Rackspace announced that Lanham Napier has retired as chief executive officer and a member of the board of directors, the company announced in a statement released Monday afternoon after markets closed.
Earlier in the day, the cloud computing company announced 4Q net income fell to $20.8 million, or 14 cents a share, compared to $29.9 million, or 21 cents a share, one year ago. Rackspace shares closed up .85 of a point to $40.36 a share, but were off more than 11% in after-hours trading.
Graham Weston, Rackspace co-founder and executive chairman of the board of directors, has been appointed CEO while the board searches for a long-term replacement. Weston served previously for seven years as Rackspace CEO, between 1999 and 2006.
The statement indicated that Napier plans to remain a consultant to Rackspace for the next several months, to ensure a smooth transition, but ultimately plans to invest in and advise other entrepreneurial companies.
Andre Lenartowicz with Rackspace public relations told the Rivard Report that “Lanham has been at Rackspace for the past 14 years and is looking forward to focusing on his family and having more of a personal life. Over the holidays, he decided that it was time to retire and he and the Board worked together on finalizing a transition plan.”
Napier, 42, spent seven of those 14 years at Rackspace as CEO. He was quoted in Monday’s prepared statement as saying that his “decision to step down as CEO was a difficult one, but it’s the right choice for me and for the company. With the board and management team aligned around our 2014 strategy and financial plan, I believe now is a natural transition point to select a new leader for the next exciting phase of Rackspace’s growth. I look forward to following Rackspace’s success as I return to my entrepreneurial roots to build new things and invest in disruptive ideas.”
Napier joined the company in April 2000, just a few years after its formation in 1998, and in 2010 Forbes magazine named him one of “America’s 15 most powerful CEOs 40 and Under.” An alumnus of Rice University (undergraduate degree in economics) and Harvard University (M.B.A), he worked for Merrill Lynch and private equity firm Silver Brands prior to his Rackspace tenure.
During Napier’s years at the cloud-computing giant, lead director James Bishkin explained in the company’s news release, that Rackspace grew from a small startup to a global, $1.5 billion public company. “We are grateful for the way Lanham positioned Rackspace for continuing success in this attractive and growing market,”Bishkin stated.<
The board of directors has initiated a search, considering both internal and external candidates, to identify a long-term successor CEO with the help of a leading executive search firm. Weston will partner with Taylor Rhodes, who was appointed president of the company on January 13, 2014, to lead the company during the interim. The board has “great confidence that Graham is the right person to guide Rackspace while it conducts a thorough search for a CEO with the talent and passion to lead the company during its next phase of growth.”
Rhodes was named president after Lew Moorman announced his intention to step down as president last year.
Weston, the chairman, cofounder and now-CEO of Rackspace, also serves as CEO of Weston Properties. In the Rackspace statement, Weston said, “I’m personally grateful to Lanham for 14 years of partnership and friendship as we worked side-by-side to build this company. Lanham has been an inspiring and successful leader, and we wish him all the best as he pursues his other passions.”
“Lanham believes that Rackspace’s future is brighter than ever,” said Lenartowicz, “given our strategy and the growing opportunity in the hybrid cloud market, and that the strong Rackspace team that is in place will continue to build on our success.”
Weston and other Rackspace representatives were unavailable for further comment Monday evening. This story will be updated as details are released.
Miriam Sitz is a freelance writer in San Antonio. A graduate of Trinity University, she blogs on Miriam210.com. Follow her on Twitter at @miriamsitz and click here for more stories from Miriam Sitz on the Rivard Report.