The 48-year-old admits that the Portuguese could be sanctioned by the club, but asserts that he has been targeted
The Portuguese defender was widely criticized for his boisterous performance in Wednesday's Clasico, which featured a stamp on Barcelona's Lionel Messi.
However, Butragueno has stated that Pepe is not a bad person, and has been targeted due to his athletic ability.
"Pepe is a nice guy and very passionate. He has suffered because he's a good athlete," Butragueno said according to Sport.
However, the 48-year-old remained tight-lipped as to whether Pepe would receive censure from the club for his performance.
"We have an internal system," he explained. "Much has been said over him, and we are not going to participate with the public discussions. It's something that will be discussed amongst ourselves."
The director, who represented Real Madrid as a player, has also asserted that his side's defense of the Copa del Rey title is far from over, despite a 2-1 deficit after the quarterfinal first leg.
"The tie is not over yet. You will se us fight for this shield," he vowed.
Real Madrid and Barcelona square-off once more on Wednesday at Camp Nou, with Jose Mourinho's side needing at least two goals to progress to the semifinals of the competition.