SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2023

14.	SHARE-BASED COMPENSATION

With effect on January 1, 2024, the maximum number of shares which may be issued pursuant to all awards under its 2009 share incentive plan (the “Plan”) increased to 210,888,606 Class A ordinary shares. The Company amended the Plan in April 2022 to automatically increase on January 1 of each of 2023, 2024, 2025 and 2026 by 3% of the total number of ordinary shares of all classes of the Company outstanding on that day immediately before the increase. Under the Plan, the Company may grant options, restricted share award (“RSA”), restricted share unit (“RSU”) or share appreciation right (“SAR”) to its officers, employees, directors and other eligible persons (collectively known as “Eligible Persons”). The Plan is administered by an authorized administrator appointed by the Board of Directors of the Company set forth in the Plan (the “Plan Administrator”).

All options granted have a contractual term of ten years. The options vest according to the stated vesting period in the grantee’s option agreement. The RSUs and SARs generally vest 25% on the first anniversary year from the stated vesting commencement date and the remaining 75% will vest in 12 substantially equal quarterly instalments.

On April 17, 2022, 4,000,000 existing options were cancelled and 4,000,000 new options were granted concurrently to the same grantee with an exercise price of US$120 per share on the same date. The new options will vest every three months over a period of five years commencing April 30, 2022 and will expire 10 years after the grant date. This is accounted for as a modification and resulted in an incremental share-based compensation cost of US$99,198, which shall be recognised over the new vesting period of the new options of five years commencing April 30, 2022.

(a)

Option granted to Eligible Persons

The following table summarizes the Company’s share option activity under the Plan:

	Number of options			Weighted average exercise price		Weighted average remaining contractual term		Aggregate intrinsic value
				$		Years		$

Outstanding, January 1, 2021		47,465,720			14.76
Granted		4,162,121			269.09
Exercised		(5,405,228	)		14.44
Forfeited		–
Outstanding, December 31, 2021		46,222,613			37.70		6.89		8,822,987
Vested and expected to vest at December 31, 2021		46,222,613			37.70
Exercisable as of December 31, 2021		30,707,210			14.13		6.32		6,435,641
Outstanding, January 1, 2022		46,222,613			37.70
Granted		30,000,000			120.00
Cancelled or forfeited		(4,012,516	)		279.17
Exercised		(3,676,911	)		13.82
Outstanding, December 31, 2022		68,533,186			60.87		7.30		1,433,420
Vested and expected to vest at December 31, 2022		68,533,186			60.87
Exercisable as of December 31, 2022		36,880,548			22.99		5.97		1,274,793
Outstanding, January 1, 2023		68,533,186
Granted		1,925,000			60.00
Cancelled or forfeited		(9,292,295	)		104.02
Exercised		(1,336,980	)		7.19
Outstanding, December 31, 2023		59,828,911			55.34		6.18		944,611
Vested and expected to vest at December 31, 2023		59,828,911			55.34
Exercisable as of December 31, 2023		42,877,386			35.29		5.51		887,174

The aggregate intrinsic value is calculated to be the difference between the exercise price of the underlying awards and the fair value of the underlying stock at each reporting date, for those awards that have an exercise price below the estimated fair value of the Company’s ordinary shares.

The Company calculated the estimated fair value of the options on the respective grant dates using the Black-Scholes Option Pricing Model with the following assumptions:

	Granted in 2021	Granted in 2022	Granted in 2023

Risk-free interest rates	0.74% – 1.07%	2.79% – 2.84%	3.60% – 4.10%
Expected term	5.6 – 7.5 years	5.1 – 7.5 years	6.5 – 7 years
Expected volatility	32.1% – 33.0%	48.7% – 55.9%	60.2% – 62.0%
Expected dividend yield	–	–	–

The risk-free interest rate for periods within the contractual life of the option is based on the US Treasury Yields at the time of grant. The Company has used the simplified method to determine the expected term due to insufficient relevant historical exercise data to provide a reasonable basis to estimate expected term. The Company estimated expected volatility primarily based on the weighted-average historical share price volatility of the Company’s ADS. The Company’s management is ultimately responsible for the determination of the estimated fair value of its ordinary shares.

The weighted-average grant-date fair value of share options granted during the years of December 31, 2021, 2022 and 2023 were $75.83, $57.74 and $40.62, respectively. The total fair value of share options vested during the years ended December 31, 2021, 2022 and 2023 was $88,507, $389,734 and $325,183, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2021, 2022 and 2023 was $1,361,800, $143,176 and $72,072, respectively.

As of December 31, 2023, there were $829,528 total unrecognized share-based compensation cost related to unvested options which is expected to be recognized over a weighted-average period of 3.31 years. Total unrecognized compensation cost may be adjusted for future changes in actual forfeitures.

(b)

RSAs/RSUs granted to Eligible Persons

The following table summarizes the Company’s RSAs/RSUs activity under the Plan:

	Number of RSAs/RSUs			Weighted average grant date fair value		Weighted average remaining contractual life		Aggregate intrinsic value
				$		Years		$

Unvested, January 1, 2021		9,341,928			46.36		8.64		1,859,511
Granted		3,551,491			258.97
Vested		(4,127,006	)		40.59
Forfeited		(637,193	)		102.92
Unvested, December 31, 2021 and January 1, 2022		8,129,220			137.76		8.47		1,818,588
Granted		7,320,443			99.25
Vested		(3,864,257	)		110.34
Forfeited		(1,933,175	)		133.12
Unvested, December 31, 2022 and January 1, 2023		9,652,231			120.48		8.81		502,206
Granted		7,119,505			63.46
Vested		(4,130,583	)		109.11
Forfeited		(1,786,921	)		116.01
Unvested, December 31, 2023		10,854,232			90.02		8.86		439,596

Share-based compensation cost for RSAs and RSUs is measured based on the fair value of the Company’s ordinary shares on the date of grant.

The weighted-average grant-date fair value of RSAs and RSUs granted during the years ended December 31, 2021, 2022 and 2023 was $258.97, $99.25 and $63.46, respectively. The total fair value of RSAs and RSUs vested during the years ended December 31, 2021, 2022 and 2023 was $167,507, $426,398 and $450,703, respectively.

As of December 31, 2023, there was $977,151 of unrecognized share-based compensation cost related to RSAs and RSUs which is expected to be recognized over a weighted-average vesting period of 2.55 years. Total unrecognized compensation may be adjusted for future changes in actual forfeitures.

(c)

SARs granted to Eligible Persons

During the years ended December 31, 2022 and 2023, the Company granted 54,186 and 64,295 SARs, respectively, to the Eligible Persons. Fair value of the SARs is measured based on the fair value of the Company’s ordinary shares at the end of each reporting period.

Total compensation expense relating to share options, RSAs, RSUs and SARs granted to employees after deducting forfeitures recognized for the years ended December 31, 2021, 2022 and 2023 is as follows:

	Year ended December 31,
	2021		2022			2023
	$		$			$

Share options:
Cost of revenue		390		–			–
Sales and marketing expenses		5		–			–
General and administrative expenses		207,204		313,917			253,408
Research and development expenses		33		254			44
		207,632		314,171			253,452

Cash received for the exercise in the respective years		77,639		50,211			10,643

RSAs/ RSUs:
Cost of revenue		8,318		11,104			12,727
Sales and marketing expenses		23,350		36,812			35,988
General and administrative expenses		67,421		67,388			99,048
Research and development expenses		148,592		283,747			282,381
		247,681		399,051			430,144

SARs:
Cost of revenue		3,389		(1,928	)		383
Sales and marketing expenses		6,850		(1,762	)		710
General and administrative expenses		3,658		(2,993	)		200
Research and development expenses		1,114		(643	)		141
		15,011		(7,326	)		1,434