UPS ( UPS) said CEO Mike Eskew will retire at the end of the year and be replaced by Chief Financial Officer Scott Davis.

In a prepared statement, UPS praised Eskew, 58, calling him "an innovator and strategist." The company said that since 2002, when Eskew took over as CEO, net income rose by 75% through 2006.

"Mike Eskew has helped transform one of America's most admired companies into a global logistics organization that helps thousands of businesses and individuals succeed every day," said board member Victor Pelson.

Eskew's retirement isn't shocking, but it wasn't necessarily wholly expected either.

"I wasn't expecting it, but it is not entirely a surprise," says Morningstar analyst Keith Schoonmaker. "He's had a long career there, and he was successful. It's a rock-solid organization that puts out impressive results year after year."

Insiders say Eskew is relatively young and might have served longer, but at the same time, he could have been inspired to move on after recently presiding over the celebration of UPS's 100th anniversary and negotiating a new contract with the Teamsters. In a report, Bank of America analyst Scott Flower said UPS typically changes CEOs in five- to seven-year intervals.

Davis, 55, joined UPS in 1986 when it acquired Oregon-based technology company II Morrow (pronounced "tomorrow"), where he was CEO. He became financial chief at UPS in 2001. Eskew joined UPS in 1972 as an industrial engineering manager.

"UPS has a deep management bench and we consider Scott Davis to be an excellent choice," Flower wrote in a research report. "Since he has had a close relationship with Mr. Eskew and shares his focus on execution and growth, we do not expect any large or substantial shift in UPS strategy or direction."

Bank of America has a financial relationship with UPS that includes beneficial ownership of 1% or more of a class of common equity, and it could be compensated for future investment banking services.

Davis will be replaced as CFO by Kurt Kuehn, currently the senior vice president of global sales and marketing.

UPS shares slipped 8 cents to $76.54, and are down about 2% for the year. The company is scheduled to report third-quarter earnings on Oct. 23.