Trump To Pullback On Dividends, Buybacks For Defense Companies, Adds Executive Pay Packages Are ‘Exorbitant’

• Trump said that American defense companies are not producing equipment fast enough and if produced, they are not being maintained well enough. 
• He also criticized the high compensation for executives in the defense industry, saying the large pay packages do not justify the slow pace at which the companies deliver important equipment.
• The president claimed that in the long term, this move would be good for defense executives as well as shareholders.

U.S. President Donald Trump said in a social media post on Wednesday that he would not permit dividends or stock buybacks for defense companies as they take away from investments.

In a Truth Social post, Trump said that defense companies are not producing equipment fast enough, adding that if produced, they are not being maintained appropriately.

The president said that until this problem was addressed, he would pull back on dividends and buybacks. He also added that executive compensation was “exorbitant and unjustifiable” in the industry.

Military Equipment Improvement

“Defense contractors are currently issuing massive dividends to their shareholders and massive stock buybacks, at the expense and detriment of investing in plants and equipment. This situation will no longer be allowed or tolerated!” Trump said in his post.

“Additionally, the maintenance and repair of equipment, once sold, is far too slow, and must be immediately enhanced,” he added, saying that maintenance must be “spot on, on time.”

Executive Compensation

Trump also criticized the high compensation for executives in the defense industry, saying the large pay packages do not justify the slow pace at which the companies deliver important equipment to the U.S. military, and its allies.

Defense executives must focus on building new and modern production plants, both for delivering and maintaining defense equipment as well as for building better models of future military equipment, Trump said. “Until they do so, no executive should be allowed to make in excess of $5 million dollars which, as high as it sounds, is a mere fraction of what they are making now,” he added.

Trump said that the money from dividends, buybacks, and lowered executive compensations should be diverted to improve military equipment production instead of relying on borrowings or government funding. The president claimed in the post that in the long term, this would be good for defense executives as well as shareholders.

How Did Stocktwits Users React?

Defense company stocks declined after Trump’s comments.

Shares of Lockheed Martin Corp. (LMT) declined over 3.4% on Wednesday at the time of writing. Retail sentiment on the stock jumped to ‘extremely bullish’ from ‘bullish’ territory in 24 hours amid ‘high’ message volumes.

Shares of Northrop Grumman Corp. (NOC) fell nearly 4% with retail sentiment at ‘neutral’ levels amid ‘normal’ message volumes.

Meanwhile, GE Aerospace (GE) stock declined marginally by 0.45%, Boeing Co. (BA) shares dropped 0.51%, and L3Harris Technologies Inc. (LHX) shares fell 0.85% at the time of writing.  

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