New York City's pension funds want three big Wall Street banks to impose tougher compensation-clawback rules for top executives.

NYC Pension Funds and City Comptroller John Liu called on the boards of Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co to strengthen language in top executives' compensation agreements. The funds held $483.3 million worth of stock in the three banks as of Monday.

In shareholder proposals, released on Wednesday, the pension funds proposed that two of the banks remove the word material from language in compensation contracts that require a material loss or reputational harm to have occurred before executives' pay can be reclaimed.

They also proposed that all three banks make changes so that supervisors' pay can be reclaimed for the bad behavior of employees they manage, and that all clawback actions be disclosed to shareholders.

No one should profit or be rewarded with bonuses when engaged in improper or unethical behavior, said Liu. These tougher clawback provisions will not only recover money that shouldn't have been paid in the first place, but also set the tone for a stronger standard of conduct for company executives as well as their bosses.

A press release from Liu's office noted that JPMorgan, Goldman and Morgan Stanley have each paid more than $100 million over the past 18 months to settle state or federal charges in connection with mortgage securities.

There have been no publicly disclosed clawback actions for any of the three banks, although they do have clawback provisions in place.

Both JPMorgan and Goldman can reclaim pay for employees who cause material harm for the banks, or who engage in conduct that leads to their firing for cause. Morgan Stanley uses different language, allowing for clawbacks from employees who engage in conduct detrimental to the company or who are fired for cause.

The pension fund group gave JPMorgan and Morgan Stanley credit for introducing new clawback provisions in the wake of the financial crisis, but said all three banks need to go further in curbing excessive risk-taking or improper or unethical conduct through pay policies.

Representatives for Morgan Stanley and Goldman Sachs declined to comment. A spokesman for JPMorgan Chase did not immediately respond to a request for a comment on the proposal.

The New York City pension system held $108 billion under management as of September 30, for retirement funds of teachers, police, firefighters and other city employees.

The funds held 10.6 million shares of JPMorgan, valued at $324.3 million; 1.2 million shares of Goldman, valued at $107.1 million; and 3.7 million shares of Morgan Stanley, valued at $51.9 million.

(Reporting By Lauren Tara LaCapra; Editing by Steve Orlofsky and Maureen Bavdek)