The PulteGroup drama escalated Monday as the Atlanta-based homebuilder’s founder and major shareholder fired another broadside at CEO Richard Dugas.
In a scathing letter 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.
“In my opinion, for the Board of Directors to even consider letting Richard Dugas stay another year as a lame duck CEO puts the personal interests of Richard Dugas ahead of the interests of the company and works to the detriment of the shareholders, the employees, and our customers, who are watching a board protect a failed CEO,” Pulte wrote.
He called on the board to find a seasoned homebuilding executive to lead the nation’s third-largest builder.
The company responded that it was “disappointed that the Pultes continue to attempt to destabilize the company’s leadership” and said it “will continue to stay focused” on 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 shareholders through dividends and stock buy-backs.
Pulte, 83, holds about 9 percent of PulteGroup stock and is unhappy with the company’s financial results and stock performance, which has lagged rivals’ in recent years.
Last week, the company abruptly announced Dugas, 50, would leave next year, in part because of Pulte’s unhappiness. Pulte’s gripes include the company’s Dugas-led headquarters move in 2014 to Atlanta from suburban Detroit.
In Monday’s letter Pulte reiterated his concerns and called hiring Dugas, CEO since 2003, “perhaps the biggest mistake of my career.”
“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,” Pulte wrote, referring to a campaign Dugas has championed since 2011.
In addition to seeking Dugas’ immediate removal, Pulte and his grandson are upset the company’s board is booting their ally, one-time CEO Jim Grosfeld, off the board just months after he was added at their behest. The Pultes want more seats on the board. The company’s annual meeting is next month.
Last week, PulteGroup’s board called the family’s push “misguided” and said it’s been happy with Dugas’ leadership. It characterized his planned departure as a way to avoid a messy fight.
“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, who left the company’s board several years ago, 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,” Pulte wrote.
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