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Donald Trump has claimed he plans to crack down on executive compensation and shareholder payouts at military defense contractors, as his administration looks to dramatically ramp up spending on the armed forces.
In a series of posts on social media, the US president said he wants to increase the military budget to $1.5tn – and complained that defense giants had been failing to swiftly deliver “vital” equipment to the US and its allies across the world.
The firms are paying “exorbitant” salaries to their top executives and vast dividends to shareholders while equipment is “NOT BEING MADE FAST ENOUGH”, Trump said.
He said he would “not permit” dividends and stock buybacks by defense companies, or allow them to pay executives more than $5m, until they started to accelerate deliveries and build new and modern production plants.
Trump’s intervention came days after US forces struck Venezuela and captured its president, Nicolás Maduro. The Trump administration has also said it is examining “a range of options” to acquire Greenland, and noted that using the US military to do so is “always an option”.
On Truth Social, Trump wrote: “All United State Defense Contractors, and the Defense Industry as a whole, BEWARE: While we make the best Military Equipment in the World (No other Country is even close!), 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!
“Executive Pay Packages in the Defense Industry are exorbitant and unjustifiable given how slowly these Companies are delivering vital Equipment to our Military, and our Allies,” he added. “Salaries, Stock Options, and every other form of Compensation are far too high for these Executives.”
In fiscal year 2024, the CEOs of Lockheed Martin and General Dynamics received more than $23.7m each in total compensation, the RTX CEO received more than $18m, and the Northrop Grumman CEO received more than $24.3m.
General Dynamics declined to comment. Lockheed Martin, RTX and Northrop Grumman did not immediately respond to requests for comment.
Trump has pushed military defense spending to nearly $1tn annually, signing a bill last month authorizing a record $901bn. But on Wednesday, he raised the prospect of increasing the overall budget to $1.5tn by 2027.
“This will allow us to build the ‘Dream Military’ that we have long been entitled to and, more importantly, that will keep us SAFE and SECURE, regardless of foe,” Trump claimed.
Less than two hours earlier, he had ordered the US defense sector to curb its payments to executives and shareholders.
“I will not permit Dividends or Stock Buybacks for Defense Companies until such time as these problems are rectified – Likewise, for Salaries and Executive Compensation,” said Trump, without providing a legislative plan. “MILITARY EQUIPMENT IS NOT BEING MADE FAST ENOUGH! It must be built now with the Dividends, Stock Buybacks, and Over Compensation of Executives, rather than borrowing from Financial Institutions, or getting the money from your Government.”
Trump has been told by officials that Raytheon, owned by RTX, has been “the least responsive to the needs” of the Pentagon, “the slowest in increasing their volume, and the most aggressive spending on their Shareholders rather than the needs and demands of the United States Military”, he said.
“Either Raytheon steps up, and starts investing in more upfront Investment like Plants and Equipment, or they will no longer be doing business with Department of War,” Trump wrote. “Also, if Raytheon wants further business with the United States Government, under no circumstances will they be allowed to do any additional Stock Buybacks, where they have spent Tens of Billions of Dollars, until they are able to get their act together. Our Country comes FIRST, and they’re going to have to learn that, the hard way!”
