KKR Real Estate Finance Trust Inc.KREF
KKR Real Estate Finance Trust Inc. Stock Compensation Disclosure
Stock-based Compensation
KREF is externally managed by the Manager and does not currently have any employees. However, as of December 31, 2025, certain individuals employed by the Manager and affiliates of the Manager and certain members of KREF's board of directors were compensated, in part, through the issuance of stock-based awards.
The KKR Real Estate Finance Trust Inc. 2025 Omnibus Incentive Plan was adopted on April 25, 2025 (the "Incentive Plan") and replaced the Amended and Restated KKR Real Estate Finance Trust Inc. 2016 Omnibus Incentive Plan (the "Prior Plan"). Outstanding awards previously granted under the Prior Plan as of the date of approval by our shareholders of the Incentive Plan remain outstanding pursuant to the terms of the Prior Plan. However, following the approval of the Incentive Plan, no new awards will be made under the Prior Plan.
Under the Incentive Plan, a total of 2,750,000 shares of common stock, will be available for awards to certain members of KREF’s board of directors and employees of the Manager or its affiliates, none of whom are KREF employees. No awards may be granted under the Incentive Plan on or after April 25, 2035. The Incentive Plan will continue to apply to awards granted prior to such date. During the years ended December 31, 2025 and 2024, 686,935 and 681,350 restricted stock unit (“RSU”) awards were granted to KREF's directors and employees of the Manager or its affiliates under the Prior Plan.
RSUs awarded to employees of the Manager or its affiliates, generally vest over three consecutive one-year periods and awards to certain members of KREF's board of directors generally vest over a one-year period, pursuant to the terms of the respective award agreements and the terms of the Incentive Plan. All outstanding RSU awards were entitled to nonforfeitable dividends during the vesting periods, at the same rate as those declared on the common stock. As of December 31, 2025, 2,289,960 shares of common stock remained available for awards under the Incentive Plan.
The following table summarizes the activity in KREF’s outstanding RSUs and the weighted-average grant date fair value per RSU:
| Restricted Stock Units | Weighted Average Grant Date Fair Value Per RSU(A) | |||||||||||||
Unvested as of December 31, 2024 | 1,248,813 | $ | 12.35 | |||||||||||
| Granted | 686,935 | 8.51 | ||||||||||||
| Vested | (629,950) | 12.71 | ||||||||||||
| Forfeited / cancelled | (10,002) | 11.84 | ||||||||||||
Unvested as of December 31, 2025 | 1,295,796 | $ | 10.14 | |||||||||||
(A) The grant-date fair value is based upon the closing price of KREF’s common stock at the date of grant.
KREF expects the unvested RSUs outstanding to vest during the following years:
| Year | Restricted Stock Units | |||||||
| 2026 | 612,361 | |||||||
| 2027 | 475,101 | |||||||
| 2028 | 208,334 | |||||||
| Total | 1,295,796 | |||||||
KREF recognizes the compensation cost of RSUs awarded to employees of the Manager, or one or more of its affiliates, on a straight-line basis over the awards’ term at their grant date fair value, consistent with the RSUs awarded to certain members of KREF's board of directors.
During the years ended December 31, 2025, 2024 and 2023, KREF recognized $7.9 million, $8.3 million and $8.1 million respectively, of stock-based compensation expense included in “General and administrative” expense in the Consolidated Statements of Income. As of December 31, 2025, there was $11.4 million of total unrecognized stock-based compensation expense related to unvested share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of 1.1 year.
Upon any payment of shares as a result of restricted stock unit vesting, the related personal tax withholding obligation will generally be satisfied by KREF, reducing the number of shares to be delivered by a number of shares necessary to satisfy the related applicable personal tax withholding obligation. The amount results in a cash payment related to this personal tax liability and a corresponding reduction to “Additional paid-in capital” in the Consolidated Statement of Changes in Equity.
Directors and Officers Deferral Plan — In March 2022, KREF's board of directors adopted the KKR Real Estate Finance Trust Inc. Directors and Officers Deferral Plan (the “Deferral Plan”). Pursuant to the Deferral Plan, participants may elect to defer receipt of all or a portion of any shares of KREF’s common stock issuable upon vesting of any RSU granted to such participant in 25% increments. Deferred stock units (“DSU”) credited to a participant are non-voting but shall be entitled to dividend equivalent payments upon payment of dividends on shares of KREF’s common stock in the same form and amount equal to the amount of such dividends and are not subject to deferral under the Deferral Plan.
During the year ended December 31, 2025, 189,777 vested RSUs were deferred under the Deferral Plan. As of December 31, 2025, there were 395,889 DSUs outstanding.
Participating Securities' Share in Earnings — During the years ended December 31, 2025, 2024 and 2023, KREF declared $1.5 million, $1.2 million and $1.8 million respectively, of nonforfeitable dividends on unvested RSUs and outstanding DSUs. Such nonforfeitable dividends were deducted from “Retained earnings (Accumulated deficit)” in the Consolidated Statement of Changes in Equity.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.