LogicaCMG, the IT services company under investor fire over corporate governance, has denied that there was a conflict of interest in paying a non-executive director €25,000 (£17,000) a month in consultancy fees.

Gerard Philippot was appointed a non-executive director in October 2005 after LogicaCMG paid £630 million to acquire Unilog, where he was chairman of the management board. The following March Mr Philippot entered into a one-year consultancy agreement under which he was paid €300,000 in total to advise on integrating Unilog into LogicaCMG, as well as receiving a £33,000 fee for his non-executive duties.

LogicaCMG announced at the weekend that it was examining the size and structure of its 14-strong board as it confirmed that Martin Read, its chief executive, would step down after a profit warning last week.

The decision was reached after Morley Fund Management, which owns more than 2 per cent of LogicaCMG, met the company's board, demanding that a clear succession plan should be put in place for the chief executive’s role.

It is understood that concerns were also raised about the size of LogicaCMG’s board.

The company is in the process of recruiting an independent non-executive director.

Commenting on Mr Philippot’s independence, a spokesman for LogicaCMG said that there was no conflict of interest between receiving consultancy fees and acting as a representative to shareholders.

He said: “We have always made it clear that he was not an independent director.”

LogicaCMG has also disclosed in the past that Cor Stutterheim, the non-executive chairman, is also not considered to be independent as outlined in the Combined Code on Corporate Governance. Mr Stutterheim was the executive chairman at CMG before its merger with Logica in December 2002.

LogicaCMG yesterday refused to comment on whether Mr Stutterheim would stand for re-election after his three-year term as non-executive chairman comes to an end in May 2008. It will begin to search for chief executive to replace Dr Read, who said that he would stay at the company until a successor is found.

Morley Fund Management declined to comment.

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