Sharing the Wealth at SJE-Rhombus

At SJE-Rhombus, The ESOP Association’s 2017 ESOP Company of the Year, everyone is benefitting from an ambitious plan to boost the company stock price.

Growing the stock price—and employee owners’ ESOP accounts—at warp speed was a goal CEO Dave Thomas set shortly after arriving at SJE in 2012. Called Vision 2020, the goal calls for boosting the stock price 3.5 times—three times greater than the previous all-time high—by the year 2020.

Why was the goal set so high?

“It would have been impossible to get there by just working harder,” says Thomas. “It forces us to do things differently and to find different ways of doing things. And the team has responded tremendously well to that challenge.”

To help employee owners meet the challenge, SJE shared a roadmap of sorts, to help employee owners understand how to reach the goal—and that it was attainable. The company explained what needed to be accomplished in different areas, such as sales growth, margin improvement, and cost control.

“We’ve helped people understand that saving $10K a year will have a certain specific effect on the share price. And now they can do that math in their heads,” says Thomas.

That kind of shared insight has impressed Sheryll Barraco, an Engineering/Marketing Coordinator at the company’s Milford, OH, location. “Everything we discuss, there’s a plan behind it, and this is how it is going to work, and this is why it is going to work,” she says. “That ties in to the culture because we all have to work together.”

The result is a force multiplier.

“We’re to a point where we can get ideas from anybody at any level at any location of the business,” says Thomas. “It’s because they understand how it could impact the stock price. And when you get that level of engagement, change becomes quite a bit easier because they know truly what it means to them.”

Says Barraco: “Knowing that the best that you do is going to come back to you monetarily…it’s a feeling, and it’s a good one.”

What If?

The response from employee owners—and its effect on the stock price—has been aided by encounters dubbed “What If?” meetings.

Each quarter, Thomas and SJE’s CFO— Taunia Suckert—visit each of SJE’s eight locations to discuss the share price. Employee owners who have questions or want to better understand the ESOP can sign up for a one-on-one session with Thomas or Suckert.

The sessions usually last about 15 minutes but can go longer, if needed. Thomas says that, on average, 30-40 percent of employee owners at any given location sign up for a session.

The meetings provide an opportunity for employee owners to interact with company leaders and to better understand the stock price and what causes it to move up or down. They also provide invaluable feedback to Thomas.

Early meetings, for example, showed Thomas that employee owners needed clearer explanations of how the stock price is determined and what factors influence its value. “Since then we’ve spent a lot of time and energy educating the team on concepts such as multiples and EBITDA,” says Thomas.

That investment is paying dividends. “When ideas on how to improve the business start coming from 400+ people who understand it—versus just the most experienced people, or just managers and supervisors—that’s where the true value starts to kick in,” says Thomas.

And the value is indeed kicking in—so much so that SJE currently is on pace to meet is ambitious stock goal a year early.

Now when Thomas visits employee owners, he hears different kinds of questions.

“Now I get more questions about what will happen after we reach that goal,” says Thomas. “That is a pretty clear sign to me that the team believes in what we’re accomplishing and that the momentum will continue.”

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