Billy Davies leaves Derby County pocketing a healthy pay-out.
A clause in the three-year contract he signed only in July means Davies collects a £750,000 pay-off.
Pearson admitted he had not envisaged losing his manager only a few weeks after taking control, adding: "It is a situation that has come to a head over the weekend. Obviously, I was surprised on Saturday night when it was suggested I had not spoken to Billy for three weeks. That is totally inaccurate. My last formal meeting with him was 10 or 12 days ago and there have been subsequent phone calls between myself and Billy.
"Things were brought to a head because of continual comments about lack of investment. But £12million has been spent on players, the debt has been reduced by £6m, so there have been significant improvements and that has been on the back of Billy getting success for the club.
"I had a positive conversation with Billy in the morning and we both decided that it is in the best interests of all parties that we call it a day. But I still believe we have a squad of players - and I have told them this - that can compete at this level.
"I cannot believe this squad isn't good enough to at least compete. Of course it needs strengthening, and we will do that, but I would like to see a return to the emphasis that these are good players and good people."
