"At the same time, the order claims, these companies have bought back billions in stock, enriching both shareholders and executives. "Effective immediately, they are not permitted in any way, shape, or form to pay dividends or buy back stock, until such time as they are able to produce a superior product, on time and on budget," the order, titled "Prioritizing the Warfighter in Defense Contracting," states."
"Trump elaborated in a post on his messaging platform Truth Social last week, railing against pay packages in the defense industry, claiming they are "exorbitant and unjustifiable" given the delays in delivering military equipment. Until those issues are remediated, "no Executive should be allowed to make in excess of $5 Million Dollars which, as high as it sounds, is a mere fraction of what they are making now," the president wrote."
The executive order bars dividends and stock buybacks by large defense contractors until they deliver superior products on time and on budget. The order directs the Secretary of War to identify contractors that underperformed contract terms and to craft plans resolving delays and production issues. If resolution plans are insufficient, future contracts could ban buybacks and dividends and prohibit pay tied to short-term financial metrics like free cash flow or earnings per share. The president proposed capping executive pay at $5 million while problems persist. A governance expert said boards must prioritize the U.S. government over shareholders and employees.
Read at Fortune
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