NEWS ANALYSIS: MasterCard's Lockhart: Methodically Changing the Culture

Members of MasterCard International Inc. will be watching closely to see how chief executive officer H. Eugene Lockhart moves to fill the vacancy at the top of his U.S. regional organization.

Such key appointments give CEOs an opportunity to set a tone and send a signal about their own management styles and vision.

Though he has not been loud about it in less than a year on the job, Mr. Lockhart has done both in spades, in large part through executive appointments. He is about to do the same with the U.S. opening.

He has already made one thing clear about who the candidates will be to succeed Peter S.P. Dimsey: senior banking and financial services executives with marketing and management experience.

People much like Mr. Lockhart, who augmented his management consulting career with a stint as one of the top executives at Midland Bank in Britain.

People less like Mr. Dimsey, whose background in consumer product and brand marketing did not fit the traditional mold of bank card association executives.

As he launched the search, Mr. Lockhart promised to take an "active role" in managing the U.S. region - itself an opportunity to put more of a personal stamp on the organization.

But simultaneously bowing to MasterCard's past, Mr. Lockhart asked Arthur Ziegler, a retired banker and former MasterCard board chairman, to take on some administrative responsibilities while Mr. Lockhart gets involved in policy and strategy.

Reports from inside MasterCard's New York offices and from the membership ranks point to various ways in which the Lockhart influence has been felt. He altered and accelerated the course of the planned move of headquarters to a Westchester County suburb.

Another case in point was his reexamination - and ultimate embrace - of a smart card strategy.

Though initially wary about his staff's headlong rush to cards with embedded microcomputer chips, Mr. Lockhart spent his first few months studying and refining the business case and emerged a zealot. By June, MasterCard had recruited two of the biggest names in advanced card technology - senior vice presidents Robin Townend, formerly of Barclays Bank, and Diane Wetherington, from AT&T Corp. - to spearhead a seven-year conversion drive.

More recently, John Tunstall, former head of an international smart card standards panel, joined the team.

He said he wouldn't have moved from Europe to New York if not for Mr. Lockhart's presence and leadership. Mr. Lockhart, meanwhile, said the appointments were exactly what they seemed: evidence of "commitment and conviction."

The transition plan for Mr. Dimsey's job will entail the same methodical, thorough, intellectually rigorous, strategically long-term approach that MasterCard bought into by bringing in Mr. Lockhart.

His three highest-level recruits to date, all for newly created posts, may suggest the directions Mr. Lockhart is heading:

* Jerry McElhatton, who in September was named president-global operations and technology services. A bank operations veteran who did consulting work for Midland Bank while Mr. Lockhart was there, Mr. McElhatton oversees the worldwide MasterCard infrastructure from the systems hub in St. Louis.

* Robert W. Selander, who concurrently with Mr. McElhatton's appointment became president of the Europe-Middle East-Africa and Canada regions. He is based in New York. His experience - two decades with Citibank, most recently as director of global retail strategy - certainly epitomizes what Mr. Lockhart will be looking for in a U.S. CEO.

* William I Jacobs, who joined MasterCard last week as executive vice president of global resources. He will be overseeing financial and administrative staff functions, but his background includes business start- ups, chief operating responsibilities, and commercial banking, and he thinks big.

"There are going to be a few major players" in global financial services, Mr. Jacobs said in an interview. His overriding objective is to "make sure MasterCard is one of those people."

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