The recession is for real. Even the once mighty Intel Corp is getting hit in the wallet. Intel is freezing all salaries, even for their top executives. But what is kind of strange is that Intel is planning a stock swap. It seems that some employees are holding stock that is over valued. The company is offering a swap for the higher stock for a lower stock. Seems strange, but I am no financial whiz. Of course in this day and age, I should say I am not a financial crook. LOL

According to the San Jose Mercury News article it states the following information:

While no Intel employees will get raises this year, many may get a chance to improve their odds of profiting from stock options.

At the end of 2008, the company said, 99 percent of its stock options were “underwater,” meaning the exercise price exceeded the market price. Those options are held by 87 percent of Intel’s 83,900 employees.

If approved by shareholders, employees will be able to exchange options for a smaller number of options at the market price when the transaction takes place. The potential impact, it said, could be the reduction of 285 million stock-option shares.

Employees are holding options with exercise prices ranging from $13.59 to $72.88 per share. Amid a broad rally, Intel’s shares were up nearly 6 percent to $15.52 in Nasdaq trading Monday. That’s down from its 52-week high of $25.29 a share.

Molloy said the stock-option exchange will be voluntary, and will take place during the last quarter of the year if approved by shareholders. The top corporate officers will not be able to participate in the exchange.

The move is needed, Molloy said, to keep employees engaged. Having options at a price that’s not redeemable “certainly is a demotivator,” he said. Indeed, according to the proxy statement, the situation is “creating a serious threat to retention.”

Say what?  ”creating a serious threat to retention.” Sounds like language that AIG would use. 

Anyway, you can read the story here.

Comments welcome.