With the economic tsunami spinning Silicon Valley’s revolving faster, Google is throwing a lifeline to its employees, while the new chief executive of financially distressed Yahoo is battening down the hatches.

Google this week announced that the roughly 85 percent of its employees who have “underwater” stock options will be allowed to exchange the financial instruments one-for-one for new options with a strike price set at the close of trading on March 2.

Google, whose stock has sunk along with the rest of the market, has seen defections to venture capital firms, established rivals like Facebook and startups like social networker Friendfeed.

Yahoo also has seen an exodus of talent amid financial strains and management turmoil that has seen co-founder Jerry Yang step down as chief executive. New Chief Executive Carol Bartz, who is getting a base annual salary of $1 million options for 5 million shares of common stock and an annual target bonus of $2 million based on performance, has imposed a pay freeze on the almost 14,000 rank-and-file.

On Friday afternoon, shares of Google, which posted higher revenue earlier in the week, climbed $17.30, or 5.64 percent, to $323.80. Yahoo stock, meanwhile, slid $.11, or .98 percent, to $11.17.

In a research note, UBS analyst Benjamin Schachter (no relation to the reporter) said that Google took the action because of concerns about “losing employees and overall employee morale.”

In an earnings conference call, Patrick Pichette, Google’s chief financial officer, said the options reset is designed to “make sure that people think of the company and manage the company as it grows.”

Options gain value when the price of the underlying stock climbs above the “strike price,” typically the closing stock price on a day close to when the financial instrument was issued. Options are underwater when their strike prices are below the price of the common stock.