China's largest e-commerce company Ltd <1688.HK> said on Friday it would pay a HK$1.1 billion ($140 million) special cash dividend to shareholders, sending its shares sharply higher.

Alibaba shares were down as much as 2.8 percent in morning trade in Hong Kong before the dividend was announced. When trading resumed after the announcement, they jumped to finish the day up 4.3 percent from their Thursday close.

Investors who hold Alibaba shares on December 31 will receive a cash dividend of HK$0.22 cents a share on January 31, it said in a statement to the Hong Kong stock exchange.

It also said Deng Kangming would resign as an executive director to be replaced by Shao Xiaofeng.

Separately, Alibaba said the percentage of its shares awarded to employees as part of incentive programmes will rise to 3.1 percent over the next three years from the current 2.67 percent, as it seeks to retain the best talent.

The company had previously approved 135 million shares for awards under employee incentive plans, or 2.67 percent of its total shares. In 2007-2009, it had given out about 9,000 awards totaling 120 million shares.

Appropriate use of an incentive plan will help the company in the increasingly competitive world of Internet personnel, a company official said at a news briefing to discuss the expanded incentive programme.

(Reporting by Kelvin Soh and Huang Yuntao; Editing by Jacqueline Wong, Doug Young and Will Waterman)