The CEO of PulteGroup is being pushed out the door by the homebuilder’s founder, who among other things is unhappy about the company’s move to Atlanta from Detroit two years ago.
PulteGroup on Monday announced that CEO Richard Dugas, 50, will retire in May 2017 as part of an accelerated succession plan. A board of directors committee will start a search for his replacement.
Dugas engineered PulteGroup's move to Atlanta and has quickly built a high civic profile here. But the move contributed to a rift between Dugas and the Pulte family.
William Pulte, who started the company in Michigan in 1950, is retired but is the biggest individual shareholder with about 9 percent of PulteGroup stock.
In announcing Dugas’ departure plan, PulteGroup’s board of directors praised his leadership and took the unusual step of publicly pointing to the founding family’s role in developments.
“Mr. Dugas’ decision to retire is due in part to the actions of Bill Pulte … Mr. Pulte’s grandson, and Jim Grosfeld, who was appointed to the Board in December at the behest of Mr. Pulte,” the company said in a press release.
“These individuals recently demanded an immediate CEO change and a different direction for the Company. In an effort to avoid a contested public battle that would not be in the interests of shareholders, Mr. Dugas offered to accelerate and make public the Board’s succession plan, prompting today’s announcement.”
William Pulte issued his own statement later Monday in the form of a letter to the PulteGroup board. He wrote that Dugas' decision to retire in 13 months "falls far short of the short-term leadership change that PulteGroup shareholders and PulteGroup employees need."
Pulte said the Atlanta move “cost the shareholders tens of millions of dollars with no apparent benefit to shareholders.” But he also expressed his “extreme disappointment” in Dugas’ running of the company and “the lack of performance of PulteGroup under his watch.” And he criticized a recent company move to remove Grosfeld from the board.
PulteGroup said it was attracted to Atlanta by the promise of a renewed homebuilding market in metro Atlanta and the Southeast. The company moved or hired about 350 executives and staff to the Capital City Plaza tower in Buckhead.
Monday’s events torpedoed PulteGroup stock, which lost about 6.6 percent.
In its announcment, PulteGroup’s board said Dugas’ “outstanding leadership … positioned PulteGroup to succeed in the future.” The company said pre-tax profits have increased $1.1 billion since Dugas rolled out a “Value Creation” strategy in 2011, and shareholders have seen a 160 percent return in the same period.
William Pulte, though, contended in his letter that company stock “has not appreciated significantly,” during Dugas’ 13 years at the helm. He also said Dugas laid off “key and irreplaceable homebuilding talent.”
Dugas took a board role with the Metro Atlanta Chamber after the move and played a role in convincing Mercedes-Benz to move its U.S. headquarters to metro Atlanta from New Jersey. He also is the founding chairman of the Westside Future Fund, a non-profit tasked with aiding redevelopment of neighborhoods around the new Falcons stadium. Dugas is expected to remain its chairman.
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