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- President Donald Trump took aim at defense contractors on Wednesday in an executive order.
- In a post on Truth Social, he proposed capping the compensation of defense contractor CEOs at $5 million.
- That figure is a fraction of the current pay for leaders of the largest defense contractors.
President Donald Trump is targeting the bank accounts of defense contractor CEOs.
On Wednesday, Trump signed an executive order outlining new rules for defense contractors that would ban stock buybacks and dividends "until such time as they are able to produce a superior product, on time and on budget" — as well as limit executive compensation.
The order stipulates that in future contracts, if the Secretary of War were unsatisfied with a company's performance, executive base salaries would be capped at current levels. Future contracts would also ensure compensation "not be tied to short-term financial metrics" and instead be "linked to an on-time delivery, increased production, and all necessary facilitation of investments and operating improvements."
The goal, per the executive order, is to increase the speed of innovation at defense companies, rather than focus on corporate profits.
Trump also took aim at the leaders of defense contractors in a series of posts on Truth Social on Wednesday.
"Executive Pay Packages in the Defense Industry are exorbitant and unjustifiable given how slowly these Companies are delivering vital Equipment to our Military," Trump wrote. "Salaries, Stock Options, and every other form of Compensation are far too high for these Executives."
He proposed that no executive should earn "in excess of $5 million" until their production speed and maintenance improve, though the executive order did not cap pay at that exact amount.
The leaders of the big five defense contractors — Lockheed Martin, RTX (formerly known as Raytheon), Northrop Grumman, Boeing, and General Dynamics — each earned more than $18 million in total compensation in 2024, the most recent year for which data is available. Their total income was a combination of salary, incentives, stock options, and other forms of compensation, including the value of security services and changes in the value of pension funds.
While exceeding the $5 million cap proposed by Trump by magnitudes, the CEOs' compensation pales in comparison to that of some other business leaders.
Dozens of CEOs earned more than them in 2024. James Robert Anderson, who runs materials manufacturer Coherent, had a pay package of more than $100 million last year. The CEOs of Starbucks, GE, and Microsoft each made more than $75 million.
Executive pay and stock transactions are part of Trump's larger plans for the military. On Wednesday evening, he said on Truth Social that America's military budget should be increased to $1.5 trillion in 2027, up from the record 2026 defense budget of $901 billion.
That sent defense stocks climbing on Thursday morning, gaining back what they'd lost following the signing of the executive order.
In a statement to Business Insider regarding the order, a spokesperson for Lockheed Martin said the company "shares President Trump's and the Department of War's focus on speed, accountability, and results, and will continue to invest and innovate at scale to ensure our warfighters maintain a decisive advantage and are never sent into a fair fight."
Boeing and General Dynamics declined to comment, and Northrop Grumman and RTX did not immediately respond to requests for comment.
