Ms. Kelly, whose title was vice chairman for legal, human resources, corporate affairs and corporate communications, resigned for "good reason," under the terms of AIG's executive severance plan, based on the reduction in her salary mandated for TARP recipients, AIG said.
Ms. Folsom was chief compliance and regulatory officer, and deputy general counsel.
In a press release last week, AIG said it has initiated a process to identify successors. Until then, those who reported to Kelly will report to Robert Benmosche, AIG's president and chief executive.
"On behalf of the management team, employees, and the Board of Directors, I would like to thank Stasia for her tireless service to the company," Mr. Benmosche said in the press release. "We are exceedingly grateful for the work she has done to help AIG recover from its financial crisis and the excellent counsel she has provided the company, often during very difficult times. We wish her well in her future endeavors."
Mr. Benmosche has argued that pay curbs will make it difficult for AIG to retain the expertise it needs to rebuild the company and repay its government bailout.
Earlier this month, U.S. pay czar Kenneth Feinberg capped annual cash salaries for most executives at the companies that received the biggest bailouts at $500,000, which would have reduced Kelly's pay "significantly," according to the Journal report
According to the report, Ms. Kelly advised other executives on what they could do to protect their rights to collect severance benefits, and helped them arrange for outside counsel.
Ms. Kelly and four other executives notified AIG on Dec. 1 that they were prepared to resign and collect severance if their pay was cut significantly. The four others later withdrew their notices, but Ms. Kelly did not.