Mark Thompson, the former director general of the BBC, has stood by his decision to make a pay-off of almost £1m to a senior executive in 2010.
He told MPs that the payment of £949,000 to his former deputy Mark Byford came as part of a process designed to deliver £19m of annual savings by cutting the number of senior executives.
“I recognise it is a very large sum of money but it means better value for money,” Thompson told MPs on the Commons Public Accounts Committee.
“I don’t think we lost the plot,” he added, saying that the time was not right to negotiate redundancy terms while the BBC was axeing large swathes of senior management.
Labour MP Margaret Hodge, who chairs the committee, quizzed Thompson over why Byford was offered around half a million pounds more than he was contractually entitled to.
She asked: "Why was £500,000, which is for most people mega bucks, not enough?"
Referring to the fact that Byford was offered one years' salary in lieu of notice, Thompson said: “I wanted Mark Byford to be fully focused on the enormous task we had and that is why I asked him not to work through his notice.”
Thompson was facing MPs alongside the chair of the BBC Trust, Lord Patten, fellow BBC trustee Anthony Fry, former trust chairman Sir Michael Fry and HR director Lucy Adams.
The PAC intended to discover who knew what about a series of excessive pay-offs to departing executives. The National Audit Office last week discovered that the BBC had paid £1.4m more than it was contractually obliged to 22 former bosses between 2009-2012.
Thompson said he accepted there were “examples of slackness” in some of the severance packages offered at the time, but said “there was a prize of real savings”.
He added: “The savings were so large that a single month’s delay could have cost £1m.”
In the build-up to the session, Thompson accused Patten and Fry of misleading the committee when they gave evidence about BBC severance pay in July.
Patten and Fry had claimed the BBC Trust had not been kept informed about the pay-off to Byford.
Thompson said he stood by a written statement submitted last week.
Patten said he took the charge of misleading the committee “very strongly”.
He added: “I'm in the position in which I'm accused of having misled the committee on something I didn't know and couldn't have been expected to know.”
Patten took over as chair after the pay-off to Byford had been agreed and told the committee that details of the severance package had not been included as part of his induction process.
Hodge described the meeting as a "grossly unedifying occasion which can only damage the standing and the reputation of the BBC".
She added: "At best, what we've seen is incompetence, lack of central control, a failure to communicate for a broadcaster whose job is communicating.
"At worst, we may have seen people covering their backs by being less than open. That is not good."
Earlier she said: “You are all people of assumed integrity and you have been accusing each other of misleading this committee.”
Hodge also rounded on the role of the BBC Trust, suggesting governance at the corporation was "broke".
She said: "We all around the table feel it is broke. What are you going to change?"
Patten baulked at the suggestion that Ofcom should take over responsibility for governance, telling MPs: "I can't imagine handing the regulatory power to Ofcom and Ofcom wanting to be involved in remuneration."
BBC HR boss Adams also came under fire from the committee after she told MPs at an earlier hearing she had not seen a note detailing plans for pay-offs to Byford and marketing boss Sharon Baylay before later admitting she had helped to write it.
Following the suggestion that her evidence should be taken with "a pinch of salt", Adams said such an inference was "grossly unfair" and she had been confused about what document the committee was referring to.
She said she "immediately" clarified the issue, but then admitted not telling the committee until 2 September ,having giving the mistaken evidence on July 10.
"It's a very funny interpretation of immediate," said Hodge.
Later, when Adams asked to see a leaked email in which she allegedly referred to a severance package as a "sweetener", Hodge said: "You are developing a habit, Ms Adams, of changing your evidence after the hearing."