Senators Warren (D-MA) and Hawley (R-MO) introduced a bipartisan bill to restrict stock buybacks and executive compensation for defense contractors.
The bottom line: The bill and underlying policy issues have the support of the White House and both Congressional Republicans and Democrats – an extremely rare trifecta. That type of backing boosts the bill’s chances of passing, which are nonetheless still slim in an election year.
What’s in the bill: The Prioritizing the Warfighter in Defense Contracting Act of 2026 would prohibit large defense contractors from purchasing their own stock, paying out dividends, and paying executives more than $5 million – codifying President Trump’s previously issued executive order with similar directives.
Specific provisions in the bill include:
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No buybacks: Contractors would be prohibited from purchasing their own stock or equity securities and from paying dividends or making any other capital distribution.
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Compensation caps: Contractors would be prohibited from paying employees more than $5 million annually or from linking any pay to short-term financial metrics.
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Covered employees would be any “employee, executive or officer.”
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Covered compensation would include salary, bonuses, and any compensation that is granted, earned, or vested upon reaching any financial reporting measure or other performance metric.
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“Short-term financial metrics” are defined as:
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Who’s covered: “Large defense contractors” are defined as those that received more than $250,000,000 in annual revenue from Department of Defense contracts or licenses in any of the previous 3 years.
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Certification requirements: Contractors would be required to submit a certification that they are in compliance with all of the above requirements.
Employer takeaways:
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The bill’s bipartisan support – including support from the White House – highlights broader appetite for curbing executive pay and stock buybacks – even if this bill does not ultimately pass, the issue is not going away.
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While this bill and President Trump’s executive order focus on defense contractors, it is certainly plausible that future legislation (or executive orders) could target all contractors – or all private sector employers.
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Like contractors facing DEI certification requirements, contractors covered by this bill and its certification requirements could face False Claims Act liability if they are later found to be in non-compliance.
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Given the looming midterm elections and continued Congressional gridlock, the chances of the bill passing are still slim, despite starting with broad support.
