Blackwater founder Erik Prince steps down as CEO

Blackwater Chief Executive Erik Prince told employees Monday he will leave the daily operations of the private military contractor he founded and built, the latest step in a widespread company shake-up.

Prince also announced the departure of several long time executives, including President Gary Jackson, Vice Chairman Cofer Black and corporate counsel Joseph Schmitz. Last month, the privately held company changed its name to Xe.

The moves come as the Moyock, N.C.-based contractor struggles through numerous legal and political challenges. Blackwater guards have been charged with shooting civilians in Iraq, and a new administration and Congress are seeking to curb the use of private contractors in the military.

Prince told The Wall Street Journal that he's "a little worn out by the whole thing, the politics of it all." He also shed light on the meaning of the company's new name, saying that it's taken from the abbreviation for xenon, "an inert, noncombustible gas."

The company on Monday named replacements for two key positions.

Joseph Yorio, 44, a former vice president at shipping company DHL, becomes company president. Yorio is a former Army Special Forces officer and a graduate of Saint Vincent College. He also holds an MBA, according to the company.

Danielle Esposito, 32, will take over as chief operating officer and executive vice president. Esposito, a Virginia Tech graduate, has been with the company for about 10 years. She was promoted from vice president for quality assurance.

Prince remains chairman but will remove himself from day-to-day operations, spokeswoman Anne Tyrrell said on Monday. He is not selling his stake in the company, she said.

Prince said in a statement that the new management team will help the company grow and allow him more time to "take on some new challenges."

Prince, 39, started the company 11 years ago. After the bombing of the Norfolk-based destroyer Cole, it began training Navy sailors in anti-terrorism tactics.

Blackwater grew rapidly during the wars in Afghanistan and Iraq, receiving a five-year security contract to protect State Department staff and other top officials in combat zones. The State Department recently announced it would not renew its contract with the company when it expires in May.

The company has received a total of nearly $1.3 billion in government contracts since 2000, $1 billion of it from the State Department, according to FedSpending.org.

Its security work brought increased scrutiny. Five former Blackwater guards are facing charges for their involvement in the shooting deaths of 17 civilians in a Baghdad traffic circle in 2007.

President Barack Obama has targeted military contractors for reform, promising to build greater transparency into contracting awards and to prosecute "any abuses committed by private military contractors."

The company's contract for personal services, mostly security work, declined from $342 million to $331 million between 2006 and 2007, according to FedSpending.org.

In the first quarter of 2008, the company's top revenue sources, about $9 million, came from air charter operations and educational services and training, according to the Web site.

The company now describes itself as a provider of training and logistics services.

Prince told employees he feels like a proud parent sending his child off to college.

He touted the company's accomplishments: training 140,000 Navy and Coast Guard members, flying 57,000 combat supply sorties in Afghanistan, and constructing bases in combat zones to train thousands of Afghan border guards.

Prince also noted the company has conducted more than 35,000 personal security missions in Iraq and Afghanistan without losing a VIP.

Tyrrell said some of the departing executives were asked to leave and others retired voluntarily. She declined to name those who were forced out. The company has also laid off an unspecified number of employees, she said. She could not immediately provide the number of full-time employees and contractors.

Peter Singer, director of the 21st Century Defense Initiative at the Brookings Institution, said the company is reacting to changing political environments. The military has changed its attitude on private contractors since the war began, he said.

Singer believes the contracting industry will play a smaller role in combat but will continue in training and support roles.

The revamped Xe, he said, "may be just going back to that niche."

Pilot writer Bill Sizemore contributed to this report.

Louis Hansen, (757) 446-2322, louis.hansen@pilotonline.com