President Trump plans to cap defence executive pay at $5m and ban dividends and stock buybacks to force investment in new plants and equipment.
WASHINGTON: President Donald Trump has threatened to cap executive pay and ban shareholder dividends and stock buybacks at major US defence contractors.
He accused the industry of prioritising profits over the speed of weapons production and equipment delivery.
“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,” Trump wrote on his Truth Social platform.
He stated that defence company executives would be barred from earning more than $5 million annually until they build new manufacturing facilities and accelerate military equipment deliveries.
Trump argued that the $5 million cap, “as high as it sounds,” is a fraction of current executive earnings.
The announcement surprised markets, sending shares of major contractors like Lockheed Martin and General Dynamics down more than 4%.
Northrop Grumman shares fell more than 5%.
In a separate post, Trump specifically targeted Raytheon, threatening to cut its government business.
He said Raytheon “has been the least responsive to the needs of the Department of War.”
“Either Raytheon steps up, and starts investing in more upfront Investment like Plants and Equipment, or they will no longer be doing business with Department of War,” he stated.
Trump also broadly criticised the industry’s maintenance and repair timelines for existing equipment.
He demanded that service be “spot on, on time” and declared a ban on dividends and buybacks until problems are fixed.
Trump argued companies should fund necessary investments from their own cash reserves rather than through government contracts or loans.
The statement did not specify the legal authority for these restrictions, but the White House hinted at a planned executive order.
The move follows warnings from US Defense Secretary Pete Hegseth in November about revamping Pentagon acquisition methods.
