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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.           )

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		Donald E. Brandt Chairman of the Board, President and Chief Executive Officer

Dear Fellow Shareholder:To Our Shareholders:

On behalf of our Board of Directors, management and employees, I invite you to participate in our 20172018 Annual Meeting of Shareholders.

The meeting will be held at10:30 a.m. (MST),Wednesday, May 17, 2017. This year's Annual Meeting will be a completely virtual meeting of shareholders, which will be conducted via live webcast. You will be able to attend the Annual Meeting online by visiting www.virtualshareholdermeeting.com/PNW. You also will be able to vote your shares electronically during the Annual Meeting (other than shares held through our 401(k) Plan, which must be voted prior to the meeting).

We are looking forward to using the virtual Annual Meeting technology. For those of you who have been able to join us at the past several physical meetings, you would have seen our shareholder attendance dwindling. Holding a virtual meeting will make the Annual Meeting available to all of our shareholders from any location. A virtual meeting is also environmentally friendly and sustainable over the long-term.16, 2018. Details regarding how to attend the meeting online and the business to be conducted at the Annual Meeting are in the accompanying Notice of Annual Meeting and Proxy Statement.

Pinnacle West hadachieved another successful year of outstanding performance as we continued to focus on delivering on our commitments to the customers who depend on us, the communities we serve, our dedicated team members, and the shareholders who trust us with their investment. Operational performance at our primary subsidiary, Arizona Public Service Company ("APS"), an electric utility that serves approximately 1.2 million customers throughout Arizona and operates the largest nuclear power plant in 2016. Examplesthe United States, was strong in 2017. Included in the Proxy Statement Summary you will see a number of our successes include:shareholder value creation and operational accomplishments. It is an impressive list, and one that I and the senior management team are proud to share with you. Here are just a few of those achievements:

At this year's Annual Meeting, as explained in the attached Proxy Statement, we are asking you to: (1) elect eleven Board of Director nominees; (2) consider and vote FOR an advisory resolution to approve executive compensation; (3) consider and vote, on an advisory basis, on how frequently the Company should obtain future advisory votes on executive compensation; (4) re-approve the material terms of the performance goals under, and an amendment to, the 2012 Long-Term Incentive Plan; and (5) ratify the appointment of our independent public accounting firm for 2017.

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Last, but not least, your voteIn addition to delivering exceptional financial performance, we continue to focus on our sustainability efforts, fostering diversity and supporting our communities. Our usage of reclaimed water is importanta prime example of a sustainable balance and exemplifies our focus on the water-energy nexus. Thanks in large part to us. Whetherthe Palo Verde Generating Station, reclaimed water accounted for 72% of the water used in our generating facilities in 2017.

Our Executive Diversity Council worked diligently in 2017 to continue improving our workforce diversity. Over 48% of candidates hired in 2017 were ethnically or notgender diverse. As a Company we are committed to diversity, respect and inclusion as core to our culture and essential to our success.

In 2017 we remained steadfast in our commitment to our communities. We contributed more than $9.8 million to our Arizona communities, with more than $1.4 million invested in science, technology, engineering and mathematics ("STEM") education. Our men and women pledged more than $2.4 million through our Company-sponsored charitable giving program, through which the Company provides a 50% match. This year our team members donated nearly 110,000 volunteer hours to a diverse and wide-range of organizations, including Habitat For Humanity, Treasures for Teachers, Phoenix Children's Hospital and St. Mary's Food Bank Alliance. These are only a few examples of how our men and women continuously demonstrate a commitment to excellence by living the values core to our culture. In addition, APS continued to partner with the Arizona Diamondbacks Foundation to build youth baseball fields in deserving neighborhoods. In 2017 we built our 35^th field. We are proud to support efforts that unite our communities and help them thrive.

As you planknow, in 2016 the Board of Directors adopted a Director Retirement Policy to participate inprovide for an orderly transition of our Board members. This year the first retirement under that policy will take place. Roy Herberger will retire from the Board effective at the Annual Meeting on the meeting day, we encourage youMeeting. Over my years at Pinnacle West, I always valued Roy's counsel, wisdom and guidance. On behalf of all of us, I extend our appreciation and thanks to vote promptly. You may vote over the Internet; by telephone; by completing, signing, datingRoy for his many years of contributions and returningdedicated service to our Company and to our shareholders.

I am both privileged and proud to lead Pinnacle West. Our men and women are working to shape a proxy card or voting instruction form; or by voting during the meeting.better, sustainable future for our customers and our communities, and in that process, they are also building a more valuable company for our shareholders.

Thank you for the confidence you place in Pinnacle West through your investment.

Sincerely,

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		Kathryn L. Munro Lead Director

To Our Shareholders:Dear Fellow Shareholders,

On behalf of the Board, I would like to thank you for your Board of Directors,investment in Pinnacle West. As we approach our 2018 Annual Meeting, I welcomewould like to take this opportunity to communicateprovide you with an update on how your Board is approaching and addressing key areas of shareholder interest, particularly with respect to our shareholders. In stewarding your Company,governance and compensation practices.

Driving Shareholder Value Creation and Promoting a Sustainable Energy Future

As directors of Arizona's largest and longest-serving electric company, we continually seekview operational excellence as paramount to achievelong-term value creation for our shareholders, and our long-term strategy reflects this focus. Our management team continues to drive outstanding operational execution while growing our business and leveraging technology to promote a long-term sustainable performance and create shareholder value by focusing on implementing effective business strategies, prudent risk management, and sound corporate governance practices.

Don Brandt becameenergy future. These efforts have resulted in strong returns for our Chairman of the Board and Chief Executive Officer in April 2009. He brought to the Company a focus on returning to our core business of operating and investing in a vertically integrated utility. He has built a strong leadership team and our Company's performance under Don's and his team's leadership continues to be impressive. Here are several examples of our improved performance:

•

Total Shareholder Return.  Since April 2009, our Company'sshareholders: annualized total shareholder return (stock price appreciation plus dividends) ("TSR") has outperformed thatof 18.8% since May 1, 2009, which was when Don Brandt took over as CEO. This exceeds the annualized returns of the S&P 1500 Electric UtilityUtilities Index by over 158%of 11.8% and the S&P 500 Index of 16.2%. Also during this period, the Company has delivered an annualized TSR of 19.7%,We also continue to be recognized for our safety and ranked 4th when compared against the companies in our Peer Group (as defined on page 42 of the Proxy Statement but excluding from this comparison one company that was acquired in 2016);



sustainability leadership:

•

Earnings Performance.  The compounded annual growth rate of Pinnacle West's earnings from 20092017 was another successful year with regard to 2016 was 30.7% compared to –10.6% from 2002 to 2009;



•

Return on Equity.  Pinnacle West's average return on equity from 2010 to 2016 was 9.6% compared to 7.0% from 2002 to 2009;



•

Dividend.  In 2012,safety, with APS remaining in the Company began raisingtop decile for safety performance in the dividend. During the past several years, the annual dividend increase has been approximately 5%;U.S. electric utilities industry; and



•

We earned a "Leadership" rating from CDP, a not-for-profit entity that reports on environmental performance, for climate change and water management — one of only two U.S. utilities to earn the highest rating in both categories.

APS's Credit Rating.Board-Driven Shareholder Engagement  Standard and Poor's senior unsecured credit rating for APS was upgraded three levels since 2009 improving from BBB– to the current A–.

I would now like to take this opportunity to highlight some areas of interest to our shareholders with respect to issues more specific to the Board and our shareholders:

•

We continue to bePinnacle West has an active and engaged Board.  Our independent Board members are expected to be active, engaged and contributing members. Our discussions are focused on oversight of Pinnacle West's business strategy; targeting the Company's critical areas of focus of shareholder value, operational excellence, environment, customer value, employees, and the communities we serve. This year we held a combined total of 33 Board and Board committee meetings, including holding an all-day session at the Palo Verde Nuclear Power Generating Station. In addition to the Board meetings, our directors have focused on ourestablished shareholder engagement program, participatedwhich was further augmented during 2017 in meetings held byresponse to what the Palo Verde Off-Site Safety Review Committee and by the InstituteBoard considered a disappointing level of Nuclear Power Operations, and spoken at the Company's sponsored Women's Leadership Symposium.

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•

We added Paula J. Simsshareholder support for our annual advisory vote on compensation. Shareholder input is very valuable to the Board.  In October 2016Board's decision-making, and we elected Paula Simswanted to ensure we had the opportunity to engage directly with our shareholders on our compensation, governance and broader Board of Directors. Ms. Sims brings extensive experience to the Company in electric utility operationspractices. As Lead Director and utility regulation. In her prior roles at Progress Energy, Ms. Sims was responsible for business operations such as new generation, supply chain, and information technology, as well as overall processes and efficiency improvements. Her experience gives her insight into the operational, financial and regulatory matters that are of ever increasing significance to the Company.



•

We implemented a retirement age for directors.  We have implemented a Director Retirement Policy that provides that no individual may be nominated for election to the Board of Directors who has attained the age of 75 years at the timemember of the nomination. In consideringHuman Resources Committee, I participated on behalf of the termsindependent directors in a number of the shareholder discussions during the fall of 2017. These conversations were valuable to our Board, spurred important discussions, and have resulted in changes and disclosure enhancements that you will see detailed in this policy, it was important to the Board that there be an orderly transition from the existing Board members to new Board members. The policy as adopted will accomplish that transition.

Shareholder-Informed Compensation Program Changes

•

Proxy Access.

As a Board, we are committed to an executive compensation program that establishes strong pay for performance alignment and supports our ability to attract and retain a talented and proven leadership team. We have adopted proxy access inseek to design compensation programs that support our Bylaws. We know that manylong-term goals, reward achievement of long-term performance and align with the interests and feedback of our shareholders are in favor of some form of proxy access and weshareholders. To this end, our compensation programs have responded accordingly. We took a very measured and thoughtful approach in developing a proxy access Bylaw that we believe serves the needs ofevolved with our shareholders while balancing the potential for injury to the effectiveness of the Board and by extension, the Company's operational performance and long-term growth. The proxy access Bylaw generally permits a shareholder, or a group of up to 20 shareholders, owning 3% or more of the Company's outstanding common stock continuously for at least three years, to nominate and include in the Company's proxy materials director nominees constituting up to 25% of the Board.



•

Shareholder Engagement.  Your views always are, and will be, important to us. We have continued our focus on strengthening our shareholder engagement program. You will find the details on page 22 of the Proxy Statement.

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I appreciateincluding several changes made in 2016. Following shareholder discussions in 2017, we have made further changes to our program that we believe will create even greater alignment between our executives and the opportunityperformance of our Company, and changes to provide you with an updateour program and encourage you to readdisclosures that reflect the feedback we have received from our shareholders. These changes are detailed in the Compensation Discussion and Analysis of this Proxy Statement and include:

•

Increase in the proportion of performance shares in our CEO's and Executive Vice Presidents' 2018 long-term incentive awards from 60% to 70% (reducing the percent of restricted stock units from 40% to 30% as well);

•

Revised 2018 metrics in certain key business units to better align with our priorities and emphasize top-quartile or above performance;

•

Adoption of a formal clawback policy;

•

Enhanced CD&A disclosures;

•

Additional transparency into our metric setting practices;

•

Redesigned annual incentive disclosure; and

•

Additional detail on how we select our peer group.

These structural and disclosure enhancements are directly in response to feedback we received from our shareholders.

Thoughtful and Systematic Management Succession Planning Process

As you would expect for a company with a highly skilled and long-tenured management team, the Board is very engaged in succession planning to ensure we are building a sustainable leadership pipeline. CEO and senior leadership succession planning continues to be a focus for the Board, and we have been executing on a very deliberate succession and development plan. Our current management team, under the leadership of Don Brandt, has delivered very strong performance and the Board and its Committees are actively involved in our succession plans for our top talent to ensure we are providing development opportunities that will allow for smooth leadership transitions in the future.

Robust Board Refreshment and Succession Planning Practices

The Board has established strong practices to support regular Board evaluation and refreshment. In 2016, the Board adopted a Director Retirement Policy to facilitate an orderly transition of Board members and implemented a five-year plan to refresh the Board and its leadership. This five-year plan encompasses the following:

•

Development of a matrix of our Board members' current skills and experiences;

•

Evaluation of the skills and experience leaving our Board over the next five years;

•

Assessment of skills and experience needed to guide the company's future long-term plans;

•

Incoming committee chairs are identified one year in advance of assuming chair leadership to ensure proper transition — with Roy Herberger's retirement, Rick Fox will take over as the Chair of the Human Resources Committee effective at the Annual ReportMeeting.

This process helps guide the Board in its recruitment efforts.

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On behalf of the Board, I want to thank our shareholders for more information. Thank youtheir time and feedback. I am pleased to provide this additional window into the Board's activities in 2017 and express our commitment to running our business for the long-term value creation for our shareholders. We appreciate your investment in Pinnacle West Capital Corporation and your continued support.support at our 2018 Annual Meeting.

Sincerely,

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March 31, 201729, 2018

The 20172018 Annual Meeting of Shareholders (the "Annual Meeting") of Pinnacle West Capital Corporation ("Pinnacle West", "PNW", or the "Company") will be held at 10:30 a.m., Mountain Standard Time, on Wednesday, May 17, 2017.16, 2018. The Annual Meeting may be accessed online at www.virtualshareholdermeeting.com/PNW. The purposes of the Annual Meeting are:

(1)

To elect eleventen directors to serve until the 20182019 Annual Meeting of Shareholders (Proposal 1);

(2)

To hold an advisory vote to approve executive compensation (Proposal 2); and

(3)

To hold an advisory vote on the frequency of our shareholders advisory votes on executive compensation (Proposal 3);

(4)

To re-approve the material terms of the performance goals under, and to approve an amendment to, the 2012 Long-Term Incentive Plan (Proposal 4);

(5)

To ratify the appointment of our independent accountants for the year ending December 31, 20172018 (Proposal 5); and

(6)

To transact such other business as may properly come before the Annual Meeting and at any adjournments or postponements thereof.3).

All shareholders of record at the close of business on March 9, 20172018 are entitled to notice of and to vote at the Annual Meeting. Your vote is important. Whether you plan to participate in the Annual Meeting or not, please promptly vote by telephone, over the Internet, by proxy card, or by voting instruction form.

By order of the Board of Directors,

DIANE WOOD
Corporate Secretary

Executive Offices Address:
PINNACLE WEST CAPITAL CORPORATION
Post Office Box 53999
Phoenix, Arizona 85072-3999

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This summary highlights our 2016 performance, our new and continuing corporate governance and executive compensation highlights, and certain information contained elsewhere in this Proxy Statement. As it is only a summary, please read the complete Proxy Statement and 20162017 Annual Report before you vote. The Proxy Statement and form of proxy are first being made available to shareholders on or about March 31, 2017.29, 2018.

Our Company continued its strong performance in 2016 as evidenced by the following:

•

Who We Are

Shareholder Value:Strategic Framework

o

Pinnacle West increased the common dividend for the fifth straight year, raising it by 5%;

o

Pinnacle West's share price reached a new all-time closing high and new 52-week intraday highs on 27 trading days, including a new all-time intraday high;

o

Pinnacle West's earnings were $442 million, or $3.95 per share;

o

Our Company's TSR was solid, as shown by the graph below, outperforming the S&P Composite 1500 Electric Utilities Index in all periods shown;

o

Our total shareholder value increased over the last five years as follows:

TheCore is our strategic framework. It sets forth the basis from which we operate by defining our vision, mission, critical areas of focus, and values. The framework affirms our corporate values of safety, integrity and trust, respect and inclusion, and accountability. This is the foundation from which our long term strategy is built. For example, employees are an element of our Core and one of our greatest assets. The Core helps us focus on keeping them safe, fostering a healthy and balanced environment, supporting their development through training and mentoring and encouraging engagement. This culture not only benefits each individual employee, it also positions our Company for long-term sustainable success.

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o

Our stock

Strategic Priorities

TheCore continues its competitiveto serve as the foundation for all strategic and business initiatives. In turn, our performance as shownmetrics reinforce our highest priorities, including operational excellence, financial strength and leveraging economic growth, in a tangible, measurable way, and allow us to monitor and enhance our progress.

Building on that foundation, the APS Strategic Business Plan is anchored by comparingfour themes that align with industry trends shaping our stock's performance to companies infuture and the Edison Electric Institute Index (U.S. shareholder-owned electric utilities) and in the Standard and Poor's 500 Index:

way we do business:

•

Operating Performance:Consumer Engagement

o

Arizona Public Service Company ("APS") operates Palo Verde Nuclear Generating Station ("Palo Verde"), — Deliver value-added programs and services that derive from consumer insights and strengthen our brand for the largest nuclear generating station in the United States. In 2016:

•

Palo Verde produced approximately 80% of Arizona's carbon-free energy;future



•

Palo Verde generated 32.2 million megawatt-hours of electricity, marking the third consecutive year the plant has produced more than 32 million megawatt-hours,Flexible Resources — Develop new initiatives and it remains the only U.S. generating station to produce more than 30 million megawatt-hours in a year, a feat the plant has achieved each of the past eight years; andbusinesses that leverage our core capabilities



•

Palo Verde achieved an annual capacity factor of 93.2%;Employees

o

APS completed — Adopt sustainable programs to invest in our people today and in the 40 megawatt Red Rock Solar Plant — APS's largest utility-scale solar plant;future

o•

APS developedInnovation — Integrate new technologies to enhance performance, reliability and the first microgrid for the U.S. Navy, providing 25 megawattsoverall experience of standby power;


our customers and employees

o

2017 Highlights and Achievements

Shareholder Value

Our diverse supplier program continues to be successful, with our 2016 spend exceeding $350 million. We were recognized as the Corporation of the Year at the 2016 Women's Business Enterprise Council — West Annual Strategic Opportunity Conference;management team has delivered superior performance:

Financial and

Operating Highlights

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ü		PNWincreased its dividend for the 6th consecutive year, by 6%;
ü		Maintainedstrong credit ratings from all three rating agencies;
ü		APS spent$363 million with diverse suppliers;
ü		APS continued successful operation of the Palo Verde Generating Station, a nuclear energy facility that is the largestclean-air generator in the United States; and
ü		Achievedtop quartile distribution reliability metrics for 2017, and had the best summer reliability in 5 years.
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​Achievements

o

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ü		Received theDistributech Renewable Integration Project of the Year award for the Solar Partner Program;
ü		Obtained "Leadership" rating from CDP for climate change and water management – one of only two U.S. utilities that earned the highest rating in both categories;
ü		Recognized as theCorporate Advocate of the Year by the National Center for American Indian Enterprise Development; and
ü		Recognized as aBest Corporation for Veteran's Business Enterprises by the National Veteran-Owned Business Association.
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APS gas and oil generation plants achievedCommunity Engagement

​
ü		Contributed more than$9.8 million to our Arizona communities, with more than $1.4 million invested in STEM education;
ü		Employees pledged more than$2.4 million through our Company-sponsored charitable giving program, through which the Company provides a 50% match;
ü		Built our 35th baseball field in one of our Arizona neighborhoods together with the Arizona Diamondbacks Foundation; and
ü		Employees donated nearly110,000 volunteer hours to community organizations.
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Sustainability

Our commitment to create a startup reliability of 99.3%.

•

Customer Value:

o

APS improved paperless billing adoption to 30% ofsustainable future for our Company and our customers (or 363,000) comparedwill continue to the U.S. averagelight our way to success — not just today but for years to come. We continue to make progress on ourfive critical areas of 24% and the utility average of 19%;sustainability

:

o

APS was named the Environmental Protection Agency ENERGY STAR Sustained Excellence partner for the 7th consecutive year based on the effective delivery of customer energy efficiency programs;

o

APS contributed more than $10 million to Arizona communities, $2 million of which was invested in science, technology, math and engineering education programs across Arizona; and

o

Our employees contributed 120,000 volunteer hours, and APS was ranked 2nd by thePhoenix Business Journal on its list of Arizona's top corporate volunteer programs.

•

Sustainability:

o

In 2016 we continued to focus on advancing our priority sustainability initiatives: safety and security, energy innovation, carbon management, water resources, and people. Examples of accomplishments in these areas include:

•

Safety and Security:    In 2016 our employees achieved the fewest OSHA recordable injuries in Company history. APS continued to take actions throughout the year to improve both our cybersecurity and security hardening of physical assets;



•

Energy Innovation:    APS's research and development pilot project that is studying the offset of peak energy usage with solar energy production was expanded to included four megawatts of grid scale battery storage devices;



•

Carbon Management:    APS continued to build renewable assets as a means of managing carbon emissions, surpassing a milestone of one gigawatt of solar energy capacity on our system. APS expects to produce over 50% of our energy mix from carbon-free resources in 2017 from renewables, energy efficiency and nuclear generation;



•

Water Resources:    APS focused on reducing the use of non-renewable water at its power generation plants. During 2016, the use of non-renewable water was 28% less than our baseline year of 2014; and



•

People:    APS's efforts to improve the workplace experience of our employees yielded positive results. We improved our 2016 employee engagement survey scores in all categories, including our overall engagement score, which placed us above other benchmarked utility organizations.

​
		Carbon Management		• 50% of our diverse energy mix iscarbon-free • Plan toreduce carbon intensity by 23% over the next 15 years • MSCI Environmental Sustainability and GovernanceA rating (as of 10/27/17)
​		Energy Innovation		• More than 1,300 MW of installed solar capacity • Plan to add over500 MW of energy storage in the next 15 years
​		Safety & Security		• 70% reduction in Occupational Safety and Health Administration ("OSHA") recordable injuries over the past 10 years • Remain top decile for safety performance in the U.S. electric utilities industry
​		Water Resources		• 14% reduction in groundwater use since 2014 • 20 billion gallons of water recycled each year to cool Palo Verde Generating Station
​		People		• Averageemployee tenure of 13 years due to strong talent strategy • More than 20% of our employees areveterans • Palo Verde hosted a nuclearWomen in Leadership forum
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To learn more about our sustainability efforts, please see our Corporate Responsibility Report located on our website (www.pinnaclewest.com).

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Board and Governance HighlightsPractices

•

Our Board's performance andBoard remains committed to maintaining strong corporate governance remain strong.practices. Our new and continuing highlightspractices include:

o

We implemented our Director Retirement Age Policy, see page 21;

o

We increased the operational experience and diversity of the Board with the addition of Paula J. Sims;

o

We adopted proxy access;

o

We continued our focus on strengthening our shareholder engagement process, see page 22;

o

We hold annual elections of all directors (see page 7 of this Proxy Statement Summary for a list of the nominees);

o

Ten of our eleven directors are independent;

o

Our independent Lead Director has clearly defined and robust responsibilities;

o

Each of our directors attended at least 90% or more of the Board meetings and any Board committee meeting on which he or she served;

o

We do not have a poison pill plan or similar anti-takeover provision in place; and

o

Our directors and officers are prohibited from pledging or hedging our stock.

Executive Compensation Highlights

•

We continue to evaluate and improve our executive compensation program. New and continuing highlights in this area include:

o

We changed the allocation of the value of our annual long-term equity awards to 60% performance-based and 40% time-based vesting beginning with the 2016 awards;

o

We added clawback provisions to our 2016 annual cash incentive plans and performance share equity grant agreements;

o

We limited the use of discretion to adjust incentive awards solely to the occurrence of unanticipated events that may arise during the performance period in the 2016 CEO Incentive Plan; and

o

We continued our executive compensation program's focus on being transparent with a clear emphasis on rewarding performance by putting pay at risk and retaining key

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executives. Our executive compensation philosophy incorporates the following core principles and objectives:

•

Alignment with shareholder interests;



•

Key management retention;



•

A focus on a few key elements that are simple and understandable: base salary; an annual performance-based cash incentive; a three-year performance-based equity grant; a retention-based equity grant that releases over a four-year period; pension and supplemental pension retirement benefits; and limited perquisites;



•

A significant portion of our Named Executive Officers' (as identified on page 40 of this Proxy Statement) compensation is at risk and based on performance — our annual cash incentive plans are 100% tied directly to earnings, business unit performance and individual performance, and our performance shares are based on TSR and value-driving business metrics; and



•

We use multiple business performance metrics, capped payouts and other features that are designed to reward performance but not encourage unacceptable risk taking.



o

Please see our "Compensation Discussion and Analysis" beginning on page 40 of this Proxy Statement for a detailed explanation of our executive compensation program.

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Annual Meeting of Shareholders

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Date:ü		May 17, 2017Adirector retirement policy at age 75;
Time:		10:30 a.m. Mountain Standard Time
Place:		www.virtualshareholdermeeting.com/PNW
Record Date:		March 9, 2017
Delivery of Materials:ü		Proxy Statement and formaccess rights allowing up to 20 shareholders owning 3% of proxy are first being made availableour outstanding stock for at least 3 years to shareholders on or about March 31, 2017.nominate up to 25% of the Board;
Virtual Meeting Admission:ü		To participateStrong ongoing shareholder engagement program that expanded in 2017, including participation of the Lead Director in several shareholder meetings;
ü		Independent Lead Director role with clearly defined and robust responsibilities;
ü		Ten of our eleven current directors are independent and the members of all of the Board Committees are independent;
ü		Annual Meeting, you will need the 16-digit control number included on the Internet Noticeelections of all directors (see page 8), your proxy card,5 of this Proxy Statement Summary for a list of the nominees);
ü		Robust board and management succession planning;
ü		No poison pill plan or similar anti-takeover provision in place;
ü		No supermajority provisions in our Articles of Incorporation or Bylaws;
ü		Each of our directorsattended at least 90% of the voting instruction form. Online check-in will begin at 10:00 a.m. Mountain Standard Time,Board meetings and you should allow ample time for the online check-in proceedings. We will have technicians standing by ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtualBoard committee meeting during the check-in on which he or meeting time, please call: 855-449-0991.she served; and
ü		Our directors and officers are prohibited from pledging or hedging our stock.
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Voting Matters and Board of Directors ("Board") RecommendationsShareholder Engagement

MATTERS		BOARD RECOMMENDATIONS		PAGE
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Election of directors		üFOR each nominee		27
Advisory vote to approve executive compensation		üFOR		96
Advisory vote on the frequency of the advisory vote to approve executive compensation		üFOR one year		97
Re-approval of the material terms of the performance goals under, and approval of an amendment to, the 2012 Long-Term Incentive Plan (the "2012 Plan")		üFOR		98
Ratification of the appointment of Deloitte & Touche LLP ("D&T") as our independent accountants for 2017		üFOR		108

We have an established shareholder engagement program to maintain a dialogue with our shareholders throughout the year, which was further augmented during 2017 in response to what our Board considered a disappointing level of shareholder support for our annual advisory vote on compensation. Each year we strive to respond to shareholder questions in a timely manner, conduct extensive proactive outreach to investors, and evaluate the information we provide to investors in an effort to continuously improve our engagement. In 2017, we contacted the holders of approximately 50% of the shares outstanding and met with the holders of approximately 40% of the shares outstanding. Our Lead Director and member of the Human Resources Committee, Kathryn Munro, participated in a number of the shareholder discussions providing shareholders with direct access to the Board.

What our shareholders think is important to us and we want to ensure we have the opportunity to engage directly with our shareholders. We seek to maintain a transparent and productive dialogue with our shareholders by:

ü

Providing clear and timely information,

ü

Seeking and listening to feedback, and

ü

Being responsive.

A detailed discussion of this outreach and the Board's response can be found on pages 23-24 and 48-49 of this Proxy Statement.

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Director Nominees, Their Skills and Experience

(1)

Directors' ages as of February 21, 2018.

(2)

Dr. Herberger is currently the Chairman of the Human Resources Committee and will be retiring effective at the Annual Meeting. Mr. Fox will take over as the Chair of the Human Resources Committee effective at the Annual Meeting.

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Board Diversity		Directors' Key Skills and Experience Matrix
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Succession Planning

Director succession is overseen by the Corporate Governance Committee, which regularly assesses whether the composition of the Board reflects the knowledge, skills, expertise, and diversity appropriate to serve the needs of the Company. Since 2014 three new members have joined the Board. The Board adopted a Director Retirement Policy in 2016, which is described on page 22 of this Proxy Statement, to better facilitate board refreshment and transition.

Given our need for specialized experience, we also maintain strong management succession planning practices and are focused on developing and retaining talent within our Company. Our Board's focus on attracting, developing and retaining highly skilled and experienced executives is a core consideration in structuring our executive compensation programs.

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Executive Compensation Program Highlights

Our director nominees are:compensation program is designed to be transparent with a clear emphasis on putting pay at risk and retaining key executives. Our executive compensation philosophy centers on the core objectives of maintaining alignment with shareholder interests and retaining key management.

Our incentive program structure and metrics aredesigned to drive sustained value creation for shareholders, with incentive compensation tied to the Company's TSR, earnings, and the achievement of measurable and sustainable business and individual goals. See the CD&A on page 44 for further details.

	​		​		​		​		​		​		​		​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	Pay Element					​		​	Measurement Period	​		​	Performance Link	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	Base Salary	​		​	Cash	​		​		​		​		​
​	​​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	Annual	​		​	Cash	​		​	1 year	​		​	Earnings CEO: 62.5% NEOs(1): 50.0%	​
​	​​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	Incentives	​		​		​		​		​		​	Business Unit Performance CEO: 37.5% NEOs(1): 50.0%	​
​	​​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	​	​		​	Performance	​		​		​		​	Relative TSR 50%	​
​	​​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	Long-Term Incentives	​		​	Shares 60%(2)	​		​	3 years	​		​	Relative Operational Performance 50%	​
​	​​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	​	​		​	Restricted Stock Units 40%(2)	​		​	Vest ratably over 4 years	​		​	Stock Price	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

(1)

Named Executive Officers ("NEO") identified on page 44 of this Proxy Statement.

(2)

Long-term incentives award mix changed to 70% performance share awards and 30% restricted stock unit ("RSU") awards starting in 2018 for the CEO and Executive Vice Presidents.

2017 CEO Total Compensation 88% at risk	​	2017 Average for Other NEOs' Total Compensation 67% at risk
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Proxy Statement — General Information

Time, Date and Place

The Company's 20172018 Annual Meeting of Shareholders ("Annual Meeting") will be held at 10:30 a.m., Mountain Standard Time, on Wednesday, May 17, 2017.16, 2018. The Annual Meeting will not be held at a physical location, but will instead be held virtually, where shareholders will participate by accessing a website using the Internet. The Annual Meeting will be accessed atwww.virtualshareholdermeeting.com/PNW.PNW. To participate in the Annual Meeting, you will need the 16-digit control number included on the proxy card, the Internet Notice or the voting instruction form. Online check-in will begin at 10:15 a.m. Mountain Standard Time, and you should allow ample time for the online check-in proceedings. We will have technicians standing by ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call: 855-449-0991. An audio broadcast of the Annual Meeting will be available by telephone toll-free at 877-328-2502 (domestic) or 412-317-5419 (international). Upon dialing in, you will need to provide your 16-digit control number.

We continue to believe that the virtual-only format, which we used for the first time last year, is in the best interests of our shareholders, given the time and expense of an in-person meeting compared to the shareholder participation at those meetings. The number of non-employee shareholders actually attending our Annual Meetings of Shareholders has significantly dwindled. For the past five in-person meetings, only about 30 shareholders attended each of the meetings. The meetings, on average, lasted less than 45 minutes, including the formal business portion of the meeting, the remarks by the CEO, a video highlighting the Company's performance, and the question and answer period. A virtual meeting allows all of our shareholders, regardless of location, the ability to participate in the Annual Meeting.

Our virtual meeting will be governed by our Rules of Conduct, which we use for both in-person and virtual meetings. Shareholders at the virtual-only meeting will have the same rights as at an in-person meeting, including the rights to vote and ask questions through the virtual meeting platform.

Notice of Internet Availability

Unless you elected to receive printed copies of the proxy materials in prior years, you will receive a Notice of Internet Availability of Proxy Materials by mail, or if the shareholderyou so elected, by electronic mail (the "Internet Notice"). The Internet Notice will tell you how to access and review the proxy materials. If you received an Internet Notice by mail and would like to receive a printed copy of the proxy materials, you should follow the instructions included on the Internet Notice.

The Internet Notice is first being sent to shareholders on or about March 31, 2017.29, 2018. The Proxy Statement and the form of proxy relating to the Annual Meeting are first being made available to shareholders on or about March 31, 2017.29, 2018.

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Record Date; Shareholders Entitled to Vote

All shareholders at the close of business on March 9, 20172018 (the "Record Date") are entitled to vote at the meeting. Each holder of outstanding Company common stock is entitled to one vote per share held as of the record date on all matters on which shareholders are entitled to vote, except for the election of directors, in which case "cumulative" voting applies (see "Vote Required — Election of directors"). At the close of business on the Record Date, there were 111,555,682111,928,566 shares of common stock outstanding.

Voting

		Vote prior to the Annual Meeting by Internet. The website address for Internet voting is on the proxy card, the Internet Notice and the voting instruction form. Internet voting is available 24 hours a day.
		Vote prior to the Annual Meeting by telephone. The toll-free number for telephone voting is on the proxy card, the Internet Notice and the voting instruction form. Telephone voting is available 24 hours a day.

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		Vote prior to the Annual Meeting by scanning the QR code. The QR code is on the proxy card, the Internet Notice and the voting instruction form, and is available 24 hours a day.
		Vote prior to the Annual Meeting by mail. You may vote by mail by promptly marking, signing, dating, and mailing your proxy card or voting instruction form (a postage-paid envelope is provided for mailing in the United States).
		Vote during the Annual Meeting over the Internet. To participate in the Annual Meeting, you will need the 16-digit control number included on the proxy card, the Internet Notice or the voting instruction form. Shares held in your name or shares for which you are the beneficial owner but not the shareholder of record may be voted electronically during the formal business portion of the Annual Meeting. Shares held in the Pinnacle West 401(k) Plan cannot be voted during the Annual Meeting. If you hold shares in the Pinnacle West 401(k) Plan, you will need to submit your vote to the plan trustee by May 14, 201713, 2018 to vote your shares.

You may change your vote by: re-voting by telephone; re-voting by Internet; or re-voting during the formal business portion of the Annual Meeting. For shares held in your name you may change your vote by re-submitting a signed proxy card. In addition, for shares held in your name, you may also revoke a previously submitted proxy card by filing with our Corporate Secretary a written notice of revocation. For shares for which you are the beneficial owner but not the shareholder of record, you may change your vote by re-submitting a signed voting instruction form to your broker. In addition, for shares for which you are the beneficial owner but not the shareholder of record, you should contact your broker if you would like to revoke your vote.

Your vote is confidential. Only the following persons have access to your vote: election inspectors; individuals who help with the processing and counting of votes; and persons who

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need access for legal reasons. All votes will be counted by an independent inspector of elections appointed for the Annual Meeting.

Quorum

The presence, in person or by proxy, of a majority of the outstanding shares of our common stock is necessary to constitute a quorum at the Annual Meeting. In counting the votes to determine whether a quorum exists, shares that are entitled to vote but are not voted at the direction of the beneficial owner (called abstentions) and votes withheld by brokers in the absence of instructions from beneficial owners (called broker non-votes) will be counted for purposes of determining whether there is a quorum. Shares owned by the Company are not considered outstanding or present at the meeting.

Vote Required

Election of directors.    Individuals receiving the highest number of votes will be elected. The number of votes that a shareholder may, but is not required to, cast is calculated by multiplying the number of shares of common stock owned by the shareholder, as of the Record Date, by the number of directors to be elected. Any shareholder may cumulate his or her votes by

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casting them for any one nominee or by distributing them among two or more nominees. Abstentions will not be counted toward a nominee's total and will have no effect on the election of directors. You may not cumulate your votes against a nominee. If you hold shares in your own name and would like to exercise your cumulative voting rights, you must do so by mail. If you hold shares beneficially through a broker, trustee or other nominee and wish to cumulate votes, you should follow the instructions on the voting instruction form.

Under the rules of the New York Stock Exchange ("NYSE"), your broker is not able to vote on your behalf in any director election unless you give your broker specific voting instructions. We encourage you to provide instructions so that your shares will be counted in the election of directors.

Say-on-Pay and the frequency of the Say-on-Pay vote.    The votes cast "for" must exceed the votes cast "against" to approve the advisory resolution on the compensation disclosed in this Proxy Statement of our Named Executive OfficersNEOs identified on page 44 — the Say-on-Paysay-on-pay vote. This resolution is not intended to address any specific item of compensation, but rather the overall compensation of the Named Executive OfficersNEOs and the compensation philosophy, policies and procedures described in this Proxy Statement. The frequency option — one year, two years, or three years — that receives the greatest number of votes cast on this proposal will be the frequency option approved by the shareholders. Because your votes on both Say-on-Pay and the frequency of the Say-on-Pay vote areis advisory, theyit will not be binding on the Board or the Company. However, theThe Board will review the voting results and take them into consideration when making future decisions regarding executive compensation and the frequency of the Say-on-Pay vote.compensation. Abstentions and broker non-votes will have no effect on the outcome of these proposals.

Re-approval of the material terms of the performance goals under the 2012 Plan and approval ofthis proposal. We will hold an amendment to placeadvisory vote on say-on-pay on an annual upper dollar limitbasis until we next hold an advisory vote of shareholders on the valuefrequency of awards to individual, non-employee directors.    Re-approval of the material terms of the performance goals under, and approval of an amendment to, the 2012 Plan requires thesuch votes cast "for" to exceed the votes cast "against" this proposal. For purposes of these approvals, abstentions have the effect of a vote against the proposal, and broker non-votes are not considered to be votes cast.as required by law.

Ratification of the appointment of the independent accountants.    The votes cast "for" must exceed the votes cast "against" to ratify the appointment of the independent accountants for the year ending December 31, 2017.2018. Abstentions and broker non-votes will have no effect on the outcome of this proposal.

The Board recommends a vote:

ü

FOR the election of the nominated slate of directors (Proposal 1);

ü

FOR the approval, on an advisory basis, of the resolution approving the compensation of our Named Executive Officers,NEOs, as disclosed in this Proxy Statement (Proposal 2);

ü

FOR, on an advisory basis, an annual advisory vote on the compensation of our Named Executive Officers (Proposal 3); and

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FOR re-approval of the material terms of the performance goals under the 2012 Plan and approval of the amendment to place an annual upper dollar limit on the value of awards to individual, non-employee directors (Proposal 4); and

ü

FORthe ratification of the appointment of D&T as the Company's independent accountants for the year ending December 31, 20172018 (Proposal 5)3).

The Board is not aware of any other matters that will be brought before the shareholders for a vote. If any other matters properly come before the meeting, the proxy holders will vote on those matters in accordance with the recommendations of the Board or, if no recommendations are given, in accordance with their own judgment.

If you and one or more shareholders share the same address, it is possible that only one Internet Notice, Annual Report or Proxy Statement was delivered to your address. Registered shareholders at the same address who wish to receive separate copies of the Internet Notice, the Annual Report or Proxy Statement may:

•

Call the Company's Shareholder Services Department at 1-602-250-5511;

•

Mail a request to Shareholder Services at P.O. Box 53999, Mail Station 8602, Phoenix, Arizona, 85072-3999; or

•

E-mail a request to: shareholderdept@pinnaclewest.com.

The Company will promptly deliver to you the information requested. Registered shareholders who share the same address but wish to receive one Internet Notice, Annual Report or Proxy Statement may contact the Company through the same methods listed above. Shareholders who own Company stock through a broker and who wish to receive single or separate copies of the Internet Notice, Annual Report or Proxy Statement should contact their broker.

You may access our Annual Report and Proxy Statement via the Internet. Copies of the Annual Report and Proxy Statement are available on the Company's website (www.pinnaclewest.com) and will be provided to any shareholder promptly upon request. Shareholders may request copies from Shareholder Services at the telephone number or addresses set forth above, or as described on the Internet Notice.

Shareholder Proposals.    To be included in the proxy materials for the 20182019 Annual Meeting of Shareholders (the "2018"2019 Annual Meeting"), any shareholder proposal intended to be presented must be received by our Corporate Secretary no later than December 1, 2017November 29, 2018 at the following address:

Corporate Secretary
Pinnacle West Capital Corporation
400 North Fifth Street, Mail Station 8602
Phoenix, Arizona 85004

A shareholder who intends to present a proposal at the 2019 Annual Meeting, but does not wish it to be included in the 2019 proxy materials, must submit the proposal no earlier than January 16, 2019 and no later than the close of business on February 15, 2019.

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A shareholder who intends to present a proposal at the 2018 Annual Meeting, but does not wish it to be included in the 2018 proxy materials, must submit the proposal no earlier than January 17, 2018 and no later than the close of business on February 16, 2018.

Shareholder Nominations.    Shareholder nominations for a director to the Board must be received by the Corporate Secretary at the address set forth above by November 17, 201716, 2018 ("Shareholder Nomination").

Proxy Access.    In February 2017, our Board amended the Bylaws to provide, among other things, that under certain circumstances a shareholder or group of shareholders may include director candidates that they have nominated in our annual meeting proxy statement — "proxy access." Under these provisions, a shareholder or group of up to 20 shareholders seeking to include director nominees in our annual meeting proxy statement must own 3% or more of our outstanding common stock continuously for at least the previous three years. Generally the number of qualifying shareholder-nominated candidates the Company will include in its annual meeting proxy materials will be limited to the greater of 25% of the Board or two candidates. Based on the current Board size of 11 directors, the maximum number of proxy access candidates we would be required to include in our proxy materials is two.

Nominees submitted under the proxy access provisions that are later withdrawn or are included in the proxy materials as Board-nominated candidates will be counted in determining whether the 25% maximum has been reached. If the number of shareholder-nominated candidates exceeds 25%, each nominating shareholder or group of shareholders may select one nominee for inclusion in our proxy materials until the maximum number is met. The order of selection would be determined by the amount (largest to smallest) of shares of our common stock held by each nominating shareholder or group of shareholders. Requests to include shareholder-nominated candidates under proxy access must be received by our Corporate Secretary at the address set forth above not earlier than the close of business on November 1, 2017October 30, 2018 nor later than the close of business on December 1, 2017.November 29, 2018. The number of qualifying shareholder-nominated candidates the Company will include in its proxy materials under proxy access will be reduced on a one-for-one basis in the event the Company receives a Shareholder Nomination, but at least one qualifying shareholder-nominated proxy access nominee will be included in the proxy materials.

In all cases, shareholders and nominees must also comply with the applicable rules of the Securities and Exchange Commission ("SEC") and the applicable sections of our Bylaws relating to qualifications of nominees and nominating shareholders and disclosure requirements.

The Board is soliciting the enclosed proxy. The Company may solicit shareholders over the Internet, by telephone or by mail. The Company has retained D.F. King & Co., Inc. to assist in the distribution of proxy solicitation materials and the solicitation of proxies for $11,000, plus customary expenses. The costs of the solicitation will be paid by the Company. Proxies may also be solicited in person, by telephone or electronically by Company personnel who will not receive additional compensation for such solicitation. As required, the Company will reimburse brokerage houses and others for their out-of-pocket expenses in forwarding documents to beneficial owners of our stock.

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The Board has the following standing committees: Audit; Corporate Governance; Finance; Human Resources; and Nuclear and Operating. All of the charters of the Board's committees are publicly available on the Company's website (www.pinnaclewest.com). All of our committees conduct a formal review of their charters every other year and as often as any committee member deems necessary. In the years in which a formal review is not conducted, the Board has tasked management with reviewing the charters and recommending any changes management deems necessary or reflective of good corporate governance. The charters are also changed as needed to comply with any corresponding changes to any applicable rule or regulation.

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All of our committees are comprised of independent directors who meet the independence requirements of the NYSENew York Stock Exchange ("NYSE") rules, SEC rules, and the Company's Director Independence Standards, including any specific committee independence requirements. The duties and responsibilities of our committees are as follows:

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Lead Director.    Kathryn L. Munro serves as the Company's Lead Director and chairs the Corporate Governance Committee. The Lead Director performs the following duties and responsibilities as set forth in our Corporate Governance Guidelines:

•

Serves as a liaison between the Chairman of the Board (the "Chairman") and the independent directors;

•

Advises the Chairman as to an appropriate schedule of Board meetings, reviews and provides the Chairman with input regarding agendas for the Board meetings and, as appropriate or as requested, reviews and provides the Chairman with input regarding information sent to the Board;

•

Presides at all meetings at which the Chairman is not present, including executive sessions of the independent directors (which are regularly scheduled as part of each Board meeting) and calls meetings of the independent directors when necessary and appropriate;

•

Oversees the Board and Board committee self-assessment process;

•

Is available for appropriate consultation and direct communication with the Company's shareholders and other interested parties; and

•

Performs such other duties as the Board may from time to time delegate.

These duties and responsibilities do not, however, fully capture Ms. Munro's active role in serving as our Lead Director. For example, Ms. Munro regularly speakshas regular discussions with the CEO, other members of the senior management team and members of the Board in between Board meetings on a variety of topics, and she serves as a liaison between the CEO and the independent directors. Ms. Munro focuses the Board on key issues facing our Company and on topics of interest to the Board. She takes the lead on director recruitment and has a formal annual call with each non-employee director to discuss the Board, its functions, its membership, the individual's plan with respect to his or her continuing Board service, and any other topic the individual desires to discuss with our Lead Director. Her leadership fosters a Board culture of open discussion and deliberation to support sound decision-making. She also encourages communication between management and the Board to facilitate productive working relationships.

Chairman and CEO Positions.    The Chairman is Donald E. Brandt, the Company's President and CEO. The independent directors believe that Mr. Brandt, as an experienced leader with extensive knowledge of the Company and our industry, serves as a highly effective conduit between the Board and management and that Mr. Brandt provides the vision and leadership to execute on the Company's strategy and create shareholder value. The Board believes that separating the roles of the CEO and Chairman and appointing an independent Board Chairman at this time would simply create an additional level of unneeded hierarchy that would only duplicate the activities already being vigorously carried out by our Lead Director.

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Management Succession.    Our Board places a high priority on senior management development and succession planning. While the Corporate Governance Committee has principal responsibility for overseeing CEO and other senior management succession planning, the full Board is actively involved in reviewing our senior management succession plans that will allow for smooth and thoughtful leadership transitions in the future.

Executive succession planning and senior management development were specific areas of focus for the Corporate Governance Committee in 2017. The Corporate Governance Committee engaged in thorough and thoughtful discussions regarding the development and evaluation of current and potential senior leaders, as well as the development of executive succession plans, including succession plans for our CEO position.

Board Succession.    Our Board has developed a robust process to refresh the Board and its leadership significantly over the next several years and beyond. The process is designed to continue to provide for a well-qualified, diverse and highly independent Board, with the requisite experience and skills to provide effective oversight. This process includes the identification of the current key skills and experience possessed by our members. A matrix of current key skills and experience possessed by our Board is on page 5 of this Proxy Statement. The identification of these skills and experiences, combined with a comprehensive Board evaluation process, provide visibility into the skills and experience leaving our Board in the future and allows for the identification of additional skills, experience or expertise needed to facilitate the Company's long-term strategy. This information is taken into account when identifying director nominees during the recruitment process.

Board Evaluations.    The Corporate Governance Committee has established a thorough evaluation process wherein each Director completes a Board evaluation as well as an individual self-evaluation annually. The Board evaluation allows each Director the opportunity to examine and evaluate the Board's composition and effectiveness, competency, accountability, deliberations and administration, and each committee, as well as the opportunity to identify any skills, experience or expertise the Director believes should be represented, or more fully represented, on the Board. The individual self-evaluation asks each Director to evaluate different areas of their performance as a Director, including independence, expertise, judgment and skills. The Board assessment results are reviewed both on a one-year standalone basis and on a three-year basis in order to identify any year-over-year trends. The assessment results are initially reviewed by the Lead Director. The Lead Director then has a formal annual call with each Director to discuss the Board, its functions, its membership, the individual's plan with respect to his or her continuing Board service, and any other topic the individual desires to discuss with our Lead Director. The results of the evaluations and calls are presented to the Corporate Governance Committee and full Board each February. This process provides the Board the ability to assess the overall functioning of the Board as a whole, and identify any skills, experience or expertise needed to continue to provide effective oversight of the Company's long-term strategy.

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Consistent with the requirements of the NYSE's corporate governance standards, the Audit Committee periodically reviews the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures. The Audit Committee also reviews the comprehensiveness of the Board's risk oversight activities and the Company's risk assessment process, and plays a coordinating role designed to ensure that no gaps exist in the coverage by the Board committees of risk areas.

The Executive Risk Committee is comprised of senior level officers of the Company and is chaired by the Chief Financial Officer. Among other responsibilities, this Committee is responsible for ensuring that the Board receives timely information concerning the Company's material risks and risk management processes. The Executive Risk Committee provides the Board with a list of the Company's top risks on an annual basis. The internal enterprise risk management group reports to the Vice President, Controller and Chief Accounting Officer, who reports to the Executive Vice President and Chief Financial Officer. The internal risk management group is responsible for (1) implementing a consistent risk management framework and reporting process across APS,the Company, and (2) ensuring that the Executive Risk Committee is informed of those processes and regularly apprised of existing material risks and the emergence of additional material risks.

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Under the Company's Corporate Governance Guidelines, upon a substantial change in a director's primary business position from the position the director held when originally elected to the Board, a director is required to apprise the Corporate Governance Committee and to offer his or her resignation for consideration to the Corporate Governance Committee. The Corporate Governance Committee will recommend to the Board the action, if any, to be taken with respect to the tendered resignation.

Under the Company's Corporate Governance Guidelines, an individual shall not be eligible to be nominated for election or re-election as a member of the Board of the Company or APS if, at the time of the nomination, the individual has attained the age of 75 years. This policy shall apply regardless of the source of the nomination or whether the nomination was made at a meeting of the Board of Directors, at an Annual Meeting or otherwise.

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Our Goal.What our shareholders think is important to us. We seek to maintain a transparent and productive dialogue with our shareholders by:

ü

Providing clear and timely information,

ü

Seeking and listening to feedback, and

ü

Being responsive.

Our Plan.    To accomplish this goal, we have a long-standing investor outreachan established shareholder engagement program conducted throughout the yeardesigned to maintain a dialogue with currentour shareholders, which was further augmented during 2017 in response to what the Board considered a disappointing level of shareholder support for our annual advisory vote on compensation. Each year we strive to respond to shareholder questions in a timely manner, conduct extensive proactive outreach to investors, and potential shareholders.evaluate the information we provide to investors in an effort to continuously improve our engagement. In 2017, we contacted the holders of approximately 50% of the shares outstanding and met with the holders of approximately 40% of the shares outstanding. Our activeLead Director and member of the Human Resources Committee, Kathryn Munro, participated in a number of the shareholder engagement program includes a focus on ensuring that we understanddiscussions providing shareholders with direct access to the governance priorities ofBoard.

Our Results.    We listened to our shareholders. Discussion topics include governance best practices,After considering their feedback, the Board makeup, compensation policiesin late 2017 and sustainability. Feedbackearly 2018 made several changes in response:

ü

Increased the proportion of performance shares in our CEO's and Executive Vice Presidents' 2018 long-term incentive awards from investors is communicated60% to 70%;

ü

Clarified how our performance metrics support and align with our long-term strategy;

ü

Revised 2018 metrics in certain key business units to better align with our priorities and emphasize top-quartile and above performance;

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ü

Adopted a formalclawback policy;

ü

EnhancedCD&A disclosures;

ü

Redesignedannual incentive disclosure;

ü

Added detail on how we select ourpeer group;

ü

Added specificresponsibility for oversight of sustainability matters to the Boardcharter of the Nuclear and used to enhance our disclosuresOperating Committee; and governance practices. The diagram below provides an overview of our outreach program cycle:

ü

Included a director key skills and experience matrix in this Proxy Statement.

Communicating with the Board.

Shareholders and other parties interested in communicating with the Board may do so by writing to the Corporate Secretary, Pinnacle West Capital Corporation, 400 North Fifth Street, Mail Station 8602, Phoenix, Arizona 85004. The Corporate Secretary will transmit such communications, as appropriate, depending on the facts and circumstances outlined in the communications. In that regard, the Corporate Secretary has discretion to exclude communications that are unrelated to the duties and responsibilities of the Board, such as commercial advertisements or other forms of solicitations, service or billing matters and complaints related to individual employment-related actions.

•

Integrity and Accountability:  Directors should act with integrity. We look for directors who have integrity and strength of character in their personal and professional dealings. Our directors should be prepared to be, and are held, accountable for their decisions.

•

Time and Effort:  Directors should spend the necessary time to properly discharge their responsibilities as directors, including reviewing written materials provided to the Board or committee in advance of Board or committee meetings. Directors are expected to be present at all Board meetings, the Annual Meeting of Shareholders, and meetings of committees on which they serve. We also expect our directors to make themselves accessible to management upon request.

•

Other Commitments:  We expect our directors to monitor their other commitments to assure that these other commitments do not impact their service to our Company. Directors may not serve on more than three other boards of public companies in addition to the Pinnacle West Board without the prior approval of the Corporate Governance Committee. A director may not serve as a member of the Audit Committee if they serve on the audit committees of more than three public companies (including the Company) unless the Board determines that such simultaneous service would not impair the ability of such member to effectively serve on the Company's Audit Committee.

•

Stock Ownership:  We expect our directors to have investments in the Company's stock that alignsalign with our shareholders. Our directors are expected to comply with our Director Stock Ownership Policy.

In addition, the Corporate Governance Committee considers the following qualities, among others: knowledge, including regulatory and political knowledge, and nuclear expertise at the strategic level; understanding of the Company's business environment; and the potential contribution of each candidate to the diversity of backgrounds, experience and competencies which the Board desires to have represented, including large organizational leadership, public company experience and risk oversight skills. The Corporate Governance Committee considers diversity in its selection of nominees utilizing a broad meaning to include not only factors such as race and gender, but also background, experience, skills, accomplishments, financial expertise, professional interests, and professional interests.the potential contribution of each candidate to the diversity of backgrounds, experience and competencies which the Board desires to have represented. The Corporate Governance Committee considers the following qualities as well:

•

Regulatory and political knowledge is relevant to the Company as the utility industry is heavily regulated and directly affected by public policy and the actions of federal, state and local governmental agencies.

•

Nuclear expertise at the strategic level is important to the Company as we operate, Palo Verde Generating Station, a nuclear power plant and the largest power plant in the United

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States. As we plan for our future, Palo Verde plays a large role in shaping the Company's business strategy and the future of our generation mix.

•

Understanding of the Company's business environment is a critical attribute in planning our short- and long-term business strategies. Possessing knowledge of the Company's business environment includes not only experience in the broader utility industry, but also experience with factors unique to the Southwest and Arizona, including understanding the business from the perspective of the customer.

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Large organizational leadership of complex operations provides a broad range of skills and experience beneficial to our decision-making, including human resource management, business strategy, finance and capital allocation.

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Public company experience, as a member of a public company board or as CEO or other senior leader, gives a director an understanding of many of the structural and business strategy challenges facing a public company. This experience provides invaluable leadership skills in auditing matters, investment strategy and corporate governance.

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Risk oversight and management skills are essential to the Board's role in overseeing and managing the risk associated with operating in the utility industry.

Selection of Nominees for the Board.    The Corporate Governance Committee uses a variety of methods to identify and evaluate nominees for a director position. The Corporate Governance Committee regularly assesses the appropriate size of the Board, whether any vacancies on the Board are expected due to retirement or otherwise, and whether the Board reflects the appropriate balance of knowledge, skills, expertise, and diversity required for the Board as a whole. In the event that vacancies are anticipated, or otherwise arise, the Corporate Governance Committee may consider various potential candidates. Candidates may be considered at any point during the year and come to the attention of the Corporate Governance Committee through current Board members, professional search firms or shareholders. The Corporate Governance Committee evaluates all nominees from these sources against the same criteria.

Other than Ms. Sims, all directors were elected at the 2016 Annual Meeting of Shareholders. In recruiting Ms. Sims, the Corporate Governance Committee retained the search firm of Spencer Stuart to help identify director prospects, perform candidate outreach, assist in reference and background checks, and provide related services. Candidates who passed the initial screening tests were then interviewed by members of the Corporate Governance Committee and by Mr. Brandt. The Corporate Governance Committee recommended Ms. Sims for Board membership, and Ms. Sims was added to the Board in October 2016.

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The eleventen nominees for election as directors are set forth below. All nominees will be elected for a one-year term that will expire at the 20182019 Annual Meeting. The directors' ages are as of February 24, 2017.21, 2018. All of our directors also serve as directors of APS for no additional compensation. Individuals receiving the highest number of votes will be elected.

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