More Technology Staff Leave Lehman Brothers, Including Bond Research Head Martha Dillman

Lehman Brothers Inc. has in recent weeks seen several more key technology and systems development staffers take their leave. The departures follow the earlier exit of a series of senior technology executives, including -- it has lately emerged -- Clay Cippione, Lehman's chief operating officer. Though trading technology managing director Jonathan Beyman says that the latest departures are indicative only of a standard springtime turnover, sources say that many techies are being driven out by the new corporate culture established under new trading services chief Jerry Callaghan.

Though the highest-level exec to leave this time around -- managing director Martha Dillman -- was motivated to leave for personal reasons, sources say, the other six were all blown door-ward by the new prevailing winds at the firm. Sources describe many Lehman technology personnel as frustrated by Callaghan's cancellation of certain projects, as well as by Lehman's lack of a unified technology strategy. One source points to the "demoralizing effect" of a number of recent reorganizations that followed Callaghan's appointment.

These sources say that many employees intending to leave have waited for Lehman to pay their bonuses before giving notice; Lehman's bonuses are typically issued by early March.

Dillman, who resigned May 17, was head of fixed-income research and derivative systems development. While not a member of Lehman's I.T. hierarchy, Dillman had been taking on more systems development responsibility in the months prior to her resignation (TST Aug. 9, 1993). Sources say her star had been steadily rising at the firm in spite of ongoing turmoil. (For the last two years, under Dillman, Lehman's fixed-income research group has ranked No. 1 in an Institutional Investor poll.)

Dillman's responsibilities will be split up at Lehman between Jim Roper and Dexter Senft, who will serve as co- heads of taxable fixed-income research. Senft joined Lehman last year, after 17 years at First Boston Corp. and two years at EJV Partners L.P (TST, Aug. 23, 1993); Roper has been with Lehman for 12 years.

Other recent departures include vice president for network management Constantine Jeronimon and vice president equity technology Simon Young, as well as trading services staffers Jack Alsandari, Mike Lewis, Perry Metzger and Jonathan Harris.

Jeronimon, now at J.P. Morgan & Co., has been replaced at Lehman by first vice president Steve Ruegnitz. Harris has also gone to work for J.P. Morgan, as a consultant. Perry Metzger is consulting for Investment Management Services Inc.'s Moore Capital Management.

Sources close to the firm describe a sense of frustration among many I.T. staff. One points out that "a number of projects... have been impacted by resignations."

This source says that Lehman's so-called development services organization, headed by Steve Barnes, was in particular hit hard by resignations. "That department lost about a half-dozen key staff, very quickly," the source says.

Word of these departures has emerged following news of six prior Lehman losses (TST, April 18): equity operations and technology managing director Phil DeFeo, senior vice president for equity technology Steve Silberstein, first vice president for forex and commodities technology Joel Rosner, senior vice president for derivatives technology Don Sunderland, and John Carroll and Fred Matteson -- respectively the operations vice president and senior vice president for telecommunications who together quit Lehman in favor of Market Vision Corp. (TST, April 4).

Silberstein left Lehman to buy -- with venture capital supplied by Warburg Pincus -- Citicorp's Fame Software Corp., a time-series, fourth-generation database management system vendor. Sunderland is now at Sumitomo Bank in New York.

The departed staffers either decline to comment or didn't return phone calls by press time.

The shifts appear to be only so many after-flutters to the major tremor following the fall of trading services head Steve Gott and the subsequent installation of American Express Co.'s Securities Processing Group's Callaghan as new managing director of trading services (TST, Oct. 4, 1993). The departures also follow the consolidation of a number of technology areas under managing director Beyman.

Some sources close to the firm say that Callaghan's lack of experience in client/server, front-office trading room technology hinders Lehman's ability to move forward technologically. One source says: "He comes from a back- office, operations background, so he has little commitment to technology. It's a firmwide problem; there's virtually no technologists at the managing director level. High-up they don't know what [technologists] do, or understand why they're there."

Meanwhile, sources say, Lehman's chief operating officer Clay Cippione resigned at the end of 1993 -- after barely a three-month tenure -- following a dispute with Callaghan over the direction the firm should take with regard to its back-office. Back-office technology, including the so-called Project Solo effort to prepare Lehman for its separation from Shearson, has been Callaghan's main preoccupation since he took office (Wall Street Network News, Feb. 11).

Sources say that Cippione was hired to lead efforts to develop new back-office technology in-house, while Callaghan arrived with the goal of outsourcing. Callaghan won, and Cippione was out, say sources.

Callaghan, meanwhile, has also been tasked with cutting costs -- as have Lehman executives firmwide.

"There has always been a high turnover, but it's gotten worse lately," says a source. "There was no big shake-up. Just that lots of people, around bonus time, decided there was no point in sticking around. However, for one reason or another, the firm was unable to make a lot of people want to stay. There are still people now who want to leave Lehman because of projects being canceled by [Callaghan]."

The source continues: "While nothing was formally, totally derailed ... management was pretty scared."

On the other hand, Beyman asserts that those leaving are not big-league enough to cause Lehman any worry. "These are pretty junior guys, besides Martha [Dillman], who I don't consider relevant."

Beyman says: "I think it's just the time of year [when] we pay out bonuses. We have a thousand people working in systems. I don't think it's something that's particularly troubling. There's always a large level of turnover."

But others disagree. One source says: "It's gotten worse lately, because of Gott's leaving. But, there have always been so many shakeups. This has been the case at Lehman for years now. People always used to joke about having to dial R, E, O, R, G every morning to find out who their manager was for the day. It's a rather chaotic place."