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At Axon Capital Management, we help SpaceX employees evaluate whether a 10b5-1 trading plan makes sense as part of a broader strategy for RSUs, ISOs, taxes, and long-term wealth planning.
A 10b5-1 plan is not required for every employee, and many people will never need one. But for employees with meaningful equity, access to sensitive company information, or a need for a disciplined, recurring way to sell, it can be a valuable tool. If you are evaluating whether a 10b5-1 plan may fit into your broader financial strategy, consider speaking with one of our financial advisors before making a decision.
A Rule 10b5-1 plan is a pre-arranged, written trading plan that allows a company insider to buy or sell company stock according to instructions set in advance. Rather than deciding to sell in the moment, you establish the parameters ahead of time - how many shares, at what prices or on what dates, using a formula or schedule - and the trades are then executed automatically by your broker according to those instructions.
The core idea is separation in time: you make the decision to sell before you could be accused of acting on information you should not be trading on, and the actual trades happen later.
Properly established and followed, a 10b5-1 plan can provide an affirmative defense against an insider-trading claim. In plain terms, if you are later questioned about a sale, a valid plan helps demonstrate that you committed to the trade at a time when you were not acting on material nonpublic information (MNPI).
What a 10b5-1 plan is not is a free pass. It does not allow you to trade on inside information, and it does not protect a plan that was set up in bad faith or used as part of a scheme to evade the rules. The defense only works if the plan genuinely meets the requirements - and if you actually operate within it.
A plan generally must be adopted at a time when you are not aware of material nonpublic information. That timing requirement is central to the whole concept.
The SEC's amended rules also added mandatory cooling-off periods - a required waiting period between when you adopt (or modify) a plan and when trading can actually begin. For individuals who are not directors or officers, that cooling-off period is 30 days. For directors and officers, it is longer (covered in detail below). The practical takeaway: a 10b5-1 plan is something you put in place ahead of when you want to sell, not the day you decide to sell.
For years, SpaceX equity was largely illiquid - held by employees who believed in the mission but had limited ability to convert that belief into cash. The IPO changes the math. Equity that once sat on paper is now publicly traded stock with a daily price, and that shift brings a new set of decisions: how much to hold, how much to sell, when, and why.
Keep in mind that the IPO itself does not usually mean you can sell immediately. Newly public companies typically impose a lock-up period - often around six months - during which employees and other pre-IPO holders cannot sell. You will want to confirm SpaceX's specific lock-up terms. Interestingly, the lock-up window is often a sensible time to plan, because in many cases a 10b5-1 plan can be adopted during the lock-up so that it is ready to execute once selling is permitted (subject to company policy and the MNPI requirement).
For many employees, SpaceX stock represents a large - sometimes outsized - percentage of total net worth. And unlike a typical concentrated position, your exposure does not stop at the stock. Your salary, your bonus, your future equity grants, and your career are all tied to the same company. If SpaceX has a difficult stretch, several parts of your financial life can move in the same direction at once.
That overlap is the heart of concentration risk, and it is a major reason employees begin thinking about a structured way to diversify over time.
Even when an employee decides they want to reduce exposure, they often cannot simply sell whenever they like. Public companies commonly restrict insider trading to defined open windows and impose blackout periods - for example, around quarterly earnings. If your selling opportunities are limited to a few windows each year, a plan that executes automatically can make sure you actually follow through during the periods when selling is allowed.
Concentrated stock is emotional. Loyalty, optimism, and the memory of how far the company has come all pull in one direction; headlines, price swings, and fear of missing out pull in others. Left to in-the-moment decisions, many people either sell at the wrong time or never sell at all.
A 10b5-1 plan can take much of that emotion out of the process. Because the instructions are set in advance, you are far less likely to react to a single news cycle or a scary trading day.
If you hold a modest amount of equity, have no access to sensitive company information, and simply want to sell a limited number of shares during an open window, you may not need a 10b5-1 plan at all. For straightforward, one-time sales, the added structure and rigidity may be more complexity than the situation calls for.
The calculus changes as the position grows. Employees with six- or seven-figure equity exposure, multiple unlock or vesting events ahead of them, or a plan to diversify gradually over several windows tend to benefit far more from a rules-based approach. When you intend to sell repeatedly and over time, a 10b5-1 plan starts to earn its keep.
Employees who sit closer to sensitive information - financial results, operating metrics, launch outcomes, major contracts, defense work, Starlink developments, fundraising, or potential M&A - have more reason to be careful and to coordinate with company compliance before they sell. If you regularly have visibility into information the public does not, a 10b5-1 plan is often the cleanest way to sell with confidence rather than constantly second-guessing whether a given window is "safe."
A 10b5-1 plan tends to make the most sense when several of the following are true:
If your goal is phased diversification - trimming the position steadily rather than all at once - a plan lets you commit to that schedule in advance and stick to it.
The more your financial security depends on a single stock, the more valuable a disciplined, pre-committed selling process becomes. A plan can be built around a concentration target: reducing exposure to a level you are comfortable with while still leaving room to participate in future upside.
This is especially relevant for senior employees and for those in finance, legal, strategy, engineering leadership, business development, government contracts, or any role with a line of sight into key operating metrics. If you are frequently "inside," a plan adopted at a clean moment can keep you trading on the right side of the line.
Preset instructions reduce emotion and enforce discipline. For many people, the hardest part of managing concentrated stock is simply following through - and a plan makes following through the default.
Sales rarely happen in a vacuum. A plan can be designed around real objectives: setting aside a tax reserve, paying off a mortgage, funding 529 college accounts, building an emergency fund, buying a home, or diversifying into a broader portfolio. Aligning the what and when of selling with those goals is often more important than the plan mechanics themselves.
A plan is a tool, not an obligation. It may not be the right fit when:
If company policy already permits the sale and you only intend to sell once, a simple sale during an open window may be all you need.
Lower-risk employees - those without regular exposure to MNPI - may not need the additional structure a 10b5-1 plan provides.
10b5-1 plans are deliberately rigid; that rigidity is the point. But if you want the ability to react to changing circumstances and retain discretion over exactly when and at what price you sell, a plan can feel restrictive.
Before anything else, start with SpaceX's own rules. The company's compliance, legal, HR, or equity-administration teams can tell you what is required, what is restricted, and what process you need to follow. In some cases, that guidance alone resolves the question.
If you do pursue a plan, a few rules from the SEC's amended Rule 10b5-1 are worth understanding. (These reflect amendments the SEC adopted in late 2022 that apply to plans adopted or modified after February 27, 2023.)
The rule requires that the plan be entered into in good faith - and that you continue to act in good faith with respect to it. A plan set up as a workaround, or one you try to game after the fact, does not provide the protection it is designed to offer.
There is a mandatory waiting period between adopting (or modifying) a plan and the start of trading:
This is why planning ahead matters: you cannot adopt a plan and trade the same week.
Changes to the amount, price, or timing of trades (including changes to an underlying formula or algorithm) are generally treated as canceling the existing plan and adopting a new one - which triggers a new cooling-off period. Frequent tinkering can undermine the very protection the plan is meant to provide, so plans are best designed thoughtfully up front.
Even when SEC rules would permit a plan, SpaceX's own trading policy governs. The company may have its own pre-clearance process, approval requirements, blackout periods, or other restrictions that go beyond what the SEC requires. Your first stop is always the company's policy and the people who administer it.
Note: The rules summarized here are general and simplified. The specifics of Rule 10b5-1 are nuanced and fact-dependent, and they should be applied to your situation with the help of qualified legal, tax, and financial professionals.
A trading plan is a mechanism for executing a strategy - it is not the strategy itself. The strategy comes first.
Before deciding what to sell, you need to understand what you own. That means knowing your vest dates, acquisition dates, and cost basis for each lot of shares, and whether each lot qualifies for long-term capital gains treatment (generally, shares held more than a year) or would be taxed at higher short-term rates. Two employees with identical share counts can owe very different amounts of tax depending on which lots they sell.
One of the most common and costly mistakes is spending sale proceeds before accounting for the tax bill they create. Capital gains, and potentially the 3.8% net investment income tax for higher earners, can take a meaningful bite - and that money may not be due until a future estimated-tax deadline, which makes it easy to over-spend in the meantime. Setting aside a tax reserve before directing proceeds toward goals is one of the highest-value habits in any concentrated-stock plan. (We cover this in depth in our companion guide on building a SpaceX selling strategy.)
The aim is usually not to sell everything, but to reduce concentration to a level that fits your goals and risk tolerance while preserving room for upside. Defining a target - what share of your net worth you are comfortable keeping in SpaceX - turns an open-ended question into a clear plan.
Finally, connect the selling schedule to what the money is actually for: an emergency fund, mortgage payoff, 529 funding, a taxable investment portfolio, charitable giving, or a real estate down payment. When sales are tied to specific objectives, the plan becomes far easier to commit to and follow.
For many employees, the practical question is not "plan or no plan" in the abstract, but which approach fits a given sale.
Selling during permitted open windows lets you retain discretion over timing and price. For simple, one-time sales - and for employees who want to stay nimble - this is often perfectly adequate.
A 10b5-1 plan trades flexibility for structure and discipline. It is well suited to recurring, phased, or sensitive sales, and to situations where you want the decision made in advance and executed automatically.
There is no universal answer. A junior employee selling a small, one-time amount during an open window has very different needs from a senior employee diversifying a seven-figure position across several years while regularly exposed to MNPI. The right approach depends on your role, your access to information, the size of your position, and what you are trying to accomplish - not on a blanket rule that everyone needs a plan.
Across concentrated-stock situations, the same avoidable errors come up again and again:
A useful starting checklist:
If you find yourself answering "I'm not sure" to several of these, that is a strong signal to slow down and get organized before selling - with or without a 10b5-1 plan.
We work with SpaceX employees to turn newly liquid equity into a clear, disciplined, tax-aware plan. That typically includes:
SpaceX equity review. We map your tax lots, vesting dates, cost basis, lock-up windows, and overall concentration risk so you understand exactly what you hold and how it is taxed.
Selling strategy. We design a phased, tax-aware selling approach - choosing which lots to sell and setting diversification targets - and, where appropriate, help structure it through a 10b5-1 plan in coordination with company compliance.
Tax coordination. We work alongside your CPA to estimate capital gains, the net investment income tax, and required estimated payments, to evaluate ISO/AMT issues, and to make sure an adequate tax reserve is set aside before proceeds are spent.
Broader wealth planning. Selling stock is one piece of a larger picture. We help integrate proceeds into mortgage payoff, 529 funding, an emergency fund, estate planning, charitable giving, real estate, and long-term portfolio management.
Ongoing monitoring. Your situation is not static. We revisit the plan as shares unlock, the stock price moves, tax lots age into long-term treatment, and your family's goals evolve.
A 10b5-1 plan can be a useful tool for SpaceX employees with large positions, recurring sale needs, or regular access to sensitive company information. For the right person, it brings discipline, reduces emotion, and provides an important layer of protection.
But the first step is not filling out a trading-plan document. The first step is understanding your tax lots, company restrictions, concentration risk, and financial goals. Once those are clear, whether you need a 10b5-1 plan - and how it should be designed - usually answers itself.
If you're a SpaceX employee looking for personalized guidance around your equity, fill out the form below to schedule a complimentary consultation.
Article written by Brady Lochte, founder of Axon Capital Management and a fee-only fiduciary financial advisor. Brady is committed to providing clear, transparent financial guidance that helps people navigate retirement, investing, and long-term planning with confidence.
Disclaimer: This article is provided for educational and informational purposes only and does not constitute investment, legal, or tax advice, nor a recommendation to buy or sell any security. Rule 10b5-1 and the tax treatment of equity compensation are complex and depend on your individual circumstances and on SpaceX's specific policies. Before acting, consult SpaceX's compliance and legal teams, a qualified tax professional, and a financial advisor. Axon Capital Management does not provide legal or tax advice.
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