Dorsey said that one per cent of the company - worth an estimated £130m - will be “reinvested directly in our people”.
The stock will go into the employee equity pool shared by the company's 4,000 workers.
Dorsey announced the news to his 3.2 million followers in true Twitter style, complete with emoji lightning bolts, chicks and peace signs.
“I’d rather have a smaller part of something big than a bigger part of something small,” Dorsey tweeted.
“I’m confident we can make Twitter big.”
The reaction was mainly positive, with hundreds of users commending the move. But not everyone was happy.
Twitter user @schwa, who claims to have left the company in April, said: "Hey just after your lay offs. How coincidental. It's almost as if you might be trying to fix a morale problem?!?"
The company fired an estimated 336 staff last week - around eight per cent of the company's global workforce.
The San Francisco-based firm said the restructuring was part of an overall plan to "reinvest savings in its most important priorities".
Dr Sotirios Paroutis, associate professor of strategic management at Warwick Business School, said: "After the stick, we now have the carrot.
"Dorsey now sends a motivational signal inside the firm that he is also taking steps to retain Twitter’s talent pool. It also sends a signal to investors that he is prepared to take bold decisions to make sure Twitter keeps up the pace with its innovations to market.
"He now has a second chance to revive Twitter in a way that convinces its primary stakeholders that there is a viable business plan behind the firm that can help it deliver both credible user innovations and future growth."
Earlier this month, Twitter shares rose as much as four per cent after Dorsey was appointed chief executive permanently.
The social network is expected to post its third-quarter results on Tuesday, which it anticipates to be "at or above the high end of previously forecasted ranges".