* Vacancy comes amid critical negotiations with Washington
* CEO Benmosche plans performance management revamp
* No more retention bonuses; focus on performance
By Lilla Zuill
NEW YORK, Dec 4 American International Group Inc (AIG.N), the bailed out insurer beset by executive pay restrictions, has parted ways with its head of human resources, leaving open a key vacancy in the midst of fragile pay negotiations with Washington.
AIG confirmed the departure but declined to comment on it further, or to say how quickly someone will be named to replace Andrew Kaslow, who had been chief human resources officer since 2007 and a member of the senior executive committee.
A home number for Kaslow had been disconnected, and he could not otherwise be reached.
The vacancy leaves a hole within AIG's management ranks not only at a time when it is sparring with the Obama administration's pay czar Kenneth Feinberg over executive compensation, but as it faces coming up with a pay system to strike a balance between rewarding top performing employees and keeping federal overlords happy.
AIG, the recipient of up to $180 billion in taxpayer aid, angered many Americans earlier this year when it paid million-dollar retention bonuses -- payments simply for staying in their jobs -- to executives at a financial products unit that was responsible for its financial implosion.
Chief Executive Robert Benmosche, a former CEO at No. 1 U.S. life insurer MetLife (MET.N) who took the job just four months ago, wants to honor bonus contracts already in force, but thereafter wants all new bonuses to be based solely on performance, said one person familiar with developments.
Benmosche already has at least one candidate in mind for the chief human resources position, the person said, adding that it was possible he would recruit a former colleague from MetLife.
"He wants to have a strong person there (in that position)," said the person. "He changed comp at MetLife and wants to do the same here."
At MetLife, Benmosche revamped performance management with a forced ranking system that required managers to rate individual performance on a numerical scale of 1-5, with the biggest bonuses reserved for those who achieved the highest rankings.
If an employee scored on the low end of the scale, he or she either had to show improvement or leave the company, according to a person working there at that time.
To institute the revamp at MetLife, Benmosche recruited Lisa Weber, an HR professional he had also recruited to PaineWebber when he worked at the brokerage firm prior to its acquisition by UBS.
Weber, who implemented sweeping changes to how performance was measured, is not being considered for AIG's human resources vacancy, said the person. Weber, most recently a president of MetLife's individual business, left the company in September and is currently barred from working for a rival insurer. She did not return a call seeking comment.
(Reporting by Lilla Zuill; Editing by Phil Berlowitz) ((email@example.com;+1 646 223 6281))