Companies would have to tell investors how executive pay policies create incentives for risk-taking under rules proposed Wednesday by the Securities and Exchange Commission.

The SEC also proposed rules to force some banks and others that received federal bailout money to give shareholders a non-binding vote on executive pay.

Separately, the commission approved in a 3-2 vote a controversial rule proposed by NYSE Euronext (NYX) to ban brokers from voting in contested or uncontested corporate board elections on behalf of customers who did not return voting instructions.

The proposed compensation disclosure rules would require public companies to discuss information about the relationship between overall compensation policies and risk and how risks are managed. Companies would only need to provide this information, however, if the risks could have a material effect on the business, such as steep losses.

The proposal also targets potential conflicts of interest posed by compensation consultants by requiring companies to disclose fees paid to consultants or their affiliates if they provide other additional services to the companies. In addition, the rules seek to improve how stock and option awards are reported in corporate disclosures.

The commission's push to move forward on these issues received the praise of shareholder advocacy groups, which lauded the agency for taking steps to empower shareholders in elections and provide them with greater information about the companies they own.

"Compensation consultants are supposed to provide the board advice on a CEO's pay," AFL-CIO President John Sweeney said in a statement. "Too often, the consulting firm pockets far more in fees for providing employee benefit services to the company's management."

The proposals on compensation and corporate governance matters come at a time when some financial firms that received bailout funds have faced public wrath for paying high salaries and bonuses to employees.

Regulators now say they believe compensation structures helped fuel the financial crisis by encouraging excessive risk-taking and the Obama administration is seeking new laws to help align compensation structures with the long-term well-being of companies.

The bill which authorized the $700 billion Wall Street bailout last year had sought to keep executive pay in check in part by requiring bailout recipients to hold a non-binding shareholder vote on executive compensation.

As part of that law, the SEC agreed Wednesday to propose these say-on-pay rules for bailed-out public companies so the agency will be able to enforce the provisions in the law.

That vote was not controversial since Congress has already mandated the SEC must take action, but the vote to finalize NYSE's proposed broker voting ban created more waves Wednesday among the SEC's two Republican commissioners who feared it could give institutional investors too much influence or have unintended consequences.

First proposed in 2006, the rule is an effort to give retail investors more of a voice in corporate elections amid fears that brokers all too often vote with management. But much to the chagrin of some investor advocates, it has languished at the SEC until Wednesday.

The rule's approval is just the latest item in a series of corporate governance and proxy issues that SEC Chairman Mary Schapiro has put at the top of her to-do list.

Last month, the SEC agreed to consider rules to give shareholders a greater say in nominating directors to corporate boards. Having a stronger voice in corporate elections would allow shareholders to have more input on things like executive compensation.

In addition to the proposed new rules on compensation Wednesday, the SEC also said it will consider reforms on other proxy-related issues including requiring companies to provide more details on the background and qualifications of directors, executive officers and nominees, and making them report election results at a faster pace.

SEC Chairman Mary Schapiro said she hopes the proposed disclosure rules, if enacted, will give investors "better or more timely" information and don't merely add to an already "weighty document."

-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634; sarah.lynch@dowjones.com