Intel Freezes Salaries for Top Executives

The chipmaker freezes top salaries and overhauls employee stock options.
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Chip giant


(INTC) - Get Report

is looking to revamp its compensation plan as the

tech bellwether

attempts to control its costs and weather the economic storm.

The plan, which must be approved by shareholders, includes a freeze on the company's top salaries and an exchange of "underwater" stock options.

Intel revealed its strategy in a regulatory filing Monday, outlining its plan to compensate employees for plummeting stock options. The chipmaker's employees, with the exception of its top executives, would be given the opportunity to exchange underwater stock options for new options.

"Intel employees (but not our listed officers) would be given the opportunity to exchange stock options with an exercise price above our 52-week high for a lesser number of new stock options that have approximately the same fair value as the options surrendered," the company said, in its filing.

The company's move is a sign of the times, and it reflects Intel's desire to mitigate the worst effects of the economic slump. "New stock options received under the program will provide added incentive to motivate and retain talented employees," it said.

Intel, which is embroiled in a

breach of contract dispute

with fellow chipmaker


(AMD) - Get Report

, has certainly felt the effects of the economic slowdown.

The Santa Clara, Calif.-based firm is already

sitting on a mountain

of aging PC chips thanks to slumping computer sales and the rise of cheap netbooks. Intel is also under pressure to find a new market hungry for more lucrative advanced chips.

Set against this backdrop, the company's recent fourth-quarter revenue plummeted 14% year-over-year, and CEO Paul Otellini has promised to drive more operating efficiency.

Intel's share price has plunged more than 30% in the last 12 months, closing at $14.65 on Friday. Recently, though, the stock was up 3.8% at $15.20.