With the Swans sliding down the Premier League table, Laudrup was sacked and Garry Monk was installed as the new boss.
Laudrup criticised the manner of his dismissal just 12 months after leading the club to their first major trophy - the League Cup - and subsequently took legal advice with the League Managers Association also involved.
Three months later, the two parties have now come to agreement on how much Laudrup should receive.
A statement on the club website read: "The club would like to thank Michael for his work over the 18-month period where he guided the club to ninth place in the Barclays Premier League and the Capital One Cup trophy.
"Everyone at Swansea City Football Club would like to wish Michael all the best for the future. Both parties will not be issuing any further comments on this matter."