Vanke adjusts executive compensation structure, with performance accounting for no less than 50%

How AI · How Vanke’s Compensation Reform Responds to the CSRC’s New Rules?

Interface News Reporter | Wang Yuhan

On May 8, Vanke’s board of directors approved a resolution related to executive compensation. According to an announcement released on the same day, the company’s 2026 compensation plan for directors and senior management clearly reconstructs the compensation structure: for full-time directors and executives, the proportion of performance-based compensation in total base compensation and performance compensation shall, in principle, be no less than 50%. At the same time, a “payment suspension and clawback” mechanism has been added.

It is understood that prior to this adjustment, Vanke’s executive compensation allocation was based on the importance of their positions. Although a structure of fixed compensation and annual bonuses existed, there had never been a hard red line set for the share of performance.

The latest plan breaks this ingrained logic. According to the announcement, Vanke’s compensation structure for full-time directors and senior management is clearly divided into three parts: basic compensation, performance compensation, and medium- to long-term incentives.

Of these, performance compensation is determined based on the company’s operating objectives from the previous fiscal year. It is approved and paid out according to annual performance indicators and individual contributions. The proportion of performance compensation, in principle, shall be no less than 50% of the total of basic compensation and performance compensation. This is also the adjustment item in this change that the market is paying relatively close attention to.

Screenshot from Interface News of the original announcement text

“This is also a response to the new corporate governance rules newly implemented by the CSRC this year,” an insider told Interface News.

According to Interface News’ research, in October last year, the CSRC issued the latest “Code of Corporate Governance for Listed Companies” (effective from January 1, 2026). Article 57 clearly states: “The compensation of directors and senior management of listed companies consists of income from basic compensation, performance compensation, and medium- to long-term incentive income. Among them, the proportion of performance compensation shall, in principle, be no less than 50% of the total of basic compensation and performance compensation.” From the policy perspective, Vanke’s adjustment is precisely the implementation of this new requirement.

In addition to increasing the performance proportion, this adjustment also introduces for the first time a “reward-and-penalty” mechanism: when the company shifts from profit to loss, or when losses widen compared with the previous accounting year, the average performance compensation of directors and senior executives should, in principle, decrease correspondingly. If the company issues financial statements that are restated due to misreporting or other wrongdoing such as financial fraud, the company has the right to recover the previously overpaid performance compensation and incentive income. If directors and senior executives bear responsibility for the company’s losses or unlawful and non-compliant conduct, the company can also reduce, suspend, or even fully claw back the portions that have already been paid.

“The core of this compensation adjustment is to deeply tie executive income to Vanke’s operating outcomes, so as to respond to the industry’s downward pressure and improve governance transparency,” said Yan Yuejin, Vice Dean of the Shanghai E-House Real Estate Research Institute, in an interview with Interface News.

“According to the latest plan, the proportion of performance compensation has been raised to no less than 50% of the total of basic compensation and performance compensation. That means nearly half of executives’ income will be in a floating state, and they must rely on actual ‘results’ to prove it. This adjustment changes the previous allocation logic that leaned heavily toward position importance. Meanwhile, the newly added payment suspension and clawback mechanisms further strengthen risk sharing. If problems are found in future performance reviews and lookbacks, previously granted bonuses can be recovered.”

In Yan Yuejin’s view, the substance of Vanke’s reform is to promote organizational resilience through a more market-oriented incentive and restraint mechanism. At the same time, it also sets higher requirements for assessment fairness and execution transparency.

In terms of operating conditions, Vanke’s current situation is not optimistic. In 2025, Vanke achieved operating revenue of 2334.3 billion yuan, down 32.0% year-on-year. The net profit attributable to shareholders recorded about -885.6 billion yuan; the loss amount increased by nearly 80% year-on-year compared with 2024.

Sales were also bleak. Full-year contracted sales amounted to 1340.6 billion yuan, down 45.5% year-on-year. Revenue from the main real estate development business decreased by 36.7% year-on-year to 1906.5 billion yuan. This segment contributed 81.7% of total revenue, making it the main reason for the revenue decline. Only the property services segment remained relatively steady, increasing 7.2% year-on-year to 355.2 billion yuan.

Vanke’s financial performance in recent years | Chart prepared by Interface News

More urgent than the losses is the debt repayment crisis. As of the end of 2025, Vanke’s interest-bearing liabilities totaled approximately 3584.8 billion yuan, of which debts due within one year were as high as 1605.6 billion yuan, accounting for nearly 45%. Meanwhile, cash and cash equivalents held by the company at period-end were only 672.4 billion yuan. The cash-to-short-term debt ratio was as low as 0.42x, and the repayment shortfall exceeded 900 billion yuan.

Entering 2026, the debt repayment pressure remains very high. Interface News’ review of iFind data shows that Vanke’s domestic bond balance is currently 201.38 billion yuan, and the repayment peak for the next 12 months falls in July this year, at 48.8 billion yuan.

Based on the just-disclosed first-quarter report, in this year’s first quarter, Vanke achieved revenue of 289.28 billion yuan, down 23.86% year-on-year. Net profit attributable to shareholders was a loss of 59.52 billion yuan, narrowing compared with the 62.46 billion yuan loss in the same period last year.

Behind the narrowing losses is a clear divergence between two major segments. The main real estate development business continues to face sustained pressure, with revenue of only 145.7 billion yuan, down 36.1% year-on-year; contracted sales were only 167.7 billion yuan, down 53.8% year-on-year.

But overall, the operation services business maintained a steady trend for the better. Wanwu Cloud contributed revenue of 124.8 billion yuan, up slightly 1.7% year-on-year. Among them, Wanwu Cloud won bids for multiple hospitals and large public construction projects. Wanwei Logistics achieved revenue of about 11 billion yuan, with the cold chain business growing 28%. The occupancy rate of Boyu apartments remained stable at around 94%, with customer lease contracts extended to 366 days.

At the same time, Vanke is also doing everything it can to “self-rescue,” continuously divesting non-core assets to “shrink.” After the release of the first-quarter report, Vanke announced that it plans to transfer its 99.413% equity stake in Huan Shan Group at a listing price of 32.7 billion yuan. Huan Shan Group mainly engages in businesses such as hog farming. In 2025, its operating revenue was 57.6 billion yuan, and its net profit was 4.5 billion yuan.