The former chairman of the Central Remedial Clinic says he needed to agree to the controversial pay-off to Paul Kiely to save the organisation around €1.4m.
Hamilton Goulding, whose mother founded the CRC, says he had tried to cut Mr Kiely's €240,000 a year CEO salary, but was told he could not.
In an interview in The Irish Daily Mail, he says then agreed an early retirement package for Mr Kiely and hired a successor on a lower salary to save the clinic money in the long term.
"So we took as a model for his severance package the structure of the previous HSE voluntary severance scheme, worked out what he would have got under that scheme had he been in it, and then reduce that sum," said Mr Goulding.
"We took a substantial chunk off that to reach what we thought was a figure that all parties thought would find appropriate, given the length of service by Paul Kiely and the contractual obligations that we had to."