Stock
options may be the gas that Silicon Valley runs on, but two years of
falling stock prices left a lot of tanks on empty last year. Yet as it
heads into a new decade, the valley's options culture remains
surprisingly resilient.

The answer for some companies in 2009,
including Google, Intel and eBay, was to hit the reset button by
exchanging options that became worthless (or were "underwater") because
of the falling stock market for ones that reflected the new, lower
share prices.

Options give workers the right to buy company stock
at a preset price, offering them the opportunity to profit if those
shares increase in value.

For companies that did not do an
exchange, the improving economy and rising share prices helped take
care of the problem, lifting many options near or above the water line.

A
study by Equilar, a Redwood City executive compensation research firm,
shows options of top officers at 140 valley companies gradually
surfacing above water during the last half of the year.

At the
end of their fiscal years, an average of 61.4 percent of top
executives' options were underwater, the study found, but by Christmas
Day, only 46.9 percent of those options were, reflecting the economic
rebound of the year's fourth quarter.

"We've had a rough year but
stock compensation continues to be an essential tool in the total
compensation," said Emily Cervino, director of the Certified Equity
Professional Institute at Santa

Contact Pete Carey at 408-920-5419.