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QAD Inc. (QADA) Ex-Dividend Date Scheduled for December 21, 2015

QAD Inc. ( QADA ) will begin trading ex dividend on December 21, 2015. A cash dividend payment of $0.072 per share is scheduled to be paid on January 06, 2016. Shareholders who purchased QADA prior to the ex

Thoughts On Metrics And Incentives

Thoughts on Metrics and Incentives first appeared at The Activist Investor. A brief meditation on motivating, measuring, and rewarding executive performance. Metrics have been in the news lately: Sensational accounts of how share repurchases boost EPS to benefit CEOs Bennett Stewart promoting his Corporate Performance Index (CPI) Corporations futzing with GAAP accounting, specifically EBITDA, to present great results. Let’s consider the metric alphabet soup, then. EPS: Earnings per Share, duh. Accounting profit divided by number of outstanding shares. EBBS: Earnings Before Bad Stuff. EPS without expenses that management doesn’t like, the zenith of futzing. EBITDA: Earnings Before Interest, Tax, Depreciation, and Amortization. A customary measure of operating cash flow, but based on accounting profit. Adjusted EBITDA: see EBBS, call it AEBITDA ROI: Return on Investment, with whatever measure of return and investment the company chooses. Highly futz-able. TSR: Total Shareholder Return. Change in share price, plus any cash to shareholders as dividends. Can’t really futz with it. CPI: Corporate Performance Index. The new metric, based on EVA (Economic Value Added). How to make sense of all this in the context of recent news accounts? For as long as investors have monitored EPS and EBITDA, companies have tried to massage it into EBBS or AEBITDA. GAAP accounting is rife with judgment, so management will seek to influence (futz with) EPS and EBITDA in subtle ways, or just dispense with it and use EBBS and AEBITDA. Investors also know that EPS measures mostly the returns part of ROI. We also want to know the investment part. Bennett Stewart years ago gave voice to these two concerns with EVA. It deals with the two problems of EPS, EBBS, EBITDA, and AEBITDA: management can futz with accounting results, and thinks capital investment comes free of charge. He spent decades trying to persuade companies and investors that EVA improves on these other metrics. We don’t know why Stewart created CPI, which starts with EVA. It seems like he wanted something similar to but better than TSR in exec comp packages. Many exec comp packages reward EPS or change in EPS. Lately, they also reward TSR. Neither idea makes any sense. Basic economics, and indeed cognitive and behavioral science, finds that one designs incentives to elicit the behavior one desires, or to discourage behavior one doesn’t. In this instance, exec comp incentives should pertain directly to decisions and other actions that executives can influence and control. Executives don’t influence and control share price. TSR measures mostly share price. On the other hand, executives control the metrics EPS, EBBS, EBITDA, and AEBITDA, in addition to controlling the decisions and other actions whose outcomes these metrics measure. That won’t work. More generally, exec comp programs should use metrics that measure company performance, not investment performance. TSR makes sense for a PM, but not for a CEO. EVA or maybe CPI makes sense for a CEO. EPS makes no sense for anyone. Critics can object to share repurchases that boost exec comp. Let’s improve exec comp and the underlying metrics – reward and punish CEO decisions and other actions, and make it hard to futz with the metrics. Leave share repurchases alone.

No Danger From COP21 For Airline And Shipping ETFs

The world is striving to arrest the rise in the global temperature to 2 degree Celsius by the end of this century. In that vein, global leaders assembled in Paris at the COP21 meet – which was the 21st annual conference of parties – to chalk out an elaborate and comprehensive plan to lower carbon emissions and moderate the warming of the planet. In any case, efforts to check global warming have been constant across countries. Not only developed economies, but the emerging ones too are pushing themselves to attain this goal. However, following two weeks of sharp diplomacy, 196 countries agreed upon a historic agreement on climate change last Saturday. Per the agreement, developed economies will provide a minimum of $100 billion to developing nations a year to finance the needed reforms they can’t pay for to restrain greenhouse gas emission. Needless to say, clean energy stocks and ETFs as well as fossil-fuel free investments will enjoy a huge benefit in the coming days. Is There Any Loophole in COP21 Treaty? Two key pollution causing sectors, international shipping and aviation were excluded from the COP21 treaty. International shipping emits 2.4% of global greenhouse gas emissions, almost the same that the whole of Germany does. Total aviation gives up about 2% of global GHGs, and international flights make up about 65% of that number, per the source . These emissions do not come under the territory of any specific country and thus is out of the COP21 treaty. In fact, greenhouse emissions are estimated to rise exponentially by 2050. However, International Civil Aviation Organization (ICAO) has indicated to that it will plan a global market-based measure to lower carbon emissions. The agency has vowed to perk up fuel efficiency by 1.5% each year until 2020 and ‘to halve 2005-level emissions by 2050’, per citylab.com. International Maritime Organization also “has set an energy efficiency requirement for ships built in 2025, but not an overall carbon emissions target.” Needless to say, technological advancements are being tested rigorously in the aviation and shipping industry for decarbonization, but it has a long way to go. As of now, these two sectors are not as vulnerable as the fossil-fuel related sectors from Paris climate summit. Investors can safely play or dump airline and shipping stocks and ETFs on their inherent sector strength or weakness. Below we highlight two sector ETFs in detail. Airline – U.S. Global Jets ETF (NYSEARCA: JETS ) This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 34 securities with double-digit allocation going to Southwest Airlines, Delta Air Lines, American Airlines and United Continental. Other firms hold less than 4.44% share. The ETF has a certain tilt toward large-cap stocks at 62% while small and mid caps account for 24% and 14% share, respectively, in the basket. The fund has gathered $48.4 million in its asset base while sees moderate trading volume of nearly 40,000 shares a day. It charges investors 60 bps in annual fees. The fund added 13.2% in the last six months (as of December 15, 2015). Guggenheim Shipping ETF (NYSEARCA: SEA ) The $30.2 million fund tracks the Dow Jones Global Shipping Index and holds 26 securities in its basket. The index reflects high dividend-paying companies in the global shipping industry. As far as the sector breakdown goes, the fund is concentrated on the industrial sector with about 58.8% exposure while the rest is attributed to the energy sector. In terms of geographic distribution, the U.S. takes the top spot with more than 36% of focus, followed by Denmark (19.1%), Japan (13.5%) and Greece (9.5%). The product charges 65 bps in annual fees for this diversified exposure. However, the fund was off about 31% in the last six months (as of December 15, 2015). Original Post