Twitter just announced in a filing with the SEC that embattled CEO Dick Costolo will step down on July 1.
Jack Dorsey, one of the original founders of the company, will be the interim CEO.
The stock is up about 8% after hours on the news.
Dorsey is currently the CEO of Square, which will be a complicated situation for him to manage. In a press release, he said he would continue to lead Square for now.
In a press release, the company said it would form a search committee led by board member Peter Currie, plus Peter Fenton and Ev Williams.
Costolo has been under fire recently for Twitter’s failing to hit revenue and profitability targets, and for the fact that Twitter’s user base seems to have stalled out.
Here is the filing in its entirety:
On June 11, 2015, Twitter, Inc. (“Twitter”) announced that Richard Costolo has decided to step down as Chief Executive Officer of Twitter, effective July 1, 2015. Twitter’s Board of Directors has named Jack Dorsey, Co-Founder and Chairman of the Board, to serve as Interim Chief Executive Officer while the Board conducts a search for Twitter’s next CEO. Mr. Costolo will continue to serve on Twitter’s Board of Directors, and Mr. Dorsey will continue to serve as CEO of Square, Inc., the payments and financial services company he co-founded in 2009.
Mr. Dorsey, 38, is one of Twitter’s co-founders and has served as the Chairman of Twitter’s Board of Directors since October 2008 and as a member of the Board of Directors since May 2007. Mr. Dorsey served as Twitter’s President and Chief Executive Officer from May 2007 to October 2008. Since February 2009, Mr. Dorsey has served as Co-Founder and Chief Executive Officer of Square, Inc. Mr. Dorsey currently serves on the boards of directors of The Walt Disney Company and Square, Inc.
There are no arrangements or understandings between Mr. Dorsey and any other persons pursuant to which he was selected as Interim Chief Executive Officer. There are also no family relationships between Mr. Dorsey and any director or executive officer of Twitter and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Twitter entered into an offer letter with Mr. Dorsey on June 11, 2015, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference. Mr. Dorsey has agreed to forego all forms of direct compensation until the Compensation Committee of Twitter’s Board of Directors agrees upon a compensation package for him at the same time that it conducts its annual assessment and setting of executive compensation later in the year.
In connection with his change in roles, Mr. Costolo entered into a letter agreement (“Letter Agreement”) with Twitter agreeing to cancel all of his remaining unvested equity after July 1, 2015. After such date, Mr. Costolo will be entitled to the compensation set forth in Twitter’s Outside Director Compensation Policy, a copy of which has been filed as Exhibit 10.23 to Twitter’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 6, 2014. The foregoing description of the Letter Agreement is qualified in its entirety by reference to the full text of the Letter Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated by reference.
Here’s a tweet from a Twitter employee who says Dick Costolo got a standing ovation when he told the company the news.