Fox Business·2026-01-08 03:45Core Viewpoint - President Trump signed an executive order to prohibit defense companies from paying dividends or buying back stock until they improve production and delivery performance [1][3]. Group 1: Executive Order Details - The order states that defense companies are not allowed to pay dividends or buy back stock until they can produce superior products on time and within budget [1]. - Within 30 days, the Pentagon chief will identify underperforming defense contractors that have engaged in stock buybacks and will require them to submit a remediation plan within 15 days [9]. - Future defense contracts must include provisions banning stock buybacks for underperforming firms and ensure that executive compensation is linked to on-time delivery rather than short-term financial metrics [12]. Group 2: Industry Criticism and Response - The Trump administration and the Pentagon have criticized the defense industry for high costs and slow production, emphasizing the need for changes to boost military equipment production [2][5]. - Trump highlighted that while the U.S. produces the best military equipment, the production rate is insufficient to meet military needs, necessitating higher standards for defense contractors [5]. Group 3: Market Reaction - Following Trump's announcement, defense stocks experienced declines, with Lockheed Martin falling 4.8%, Northrop Grumman down 5.5%, and General Dynamics decreasing by 3.6% [8]. - RTX shares initially dropped 2% but later recovered, climbing 2.5% in after-hours trading [8].