Australian directors top of tree

Executive and non-executive directors' remuneration soaks up almost 2 per cent of Australian company profits, the highest share among 12 Asian countries, research by the broker CLSA shows.

Boards in Japan receive 0.75 per cent of profits and directors in Hong Kong and South Korea receive fewer than 1.5 per cent.

While the report rated Australian governance standards as the best in the region, it said firms in Western countries tended to pay their board members more because dominant shareholders played a lesser role than in Asia.

"Directors' remuneration is a much bigger issue in Western markets where CEOs and senior management are given generous options and run the company without a significant controlling shareholder to rein in compensation," the report said.

"In Asia, one of the benefits of family or individual-controlled companies is that compensation to senior executives is kept in check."

A previous study by the Australian Council of Superannuation Investors found the average non-executive director who was not a chairman received $208,000 in 2010, the latest year of the study. Despite the high share of profits going to Australian directors, ASX-listed firms were ahead of the pack on most measures in the report.

Australia had the highest share of companies with an independent chairman, at more than 80 per cent. In Singapore, fewer than 60 per cent of companies had an independent chairman, while in Japan, the ratio was fewer than 30 per cent.

Overall, the survey found Australian companies had the highest average corporate governance rating of 64.2, compared with an Asia-wide average of 52.6.

The findings were based on research into 864 listed companies across Asia-Pacific markets.

Three Australian companies - Newcrest, Brambles and BHP Billiton - were among the top-20 stocks for corporate governance.