“The Securities and Exchange Commission staff plans to recommend that the agency move to give shareholders more power in nominating and electing corporate directors, according to people familiar with the matter,” writes Deborah Solomon in today’s Wall Street Journal.

“In a report to be delivered to the SEC next week, the staff plans to recommend that companies be required to lift some of the obstacles that prevent shareholders from nominating and electing directors. While details still are being hammered out, the report is likely to suggest that, in limited circumstances, companies should have to place a shareholder-selected board nominee on a company’s official proxy material.”

“Under current SEC rules, shareholders elect directors and they also can nominate candidates, but they can’t include a nominee’s name in the official proxy material, which lists the company’s candidates. The SEC has been considering revising the rules because of concern that shareholders face barriers in nominating and electing directors.”

“Options under consideration include allowing shareholder nominees on the company ballot when a certain percentage of shareholders support a candidate or when a ‘majority of shareholders’ express serious concern about the board’s makeup.”

“Although it isn’t clear what the SEC’s final rules will look like, people familiar with the matter said there is a desire within the commission to open the process to allow for greater corporate democracy.”

” ‘Something measured has to be done to make it possible for significant shareholders who are not simply intrusive and disruptive to be involved in the process,’ one SEC official said. In April, SEC Chairman William Donaldson said the ‘time has come’ for a thorough review of the proxy rules to ‘ensure that they are serving the best interests of today’s investors.’ “

“The five-member commission is scheduled to get the report Tuesday and will then work with the staff to issue proposed rules. An SEC spokesman declined to comment.”