Wells Fargo claws back part of CEO, other executive's salary

In this Tuesday, Sept. 20, 2016, photo, Wells Fargo CEO John Stumpf testifies on Capitol Hill in Washington, before the Senate Banking Committee.
In this Tuesday, Sept. 20, 2016, photo, Wells Fargo CEO John Stumpf testifies on Capitol Hill in Washington, before the Senate Banking Committee.

WASHINGTON (AP) - Wells Fargo says CEO John Stumpf and the executive who ran the bank's retail banking division will forfeit tens of millions of dollars in bonuses as the bank tries to stem a scandal over its sales practices.

The board of directors at the nation's second-largest bank said Tuesday that Stumpf will forfeit $41 million in stock awards, while former retail banking executive Carrie Tolstedt will forfeit $19 million of her stock awards, effective immediately. Both are also giving up any bonuses for 2016, and Tolstedt will not receive any severance or any other compensation in connection with her retirement, the bank's directors said.

The San Francisco-based bank's independent directors are also launching their own investigation, hiring the law firm Shearman & Sterling to assist them.

In their announcement, Wells Fargo's independent directors said the pay clawbacks did not preclude the board from pursuing more salary clawbacks from Stumpf or Tolstedt.

"We will proceed with a sense of urgency but will take the time we need to conduct a thorough investigation," Stephen Sanger, Wells Fargo's lead independent director, said in a statement.

Wells Fargo had been under pressure from lawmakers and others to implement its executive compensation clawback provisions after the bank agreed to pay $185 million to settle allegations its employees opened millions of accounts without customers' permission to reach aggressive sales targets.

Stumpf has faced bipartisan outrage for his handling of the scandal. Republican Sen. Bob Corker of Tennessee said at a Banking Committee hearing where Stumpf testified last week that it would be "malpractice" if Wells Fargo didn't institute any compensation clawbacks. Democratic Sen. Elizabeth Warren of Massachusetts told Stumpf he should resign and "give back the money you took while the scam was going on."

Stumpf, a 34-year veteran of Wells Fargo and CEO since 2007, earned $19.3 million last year. Tolstedt announced her retirement in July and had been expected to leave with as much as $125 million in salary, stock options and other compensation.

The consumer banking giant, which is the biggest U.S. mortgage lender, has fired about 5,300 employees over the sales practices. Lawmakers told Stumpf at the hearing those dismissals didn't go high enough up the chain.