WFC Wells Fargo and Company

By Emily Glazer and Austen Hufford 

Wells Fargo & Co.'s board stripped eight top executives of their 2016 cash bonuses, also clawing back certain of their stock awards in response to the bank's sales-practices scandal.

The San Francisco lender said Wednesday that the compensation cuts for current executives don't reflect the culpability of individuals but are meant to show their accountability for the bank's overall performance and reputation risk as a result of the scandal.

Eight of Wells Fargo's executives, including current Chief Executive Timothy Sloan and financial chief John Shrewsberry, are impacted by the moves, resulting in a loss of total compensation of about $32 million.

Mr. Sloan didn't become chief executive until October when former CEO John Stumpf abruptly retired following congressional grillings and a public uproar over the sales-practices scandal that also cost the bank a $185 million settlement. Before this, Mr. Sloan was the bank's president and chief operating officer.

In addition to the bonus cut for the year, the company also said it would claw back up to 50% the compensation the executives would have received from certain shares granted in 2014. The shares, which were tied to the company's performance, are part of executives' so-called long-term equity incentives.

In 2015, Mr. Sloan received so-called performance share awards valued at $6.5 million, according to the bank's most recent proxy.

Wells Fargo's board in late September rescinded a total of about $60 million in pay from Mr. Stumpf and then-retail-bank head Carrie Tolstedt.

The board's investigation into the scandal is ongoing, and the bank reiterated it is expected to be completed before its annual shareholder meeting expected in late April.

"We will continue to work to make right what went wrong," Chairman Stephen Sanger said.

While it is unusual for banks to withhold bonuses from top executives -- incentive compensation makes up the bulk of their pay -- it has become more common in recent years. Deutsche Bank AG said in January that managing directors and other senior employees wouldn't receive individual bonuses for 2016 given the German bank's escalating legal costs and other pressures on profit. In the wake of its so-called London Whale trading debacle, J.P. Morgan Chase & Co.'s board halved Chief Executive James Dimon's pay for 2012.

Wells Fargo's board voted this week to finalize its decision on the top executives' compensation, people familiar with the matter said.

The decisions confirm a February Wall Street Journal article about the board's expected move to eliminate annual bonuses.

The announcement impacts members of the bank's 11-person operating committee, but excludes executives who were named to that governing body after the settlement was announced in September.

Beyond Messrs. Sloan and Shrewsberry, the pay cuts will hit David Carroll, head of wealth and investment management; Avid Modjtabai, head of payments, virtual solutions and innovations; Hope Hardison, chief administrative officer; David Julian, chief auditor; Michael Loughlin, chief risk officer; and James Strother, general counsel.

This follows the board's decision to fire four executives in Wells Fargo's embattled retail-banking operation, the first terminations of senior managers since the scandal erupted in the fall.

Write to Emily Glazer at emily.glazer@wsj.com and Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

March 01, 2017 11:18 ET (16:18 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.