Company: LGN
Filing Date: 2025-12-09
Form Type: S-1
Source: 0001193125-25-312729
Chunk: 312

Company: Legence Corp.
Filing Date: 2025-12-09
Form: S-1
Chunk 312
---
ated Balance Sheets and are expensed on a straight-line basis over the lease term.

For leases of real estate, the Company elected not to separate the accounting for lease and non-lease
components. For all other lease asset classes, the Company separates the accounting for lease and non-lease components.

Please refer to “” for additional lease information and disclosures.

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