Starbucks (NASDAQ: SBUX) CEO Howard Schultz and the company's other top executives did not earn bonuses for 2008 as the company's fortunes deteriorated.

Schultz's compensation package declined to $9.7 million from $10.6 million in 2007. According to the proxy statement, Schultz will be taking a long-term stock option grant in lieu of bonuses for the current fiscal year as well.

That all sounds good but in March, the company will be asking its shareholders to approve a plan that would allow executives to trade in their underwater stock options for a smaller number of new ones with a lower strike price. Ordinarily this is the kind of thing that drives executive pay hawks nuts but in this case it might be fair.

Starbucks fortunes have declined along with the rest of the restaurant industry because of an unprecedented rout in consumer spending. There have also been some significant missteps leading up to that mess, but the company's low stock price is partly a result of factors beyond Schultz and company's control. If the options are not repriced, executives could be tempted to bold for competitors who are offering options grants priced based on current low valuations.

The exchange ratios also seem fair. For instance, executives with options with strike prices of $35 or higher will be able to trade those in for new ones based on the price of around $9 per share: But they'll receive 1/15.5th the number of options.