3 Min Read
(Reuters) - U.S. homebuilder PulteGroup Inc (PHM.N) said Chief Executive Richard Dugas would retire effective May 2017, bowing to a demand from founder and Chairman Emeritus Bill Pulte.
Dugas's decision to retire after nearly 13 years at the helm comes as Pulte is seeking a "different direction" for the No. 3 U.S. homebuilder by home sales, PulteGroup said.
Pulte, however, said the year-long succession plan fell "far short of the short-term leadership change" that the company needs. In a letter to shareholders, he reiterated his "extreme disappointment" in the leadership of Dugas and asked the board to speed up the succession plan.
PulteGroup's shares fell as much as 9.8 percent before closing down 6.6 percent at $17.21.
"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, prompting today's announcement," the company said earlier on Monday.
PulteGroup, which was the No. 2 U.S. homebuilder until 2014, has been unable to take full advantage of a steady recovery in the nationwide housing market.
The housing market in Texas, PulteGroup's biggest market by home closings in 2015, has been affected by a sharp drop in oil prices.
"I was surprised by this announcement," Susquehanna Financial Group analyst Jack Micenko told Reuters.
"I found the comment about 'demanding immediate change in CEO' as extremely strong wording and not consistent with the progress Dugas had made at the company."
Under Dugas, who has been with the company for nearly 22 years, the company's market value has grown to about $6.5 billion from $2.7 billion at the beginning of 2004.
Micenko said pushing for change at this point seemed to be the wrong solution, adding that Dugas was not responsible for the company's lagging stock price.
Up to Friday's close, PulteGroup's stock had fallen about 19 percent in the past 12 months, compared with a 2.2 percent rise in the Dow Jones U.S. Household Goods & Home Construction index .DJUSHG.
PulteGroup's board has formed a special committee of independent directors to search for Dugas's successor, the company said.
Reporting by Yashaswini Swamynathan and Ankit Ajmera in Bengaluru; Editing by Anupama Dwivedi and Don Sebastian