Burak told a legislative committee there were no legal grounds to fire Parkinson, even though he billed personal expenses on his secretary's corporate credit card.
She said the Hydro One board and Parkinson agreed he had to go after an Auditor General's report on his expenses, and the severance meant he would resign immediately.
Burak also defended the board's decision not to resign after the scathing Auditor General's report.
The Liberal government came under heavy fire from the opposition parties in December over Parkinson's $1.6 million annual compensation and $3 million in severance.
Energy Minister Dwight Duncan has since announced a review of executive salaries at Hydro One, Ontario Power Generation and other provincial energy agencies.
Duncan said the government thinks the salaries should be more in line with the public service nature of energy utilities rather than competing with CEOs on Bay Street.