When private equity firm KKR announced the $3 billion sale of CHI Overhead Doors to steelmaker Nucor on Monday, it generated a windfall for hundreds of hourly workers at the plant in tiny Arthur, Illinois, who will receive between $20,000 and $800,000 each when the transaction closes. .
The deal represents a huge return on investment for KKR, which bought the garage door maker for $600 million in 2015. For the employees, who were given a stake in the company at no cost, the sale is potentially a life change.
“I had no idea it was going to be a big deal,” said Rhonda Jamison, 60, an office manager for CHI Overhead Doors.
Jamison, a 17-year veteran of the garage door company, learned about the sale and its six-figure payout at an all-employee meeting last week. Payments vary based on seniority and salary, with some longtime truckers, the highest-paid hourly workers, taking home more than $800,000 from the sale.
More than 630 hourly workers and truckers will receive an average of $180,000 through the sale, the company said.
Located in Arthur, a town of about 2,100 people south of Champaign, the 41-year-old company manufactures garage doors for commercial and residential use. When KKR bought the company in 2015, it allowed all 800 workers, including salaried employees, to participate in the stock ownership plan as a free benefit.
Employees who earned more than $100,000 per year were also allowed to invest their own money in the stock plan.
The program has been implemented by New York-based KKR across 25 portfolio companies since 2011. The garage door manufacturer, which generated KKR’s highest return on investment in more than 30 years, demonstrated the value of capital plan for both property and employees.
“We do it because it’s obviously good for the workers,” said Pete Stavros, 47, co-head of private equity at KKR and president of CHI Overhead Doors. “And it turns out it’s also smart business. It leads to a workforce that is more engaged, stable, financially resilient and less likely to quit, leading to better results for companies and investors.”
Stavros, an Arlington Heights native whose father was a unionized road grader at a Chicago construction company, developed the model to give hourly employees free stock ownership. In addition to an ownership interest, the employees were allocated $1 million per year to improve the factory, investing in everything from air conditioning to new break rooms and a cafeteria.
Productivity boomed, Stavros said, with revenue growth of 120% and profit margin rising from 21% to 35% during KKR’s ownership of CHI.
Last month, Stavros helped launch a nonprofit, Ownership Works, to help spread the employee-ownership model in more companies.
Founded in 1981, CHI Overhead Doors is the largest employer in Arthur, which is about three hours south of Chicago. The manufacturer, which has had four private equity owners during the new millennium, plans to continue operations in the same location under new ownership, Nucor, a North Carolina-based steel producer.
The sale, which is expected to close in June pending regulatory approval, will generate more than $360 million in payments for 800 employees. Hourly employees will receive about $114 million of the earnings, while salaried employees will receive about $250 million, the company said.
When Stavros announced the deal in front of about 400 employees last Wednesday, with potential payments projected on a big screen, Jamison and his co-workers were overwhelmed by the news.
“The whole crowd went crazy,” Jamison said. “The grown men were crying. I was about to pass out.
Jamison, who lives near Atwood, will receive “several hundred thousand dollars” from the sale. She plans to pay off the mortgage on her house and several loans, and use part of the proceeds from the sale to help a grandson with special needs.
However, he does not plan to stop working any time soon.
“There’s no reason for me to leave,” Jamison said. “I want to stay as long as they have me.”