Richard Dugas plans to retire next year after more than a decade as chief executive officer of U.S. homebuilder PulteGroup Inc., saying the company's founder wants a change.
Bill Pulte, his grandson and Jim Grosfeld, a former chairman who was appointed to the board at Pulte's request, "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,
The move is surprising because Dugas' 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 share a year earlier. The company's gross margin on home sales was 23.5%, up from 23.1%.
"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 in an interview. "How to leverage the company's much-improved balance sheet may be among the considerations."
PulteGroup shares fell 4.7% to $17.56 at 10:11 a.m. Eastern time. They've lost 23% in the past 12 months, compared with an 11% decline in the S&P Supercomposite Homebuilding index.
The board named James Postl, Cheryl Grise and Patrick O'Leary to its search committee, which is considering internal and external candidates to take over for Dugas, according to the statement.
Bill Pulte founded the company in 1950, at age 18, with five high school friends.
