Equity Appreciation Rights

3 Months Ended

Mar. 31, 2026

Madison Industries IAQ Solutions Corporation

Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]

Equity Appreciation Rights

Equity Appreciation Rights

Certain employees of the Company and its subsidiaries participate in an Equity Appreciation Rights Plan (the “EAR Plan”) to provide an equity-value based long-term incentive to align the participants’ interest with those of the owners of the Company and to retain key employees. The Company’s EAR Plan was accounted for as a deferred compensation plan in accordance with ASC 710 – Compensation until the EAR Plan was amended on December 31, 2025 (“Amended EAR Plan”). The Amended EAR Plan is accounted for in accordance with ASC 718 – Compensation – Stock Compensation.

EAR Plan. Prior to December 31, 2025, awards under the EAR Plan are earned and payable upon the attainment of performance conditions, the occurrence of a qualifying liquidity event (as defined in the EAR Plan), or at the discretion of the EAR Plan manager. Awards generally vest over a five-year term and are settled in cash. Awards under the EAR Plan are subject to restrictive covenants including non-compete provisions. Valuation of the awards is based on the Company’s best estimate of amounts to be paid based on the EAR Plan manager’s assumptions around equity value, service period, and expected term and payout date. In addition, the Company has elected a policy of discounting the liability associated with the awards to its expected payout date.

Amended EAR Plan. Awards granted in the Amended EAR Plan generally cliff vest on the fifth anniversary of the grant date, subject to the equity appreciation based market condition, which is based on the Company's equity value exceeding a multiple of contributed capital (as calculated in accordance with the Amended EAR Plan), or vest upon the occurrence of a qualifying liquidity event (as defined in the Amended EAR Plan). As of March 31, 2026, awards are settled in units of Madison Indoor Air Solutions (“Plan Sponsor”), a subsidiary of the Company (or, in the event of a public offering, shares of our Madison Air Solutions Corporation Class A common stock). Awards under the Amended EAR Plan are subject to restrictive covenants including non-compete provisions. Awards are issued as a percentage of a pre-determined equity profit pool that is set aside for plan participants. As of March 31, 2026 and December 31, 2025, 10.0% of the Plan Sponsor’s equity profit pool is authorized for issuance. Compensation expense for the Amended EAR Plan is recognized on a straight-line basis over the term of the award and the Company recognizes forfeitures as they occur.

When awards become fully vested, the Company will withhold shares to satisfy employee tax obligations. As part of this process, cash payments are remitted to taxing authorities by the Company. These payments are reflected as financing activities, consistent with their treatment as share repurchases for accounting purposes.

Equity appreciation rights expense is included in selling, general, and administrative expenses in the accompanying unaudited condensed consolidated statements of income (loss).

Equity appreciation rights cost by award type was as follows:

	Three months ended March 31,
	2026		2025
Equity compensation cost - EAR Plan	$	—	$	5.2
Equity compensation cost - Amended EAR Plan	10.4		—
Total Equity Appreciation Rights cost	$	10.4	$	5.2

See Note 21. Subsequent Events," for information related to the treatment of EARS upon the consummation of the IPO.