Mark Zuckerberg has been criticized by privacy advocates, parents critical of social media, and politicians on Capitol Hill. But in one respect, the Meta Platforms CEO is the model executive. Mr. Zuckerberg trades shares in his company each trading day, ensuring that his diversification is done randomly and avoiding any possibility that he benefits from insider information. More executives should follow his lead, and the Securities and Exchange Commission might be smart to mandate they do.

The problem starts with CEO pay. It isn’t the canard that it is “excessive,” but a conundrum arises because CEOs are compensated primarily with company stock. This idea—a product of the early 1990s—revolutionized American corporations. By aligning the interests of CEOs and shareholders, equity pay reduced the temptation to build empires and focused corporate managers on creating value for shareholders.

CEOs need to sell stock for their expenses and to diversify their portfolio. Diversification benefits not only CEOs (who are better off not having all their eggs in one basket) but also the company, since underdiversified executives value the additional shares they earn less. Selling shares is fraught, however, since CEOs possess information about the value of their shares that the broader market doesn’t have. Companies take steps to minimize the risk—such as banning executives from selling right before earnings announcements—but these are imperfect. Numerous studies show that executives often earn abnormal returns on their stock sales.

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