Public tech companies are increasingly granting employees more stock to woo talent, even as tech stock prices continue to plummet.
Equity in a company — known as restricted stock units or RSUs — is often a major part of compensation packages for tech workers, which dramatically increases total compensation for employees.
This strategy worked well when stocks were flourishing but a falling stock market is now forcing many tech companies to issue more shares to match the same compensation levels to entice new employees. Companies are trying to keep their employees happy during this turbulent time for the tech industry. For example, Snap gave its remaining employees additional RSUs to get employee equity levels back to the same value as when they were granted. Still, this practice could dilute existing shareholders, analysts say.
Companies also do share repurchases, or stock buybacks, to reduce stock dilution. Insider's analysis excludes buybacks.
Our analysis showed that Roku and Zoom have each issued more than 10 times the number of RSUs by the second quarter of 2022 compared to the same time period in 2021.
Although less extreme, major tech companies including Wayfair, Doordash, Uber, and Pinterest have more than doubled the number of RSUs granted during the first and second quarters.
Compared to a previous Insider analysis of RSU dilution during the first quarter of 2022, companies are ramping up the number of newly issued RSUs — every increase in RSUs dilutes investors even more.
But it's not all bleak. Apple continued to issue around the same amount of RSUs after the first two quarters of 2021 and 2022, while PayPal and Hubspot actually issued fewer RSUs than the year before.
The new chart below shows the changes in RSUs granted by the second quarter of 2021 versus the second quarter of 2022 for major tech companies.
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