Share-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

The Company has adopted equity incentive plans, pursuant to which the Company grants share options, SARs, restricted and unrestricted shares, and share units, performance awards, and other awards that are convertible into or otherwise based on ordinary shares to employees and directors of the Company as well as to certain advisors and service providers. In March 2015, the Board of Directors of the Company approved such an Equity Incentive Plan (the “2015 Plan”). 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”). No new equity-based awards would be granted under the 2015 Plan subsequent to the IPO; new equity-based awards would be granted under the 2017 Plan.

The Company adopted the 2022 Equity Incentive Plan (the “2022 Plan”), which became effective in June 2022 following required approvals from the Company’s shareholders and Board of Directors. No new equity-based awards will be made under the 2017 Plan as of the effective date of the 2022 Plan. The initial aggregate number of shares available for issuance under the 2022 Plan was 97,908,743 ordinary shares.

The share options granted under the equity incentive plans described above have a contractual term of ten years. Share options granted since April 2023 generally vest ratably over a four-year period, and share options granted prior to April 2023 generally vest ratably over a five-year period, with 25% or 20% of the awards vesting on each anniversary of the grant date, respectively, subject to continued employment/service with the Company on the vesting date. The restricted shares granted generally vest ratably over a specified period on the anniversary of the grant date, subject to continued employment/service with the Company on the vesting date. The shares underlying restricted share grants represent shares not yet vested until they have met related consideration or vesting requirements, which are generally continued employment/service to the Company or satisfaction of specified performance conditions. 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.

Before November 2023, upon each settlement date of the share awards, shares were generally 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 in 2023:


	Number of options	Weighted average exercise price ($)	Weighted average remaining contractual term (years)	Aggregate intrinsic value ($ in thousands)
Outstanding at December 31, 2022	91,181,420	3.05	5.89	115,969
Granted	24,102,740	3.36
Exercised	(6,516,920)	0.39
Forfeited	(4,183,190)	6.68
Outstanding at December 31, 2023	104,584,050	3.14	5.97	83,424
Vested and exercisable as of December 31, 2023	58,695,320	2.11	3.93	83,266

The aggregate intrinsic value of stock options exercised during 2023, 2022, and 2021 was $20.3 million, $14.3 million, and $170.4 million, respectively.

Stock Option Valuation Assumptions

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


	2023	2022	2021
Risk-free rate of return	3.5%-4.7%	1.4%-4.0%	0.9%-1.4%
Expected term (in years)	6, 6.25,or 6.5	6.5	6, 6.25 or 6.5
Estimated volatility rate	70%	65%	65%
Expected dividend rate	0%	0%	0%

Options granted are measured based on grant-date fair value using the Black-Scholes option pricing model. The weighted-average grant-date fair value per share for options granted during 2023, 2022, and 2021 were $2.21, $2.74, and $12.60 per share, respectively.

Non-Vested Restricted Shares Activity

The following table summarized the Company’s non-vested restricted share activity in 2023:


	Numbers of non-vested restricted shares	Weighted average remaining contractual term (years)	Aggregate intrinsic value ($ in thousands)
Non-vested as of December 31, 2022	33,433,890	3.55	102,642
Granted	9,001,740
Vested	(8,178,500)
Forfeited	(2,977,530)
Non-vested as of December 31, 2023	31,279,600	2.75	85,487

The grant-date fair value of restricted shares is the fair value of the underlying stock on the award’s grant date. The weighted-average grant-date fair value per share for restricted shares granted in 2023, 2022, and 2021 were $3.18, $3.71, and $10.55 per share, respectively.

Stock-Based Compensation Expenses

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


	Year Ended December 31,
	2023	2022	2021

Selling, general and administrative	48,017	38,118	23,194
Research and development	31,617	23,184	17,520
Total	79,634	61,302	40,714

As of December 31, 2023, there was unrecognized share-based compensation expense related to unvested share options and unvested restricted shares of $104.2 million and $104.1 million, respectively, which the Company expects to recognize over a weighted-average period of 3.05 years and 2.75 years, respectively.