2006 IPO the start of a new phase in the company's history
As part of the 50th anniversary celebrations at Leidos, Insights will be taking a closer look over the course of this year at some of the key moments in the company's history. For a deeper dive into our past, we invite you to download and read our new eBook.
SAIC stock began trading on the New York Stock Exchange for the first time on Oct. 13, 2006. While the decision to go public was a difficult one for the then-37-year-old company, it was also necessary.
Employee ownership was one of the hallmarks of SAIC and its founder, Dr. J. Robert Beyster. The tagline "An Employee-owned Company" was even part of SAIC's logo. But in Sept. 2005, the company’s Board of Directors voted to launch an initial public offering (IPO) to take SAIC onto the stock market.
The idea of going public wasn’t new but it never gained traction until the Board’s vote. Beyster always believed Wall Street wouldn’t understand the complexities of SAIC.
“Bob used to say, ‘I’m just worried that we’re such a complicated, complex company that the markets won’t get us, because we work on all these national security programs and you can’t talk about them,’” said Ron Zollars, Beyster’s former chief of staff. “[Analysts] want to dig in and learn about everything, and it’s like: “Well, I’m sorry. We can’t talk about this. We can’t talk about that one, either.” And [Beyster] just didn’t feel that the markets would be as accepting.”
Whether or not the markets would be welcoming, SAIC had a good reason to go public: its internal stock trading program was getting expensive. The program allowed employee shareholders to buy and sell their shares every three months. From 2000 to 2005, SAIC spent $2.4 billion purchasing employee shares. Buying back those shares cost roughly $500 million annually, almost as much cash flow as SAIC saw yearly.

The Board of Directors proceeded to work on its IPO plan for a year until presenting it to the shareholders for a vote on Sept. 27, 2006. More than 86 percent of shareholders voted to approve the IPO. A little more than two weeks later, then-CEO Kenneth Dahlberg rang the NYSE opening bell. Operating under the ticker symbol SAI, the company’s stock rose by 21 percent in its first day of trading and, in total, the IPO raised more than $1 billion.
Throughout the IPO process, the Board of Directors ensured employee owners that they would benefit. Employee shareholders received special dividends while also receiving new stock, which helped them keep control of SAIC after the IPO as they owned 81 percent of the stock when the company went public. In addition, because each employee share counted as 10 votes, employees held 98 percent of the voting power. Thus, employees continued to take significant personal ownership in the future of the company.
Before the IPO, SAIC was the largest employee-owned research and engineering firm in the United States. Thanks to the measures the company took to ensure a smooth public offering, SAIC reported a 7 percent increase in annual revenue a year after the IPO. Its operating income increased by 19 percent.
The IPO process also convinced the company to produce a long-term forecast, something it had never done. By 2007, SAIC had 44,000 employees, making it larger than the combined workforces of the U.S. Departments of Energy, Labor, and Housing and Urban Development. Many changes have taken place in the decade-plus following the IPO but one thing that remains, and still resonates, is a legacy of personal ownership among the employees of Leidos.