Form 4: Sprout Social Executive Chair Sells Shares Under 10b5-1 Plans

Justyn Russell Howard, Executive Chair of Sprout Social, reported sales of Class A Common Stock totaling 30,566 shares, primarily for tax obligations and under pre-arranged 10b5-1 plans.

Summary

• Justyn Russell Howard, Executive Chair, Director, and 10% Owner of Sprout Social, Inc. (SPT), reported multiple transactions involving the company's stock.
• On September 3, 2025, Howard sold 10,566 shares of Class A Common Stock at a price of $15.163 per share. This sale was made pursuant to an irrevocable election on November 29, 2024, under a Rule 10b5-1 plan, to cover tax obligations arising from the settlement of restricted stock units (RSUs).
• On September 5, 2025, Howard converted 20,000 shares of Class B Common Stock into 20,000 shares of Class A Common Stock at an exercise price of $0.00.
• Immediately following the conversion on September 5, 2025, Howard sold 20,000 shares of Class A Common Stock at a weighted average price of $14.937 per share. These shares were sold in multiple transactions ranging from $14.75 to $15.26 per share.
• Both transactions on September 5, 2025, occurred under a separate 10b5-1 plan adopted by Howard on September 10, 2024.
• Following these transactions, Howard directly holds 296,522 shares of Class A Common Stock and 518,874 shares of Class B Common Stock.
• Indirect holdings include 7,417 shares of Class A Common Stock and 1,006,190 shares of Class B Common Stock held by the JRH Revocable Trust, 170,000 shares of Class B Common Stock by the EEH Revocable Trust, 285,000 shares of Class B Common Stock by the JRH Gift Trust, and 300,000 shares of Class B Common Stock by the EEH Gift Trust.
• Remaining RSUs include 12,308 units vesting in 2 equal quarterly installments starting December 1, 2025; 42,663 units vesting in 6 equal quarterly installments starting December 1, 2025; 74,203 units vesting in 10 equal quarterly installments starting December 1, 2025; and 109,489 units with 25% vesting on March 1, 2026, and the remainder in 12 equal quarterly installments starting June 1, 2026.

Sentiment

Score: 5

Explanation: The filing details routine insider stock sales under pre-arranged 10b5-1 plans, with one sale specifically for tax obligations. This is generally considered neutral, as it does not reflect new information about the company's performance or a change in management's confidence, but rather a planned financial event.

Positives

• The sales were conducted under pre-arranged Rule 10b5-1 plans, indicating a structured and pre-determined approach to stock liquidation rather than opportunistic selling.
• A portion of the sales was explicitly for covering tax obligations upon RSU settlement, which is a common and expected reason for insider sales.

Negatives

• The transactions represent a reduction in the direct beneficial ownership of Class A Common Stock by a key executive and 10% owner, totaling 30,566 shares.
• While under 10b5-1 plans, any insider sale can be perceived as a slight decrease in management's direct equity alignment with shareholders.

Future Outlook

The filing indicates future vesting schedules for a significant number of Restricted Stock Units (RSUs) held by the Executive Chair, with vesting commencing on December 1, 2025, March 1, 2026, and June 1, 2026. These RSUs represent contingent rights to receive Class A Common Stock.

Management Comments

• Shares were sold pursuant to an irrevocable election made on November 29, 2024, in conformity with the requirements of Rule 10b5-1 for the purpose of covering tax obligations upon settlement of restricted stock units.
• The transactions reported on September 5, 2025, occurred under a 10b5-1 plan adopted by the Reporting Person on September 10, 2024.

Industry Context

This Form 4 filing is a routine disclosure of insider transactions and does not provide specific industry context or trends. It reflects individual executive stock management rather than broader industry movements.

Related Party Transactions

• Indirect beneficial ownership is held through various trusts (JRH Revocable Trust, EEH Revocable Trust, JRH Gift Trust, EEH Gift Trust) where the Reporting Person or their spouse serves as a sole trustee, indicating related party control over these holdings.

Stakeholder Impact

• Shareholders may note the reduction in direct insider ownership, though the pre-planned nature of the sales under 10b5-1 plans mitigates concerns about opportunistic selling.
• The continued significant indirect holdings through trusts, along with substantial unvested RSUs, indicate ongoing alignment of the Executive Chair's interests with long-term shareholder value.

Next Steps

• Vesting of 12,308 RSUs in 2 equal quarterly installments beginning December 1, 2025.
• Vesting of 42,663 RSUs in 6 equal quarterly installments beginning December 1, 2025.
• Vesting of 74,203 RSUs in 10 equal quarterly installments beginning December 1, 2025.
• Vesting of 25% of 109,489 RSUs on March 1, 2026, with the remainder vesting in 12 equal quarterly installments beginning June 1, 2026.

Key Dates

Recommendation

The filing details routine insider stock sales by the Executive Chair, primarily for tax obligations and under pre-arranged 10b5-1 plans. These transactions do not provide new fundamental information about the company's performance or outlook that would warrant a change in investment thesis. Therefore, a 'hold' recommendation is appropriate, maintaining existing positions based on broader company fundamentals.

Keywords

Sprout Social, SPT, Insider Trading, Form 4, Stock Sale, Justyn Howard, Executive Chair, 10b5-1 Plan, Class A Common Stock, Class B Common Stock, RSU