The ousted ex-chairman of J Sainsbury, Sir Peter Davis, is to receive a controversial £2.6m ($4.67m) cash payout from the supermarket giant.
Sir Peter's bonus sparked anger from shareholders
Sir Peter left the company in July and had been locked in a legal battle with Sainsbury's over the revised terms of his salary and payoff.
Now, on top of the cash deal, he will get £0.5m a year until July 2005, when his fixed term contract was to run out.
This has been reduced from his original salary of £850,000 a year.
Sainsbury's said the £2.6m was a "significant reduction" of about £1m from what Sir Peter had originally been entitled to.
Sir Peter came under pressure to quit the company after the UK's third-largest supermarket retailer lost market share and suffered a fall in earnings.
A shareholder revolt in July forced the board to withdraw its original payoff deal.
The supermarket chain says it hoped the new settlement would draw a line under the affair.
"Sainsbury's believes it is in the best interests of the company's shareholders to reach settlement and bring this matter to a conclusion," the grocery firm said in a statement.
Sainsbury also announced that Keith Butler-Wheelhouse, head of its remuneration committee, had resigned along with fellow non-executive director Lord Levene.
New chairman Philip Hampton is said to be keen to begin a clearout of non-executive directors responsible for signing off Sir Peter's original deal, valued at almost £4m.
Meanwhile, Sir Peter said he plans to retire from corporate life and has no intention of taking on another job at a public company.
"I am retiring and want to enjoy life out of the public eye," he said.