KAI Pushes for Secret Board Meeting Tomorrow... Will It Ram Through Appointment of Kim Jongchul? [Yang Nakgyu's Defence Club]

Time and location kept completely undisclosed amid union opposition
Industry concerned as export and cost issues pile up

Korea Aerospace Industries (KAI)'s board of directors will hold an emergency board meeting on the 27th. The agenda is to appoint a new president, and the meeting will be held at an undisclosed time and place in order to appoint former Defense Acquisition Program Administration Unmanned Systems Program Manager Kim Jongchul.

According to a KAI official on the 26th, the KAI board of directors is scheduled to convene at 4:30 p.m. on the 27th. The meeting is highly likely to be held at the Export-Import Bank of Korea, which is KAI's major shareholder. As the labor union has opposed the agenda to appoint former manager Kim, the move appears intended to hold the meeting at a location where union members cannot gain access.

Board quietly moves to table agenda for appointing new CEO Kim Jongchul

The KAI board of directors consists of one inside director and five outside directors. The inside director is KAI Executive Vice President Cha Jaebyung. The outside directors are Kim Kyungja (Vice President of the Export-Import Bank of Korea), Kim Geuntae (retired four-star general and 19th National Assembly member), Lee Sangwon (Director General for Welfare Budget at the Ministry of Economy and Finance's Budget Office), Cho Jinsu (President of the Korean Society for Aeronautical and Space Sciences), and Hong Cheolgyu (President of the Korean Management Accounting Association).

The labor union has consistently argued that KAI needs the leadership of a "professional manager with expertise" rather than someone from a military background. Taking KAI's management situation into account, the union believes that former manager Kim lacks knowledge and experience in aviation technology and corporate management. KAI requires a comprehensive chief executive officer capable of overseeing large-scale manufacturing, exports, and finance, and the union contends that former manager Kim is not suitable. The defense and aerospace industry shares a similar view. According to the union, former manager Kim is known to have been rejected in an open recruitment process for head of the Aerospace Division at Gyeongnam Technopark due to insufficient expertise.

Series of appointments of retired military officers lacking management expertise

The union is also pushing back against what it sees as a series of patronage appointments. Former CEO Kang Guyoung is a graduate of the 30th class of the Air Force Academy. Immediately after taking office, former CEO Kang carried out a sweeping reshuffle of executives, as if it had been preannounced. Around 20 executives left the company within three months. The vacancies were filled with former military officers and figures from organizations where he had previously worked. Former manager Kim also comes from the Air Force. A graduate of the 31st class of the Air Force Academy, he retired as an Air Force lieutenant colonel in 2006 and then joined the Defense Acquisition Program Administration. He served as head of the Defense Export Support Team, deputy head of the Strategic Planning Group, head of the Program Management Team, director of Planning and Coordination, and head of the Unmanned Systems Program Department.

Former manager Kim in op-ed: "May CEO Kang Guyoung be a masterstroke"

In an opinion piece contributed to a media outlet, former manager Kim evaluated former CEO Kang's appointment as appropriate. In the op-ed, former manager Kim wrote that "(the appointment of CEO Kang Guyoung) is a 'masterstroke' among the personnel decisions of the Yoon Suk Yeol administration." The union argues that this "even raises issues about continuity with the previous management."

Kwak Sanghun, policy chief of the KAI labor union, said, "Appointing a non-expert in aviation from the military is not a practical personnel decision, but merely a repetition of parachute appointments made as a reward," adding, "The government must clearly explain how its personnel philosophy, which emphasizes fairness and merit-based appointments, has been applied in the selection of the new KAI president."

A defense industry official said, "There are pressing issues piling up, including exports of the FA-50 and Surion and the cost-sharing issue for the KF-21, yet how can someone with no overseas network and no management experience properly handle personnel, labor relations, and cost analysis?" The official added, "Board members have a duty to take responsibility and exercise due care when appointing the CEO."