By Emily Bary
Twitter Inc. Chief Executive Jack Dorsey will be leaving his post and be replaced by Parag Agrawal, a longtime veteran of the social-media company who most recently served as its chief technology officer.
Shares of Twitter closed down 2.7% Monday 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 was 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 statement. “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.
Read: Who is Parag Agrawal? 5 things to know about the new CEO of Twitter
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.
Agrawal will receive an annual salary of $1 million and he will continue to be eligible for Twitter’s executive bonus plan, with a new target bonus of 150% of his base salary, according to a filing with the Securities and Exchange Commission. Agrawal will also receive restricted stock units with a $12.5 million face value.
Shares of Square Inc. /zigman2/quotes/205989440/composite SQ +0.76% rose as much as 4% Monday but gave back most of their gains and ended the day up 0.3%. 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.
“Twitter is now executing against an ambitious multi-year plan to dramatically increase the company’s reach and value, and we look forward to the next chapter of Twitter’s story,” Elliott Managing Partner Jesse Cohn and Senior Portfolio Manager Marc Steinberg said in a statement Monday. “Having gotten to know both incoming Chairman Bret Taylor and incoming CEO Parag Agrawal, we are confident that they are the right leaders for Twitter at this pivotal moment for the company.”
Twitter shares have declined 27.8% over the past three months as the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.29% has risen 3.3%.