Lee, Warren find common ground on limiting stock buybacks for defense companies

SALT LAKE CITY — It's not often that Sens. Mike Lee and Elizabeth Warren see eye to eye, but the Utah Republican and Massachusetts Democrat are aligned on wanting to codify an executive order by President Donald Trump meant to limit stock buybacks for defense companies that fail to deliver weapons on time and budget.

Trump's executive order was signed earlier this year and was meant to limit defense contractors from issuing stock buybacks — when a company buys its own shares from investors, reducing the number of shares available and increasing the share price — if they are not current on government contracts.

"Although some contractors have made critical investments in increased production capacity and been responsive to our nation's vital interests, far more have not," the order states. "Many large contractors — while underperforming on existing contracts — pursue newer, more lucrative contracts, stock buybacks and excessive dividends to shareholders at the cost of production capacity, innovation and on-time delivery.

"Effective immediately, they are not permitted in any way, shape or form to pay dividends or buy back stock, until such time as they are able to produce a superior product, on time and on budget."

The order has already been effective, according to an analysis by Lee and Warren staffers, which found that the four largest defense contractors that have offered stock buybacks and dividend payouts cut the amount they were buying back in early 2026. Those four companies — Lockheed Martin, RTX, Northrop Grumman and General Dynamics — spent 36% less on buybacks and dividends in the first quarter of 2026 compared with the same period in 2025, according to the senators' analysis of corporate earnings calls.

Those companies still reported strong financials, according to the senators, and many had increased capital expenditures.

"These defense contractors continued to report a strong financial outlook for their shareholders, indicating this reduction in buybacks did not pose any harm to each of the companies' underlying business fundamentals," Lee and Warren wrote in a joint letter to Defense Secretary Pete Hegseth.

That letter was sent urging the secretary's support of a bill the pair introduced that would codify the executive order on buybacks and dividends. The Prioritizing the Warfighter in Defense Contracting Act of 2026 had some key elements included as part of the Senate's national defense spending bill, but "the military industrial complex is fighting aggressively against this bipartisan legislation," according to the senators.

"If they succeed in stripping this amendment from the (National Defense Authorization Act), defense contractors will continue to profit at taxpayers' expense while failing to provide for the common defense," Lee and Warren wrote. "The Pentagon is handing companies billions — and now potentially trillions — of taxpayer dollars. Congress and the administration must work together to ensure they fulfill their contractual obligations and enhance national security."

They said their review shows that "despite their concerns, defense contractors can afford to prioritize the warfighter and increase investments to improve outcomes and address schedule delays and cost overruns plaguing the Pentagon's weapons systems."

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