Also known as a trading plan, program selling allows persons who would normally be regarded as corporate insiders and thus at risk of being accused of insider trading, were they to buy or sell company stock, to do so in accordance with predetermined written plan that details when they will be able to buy or sell shares at a predetermined time on a scheduled basis. The essential idea is that, by determining sufficiently in advance of business developments what their trading activity might be, that activity cannot have been influenced by material non-public information – typically the rules preclude changes to the plan once the trading person has access to material non-public information.
Although program selling plans can be difficult to orchestrate, they can be necessary where, for example, corporate insiders/founders have most of their wealth tied up in company stock and need to fund things like purchases of home, divorce settlements, etc. or where new board members are expected to personally acquire and hold shares in the company.