39. Share-based payments
Stock incentive plans
The Company’s stock incentive plans allow the Company to offer a variety of incentive awards to employees, consultants or external service advisors of the Group.
Stock option plan
The options are granted at the fair market value of the Company’s ordinary shares and expire 10 years from the date of grant and vest over a requisite service period of four years.
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the share options were granted.
Restricted share units (“RSUs”)
The Company adopted the Equity Incentive Plan (“EIP”) whereby the Company provided additional incentives to the Group’s employees, directors and external consultants through the issuance of restricted shares, RSUs and stock appreciation rights to the participants at the discretion of the Board of Directors. The RSUs vest over a requisite service period of 4 years and expire 10 years from the date of grant.
The fair value of each RSU granted is estimated on the date of grant using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the instruments were granted.
Share option plan for subsidiaries (“Subsidiary Plan”)
The options granted under the Subsidiary Plan shall entitle a participant of the Subsidiary Plan to purchase a specified number of subsidiary shares during a specified period at the price fixed by the relevant subsidiary committee at the time of grant or by a method specified by the relevant subsidiary committee at the time of grant and expire 10 years from the date of grant. The options vest over a requisite service period of four years.
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the share options were granted.
The expense recognized for employee services received during the year is shown in the following table:
|
|
|
Year ended |
|
Year ended |
|
Year ended |
|
|
|
12/31/17 |
|
12/31/16 |
|
12/31/15 |
|
|
|
USD’000 |
|
USD’000 |
|
USD’000 |
|
Expense arising from equity-settled share-based payment transactions |
|
18,214 |
|
14,210 |
|
18,329 |
Movements during the year
|
(i) |
The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, share options during the year (excluding Restricted Share Units (“RSUs”) and share option plan for subsidiaries (“Subsidiary Plan”): |
|
|
|
2017 |
|
2017 |
|
2016 |
|
2016 |
|
2015 |
|
2015 |
|||
|
|
|
Number |
|
WAEP |
|
Number* |
|
WAEP* |
|
Number* |
|
WAEP* |
|||
|
Outstanding at January 1 |
|
72,482,764 |
|
US$ |
0.82 |
|
100,295,578 |
|
US$ |
0.82 |
|
116,362,727 |
|
US$ |
0.84 |
|
Granted during the period |
|
6,071,477 |
|
US$ |
1.14 |
|
2,076,652 |
|
US$ |
0.92 |
|
5,656,526 |
|
US$ |
1.02 |
|
Forfeited and expired during the period |
|
(3,842,461) |
|
US$ |
1.33 |
|
(6,430,431) |
|
US$ |
1.16 |
|
(8,792,890) |
|
US$ |
1.37 |
|
Exercised during the period |
|
(21,830,502) |
|
US$ |
0.78 |
|
(23,459,035) |
|
US$ |
0.75 |
|
(12,930,785) |
|
US$ |
0.67 |
|
Outstanding at December 31 |
|
52,881,278 |
|
US$ |
0.83 |
|
72,482,764 |
|
US$ |
0.82 |
|
100,295,578 |
|
US$ |
0.82 |
|
Exercisable at December 31 |
|
39,511,002 |
|
US$ |
0.78 |
|
50,708,535 |
|
US$ |
0.77 |
|
51,319,799 |
|
US$ |
0.80 |
As at December 31, 2017, the 39,511,002 outstanding share options were exercisable (December 31, 2016: 50,708,535* and December 31 2015: 51,319,799*).
The weighted average remaining contractual life for the share options outstanding as at December 31, 2017 was 5.21 years (2016: 5.29 years and 2015: 6.04 years).
The range of exercise prices for options outstanding at the end of the year was from US$0.23 to US$1.38 (2016: from US$0.23* to US$1.48* and 2015: from US$0.23* to US$1.52*).
The weighted average closing price of the Company’s shares immediately before the dates while the share options were exercised was US$1.44 (2016: US$1.24* and 2015: US$1.07*).
During the year ended December 31, 2017, share options were granted on April 5, 2017, May 22, 2017 and September 7, 2017. The fair values of the options determined at the dates of grant using the Black-Scholes Option Pricing model were US$0.56, US$0.42and US$0.40, respectively.
During the year ended December 31, 2016, share options were granted on May 25, 2016, September 12, 2016 and November 18, 2016. The fair values of the options determined at the dates of grant using the Black-Scholes Option Pricing model were US$0.36*, US$0.42* and US$0.52*, respectively.
During the year ended December 31, 2015, share options were granted on February 24, 2015, May 20, 2015 and September 11, 2015. The fair values of the options determined at the dates of grant using the Black-Scholes Option Pricing model were US$0.36*, US$0.44* and US$0.54*, respectively.
The following table list the inputs to the Black Scholes Pricing models used for the option granted during the years ended December 31, 2017, 2016 and 2015 respectively:
|
|
|
2017 |
|
2016 |
|
2015 |
|
|
Dividend yield (%) |
|
— |
|
— |
|
— |
|
|
Expected volatility |
|
42.80 |
% |
44.80 |
% |
46.13 |
% |
|
Risk-free interest rate |
|
1.84 |
% |
1.39 |
% |
1.61 |
% |
|
Expected life of share options |
|
6 years |
|
6 years |
|
6 years |
|
The risk-free rate for periods within the contractual life of the option is based on the yield of the US Treasury Bond. The expected term of options granted represents the period of time that options granted are expected to be outstanding. Expected volatilities are based on the average volatility of the Company’s stock prices with the time period commensurate with the expected term of the options. The dividend yield is based on the Company’s intended future dividend plan.
The valuation of the options are based on the best estimates from Company by taking into account a number of assumptions and is subject to limitation of the valuation model. Changes in variables and assumptions may affect the fair value of these options.
|
* |
The number, price and fair value of share options for the prior years have been adjusted to reflect the impact of the share consolidation, on the basis that every ten ordinary shares and preferred shares of US$0.0004 each consolidated into one ordinary share and preferred share of US$0.004 each, which was accounted for as a reverse stock split effective on December 7, 2016. |
|
(ii) |
The following table illustrates the number and weighted average fair value (“WAFV”) of, and movements in, RSUs during the year (excluding stock option plan and Subsidiary Plan): |
|
|
|
2017 |
|
2017 |
|
2016 |
|
2016 |
|
2015 |
|
2015 |
|||
|
|
|
Number |
|
WAFV |
|
Number* |
|
WAFV* |
|
Number* |
|
WAFV* |
|||
|
Outstanding at January 1 |
|
26,489,152 |
|
US$ |
0.98 |
|
30,451,268 |
|
US$ |
0.99 |
|
27,405,767 |
|
US$ |
0.87 |
|
Granted during the period |
|
14,055,477 |
|
US$ |
1.11 |
|
8,738,247 |
|
US$ |
0.86 |
|
14,685,298 |
|
US$ |
1.06 |
|
Forfeited during the period |
|
(950,412) |
|
US$ |
1.04 |
|
(1,124,847) |
|
US$ |
0.98 |
|
(1,342,168) |
|
US$ |
0.96 |
|
Exercised during the period |
|
(10,893,120) |
|
US$ |
0.97 |
|
(11,575,516) |
|
US$ |
0.91 |
|
(10,297,629) |
|
US$ |
0.79 |
|
Outstanding at December 31, |
|
28,701,097 |
|
US$ |
1.05 |
|
26,489,152 |
|
US$ |
0.98 |
|
30,451,268 |
|
US$ |
0.99 |
As at December 31, 2017, the number of outstanding RSUs granted 28,701,097 (December 31, 2016: 26,489,152* and December 31, 2015: 30,451,268*).
The weighted average remaining contractual life for the RSUs outstanding as at December 31, 2017 was 8.51 years (2016: 8.37 years and 2015: 8.69 years).
The weighted average closing price of the Company’s shares immediately before the dates on which the RSUs were exercised was US$1.29 (2016: US$0.83* and 2015: US$0.94*).
During the year ended December 31, 2017, RSUs were granted on April 5, 2017, May 22, 2017, September 7, 2017 and December 7, 2017. The fair values of the RSUs determined at the dates of grant using the Black-Scholes Option Pricing model were US$1.24, US$1.09 US$1.01,and US$1.31 respectively.
During the year ended December 31, 2016, RSUs were granted on May 25, 2016, September 12, 2016 and November 18, 2016. The fair values of the RSUs determined at the dates of grant using the Black-Scholes Option Pricing model were US$0.82*, US$1.11* and US$1.39* respectively.
During the year ended December 31, 2015, RSUs were granted on May 20, 2015, September 11, 2015 and November 23, 2015. The fair values of the RSUs determined at the dates of grant using the Black-Scholes Option Pricing model were US$1.07*, US$0.89* and US$1.11* respectively.
The following table list the inputs to the models used for the plans for the years ended December 31, 2017, 2016 and 2015, respectively:
|
|
|
2017 |
|
2016 |
|
2015 |
|
|
Dividend yield (%) |
|
— |
|
— |
|
— |
|
|
Expected volatility |
|
39.45 |
% |
39.66 |
% |
37.07 |
% |
|
Risk-free interest rate |
|
1.24 |
% |
0.9 |
% |
0.60 |
% |
|
Expected life of share options |
|
2 years |
|
2 years |
|
2 years |
|
The risk-free rate for periods within the contractual life of the RSUs is based on the yield of the US Treasury Bond. The expected term of RSUs granted represents the period of time that RSUs granted are expected to be outstanding. Expected volatilities are based on the average volatility of the Company’s stock prices with the time period commensurate with the expected term of the RSUs. The dividend yield is based on the Company’s intended future dividend plan.
The valuation of the RSUs is based on the best estimates from Company by taking into account a number of assumptions and is subject to limitation of the valuation model. Changes in variables and assumptions may affect the fair value of these RSUs.
|
* |
The number and fair value of RSUs for the prior years have been adjusted to reflect the impact of the share consolidation, on the basis that every ten ordinary shares and preferred shares of US$0.0004 each consolidated into one ordinary share and preferred share of US$0.004 each, which was accounted for as a reverse stock split effective on December 7, 2016. |
|
(iii) |
The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, share options of the Subsidiary Plan during the year (excluding stock option plan and RSUs): |
|
|
|
2017 |
|
2017 |
|
2016 |
|
2016 |
|
2015 |
|
2015 |
|
|
|||
|
|
|
Number |
|
WAEP |
|
Number |
|
WAEP |
|
Number |
|
WAEP |
|
|
|||
|
Outstanding at January 1 |
|
14,598,750 |
|
US$ |
0.19 |
|
7,000,000 |
|
US$ |
0.06 |
|
— |
|
|
— |
|
|
|
Granted during the year |
|
1,598,750 |
|
US$ |
0.31 |
|
7,698,750 |
|
US$ |
0.31 |
|
8,330,000 |
|
US$ |
0.06 |
|
|
|
Forfeited and expired during the year |
|
(934,948) |
|
US$ |
0.05 |
|
(100,000) |
|
US$ |
0.05 |
|
(1,192,500) |
|
US$ |
0.06 |
|
|
|
Exercised during the year |
|
(343,750) |
|
US$ |
0.25 |
|
— |
|
|
— |
|
(137,500) |
|
US$ |
0.05 |
|
|
|
Outstanding at December 31, |
|
14,918,802 |
|
US$ |
0.20 |
|
14,598,750 |
|
US$ |
0.19 |
|
7,000,000 |
|
US$ |
0.06 |
|
|
|
Exercisable at December 31, |
|
7,079,401 |
|
US$ |
0.15 |
|
3,297,135 |
|
US$ |
0.07 |
|
689,479 |
|
US$ |
0.05 |
|
|
The weighted average remaining contractual life for the share options outstanding as at December 31, 2017 was 8.3 years (2016: 9.2 years and 2015: 9.1 years).
The range of exercise prices for options outstanding at the end of the year was from US$0.05 to US$0.31 (2016: from US$0.05 to US$0.31 and 2015: from US$0.05 to US$0.08).
During the year ended December 31, 2017, share options of the Subsidiary Plan were granted on August 9, 2017. The fair values of the options of the Subsidiary Plan determined at the dates of grant using the Black-Scholes Option Pricing model were US$0.11.
During the year ended December 31, 2016, share options of the Subsidiary Plan were granted on December 27, 2016. The fair values of the options of the Subsidiary Plan determined at the dates of grant using the Black-Scholes Option Pricing model were US$0.14.
During the year ended December 31, 2015, share options of the Subsidiary Plan were granted on January 1, 2015, May 4, 2015 and September 15, 2015. The fair values of the options of the Subsidiary Plan determined at the dates of grant using the Black-Scholes Option Pricing model were US$0.069, US$0.069 and US$0.099, respectively.
The following table list the inputs to the Black Scholes Pricing models used for the option of the Subsidiary Plan granted during the years ended December 31, 2017:
|
|
|
2017 |
|
2016 |
|
2015 |
|
|
Dividend yield (%) |
|
— |
|
— |
|
— |
|
|
Expected volatility |
|
32.0 |
% |
41.5 |
% |
36.0 |
% |
|
Risk-free interest rate |
|
1.90 |
% |
2.10 |
% |
1.01 |
% |
|
Expected life of share options |
|
6 years |
|
6 years |
|
3 years |
|
The risk-free rate for periods within the contractual life of the option of the Subsidiary Plan is based on the yield of the US Treasury Bond. The expected term of options of the Subsidiary Plan granted represents the period of time that options of the Subsidiary Plan granted are expected to be outstanding. Expected volatilities are based on the average volatility of the relevant subsidiary’s set of public comparables with the time period commensurate with the expected term of the options. The dividend yield is based on the relevant subsidiary’s intended future dividend plan.
The valuation of the options of the Subsidiary Plan are based on the best estimates from the relevant subsidiary by taking into account a number of assumptions and is subject to limitation of the valuation model. Changes in variables and assumptions may affect the fair value of these options.