Defense contractors face sweeping new constraints under the latest policy directive. Executive compensation at military firms will be capped at $5 million annually—with a critical catch: only those companies investing in domestic manufacturing facilities can reach that threshold. Beyond salary restrictions, the policy prohibits stock buybacks and dividend distributions across the defense sector. This dual-pronged approach aims to redirect corporate capital toward capital expenditure and production capacity rather than shareholder returns. Military contractors including major players in the sector are already analyzing the impact on their capital allocation strategies and investor returns. The policy signals a broader shift in how government views defense spending and corporate priorities, potentially reshaping investment flows in the defense and industrial sectors.