On March 9, 2015, the Group adopted the 2015 Share Option Plan ("2015 Plan"), under which the maximum number of shares that may be granted is 59,899,375 shares. The vesting schedules ranged from two to five years with the options vesting on various dates during the vesting period.

On January 12, 2018, the Group adopted the 2018 Share Option Plan ("2018 Plan"), under which the maximum number of shares that may be granted is 25,703,602 shares. The vesting schedules under the 2018 Plan are the same as the 2015 Plan.

On November 12, 2020, the Group adopted the 2020 Share Incentive Plan, which was subsequently amended on March 8, 2022 ("2020 Plan"), under which the maximum number of shares that may be granted is initially 20,521,221 shares, plus an annual increase on the first day of each fiscal year of the Company during the term of the 2020 Plan commencing with the fiscal year beginning January 1, 2021, by an amount equal to 2.0% of the total number of issued and outstanding shares, on an as-converted and fully diluted basis, on the last day of the immediately preceding fiscal year and the number of ordinary shares repurchased by the Group from time to time pursuant to share repurchase programs of the Group, or such lesser number as determined by the chief executive officer of the Group.

The vesting schedules under the 2020 Plan shall be determined by the plan administrator, which is specified in the relevant award agreements.

The following table summarized the Group's share option activities for the year ended December 31, 2023:


	Number of options			Weighted average exercise price		Weighted average remaining contract life		Weighted average grant date fair value		Aggregate intrinsic value
				US$				US$		US$
Outstanding as of January 1, 2023		34,617,521			0.20		6.82		1.00		5,366,449
Granted		3,300,000			0.0014		—		0.19		—
Forfeited		(1,054,756	)		0.0014		—		0.88		—
Exercised		(3,491,990	)		0.01		—		1.41		—
Outstanding as of December 31, 2023		33,370,775			0.21		6.07		0.88		997,133
Vested and expect to vest as of December 31, 2023		33,370,775			0.21		6.07		0.88		997,133
Exercisable as of December 31, 2023		21,941,571			0.31		4.99		0.98		529,226

In determining the fair value of the share options, the binomial option pricing model was applied. The key assumptions used to determine the fair value of the options at the respective grant dates in 2021, 2022 and 2023 were as follows:


	For the years ended December 31
Grant date	2021	2022	2023
Expected volatility	45.6%~50.2%	58.0%~59.0%	61.2%
Risk-free interest rate	2.9%~3.1%	2.75%~2.84%	2.9%
Exercise multiples	2.2~2.8	2.2~2.8	2.2
Expected dividend yield	0.0%	0.0%	0.0%
Life of options	10 years	10 years	10 years
Fair value of underlying ordinary shares	$1.12~$5.32	$0.09~$0.24	$0.19

The volatility of the underlying ordinary shares during the lives of the options was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the expected term of the options.

Risk-free interest rate was estimated based on the daily treasury long term rate of the U.S. Treasury Department with a maturity period close to the expected term of the options, plus the country default spread of China.

Exercise multiple represents the value of the underlying share as a multiple of exercise price of the option which, if achieved, results in exercise of the option.

The dividend yield was estimated by the Group based on its expected dividend policy over the expected term of the options.

In February 2022, the Company's board of directors approved the accelerated vesting and continued vesting of the options previously granted to staff who left the Group, according to which, all remaining unvested portions of the options as of the date of the termination of their employment were allowed to vest immediately or vest continuously after change in their employment status.

The Company accounted for the above modifications as improbable to probable (Type III) modifications as the staff who left the Group would have forfeited their awards upon termination of their employments under the original terms of the option agreements. The incremental cost related to those options is equal to the fair value of the modified awards on the modification date. This incremental compensation cost is recognized immediately upon the termination of employment or continuously vested and recognized after change in their employment status.

The total incremental cost as a result of the modification amounted to RMB3,750. The Company recorded compensation expense amounting to RMB2,638 and RMB741 related to this modification for the years ended December 31, 2022 and 2023, respectively.

The Group recorded compensation expense of RMB101,303, RMB58,880 and RMB41,841 for the years ended December 31, 2021, 2022 and 2023, respectively related to share options.

As of December 31, 2022 and 2023, the unrecognized compensation expense related to share options amounted to RMB102,394 and RMB60,386, respectively, which will be recognized over a weighted-average period of 2.99 years and 2.32 years, respectively.

The Company established three trusts, namely, 17 Prosperity Limited, Alouette Limited, and Great Merit Group Limited, which are controlled by the Company as vehicles to hold shares that will be used to provide incentives and rewards to management team members who contribute to the success of the Company's operations (the "Shareholding Platforms"). The Shareholding Platforms have no activities other than administrating the incentive programs and do not have any employees. On behalf of the Company and subject to approvals from its board of directors, advisory committee was set up for each Shareholding Platform, who holds the authority and responsibility to process the eligible participants to whom awards will be granted, the number of shares, the terms and conditions of such awards.

In June and October 2020, the Group granted 32,855,200 restricted shares to certain management (the "Selected Management") to replace options previously granted under the 2015 and 2018 plan. The purchase price of the restricted shares of US$0.0014 per share is the exercised price of the original options and was paid by the Selected Management at the time the restricted shares were granted. The vesting and other requirements imposed on the restricted shares were the same as those under the original option granted. As a result, the Group accounted for the issuance of restricted shares in exchange of the options of the Selected Management as a modification. Incremental compensation expense as a result of this modification was immaterial.

The restricted shares received by the Selected Management were immediately transferred to the Shareholding Platforms. All shareholder rights of the nonvested restricted shares, including but not limited to voting rights and dividend rights, are unconditionally waived until the shares are vested. As a result, all nonvested shares held by the Shareholding Platforms are solely for purpose of future issuance to employees once they vest, and have been treated as treasury shares in the consolidated financial statements.

The following table summarized the Group's activities of restricted shares held by the Shareholding Platform for the year ended December 31, 2023:


	Number of Restricted Shares			Grant date fair value per share
				US$
Outstanding as of January 1, 2023		5,453,554			2.3
Granted		—			—
Vested		(2,063,806	)		2.9
Forfeited		(866,667	)		2.5
Outstanding as of December 31, 2023		2,523,081			1.8

The share-based compensation expenses recognized for these restricted shares for the years ended December 31, 2021, 2022 and 2023, were RMB93,911, RMB70,678 and RMB41,854, respectively.

As of December 31, 2022 and 2023, the unrecognized compensation expense related to the restricted shares amounted to RMB87,265 and RMB31,905, respectively, which will be recognized over a weighted-average period of 1.53 years and 0.80 years, respectively.

Total share-based compensation expense of share options and restricted shares recognized for the years ended December 31, 2021, 2022 and 2023 were as follows:


	For the years ended December 31
	2021		2022		2023
Sales and marketing expenses		25,776		17,305		17,243
Research and development expenses		60,002		28,624		26,954
General and administrative expenses		109,436		83,629		39,498
		195,214		129,558		83,695