Twitter Inc CEO Dick Costolo abruptly announced he was stepping down on Thursday amid increasing scrutiny of the company's slow user growth and inability to attract advertisers at the same rate as its competitors.
Mr. Costolo will be replaced by co-founder Jack Dorsey on an interim basis. According to a source familiar with the matter, it was Mr. Costolo's decision to leave, and Mr. Costolo said he brought it up with the board last year as it began talking about succession planning.
Twitter has had a number of shake-ups in its management. Co-founders Jack Dorsey and Evan Williams both served as CEOs of the company before Mr. Costolo, and Mr. Costolo has overhauled much of his management team over the past year.
"Unfortunately this news isn't surprising," said Nate Elliott of management consultant Forrester Research. "The bottom line is that Twitter isn't very good right now at serving either its users or its marketers."
Mr. Costolo said on a conference call that Twitter will consider both internal and external candidates for its next CEO and that it has the "strongest management team (it's) ever had," which influenced his decision to step down. In a statement earlier he said he was "tremendously proud" of his six years at Twitter.
In an interview with Reuters , Mr. Dorsey said he was not thinking "at all" about remaining CEO permanently because the search has just begun but did not rule out the job. He also said he did not anticipate any change in Twitter's strategy or direction. Although he was ousted by management in 2008, Mr. Dorsey said that he is now surrounded by a strong executive team and had learned from his experience running Square Inc.
Mr. Dorsey said the CEO search has not begun, but he noted the company was looking for a CEO who uses Twitter every day and "loves" the product. Mr. Dorsey continues as CEO of Square. He had served as Twitter's president and CEO from May 2007 to October 2008.
Wall Street reacted positively to the news, as Twitter shares rose to $37.17, up 3.6 per cent, after the announcement, meaning investors thought Twitter was worth $900 million more without Mr. Costolo than with him.
Mr. Costolo will step down on July 1 and will continue to serve on the board, the company said in a regulatory filing. Anthony Noto, Twitter's chief financial officer, said Mr. Costolo did not receive a severance package because he voluntarily stepped down.
Mr. Costolo has agreed to cancel all of his remaining unvested equity in Twitter after July 1.
