UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant ☒

Filed by a Party other than the Registranto

Check the appropriate box:

Payment of Filing Fee (Check the appropriate box):

QAD Inc.
100 Innovation Place
Santa Barbara, California 93108
805-566-6000

April 28, 2015May 3, 2016

To All QAD Inc. Stockholders:

On behalf of the Board of Directors of QAD Inc. (“QAD” or the “Company”), I cordially invite you to attend the Annual Meeting of Stockholders of QAD to be held at the QAD corporate headquarters located at 100 Innovation Place, Santa Barbara, California, on Wednesday,Tuesday, June 9, 201514, 2016 at 4:30 p.m.8:00 a.m. local time. This year, weWe will again be using the “Notice and Access” method of providing proxy materials to stockholders via the Internet. We believe that this process shouldcontinues to provide stockholders with a convenient and quick way to access the proxy materials and vote, while allowing us to conserve natural resources and reduce the costs of printing and distributing the proxy materials.

On or about April 28, 2015,May 3, 2016, we will mail a Notice of Internet Availability of Proxy Materials (“Notice”) to our stockholders of record as of April 13, 2015,18, 2016, other than those stockholders who previously requested electronic or paper delivery of communications from us. The Notice will include instructions on how to access an electronic copy of our proxy materials, including the proxy statement, our 20152016 Annual Report on Form 10-K, and instructions with respect to how to vote your shares, as well as instructions on how to request a printed copy of our proxy materials. Details regarding the business to be conducted at the annual meeting are described in the Notice and proxy statement.

Your vote is important. Whether or not you plan to attend the annual meeting, you are urged to vote your shares as promptly as possible to ensure your representation at the annual meeting. Please review the instructions on the Notice regarding voting, as well as the question and answer section in the first part of this proxy statement.

We look forward to seeing you at the Annual Meeting.

Sincerely,
Karl F. Lopker

Chief Executive Officer

QAD INC.
NOTICE OF 20152016 ANNUAL MEETING OF STOCKHOLDERS

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on June 9, 2015.14, 2016. The proxy materials, including this proxy statement and our Annual Report on Form 10-K are available on the following website: www.proxyvote.com

By Order of the Board of Directors

Daniel Lender

Corporate Secretary

Santa Barbara, California
April 28, 2015May 3, 2016

QAD Inc.
100 Innovation Place
Santa Barbara, California 93108
805-566-6000

PROXY STATEMENT

We are providing these proxy materials in connection with the 2015QAD Inc.’s 2016 Annual Meeting of Stockholders of QAD Inc. (“QAD or the Company”(the “Annual Meeting”). The Notice of Internet Availability of Proxy Materials (the “Notice”), this proxy statement and the accompanying proxy card or voting instruction card, including an Internet link to our previously filed 20152016 Annual Report on Form 10-K, were first made available to stockholders on or about April 28, 2015.May 3, 2016. This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully.

FREQUENTLY ASKED QUESTIONS

What is a “proxy”?

The board of directors of QAD Inc. is soliciting your vote at our 2015 annual meeting of stockholders. A proxy is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. Mr. Karl F. Lopker and Ms. Pamela M. Lopker have been designated as proxies for our 20152016 annual meeting of stockholders.

Who is soliciting my vote?

The Board of Directors of QAD (the “Board”) is soliciting your vote at the 2015 Annual Meeting of Stockholders.Meeting.

What is the purpose of the Annual Meeting?

You will be asked to:

What are the Board of Directors’ recommendations?

Who is entitled to vote at the Annual Meeting?

The Board of Directors set April 13, 201518, 2016 as the record date for the Annual Meeting. All stockholders who owned QAD common stock at the close of business on April 13, 2015,18, 2016, or their duly appointed proxies, may attend and vote at the Annual Meeting.

Who can attend the Annual Meeting?

Only stockholders as of the record date, and any stockholder’s spouse or duly appointed proxy, may attend. No guests will be allowed to attend the Annual Meeting.

What do I need to be admitted to the Annual Meeting?

In order to be admitted to the Annual Meeting, a stockholder must present photo identification, such as a driver’s license, and proof of ownership of QAD stock on the record date, such as the Notice, a brokerage

statement or letter from a bank or broker indicating ownership on the record date, a proxy card, or legal proxy or voting instruction card provided by your broker, bank or nominee.

How many votes can be cast by all stockholders?

Each share of QAD Class A common stock is entitled to one-twentieth (1/20th) of one vote and each share of QAD Class B common stock is entitled to one (1) vote. There is no cumulative voting available in the

If you are a stockholder of record and you indicate when voting by Internet or by telephone that you wish to vote as recommended by our Board of Directors, or you return a signed proxy card but do not indicate how you wish to vote, then to the extent you did not specify a choice, your shares will be voted:

Vote by Mail. If you have requested printed proxy materials, you may choose to vote by mail, by marking your proxy card or voting instruction card, dating and signing it, and returning it in the postage-paid envelope provided. If the envelope is missing and you are a stockholder of record, please mail your completed proxy card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. If the envelope is missing and your shares are held with a broker, please mail your completed voting instruction card to the address specified therein. Please allow sufficient time for mailing if you decide to vote by mail.

Annual Report

If you would like a copy of our 20152016 Annual Report on Form 10-K, we will send you one without charge. Please call 805-566-5139 or write to request a copy:

QAD Inc.
100 Innovation Place
Santa Barbara, CA 93108
Attn: Investor Relations

The Annual Report on Form 10-K and this proxy statement are available in the Investor Relations section of the QAD Internet site at www.qad.com. The SEC also maintains an Internet site at http://www.sec.gov that contains all SEC filings made by QAD.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

At our Annual Meeting, stockholders will elect six directors to hold office until our next Annual Meeting of Stockholders. The directors shall serve until their successors have been duly elected and qualified or until any such director’s earlier resignation or removal. Proxies cannot be voted for a greater number of persons than the number of nominees named. If any nominee for any reason is unable to serve or will not serve, the proxies may be voted by the proxy holders for such substitute nominee designated by our Board of Directors. We are not aware that any of the nominees will be unable or unwilling to serve as director.

Directors

The following incumbent directors are being nominated for re-election to the Board: Karl F. Lopker, Pamela M. Lopker, Scott J. Adelson, Lee D. Roberts, Leslie J. Stretch and Peter R. van Cuylenburg. Please see “Information Concerning the Nominees for Election” beginning on page 813 of this proxy statement for information concerning each of our incumbent directors standing for re-election.

Required Vote

Directors are elected by a plurality of votes cast. Votes withheld and broker non-votes are not counted toward a nominee’s total. If you do not vote for a particular nominee or indicate that you withhold authority“WITHHOLD AUTHORITY” to vote for a particular nominee, your withholding will have no effect on the election of directors.

The Board of Directors recommends a vote FORfor the election of the nominated directors.

PROPOSAL NO. 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires us to hold an advisory vote of our stockholders at least once every three years to approve the compensation of our Named Executives. Consistent with the advisory vote of stockholders at our 2013 Annual Meeting on the frequency of such proposal, our Board of Directors has chosen to hold this vote annually. This vote is not intended to address any specific item of compensation or specific Named Executive, but rather the overall compensation of all of our Named Executives and the compensation philosophy, policies and practices described in this proxy statement. QAD discloses those items in the “Executive Compensation”“Executive Compensation” and “Compensation“Compensation Discussion and Analysis”Analysis” sections of this proxy statement beginning on page 18.23.

As described in the “Compensation“Compensation Discussion and Analysis,” we design our executive compensation programs to attract and retain highly-talented and productive Named Executives; align the interests of the Named Executives with the interests of the stockholders; provide incentives for the Named Executives to achieve strategic and financial goals; and reward the Named Executives for performance that enhances stockholder value. A meaningful portion of our Named Executives’ compensation is at risk, reflecting the Company’sour emphasis on pay that reflects performance and drives long-term stockholder value. We believe the Company’sour compensation program, as a whole, promotes the Company’sour objectives in both the short and long term.

As an advisory vote, this proposal is not binding on the Company, the Board of Directors or the Compensation Committee. However, the Compensation Committee, which is responsible for designing and administering the Company’sour executive compensation programs, values the opinions expressed by our stockholders and will consider the outcome of the vote when making future compensation decisions on the Company’sour executive compensation programs.

We ask you to approve the following resolution:

“RESOLVED, that the compensation paid to the Company’sQAD’s Named Executives, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

The Board of Directors recommends a vote FORfor the approval, on a non-binding, advisory basis, of the
resolution set forth above relating to the compensation paid to our Named Executives.

PROPOSAL NO. 3

APPROVAL OF QAD INC. 2016 STOCK INCENTIVE PROGRAM

Summary of the QAD Inc. 2016 Stock Incentive Program

The following is a summary of the principal features of the QAD 2016 Stock Incentive Program (the “2016 Program”). The complete text of the 2016 Program is filed as Exhibit A to this proxy statement and the following summary is qualified in its entirety by reference to the 2016 Program document. In April 2016, the Board of Directors adopted the 2016 Program. However, no awards may be issued under the 2016 Program unless approved by a majority of the Company’s stockholders. Under the 2016 Program, the Board of Directors, or its designated administrators, has the flexibility to determine the type and amount of awards to be granted to eligible participants.

Purpose, structure, awards and eligibility. The 2016 Program is intended to secure for QAD and its stockholders the benefits arising from ownership of common stock by individuals employed or retained by QAD who will be responsible for the future growth of the enterprise. The 2016 Program is designed to help attract and retain superior personnel for positions of substantial responsibility, and to provide individuals with an additional incentive to contribute to our success. The 2016 Program will replace the expiring QAD 2006 Stock Incentive Program (the “2006 Program”) and enable QAD to continue to offer competitive equity-based compensation in accordance with its compensation philosophy.

The 2016 Program is composed of five parts and the program administrators may make the following types of awards under the 2016 Program:

Officers, directors, employees, consultants and other independent contractors or agents of QAD or our subsidiaries who are responsible for or contribute to the management, growth or profitability of our business are eligible for selection by the program administrators to participate in the 2016 Program; provided, however, that incentive stock options granted under the Incentive Stock Option Plan may only be granted to persons who are employees of QAD and its subsidiaries. We currently have approximately 1,680 employees, including officers and directors, and four non-employee directors who are eligible to participate in the 2016 Program.

Shares subject to the 2016 Program. The maximum aggregate number of shares of Common Stock subject to the 2016 Program is 4,000,000 Class A shares. Upon stockholder approval of the 2016 Program, no further

awards will be granted under the 2006 Program after June 30, 2016; provided, however, we may continue to issue shares under the 2006 Program to satisfy already outstanding equity incentives. The shares of common stock issuable under the 2016 Program may be authorized but unissued shares, shares issued and reacquired, or shares purchased by the Company on the open market. If any of the awards granted under the 2016 Program expire, terminate or are forfeited for any reason before they have been exercised, vested or issued in full, the unused shares subject to those expired, terminated or forfeited awards will again be available for purposes of the 2016 Program. Shares tendered, held back or otherwise not issued upon exercise of an option or a stock appreciation right or settlement of an award to cover the exercise price or tax withholding revert back to the 2016 Program and will again be available for purposes of the 2016 Program.

Limitations on Awards. No individual may receive in any calendar year (i) a total of more than 250,000 Class A shares of Common Stock subject to grants of incentive stock options, nonqualified options or stock appreciation rights in such calendar year, (ii) a total of more than 125,000 Class A shares of Common Stock in restricted shares or other stock rights, and (iii) dividend equivalent rights with respect to more than 125,000 Class A shares of Common Stock.

In addition to the foregoing limitations, awards granted under the 2016 Program to any non-employee director in any one calendar year may not have a value in excess of $250,000, as determined for the Company’s financial accounting purposes as of the date of grant.

Exercise Price and Term of Options and SARs. Options and stock appreciation rights must be granted with an exercise price that is not less than 100% of the fair market value of the Class A shares of Common Stock on the date of grant and for a term of not more than 10 years. For an optionee who holds more than 10% of the voting power of all classes of the Company’s stock, the exercise price for incentive stock options must be at least 110% of fair market value of the Class A shares of Common Stock on the date of grant and the option term not more than five years.

No Repricing of Options or SARs. The 2016 Program precludes reducing the exercise price of options and stock appreciation rights or exchanging them for options or stock appreciation rights having a lower exercise price, without the approval of a majority of the Company’s stockholders.

Performance Criteria. Awards may be granted under the 2016 Program that are intended to meet the requirements necessary to qualify as “performance based” for purpose of the $1 million annual limitation on deductibility of compensation to certain “covered employees” set forth in Section 162(m) of the Internal Revenue Code of 1986 as amended (the “Code”). The 2016 Program contains the following performance-based business criteria, which may be used either on a business unit or Company-specific basis or in comparison with peer group performance: net sales; gross sales; return on net assets; return on assets; return on equity; return on capital; return on revenues; asset turnover; economic value added; total stockholder return; net income; pre-tax income; operating profit margin; net income margin; sales margin; market share; inventory turnover; days sales outstanding; sales growth; capacity utilization; increase in customer base; cash flow; book value; share price performance (including options and stock appreciation rights tied solely to appreciation in the fair market value of the shares); earnings per share; stock price earnings ratio; earnings before interest, taxes, depreciation and amortization expenses (“EBITDA”); earnings before interest and taxes (“EBIT”); or EBITDA, EBIT or earnings before taxes and unusual or nonrecurring items as measured either against the annual budget or as a ratio to revenue. Stockholders voting to approve the 2016 Program are approving the use of these performance criteria for awards intended to be “performance based” for purposes of Section 162(m) of the Code.

Effective date and duration. All of the plans under the 2016 Program become effective on July 1, 2016, subject to the approval of the 2016 Program by the Company’s stockholders. The 2016 Program will continue in effect until July 1, 2026 unless sooner terminated under the general provisions of the 2016 Program.

Administration; Amendment. The 2016 Program is administered by the Board of Directors or by a committee appointed by the Board. That committee must consist of not less than two directors who are:

Subject to these limitations, the Board of Directors may from time to time remove members from the committee, fill all vacancies on the committee and select one of the committee members as its chair. The program administrators may hold meetings when and where they determine, will keep minutes of their meetings, and may adopt, amend and revoke rules and procedures in accordance with the terms of the 2016 Program. The 2016 Program is presently administered by the directors who serve on the Compensation Committee of the Board.

The program administrators may at any time amend or revise the terms of the 2016 Program, including the form and substance of the award agreements to be used; provided, however, that, except as provided in the 2016 Program, without approval by the stockholders of the Company, no amendment or revision shall (a) increase the maximum aggregate number of shares that may be sold or distributed pursuant to awards granted or stock sold and purchased under the 2016 Program, except as permitted under the 2016 Program for stock splits, stock dividends, reorganizations, recapitalizations and the like; (b) change the minimum purchase price for shares subject to stock options or the exercise price of a stock appreciation right; (c) increase the maximum term established for any award; (d) permit the granting of an award to anyone other than as authorized under the 2016 Program; or (e) extend the term of the 2016 Program.

U.S. Federal Income Tax Consequences

Option Grants

Options granted under the 2016 Program may be either incentive stock options which satisfy the requirements of Section 422 of the Code or nonqualified stock options which are not intended to meet those requirements. The federal income tax treatment for nonqualified stock options and incentive stock options are as follows:

Restricted Shares Plan

capital gain income or loss upon sale of the shares. Subject to Section 162(m) of the Code and the satisfaction of applicable withholding and reporting obligations, QAD will be entitled to an income tax deduction equal to the ordinary income recognized by the grantee in the year in which the grantee recognizes such income.

Stock Appreciation Rights

Other BusinessStock Rights

Deductibility of executive compensation

We anticipate that any compensation deemed paid by QAD in connection with the disqualifying disposition of incentive stock options and the exercise of nonqualified stock options granted with exercise prices equal to or greater than the fair market value of the shares on the grant date will not be subject to the Code Section 162(m) $1 million limitation per covered employee on the deductibility of the compensation paid to certain executive officers of QAD. Accordingly, we believe all compensation deemed paid under the 2016 Program with respect to those dispositions and exercises will remain deductible by QAD without limitation under Code Section 162(m).

The 2016 Program also specifies performance criteria (listed above) that may be used by the program administrator in granting awards to executive officers whose compensation may be subject to the Code Section 162(m) $1 million annual limitation on deductible compensation. This is to permit the grant of performance based restricted shares or other performance based stock awards providing compensation that is deductible by QAD without limitation under Code Section 162(m).

Stockholder Approval

QAD is seeking stockholder approval of the 2016 Program, including the 4,000,000 Class A shares of common stock reserved under the 2016 Program, the persons eligible to participate in the 2016 Program, the annual limitation on awards to individual participants and the performance criteria that may be used for granting performance-based awards. The Board believes that it is in the best interest of QAD to have a comprehensive equity incentive program which will provide a meaningful opportunity for officers, directors, employees, consultants and other independent contractors or agents of QAD or our subsidiaries to acquire a substantial proprietary interest in QAD. The Board believes this will encourage those individuals to remain in QAD’s service and more closely align their interests with those of the stockholders, and at the same time provide the Company with the flexibility to manage the impact the 2016 Program has on stockholder dilution.

Equity Compensation Plan Information

Information as of January 31, 2016 regarding equity compensation plans approved and not approved by stockholders (without regard to the 2016 Program) is summarized in the following table:

Required Vote

QAD must receive the affirmative vote of a majority of the shares of our common stock present in person or represented by proxy and casting votes on this proposal at the meeting in order to approve this Proposal 3. If you are present in person or represented by proxy at the meeting and abstain from voting on this proposal, it has the same effect as if you voted “AGAINST” the proposal. In addition, if your shares are held in a brokerage account and you do not instruct your broker on how to vote on this proposal, your broker will not be able to vote your shares on this proposal and your shares will be treated as not having been voted on this proposal.

The Board of Directors recommends a vote
for the approval of the 2016 Program.

PROPOSAL NO. 4

NON-EMPLOYEE DIRECTOR EQUITY AWARD LIMITATIONS

The 2016 Program (for which stockholder approval is being sought under Proposal No. 3) limits the awards that may be granted to any participant in any calendar year to (i) a total of no more than 250,000 Class A shares of Common Stock subject to grants of incentive stock options, nonqualified stock options and stock appreciation rights, (ii) a total of no more than 125,000 Class A shares of Common Stock in restricted shares, performance shares or restricted stock units, and (iii) dividend equivalent rights with respect to no more than 125,000 Class A shares of Common Stock.

In addition to these limitations applicable to all 2016 Program participants, the Board has determined that a reasonable and meaningful limitation, specific to non-employee members of the Board, should be placed on the maximum aggregate value of awards that may granted under the 2016 Program to any non-employee director in any one calendar year. To implement this, the 2016 Program, as adopted by the Board, precludes the grant of awards to any non-employee director in any one calendar year having a grant date value in excess of $250,000, as determined for the Company’s financial accounting purposes as of the date of grant. The Board has determined that annual equity compensation to each non-employee director of up to $250,000 is reasonable compensation for such directors’ service on the Company’s Board.

The value of equity awards made to each of the Company’s non-employee directors for the 2016 fiscal year under the 2006 Program and the equity compensation program currently provided to non-employee directors of

the Company, which is described under the heading “DIRECTOR COMPENSATION - Non-Employee Director Equity Compensation” beginning on page 19 of this proxy statement, was $104,440. This value fell well under this limitation.

QAD is seeking stockholder approval of the specific limitation set forth in the 2016 Program on the maximum aggregate value of awards that may be granted under the 2016 Program to any non-employee director in any one calendar year. Stockholder approval of this proposal approves and authorizes annual equity compensation to each non-employee director having a value of up to $250,000, as determined for the Company’s financial accounting purposes as of the date of grant, and determines such amount to be reasonable annual compensation for such directors’ service on the Board. In the event stockholder approval of this Proposal 4 is not obtained but stockholder approval of Proposal 3 is obtained, the limitation on the maximum aggregate value of awards that may be granted under the 2016 Program as set forth above will still continue to be part of the 2016 Program.

Required Vote

QAD must receive the affirmative vote of a majority of the shares of our common stock present in person or represented by proxy and casting votes on this proposal at the meeting in order to approve this proposal. If you are present in person or represented by proxy at the meeting and abstain from voting on this Proposal 4, it has the same effect as if you voted “AGAINST” the proposal. In addition, if your shares are held in a brokerage account and you do not instruct your broker on how to vote on this proposal, your broker will not be able to vote your shares on this proposal and your shares will be treated as not having been voted on this proposal.

The Board of Directors recommends a vote for the approval
of the non-employee director equity award limitations

OTHER BUSINESS

The Board of Directors does not presently intend to bring any other business before the meeting, and, so far as is known to the Board of Directors, no matters are to be brought before the meeting except as specified in the Notice of Annual Meeting of Stockholders. As to any business that may properly come before the meeting, however, it is intended that proxies will be voted in respect thereof in accordance with the judgment of the persons voting such proxies.

ELECTION OF DIRECTORS

Nominees for Director

There are six nominees for election to the Board of Directors at the Annual Meeting. Valid proxies received will be voted, unless contrary instructions are given, to elect the nominees named in the following table. Should any nominee decline or be unable to accept the nomination to serve as director, an event that we do not currently anticipate, your proxy will have the right, in his or her discretion, to vote for a substitute nominee designated by the Board of Directors, to the extent consistent with the QAD Certificate of Incorporation and Bylaws of QAD Inc.its Bylaws. If elected, the nominees will hold office until the next annual meeting of stockholders and until their successors are elected and qualified.

The Board oversees theour business, assets, affairs, performance and financial integrity of the Company.integrity. Four of the six director nominees are independent as defined under the rules and regulations of the NASDAQ Market System and two are members of management.

The Board believes that each director nominee possesses the qualities and experience required for membership on the Board. The Board seeks out, and the Board is comprised of, individuals whose background and experience complement other Board members. The nominees for election to the Board, together with biographical information furnished by each of them, are set forth below. Other than Mr.Karl F. Lopker and Ms.Pamela M. Lopker, who are married to each other, there are no family relationships among executive officers and directors of the Company. All nominees have been directors since last year’s Annual Meeting.

Information Concerning the Nominees for Election

Karl F. Lopker. Chief Executive Officer of QAD Inc. Mr. Lopker has served as CEO and as a director of the Company since joining QAD in 1986. Previously, he founded Deckers Outdoor Corporation in 1973 and was its President until 1981. Mr. Lopker is certified in Production and Inventory Management by the American Production and Inventory Control Society. He received a Bachelor of Science degree in Electrical Engineering from the University of California, Santa Barbara. Mr. Lopker is married to Pamela M. Lopker, President and Chairman of the Board and President of QAD. The Board nominated Mr. Lopker to serve as a director based on his industry expertise, knowledge of QAD’s customer base, strategic counsel and extensive history with QAD. His in-depth knowledge of the Company, its industry and its customers assists the Board in overseeing management and is important to the Board’s oversight of strategy and risk management. Mr. Lopker also brings strong leadership skills and complex business operational experience to the Board by virtue of his over thirty-fivethirty years of experience as CEO.

Pamela M. Lopker. Chairman of the Board and President of QAD Inc. Ms. Lopker founded QAD in 1979 and has been Chairman of the Board and President since the Company’s incorporation in 1986. Prior to founding QAD, Ms. Lopker served as Senior Systems Analyst for Comtek Research from 1977 to 1979. She is certified in Production and Inventory Management by the American Production and Inventory Control Society. Ms. Lopker earned a Bachelor of Arts degree in Mathematics from the University of California, Santa Barbara. She is married to Karl F. Lopker, Chief Executive Officer and Director of QAD. The Board nominated Ms. Lopker to serve as a director because she is the founder and visionary for the Company, with over thirty-five years of enterprise

software company experience, extensive software industry expertise and a deep understanding of the

Computer, Inc., and Cable and Wireless plc. Dr. van Cuylenburg’s career includes executive posts at Xerox

discussion and execution of strategy. The Board believes that having Mr. Lopker in the role of CEO and Ms. Lopker in the role of President and Chairman promotes strategic development and execution, and fosters greater communication between management and the Board, which are essential to effective governance.

Key responsibilities of the Board include developing strategic direction and holding management accountable for the execution of strategy once it is developed. The Board also believes that having Mr. Lopker in

The Audit Committee is responsible for the appointment, compensation, retention and oversight of the independent auditor engaged to prepare or issue audit reports on the financial statements and internal control

Nominating Procedures

The Board does not have a formal nominating committee. QAD is a “controlled company” as such term is used in the NASDAQ Stock Market rules and, accordingly, is exempted from certain regulations pertaining to the director nomination process. Please see “Exemptions for a Controlled Company Election” on page 5 of this proxy statement. The Board has determined that director nominees who are not currently serving as directors be recommended for the Board’s selection by a designated committee of one or more directors. These directors do not operate under a charter, but meet as appropriate to recommend nominees to the Board for service on the Company’s Board of Directors and to recommend to the Board such persons to fill any vacancy that may arise between Annual Meetings of the Stockholders. The directors nominated for election identified in this proxy statement, all of whom are existing directors, were nominated unanimously by the full Board.

When evaluating potential director nominees, the committee designated by the Board considers the listing requirements of the NASDAQ Stock Market as well as a potential nominee’s personal and professional integrity, experience in corporate management, time available for service, experience in the Company’s industry, global business and social perspective, experience as a board member of another publicly-held company, ability to make independent analytical inquiries and practical business judgment. The CompanyQAD does not have a formal policy with regard to the consideration of diversity in identifying director nominees, but the committee strives to nominate directors with a variety of complementary skills so that, as a group, the Board will possess the appropriate talent, skills, and expertise to oversee the Company’s business. After potential nominees are evaluated, the committee designated by the Board makes recommendations regarding nominations to the Board. The committee may retain, at the Company’s expense, any independent search firm, experts or advisors that it believes are appropriate in connection with the nomination process.

The policy of the Board is to have the Board consider properly submitted stockholder recommendations for candidates for membership to the Board. In evaluating nominees recommended by stockholders, the Board will utilize the same criteria used for nominees initially proposed by the Board members. If a stockholder wishes to nominate directors for election to the Board at next year’s Annual Meeting, such nominations must comply with Section 2.7 of our bylaws and be submitted in writing to the following address:

QAD Inc.
100 Innovation Place
Santa Barbara, CA 93108
Attention: Corporate Secretary

Charters for Board Committees

Each of the Audit Committee, the Compensation Committee and the Governance Committee has a committee charter. The committee charters describe the purpose, responsibilities, structure and operations of each committee. Copies of the committee charters are available on the Company’s Internet site at www.qad.com, under “Investor Relations — Corporate Governance.”

Risk Oversight

The Board has an active role, as a whole and at the committee level, in overseeing management of the Company’s risks. The Board regularly reviews the Company’s operations and the associated risks.

Both committees rely on management to be responsible for day-to-day risk management, including the monitoring of material risks facing the Company, such as strategic risks, operational risks, financial risks and

legal and compliance risks. In addition, the Board encourages management to promote a corporate culture that incorporates risk management into the Company’s corporate strategy and day-to-day business operations. With the input of the Company’s executive officers, the Board also works to assess and analyze the most likely areas of future risk for the Company.

Code of Business Conduct and Code of Ethics

The Board sponsorshas adopted the Company’s “Code of Business Conduct,” (the “Code of Business Conduct”), which promotes the highest ethical standards in all of the Company’s business dealings. The Code of Business Conduct applies to the Company’s directors and employees, including the Chief Executive Officer, the Chief Financial Officer and the Chief Accounting Officer. The Board has also approved, and the Company has adopted, a “Code of Ethics for the Chief Executive Officer and Senior Financial Officers of QAD Inc.” (the “Code of Ethics”) in order to satisfy the SEC’s requirements for a code of ethics for senior financial officers. The Code of Business Conduct and the Code of Ethics are available on the Company’s Internet site at www.qad.com, under “Investor Relations — Corporate Governance.”

Management’s Compliance Committee

Management has established a Compliance Committee composed of certain executive and non-executive officers to oversee the Company’s compliance with its obligations related to certification of appropriate disclosure controls and internal controls over financial reporting. The Compliance Committee administers a set of procedures to oversee such compliance, including a requirement that certain members of management sign certifications each fiscal quarter that, to their knowledge, the operations within their span of control are fairly presented and appropriate internal controls are in place to ensure the accuracy of such results. The Compliance Committee typically meets at least twice quarterly and may meet more often if needed. In fiscal year 2015,2016, the Compliance Committee met eight times, and has reported its findings to the Audit Committee in each quarter of fiscal year 2015.2016.

Employee Complaint Procedure

With oversight from the Audit Committee, the Company has established procedures to receive, retain and address employee complaints communicated to QAD. These procedures include a confidential hotline to answer employees’ ethics questions and to report employees’ ethical concerns and incidents including, without limitation, concerns about (i) accounting, internal controls or auditing matters and (ii) legal and regulatory compliance matters. This hotline is available 24 hours a day, seven days a week, and callers may choose to remain anonymous.

Availability of Corporate Governance Information

For additional information on our corporate governance, including Board committee charters and our Code of Business Conduct and Code of Ethics, visit our investor relations Internet site at www.qad.com, under “Investor Relations — Corporate Governance.” Each of these documents is also available in print, free of charge, to any stockholder who requests it by writing to QAD Inc., 100 Innovation Place, Santa Barbara CA 93108, Attention: Investor Relations or email to investor@qad.com.

DIRECTOR COMPENSATION

Director Compensation Overview

Our directors play a critical role in guiding QAD’s strategic direction and overseeing the management of the Company. We seek to attract and retain highly qualified directors who have sufficient time to attend to their considerable duties and responsibilities as directors of the Company. The many responsibilities and risks and the substantial time commitment of being a director of a public company require that we provide adequate incentives for our directors’ continued performance by paying compensation commensurate with our directors’ workload. While our employee directors are not separately compensated for being on the Board, our non-employee directors are compensated based upon their respective levels of Board participation and responsibilities, including service on Board committees. Annual cash retainers and equity grants to the non-employee directors are intended to correlate with the responsibilities of each such director.

Non-Employee Director Cash Retainer and Meeting Fees

For fiscal year 2015,2016, each of our non-employee directors received the applicable retainers and fees set forth below for serving as a chair or a member of one or more of the standing committees of the Board.

A Board member receives $2,000 for each Board and committee meeting attended in person and $1,000 for each such meeting attended via telephone. However, separate fees do not apply to any committee meetings held in conjunction with a regularly scheduled Board meeting or another committee meeting. From time to time, the Board forms special ad hoc committees to perform various functions on behalf of the Board. At times, fees may be paid for services on such committees. For fiscal year 2015, additional fees earned by non-employee directors related to special ad hoc committee services ranged from zero to $8,500. Directors are also reimbursed for direct expenses related to their activities as members of the Board of Directors.

Non-Employee Director Equity Compensation

The Board of Directors has approved an equity compensation plan for the non-employee Board members that provides for the following equity compensation:as follows:

Such awards have been made from our 2006 Program and in the future will be made from our 2016 Program if it is approved by our stockholders. Also, subject to approval by the shareholders, under the 2016 Stock Incentive Program equity awards to non-employee Board members will be limited to $250,000 per year, as determined for the Company’s financial accounting purposes as of the date of grant.

The Board applies stock ownership guidelines to non-employee directors to further align the interests of the non-employee directors with the interests of the Company’sour stockholders. The guidelines stipulate that each non-employee Board member should own at least $30,000 in Company stock per year served on the Board, up to a maximum requirement of $150,000 in Company stock, measured on an annual basis as of the date of the annual stockholder meeting, based on serving from June 2011 or a director’s start date, if later.

The table below sets forth information concerning the compensation of our non-employee Board members for fiscal year 2015.2016.

Non-Employee Director Compensation for Fiscal Year 20152016

Non-Employee Director Outstanding Equity Awards at 20152016 Fiscal Year-End

As of January 31, 2015,2016, none of the non-employee directors held any unvested or unexercised outstanding options or SARs.SARs or any other unvested stock awards.

STOCK OWNERSHIP AND EQUITY COMPENSATION PLAN INFORMATION

Stock Ownership of Directors, Executive Officers and Certain Beneficial Owners

The following table shows the number of shares of QAD common stock beneficially owned on the record date, April 13, 2015,18, 2016, by each executive named in the “Summary Compensation TableTable” on page 2833 and each non-employee director. The table also shows any person known to the Company to be the beneficial owner of more than five percent of the Company’sour common stock as of March 31, 2015.2016. Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options, SARs, RSUs, warrants and other rights held by that person that are currently exercisable or become exercisable within 60 days following April 13, 2015,18, 2016, are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the beneficial owner’s name.

Mr.Ms. Lopker and Ms.Mr. Lopker hold the following: 5,747,4645,350,835 Class A and 1,730,3071,990,770 Class B shares held jointly in the Lopker Living Trust, 5,084 Class A and 1,247 Class B shares held in the Lopker Family 1997 Charitable Remainder Trust of which Mr.Ms. Lopker and Ms.Mr. Lopker act as joint trustees, and 361,140524,140 Class A and 19,828 Class B shares held by the Lopker Family Foundation. Mr.Ms. Lopker and Ms.Mr. Lopker are members of the Board of Directors of the Lopker Family Foundation and officers of the aforementioned Charitable Trust. Ms. Lopker holds 4,193 Class A and 1,028 Class B shares in an IRA account. Mr. Lopker holds 103,860 Class A and 30,441 Class B shares in his name only and Ms. Lopker holds 99,318 Class A and 29,165 Class B shares in her name only. The business address for Mr.Ms. Lopker and Ms.Mr. Lopker is: c/o QAD Inc., 100 Innovation Place,

Santa Barbara, California, 93108. Mr.Ms. Lopker and Ms.Mr. Lopker disclaim beneficial ownership of any of the foregoing shares in which they have no pecuniary interest.

The holdings for Nantahala Capital Management, LLC (“Nantahala”) are based on a Form 13G/A filed with the SEC on February 17, 201516, 2016 showing shares owned as of December 31, 2014.2015. The address for Nantahala is 19 Old Kings Highway South, Suite 200, Darien, CTConnecticut 06820.

The holdings for Palogic Value Management, L.P. (“Palogic”) are based on a Form 4 filed with the SEC on February 21, 2014 showing shares owned as of February 19, 2014. The address for Palogic is 5310 Harvest Hill Road, Suite 110, Dallas, Texas 75230.

The holdings for Tikvah Management LLC (“Tikvah”) are based on a Form 13G13G/A filed with the SEC on January 21, 2015February 8, 2016 showing shares owned as of January 16,December 31, 2015. The address for Tikvah is 831 E. Moorehead Street, Suite 940, Charlotte, North Carolina 28202.

Equity Compensation Plan Information

Information as of January 31, 2015 regarding equity compensation plans approved and not approved by stockholders is summarized in the following table:

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

The following Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act or the Exchange Act, except to the extent that QAD specifically incorporates it by reference into such filing.

The Board of Directors has established a Compensation Committee of independent directors to assist in the oversight and governance of compensation for the Named Executives. The Compensation Committee has the duties and powers as described in its written charter as adopted by the Board and available on the Company’sour website. The current members of the Compensation Committee are Dr. van Cuylenburg,Mr. Roberts, Mr. Adelson and Mr. Roberts.Dr. van Cuylenburg.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section of this proxy statement with QAD’s management as required by Item 402(b) of Regulation S-K. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our proxy statement and incorporated by reference into our Annual Report on Form 10-K for the year ended January 31, 20152016 filed with the SEC on April 13, 2015.15, 2016.

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

QAD’s executive compensation program applies to the following named executive officers (“Named Executives”):

The compensation objectives for QAD’s Named Executives are to:

When making compensation decisions, the Compensation Committee considers the elements of base salary (“Base Salary”), short-term cash incentives (“Cash Bonus”) and long-term equity awards in the form of RSUsrestricted stock units (“RSUs”) and/or SARsstock appreciation rights (“EquitySARs” and with RSUs “Equity Awards”) collectively in order to determine the total compensation for each Named Executive. Base Salary is the only fixed element and provides baseline compensation for the Named Executives. The Compensation Committee sets compensation for the Named Executives so their individual components as well as their total compensation packages are within the market range for their individual positions and are internally consistent with the compensation packages of other executives relative to their positions in the Company. The Compensation Committee focuses the Named Executives on achieving superior annual and long-term performance by structuring their compensation mix so that a substantial part of their potential compensation is tied to achieving positive returns for our stockholders.

The Compensation Committee established fiscal year 20152016 compensation targets for the Named Executives based on the Company’s annual operating plan and at a level that, based on market data, they believed fairly compensated the Named Executives. Individual Named Executive compensation packages took into account the following factors:

Executive Compensation Philosophy

Compensation of the PresidentCEO and CEOPresident

QAD is a “controlled company” with a majority of the vote controlled by the two individuals currently holding the offices of President and CEO. Ms. Lopker is the President and the founder of QAD and Mr. Lopker is the CEO of QAD and the husband of Ms. Lopker. Together they have been the leaders of QAD throughout its growth from a private company to a public multinational enterprise. They continue to provide active leadership in the strategic direction and day-to-day operations of the Company. The Compensation Committee has determined that due to the crossover in the roles they perform in setting the direction of the Company, determining our product strategy and interfacing with key customers, they are to be compensated equally.

Cash compensation for each of Mr. Lopker and Ms. Lopker includes a Base Salary plus a Cash Bonus incentive targeted at 100% of Base Salary. For fiscal year 2015,2016, 70% of each of their respective Cash Bonus opportunities was based on QAD’s financial performance, weighted by the Customer Satisfaction Multiplier as described below under “Customer Satisfaction Multiplier.”Multiplier” and 30% of their Cash Bonus opportunities was based on individual performance, as described below. The financial performance opportunity consisted of 40% based on actual revenue relative to planned revenue (non-GAAP, as further described below) for the fiscal year, 40% based on contribution margin (non-GAAP) relative to the plan for the fiscal year, and 20% based on results related to the Company’s DSO goals.our cash collection goals, measured in days sales outstanding (“DSO”). 21% of the Cash Bonus opportunity for financial performance was available each quarter related to quarterly results and 16% was available on an annual basisafter fiscal year end related to annual performance. The remaining 30% of their Cash Bonusindividual performance opportunity was based on individual performance against the Company’s strategic plan as determined in the discretion of the Compensation Committee, weighted by the Customer Satisfaction Multiplier.

Because of their significant ownership interest in the Company,majority control, the Compensation Committee believes the personal motivation of Mr. Lopker and Ms. Lopker is more focused on equity rather than cash. The Compensation Committee further believes that this focus on equity is a positive factor because it more closely aligns the interests of Mr. Lopker and Ms. Lopker with the interests of other stockholders. Therefore, when determining the compensation mix for Mr. Lopker and Ms. Lopker, the Compensation Committee places greater emphasis on the equity portion of their total compensation package as compared to the other Named Executives.

Compensation of Other Named Executives

The other Named Executives include Mr. Lender, Mr. FlemingChilton and Ms. Bellamy. Cash compensation for these other Named Executives includes a Base Salary plus a Cash Bonus incentive, which is intended to ensure a strong connection between the Named Executive’s compensation and operating results. Mr. Lender had a Cash Bonus opportunity at target equal to 60% of Base Salary, Mr. FlemingChilton had a Cash Bonus opportunity at target equal to 56%60% of Base Salary and Ms. Bellamy had a Cash Bonus opportunity at target equal to 42% of Base Salary. For fiscal year 2015,2016, 70% of the Cash Bonus opportunity of each of the other Named Executives was based on QAD’s financial performance, weighted by the Customer Satisfaction Multiplier. The financial performance opportunity consisted of 40% based on actual revenue relative to planned revenue (non-GAAP) for the fiscal year, 40% based on contribution margin (non-GAAP) relative to the plan for the fiscal year, and 20% based on results related to the Company’s DSO goals. 21% of the Cash Bonus opportunity for financial performance was available each quarter related to quarterly results and 16% was available on an annual basisafter fiscal year end related to annual performance.

For fiscal year 2015,2016, the remaining 30% of the Cash Bonus of each of the other Named Executives was based on their individual performance against the Company’s strategic plan within the individual Named Executive’s area of responsibility, weighted by the Customer Satisfaction Multiplier. The Compensation Committee exercisesexercised its discretion in determining the individual performance of each of the Named Executives, which may behave been supplemented by additional matters addressed by a Named Executive during the course of the year that were not part of the initial strategic plan.

Equity Awards are used as long-term incentives for the other Named Executives and are intended to align the interests of the other Named Executives with QAD’s strategic goals and the interests of stockholders.

Benchmarking of Compensation

To ensure that the compensation of the Named Executives is market competitive, pay levels for the Named Executives are benchmarked against published survey data from AON Corporation, proxy data compiled by Equilar, Inc.Main Data Group and the compensation practices of the Compensation Peer Group (as defined below). If insufficient Compensation Peer Group data is available for a particular position, we expand the benchmarking to include companies outside our Compensation Peer Group that have similar industry, revenue and employee population characteristics. A review of publicly-traded companies is internally conducted each year to determine appropriate companies for possible inclusion in the Compensation Peer Group. EquilarMain Data Group is used to identify candidates by reviewing proxies of technology companies that compete with QAD or have other characteristics that make them suitable for comparison with the Company,QAD, have similar revenues and employ a similar employee base population. A list of potential candidates for inclusion in the Compensation Peer Group, along with three years of each company’s financial performance, is presented to the Compensation Committee. The Compensation Peer Group is selected by the Compensation Committee from this list by includingto include those companies that are most likely to compete against the Companyus in the market for executive talent. For fiscal year 2015,2016, the Compensation Peer Group consisted of the following companies:

To market check the appropriate compensation for the Named Executives, the Compensation Committee reviews points of similarity between the CompanyQAD and the companies within the Compensation Peer Group based on factors such as industry segment, size when measured by market capitalization and/or revenue, growth expectations, number of employees and similar business models. For each Named Executive, each element of their compensation mix, as well as their total direct compensation, is compared against market data. The Compensation Committee reviews the survey data and the compensation practices of the Compensation Peer Group and compares the compensation of each of the Named Executives to compensation paid for similar

positions in the Compensation Peer Group. The Compensation Committee also compares the compensation of

Customer Satisfaction Multiplier being 80%. Achievement above the top of the range would result in the Customer Satisfaction Multiplier being 120%. The customer surveys conducted during fiscal year 20152016 resulted in the CompanyQAD achieving scores within the range of the baseline and, as a result, the Customer Satisfaction Multiplier was 100% for the year.

Cash Bonus Results

Cash Bonus payments for achieving the Company’sCompany financial goals are based on quarterly and annual non-GAAP targets set in the operating plan for (i) revenue performance (the “Revenue Component” which is 40% of the target payment), (ii) contribution margin (the “Contribution Component” which is 40% of the target payment) and (iii) DSO targets (the “DSO Component” which is 20% of the target payment). We believe the overall goal was aggressive, but achievable. Fiscal year 2015 resulted in 11%In constant currency, fiscal 2016 total revenue growth and 103% growth in net income. The drivers of our revenue growth were a 45% increase inincreased by 1%, driven primarily by higher subscription revenue due to the success offrom our cloud offering and income from operations declined by 8%, primarily due to lower services margins. On a 13% increase inconstant currency basis subscription revenue increased by 41%, license revenue decreased by 21% and a 19% increase in professional services revenue due to larger implementation or upgrade projects during the year resulting from increased cloud subscriptions and license sales.decreased by 2%. After application of the Customer Satisfaction Multiplier, each Named Executive earned approximately 140%86% of their Cash Bonus target that was based on achievement of Company financial goals.

Revenue Component

Contribution Component

DSO Component

In all cases, payoutspayout percentages are prorated for performance between the minimum and the target and between the target and the maximum.

The major differences between non-GAAP revenue and GAAP revenue are that:

Cash Bonus payments for achievement of individual performance goals are generally based on the contribution of each Named Executive to the priorities set out in QAD’s strategic plan. After fiscal year earnings are released, Named Executives are evaluated on their accomplishments for the year based on strategic goals for their individual areas of responsibility as well as material accomplishments achieved during the year that were not identified at the time strategic goals were set. This evaluation is a subjective assessment of their accomplishments for the year in the areas for which they are responsible. QAD’s fiscal year 20152016 strategic plan included initiatives in the areas of continuing to grow QAD’s global cloud business, enhancing our professional services capabilities, updating and augmenting our international and vertical product capabilities, developing our employees and continuous operational improvement. Each Named Executive’s individual goals were set in support of these strategic initiatives.

Mr. Lopker’s and Ms. Lopker’s individual performance component was divided into two parts, with 50% relating to the Company achieving what we believe to be very aggressive growth targets in relation to itsour global cloud business and 50% related to individual goals. The Company’s very aggressive growth targets in relation to itsour cloud business were not completely achieved and as a result did not meet the payout threshold, resulting in no payout for this portion. Mr. Lopker’s and Ms. Lopker’s individual goals related to meeting the overall revenue and profitability targets of the Company, driving growth in our global cloud business, continuing our customer engagement initiatives to maintain high customer satisfaction, enhancing our professional services capabilities, driving product development initiatives and stewarding employee and operational programs. Mr. Lopker and Ms. Lopker shared individual goals and were jointly assessed on achievement against these goals. The Compensation Committee

For fiscal year 2015,2016, the dollar amounts approved by the Compensation Committee as Cash Bonus payments to the Named Executives for achievement of individual performance goals were as follows:

Discretionary Bonus

The Compensation Committee may, on occasion, award discretionary bonuses to the Named Executives. On October 8, 2014, the Compensation Committee awarded a discretionary bonus to Ms. Bellamy for managing the upgrade of the Company’s internal accounting systems on a global basis. Her discretionary bonus consisted of $20,000 inNo cash and a grant of 2,000 RSUs for Class A common stock, subject to standard QAD terms, including four-year vesting. No other discretionary bonuses were awarded to Named Executives in fiscal year 2015.2016. On February 20, 2015, Mr. Lender, Mr. Chilton and Ms. Bellamy each received, along with a broader group of senior QAD officers, a one-time 2,500 share RSU grant with one-year vesting terms in recognition of their services to the Company.

We believe Equity Awards create performance incentives and align the interests of the Named Executives with the interests of stockholders because the value of an Equity Award increases or decreases in conjunction with the Company’s stock price, thereby focusing the Named Executives on achieving long-term Company growth and profitability. RSUs are also a retention tool that provides compensation to the Named Executives because, despite the volatility of our stock price, a given number of shares are awarded pursuant to an RSU irrespective of the price of the underlying stock. Both RSUs and SARs minimize the dilutive effects of the Company’sour equity award program compared to traditional stock options. In the case of RSUs, this is accomplished by granting a smaller number of RSUs compared to stock options because the grant-date fair value of an RSU is generally greater than that of a stock option. In the case of SARs, this is accomplished by awarding shares on the exercise of a SAR only for the appreciation from the strike price, whereas a stock option results in the issuance of a whole share on exercise.

Both RSUs and SARs are issued from a Board-approved pool of shares. We limit the size of the pool in relation to the number of outstanding shares in order to limit the potential economic dilution to existing stockholders. We also adjust the size of the pool as required to reflect the number of employees eligible for Equity Awards in a given year. The Company has guidelines by employee level for all departments and levels, other than President, Chief Executive Officer and Chief Financial Officer. We granted approximately 674,000 Equity Awards during fiscal year 2015 for all employees, including the Named Executives, new hires, and non-employee directors.

When determining the number of Equity Awards to be granted to each Named Executive, the Compensation Committee analyzes factors related to each Named Executive, including:

Compensation Committee has approved CIC agreements with Mr. Lopker, Ms. Lopker Mr. Lender and Mr. Fleming.Lender. Other than increases to Mr. Lopker’s payments that are carried over from his pre-existing CIC agreement, these CIC agreements reflect current policy. As a Senior Vice President,Mr. Chilton and Ms. Bellamy doesdo not have a CIC agreement, because CIC agreements are generally granted only to the President, Chief Executive Officer and Executive Vice Presidents.agreements.

CIC agreements for the applicable Named Executives provide that 50% of the previously granted, unvested, equity-based compensation for each Named Executive vests immediately upon a change in control. The remaining unvested Equity Awards vest upon the first anniversary date of the change in control, provided the Named Executive remains employed by the Company as of that date. For all other CIC benefits, the CIC agreements for the Named Executives are “double trigger” agreements, meaning that the payment of cash severance, accelerated vesting of the remaining 50% of the previously granted, unvested, equity-based compensation prior to the first anniversary date of the change in control and cash in lieu of continuation of benefits require both a “change in control” of the Company and the termination of a Named Executive’s employment by the Company, actually or constructively, without “cause” within 18 months following a change in control. The terms “change in control” and “cause” are defined in the CIC agreements. Upon being triggered,occurrence of the double trigger, the CIC agreements provide for the following:

The Chief People Officer is the primary contact between management and the Compensation Committee. Each quarter, the Chief People Officer presents reports to the Compensation Committee, including information on the top 25 most highly compensated employees, a 401(k) plan update and the status of any recruitment of senior management. Other directors may be invited to Compensation Committee meetings as may be certain employees, including the CEO, the President and the Chief Financial Officer.

Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally limits the annual corporate deduction for compensation paid to Named Executives to $1 million per individual, unless certain requirements are met which establish the compensation as performance-based. The Compensation Committee has considered the impact of this tax code provision and attempts, to the extent practical, to implement compensation policies and practices that maximize the potential income tax deductions available to the Company by qualifying such compensation as performance-based compensation exempt from the deduction limits of Section 162(m).

The Compensation Committee will continue to review and modify our compensation practices and programs as necessary to ensure our ability to attract and retain executive talent while taking into account the deductibility of compensation payments. However, the Compensation Committee has deemed it desirable to retain flexibility

Consolidated Financial Statements in our Annual Report on Form 10-K filed on April 15, 2016. These amounts do not correspond to the actual value that will be realized by the Named Executives upon the exercise of SARs, or the sale of the Common Stock underlying such awards.