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How do you share the wealth with your employees without going public? SAIC created an internal stock market that outperforms Wall Street.

Welcome to the internal market for shares in employee-owned Science Applications International Corp. Based in San Diego, SAIC is a huge company (1996 revenues: $2.2 billion) with a record of innovation in fields from advanced research for the Pentagon to information systems for health care. It recently announced a $700 million plan to acquire Bellcore, the R&D consortium owned by the Baby Bells.

But SAIC’s most powerful innovation is its ownership structure. The company’s 23,000 people control more than 90% of its stock. As at most high-tech companies, the engineers, programmers, and marketers at SAIC want to share in the value their breakthroughs create. But unlike a Silicon Valley startup, SAIC isn’t vulnerable to the vagaries of Wall Street. Share purchases are restricted to the company’s employees, consultants, and directors. Trading is restricted to one day per quarter. In a typical year, 2,000 people sell the stock and 3,000 people buy, with an average purchase of $3,000 and an average sale of $15,000.

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