WASHINGTON—Sen. Bernie Sanders (I., Vt.) would sharply curb the tax benefits of executives’ retirement plans and require earlier taxation of stock options in a proposal that could dramatically alter compensation at major U.S. companies.

In a plan set to be introduced Thursday, the front-runner for the Democratic presidential nomination cited a new Government Accountability Office report. That analysis found executive deferred-pay plans at the 500 biggest publicly traded companies totaled about $13 billion in assets in 2017,...