Annual Report — Form 10-K Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: 10-K Annual Report HTML 3.25M
2: EX-4.9 Instrument Defining the Rights of Security Holders HTML 63K
3: EX-10.4.4 Material Contract HTML 51K
4: EX-10.4.5A Material Contract HTML 47K
5: EX-10.4.5B Material Contract HTML 45K
6: EX-10.4.6 Material Contract HTML 58K
7: EX-10.4.7 Material Contract HTML 52K
8: EX-10.4.8 Material Contract HTML 51K
9: EX-10.6.4 Material Contract HTML 40K
10: EX-10.6.5K Material Contract HTML 77K
11: EX-10.6.5L Material Contract HTML 77K
12: EX-21.1 Subsidiaries List HTML 37K
13: EX-23.1 Consent of Expert or Counsel HTML 37K
14: EX-23.2 Consent of Expert or Counsel HTML 37K
15: EX-31.1 Certification -- §302 - SOA'02 HTML 43K
16: EX-31.2 Certification -- §302 - SOA'02 HTML 43K
17: EX-31.3 Certification -- §302 - SOA'02 HTML 43K
18: EX-31.4 Certification -- §302 - SOA'02 HTML 43K
19: EX-32.1 Certification -- §906 - SOA'02 HTML 41K
20: EX-32.2 Certification -- §906 - SOA'02 HTML 41K
27: R1 Cover Page HTML 115K
28: R2 Consolidated Statements of Income HTML 136K
29: R3 Consolidated Statements of Comprehensive Income HTML 74K
30: R4 Consolidated Statements of Comprehensive Income HTML 46K
(Parenthetical)
31: R5 Consolidated Balance Sheets HTML 254K
32: R6 Consolidated Balance Sheets (Parenthetical) HTML 56K
33: R7 Consolidated Statements of Cash Flows HTML 165K
34: R8 Consolidated Statements of Changes in Equity HTML 129K
35: R9 Consolidated Statements of Changes in Equity HTML 39K
(Parenthetical)
36: R10 Summary of Significant Accounting Policies HTML 123K
37: R11 Revenue HTML 71K
38: R12 New Accounting Standards HTML 49K
39: R13 Regulatory Matters HTML 258K
40: R14 Income Taxes HTML 225K
41: R15 Lines of Credit and Short-Term Borrowings HTML 58K
42: R16 Long-Term Debt and Liquidity Matters HTML 105K
43: R17 Retirement Plans and Other Postretirement Benefits HTML 311K
44: R18 Leases HTML 87K
45: R19 Jointly-Owned Facilities HTML 87K
46: R20 Commitments and Contingencies HTML 99K
47: R21 Asset Retirement Obligations HTML 50K
48: R22 Fair Value Measurements HTML 159K
49: R23 Earnings Per Share HTML 54K
50: R24 Stock-Based Compensation HTML 75K
51: R25 Derivative Accounting HTML 121K
52: R26 Other Income and Other Expense HTML 80K
53: R27 Palo Verde Sale Leaseback Variable Interest HTML 48K
Entities
54: R28 Investments in Nuclear Decommissioning Trusts and HTML 108K
Other Special Use Funds
55: R29 Changes in Accumulated Other Comprehensive Loss HTML 77K
56: R30 Schedule I - Condensed Financial Information of HTML 148K
Registrant
57: R31 Summary of Significant Accounting Policies HTML 141K
(Policies)
58: R32 Summary of Significant Accounting Policies HTML 80K
(Tables)
59: R33 Revenue (Tables) HTML 64K
60: R34 Regulatory Matters (Tables) HTML 162K
61: R35 Income Taxes (Tables) HTML 224K
62: R36 Lines of Credit and Short-Term Borrowings (Tables) HTML 54K
63: R37 Long-Term Debt and Liquidity Matters (Tables) HTML 103K
64: R38 Retirement Plans and Other Postretirement Benefits HTML 304K
(Tables)
65: R39 Leases (Tables) HTML 85K
66: R40 Jointly-Owned Facilities (Tables) HTML 88K
67: R41 Commitments and Contingencies (Tables) HTML 55K
68: R42 Asset Retirement Obligations (Tables) HTML 48K
69: R43 Fair Value Measurements (Tables) HTML 139K
70: R44 Earnings Per Share (Tables) HTML 54K
71: R45 Stock-Based Compensation (Tables) HTML 92K
72: R46 Derivative Accounting (Tables) HTML 168K
73: R47 Other Income and Other Expense (Tables) HTML 79K
74: R48 Palo Verde Sale Leaseback Variable Interest HTML 47K
Entities (Tables)
75: R49 Investments in Nuclear Decommissioning Trusts and HTML 107K
Other Special Use Funds (Tables)
76: R50 Changes in Accumulated Other Comprehensive Loss HTML 76K
(Tables)
77: R51 Summary of Significant Accounting Policies - HTML 121K
Additional Information (Details)
78: R52 Summary of Significant Accounting Policies - HTML 66K
Summary of Property, Plant and Equipment (Details)
79: R53 Summary of Significant Accounting Policies - HTML 62K
Supplemental Cash Flow Information (Details)
80: R54 Revenue - Sources of Revenue (Details) HTML 55K
81: R55 Revenue - Additional Information (Details) HTML 52K
82: R56 Revenue - Allowance for Doubtful Accounts HTML 45K
(Details)
83: R57 Regulatory Matters - Regulatory Matters - COVID-19 HTML 79K
(Details)
84: R58 Regulatory Matters - Retail Rate Case Filing HTML 136K
(Details)
85: R59 Regulatory Matters - Capital Structure and Costs HTML 52K
of Capital (Details)
86: R60 Regulatory Matters - Additional Information HTML 285K
(Details)
87: R61 Regulatory Matters - Deferred Fuel and Purchased HTML 50K
Power Regulatory Asset (Details)
88: R62 Regulatory Matters - Four Corners, Cholla and HTML 51K
Navajo Plant (Details)
89: R63 Regulatory Matters - Schedule of Regulatory Assets HTML 96K
(Details)
90: R64 Regulatory Matters - Schedule of Regulatory HTML 96K
Liabilities (Details)
91: R65 Income Taxes - Additional Information (Details) HTML 62K
92: R66 Income Taxes - Reconciliation of Unrecognized Tax HTML 59K
Benefits (Details)
93: R67 Income Taxes - Summary of Unrecognized Tax HTML 47K
Benefits (Details)
94: R68 Income Taxes - Components of Income Tax Expense HTML 64K
(Details)
95: R69 Income Taxes - Effective Tax Rate Reconciliation HTML 71K
(Details)
96: R70 Income Taxes - Components of Deferred Income Tax HTML 109K
Liability (Details)
97: R71 Lines of Credit and Short-Term Borrowings - HTML 57K
Schedule of Credit Facilities (Details)
98: R72 Lines of Credit and Short-Term Borrowings - HTML 104K
Additional Information (Details)
99: R73 Long-Term Debt and Liquidity Matters - Components HTML 100K
of Long-Term Debt (Details)
100: R74 Long-Term Debt and Liquidity Matters - Additional HTML 116K
Information (Details)
101: R75 Long-Term Debt and Liquidity Matters - Future HTML 61K
Principal Payments (Details)
102: R76 Long-Term Debt and Liquidity Matters - Fair Value HTML 46K
of Long-Term Debt (Details)
103: R77 Retirement Plans and Other Postretirement Benefits HTML 84K
- Additional Information (Details)
104: R78 Retirement Plans and Other Postretirement Benefits HTML 66K
- Net Periodic Benefit Costs and Portion including
Portion Charged to Expense (Details)
105: R79 Retirement Plans and Other Postretirement Benefits HTML 78K
- Changes Benefit Obligations and Funded Status
(Details)
106: R80 Retirement Plans and Other Postretirement Benefits HTML 49K
- Projected Benefit Obligation for Pension Plans
(Details)
107: R81 Retirement Plans and Other Postretirement Benefits HTML 56K
- Amounts Recognized on the Consolidated Balance
Sheets (Details)
108: R82 Retirement Plans and Other Postretirement Benefits HTML 55K
- Impact to Accumulated Other Comprehensive Loss
(Details)
109: R83 Retirement Plans and Other Postretirement Benefits HTML 80K
- Weighted-Average Assumptions for Pensions and
Other Benefits (Details)
110: R84 Retirement Plans and Other Postretirement Benefits HTML 61K
- Asset Allocation (Details)
111: R85 Retirement Plans and Other Postretirement Benefits HTML 118K
- Fair Value of Pinnacle West's Pension Plan
(Details)
112: R86 Retirement Plans and Other Postretirement Benefits HTML 55K
- Estimated Future Benefit Payments (Details)
113: R87 Leases - Additional information (Details) HTML 61K
114: R88 Leases - Lease costs (Details) HTML 53K
115: R89 Leases - Maturity of our operating lease HTML 66K
liabilities (Details)
116: R90 Leases - Other additional information related to HTML 47K
operating lease liabilities (Details)
117: R91 Jointly-Owned Facilities (Details) HTML 102K
118: R92 Commitments and Contingencies - Palo Verde Nuclear HTML 119K
Generating Station and Contractual Obligations
(Details)
119: R93 Commitments and Contingencies - Superfund-Related HTML 48K
Matters and Southwest Power Outage (Details)
120: R94 Commitments and Contingencies - Environmental HTML 105K
Matters and Financial Assurances (Details)
121: R95 Asset Retirement Obligations (Details) HTML 63K
122: R96 Fair Value Measurements - Fair Value of Assets and HTML 122K
Liabilities (Details)
123: R97 Fair Value Measurements - Additional Information HTML 48K
(Details)
124: R98 Earnings Per Share (Details) HTML 66K
125: R99 Stock-Based Compensation - Additional Information HTML 101K
(Details)
126: R100 Stock-Based Compensation - Summary of Restricted HTML 49K
Stock, Stock Grants, Stock Units and Performance
Shares (Details)
127: R101 Stock-Based Compensation - Status of Nonvested HTML 78K
Restricted Stock, Stock Grants, Stock Units and
Performance Shares (Details)
128: R102 Derivative Accounting - Additional Information HTML 56K
(Details)
129: R103 Derivative Accounting - Outstanding Gross Notional HTML 42K
Amounts Outstanding (Details)
130: R104 Derivative Accounting - Gains and Losses from HTML 55K
Derivative Instruments (Details)
131: R105 Derivative Accounting - Derivative Instruments in HTML 97K
the Balance Sheet (Details)
132: R106 Derivative Accounting - Credit Risk and Related HTML 45K
Contingent Features (Details)
133: R107 Other Income and Other Expense (Details) HTML 79K
134: R108 Palo Verde Sale Leaseback Variable Interest HTML 70K
Entities (Details)
135: R109 Palo Verde Sale Leaseback Variable Interest HTML 51K
Entities - Schedule of VIEs (Details)
136: R110 Investments in Nuclear Decommissioning Trusts and HTML 133K
Other Special Use Funds (Details)
137: R111 Changes in Accumulated Other Comprehensive Loss HTML 73K
(Details)
138: R112 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF HTML 77K
REGISTRANT - Comprehensive Income (Details)
139: R113 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF HTML 154K
REGISTRANT - Balance Sheets (Details)
140: R114 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF HTML 117K
REGISTRANT - Cash Flows (Details)
142: XML IDEA XML File -- Filing Summary XML 254K
26: XML XBRL Instance -- pnw-20201231_htm XML 7.07M
141: EXCEL IDEA Workbook of Financial Reports XLSX 234K
22: EX-101.CAL XBRL Calculations -- pnw-20201231_cal XML 507K
23: EX-101.DEF XBRL Definitions -- pnw-20201231_def XML 2.30M
24: EX-101.LAB XBRL Labels -- pnw-20201231_lab XML 3.87M
25: EX-101.PRE XBRL Presentations -- pnw-20201231_pre XML 2.51M
21: EX-101.SCH XBRL Schema -- pnw-20201231 XSD 465K
143: JSON XBRL Instance as JSON Data -- MetaLinks 763± 1.19M
144: ZIP XBRL Zipped Folder -- 0000764622-21-000013-xbrl Zip 1.24M
THIS AWARD AGREEMENT is made and entered into as of __________ (the “Date of Grant”), by and between Pinnacle West Capital Corporation (the “Company”), and _________________ (“Employee”).
BACKGROUND
A.The Board of Directors of the Company (the “Board of Directors”)
has adopted, and the Company’s shareholders have approved, the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan (the “Plan”), pursuant to which Performance Share Awards and Dividend Equivalent Awards may be granted to employees of the Company and its subsidiaries.
B.The Company desires to grant to Employee Performance Shares and Dividend Equivalents under the terms of the Plan.
C.Pursuant to the Plan, the Company and Employee agree as follows:
AGREEMENT
a.Grant of Award. Pursuant to action of the Committee, which was taken on the Date of Grant, the Company grants to Employee ____________ (____) Performance Shares and related Dividend Equivalents. The
Performance Shares granted under this Section 1 are referred to in this Award Agreement as the “Base Grant.”
b.Award Subject to Plan. This Performance Share Award and the related Dividend Equivalent Award are granted under and are expressly subject to all of the terms and provisions of the Plan, which terms are incorporated herein by reference, and this Award Agreement. In the event of any conflict between the terms and conditions of this Award Agreement and the Plan, the provisions of the Plan shall control.
c.Performance Period. The Performance Period for this Award begins January 1, _____, and ends December 31, ______.
d.Payment
and Vesting.
(i)Performance Shares Payable In Stock. As soon as practicable in the fiscal year immediately following the end of the Performance Period, the Company will determine (i) the Company’s Total Shareholder Return (as defined herein) as compared to the Total Shareholder Return of the companies in the Edison Electric Institute Index (the “Growth Index”) over the Performance Period and (ii) the Company’s Average Performance with respect to the Performance Metrics (as defined herein). The Company then will deliver to Employee one (1) share of the Company’s Stock for each then-outstanding Performance Share under this Award Agreement, subject to adjustment pursuant to Section 5 below. The Company anticipates that the Stock payout, if any, related to the Company’s
Total Shareholder Return will be made by ________. The Company anticipates that the Stock payout, if any, related to the Performance Metrics will be made by ________ and in no event will such Stock payout be made later than ________.
(ii)Normal or Early Retirement, Death or Disability; Late Career Recipient.
(i) Provided that Employee either qualifies for “Early Retirement” or “Normal Retirement” under the Pinnacle West Capital Corporation Retirement Plan (the “Retirement Plan”), or is a Late Career Recipient (as defined below), in the case of Employee’s death or Disability, Employee shall be deemed to have been employed by the Company through the end of the Performance
1
Period
and Employee (or his or her estate) will receive the Stock, if any, to which Employee is entitled at the time specified in Section 4(a).
(ii) In the case of Employee’s Termination of Employment during the Performance Period which constitutes an Early Retirement or a Normal Retirement under the Retirement Plan, Employee shall be deemed to have been employed by the Company through the end of the Performance Period and Employee (or his or her estate) will receive the Stock, if any, to which Employee is entitled at the time specified in Section 4(a).
(iii) If, at the time of Employee’s death, Disability or retirement Employee has reached sixty (60) years of age and has been credited with at least five (5) Years of Service, as defined under the Retirement
Plan, and does not otherwise meet the criteria for Early Retirement or Normal Retirement under the Retirement Plan, Employee shall be treated for purposes of this Agreement as a “Late Career Recipient”. Upon a Late Career Recipient’s retirement during the Performance Period, Employee will receive a straight prorated payout of the number of Performance Shares calculated in accordance with Section 5 based on the number of days Employee was employed during the Performance Period. Upon a Late Career Recipient’s retirement following the end of the Performance Period, Employee will receive a payout of the number of Performance Shares calculated in accordance with Section 5. No fractional Stock shall be issued. If the Stock payout results in a fractional share of one-half or greater, such fraction will be increased to provide for the issuance of a full share of Stock. Employee
will receive the Stock, if any, to which Employee is entitled at the time specified in Section 4(a).
(iii)Termination Without Cause. In the event Employee’s employment is terminated by the Company without cause, the Chief Executive Officer (“CEO”) of the Company may determine in his discretion if, to what extent, and when any unvested portion of the Performance Shares granted under this Agreement should vest; provided, however, that (i) any vesting of unvested Performance Shares granted under this Agreement pursuant to this Section 4(c) shall be approved by the Committee, and (ii) nothing herein shall obligate the CEO to exercise his discretion to cause any unvested Performance Shares to vest.
(iv)Termination For Cause. Notwithstanding
any other provision in this Section 4, in the event Employee is terminated for Cause, then regardless of Employee’s retirement, Early Retirement, Normal Retirement, death or Disability, Employee shall forfeit the right to receive any Stock hereunder that Employee would otherwise be entitled to receive following his or her date of termination. For purposes only of this Section 4(d), “Cause” means (A) embezzlement, theft, fraud, deceit and/or dishonesty by the Employee involving the property, business or affairs of the Company or any of its subsidiaries, or (B) an act of moral turpitude which in the sole judgment of the CEO reflects adversely on the business or reputation of the Company or any of its subsidiaries or negatively affects any of the Company’s or any of its subsidiaries’ employees or customers.
(v)Disability. “Disability”
has the meaning set forth for such term in the Retirement Plan.
(vi)Dividend Equivalents. In satisfaction of the Dividend Equivalents Award made pursuant to Section 1, at the time of the Company’s delivery of Stock to Employee pursuant to this Section 4, the Company also will deliver to Employee fully transferrable shares of Stock equal in value to the amount of dividends, if any, that Employee would have received if Employee had directly owned the Stock to which the Performance Shares relate from the Date of Grant to the date of the Stock payout, plus interest on such amount at the rate of 5 percent compounded quarterly, as determined pursuant to the Plan. The number of shares of Stock distributed to Employee will be determined by dividing the amount of the Dividend Equivalents and interest
by the Fair Market Value of one share of Stock as of the applicable date of the Stock payout. No fractional Stock
2
shall be issued. If the Stock payout results in a fractional share of one-half or greater, such fraction will be increased to provide for the issuance of a full share of Stock.
(vii)Impact on Retirement Plans. The value of the shares of Stock distributed upon payment for the Performance Shares and Dividend Equivalents will be disregarded for purposes of calculating the amount of Employee’s benefit under any Company retirement plans.
e.Performance Criteria and Adjustments. Fifty
percent (50%) of the Performance Shares awarded under this Award Agreement will be determined pursuant to Section 5(a) and fifty percent (50%) of the Performance Shares awarded under this Award Agreement will be determined pursuant to Section 5(b). In no event will Employee be entitled to receive a number of Performance Shares pursuant to this Award Agreement greater than 2.0 times the Base Grant.
(i)Adjustment of Base Grant for Total Shareholder Return. Fifty percent (50%) of the Base Grant will increase or decrease based upon the Company’s “Total Shareholder Return” as compared to the Total Shareholder Return of the companies in the Growth Index during the Performance Period, as follows:
If
the Company’s Total Shareholder Return Over The Performance Period As Compared to the Total Shareholder Return of the Companies in the Growth Index is:
The Number of Performance Shares will be:
90th Percentile or greater
75th Percentile
1.0 X Base Grant
.75 X Base Grant
55th Percentile
0.5 X Base Grant
25th Percentile
0.25 X Base Grant
Less than 25th Percentile
None
If
intermediate percentiles are achieved, the number of Performance Shares awarded will be prorated (partial shares will be rounded down to the nearest whole share when applicable). In no event will Employee be entitled to receive a number of Performance Shares pursuant to this Subsection 5(a) greater than 1.0 times the Base Grant.
(ii)Adjustment of Base Grant for Performance Metrics. Fifty percent (50%) of the Base Grant will increase or decrease based upon the Company’s “Average Performance” with respect to the “Performance Metrics,” as follows:
If the Company’s Average Performance is:
The
Number of Performance Shares will be:
90th Percentile or greater
75th Percentile
1.0 X Base Grant
.75 X Base Grant
55th Percentile
0.5 X Base Grant
25th Percentile
0.25 X Base Grant
Less than 25th Percentile
None
If intermediate percentiles are achieved, the number of Performance Shares awarded pursuant
to this Subsection 5(b) will be prorated (partial shares will be rounded down to the nearest whole share when applicable). In no event will Employee be entitled to receive a number of Performance Shares pursuant to this Subsection (b) greater than 1.0 times the Base Grant.
3
f.Definitions.
(i)Performance Metrics. The “Performance Metrics” for the Performance Period are: (i) the System Average Interruption Frequency Index (Major Events Excluded) (“SAIFI”); (ii) Arizona Public Service Company’s customer
to employee improvement ratio; (iii) the OSHA rate (All Incident Injury Rate); (iv) nuclear capacity factor; and (v) the J.D. Power Electric Utility Residential Study Overall Customer Satisfaction Index.
(1)With respect to the Performance Metric described in clause (i) of this Subsection 6(a), the Edison Electric Institute (“EEI”) will provide data on an annual basis regarding the SAIFI result of the participating companies; the Company will calculate its SAIFI result for the year in question and determine its percentile ranking based on the information provided by EEI.
(2)With respect to the Performance Metric described in clause (ii) of this Subsection 6(a),
S&P Global Market Intelligence (“Market Intelligence”), an independent third party data system, will provide data on an annual basis regarding the customer and employee counts; the Company will use its customer and employee counts for the year in question and determine its percentile ranking based on the information provided by Market Intelligence. Only those companies whose customers and employees were included in the data provided by Market Intelligence in each of the years of the Performance Period will be considered.
(3)With respect to the Performance Metric described in clause (iii) of this Subsection 6(a), EEI will provide data on an annual basis regarding the OSHA rate of the participating companies; the Company will calculate its OSHA rate for the year in question and determine its percentile
ranking based on the information provided by EEI.
(4)With respect to the Performance Metric described in clause (iv) of this Subsection 6(a), Market Intelligence will provide data on an annual basis regarding the nuclear capacity factors of the participating nuclear plants; the Company will calculate its nuclear capacity factor for the year in question and determine its percentile ranking based on the information provided by Market Intelligence. Only those plants that were included in the data provided by Market Intelligence in each of the years of the Performance Period will be considered.
(5)With respect to the Performance Metric described in clause (v) of this Subsection 6(a),
the J.D. Power Electric Utility Residential Study will provide data on an annual basis regarding the scores of the participating companies; the Company will calculate its percentile ranking within the large, investor-owned utility peer set based on the information provided by J.D. Power.
(6)The Company’s percentile ranking during the Performance Period for each Performance Metric will be the average of the Company’s percentile ranking for each Performance Metric during each of the three years of the Performance Period (each, an “Average Performance Metric”); provided, however, that if the third year of a Performance Metric is not calculable by December 15 of the following year, the Performance Metric shall consist of the three most recent years for which such Performance Metric is calculable. The Company’s “Average Performance,” for purposes of determining
any Base Grant adjustments pursuant to Subsection 5(b) above will be the average of the Average Performance Metrics. If only quartile, rather than percentile, rankings are available for a particular Performance Metric, the Average Performance Metric for any such Performance Metric shall be expressed as a percentile. For example, if the Performance Metric was in the top quartile for two Performance Periods and in the lowest quartile in the other
4
Performance Period, the average of these quartiles would be 3 (the average of 4, 4, and 1) and the Average Performance Metric would be the 75th percentile (3 /4). The calculations in this Subsection 6(a)(6)
will be verified by the Company’s internal auditors.
(7)If either EEI or Market Intelligence discontinues providing the data specified above, the Committee shall select a data source that, in the Committee’s judgment, will provide data most comparable to the data provided by EEI or Market Intelligence, as the case may be. If the J.D. Power Electric Utility Residential Customer Satisfaction Study (or a successor JD Power survey) is not available during each of the years of the Performance Period, the Performance Metric associated with the JD Power Residential Survey (Subsection 6(a)(5)) will be disregarded and not included in the Company’s Average Performance for purposes of determining any Base Grant adjustments pursuant to Subsection 5(b).
(ii)Total
Shareholder Return. “Total Shareholder Return” for the Performance Period is the measure of a company’s stock price appreciation plus any dividends paid during the Performance Period. Only those companies that were included in the Growth Index in each of the years of the Performance Period will be considered. Total Shareholder Return for the Company and the companies in the Growth Index will be determined using the Daily Comparative Return as calculated by Bloomberg (or other independent third party data system). If the Growth Index is discontinued, the Committee shall select the most comparable index then in use for the sector comparison. In addition, if the sector comparison is no longer representative of the Company’s industry or business, the Committee shall replace the Growth Index with the most representative index then in use. Once the Total Shareholder Returns of the Company and all relevant companies in the Growth Index have
been determined, the member companies will be ranked from greatest to least. Percentiles will be calculated (interpolated from 0% to 100%) based on a company’s relative ranking. Percentiles will be carried out to one (1) decimal place. If the Company is not in the Growth Index, then its percentile will be interpolated between the companies listed in the relative ranking. These calculations will be verified by the Company’s internal auditors.
g.Termination of Award. This Award Agreement will terminate and be of no further force or effect on the date that Employee is no longer employed by the Company or any of its subsidiaries, whether due to voluntary or involuntary termination, death, retirement, Disability, or otherwise, except as specifically set forth in Section 4 above or in Article 15
of the Plan. Employee will, however, be entitled to receive any Stock and Dividend Equivalents payable under Section 4 of this Award Agreement if Employee’s employment terminates after the end of the Performance Period but before Employee’s receipt of such Stock and Dividend Equivalents.
h.Section 409A Compliance. If the Company concludes, in the exercise of its discretion, that this Award is subject to Section 409A of the Code, the Plan and this Award Agreement shall be administered in compliance with Section 409A and each provision of this Award Agreement and the Plan shall be interpreted to comply with Section 409A. If the Company concludes, in the exercise of its discretion, that this Award is not subject to Section 409A, but, instead, is eligible for the short-term deferral exception to the requirements of Section 409A, the Plan
and this Award Agreement shall be administered to comply with the requirements of the short-term deferral exception to the requirements of Section 409A and each provision of this Award Agreement and the Plan shall be interpreted to comply with the requirements of such exception. In either event, Employee does not have any right to make any election regarding the time or form of any payment due under this Award Agreement.
i.Tax Withholding. Employee is responsible for any and all federal, state, and local income, payroll or other tax obligations or withholdings (collectively, the “Taxes”) arising out of this Award. Employee shall pay any and all Taxes due in connection with a payout of Stock hereunder by having the Company withhold shares of Stock from such payout.
5
j.Continued
Employment. Nothing in the Plan or this Award Agreement shall be interpreted to interfere with or limit in any way the right of the Company or its subsidiaries to terminate Employee’s employment or services at any time. In addition, nothing in the Plan or this Award Agreement shall be interpreted to confer upon Employee the right to continue in the employ or service of the Company or its subsidiaries.
k.Confidentiality. During Employee’s employment and after termination thereof, for any reason, Employee agrees that Employee will not, directly or indirectly, in one or a series of transactions, disclose to any person, or use or otherwise exploit for Employee’s own benefit or for the benefit of anyone other than the Company or any of its Affiliates any Confidential Information (as hereinafter defined), whether prepared by Employee or not; provided, however,
that during the term of Employee’s employment, any Confidential Information may be disclosed (i) to officers, representatives, employees and agents of the Company and its Affiliates who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the business, and (ii) in good faith by Employee in connection with the performance of Employee’s job duties to persons who are authorized to receive such information by the Company or its Affiliates. Employee shall have no obligation to keep confidential any Confidential Information, if and to the extent disclosure of any such information is specifically required by law; provided, however, that in the event disclosure is required by applicable law, Employee shall provide the Company with prompt notice of such requirement, prior to making any disclosure, so that it may seek an appropriate protective order.
Employee
agrees that all Confidential Information of the Company and its Affiliates (whether now or hereafter existing) conceived, discovered or made by him during employment exclusively belongs to the Company or its Affiliates (and not to Employee). Employee will promptly disclose such Confidential Information to the Company and perform all actions reasonably requested by the Company to establish and confirm such exclusive ownership. For purposes of this Section 11, the term “Confidential Information” shall mean and include any information disclosed to Employee any time during Employee’s employment with the Company or its Affiliates or thereafter which is not generally known to the public, including, but not limited to, information concerning the Company’s or its Affiliates’ assets and valuations, business plans, methods of operation, management, information systems, procedures, processes, practices, policies, plans, programs,
personnel and/or reports or other information prepared by appraisers, consultants, advisors, bankers or attorneys.
l.Restrictive Covenants.
(i)Non-Competition. Employee agrees that for a period of 12 months following any Termination of Employment voluntarily by Employee (other than due to Disability), Employee shall not, without the prior written consent of the Company’s General Counsel, participate, whether as a consultant, employee, contractor, partner, owner (ownership of less than 5% of the outstanding stock of a publicly traded company will not be considered ownership under this provision), co-owner, or otherwise, with any business, corporation, group, entity or individual that is or intends to be engaged in the business activity of supplying electricity in any area of Arizona for which
the Company or its Affiliates is authorized to supply electricity.
(ii)Employee Non-Solicitation. Employee agrees that for a period of 12 months following Employee’s Termination of Employment for any reason, Employee will not encourage, induce, or otherwise solicit, or actively assist any other person or organization to encourage, induce or otherwise solicit, directly or indirectly, any employee of the Company or any of its Affiliates to terminate his or her employment with the Company or its Affiliates, or otherwise interfere with the advantageous business relationship of the Company and its Affiliates with their employees.
(iii)Remedies. If Employee fails to comply with Sections 11, 12(a), or 12(b) in a material respect, the Company may (i) cause any of Employee’s unvested Performance Shares
and related Dividend Equivalents to be cancelled and forfeited, (ii) refuse to deliver shares of Stock or cash in exchange for vested Performance Shares or Dividend Equivalents, and/or (iii) pursue any other
6
rights and remedies the Company may have pursuant to this Award Agreement or the Plan at law or in equity including, specifically, injunctive relief.
m.Cooperation with Government Agencies. Employee shall have no obligation to keep confidential any Confidential Information, if and to the extent disclosure of any such information is specifically permitted by law, because Employee is providing information to government investigatory or enforcement agencies, such as the Nuclear Regulatory
Commission, Department of Labor, Equal Employment Opportunity Commission (or its state equivalent), National Labor Relations Board, the Occupational Safety and Health Administration (or its state equivalent) or the Securities and Exchange Commission. This Award Agreement also does not limit Employee’s ability to communicate with any government agency regarding matters within the agency’s jurisdiction or otherwise participate in any investigation or proceedings that may be conducted by such agency, including providing documents or other information without notice to the Company. Nothing in this Award Agreement shall prevent Employee from the disclosure of Confidential Information or trade secrets that: (i) is made: (a) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (b) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document
filed in a lawsuit or other proceeding, if such filing is permitted to be made, and is made, under seal. In the event that Employee files a lawsuit alleging retaliation by Company for reporting a suspected violation of law, Employee may disclose Confidential Information or trade secrets related to the suspected violation of law or alleged retaliation to Employee’s attorney and use the Confidential Information or trade secrets in the court proceeding if Employee or Employee’s attorney: (i) files any document containing Confidential Information or trade secrets, under seal if permitted; and (ii) does not disclose the Confidential Information or trade secrets, except pursuant to or in accordance with a court order. The Company provides this notice in compliance with federal law, including the Defend Trade Secrets Act of 2016.
n.Clawback. The portion of this
Award, if any, that is earned based on the Company’s Total Shareholder Return will be subject to potential forfeiture or recovery to the extent called for by the Company’s Clawback Policy. The Clawback Policy may include such provisions as the Human Resources Committee of the Board of Directors determines to be necessary or appropriate either to comply with any applicable law or listing standard or in light of Company ethics or other policies and practices. Specific requirements of the Clawback Policy may be adopted and amended at such times as the Human Resources Committee of the Board of Directors determines in its discretion. By accepting this Award, Employee consents and agrees to abide by such Clawback Policy.
o.Non-Transferability. Neither this Award nor any rights under this Award Agreement may be assigned, transferred, or in any manner encumbered except as provided in
the Plan.
p.Definitions: Copy of Plan and Plan Prospectus. To the extent not specifically defined in this Award Agreement, all capitalized terms used in this Award Agreement will have the same meanings ascribed to them in the Plan. By signing this Award Agreement, Employee acknowledges receipt of a copy of the Plan and the related Plan prospectus.
q.Amendment. Except as provided below, any amendments to this Award Agreement must be made by a written agreement executed by the Company and Employee. The Company may amend this Award Agreement unilaterally, without the consent of Employee, if the change (i) is required by law or regulation, (ii) does not adversely affect in any material way the rights of Employee, or (iii) is required to cause the
benefits under the Plan to qualify for favorable tax treatment either for the Company or Employee or to comply with the provisions of Section 409A of the Code and applicable regulations or other interpretive authority. Additional rules relating to amendments to the Plan or any Award Agreement to assure compliance with Section 409A of the Code are set forth in Section 17.15 of the Plan.
r.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages
7
to this Agreement transmitted by facsimile transmission, by electronic mail in
portable document format (.pdf), or by any other electronic means will have the same effect as physical delivery of the paper document bearing an original signature.
IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed, as of the Date of Grant, by an authorized representative of the Company and this Award Agreement has been executed by Employee.
PINNACLE WEST CAPITAL CORPORATION
By: ________________________________
Its: _______________________________
Date: ________________________________
EMPLOYEE
By:
Date:
___________________________________
8
Dates Referenced Herein and Documents Incorporated by Reference