THE BURNED OVER DISTRICT

In a desperate effort to save his job Wells Fargo Thief-In-Chief John Stumpf has allowed his board to 'claw back' $41 Million in stock grants. At present, this is the largest such 'claw back' from a CEO in any industry.

Wells Fargo announced on Tuesday that it would claw back compensation valued at $41 million from its embattled chairman and chief executive, John G. Stumpf, as the financial consequences of the scandal over illegally created sham accounts at the bank reached the executive suite.

The action represented one of the first 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.

And it came one week after a blistering Senate hearing in which lawmakers criticized the company and its board for not holding its leaders financially accountable for the scandal.

Carrie Tolstedt, who led the Wells Fargo community banking division now engulfed in scandal, will surrender stock grants valued at about $19 million, the board said as it announced an investigation into the company’s practices.

The two executives will also forgo any bonus payments for the year.

Mr. Stumpf, 63, will forgo his base salary, $2.8 million annually, during the investigation, Wells Fargo said. The company’s board has hired the law firm Shearman & Sterling to work on its inquiry.

Only a relatively small portion of the compensation of Wells Fargo’s executives can be clawed back. The bank’s clawback provisions are specific about the circumstances in which it can recoup money from executives — most hinge on misconduct that forces the company to significantly revise its financial results or pay that was received based on inaccurate financial information. Neither is the case here.

But it took advantage of a clause that allows the company to retract performance-based stock awards if an executive causes significant “reputational harm” to the company.

Ms. Tolstedt will also not seek to cash in any stock awards during the investigation. And potentially the board can remove Stumpf as Chairman and/or CEO if they wish.