The Dell Class V stock settlement is a $1 billion cash payment approved by the Delaware Court of Chancery on April 25, 2023, resolving claims that Dell Technologies underpaid holders of its Class V tracking stock (ticker DVMT) when it converted those shares into Class C common stock on December 28, 2018. It is the largest pre-trial recovery in a fiduciary duty case in the Chancery Court’s history.
Who Is Eligible for a Payment
The class covers people and institutions that held Dell Class V shares at the close of the December 28, 2018 conversion transaction. Eligibility turns on ownership at that moment, not on when the shares were originally bought.
No claim form was required. The net settlement fund, meaning the $1 billion minus court-approved fees and expenses, is distributed pro rata based on the number of eligible Class V shares each class member held at closing. The per-share recovery is simply the net fund divided by the total number of eligible shares. Roughly 199 million Class V shares were outstanding at the time of the transaction, and payments flow through the record holders and brokers who held those shares in 2018.
What the Lawsuit Was About
Dell created the Class V tracking stock in 2016 to help finance its acquisition of EMC Corporation. Each Class V share was designed to mirror, one-for-one, the public trading price of VMware, the cloud company Dell controlled through EMC. Dell and its bankers had told investors to expect the tracker to trade at no worse than a 5–10% discount to VMware.
It never did. From its first day of trading in August 2016 through late October 2018, DVMT averaged a roughly 35% discount to VMware. Investors blamed Dell’s complex capital structure, its debt load, and governance terms that let Dell’s controllers force a conversion of the tracker into Class C stock on terms the controllers largely dictated.
In 2018 Dell used that power. On July 2, 2018, the company announced a deal to exchange each Class V share for 1.3665 shares of Class C stock or $109 in cash, capped at $9 billion in aggregate cash. By the time stockholders approved the transaction on December 11 and it closed on December 28, the terms had been raised to $120 in cash (capped at $14 billion) or 1.8066 Class C shares. About 91% of shares elected cash, triggering a proration factor of roughly 0.6414 on cash elections. Dell paid out $14 billion in cash and issued about 149.4 million Class C shares. DVMT stopped trading, and Class C shares began trading on the NYSE under the ticker DELL the same day.
The lead plaintiff, Steamfitters Local 449 Pension Plan, argued that even at the improved terms the conversion price still embedded a large chunk of the discount to VMware, letting Michael Dell and Silver Lake — the controlling stockholders — capture value that belonged to minority holders. The consolidated complaint named Mr. Dell, Silver Lake, several Dell directors, and Goldman Sachs, which was accused of aiding and abetting the alleged fiduciary breaches in its role as financial advisor.
Why the Case Survived and Grew Stronger
Delaware ordinarily gives controller buyouts deferential review when the controller follows the framework of Kahn v. M&F Worldwide Corp., known as MFW, which requires both an independent special committee and a majority-of-the-minority stockholder vote. If MFW is satisfied, courts apply the business judgment rule. If it is not, courts apply the far more demanding “entire fairness” test, which puts the burden on the defendants to prove both a fair price and a fair process.
On June 11, 2020, Vice Chancellor J. Travis Laster denied the defendants’ motion to dismiss, finding that plaintiffs had adequately alleged failures on at least four of the MFW elements. The court found that Dell had not properly conditioned the deal on special committee approval because it kept the right to force a conversion around the committee. It found that Dell’s repeated public threats of a forced conversion created an “objectively coercive” environment, with the Vice Chancellor writing that “someone pointing a gun at you may not have decided whether to pull the trigger, but the situation is objectively threatening regardless of the shooter’s subjective intent.” The court identified independence problems for both special committee members, including close ties between one member and Silver Lake’s managing partner (they shared exclusive golf club memberships) and a decades-long relationship between the other member and a Dell senior advisor. And the court found the proxy statement allegedly omitted material information, including the price of the committee’s own final counterproposal and details about a prior Deloitte valuation of Class C stock favorable to Dell.
With MFW off the table, entire fairness applied. That ruling changed the litigation. After extensive discovery and with a trial set for December 2022, the parties announced a $1 billion settlement three weeks before trial. The stipulation is dated December 22, 2022, and Vice Chancellor Laster granted final approval on April 25, 2023.
How the $1 Billion Compares
The recovery is nearly four times the next-largest comparable pre-trial settlement in the Court of Chancery’s history, a point both the trial court and, later, the Delaware Supreme Court highlighted. For a class defined by ownership at a single moment in time, and paid without a claim form, that scale directly drives what each eligible share receives.
What Came Out of the Fund Before Distribution
Class members are paid from the net fund, so the fee award matters to the per-share number. Five plaintiffs’ firms litigated the case on a fully contingent basis, advancing more than $4 million in expenses: Labaton Keller Sucharow and Quinn Emanuel Urquhart & Sullivan as co-lead counsel, together with Robbins Geller Rudman & Dowd, Andrews & Springer, and Friedman Oster & Tejtel. They asked for $285 million.
Vice Chancellor Laster awarded $266.7 million, or 26.67% of the fund, the second-largest fee payout in Chancery Court history. He used Delaware’s “stage-of-case” method, which sets an indicative percentage that rises as a case moves through filing, motion practice, discovery, and toward trial; because counsel had litigated to the eve of trial and produced what the court called an “unprecedented result,” the highest bracket applied.
Pentwater Capital Management and seven other institutional investors, holding about 26% of the class, objected. They argued Delaware should adopt a “declining percentage” approach common in federal securities cases, under which the percentage falls as the fund grows. Five law professors filed amicus briefs proposing a 15% fee. Vice Chancellor Laster rejected the declining-percentage approach, calling it a “covert return to the lodestar method” Delaware had abandoned, and reasoned that shrinking fees on the largest recoveries would discourage firms from taking the hardest cases. The Delaware Supreme Court affirmed the fee award on August 14, 2024, holding that no mandatory declining-percentage rule exists in Delaware.
After the fee and approved expenses, the remainder of the $1 billion is what gets divided pro rata among eligible Class V shares from the December 28, 2018 conversion.
What This Settlement Does Not Cover
The settlement resolves claims tied to the 2018 Class V-to-Class C conversion only. It does not concern Dell’s later, unrelated matters, including a 2024 False Claims Act settlement over federal contracting, a 2024 California Energy Commission registration settlement, or a 2025 Canadian class action over a 2018 data breach. Holders of ordinary Dell common stock (Class C) at other times are not class members; eligibility runs to Class V holders at the moment of the December 28, 2018 conversion.