Trump orders defense companies to stop stock buybacks, dividends

President Donald Trump said Wednesday he would not allow defense companies to buy back their own stocks, offer executives large salaries and issue dividends to shareholders until they begin accelerating the production of military equipment.

In a post on Truth Social, Trump blasted the defense industry for the speed at which companies are producing “Great Military Equipment” and criticized them for not “maintaining it properly or quickly” thereafter. Executive pay packages in the industry, he said, are “exorbitant and unjustifiable given how slowly these companies are delivering vital Equipment to our Military, and our Allies.”

In demanding the defense companies pull back on their buybacks and dividends, Trump is laying out yet another example of how his administration is seeking to exert greater control over parts of corporate America. That has also included taking stakes in private businesses, such as the chipmaker Intel. Earlier Wednesday, in a push to curb housing costs, Trump posted that he wants to bar large investors from acquiring more single-family homes.

How Trump would implement such restrictions was not clear from the post, and the White House did not immediately respond to a request for further comment.

“From this point 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 wrote. He later said that “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.”

Trump added that “no Executive should be allowed to make in excess of $5 Million Dollars.”

POLITICO previously reported that several of the largest American defense contractors, such as Lockheed Martin, RTX, General Dynamics and Northrop Grumman paid out roughly $89 billion in stock buybacks and dividends from 2021 to 2024. In the wake of Trump’s announcement, defense stocks appeared to dip, with all four of those contractors in the red for the day, and Northrop’s share value losing about 4 percent.

But Trump’s comments seemed to contrast with the Pentagon’s recent courtship of the defense industry, including Defense Secretary Pete Hegseth’s November speech to executives at Ft. McNair and the agency’s deal with Lockheed Martin, announced Tuesday, which would see the company triple production for Patriot missile interceptors which are high on the military’s wish list.

It also left longtime defense industry observers scratching their heads about how Trump might pull off such a move to pressure contractors, since compensation issues are typically decided in boardrooms. And among industry insiders, there is still reluctance to build more brick-and-mortar weapons factories without concrete contract promises from DOD.

One way he might attempt to do so would be by making it a condition for companies that have government contracts, said Ann Lipton, a law professor at the University of Colorado.

“What’s his real power to do this kind of stuff?” said Byron Callan, a defense industry analyst at Capital Alpha Partners. “You can jawbone the industry, but at the end of the day, the boards of directors are the ones who are going to decide pay. Shareholders are certainly gonna have a say on this.”

“No company in its right mind is going to be investing without some kind of assurance that it’s taking a reasonable risk for a reasonable return,” Callan added. “Do you think that levying this kind of pressure on a handful of contractors that are really kind of the tip of the iceberg for the entire defense sector is going to resolve the production delays?”

“I thought we grabbed Maduro to stem socialism in the Americas, not to turn D.C. into Caracas on the Potomac,” said a defense industry official, referring to the capture of Venezuelan President Nicolás Maduro.