Corporate Headquarters

Table of Contents What Is a Corporate Headquarters (HQ)? Understanding Corporate Headquarters The State of Incorporation Changing HQ Locations Tax Breaks and Incentives Special Considerations The Bottom Line Corporate Headquarters FAQs A corporate headquarters (HQ) is a place where a company's executive management and key managerial and support staff are located. Recent history has shown a few examples of large U.S. corporations moving their corporate headquarters or even adopting a system of dual corporate headquarters. A corporate headquarters may be a single building or campus of buildings that serve as a home for a corporation's executive, managerial, human resources, corporate communications, legal and accounting teams, as well as its main support teams and staff. They also contend that the use of tax breaks to secure company headquarters is the best way to maintain locations and workers already in place, rather than attempting to land new corporate residents.

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What Is a Corporate Headquarters (HQ)?

A corporate headquarters (HQ) is a place where a company's executive management and key managerial and support staff are located. A corporate headquarters is considered a business's most important location and may also lend prestige to its host city and help attract other businesses to the area.

Businesses frequently locate their corporate headquarters in and around large cities because of the greater business opportunities, access to talent, infrastructure, and services they offer.

Corporate headquarters tend to be located in or around large metropolitan areas like Boston or New York City, or specialized commercial centers such as Silicon Valley.

A corporation's physical corporate HQ is not necessarily located in the same place as where it is incorporated as a legal entity.

Companies may change the location of their headquarters to gain favorable tax status, attract talent, or expand to a larger property.

Due to the advantages of remote working and the coronavirus pandemic, many corporations are opting to move their headquarters to smaller, less expensive cities.

Understanding Corporate Headquarters

A corporate headquarters may be a single building or campus of buildings that serve as a home for a corporation's executive, managerial, human resources, corporate communications, legal and accounting teams, as well as its main support teams and staff. A company's chief executive officer (CEO) will be located in a corporate headquarters. Where a corporation's headquarters is located can play a significant part in helping form its culture and mission, as well as informing its philanthropic and business practices.

A business's corporate headquarters is not necessarily the location where the majority of its employees work. Offices of a business that are not the corporate headquarters are called branch offices.

In the vernacular, corporate headquarters may be referred to simply as "corporate" or the "head office." For example, a manager might say to an employee, "Our rules regarding sick days come from corporate."

The State of Incorporation

A corporation's physical corporate headquarters is rarely the same place as where it is incorporated. About half of the publicly traded corporations in the United States (and about 60% of Fortune 500 companies) are incorporated in the state of Delaware, whose General Corporation Law and Court of Chancery provide especially solid legal footing for businesses.

In 2020, New York topped the list with 54 Fortune 500 corporations headquartered in the state, followed by California with 53 and Texas with 50.

Changing HQ Locations

Recent history has shown a few examples of large U.S. corporations moving their corporate headquarters or even adopting a system of dual corporate headquarters. In 2020, both Tesla and Oracle moved their corporate headquarters from California to Texas.

These moves are often influenced by political preferences, tax policies, or market conditions. In 2017, after over 40 years General Electric uprooted its headquarters from the Connecticut suburbs to Boston to be closer to students and a younger labor pool. It received $145 million in incentives from Boston and the State of Massachusetts for the move, bringing along 200 employees from the Connecticut headquarters, in addition to 600 workers hired from the Boston area.

Because a corporate headquarters can bring jobs and business, many state governments offer generous tax incentives to companies that choose to relocate.

Amazon HQ2

In 2017, Seattle-based Amazon.com engaged in a highly-publicized search for a second, supplemental headquarters known as "HQ2." The company stipulated that candidate cities should be in metro areas of at least one million people, be close to both a population center and an international airport, near major highways, be accessible to mass transit, and have plenty of office space for future expansion.

Tax incentives were also expected. For example, Newark, N.J., proposed as much as $7 billion in incentives, Montgomery County, Md., has said it would allocate $5 billion to infrastructure, and Chicago has said it would pony up $2 billion. For its part, Amazon promised to place 50,000 highly paid workers in the new headquarters and spend $5 billion on new construction.

In 2018, Amazon revealed that HQ2 would be divided between Long Island City, New York, and Arlington, Virginia. The New York location was scrapped after opposition from local activists.

Tax Breaks and Incentives

Amazon received over 200 proposals from governments and economic development organizations in the U.S., Canada, and Mexico that touted multi-billion-dollar infrastructure projects, appeals based on the civic character, practical and cultural amenities of each city, and outright offers of billions of dollar of tax breaks.

Experts on the subject contend that cities may overbid in such cases and wind up negating the benefits of winning. They also contend that the use of tax breaks to secure company headquarters is the best way to maintain locations and workers already in place, rather than attempting to land new corporate residents.

Special Considerations

The role of corporate headquarters has changed as a result of globalization, remote working, and the coronavirus pandemic. Although it is no longer crucial to have company executives in the same city, urban headquarters are still important sites for talent scouting and training, explains the Harvard Business Review.

In addition, there are fewer advantages for companies headquartered in major cities like San Francisco or New York. As more office workers opt for remote work, many companies will find benefits and savings in spreading their operations to smaller, less expensive cities.

The Bottom Line

The corporate headquarters was once an important nerve center for the modern company and the site of all executive decision-making. Although online communications and remote working have made the physical locations less important, there is still a high symbolic value for companies based in prestigious cities. However, many companies are choosing to relocate in search of more advantageous tax benefits.