Why Multiple Headquarters Multiply



By Phred Dvorak

Until 2005, few would have doubted UniCredito Italiano was an Italian bank: It traced its roots to 15th-century Bologna and its headquarters and executives were in Milan. Then, it merged with a big German lender, started calling itself UniCredit SpA, adopted English in place of Italian, and billed itself as "the first truly European bank."

As for where it's based: "We regard ourselves as having a home base in each of the 23 countries where we operate," says Marc Beckers, the executive in charge of UniCredit's "group identity."

These days a lot of multinational companies are, like UniCredit, leaving their birthplaces behind. Lenovo Group Ltd. was a Chinese computer maker until it bought International Business Machine Corp.'s personal-computer business in 2005. Now Lenovo's spokesman lists nine operational hubs. "If you have to nail it down," he says, main corporate functions are divided among Beijing, Singapore and Raleigh, N.C.

Frank Dangeard, CEO of digital-media company Thomson SA, says he doesn't "want people to think we're based anyplace." Thomson is legally based in Paris, though each of its eight major locations displays a map of the world with its own site in the center.

Companies have varied reasons for moving beyond the nest. Some, like UniCredit or Lenovo, found their businesses and work forces reshaped after cross-border mergers or acquisitions. Others, like consultancy Accenture Ltd., which has no headquarters and whose CEO has no office, are reflecting their far-flung customers.

Still others move to trim their tax bills. Tyco International Ltd. shifted its legal home to Bermuda, a tax haven, after a 1997 merger with ADT Ltd. Industrial-equipment maker Ingersoll-Rand Co. in 2001 reincorporated in Bermuda. Such moves provoked an uproar among American politicians -- prompting a 2004 law that makes it harder for American firms to move abroad for tax reasons.

Technically, of course, every company has a home, where it was legally formed. That legal home is the starting point in determining the corporate laws and taxes that apply. Corporate headquarters -- where top executives and main corporate offices are based -- is typically in the same country. But it doesn't have to be. Ingersoll-Rand, for instance, says its headquarters is still in New Jersey, though it is incorporated in Bermuda.

Beyond the legalities, marketing often plays a big role in how a company describes itself. Some organizations are creating global brands, and don't want to be associated with just one country or region. Fashion-apparel maker Ports 1961, which recently moved its headquarters and executive team to New York from Xiamen, China, describes itself as a global brand with roots in Canada -- though its owner and manufacturing base remain in China.

Business school Insead, founded in 1957 in Fontainebleau, France, opened a campus in Singapore in 2000 and markets itself as "Business School for the World." "People assume the majority of faculty and students are French," complains Insead Dean Frank Brown. "That's not true."

Some companies try to appear more global by dropping national references from their names, says Marc Agostini, nonexecutive chairman for marketing consultant Added Value Group. The former British Petroleum Corp. became BP PLC after its 1998 merger with Amoco Corp. of the U.S.

These moves sometimes backfire. British Airways PLC in 1997 replaced the British flags on the tailfins of its fleet with colorful ethnic designs from around the world. The move was so unpopular inside Britain that the carrier restored the Union Jack two years later.

U.S. energy-services firm Halliburton Co. announced earlier this year that it was opening new corporate headquarters in Dubai and sending its CEO, David J. Lesar, there, where he remains, to spearhead investment in the region. U.S. politicians accused the company of trying to avoid taxes. Halliburton denied that; the company is still incorporated in Delaware. Halliburton also stresses that most of its executives work out of its "principal executive office" in Houston, and don't plan to relocate.

The global wanderings of drug maker Organon shows many of these forces at play. Founded in the Netherlands, Organon in 2002 moved its headquarters to Roseland, N.J., to be closer to the important U.S. market and work with American firms. By 2005, it had switched to dual headquarters as it prepared to merge with another unit of Akzo Nobel NV, its Dutch parent. In 2006, it dropped the U.S. headquarters and moved back to the Netherlands to prepare for a stock-market listing there. By the end of this year, Organon will again be based in New Jersey, after Schering-Plough Corp. of Kenilworth, N.J., closes a deal to buy it. The past few years have been "chaotic," says spokeswoman Monique Mols.

At UniCredit, Mr. Beckers says the bank's largely Italian executive team supported the move to a more broadly European corporate identity -- although the switch to English from Italian was challenging at first. The bank is still legally based in Italy -- its CEO, Alessandro Profumo, is in Milan -- but UniCredit derives less than half its revenue from Italy and stations only a third of its top executives there, Mr. Beckers says.

UniCredit grew by buying or merging with lenders in countries such as Poland and Germany. To keep strong positions in those countries, Mr. Beckers says executives felt it important to build a new corporate culture not dominated by any one nation. So UniCredit regularly moves bankers to different markets, tripling during the last two years the number of people working outside their home countries. It also jettisoned the Italian domain name ".it" from its primary Web address, in favor of the pan-European ".eu." Mr. Beckers says executives thought the ".it" address "labeled ourselves as an Italian bank."

After completing the IBM purchase, Lenovo initially said it would move its corporate headquarters to New York, from Beijing. But after several months, Lenovo's executive team decided that having a central base slowed the company down, says Chief Executive William Amelio.

Lenovo is incorporated in Hong Kong, where its stock is listed. But its top managers and corporate functions are scattered across the globe. Mr. Amelio is based in Singapore. Chairman Yang Yuanqing lives in Raleigh, N.C. The chief financial officer is in Hong Kong and the human-resources head is in Seattle; world-wide marketing is coordinated in India. Lenovo's top 20 leaders meet monthly, in a different place.

Three-quarters of Lenovo's work force is in China. But Mr. Amelio says that Lenovo -- and its brand -- transcend both its Chinese and American roots. The concept of a home country "is outdated," he says.