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Landmark sued by former real estate head

The firm failed to deliver on the terms of its employment offer to Gary Stevens, the suit alleges

Landmark Partners is being sued by its former real estate head, Gary Stevens, over claims the secondaries firm failed to keep a promise to grant him at least a 10 percent ownership in the firm.

Stevens, who joined the private equity and real estate secondaries firm as partner in May 2004 to lead its real estate operations, filed a lawsuit with the District Court of Maryland in November citing a breach of contract. He was terminated by Landmark on 6 November, according to court documents.

The dispute allegedly involves Landmark's offer to provide Stevens with an ownership interest in the whole of Landmark, initially set at 10 percent and to start from the time of his employment. The economic participation plan, as it was referred to, would be drawn up at a later date following Stevens' appointment.

When the “economic participation plan” was drawn up four years later, according to the suit, it did not provide Stevens with any interest in the “growth in the equity of the entire firm”, the “participation rights in the amount of 10 percent” nor “remuneration of compensation for the increase in the value of the firm” between 2004 and 2008.

Prior to joining Landmark, Stevens was a managing director of The Carlyle Group, leading its real estate fund activities and before that was chief operating officer of JE Robert Companies.

Landmark Partners is currently looking to raise the largest real estate secondaries fund ever, with a target of $750 million.

Landmark, founded in 1989, only invested in private equity until 1996 when it branched out into real estate secondaries. It now has more than $6 billion in capital commitments—a fifth of that in real estate secondary programmes—and has transferred more than 1,100 limited partnership interests in funds managed by more than 400 GPs.

It is run by president Timothy Haviland and chairman and managing partner Francisco Borges. Landmark has raised 14 funds in total, securing capital commitments of $4.8 billion.

An excerpt from Gary Stevens' suit
As part of the Contract, Landmark promised Stevens the right to participate in the economics of Landmark (“Economic Participation Provision”). The Economic Participation Provision of the Contract provides, in relevant part, that Landmark is “in the process of examining various options for key principals to benefit from their contributions to the growth of the firm. At this time, we have not determined what form that will take, i.e., ownership in the management of the company, options, profit sharing, or some combination thereof. You will have a meaningful participation (initially 10 percent) in the program, once it is finalised.”

At the time the Contract was entered into, and as an inducement top persuade Stevens to join Landmark, Defendant further promised Stevens that whatever the form of the economic participation in Landmark, it would be effective so as to begin to build value as of May 2004, the month in which the Plaintiff commenced employment with Defendant.

Plaintiff accepted Defendants offer of employment in reliance on Defendant's promises regarding Plaintiff's economic participation in the Firm.

Despite assurances by Defendant that it was developing a plan that would meet its obligations under the Contract, it was not until more than four years later, in or around September 2008, that Defendant finally proposed an economic participation plan, the Landmark Partners Equity Share Program (“the Proposal”).

The Proposal fails to implement the terms Defendant agreed in the Contract. Among other things, the Proposal:

(a) does not provide the Plaintiff any interest in the growth in the equity of the entire Firm;

(b) does not provide Plaintiff with initial participation rights in the amount of 10 percent; and

(c) does not provide any remuneration or compensation for the increase in the value of the Firm's equity between the date of his employment in May 2004 and the present.