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PulteGroup founder's campaign 'misguided,' board member's conduct 'inexcusable,' director says


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PulteGroup founder's campaign 'misguided,' board member's conduct 'inexcusable,' director says

In an April 5 letter to PulteGroup Inc. shareholders, the company's leadindependent director called founder Bill Pulte's against CEO Richard Dugas"misguided," and said actions by fellow board member James Grosfeldare "unacceptable" and "inexcusable."

Pulte, who owns 8.87% of the company's common stock, hascriticized Dugas' leadership and called on the executive to hasten his plans toretire at thecompany's scheduled May 2017 annual meeting. In the April 5 letter, leadindependent director James Postl said Pulte, Pulte's grandson and Grosfeld —who joined the boardin December 2015 at Pulte's behest — confronted Dugas at a March 21 meetingwith critiques of company strategy, including the move of PulteGroup'sheadquarters to Atlanta from Michigan.

According to Postl, the Pultes and Grosfeld also said theyhad identified a successor to Dugas — though they did not reveal the person'sname — and said he should announce his retirement in the near term or"there would be war." Grosfeld did not notify the rest of the boardof the meeting before or after it occurred, Postl said.

"It was not until after we reminded Mr. Grosfeld of hisfiduciary duties as a director that he agreed to assist the independentdirectors in arranging a follow-up meeting with the Pultes," Postl wrote,by way of explaining why Grosfeld's fellow board members have not him for re-election tothe panel at the company's May 2016 annual meeting.

"The fact that Mr. Grosfeld did not discuss hisparticipation in a meeting of this nature, nor his plan with the Pultes, withany of his fellow directors — until the independent directors reached out tohim — is inexcusable," Postl wrote. Statements by Pulte indicating that hehas had "serious issues" with Dugas for two-and-a-half to three years"are strong evidence that he and Mr. Grosfeld had undisclosed motivesbehind their efforts to have Mr. Grosfeld added to the Board lastDecember," he added.

Regarding Dugas' planned departure, he added: "TheBoard not only thanks Mr. Dugas for his outstanding leadership, but themagnanimity he has displayed in offering to accelerate and make public hisdecision to retire, in the spirit of avoiding a costly, contested public battlewith the Pultes that would risk destroying value for shareholders."

Citing a "value-creation" strategy launched in2011 under Dugas' leadership, Postl wrote: "We expect 2016 to be animportant inflection point in the execution of this strategy, as priorinvestments and operational improvements drive continued earnings growth. Westrongly believe the Value Creation strategy is the right path forward, andthat this team is positioned to execute it successfully."