DUBAI: Saudi Aramco will make available $1 billion of shares for employees under a plan to incentivize executives and other staff members alongside the initial public offering (IPO) due to take place next month.

The plan — which was disclosed in the IPO prospectus published late on Saturday night — will involve Aramco buying the shares from the government and making them available for employees under special terms.

Details are still being worked through, but the prospectus talked of a “celebratory grant plan,” implying that at least some of the shares would be given free to some of Aramco’s 73,000 employees.

Such share schemes are not uncommon in privatizations. 

Contributions

The Aramco plan is designed to “provide additional incentives to employees whose contributions are essential to the growth and success of the company, to attract and retain qualified individuals and to further align the interests of such employees with shareholders of the company,” the prospectus said.

The scheme will be in three parts: A long-term incentive plan for executives, a similar plan for management levels, and an incentive scheme for other eligible employees, in addition to the “celebratory grant.”

Aramco said it was also considering introducing an employee stock purchase plan once it becomes a public listed entity.

Publication of the offer prospectus is expected to stimulate interest among Saudi nationals, eligible expats and Gulf Cooperation Council (GCC) citizens for the IPO, expected to be the biggest share offering ever. Some 1 billion shares will be made available to private investors in the IPO, with as much as 2 percent being sold to global investors.

High net worth individuals interested in buying large chunks of shares may be included in the institutional offering if there is a lot of private investor demand.

The final proportion to be sold will be determined by the strength of global demand for the stock. There is also the possibility that the government could sell a big tranche of shares to a strategic foreign investor — like a big energy trade partner or a sovereign wealth fund.

The 658-page prospectus contains detailed financial and commercial information on Aramco and will be studied closely by investors interested in the shares.