit plans and programs it offers to employees. |
5. |
Effect of Termination on Compensation. Employee shall be entitled to the base salary earned by Employee prior to the date of termination, computed pro rata up to the date of termination. Employee shall not be entitled to any further salary or other compensation after the date of termination. Except as expressly modified in Exhibit A, on termination of this Agreement, Employee shall not be deemed to have earned any incentive compensation not already declared and paid by the Company because such compensation is not for services rendered and employment on the date of payment is an express requirement to be deemed to have earned any such compensation. Unless otherwise agreed-to in writing, Employee shall be obligated to return to the Company within ten (10) days after the termination of Employees employment any draws or other advance payments (of incentive compensation or otherwise) made to him during the annual period in which such termination occurs. Unless otherwise agreed-to in writing, interest shall accrue on the sum of any such advances at the rate often percent (10%) per annum after said ten-day period. |
6. |
Business Expenses. The Company will promptly reimburse Employee for reasonable business expenses incurred by Employee in promoting the business of the Company, including expenditures for entertainment, gifts and travel, provided that: (i) Each such expenditure is of a nature qualifying it as a proper deduction on the Federal and State income tax returns of the Company; and (ii) Employee furnishes to the Company, in accordance with the Companys established policy, adequate records and other documentary evidence required by Federal and State statutes and regulations issued by the appropriate taxing authorities for the substantiation of such expenditures as income tax deductions. |
7. |
Non-Solicitation and Confidential Information. |
(i) |
During the term of this Agreement, Employee shall not directly or indirectly, either as an employee, employer, consultant, agent, principal, owner, partner, stockholder, corporate officer, director, or in any other individual or representative capacity, engage or participate in any business that is in competition in any manner whatsoever with the business of the Company or the Companys affiliates, assigns or successors. |
(ii) |
Employee acknowledges that the Company has devoted substantial resources to develop proprietary computer systems and software, and to obtain and organize information to be utilized by its agents in connection with their business activities on behalf of the Company and its clients. Employee is eligible to utilize, subject to the terms and conditions set forth in this Agreement, certain computer systems, software and data developed by or on behalf of the Company. Employee agrees that unauthorized use or disclosure of such systems, software or data would cause irreparable damage to the Company, and would lessen the value of the services it provides to its agents and clients. |
2
(iii) |
Employee acknowledges that he serves in a position of trust with the Company and its affiliates and that he owes a fiduciary duty of loyalty to the Company and its affiliates, and that as a result of that position, that Company has entrusted Employee with Confidential Information. Employee understands and agrees that during Employees employment Employee is provided with valuable Confidential Information regarding: (i) the business, present or future, of the Company; (ii) research, inventions, products and services of the Company and its affiliates; (iii) clients, Employees, and Salespersons of the Company and its affiliates; and (iv) operations, skills, and capabilities of the Company and its affiliates and its employees and Salespersons. Such Confidential Information includes, but is not limited to: (a) earnings, finances, projections, business plans, strategies, techniques, deployment, and business models, and business-related data relating to the Company and its affiliates and its clients, Employees and Salespersons; (b) manuals, research, data, reports or other information as stored on, input to or downloaded from the Companys software, system or network; (c) business processes, strategies, and endeavors, business plans and models, customer and Salesperson lists and procuring and retention methodology, and all proprietary information regarding the operations of the Company and its affiliates and its departments; (d) client strategies, listings, past/present/future transactions and information related thereto, non-public client contact, ownership, transactional history, or financial information; and (e) salesperson or employee strategies, listings, past/present/future transactions and information related thereto, transactional history, and contact, ownership, and financial information. |
(iv) |
For the purpose of protecting legitimate business interests of the Company, including Confidential Information and trade secrets, Employee agrees that, during the term of Employees employment with the Company or with any of its affiliates, and for a two (2) year period thereafter, Employee will not (a) induce, convince, recruit, cause, or solicit any employees, contractors, or sales personnel of the Company or its affiliates to terminate his/her employment with the Company; or (b) induce, recruit, converse with, convince, cause, or solicit any employees, contractors, or sales personnel of the Company or its affiliates to terminate his/her employment with the Company to join Employee in a business operation or venture competitive to the business of the Company or its affiliates. For the purpose of this Agreement, the affiliates of the Company consist of the Company and all entities which are subsidiaries or related parties of M&M and/or the Company, or its assigns, or successors of M&M and/or the Company. This prohibition shall include, but not be limited to, activity done personally, directly, or indirectly by Employee, or through agents or employees acting on behalf of Employee, or for Employees direct or indirect benefit. It shall not be a violation of this paragraph to hire an individual who was not induced, convinced, or otherwise solicited in violation of this paragraph. |
3
(v) |
Both during and after Employees association with the Company, Employee shall not disclose to anyone, or use in any manner (except as such disclosure or use is specifically authorized by the Company) any Confidential Information. Employee shall not during the term of this Agreement or at any time thereafter use to Employees own advantage, or the advantage of any other person, firm or entity, any information gained from the files or business of the Company or its affiliates, including, but not necessarily limited to, information training materials, the IC Policy Manual, Employee Manual, customer lists, computer operations, financial and business information, and any other confidential aspects of the Companys operations or of its affiliates. All such information shall be treated by Employee in a confidential manner. Nothing in this Agreement shall prohibit the disclosure of information as required by law. |
(vi) |
If Employee leaves the Companys employment, Employee shall promptly return to the Company all manuals, disks, programs, documents, papers and other materials in Employees possession or under Employees control that may contain or be derived from Confidential Information, regardless of the medium in which they are contained; and Employee shall retain no copies of any of the foregoing. |
(vii) |
Employee agrees that the restrictive covenants set forth herein are separate and independent agreements, are reasonable and are necessary to protect the Companys legitimate business interests given Employees high level and confidential access to such proprietary information and interests. Because of the unique nature of the Confidential Information and other proprietary information described herein, Employee understands and agrees that the Company will suffer irreparable harm if Employee fails to comply with the obligations contained herein, and that monetary damages will be inadequate to compensate the Company for said breach. Accordingly, Employee agrees that the Company will, in addition to any other remedies available to it at law or in equity, be entitled to injunctive relief to enforce the terms of this Agreement. |
8. |
Employees Representations. Employee shall never use any Confidential Information belonging to any of the Employees former employers in the course of Employees duties for the Company. |
9. |
Ownership of Records. All documents and other materials relating to the Companys or its affiliates accounts, customers, real estate listings, employees, sales personnel, computer programs, investments, finances, strategies and business plans, financial statements, training programs or any other type of Confidential Information, and all copies thereof, whether prepared by Employee or otherwise coming into Employees possession, are the exclusive property of the Company. All such documents shall be immediately returned by Employee to the Company upon termination of Employees employment. |
4
10. |
Mutual Arbitration Agreement. |
(i) |
Employee and the Company (which is inclusive of all parent, related, and subsidiary entities) agree that all past, present, or future disputes or claims arising from or relating to this Agreement or Employees affiliation with the Company, including disputes or claims relating to any contract between the Company and Employee, shall be decided exclusively through mutual, binding arbitration before a single arbitrator of the American Arbitration Association (AAA) in accordance with its commercial rules and procedures (Rules), except where modified herein. AAAs Expedited Procedures shall not apply. A copy of the Rules may be found of AAAs website at www.adr.org, and shall be provided by the Company upon request. |
(ii) |
The Parties understand and agree that all claims, disputes, or controversies between Employee and the Company (including owners, directors, managers, employees, parent or subsidiary entities) shall be resolved exclusively through binding arbitration in conformance with the Federal Arbitration Act (FAA) and the procedures of any applicable State arbitration act. The Parties agree their relationship and work relates to and substantially affects interstate commerce, and that the FAA governs the enforcement and interpretation of this arbitration provision. |
(iii) |
The Agreement applies to all claims arising from or relating in any fashion to Employees affiliation with the Company, including claims asserted under statute, equitable law, common law, regulations, ordinances, tort or contract law, or any other basis, and includes, but is not limited to, claims for breach of contract, unpaid commissions, unfair business practices, discrimination, harassment, retaliation, unpaid wages, unpaid benefits, failure to reimburse business expenses, wage statement violations, misclassification, wrongful discharge, defamation, misrepresentation, fraud, assault/battery, and infliction of emotional distress, as well as any claims under the California Labor Code and the California Fair Employment and Housing Act. This Agreement excludes claims arising under the National Labor Relations Act that are brought before the National Labor Relations Board, State medical and disability benefits, State workers compensation benefits, State unemployment benefits, claims under Californias Private Attorney General Act (Cal. Labor Code § 2698, et seq. (PAGA)) and any other claim excluded from arbitration under State of Federal law. |
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(iv) |
The Parties understand and agree that they hereby waive their rights to a jury trial on any covered claim. The Parties further understand and agree that they may bring claims on behalf of themselves, and themselves only. The Parties hereby waive the right to bring, or otherwise participate in any fashion in, a claim or action on a class, collective or representative basis to the fullest extent allowed by law. The Parties understand and agree that this Agreement shall not be construed to allow or permit, and the arbitrator shall have no authority to allow or permit, the consolidation or joinder of other claims or controversies involving other individuals, or to order any action to proceed on a class, collective, or representative basis. Notwithstanding the foregoing, if a court or arbitrator determines a certain matter may proceed by law as a class, representative, or collective action, that action shall proceed in court only, and shall be stayed until the final disposition of all arbitrable claims. |
(v) |
The arbitrator shall have the authority to make orders regarding discovery, including depositions, written discovery, and document production, consistent with State law and as necessary for fair disposition of claims. The arbitrator shall apply all rules of evidence that would apply to an action brought in a State court. The arbitrator shall hear and issue written rulings on all dispositive motions, including, but not limited to demurrers, motions for summary judgment or adjudication, or motions for terminating sanctions. The arbitrator shall extend times for notices or hearings as required for the Parties full use and benefit of this Agreement. The arbitrator may award any type of relief that would otherwise be available in court. Issues of arbitrability shall be determined in conformity with the FAA. On all other issues of substantive law, the arbitrator shall apply the law that would apply to the claims and defenses if they were brought in court, and shall issue a written, reasoned opinion/award. The Company shall pay all costs unique to arbitration that Employee would not otherwise be required to pay if the matter were litigated in court, including the cost of the arbitrator. |
(vi) |
The arbitration shall occur in the county where the Companys office from which Employee is or was based is located. This is the entire agreement regarding the resolution of disputes. It supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to arbitration or the resolution of disputes or claims. Any modification to this Agreement will be effective only if it is in writing signed by the party to be charged. The Parties intend that this Agreement be enforced to the fullest extent allowed by law, and the Parties therefore agree the Court or arbitrator should construe it in a manner that renders it enforceable. |
By initialing below, the Parties acknowledge that they have read, considered, and understand the foregoing arbitration agreement, and agree to be bound by it.
Initials: | ||||||
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Company | Employee |
11. |
Notices. Any notices to be given hereunder by either party to the other may be effected either by personal delivery in writing or by certified mail. Mailed notices shall be addressed to the parties at the addresses appearing just under their signature on the execution page of this Agreement, but each party may change their address by giving written notice thereof to the other party. |
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12. |
Entire Agreement. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Employee by the Company, and contains all of the covenants and agreements between the parties with respect to such employment in any manner whatsoever. Any modification of this Agreement will be effective only if it is in writing signed by all parties. This Agreement does not however modify the terms of the equity agreements provided under the Companys Omnibus Equity Incentive Plan. |
13. |
Partial Invalidity. The Parties intend that this Agreement be interpreted to render it enforceable. If any part of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, it shall be severed or where possible modified by the court or arbitrator and the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way. |
14. |
Attorneys Fees. Where not disallowed by state laws, in the event litigation is instituted by either party concerning any aspect of this Agreement, the prevailing party shall be entitled to receive from the other party all costs and reasonable attorneys fees in addition to any other appropriate relief in accordance with state law. |
15. |
Additional Terms. Electronic, or electronically transmitted, signatures shall be deemed to be originals. The Parties have been advised to seek counsel regarding the terms of this Agreement, and having had that opportunity now knowingly and voluntarily wish to enter into it. Both parties have participated in the negotiation and drafting of this Agreement, such that it will not be construed more strictly against the drafting party. |
16. |
Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of California. As used herein, State refers to California. |
IN WITNESS WHEREOF, the Parties understand and agree to the foregoing terms.
EMPLOYEE | MARCUS & MILLICHAP, INC. | |||||
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By: |
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STEVEN F. DEGENNARO | HESSAM NADJI | |||||
President / CEO | ||||||
23975 Park Sorrento, Suite 400 | ||||||
Date: 8/4/20 | Calabasas, CA 91302 | |||||
Date: | 8/4/20 |
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EMPLOYMENT AGREEMENT
EXHIBIT A
This document is Exhibit A of the Employment Agreement (hereinafter called the Agreement) between Marcus & Millichap, Inc. (the Company) and Steven F. DeGennaro (Employee). The provisions hereof are an integral part of said Agreement and are fully incorporated into the Agreement.
Compensation and Fringe Benefits of Employee.
The compensation and fringe benefits to be paid to Employee are as follows:
1. |
Compensation and Special Conditions. |
i. |
Salary. Employee shall be entitled to receive from the Company a base monthly salary of $33,333.33, payable in semi-monthly installments, prorated for less than a full year of service. This amount will be reduced by twenty percent (20%) until written further notice by the President as part of the Companys COVID-19-related cost reduction measures. In the event employment is terminated, the base salary amount will be paid on a pro-rata basis up to the date of termination in accordance with state law, with no salary due or earned after the date of termination. |
ii. |
Signing Advance Bonus: Employee will be provided a signing bonus of two hundred and fifty thousand dollars ($250,000), less all required payroll withholdings and applicable deductions (Signing Advance Bonus). The Signing Advance Bonus will be paid as an advance in February 2021 so long as Employee remains employed in good standing with the Company on such date. It will be deemed earned on, and not before, the end of the service period ending December 31, 2022 (Advance Earning Date) if Employee is employed in good standing on the Advance Earning Date. In the event Employee voluntarily departs without Good Reason (as defined below) or is terminated for Cause (as defined below) prior to the Advance Earning Date, the Signing Advance Bonus is subject to claw-back and must be immediately repaid by Employee to the Company in its entirety. |
a. |
For purposes of the Agreement, Good Reason shall be defined as: (i) material reduction in position or compensation without Cause; or (ii) relocation is required to an office location in excess of fifty (50) miles from the Companys current Headquarters. |
1
b. |
For purposes of the Agreement, Cause shall be defined as: (i) material violation of Companys policies or the Agreement following notice and thirty (30) days opportunity to cure where such breach is capable of cure; (ii) material violation of Companys policies or this Agreement where such breach is not capable of cure; (iii) failure to perform Employees duties in a manner equal to or exceeding that which is reasonable and customary for individuals holding the same or similar title for public companies in the United States; (iv) failure to comply with the reasonable requests and directives of Employees supervisor; (v) commission of, plea of guilt or no-contest to, or conviction for any felony or crime of moral turpitude; (vi) commission of fraud; (vii) commission of any conduct for which punitive damages are awarded; or (viii) commission of any act which materially and negatively affects the Companys brand, reputation, standing, or licensure. |
iii. |
Bonus Potential: Employee will be eligible to receive an annual discretionary incentive bonus targeted at six hundred thousand dollars ($600,000) per calendar year starting for 2021 (with eligible bonus paid by the end of February 2022) and continuing annually thereafter. This bonus will be 50% based on Company financial and non-financial performance against goals, and 50% based on personal goals that will be set with Employees input. It will be determined based on Employees performance review with the Chief Executive Officer and paid, if appropriate, in February after the Compensation Committee meeting and approval process. If in any given year, the Company does not meet a minimum of 50% of its pre-tax income goal, no bonuses will be paid to executives for that year, unless special considerations are determined by the Compensation Committee. |
iv. |
Restricted Stock Units: Subject to approval by the Compensation Committee, as a senior leader of the Company, as set forth below contingent upon Employees continued employment and good standing, Employee will be eligible for long term incentive compensation in the form of restricted stock units (RSUs). All RSUs require the approval of the Compensation Committee and shall be governed by the Companys Omnibus Equity Incentive Plan Restricted Stock Unit Award Agreement, except as modified and approved by the Compensation Committee. |
a. |
Initial RSU Awards: Subject to approval of the Compensation Committee, Employee will receive a grant of seventy five hundred (7,500) RSUs with a 5-year vesting schedule in August 2020 and an additional seventy five hundred (7,500) RSUs with 5-year vesting in August 2021 if Employee is in good standing with the Company. |
b. |
LTP1 and LTP2 RSU Grant: Subject to approval of the Compensation Committee, and Employee being in good standing, beginning with any discretionary cash bonus paid in 2022, Employee will be eligible in the Companys discretion to receive an RSU grant potential equivalent of up to fifty percent (50%) of Employees actual discretionary cash bonus earned and paid each year. Twenty-five percent (25%) will be based on the years overall results including the Companys performance and Employees individual performance (LTP1). Twenty-five percent (25%) will be based on progress toward achieving the Companys long-term goals and Employees contribution toward them (LTP2). Beginning in 2022, these RSU grants will be part of the annual review process, with amounts determined by the Company, in its discretion, in February based on the prior calendar year. The RSU grants will be subject to a 5-year vesting schedule. There is no LTP1 or LTP2 eligibility based on 2020. |
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v. |
Severance Program: |
a. |
Change of Control. In the event of a Change of Control as defined below, and as a result of such Change of Control and within one year of such event the Company terminates Employees employment or Employee resigns for Good Reason, then: (a) the Company will provide Employee a severance payment equal to six (6) months of base salary and one-half (1/2) the amount of Employees last annual cash discretionary bonus (Severance Payment); and (b) Employee will receive accelerated vesting of any unvested RSUs or other awarded unvested equity. If a Change of Control occurs in 2021, Employee will receive $200,000 in base salary (one half of one year) and $300,000 in bonus (one half of target bonus). For purposes of this Agreement, Change in Control shall be defined as the sale or merger of the Company wherein the other transacting entity to such sale or merger takes a controlling ownership interest in the Company. |
b. |
Termination Without Cause or Departure for Good Reason. In the event the Company terminates Employees employment without Cause or Employee terminates Employees employment for Good Reason, then the Company will provide Employee a severance payment equal to six (6) months of base salary and one-half (1/2) the amount of Employees last annual cash discretionary bonus (Severance Payment). |
c. |
Paragraphs 1(v)(a) and 1(v)(b) are collectively referred to herein as the Severance Program. The Severance Program is only applicable to the circumstances expressly stated herein and Employee, when and if eligible, will receive the Severance Payment under either Paragraph 1(v)(a) or 1(v)(b), as applicable, not under both paragraphs. Amounts provided for in the Severance Payments are not compensation or otherwise earned in any respect until actually paid. There is no eligibility for or expectation of the Severance Program or any other severance benefits for any other circumstance, including, but not limited to, voluntary termination of employment by Employee, termination not triggered by a Change of Control, termination for Cause by the Company, or termination by Employee without Good Reason. Unless otherwise determined by the Company in its sole discretion, all Severance Payments made under the Severance Program shall be paid at such times and in such manner (including the withholding of required payroll withholdings and applicable deductions) as the amounts would have otherwise been paid to the Employee had Employee remained employed. Notwithstanding any term to the contrary, eligibility for and receipt of all Severance Payments and advanced RSU vesting is also expressly conditioned upon: (1) Employees compliance with all post-termination obligations under the Agreement, including but not limited to those in Paragraph 7, and no Severance Payment of any kind shall be due or payable in the event Employee fails to comply with such obligations; and (2) Employees execution of a severance agreement consistent with Employees obligations under this Agreement and which shall be inclusive of a general release by Employee. |
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2. |
Performance-Based Compensation Clawback. Employee acknowledges and agrees that the Company will be entitled, pursuant to any policy it adopts to comply with the clawback rules implemented by the Securities and Exchange Commission and/or our exchange listing standards, to recover from Employee, regardless of fault, that portion of performance-based compensation which was based on financial information required to be reported under securities laws that would not have been paid in the three completed fiscal years preceding the year(s) in which an accounting restatement is required to be filed to correct a material error. Subject to applicable law, the Compensation Committee may seek to recoup such performance-based compensation by requiring Employee to repay such amount to the Company; by set-off; by reducing future compensation; or by such other means or combination of means as the Compensation Committee, in its sole discretion, determines to be appropriate. |
3. |
Cellular Phone Allowance. Employee shall be entitled to a monthly cellular phone allowance in the amount of one hundred dollars ($100.00), reimbursed through regular and timely Expense Report submittal. |
4. |
Insurance and Retirement. Employee shall be entitled to participate in insurance packages (medical, dental, and life) in accordance with the terms of Company Insurance Plan(s) available to eligible Company employees. Additionally, Employee shall be entitled to participate in a retirement savings plan in accordance with the terms of Company 401(K) Plan(s) available to eligible Company employees. |
5. |
Paid Time Off (PTO): Upon employment, Employee will begin accruing paid time off equal to 15 days (120 hours) per anniversary year. Any unused PTO will carry over from year to year, to the maximum limits of the Companys policy. |
EMPLOYEE | MARCUS & MILLICHAP, INC | |||||
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By: |
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STEVEN F. DEGENNARO | HESSAM NADJI | |||||
President / CEO | ||||||
Date: 8/4/20 | 23975 Park Sorrento, Suite 400 | |||||
Calabasas, CA 91302 | ||||||
Date: | 8/4/20 |
4
Exhibit 31.1
Certification of Chief Executive Officer of Marcus & Millichap, Inc. pursuant to
Rule 13a-14(a) under the Exchange Act,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Hessam Nadji, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Marcus & Millichap, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: November 9, 2020 | /s/ Hessam Nadji | |
Hessam Nadji President and Chief Executive Officer |
Exhibit 31.2
Certification of Chief Financial Officer of Marcus & Millichap, Inc. pursuant to
Rule 13a-14(a) under the Exchange Act,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Steven F. DeGennaro, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Marcus & Millichap, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: November 9, 2020 | /s/ Steven F. DeGennaro | |
Steven F. DeGennaro Chief Financial Officer |
Exhibit 32.1
Certifications of Chief Executive Officer and Chief Financial Officer of Marcus & Millichap, Inc. Pursuant to
Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the quarterly report of Marcus & Millichap, Inc. on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), we, Hessam Nadji, President and Chief Executive Officer of the Company, and Steven F. DeGennaro, Chief Financial Officer of the Company, certify, to the best of our knowledge, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 9, 2020 | /s/ Hessam Nadji | |
Hessam Nadji President and Chief Executive Officer (Principal Executive Officer) |
Date: November 9, 2020 | /s/ Steven F. DeGennaro | |
Steven F. DeGennaro Chief Financial Officer (Principal Financial Officer) |