by: Scott, Bill
Source: The Foundation for Enterprise Development
There are some who suggest that a strong culture of employeeownership can thrive only if a company is privately held. Going public, they say, will surely spell the end of true employee ownership, as well as the many performance benefits that result. Our experience at Science Applications International Corporation (SAIC)—the largest employee-owned science and engineering firm in the United States—leads us to a different conclusion. After 35 years of privately held employee ownership, SAIC announced in September of 2005 that it would go public by way of an initial public offering (IPO) of company stock. The move to the public market ended the unique system of internal stock trading that SAIC pioneered during its years of private ownership. Under that system, the company's board of directors, with the advice of an outside appraiser, established the fair market price of the company's stock each quarter. On the basis of the new price, the company conducted a market-making operation in which shareholders were permitted to buy and sell shares through the company's licensed broker-dealer, Bull Inc. Although not legally obligated to do so, SAIC's policy was to balance these trade orders by buying excess tendered shares or issuing new stock as necessary.
Link: Myth #3: Going Public Ends Employee Ownership
Publication Date: 2007-01-01