In the wake of the rate-rigging scandal, former Barclays boss Bob Diamond has voluntarily waived a £20m bonus package - but will still walk away with £2m in benefits.
It is understood Mr Diamond's pay-off amounts to a year's salary and pension contribution.
But it is significantly less than he is thought to have been entitled to in bonuses and deferred long-term and annual share awards triggered by his resignation after the bank was fined £290m for attempting to fix the interbank borrowing rate Libor.
Marcus Agius told MPs on Tuesday that Diamond had voluntarily decided to forego any "deferred bonuses" to which he was entitled.
Agius said the maximum amount he would have been entitled to was £20m.
"Frankly I think the board welcomes it and I am glad that he has done it," he said.
Chuka Umunna, Labour’s Shadow Business Secretary, questioned whether Diamond should have received any bonus at all.
He said: “Bob Diamond’s severance package is primarily a matter for Barclays’ shareholders. However, had he taken the amount of up to £20m it is said he could have been entitled to, that would have done further damage to the reputation of Barclays and the financial services sector as a whole.
“To most people a payment of between £1m and £2m, as has been reported, will still seem like a huge sum of money and the Board no doubt will want to consider whether such a sum is justified in the eyes of shareholders, staff and the customers of the bank who feel let down by those who have led the bank in recent years."
Today's announcement follows what are said to have been intense negotiations over Mr Diamond's leaving deal.
It is thought Barclays remains in talks with Mr Diamond's right-hand man, chief operating officer Jerry del Missier, over his pay-off.
Mr Agius - who will remain at the bank while a successor to Mr Diamond is found - was the first executive to quit when the scandal emerged earlier this month, but his resignation was not enough to prevent Mr Diamond from being forced out.
Mr Diamond said on announcing his severance agreement: "For the past 16 years I've had the honour of working at Barclays.
"The wrongful actions of a relative few should not detract from the outstanding work that Barclays employees carry out each day on behalf of clients and customers around the world."
The former Barclays chief executive quit last Tuesday as the full scale of the scandal emerged.
He said in an appearance in front of MPs last Wednesday he felt "physically ill" when he discovered traders at his bank were manipulating the inter-bank rate.
Reports that Mr Diamond stood to receive around £20m as a “golden goodbye” had been met with fury by MPs.
Ed Balls said the payout would be “outrageous” and business secretary Vince Cable said he hoped the Barclays’ board would “take a fairly strict view about” the golden parachute pay deal.
Speaking to the BBC’s Andrew Marr programme on Sunday morning, shadow chancellor Ed Balls said the public would be outraged by Diamond’s payout.
"I think people will look at that and think that is totally outrageous. It’s outrageous that somebody should stand aside [Diamond resigned with immediate effect last week] because the board decides that there’s a problem and then get a payout which is, sort of, off the scale for anything anybody, normal people, will earn in their lifetimes.
“I think the shareholders are going to think really had about this and I think the government will need to look at this as well and talk to the shareholders. They clearly talked to the shareholders about Mr Diamond. I think they’re going to have to say to them the public will just think that’ is really shocking.”
Mr Agius is the third high-profile witness to appear before the Committee since last week as MPs seek to get to the bottom of the Libor scandal that has rocked the banking industry.
Bank of England deputy governor Paul Tucker appeared in front of the Committee on Monday and said he "absolutely" rejected suggestions he had leant on Barclays to manipulate a key lending rate or that Labour ministers had encouraged him to do so.