Trump Takes on Buybacks, Dividends and Executive Pay at U.S. Defense Contractors

Core Insights - President Trump has announced that defense companies will no longer be allowed to engage in stock buybacks and dividend programs, marking a significant shift in corporate finance practices [2][5] - This move reflects a broader desire from the Trump administration to exert greater control over public companies, particularly in sectors deemed critical for national security [3][4] Defense Sector Impact - Shares of major defense contractors such as Lockheed Martin, Northrop Grumman, and General Dynamics fell by at least 4% following Trump's announcement [5] - The administration's intervention in the defense sector is part of a larger trend of government involvement in corporate affairs, which has included equity stakes in companies like Nvidia and Intel [4][8] Historical Context - The discussion around stock buybacks has gained traction, with President Biden previously implementing a 1% excise tax on such repurchases, although this has not significantly reduced the practice [7] - Companies in the S&P 500 spent over $1 trillion on stock buybacks in the year ending September 2025, an increase from over $918 billion the previous year, indicating a strong trend in corporate cash utilization [7]