Murray Goulburn managing director Stephen O'Rourke is to resign following the revelation last week that his wife had being receiving an undisclosed executive-level salary and benefits.
He will leave the co-operative on July 5 next year.
In a letter to suppliers, Mr O'Rourke clarified the arrangements that saw his wife Michelle paid for her "all-encompassing support role for myself and the company".
Mrs O'Rourke's salary and benefits package varied from year to year and ranged to well over $400,000.
Mr O'Rourke's own salary and benefits package was worth $1.674 million in 2008/09.
"Everyone can have a view about whether we are worth such salaries, but I would have thought the board of directors, virtually all of whom are dairy farmers, were in the best position to properly judge this," he wrote.
Mr O'Rourke's letter offered no explanation of why the payment to his wife had not been disclosed to shareholders until last week - the matter was not mentioned in his two-page missive.
Murray Goulburn chairman Grant Davies revealed last week that the payment had been ongoing throughout Mr O'Rourke's 12-year tenure.
He said it was the co-operative's standard practice to employ the chief executive's wife and that the wife of Mr O'Rourke's predecessor, Alf Leysen, had also been paid.
He described the non-disclosure as "an oversight".
It was the non-disclosure, rather than the payment itself, that sparked anger among Murray Goulburn suppliers.
"If he's worth an extra half a million, just pay it to him, but don't try to dress it up as something different," said Pomborneit supplier Ben Bennett after first hearing of the undisclosed payment.
Mr Bennett said the non-disclosure was "very disappointing" and not in the spirit of the co-operative model.
"It's not a good look."
Yesterday, after hearing of the resignation, Mr Bennett said he felt both an emotional and a rational reaction.
"People wanted action and the resignation has given it to them," he said.
"At a rational level we have to ask if the company is better for it.
"It has performed very well under Stephen O'Rourke."
Simpson supplier David Spokes questioned the integrity of the other directors.
"I think it has to go back to those who knew about it for all those years and said nothing.
"We had to borrow money from Murray Goulburn to keep going when the price went down," Mr Spokes told The Standard.