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IndyMac Bancorp’s chief executive sent a signal by declining to exercise his stock options. How the signal should be read is debatable.

Mortgage lender Indymac Bancorp (nyse: IMB - news - people ) announced Tuesday that its chief executive, Michael W. Perry, cancelled his option to buy 1 million shares. In the company’s filing to the Securities and Exchange Commission, it said Perry did so to make those shares available to employees of the Pasadena, Calif.-based company.

“Voluntarily cancelling his options is a cosmetic signal but doesn’t change the economics of the company or what’s going on with the business,” said Fox-Pitt Kelton Cochran Caronia Waller analyst Matthew Howlett.

IndyMac has been at “ground zero” of the credit crunch, Howlett said, recently reporting its first annual loss, a result of the subprime mortgage meltdown.

For its fiscal year ended Dec. 31, the company reported a net loss of $614.8 million, or $8.28 loss per diluted share. IndyMac attributed the decline in profitability to higher credit costs and illiquidity in the secondary mortgage market.

Perry said that in order for the company to return to profitability, it must find a balance between controlling expenses and retaining quality employees. He hopes offering them his options will help motivate those workers to grin and bear it through the current economic downturn.

With shares of IndyMac plummeting 86.2% in the last year, giving up options may also signal Perry’s unwillingness to buy them himself.

“With the strong potential upside that I believe exists in our stock if we are able to continue to successfully navigate our way through the current environment and turn around our financial performance, these options will provide strong incentives for the people who are doing great things for IndyMac to stay with us and help us fight our way through the current crisis,” Perry said.

The stock was up 14 cents, or 3.6%, to $4.00 in early afternoon trading Tuesday.

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