Former U.S. President Donald Trump has stated he would block defence companies from issuing dividends or buying back their own stock until they increase investment in production and research. These remarks spurred an immediate selloff across the defence sector. Trump conveyed in a social media post that executive pay at defence companies should be capped at $US5 million until they build what he termed “NEW and MODERN Production Plants”, criticising the pace of military equipment production and maintenance.
Trump asserted that defence companies are currently prioritising “massive Dividends to their Shareholders and massive Stock Buybacks” over investing in essential infrastructure. He declared that this practice would no longer be tolerated. The former President’s comments led to a downturn in the shares of major U.S. defence contractors.
Northrop Grumman, a global aerospace and defence technology company, saw its shares fall by more than 4 per cent. Lockheed Martin, a global technology company engaged in the research, design, development, manufacture and sustainment of systems, products and services, as well as RTX and General Dynamics also experienced declines. Spokespeople for RTX, Northrop Grumman, and Lockheed Martin have not yet responded to requests for comment on the statement.
Recent data reveals that in 2024, Northrop Grumman chief executive Kathy Warden received total compensation of $US24 million, including an annual salary of $US1.79 million. Lockheed Martin chief executive Jim Taiclet’s total compensation amounted to $US23.75 million, with a salary of $US1.75 million.
