11. Share-Based Compensation

On November 18, 2015, the Company’s Board of Directors adopted and approved the 2015 Equity Incentive Plan (the 2015 Plan), which authorized the Company to grant up to 223,424 ordinary shares in the form of incentive share options, nonstatutory share options, share appreciation rights, restricted share awards, restricted share units and other share awards. The types of share-based awards, including the rights, amount, terms, and exercisability provisions of grants are determined by the Company’s Board of Directors. The purpose of the 2015 Plan is to provide the Company with the flexibility to issue share-based awards as part of an overall compensation package to attract and retain qualified personnel. On May 18, 2017, the Company amended the 2015 Plan to increase the number of ordinary shares available for issuance under the 2015 Plan by 219,605 shares to 443,029 shares.

On March 14, 2018, the Company’s Board of Directors adopted and approved the 2018 Equity Incentive Plan (the 2018 Plan), which became effective upon the execution and delivery of the underwriting agreement related to the Company’s IPO in May 2018. No further grants will be made under the 2015 Plan. The ordinary shares underlying any options that are forfeited, cancelled, repurchased or are otherwise terminated by the Company under the 2015 Plan will not be added back to the ordinary shares available for issuance.

The 2018 Plan authorizes the Company to grant up to 1,018,459 ordinary shares in the form of incentive share options, nonstatutory share options, share appreciation rights, restricted share awards, restricted share units, performance share awards, performance cash awards and other share awards. The types of share-based awards, including the amount, terms, and exercisability provisions of grants are determined by the Company’s Board of Directors. The ordinary shares underlying any options that are forfeited, cancelled, repurchased or are otherwise terminated by the Company under the 2018 Plan will be added back to the ordinary shares available for issuance under the 2018 Plan.

On December 5, 2018, pursuant to powers delegated to it by the Board of Directors of the Company, the Compensation Committee approved an increase in the number of ordinary shares available to be granted pursuant to the 2018 Plan by 4% of the total number of shares of the Company’s issued share capital on December 31, 2018, being 574,081 ordinary shares.

On February 14, 2020, pursuant to powers delegated to it by the Board of Directors of the Company, the Compensation Committee approved, by written resolution, an increase of 594,758 ordinary shares to the number of ordinary shares available to be granted pursuant to the 2018 Plan, being just under 4% of the total number of the Company’s ordinary shares outstanding shares on December 31, 2019, in accordance with the terms of the 2018 Plan.

On June 10, 2020, at the Company’s annual general meeting of shareholders, the shareholders approved and adopted an amended and restated 2018 Plan which, among other things includes an increase of 2,250,000 ordinary shares in the number of ordinary shares reserved for issuance under the 2018 Plan. 

Restricted Ordinary Shares

In connection with the Company’s formation, 413,110 restricted ordinary shares were issued on October 14, 2015 to the Company’s founders at par value. These ordinary shares are subject to various restrictions pursuant to ordinary share purchase agreements between the Company and each founder, including restrictions on transfer and a Company right of repurchase. The restricted ordinary shares were 25% vested as of October 14, 2016 and 1/36th of the remaining restricted ordinary shares vest on a monthly basis thereafter (subject to acceleration of vesting in connection with certain change of control transactions). A change in status occurred on November 18, 2015 when the founders became employees of the Company. The grant date of these shares is now considered to be November 18, 2015 when the fair value was $3.14 per share.

Restricted ordinary shares were fully vested as of December 31, 2019 and there was no restricted ordinary share activity for the nine months ended September 30, 2020.

The Company recorded share-based compensation expense for the restricted ordinary shares based on the grant date fair value. The Company recorded an expense of $247 for the nine months ended September 30, 2019. Total unamortized compensation expense related to restricted ordinary shares was $13 as of September 30, 2019 recognized over a weighted average period of 0.04 years as of September 30, 2019.

Share Options

The Company granted 64,840 and 512,178 share options to employees and directors during the nine months ended September 30, 2020 and 2019, respectively, under the 2018 Plan. There were 420,783 and 880,529 unvested employee options outstanding as of September 30, 2020 and September 30, 2019, respectively. Total expense recognized related to employee share options was $922 and $1,019 for the nine months ended September 30, 2020 and 2019, respectively. Total unamortized compensation expense related to employee share options was $1,722 and $3,711 as of September 30, 2020 and September 30, 2019, respectively, which is expected to be recognized over a remaining average vesting period of 1.81 years and 2.84 years as of September 30, 2020 and September 30, 2019, respectively.

The range of assumptions that the Company used to determine the grant date fair value of employee and director options granted were as follows:

The following table summarizes the number of options outstanding and the weighted-average exercise price as of September 30, 2020:

Restricted share units (RSUs)

No RSUs were granted to directors during the nine months ended September 30, 2020. The Company granted 31,367 RSUs to directors during the nine months ended September 30, 2019.

The table below shows the number of RSUs outstanding covering an equal number of the Company’s ordinary shares and the weighted-average grant date fair value of the RSUs outstanding as of September 30, 2020:

The fair value of the RSUs is determined on the date of grant based on the market price of the Company’s ordinary shares on that date. The fair value of RSUs is expensed ratably over the vesting period, which is generally one year for directors. Total expense recognized related to the RSUs was $63 and $257 for the nine months ended September 30, 2020 and 2019, respectively. All RSUs were fully vested as of nine months ended September 30, 2020. Total unamortized compensation expense related to RSUs was $154 as of September 30, 2019, which was recognized over a remaining average vesting period of 0.70 years as of September 30, 2019.

The Company awarded 1,079,000 and 50,000 RSUs to certain employees during the nine months ended September 30, 2020 and 2019, respectively, which are subject to certain performance-based vesting conditions (Performance RSUs). None were awarded in the three months ended September 30, 2020 and 2019.

The table below shows the number of Performance RSUs outstanding covering an equal number of the Company’s ordinary shares and the weighted-average grant date fair value of the Performance RSUs outstanding as of September 30, 2020:

The weighted average grant date fair values of Performance RSUs with a market condition were determined using the Monte Carlo simulation model. The fair value of Performance RSUs is expensed evenly over the vesting period. Total expense recognized related to Performance RSUs was $1,648 and $151 for the nine months ended September 30, 2020 and 2019, respectively. Total unamortized compensation expense related to Performance RSUs was $381 and $259 as of September 30, 2020 and September 30, 2019, respectively, which is expected to be recognized over a remaining average vesting period of 0.42 years and 1.06 years as of September 30, 2020 and September 30, 2019, respectively.

The Company’s share-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows:

There was a total of $2,103 and $4,137 unamortized share-based compensation expense for restricted ordinary shares, options, restricted share units and Performance RSUs as of September 30, 2020 and September 30, 2019, respectively, which is expected to be recognized over a remaining average vesting period of 0.65 years and 2.66 years as of September 30, 2020 and September 30, 2019, respectively.