Animated Shareholders

Walt Disney Co.’s shareholder meeting Wednesday signaled more than an embarrassing comeuppance for longtime Disney Chairman and Chief Executive Michael Eisner. Shareholder power is coming into its own. “Get used to it, corporate America, because this is just the beginning,” shareholder activist Nell Minow said as the dust kicked up during the meeting began to settle.

Corporate elections usually proceed according to the company script, and board candidates typically blush if 5% of votes are withheld. Disney shareholders, led by pension funds, withheld 43% of their votes from Eisner and 24% from former Sen. George J. Mitchell, who immediately after the meeting was named to take Eisner’s place as chairman of Disney’s board of directors.

The meeting continued a nightmarish chain of events for Eisner that mirrors Mickey Mouse’s mad scramble as the sorcerer’s apprentice to control an army of brooms that are wrecking the magician’s workshop. The brooms are wielded by dissidents Roy E. Disney and Stanley P. Gold, along with Comcast chief Brian L. Roberts, Pixar Chairman Steve Jobs and the pension funds, all working to sweep out Eisner.

But it’s not just Eisner’s bad dream. His counterparts in the corporate world have reason for concern, although few face a founder’s nephew using his famous name to recruit allies and it’s hard for dissidents to reshape boards under current rules. But the long-simmering revolt at Disney underscores why the Securities and Exchange Commission is considering a controversial shareholder voting rights rule that would force boards to pay attention to dissidents.

The SEC proposal, one of several prompted by the recent wave of corporate crime, would, if more than 35% of votes for an existing director were withheld, allow a major shareholder or a group of dissidents to nominate directors at a subsequent annual meeting. Disney and Gold now are considering a costly corporate version of a recall to oust Eisner. If the SEC proposal had been in effect, the Disney dissidents would be able to nominate a board member at next year’s annual meeting at less cost and risk.

With or without new rules, though, the landscape has changed. Since the wave of corporate earnings scandals, shareholders have been demanding that companies no longer allow one person to consolidate power as both chairman of the board and chief executive, as Eisner did until Wednesday. Mutual funds that have voted investors’ shares in a block will feel more pressure to justify their votes. And unions, retirees, environmentalists and others with a special interest will be emboldened to stand their ground.