The founder of PulteGroup Inc. is again calling for the removal of its current CEO Richard Dugas.
“I supported the appointment of Richard Dugas as CEO in 2003, which in hindsight was a mistake and perhaps the biggest mistake of my career,” founder William J. (Bill) Pulte wrote in a letter released Monday morning.
The four-page letter renewed calls for Dugas to step down immediately and provides more detail on what happened behind the scenes.
Pulte’s grandson ─ also of the same name William J. (Bill) Pulte ─ is CEO of Pulte Capital and the family’s spokesman. Bill Pulte said his grandfather is “a big fan of Atlanta” and committed to keeping headquarters in its Buckhead location.
“We just think that it’s another indication of a bad business decision by Richard Dugas,” the Pulte Capital CEO said. “To move the company, spend tens of millions of dollars, lay off hundreds of people, and we still haven’t seen the proof for why it was good.”
Dugas moved the company’s headquarters to Atlanta from suburban Detroit in 2014.
A Public Feud
Bill Pulte said his family has tried to meet with the company’s board of directors privately, but then “the company blindsided us on a Monday morning” with the announcement on April 4 of an early retirement of Dugas in May 2017.
“It seems as if they were trying to really showcase Richard’s track record and they wanted to control the story,” Bill Pulte said. “But in our opinion, it was not in the best interest to shareholders and the public fight that’s ensued is not helpful. And the end of the day, PulteGroup will win and we will get a new CEO in there, but it’s just a little frustrating that it’s having to be done in public.”
Bill Pulte said his family had asked Dugas to retire soon. PulteGroup Inc. has been highlighting recent successes, “looking at the fifth inning” instead of the “whole ball game.”
“We think there are some good things the company is doing in terms of being conservative and having a return-focus model on land, but having said that, the company’s sales have been stagnant,” Bill Pulte said. “Any company that’s going flat or backwards is not a company that’s growing, and we really want to see them to continue their conservativeness but also grow at the same time, and you can’t do that with the amount of loss in homebuilding talent that the company has seen.”
Pulte’s grandfather wrote in his letter that since 2003, the company has lost $530 million. Dugas has served as CEO since 2003 and chairman of the company’s board since 2009.
Immediate Retirement
In his letter, founder William Pulte wrote another year with Dugas, who he refers to as a “lame duck CEO,” would hurt the company’s investors.
Bill Pulte said the founder is considering a proxy contest among its options. A proxy contest is when a shareholder with a lot of stocks in a company uses their proxy votes to replace existing members of a company’s board of directors.
“We’re looking at all options, but right now our hope is to work constructively with the company,” Bill Pulte said. “We appreciate all of the support we’ve gotten so far, and we believe that an impartial, unbiased shareholder looking at this would realize that this is not a great track record and that the shareholders need a better vision for the company.”
Founder William Pulte started the company in 1950 and stepped down as chairman in 2009. He is the company’s largest shareholder and owns 8.87 percent of the PulteGroup stock.
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