Christopher Hunt of the UK paper the Telegraph reports on the controversy.
The public spending watchdog found that the salary paid to CDC Group's Richard Laing was more than double a threshold which had been set by its owner, the Department for International Development.
The National Audit Office found that Mr Laing's pay jumped after DFID decided to compare his remuneration with private equity bosses.
Edward Leigh, the chairman of the Public Accounts Committee, said the salary was "ridiculous".
CDC is a fund management company which invests in private businesses in emerging markets, particularly in sub-Saharan Africa and south Asia.
A 2004 agreement had set a £466,000 threshold on the chief executive's pay and £205,000 for other senior executives, above which DFID should be consulted.
The levels were based on comparisons with other senior staff in development finance institutions, pension funds and private equity "funds of funds".