Lockheed Martin Corporation (NYSE:LMT) faced a sharp decline in its share price on Wednesday, responding to a public directive from President Donald Trump aimed at reshaping the financial practices of U.S. defense contractors. The president’s statement, shared on his social media platform, called for an immediate halt to dividend payments and stock buybacks by defense firms until they boost investment in production infrastructure and increase the pace at which vital military equipment is delivered.
In his post, Trump asserted that these companies have been distributing substantial dividends and executing significant stock repurchase programs, actions he claims come at the expense of essential investments in plant and equipment. He emphasized that such a trade-off, favoring shareholder returns over manufacturing capability enhancements, would no longer be permissible or tolerated under his watch.
Further criticism was directed at the levels of executive compensation within the defense sector. The president characterized the pay packages as excessive and unjustifiable, particularly considering the slow delivery timelines for critical equipment that supports both U.S. military operations and allied forces. To address this imbalance, he stipulated a cap on executive earnings, mandating that no individual in defense leadership can receive more than $5 million annually unless new production plants are built and equipment maintenance operations see marked improvements.
Trump underlined a concern that defense companies are failing to produce military hardware at a satisfactory speed and are similarly lagging in maintaining existing stock of such equipment. He urged an urgent pivot towards constructing new, state-of-the-art manufacturing facilities as a prerequisite for any future executive compensation above the imposed limits.
In addition to executive pay controls, the president reinforced that no defense company should resume issuing dividends or conducting stock buybacks until they resolve production inefficiencies. He advocated that funds currently allocated to these financial maneuvers be redirected to expanding manufacturing capacity, and explicitly discouraged turning to banks or government resources for such investments.
As a direct consequence of this intervention, Lockheed Martin’s shares suffered a notable downturn, falling by approximately 4.28 percent to trade near $499.72 at the time of reporting. The market response reflects investor concern over how the proposed changes might impact the company’s capital allocation strategies and operational priorities moving forward.
This situation highlights ongoing tensions between the expectations of public officials regarding national defense readiness and the financial management approaches taken by leading defense contractors. Balancing shareholder returns against infrastructure development and operational efficiency remains a critical challenge for the sector.