The White House is planning an executive order that would limit dividends, stock buybacks and executive compensation for defense contractors whose projects are delayed and over-budget, Reuters reported, citing three sources briefed on the order.
The language of the order could still change, the sources added. It’s unclear how the order would compel defense firms to enact any restrictions.
“Until officially announced by the White House, discussion about potential executive orders is purely speculation,” an official told Reuters.
The proposed order would require defense companies to tie executive pay more closely to overall performance levels in delivering specific systems, a source told Bloomberg News.
The Trump administration has long complained about the expensive and slow-moving nature of the defense industry, and pledged to bring sweeping changes to improve production of weapons and related technologies.
Last month, War Secretary Pete Hegseth unveiled reforms to how the Pentagon purchases weapons, with the aim of speeding up procurement and eliminating bureaucracy.
Shares of defense contractors ticked lower premarket on Wednesday: Lockheed Martin (LMT) -1.5%, L3Harris (LHX) -0.8%, Leidos (LDOS) -0.6%, Northrop Grumman (NOC) -0.5%, General Dynamics (GD) -0.5%, RTX (RTX) -0.5%.