On 12 June, a short but telling statement issued by investment bank Lehman Brothers announced the departure of its chief operating officer Joe Gregory and chief financial officer Erin Callan. Gregory, it was speculated, resigned under pressure: he had been at Lehman man-and-boy and chief executive Richard Fuld counted him as a long-standing friend, but one of them had to go and it was easier for the bank if the number two jumped, which he obligingly did.

Additionally, it was Gregory who had championed Callan as the next CFO, elevating her to number three from number somewhere-in-the-middle: she had never managed a finance function and was to learn on the job just as the credit crunch was kicking in.

Callan faced a particularly humiliating departure from the board. Ruthlessly resubordinated, “Wall Street’s most powerful female” was demoted to her old stomping ground in the investment banking division she used to lead, into an undisclosed middle-weight role. No doubt demotion was better than dismissal for the CFO, keeping bad news safely in the control of the bank rather than free to run amok and erode the share price. But in hindsight, the whole set-up may never have had a chance of working out.

The fall guy
You’d think what with so much riding on the CFO choice, the bank, (hopefully) aware of the sub-prime fallout coming over the horizon, giving unproven but popular small fry a chance to shine instead of hiring a seasoned board-level number-cruncher would have been too risky.

Callan’s reputation for “deep financial acumen and strong client relationships” could have been the draw if the bank believed the way to survive the oncoming credit crunch was to sweet talk its way through bad news.

Or, she could have been hired as a fall guy, an unusual figure for the job such as herself buying the bank time by distracting the media and creating a visible public figurehead of the FD job.

Indeed, FDs aren’t normally known for enjoying a public role. But as it has expanded from shadow-bound, abacus-botherer to visibly engaged strategy architect, FDs’ interpersonal skills have necessarily been teased out and this has put them in the firing line for the first time.

But it seems not all FDs realise that a new responsibility has been bolted on to their expanded remit. FDs are unofficially expected to volunteer as patsy to protect the CEO when the board wants to make a visible show of action, since an admission of failure from the chief executive is deemed far more destabilising for the company than the swift removal of their numbers man.

Coming out of the shadows, FDs have emerged as the people on whom the onus is to identify and raise with the board inconvenient truths, share bad news, raise practical but unpopular concerns about strategy, bring up potential legal breaches and, worst, flag up moral or ethical breaches that get the newspapers slathering and shareholders calling for heads.

That has meant FDs have become much more accountable for corporate failings, even if those failings have little to do with the FD themselves.