Wells Fargo & Co. Chairman and Chief Executive John Stumpf will forfeit $41 million for the bank's burgeoning sales scandal, marking one of the biggest rebukes to the head of a major U.S. financial institution.

The bank's board moved to rescind pay for Mr. Stumpf and former community- banking head Carrie Tolstedt ahead of a hearing of the House Financial Services Committee Thursday. Wells Fargo's board said Ms. Tolstedt, who oversaw retail banking during bad behavior there, will forfeit unvested equity awards valued at $19 million.

The board said she won't exercise "outstanding options" during an investigation into the bank's sales practices. Ms. Tolstedt has also left the bank, earlier than her planned Dec. 31 retirement.


The bank said that the $41 million is from Mr. Stumpf's unvested equity awards. It also said that he would forgo salary during an independent investigation the board is leading and has recused himself from all matters related to that as well as independent directors' deliberations. Neither he nor Ms. Tolstedt will receive a bonus for 2016.


The bank's lead independent director, Stephen Sanger, said in the board's statement that further action may be warranted. The board's independent directors "will take such other actions as they collectively deem appropriate, which may include further compensation actions before any additional equity awards vest or bonus decisions are made early next year, clawbacks of compensation already paid out, and other employment-related actions."

The results of that investigation, for instance, will determine what becomes of Ms. Tolstedt's roughly $35 million in unvested options, according to a person familiar with the matter.


In 2013, Wells Fargo agreed to enhance its clawback policy in exchange for New York City pension funds dropping a related shareholder resolution proposed by the city comptroller's office. New York City pension funds own almost $500 million in Wells Fargo stock.

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