PulteGroup Founder Hires Lawyers in Fight to Oust CEO Dugasby
Bill Pulte retains two partners from Olshan Frome Wolosky
Family missed proxy-fight deadline, considering other options
PulteGroup Inc.’s founder and largest stockholder hired lawyers from a shareholder-activism practice, a sign that he’ll increase pressure to get Richard Dugas to step down immediately as the homebuilder’s chief executive officer.
Bill Pulte retained Steve Wolosky and Aneliya Crawford, partners with Olshan Frome Wolosky LLP and members of its Activist & Equity Investment Practice, Crawford said Tuesday. The practice has been involved in seeking board representation at more than 300 publicly traded companies, according to its website.
The hiring shows that the battle over the direction of the third-biggest U.S. homebuilder is likely to intensify as Pulte and his grandson pit themselves against a board that backs Dugas, the company’s CEO since 2003 and its chairman beginning in 2009. Pulte, who founded the company in 1950 at the age of 18, has blamed Dugas for the departures of talented executives, overly aggressive land purchases before the housing-market crash and the stock’s weaker performance relative to some peers.
Pulte’s efforts had been backed by James Grosfeld, a former CEO of the company who was put on the board at the founder’s behest in December. Grosfeld said in a regulatory filing Tuesday that he would step down as a director because he had been excluded from several board meetings.
Pulte’s 27-year-old grandson, who shares his name, declined to comment on the hiring of the law firm. He said on Monday that the family missed the deadline for a proxy fight ahead of next month’s shareholder meeting and that it was evaluating “other options.” Crawford declined to comment on the specifics of Pulte’s strategy. Jim Zeumer, a PulteGroup spokesman, also declined to comment.
PulteGroup, in a letter to shareholders last week, said the resignation demand emerged at a surprise meeting last month and that Bill Pulte’s complaints also appeared tied to unhappiness with the company’s 2014 move to Atlanta from suburban Detroit. Dugas said he would retire in May 2017 -- which Pulte has said is not soon enough. On Monday, in a letter to the board, Pulte said that making Dugas CEO was the “biggest mistake of my career.”
Shares of PulteGroup have fallen 20 percent in the past year, compared with a 7 percent decline in the Standard & Poor’s Supercomposite Homebuilding Index.
PulteGroup has been profitable under Dugas. The company’s fourth-quarter net income climbed 5 percent from a year earlier as both revenue and its gross margin on home sales improved.
“The PulteGroup board and management team will continue to stay focused on delivering on the successful strategy it has been executing since 2011,” the company said in a statement Monday.