Longtime PulteGroup CEO Richard Dugas announced he will resign come May 2017 due to disputes with the builder's founder and largest shareholder over the company's direction, an article in Bloomberg states.
From the article by Prashant Gopal:
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.”
The article noted that Dugas, 50, joined the company in 1994 and has served as CEO since 2003, and chairman since 2009. There is currently no named replacement, causing the board put together a search committee to find another CEO, the article noted.
This transition seems strange given the success of the top homebuilder.
From the article:
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’s gross margin on home sales was 23.5%, up from 23.1%.
Yet, clearly Pulte's founder and Prashant Gopal disagree on what defines an improvement in profitability.
Also, Dugas recently did a Q&A BISNOW, which shed light on what exactly his plans for the company were.
In the interview, Dugas said the builder is focused on serving the Millennial, a need that is growing in the current lending environment.
Dugas said in the interview:
We are focused on serving the Millennial buyer who is looking for a more urban-like location, specifically targeting older Millennial buyers who are seeking closer-in locations and comfortable with a townhome or condo product. While the entitlement/development process is often more challenging, the high returns, which can be realized make this is an attractive product category, and one we can develop in many markets throughout the country.
