KE Holdings Inc. (02423.HK) released its 2025 annual report on April 24. Compared to the full-year 2025 results announced a month prior, the annual report provided additional details, including specifics on executive compensation that have recently attracted public interest.
The report shows that Peng Yongdong, Co-founder, Chairman, and CEO of KE Holdings, received total compensation of 235 million yuan in 2025, a decrease of 41.25% year-over-year. Shan Yigang, Co-founder and Executive Director, received compensation of 176 million yuan, down 41.14% year-over-year.
While the nine-figure compensation packages drew attention, a detailed breakdown reveals that the largest component for both individuals was "share-based compensation," which accounted for over 96% of their total remuneration in 2025. Excluding this portion, their respective compensations were 9.378 million yuan and 6.728 million yuan, which are within a reasonable range compared to the compensation levels of chairmen at other Hong Kong-listed property companies.
Peng Yongdong and Shan Yigang donated the full value of their 2025 restricted shares. The donations are intended to provide medical security and children's education support for service providers and their families in the residential industry, support for new graduates, and to establish a "Health and Home Protection Fund."
The year 2025 was one of ongoing adjustment for KE Holdings, largely mirroring broader trends in the real estate market. The company achieved net revenues of 94.6 billion yuan, a slight increase of 1.2% year-over-year. However, net profit was 2.99 billion yuan, a decline of 26.7%. The increasing proportion of non-property transaction businesses with lower margins, such as leasing and home renovation, helped offset revenue pressure from declining scale but also diluted the company's overall profitability.
Following the peaking of its revenue scale, KE Holdings is exploring new strategic directions. As China's largest brokerage and platform, the company is continuously extending its industrial chain upstream and downstream. In 2025, KE Holdings introduced various initiatives to enhance service quality and efficiency, including customer-property separation trials, a large-store model, a "True Protection" full-process service guarantee system, and an AI assistant.
During an earnings conference call on March 16, Peng Yongdong stated that the fundamental logic of the market has undergone significant changes. The real estate brokerage industry is shifting from past reliance on resource scale to competing on professional service capability and operational efficiency. Entering 2026, KE Holdings continues with large-scale organizational restructuring, defining the year as critical for its transformation into a residential service platform.
The disclosure of the nine-figure compensation packages for Peng and Shan sparked public discussion. A detailed analysis shows this does not represent take-home pay. The substantial "share-based compensation" for the two co-founders originated from KE Holdings' 2022 listing in Hong Kong. At that time, the U.S. Holding Foreign Companies Accountable Act raised the risk of forced delisting for U.S.-listed Chinese companies, prompting KE Holdings to list in Hong Kong using a weighted voting rights structure.
This structure, common in the Hong Kong market and used by companies like Xiaomi, Kuaishou, and JD.com, means shareholding percentage does not equate to voting power. To comply with Hong Kong exchange rules requiring "super-voting right" holders to have an economic interest exceeding 10% of shareholder equity, KE Holdings granted Peng Yongdong 71.82 million restricted Class A shares and Shan Yigang 53.87 million restricted Class A shares, totaling 126 million shares, prior to its Hong Kong listing. This equity incentive plan spans ten years.
Under accounting rules, the value of this equity grant is being amortized using the straight-line method over five years, appearing on financial statements as an annual "share-based payment expense" amounting to hundreds of millions. These restricted shares cannot be sold, transferred, or pledged before the vesting period. Even after vesting, the value must be realized through sale.
Different compensation disclosure rules between A-shares and Hong Kong listings contribute to the perception of "sky-high" compensation at KE Holdings. A-share listed companies typically disclose only cash components like base salary and performance bonuses in executive compensation figures, whereas Hong Kong-listed companies include salary, bonus, and share-based compensation. The latter is an accounting entry, not an actual cash outflow from the company.
Excluding the share-based compensation, Peng and Shan's 2025 compensations were 9.378 million yuan and 6.728 million yuan, respectively. For comparison, the total compensation for the Chairman and CEO of Longfor Group (0960.HK) was 34.67 million yuan in 2023, the last year it was disclosed, with a base salary of 16.5 million yuan. Some other Hong Kong-listed property developers have significantly reduced executive salaries due to financial distress.
KE Holdings' 2025 annual report also disclosed that Peng Yongdong has donated the full value of his restricted shares for two consecutive years. Combined with Shan Yigang's donation in early 2026, the total donated shares amount to 19 million, valued at over 800 million yuan. Prior to this, Peng had never sold, transferred, or otherwise disposed of any KE Holdings shares he beneficially owned. These donations are fully allocated to the initiatives mentioned above, and the "Health and Home Protection Fund" was officially launched on April 23, with personalized benefit cards pushed to over 500,000 KE Holdings, Lianjia employees, and industry service providers.
Ahead of the annual report release, on March 29, KE Holdings announced a new round of organizational adjustments. At the group level, it established a Group Transformation Committee and five specialized management committees, and realigned group functions. Regionally, it set up ten major regions. Significant changes were also made at Beijing Lianjia, the main focus of this adjustment, including establishing a strategic committee and integrating transaction, home renovation, and leasing businesses. Three new Vice Presidents were appointed as Chief Customer Officers for Beijing Lianjia.
Substantial personnel changes were also implemented. For example, the former General Manager of the Suzhou region was appointed as General Manager of Shanghai Lianjia, while the former Shanghai Lianjia General Manager will focus on the rental business as Group Senior Vice President and CEO of HuiJu. On the same day, Peng Yongdong issued a company-wide letter detailing the rationale for the restructuring and his views on the business model, corporate bureaucracy, the Agent Cooperation Network, and AI's impact on agents. He also stated that KE Holdings is deepening its transition from a transaction platform to a community living service platform. Starting March 29, a 100-day transformation initiative began in the Beijing region, requiring all managers, including Peng himself, to serve consumers on the front lines.
This large-scale adjustment continues the series of changes initiated in 2025. That year, KE Holdings piloted innovative service models like customer-property separation and the large-store model through Lianjia stores, launched the "True Protection" service guarantee system platform-wide, and reiterated its neutral market stance. In response to AI's impact on the brokerage industry, it introduced an AI assistant and other tools to improve agent efficiency.
This is KE Holdings' strategic response after its scale growth peaked. Financial reports show that while full-year 2025 net revenue slightly increased by 1.2% to 94.6 billion yuan, net profit declined by 26.7% to 2.99 billion yuan. The core housing transaction business was impacted, with non-property transactions now supporting 40% of revenue. However, these non-property businesses, like leasing and home renovation, have lower margins, which dilutes overall profitability while maintaining revenue scale.
Property transactions remain KE Holdings' core revenue source, but this segment's net income declined in 2025 amid the market downturn, and its share of total revenue decreased. Specifically, new home and existing home transaction net revenues were 30.6 billion yuan and 25 billion yuan, down 9.2% and 11.4% year-over-year, respectively. Together, they accounted for 58.83% of total net revenue, a decrease of 7.37 percentage points.
KE Holdings is pinning its hopes on non-property businesses. In July 2023, the company proposed a "One Body, Three Wings" strategy, segmenting its business lines. The "One Body" refers to new and existing home transactions, while the "Three Wings" comprise home renovation and furnishings, rental services, and emerging businesses. The share of revenue from non-property businesses has risen rapidly from 2.89% in 2021 to 41.17% in 2025.
Among these, rental services have shown particularly significant growth. By the end of 2025, managed rental properties exceeded 700,000 units, a 62% increase year-over-year, generating net revenue of 21.9 billion yuan, up 52.8%, and achieving full-year profitability for the first time. This growth is primarily driven by the expansion of managed properties under the "Worry-Free Lease" model, where KE Holdings provides standardized services for scattered properties converted into institutional long-term rentals, earning management fees. However, the industry is relatively saturated and reliant on scale expansion, requiring high costs for rapid market capture.
During the March 16 earnings call, Peng Yongdong noted that the market's fundamental logic has significantly changed, with transaction structures shifting, the secondary home market share increasing, and the new home market diverging. Homebuyers are also more cautious, viewing purchases more as "family asset restructuring." However, entering 2026, some positive signals have emerged. Data shows that in March, new and existing home prices in first-tier cities stopped falling, and transaction volumes hit new highs. The recovery is not limited to first-tier cities, with cities like Xuzhou, Wuxi, and Chongqing also seeing varying degrees of improvement in their secondary home markets.
Zuo Donghua, Party Committee Secretary and Executive President of KE Holdings, recently commented that the most notable market change is the shift from broad price movements to a structural recovery, accompanied by significant changes in consumer mentality. He believes the agent's role is evolving from an information intermediary to a professional residential service provider, and that KE Holdings needs to better leverage AI technology while improving its ability to understand consumer needs, coordinate complex issues, and safeguard transactions.
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