Australia Post chair Lucio Di Bartolomeo and Christine Holgate, the chief executive he helped ouster, have settled their differences.
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Ms Holgate will receive $1 million as part of the termination settlement with Australia Post following mediation last month, and an additional $100,000 for her legal costs.
In exchange, Ms Holgate has agreed to drop all legal claims against Australia Post over losing her $1.6 million a year role.
The deal ends the public and acrimonious departure 10 months ago, in the wake of the Cartier watches scandal, in which four executives were rewarded with expensive gifts following the completion of a successful licencing deal.
Despite the scandal, the former CEO was widely seen as popular and effective among employees, partners and licensees of Australia Post.
In a joint statement with Ms Holgate, the government-owned postal carrier expressed "regret" for the circumstances in which it "lost an effective CEO".
"Australia Post regrets the difficult circumstances surrounding Ms Holgate's departure from her role as CEO," the statement said.
"Australia Post recognises and thanks Ms Holgate for her outstanding contribution and strong leadership during her employment as CEO of Australia Post."
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An investigation, commissioned by the Australia Post board and conducted by a law firm into the watches scandal, found no policy breaches had occurred, but that guidance from the board had been unclear.
A parliamentary inquiry into the circumstances of her departure recommended that Prime Minister Scott Morrison apologise for comments he made in parliament about Ms Holgate immediately following the scandal coming to light.
Senator Sarah Hanson-Young, who chaired that committee, responded to the payout on Twitter saying Mr Morrison's "hot-headed, emotional overreaction" had cost the taxpayers more than a million dollars.
"Despite the public bullying and berating, turns out Christine Holgate was an 'effective CEO' and made an 'outstanding contribution'.
"Good on Ms Holgate for standing up to the bully boys."
Ms Holgate has since joined Toll Global Express as its new CEO.