MA MasterCard Incorporated

By Nina Trentmann 

Mastercard Inc.'s incoming finance chief will help lead the credit-card company's expansion into adjacent businesses as new competition from technology companies continues to transform the payments industry.

Purchase, N.Y.-based Mastercard announced on Wednesday that its current Chief Financial Officer Martina Hund-Mejean will retire after more than a decade in the role. The 58-year-old, German-born executive will be replaced by Chief Financial Operations Officer Sachin Mehra on April 1.

48-year-old Mr. Mehra joined the card company in 2010 as treasurer, following various treasury and finance roles at Hess Corp., General Motors Co. and GMAC, the former finance arm of GM. He led Mastercard's commercial products and solutions business before returning to the finance function in 2018.

Mr. Mehra's role will be to assist the company's expansion into adjacent business areas, for example business-to-business payments and services, analysts said. Mastercard and competitor Visa Inc. are both bidding for U.K.-based payment company called Earthport PLC, highlighting the need for growth outside their traditional cards business.

"His [Mr. Mehra's] deep knowledge of Mastercard and the marketplace will be key to continuing our Grow, Diversify and Build strategy," President and Chief Executive Officer Ajay Banga said, according to a statement. "He has a keen understanding of the opportunities ahead of us and how best to capitalize on them."

Mr. Mehra's appointment comes as technology companies such as Apple Inc. and Amazon.com Inc. are venturing into the payments space and PayPal Holdings Inc., Ripple and Alibaba Group Holding Ltd. are influencing consumer behavior. So far, this hasn't reduced the dominance of card companies, according to Brendan Browne, a credit analyst at S&P Global Ratings.

Keeping up spending for research and development will be key for the incoming finance chief, said Moshe Katri, an analyst at Wedbush Securities Inc. "It's mostly new people and new technologies that Mastercard has to invest in," Mr. Katri said. Mastercard recorded $1.7 billion of investments in 2018, down from $1.85 billion in 2017.

Mr. Mehra is taking over a well-run finance department from Ms. Hund-Mejean, analysts said. She was appointed as CFO in November 2007 following Mastercard's initial public offering in 2006 and managed the company through the financial crisis.

"Martina maintained the highest standard of leadership, strategic thinking and financial stewardship in her years as CFO," Mr. Banga said, according to the statement. "She helped drive the transition of Mastercard to a publicly traded company, during which time Mastercard stakeholders participated in remarkable growth and value creation."

Operating profit margin rose from 16% in the fourth quarter of 2007 to 32.4% in the fourth quarter of 2018 under her leadership.

Mastercard's ratio of debt to earnings before interest, tax, depreciation and amortization is close to zero, which is one of the reasons S&P Global Ratings upgraded the firm's credit rating in November to A+. "The company over many years has maintained a strong business and financial performance," Mr. Browne said.

Ms. Hund-Mejean was highly regarded by investors who appreciated the three-year guidance that Mastercard introduced in 2010. "She was one of the only CFOs that provided three-year visibility," said James Friedman, an analyst at Susquehanna Financial Group LLP. "That's very unique and something that the buy-side loves," he said.

Other companies in the industry have a one-year guidance window, Mr. Friedman said.

Mastercard's incoming CFO, Mr. Mehra, was "heavily involved" in the development of the three-year targets that the company laid out during its latest earnings call, said Harshita Rawat, an analyst at Bernstein Research, and participated in many areas of financial planning over the last year. "The new CFO appears to have been groomed for the role," Ms. Rawat said, adding that some investors were surprised by the departure of Ms. Hund-Mejean, whose retirement wasn't expected.

Mastercard shares rose $1.74, or 0.79%, to $220.65 in recent trading, according to FactSet.

Write to Nina Trentmann at Nina.Trentmann@wsj.com

(END) Dow Jones Newswires

February 13, 2019 15:09 ET (20:09 GMT)

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