That thud you heard all the way from Philadelphia was Walt Disney chief Michael Eisner - and his ego - hitting the floor after investors representing 43 percent of Disney shares withheld their support for Eisner's reappointment as company CEO and chairman.
A no-confidence vote by 20 percent would be big news. Double that is revolutionary.
There's a Magic Kingdom's worth of reasons behind the stunning thumbs-down on Eisner. Investors already fed up with corporate mismanagement in America were swept up by the anti-Eisner campaign by former directors Roy Disney and Stanley Gold. Disney's subpar performance of recent years upset shareholders. Eisner's inability to cut a new deal with red-hot Pixar Studios was a blown opportunity.
There's more. Disney leaked top talent for years. Past executive hirings-gone-astray - remember Michael Ovitz? - proved embarrassing and expensive to fix. Disney's love of inbred boards of directors grew infamous. And Eisner's own failure to acknowledge a company in decline was downright annoying.
The list goes on. I won't even get into Comcast's recent offer to buy Disney. That proposed deal never would have seen the light of day if Disney were stronger.
There was even a rumor that Disney stalwarts such as Grumpy, Mickey, Winnie-the-Pooh and Miss Piggy (the recently acquired Muppet) were whispering Dump Mikey behind Eisner's back.
By late Wednesday, Eisner had survived Disney's annual shareholders riot - I mean meeting - in Philadelphia. He lost his title of chairman but managed to hold on to his CEO job by his fingernails. His contract expires in 2006.
Is this battle over? Not by a long shot.
Plenty of individual investors with modest stakes in Disney stood at the annual meeting to complain to (and about) Eisner. But the nation's largest public pension fund, one of investing's Big Kahunas and a longtime critic of Eisner, already had spoken its mind and voted its shares before the annual meeting was called to order.
CalPERS - the California Public Employees' Retirement System, with $165-billion in assets - last week called Disney's performance "dismal" over the past five years and said it would withhold its vote for Eisner. CalPERS is the 29th largest single shareholder of Disney, with 9.9-million shares worth more than $235-million. Big public pension funds in New York, Massachusetts and other states soon followed.
They were even joined this week by the State Board of Administration of Florida, manager of the country's fourth-largest public pension fund. Here's a meek pension overseer that, until recently, chose to steer clear of investor activism. Maybe getting burned by its stake in Enron, whose shares became worthless when the company declared bankruptcy, convinced Florida to get more involved.
CalPERS embraced shareholder involvement long ago and sticks its nose into the business of any wayward company whose stock it holds.
In a way, CalPERS' history of harping at Disney to clean up its management act helped set the stage for Wednesday's vote against Eisner.
At Disney's 1997 annual meeting, CalPERS was among the outspoken pension funds that withheld its votes to re-elect five Disney directors on a board awash in conflicts of interest.
That was the same year Business Week magazine picked Disney's corporate board as the country's worst. We have a lot of crummy boards at U.S. corporations, so Disney's must have really reeked.
In 1998, CalPERS backed a motion insisting that Disney have truly independent directors, not former employees or board members with cozy financial ties. The motion won a 35 percent backing of shareholders.
In 2000, CalPERS opposed two Disney directors for compromising their independence by receiving lucrative consulting fees from the company. One of those was George Mitchell, the same director picked this week to succeed Eisner as Disney's new chairman.
Disney is hardly CalPERS' only target.
The pension fund last year issued its dreaded "focus list" of companies the giant pension fund said need to mend their ways. Among the names: Xerox, Gemstar and JDS Uniphase. In 2002, Gateway, Qwest and Lucent Technologies made the hit list. And Circuit City and Warnaco topped the list in 2001.
Emboldened by Wednesday's large number of shareholder votes against Eisner, CalPERS upped the ante and called for the CEO to resign by the end of 2004.
"This discontent is too wide and way too deep in the marketplace, and it has led us to believe that Eisner should go and the board should get quickly to work on planning for an orderly transition," said CalPERS president Sean Harrigan in a statement.
After 20 years of fighting Disney's corporate battles, Eisner's got a thick skin. But after Wednesday's humiliating annual meeting and the stripping of his chairman's title, Eisner is licking his wounds.
In the corporate governance world, there's blood in the water.
Could we possibly hear a familiar tune in about eight more months?
Now it's time to say goodbye, to all our family ...
