Share-based Compensation

12 Months Ended

Dec. 31, 2022

Share-based Payment Arrangement [Abstract]

17.	Share-based Compensation

a)	Description of share option and RSUs plans

In July 2014, the Group adopted its Global Share Incentive Plan (the “Global Share Plan”), which permits the grant of options of the Company to relevant directors, officers, other employees and consultants of the Group. The maximum aggregate number of Class Z Ordinary Shares, which may be issued pursuant to all awards under the Global Share Plan, is 19,880,315 shares.

The Global Share Plan was terminated on the Primary Conversion Effective Date.

In February 2018, the Group adopted its 2018 Share Incentive Plan (the “2018 Plan”) to provide additional incentives to employees, directors and consultants and promote the success of

its

business. The maximum aggregate number of Class Z Ordinary Shares, which may be issued pursuant to all awards under the 2018 Plan as at December 31, 2022, is 33,132,989 shares.

As at the date on which the voluntary conversion of its secondary listing status to primary listing on the Hong Kong Stock Exchange becomes effective , the

roup subsequently amended

its

2018 Plan, under which the maximum aggregate number of Class Z ordinary shares may be issued pursuant to all awards is 30,673,710 Class Z ordinary shares, representing 10% of the total number of issued Class Z ordinary shares, which permits the grant of restricted share units (“RSUs”) of the Company to relevant directors, officers, other employees and consultants of the Group.

Option awards are granted with an exercise price determined by the Board of Directors. Those option awards generally vest over a period of zero to six years and expire in

six to seven years

, and RSUs generally vest over a period of

zero

to four years.

RSUs

The following table presents a summary of the Group’s service-based RSUs activities for the year ended December 31, 2022:


	Employees		Senior Management		Consultants		Total		Weighted Average Granted fair value
	(In thousands)		(In thousands)		(In thousands)		(In thousands)		US$
Outstanding at January 1, 2022		—		—		—		—		—
Granted		1,932		—		35		1,967		24.59
Vested		—		—		—		—		—
Forfeited		—		—		—		—		—

Unvested at December 31, 2022		1,932		—		35		1,967		24.59

The aggregate number of Class Z Ordinary Shares available for future grant under the 2018 Plan was 28,706,326 as of December 31, 2022.

As of December 31, 2022, total unrecognized compensation expenses related to unvested service-based RSUs granted under the 2018 Plan, adjusted for estimated forfeitures, was RMB 292.0 million, which is expected to be recognized over a weighted-average period of 3.9

years and may be adjusted for future changes in estimated forfeitures. There is no vested RSUs for the year ended December 31,2022.

Share options

b )	Valuation assumptions

The Group uses binomial option pricing model to determine the fair value of share options. The estimated fair value of each share option granted is estimated on the date of grant using the binomial option-pricing model with the following assumptions:


	For the Year Ended December 31,
	2020			2021			2022
Expected volatility		50.1%-55.0	%		53.0%-53.5	%		57.6%-58.0	%
Weighted average volatility		51.9	%		53.2	%		57.9	%
Expected dividends		—			—			—
Risk-free rate		0.4%-0.7	%		0.9%-1.4	%		2.7%-3.6	%
Contractual term (in years)		6-7			6-7			6-7

The expected volatility at each grant date was estimated based on the annualized standard deviation of the daily return embedded in historical share prices of comparable peer companies with a time horizon close to the expected expiry of the term of the share options. The weighted average volatility is the expected volatility at the grant date weighted by the number of the share options. The Company has never declared or paid any cash dividends on its capital stock, and the Company does not anticipate any dividend payments in the foreseeable future. Contractual term is the remaining contract life of the share options. The Group estimated the risk-free interest rate based on the yield to maturity of U.S. treasury bonds denominated in US dollars at the share option grant date.

(

)

Share options activities

The following table presents a summary of the Group’s share options activities for the years ended December 31, 2020, 2021 and 2022:


	Employees			Senior Management			Consultants			Total			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
	(In thousands)			(In thousands)			(In thousands)			(In thousands)			US$		(In years)		(RMB in thousands)

Outstanding at January 1, 2020		8,274			3,655			245			12,174			0.0001		4.13		1,581,408
Granted		6,966			8,700			50			15,716			2.9007
Exercised		(2,784	)		(1,643	)		(65	)		(4,492	)		0.0001
Forfeited		(1,101	)		—			—			(1,101	)		0.4234

Outstanding at December 31, 2020		11,355			10,712			230			22,297			2.0236		5.41		12,177,047

Outstanding at January 1, 2021		11,355			10,712			230			22,297			2.0236		5.41		12,177,047
Granted		3,927			—			21			3,948			0.0001
Exercised		(2,094	)		(1,101	)		(68	)		(3,263	)		0.0001
Forfeited		(472	)		—			—			(472	)		0.0001

Outstanding at December 31, 2021		12,716			9,611			183			22,510			2.0010		5.01		6,372,503

Outstanding at January 1, 2022		12,716			9,611			183			22,510			2.0010		5.01		6,372,503
Granted		5,661			6			162			5,829			0.0036
Exercised		(2,575	)		(1,204	)		(150	)		(3,929	)		0.0001
Forfeited		(2,500	)		—			—			(2,500	)		0.2331

Outstanding at December 31, 2022		13,302			8,413			195			21,910			2.0283		4.70		3,305,336

Exercisable at December 31, 2022		2,113			2,580			22			4,715			2.8747		4.00		778,043

The weighted average grant date fair value of share options granted for the years ended December 31, 2020, 2021 and 2022 was RMB262.0, RMB423.6 and RMB126.8 (US$18.5) per share, respectively.

As of December 31, 2022, total unrecognized compensation expenses related to unvested options granted under the Global Share Plan and the 2018 Plan, adjusted for estimated forfeitures, was RMB 3,415.8 million, which is expected to be recognized over a weighted-average period of 3.5 years and may be adjusted for future changes in estimated forfeitures.