Overview
- An executive order issued late Wednesday immediately blocks defense contractors from paying dividends or buying back shares until they meet production speed, cost, and quality benchmarks.
- The order gives the defense secretary 30 days to name underperforming firms and 60 days to add provisions to future contracts that suspend payouts if contractors miss standards.
- Trump proposed raising the 2027 defense budget to $1.5 trillion and said tariff revenue would fund it, a contention independent budget watchers say is insufficient.
- Defense stocks fell after the payout ban remarks, then rebounded sharply after the budget push, with major contractors recouping losses in Thursday trading.
- Trump urged capping defense executive compensation at $5 million and singled out RTX as lagging on capacity, while questions persist over the legal mechanisms and congressional approval required.