Chrysler Moves to Reward Investors, Including No. 1 : Autos: Company, partly at urging of Kerkorian, hikes dividend and relaxes poison pill.

Answering in part the demands of mega-shareholder Kirk Kerkorian, Chrysler Corp. on Thursday announced a dividend increase, stock buyback and easing of its anti-takeover defenses.

The actions--some expected for months--were approved by the board of directors in its first meeting since Kerkorian, owner of 9% of Chrysler’s shares, asked on Nov. 14 that steps be taken to boost the stock price.

The board approved a 60% dividend increase to $1.60 annually, endorsed a $1-billion stock buyback to begin early next year and relaxed its anti-takeover “poison pill” provision to increase the percentage of stock one person can control to 15% from 10%.

“We are very pleased,” said Alex Yemendijian, an executive with Tracinda Corp., Kerkorian’s Las Vegas-based operating company. “These are all steps that will enhance the value of Chrysler shares for all shareholders.”

Chrysler stock slipped 75 cents Thursday to close at $47.75 in heavy trading on the New York Stock Exchange. The shares were trading just below $46 in mid-November, before Kerkorian made his demands.

While taking steps to reward shareholders, company officials said they would not be derailed from strengthening Chrysler’s financial statement, spending heavily on future products and preparing for the next economic slump.

Toward that end, the company said it would fully fund its pension plan and set aside $7.5 billion cash by year’s end. It also is continuing to reduce debt and has increased by 10% its five-year capital spending program on future products to $22.9 billion.

“We are confident that our plan is the correct one and that our financial position will continue to strengthen,” said Robert Eaton, chairman and chief executive of Chrysler.

Analysts praised Chrysler’s moves. “The board sent a big message that the prospects for the company are very good,” said Nicholas Lobaccaro, analyst with S.G. Warburg & Co. in New York.

Lobaccaro said Chrysler probably would have raised its dividend and initiated a stock buyback anyway, but that Kerkorian served as a catalyst in forcing the board to act sooner in some areas than it would have otherwise.

Kerkorian, who made his fortune in the airline and entertainment industries, said on Oct. 14 that he wanted to increase his stake in Chrysler to 15%.

But such a move was prohibited by the company’s poison pill.