Ace Tim Lincecum has reportedly signed a two-year, $40.5 million extension with the San Francisco Giants, avoiding an arbitration hearing in the process.

Tweeted Henry Schulman of the San Francisco Chronicle:

According to Schulman, Lincecum will receive a $500,000 bonus and is due to earn $18 million this year and $22 million next year.

Lincecum has been the Giants' ace ever since his second year in the league, in which he posted a 2.62 ERA, 1.17 WHIP and 265 strikeouts while winning 18 games.

Last season, Lincecum posted a 2.74 ERA, 1.21 WHIP and 220 strikeouts in 217 innings, holding opposing batters to a .222 average.

What It Means

This is a great deal for the Giants. They not only avoid an arbitration hearing, potentially saving them money, they also avoid a long-term contract, which would be risky given Lincecum's workload throughout the years.

Lincecum asked for a $21.5 million salary in arbitration last Tuesday. With the Giants offering $17 million in arbitration, I find it hard to believe that the arbitrator would side with the Giants given Lincecum's status as an elite arm.

The Giants did a similar thing with Lincecum in February 2010, agreeing on a two-year, $23 million deal ahead of the scheduled hearing. They've been lucky to save some money dealing with Lincecum, who is unquestionably one of the top pitchers in the majors.

What's Next

The Giants also reached one-year deals with outfielders Nate Schierholtz and Melky Cabrera, and reliever Santiago Casilla last Tuesday.

With Lincecum locked up, they appear set to head into the season with what they have. Second-year pro Brandon Belt will likely take over for the recently departed Cody Ross in left field, with Cabrera taking over for Andres Torres in center and Schierholtz starting in right field. The Giants have a payroll of about $130 million this season.