Euan Sutherland, the former CEO of The Co-operative Group, is to receive a £1m payoff.
Sutherland stepped down from the society in March this year after just 10 months in the role after details of a proposed £3.6m pay package were leaked to the media.
Details of the payoff, reported by The Observer, have angered members and critics, especially as the society is looking to reduce its £1.4bn debt and is considering job losses.
But in a statement, The Co-op Group said: “Euan Sutherland was on a 12-month notice period as group chief executive.
“When he resigned in March, the board did not feel it appropriate to ask him to work his notice period and exercised its rights to put him on gardening leave, which is normal practice for a senior executive,” it added.
Meanwhile, it has also emerged that Len Wardle, the former chairman of the Co-op Group who stepped down in November last year at the height of the Paul Flowers scandal, has written to members urging them to reject the society’s corporate governance reforms.
According to The Guardian, Wardle emailed members of the society’s seven regional boards ahead of a meeting held on Saturday where the reforms were debated.
In the email he said the ideas would “remove any effective member control from The Co-op Group” and there was a “fundamental flaw” in the way new board members would be elected.
Wardle was appointed chairman in 2007. In October 2013 he announced plans to step down from the role in May 2014, but left the role in November 2013 after former Co-op Bank chairman Paul Flowers was filmed buying drugs.
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