President Donald Trump urged America’s defense contractors to invest in new and modern production facilities Wednesday, saying he would ban dividends, stock buybacks, and executive compensation exceeding $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 U.S. 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!”
The president praised American defense manufacturing as the best in the world, saying “No other Country is even close!” He added that companies should build “NEW and MODERN Production Plants” for both manufacturing and maintaining military equipment.
Trump criticized defense companies for delivering equipment too slowly and failing to maintain it properly once sold. “MILITARY EQUIPMENT IS NOT BEING MADE FAST ENOUGH!” he wrote, saying companies must build capacity “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 also said maintenance and repair of equipment “is far too slow, and must be immediately enhanced,” demanding that maintenance be “spot on, on time.”
Trump 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 American military readiness.
The statement reiterated concerns Trump first raised 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 touched on similar themes in November, railing against what he characterized as a painfully slow defense procurement process in which weapons are often over-budget, years late, and sometimes obsolete by the time they debut. Hegseth demanded the biggest U.S. defense companies invest their own capital in speed and volume of delivery, with officials from companies including Lockheed and Northrop Grumman in the audience.
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 their industrial base and stockpiles, warning that the public needs to prepare for a changed security environment.
While Trump is frequently accused of undermining NATO, his push to accelerate defense production addresses one of the alliance’s most serious concerns—a problem that remains largely unappreciated outside defense policy circles. 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 Tuesday, with Northrop Grumman dropping as much as 3 percent, according to Bloomberg. Lockheed Martin, RTX Corp, and General Dynamics also declined.
The $5 million executive pay cap would represent a dramatic reduction from current compensation levels. Northrop Grumman CEO Kathy Warden’s total compensation in 2024 was $24 million, while Lockheed Martin CEO Jim Taiclet made $23.75 million, Bloomberg reported. The i-Shares 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.
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