SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

The Company has a stock incentive plan for directors, employees and consultants that is administered by the Compensation Committee of the Board of Directors.

Employee and Director Restricted Shares

For the six months ended June 30, 2020, 306,264 (2019: 235,701) Class A ordinary shares were issued to employees pursuant to the Company’s stock incentive plan. These shares contain certain restrictions relating to, among other things, vesting, forfeiture in the event of termination of employment and transferability. The restricted shares cliff vest three years after the date of issuance, subject to the grantee’s continued service with the Company. During the vesting period, the holder of the restricted shares retains voting rights and is entitled to any dividends declared by the Company.

For the six months ended June 30, 2020, 145,089 (2019: 89,945) Class A ordinary shares were issued to the Company’s Chief Executive Officer (“CEO”) pursuant to the Company’s stock incentive plan. These shares contain performance and service conditions and certain restrictions relating to, among other things, vesting, forfeiture in the event of termination of employment and transferability. These restricted shares cliff vest 5 years after the date of issuance, subject to the performance condition being met and the grantee’s continued service with the Company. During the vesting period, the holder of the restricted shares retains voting rights and is entitled to any dividends declared by the Company. The weighted average grant date fair value of these restricted shares subject to performance conditions was $6.72 (2019: $10.84) per share. As the performance conditions associated with these restricted shares have not been met, no compensation cost was recognized relating to these shares for the six months ended June 30, 2020 and 2019. Subsequent to June 30, 2020, the Company accelerated the vesting of a portion of the CEO’s restricted shares resulting in 72,545 shares vesting on July 30, 2020. The remaining restricted shares are still subject to performance and service conditions.

For the six months ended June 30, 2020, 18,701 (2019: 2,155) restricted shares were forfeited by employees who left the Company prior to the expiration of the applicable vesting periods. For the six months ended June 30, 2020, $0.1 million stock compensation expense (2019: nil) relating to the forfeited restricted shares was reversed.

The Company recorded $1.2 million of share-based compensation expense, net of forfeiture reversals, relating to restricted shares for the six months ended June 30, 2020 (2019: $1.5 million). As of June 30, 2020, there was $3.1 million (December 31, 2019: $2.7 million) of unrecognized compensation cost relating to non-vested restricted shares (excluding CEO’s restricted shares with performance conditions) which are expected to be recognized over a weighted average period of 2.1 years (December 31, 2019: 1.6 years). For the six months ended June 30, 2020, the total fair value of restricted shares vested was $2.8 million (2019: $3.1 million).

The following table summarizes the activity for unvested outstanding restricted share awards during the six months ended June 30, 2020:


	Number of non-vested restricted shares	Weighted average grant date fair value




Balance at December 31, 2019	873,087	$	12.83
Granted	451,353	6.72
Vested	(163,288)	17.00
Forfeited	(18,701)	12.78
Balance at June 30, 2020	1,142,451	$	9.82

Employee and Director Stock Options

For the six months ended June 30, 2020, no Class A ordinary share purchase options were granted, no stock options were exercised by directors or employees, and no stock options vested. When stock options are granted, the Company reduces the corresponding number from the shares authorized for issuance as part of the Company’s stock incentive plan.

The total compensation cost expensed relating to stock options for the six months ended June 30, 2020 was $0.4 million (2019: $0.6 million). At June 30, 2020, the total compensation cost related to non-vested options not yet recognized was $0.9 million (December 31, 2019: $1.3 million) to be recognized over a weighted average period of 2.2 years (December 31, 2019: 2.4 years) assuming the grantee completes the service period for vesting of the options.

There was no activity in employee and director stock options during the six months ended June 30, 2020. At June 30, 2020 and December 31, 2019, there were 0.9 million and 0.9 million stock options outstanding, respectively, with a weighted average exercise price of $22.68 and $22.68 per share, respectively and weighted average grant date fair value of $10.25 and $10.25 per share, respectively. The weighted average remaining contractual term of the stock options was 5.3 years and 5.8 years, at June 30, 2020 and December 31, 2019, respectively.

Employee Restricted Stock Units

The Company issues restricted stock units (“RSUs”) to certain employees as part of the stock incentive plan.

These RSUs contain restrictions relating to vesting, forfeiture in the event of termination of employment, transferability and other matters. Each RSU grant cliff vests three years after the date of issuance, subject to the grantee’s continued service with the Company. On the vesting date, the Company converts each RSU into one Class A ordinary share and issues new Class A ordinary shares from the shares authorized for issuance as part of the Company’s stock incentive plan. For the six months ended June 30, 2020, 60,622 (2019: 48,535) RSUs were issued to employees pursuant to the Company’s stock incentive plan. For the six months ended June 30, 2020, no (2019: 24,165) RSUs were forfeited by employees who left the Company prior to the expiration of the applicable vesting periods.

The Company recorded $0.2 million of share-based compensation expense, net of forfeitures, relating to RSUs for the six months ended June 30, 2020 (2019: $0.2 million).

Employee RSU activity during the six months ended June 30, 2020 was as follows:


	Number of non-vested RSUs	Weighted average grant date fair value




Balance at December 31, 2019	63,582	$	13.76
Granted	60,622	6.72
Vested	(7,482)	21.65
Forfeited	—	—
Balance at June 30, 2020	116,722	$	9.60

For the six months ended June 30, 2020 and 2019, the combined stock compensation expense (net of forfeitures), which was included in the caption “General and administrative expenses” in the Company’s statements of operations, was $1.7 million and $2.2 million, respectively.