For the fiscal year ended December 31, 2022, we paid our Manager an aggregate of
$30.7 million pursuant to the Management Agreement, of which $25.7 million represented management fees, $0.6 million represented incentive compensation fees and $4.4 million represented reimbursement of costs and expenses, which included the
reimbursement for the salary and benefits earned by the persons serving as our Chief Financial Officer in 2022.
For context of our Named Executive Officers’ compensation, our Manager paid our
Named Executive Officers aggregate base salary, cash bonus and Company incentive fee participation payments of $5.8 million during fiscal year 2022, which amount represented 22% of the management and incentive fees we paid our Manager for 2022.
This aggregate compensation amount excludes (i) incentive payments to our Named Executive Officers by affiliates of our Manager specifically related to the performance of other investment vehicles that are sponsored, managed or advised by
affiliates of our Manager, (ii) equity grants of common stock of KKR & Co. Inc. (the “KKR Common Stock”) (or other awards exchangeable into KKR Common Stock) by affiliates of our Manager to our Named Executive Officers, and (iii) the
compensation, disclosed in the Summary Compensation Table below, paid by us directly to our Named Executive Officers during fiscal year 2022, including grants of RSUs.
Our Manager and its affiliates compensate their employees, including our Named
Executive Officers, in accordance with KKR’s compensation practices. The compensation of senior employees at KKR, including our Named Executive Officers, consists of all or substantially all of the following components: (i) a fixed annual base
salary, (ii) an annual cash bonus payment based on the performance of KKR and of the Named Executive Officer, (iii) an allocation of carried interest, the payment of which is based on the performance of investment funds managed by KKR, (iv)
equity awards representing shares of KKR Common Stock, and (v) various employee benefit plans and programs. For 2022, our Named Executive Officers’ compensation paid by KKR, in the aggregate, was apportioned 11.5% to fixed compensation (e.g.,
base salary) and 88.5% to performance-based compensation (e.g., annual cash bonus). Our Manager did not utilize any fixed performance metrics to determine the amount of variable compensation payable to our Named Executive Officers in 2022, but
rather considered a range of various factors, including but not limited to the performance of the Named Executive Officers, the performance of the applicable business functions for which the Named Executive Officers are primarily responsible,
the performance of our common stock, market conditions, growth in our business and the credit quality of our investment portfolio.
Role of Compensation Committee
Currently, we do not have any employees and our executive officers do not receive
any cash compensation from us or any of our subsidiaries for serving as executive officers. Accordingly, our Compensation Committee does not currently make any recommendations regarding the base salaries and target bonus levels of our Named
Executive Officers. Our Compensation Committee reviews and approves the equity based awards to be paid or made by us to our Named Executive Officers based on recommendations from the Company’s Chairman and outside compensation consultant. Our
executive officers do not participate in the deliberations or recommendations with respect to the form or amount of executive officer compensation.
Role of Compensation Consultant
The Compensation Committee engaged the services of a compensation consultant,
Ferguson Partners Consulting, L.P., or FPL, to review and advise the Compensation Committee regarding the size of the Company’s equity award pool for 2022. FPL has no other relationships with the Company and is considered an independent
third-party advisor. At the time of the engagement of FPL, the Compensation Committee reviewed FPL’s independence and determined that FPL’s work for the Compensation Committee did not raise any conflict of interest pursuant to SEC and NYSE
rules.
Equity-Based Compensation
We have adopted an incentive plan, the Amended and Restated KKR Real Estate Finance
Trust Inc. 2016 Omnibus Incentive Plan (the “Incentive Plan”), under which we may award equity-based and cash-based awards to our and our subsidiaries’ directors, officers, employees, consultants and advisors, and directors, officers and
employees of our Manager and its affiliates that are providing services to us and our subsidiaries. These awards are designed to align the interests of such individuals with those of our stockholders and enable our Manager and its affiliates
that provide services to us and our subsidiaries to attract, motivate and retain talented individuals.
Our Compensation Committee may, from time to time, grant our Named Executive
Officers equity-based awards, including stock options, restricted shares of our common stock, RSUs, stock appreciation rights and other
