International Lease Finance Corp. Chief Executive Henri Courpron has lost his chairman title and is being docked $1 million in annual salary after the company determined he had had an affair with an employee under his supervision.

American International Group, the New York parent of the Century City aircraft leasing company, said late Thursday that Coupron’s conduct in the “personal relationship” was “contrary to AIG’s expectations of its officers.”

A new title of executive chairman has been created, which will be filled by Laurette Koellner, a former president of Boeing International and an AIG independent director since 2009. Courpron will report to Koellner, who in turn will report to AIG Chief Executive Robert Benmosche.

Sources with knowledge of the situation told Aviation Week and Bloomberg News that AIG decided not to fire Courpron because of the value he provides to the company. ILFC recently received a Moody’s credit upgrade, $3.3 billion in refinancing, and the company is planning a public offering later this year.

AIG does not prohibit voluntary intimate relationships between employees, but when the two people work in the same department or where one person supervises or, can affect the terms and conditions of the other’s employment, the relationship must be disclosed to managers or human resources,” Benmosche reminded employees in a letter to them explaining the changes.

The demotion came after an anonymous complaint alleging improper use of company assets and inappropriate personnel decisions. AIG said its investigation concluded that those allegations could not be substantiated.