Now, the complications.  The press release notes that "shareholders would be able to include their nominees for director in the company's proxy materials unless the shareholders are otherwise prohibited-either by applicable state law or company's charter/bylaws-from nominating a candidate for election as director."  I would imagine that provision is intended to exclude non-voting preferred shares.  However, as it is worded it would seem that boards could alter their bylaws to specifically exclude certain classes of shareholders from nominating.  Could Boards adopt bylaws prohibiting unions and public pension funds from nominating candidates?  

I also wonder whether a Board could exclude a nominee because including them would require the Board to violate their fiduciary duty, a possibility that motivated Delaware's AFSCME ruling on election bylaws. Perhaps a Board could seek a declaratory judgment from the Court of Chancery if it felt a nominee could endanger shareholder value, then exclude that nominee from the proxy?  That would seem to fit under the heading of a shareholder nomination "prohibited by law." I also wonder about the consequences of the federal government's ownership in TARP participants.  It would seem this rule adds to the government's existing control over the automobile and banking industry, the dangers of which I explore here, and I wonder why a federal government shareholder exclusion wasn't even considered for this rule.