A top executive at American International Group Inc has resigned because of pay curbs imposed by the Obama Administration's pay czar, the insurer said on Wednesday.
Anastasia Kelly, AIG's vice chairman for legal, human resources, corporate affairs and corporate communications, resigned effective December 30 for good reason and is eligible for severance pay under the terms of the company's executive severance plan, the insurer said.
Kelly stands to be paid about $2.8 million in severance, according to a source familiar with the matter.
Kelly's resignation comes after Kenneth Feinberg, who is charged with monitoring pay levels at companies that received taxpayer funds, imposed pay caps for AIG's top executives.
Earlier this month, Feinberg set the compensation structures for the 26th through 100th highest-paid employees at four firms, including AIG, limiting most cash salaries to $500,000.
Feinberg also granted less than a dozen special exemptions from the cash salary cap, including several AIG executives, after being urged to do so by Federal Reserve and Treasury officials.
Kelly met frequently with Feinberg to discuss pay issues as he prepared to rule on compensation at companies that received extraordinary taxpayer bailouts.
She was among five executives reported by The Wall Street Journal to have notified the insurer that they were prepared to resign and collect severance benefits if their pay was cut sharply by Feinberg. Chief Executive Robert Benmosche separately also had considered quitting because of the pay constraints, the Journal has reported.
Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University, said no AIG employee was irreplaceable.
We have been duped into thinking that these AIG employees have some kind of secret code that no other employee could discover if they were hired to replace them and therefore they are able to basically hold the company ransom, Hurley said.
AIG had to be propped up with some $180 billion in taxpayer support after its near collapse in September 2008. The U.S. government now owns nearly 80 percent of the company, once the world's largest insurer by market value.
The government stepped in to rescue AIG after it ran short of funds to meet collateral demands from global banks that had bought credit protection from an AIG financial products unit. The government saw the company's possible collapse as a systemic risk.
AIG angered many Americans earlier this year when it paid million-dollar retention bonuses -- payments simply for staying in their jobs -- to executives at a financial products unit that was responsible for its financial implosion.
The insurer also said on Wednesday that Suzanne Folsom, chief compliance and regulatory officer, has left to pursue other opportunities. It was unclear if her departure was related to the pay issue.
It said it is looking for successors for both officials.
(Reporting by Steve Eder and Paritosh Bansal; Editing by Gary Hill, Robert MacMillan, Leslie Gevirtz)