CORRECTED - UPDATE 1-EBay seeks OK for staff option exchange program

(Corrects name to Donahoe from Donahue in paragraph 4)

NEW YORK, March 10 (Reuters) - EBay Inc EBAY.O is asking its stockholders to approve a one-time program to let employees exchange their "underwater" stock options for restricted stock units at a set ratio, according to a U.S. regulatory filing.

The proposed program was a result of the “significant decline in our stock price in light of the global financial and economic crisis,” eBay said in a filing with the Securities and Exchange Commission.

Stock options provide incentives to employees to work hard and share in profits, but such options lose value when the market price of the stock falls below the exercise price, which puts them “underwater.”

The online auctioneer said its officers, including Chief Executive John Donahoe, board members and former employees would not be allowed to take part in the exchange.

EBay does not know when the exchange will begin, but has until April 2010 to do so with approval from stockholders. The company is scheduled to hold its annual shareholders meeting on April 29.

Google Inc GOOG.O said previously that it would offer employees a 1-for-1 stock option exchange for underwater options as an incentive for them to stay with the company -- a move that did not go down well with some of its investors. (Reporting by Aarthi Sivaraman; Editing by Lisa Von Ahn)