Detecting 10b5-1 Plan Execution: VWAP Signature Decoded

SEC Rule 10b5-1 lets corporate insiders pre-schedule stock sales through written plans adopted during open trading windows. Once a plan is in force, the actual sales execute on the plan's schedule regardless of subsequent material non-public information the insider may possess. The mechanism is designed to give executives a compliant path to portfolio diversification without forcing them to time sales around blackout periods.

The implication for reading insider sales: most large-CEO Form 4 sales are plan-driven rather than discretionary. Detecting plan execution from the Form 4 transaction tape — without seeing the underlying plan documents — is the single most useful skill for distinguishing plan-driven cadence from genuine view-driven position changes.

The Four Detection Patterns

Four structural patterns in the Form 4 transaction tape distinguish 10b5-1 plan execution from discretionary sales:

• Multi-block VWAP-style pricing. Plan execution typically distributes share blocks across a narrow $1-10 price range within a single trading window or two. Discretionary sales typically cluster at a single price point (one large block) or a single trading-day VWAP. The multi-block-with-narrow-range distribution is the cleanest signature.
• Recurring monthly or quarterly cadence. Plan execution recurs on scheduled dates (typically monthly or quarterly). Watch for transaction filings on similar calendar dates across multiple quarters — same week of the month, same week relative to earnings calendar.
• Consistent block sizing across executions. Plan execution typically delivers similar share-count blocks across multiple windows. Discretionary sales tend to be opportunistic, with block sizes that vary based on intraday liquidity and the insider's tactical view.
• Plan footnote disclosures. Form 4 filings made under a 10b5-1 plan include a Rule 10b5-1 footnote citing the plan adoption date. The footnote is the explicit signal — if present, the filing is definitionally plan-driven.

A Real-World Detection: Eric Yuan's Zoom Sales

Eric Yuan's April 13-14, 2026 Form 4 filings on Zoom (ZM) illustrate the multi-block VWAP signature exactly. Selected transactions:

• April 13 — 12,034 shares at $82.60 = $994K
• April 13 — 26,243 shares at $81.92 = $2.15M
• April 13 — 25,650 shares at $79.95 = $2.05M
• April 14 — 7,543 shares at $82.47 = $622K
• April 14 — 7,025 shares at $81.80 = $575K

Multi-thousand-share blocks priced within a $4 range across two trading days. This is the plan-driven VWAP signature. Discretionary view-driven sales would either cluster at a single price (one block at one execution time) or scatter across a wider price range based on opportunistic timing.

Another Example: Sanjay Mehrotra's Micron Sales

Sanjay Mehrotra's May 1, 2026 Form 4 filings on Micron (MU) illustrate the same pattern across a single trading window:

• 4,026 shares at $542.24 = $2.18M
• 7,854 shares at $541.44 = $4.25M
• 2,870 shares at $540.30 = $1.55M
• 3,538 shares at $539.28 = $1.91M
• 1,632 shares at $538.45 = $879K

Multi-thousand-share blocks priced across a $7 range within a single trading window. Same VWAP signature as Yuan, executed in a single day rather than two.

Distinguishing Plan-Driven From Discretionary Cases

How to tell when a Form 4 filing is genuinely discretionary rather than plan-driven:

• Single large block at a single price. A discretionary sale typically executes as one block at one negotiated price (often through an institutional buyer block trade) rather than as multiple multi-thousand-share blocks across a price range.
• Clustering around earnings or material event windows. Discretionary sales often cluster around earnings windows or strategic-event windows when the insider has updated information. Plan-driven sales execute mechanically regardless of these windows because the plan was adopted in advance.
• Absence of plan footnote. A Form 4 without a 10b5-1 footnote is technically discretionary by default, though the same plan could be in force from a prior adoption — always check the filing for footnote disclosures.
• Coordinated timing with peer executives. When multiple executives at the same firm execute on similar timing windows with similar block sizing, the structural explanation is firm-wide 10b5-1 plan administration rather than coordinated discretionary trades.

Why the Distinction Matters

Reading a plan-driven cadence as a discretionary view-change is the single most common editorial error in insider-transaction reporting. The framing implications are material:

• Plan-driven framing. "CEO X executed a routine 10b5-1 plan sale on schedule." Reader interpretation: no view change; routine portfolio diversification.
• Discretionary framing. "CEO X dumped $X million in shares." Reader interpretation: view change; loss of confidence; potential negative signal on the equity.

The same Form 4 transaction can be framed either way. Reading the VWAP execution signature is what allows the writer to make the correct framing call. (See our Form 4 cashless exercise reading guide for the complete framework on M+S sequences and plan execution.)

The Coordinated Cadence Signal

When multiple executives at the same firm execute on similar timing windows, the pattern signals firm-wide 10b5-1 plan administration. Arista Networks (ANET) illustrates this pattern: CEO Jayshree Ullal, Founder/CTO Kenneth Duda, and General Counsel Marc Taxay have all executed on similar quarterly cadences with similar block sizing. The coordinated pattern is structurally inconsistent with coordinated discretionary exits — the simpler explanation is firm-wide plan management with similar quarterly-refresh windows.

What Plan Detection Is Not

Two common misreads to avoid:

• "Plan-driven sales are always neutral signals." Plan-driven sales are directionally neutral (they don't reflect view change) but the cumulative footprint over multi-year periods can still be informative. A founder who has systematically distributed $1B+ over multiple years is mechanically reducing their direct stake even if any single execution is plan-driven.
• "Absence of plan footnote means discretionary." A Form 4 without a 10b5-1 footnote could still be operating under a previously-adopted plan that doesn't require footnote disclosure on every transaction. The footnote is sufficient evidence of plan-driven; absence is not sufficient evidence of discretionary.

The Practical Workflow

• For every executive Form 4 filing, examine the transaction execution pattern: multi-block VWAP-style pricing, narrow price range, consistent block sizing, recurring cadence.
• Check the filing for explicit 10b5-1 plan footnotes citing the adoption date.
• Cross-reference with peer-executive Form 4 filings at the same firm. Coordinated cadence signals firm-wide plan administration.
• For executives below the 5% beneficial-ownership threshold, the Form 4 record is authoritative. For above-5% holders, combine Form 4 with Schedule 13G/A for the full picture.
• Frame plan-driven sales as routine compliance execution, not as discretionary view changes. Genuine view changes require either explicit discretionary indicators (single block, no plan footnote, earnings-window timing) or external context (announced exit, strategic-event).

Detecting 10b5-1 plan execution correctly is what separates substantive insider-transaction analysis from headline-driven misreads. The platform's insider transaction feed surfaces transaction codes and execution patterns alongside cumulative footprints, so the detection framework above can be applied directly. Browse insider profile pages on 13F Insight → to see real execution patterns per insider.