Annual and transition report of foreign private issuers pursuant to sections 13 or 15(d)

SHARE BASED COMPENSATION

v2.4.0.6
SHARE BASED COMPENSATION
12 Months Ended
Mar. 31, 2013
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, 2013, 2,017,842 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 two employees’ vested share options and continued the vesting of their unvested share options and continued the vesting of one employee’s nonvested shares upon their resignation. 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.

 

 

 

 

 

Weighted

 

Weighted

 

Aggregate

 

 

 

 

 

average

 

remaining

 

intrinsic

 

 

 

Number of

 

exercise

 

contractual

 

value

 

 

 

shares

 

USD

 

Years

 

USD

 

Outstanding as of March 31, 2010

 

3,413,251

 

2.98

 

 

 

 

 

Granted

 

 

 

 

 

 

 

Exercised

 

(43,884

)

3.60

 

 

 

 

 

Forfeited

 

(225

)

3.60

 

 

 

 

 

Expired

 

(106,492

)

3.32

 

 

 

 

 

Outstanding as ofMarch 31, 2011

 

3,262,650

 

2.96

 

 

 

 

 

Granted

 

 

 

 

 

 

 

Exercised

 

(27,864

)

3.60

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

Expired

 

(446,444

)

3.60

 

 

 

 

 

Outstanding as ofMarch 31, 2012

 

2,788,342

 

2.85

 

 

 

 

 

Granted

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

Expired

 

(41,000

)

3.60

 

 

 

 

 

Outstanding as ofMarch 31, 2013

 

2,747,342

 

2.84

 

 

 

 

 

Vested and expected to vest as of March 31, 2013

 

2,747,342

 

2.84

 

3.1

 

Nil

 

Exercisable as of March 31, 2013

 

2,672,342

 

2.86

 

3.0

 

Nil

 

 

The aggregate intrinsic value of options outstanding and exercisable at March 31, 2013, was calculated based on the closing price of the Company’s common shares on March 31, 2013.

 

The total intrinsic value of options exercised in the years ended March 31, 2011, 2012 and 2013 are USD 10,175, USD 28,775 and USD nil respectively.

 

In March 2011, certain individuals exercised 43,884 share options with an exercise price of USD3.6 per share. The proceeds of USD157,982 (RMB1,035,796) were not received by the Company as of March 31, 2011 and a receivable from shareholders of RMB 1,035,796 was recorded in the shareholders’ equity. The Company received the proceeds in May 2011.

 

Information relating to options outstanding and exercisable as of March 31, 2013 is as follows:

 

Options outstanding as of March 31, 2013

 

Options exercisable as of March 31, 2013

 

 

 

Exercise

 

Remaining

 

 

 

Exercise

 

Remaining

 

Number of

 

Price

 

Contractual

 

Number

 

Price

 

Contractual

 

Shares

 

per Share

 

Life

 

of Shares

 

per Share

 

Life

 

 

 

USD

 

Years

 

 

 

USD

 

Years

 

1,312,600

 

2.26

 

2.1

 

1,312,600

 

2.26

 

2.1

 

674,000

 

3.60

 

2.7

 

674,000

 

3.60

 

2.7

 

250,000

 

3.60

 

3.6

 

250,000

 

3.60

 

3.6

 

101,000

 

3.60

 

4.7

 

101,000

 

3.60

 

4.7

 

100,000

 

4.75

 

4.5

 

100,000

 

4.75

 

4.5

 

9,742

 

2.69

 

5.9

 

9,742

 

2.69

 

5.9

 

300,000

 

2.12

 

7.0

 

225,000

 

2.12

 

7.0

 

2,747,342

 

2.84

 

3.1

 

2,672,342

 

2.86

 

3.0

 

 

Compensation expense for share options is allocated to the following expense items:

 

 

 

Year Ended March 31,

 

 

 

2011

 

2012

 

2013

 

 

 

RMB

 

RMB

 

RMB

 

Cost of revenues

 

568

 

 

 

Research and development

 

1,450

 

 

 

Sales and marketing

 

6,897

 

42,914

 

 

General and administrative

 

1,636,369

 

547,231

 

306,659

 

Total share based compensation expense

 

1,645,284

 

590,145

 

306,659

 

 

As of March 31, 2013, RMB 94,511 of total unrecognized compensation expense related to nonvested share options is expected to be recognized over one year.

 

Nonvested shares

 

A summary of the nonvested shares activities for the year ended March 31, 2011, 2012 and 2013 is presented below:

 

 

 

 

 

Weighted
average

 

 

 

Number

 

grant date

 

 

 

of shares

 

fair value

 

 

 

 

 

USD

 

Outstanding at March 31, 2010

 

431,049

 

2.943

 

Granted

 

20,000

 

1.655

 

Vested

 

(120,121

)

2.865

 

Forfeited

 

(24,928

)

2.209

 

Outstanding at March 31, 2011

 

306,000

 

2.949

 

Granted

 

1,060,000

 

4.963

 

Vested

 

(116,245

)

2.076

 

Forfeited

 

(103,005

)

4.470

 

Outstanding at March 31, 2012

 

1,146,750

 

4.788

 

Granted

 

100,000

 

4.030

 

Vested

 

(334,250

)

4.423

 

Forfeited

 

(17,500

)

3.807

 

Outstanding at March 31, 2013

 

895,000

 

4.858

 

 

The total fair value of shares vested during the years ended March 31, 2011, 2012 and 2013, was USD 219,615, USD 527,371 and USD 829,077 respectively.

 

Compensation expense recognized for nonvested shares for the years ended March 31, 2011, 2012 and 2013 is allocated to the following expense items:

 

 

 

Year Ended March 31,

 

 

 

2011

 

2012

 

2013

 

 

 

RMB

 

RMB

 

RMB

 

Cost of revenues

 

140,900

 

71,691

 

21,813

 

Research and development

 

194,527

 

189,462

 

308,577

 

Sales and marketing

 

595,713

 

344,226

 

702,683

 

General and administrative

 

2,075,547

 

11,068,873

 

10,239,490

 

Total share based compensation expense

 

3,006,687

 

11,674,252

 

11,272,563

 

 

As of March 31, 2013, RMB8,161,687  of total unrecognized compensation expense related to nonvested shares is expected to be recognized over a weighted average period of approximately 2.44 years.