No dividends, stock buybacks for defense companies
President Donald Trump said Wednesday that he “will not allow” defense companies to issue dividends or stock buybacks until they ramp up production of military equipment and address other complaints he has about the industry.
Trump for a long time Real Social The Post also took aim at defense contractors’ executive pay packages, calling them “exorbitant and unfair.”
“Defense Companies are not producing our Major Military Equipment fast enough, and once produced, they are not maintaining it properly or quickly,” he wrote.
Trump said that until these companies build new manufacturing facilities, “no Executive should be allowed to make more than $5 Million.”
shares General Dynamic, LockheedMartin And Northrop Grumman Each fell about 3% following Trump’s comments.
$GD, $LMT and $NOC Share Prices
It was not initially clear what impact or binding force Trump’s announcement would have on the financial operations of major defense companies. The White House did not immediately respond to CNBC’s request for additional information.
In his post, Trump lamented that “massive” shareholder dividends and buybacks were occurring “to the detriment and detriment of Plant and Equipment investments.”
“This situation will no longer be allowed or tolerated!” In his post, Trump warned the defense industry to be “CAUTIONAL”.
“Therefore, I will not allow Dividends or Stock Buybacks for Defense Companies until these issues are corrected – Ditto for Salaries and Executive Compensation,” he wrote.
Trump added that military equipment “must now be built with Dividends, Stock Buybacks, and Excessive Executive Compensation instead of borrowing from Financial Institutions or taking the money from your Government.”
While the technology sector takes the lead in buybacks, defense companies have also spent large amounts of buyback stocks in recent years.
Northrop Grumman, for example, spent $1.17 billion on share buybacks in the nine months ending Sept. 30 and paid $964 million in dividends to shareholders during that period.
Lockheed spent $2.25 billion on stock buybacks and paid $2.33 billion in dividends in the nine months ending Sept. 28.
Northrop, Lockheed and General Dynamics did not immediately respond to CNBC’s requests for comment on Trump’s post.
