Share-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-based Payment Arrangement [Abstract]

17.	SHARE-BASED COMPENSATION

Employee options

In November 2018, the Company adopted the 2018 Incentive Compensation Plan (“2018 Plan”). As of December 31, 2022 and 2023, the Company granted in total of 2,300,588,991 share options under the 2018 Plan. The options granted will expire in ten years from the date of grant.

In April 2021, the board approved the 2021 Incentive Compensation Plan (“2021 Plan”). As of December 31, 2022 and 2023, 813,513,695 and 986,820,279 share options were granted under 2021 Plan, respectively. The options granted will expire in ten years from the date of grant.

During the year ended December 31, 2022, 285,050,115 options were granted to employees under the 2021 Plan, of which 207,458,573 options were vested immediately upon grant while 71,251,482 and 6,340,060 were subject to a four-year and

one-year

service condition, respectively.

During the year ended December 31, 2023, 173,306,584 options were granted to employees under the 2021 Plan,

and

all options were subject to a four-year

one-year

service condition.

The following table summarized the activities of the Group’s share options classified as equity:


	Number of options			Weighted average exercise price per share		Weighted average remaining contract life		Weighted average grant date fair value per share		Aggregate intrinsic value
				US$				US$		US$
Outstanding at December 31, 2022		377,059,533			0.000010		8.23		0.4874		150,820
Granted		173,306,584			0.000010				0.3553
Exercised		(131,869,359	)		0.000010				0.5082
Forfeited		(20,070,480	)		0.000010				0.4841

Outstanding at December 31, 2023		398,426,278			0.000010		8.25		0.4233		139,644

Vested and expected to vest at December 31, 2023		398,426,278			0.000010		8.25		0.4233		139,644

Exercisable at December 31, 202 3		77,187,431			0.000010		6.71		0.3453		27,053

The unrecognized compensation costs related to unvested options is RMB782 million as of December 31, 2023. It is expected to be recognized over a weighted-average period of 2.1 years.

In determining the fair value of the stock options, the Company applied the binomial option pricing model before the completion of its USIPO in June 2021 and the Black-Scholes model for the options granted thereafter. The change of valuation model does not result in any difference in valuation results as the exercise price of the options granted is significantly below the spot price (deemed as “deep in the money”) and the fair value of the options approximates the closing price of the ordinary shares on the grant date. The key assumptions used to determine the fair value of the options for the years ended December 31, 2021, 2022 and 2023 were as follows:


	Years ended December 31,
	2021			2022			2023
Expected volatility		37.2%~38.1	%		35.2%~44.2	%		36.7%~38.7	%
Risk-free interest rate (per annum)		1.00%~1.96	%		1.44%~3.97	%		3.40%~4.89	%
Exercise multiples		2.8	(1)		2.8	(1)		2.8	(1)
Expected dividend yield		0.00	%		0.00	%		0.00	%
Fair value of underlying ordinary shares	$	0.370~1.050		$	0.302~0.461		$	0.290~0.400
Fair value of share option	$	0.370~1.050		$	0.302~0.461		$	0.290~0.400

(1)	Exercise multiples defines the early exercise strategy of the grantees and only applies to binomial option pricing model.

The Group estimated expected volatility by reference to the historical price volatilities of ordinary shares of comparable companies over a period close to the contract term of the options. The Group estimated the risk-free interest rate based on the yield to maturity of U.S. government bonds as at each valuation date with a maturity period close to the contract term of options. The exercise multiple was estimated based on empirical research on typical employee stock option exercising behavior. The dividend yield was estimated as zero based on the plan to retain profit for corporate expansion and no dividend will be distributed in the near future. Prior to the completion of USIPO, the Group determined the fair value of ordinary shares underlying each share option granted based on estimated equity value and allocation of it to each element of its capital structure. After the completion of USIPO in June 2021, the Group uses the stock market closing price as the fair value of the ordinary shares. The assumptions used in share-based compensation expenses recognition represent the Group’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. If factors change or different assumptions are used, the share-based compensation expenses could be materially different for any period.

For the years ended December 31, 2021, 2022 and 2023, share-based compensation expenses of RMB3,837,913, RMB896,982 and RMB419,551 were recognized in connection with options granted, respectively.

Subsidiary’s Plan

The Group acquired Beijing Bang Li De Network Technology Co., Ltd. (“TYT”), a private company, in December 2021. Upon the completion of the acquisition, ordinary shares held by

non-controlling

interest holders, who are also management of TYT, are restricted and subject to a four-year vesting period since July 1, 2022.


	Number of restricted shares			Weighted average grant date fair value per share
				RMB
Unvested at December 31, 2022		968,198			99.91
Vested		(242,049	)		99.91

Unvested at December 31, 2023		726,149			99.91

The Group recorded nil, RMB22,273, RMB21,282 share-based compensation expenses for the year

ended

December 31, 2021, 2022 and 2023, respectively.

In 2023, Smart Cold Chain, the subsidiary of the Group adopted share incentive plan to grant options to certain employees of Smart Cold Chain. The awards are vested immediately, or subject to

one-year,

three-year

four-year

service condition. During the year ended December 31, 2023, the subsidiary granted 471,550 options, of which 44,504 options were vested immediately upon grant while 427,046 were subject to a one-year to four-year service condition. The subsidiary recorded

RMB

994

share-based compensation for year ended December 31, 2023.

Share-based compensation for all share options and restricted shares

The Group recorded share based compensation expense of RMB3,837,913, RMB919,255 and RMB441,827 for the years ended December 31, 2021, 2022 and 2023, respectively, which were classified in the accompanying consolidated statements of operations and comprehensive (loss) income as follows:


	Years ended December 31,
	2021		2022		2023
	RMB		RMB		RMB
General and administrative expenses		3,728,421		809,194		297,469
Selling and marketing expense		56,975		39,771		55,503
Research and development expense		48,777		63,884		80,279
Cost of revenues		3,740		6,406		8,576

Total		3,837,913		919,255		441,827