Founder of Anduril, a defense technology firm valued at $30 billion, welcomes Trump’s warning of stricter measures: ‘Occasionally, instilling fear is beneficial’

Defense Tech Founder Palmer Luckey Voices Support for Trump’s Industry Overhaul

While many in the defense sector and some market analysts express concern over President Donald Trump’s proposed clampdown on the industry, Palmer Luckey—the founder of the defense technology firm Anduril, valued at $30 billion—has emerged as an unexpected advocate for the sweeping changes.

Luckey, who established Anduril in 2017, has largely endorsed Trump’s policy direction. Although he acknowledged that not every aspect of the reforms would necessarily benefit the defense sector, he maintained his support even as Trump criticized both defense companies and their executives.

“Sometimes it’s actually beneficial to put a little fear into people,” Luckey remarked during an interview with Bloomberg TV.

Anduril’s spokesperson declined to provide further comments beyond Luckey’s public statements.

Key Elements of the White House Reforms

According to a recent executive order, the White House has imposed a $5 million annual salary cap for defense company CEOs until specific criteria are satisfied. Although Luckey is Anduril’s founder and not its CEO, reports from TechCrunch indicate he received $10.9 million in total compensation around 2021, while he told Bloomberg his annual salary is $100,000. In comparison, the CEOs of major defense firms such as RTX (formerly Raytheon) and Lockheed Martin earned $18 million and $23 million, respectively, in 2024.

Analysts Raise Concerns Over Industry Impact

The executive order also prohibits defense contractors from conducting stock buybacks or issuing dividends during times of “underperformance.” Furthermore, future government contracts will tie executive compensation to production speed and timely delivery, rather than short-term financial results.

As a privately held company, Anduril does not currently engage in stock buybacks or pay dividends, though Luckey has previously stated that the company intends to go public in the future.

Drawing an analogy, Luckey likened Trump’s reforms to “grounding” a teenager, suggesting that such measures could temporarily boost the industry’s overall performance. He emphasized that when companies rely on public funding, it is reasonable for the government to impose restrictions.

“If you’re essentially funded by taxpayers, the public should have the authority to set whatever rules they see fit,” Luckey told Bloomberg TV.

Luckey’s endorsement of Trump’s approach sets him apart from much of the defense industry—and may even conflict with Anduril’s own interests as it prepares for a potential IPO.

Trump’s reforms mark a significant change in how the U.S. government interacts with private defense firms, and some analysts have cautioned that these policies could negatively affect the sector. Following the announcement, shares of leading defense contractors—including Lockheed Martin, Northrop Grumman, and Raytheon—dropped by about 6% before mostly recovering the next day.

Anduril’s Alignment with New Policies

Despite industry concerns, Anduril appears to be largely in step with the new regulations, according to Luckey. The company holds Pentagon contracts for technology to counter autonomous drones and border security systems.

Luckey highlighted Anduril’s “Arsenal-1” facility in Columbus, Ohio, which manufactures autonomous vehicles. The company invested $900 million in the plant and completed construction ahead of schedule, with production set to begin this summer. However, he admitted that development of a portable anti-drone system for soldiers is behind schedule due to technical challenges.

Although Luckey likely retains an ownership stake in Anduril, he says his personal compensation remains well below the $5 million cap, and he is unconcerned about the proposed salary limit.

“If the rule is that I can’t pay myself even a dollar until we catch up, I think that’s entirely fair,” he said.

This article was originally published on Fortune.com.