My friend and sometime coauthor Todd Henderson recognizes that SEC Rule 10b5-1 has not prevented use of inside information by corporate executives and has come up with a unique and sensible reform proposal:
The typical big-company CEO makes enough money—more than $24 million in 2020—that he shouldn’t need to sell shares urgently. A CEO can set a goal for the year in dollar or percentage terms and then have those sales spread out evenly over every trading day to diversify his portfolio. No surprises, no allegations of trading in advance of information disclosure, no timing the market and no big risk of front-running.
I think this is an excellent idea, but I would offer what I hope is a friendly amendment: Why not allow CEOs to trade once a week or once a month. For example, the CEO could be obliged to sell the same number of shares on the same day of the week every week of the year. It's not clear to me why allowing the CEO to sell 1000 shares every Wednesday the exchange is open, for example, would not achieve essentially the same result.
