Investing.com -- Investing.com -- Twitter (NYSE:TWTR) announced on Thursday that Dick Costolo will step down as CEO on July 1, when he will be replaced by the company's co-founder Jack Dorsey on an interim basis.
Costolo, 51, inherited the position from Evan Williams in October, 2010 just over a year after he left a position at Google (NASDAQ:GOOGL). Costolo's decision to step down as Twitter CEO is voluntary and he will not receive a severance package, according to SEC filings. Costolo, who reportedly owns approximately 8 million shares of Twitter, is planning on remaining on the company's Board of Directors.
Costolo said on a conference call on Thursday evening that the comprehensive succession process began at some point last year.
"We are confident that we can execute a smooth transition," Costolo said on the call. "We are in the extremely unique position of having the ideal leader to facilitate the transition while the board conducts its search."
Costolo was effusive in his praise of Dorsey on Thursday, adding that the interim CEO has been deeply involved in every strategic decision the company has made over the past decade.
"I want to point out once again that Jack thinks elegantly and deeply about the product and engaging user experiences," Costolo said. "I am delighted he is stepping into the role. He will be supported by the strongest management team Twitter has ever had."
Dorsey, 38, was instrumental in the launching of Twitter when he built a prototype of the social media site in a two-week span with site co-founder Biz Stone. Dorsey became the company's chairman of the board in October, 2008 when Williams was named CEO. Dorsey was named the Executive Chairman two years later when Costolo replaced Williams as CEO.
"Thank You for everything (Dick), you're a selfless leader who has built an amazing team and company," Dorsey wrote on his Twitter account.
Dorsey will split his time between Twitter and Square, Inc. where he currently serves as CEO.
"One thing I do want to make clear is this transition is not the result than anything more than Dick wanting to move on from his role as CEO," Dorsey said on the call.
On November, 7, 2013, Twitter shares opened at $26 on its first day of trading on the New York Stock Exchange, rising to above $44 at the close. The strong IPO gave Twitter a market capitalization of approximately $31 billion.
In late-April, Twitter shares fell more than 20% after it reported disappointing revenue for the first quarter. It prompted Twitter to offer a guidance of earnings of $470 to $485 million for the second quarter, well below analysts' forecasts of $538.16 million. In making his decision, Costolo emphasized that he didn't want the current scrutiny on Twitter to be a distraction for the firm moving forward.
The company "has huge, unmatched potential," Dorsey said on the conference call.
Shares in Twitter jumped 1.96 or 5.41% in after-hours to 37.77 after reports surfaced of Costolo's resignation.