I am about to vote against this proposal, but before I do I wanted to see if anyone had any convincing arguments as to why I am wrong.

As per the proxy report Micrel wants to exchange employees' stock options for a better deal for them. They claim it is fair and it only cost $36,000. That figure is ridiculous and a manipulation. Perhaps if they did not try to manipulate the shareholders and were totally honest about the cost of their proposal I would go along with it. Stock options are meant to align employees' interests with shareholders. Supposedly, if you believe in them then employees perform better if they have stock options and it will show in the stock price. If you believe that logic (which I don't) then employees must have done poorly and that's why the stock price went down so why should we give them a better deal. It seems that holders of options cannot lose. If the stock does well, they win. If it does poorly, management will exchange them. As far as cost, according to my calculations, this could effectively cause issuing 2 million options at about $7.40 or so as opposed to the existing 5 million shares that are at substantially higher strike prices. The 5 million shares are worthless pretty much so by exchanging them even for fewer shares, you effectively increase compensation by a substantial amount. Say at expiration the stock price is $9.40, then Micrel has spent an extra 4 million dollars on compensation (2 million shares X $2). This is another way to stick it to shareholders.

I like Zinn and company, but this proposal sticks it to shareholders. They need to find another way to motivate and inspire employees. I am sick of management who believes compensation is the answer to retention and good performance whether it is for executives or employees.