Earlier this year, the SEC began to explore changes that would bring improper use of these plans to heel. This new focus comes not so long after executives of pharmaceutical companies sold a collective half a billion dollars of stock in 2020 – frequently through such plans.

In examining 10b5-1 plans, the SEC has shown a spotlight on a pervasive problem trend in the realm of executive compensation – the use of supposedly long-term tools for short-term pay. The reasonable goal of a 10b5-1 plan is to schedule the sale of a set amount of stock on a regular basis. But about a third of plans since 2004 involve just a single trade. Clearly, what was intended to be a tool to provide structured liquidity over time is being gamed to provide one-off paydays instead. READ MORE