A BBC trustee who was involved in the decision to give George Entwistle a £450,000 payoff for resigning as director general insisted today he still believes it was the right thing to do.
Anthony Fry said that Mr Entwistle made clear he wanted a full year's salary as a condition of resigning after just 54 days in the job - twice as much as he was entitled to under his contract and the same as he would have got for being sacked.
Mr Fry said the BBC Trust was faced with the decision of whether to draw a line under the issue immediately or face a protracted wrangle and a possible industrial tribunal, which lawyers warned could result in Mr Entwistle receiving an additional £80,000.
Despite his "irritation" over being asked for double the payout to which the director general was entitled, he told the House of Commons Public Accounts Committee (PAC) that he decided - and Trust chairman Lord Patten agreed - it was better to accept the offer of resignation on November 10.
Mr Fry revealed that the outgoing director general also received a year's Bupa private medical cover, as well as up to £10,000 to cover legal fees connected with his resignation, legal expenses of up to £25,000 to help Mr Entwistle give evidence to two inquiries into the Jimmy Savile affair, and £10,000 for PR.
The BBC trustee accepted that the figures involved would appear to licence fee-payers to be "in the stratosphere", but insisted that they were not out of the ordinary for senior BBC managers.
Mr Entwistle received less than former chief operating officer Caroline Thomson, who was paid £670,000 - two years' salary - when she left earlier this year after being beaten by him in the contest for the director general's post, he pointed out.
"The director general made it very clear to the Trust through his lawyers that the only thing that was on the table if he was to resign was a payment of £450,000," Mr Fry told the PAC during a hostile grilling by the committee.
With an increasing sense of crisis building around the BBC following Mr Entwistle's much-derided response to Newsnight's inaccurate report on child sex abuse, Mr Fry said he felt that getting the matter resolved quickly was "by far and away more important than sitting on a moral high horse and trying to get the director general to change his mind about the terms under which he would leave".
He told the committee: "That was a judgment call. If I was asked to make that judgment call again today, I would do the same thing."
Mr Fry said he felt "a degree of substantial irritation and aggravation" at having to pay Mr Entwistle £450,000, rather than £225,000.
But he was interrupted by PAC chair Margaret Hodge, who told him: "It is not you. It is the licence fee-payer."
Hearing the details of Mr Entwistle's severance package, Ms Hodge told Mr Fry: "We express incredulity. It demonstrates a complete lack of understanding of how this is viewed in the public domain, given that it is licence fee-payers' money. That is the real shocker about this.
"He took a public job, he was hugely well remunerated, he failed in 54 days, he gets incredibly rewarded for failure... There is no understanding of what the ordinary punter turning on the telly feels about it."
MPs on the committee expressed shock that Mr Entwistle's contract - and his severance deal - included thousands of pounds-worth of private medical cover.
BBC chief financial officer Zarin Patel told the committee that Bupa cover was a standard part of senior managers' packages, with 574 of them enjoying the perk at a cost of around £2 million a year, but the practice was halted for new recruits as a cost-saving measure last year.
Ms Hodge said: "I think we are shocked that the BBC feels it is appropriate to use licence fee-payers' money to fund individuals to get private medicine. I think that is shocking as a principle."
She urged the Trust to "reflect" on whether medical cover should also be withdrawn from existing staff.
And PAC member Richard Bacon demanded to know why licence fee-payers' money was given to Mr Entwistle to pay for "PR or bouncers" to help him deal with "doorstepping" by the press.
Another committee member, Guto Bebb, said the director general's severance brought to £4 million the sums paid out to 10 departing BBC executives in the past two years, adding: "It does look as though losing a job at the BBC is the same as winning the lottery."
Mr Fry told the committee that the Trust, which acts as the BBC's regulator and has no part in day-to-day operations, met on the afternoon of Saturday November 10 in the wake of what was widely regarded as a disastrous set of interviews by Mr Entwistle about the Newsnight affair.
The programme had been forced to apologise to Lord McAlpine after wrongly implying that he was involved in child sex abuse, but the director general admitted he had not been aware of the allegations the BBC2 show was planning to air.
At the meeting, Mr Fry said there were "serious concerns around the issue of whether the gravity of the situation had been grasped by the director general", who told them the BBC must not "over-react" to the crisis, while trustees felt the main danger lay in under-reacting.
"It is clear from what happened subsequently that the director general left the meeting with the very clear impression that he no longer carried the full support of the BBC Trust," said Mr Fry. "I would characterise that as a fairly accurate reading of the tone of the meeting."
Mr Fry said Mr Entwistle contacted the BBC's director of human resources Lucy Adams later that afternoon and asked her to tell Lord Patten that he was "minded" to discuss the terms of his resignation. His lawyers then made clear that he wanted a payout of £450,000, along with further sums to cover other expenses, some of which were refused.
But the Trust never told the director general that he must resign, revealed Mr Fry, telling the MPs: "We did not at any stage, and nor did the chairman, say 'George, you've got to go'."
There were "no reasons under the terms of the contract" under which the BBC could fire Mr Entwistle without giving him a full year's salary as compensation, said Mr Fry. And he added: "At no stage on Saturday evening was the director general prepared to resign his position as director general of the BBC other than with the payment of £450,000.
"I expressed the very strong feeling that, in the best interests of the BBC and licence fee-payers, reaching an urgent conclusion was better than playing it long and hoping that in the next 12 or 24 hours the director general's position would change."
He added: "Did I feel good about it? Absolutely not. Do I still feel good about it? No. I still feel it was the right thing to do."
Mr Fry said that compensation for resignation or dismissal was a standard feature of senior people's contracts at the BBC and it would have been "extraordinary" for someone in a position like Mr Entwistle's to be expected to serve a probationary period after being hired.
Ms Hodge urged the Trust to allow spending watchdog the National Audit Office (NAO) to look at the terms of Mr Entwistle's departure.
But Mr Fry said he was not in a position to give permission for such an inquiry, though Lord Patten made clear he was ready for the NAO to conduct a "holistic" review of the BBC's senior management, including the issue of severance packages.
Mr Fry said he was "deeply concerned" about the number of senior managers at the BBC and the levels of pay they receive, and had taken steps since arriving at the Trust to reduce both.
He told MPs that some cuts had been made, but added: "It is still a journey, still work in progress...
"I recognise - more than sometimes people understand - how shocking some of these numbers are to licence fee-payers."
Mr Fry said that in addition to his pay-off, Mr Entwistle had a pension pot of £833,000, which would give him an annual pension of £38,000 to £40,000.
He said that under the terms of the "compromise agreement" with Mr Entwistle, some funds could be recouped depending what came out of the inquiry into the decision to drop the original Newsnight into Jimmy Savile last year.
He said that by the Saturday night when Mr Entwistle resigned, they were in a "very difficult situation".
"I got to the point at about 8.45 on Saturday night where actually all I was interested in was the preservation of what I thought was the best interests of the BBC. I am sure we all could have done marginally better. Im the circumstances I sort of think we did OK," he said.
"At 8.45 I sort of got off my moral high horse. I thought 'I have got to do what I think is right here for the BBC and the licence fee-payers. I can get my moral outrage out later'."