10b5-1 Plans: Selling Company Stock Without Second-Guessing Yourself

Henry Supinski, ChFC® · 4 min read · July 2026

If you've ever held onto shares because you were worried a sale would look bad, or because you weren't sure when you were even allowed to sell, a 10b5-1 plan solves both problems at once.

What It Actually Is

A 10b5-1 plan is a written, pre-set instruction to sell (or buy) a set number of shares on a schedule you define in advance, while you have no material nonpublic information. Once it's adopted, the sales happen automatically according to the plan, regardless of what you know or how you feel about the stock that week.

Who Actually Needs One

Executives and insiders subject to blackout windows are the classic case, but the plans are useful for anyone who wants to remove emotion and timing risk from selling concentrated stock. If you've never sold a share because it never felt like the "right" time, a 10b5-1 plan makes that decision once instead of every quarter.

The Details People Get Wrong

• You can only adopt a plan when you're not in possession of material nonpublic information, which usually means outside a blackout window.
• There's a mandatory cooling-off period before trading can begin under a newly adopted plan.
• The plan should be built around your actual tax and cash flow picture, not just an arbitrary share count, or you'll end up with a tax bill you didn't plan for.

Where It Fits Into a Broader Plan

A 10b5-1 plan is a mechanism, not a strategy. It's most useful once you already know how much concentration you want to reduce and over what time frame. Setting one up before you've answered that question just automates a plan you haven't actually made yet.

What Changed With the 2022 Amendments

The SEC amended Rule 10b5-1 in late 2022, and the changes matter for anyone adopting a plan now. Every new plan carries a mandatory cooling-off period between adoption and the first trade. For directors and officers, the cooling-off period is longer and tied to the company's next earnings disclosure, and they must also certify in writing that they hold no material nonpublic information and are adopting the plan in good faith.

The amendments also restrict overlapping plans and limit single-trade plans to one within a set stretch of time. Most important, the affirmative defense now depends on acting in good faith for the life of the plan, not just on the day you sign. A plan you keep amending around good and bad news is a plan that no longer protects you.

A Hypothetical Plan in Practice

Consider a hypothetical VP with 20,000 vested shares of company stock trading near $100. That is about $2 million riding on one ticker. She decides the position should fund a home renovation and a broader portfolio over two years. Her plan, adopted during an open trading window, sells 2,500 shares each quarter for eight quarters, starting after the cooling-off period ends.

When the next blackout closes around earnings, her sales continue on schedule, because the instructions predate anything she now knows. When the stock jumps and a colleague asks if she regrets the shares already sold, the honest answer is that the plan was the decision. She made it once, calmly, with her tax projection in front of her. That is the whole point. The figures are invented, but the relief is real.

How We Approach It

I spent years at SAP watching talented people hold concentrated stock because no moment ever felt clean enough to sell. I felt that hesitation with my own shares. A written plan is how you retire the feeling. We start with the target: how much concentration to unwind, and by when. Then we shape the schedule around the tax picture, because every sale of low-basis stock has a capital gains cost that should be spread across years on purpose. Then we coordinate with your company's legal or compliance team on adoption timing. The mechanics sit inside the bigger framework on our equity compensation planning page, and the concentration question itself is a core part of what we do for tech employees.

Questions We Hear

Can I change or cancel a 10b5-1 plan?

You can generally terminate a plan, and a modification is treated like adopting a new plan, which restarts the cooling-off period. But frequent changes undercut the purpose. Company counsel and regulators view a plan that gets edited around news with suspicion, and the affirmative defense depends on good faith. Build a plan you can leave alone.

Do I need to be an executive to use one?

No. Any employee subject to a trading policy or blackout windows can typically adopt one, and some people use the structure purely for discipline even without legal restrictions. The written certification and the longer cooling-off period apply specifically to directors and officers.

Will selling under a plan make me look disloyal?

This worry keeps more people concentrated than any legal rule does. Prearranged, scheduled selling is the most defensible way for an insider to diversify, precisely because the schedule decides the timing, not the seller. Many companies now encourage or require plans for exactly this reason. A steady pattern of planned sales reads very differently from one sudden large trade.

Who actually sets the plan up?

The plan itself is a brokerage document, usually prepared with the broker that holds your shares and reviewed by your company's legal or compliance team. The paperwork is the easy part. The expensive mistake is adopting a schedule that ignores your tax situation, which is why we model the tax impact of the sale schedule before anything gets signed.