Trump to host defence firms to urge less spending on buybacks

PALM BEACH, Florida – US President Donald Trump announced he will meet executives from major US defence contractors next week in a bid to force them to spend more money on weapons development, not stock buybacks, executive pay and dividends.

“We make the best equipment in the world, but they don’t make them fast enough,” he said.

“We don’t want to have executives making US$50 million (S$64.4 million) a year issuing big dividends to everybody and also doing buybacks and also saying we don’t have the money to build a plant.” 

Mr Trump made the announcement on Dec 22 at his Mar-a-Lago estate, where he also unveiled

plans to build a new “Trump-class” warship

, in a fresh push to revive US shipbuilding.

The plan for the meeting comes after people familiar with the matter said Mr Trump could sign a new executive order clamping down on buybacks and dividends by top defence companies.

The proposed directive would mandate that the companies tie executive compensation more closely to overall performance levels in delivering specific systems.

Mr Trump’s ability to enforce such an order is unclear, and it would represent an extraordinary intrusion by the US government into corporate affairs.

But the administration has not been shy about making similar demands in recent months, telling contractors to get in line with its priorities and even buying stakes in some companies.

Backed by Mr Trump, Defence Secretary Pete Hegseth has said he intends to fix the painfully slow procurement process in which weapons are often over-budget, years late and sometimes obsolete by the time they debut.

That challenge drew the ire of White House chief of staff Susie Wiles, who told Vanity Fair in an interview published on Dec 16 that Mr Hegseth was the right person to take on the job.

“People talk about the deep state being at the State Department,” she said. “It’s not. It’s the military-industrial complex.”

In October, Lockheed Martin Corp raised its quarterly dividend by 15 US cents and approved buying back up to an additional US$2 billion. Northrop pays a dividend of US$2.31 per share.

But the companies have also made major investments.

Earlier in December, Lockheed opened a new lab focused on hypersonic weapons in Alabama as part of a planned US$700 million investment from the strategic and missile defence unit in recent years to expand and upgrade facilities.

Northrop has invested more than US$1 billion in advanced manufacturing plants since 2018. BLOOMBERG