When establishing a 10b5-1 trading plan, executives must make four key decisions:
There are also wealth management questions that can arise during the lifetime of a 10b5-1 trading plan. For example, if existing criteria triggered a sale of some amount of shares, it is important to update an overall financial plan to reflect these newly liquid assets.
A 10b5-1 trading plan is a strategic way to return control of equity compensation to executives, particularly within the confines of a well-designed financial plan. Without the structure that a 10b5-1 trading plan provides, executives may find it difficult to maintain the discipline of periodically selling shares. This is often true, even when it provides the executive with an important level of asset diversification.
A 10b5-1 plan provides other benefits as well, including:
Multiple advisors at Blue Chip Partners hold the Chartered Market Technician (CMT) designation – a credential held by few in the private wealth management community. This allows our team to provide individual stock analysis, which can be particularly valuable when an insider is considering selling a portion of their concentrated position.
We recommend corporate insiders explore our thinking prior to transacting directly held shares, vested RSUs (Restricted Stock Units), PSUs (Performance Share Units), and stock options. We are confident that our perspective can help insiders achieve a better outcome when selling and managing their holdings in company stock.
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