Procter and Gamble said it is bringing former CEO A.G. Lafley out of retirement to be its new Chairman and CEO, effective immediately. He replaces Bob McDonald, the man who succeeded Lafley in 2009.
He succeeds Bob McDonald, who is retiring at the end of June after 33 years with the company. In 2009, McDonald took over the CEO job from Lafley.
Share of the Dow component were up slightly shortly after the surprise announcement.
Jim McNerney, the presiding director of P&G's board said in a statement that Lafley's "track record and depth of experience at P&G make him uniquely qualified to lead the company."
Reuters quoted Lafley as saying McDonald decided on his own to retire and the Board then approached him "days ago" about returning to his old job.
Lafley said he thinks McDonald retired for a "number of personal reasons." He called the company's current management a "strong team."
The move comes as some investors have pushed for faster improvements from the world's largest household products maker.
Pershing Square's Bill Ackman has been critical of McDonald. In a "Squawk Box" interview last October he said the company had "stumbled" under the CEO's leadership and he had met with the Board to express his concerns.
On Lafley's appointment, Ackman told CNBC: "A.G. Lafley is one of the greatest CEOs and we're delighted to have him back."
During McDonald's tenure the stock was up 54 percent, but that underperformed the S&P 500's 80 percent advance. It also lagged other consumer product companies.
In January, the company reported better than expected earnings and revenue, a performance that was seen as giving McDonald some breathing room.
(Read more: Procter & Gamble Tops Estimates, Raises Outlook)
The strong results prompted CNBC's Jim Cramer to predict P&G could be the " best stock in the Dow ." He also praised McDonald for answering his critics. "I like this guy, he means business."
Analyst Ali Dibadj told Dow Jones he thinks Lafley is a "great CEO." While McDonald's departure wasn't expected, Dibadj said, "Clearly the Board had had enough."
P&G also confirmed its previous fiscal year and fourth quarter guidance. Its fiscal year ends on June 30.
- By CNBC.com and Reuters