UPDATE 2-Elan nominates two dissidents to board

* Schuler called for Elan CEO to be fired

* Bryson is former Eli Lilly CEO

* Shares close up 1 percent at $8 on NYSE (Adds details, company comment, background)

LOS ANGELES, June 11 (Reuters) - Elan Corp Plc (ELN.I) (ELN.N) on Thursday nominated two dissidents to its 15-member board, including a major shareholder who has called for the ouster of the Irish drugmaker's chief executive.

Elan, based in Dublin, said it has proposed that Vaughn Bryson and Jack Schuler join nominee Richard Pilnik, whose appointment to the company's board was announced in mid-May, as nonexecutive directors of the company.

In conjunction with the proposed election of the three new directors, Elan announced the planned retirement of Floyd Bloom, Ann Gray and Dennis Selkoe from the board.

Schuler, the co-founder of private investment firm Crabtree Partners LLC and a former Abbott Laboratories (ABT.N) executive, said in December that investors had "completely lost confidence" in Elan Chief Executive Kelly Martin and his management team.

At the time, he said he owned 5.5 million shares of Elan.

Martin was not available to comment on the nominations.

Bryson is a former CEO of Eli Lilly and Co (LLY.N) who has served on the boards of several other companies, Elan said in a statement. He was suggested as a candidate for the board by Schuler, the company said.

"Elan thinks these new board members will strengthen the board's expertise in commercial pharmaceutical operations at a good time in the company's history," Elan spokeswoman Mary Stutts said.

Elan, which co-markets the multiple sclerosis drug Tysabri with Biogen Idec (BIIB.O), hired Citigroup in January to conduct a review of its business and said at the time a merger or sale of the company was possible.

Martin said on Wednesday that Elan expects to conclude a strategic transaction in the near term after discussions with a number of pharmaceutical and large biotechnology companies.

A source told Reuters last week that talks with potential Elan acquirer Bristol-Myers Squibb Co (BMY.N) had broken off.

In a letter to Elan's chairman in December Schuler said, "The combination of management incompetence and misuse of company resources have caused Elan to lose more than $13 billion in value in the last four months."

Schuler at the time recommended that Elan replace top managers with executives with "relevant" pharmaceutical marketing experience, eliminate egregious misuse of company funds, and more closely monitor the decisions and actions of the CEO.

Elan Chairman Kyran McLaughlin defended Martin, calling him "highly effective in streamlining our operations and positioning us to make the most of our pipeline."

The company said its annual meeting will be held July 16.

(Additional reporting by Bill Berkrot in New York) (Reporting by Deena Beasley; Editing by Bernard Orr and Steve Orlofsky)