Former VSS Buyout Executive Sues For Severance

  • Former executive asks for at least $650,000
  • Alleges Veronis Suhler Stevenson changed job terms
  • Latest lawsuit in private equity over employment issues

The lawsuit, filed in August by George L. Cole, a former fund manager at New York-based Veronis Suhler Stevenson, seeks at least $650,000, the amount he calculated he would be entitled to under the firm’s severance policy.

Cole’s attorney, John K. Crossman of the law firm Zukerman Gore Brandeis & Crossman LLP, could not be reached for comment by deadline. Spokespeople for Veronis Suhler Stevenson did not reply to requests for comment.

Cole said in the suit that the firm attempted to change the terms of his employment this year, after he had worked there for a dozen years. Cole said he was hired by the firm in November 2000 and worked 12 years as a fund manager while never being bound by restrictive covenants until this summer, when the firm first sought to impose such conditions on his employment.

Along the way, Cole said he was tapped to be co-manager of the general partner in VSS Mezzanine Partners LP, a 2004 vintage vehicle focused on non-control investments, and the 2008 fund VSS Structured Capital II, where he was defined as a “key man” under the partnership agreement, requiring formal notice to the limited partners of his departure.

It was only early this year, when Veronis Suhler Stevenson sought to start another fund, to be called VSS Structured Capital III, where Cole was assigned once again to be co-manager, that Jeffrey T. Stevenson, managing partner at the firm, asked Cole to become a participant in Fund III and asked him for the first time to sign an employment agreement, Cole said.

This document “did not accurately reflect the terms pursuant to which Cole had been employed during the prior twelve years,” according to the complaint. The draft agreement also would change the terms of Cole’s employment, “including new restrictive covenant terms” that Cole charged “sought to severely restrict Cole’s activities upon separation,” according to the complaint. When Cole refused to sign the new agreement as written, he said he was fired “without cause” on July 1.

Cole said he earned $750,000 from 2008 to early 2012 (presumably annually) and from early 2012 to the termination of employment he was on a $650,000 run rate. He called for a payment by the firm of at least $650,000, under the firm’s policy of awarding severance at a rate of one month’s pay for each year of employment.

The private equity industry, long a clubby environment for dealmakers and their partners, has in recent years become the scene for a series of employment-related lawsuits by former executives. The most prominent cases have emerged in the venture capital industry, most notably in a suit filed in May 2012 by Ellen Pao, a former investment partner with the Sand Hill Road giant Kleiner Perkins Caufield & Byer, who accused the firm of tolerating sexual harassment and gender discrimination that affected her pay and career advancement. An appeals court rejected Kleiner Perkins’s effort to remove the case to arbitration; the firm has denied any fault.

Other lawsuits have been filed against firms including venture firm CMEA, where three executive assistants accused a former operating partner of making inappropriate sexual comments, often in front of other executives who allegedly did little to curb the behavior. CMEA has voiced confidence it will prevail in the case.

The mega-firm Cerberus Capital Management LP became the target of a lawsuit in April, when a former marketing executive accused the firm of retaliating against her and wrongfully firing her after she complained that marketing documents misrepresented a fund that she was selling. Cerberus has disputed the allegations.