President Donald Trump put defense contractors on notice today. In a post on Truth Social, Trump says his administration is capping executive compensation at $5 million and prohibiting companies from doing stock buybacks and paying out dividends to shareholders.
President Trump signed an executive order Wednesday evening putting these restrictions in place at a policy level.
“All U.S. 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!” President Trump wrote in a post this afternoon. “Also, 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. Salaries, stock options, and every other compensation are far too high for these executives.”
President Donald Trump wants to cap how much defense contractors pay executives. (AP Photo/Evan Vucci)
President Trump said going forward, until these companies build new and modern production plants for military equipment, no executive should be allowed to make in excess of $5 million.
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The limiting of executive compensation isn’t a new idea. President Barack Obama called on Congress to limit executive competition to $400,000. In 2013, the White House said under current law, government-reimbursed contractor pay is tied to a formula that mimics the compensation levels of top private-sector CEOs, which has grown by more than 300% since 1995.
An hour later, President Trump sent out a second post taking specific aim at Raytheon, now known at RTX. He said Raytheon has been “the least responsive to the needs of the [DoD], the slowest in increasing their volume, and the most aggressive spending on their shareholders rather than the needs and demands of the U.S. military.”
Trump said if Raytheon wants to do further business with the government, it will not be allowed to do any further stock buybacks.
“Either Raytheon steps up, and starts investing in more upfront investments like plants and equipment, or they will no longer be doing business with [DoD],” President Trump wrote.
An email to RTX seeking comment was not immediately returned.
The defense giant said 54% of its $80.8 billion in revenue came from its defense business worldwide in 2024.
In fiscal 2025, USASpending.gov shows RTX held 1,652 contracts worth more than $7.2 billion. The Navy and Air Force are among RTX’s biggest DoD customers.
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RTX is known for providing systems like Patriot, National Advanced Surface-to-Air Missile System (NASAMS) and Upgraded Early Warning Radars.
Federal procurement experts question whether the executive order would even be legal and how this would “chill” the markets.
“So much of this ignores that the speed to build/buy/repair is often the fault of the government, not the contractor,” said one industry expert, who requested anonymity.
President Trump went even further in a third post, calling on Congress to increase the DoD’s fiscal 2027 budget to $1.5 trillion.
“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,” the president wrote. “If it weren’t for the tremendous numbers being produced by tariffs from other countries, many of which, in the past, have ‘ripped off’ the United States at levels never seen before, I would stay at the $1 trillion dollar number but, because of tariffs, and the tremendous income that they bring, amounts generated that would’ve been unthinkable in the past … we are able to easily hit the $1.5 trillion number, while at the same time producing an unparalleled military force and having the ability to, at the same time, pay down debt, and likewise, pay a substantial dividend to moderate income patriots without our country!”
DoD requested $848.3 billion for fiscal 2026 which was slightly lower compared to its $849.8 billion request in 2025.
Industry associations like the Professional Services Council, the National Defense Industrial Association and Aerospace Industries Association all declined to comment or didn’t respond to a request for comment.
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