The Order directs the Secretary of War to ensure future contracts prohibit stock buybacks and corporate distributions during periods of underperformance, non-compliance, insufficient prioritization or investment, or insufficient production speed.

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directive

EO directs changes to future contract terms to prohibit buybacks/distributions under the specified conditions.

Source summary

President Trump signed an Executive Order directing the Secretary of War to identify and act against defense contractors that prioritize stock buybacks and dividends over production, investment, and on-time delivery for U.S. military contracts. The order allows remediation plans but authorizes remedies—including contract amendments, use of the Defense Production Act, prohibiting buybacks during underperformance, capping executive base salaries, and tying incentive pay to delivery and production metrics—and asks the SEC to reconsider safe-harbor protections. It also directs consultation with State and Commerce on halting advocacy for underperforming firms in foreign military sales.

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Latest fact check

The White House fact sheet for the January 7, 2026 executive order explicitly states: “The Order directs the Secretary of War to take steps to ensure that future contracts prohibit stock buybacks and corporate distributions during periods of underperformance, non-compliance, insufficient prioritization or investment, or insufficient production speed.” Independent news reporting (Reuters, AP, Reuters earlier previews and specialty outlets) also describes the order’s aim to limit buybacks/dividends and tie compensation to delivery and production. Verdict: True — the official White House fact sheet explicitly contains the quoted directive and contemporary reputable news outlets report the same substance.

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Timeline

Update · Jan 08, 2026, 08:24 AMTrue
The White House fact sheet for the January 7, 2026 executive order explicitly states: “The Order directs the Secretary of War to take steps to ensure that future contracts prohibit stock buybacks and corporate distributions during periods of underperformance, non-compliance, insufficient prioritization or investment, or insufficient production speed.” Independent news reporting (Reuters, AP, Reuters earlier previews and specialty outlets) also describes the order’s aim to limit buybacks/dividends and tie compensation to delivery and production. Verdict: True — the official White House fact sheet explicitly contains the quoted directive and contemporary reputable news outlets report the same substance.
Original article · Jan 07, 2026
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