NU Online News Service, Jan. 4, 12:23 p.m.EST

Anastasia Kelly, American International Group vice chairman forlegal, human resources, corporate affairs and corporatecommunications, resigned last week in the wake of a federallymandated pay cut.

The company announcement Wednesday that Ms. Kelly was leavingalso reported the departure of Deputy General Counsel SuzanneFolsom, the company vice president serving as chief regulatory andcompliance officer.

AIG said Ms. Kelly resigned for "Good Reason" under the terms ofAIG's Executive Severance Plan based on the reduction in her basesalary.

Her pay cut was part of a package of executive pay limits thatwere set by Kenneth Feinberg, the special master for executivecompensation for companies taking government bailout cash under theTroubled Asset Relief Program.

AIG's statement made no mention of Ms. Kelly's severance packagethat reportedly will exceed $2 million. The company said Ms. Folsomwas leaving to "pursue other opportunities" and did not mention asalary reduction. She joined AIG in April 2008.

Ms. Kelly, the former chief legal officer at MCI/WorldCom,joined AIG in September 2006 as executive vice president, generalcounsel, and senior regulatory and compliance officer.

She was named vice chairman in January of 2009 as part of areorganization the company said was designed to better its effortsto repay billions in taxpayer bailout money and restore AIG'sfinancial health.

Robert H. Benmosche, AIG president and chief executive officer,thanked both women for their service. He said Ms. Kelly in workingto help AIG's financial recovery provided excellent counsel "oftenduring very difficult times."

Ms. Folsom's efforts, he said, "have put AIG on a betterregulatory footing."

AIG expects a smooth transition, said Mr. Benmosche, and hasalready initiated the process to identify successors to both Ms.Kelly and Ms. Folsom.