Lehman Brothers Gives Executives the Boot
TSC Staff
06/12/08 - 12:54 PM EDT
Updated from 10:52 a.m. EDT
Lehman Brothers(LEH Quote) on Thursday said it is dumping CFO Erin Callan and COO Joseph Gregory after the firm earlier this week said it expects to report massive second-quarter losses.
A firm statement said Ian Lowitt, the firm's co-chief administrative officer, will succeed Callan as CFO and Herbert McDade III, who headed the firm's equities division, will succeed Gregory as president and chief operating officer. Callan will remain with the firm in a senior capacity within its investment banking division.
Lehman Chairman and CEO Richard Fuld, in the statement, did not explicitly give a reason for the changes. But he noted the "challenging times" the firm faced and expressed remorse for the fate of his long-time lieutenant Gregory.
"Joe has been my partner for over 30 years and has been a driving force behind who we are today and what we have achieved as a firm," Fuld said. "This has been one of the most difficult decisions either of us has ever had to make."
Lehman shares have plummeted more than 70% over the past year, a fall that has accelerated in recent weeks, as concerns have mounted about the firm's capital position. The firm on Monday
warned it expects to post a $2.8 billion loss and raise $6 billion when it reports second-quarter results on Monday.
Lehman shares were recently flat in furious trading. Volume was at nearly twice its three-month average daily volume by 10:30 a.m.
The stock was bolstered by former
AIG(AIG Quote) chief Maurice "Hank" Greenberg, who said he still planned to buy shares of the firm, in line with earlier statements, despite the expected loss.
Investors fear that Lehman's troubles could make it the next Bear Stearns, which in March, on the verge of bankruptcy after rumors about its liquidity hammered the stock, sold itself to
JPMorgan Chase(JPM Quote). Bear shareholders approved the deal last month.
Callan's fall is precipitous. The CFO was widely lauded for her stewardship of the firm earlier this year, when it was regarded as one of the few Wall Street firms to navigate the credit crisis relatively unscathed. But recently, she was assailed by hedge fund manager David Einhorn of Greenlight Capital for masking losses.
Callan and Gregory's departure are the latest in a growing line of executive casualties amid the credit crunch.
Cramer: Lehman Not Out of the Woods |
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Ex-
Merrill Lynch(MER Quote) CEO Stanley O'Neal and former
Citigroup(C Quote) head Charles Prince were among the first high-profile casualties late last year, after their banks posted big losses tied to the deteriorating mortgage market.
Ex-Bear Stearns CEO James Cayne gave up the job in January, but retained the chairman title before the firm sold to JPMorgan.
