## Facts

- PFPC Worldwide, Inc. completed a short-form merger under 8 Del. C. § 253, with PFPC as the surviving corporation.
- John J. Andaloro and Robert J. Perlsweig were PFPC executives who, before the merger, owned PFPC common stock and held PFPC stock options under option agreements.
- The option agreements provided for vesting upon a change of control, including a § 253 merger.
- Petitioners alleged PFPC failed to provide adequate information or a reasonable opportunity to exercise vested options and convert them to shares before the merger’s effective time.
- Petitioners claimed PFPC instead presented a “take-it-or-leave-it” offer that undervalued their options and required waiver of legal rights.
- Petitioners filed an appraisal proceeding under 8 Del. C. § 262 seeking appraisal of (a) their PFPC shares and (b) the options they asserted they were forced to relinquish.
- PFPC moved for partial summary judgment, arguing § 262 appraisal is available only for shares held by stockholders and cannot be used to appraise options.

## Issues

1. Whether holders of stock options may obtain statutory appraisal of the value of those options under 8 Del. C. § 262 in connection with a merger.
2. Whether § 262 appraisal is limited to stockholders seeking fair value for their shares, leaving option-related disputes to contract or equitable remedies.

## Decision

- The Court of Chancery granted PFPC’s motion for partial summary judgment.
- The court held § 262 appraisal is limited to stockholders and their shares and does not extend to stock options.
- The appraisal action could proceed only as to petitioners’ PFPC shares, not their options.

## Legal Principles

- Statutory appraisal under 8 Del. C. § 262 is a limited remedy available only to “stockholders” for “shares of stock,” as those terms are used and defined in the statute.
- Stock options are contractual rights, not shares, and are outside the scope of § 262 appraisal absent legislative authorization.
- Courts will not expand appraisal beyond the statutory text based on equitable arguments; alleged mishandling of option rights must be pursued through contract and, where appropriate, equitable claims.
- Prior Delaware authority holding that option holders lack appraisal rights under § 262 is controlling absent a statutory basis to depart from it.

## Conclusion

The court ruled that Delaware’s appraisal statute provides a remedy only for stockholders seeking fair value of their shares and cannot be used to appraise stock options, even where option holders allege unfair treatment during a merger.


Andaloro v. PFPC Worldwide, Inc., 830 A.2d 1232 (Del. Ch. 2003)