On February 6, 2026, Christopher Griesedieck and Douglas Proxmire published “War Department to cap contractors’ executive comp, punish underperformers” in Westlaw Today. The following is an excerpt:
On January 7, 2026, President Trump issued an executive order (EO, https://bit.ly/4a3KNXW) and fact sheet (https://bit.ly/4bjFgP8) that, if fully implemented, will impose consequences on federal defense contractors determined to be "underperforming" or not in compliance with several government priorities (such as investing their own capital in production capacity, innovation, and on-time delivery), while at the same time engaging in stock buy-backs or corporate distributions of profit.
The EO would also create a new contract clause permitting the government to cap executive compensation when a contractor is determined to be "underperforming" and prohibiting the use of short-term metrics for executive pay; instead, executive compensation will be linked to on-time delivery, increased production, and expanding stockpiles of critical defense items.
Click here to access the article.