Company: LGN
Filing Date: 2025-08-15
Form Type: S-1
Source: 0001193125-25-181698
Chunk: 279

Company: Legence Corp.
Filing Date: 2025-08-15
Form: S-1
Chunk 279
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Legence Holdings LLC and Subsidiaries

Notes to Consolidated Financial Statements

Member’s Equity

Contributions to the Company from the Parent and distributions from the Company to the Parent are accounted for by the Company as adjustments to Member’s
equity. Additionally, Parent may issue Parent interests to the Company’s employees or to other parties in connection with certain transactions, which the Company accounts for as a capital contribution from or on behalf of Parent recorded
within Member’s equity.

Please refer to “” for additional information related to equity.

Stock-Based Compensation

Parent issues Series A profits
interests (“Series A Profits Interests”) awards and Restricted Series C common interests (“Restricted Series C Common Interests”) awards as compensation to the Company’s employees. Because these Parent interests are
issued to the Company’s employees, are indexed and settled in Parent interests, and the Company does not reimburse the Parent for the awards, the Company accounts for these awards as stock-based payment awards under ASC Topic 718,
Compensation—Stock Compensation(“ASC 718”).The Company recognizes compensation expense for equity-classified awards at their fair value measured as of the grant date. The Company recognizes compensation expense for
liability-classified awards at their fair value measured as of the reporting date, with an offset to stock-based compensation liability in Other long-term liabilities on the Consolidated Balance Sheets.

Series A Profits Interests awards are comprised of time vesting (60%) (“Time Interests”), performance vesting (20%) (“Performance
Interests”), and exit vesting (20%) (“Exit Interests”). Time Interests and Restricted Series C Common Interests are service based awards, and the Company accounts for these awards as liability-classified awards under ASC 718. The
awards are liability-classified due to a below fair value repurchase feature that is exercisable by the Parent under certain employment termination scenarios. The Company recognizes compensation expense on a straight-line basis over the five-year
vesting period with accelerated vesting and compensation expense when or if a change of control, as defined in Parent agreement (“Change of Control”), event occurs. The liability is adjusted for changes in fair value at each reporting
date. The liability is reclassified to equity when or if the awards are no longer subject to the below fair value repurchase feature.

The Company
accounts for the Performance Interests as equity-classified awards under ASC 718 and recognizes compensation expense when or if certain liquidity events (including Change of Control) that trigger vesting occur. The Company