The current financial crisis claimed its latest casualties as Lehman Brothers announced today that chief financial officer (CFO) Erin Callan and chief operating officer (COO) Joseph Gregory have been removed from their positions, just days after the investment bank announced a $3-billion quarterly loss, the first in its 14-year history.
With this reshuffle, Lehman joins the ranks of Citigroup, Merrill Lynch and Wachovia, all of whom have seen the exits of their senior management in recent times.
The firm's shares sank almost seven per cent in early morning trading, extending the losses to more than 25 per cent over this week, after the disclosure of quarterly results. Investors have been shaken after the company disclosed Monday it needed $6 billion of fresh capital to offset its first loss since going public in 1994. That offering of common and preferred stock is set to close Thursday. (See: Lehman Brothers may raise additional $5 billion in capital)
Lehman's chief executive officer (CEO) Richard Fuld had described the performance as "very disappointing".
Lehman has already been forced to raise $4 billion in extra funds this year to help bolster its balance sheet, undermined by credit losses and the write-down of investments linked to the mortgage market.
Post reorganization, Callan will be moving to a position within the firm's investment banking division and will be succeeded by Ian Lowitt. Gregory is to be replaced by Herbert McDade. It is not yet clear whether Gregory will remain with the firm.
A spokesman for Lehman would not comment on the changes to Lehman's top ranks. However, CEO Fuld said in a statement that removing Gregory from the COO job was "one of the most difficult decisions either of us has ever had to make."