Twitter Inc. Chief Executive Jack Dorsey will be leaving his post and immediately replaced by Parag Agrawal, a longtime veteran of the social-media company who most recently served as its chief technology officer.
Shares of Twitter TWTR, +2.91% are up 5.1% in Monday morning trading after the company confirmed Dorsey’s plans to step down and disclosed that Agrawal will be taking over the role, effective immediately. News of Dorsey’s plans to depart were first reported by CNBC earlier Monday, and shares had been up as much as 11.1% initially following that report.
“I’ve decided to leave Twitter because I believe the company is ready to move on from its founders,” Dorsey said in a release. “My trust in Parag as Twitter’s CEO is deep.”
Dorsey will stay on Twitter’s board of directors until his term ends at the company’s 2022 shareholder meeting. Bret Taylor will serve as the new independent chair of Twitter’s board, which unanimously appointed Agrawal to the CEO post.
Dorsey took to Twitter to share the email he wrote employees announcing his departure. “I believe it’s really important to give Parag the space he needs to lead,” Dorsey said, in addressing why he won’t be staying on the company’s board.
“The stock price jumping is an indication that the market might have felt that a new CEO with a focus only on the one company might be more effective,” said Tim Hubbard, a management professor at University of Notre Dame’s Mendoza College of Business, in an emailed statement.
Shares of Square Inc. SQ, +0.43% rose as much as 4.0% earlier Monday after the CNBC report but gave back those gains and were recently off 0.4%. Dorsey also serves as the CEO of Square.
Twitter has been the subject of attention from activist investor Elliott Investment Management, which owns 1.25% of Twitter’s shares outstanding, according to data from FactSet. Twitter announced in March 2020 that it had reached an agreement with Elliott to buy back $ 2 billion of its shares, in an arrangement that was partially funded by an investment from private-equity firm Silver Lake.
At the time, Elliott reportedly had been interested in seeing Dorsey leave his post, but Twitter disclosed in a November 2020 filing that the “Management Structure Committee” of its board of directors, which was led by an independent director, “assessed the current management structure, new operating plan and procedures put in place” and “recommended that the current structure remain in place.”
Twitter shares have declined 22.3% over the past three months as the S&P 500 SPX, +0.98% has risen 2.8%. The stock closed at a 10-month low on Friday.