Lehman Brothers Holdings Inc. is replacing Chief Operating Officer Joseph Gregory and Chief Financial Officer Erin Callan as the brokerage deals with a tumbling stock price and questions about the firm's future.
Shares fell 6% in premarket trading to $22.32.
Gregory will be replaced by Herbert H. "Bart" McDade III - who has led Lehman's equities business the past three years - while Ian Lowitt will succeed Callan. Lowitt, who has been co-chief administrative officer since October 2006, will also join Lehman's executive committee.
"Bart, who has been my partner for 25 years and has proven himself to be the firm's best operator, is the right individual to take on this responsibility and lead the firm to the next level," said Chairman and Chief Executive Richard Fuld. "His experience in both fixed income and equities capital markets will benefit the firm, especially during these challenging times."
In discussing Gregory's departure, Fuld said, "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. This has been one of the most difficult decisions either of us has ever had to make."
Callan, who became financial chief in December and has been the public face in explaining Lehman's troubles haven't been as bad as some contend, will rejoin Lehman's investment banking arm "in a senior capacity."
The smallest of the big four U.S. investment banks saw its shares drop 14% Wednesday, bringing its losses this week alone to more than one-quarter. The three-day decline has wiped out about $4.5 billion in market value and left the stock near the low point it hit in March, when investors feared it might go the way of Bear Stearns Cos. (BSC).
Lehman on Monday announced that it will sell $6 billion in stock and post a fiscal second-quarter loss of about $2.8 billion next week.
