10b5-1 Plan Structures: Fixed-Share, Fixed-Dollar, and Limit-Price

When an executive adopts a 10b5-1 plan, the trading algorithm inside the plan determines what actually happens on execution days. The three most common structures are fixed-share, fixed-dollar, and limit-price. Each handles price volatility differently, produces different dollar outcomes under the same price path, and exposes the executive to different patterns of criticism when the stock moves unexpectedly.

This article walks through each structure, the mechanics, and the decision framework for choosing among them.

Fixed-share plans

The executive commits to selling a specific number of shares on each execution date.

Example

Sell 2,000 shares on the 15th of each month for 12 months. Total: 24,000 shares.

Price behavior

If the price is $50 the first month and $70 the last month, the executive captures more total dollars than under fixed-dollar. Proceeds track the price path.

Advantages

• Simple to explain
• Predictable share reduction schedule
• Works well for diversification targets measured in shares rather than dollars
• Easiest for the broker to execute

Disadvantages

• Dollar proceeds vary widely with price
• During price surges, the executive sells at high prices but takes home disproportionate proceeds (optics concern)
• During declines, the executive may feel they have sold at a low price

When to use

• Clear share-count reduction targets (e.g., reduce holdings from 100,000 to 80,000)
• Sell-to-cover plans where share count equals tax obligation
• Executives comfortable with variable dollar outcomes

Fixed-dollar plans

The executive commits to selling a specific dollar amount on each execution date; the broker calculates the share count based on current price.

Example

Sell $500,000 worth of stock on the 15th of each month for 12 months. Total: $6M.

Price behavior

If the price drops, the broker sells more shares to hit $500,000. If the price rises, fewer shares are sold.

Advantages

• Smooth dollar proceeds
• Good for matching planned cash flows (e.g., specific diversification allocation)
• Optics in rising markets: the executive sells fewer shares as price climbs, which is interpreted as less aggressive

Disadvantages

• During sharp price declines, share count grows quickly (can exhaust holdings)
• Requires accurate account-balance tracking; share supply can run out
• Brokers need clear instructions on price determination (average, open, close, limit) to avoid slippage

When to use

• Specific dollar needs (diversification, philanthropy, tax pre-funding)
• Executives prioritizing cash-flow predictability over share-count reduction
• Situations where price increases are expected and selling fewer shares at higher prices is the intent

Limit-price plans

Trades execute only if the stock reaches a defined limit price during a specified window.

Example

Sell 2,000 shares if the stock reaches $75 during the second week of each month; otherwise, no trade that month.

Price behavior

Trades execute opportunistically. Months where the price doesn’t reach the limit produce no sale. Months with favorable prices execute normally.

Advantages

• Avoids selling at low prices during the execution window
• Captures upside if the stock surges
• Tax planning friendly (trades only execute on desirable price terms)
• Aligns with value-sensitive selling discipline

Disadvantages

• Unpredictable timing of trades and proceeds
• Executive cannot count on specific cash arriving from plan execution
• In flat or declining markets, the plan may never execute, leaving the executive with the full position
• Requires careful limit-price design; too high means no trades, too low means executions at suboptimal prices

When to use

• Executives with strong conviction in long-term upside who want to sell only at premium prices
• Plans designed to trim concentration at price targets rather than over time
• Combination plans where base-layer fixed execution is augmented by opportunistic limits

Combination structures

Most executive plans use a combination of the three. A typical high-level structure:

Base layer: fixed-dollar or fixed-share

A small, regular sale ensures execution regardless of market conditions. This establishes a trading pattern and maintains the appearance of systematic diversification.

Limit-price layer

Additional sales execute when the stock hits specific price targets. This captures upside without exposing the executive to low-price sales.

Event-driven layer

Vesting-triggered sales (often under the sell-to-cover exception) run alongside. These are not discretionary but are scheduled to execute at vest.

Example combined plan:

• Month 1-12: sell 1,000 shares on the 15th (base fixed-share)
• Month 1-12: sell additional 2,000 shares if price is ≥ $80 during the 10th-20th of the month (limit)
• Vest dates: automatic sell-to-cover (exception)

Total sales vary based on price path. Base layer is predictable; limit-price layer captures upside.

Broker discretion within the plan

All three structures delegate some discretion to the broker. The permissible discretion is:

Fixed-share

Broker selects the specific moment of execution within the execution window (e.g., 10am-4pm on the execution date). Can use VWAP or similar to minimize market impact.

Fixed-dollar

Broker computes share count based on a stated pricing method (VWAP, average of high/low, close price). Executes the computed quantity.

Limit-price

Broker monitors the price during the window. If limit is reached, executes. If not, does not execute.

Not permitted

• Broker selecting trade date outside the plan window
• Broker changing the dollar amount or share count at will
• Executive directing execution through the broker mid-plan

Plan terms to specify

Regardless of structure, a defensible plan document specifies:

• Trading algorithm (fixed-share, fixed-dollar, limit-price, or combination)
• Execution dates or windows
• Share-count or dollar-amount terms
• Pricing method for volume calculation (VWAP, close, etc.)
• Any limit prices and their duration
• Aggregate caps (total shares, total dollars, plan duration)
• Broker contact and authority
• Termination triggers (death, incapacity, employment change)
• Amendment procedures
• Required certifications

Plan duration

Plans run for periods defined in the plan document. Typical durations:

• 6-12 months: most common for single-year diversification
• 12-24 months: longer-horizon plans covering multiple vesting cycles
• Event-triggered: plan expires at a specific date or upon a specific event

Longer plans reduce the frequency of new-plan adoption (and new cooling-off periods) but limit the executive’s ability to adjust.

Example outcomes under each structure

Stock price path: $60, $65, $55, $70, $62, $58, $75, $80, $65, $70, $68, $72 (monthly close).

Fixed-share: 2,000 shares monthly

Total shares: 24,000 Total proceeds: $1,620,000 Weighted average: $67.50 per share

Fixed-dollar: $130,000 monthly

Total shares: ~24,000 (varies slightly per month) Total proceeds: $1,560,000 Consistent monthly $130,000

Limit-price: 2,000 shares if ≥$70

Triggered in months 4, 7, 8, 10, 12 (5 months) Total shares: 10,000 Total proceeds: $735,000 Average execution: $73.50

Frequently asked

Which structure has the best optics?

Fixed-dollar in rising markets (selling fewer shares at higher prices) and limit-price (selling only at favorable levels) often have better optics than fixed-share. Fixed-share produces the “executive sold aggressively into the peak” narrative if the price surges.

Can I change structure mid-plan?

Modifying structure is a material modification. Fresh cooling-off applies. Design carefully upfront to avoid modifications.

What if the stock tanks during a fixed-dollar plan?

Share count grows. Monitor the plan’s aggregate share cap. If the cap would be exceeded, the plan typically has a termination clause.

What if the stock never hits my limit price?

The plan doesn’t execute. At plan termination (or duration end), the shares remain in your holdings. You must re-plan to sell them.

Can I have tranched limits (different limits for different share blocks)?

Yes, within a single plan. Layer multiple limit-price blocks at ascending prices.

How do I pick the right structure?

Match structure to goal. Share-count target: fixed-share. Cash-flow target: fixed-dollar. Value-sensitive target: limit-price. Most executives use a combination.

Does the plan document itself need to specify the pricing method for broker execution?

Yes. Vague instructions give the broker too much discretion and weaken the 10b5-1 defense. Specify VWAP, daily close, or other objective reference.

Next step

Before discussing plan structure with your broker, write down three things: total shares you want to sell, total dollars you want to receive, and any price at or above which you’d prefer to sell more aggressively. Those three numbers translate directly into a combination plan with base layers and limit layers. Taking 30 minutes to define your goals upfront produces a plan that actually serves them rather than a default fixed-share plan that may not match what you need.