President Donald Trump has declared that American defense contractors will no longer be allowed to distribute dividends or engage in stock buybacks until certain issues are resolved. According to Trump, these issues are impacting the production, maintenance, and modernization of the military industry.
In a statement on his social media platform, Truth Social, Trump emphasized that contractors have been allocating "massive dividends" and "large buybacks" at the cost of investing in facilities and equipment. He asserted that such practices will "no longer be tolerated or allowed."
Trump insists that funds currently directed towards dividends and buybacks should instead be used to build new and modernized production plants, expedite deliveries, and enhance equipment maintenance. He also criticized the executive salaries and compensations in the sector as "exorbitant and unjustifiable," especially considering the "slow pace" at which companies are supplying "vital" equipment to the Armed Forces and allied nations.
The former president stated that no executive should earn more than $5 million until necessary facilities are built and modernized, highlighting that this amount is "just a fraction" of their current earnings, as per his claims.
Additionally, Trump set forth specific demands regarding the maintenance and repair of sold equipment, criticizing these processes as "too slow" and in need of immediate improvement. "As president, I demand maintenance to be timely and precise," his statement reads.
In conclusion, Trump justified the announced ban by pointing out that "military equipment is not being manufactured quickly enough." He argued that instead of borrowing from financial institutions or receiving government funds, the industry should use the resources currently allocated to dividends, buybacks, and "overcompensation" of executives to increase capacity.
He maintained that, in the long run, this approach would also benefit executives and shareholders "because it will be excellent" for the nation.
FAQ on Trump's Defense Contractor Policy Changes
Why is Trump imposing restrictions on defense contractors?
Trump believes that defense contractors are prioritizing dividends and stock buybacks over necessary investments in production, maintenance, and modernization of military equipment.
What changes does Trump demand in executive compensation?
Trump has proposed that no executive in the defense sector should earn more than $5 million until necessary improvements in facilities and processes are made.
What areas does Trump want defense contractors to focus on instead of dividends and buybacks?
Trump urges that funds be reallocated to build and modernize production plants, accelerate equipment deliveries, and improve the maintenance of military gear.