DALLAS: FedEx Corp’s shares soared the most in almost 36 years after the courier hiked its dividend and announced board changes in coordination with activist investor DE Shaw & Co, a bold shakeup just two weeks into the tenure of new chief executive officer Raj Subramaniam.

       The quarterly dividend will jump 53% to US$1.15 (RM5.09) per share, the Memphis, Tennessee-based company said in a statement.

       That’s well above the 87 US cent (RM3.85) prediction by Bloomberg analytics. FedEx also said it would cut capital spending and rework its executive compensation programme.

       The shares surged 14% to US$229.95 (RM1,016.86) in New York, the biggest one-day gain since September 1986. The stock has declined 11% this year, better than the S&P 500’s slide.

       The higher-than-expected dividend increase and reduction in capital spending will be accompanied by the addition of Amy Lane and Jim Vena as independent directors effective immediately, with a third new director to be named at a later date and agreed upon by FedEx and DE Shaw.

       “We appreciate the collaboration with the DE Shaw group, a long-time FedEx stockholder, with whom we have maintained an ongoing and constructive dialogue in reaching this agreement,” said Subramaniam in the statement.

       “Investors have been speculating about an activist at FDX for years, without one materialising,” Jack Atkins, an analyst with Stephens with an “overweight” rating on the stock, wrote in a note to clients.

       “Now, with a new leadership team and fresh voices on the board (including a proven operator like Vena), we are hopeful that a new day is dawning.”

       The moves indicate that Subramaniam, who took over as CEO from founder Fred Smith on June 1, may be more open to addressing investor concerns as FedEx struggles to boost profit margins and has trailed the performance of its larger rival, United Parcel Service Inc.

       Smith, who started FedEx operations in 1973 with a handful of private jets converted to freighters, remained as chairman of the board. He is FedEx’s single largest stockholder with 7.5% of outstanding shares.

       FedEx’s annual operating profit margins haven’t topped 7% since 2017 and lately the company has struggled to hire enough workers at its sorting hubs, hurting its on-time delivery performance.

       UPS, which hired former Home Depot Inc chief financial officer Carol Tome as CEO in June 2020, increased its profit margins to 13.2% last year, up from 9.1% in 2020, and has maintained its on-time service.

       The structural pressures on FedEx “are intensifying” as more retailers ship directly from the store, the US Postal Service expands operations and Amazon.com Inc looks to extend its logistics service to also pick up packages, which will put the eCommerce giant in direct competition with FedEx and UPS, said Morgan Stanley analyst Ravi Shanker, in a note to clients.

       “While the market may welcome today’s ‘shareholder friendly’ actions, in our view none of this addresses the real pressures facing the business,” Shanker, who has a rating of “equal weight” on the stock, wrote in the note.

       FedEx is planning to hold its first investor day meeting in a decade at the end of this month and more changes are likely.

       Smith has a big say in how to run the company and appointed his son, Richard Smith, as chief of the company’s largest unit, FedEx Express, in March before announcing that Subramaniam would be his successor. — Bloomberg