Lockheed Martin Corp. (LMT) had a rough Wednesday after President Donald Trump took to Truth Social with a message defense contractors probably didn't want to hear: stop rewarding shareholders and start building factories.
What's the Deal?
Trump didn't mince words. He accused defense companies of prioritizing "massive Dividends to their Shareholders and massive Stock Buybacks, at the expense and detriment of investing in Plants and Equipment." His verdict? "This situation will no longer be allowed or tolerated!"
The directive is straightforward: no more dividends or stock buybacks until these companies get serious about expanding production capacity and delivering equipment faster. Trump wants the money that would have gone to shareholders redirected into building new, modern manufacturing plants instead.
But Trump wasn't done. He also went after executive compensation, calling pay packages "exorbitant and unjustifiable given how slowly these Companies are delivering vital Equipment to our Military and our Allies." His proposed solution? Cap executive pay at $5 million until new production facilities are up and running and equipment maintenance improves.
"Defense Companies are not producing our Great Military Equipment rapidly enough and, once produced, not maintaining it properly or quickly," Trump wrote. "From this moment forward, these Executives must build NEW and MODERN Production Plants."
The president made it clear that companies shouldn't expect to lean on banks or government support to fund this expansion. The money for new facilities should come from what would have been shareholder returns.
How the Market Reacted:
Lockheed Martin shares dropped 4.28% to $499.72 on Wednesday following Trump's post.
