Michael Grade, who quit as chairman of the BBC today, has been lured to ITV by a package that could be worth more than £10 million over five years.

The media executive, who will be full-time executive chairman at Britain's biggest commercial broadcaster for up to three years, will be paid a base salary of £825,000 - nearly six times his pay at the BBC, where he worked a four-day week.

During that period Mr Grade will be charged with finding a new chief executive to take day-to-day responsibility for running ITV, after which he will step back and become non-executive chairman.

Subject to meeting targets, Mr Grade will be handed annual share awards worth 150 per cent of his base salary each year over the next five years. He will also receive a performance-related annual bonus.

If Mr Grade loses his job as a result of a takeover, he will be paid in full up to the end of 2008. His contract states that his notice will not expire until then, although after that date, one year's notice applies. ITV is currently being circled by NTL, the cable group, whose largest shareholder is Sir Richard Branson.

ITV was not immediately available to comment on whether he would take a salary cut once he becomes non-executive chairman. This would reduce the overall five-year deal.

The arrival of Mr Grade at ITV will be seen as a serious coup for ITV, which has been hunting for a new chief executive at the same time as fending off the approaches of NTL. His departure from the BBC leaves the publicly-funded broadcaster without a chairman as it prepares for crunch negotiations over the level of the new licence fee.

Mr Grade said: "It has been a tough career decision to leave the BBC but it was an opportunity I could not resist, given my family's history in the founding of ITV and my own background at London Weekend Television."

He added: "My first priority at ITV will be to support the team in accelerating the improvement in programming performance for our viewers and advertisers. This is the best way to enhance the value of the company for our shareholders."

He said he aims to beef up programming confidence but had no major plans for a shakeup of creative personnel.

He praised the ITV board for cancelling its £500 million share buyback, with only half the money spent.

This was the right move, he said, as it "gives more flexibility going forward."

He added: "What this organisation really needs now is a period of real stability and confidence building. Uncertainty and creative confidence do not go together."

ITV's current chairman Sir Peter Burt acknowledged that making Grade both chairman and chief executive was "relatively unusual" under corporate governance codes but he said the appointment for a specified term was "entirely appropriate given all the circumstances".

Mr Burt said his own three-year appointment was due to expire in March, adding: "I have decided that I would not seek re-appointment due to my increasing commitments elsewhere. I regard it as a real coup to have persuaded Michael to join us."

During ITV's much publicised hunt for a new chief executive to replace Charles Allen, analysts and observers had stressed the company needed someone with both experience in dealing with the City investors and a programming background. Mr Grade has both.

Grade was forthright about ITV's problems, blaming a combination of a weak advertising market and a string of ill-conceived series.

"The advertising downturn has hit ITV hard and the schedule has not been performing as it might have done," he said, adding that ITV's "programming confidence" had been "shot".

His uncle Lord (Lew) Grade was a well-known media and magnate and he began his own television career in 1973 when he became an executive at London Weekend Television.

Mr Grade has also been chief executive of Channel 4 and was chief executive of the health club and bingo hall operator First Leisure.

His appointment may explain why ITV felt able to rebuff a £4.7 billion takeover offer from NTL and indicates that the company is determined to steer an independent course.

But it also leaves the BBC rudderless since the appointment of a new BBC chairman, undertaken by the Department of Culture, Media and Sport, in negotiation with the Prime Minister's office, is expected to take several months.

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