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SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

23. SHARE-BASED COMPENSATION

On December 19, 2017, the Company adopted the 2017 Share Incentive Plan (“the 2017 Plan”), which allows the compensation committee to grant options and restricted share units (“RSU”) of the Company to its directors, employees, and etc. (collectively, the “Grantees”) to acquire ordinary shares of the Company at an exercise price as determined by the Compensation Committee at the time of grant. The 2017 Plan was amended and restated in its entirety in March 2019 and referred to as the 2019 Plan. The awards granted and outstanding under the 2017 Plan survive the termination of the 2017 Plan and remain effective and binding under the 2019 Plan. According to the 2019 Plan, 227,401,861 ordinary shares were authorized and reserved for the issuance.

Since adoption of the 2017 Plan, the Company granted options and RSUs to employees. All options and RSUs granted have a contractual term of six years from the grant date, and the vest over a period of four years of continuous service, half (1/2) of which vest upon the second anniversary of the stated vesting commencement date and

one-fourth

(1/4) of the remaining will vest upon the third and fourth anniversaries of the stated vesting commencement date. Under the option plan, options are exercisable subject to the grantee’s continuous service.

The Company accounted for the share-based compensation costs on a straight-line bases over the requisite service period for the award based on the fair value on their respectively grant date.

On December 19, 2017, June 30, 2018, November 28, 2018, and January 31, 2019 the Company granted 73,225,200, 12,021,500, 5,540,000 and 4,968,000 stock options to its directors and employees, respectively. In addition, on December 19, 2017, November 28, 2018 and January 31, 2019, the Company granted 5,000,000, 19,800,000 and 14,925,000 RSUs to its directors and employees, respectively. On May 3, 2019, the Company granted 720,000 stock options to its two independent directors. In addition, on May 3, 2019, the Company was authorized by its Board of Directors to grant stock options and RSUs to

non-employees

under the 2019 Plan, and granted total 10,409,050 stock options and 3,332,040 RSUs to

non-employees

by batches during the year ended December 31, 2019.

On January 1, 2020, the Company granted 356,210 and 49,964,000 RSUs to its two external consultants and employees, respectively. In addition, on July 1, 2020, the Company granted 13,890,000 RSUs to its directors and employees.

On January 1, 2021 and February 1, 2021, the Company granted 29,170,000 and 26,818,000 RSUs to its employees, respectively. Meanwhile, the Company modified the exercise price and vesting schedules of certain stock options on February 1, 2021.

(a) Options

The following table sets forth the stock options activity for the years ended December 31, 2019, 2020 and 2021:


	Number of shares			Weighted- average exercise price		Weighted average remaining contractual term		Aggregate intrinsic value
				US$				000’US$
Outstanding as of December 31, 2019		93,846,550			0.19		3.77		30,442
Granted		—			—
Forfeited		(16,014,140	)		0.11
Exercised		(9,151,290	)		0.10
Expired		(115,200	)		0.14

Outstanding as of December 31, 2020		68,565,920			0.22		2.65		2,826

Granted		—			—
Forfeited		(5,655,230	)		0.26
Exercised		(748,730	)		0.10
Expired		(231,520	)		0.28

Outstanding as of December 31, 2021		61,930,440			0.21		1.73		—

Vested and expected to vest as of December 31, 2021		61,930,440

Exercisable as of December 31, 2021		59,693,900

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the estimated fair value of the underlying stock at each reporting date (December 31, 2020: US$0.19, December 31, 2021: US$ 0.06).

The Group uses the Binominal option pricing model to estimate the fair value of stock options. The assumptions used to value the Company’s options modified were as follow:


	2020		2021
Exercise price (US$)		N/A		0.0925
Exercise multiple		N/A		2.2/2.8
Risk-free interest rate		N/A		0.24%/0.33%
Expected term (in years)		N/A		6
Expected dividend yield		N/A		0.00%
Expected volatility		N/A		52.96%/55.13%
Expected forfeiture rate (post-vesting)		N/A		5%
Fair value of the underlying shares on the date of options grants (US$)		N/A		0.23
Fair value of share option (US$)		N/A		0.15

Risk-free interest rate is estimated based on the yield curve of US Sovereign Bond as of the option valuation date. The expected volatility at the grant date and each option valuation date is estimated based on annualized standard deviation of daily stock price return of comparable companies with a time horizon close to the expected expiry of the term of the options. The Company has never declared or paid any cash dividends on its capital stock, and the Group does not anticipate any dividend payments in the foreseeable future. Expected term is the contract life of the options.

Share-based compensation expense is recorded on a straight-line basis over the requisite service period, which is generally four years from the date of grant. The Company recognized share-based compensation expenses of RMB

66,190

, RMB 52,870 and RMB 20,782 for share options granted under the 2017 Plan and the 2019 Plan in the Consolidated Statements of Comprehensive (Loss)/Income for the years ended 2019, 2020 and 2021, respectively.

As of December 31, 2020 and 2021, there was RMB 40,192 and RMB 2,573, respectively, in total unrecognized compensation expense, related to unvested share options, which is expected to be recognized over a weighted average period of 0.8 and 0.95 years, respectively. The unrecognized compensation expense may be adjusted for future changes in actual forfeitures.

(b) Restricted share units

A summary of activities of the service-based RSUs for the years ended December 31, 2019, 2020 and 2021 is presented below:


	Number of RSUs			Weighted-Average Grant-Date Fair Value
				US$
Unvested at December 31, 2019		36,834,850			0.76
Granted		64,210,210			0.43
Vested		(954,960	)
Forfeited		(51,629,000	)
Expired		(500,000	)
Unvested at December 31, 2020		47,961,100			0.63

Granted		55,988,000			0.21
Vested		(12,908,750	)
Forfeited		(45,336,000	)

Unvested at December 31, 2021		45,704,350			0.45

The fair value of each restricted share units granted with service conditions is estimated based on the fair market value of the underlying ordinary shares of the Company on the date of grant.

As of December 31, 2020 and 2021, 954,960 RSUs and 12,908,750 RSUs were vested.

For the years ended December 31, 2019, 2020 and 2021, total share-based compensation expenses recognized by the Group for the RSUs granted were RMB 62,007 , RMB 45,508 and RMB 35,128, respectively.

As of December 31, 2020 and 2021, there was RMB 112,376 and RMB 60,217 in total unrecognized compensation expense, related to unvested

RSUs

, which is expected to be recognized over a weighted average period of 2.51 and 2.55 years, respectively.