Trump signs executive order to curb buybacks at ‘underperforming’ defense firms

President Trump signed an executive order aimed at asserting broad new powers over the defense industry to boost weapons production and punish contractors deemed “underperforming.” The order prohibits stock buybacks and dividend payouts at defense companies that haven’t made capital investments or are judged underperforming and authorizes Defense Secretary Pete Hegseth to review compensation for such contractors.

The order directs Mr. Hegseth to compile a list of companies within 30 days; firms on that list could face executive pay caps and the loss of administration support for international military sales. It also mandates that future military contracts include provisions tying executive bonuses to higher output and on-time deliveries.

The move targets major contractors including Lockheed Martin, Boeing, General Dynamics, Northrop Grumman and RTX, and comes as the administration seeks to overhaul a procurement process critics say produces late and over-budget weapons. The administration framed the action as a response to long-running frustrations over delivery times; Mr.

Trump told Republican lawmakers he was putting contractors on notice and said allies sometimes wait years for deliveries. The legal basis of the order is unclear, and some experts say greater production capacity is better achieved through multiyear contracts and predictable orders.

Key Topics

Business, Donald Trump, Defense Contractors, Stock Buybacks, Executive Compensation, Lockheed Martin