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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.
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