Last updated: September 29, 2025
Why a 10b5-1 Plan Matters
If you’re sitting on a mountain of equity, you already know to diversify and steer clear of insider-trading traps. The mistake is treating a 10b5-1 plan like a checkbox. Done right, it smooths cash flow, reduces tax drag, and keeps optics clean when Form 4s hit. (Source: original newsletter)
The Basics: What’s a 10b5-1 Plan?
Think of it as your pre-approved playbook for selling stock. You adopt the plan when you’re “clean” (no MNPI). It dictates when and how your broker will sell later, automatically, even in blackout windows. That automation provides an affirmative defense if questions arise.
RSUs can feel like free money, until vesting creates taxable income whether you sell or not. Miss an open window and you may be stuck holding concentration just as volatility ramps. (Source: original newsletter)
RSUs: Golden Ticket or Concentration Trap?
Without a plan, emotion takes over: “Should I hold? Sell? What if earnings crush it?” Meanwhile, taxes don’t wait. A 10b5-1 plan removes emotion and executes the rules you set.
What a Smart 10b5-1 Plan Looks Like
- Sale cadence: e.g., “Sell 10,000 shares on the 1st of each month if price > $250.”
- Price floors: Don’t dump at the lows.
- Liquidity pacing: Cash arrives when you need it, not when markets dictate.
- Tax alignment: Pair sales with deductions or loss harvesting to reduce drag.
Think of it as dollar-cost averaging in reverse: sell in measured bites, steadily lowering concentration risk and keeping optics neutral. (Source: original newsletter)
Staggered (Non-Overlapping) Plans: Execution-Risk Diversification
Overlapping 10b5-1s were restricted in 2023, but you can still stagger sequential plans. Example: 40% under a 12-month plan, then start a second plan only after the first ends. This spreads risk across time, avoids liquidity cliffs, and eliminates the PR sting of a single massive insider sale. (Source: original newsletter)
Making Sense of 10b5-1: Your Next Steps
- Define the “why”, liquidity, tax alignment, de-risking concentration (or all three).
- Codify the rules, frequency, amounts, floors, and blackout-safe execution.
- Automate, let the plan run in the background and review on a set cadence.
Key Takeaways
- A 10b5-1 plan isn’t a checkbox, it’s a core tool for RSU-heavy execs.
- Rules beat reactions: cadence, floors, pacing, and tax coordination.
- Staggered plans diversify execution risk across time.
- Good optics matter: steady sales look like disciplined diversification.
FAQs
Why do executives use 10b5-1 plans?
They provide a legal affirmative defense, automate trades during blackout windows, and create a disciplined path to diversify out of concentrated equity.
Can a 10b5-1 plan be customized?
Yes, set timing, size, and price floors. You can also align sales with tax moves like loss harvesting.
What about RSUs and taxes?
RSUs are taxable at vest. A plan ensures systematic selling so you’re not stuck with a bigger, riskier position by default.
Are overlapping plans allowed?
Overlapping plans were curtailed in 2023. The alternative is staggering sequential plans to spread execution risk across time.