It Pays to Be an Outstanding Member of the CoolSys Family
August 25, 2020
Greetings, Team CoolSys! We believe we have the best employees on the planet, and we’re always looking for ways to reward your talent, hard work and dedication. That’s why I’m excited to introduce the Incentive Unit Program (“IUP”), a new employee recognition program coming soon to CoolSys.
You may not be familiar with the IUP concept, so here’s a little background: CoolSys is a privately held company. Unlike a public company, where stock is traded on an exchange like the NYSE or NASDAQ, CoolSys stock is not available to the general public. However, we do have a lead shareholder that owns the company, Ares Management Corporation (“Ares”).
As CoolSys grows, our stock increases in value. Eventually, our lead shareholder exits and sells the company to another lead shareholder. Institutionally held private companies like CoolSys are bought and sold roughly every five years in order to return money to investors. This path will continue until CoolSys grows so large that it may become a public company.
Ares Management is the most generous private equity firm I have ever encountered. The firm has given up a percentage of its ownership in CoolSys (equal to millions of dollars) to create this IUP, which provides grants to a few carefully selected, high-performing employees each year. The monetary face value of these grants will increase as the value of CoolSys increases. When Ares sells CoolSys to the next lead shareholder (or we enter the public markets), the IU will pay each grant recipient the value of his or her IUP award in cash (which is taxable, incidentally).
Here’s an example of how the IUP works: In 2020, John Smith receives an IUP grant of 250 units at $10 per unit—a total value of $2,500. By the time CoolSys is sold, John’s IUs have increased four times in value and are now worth $40 per unit. At the time of sale, John’s original $2,500 in IU grants will now pay him $10,000 in cash.
In 2020, over 100 CoolSys employees will receive IUP grants, with a total value at issuance of $386,000. That’s unheard of in the private company environment and is a testament to our generous owner, Ares!
This year’s recipients will be notified soon. If you don’t receive a grant this year, please don’t worry—we plan to do this every year! However, if you are no longer with CoolSys when it is sold to the next shareholder, you will forfeit any IUs that have been issued to you. Also, a recipient cannot transfer his or her units or any right to payment for the value of such IUs at any point in time. The IUs are actionable only when CoolSys is sold.
There’s more exciting news to come about our relationship with Ares. Keep your eye out for more information about how Ares helped CoolSys create the CoolSys Cares Relief Fund. This tax-deductible charity was initially funded by Ares and will be funded in the future by CoolSys and our generous team members—all to aid our fellow employees!