Tuesday, April 12, 2016

A company relocating to Charlotte expresses frustration with HB2

Welcome to North Carolina - Unless you are LGBT
Monday, Luke Kissam, CEO of Albemarle Corp (NYSE:ALB), reaffirmed that the company is moving its headquarters to Charlotte in spite of concerns over North Carolina's anti-gay laws. Albemarle is expected to complete its move in June. Not every company is positioned to do what PayPal did. Last week PayPal announced that it was not moving forward with its plans to open a global operations center in Charlotte because of HB2.

According to the AP: In a letter to Gov. Pat McCrory last week, Kissam said the new law is “inconsistent with our company's values” and could hurt its recruiting efforts. “This law is bad for Albemarle, and it is bad for North Carolina,” Kissam said of the law, known as HB2.

The company employs about 6,900 people globally and “must attract the best and brightest employees” for competitive reasons, Kissam added.

“Having North Carolina be viewed as a place that values and welcomes diversity is a must if companies like Albemarle are going to prosper here. HB2, which you signed into law, is an impediment to creating this welcoming business environment,” Kissam said.

I know first hand that corporate relocations require many months of planning. Just think of the complexity of moving servers and IP space. Provisions have to be made for replacing employees who choose not to relocate. Then there is office space and the build-out. Employees who make the move with the company require support in the form of relocation assistance. I am barely scratching the surface of the challenges inherent in a corporate relocation. Moreover, they are already in the final stages. According to the 10-K:
We announced that we will relocate our corporate headquarters and Performance Chemicals business from Baton Rouge, LA to Charlotte, NC. In addition, we will relocate Baton Rouge employees in our Refining Solutions business to our existing Clear Lake, TX office. Approximately 120 employees will be relocated to Charlotte or Clear Lake, with the majority of the relocations expected to take place in June 2016.
On the other side of the ledger, Albemarle's move to Charlotte will create a number of high paying jobs. The company will receive an incentives package from the state totaling $2 million worth of rebates on its payroll taxes over the next 12 years. It's something less than a drop in the bucket for a nearly $4 billion company. Indeed, there is no mention of the rebates in the 10-K.

I might argue that, given the comments of the CEO, HB2 creates a material event that the company must report with an 8-K filing.

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