Company: LGN
Filing Date: 2025-02-14
Form Type: DRS
Source: 0000950123-25-002471
Chunk: 243

Company: Legence Corp.
Filing Date: 2025-02-14
Form: DRS
Chunk 243
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uant to 17 C.F.R. Section 200.83

Legence Holdings LLC and Subsidiaries

Notes to Consolidated Financial Statements

Company’s employees or to other parties to facilitate 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 share-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 payment liability in Other long-term liabilities on the Consolidated Balance Sheet.

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 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 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 accounts for the Exit Interests as equity-classified awards under ASC 718 and recognizes compensation expense when or if a Change of Control that triggers vesting occurs.
Awards forfeitures are accounted for as they occur.

The Company utilizes an option-pricing model (“OPM”) using certain