11.

STOCK-BASED COMPENSATION

Equity Awards Issued to Employees

The Company has long-term compensation plans that permit the granting of

equity based-awards in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock, and performance awards. 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 granted generally vest over various time frames or upon milestone accomplishments. The Company’s options generally expire

ten

years from the date of the grant.

2007,

the Company adopted the Celsion Corporation

2007

Stock Incentive Plan (the

2007

Plan) under which

15,873

shares were

initially 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 7, 2012,

June 20, 2014,

and

May 16, 2017

the stockholders approved amendments to the Plan. The only material difference between the original Plan and the amended Plan was the number of shares of common stock available for issuance under the amended Plan which was increased by

15,873

to a total of

31,746

shares in

2010,

35,714

to a total of

67,460

shares in

2012,

178,571

to a total of

246,031

shares in

2014

and by

442,500

to a total of

688,531

shares in

2017.

Prior to the

adoption of the

2007

Plan, the Company adopted

two

stock plans for directors, officers and employees (

one

2001

and another in

2004

) under which

21,164

shares collectively were reserved for future issuance under both of these plans. As these plans have been superseded by the

2007

Plan, any options previously granted which expired, were forfeited, or canceled under these plans were rolled into the

2007

Plan.

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

stock 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.

As of

December 31,

201

there were a total of

705,893

shares reserved, which were comprised of

703,442

equity awards granted and

2,451

equity awards available for future issuance.

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

1.1

million and

$1.5

million for the years ended

December

31,

2017

and

2016,

respectively. As of

December

31,

2017,

there was

$0.4

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

0.9

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

December

31,

2017

and

2016

were

$2.32

and

$16.24,

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. During

2017,

22,500

equity awards were granted to consultants.

equity awards were granted to consultants during the year ended

December 31, 2016.

A summary of stock option awards as of

December

31,

2017

and changes during the

two

years ended

December

31,

2017,

is presented below:

Stock Options	Number Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 201 6		154,581		$	80.44
Granted		60,449		$	18.08
Canceled or expired		(3,817	)	$	135.95
Outstanding at December 31, 201 6		211,213		$	61.59
Granted		535,964		$	2.69
Canceled or expired		(43,735	)	$	164.12
Outstanding at December 31, 2017		703,442		$	10.34		8.9	$	-

Exercisable at December 31, 201 7		405,075		$	14.97		8.6	$	-

A summary of the status of the Company

’s non-vested restricted stock awards as of

December 31, 2017

and changes during the

two

years ended

December 31, 2017,

is presented below:

Restricted Stock	Number Outstanding			Weighted Average Grant Da te Fair Value
Non-vested stock awards outstanding at January 1, 201 6		5,822		$	36.96
Granted		8,000		$	22.82
Vested and issued		(9,037	)	$	24.08
Non-vested stock awards outstanding at December 31, 2016		4,785		$	37.42
Vested and issued		(3,357	)	$	42.20
Forfeited		(1,428	)	$	26.18
Non-vested stock awards outstanding at December 31, 2017		-		$	-

A summary of stock options outstanding at

December 31,

201

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

Up to		$5.00		535,964		9.4	$	2.69		256,720		9.4	$	2.69
5.00	to	35.00		105,674		7.9	$	24.64		88,153		7.9	$	25.12
Above $ 35.00				61,804		6.2	$	52.23		60,202		6.2	$	52.32
				703,442						405,075

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 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 7					2016
Risk-free interest rate		2.21	to	2.32	%		1.55	to	1.87	%
Expected volatility		90.4	-	100.8	%		87.5	-	89.1	%
Expected life (in years)			10					10
Expected forfeiture rate			0		%			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 bonds with terms that approximate the expected option lives in effect at the time of grant. The model incorporated exercise, pre-vesting and post-vesting forfeiture assumptions based on analysis of historical data for forfeitures through

December 31, 2016.

Starting in

2017,

the Company made the election to account for any forfeitures when they occur. The expiration of each option granted in fiscal year

2017

and

2016

was used as the expected life.