NEW YORK (CNN/Money) - Joseph Nacchio resigned Monday as CEO of Qwest Communications International Inc., the western U.S. telecom he helped to build, and was replaced by former Ameritech CEO Richard Notebaert.

Qwest shares rallied following the news, paring year-to-date losses to about 68 percent.

Nacchio, 52, came under fire from company shareholders at the company's annual meeting earlier this month for his $27 million compensation package plus stock options he received last year. Qwest endured a downgrade of its debt to "junk bond" status and eliminated dividend payments. And the company said in February it faces an accounting probe by the Securities and Exchange Commission.

The company's statement quoted Nacchio as saying he was resigning to spend more time with his family and pursue other opportunities.

Nacchio's downfall came amid Qwest's (Q: Research, Estimates) poor performance, regulatory and financial troubles and flagging stock price.

The former CEO took over in 1997, heady times for telecom companies. Using its once-soaring stock price, Nacchio quickly built Qwest into the No. 4 U.S. local and long-distance telephone company through acquisitions, including Baby Bell regional phone company U S West Inc.

But one Qwest investor said it was about time for Nacchio's exit.

"The stock made the move from over $60 to down to $4. Somewhere the board might have stepped in a little earlier and realized that they had a credibility issue," said Henry Asher, president of the Northstar Group, a New York money manager with a small stake in Qwest.

Qwest also announced early Monday that principal shareholder Philip Anschutz, who owns about 18 percent of the outstanding shares, has resigned as chairman of the board of directors, although he will remain on the board and head its executive committee. Notebaert assumes the chairman title as well as the CEO position.

Notebaert, the new CEO, led local phone company Ameritech, which served five Midwest states, until its purchase by SBC Communications. He is leaving Tellabs Inc. (TLAB: Research, Estimates), a maker of telecom equipment, where he has been CEO since 2000. Michael Birck, Tellabs' chairman and co-founder, will resume the CEO duties he had until Notebaert joined the company.

In a brief phone call for investors Monday that did not produce a single question from analysts, Notebaert, 54, said that reestablishing credibility with Wall Street would be one of his major priorities at Qwest.

"Dick Notebaert may be just what the doctor ordered for Qwest," independent telecom analyst Jeff Kagan told Reuters. "He's got the experience, the track record and the demeanor that should be very helpful to rebuilding shareholder confidence in Qwest."

Frank Popoff, a Qwest board member, said that the change in management did not reflect any change of direction for the company.

"At this time we belive it's in the best interest of Qwest and its shareholders to bring in a new leader for the next stage of our growth and development," he told the analysts.  

-- from staff and wire reports