Paul Kahn Leaving AT&T Universal Card in Surprise Move
NEW YORK (AP) _ Paul Kahn, one of the credit card industry’s leading lights, resigned abruptly Wednesday as president of the spectacularly successful AT&T Universal Card, shocking others in the business.
Kahn will leave his post on May 15, and will also quit as chairman of the AT&T Universal Financial Corporation, the company said. Kahn left voluntarily and had been contemplating the move since December, it said.
″I have accomplished in four years what many people could not do in an entire business career,″ Kahn said in a statement from the operation’s Jacksonville, Fla. headquarters. ″With the startup success of Universal Card behind me, I intend to move on to another exciting challenge.″
Kahn, 48, led American Telephone & Telegraph Co. into the credit card business three years ago, rapidly building the Universal Card from scratch into one of the industry’s greatest success stories.
The company triumphantly challenged the banking industry’s dominance of the lucrative credit card business and has attracted 10.5 million accounts, making AT&T the third-largest purveyor of cards in the country.
Kahn radically changed the competitive dynamic of the credit card market with innovations like no-fee pricing, variable interest rates and linking the card to AT&T’s long distance telephone service.
The success of the AT&T card, which in 1992 became the only financial services company ever to receive the Malcolm Baldrige National Quality Award, helped lure other non-banking companies into credit cards, ranging from General Electric Co. to the Big Three automakers.
Many people in the credit card business had no idea Kahn was leaving until the announcement. James Daly, associate editor of Credit Card News, a Chicago- based trade publication, said Kahn’s departure ″definitely took the credit card industry by surprise.″
Before joining AT&T in May, 1989, Kahn served in executive positions with the First National Bank of Chicago, Mellon Bank and Wells Fargo Bank.
AT&T and industry analysts said Kahn’s resignation was unlikely to undermine the success of the card.
″Paul Kahn will be a tough act to follow,″ said Robert J. Ranalli, president of AT&T’s consumer services division. ″He built an organization that made all of us proud.″ But the company emphasized that there would be no changes in its day-to-day operations, and said it was ″not dependent on any individual.″
″With or without Paul Kahn they’re going to continue to grow, the hard work has been done,″ said Robert McKinley of Ram Research Corp., a credit- card research concern based in Fredericksburg, Md.
McKinley said the resignation was a ″surprise that doesn’t make any business sense.″
Kahn’s departure from AT&T appeared to be amicable, but McKinley said there was some speculation that it may have been sparked by tension over differences of management style and personality.
″He wasn’t detail oriented, and AT&T is very much detail oriented,″ McKinley said.
AT&T Universal Card said it would begin a search for a successor to Kahn both within the company and among outside candidates.
Frederick Winkler, the executive vice president of customer services and Alan Schultheis, vice president for marketing have been mentioned as possible replacements, McKinley said.
According to Ram Research, at the end of last year the Universal Card had outstanding debt of only $600 per account, about half the industry standard.
McKinley said the card has attracted ″transactors,″ customers who pay their bills immediately to avoid interest charges.