Share-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

In March 2015, the Board of Directors of the Company approved an Equity Incentive Plan (the “2015 Plan”), pursuant to which the Board of Directors could grant options to purchase ordinary shares to management including officers, directors, employees, and individual advisors who rendered services to the Company. In August 2017, in connection with the completion of the Company’s initial public offering on Nasdaq (the “IPO”), the Board of Directors approved the 2017 Equity Incentive Plan (the “2017 Plan”). All equity-based awards subsequent to the IPO would be granted under the 2017 Plan. The 2017 Plan provided for an automatic annual increase to the number of ordinary shares reserved under the 2017 Plan on each January 1st between January 1, 2018 and January 1, 2027 equal to the lesser of 4% of the number of ordinary shares outstanding as of the close of business on the immediately prior December 31st or such number as approved by the Board on or prior to such date each year.

On June 22, 2022, at the 2022 Annual General Meeting of Shareholders of the Company, the Company’s shareholders approved the 2022 Equity Incentive Plan (the “2022 Plan”), which was previously approved by the Board of Directors on April 20, 2022, conditioned on and subject to (i) the dual primary listing of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) and (ii) the granting of a waiver on Note 1 to Rule 17.03(9) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. The Company’s voluntary conversion of its secondary listing status to primary listing status on the Hong Kong Stock Exchange became effective on June 27, 2022, and the waiver was granted to the Company in connection with the primary conversion. As such, the 2022 Plan became effective on June 27, 2022, and the aggregate number of shares that may be delivered in satisfaction of awards under the 2022 Plan is 97,908,743 ordinary shares as of June 22, 2022. No new grants will be made under the 2015 Plan or the 2017 Plan as of the effective date of the 2022 Plan.

The options granted have a contractual term of ten years and generally vest ratably over a five-year period, with 20% of the awards vesting on each anniversary of the grant date. The non-vested restricted shares granted vest ratably over a five- or four-year period, with 20% or 25% of the awards vesting on each anniversary of the grant date. The restricted shares will be released from the restrictions once they vest. Upon termination of the award holders’ service with the Company for any reason, any shares that are outstanding and not yet vested will be immediately forfeited unless otherwise set forth in an agreement between the Company and the award holder.

Upon each settlement date of the share awards, shares were withheld to cover the required withholding tax, which was based on the value of a share on the settlement date as determined by the closing price of the ADSs on the trading day of the applicable settlement date. The remaining shares after the withholding were delivered to the recipient. The amount remitted to the tax authorities for employee tax obligations was reflected as a financing activity on the consolidated statements of cash flows. These shares withheld by the Company as a result of the net settlement were accounted for as treasury stock and considered issued but not outstanding.

Stock Option Activity

The following table presents a summary of option activity and related information during the year ended December 31, 2022:


	Number of options	Weighted average exercise price		Weighted average remaining contractual term (years)	Aggregate intrinsic value (thousands)
Outstanding at December 31, 2021	81,015,590	$	2.79	5.98	$	339,570
Granted	22,571,050	$	4.37
Exercised	(5,151,190)	$	1.14
Forfeited	(7,254,030)	$	5.66
Outstanding at December 31, 2022	91,181,420	$	3.05	5.89	$	115,969
Vested and exercisable as of December 31, 2022	54,682,520	$	1.48	4.22	$	112,582

The aggregate intrinsic value of stock options exercised during 2022, 2021, and 2020 was $14.3 million, $170.4 million, and $64.8 million, respectively.

Stock Option Valuation Assumptions

The following table presents the assumptions used to estimate the fair values of the share options granted:


	2022	2021	2020
Risk-free rate of return	1.4%-4.0%	0.9%-1.4%	0.4%-0.8%
Expected term (in years)	6.5	6, 6.25 or 6.5	6 or 6.5
Estimated volatility rate	65%	65%	70%
Expected dividend rate	0%	0%	0%

Non-Vested Restricted Shares Activity

The following table summarized the Company’s non-vested restricted share activity in 2022:


	Numbers of non-vested restricted shares	Weighted average remaining contractual term (years)	Aggregate intrinsic value (thousands)
Non-vested as of December 31, 2021	9,567,360	3.36	$	60,131
Granted	30,663,040
Vested	(1,940,680)
Forfeited	(4,855,830)
Non-vested as of December 31, 2022	33,433,890	3.55	$	102,642

Stock-Based Compensation Expenses

Options granted are measured based on grant-date fair value estimated using the Black-Scholes option pricing model. The grant-date fair value of restricted shares is the fair value of the underlying stock on the award’s grant date. Compensation expense is recognized over the vesting period of the applicable awards on a straight-line basis. The weighted-average grant-date fair value per share for options granted during 2022, 2021, and 2020 were $2.74, $12.60, and $4.06 per share, respectively. The weighted-average grant-date fair value per share for restricted shares granted in 2022, 2021, and 2020 were $3.71, $10.55, and $7.46 per share, respectively.

The following table presents the stock-based compensation expense which has been reported in the Company’s consolidated statements of operations (in thousands):


	Year Ended December 31,
	2022	2021	2020
	$	$	$
Selling, general and administrative	38,118	23,194	15,718
Research and development	23,184	17,520	9,112
Total	61,302	40,714	24,830

As of December 31, 2022, there was unrecognized share-based compensation expense related to unvested share options and unvested restricted shares of $101.3 million and $128.6 million, respectively, which the Company expects to recognize over a weighted-average period of 3.34 years and 3.59 years, respectively.