Required 10-Q / 10-K Disclosures Under the 2022 10b5-1 Rules

Before 2023, 10b5-1 plans existed largely in the shadows. The plan’s existence was known to the executive, the broker, and the company’s compliance team. Investors saw only the ultimate Form 4 filings showing trades. The SEC’s 2022 amendments changed this: Item 408(a) of Regulation S-K now requires public companies to disclose in each quarterly 10-Q and annual 10-K every 10b5-1 plan adopted, modified, or terminated by an officer or director during the covered period.

The disclosure adds a governance layer that didn’t exist before. It exposes plan-timing patterns to public scrutiny and raises the optics cost of plan management. For executives and their companies, Item 408(a) is now a routine part of quarterly reporting that requires careful process design.

This article walks through what Item 408(a) requires, the boundary questions, and the practical reporting workflow.

What Item 408(a) requires

Disclosure elements

For each Section 16 officer or director adopting, modifying, or terminating a 10b5-1 plan during the quarter:

• Name of the officer or director
• Title (officer or director; and position if officer)
• Dates of adoption / modification / termination
• Duration of the plan (specific end date or “until [date]”)
• Aggregate number of securities to be sold or purchased under the plan
• A checkbox confirming the plan is intended to satisfy Rule 10b5-1(c)(1)

Checkbox for non-Rule-10b5-1 trading arrangements

Item 408(a) also covers “non-Rule 10b5-1 trading arrangements,” which are written trading plans that don’t rely on the 10b5-1 affirmative defense. These are less common but still must be disclosed if adopted/modified/terminated by an officer or director.

Filing location

Disclosure goes in the 10-Q (quarterly) or 10-K (annual) for the period in which the adoption, modification, or termination occurred. Late filings create separate compliance issues.

What triggers disclosure

Adoption

Any new 10b5-1 plan adopted during the quarter. The plan is disclosed in the 10-Q for the quarter of adoption.

Modification

Any material modification to an existing plan. Since modifications reset the cooling-off clock, they are substantive changes that must be disclosed.

Termination

Voluntary termination of a plan by the executive. Automatic termination due to departure or plan-expiration also counts (though some plans distinguish between “termination” and “expiration”; check specific language).

What does not trigger disclosure

• Normal execution of trades under an existing plan (these are Form 4 filings, separate from Item 408(a))
• Administrative changes (broker contact update) that aren’t material modifications
• Plans at non-Section-16 employees (not covered by Item 408(a))

The quarterly filing workflow

Step 1: collect plan activity during the quarter

Compliance team maintains a running log of all adoption, modification, and termination events by Section 16 officers and directors.

Step 2: verify plan details

For each event, confirm: name, title, dates, duration, aggregate securities, and Rule 10b5-1 satisfaction.

Step 3: draft Item 408(a) disclosure

Standard format is a table or list in the 10-Q/10-K. Most companies use a table with columns for each required element.

Step 4: legal review

General counsel reviews disclosure for accuracy and completeness.

Step 5: file

10-Q filed quarterly within 40 days of quarter-end (large accelerated filer) or 45 days (accelerated filer). 10-K filed annually within 60 days (large accelerated) or 75 days (accelerated).

Step 6: coordinate with IR/PR

Disclosure is public once filed. IR/PR teams should be prepared for questions if the disclosure highlights unusual patterns.

Who compiles the data

Compliance team

The company’s compliance or legal team maintains the plan log. This function is usually housed in the general counsel’s office.

Broker input

Brokers running plans provide adoption confirmations, modification notices, and termination summaries. Companies typically have a process requiring brokers to notify compliance of plan events.

Executive self-reporting

Executives should confirm plan events to the compliance team. Self-reporting is a backstop for broker notifications and ensures the compliance team has full information.

Common disclosure issues

Missed adoption disclosure

An adoption not logged to the compliance team gets omitted from the 10-Q. This is a disclosure violation. The fix is a subsequent amendment or a disclosure in the next quarterly filing, both of which invite scrutiny.

Incorrect share counts

Plans sometimes specify ranges or conditional share counts. Disclosure must capture the aggregate maximum. Errors create amendment requirements.

Missing modifications

Modifications are sometimes treated as minor operational changes and omitted. If the modification is material (changes to algorithm, limits, or duration), it must be disclosed.

Late filings

Compliance teams working on other disclosures may miss Item 408(a) updates. Late filings trigger standard SEC compliance-penalty regimes.

Ambiguous terminations

If a plan simply ends on its scheduled date with no early termination, this is sometimes disclosed as a termination and sometimes not. Best practice: disclose plan expirations as terminations for consistency.

Optical considerations

Plan timing patterns

Investors and analysts examine Item 408(a) disclosures over time to identify patterns. An executive who adopts plans immediately before positive announcements and terminates immediately before negative ones creates a visible pattern that can support insider-trading allegations.

Concentration of adoptions

Multiple executives adopting plans in a single quarter can signal coordinated activity. Spread out adoptions across quarters if consistent with individual timing needs.

Plan-size anomalies

Very large plans or unusually specific share counts can attract commentary. Ensure plan sizes are consistent with individual executive’s compensation patterns.

Executive-level distribution

Senior leadership trading more aggressively than mid-level officers can look unbalanced. This is a governance concern rather than a legal one, but it matters for stakeholder perception.

The “plan rushed before the rule” problem

Before the 2023 amendments took effect on February 27, 2023, many executives rushed to adopt plans under the old, laxer rules. These plans are grandfathered. But they age out of grandfathering when modified.

Grandfathered plans continue

Plans adopted before February 27, 2023 continue under pre-amendment rules for their original term (no good-faith certification, no 90-day cooling-off, no Item 408(a) disclosure).

Modifications bring them forward

A modification to a grandfathered plan brings it under the 2023 rules, triggering cooling-off, certification, and Item 408(a) disclosure.

Natural expiration

Most grandfathered plans have expired by now. Plans adopted in early 2023 under the old rules have run their 12-24 month course. New plans are under the 2023 framework.

Item 408(b): insider-trading policies

Related to Item 408(a), Item 408(b) requires public companies to disclose whether they have adopted insider-trading policies and procedures. This is a once-a-year annual-report disclosure (10-K) rather than quarterly.

What counts

Companies that have formal written policies disclose their existence. Companies without such policies must disclose that fact (which is a governance red flag and rarely the case).

Policy filing as exhibit

Companies must file the actual insider-trading policy as an exhibit to the 10-K. This means the policy becomes public and subject to commentary.

Content expectations

Policies should cover: trading windows, blackout periods, pre-clearance requirements, 10b5-1 plan-adoption processes, and post-trade reporting obligations. Policies that are thin or outdated can invite governance scrutiny.

Item 402(x): option-grant disclosures near MNPI

Item 402(x) of Regulation S-K requires disclosure of option grants made within 4 business days before or 1 business day after release of MNPI (earnings, material events). This is the “spring-loaded grants” provision.

Disclosure details

• Grant date
• Number of options granted
• Grant-date fair value
• Exercise price
• Date and time of the 8-K filing relating to the MNPI

Why this matters

The provision is designed to identify and penalize option grants timed to capture post-announcement price movements. Grants made immediately after positive announcements or before negative ones face additional scrutiny.

Interaction with 10b5-1

If an option grant is made pursuant to a 10b5-1 plan, the plan’s pre-adopted structure mitigates some of the MNPI-proximity concern. The disclosure is still required.

Compliance best practices

Maintain real-time plan log

Don’t wait until filing season. Log every adoption, modification, and termination as it happens.

Coordinate with brokers

Establish notification protocols with all brokers serving Section 16 officers. Broker should confirm every plan event to compliance.

Use structured data

A standardized template for each disclosure ensures completeness and consistency.

Legal review of material changes

Any plan event that could affect disclosure should get legal review before finalization.

Calendar the filing deadlines

10-Q and 10-K deadlines plus the Item 408(a) disclosure preparation timeline should be built into compliance calendars.

Frequently asked

Does Item 408(a) apply to non-officers?

No. Item 408(a) disclosure applies only to officers and directors (Section 16 persons). Non-officer plans are not disclosed in quarterly filings.

What about 10% beneficial owners?

10% owners are Section 16 reporters but are covered by Item 408(a) only if they are also officers or directors. Pure 10% owners without officer/director status are not within Item 408(a)‘s scope.

Does the disclosure mention the plan’s price terms?

No. Disclosure includes aggregate securities and duration, not pricing algorithms or limit levels. Plan-specific design details remain confidential.

Can we omit an officer’s name?

No. Named officers must be disclosed by name. Omitting names is a disclosure violation.

What if a plan is adopted just before quarter-end?

Adoption in the final days of a quarter is disclosed in that quarter’s 10-Q. If the 10-Q is not yet drafted, include the disclosure in the normal drafting cycle. Late quarters can create tight timing; compliance should be alert.

Do we need to disclose plans adopted by officers who subsequently left the company?

Yes, if the adoption occurred during the covered period and the individual was an officer or director at the time of adoption.

What if we discover an old adoption we didn’t disclose?

Consult counsel about amending the prior filing or including the disclosure in the current period with explanation. Late disclosure is better than continued omission.

Next step

If you are a Section 16 officer or director with a 10b5-1 plan, confirm with your company’s compliance team that your plan is captured in the Item 408(a) log. Review the disclosure in the quarter of adoption and again at any modification or termination. The disclosure is usually a few lines in a table; getting it right is straightforward, but getting it wrong (or missing it) is a separate compliance failure beyond any underlying trading issues.