Is Visa's New CEO Up to the Job?

There are big shoes to fill, and then there are big shoes to fill. Just-named Visa (NYSE: V  ) CEO Charles Scharf falls into the latter footwear category.

Scharf will be replacing legend Joseph Saunders, the chairman and CEO who took Visa public in 2008, at the time the largest initial public offering in U.S. history . Since its IPO, Visa's stock has gone from $64.35 per share to its current price of $137.55 , for a staggering 114% rate of return. So how big exactly are Scharf's feet?

Charles in charge
Saunders is 66 and has been Visa's chairman and CEO since 2007 . That's a long time to be on top at any organization, so despite his stellar track record, his departure isn't unexpected. Scharf will become CEO on Nov. 1. Saunders will stay on as Visa's executive chairman until March 31, when he will formally retire, at which point Visa will get a non-executive independent chair.  

Scharf is coming to Visa from One Equity Partners, an internal private-equity concern of JPMorgan Chase (NYSE: JPM  ) . One Equity manages $10 billion of investments for the bank, where Scharf has been managing director since June 2011 . Previous to that, he was CEO of Retail Financial Services at JPMorgan (and its predecessors).

This bodes well for both Visa's new CEO and its investors. JPMorgan's Retail Financial Services division is one of the big issuers of Visa-branded credit cards. Under Scharf's nine-year reign as CEO there, he generated $30 billion of annual revenue while overseeing 130,000 employees. And for good measure, Scharf also sat on Visa's board, from 2007 through 2011 .

Visa: everything an investor wants it to be
So it's safe to say Scharf knows a thing or two about the credit card business in general and, in particular, Visa's credit card business. It's also safe to say that Scharf knows how to run a big organization, two things the departing Saunders also believes. "I have known Charlie Scharf for almost a decade," Saunders said in the statement announcing the change of leadership, "and I believe he is uniquely qualified to lead Visa in the future. He has a record of profitably growing businesses, and managing complex, large-scale global enterprises." 

And there aren't very many business more capable of profitably growing these days, or that look to stay as profitably growing into the foreseeable future, as electronic payments. To say that electronic payments are on the rise is a gross understatement. The death of cash has probably been exaggerated, but not by very much. Forget credit cards. People are already paying for their lattes at Starbucks with their smartphones, and that's only the beginning.

And for investors, out of all the companies that process electronic payments, Visa might be everywhere -- and everything -- they need to it be. For the most recent quarter, Visa grew its revenue by 11% year over year. Rivals MasterCard (NYSE: MA  ) and Discover Financial (NYSE: DFS  ) grew their revenue by only 9% YOY, and American Express (NYSE: AXP  ) by a mere 1%.

The acid test
"The payments industry is an exciting place to be," Scharf accurately noted in a statement, "with both the continued migration across the globe to electronic payments and the development of groundbreaking new technologies, and Visa plays an important role in enabling both."  

Scharf definitely seems to get it. Visa is big, in an industry that's only growing bigger. And as far as resumes go, Scharf seems to be the man for the job, with extensive experience in the industry and extensive experience with Visa in particular. And the man used to work for Jamie Dimon, JPMorgan's infamously tough CEO. What more does a guy have to do to prove himself?  The acid test still remains, of course -- when Scharf steps into Saunders shoes on Nov. 1 -- but by all accounts his feet seem big enough to keep Visa moving forward.

Thanks for reading, and for thinking. While you have financials on the brain, take a few minutes to learn more about America's most talked about big bank in our new in-depth report on Bank of America. It concisely details B of A's prospects, and highlights three reasons to buy and three reasons to sell. Just click here to get access.

Fool contributor John Grgurich owns no shares of any of the companies mentioned in this column. Follow John's dispatches from the bleeding edge of capitalism on Twitter, @TMFGrgurich.The Motley Fool owns shares of Bank of America, JPMorgan Chase, MasterCard, and Starbucks and has options on Starbucks. Motley Fool newsletter services recommend American Express, Starbucks, and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a delightful disclosure policy.


Read/Post Comments (2) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 24, 2012, at 9:38 PM, RonSonntag wrote:

    We need to really stop glorifying these CEOs as being so "super human". There is NOTHING magical about this business. Compare this simple concept with, say, relativity, and you really have to wonder why the compensation is what it is.

  • Report this Comment On October 25, 2012, at 9:38 AM, XMFGrgurich wrote:

    Leadership does count, but I always enjoy a laugh when I remember Peter Lynch's famous maxim (paraphrasing here): "Invest in companies that can be run by monkeys - because at some point they will be."

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2074429, ~/Articles/ArticleHandler.aspx, 10/1/2014 11:05:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement