Overview
- President Donald Trump announced plans to bar dividends and stock buybacks at U.S. defense contractors until they build modern domestic production capacity and fix delivery problems.
- He also proposed capping defense‑industry executive compensation at $5 million annually until those issues are resolved.
- Major defense stocks fell after the announcement, with Lockheed Martin down about 5%, Northrop Grumman off 5.5%, and General Dynamics lower by roughly 4%.
- The administration is preparing an executive action, but analysts note the legal basis and practical enforceability are uncertain and could clash with corporate fiduciary duties.
- Trump tied the push to a broader buildup, calling for a 2027 military budget of $1.5 trillion and citing GAO findings that incentive payments have not ensured timely deliveries on key programs.