Sir Stuart Rose, who will be replaced by Bolland in May, said M&S needed to pay the sum in order to remain competitive.
He told a Sunday newspaper: “At the end of the day, if you’re looking to get the right level of people and that is the market rate, you have to pay the market rate.
“If you look around that is what big retailer players are being paid at the moment.
“I recognise it’s a problem, but it’s not a Marks & Spencer problem, it’s an industry problem being created by what shareholders have been saying – keep these guys with skin in the game.”
Bolland will be paid a £975,000 basic salary, receive a potential bonus worth 250 per cent of salary and a one-off award of shares worth a staggering 400 per cent of basic pay.
He will receive £7.5m in cash and shares when he arrives to compensate for forfeited share schemes from his former employer Wm Morrison.
Bolland will be replaced at the supermarket with former Wal-Mart chief Dalton Philips.