\n<\/p>\n
It was showtime for the employees of CoolIT.<\/p>\n
In the late afternoon of March 25, as an unexpected snowstorm blanketed Calgary, Alberta, around 600 mainly frontline workers of CoolIT Systems gathered under an immense tent for a highly anticipated town hall. Less than three years earlier, private equity colossus KKR had purchased CoolIT, and as it does for all its acquisitions, awarded equity to everyone. In this case, that meant employees from thermal mechanical engineers to security guards at the liquid cooling purveyor for big tech infrastructure. Five days earlier, these folks got the official word that KKR and its partner, the sovereign wealth investor of Abu Dhabi, were selling their employer to Ecolab, the industrial water treatment giant, for $4.75 billion, or around 18 times CoolIT\u2019s roughly $270 million valuation when KKR took charge.<\/p>\n
The employees knew they were shareholders and that a sale would trigger cash payouts for everyone, and the crowd was about to find out how much. The new deal, and the money it would bring them, was still another stunner in what had been a dizzying rise under KKR, a moonshot that already left the old-timers I spoke to amazed. In fact, this event was something of a celebration for one of the top niche success sagas in the AI revolution.<\/p>\n
Founded 25 years ago by an engineer tinkering in a garage, CoolIT first specialized in liquid cooling for gaming computers. But under KKR, it went all in on outfitting the burgeoning ranks of AI data centers. The hyperscalers deployed its technology to pack servers at far more density than is possible using air cooling, and CoolIT benefited greatly by Nvidia\u2019s insistence that its fastest GPUs be liquid cooled. Result: In the past three years, the former plodder\u2019s revenues jumped 300%, as the hyperscaler share soared from 5% to 60%. It has multiplied production capacity 30 times while mushrooming its manufacturing footprint to cover an area the size of over five football fields. \u201cWe were a small company where everyone was multitasking, and we were often struggling,\u201d says Nga Morris, a supervisor who tests products for mass production. \u201cI thought KKR would help us grow, but nothing like the explosion we\u2019ve seen in the past three years.\u201d \u00a0\u00a0<\/p>\n
The assembled knew the huge sales price and that they would get nicely rewarded. Yet according to those I spoke to, they harbored relatively modest expectations. \u201cWe had a lot of excitement and happiness going around the days before the town hall,\u201d says Kenny Kong, a quality control and data analyst who joined in 2011 when CoolIT had 22 employees. \u201cBut I, like most people, didn\u2019t know how the scheme worked [in determining payouts]. I\u2019d looked at videos on YouTube from times when KKR sold other companies, and saw numbers like $10,000, or $30,000, or $50,000.\u201d Kong was expecting a nice reward, he says, but nothing that would transform his financial standing.<\/p>\n
The presentation opened with cheerleading for the ownership mindset that\u2019s \u201cgetting everyone to pull together\u201d by making employees \u201cstewards of the business\u201d from Pete Stavros, KKR\u2019s global head of private equity and the figure who launched its employee ownership program. CoolIT CEO Jason Waxman, who took charge at the buyout, appeared by video from Portland, Ore., where he got stuck in the snowstorm, avowed that he could \u201chear the shouting\u201d from across the border. Then, Kyle Matter, KKR managing director and chairman of CoolIT, took the stage for the main event.<\/p>\n Courtesy of KKR<\/p>\n<\/figure>\n The casting was impeccable. Matter\u2014slim, dark-haired, attired in a dark blue zip-up sweater and matinee idol handsome\u2014is a natural entertainer who savored every moment holding a mic. \u201cI feel like a game show host,\u201d he declared. \u201cBut on this game show, everyone is a winner!\u201d \u00a0He explained that each employee would receive cash at the closing, scheduled for Q3, based on two factors: their annual base pay (salary, hourly, or temp), and their years with CoolIT. Each category for length of service would garner a different multiple of their earnings in a lump sum\u2014the longer the tenure, the higher the multiplier. \u201cShould we get to the numbers?\u201d Matter intoned. As the hearty roar displayed, this horde\u2014featuring many attired in sweatshirts labeled \u201cOwnIT\u201d for the name of the CoolIT equity plan\u2014this crowd wasn\u2019t cooling it.<\/p>\n Matter proceeded to show the payday for the first group on a big screen. The slide displayed, \u201cIf you joined in 2026, you will receive a minimum of 1x annual pay\u2026minimum payout of $35,000 Canadian ($25,200 U.S.; payouts to follow are expressed in Canadian). Matter didn\u2019t step on the applause line. He took a long pause, and in fact proved a master of going slow and building suspense all during his presentation. Next came the numbers for people employed in 2025: 2.5x annual pay, and a minimum of $95,000. An engineer earning $80,000, for example, would get $200,000, even if they\u2019d arrived just a few months ago. \u201cWhen I saw what people from 2025 would get, I knew something was happening,\u201d says Kong. \u201cI didn\u2019t expect that we\u2019d be getting multiples of salary. As the numbers kept coming, the excitement got more and more unbelievable.\u201d<\/p>\n Folks joining as recently as 2023 got 5x annual pay. That\u2019s quite a windfall for a lot of people, since CoolIT has grown its workforce around 50% since the KKR purchase. \u00a0Then things got really fabulous for what CoolIT dubs the \u201cOGs\u201d or \u201coriginal gangsters.\u201d Anyone hired in 2016 and before got an eight times multiplier, and at least $490,000. Keep in mind that the minimum would apply to people making just $61,000 or below, and the number would ramp from there.<\/p>\n Both Morris and Kong, who\u2019d been at CoolIT for 12 and 15 years respectively, fit the super-veteran category. \u201cI was expecting nine to 18 months, and a maximum of two years,\u201d says Kong. \u201cI couldn\u2019t believe what I was seeing. I took off my glasses and covered my mouth and started crying when I heard about my category.\u201d Indeed, the livestream shows Kong in tears as several female colleagues sporting broad smiles pat his shoulders as if to remind him these are tears of joy. \u201cA day later,\u201d he says, \u201cI was still trying to digest the event.\u201d<\/p>\n As for fellow OG Morris: \u201cI was shocked, honestly speechless. I was optimistic but didn\u2019t expect anything large to happen.\u201d She orchestrated her own little exercise in suspense when telling her husband. \u201cI wanted to build in some surprise. When he came home, I stayed quiet and waited for him to ask me, \u2018How did it go?\u2019 He\u2019s a calm guy, so he didn\u2019t jump up and down, but he was really happy.\u201d She plans to use the windfall to invest in a family retirement plan and pay for her son\u2019s university education. The loot will help fund some vacation ambitions as well, she notes, specifically attending her niece\u2019s wedding in her native Vietnam next year, and visiting countries such as Italy and France that she\u2019s long wanted to see.<\/p>\n \u201cMy reaction was, this is surreal, it\u2019s too good to be true, it\u2019s life-changing,\u201d says Ibrahim Ibitoye, who manages the assembly line for CooIT\u2019s CDUs, or cooling distribution units. \u201cIn 2017, soon after I arrived, we had five people on the line,\u201d he says. \u201cNow we have 120.\u201d It\u2019s a big step toward financial security, he avows. \u201cI can rest assured I can pay for college for my three kids, ages 3, 9, and 11. When I got the envelope with my specific number after the town hall, the first thing I did was call my wife. Before the event, she was cautious. When I called, she was blown away.\u201d<\/p>\n By the way, the CoolIT workforce is super-multicultural. Ibitoye comes from Nigeria, while Morris immigrated from Vietnam as a young adult, and Kong was born in Hong Kong.<\/p>\n Matter uncorked one more surprise before signing off. \u201cLike any game show host [would say], there is more!\u201d he announced, and went on to announce that anyone who remained at CoolIT through 2027 would get an extra half-a-year\u2019s pay. Then, a huge curtain parted to open a party space under the tent, where the happy throng dined on the likes of Vietnamese vermicelli noodles and pastel glazed donuts from a display wall.<\/p>\n Measured by payout per person, the CoolIT sale marked the high point of KKR\u2019s employee ownership campaign to date: Workers on average received roughly $240,000. That\u2019s nearly equal to the average Wall Street bonus for 2025. But KKR has been arguably the leading proponent in America for making owners of the rank and file. It amounts to a personal crusade for the figure who\u2019s spearheaded the effort, Pete Stavros. \u201cIt\u2019s hard to get rich on your labor alone,\u201d says Stavros. \u201cPeople build wealth in this country by owning things. But that hasn\u2019t been the case for frontline workers.\u201d He points out that from 1984 to 2024, productivity has grown 80%, but worker pay has lagged far behind, rising only 20% in real terms. In the same period, the stock market has rocketed 9,000%, creating immense wealth for the likes of executives who get options, restricted stock, and other equity grants. Upshot: The top 0.1% of Americans measured by wealth own 24% of the stock, and the top 10% own 87%. The bottom 50% hold just 1%.<\/p>\n It was Stavros\u2019s father who inspired this inclusive vision. \u201cHe was a road grader for a union construction company. He saw that hourly workers didn\u2019t want to speed up because if you get more productive, your hours go down.\u201d Yet employers never found a way of rewarding them for working faster and better, he says, adding, \u201cWhat really drove him nuts was that the company never asked for the workers\u2019 opinion. His dream was creating greater alignment between the company and the workers, and giving workers a chance to build some wealth.\u201d Stavros made analyzing employee stock plans his specialty as a student at Harvard Business School.<\/p>\n Stavros helped convince KKR to institute the first program in 2011, and today the company oversees ownership plans at 84 portfolio companies, covering 195,000 non-senior management workers, poised to pay out as much as $14 billion when the enterprises go public or get sold, \u00e0 la CoolIT. It has already distributed $1.8 billion over 13 exits. Among the most celebrated examples: C.H.I. Overhead Doors. When KKR bought the Illinois manufacturer in 2015, only 18 employees were shareholders. The company extended ownership to all and sundry, and when it sold C.H.I. to Nucor in 2022, 800 workers received checks averaging $175,000, the top number pre-CooIT. Other sales that created notable payouts: Australian environmental project developer GreenCollar (2023), hazard mitigation specialist GeoStabilization (2024), and Kito Crosby (2026), a Texas maker of lifting and rigging gear.<\/p>\n Stavros and the KKR team had to overcome a legal and taxation thicket to find a template that works. Employees don\u2019t have individual accounts. Instead, the portfolio company places equity reserved for workers, technically as a type of stock options, in a special trust. \u201cWorkers don\u2019t trade wages or wage increases or other benefits for the equity, and they keep their 401(k)s,\u201d says Stavros. \u201cSo this is a way you can grow your wealth.\u201d When the enterprise is sold or goes public, the cash generated or stock gets distributed by the model in view at CoolIT, via a formula based on both annual pay and length of service.<\/p>\n \u201cThe payback comes in a stronger culture,\u201d says Stavros. He asserts that two crucial measures greatly improve: turnover and \u201cengagement.\u201d \u201cThe quit rates for all companies in the U.S. average around 30% on average,\u201d he says. \u201cWe\u2019ve had companies start with quit rates as high as 80%. If you\u2019re losing workers that fast, why bother to train or educate them? It results in workers staying low-skilled. And all that time and money gets wasted on constantly hiring and onboarding, plus you\u2019re losing so much knowledge.\u201d On average, Stavros finds, the pace of turnover improves around 30% once KKR achieves an ownership culture.<\/p>\n The second big goal, added engagement, is broad and difficult to define. But it basically amounts to motiving workers toward pursuing a common purpose. It can take such forms as speaking up early on when problems appear, or for assembly-line crews, constantly making suggestions to improve workflow, and readily sharing knowledge with colleagues. \u201cThe idea is, \u2018We want you to help lead the way, and the equity plan, by making you an owner, is a symbol of that,\u201d says Stavros.<\/p>\n A case study of the concept\u2019s power is Ingersoll Rand. In 2013, KKR bought air compressor and pump-maker Gardner Denver, setting a slice of equity for the employees. KKR named Vicente Reynal as Gardner\u2019s new CEO in 2016. \u201cI\u2019d worked for big manufacturers, and I saw that the hourly workforce wasn\u2019t emotionally attached to the company. I wanted to change that by giving workers skin in the game,\u201d Reynal recalls. He marshaled ownership as a tool to promote a new mindset. \u201cI wanted an attitude like, \u2018This is my company. I want to improve the process on the factory floor, I want to negotiate with suppliers for better payment terms.\u201d He and KKR extended $100 million in equity just before its IPO in 2017 that handed 6,000 employees chunks of stock. KKR then awarded an additional $150 million in shares to the workers. \u201cOur goal was to unlock lots of cash,\u201d says Reynal. And it worked.<\/p>\n In two years, Gardner generated an enormous growth in cash flows that enabled it to purchase competitor Ingersoll Rand for $6 billion in 2020; Gardner then took the name of its acquisition. KKR says the quit rate dropped 90% from the time it bought Gardner to single digits 10 years later. Accident frequency is down 70% to a number Reynal characterizes as a \u201cbest in class.\u201d \u201cWe use kaizen events [a method pioneered at Toyota that encourages workers to volunteer improvements on assembly-line productivity] and instead of hiring consultants, the workers make those improvements on their own every day.\u201d Reynal notes that he\u2019s kept awarding equity to workers every year, and that the $300 million in stock they\u2019ve received is now worth over $1 billion.<\/p>\n Unfortunately, Ingersoll Rand is an exception in offering equity to all employees. Though the policy has grown in private equity (TPG is also a big practitioner), it\u2019s still relatively rare in public companies. To spread the gospel, Stavros was the leading force in creating a nonprofit called Ownership Works. Reynal is a founding member. The organization counts a long list of participants including many PE firms such as Leonard Green and Warburg Pincus and a few big public players, notably Harley-Davidson and Ingersoll Rand. The idea is for the experts who\u2019ve made the concept work to get public companies interested and show them how to establish the programs successfully. Says Reynal, \u201cI have the playbook on how this operates. I talk about its benefits at conferences, and coach CEOs on how to do it.\u201d Ownership Works harbors the ambitious goal of achieving $20 billion in employee wealth by 2030.<\/p>\n But Stavros believes ownership could spread to multiples of that number if America once again embraced an instrument called the ESOP, for employee stock ownership plan. The Ownership Works platform offers no tax incentives to the company and imposes an upfront cost. In addition, it may take a long time to harvest the return. Hence, many publicly traded companies aren\u2019t buying in. By contrast, ESOPs provide major tax breaks to both employers and employees. The rub is that ESOPs have triggered a rush of lawsuits that have caused a sharp decline. Stavros is spearheading an effort in Washington, D.C., to modernize the ESOP laws. An ESOP revival, he contends, could make owners of another 50 million workers.<\/p>\n At CoolIt, the workers I interview testify to the force of ownership as a motivator. \u201cThe company is trying very hard to treat everyone equally and make the workplace a better place,\u201d says Morris. \u201cBefore KKR, we had good times and bad times.\u201d She recalls that employees took pay cuts to help the company survive when the pandemic crushed production, and notes that \u201cmorale is much better now.\u201d Kong agrees. \u201cI was with another global company before that did give stock, but I never felt like an owner,\u201d he says. \u201cHere, management is constantly telling you that you are actually an owner, and that you, not just the executives, can get a spectacular return from the good work we\u2019re doing. If our production line operators didn\u2019t build quality products and maintain the highest standards why would Ecolab be interested in buying us?\u201d<\/p>\n As for Ibitoye, he adds that \u201cownership\u201d is encouraging workers to do things as simple as \u201celiminating any waste\u201d and nixing anything that \u201cdoesn\u2019t add value to production.\u201d He adds that CoolIT takes the \u201cno idea is too silly\u201d approach that encourages folks to come forward with changes that seem so minuscule that people are reluctant to propose them but, taken together, can speed output and hone quality. \u00a0<\/p>\n The cheers from that snowy day under the cavernous tent testified that an ownership culture can work wonders. Like CoolITs innovations, it\u2019s an idea that should come out of the lab and onto the production floor.<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":" It was showtime for the employees of CoolIT. In the late afternoon of March 25, as an unexpected snowstorm blanketed Calgary, Alberta, around 600 mainly frontline workers of CoolIT Systems…<\/p>\n","protected":false},"author":520,"featured_media":8329,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[6],"tags":[9074,1181,5755,9075,9073,451],"jetpack_publicize_connections":[],"yoast_head":"\nEmployees had high hopes\u2014and still got shock<\/strong><\/h2>\n
KKR is leading the way in employee ownership<\/strong><\/h2>\n
For the companies awarding equity, the payoff comes in greater engagement, loyalty, and productivity<\/strong><\/h2>\n