Nov. 12 (Bloomberg) -- Executive compensation is “out of control,” and long-term shareholders need a greater say in how companies are run, AFL-CIO President Richard Trumka said.

There’s been “no relationship between performance and pay,” Trumka said today at a conference in Washington held by Bloomberg Ventures, a unit of Bloomberg LP, parent of Bloomberg News. “As it is right now, only management can put people on the proxy, so the board of directors continues to be perpetuated around management.”

Changes in the U.S. taxes are also necessary as wage growth has stagnated for almost four decades, Trumka said. The need to create jobs will be the focus of the 2010 election, and the U.S. should consider introducing a Troubled Asset Relief Program for small and medium-size businesses, he said.

“We need to have another shot” at an economic stimulus Trumka said. “We need to do some lending directly to small and mid-sized companies, so that the lending goes directly to them.”

The economic stimulus that Obama signed early this year pulled the country “back from the brink of disaster” on the economy, he said.

Trumka also said President Barack Obama’s top domestic priority, an overhaul of the nation’s health system, will probably be completed with a public-insurance option, “possibly” this year.

Free Choice Act

Trumka leads the nation’s largest union organization, which helped elect Obama in 2008 and bring more Democrats to Congress. He and other labor leaders have pressed Democrats to pass a health-system overhaul that includes a government-run public option, as well as a union-organizing measure called the Employee Free Choice Act.

The legislation will pass this year or early next year even with holdups because of a lack of support in the Senate, Trumka said. The bill would make union organizing easier.

Trumka also discussed China, saying the country has manipulated its currency and “hasn’t played by the rules.”

China “needs to live up to its agreements,” he said.

Trumka was elected president of the AFL-CIO in September in the first change in leadership in 14 years at the labor federation. He has vowed to step up the labor movement’s pressure on businesses and politicians to make sure workers’ interests are protected.

To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net

Last Updated: November 12, 2009 12:01 EST