PulteGroup Further Details Battle For Control of Company

Richard Dugas speaks at an infrastructure summit in 2011. PulteGroup said Mr. Dugas would step down next year. ENLARGE
Richard Dugas speaks at an infrastructure summit in 2011. PulteGroup said Mr. Dugas would step down next year. Photo: Brendan McDermid/REUTERS

PulteGroup Inc.’s board said Tuesday that founder Bill Pulte, his grandson and one of the board’s directors had engaged in a “misguided” push to oust Chief Executive Richard Dugas Jr. and seek a different direction for the company.

The comments, written in a public letter to shareholders by lead independent director James Postl, come a day after the battle for control of the home builder went public. Messrs. Dugas and Pulte on Monday traded barbs and outlined competing visions for the nation’s third-largest home builder as PulteGroup said Mr. Dugas would step down next year.

Mr. Postl, who also backed the CEO’s direction for the company in a statement on Monday, told shareholders that Bill Pulte, his grandson of the same name and director Jim Grosfeld had attempted “to influence our considered succession planning process and change the strategic direction of PulteGroup.”

“While we have significant respect for Mr. Pulte as the founder of PulteGroup, we believe his campaign is misguided and is not in the best interests of shareholders,” Mr. Postl wrote in the letter.

The founder and Mr. Grosfeld couldn’t be immediately reached for comment.

In an interview Tuesday, the younger Bill Pulte said Mr. Postl “can talk about the value-creation strategy, but at the end of the day PulteGroup’s share price, shareholders’ equity, revenue and housing deliveries have remained relatively stagnant over the last two to three years.”

He added that he, his grandfather and Mr. Grosfeld “expected to resolve this privately, but we were blindsided” by Monday’s announcement that Mr. Dugas would remain chief executive for another year.

“We are not happy with the uncertainty that a year longer under his tenure would bring,” the younger Mr. Pulte said.

In the letter Tuesday, Mr. Postl described in detail the behind-the-scenes actions that lead to what would become a public battle for control of the company.

On March 21, Mr. Dugas was summoned by the older Mr. Pulte to a meeting. “To Mr. Dugas’ surprise, Mr. Pulte’s grandson and Mr. Grosfeld were also at the meeting,” Mr. Postl wrote.

At the meeting, the three made various critiques of the company’s performance and strategy; criticized the company’s decision to relocate its headquarters; stated that they had identified Mr. Dugas’ successor; and demanded that Mr. Dugas agree within 10 days that he would be retiring—or “there would be war,” according to Mr. Postl’s account of the meeting.

Mr. Postl, with regard to Mr. Grosfeld’s involvement, said “this is unacceptable behavior for a sitting board member.”

PulteGroup said Monday that directors had decided not to nominate Mr. Grosfeld for election at the upcoming annual meeting, citing “differing points of view” between Mr. Grosfeld and other board members over “succession planning and other business strategy matters.”

The older Mr. Pulte, also the company’s largest shareholder, had blasted the CEO’s “lack of performance and repeated bad decision-making” in a letter to board members on Monday. That came after the company said Mr. Dugas agreed to step down next year, citing what the two sides called a disagreement over the builder’s direction.

In an email to employees obtained by The Wall Street Journal, Mr. Dugas said Mr. Pulte, his grandson and Mr. Grosfeld—who was appointed to the board at the behest of the older Mr. Pulte—had demanded his immediate resignation, which could lead the company to “toss aside much of our hard work” and “makes little sense to me.” The company wouldn’t confirm the letter or comment on its contents.

Write to Joshua Jamerson at [email protected] and Chris Kirkham at [email protected]

WSJ.com: US Business

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