11.

STOCK

BASED COMPENSATION

Employee Stock Options

The Company has long-term compensation plans that permit the granting of incentive awards in the form of stock options. Generally, the terms of these plans require that the exercise price of the options

may

not be less than the fair market value of Celsion’s common stock on the date the options are granted. Options generally vest over various time frames or upon milestone accomplishments. Some vest immediately. Others vest over a period between

one

and

five

years. The options generally expire

ten

years from the date of the grant.

2001

Stock Option Plan

2001,

the Board of Directors adopted a stock plan for directors, officers and employees (the

“2001

Plan”) under which

148,148

shares were reserved for future issuance. The purpose of the

2001

Plan was to promote long-term growth and profitability of Celsion by providing key people with incentives to improve stockholder value and contribute to the growth and financial success of Celsion, and to enable the company to attract, retain and reward the best available persons for positions of substantial responsibility.

2004

Stock Incentive Plan

2004,

the Board of Directors adopted a stock plan for directors, officers and employees (the

“2004

Plan”) under which

148,148

shares were reserved for future issuance. The

2004

Plan provides for stock instruments to be issued enabling the holder thereof to acquire common stock of the Company at prices determined by the Company’s Board of Directors. The purpose of the

2004

Plan was to promote the long-term growth and financial success of the Company and enable the Company to attract, retain and reward the best available persons for positions of substantial responsibility. The

2004

Plan permitted the granting of awards in the form of incentive stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock, and performance awards, or in any combination of the foregoing. The

2004

Plan terminated in

2014,

years from the date of the Plan’s adoption by the Company’s stockholders.

Any options forfeited or terminated under the

2001

Plan and

2004

Plan are rolled into the

2007

Stock Incentive Plan for future issuance.

2007

Stock Incentive Plan

2007,

the Company adopted the Celsion Corporation

2007

Stock Incentive Plan (the

“2007

Plan”) under which

222,222

shares were authorized for issuance. The purpose of the

2007

Plan is to promote the long-term growth and profitability of the Company by providing incentives to improve stockholder value and enable the Company to attract, retain and reward the best available persons for positions of substantial responsibility. The

2007

Plan permits the granting of equity awards in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock, and performance awards, or in any combination of the foregoing. At the Annual Meetings of Stockholders of Celsion held on

June

25,

2010,

June

2012

and

June

20,

2014,

the stockholders approved amendments to the

2007

Plan. The only material difference between the original

2007

Plan and the amended

2007

Plan was the number of shares of common stock available for issuance under the amended

2007

Plan which was increased by

222,222

to a total of

444,444

shares in

2010,

500,000

to a total of

944,444

shares in

2012

and by

2,500,000

to a total of

3,444,444

shares in

2014.

The Company has issued stock awards to employees, directors and vendors out of the stock option plans. Options are generally granted with strike prices equal to the market value on the date of the grant.

Incentive stock options

may

be granted to purchase shares of common stock at a price not less than

100%

of the fair market value of the underlying shares on the date of grant, provided that the exercise price of any incentive option granted to an eligible employee owning more than

10%

of the outstanding stock must be at least

110%

of the such fair market value on the date of grant. Only officers and key employees

may

receive incentive stock options; all other qualified participants

may

receive non-qualified stock options.

Option awards vest upon terms determined by the Board of Directors. Restricted stock awards, performance stock awards and stock options are subject to accelerated vesting in the event of a change of control. The Company issues new shares to satisfy its obligations from the exercise of options.

2007

an option to purchase

95,555

shares of the Company's common stock was issued to the Company's Chief Executive Officer. This option vested in equal installments over

four

years and was separately registered with the Securities and Exchange Commission (the "SEC") and was not issued under any of the Employee Stock Incentive Plans. All of these options expired in

January

2017.

As of

December

31,

2016,

there were a total of

3,533,752

shares reserved, which were comprised of

2,999,663

equity awards granted and

534,089

equity awards available for future issuance.

Total compensation cost charged related to employee stock options and non-vested restricted stock awards amounted to

$1.5

million and

$1.8

million for the years ended

December

31,

2016

and

2015,

respectively.

compensation cost related to stock-based payments arrangements was capitalized as part of the cost of any asset at these same periods. As of

December

31,

2016,

there was

$0.3

million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of

0.7

years. The weighted average grant-date fair values of the equity awards granted during the years ended

December

31,

2016

and

2015

were

$1.16

and

$2.05,

respectively.

Equity Awards Issued to Consultants for Services

The Company periodically issues equity awards to consultants in exchange for services provided. The fair value of options granted is measured in accordance with ASC

718,

Compensation – Stock Compensation,

using the Black-Scholes option pricing model and recorded as an expense in the period in which such services are received. Generally, the terms of these plans require that the exercise price of such awards

may

not be less than the fair market value of the Company’s common stock on the date the equity awards are granted. Consultant equity awards generally vest over various time frames or upon milestone accomplishments. Some vest immediately upon issuance. The equity awards generally expire within

years from the date of grant. No equity awards were granted to consultants during the years ended

December

31,

2016

and

2015.

A summary of stock option awards as of

December

31,

2016

and changes during the

two

years ended

December

31,

2016,

is presented below:

Stock Options	Number Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 2015		1,744,755		$	7.20
Granted		839,250			2.35
Canceled or expired		(444,183	)		5.56
Outstanding at December 31, 2015		2,139,822		$	5.64
Granted		846,283			1.29
Canceled or expired		(53,442	)		9.71
Outstanding at December 31, 2016		2,932,663			4.31		7.2	$	-

Exercisable at December 31, 2016		2,198,907		$	5.09		6.9	$	-

A summary of the status of the Company’s non-vested restricted stock awards as of

December

31,

2016

and changes during the

two

years ended

December

31,

2016,

is presented below:

Restricted Stock	Number Outstanding			Weighted Average Exercise Price
Non-vested stock awards outstanding at January 1, 2015		7,018		$	3.32
Granted		88,500			2.60
Vested and issued		(14,000	)		2.72
Non-vested stock awards outstanding at December 31, 2015		81,518		$	2.64
Granted		112,000			1.63
Vested and issued		(126,518	)		1.72
Non-vested stock awards outstanding at December 31, 2016		67,000	*	$	2.67

*	The non-vested restricted stock awards as of December 31, 2016 had a weighted average remaining contractual term of 0.7 years with an intrinsic value of approximately $21,000.

A summary of stock options outstanding at

December

31,

2016

by price range is as follows:

			Options Outstanding						Options Exercisable
Range of Exercise Prices			Number		Weighted Average Remaining Contractual Term (in years)		Weighted Average Exercise Price		Number		Weighted Average Remaining Contractual Term (in years)		Weighted Average Exercise Price

$1.00	to	2.99		1,560,699		8.9	$	1.77		857,897		8.9	$	1.78
3.00	to	5.99		890,857		7.2	$	3.81		859,903		7.2	$	3.69
6.00	to	12.99		322,387		3.0	$	10.82		322,387		3.0	$	10.82
13.00	to	19.99		88,856		3.4	$	14.19		88,856		3.4	$	14.19
Above $20.00				69,864		1.2	$	24.85		69,864		1.2	$	24.85
				2,932,663						2,198,907

The fair values of stock options granted were estimated at the date of grant using the Black-Scholes option pricing model. The Black-Scholes model was originally developed for use in estimating the fair value of traded options, which have different characteristics from Celsion’s nonqualified stock options. The model is also sensitive to changes in assumptions, which can materially affect the fair value estimate. The Company used the following assumptions for determining the fair value of options granted under the Black-Scholes option pricing model:

	Year Ended December 31,
	201 6					201 5
Risk-free interest rate		1.55	to	1.87	%		1.57	to	2.93	%
Expected volatility		87.5	-	89.1	%		92.9	-	104.1	%
Expected life (in years)				10					10
Expected forfeiture rate				5	%				5	%
Expected dividend yield				0.0	%				0.0	%

Expected volatilities utilized in the model are based on historical volatility of the Company’s stock price. The risk free interest rate is derived from values assigned to U.S. Treasury strips as published in the Wall Street Journal in effect at the time of grant. The model incorporates exercise, pre-vesting and post-vesting forfeiture assumptions based on analysis of historical data. The expected life of the fiscal

2016

and

2015

grants was generated using the simplified method as allowed under Securities and Exchange Commission Staff Accounting Bulletin No.

107.