"It's clear that the company, which had sort of a de facto monopoly for so many years in the print media, is now moving into something which is a very competitive environment," board chairman Robert MacLellan said Thursday in an interview.
The new CEO will continue the company's digital transition, MacLellan said.
"What we're really looking for is somebody who has some experience with change management and somebody who has had some experience with emerging technologies around digital media," he said.
"Yellow has a terrific opportunity in front of it, but getting the right CEO is going to be absolutely key."
Outgoing chief executive Marc Tellier Tellier led the company for 12 years and oversaw declining print revenues as Canadians moved to using their computers, tablets and smartphones to search for information about local businesses.
He will get $4.3 million in separation pay when he the leaves the company this summer.
MacLellan said the appointment of Don Morrison, former chief operating officer of Research In Motion (TSX:BB), to its board of directors will strengthen Yellow Media.
"I think we've got one of the best guys in Canada who has got deep experience in digital media."
Morrison, 60, left RIM, since renamed BlackBerry, in 2011. At this point, he isn't being considered to replace Tellier as CEO, MacLellan said.
Before joining the smartphone maker, Morrison held a number of senior leadership positions in Canada, Europe and the United States with AT&T and Bell Canada.
MacLellan noted that Tellier, 44, has been leading the company for a dozen years and the board wanted someone with "fresh eyes."
"This was a very, very amiable, friendly discussion. No pots or pans were throw. We think it's the logical outcome for both the company and for Marc."
Tellier's separation package, detailed in the company's proxy circular, includes a payment of 300 per cent of the sum of his base salary of $825,000 and his 2012 annual bonus of $606,000, for a total amount of $4.3 million. The separation payment will be paid in 24 equal consecutive monthly payments.
He is also entitled to a lump sum payment of $124,500 payable on the termination date representing the value of his participation in the company's group insurance benefits plan for a period of 36 months.
Tellier's annual pension will be $455,086 when he turns 65 in 2033, the circular also said.
Yellow Media has been transitioning from a print directories publisher to an online publisher by expanding its services from business listings to digital services, including producing videos and building websites for small and medium-sized businesses.
In its most recent quarter, online revenues represented about 38 per cent of total revenues.
Yellow Media's net debt as of Dec. 31, 2012, stood at $781.7 million.