David-Katz (Photo courtesy of Wachtell, Lipton, Rosen & Katz)
On January 7, 2026, President Trump signed an Executive Order titled Prioritizing the Warfighter in Defense Contracting which could limit the ability of defense contractors to pay dividends or repurchase their stock, as well as potentially impact the compensation of their executives. According to the Executive Order:
While the United States produces the best military equipment in the world, we do not make enough of it quickly enough to meet the needs of our military and our partners. As a result, in these dangerous times, it is imperative that our defense contractors be held to the highest standards intended to ensure the advancement of core national interests, including with respect to the timeliness and quality of the defense items that they deliver.
Although some contractors have made critical investments in increased production capacity and been responsive to our Nation’s vital interests, far more have not. Many large contractors — while underperforming on existing contracts — pursue newer, more lucrative contracts, stock buy-backs, and excessive dividends to shareholders at the cost of production capacity, innovation, and on-time delivery.
