Central Coast embraces employee ownership
Since 2019, there has been a rise in new employee-owned businesses nationally.
According to the National Center for Employee Ownership, the number of Employee Stock Ownership Plans has increased from 259 in 2019 to 309 in 2023, the most recent year for which data is available.
The tri-county region is home to more than 35 employee-owned companies.
Several, including Associated Building Supply in Oxnard, Santa Maria-based Diani Building Corp., Toro Enterprises, also in Oxnard and Santa Barbara-headquartered Tynan Group Companies, have become employee-owned since 2023.
Employee Stock Ownership Plans (ESOPs) are retirement plans in which employees become owners of companies and share in the rewards if the firms’ stocks rise and the risks if the stocks fall.
“Our ESOP has reinforced a culture where employees directly benefit from the success of the business,”Brent Luna Sr., Diani Building’s vice president, told the Business Times.
“As the company grows and succeeds, our employees share in that success,” he said.
Diani Building has about 20 employees.
ESOPs in theory motivate employees, increase productivity, and improve worker retention.
Employee-owned companies structured as ESOP S-corporations pay no federal income tax and usually no state income tax on their corporate profits.
As of 2023, there were 6,609 plans identified as ESOPs in the U.S. holding total assets of over $2 trillion, according to the National Center for Employee Ownership.
The number of unique companies with an ESOP was 6,411(5,993 private companies and 418 publicly traded companies), according to the center.
A company may sponsor multiple plans, the center noted.
In California, there were 787 ESOPs with 911,688 participants, the center said.
“In 2023, and a little bit the year before that, the number of new plans grew some, but I think this year there’s evidence that it’s growing much more,” Corey Rosen, the center’s founder, said.
This year, based on news reports, there have been 81 new ESOPs, Rosen said. In 2024 and 2025, there were about 75 new ESOPs in total.
Other tri-county employee-owned companies include Saalex Corp in Camarillo, Tecolote Research in Goleta, Chatsworth Products in Simi Valley, Hardy Diagnostics in Santa Maria, and Glenn Burdette in San Luis Obispo.
Tecolote and Arnold Magnetics Corp. in Camarillo became employee-owned in 1974, when such plans were formally established under the federal Employee Retirement Income Security Act.
That is according to company 5500 reports, public records and more.
Form 5500 is a joint IRS and Labor Department annual report required for employee benefit plans covered by the Employee Retirement Income Security Act.
CPA firm Glenn Burdette, which was founded in 1965, established its ESOP plan in 2000.
The company had about 60 employees then and approximately 80 now.
“The firm’s leadership recognized the need for a long-term succession solution that would preserve Glenn Burdette’s culture and independence while creating opportunities for future generations of professionals,” David Merlo, who became the company’s CEO/managing principal two years ago, said.
Leadership also wanted a structure that would help attract and retain talented people in a highly competitive profession, he said.
“Most importantly, the ESOP reflected a belief that the people who help create value should have the opportunity to share in that value,” Merlo said.
Merlo said Glenn Burdette’s ESOP has worked out extremely well.
“The ESOP helped the firm navigate multiple ownership transitions over a 25-year period while maintaining continuity for clients and employees,” he said.
“It provided meaningful retirement benefits to employee-owners and helped preserve the collaborative culture that has always been one of Glenn Burdette’s defining strengths,” Merlo said.
Luna also gave high marks to Diani Building’s ESOP, which the company formed in June 2025.
“The primary goal was to create a sustainable ownership transition that would allow the company to continue to grow and operate into the future,” he said.
Even though the ESOP is only a year old, Luna said the company’s new generation of leaders have already become engaged and have injected new energy and insight into the firm’s growth and market potential, resulting in increased backlog and hiring.
“We believe employee ownership creates a powerful incentive for teamwork, accountability, and a long-term perspective,” he said.
Santa Maria-based Hardy Diagnostics, which was founded in 1980, became employee-owned in 2013, said CEO/president Chris Catani.
The company had about 350 employees then and approximately 425 now.
Catani said founder and then-president Jay Hardy wanted to create the ESOP “kind of as a thank you to the employees for building a great company.
“He wanted to share the company’s wealth,” Catani said.
At the time, Hardy had about 350 employees, he said. It now has about 425.
Catani said being employee-owned has turned out to be a major boon for the company.
While there’s a considerable amount of administrative work and financial planning, Hardy doesn’t pay state or federal taxes, which frees up a lot of operating capital, he said.
Like other companies’ executives, Catani also said employee ownership is a great tool to motivate people to do their best work.
It also results in employee retention as their stock grows, he said.
“Internally, we call it a share in the outcome,” Catani said.
“The better the company does, the better the stock for the employees goes up, and everybody wins,” he said.
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