| SHARE BASED PAYMENTS | 20. SHARE BASED PAYMENTS 2007 Share incentive
plan On July 2, 2007, the Board
of Directors adopted the 2007 share incentive plan (the “2007 Option Plan”), which allows the Group to grant options
to its employees and directors to purchase up to 12,000,000 ordinary shares of the Company subject to vesting requirement. On December 29, 2008, the
Board of Directors amended 2007 Option Plan to allow the Group to grant options to its employees and directors to purchase up to
17,000,000 ordinary shares. On September 1, 2012, the
Board of Directors approved to grant options to the employees under 2007 Share Incentive Plan to purchase an aggregate of 1,857,538
ordinary shares of the Company, at an exercise price of $0.72 per ordinary share. One twelfth of the options will vest each quarter
from September 4, 2012. The expiration date will be 5 years from the grant date. On April 15, 2014, the Board
of Directors approved to extend the expiration dates of the options granted on November 29, 2007 and July 10, 2009 from April 28,
2014 to April 28, 2016. Modified awards are viewed as an exchange of the original award for a new award. The fair value of the
stock options, which was $0.21 and $0.21 per share, respectively, as of the modification dates, was estimated using the Black-Scholes
model. The incremental compensation cost of the modified award were $4 and $4, respectively, which were recognized as share-based
compensation expense for the year ended December 31, 2014. On May 31, 2014, the former
CFO resigned and the Board of Directors approved the amendment of his share option agreement. On the date of resignation, 575,440
unvested options were cancelled and the expiration date of 1,282,098 vested options was modified from September 3, 2017 to May
31, 2016. The fair value of the stock options, which was $0.43 per share as of the modification date, was estimated using the Black-Scholes
model. The incremental compensation cost of the modified award was $201, which was recognized as share-based compensation expense
for the year ended December 31, 2014. On June 9, 2014, the Board
of Directors approved to extend the expiration date of the options granted on July 10, 2009 from July 11, 2014 to July 11, 2016.
Modified awards are viewed as an exchange of the original award for a new award. The fair value were $0.22 and $0.12 per share
for the stock options whose exercise price were $1.15 and $1.57 per share, respectively, as of the modification date, was estimated
using the Black-Scholes model. The incremental compensation costs of the modified award were $686 and $5, respectively, which were
recognized as share-based compensation expense for the year ended December 31, 2014. On June 9, 2014, Board of
Directors of the Group approved to extend the expiration date of the options granted on November 1, 2012 from November 11, 2014
to November 11, 2016. Modified award is viewed as an exchange of the original award for a new award. The fair value of the stock
options, which was $0.25 per share as of the modification date, was estimated using the Black-Scholes model. The incremental compensation
cost of the modified award was $4, which was recognized as share-based compensation expense for the year ended December 31, 2014. 2011 Share incentive
plan On March 18, 2011, the Board
of Directors adopted 2011 Share Incentive Plan (the “2011 Option Plan”), which allows the Group to grant options to its
employees and directors to purchase up to 2,000,000 ordinary shares of the Company subject to vesting requirement. On March 22, 2011, the Board
of Directors granted options to Group's employees to purchase an aggregate of 2,180,000 ordinary shares of the Company under 2007
Option Plan and 2011 Option Plan, at an exercise price of $2.3 per share. The contractual term of the options was 5 or 10 years.
One twelfth of these options will vest each quarter through March 22, 2014. Subsequently on June 7, 2011, the Board of Directors
approved to modify the exercise price of these stock options to $1.57 per share. The fair value of these options at the modification
date was estimated to be $0.75 per option. The incremental share based compensation costs of the re-priced options was $314 to
be recognized over the remaining service period through March 22, 2014. On August 23, 2011, the Board
of Directors approved the adjustment of the exercise price of certain stock options that were granted on July 2, 2007, July 20,
2007, November 29, 2007, July 10, 2009 and March 22, 2011, which were subsequently modified from $1.57 per share to $1.15 per share.
The fair value of the options on the modification date was $0.21, $0.22, $0.26, $0.39 and $0.53 per share, respectively, calculated
using the Black-Scholes model. The incremental compensation cost of the re-priced options was $1,259, of which $950 was recognized
on the modification date, and the remainder to be recognized over the remaining service period. In September 2012, the former
CFO of the Group resigned. Of the 600,000 options granted to her on March 22, 2011, 300,000 were vested through her date of resignation.
In conjunction with her resignation, she signed a supplementary agreement with the Group that granted her 100,000 immediately exercisable
options and 200,000 options that would vest through September 22, 2013. During the vesting period, she would provide consulting
service as a consultant. For the 100,000 immediately exercisable options, a measurement date was reached upon grant and the Group
immediately recognized $35 share-based compensation expenses. For the 200,000 options that vested through September 22, 2013, the
Group recognized expense based on the fair value of the options as of each reporting date through the measurement date. For the
years ended December 31, 2013, 2014 and 2015, the Group recognized $59, nil and nil share-based compensation expense for these
options, respectively. 2012 Share incentive
plan On November 30, 2012, the
Board of Directors adopted 2012 Share Incentive Plan (the “2012 Option Plan”), which allows the Group to grant options
to its employees and directors to purchase up to 6,000,000 ordinary shares of the Company subject to vesting requirement. On November 1 and November
30, 2012, the Group granted 20,000 options to a consultant under the 2007 Option Plan and 60,000 options under the 2012 Option
Plan to purchase the Company's ordinary shares at an exercise price of $1.11 per share. 20,000 share options were vested immediately
and one-third of the 60,000 share options vested on February 1, May 1 and August 1, 2013, respectively. On June 1 and August 1, 2014,
the Group granted 2,376,620 options and 140,000 options to its employees under the 2012 Option Plan to purchase the CompanyÂ’s
ordinary shares at an exercise price of $1.025 and $1.045 per share, respectively. One twelfth of these options will vest each
quarter through June 1, 2017 and August 1, 2017, respectively. The expiration date will be 5 years from the grant dates. On October 13, 2014, an
employee terminated his employment with the Group but continued to provide service as a nonemployee consultant. 50,000 options
granted to him on August 1, 2014 were not modified in connection with the change in status, but future service is still necessary
to earn the award. The compensation cost was measured as if the options were newly granted at the date of the change of status.
The incremental share-based compensation expense for the year ended December 31, 2014 was not material. On October 31, 2015, the
consultant service contract terminated. Of the 50,000 options granted to him, 20,830 were vested through the service period end
and the expiration date of the vested options was modified from August 1, 2019 to January 31, 2016. The rest 29,170 unvested options
were cancelled at the service period end. On May 12, 2015, the Group
granted 660,000 options its employees under the 2012 Option Plan to purchase the CompanyÂ’s ordinary shares at an exercise
price of $1.675 per share. One twelfth of these options will vest each quarter through May 12, 2018. The expiration date will be
5 years from the grant date. On June 15, 2015, an employee
terminated his employment with the Group but continued to provide service as a nonemployee consultant. 200,000 options granted
to him on June 1, 2014 were not modified in connection with the change in status, but future service is still necessary to earn
the award. The compensation cost was measured as if the options were newly granted at the date of the change of status. The incremental
share-based compensation expense for the year ended December 31, 2015 was not material. On October 31, 2015, an
employee terminated his employment with the Group but continued to provide service as a nonemployee consultant. 100,000 options
granted to him on May 12, 2015 were not modified in connection with the change in status, but future service is still necessary
to earn the award. The compensation cost was measured as if the options were newly granted at the date of the change of status.
The incremental share-based compensation expense for the year ended December 31, 2015 was not material. On December 31, 2015, two
consultants resigned. Of the 200,000 options granted to one of them on May 12, 2015, 3,332 were vested through the date of resignation.
The expiration date of the vested options was modified from May 12, 2020 to May 31, 2016. For the rest 166,668 unvested options,
one twelfth of the total granted options will still vest on February 12, 2016 following the original vesting schedule and the rest
150,002 options were cancelled on the date of resignation. The fair value of the stock options, which was $1.12 per share as of
the modification date, was estimated using the Black-Scholes model. The incremental compensation cost of the modified award was
immaterial for the year ended December 31, 2015. Of the 100,000 options granted to the other consultant on May 12, 2015, 16,664
were vested through the date of resignation. The expiration date of the vested options was modified from May 12, 2020 to January
31, 2016, and the 83,336 unvested options were cancelled on the date of resignation. The following summary of
stock option activities under the 2007, 2011 and 2012 Share incentive plans as of December 31, 2015, reflective of all modifications
is presented below:
Outstanding Options
Weighted average Weighted average Weighted average Aggregate
Number of exercise price grant-date remaining intrinsic
options per option fair value contractual terms value
Outstanding
as of January 1, 2015 14,853,764 $ 1.15 $ 1.18
Granted 660,000 1.68 1.16
Exercised (4,453,232 ) 1.20 1.42
Forfeited (621,692 ) 1.38 1.20
Outstanding
as of December 31, 2015 10,438,840 $ 1.14 $ 1.07 2.16 $ 17,236
Options vested and expected to vest as of December 31, 2015 10,332,009 $ 1.14 $ 1.07 2.15 $ 17,056
Options exercisable as of December 31, 2015 9,237,208 $ 1.14 $ 1.13 1.99 $ 15,262 The total intrinsic value
of options exercised during the years ended December 31, 2013, 2014 and 2015 were $3, $442 and $7,039, respectively. The total
fair value of options vested during the years ended December 31, 2013, 2014 and 2015 were $1,476, $357 and $649, respectively. The Group recorded share-based
compensation of $943, $1,281 and $567 for the years ended December 31, 2013, 2014 and 2015, respectively. There was $843 of total
unrecognized compensation expense related to unvested share options granted as of December 31, 2015. The expense is expected to
be recognized over a weighted-average period of 1.67 years on a straight-line basis. The fair value of each option
granted was estimated on the date of grant/modification using the Black-Scholes option pricing model with the following assumptions
used during the applicable period.
For the years ended December 31,
2013 2014 2015
Risk-free interest rate of return 0.12%-1.10 % 0.10% - 1.07 % 0.00%-1.24 %
Expected term 0.33-4.42 years 1.00 - 3.32 years 0.04-2.93
Years
Volatility 64.75%-94.43 % 63.10% - 67.06 % 7.19%-126.63 %
Dividend yield - - -
(1) Volatility The volatility of the underlying
ordinary shares during the life of the options was estimated based on the historical stock price volatility of the Company's ordinary
shares and listed shares of comparable companies over a period comparable to the expected term of the options. From March 2011,
the volatility was estimated based on the historical volatility of the Company's share price as the Company has accumulated sufficient
history of stock price for a period comparable to the expected term of the options.
(2) Risk-free rate Risk-free rate is based on yield
of US Treasury bill as of valuation date with maturity date close to the expected term of the options.
(3) Expected term The expected term is estimated
based on a consideration of factors including the original contractual term and the vesting term.
(4) Dividend yield The dividend yield was estimated
by the Group based on its expected dividend policy over the expected term of the options. The Group has no plan to pay any dividend
in the foreseeable future. Therefore, the Group considers the dividend yield to be zero.
(5) Exercise price The exercise price of the options
was determined by the GroupÂ’s Board of Directors.
(6) Fair value of underlying ordinary shares The closing market price of
the ordinary shares of the Company as of the grant/modification date was used as the fair value of the ordinary shares on that
date. |
