On Thursday, Twitter Inc. CEO Dick Costolo announced that he will be stepping down from his position in the company. The decision comes as the micro-blogging site faces a difficult time amid slow user growth and failure to get as many advertisers aboard as its competitors.
Costolo will be substituted on an interim basis by co-founder Jack Dorsey.
In a briefing with shareholders on Thursday, Costolo emphasized that the decision to depart from Twitter was initiated by him.
He said, “I initiated conversations with some members of the board at the end of last year about CEO succession as I contemplated what was next for me.
“And ultimately following discussions with the full board and at February meeting and then at our meeting last week, we agree that now is the right time to begin this transition.”
As reported by The Guardian, Dorsey reinstated Costolo’s statement, saying, “One thing I do want to make clear is that this transition is not the result of anything more than Dick deciding to move on from his role as CEO.”
Nevertheless, Costolo will remain on the company’s board of directors.
With Twitter’s stock showing an unimpressive run, investors and analysts have called for a change. Amid its inability to expand its user base and increase revenue by means of advertising and other mediums, the news of Costolo’s departure was received positively by investors. In extended trading, the shares witnessed an escalation of as much as 9 percent.
Dorsey said that Twitter’s current business strategy is “right.”
He said, “I don’t anticipate any change in that strategy or the product direction. I believe in the course that the company is on, and the management teams ability to fulfill that and execute on it.”
In a release, Dorsey said Costolo did “good work” at the company during his tenure.
Dorsey said, “There is no one better than Jack Dorsey to lead Twitter during this transition. He has a profound understanding of the product and Twitter’s mission in the world as well as a great relationship with Twitter’s leadership team.”
According to Reuters, Costolo said in a conference call that the company has the “strongest management team [it has] ever had,” and that both internal and external candidates will be considered for the role of CEO. According to Reuters, Costolo said he was “tremendously proud” of the time he served with Twitter.
Dorsey, who is currently the CEO of Square, had previously served as Twitter’s president from May 2007 to October 2008.
SEC filings reveal that Costolo will not be entitled to any severance package under the circumstances surrounding his decision to leave; because of which, Twitter will not suffer any financial impact, CFO Anthony Noto said.
Costolo reportedly holds more than 8 million shares, which constitutes 1.2 percent of Twitter’s stock.
There are speculations as to whether Twitter may be up for sale following Costolo’s departure.
Kevin O’Leary, O’Leary Financial Group chairman, said, “It seems to me what would make a lot of sense right now would be to run a process and let someone else that has a bigger platform than Twitter actually buy it.”
However, the idea of a sale was discounted by Costolo. He said there was “no reason” why Twitter will be incapable of maximizing shareholder value on its own, and that the “focus right now is on maximizing Twitter’s value and its broad impact as an independent public company,” as reported by CNBC.
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