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Stock-Based Compensation

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

11. STOCK-BASED COMPENSATION

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, other stock awards, and performance awards.

At the 2018 Annual Stockholders Meeting of the Company held on May 15, 2018, stockholders approved the Celsion Corporation 2018 Stock Incentive Plan (the “2018 Plan”). The 2018 Plan, as adopted, permits the granting of 2,700,000 shares of Celsion common stock as equity awards in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, other stock awards, performance awards, or in any combination of the foregoing. Prior to the adoption of the 2018 Plan, the Company had maintained the Celsion Corporation 2007 Stock Incentive Plan (the 2007 Plan). The 2007 Plan permitted the granting of 688,531 shares of Celsion common stock as equity awards in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock, performance awards, or in any combination of the foregoing. The 2018 Plan replaced the 2007 Plan although the 2007 Plan remains in effect for awards previously granted under the 2007 Plan. Under the terms of the 2018 Plan, any shares subject to an award under the 2007 Plan which are not delivered because of the expiration, forfeiture, termination or cash settlement of the award will become available for grant under the 2018 Plan.

The Company has issued stock awards to employees and directors in the form of stock options and restricted stock. Options are generally granted with strike prices equal to the fair market value of a share of Celsion common stock on the date of 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 of Celsion must be at least 110% of such fair market value on the date of grant. Only officers and key employees may receive incentive stock options.

Option and restricted stock awards vest upon terms determined by the Compensation Committee of the Board of Directors and are subject to accelerated vesting in the event of a change of control or certain terminations of employment. The Company issues new shares to satisfy its obligations from the exercise of options or the grant of restricted stock awards.

On September 28, 2018, the Compensation Committee of the Board of Directors approved the grant of (i) inducement stock options (the “Inducement Option Grants”) to purchase a total of 164,004 shares of Celsion common stock and (ii) inducement restricted stock awards (the “Inducement Stock Grants”) totaling 19,000 shares of Celsion common stock to three new employees. All awards have a grant date of September 28, 2018. Each of Inducement Option Grant has an exercise price per share equal to $2.77, the closing price of Celsion’s common stock as reported by Nasdaq on September 28, 2018. Each Inducement Option Grant will vest over three years, with one-third vesting on the one-year anniversary of the employee’s first day of employment with the Company and one-third vesting on the second and third anniversaries thereafter, subject to the new employee’s continued service relationship with the Company on each such date. Each Inducement Option Grant has a ten-year term and is subject to the terms and conditions of the applicable stock option agreement. Each of Inducement Stock Grant will vest on the one-year anniversary of the employee’s first day of employment with the Company and are subject to the new employee’s continued service relationship with the Company through such date and is subject to the terms and conditions of the applicable restricted stock agreement.

As of December 31, 2018, there were a total of 3,399,893 shares of Celsion common stock reserved for issuance under the 2018 Plan, which were comprised of 3,064,741 shares of Celsion common stock subject to equity awards previously granted under the 2018 Plan and 2007 Plan and 335,152 shares of Celsion common stock available for future issuance under the 2018 Plan. As of December 31, 2018, there were a total of 106,502 of Celsion common stock subject to outstanding inducement awards.

Total compensation cost charged related to stock options and restricted stock awards amounted to $4.6 million and $1.1 million during 2018 and 2017, respectively as was recognized in operating expenses. As of December 31, 2018, there was $1.8 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 stock options granted during 2018 and 2017 was $2.36 and 2.32, respectively.

A summary of stock option awards as of December 31, 2018 and changes during the two-year period ended December 31, 2018 is presented below:

Stock Options		Number Outstanding				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (years)				Aggregate Intrinsic Value
Outstanding at January 1, 2017			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
Granted			2,629,004			$	2.26
Canceled or expired			(183,703	)		$	25.96
Outstanding at December 31, 2018			3,148,743			$	2.67				9.2			$	-

Exercisable at December 31, 2018			1,689,902			$	2.97				9.1			$	-

A summary of the status of the Company’s non-vested restricted stock awards as of December 31, 2018 and changes during the two year period ended December 31, 2018, is presented below:

Restricted Stock		Number Outstanding				Weighted Average Grant Date Fair Value
Non-vested stock awards outstanding at January 1, 2017			4,785			$	37.42
Granted			(3,357	)		$	42.20
Vested and issued			(1,428	)		$	26.18
Non-vested stock awards outstanding at December 31, 2017			-			$	-
Granted			35,000			$	2.71
Vested and issued			(6,000	)		$	2.77
Forfeited			(6,500	)		$	2.64
Non-vested stock awards outstanding at December 31, 2018			22,500			$	2.72

A summary of stock options outstanding at December 31, 2018 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			3,084,252				9.2			$	2.34				1,625,807				9.2			$	2.34
Above $5.00 to $81.90			64,491				7.0			$	19.00				64,095				7.0			$	19.00
			3,148,743												1,689,902

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,
		2018				2017
Risk-free interest rate			2.82 to 3.02	%			2.21 to 2.32	%
Expected volatility			99.9 - 102.12	%			90.4 - 100.8	%
Expected life (in years)			8.5 to 10				10
Expected dividend yield			0.0	%			0.0	%

Expected volatilities utilized in the model are based on historical volatility of the Company’s stock price. Starting in 2017, the Company made the election to account for forfeitures when they occur.