Bailed-out insurer AIG on Thursday said the head of its aircraft leasing unit admitted to having an inappropriate relationship with an employee, and the company demoted him and cut his salary as a result.
But AIG said Henri Courpron would remain chief executive of the leasing unit, ILFC, and that it was happy with his performance in the role.
Courpron will now report to a newly named executive chairman, Laurette Koellner. Koellner, a former senior Boeing executive, had been an AIG board member since 2009 but will give up that seat for the ILFC position.
The episode is not expected to change the plans for the spin-off of ILFC, which AIG filed to take public last year. AIG's senior executives have said repeatedly that they were waiting for market conditions to improve before moving ahead with the offering.
ILFC filed an amendment to its IPO prospectus on Thursday to include Courpron's demotion and details of Koellner's compensation. She will earn a salary of USD$950,000 and will be eligible for an annual bonus of up to USD$400,000.
AIG said in a statement it first learned of the relationship via an anonymous tip. Courpron and the employee admitted the affair, though AIG said an outside review found no merit to the tipster's claims that company assets were misused.
AIG also said it has reduced Courpron's annual salary by USD$1 million. In 2011, he received USD$4.2 million in cash and stock.
"We have taken the right steps to affirm AIG's and ILFC's commitment to sound conduct in the workplace," Koellner said in a statement.
Courpron, 49, is a former president of Airbus's North American unit. He is widely credited with getting ILFC's finances in order after the company suffered, along with the rest of AIG, during the financial crisis.
But AIG is still eager to part with ILFC, which it does not consider a core business. The proceeds from ILFC's public flotation could go in part to buying back more of the government's 61 percent stake in the insurer.
The executive shuffle is the latest dramatic episode for ILFC, which sued its founder and now competitor Steve Hazy in April for allegedly stealing trade secrets.
Hazy, now CEO of Air Lease, is credited with reshaping the aviation industry, as leasing made planes more affordable for new carriers in emerging markets. As one of the world's biggest buyers of planes, ILFC continues to have a major influence with both Airbus and Boeing.