President Donald Trump urged U.S. defense contractors on Wednesday to invest in new and modern production facilities, saying he would ban dividends, stock buybacks, and executive compensation above $5 million until companies accelerate manufacturing and maintenance of critical military equipment.
In a Truth Social post, Trump called on defense industry leaders to redirect capital currently flowing to shareholders and executives toward building the production capacity needed to equip American forces and allies more rapidly.
“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. “This situation will no longer be allowed or tolerated!”
Trump praised American defense manufacturing as the best in the world and said companies should build “NEW and MODERN Production Plants” for both manufacturing and maintaining military equipment. He criticized defense firms for delivering equipment too slowly and failing to maintain it properly once sold, saying production “is not being made fast enough” and that maintenance “must be immediately enhanced.”
Trump also said executive compensation should be capped at $5 million — “a mere fraction of what they are making now” — until production speeds improve, arguing the policy would ultimately benefit both executives and shareholders by strengthening U.S. military readiness.
The statement reiterated concerns Trump first raised on December 22, when he said he would meet with defense executives to force them to spend more on development instead of buybacks, executive pay, and dividends. Reuters reported in mid‑December that the administration was planning an executive order to limit dividends, buybacks, and executive pay for defense contractors whose projects are over budget and delayed.
Defense Secretary Pete Hegseth has voiced similar frustrations, criticizing what he called a slow defense procurement process in which weapons are often over budget, years late, and outdated by the time they debut. Hegseth has urged major U.S. defense firms to invest their own capital in speeding delivery and increasing volume.
Trump’s focus on defense industrial capacity echoes warnings from NATO Military Committee Chair Admiral Rob Bauer, who has repeatedly cautioned that Western defense production is inadequate for potential large‑scale conflict. Bauer has emphasized the need for nations to rebuild industrial bases and stockpiles, warning that the public needs to prepare for a changed security environment.
While Trump is often accused of undermining NATO, this push to accelerate defense production addresses one of the alliance’s key concerns: Western defense industrial capacity has atrophied over decades, leaving NATO vulnerable in any sustained conflict.
Shares of major defense contractors fell following Trump’s statement, with Northrop Grumman dropping as much as 3 percent, according to Bloomberg. Lockheed Martin, RTX Corp, and General Dynamics also declined. Trump’s proposed $5 million executive pay cap would represent a dramatic reduction from current compensation levels; Northrop Grumman’s CEO earned about $24 million in 2024, and Lockheed Martin’s CEO about $23.75 million, Bloomberg reported. The iShares aerospace and defense ETF declined by 0.6 percent.
“Longer term, this is good for both Executives and Shareholders, because it will be GREAT for our Country!” Trump wrote.
