KUALA LUMPUR:  A non-executive director (NED) in Malaysia's 300 largest listed firms receives on average RM89,000 a year in fees, allowances, emoluments and benefits, KPMG Malaysia says.

However, take away government-linked companies (GLCs), foreign-controlled companies and finance companies and the average remuneration dropps to RM72,000.

Commenting on the findings of the audit firm's 2009 Non-Executive Directors: Profile, Practices and Pay report, KPMG partner David Lim Hun Soon said there was no clear correlation between the quantum of a NED's remuneration and the performance of a company.

Lim was speaking to journalists today after the release of the report based on a study by the Audit Committee Institue under KPMG's sponsorship.

He said the biggest considerations, in deciding the remuneration package, was given to the role and responsibilities of the NEDs, taking into account their experience and skills.

Besides the 300 largest companies by market capitalisation as at July 20, the study also looked at the top 30 companies on the ACE Market.

Lim noted that the annual remuneration of NEDs in GLC finance companies such as Bumiputra-Commerce Holdings Bhd, Malayan Banking Bhd and RHB Capital Bhd averaged RM218,000, while NEDs in non-GLC financial companies such as Public Bank Bhd and Alliance Financial Group Bhd received an average of RM146,000.

The study also found that NEDs of local companies have a higher annual remuneration averaging RM91,000 compared with RM66,000 for foreign-controlled companies.

NED remuneration in the report had been adjusted for a "de-facto executive director" element, said Lim. A de-facto executive director could be an executive director at a subsidiary level but designated as a NED at the holding company level, he explained.

For instance,before the adjustment was made, one non-GLC financial company had NED remuneration of RM1.47 million. It fell to RM463,000 after the adjustment.

The report said the de-facto executive directors element was highlighted “because the role of the NED is crucial and when the NED is in substance an executive director, checks and balances may be impaired”.

Lim said that, as NEDs have a duty to ensure the sustainability of their companies, they needed a "eyes on, hands off" approach to provide insight without attempting to micro-manage. They could do this by being more active in board meetings and asking tough questions.

Lim also said that the study, meant to be an eye-opener for NEDs, would be conducted every year for comparison as a well as to attract talent to bolster the quality of people who serve as NEDs.

Among the findings of the study:

• On average an NED serves two listed companies, collecting total remuneration of about RM144,000 a year.
• NEDs who also chair the audit committee receive 19% more in total remuneration.
• Ninety four percent of NEDs are men, with the youngest aged 27 and oldest 89.
• The longest serving NED was on a company board for 44 years.
• Only 6% of NEDs are women, ranging in age from 30 to 74, with the longest board service lasting 23 years.
• A 2008 study of the top-300 European companies showed women accounted for 10% of NEDs.
• The average period on a board for a NED  is seven years.
• NEDs attend on average six board meetings annually, while the financial sector may require 11 or more meetings a year.