An unprecedented 43% of Disney(NYSE: DIS) shareholders gave the embattled Michael Eisner a vote of no confidence at the company's annual meeting last week. Eisner was stripped of his role as chairman of the company, though he remains as CEO.

On The Motley Fool Radio Show on NPR, David and Tom Gardner recently talked about the wonderful -- and not so wonderful -- world of Disney with Kim Masters, author of The Keys to the Kingdom: How Michael Eisner Lost His Grip. She attended the annual shareholder meeting last week and shared her thoughts with us. This is the first of three parts.

TMF: Michael Eisner has been stripped of the title of chairman, but will continue for now to serve as Disney's CEO. Kim, what happened here?

Masters: Well, a couple of things. There was the long-term problem and the sort of shorter-term problem. The long-term problem is that for 10 years, Disney has sort of been in a gradual swoon. There has been a sense of Michael Eisner running the company with a very acquiescent board and growing discontent with that. Short term, I think there was sort of like a 1-2-3 combination. He booted Roy Disney off the board, which I think was a grotesque miscalculation. That was followed by the rupture with Pixar(Nasdaq: PIXR), which I think was designed to hurt him but was the culmination of a very bad relationship between Eisner and Steve Jobs. Then in came Comcast(Nasdaq: CMCSK) and things got really crazy and unstable, and I don't know that that ride has ended yet.

TMF: Paint the picture for us of the shareholder meeting.

Masters: You started to get the feeling which way things were going the day before the meeting when Roy Disney and Stanley Gold, the two dissident former board members who have started this movement, had what they call the "briefing session" for shareholders. You could see a line of people. It looked like the opening weekend of Star Wars. These people were lined up down the street trying to get in. These are sort of mom-and-pop investors. A lot of them have a few shares, but together they are 35% of this company.

They were there because they were really mad and they were siding with Roy. That face -- he looks like his Uncle Walt -- and that name are magic to these people. I didn't get it until I saw them there.

These are people with babies in their arms in some cases, old people and young people. The next day many of these people came to the convention center. It was absolutely packed and then early in the proceedings they allowed Stanley and Roy as outgoing board members to speak and there was just this protracted standing ovation. I was so struck by the sight of Michael Eisner watching these people on their feet and cheering, when basically the clear message was: "We think you need to go, Michael, because this is the guy we are backing."

TMF: Was it surreal? I read a story actually from one of our Motley Fool writers who talked about it being Mickey's 75th anniversary and said there were Mickey statues and things all around the hall.

Masters: There were many, many Mickey statues dressed, I mean painted in all different ways. I think it was not quite as over-the-top celebratory as the last time I went to a shareholder meeting. Obviously, I think they knew that might not work. There was this sort of surreal quality where the shareholder Q&A came up and all the reporters are sitting there with their pencils poised and people get up and they start complaining about this. You know, "I don't like the way ABC News covers Israel."

TMF: That is fairly standard stuff. You've been to media companies' annual meetings.

Masters: Right. So, you are sitting there with this momentous issue and all those people were not deterred. (Laughing.) And all the reporters would sort of go "Aaagh" and drop their pencils. It's sort of like going to a movie premiere and you're not a celebrity and you are on the red carpet and all the paparazzi look at you in disappointment.

So, we were all waiting for the good question, which finally somebody asked. He stood up and said, "You know, my family has worked for Disney for several generations. We have been shareholders. Mr. Eisner, you should resign." Michael Eisner just said, "You know what? My family is shareholders, too, and the best thing we can do for this company is to keep the management that we presented today." It was like this absolute denial of everything that had happened all day.

Tomorrow: How Eisner made enemies.