Internet content delivery company Akamai Technologies Inc. is adding two independent directors to its 11-member board. It’s a move that could help the Cambridge company mend fences with Elliott Management, the activist hedge fund that’s taken a big stake in Akamai and is demanding reforms to boost profitability and share value.
One of the two new board members is Tom Killalea, former chief information security officer at Amazon. The second addition has not yet been named.
In addition to the expanded board, Akamai said it will set up a committee to identify ways to boost operating margins. Akamai had been aiming for margins in the high 20 percent range by 2020; the new committee will look for ways to boost that to 30 percent, an ambitious goal.
“Akamai is an outstanding company with significant potential for future growth, and we are pleased to have worked together with the board and management team on today’s announcements,” Elliott Management partner Jesse Cohn said in a press release.
Elliott said in December that it had acquired 6.5 percent of Akamai’s stock and that it would seek to maximize the value of that stake by pushing for management reforms — or maybe even by cutting a deal to sell the company.
The famously aggressive hedge fund has a track record of buying stakes in Massachusetts-based firms, such as records storage company Iron Mountain Inc., data storage hardware company EMC Corp., and medical records company athenahealth Inc.
Akamai also said Thursday that it has boosted the amount of cash it will spend to buy back $750 million of the company’s shares, an increase of $417 million. It plans to use all the buyback money on stock purchases by year’s end.
Akamai shares rose by more than 7 percent on the Nasdaq exchange Thursday, closing at $75.08. “It’s a little bit of a relief rally that there’s not going to be a proxy fight,” said Nicole Boyson, associate professor of finance at Northeastern University’s D’Amore-McKim School of Business. Boyson believes investors were also pleased by the expanded share buyback plan, and impressed that new board member Killalea is a seasoned tech-industry veteran.
“This guy seems like a pretty serious hitter,” she said. “The market feels like he’s a good fit.”
Boyson said the stock would have performed even better if Elliott and Akamai had hinted at a possible sale of all or part of the company. While the company said nothing about such a deal, Boyson noted that the Thursday announcement also didn’t rule it out.Hiawatha Bray can be reached at firstname.lastname@example.org. Follow him on Twitter @GlobeTechLab.