Share-based compensation

12 Months Ended

Dec. 31, 2022

Share-based compensation [Abstract]

Share-based compensation

18.Share-based compensation

Share-based option awards

As of December 31, 2022, there are equity-based instruments outstanding that the Company has granted under two different plans.

The Company’s 2016 Share Option and Incentive Plan (SOIP) was approved by the shareholders at the ordinary shareholders’ meeting in November 2016. The 2016 Plan authorizes the grant of incentive and non-qualified share options, share appreciation rights, restricted share awards, restricted share units, unrestricted share awards, performance share awards, performance-based awards to covered employees and dividend equivalent rights. The Company only grants equity-based instruments from the SOIP as of December 31, 2022.

The following table summarizes equity-settled share option grants for plans that existed during the period:

	Number of
	options awarded		Contractual
Plan	(since inception)	Vesting conditions	life of options
Share option plan C1	6,775,250	4 years’ service from grant date	10 years
2016 SOIP:
Executives and directors	3,277,044	1 year, 3 year and 4 years’ service from the date of grant, quarterly and annually	10 years
Employees	1,811,687	4 years’ service from the date of grant, annually	10 years

The number and weighted-average exercise prices (in CHF) of options under the share option programs for Plans C1 and the 2016 SOIP are as follows:

		Weighted-	Weighted-
		average	average
	Number of	exercise price	remaining
	options	(CHF)	term (years)
Outstanding at January 1, 2020	1,981,629	5.93	8.3
Forfeited during the year	(53,591)	6.03	—
Expired during the year	(26,729)	4.38	—
Exercised during the year	(73,669)	2.00	—
Granted during the year	1,073,027	6.29	—
Outstanding at December 31, 2020	2,900,667	5.90	8.2
Exercisable at December 31, 2020	1,099,015	5.49	7.0
Outstanding at January 1, 2021	2,900,667	5.90	8.2
Forfeited during the year	(207,331)	6.13	—
Exercised during the year	(218,561)	4.97	—
Granted during the year	1,110,914	6.34	—
Outstanding at December 31, 2021	3,585,689	6.21	7.8
Exercisable at December 31, 2021	1,613,242	6.13	6.8
Outstanding at January 1, 2022	3,585,689	6.21	7.8
Forfeited during the year	(304,738)	6.32	—
Exercised during the year	(110,250)	0.15	—
Granted during the year	1,090,316	3.18	—
Outstanding at December 31, 2022	4,261,017	5.65	7.6
Exercisable at December 31, 2022	2,345,648	6.41	6.6

The outstanding stock options as of December 31, 2022 have the following range of exercise prices:

		Range of
		expiration
	Total options	dates
Range of exercise prices
CHF 0.15	97,875	2022–2026
CHF 9.53	223,646	2027
USD 5.04 to USD 12.30	2,864,408	2028–2031
USD 2.76 to USD 4.57	1,075,088	2032
Total outstanding options	4,261,017

The weighted-average exercise price for options granted in 2022, 2021 and 2020 is USD 3.44 (CHF 3.18), USD 6.95 (CHF 6.34) and USD 7.11 (CHF 6.29), respectively. The range of exercise prices for outstanding options was CHF 0.15 to CHF 9.53 for awards previously granted in CHF (prior to 2018) and USD 2.76 to USD 12.30 for awards granted in USD as of December 31, 2022.

For awards issued in 2022, the volatility is based on the Company’s actual volatility for the period congruent with the expected term of the underlying option. The risk-free interest rate is based on yields of long-dated U.S. Treasury notes that align with the expected term of the award. The weighted-average share price of common share options exercised in 2022 is USD 3.55 (CHF 3.28).

The weighted-average grant date fair values of the options granted in 2022, 2021 and 2020 are USD 2.38 (CHF 2.20), USD 5.23 (CHF 4.78) and USD 5.25 (CHF 4.65), respectively. The following table illustrates the weighted-average assumptions for the Black-Scholes option-pricing model used in determining the fair value of these awards:

	For the Year Ended
	December 31,
	2022		2021		2020
Exercise price (USD)	2.76-4.57		5.31-7.72		5.04-9.16
Share price (weighted average)	3.44		6.95		7.11
Risk-free interest rate	0-2.4	%	0	%	0	%
Expected volatility	67-80	%	80	%	80	%
Expected term (in years)	5.5 - 6.25		5.1 - 6		5.5 - 6
Dividend yield	—		—		—

Restricted share awards

A summary of non-vested share awards (restricted share and restricted share units) activity as of December 31, 2022 and changes during the year then ended is presented below:

			Contractual
	Number of		life of non-
	share awards		vested share
Grantee type	granted	Vesting conditions	awards
Restricted share units
Directors	159,025	1 year service from date of grant, annually	10 years
Executives	274,872	3 year and 4 years’ service from the date of grant, quarterly and semi-annually	10 years

		Weighted-
	Number of	average
	non-vested	grant date fair
	shares	value (CHF)
Non-vested at January 1, 2020	42,763	9.52
Forfeited during the year	(11,828)	9.47
Expired during the year	(7,804)	9.52
Exercised during the year	(84,638)	9.51
Granted during the year	—	—
Vested during the year	(23,269)	9.52
Non-vested at December 31, 2020	19,494	9.51
Vested and exercisable at December 31, 2020	49,289	9.47
Non-vested at December 31, 2020	19,494	9.51
Exercised during the year	(2,471)	9.46
Vested during the year	(18,697)	9.52
Non-vested at December 31, 2021	797	9.41
Vested and exercisable at December 31, 2021	65,515	9.48
Non-vested at December 31, 2021	797	9.41
Granted during the year	239,194	3.06
Vested during the year	(23,505)	3.28
Non-vested at December 31, 2022	216,486	3.06
Vested and exercisable at December 31, 2022	89,020	7.84

The weighted-average grant date fair values of the remaining non-vested share awards as of the respective year end for the restricted share units were CHF 3.06, CHF 9.41 and CHF 9.51 for the years ended December 31, 2022, 2021 and 2020, respectively. The fair values of these non-vested share awards granted were determined using a reasonable estimate of market value of the common shares on the date of the award.

The expense charged against the income statement was CHF 3.3 million, CHF 4.1 million and CHF 4.1 million for the years ended December 31, 2022, 2021 and 2020, respectively. The expense is revised by the Company based on the number of instruments that are expected to become exercisable.