By Iona Bain

Measures announced by Vince Cable to curb executive pay are a "first step to transparency and fairness" but more needs to be done to satisfy shareholders, say figures from the investments world.

The business secretary announced plans yesterday to give shareholders a binding vote on executive pay in an effort to deal with excessive salaries. He also said that companies should be able to claw back bonuses for bosses if a company performs badly.

Gavin Oldham at the Share Centre agreed with the proposals, saying that "pay has got ahead of itself, and there's a clear problem with director level remuneration".

He added that there was "unanimous belief" among investors that senior earnings have become disproportionate to performance and over four fifths (83%) are in favour of clawback arrangements.

Legal & General has welcomed the proposals, but it is calling for pay to be focused on long-term performance (over three to five years), more transparent remuneration and executives to hold "a meaningful amount of shares" in the company.

Meanwhile, the firm also suggests that investors normally choose funds based on reputation and past performance and are prepared to put up with fees if the investment house delivers.

More than a quarter of investors say their main consideration when picking a fund is buying into an investment house "they feel comfortable with", while 23% of investors are most concerned with past performance.

The survey also reveals that only 14% are influenced by the reputation and attitude of fund managers themselves, and just 8% believe that fees matter the most when picking a fund.