The announcement came after two days of intense media scrutiny about a settled lawsuit that had accused Reed of making racially insensitive comments at the company he headed in California.

Reed had staunchly denied the allegations, and said the suit was settled for less than 15 percent of damages sought by the plaintiffs. He said the charges were baseless but would have been much more expensive to fight.

Hannemann, who has known Reed for more than a decade, said he did not believe Reed was in any way racist. He said Reed told him this morning that did not want to subject his family to the constant scrutiny that often surrounds public officials.