With the shock of Pulte's acquisition of Centex beginning to wear off, the clock has started to tick on putting the pro forma to plan. Pulte CEO Richard Dugas and Centex's former chief Tim Eller, who will serve as the new Pulte vice chairman for the next two years, will have to come up with a strategic plan to make the newly merged company work from a balance-sheet perspective. That means reducing redundancies, improving efficiencies, and ultimately putting the right people in the right place to ensure the company isn't just bigger but better than its competition.
Company synergies is what Dugas and Eller said make this deal a win-win, and by coming together, not only will the pro forma company gain a massive amount of market share in 59 markets, but it will also net $250 million in overhead savings by reducing redundancies. Home building is as much about people as building homes, so how Pulte management goes about evaluating talent, meaning who stays and who goes, will be a strong indication of company values.
One top executive is clearly in question when it comes to employment status come fall. During the conference call announcing the merger on April 8, Dugas said the behemoth company's management team would remain largely unchanged; he would remain as company CEO while Roger Cregg and Steve Petruska would continue in their respective roles as CFO and COO. This announcement spurred questions as to the fate of a number of Centex top executives, most notably so Centex CFO Cathy Smith.
There are no guidelines or rule books to go by for mergers and acquisitions, much less on of this size, but some industry experts believe the company could pull a page from past deals, particularly Lennar and US Homes and George Wimpey and Taylor Woodrow, which some regard as more pure mergers. In each of these, executives and managers were brought together under the new company's umbrella, whether it was through a tiered position approach or a reallocation of duties per position. However, others would disagree, arguing that when it comes to M&A deals, there's always one company who acquires and one company who is acquired.
However, according to Mark Marymee, Pulte's director of communications, no official staffing decisions have been made. "There isn't any projection at this point about the potential impact on positions," he said. "Work is under way to determine how best to eventually maximize synergies following the close of the transaction, expected sometime in the third quarter of this year."
But speculation is running rampant as to who will stay and who will go, especially on the local level, which is really where the rubber hits the road for any builder.
According to a John Burns Real Estate Consulting report, Centex has a greater presence, as measured by community counts, than Pulte in five markets--South Florida, Texas, Southeast, Northwest, and Midwest--while Pulte is more dominant of the two in North Florida and the Southwest.
Peter Tremulis, former national vice president of land for Pulte Homes, spoke to Big Builder about the company's leadership philosophy.
"Pulte spends a lot of time developing leadership," Tremulis said, adding that the company goes for a "broad mix of experiences."
Tremulis speculated that the integration team--made up of Dugas, Eller, Cregg, and Petruska--will focus on individual experience and qualifications as opposed to which company name tag the employee wears, when eliminating staffers.
However, another industry insider with familiarity with Centex operations said those difficult decisions would reflect a more market-based strategy. "Where Centex dominates, Centex people will stay," he said. "Where Pulte dominates, Pulte people will stay."
If this is how the game plays out, Centex employees in Texas and the Carolinas might feel more secure than those in other markets.
However, no matter what yardsticks are used to measure an employee's value, at the end of the day, many jobs will be cut. The exact number is unknown at this point, but some expect that when the reorganization all shakes out, Pulte could stand to eclipse its projected $250 million in overhead savings.
The following is a look at the competing positions in the corporate office.
Pulte corporate executives:
James R. Ellinghausen, executive vice president, human resources.
Ellinghausen is executive vice president of Human Resources for Pulte Homes. He oversees all of Pulte Homes' human resources, "people development," diversity and recruiting initiatives for its employees across the United States. Ellinghausen joined Pulte Homes in April 2005 as senior vice president, human resources, following seven years with Bristol Meyers Squibb (BMS.) Most recently, he served as head of human resources for BMS' Worldwide Business and more than 40,000 of its global employees. Prior to BMS, Ellinghausen spent more than nine years with the Frito-Lay division of Pepsico, where he began as an employee relations administrator in 1987 and rose to the position of vice president, human resources, for Hostess/Frito-Lay Canada.
Michael Schweninger, vice president, controller, and principal accounting officer.
On Feb. 10, 2009, the board of directors of Pulte Homes appointed Schweninger as vice president, controller, and the principal accounting officer of effective March 2. Schweninger, age 40, joined the company in November 2005 as director of corporate audit and most recently served as director of finance and accounting process improvement. Prior to joining the company, Schweninger served as director of audit and special projects for TriMas Corp. from January 2004 to November 2005, and as director, Transaction Advisory Services Group, at PricewaterhouseCoopers LLP from May 2002 to January 2004.
Peter Keane, senior vice president, operations.
Keane was appointed senior vice president, operations, in January 2006. He joined Pulte in 1993 and has served in a variety of management positions, mostly in the Midwest region. Most recently, he was the president of the Great Lakes Area.
Steven Cook, senior vice president, general counsel, and secretary.
Cook was appointed vice president, general counsel, and secretary in February 2006. Prior to joining Pulte, Cook most recently held the position of vice president and deputy general counsel, corporate, at Sears Holdings Corp. and was employed by Sears, Roebuck and Co. since 1996.
Centex corporate executives:
Scott Richter, executive vice president, operations support, Centex Homes.
Richter is executive vice president, operations support, leading the company's entitlement, land development, construction, purchasing and supply management, building supply, and sales support organizations. Richter joined Centex Homes in 1986 and progressed through a variety of positions in accounting and management. He became division president of the LA/Ventura division in 1990, and was division president of the Minnesota division from 1996 through 2006. Most recently, he served as executive vice president of the Mid-Central Region, which covered the company's operations in Colorado, Minnesota, Illinois, and the St. Louis area.
Brian Woram, senior vice president, chief legal officer, and chief compliance officer, Centex Corp.
Woram joined Centex Homes in 1995. He became regional general counsel in 1996 and was promoted to senior vice president and general counsel in 1998. In January 2005, he assumed his present position as senior vice president, chief legal officer, and chief compliance officer of Centex Corp. Before joining Centex, Woram was with Locke, Liddell & Sapp for nine years as an associate and then as a shareholder. Previously, he was a reservoir engineer for Exxon Co., U.S.A.
Robert Stewart, senior vice president, strategy, marketing and corporate development, Centex Corp.
Stewart is senior vice president of strategy, marketing, and corporate development for Centex Corp. Stewart joined Centex after a 23-year career at Weyerhaeuser, an integrated forest products company. He has a wealth of experience in corporate strategic planning, acquisitions, and international growth. He also has experience in business portfolio development, strategic alliances, aligning support functions with business requirements, marketing and market development, and research and development of new products and services.
Mark Kemp, senior vice president and controller, Centex Corp.
Kemp joined Centex in 2002 as vice president and controller of Centex Corp. He was named senior vice president in July 2004. Prior to joining Centex, Kemp spent 19 years with Arthur Andersen, LLP, an international accounting and consulting firm, most recently as a partner in the Dallas office. He served a broad range of clients during his tenure at Arthur Andersen, including companies in the manufacturing, construction, technology and communications, and service industries.
Joe Bosch, senior vice president, human resources, Centex Corp.
Bosch was named senior vice president of human resources in July 2006. In this role, he is responsible for all aspects of human resources including HR strategy and policy; talent acquisition, assessment, and development; compensation and benefits; and HR deployment processes for the company. Prior to joining Centex, Bosch served for two years as senior vice president of human resources for Tenet Healthcare Corp. Tenet's operations included more than 77,000 employees. Before that, Bosch served for seven years as chief people officer at Dallas-based Pizza Hut Inc., a unit of YUM! Brands Inc.