Trump Demands Defense Companies Stop Buybacks and Dividends

President Donald Trump said he would not allow defense companies to pay dividends or buy back their own shares unless they invest more in production and research, triggering a sell-off in the industry.

In a social media post, Trump said executive salaries at defense companies should be capped at $5 million until what he called “NEW and MODERN Manufacturing Facilities” are built. He said companies were not producing military equipment fast enough or properly maintaining it.

Defense companies “are currently distributing massive Dividends to their Stockholders and engaging in massive Stock Buybacks, to the detriment and expense of investing in Facilities and Equipment,” Trump wrote. “This situation will no longer be allowed or tolerated!”

While shares of leading US defense contractors fell on Trump’s comments, Northrop Grumman Corp. It fell as much as 3% at 14:19 in New York. Lockheed Martin Corp., RTX Corp. and General Dynamics Corp. was also rejected.

Spokespeople for RTX, Northrop and Lockheed Martin did not immediately respond to an email seeking comment on Trump’s statement.

In 2024, Northrop Chief Executive Kathy Warden had total compensation of $24 million, with an annual salary of $1.79 million. Lockheed Chief Executive Jim Taiclet’s total compensation was $23.75 million and his salary was $1.75 million.

Trump did not say how he planned to implement his request, but people familiar with the matter said he was previously considering an executive order on the issue. In Wednesday’s post, he reiterated comments made Dec. 22 in which he said he would soon meet with executives from major defense contractors in an effort to push them to spend more on development rather than buybacks, executive salaries and dividends.

This is an issue the administration has raised repeatedly during the Trump administration. In November, Defense Secretary Pete Hegseth bemoaned what he described as a painfully slow defense procurement process in which weapons are often over budget, delayed by years, and sometimes obsolete by the time they become available.

He demanded that the largest US defense companies invest their capital in the speed and volume of delivery. Officials of defense companies such as Lockheed and Northrop Grumman were also in the audience.

Trump and Hegseth are not the first officials to criticize defense company spending, but only the last. “Overall, many of you are making record profits, as your quarterly financial statements show,” Biden administration Navy Secretary Carlos Del Toro told a defense industry audience in February 2024.

With the help of Siddharth Philip.

This article was generated from an automated news agency feed without modifications to the text.