President Donald Trump is taking aim at what he says are out-of-control dividends paid to shareholders of America’s largest defense contractors that could be better spent on increasing weapons production.
In a Wednesday Truth Social post, the president accused contractors of “issuing massive Dividends to their Shareholders and massive Stock Buybacks, at the expense and detriment of investing in Plants and Equipment” and warned that such a situation would “no longer be allowed or tolerated.”
He also claimed defense executive pay is “exorbitant and unjustifiable” because companies are delivering equipment to the U.S. and allies “slowly” and said the “Salaries, Stock Options, and every other form of Compensation” paid at defense contractors were “far too high” because they were “not producing our Great Military Equipment rapidly enough and, once produced, not maintaining it properly or quickly.”
“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. 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 said.
The president added that he would “not permit” publicly traded defense contractors — a category that includes Lockheed Martin, Northrop Grumman and General Dynamics — to pay dividends or buy back their own stocks “until such time as these problems are rectified.”
It’s unclear how Trump could intervene to keep companies from paying their own executives at a market rate or issuing dividends to stockholders, but a White House official told The Independent there is an executive order in the works that would purportedly use the president’s authority over federal contracting to accomplish the goals he laid out in his social media post.
“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,” he said.
Trump also demanded that maintenance and repair of existing defense equipment, which he called “far too slow,” be “immediately enhanced” so that it is done “spot on” and “on time.”
“Longer term, this is good for both Executives and Shareholders, because it will be GREAT for our Country! Thank you for your attention to this matter,” he said.
Shares of Lockheed, Northrup Grumman and General Dynamics all saw declines on U.S. stock markets in the immediate aftermath of Trump’s comments. Each fell at least 4 percent by the close of trading on Wednesday.
Spokespersons for all three did not respond to a request for comment from The Independent.
