Ewan Sutherland resigned as chief executive in March, having become convinced internal resistance was making it impossible to overhaul the debt-ridden banking and store operation.
He also believed a fellow board member leaked details of his £3.6m remuneration package to the press. After an investigation, fellow Scot Stuart Ramsay stepped down from the board.
Although Mr Sutherland was reported to have already earned £2m, he agreed to forgo £1.5m in bonuses and long-term incentive payments.
But news he will now get £1m - equal to a year's basic salary - while thousands of Co-op jobs are under threat, provoked anger.
The Co-op said the payment was not unusual and added in a statement: "Euan Sutherland was on a 12-month notice period as group chief executive.
"When he resigned in March, the board did not feel it appropriate to ask him to work his notice period and exercised its right to put him on gardening leave, which is normal practice for a senior executive."
Critics expressed surprise that Mr Sutherland could quit and still be entitled to the pay-out. Peter Hunt, former general secretary of the Co-operative Party, said the group's members would be shocked at the deal.
"I think that members will be appalled at this news of a further management stitch-up," he said.
He claimed members were already angry about the fact that several other senior directors were handed large salaries and retention bonuses after being brought in by Mr Sutherland.
"After the secret retention bonuses that made all of the executives into cash millionaires, we now hear Euan Sutherland has been paid £1m just for quitting," he added.
"Once again it shows the double standards of management, cutting jobs, cutting funding to co-operative organisations, while doubling their own pay. This shows the danger of a Co-op dominated by its management."
The Co-op said Mr Sutherland would not be receiving a retention bonus, and argues that he helped save the group from collapse.
"As chief executive, Euan led a team that saved the Co-operative Bank and started the process of recovery within the wider group," the Co-op said.
At the group's recent annual meeting, members backed a plan devised by former City Minister Lord Myners designed to shake up the organisation and set the foundations for a lasting recovery.
However the meeting also passed a number of motions rejecting proposed pay packages for executives.