The SEC would like to give individulas or groups of legitimate long term shareholders access to proxy nominations where there is evidence it is warrented.
They do not want to create an environment where small or short trem share holders can run special interest or nuisance candidates.
So they are proposing a regulation that in some cases gives proxy access to shareholders to propose candidates to the board.
One of the proposed criteria that would trigger this is if 35% of shareholders voting withhold votes for a candidate.
I am not attorney by any stretch but I think the following bits and pieces of the SEC piece are relivant:
The proposed rules would, under certain limited circumstances, require companies to include in their proxy materials security holder nominees for election as director. Specifically, the proposed rules would create a mechanism for nominees of long-term security holders, or groups of long-term security holders, with significant holdings to be included in company proxy materials where security holders are permitted under state law to nominate directors and where evidence suggests that the company has been unresponsive to security holder concerns as they relate to the proxy process.....
The proposed security holder nomination procedure would become operative for the company only after the occurrence of one or both of the following two nomination procedure triggering events:
At least one of the company's nominees for the board of directors for whom the company solicited proxies received "withhold" votes from more than 35% of the votes cast at an annual meeting of security holders held after January 1, 2004, at which directors were elected ....
(or another that isn't the issue here as far as I can tell.)
