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This paper examines the monitoring effectiveness of independent and non independent directors on a CEO pay-performance of Malaysian financial firms from 2002-2009. It is based on the agency and managerial power theory. The former states that under optimal contract pay should be aligned to performance, while the latter postulates that powerfully entrenched CEO can influence captive directors to award generous compensation package. Our empirical results show (1) a high CEO paydividend sensitivity while market measurement plays no part in influencing CEO pay; (2) both the independent and non independent directors have failed in their fiduciary role as internal monitor, suggesting the dominance of managerial power in the board; (3) the appointment of independent directors is merely a move to fulfill the minimum standards of the best practices of corporate governance.