14. Share-based Compensation

(a) Description of stock incentive plan

2018 Incentive Plan

In September 2018 and April 2019, the Group permitted the grant of options and restricted shares of the Company to relevant directors, officers, other employees and consultants of the Company (the “2018 Incentive Plan”). Option awards are granted with an exercise price determined by the Board of Directors. Those options and restricted shares awards generally vest over a period of four years.

2019 Incentive Plan and related amendments

On May 31, 2019, the Board of Directors of the Company approved the 2019 Share Incentive Plan (the “2019 Incentive Plan”) whereby the incentive share options and restricted shares granted to employees and non-employees by Lizhi BVI in the 2018 Incentive Plan shall be replaced and superseded by the exact number of share options and restricted shares of the Company for each grantee (the “2019 Replacement”). There is no change of fair value, vesting schedule and other key terms of such award agreements entered into with each grantee and the classification of share-based awards immediately before and after the 2019 Replacement, thus, the 2019 Replacement was not considered a modification of share-based awards.

On March 18, 2020, the 2019 Incentive Plan was further amended and restated, to increase the maximum aggregate number of Class A ordinary shares authorized to issue from 40,000,000 to 100,000,000 (the “Amended and Restated 2019 Share Incentive Plan”). On September 17, 2021, the Second Amended and Restated 2019 Share Incentive Plan was adopted to replace the Amended and Restated 2019 Share Incentive Plan in its entirety, increasing the maximum aggregate number of Class A ordinary shares authorized to issue from 100,000,000 to 170,000,000.

Share-based compensation recognized for the years ended December 31, 2023, 2024 and 2025 is as follows:

Schedule of Share-based Compensation

As of December 31, 2024 and 2025, total unrecognized compensation expenses related to unvested awards granted under the Second Amended and Restated 2019 Share Incentive Plan were RMB6.2 million and RMB1.4 million (US$0.2 million), respectively. As of December 31, 2024 and 2025, the weighted average remaining vesting period for share-based awards were 1.62 and 0.88 years, respectively.

During the years ended December 31, 2023, 2024 and 2025, there was no cash settled equity instrument granted under share-based payment arrangements, and no compensation cost for share-based payment arrangements was capitalized as part of the cost of an asset.

SOUND GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(All amounts in thousands, except for share, ADS, per share and per ADS data)

14. Share-based Compensation (Continued)

The following table presents a summary of the Company’s stock options activities for the years ended December 31, 2023, 2024 and 2025.

 Schedule of Stock Option Activities

The granted options awards will be vested over a period from nil to four years. The weighted average grant date fair value of options granted for the years ended December 31, 2023, 2024 and 2025 were RMB0.19, nil and nil per option, respectively.

SOUND GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(All amounts in thousands, except for share, ADS, per share and per ADS data)

14. Share-based Compensation (Continued)

(c) Restricted shares activities

There are no remaining restricted shares outstanding as of December 31, 2024 and 2025.

(d) Restricted share units activities

(i) Pursuant to the Second Amended and Restated 2019 Share Incentive Plan, 6,687,500, nil and nil restricted share units were granted to certain employees in 2023, 2024 and 2025, respectively. These restricted share unit awards will be vested over a period of four years, with a summary of activities as follows:

 Schedule of Restricted Share Units Activities

(ii) Pursuant to the Second Amended and Restated 2019 Share Incentive Plan, the Company granted restricted share units with fixed monetary amount to certain employees from 2020 to 2023 with vesting period from one1 to four4 years. These share-settled obligations require that the variable number of shares to be issued based on an average market price for the shares over the last 30 days before each vesting day. As the monetary value of such obligation is predominantly based on a fixed monetary amount known at inception, the obligation is classified as a liability under generally accepted accounting principles in the U.S. Upon issuance of the shares to settle the obligation, equity is increased by the amount of the liability with no gain or loss recognized. For the years ended December 31, 2025, the remaining awarded units have been fully cancelled and converted to cash settlement, and the corresponding expenses have been one-off recognized in the income statement.

SOUND GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(All amounts in thousands, except for share, ADS, per share and per ADS data)