When private equity firm KKR announced Monday’s $3 billion sale of CHI Overhead Doors to steel company Nucor, it cashed in hundreds of hourly workers at the plant in small Arthur, Illinois, who would receive between $20,000 and $800,000 each. when closing the deal.
The deal represents a significant return on investment for KKR, which bought the garage door maker for $600 million in 2015. For employees, who have been assigned equity in the company for nothing, the sale will potentially change their lives.
“I had no idea it was going to be such a big deal,” said Rhonda Jamieson, 60, office manager at CHI Overhead Doors.
Jamison, a 17-year veteran of the garage door company, learned about the sale and her six-figure payout at an all-employee meeting last week. Payments vary based on seniority and salary, with some longtime truck drivers — the highest paid hourly workers — moving home in excess of $800,000 from the sale.
The company said that more than 630 hourly workers and truck drivers would make an average of $180,000 through the sale.
Located in Arthur, a village of about 2,100 people south of Champaign, the 41-year-old company manufactures garage doors for both commercial and residential use. When KKR bought the company in 2015, it allowed all of its 800 workers — including salaried employees — to participate in the stock ownership plan as a bonus.
Employees who earned more than $100,000 annually were also allowed to invest their own money in the stock plan.
The program has been rolled out by New York-based KKR in 25 companies in its portfolio since 2011. The garage door manufacturer, which has delivered KKR’s highest ROI in over 30 years, has proven the value of the stock plan to both ownership and employees.
“We’re doing it because it’s clearly good for workers,” said Pete Stavros, 47, co-chairman of private equity at KKR and chairman of CHI Overhead Doors. “And it turns out to be smart business, too. It leads to greater financial engagement, stability and flexibility, and is less likely to leave the workforce, which leads to better outcomes for companies and investors.”
Stavros, an Arlington Heights native whose father worked as a motor grader for Union with a Chicago construction company, developed a model for giving hourly employees ownership of the stock at no cost. In addition to the ownership share, the employees were It puts in $1 million annually to improve the plant, investing in everything from air conditioning to new break rooms and the cafeteria.
Productivity boomed, Stavros said, with revenue growing 120% and margins increasing from 21% to 35% during KKR’s ownership of CHI.
Last month, Stavros helped launch a nonprofit organization, Ownership Works, to help spread the employee ownership model to 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 had four private equity owners during the new millennium, plans to continue operations at the same site under the direction of the new owner, Nucor, a solid producer in North Carolina.
The deal, which is expected to close in June, pending regulatory approval, will generate more than $360 million in payments for 800 employees. The company said hourly employees will get about $114 million in revenue, while salaried employees will get about $250 million.
When Stavros announced the deal in front of about 400 employees last Wednesday, with potential payments projected on a big screen, the news flooded Jamison and her co-workers.
“The whole crowd went crazy,” Jamison said. “The grown-up men were crying. I almost fainted.”
Jamison, who lives in nearby Atwood, will receive “hundreds of thousands of dollars” from the sale. She plans to pay off her home mortgage and several loans, and use some of the proceeds from the sale to help her special-needs grandson.
However, she is not planning to leave the business any time soon.
“There’s no reason for me to leave,” Jamison said. “I want to stay as long as she is with me.”
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