(MONEY Magazine) – Annual meeting season is supposed to be an agreeable time. Activists may rant, but big shareholders tend to stick with management. Not this year. Citing corporate cronyism, the country's largest and third-largest pension funds voted against the re-election of 90% of the directors on 2,700 boards, from Michael Eisner at Disney to Sandy Weill and Charles Prince at Citigroup to Warren Buffett at Coca-Cola to, heck, just about everyone in between.

What gives? The pension funds (Calpers and Calstrs, which represent California's public employees' and teachers' unions, respectively, and together invest $300 billion) have been poked in the butt by the state's chief investment officer, California treasurer Phil Angelides, a wealthy politico who explains the shock wave of activism thusly: "We have an overriding interest that the markets get quickly cleaned up."

And how. Calpers and Calstrs generally stick to cost-efficient index funds, investing across broad swaths of the market. When things go wrong, they can't really bail. So for their returns to improve, changes in the market must be made--pronto.

Angelides says he wants a "level of corporate activism that equals the magnitude of all that has happened in the financial markets over the past couple of years." That's magnitude 10 on the corporate Richter scale when you're the size of Calpers and Calstrs. But whether activism boosts returns is debatable, since there are no conclusive studies on the link between corporate governance and stock performance.

This much we know: It's important that capital markets remain open and honest, so that the only thing investors need worry about is market risk. "This is not a witch hunt or a purge," Angelides says. "It's about asking questions and raising issues." In that case, he gets our vote. --PABLO GALARZA