Overview
- Executives at major contractors contacted attorneys on the order’s enforceability and potential court fights, according to industry sources and lawyers.
- The directive requires the Pentagon to flag underperformers within 30 days, gives 15 days for board‑approved remediation plans, and links executive incentives to on‑time delivery and higher output.
- Future contracts will restrict buybacks, dividends, and executive compensation for poor performance, with possible penalties including payment withholds or terminations that attorneys say could be litigated.
- Defense stocks fell after Trump’s posts but recovered following his $1.5 trillion FY2027 budget request, while Morgan Stanley estimates show roughly $8 billion in dividends and $10 billion in buybacks over the past year at major firms.
- Public statements ranged from support or neutral responses by Kratos, Lockheed Martin, and HII to private concerns about investor reactions, with L3Harris telling employees the moment will require increased investment.