SHARE BASED COMPENSATION
|12 Months Ended|
Mar. 31, 2014
|SHARE BASED COMPENSATION|
|SHARE BASED COMPENSATION||
(11) SHARE BASED COMPENSATION
2005 Share incentive plan
In April 2005, the Company adopted a share incentive plan (the “2005 Plan”), pursuant to which the Company is authorized to issue options to officers, employees, directors and consultants of the Group to purchase up to 2,894,000 of its common shares. In October 2007, the Company’s board of directors approved an increase in the number of shares reserved for issuance under the 2005 Plan to 3,310,300 shares. The 2005 Plan expires in ten years. Options awards provide for accelerated vesting if there is a change in control (as defined in the 2005 Plan).
2008 Share incentive plan
On January 7, 2008, the Company adopted a share incentive plan (the “2008 Plan”), pursuant to which the Company is authorized to issue options and other share-based awards to officers, employees, directors and consultants of the Group to purchase up to 336,307 of its common shares, plus, unless the board of directors determines a lesser amount, an annual increase on January 1 of each calendar year beginning in 2009 equal to the lesser of 1) one percent of the number of shares issued and outstanding on December 31 of the immediately preceding calendar year, and 2) 336,307 shares. The 2008 Plan expires in ten years. Options awards provide for accelerated vesting if there is a change in control (as defined in the 2008 Plan). As of March 31, 2014, 2,354,149 shares were reserved for issuance under the 2008 Plan.
Under both the 2005 Plan and 2008 Plan, share options are generally granted with 25% vesting on the first anniversary of the grant date and the remaining 75% vesting ratably over the following 36 months, unless a shorter or longer duration is established at the time of the option grant. Share options are granted at an exercise price equal to the fair market value of the Company’s share at the date of grant and expire 10 years from the grant date.
Under the 2008 Plan, nonvested shares are granted with a graded vesting as to 25% at the end of each year from the grant date over 4 years.
For the graded vesting share options and nonvested shares, the Company recognizes the compensation cost over the requisite service period for each separately vesting portion of the award as if the award is, in substance, multiple awards.
During the year ended March 31, 2013, the Company extended the exercise period of vested share options of two employees upon their resignation. In addition, the Company also continued the vesting of certain unvested share options and nonvested shares of these former employees. The modification resulted in additional compensation expense of RMB1,294,834 recognized in the “general and administrative expense” for the year ended March 31, 2013.
In October 2013, 1,469,460 share options were granted to an officer 25% of the options vest on the first anniversary of the grant date with the remaining 75% vest evenly over the following three years. The exercise price of these options is USD2.50 per common share.
The aggregate intrinsic value of options outstanding and exercisable at March 31, 2014, was calculated based on the closing price of the Company’s common shares on March 31, 2014.
The total intrinsic value of options exercised in the years ended March 31, 2012, 2013 and 2014 are USD 28,775, USD nil and USD nil respectively.
Information relating to options outstanding and exercisable as of March 31, 2014 is as follows:
The Company calculated the fair value of the share options on the grant date using the Black-Scholes-Merton pricing valuation model. The assumptions used in the valuation model are summarized as follows:
The expected volatility was based on the historical volatilities of the Company. The expected term was related to the period of time the options are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the United States treasury yield curve in effect at the time of grant.
Compensation expense for share options is allocated to the following expense items:
As of March 31, 2014, RMB 10,991,832 of total unrecognized compensation expense related to nonvested share options is expected to be recognized over a weighted average period of approximately 3.52 years.
A summary of the nonvested shares activities for the year ended March 31, 2012, 2013 and 2014 is presented below:
The total fair value of shares vested during the years ended March 31, 2012, 2013 and 2014, was USD 527,371, USD 829,077 and USD 560,975 respectively.
In accordance with the share incentive agreement with the employees, upon the vesting of the nonvested shares, the Company may elect to repurchase certain number of vested shares at the fair market price, with the payment due employees withheld to meet the relevant minimum tax withholding requirements. For the years ended March 31, 2013 and 2014, the Company reacquired 44,564 and 51,676 vested shares upon the vesting of the nonvested shares for a consideration of RMB 913,453 and RMB 567,881 respectively to satisfy the minimum tax withholding obligation.
Compensation expense recognized for nonvested shares for the years ended March 31, 2012, 2013 and 2014 is allocated to the following expense items:
As of March 31, 2014, RMB5,051,565 of total unrecognized compensation expense related to nonvested shares is expected to be recognized over a weighted average period of approximately 2.18 years.
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
Reference 1: http://www.xbrl.org/2003/role/presentationRef