updated 12/30/2009 7:02:56 PM ET 2009-12-31T00:02:56

American International Group Inc. has lost a top executive due to the government's limits on executive pay.

AIG said Wednesday that vice chairman and general counsel Anastasia Kelly has resigned, effective immediately.

Kelly left because of the reduction in her base salary that was mandated by the government's pay czar, Kenneth Feinberg, AIG said.

Companies like AIG that hold government bailout funds are subject to restrictions including limits on executive pay; in AIG's case, that's the insurer's 100 highest-paid employees. The government has given AIG a bailout package worth up to $182.5 billion in exchange for an 80 percent stake in the New York-based company.

AIG also said Suzanne Folsom, chief compliance and regulatory officer, has left to pursue other opportunities. The company did not say if pay was a reason for her departure.

Last month, the insurer said it cut the salaries of three top executives, including Chief Financial Officer David Herzog, to comply with the pay restrictions.

The insurer, however, has said would go ahead with a previously announced pay package for CEO Robert Benmosche of $7 million. Benmosche, who took over as CEO of the embattled insurer in August, will receive an annual salary of $3 million in cash and $4 million in AIG common stock under the pay agreement.

The Wall Street Journal reported on Tuesday that AIG was prepared to give Kelly several millions of dollars in severance pay. The Journal, quoting people familiar with the matter, said the company had determined Kelly was entitled to the money under terms of the AIG severance plan.

Kelley joined AIG in September 2006 as general counsel. She was promoted to vice chairman earlier this year.

Folsom joined AIG in April 2008.

AIG said it has already begun looking for successors for both executives.

AIG shares fell a penny to $30.59 in after-hours trading Wednesday after closing at $30.60, down $1.06, or 3.4 percent, from a day earlier.

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