Following up on its recent review of insider trading policies adopted by the SV150, Wilson Sonsini recently published a report on its survey of Rule 10b5-1 trading plan guidelines at SV150 companies. They looked at cooling-off periods, minimum and maximum terms, trading outside of the trading plan, early termination restrictions, and mandatory use of plans. This blog shares some highlights:

– A majority (53 percent) of guidelines adhere to the Rule 10b5-1 minimum cooling-off periods, but some apply longer cooling-off periods to additional personnel or impose longer durations than the minimum required in the rule.

– A significant minority (44 percent) of guidelines impose a minimum term, a maximum term, or both, with minimum terms ranging from three months to one year, and maximum terms ranging from one to three years.

– Nearly one-third (32 percent) of guidelines prohibit trading in company securities during the term of a trading plan outside of the trading plan, with some providing for limited exceptions such as dispositions of gifts.

– Many of the guidelines impose restrictions on early termination of trading plans including, for example, requiring notice or prior approval, only allowing early termination during an open trading window, or only allowing early termination when the insider is not aware of material nonpublic information.

– Only a small percentage of companies (11 percent) require company insiders to transact in company securities through trading plans, generally limited to directors, Section 16 officers, and, in some cases, other management or designated personnel.

Here’s more info on some alternative approaches to cooling-off periods:

– 28% apply the D&O cooling-off period to everyone.

– 16% of companies had approaches to cooling-off periods categorized as “other.” Of those, nine guidelines provide for the director and officer cooling-off period for directors and Section 16 officers but provide for something other than the minimum 30-day cooling-off period for all others.

– Variations include: The later of 30 days or the opening of the next trading window; the later of 60 days or the opening of the next trading window; and 90 days. Two sets of guidelines provide for the Rule 10b5-1 default cooling-off periods but include additional persons (management or other designated employees) in the director and officer cooling-off period, and one set of guidelines provides for a 120-day cooling-off period for everyone.

– Meredith Ervine