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Intel will freeze the salaries of its top five officers for 2009 and restructure its stock-option plan, allowing employees to exchange their overpriced options.

In the company's Schedule 14a preliminary proxy statement filed on Monday, the Board of Director's Compensation Committee stated that "Given Intel’s financial performance in 2008 as well as uncertainty in the global economic environment, the committee elected to keep base salaries and annual incentive cash baselines flat for all listed officers for 2009."

Those "listed officers" are defined in the proxy as the "CEO, Chief Financial Officer (CFO), and three other most highly compensated executive officers in a particular year." This year, that would be Paul Otellini, President, CEO; Stacy Smith, VP and CFO; Andy Bryant, EVP, Finance and Enterprise Services and CAO; Sean M. Maloney, EVP and Chief Sales and Marketing Officer; and David Perlmutter, EVP and General Manager of the Mobility Group.

Don't feel too badly for them, though. Total compensation for these five in 2008 came to $12.7m (£8.7m) for Otellini, $2.5m (£1.7m) for Smith, $5.5m (£3.8m) for Bryant, $5.3m (£3.6m) for Maloney, and $4.7m (£3.2m) for Perlmutter - although the latter, as noted in the proxy, is paid in Israeli sheckles, so he has those pesky currency-conversion rates to deal with.

The news was somewhat better for the rank-and-file, however. The board of directors is requesting that the stockholders approve an employee stock-option exchange program called, somewhat prosaically, Option Exchange.

Under the Option Exchange plan, employees other than the five listed officers will be given the opportunity to exchange their current over-priced stock options (defined as those "with an exercise price above our 52-week high") for a new options that have "approximately the same fair value" as the options they'll now be allowed to dump.

This is good news for employees, seeing as how the proxy says that at the end of 2008, 99 per cent of the company's outstanding stock option grants were underwater - meaning that the options' exercise price was higher than the $14.18 that Intel stock was selling for as that bleak year came to an end. ®

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