Form 4
Also called insider Form 4, statement of changes in beneficial ownership.
An insider transaction report filed after an executive buys, sells, or has equity vest or be granted. CompensationBase does not mix Form 4 amounts into SCT Total.
What it is
Form 4 is the Section 16 report insiders file after a change in beneficial ownership: open-market trades, option exercises, RSU vesting, gifts, and certain derivative transactions. It is a transaction report, usually due within two business days. It is not the annual SCT.
CompensationBase does not use Form 4 as the headline pay source. Vesting, sales, and option exercises on Form 4 are not added to SCT Total. Mixing them with grant-date pay is the most common way “CEO pay” gets double-counted.
Why companies use it
Section 16 is about reporting trading and ownership by insiders so the market can see it quickly. Companies (and executives) file Form 4 because the Exchange Act requires it, not because it is a compensation table.
Compensation committees may look at Form 4s when thinking about ownership guidelines, but the SCT remains the pay disclosure.
Pros
- Timely window into selling, withholding, and vesting.
- Shows realized events the SCT will never rewrite.
- Useful for ownership-guideline checks.
Cons
- Easy to misread a vest-and-sell as a new bonus.
- Not every compensation event is a Form 4 (cash salary is not).
- Adding Form 4 proceeds to SCT Total is not a methodology CompensationBase uses.
Examples
RSU vest on Form 4
Code M or A for acquisition, then F for shares withheld for tax. The dollar amount is vest-date value. The grant was already in an earlier SCT Stock Awards line.
Open-market sale
An executive sells shares bought years ago. That is liquidity, not a new grant. It does not belong in a total-compensation ranking.
On CompensationBase
Form 4 insider reports are not the headline pay source. Vesting, sales, and option exercises on Form 4 are not added to SCT Total.
Related terms
- Total compensation
The headline pay figure CompensationBase ranks and displays: the Summary Compensation Table Total column as filed, not a recomputed sum of the component bars.
- Reported pay vs realized pay
Reported pay is the SCT grant-date total for a fiscal year. Realized pay is cash received plus equity that actually vested or was exercised that year, which can be much higher or lower than the reported figure.
- Form 8-K Item 5.02
A current report item that can disclose new hire grants, severance, or role changes. CompensationBase does not add Item 5.02 amounts into the headline SCT total.