PulteGroup CEO to step down under pressure from founder
PulteGroup Inc.’s board is in a dispute with its founder and largest shareholder over the homebuilder’s direction, leading to the planned departure of longtime chief executive officer Richard Dugas.
Bill Pulte, his grandson and Jim Grosfeld, a board member and former executive, “recently demanded an immediate CEO change and a different direction for the company,” according to a statement from the company on Monday. “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.”
Dugas, 50, has been with the company since 1994 and has been CEO since 2003, and chairman since 2009. His retirement will be effective May 2017, PulteGroup said.
Bill Pulte — who founded the company in 1950, at age 18, with five high school friends — followed the statement with a letter to the board pressing for more immediate change, citing disappointment in PulteGroup’s share performance, staff departures and the company’s relocation to Atlanta from Bloomfield Hills in 2014.
Pulte’s move is surprising because Dugas’s strategy to improve profitability at PulteGroup, the No. 3 U.S. homebuilder by revenue, has been working, said Drew Reading, a homebuilding analyst for Bloomberg Intelligence. Net income for the fourth quarter was $228 million, or 64 cents a share, up from $217 million, or 58 cents, a year earlier.
“The company has made significant progress over the last several years under Richard Dugas by focusing on running a more efficient and balanced operation,” Reading said.
PulteGroup shares fell 6.6 percent, the most since October, to $17.21. They’ve lost 24 percent in the past 12 months, compared with an 11 percent decline in the S&P Supercomposite Homebuilding index.