Bill Pulte

William J. Pulte's contest with the company he founded and continues to hold the single-largest equity share of continues, focusing now on the succession plan for Chief Executive Officer Richard Dugas, who's to retire in May 2017.

The latest in a series of letters to PulteGroup's board of directors that began in April suggests that the board has given Bill Pulte a role--as an investor and a strategic sage--in picking the next leader of the nation's third-largest home building enterprise that bears his family name. A list of candidates he has provided to the PulteGroup board has been accepted as part of the consideration set the Board and its search firm are evaluating.

Note: In a Form 8-K filing posted today with the Security and Exchange Commission by PulteGroup, a letter from PulteGroup director Patrick J. O'Leary is clear in its message that the list of ceo candidate referrals would be among those the full board and its search firm Heidrick & Struggles considers. But that, the letter indicates, will be the extent of the founder's involvement in the search and selection process. The O'Leary letter (pasted in below) notes:

While I appreciate your stated desire as to the timing of any subsequent interview(s), we plan to run a comprehensive search to ensure the individual selected as CEO is best for the company and all of its shareholders. You should expect this search and selection process will take time to complete. Working with H&S, we need to assemble and, based on the criteria, cull the list of potential external and internal candidates; contact these individuals to determine their level of interest and complete their bios; schedule and conduct first and, as needed, second interviews; and finally negotiate the terms of the hiring agreement. All this takes time, especially when the process is conducted during the summer.

Finally, you can be assured that the committee and the Board plan to run a thorough, but highly confidential search process. As such, I want to be upfront in saying that it is the role of the Board to select PulteGroup’s next CEO, so your involvement must be limited to this request for candidate names. We will, however, let you know if we need any additional information on these individuals, as appropriate.

The primary thrust of the Bill Pulte letter to the board is an articulation of specific qualifications Mr. Pulte believes are required for the next ceo, which have dramatic ramifications. One, is that Mr. Pulte is calling for a term of service and experience that virtually rules out a succession consideration Mr. Dugas had put in motion. A related consequence--if PulteGroup's board decides it will abide by the letter's recommendations--is that Pulte President Ryan Marshall, a putative Dugas heir apparent, would be regarded as under-qualified.

Importantly, Pulte's letter is emphatic on moving both decisively and soon to clarify its executive search process and succession plan. He writes:

Given the urgency and gravity of the decision, it is my hope that the Board will provide PulteGroup shareholders with tangible results of a comprehensive and independent search process no later than July 31, 2016.

Here's the full transcript of Bill Pulte's letter to the PulteGroup board today:

*PULTEGROUP FOUNDER WILLIAM J. PULTE ISSUES LETTER TO PULTEGROUP BOARD OF DIRECTORS

Encouraged by Engagement in CEO Search Process and Looks Forward to Working Constructively with the Board to Identify PulteGroup’s Next CEO

Stresses Importance of Truly Fair and Independent Process with an Expeditious Resolution

NAPLES, FL, June 15, 2016 – William J. Pulte, the founder and largest shareholder of PulteGroup, Inc. (“PulteGroup” or the “Company”) (NYSE:PHM), with ownership of approximately 8.9% of the Company’s outstanding shares, announced today that he has issued a letter to PulteGroup’s Board of Directors detailing his views on the necessary skills a viable CEO candidate should possess, which include:

  • Public company CEO experience in the homebuilding sector or at least 25 years of homebuilding and land experience;
  • Land acquisition and management in multiple homebuilding operations in multiple U.S. markets;
  • Senior level management experience in recessionary environments; and
  • Be a consensus builder who has a track record of building effective senior leadership teams.

The full text of the letter follows:

Dear Members of the Board:
June 15, 2016

As the founder and largest shareholder of PulteGroup, Inc. (NYSE:PHM) (“PulteGroup” or the “Company”), I am encouraged that the Board of Directors (the “Board”) has agreed that the selection process for PulteGroup’s next CEO is of paramount importance and urgency and has sought my input as the special committee of the Board conducts the process. I believe including shareholders’ views in this process is critical and I am confident that with the proper search process, a world-class leader can be recruited to succeed Richard Dugas and restore value for the benefit of all of the Company’s shareholders.

I was pleased to receive director Patrick O’Leary’s letter dated May 25, 2016 advising me that the Board had retained an executive search firm to assist in the CEO search process and inviting me to propose potential candidates to succeed Mr. Dugas. As I advised Mr. O’Leary in a response letter on June 2, 2016, in order to bring PulteGroup back to prominence for the benefit of all shareholders, I strongly believe that PulteGroup’s next CEO must, at a minimum, possess the following qualifications. First, any viable candidate must have public company CEO experience in the homebuilding sector or at least 25 years of homebuilding and land experience – PulteGroup needs a real seasoned veteran, not someone who will be learning on the job. It is also important that the next CEO has experience acquiring land and managing multiple homebuilding operations in multiple markets across the United States. Next, given the constant threat of economic uncertainty, it is necessary for the Company’s next CEO to have experience successfully operating through prior recessions. PulteGroup needs someone who has senior level management experience in recessionary environments – the Company can ill afford to be led by someone who will not be prepared to successfully guide PulteGroup through the next economic downturn. Lastly, I believe that the next CEO must be a consensus builder who has a track record of building effective leadership teams at senior levels of an organization and across multiple U.S. markets.

I am confident that each of the candidates that I privately identified to the Board would make a strong CEO and help PulteGroup emerge as a stronger, more profitable company. As I indicated to the Board, I am interested in identifying the best individual to lead PulteGroup and am open to considering other candidates who possess the experience and qualifications necessary for PulteGroup’s next CEO. At the same time, I understand that the Board has its own selection criteria for the Company’s next CEO and would be interested in discussing these criteria with the Board as we work together toward the common goal of identifying the best candidate to succeed Mr. Dugas at this critical time for the Company.

As I indicated in my letter to Mr. O’Leary, given Mr. Dugas’ prior comments to me in March 2016 that he had a pre-conceived succession plan for Ryan Marshall as CEO, it is essential that the members of the special committee and the executive search firm be fair, truly independent and highly transparent for a valid and unbiased search process.

With CEO succession planning being one of the most important functions of the Board, I am happy to have brought additional attention and sense of urgency to this critical issue. The formation of the special committee and retention of the executive search firm in response to my request to replace Mr. Dugas was an encouraging start – now it is time to execute in an expeditious and efficient manner.

Given the urgency and gravity of the decision, it is my hope that the Board will provide PulteGroup shareholders with tangible results of a comprehensive and independent search process no later than July 31, 2016. Time is of the essence and it is imperative that the Company, its shareholders and its employees not be left in suspense regarding PulteGroup’s leadership.

Fellow shareholders, large and small, have shared similar views regarding changes needed at PulteGroup to maximize value for the benefit of all shareholders and have inquired as to the Company’s level of engagement with me. Shareholders have overwhelmingly provided positive feedback with respect to my involvement. As such, I will continue my effort to work constructively with the Board toward the best path forward for all my fellow PulteGroup shareholders.

I look forward to lending my expertise and working constructively with the members of the Board to expeditiously identify the best candidate to lead PulteGroup. I remain at the Board’s disposal and eagerly await your response.

Very truly yours,

William J. Pulte
Founder PulteGroup, Inc.

Here's a copy of PulteGroup board member Patrick O'Leary's letter:

Mr. Bill Pulte
6515 Thomas Jefferson Court Naples, FL 34108

Dear Bill:
Thank you for providing the names of your candidates for consideration as PulteGroup’s next CEO. I have shared your letter with our full Board and with Heidrick & Struggles (H&S), one of the world’s top executive search firms that we have retained to assist us in the search process.

I want to point out that all CEO candidates will be evaluated against established criteria of desired knowledge skills and experiences. Consistent with our ongoing succession planning, the selection criteria have been developed over the past several years with extensive input from an independent consulting group separate and apart from H&S. The individuals you have submitted will be given appropriate consideration against these criteria.

While I appreciate your stated desire as to the timing of any subsequent interview(s), we plan to run a comprehensive search to ensure the individual selected as CEO is best for the company and all of its shareholders. You should expect this search and selection process will take time to complete. Working with H&S, we need to assemble and, based on the criteria, cull the list of potential external and internal candidates; contact these individuals to determine their level of interest and complete their bios; schedule and conduct first and, as needed, second interviews; and finally negotiate the terms of the hiring agreement. All this takes time, especially when the process is conducted during the summer.

Finally, you can be assured that the committee and the Board plan to run a thorough, but highly confidential search process. As such, I want to be upfront in saying that it is the role of the Board to select PulteGroup’s next CEO, so your involvement must be limited to this request for candidate names. We will, however, let you know if we need any additional information on these individuals, as appropriate.

Please know that you have my personal assurance that the search process is being conducted in an open-minded and appropriate manner with the best interests of our shareholders in mind.

I think we can both appreciate that this has been a stressful period for everyone, but I do hope that you are finding some time to enjoy the summer. Best regards,

/s/ Patrick O’Leary

Patrick J. O’Leary
Board Director