In a dramatic announcement just after 5 p.m. Thursday, Tabcorp (ASX:TAH) announced that it and CEO Adam Rytenskild were parting ways after the company's board became aware of "inappropriate and offensive language used by Mr. Rytenskild in the workplace."

The statement, issued at 5:12 p.m., said the board "considered the language to be inconsistent with Mr. Rytenskild's continued leadership of the organization," and following discussion with the board, Mr. Rytenskild has tendered his resignation and will step down immediately.

He has worked at Tabcorp for two decades and became CEO of the company after it spun off its lotteries business in 2022.

He left the company on Thursday afternoon.

Tabcorp said Mr. Rytenskild will receive only the termination payments required by law and under his contract and will forfeit all his unvested short-term incentive and long-term incentive awards.

"Tabcorp expects its leaders to uphold company values at all times and will not hesitate to take action to uphold expected standards of conduct.

"To protect the privacy of those involved, Tabcorp does not intend to make any further comment in relation to the conduct."

The company said the board had commissioned a search firm to start a global search for a new CEO.

Chair, Bruce Akhurst will take on additional duties as Executive Chairman with immediate effect (subject to any applicable regulatory approvals) while the search for a new MD & CEO is conducted.

Akhurst said in the shock announcement on Thursday:

"The Board regrets that Mr. Rytenskild's employment has ended in this way and acknowledges his commitment to Tabcorp's growth over more than two decades, including the last two years as MD & CEO and his contribution to the transformation of the company.

"Today's change does not impact the strategic direction of the company. We have the depth and capability across the executive and the senior leadership team to continue our transformation.

"We remain focused on executing our strategy at pace, transforming our competitiveness, growing market share, leveling the playing field for fees, taxes, and regulation, and reshaping the business to deliver a more efficient and effective organization. Tabcorp is on track to deliver this and create a growing and more valuable company for shareholders."

Earlier, Tabcorp shares fell 2.55% to 76.5 cents in regular trading. That left them down nearly 8% for the year to date.