(MENAFN- ProactiveInvestors - N.America) John Stumpf, boss of Wells Fargo & Co (NYSE:WFC), had US$41mln of stock options rescinded after causing reputational harm to the bank.
Wells Fargo's board moved to claw back the option awards from Stumpf, who is chairman and chief executive of the company, after the bank became embroiled in a scandal over its sales practices.
Around two million fake accounts were created by the bank, as employees attempted to hit demanding sales targets. Stumpf was grilled by the Senate Banking Committee last week over the practices, which had prompted a US$185mln fine and regulatory action.
The head of the bank's community banking division, Carrie Tolstedt, has walked the plank and taken early retirement; she will miss out on US$19mln of stock options.
According to Andrew Ross Sorkin of the New York Times, the clawback was one of the few times since the 2008 financial crisis that a chief executive has been forced to give up compensation.
'Many large companies have adopted clawback provisions at the urging of regulators and shareholder advocates, but boards have been hesitant to invoke them,' Sorkin said.
Stumpf will not exactly be scouring the dumpsters of New York looking for a cheap lunch after the board's action, as filings indicate he had previously received 5.5mln stock options this year that are not subject to clawback; at current prices those options are worth just under US$250mln.
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