Defense Companies Face New Rules on Money Spending

President Donald Trump has proposed significant changes to how defense companies allocate their funds. Key points include:

• Shareholder and Stock Buyback Restrictions Defense companies are prohibited from distributing money to shareholders or engaging in stock buybacks until they increase military production and address other issues.

• Executive Compensation Caps Trump has set a limit on executive pay, stating that defense company bosses cannot earn more than $5 million. He believes their current compensation is excessively high.

• Announcement Platform These points were shared on a social media site.

Market Reaction

Shares of major defense companies such as General Dynamics, Lockheed Martin, and Northrop Grumman experienced a decline following Trump's announcement. The actual impact of these rules remains uncertain.

Financial Practices of Defense Companies

Defense companies have historically allocated substantial funds to shareholders. For instance:

• Northrop Grumman
• Spent $1.17 billion on stock buybacks
• Allocated $964 million to dividends

• Over a period of nine months

• Lockheed Martin
• Spent even more than Northrop Grumman

Trump's Stance on Defense Spending

Trump advocates that defense companies should utilize their funds to manufacture equipment rather than relying on borrowed money or government assistance.

Industry Response

The reaction of defense companies to these new rules is yet to be seen, as they have not issued any statements thus far.