Trump blocks military contractors from issuing dividends, stock buybacks

In a post on Truth Social, Trump warned defense companies that shareholder payouts and executive compensation have come at the expense of investing in production capacity and delivering equipment to the US military.

“All United State[s] Defense Contractors, and the Defense Industry as a whole, BEWARE: While we make the best Military Equipment in the World (No other Country is even close!), Defense Contractors are currently issuing massive Dividends to their Shareholders and massive Stock Buybacks, at the expense and detriment of investing in Plants and Equipment. This situation will no longer be allowed or tolerated,” Trump wrote.

The president criticized executive compensation across the defense industry, arguing that pay packages are unjustified given delays in manufacturing and maintaining military equipment. He went on to demand new investment in domestic production and facilities.

“From this moment forward, these Executives must build NEW and MODERN Production Plants, both for delivering and maintaining this important Equipment, and for building the latest Models of future Military Equipment,” Trump said. “Until they do so, no Executive should be allowed to make in excess of $5 Million Dollars which, as high as it sounds, is a mere fraction of what they are making now.”

Trump added that maintenance and repair of military equipment has been “far too slow” and must be immediately improved.

“Therefore, I will not permit Dividends or Stock Buybacks for Defense Companies until such time as these problems are rectified — Likewise, for Salaries and Executive Compensation. MILITARY EQUIPMENT IS NOT BEING MADE FAST ENOUGH! It must be built now with the Dividends, Stock Buybacks, and Over Compensation of Executives, rather than borrowing from Financial Institutions, or getting the money from your Government.”

Following the comments, shares of several major defense contractors fell. Stock prices for General Dynamics, Lockheed Martin, and Northrop Grumman each dropped by about 3 percent, according to CNBC.

Trump later singled out Raytheon, accusing the company of failing to meet Pentagon needs. He said the company is “the least responsive to the needs of the Department of War, the slowest in increasing their volume, and the most aggressive spending on their Shareholders rather than the needs and demands of the United States Military.”

He warned that the Pentagon would cut business ties with Raytheon unless it “steps up” on investment in plants and equipment, saying the company would not be allowed to conduct additional stock buybacks until those investments are made.