Trump signs executive order banning defense firms from stock buybacks and dividends until they 'produce a superior product'

• President Donald Trump signed an executive order aimed at defense contractors.
• On Truth Social, Trump criticized "massive" dividends, stock buybacks, and "exorbitant" pay packages.
• Prominent defense contractors saw shares drop on Wednesday after Trump's Truth Social post.

President Donald Trump took executive action aimed at defense contractors after a series of Truth Social posts.

The president signed an executive order on Wednesday that would ban defense contractors from stock buybacks and dividends "until such time as they are able to produce a superior product, on time and on budget."

"Every firm across our economy has a right to profit from prudent investment and hard work, but the American defense industrial base also has the responsibility to ensure that America's warfighters have the best possible equipment and weapons," the order said.

Earlier on Wednesday, Trump said he would "not permit" stock buybacks or dividends from US defense companies in a post on Truth Social.

In his post, the president blasted defense contractors for issuing "massive" dividends and buying back their stock. He said he wouldn't permit such practices until defense firms sped up production.

"Therefore, I will not permit Dividends or Stock Buybacks for Defense Companies until such time as these problems are rectified," he wrote. "MILITARY EQUIPMENT IS NOT BEING MADE FAST ENOUGH!"

Trump also took issue with what he called "exorbitant and unjustifiable" compensation packages for industry executives. Until companies build "NEW and MODERN" production plants, defense execs should be making no more than $5 million, he said, without providing details on how those guidelines would be implemented.

He later singled out Raytheon in a Truth Social post.

The White House did not immediately respond to a request for comment sent by Business Insider.

Defense stocks fell after Trump's Truth Social post on Wednesday. Notable movers include:

General Dynamics: -4%

Northrup Grumman: -5%

Lockheed Martin: -5%

The defense sector has been a big focus for Trump dating back to his first term as president. In the past year, he's floated projects like creating a Golden Dome missile defense system and signed off on increasing defense spending to a record $901 billion.