Italian aerospace and defense giant Finmeccanica's Chairman Pier Francesco Guarguaglini resigned on Thursday after nine years in charge following a series of corruption scandals.
A Board meeting ruled that current Chief Executive Giuseppe Orsi will take over Guarguaglini's post as well, Finmeccanica said in a statement.
The company said the Board had thanked Guarguaglini saying he had "enabled the group to grow and strengthen its position on world markets".
Prime Minister Mario Monti, who only came to power last month after Silvio Berlusconi was forced out, recently said he was following the situation at Finmeccanica "with great attention" and wanted "a quick solution".
Guarguaglini will receive a 5 million euro (US$ 6.7 million) payout, news reports said.
The Finmeccanica Group makes artillery, helicopters, jets and rockets, employing 75,200 people worldwide including 42,500 in Italy alone.
But Guarguaglini last month was forced to fend off allegations that his company created slush funds and paid off politicians for contracts.
Guarguaglini "states in no uncertain terms that he has never created illegal funds nor has ever paid or ordered anyone to pay money to politicians or political parties", the corporation said at the time.
Guarguaglini was responding to a series of leaks from a corruption and tax fraud investigation in the company that were published in Italian newspapers, adding to pressure from heavy losses in the first nine months of 2011.
Italian authorities last year launched an inquiry into no-bid contracts awarded by the civil aviation agency Enav to Selex, which is part of Finmeccanica and is directed by Guarguaglini's wife, Marina Grossi.
The company said last month it had suffered a net loss of 324 million euro in the first nine months of this year - against a profit of 321 million euro over the same period in 2010.
It also said it was now expecting a gross revenue (EBITA) loss of 200 million euro over the whole of 2011, while earlier this year it said it was expecting a gain of between 1.53 billion and 1.6 billion euro.
Finmeccanica also said turnover would be between 17.0 and 17.5 billion euro, compared to a previous forecast of 18.3-19.0 billion euro.
On Tuesday the company signed a contract worth $1.334 billion to design, construct and operate a new driverless metro in Honolulu in Hawaii. The first stretch of track is planned to be in operation from 2015.