Hiring Richard Dugas as the top executive at PulteGroup was “perhaps the biggest mistake of my career,” the founder of the Atlanta homebuilder said Monday.
In a scathing letter to the company's board of directors saying it was "time to replace Richard Dugas," William Pulte called on PulteGroup's board to dismiss Dugas immediately rather than let him stay until the May 2017 exit date announced last week.
He also criticized the company’s 2009 merger with rival Centex Corp. as the industry was still struggling with the real estate market’s crash. Dugas “must take responsibility for PulteGroup’s overly aggressive land purchases that led to significant write downs and losses,” said Pulte, a former PulteGroup chairman and its largest shareholder.
“The reality is that under Richard Dugas there has been no ‘value creation’ for our shareholders with our stock being nearly flat over the last 3 years,” said Pulte, referring to a campaign Dugas has championed since 2011 to rev up the company’s performance.
The company said it was “disappointed that the Pultes continue to attempt to destabilize the company’s leadership” and said it “will continue to stay focused” on its current strategy.
“Their attacks bear little resemblance to the facts,” the company said in a press release. The homebuilder said it has been able to slash debt levels in half since 2011 and to distributed $559 million to shareeholders through dividends and stock buy-backs.
An unusually public brawl erupted last week between the founding family and top management over the running of the nation's third-largest homebuilder, as well as the decision to move its headquarters to Atlanta from Michigan two years ago.
The elder Pulte’s move to force Dugas out has spawned a flurry of accusatory letters and media statements issued by crisis PR firms.
Dugas, 50, offered to retire next year, but Pulte, 83, and his grandson of the same name, are seeking a more rapid exit by Dugas, as well as more seats on the board of directors.
The current board also opted not to re-nominate a director allied with the Pultes, Jim Grosfeld, at the company’s annual shareholder meeting next month in Atlanta. Grosfeld had been placed on the board late last year at the Pulte’s request.
Last week, PulteGroup’s board called the family’s push “misguided” and said it’s been happy with Dugas’ leadership.
“We want to reassure our shareholders that the board stands firmly behind (Dugas’ strategy), which has produced significantly higher profitability since (he) and his team began implementing it in 2011, ” the board said last week in a letter to shareholders.
In Monday’s letter, Pulte expressing his regret for his role in promoting Dugas to CEO in 2003.
“My advice to Richard, because of his lack of homebuilding experience and in order to compete with his peers, was that he needed to have a strong team of the best talent in the homebuilding business,” wrote Pulte. But instead Dugas “lost or fired a significant amount of outstanding homebuilding talent across the company,” said Pulte.
Pulte said he offered “suggestions and advice” to Dugas on how to attract customers and maintain a conservative investment strategy.
“And while Richard always said he would consider my suggestions and get back to me, he NEVER did,” said Pulte.
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