Strong signs of shareholder activism have come in the wake of the many corporate scandals in the United States and Europe over the past few years. Once treated by management as a minor annoyance, activist investors are now increasingly central in the push for corporate-governance reform. In the United Kingdom, the government has threatened to bring in legislation compelling big shareholders to take a more active role in bringing underperforming companies to task. Trade bodies representing fund managers have drawn up codes that require them to become more active, as have global bodies such as the International Corporate Governance Network (ICGN).

Hermes, a UK fund manager that is owned by the BT Pension Scheme and serves more than 200 clients, has long been at the forefront of the shareholder-activist movement, which urges shareholders to challenge managers of companies about the way they are run. Hermes employs some 45 people in its corporate-governance work—more than twice as many as any other institution in the world, including the California Public Employees’ Retirement System (Calpers), with which Hermes enjoys a close relationship. It now has £44 billion ($80 billion) under management.

Back in the early 1990s, Hermes took on the task of...