- PulteGroup's founder and largest stockholder William J. Pulte is demanding the company’s chairman and CEO Richard Dugas either step down or be removed, calling his decision to install Dugas as head of the homebuilding giant "perhaps the biggest mistake of my career" in a letter to board members, The Wall Street Journal reported.
- The in-house feud began last month when Pulte, critical of the company’s stock performance under Dugas’ leadership, asked that Dugas step down immediately. Instead, the company announced last week that Dugas would retire in a year, setting off an increasingly vitriolic exchange between the company and the 83-year-old Pulte.
- Since Dugas assumed the role of CEO in 2003, PulteGroup’s sales revenue has plummeted 35% in contrast to competitors Lennar and D.R. Horton, who have seen sales increases of 6% and 24% respectively. Pulte said the company would be better served by appointing a CEO with homebuilding experience, a direct shot at Dugas’ background in marketing and operations at Exxon Corp. and PepsiCo Inc.
PulteGroup has responded to Pulte’s comments with more subdued language. Its statement said the company was "disappointed that the Pultes continue to attempt to destabilize the company’s leadership and derail our successful value creation strategy through their public statements."
Pulte’s grandson, Bill Pulte, has joined in the chorus against Dugas and told Bloomberg that the family is weighing its options after missing a proxy deadline in advance of a shareholder meeting next month. Pulte said Dugas' strategies have "hindered product creativity" and resulted in a "loss of sales opportunities and innovation, as reflected by PulteGroup’s negligible growth." Pulte also wrote that he disagrees with PulteGroup’s "value-creation" strategy.
The PulteGroup said its value-creation strategy has boosted pretax income, reduced its debt-to-capital ratio since 2011 and delivered $559 million in dividends and stock repurchases in 2015. According to Bloomberg, PulteGroup had net income of $228 million in the fourth quarter of 2015, an increase from $217 million in fourth quarter of 2014.
PulteGroup, currently the third-largest U.S. homebuilder in terms of revenue, was the only of the three Fortune 500 homebuilders to fall in the rankings last year. The current feud demonstrates the significant impact the housing crash had on the nation's largest building companies, as PulteGroup has struggled to fully rebound after the recession. The company was the nation's largest homebuilder before the crash.