KAI Loses Its Way on CEO Appointment... The Real Issue Is 'Unqualified Parachute Appointments' [Yang Nakgyu's Defence Club]

Kim Jongchul, former head of the Unmanned Systems Division at the Defense Acquisition Program Administration, was not appointed as the new CEO of Korea Aerospace Industries (KAI). Due to opposition from the labor union, the board of directors was not even able to table the agenda item on appointing a new CEO.

Korea Aerospace Industries union members who opposed the board's appointment of Kim Jongchul, former head of the Unmanned Systems Division at the Defense Acquisition Program Administration, as the new CEO.

According to industry sources on the 25th, the board had planned to discuss an agenda item that would appoint former Unmanned Systems Division head Kim Jongchul as the new CEO and president at the meeting that day. However, the item on appointing the CEO was ultimately not included. The direct cause appears to have been opposition from the KAI union.

Reacting to news that Kim had been tapped as the next CEO, the KAI union criticized the move, saying, "We demanded that a manager with experience and expertise be appointed as president, but the answer we got was, yet again, someone from the military," and added, "KAI is neither a resort for parachuted appointees nor a convalescent home for former public officials." Former CEO Kang Googyoung is a graduate of the 30th class of the Air Force Academy. Immediately upon taking office, Kang carried out a sweeping reshuffle of executives, as if it had been pre-announced. In just three months, around 20 executives left the company. The resulting vacancies were filled with former military officers and people from organizations he had previously been affiliated with.

Kim is also from the Air Force. A graduate of the 31st class of the Air Force Academy, he joined the Defense Acquisition Program Administration in 2006 after retiring from the Air Force with the rank of lieutenant colonel. He has served as head of the Defense Export Support Team, deputy head of the Strategic Planning Group, head of the Program Management Team, planning and coordination officer, and head of the Unmanned Systems Division.

The union believes that, given KAI's management situation, Kim lacks knowledge and experience in aviation technology and corporate management. KAI requires a comprehensive chief executive who can oversee large-scale manufacturing, exports, finance, and more, but the union argues that Kim is not suited to that role.

The union also distrusts him because he is from the Defense Acquisition Program Administration. It believes that appointing someone from a procurement agency as the new CEO could repeatedly trigger objections and lawsuits from competing companies, as well as issues raised by the Board of Audit and Inspection. In particular, the union argues that, like previous presidents, there is a high likelihood that he would spend his term handling simple administrative work rather than actually managing the company.

The union further stated, "On the shop floor, it is openly being said that, after being mentioned as a candidate for head of the Defense Acquisition Program Administration due to his experience working on a presidential election campaign and then being dropped, he is now being sent to KAI as president," and argued, "If this is true, it will inevitably be criticized as a parachute appointment made in return for services rendered."

The union also criticized, "Right now, KAI is in a crisis where order backlogs, strategic confusion, and organizational fatigue are all piling up at the same time," adding, "Sending down a former military officer who does not understand management is closer to neglecting the crisis than overcoming it."

Since former CEO Kang Googyoung resigned on July 1 last year, KAI has been run for about eight months under the acting leadership of Executive Vice President Cha Jaebyung. In a situation where the defense industry is locked in fierce competition over expanding global orders and future force programs, many voices have expressed concern about the prolonged leadership vacuum.

KAI is expected to push ahead with appointing a new CEO, including by convening additional board meetings, while monitoring public opinion until the extraordinary or regular general shareholders' meeting is held next month. However, some observers say that if the directors' views do not change, it will not be easy to even table the agenda item.

One defense industry expert commented, "In a word, this is 'Kang Googyoung Season 2,'" and added, "The position of KAI CEO requires a deep understanding of both business and the defense industry, but former division head Kim is not a suitable candidate."