Special Employee Voting Rights End at SAIC

Science Applications International Corporation (SAIC), once the second-largest majority employee-owned company in the U.S., has changed its stock structure to eliminate the 10-to-1 voting rights that preferred shares held by employees were given when the company went public three years ago. Shareholders (including employees) voted on the change in June. SAIC's board concluded that the arrangement (similar to one at Google) was putting off potential investors. SAIC stock has been basically flat since its IPO, after consistently rising by about 15% per year over its 30-plus years as a private employee-owned company. The culture at SAIC has changed substantially since the IPO. Once structured around a series of semi-autonomous (and sometimes competing) teams, the company has now moved to a more traditional corporate model. SAIC is one of a number of majority employee-owned companies to go public, most of whom share a similar history. At the start, leaders pledge to maintain the company's employee ownership culture along with substantial actual ownership. Over time, both the culture and the ownership share tend to dwindle. A good article on the subject appeared in the San Diego Union Tribune on June 19.