One of the great frustrations for the Indianapolis area in the past few decades has been the loss of corporate headquarters. Department store L.S. Ayres & Co., food packer Stokely Van Camp and the Wholesale Club—along with banks American Fletcher, Merchants National and Indiana National—were inhaled by buyers from out of state.
More recently, Guidant, Bindley Western Industries, USA Group, IPALCO Enterprises, Golden Rule Financial, Galyan’s Trading Co., Hat World and Herff Jones have been swallowed. And that’s just part of the list.
So it was heartening to watch Anthem directors and CEO Joe Swedish insist that Swedish lead Anthem’s merger with Connecticut-based Cigna should regulators approve the $54 billion deal. As former Arvin Industries chief Bill Hunt explained in IBJ last month, the location of the CEO at the time of an acquisition tends to determine where a merged headquarters ultimately lands.
It’s difficult to overstate the importance of a headquarters to a community.
Headquarters house a company’s best and brightest, including executives with authority to make final decisions. The corner office is more likely than an outpost to back a risky or expensive project to improve a city. Ask any not-for-profit leader whether their chances are better with the CEO or a vice president.
Headquarters also tend to employ more people, at higher salaries, than branch locations. Those salaries make a difference not only to car dealers and real estate agents but also to governments that depend heavily on income taxes.
And headquarters tend to consolidate suppliers and services at their home bases. Like the companies themselves, growing vendors benefit communities.
Moreover, an abundance of headquarters improves the odds of attracting top talent. Trailing spouses and partners have better chances of landing management jobs and, the job candidates reason, potential for career advancement without having to uproot their home.
Anthem brass going back to Ben Lytle in the 1990s has pushed hard for growth. Indeed, former executive David Frick told IBJ that a guiding principle has been to build a big company.
Anthem isn’t the only Indianapolis-area company thinking big. Simon Property Group Inc. deserves credit for being an acquirer. And considering its offer to buy BMO Financial’s retirement business, OneAmerica Financial Partners is getting the growth bug.
Boards are rightfully obligated to make the best decision for shareholders. But too often, local directors and execs have rolled over rather than aim to dominate their industries.
They can take a cue from Anthem.•
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