Scharf, 47, will take over Nov. 1, Foster City, California- based Visa said today in a statement. Scharf moved from his position atop JPMorgan’s retail-banking division in June 2011, when his duties were reassigned and he was transferred to the private-equity unit as a partner.
Scharf is a “solid, logical choice,” Tien-tsin Huang, a JPMorgan analyst, wrote today in a note to clients. He’s “a proven thought leader in the global payments industry and can run a large organization with a focus on technology. Moreover, the selection of a bank executive to run Visa implies the board is sticking to its core in servicing bank clients.”
Saunders, 66, who has led Visa since its 2008 initial public offering and will remain as executive chairman through March, steered the company through challenges to its business model that included new rules on debit-card fees and processing that helped MasterCard Inc. (MA), the second-largest card network, gain market share. Both companies and banks they serve reached a proposed $6.6 billion settlement with merchants over credit-card transaction fees after seven years of litigation.
Scharf joins Visa from One Equity Partners, the private- investment arm of JPMorgan that manages $10 billion, and spent nine years at the New York-based bank or its predecessors, Visa said in the statement. At the retail unit, he oversaw $30 billion in revenue, more than triple the $9.2 billion reported by Visa in fiscal 2011. Scharf will become a director as the board expands to 11 from 10, according to the statement.
He will get a base salary of $950,000 and be eligible for a target bonus 250 percent of that amount, with a maximum of 500 percent, according to a company filing. Visa also will give Scharf a so-called make-whole award valued at $19 million.
“Charlie understands the payments business and the priorities of our clients,” John A. Swainson, Visa’s lead director, said in the statement, noting that Scharf was one of the senior executives responsible for the payments business at JPMorgan and was a Visa director for almost eight years.
Scharf will face challenges from competitors such as EBay Inc.’s PayPal unit, which signed an agreement with Discover Financial Services in August, and from Jack Dorsey’s Square Inc., which enables mobile payments. Scharf is “laser-focused” on technology, Saunders said in a phone interview.
“Visa has done a series of things, both in terms of rolling out new organic products as well as some of the acquisitions that have been made, to take advantage of the new technologies and adapt to the environment,” Scharf said in the same interview. “My goal is to continue that and accelerate it as the business continues to change.”
Saunders said in May that the firm had been working on succession planning for a year, and last month Chief Financial Officer Byron Pollitt said the board was preparing for the CEO’s “impending retirement.”
“Charlie is smart, he has been in the industry for a long time and he is collaborative,” Wells Fargo CEO John Stumpf, who sat on Visa’s board with Scharf, said in a phone interview. “It will be good to work with him as we think of Visa as being one of our key partners.”
JPMorgan was the biggest issuer of Visa credit cards by purchases and number of cards outstanding last year, according to the Nilson Report, an industry newsletter. The bank was the third-biggest issuer of Visa debit cards last year, based on purchases, after Charlotte, North Carolina-based Bank of America Corp. (BAC) and San Francisco-based Wells Fargo.
Visa gained 0.7 percent to $137.61 at 1:46 p.m. in New York The shares advanced 35 percent this year through yesterday, outpacing the 14 percent gain for the 70-company Standard & Poor’s 500 Information Technology Index. It’s tripled since Visa’s IPO.
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