What is a Rule 10b5-1 sales plan and why is Salesforce disclosing it?

A Rule 10b5-1 sales plan allows company insiders, like executives, to sell their company stock at predetermined times or prices, or based on a formula, even if they later come into possession of material non-public information. This plan helps demonstrate that the sale was not based on insider knowledge, thereby avoiding potential insider trading accusations. Salesforce is disclosing this plan under Regulation FD (Fair Disclosure) to ensure all investors have access to the same material information.

How many shares could Marc Benioff potentially sell under this new plan?

Under the newly adopted Fourth Plan, Marc Benioff can sell up to 2,500,000 shares of Salesforce common stock. These sales are expected to occur over approximately one year, starting after his previous trading plans are completed.

Does this mean Marc Benioff is selling all his Salesforce stock?

No, this plan allows for the sale of a portion of his shares. As of August 16, 2007, Mr. Benioff beneficially owned over 16 million shares. The Fourth Plan allows for the sale of up to 2.5 million shares, meaning a significant number of shares would remain under his beneficial ownership even if the maximum number are sold.

Will Salesforce provide updates on the actual stock sales made under this plan?

While actual sales transactions will be disclosed publicly through required SEC filings, Salesforce states it generally does not undertake to report on all modifications, terminations, or specific transactions for Mr. Benioff's plans or other officers' and directors' trading plans, unless required by law.

CRM 8-K: Regulation FD — Aug 17, 2007

Summary

This Form 8-K filing from Salesforce.com, Inc. (CRM) on August 17, 2007, primarily disclosed the adoption of a new Rule 10b5-1 sales plan by its Chairman and CEO, Marc Benioff. This fourth plan allows for the orderly sale of up to 2,500,000 shares of common stock over approximately one year, commencing after the completion of prior trading plans. The sales will occur at prevailing market prices and are subject to certain restrictions and the possibility of termination. This disclosure is important for investors as it provides transparency into executive stock sales, helping them understand potential selling pressure. The plan's structure, designed to comply with Rule 10b5-1, aims to mitigate concerns about insider trading. Additionally, the plan includes a provision for gifting up to 100,000 shares to a public charity, indicating a philanthropic element. As of the filing date, Mr. Benioff beneficially owned over 16 million shares.

Key Highlights

1Marc Benioff, Chairman and CEO, adopted a fourth Rule 10b5-1 sales plan.
2The plan permits the sale of up to 2,500,000 shares of Salesforce common stock.
3Sales are expected to commence around August 21, 2007, and continue for approximately one year.
4Sales will be conducted in open market transactions at prevailing market prices.
5The plan includes provisions for gifting up to 100,000 shares to a qualified public charity.
6Mr. Benioff beneficially owned 16,011,006 shares as of August 16, 2007.
7The company clarified it does not intend to report on all modifications or transactions of executive trading plans.

Salesforce, Inc. 8-K Report, Regulation FD Disclosure (Aug 17, 2007)

Summary

Key Highlights

Frequently Asked Questions