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(Sharecast News) - Defence stocks were on the rise on Thursday as US President Donald Trump said he wanted to ramp up military spending by 50% to $1.5tn by 2027 and took aim at the salary levels of industry bosses.
In a series of posts on social media, Trump accused weapons makers of failing to deliver equipment quickly enough to the US and its allies across the world and threatened to ban dividends and share buybacks in the sector.
Firms were paying "exorbitant" salaries to top executives and massive dividends to shareholders while equipment is "NOT BEING MADE FAST ENOUGH", Trump said.
He added that he would ban dividends and share buybacks by contractors or allow them to pay executives more than $5m, until they started to accelerate deliveries and build new and modern production plants.
"All United State Defense Contractors, and the Defense Industry as a whole, BEWARE: While we make the best Military Equipment in the World (No other Country is even close!), Defense Contractors are currently issuing massive Dividends to their Shareholders and massive Stock Buybacks, at the expense and detriment of investing in Plants and Equipment. This situation will no longer be allowed or tolerated!
"Executive Pay Packages in the Defense Industry are exorbitant and unjustifiable given how slowly these Companies are delivering vital Equipment to our Military, and our Allies," he added. "Salaries, Stock Options, and every other form of Compensation are far too high for these Executives."
The authoritarian Trump's increasingly bellicose comments come as US forces snatched Venezuela's president, Nicolas Maduro, seized two oil tankers - one Russian flagged - and White House officials openly admitted the administration was examining "a range of options" to acquire Greenland, including military force.
In fiscal year 2024, the CEOs of Lockheed Martin and General Dynamics received more than $23.7m each in total compensation, while the head of RTX received more than $18m, and Northrop Grumman's boss got more than $24.3m, the Guardian newspaper reported.
Trump has pushed military defense spending to nearly $1tn annually, signing a bill last month authorising a record $901bn. But on Wednesday, he raised the prospect of increasing the overall budget to $1.5tn by 2027 allowing the US to build the "Dream military that we have long been entitled to and, more importantly, that will keep us SAFE and SECURE, regardless of foe".
Saxo Strategist Neil Wilson said Trump wanted to use tariff income to pay for the extra spending "but we have the Supreme Court ruling to watch and Congress needs to approve it. But it does show increasingly Trump's desire to lean on US hard power assets to shape the world".
Reporting by Frank Prenesti for Sharecast.com