President Donald Trump said he wouldn’t allow defense companies to issue dividends or buy back their own stock until they invest more in production and research, comments that triggered a selloff across the sector.
In a social media post, Trump said executive pay at defense companies should be capped at $5 million until they build what he called “NEW and MODERN Production Plants.” He said firms aren’t building military equipment fast enough or maintaining it properly.
Defense companies “are currently issuing massive Dividends to their Shareholders and massive Stock Buybacks, at the expense and detriment of investing in Plants and Equipment,” Trump wrote. “This situation will no longer be allowed or tolerated!”
Shares of major US defense contractors dropped on Trump’s comments, with Northrop Grumman Corp. falling as much as 3% at 2:19 p.m. in New York. Lockheed Martin Corp., RTX Corp. and General Dynamics Corp. also declined.
Spokespeople for RTX, Northrop and Lockheed Martin didn’t 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 with a salary of $1.75 million.
Trump didn’t say how he planned to enforce his demand though people familiar with the matter said earlier he was weighing an executive order on the issue. The Wednesday post reiterated comments he made on Dec. 22 when he said he’d meet soon with executives from major defense contractors in a bid to force them to spend more on development instead of buybacks, executive pay and dividends.
It’s a theme the administration has hammered repeatedly under Trump. In November, Defense Secretary Pete Hegseth railed against what he characterized as a painfully slow defense procurement process in which weapons are often over-budget, years late and sometimes obsolete by the time they debut.
He demanded the biggest US defense companies invest their own capital in speed and volume of delivery. Officials from defense companies such as Lockheed and Northrop Grumman were in the audience.
Trump and Hegseth aren’t the first officials to criticize defense company expenditures, only the latest. Biden-administration Navy Secretary Carlos Del Toro in February 2024 told a defense industry audience “overall, many of you are making record profits, as evidenced by your quarterly financial statements.”
With assistance from Siddharth Philip.
This article was generated from an automated news agency feed without modifications to text.
