Nike chief executive office John Donahoe will step down from the company, effective Oct. 13. The beleaguered CEO will be replaced by former Nike executive Elliott Hill, who served in several leadership roles at the Swoosh before retiring in 2020.

“Given our needs for the future, the past performance of the business, and after conducting a thoughtful succession process, the Board concluded it was clear Elliott’s global expertise, leadership style, and deep understanding of our industry and partners, paired with his passion for sport, our brands, products, consumers, athletes, and employees, make him the right person to lead Nike’s next stage of growth,” said Nike executive chairman Mark Parker in a statement. “Personally, I have worked with Elliott for more than 30 years and I look forward to supporting him and his senior management team as they seize the opportunities ahead.”

Donahoe will stay on with Nike as an advisor to the board though Jan. 31, 2025.

Nike’s move was applauded by Wall Street. Shares of the company shot up 10.2 percent to $89.25 in afterhours trading on Thursday — boosting Nike’s market capitalization to nearly $134 billion, an increase of $12.4 billion.

Hill, 60, is signing on to lead one of fashion’s most prominent and powerful companies — and is receiving a pay package commensurate with the task at hand. According to a filing with the Securities and Exchange Commission, he signed on with an annual base salary of $1.5 million, a target bonus of 200 percent that salary and an annual target incentive award of $15.5 million.

To cash in on that bonus and incentive pay, Hill will have to get Nike back into shape.

The executive shift follows a wave of analyst and investor scrutiny directed at Donahoe and the downward direction of Nike’s recent performance. Throughout the last year, Nike has continued to lose share in crucial categories like running and has been criticized for its lack of innovative products. In December, Nike announced a new round of layoffs — which have been taking effect this year — in tandem with a plan to cut costs improve its innovation pipeline.

Donahoe, formerly president and CEO of ServiceNow Inc. and chairman of PayPal Holdings, joined Nike as CEO in January 2020 as the company ramped up its digital efforts. He replaced longtime leader Mark Parker, who had been president and CEO since 2006. In recent months, analysts have also been critical of Nike’s progress within its “Consumer Direct Acceleration” (CDA) program it rolled out in June 2020 under Donahoe, which involved zeroing in on DTC and digital channels and pulling out of some wholesale channels. In recent months, Nike has re-entered or reinvigorated its wholesale partnerships with retailers such as DSW, Macy’s and Foot Locker.

“It became clear now was the time to make a leadership change, and Elliott is the right person. I look forward to seeing Nike and Elliott’s future successes,” Donahoe said in a statement.

Hill most recently served as Nike’s president of consumer and marketplace, where he led Nike and Jordan Brand operations in all four of the company’s geographies before he retired in 2020.

“Nike has always been a core part of who I am, and I’m ready to help lead it to an even brighter future. For 32 years, I’ve had the privilege of working with the best in the industry, helping to shape our company into the magical place it is today,” Hill said in a statement. “I’m eager to reconnect with the many employees and trusted partners I’ve worked with over the years, and just as excited to build new, impactful relationships that will move us ahead. Together with our talented teams, I look forward to delivering bold, innovative products, that set us apart in the marketplace and captivate consumers for years to come.”

Notably, Hill is not the first Nike veteran the company has brought back in recent months to bolster its leadership team. In July, Nike rehired former senior executive Tom Peddie to the role of vice president of marketplace partners.

In June, Nike Inc. reported sales results that fell short of expectations. At the time, Donahoe said that declines in lifestyle sales as well as uncertain macroeconomic conditions caused the company to cut its guidance for fiscal year 2025.

Nike reports earnings for the first quarter next month.