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Money Management

BNY Mellon taps Scharf as CEO

Charles Scharf worked with Apple Inc. and Google to turn Visa Inc. into a tech-savvy competitor.

Now, as the new CEO at Bank of New York Mellon (BK) Corp. (BK), he plans to keep his focus on technology, pushing the giant custody bank to innovate and stay relevant. Mr. Scharf replaces Gerald Hassell, who will remain chairman of the board through December.

"Technology is always at the center of financial businesses," Mr. Scharf said in an interview after BNY Mellon announced his appointment Monday. "We have to make ourselves slightly uncomfortable as we evolve and change. If you don't do it, someone else will."

BNY Mellon, which was founded in 1784 by Alexander Hamilton, has been investing heavily in technology with a goal of automating more of the bank's processes and cutting costs. Mr. Scharf, who led Visa for four years until December, introduced new technologies there to improve payment system security and transformed the platform by opening access to its network.

"We expect him to lead BNY down the path toward further technological and digitization improvements," said Brian Kleinhanzl, an analyst at KBW. "Given his solid track record at Visa, we do view him as a capable CEO."

Mr. Hassell led BNY Mellon since 2011, rising up the ranks starting in the early 1970s. In recent years, he responded to the low-interest rate environment by controlling expenses. He moved employees to cheaper locations, sold the bank's headquarters at 1 Wall Street and streamlined technology operations.

Since July 2014, BNY shares returned about 47%, including reinvested dividends, compared with 32% for the S&P 500 and 42% for rival State Street Corp. (STT)

Mr. Hassell did face a challenge in 2015 from activist investors who targeted BNY Mellon after its performance lagged peers. Marcato Capital Management in March 2015 called for ousting Mr. Hassell as CEO. Trian Fund Management took a more collaborative approach. Trian co-founder Ed Garden joined the bank's board of directors and worked closely with management to boost profitability.

Before joining Visa, Mr. Scharf worked at JPMorgan Chase & Co. and was considered a protege and possible successor to CEO Jamie Dimon.

Mr. Scharf's annual target compensation in 2018 will be $16.5 million, including $1.25 million in salary and $15.25 million of incentive pay that's composed of cash, restricted stock units and shares tied to performance, according to a filing. His pro-rated 2017 pay includes a $7.63 million sign-on award. His annual target compensation in his last year at Visa was $15.9 million.

BNY Mellon reports earnings on Thursday. As of March 31, it had $30.6 trillion in assets under custody and administration, and $1.7 trillion of assets under management.