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Harrigan took Calpers activism to a new level. In one of its most high-profile campaigns, it persuaded fellow institutional investors to withhold votes for Disney’s chief executive, Eisner, so he would not get a seat on the board.

Eisner was held up by Calpers and other pension funds as a prime example of executive greed for his pay and alleged unwillingness to listen to shareholders. Eisner suffered a stinging rebuke at the company’s annual meeting in March with a 45% vote against his re-election as a director.

It was a historic vote. Before, dissident shareholders struggled to reach even 5% in such votes. Eisner has now set a date for retirement.

Harrigan also led the campaign against Grasso, the former NYSE chairman, and his $187m pay package, and was a vocal critic of Weill, whose Citigroup was at the centre of a series of Wall Street scandals.

But it was Calpers’s decision to withhold its support for directors from 2,700 companies this year that brought it into conflict with business leaders and others in the corporate-governance world. The move was made to protest at conflicts of interest that arise when companies hire accounting firms to perform both auditing and consulting work. One of the directors targeted was Buffett, who sits on Coca-Cola’s board, a company where such a conflict has arisen. Buffett is seen as a leader in shareholder rights and the move was widely criticised.

Some argue that the scale of Calpers’s initiative and its hardline approach skewed the debate during negotiations over a key company rule change.

One expert aid: “There are people in the governance community who argue that Calpers has become too extreme. Voting against all those directors was irresponsible and weakened the argument.”

The Business Roundtable, which represents many of the chief executives of America’s top companies, has been a vocal critic of Calpers. John Castellani, Roundtable president, recently denounced the “hysteria being driven by union-dominated pension funds. They are wrapping themselves in the cloak of corporate governance to gain power and influence.”

Peter Butler, a former Hermes director, runs Governance for Owners, a corporate-governance outsourcing service. He said governance has become such a big issue it threatens to take up too much of a pension-fund manager’s time. “A pension trustee’s main job is to look after pension issues. Corporate governance is very important, but it is a small part of their overall responsibilities,” he said.

Butler expects to see Calpers and its giant pension-fund compatriots start to retreat as other, smaller governance groups move to the front of the debate. “Governance has become too big an issue to be left to three bodies to define,” he said.

Richard Ferlauto, director of pensions for the American Federation of State, County and Municipal Employees, said Calpers’s aim was to define corporate behaviour — a role, he argued, it is unlikely to relinquish in the near future.

Calpers, he said, may become less aggressive but will still lead from the front.

“Clearly there is plenty of work to do. Business may be feeling like it has got its oats back. Shareholders will have to be even more vigilant in demanding accountability.”