Following a share price plunge that left employee equity awards deeply underwater Zoom Video Communications Inc. (ZM) modified its program to provide employees extra equity “based on certain stock price criteria.”

In other words, the more the stock falls, the more Zoom tops off employee equity awards.

Ninety-days ago we warned Zoom risked diluting shareholders in its bid to retain employees and planned to continue heaping additional restricted stock units (RSUs) on employees for the next four years. Unvested equity related to the modification amounted to nearly 2% of shares outstanding at the time.

Now we know unvested RSU growth is significantly outpacing sales growth.

In its latest quarterly filing, Zoom revealed unvested RSUs topped 13.5 million, an increase of 39.9% from the quarter ending ninety days prior. The company’s revenue grew 8% YoY and 2.3% sequentially.

Unvested RSUs are now the equivalent of 4.5% of shares outstanding.

Even worse, the unvested RSUs have a weighted average fair value of $145.93 per share. With a current share price of $83.60, employees are once again underwater when it comes to equity compensation.

With 3.5+ years remaining under the modified equity award program, investors hoping to avoid dilution should note Zoom’s current buyback ends in approximately 1.5 years. With $574.1 million remaining under the current authorization, Zoom can repurchase approximately 6.8 million shares at the current price, or only about half of all unvested RSUs as of July 31, 2022.