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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
Pinnacle West Capital Corporation
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] | No fee required. | |||||
[ ] | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||||
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[ ] | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||||
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Post Office Box 53999
PHOENIX, ARIZONA 85072-3999
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
Wednesday May 20, 2009
(1) | Elect 13 directors to serve until the 2010 Annual Meeting of Shareholders (Proposal 1); | ||
(2) | Ratify the appointment of the Company’s independent auditors for the fiscal year ending December 31, 2009 (Proposal 2); and | ||
(3) | Consideration of a shareholder proposal, if properly presented at the meeting (Proposal 3). |
Senior Vice President, General Counsel and Secretary
April 8, 2009
Please see our General Information section for information about voting by telephone, Internet or mail.
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• | FORelection of the nominated slate of directors (see Proposal 1); | ||
• | FORratification of the appointment of Deloitte & Touche LLP as the Company’s independent auditors for the fiscal year ending December 31, 2009 (see Proposal 2); and | ||
• | AGAINSTapproval of the shareholder proposal (see Proposal 3). |
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AND OUR CORPORATE GOVERNANCE
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Finance, | ||||||||||||||||
Human | Corporate | Nuclear and | ||||||||||||||
Audit | Resources | Governance | Operating | |||||||||||||
Director | Committee | Committee | Committee | Committee | ||||||||||||
Edward N. Basha, Jr. | ü | ü | ü | |||||||||||||
Donald E. Brandt | ü | |||||||||||||||
Susan Clark-Johnson | ü | ü | ü | |||||||||||||
Michael L. Gallagher | ü | X | ||||||||||||||
Pamela Grant | ü | ü | ü | |||||||||||||
Roy A. Herberger, Jr. | X | ü | ü | |||||||||||||
William S. Jamieson | ü | ü | ü | |||||||||||||
Humberto S. Lopez | ü | ü | ü | |||||||||||||
Kathryn L. Munro | ü | X | ü | |||||||||||||
Bruce J. Nordstrom | X | ü | ü | |||||||||||||
W. Douglas Parker | ü | ü | ü | |||||||||||||
William J. Post | ü | |||||||||||||||
William L. Stewart | ü | ü | ||||||||||||||
ü | Member | |
X | Chairman |
• | the integrity of the Company’s financial statements; | ||
• | the independent auditors’ qualifications, independence and performance; | ||
• | the performance of the Company’s internal audit function; and |
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• | the Company’s compliance with legal and regulatory requirements. |
• | review and assess reports from the Palo Verde Nuclear Oversight Committee (the “NOC”), which formally reports to the FNO Committee and APS’ Chief Executive Officer; | ||
• | review the results of major inspections and evaluations by external oversight groups, such as the Nuclear Regulatory Commission (“NRC”) and the Institute of Nuclear Power Operations; | ||
• | review the Company’s historical and projected financial performance and annual budgets; | ||
• | review and recommend approval of short-term investments and borrowing guidelines; | ||
• | review the Company’s financing plan and recommend approval of credit facilities and the issuance of long-term debt and common equity; | ||
• | review and recommend to the Board the Company’s dividend actions, including stock dividends and other distributions; | ||
• | review and monitor the performance of the Company’s environmental policies; and | ||
• | review and monitor the customer and power plant operations of the Company. |
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• | director qualification standards, including policies regarding director independence, tenure, retirement, and succession; | ||
• | director responsibilities, including basic duties and responsibilities with respect to attendance at Board and committee meetings and advance review of meeting materials; | ||
• | director access to management and, as necessary or appropriate, independent advisors; | ||
• | director orientation and continuing education; | ||
• | policies and principles for Chief Executive Officer (“CEO”) selection and performance review, as well as policies regarding succession in the event of an emergency or retirement of the CEO; and | ||
• | Board and committee self-assessments on at least an annual basis to determine whether the Board and its committees are functioning effectively. |
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• | Serves as a liaison between the Chairman of the Board and the independent directors; | ||
• | Advises the Chairman of the Board as to an appropriate schedule of Board meetings, reviews and provides the Chairman of the Board with input regarding agendas for the Board meetings and, as appropriate or as requested, reviews and provides the Chairman of the Board with input regarding information sent to the Board; | ||
• | Presides at all meetings at which the Chairman of the Board is not present, including executive sessions of the non-employee and the independent directors; | ||
• | Calls meetings of the non-employee and the independent directors when necessary and appropriate; | ||
• | Oversees the Board and Board committee self-assessment process; | ||
• | Is available for consultation and direct communication with the Company’s shareholders and other interested parties; and | ||
• | Performs such other duties as the non-employee directors may from time to time delegate. |
Pinnacle West Capital Corporation
400 North 5th Street, Mail Station 9068
Phoenix, Arizona 85004
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Name1 | Fees Earned | Stock | Option | Non-Equity | Change in | All Other | Total | ||||||||||||||||||||||||||||||
or Paid in | Awards | Awards | Incentive Plan | Pension Value | Compensation | ($) | |||||||||||||||||||||||||||||||
Cash | ($)3 | ($) | Compensation | and | ($)5 | ||||||||||||||||||||||||||||||||
($)2 | ($) | Nonqualified | |||||||||||||||||||||||||||||||||||
Deferred | |||||||||||||||||||||||||||||||||||||
Compensation | |||||||||||||||||||||||||||||||||||||
Earnings4 | |||||||||||||||||||||||||||||||||||||
($) | |||||||||||||||||||||||||||||||||||||
Edward N. Basha, Jr. | 67,500 | 50,128 | 0 | 0 | 0 | 5,061 | 122,689 | ||||||||||||||||||||||||||||||
Susan Clark-Johnson | 51,500 | 92,258 | 0 | 0 | 0 | 41 | 143,799 | ||||||||||||||||||||||||||||||
Jack E. Davis6 | 10,500 | 0 | 0 | 0 | 0 | 19 | 10,519 | ||||||||||||||||||||||||||||||
Michael L. Gallagher | 75,000 | 50,128 | 0 | 0 | 17,282 | 61 | 142,471 | ||||||||||||||||||||||||||||||
Pamela Grant | 74,500 | 50,128 | 0 | 0 | 0 | 5,061 | 129,689 | ||||||||||||||||||||||||||||||
Roy A. Herberger, Jr. | 75,500 | 50,128 | 0 | 0 | 12,289 | 2,061 | 139,978 | ||||||||||||||||||||||||||||||
William S. Jamieson | 67,500 | 50,128 | 0 | 0 | 11,583 | 5,061 | 134,272 | ||||||||||||||||||||||||||||||
Humberto S. Lopez | 74,500 | 50,128 | 0 | 0 | 21,828 | 5,061 | 151,517 | ||||||||||||||||||||||||||||||
Kathryn L. Munro | 66,000 | 50,128 | 0 | 0 | 5,922 | 5,061 | 127,111 | ||||||||||||||||||||||||||||||
Bruce J. Nordstrom | 73,000 | 50,128 | 0 | 0 | 8,940 | 5,061 | 137,129 | ||||||||||||||||||||||||||||||
W. Douglas Parker | 58,500 | 50,128 | 0 | 0 | 0 | 61 | 108,689 | ||||||||||||||||||||||||||||||
William J. Post6 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
William L. Stewart | 90,000 | 50,128 | 0 | 0 | 0 | 61 | 140,189 | ||||||||||||||||||||||||||||||
1 | The following Company directors also serve as directors of the following Company subsidiaries: APS: Messrs. Basha, Brandt (beginning in January of 2009), Davis (until May of 2008), Gallagher, Herberger, Jamieson, Lopez, Nordstrom, Parker, Post and Stewart, and Mses. Grant, Munro and Clark-Johnson (beginning in February of 2008); APSES: Messrs. Brandt, Post (until February of 2009), Hatfield (beginning in February of 2009) and Stewart; SunCor: Messrs. Gallagher, Lopez, Post (until March of 2009), and Brandt (beginning in March of 2009) and Ms. Grant; and El Dorado: Messrs. Gallagher, Herberger, Post (until February of 2009), and Brandt (beginning in February of 2009). Ms. Clark-Johnson became a director of the Company and of APS effective February 1, 2008. Mr. Davis decided not to stand for re-election as a director in 2008 and, as a result, his term as a director with the Company and APS ended on May 21, 2008. Mr. Brandt became a director of the Company and APS effective January 21, 2009 and thus is not included in the table. | |
2 | This amount includes fees paid to directors in connection with their service on the Board of Directors of the Company and of one or more of the Company’s subsidiaries. (See “How are directors compensated?” on page 9 of this proxy statement.) In addition, with respect to Mr. Stewart, this amount includes $20,000 paid to him in connection with his service as the Board’s liaison to the NOC. | |
3 | Represents an annual stock grant of 1,600 shares (the annual stock grant was increased from 1,100 shares to 1,600 shares in May of 2008); and a grant to Ms. Clark-Johnson of 1,100 shares which she received in February of 2008 in connection with her appointment to the Board. Mr. Davis was not a member of the Board of Directors on the date of the annual grant. Each individual who is a non-employee director as of July 1 of a calendar year, and who meets the requirements of ownership of the Company’s common stock set forth below, receives 1,600 shares of the Company’s common stock. In the first calendar year in which a non-employee director is eligible to participate in this grant, he or she must own at least 900 shares of the Company’s common stock as of December 31 of the same calendar year to receive a grant of 1,600 shares of the Company’s common stock. If the non-employee director owns 900 shares of common stock as of June 30, he or she will receive a grant of 1,600 shares of common stock as of July 1 of the same calendar year. If the non-employee director does not own 900 shares of the Company’s common stock as of June 30, but acquires the necessary shares on or before December 31 of the same year, he or she will receive a grant of 1,600 shares of common stock |
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within a reasonable time after the Company verifies that the requisite number of shares has been acquired. In each subsequent year, the number of shares of the Company’s common stock the non-employee director must own to receive a grant of 1,600 shares of common stock increases by 900 shares, until reaching a maximum of 4,500 shares. In each of the subsequent years, the non-employee director must own the requisite number of shares of the Company’s common stock as of June 30 of the relevant calendar year. In accordance with SEC rules, the amount in this column reflects the dollar amount expensed by the Company during 2008 for financial reporting purposes, which equals the number of shares issued (1,600) multiplied by the closing market price on the date the shares were issued ($31.33) and with respect to the 1,100 share grant to Ms. Clark-Johnson, represents the number of shares issued (1,100) multiplied by the closing market price on the date the shares were issued ($38.30). The grant date fair value of these awards is the same as the amount in the column. There were no forfeitures of stock awards for directors in 2008. | ||
4 | The Company does not have a pension plan for directors. The amount in this column consists solely of the above-market portion of annual interest accrued under a deferred compensation plan under which directors may defer all or a portion of their Board fees. Under the SEC’s disclosure rules, the above-market portion of interest is determined by reference to 120% of the applicable federal long-term rate, with compounding. See the discussion of the rates of interest applicable to the deferred compensation program under the heading “Discussion of Nonqualified Deferred Compensation” on page 48 of this proxy statement. | |
5 | This amount represents a premium of $61 for an accidental death and dismemberment policy that covers all directors and officers. The amount has been pro-rated for Ms. Clark-Johnson ($41.00) and Mr. Davis ($19.00) for the period during which they served as a director during 2008. The remainder of the amount represents qualifying charitable contributions matched by the Company, as described under “How are directors compensated?” on page 9 of this proxy statement. | |
6 | Mr. Post is a Named Executive Officer (as defined on page 16 of this proxy statement) and his compensation is set forth in the Summary Compensation Table on page 34 of this proxy statement. Mr. Davis retired from the Company on March 1, 2008, but continued to serve out his term as a director, which expired on May 21, 2008. Mr. Post did not receive any additional compensation during 2008 in connection with his service as a director. Mr. Davis received compensation in connection with his service as a director from March of 2008 to May of 2008. |
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Director | ||||||||||
Name | Age | Occupation, Business & Directorships | Since | |||||||
Edward N. Basha, Jr. | 71 | Chairman of the Board of Bashas’ supermarket chain since 1968. Chief Executive Officer of Bashas’ and an Arizona civic leader dedicated to multiple Arizona community projects. | 1999 | |||||||
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Director | ||||||||||
Name | Age | Occupation, Business & Directorships | Since | |||||||
Donald E. Brandt | 54 | Mr. Brandt was appointed Chairman of the Board and Chief Executive Officer, effective April 30, 2009. Mr. Brandt currently serves as the Company’s President and Chief Operating Officer and APS’ Chief Executive Officer. Mr. Brandt has served as an officer of the Company in the following additional capacities: from September 2003 to March 2008 as Executive Vice President; from December 2002 to September 2003 as Senior Vice President; and as Chief Financial Officer in 2002. Mr. Brandt was also appointed Chairman of the Board of APS effective April 30, 2009 and has held various officer positions at APS since 2002. | 2009 | |||||||
Susan Clark-Johnson | 61 | President, Gannett Newspaper Division, Gannett Co., Inc. from September 2005 until her retirement in May of 2008. Ms. Clark-Johnson was Chairman and CEO of Phoenix Newspapers, Inc. from August 2000 to September 2005. Ms. Clark-Johnson has been a director of the Company since February 1, 2008. | 2008 | |||||||
Michael L. Gallagher | 64 | Attorney-at-law with Gallagher & Kennedy, P.A., Phoenix, Arizona. Chairman Emeritus of Gallagher & Kennedy since 2001. Mr. Gallagher served as President of Gallagher & Kennedy from 1978 through 2000. Mr. Gallagher is also a director of AMERCO. | 1999 | |||||||
Pamela Grant | 70 | Civic leader. President of TableScapes, Inc. from July 1989 through January 1995. Ms. Grant was President and CEO of Goldwaters Department Stores, a division of May Department Stores, from January 1987 to April 1988. From November 1978 to January 1987, Ms. Grant was President, Chair and CEO of Goldwaters Department Stores, a division of Associated Dry Goods. | 1985 | |||||||
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Director | ||||||||||
Name | Age | Occupation, Business & Directorships | Since | |||||||
Roy A. Herberger, Jr. | 66 | President Emeritus of Thunderbird School of Global Management since November 2004. Mr. Herberger was President of Thunderbird from 1989 until August 2004. Mr. Herberger is also a director of the Apollo Group and an advisory director of MedAire, Inc. Mr. Herberger was a director of ECO2 Plastics Inc. until January 30, 2009. | 1992 | |||||||
William S. Jamieson | 65 | President of Micah Institute of Asheville, North Carolina since January 2005. From January 1999 to December 2004, Mr. Jamieson was President of the Institute for Servant Leadership. | 1991 | |||||||
Humberto S. Lopez | 63 | President of HSL Properties, Inc. (real estate development and investment), Tucson, Arizona since 1975. | 1995 | |||||||
Kathryn L. Munro | 60 | Principal of BridgeWest, LLC (investment company) since July 2003. Ms. Munro was Chair of BridgeWest, LLC from February 1999 until July 2003. From 1996 to 1998, Ms. Munro served as CEO of Bank of America’s Southwest Banking Group and was President of Bank of America Arizona from 1994 to 1996. Ms. Munro is also a director of FLOW International Corporation and Knight Transportation, Inc. | 2000 | |||||||
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Director | ||||||||||
Name | Age | Occupation, Business & Directorships | Since | |||||||
Bruce J. Nordstrom | 59 | President of and certified public accountant at the firm of Nordstrom and Associates, PC, Flagstaff, Arizona, since 1988. | 2000 | |||||||
W. Douglas Parker | 47 | Chairman of the Board and Chief Executive Officer of US Airways Group, Inc. (“USAG”) and US Airways, Inc. (“US Airways”) since September 27, 2005 to present. Mr. Parker was President of USAG and US Airways from September 27, 2005 to October 1, 2006. Mr. Parker served as Chairman of the Board and Chief Executive Officer of America West Holdings (“AWH”) and of America West Airlines (“AWA”) from September 2001 to September 2007, and has served as a director of AWH and AWA from 1999 to September 2007. Mr. Parker also served as President of AWH and AWA from September 2001 to October 1, 2006. Mr. Parker is also a director of USAG. Mr. Parker was a director of Clear Channel Outdoor until July 16, 2008. | 2007 | |||||||
William J. Post | 58 | Chairman of the Board of the Company since February 2001 and CEO of the Company since February 1999. Mr. Post has served as an officer of the Company in the following additional capacities: from August 1999 to February 2001 as President; from February 1997 to February 1999 as President; and from June 1995 to February 1997 as Executive Vice President. Mr. Post is also Chairman of the Board of APS and has held various officer positions at APS since 1982. Mr. Post has announced his retirement as an officer of the Company and APS, effective April 30, 2009. | 1997 | |||||||
William L. Stewart | 65 | Mr. Stewart retired from the Company effective November 26, 2003. Mr. Stewart served as Chief Executive Officer of Pinnacle West Energy Corporation (“PWEC”) from October 2002 until January 2003 and President of PWEC from October 1999 until January 2003. Mr. Stewart served as President, Generation, of APS from October 1998 to October 2002. | 2001 | |||||||
NOMINATED SLATE OF DIRECTORS
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AND LARGE SHAREHOLDERS
Number of Shares | Shares Acquirable | |||||||||||
Name | Beneficially Owned1 | Within 60 Days2 | Percent of Class | |||||||||
Directors: | ||||||||||||
Edward N. Basha, Jr. | 13,235 | 0 | * | |||||||||
Donald E. Brandt | 23,386 | 0 | * | |||||||||
Susan Clark-Johnson | 2,700 | 0 | * | |||||||||
Michael L. Gallagher | 15,996 | 0 | * | |||||||||
Pamela Grant | 24,656 | 0 | * | |||||||||
Roy A. Herberger, Jr. | 18,360 | 0 | * | |||||||||
William S. Jamieson | 14,290 | 0 | * | |||||||||
Humberto S. Lopez | 40,773 | 0 | * | |||||||||
Kathryn L. Munro | 14,147 | 0 | * | |||||||||
Bruce J. Nordstrom | 16,593 | 0 | * | |||||||||
W. Douglas Parker | 2,700 | 0 | * | |||||||||
William J. Post | 89,800 | 361,250 | 3 | * | ||||||||
William L. Stewart | 35,163 | 0 | * | |||||||||
Other Named Executive Officers: | ||||||||||||
James R. Hatfield | 13,463 | 0 | * | |||||||||
Randall K. Edington | 8,611 | 0 | * | |||||||||
Steven M. Wheeler | 18,015 | 0 | * | |||||||||
All Directors and Executive Officers as a Group (22 Persons): | 482,132 | 415,250 | * | |||||||||
5% Beneficial Owners4: | ||||||||||||
Barclays Global Investors, NA. and certain other entities | 7,283,887 | N/A | 7.2 | % | ||||||||
45 Fremont Street San Francisco, CA 94105 | ||||||||||||
Franklin Resources, Inc. and certain other entities | 7,219,100 | N/A | 7.2 | % | ||||||||
One Franklin Parkway San Mateo, CA 94403-1906 | ||||||||||||
State Street Bank and Trust Company | 7,137,241 | N/A | 7.1 | % | ||||||||
One Lincoln Street Boston, MA 02111 | ||||||||||||
T. Rowe Price Associates, Inc. | 10,277,215 | N/A | 10.1 | % | ||||||||
100 E. Pratt Street Baltimore, MD 21202 |
* | Represents less than 1% of the outstanding common stock |
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1 | Does not include shares that could be purchased by the exercise of options available at March 23, 2009 or within 60 days thereafter under the Company’s equity incentive plans. Those shares are shown in a separate column on this table. The following shares are held in joint tenancy: Directors: Mr. Herberger — 11,358; Mr. Post — 22,192; and Mr. Stewart — 35,163; other Named Executive Officers: Mr. Wheeler — 17,080; and all Directors and Executive Officers as a group: 98,839. The following shares are held in joint trusts: Directors: Mr. Gallagher — 15,966; Mr. Lopez — 25,773; and Ms. Munro — 13,036; and all Directors and Executive Officers as a Group: 134,228. Mr. Basha has donated 12,975 of his shares to a charitable foundation and 260 of his shares are held in a custodial account; however, he has shared voting rights with respect to such shares. | |
2 | Reflects the number of shares that could be purchased by the exercise of options available at March 23, 2009 or within 60 days thereafter under the Company’s equity incentive plans. | |
3 | The average weighted exercise price of Mr. Post’s options would be $38.75. The exercise prices of the options, as of December 31, 2008, were higher than the closing stock price on that same date. See the 2008 Outstanding Equity Awards at Fiscal Year-End table on page 40 of this proxy statement. | |
4. | Barclays Global Investors, NA., Barclays Global Fund Advisors, Barclays Global Investors, Ltd, Barclays Global Investors Japan Limited, Barclays Global Investors Canada Limited, Barclays Global Investors Australia Limited, and Barclays Global Investors (Deutschland) AG; Schedule 13G filing, dated February 6, 2009 and filed with the SEC on February 5, 2009, reports beneficial ownership collectively of 7,283,887 shares, with sole voting power as to 2,278,837 shares and sole dispositive power as to 2,926,105 shares in Barclays Global Investors, NA., sole voting power as to 3,635,556 shares and sole dispositive power as to 3,641,884 shares in Barclays Global Fund Advisors, sole voting power as to 425,151 shares and sole dispositive power as to 466,500 shares in Barclays Global Investors, Ltd., sole voting power and sole dispositive power as to 169,940 shares in Barclays Global Investors Japan Limited, sole voting power and sole dispositive power as to 52,753 shares in Barclays Global Investors Canada Limited, and sole voting power as to 26,704 shares and sole dispositive power as to 26,705 shares in Barclays Global Investors Australia Limited. Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr., and Franklin Advisers, Inc. Schedule 13G/A filing, dated January 28, 2009 and filed with the SEC on February 9, 2009, reports beneficial ownership collectively of 7,219,100 shares, with sole voting power as to 7,092,000 shares and sole dispositive power as to 7,217,000 shares in Franklin Advisers, Inc., and sole voting power and sole dispositive power as to 2,100 shares in Fiduciary Trust Company International. State Street Bank and Trust Company Schedule 13G filing, dated February 17, 2009 and filed with the SEC on February 17, 2009, reports beneficial ownership of 7,137,241 shares, with sole voting power as to 4,092,666 shares, shared voting power as to 3,044,575 shares and shared dispositive power as to 7,137,241 shares. T. Rowe Price Associates, Inc. Schedule 13G/A filing, dated March 10, 2009 and filed with the SEC on March 10, 2009, reports beneficial ownership of 10,277,215 shares with sole voting power as to 2,167,089 shares and sole dispositive power as to 10,277,215 shares. The Company makes no representations as to the accuracy or completeness of such information and believes these filings represent share ownership as of the dates reflected in the individual filings. |
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• | Transactions in which rates or charges are fixed in conformity with law or governmental authority (such as APS rates approved by the Arizona Corporation Commission) or the rates or charges are determined by competitive bid; | ||
• | Transactions with SunCor or its affiliates (such as home purchases) that are offered to the Related Party on terms comparable to those that could be obtained in arm’s length dealing with an unrelated party; | ||
• | Transactions involving charitable or non-profit organizations where the Related Party serves only as a director or chairman of the organization’s Board of Directors for no compensation; | ||
• | Transactions in which the Related Party’s interest arises only: (a) from such person’s position as a director of the entity involved in the transaction; (b) from the direct or indirect ownership by such person, in the aggregate of less than a ten (10) percent equity interest in the entity involved in the transaction; or (c) the interest arises under both (a) and (b); and | ||
• | Any transaction involving a director that was considered by the Board in assessing the director’s independence and which resulted in a determination that disclosure of the transaction was not required under Item 404(a) of SEC Regulation S-K. |
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AUDIT COMMITTEE CHAIRMAN | AUDIT COMMITTEE MEMBERS | |
Bruce J. Nordstrom | Edward N. Basha, Jr. | |
Pamela Grant | ||
William S. Jamieson | ||
Humberto S. Lopez | ||
Kathryn L. Munro | ||
W. Douglas Parker |
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Type of Service | 2007 | 2008 | ||||||
Audit Fees1 | $ | 2,762,477 | $ | 2,786,733 | ||||
Audit-Related Fees2 | 227,310 | 288,999 | ||||||
Tax Fees3 | 16,251 | 16,800 |
1 | The aggregate fees billed for services rendered for the audit of the Company’s annual financial statements, review of financial statements included in Forms 10-Q, services related to SEC matters and filings, and the financial statement audit of one of the Company’s subsidiaries. | |
2 | The aggregate fees billed for audit-related services, which primarily consist of fees for auditing of the Company’s benefit plans. | |
3 | The aggregate fees billed primarily for tax services and preparation of tax returns for one of the Company’s subsidiaries. |
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• | review management’s plans and programs for the attraction, retention, succession, motivation, and development of the human resources needed to achieve corporate objectives; | ||
• | review and approve policies on compensation, benefits, and perquisites, including incentive cash compensation plans, equity participation, and other forms of executive incentives; | ||
• | recommend persons for election or appointment as officers to the full Board; | ||
• | annually review the goals and performance of our elected officers, including review of compensation, benefits, and perquisites, to satisfy the HR Committee that there is equity in the compensation practices and general integrity in conforming to approved plans and policies; | ||
• | review and approve corporate goals and objectives relevant to the compensation of our CEO, assess the CEO’s performance in light of these goals and objectives, and set the CEO’s compensation level based on this assessment; | ||
• | make recommendations to the Board with respect to non-CEO executive compensation, and incentive compensation and equity-based plans that are subject to Board approval; | ||
• | make recommendations to the Board for director compensation, equity participation, benefits and perquisites; | ||
• | act as the “committee” under our long-term incentive plans; and | ||
• | review and recommend changes to pension benefits for executives. |
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• | Alignment with Shareholder Interests. Compensation should be tied to the Company’s stock performance through performance-based or other stock incentives so that executives’ interests are aligned with those of our shareholders. The HR Committee believes this will tie our executives’ success to the success of the Company, while at the same time preventing our executives from taking unreasonable risks that might impact the value of the Company’s stock. | ||
• | Business Performance Accountability. Compensation should be tied to the Company’s performance in several key areas, including customer satisfaction, safety, and operational performance, so that executives are focused on specific strategic and operating objectives and are held accountable through their compensation for the performance of the Company. | ||
• | Individual Performance Accountability. Compensation should be tied to an individual’s performance so that individual contributions to the Company’s performance are rewarded. | ||
• | Retention. Compensation should be designed to promote key employee retention. |
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• | Competitiveness. Finally, the compensation program should be designed to attract, retain and reward key leaders critical to the Company’s success by providing competitive total compensation. |
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• | be strongly represented by nuclear companies because the Company is a large nuclear operator; | ||
• | include representation of companies in the S&P 1500 Super Composite Electric Utility Index (the “Index”) because the Company’s performance shares are earned based on financial performance compared to this Index; | ||
• | include some companies smaller than the companies in the Index to balance the peer group from a size perspective; and | ||
• | have a solid reputation and long-term prospects. |
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• | base salary at the median of the blended market; | ||
• | total cash compensation (base salary plus annual cash incentive) and total direct compensation (total cash compensation plus long-term incentive) for target/goal performance at or near the median of the blended market; | ||
• | total cash compensation and total direct compensation for exceptional performance around or above the 75th percentile of the blended market; and | ||
• | below median pay for below median performance. For purpose of this analysis, survey data for determining annual and long-term incentive opportunities is averaged for a three-year period to smooth any variation that may occur in a single year in the survey data. |
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• | In the J.D. Power 2008 Residential Customer Satisfaction study, APS ranked first in customer service among the nation’s 55 Large Segment investor-owned utilities (“IOUs”) and among the West Region’s 10 Large IOUs, APS ranked second on the Overall Customer Satisfaction Index and fourth for all 13 West Region utilities; | ||
• | APS announced Solana, a 280 megawatt concentrating solar power plant; | ||
• | During the summer peak, Palo Verde operated all three units for 100 continuous days and during this period produced more than 9.4 million megawatt hours and operated at a 99.6 percent capacity factor. For the year, Palo Verde achieved 84.4 percent overall capacity, its best in five years; | ||
• | APS won the industry’s highest honor, the Edison Electric Institute’s Edison Award, which recognized APS’ innovation in developing the landmark Transformer Oil Analysis and Notification System; | ||
• | APS responded to once-in-a-generation summer storms that swept through Arizona, toppling more than 150 power poles, causing severe damage to APS facilities and impacting about 80,000 customers — APS restored service to 98 percent of the customers initially impacted within 48 hours; | ||
• | The fossil plants surpassed performance goals — the capacity factor for APS coal plants was 86.1 percent, surpassing the budgeted number of 84.9 percent and the availability factor for the gas plants was 91.5 percent, surpassing the budgeted number of 88.7 percent; | ||
• | APS customers enjoyed record reliability — APS’ 2008 reliability was 0.78 outages per customer, which was the best in APS history; |
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• | The Company received Innovest’s highest rating (AAA) and ranked the second highest utility in the United States for sustainability; and | ||
• | The Company was included in the Corporate Knight’s Global 100 Most Sustainable Companies. |
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• | For all Named Executive Officers, except for Mr. Hatfield, the 2008 RSUs vest in 25% increments, beginning on February 20, 2009, so that they will be fully vested on February 20, 2012; and for Mr. Hatfield, with respect to 2,500 of the RSUs, 500 vest on February 20, 2009, 1,000 vest on February 20, 2010 and 1,000 vest on February 20, 2011; and with respect to 3,500 of the RSUs, 500 vest on February 20, 2009; 1,000 vest on February 20, 2010; 1,000 vest on February 20, 2011; and 1,000 vest on February 20, 2012;. In 2007, we granted RSUs to the Named Executive Officers (other than Mr. Hatfield, who had not yet joined the Company). The 2007 RSUs vest in 25% increments beginning on February 20, 2008, so that they will be fully vested on February 20, 2011; |
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• | fully vest before the end of the regular vesting period if the participant retires (unvested RSUs are forfeited if the participant terminates employment for any other reason); | ||
• | are payable in stock or cash to the participant (the election to receive cash or stock was made by the participant within forty-five days of the date that the participant received the grant) as the RSUs vest, in an amount equal to the number of RSUs vesting multiplied by the fair market value of a share of our common stock on the vesting release date (in the case of a participant’s retirement before the end of the vesting period the RSUs are payable on the dates and in the percentages specified in the vesting schedule even though fully vested); | ||
• | accrue dividend rights equal to the amount of dividends that a participant would have received if the participant had directly owned one share of our common stock for each RSU held, with the dividend rights payable only on the RSUs that actually vest, plus interest at the rate of 5% per annum, compounded quarterly; and | ||
• | are not included in the calculation of pension benefits. |
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HR COMMITTEE CHAIRMAN Roy A. Herberger, Jr. | HR COMMITTEE MEMBERS Edward N. Basha, Jr. Susan Clark-Johnson Pamela Grant William S. Jamieson Humberto S. Lopez |
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Name and | Year | Salary | Bonus | Stock | Option | Non-Equity | Change in | All Other Compensation | Total | ||||||||||||||||||||||||||||||||||||||
Principal | ($) | ($)1 | Awards | Awards | Incentive | Pension Value | ($)5 | ($) | |||||||||||||||||||||||||||||||||||||||
Position | ($)2 | ($) | Plan | and | |||||||||||||||||||||||||||||||||||||||||||
Compensation | Nonqualified | ||||||||||||||||||||||||||||||||||||||||||||||
($)3 | Deferred | ||||||||||||||||||||||||||||||||||||||||||||||
Compensation | |||||||||||||||||||||||||||||||||||||||||||||||
Earnings | |||||||||||||||||||||||||||||||||||||||||||||||
($)4 | |||||||||||||||||||||||||||||||||||||||||||||||
William J. Post, | 2008 | 950,000 | 0 | 303,684 | 0 | 0 | 1,807,516 | 32,390 | 3,093,590 | ||||||||||||||||||||||||||||||||||||||
Chairman of the Board and Chief | 2007 | 950,000 | 0 | 1,877,976 | 0 | 1,300,000 | 2,595,365 | 30,522 | 6,753,863 | ||||||||||||||||||||||||||||||||||||||
Executive Officer and | 2006 | 950,000 | 0 | 3,725,544 | 52,644 | 985,000 | 2,353,845 | 31,906 | 8,098,939 | ||||||||||||||||||||||||||||||||||||||
Chairman of the Board, APS | |||||||||||||||||||||||||||||||||||||||||||||||
James R. Hatfield, | 2008 | 201,136 | 200,000 | 222,006 | 0 | 0 | 67 | 71,115 | 694,324 | ||||||||||||||||||||||||||||||||||||||
Senior Vice President and Chief Financial Officer | |||||||||||||||||||||||||||||||||||||||||||||||
Donald E. Brandt, | 2008 | 725,000 | 0 | 1,298,151 | 0 | 0 | 162,224 | 25,074 | 2,210,449 | ||||||||||||||||||||||||||||||||||||||
President and Chief Operating | 2007 | 599,999 | 0 | 524,513 | 0 | 766,800 | 440,417 | 24,815 | 2,356,544 | ||||||||||||||||||||||||||||||||||||||
Officer and President and Chief | 2006 | 456,263 | 0 | 402,788 | 9,286 | 648,000 | 145,144 | 24,590 | 1,686,071 | ||||||||||||||||||||||||||||||||||||||
Executive Officer, APS | |||||||||||||||||||||||||||||||||||||||||||||||
Randall K. Edington, | 2008 | 738,750 | 100,000 | 864,932 | 0 | 108,860 | 424,821 | 535,078 | 2,772,441 | ||||||||||||||||||||||||||||||||||||||
Executive Vice President, and | 2007 | 547,955 | 266,000 | 378,538 | 0 | 432,300 | 1,251 | 419,247 | 2,045,291 | ||||||||||||||||||||||||||||||||||||||
Chief Nuclear Officer, APS | |||||||||||||||||||||||||||||||||||||||||||||||
Steven M. Wheeler, | 2008 | 445,000 | 0 | 452,206 | 0 | 113,386 | 1,457,015 | 21,624 | 2,489,231 | ||||||||||||||||||||||||||||||||||||||
Executive Vice President | 2007 | 416,258 | 0 | 228,759 | 0 | 353,330 | 1,142,931 | 19,695 | 2,160,973 | ||||||||||||||||||||||||||||||||||||||
Customer Service and Regulation, APS | |||||||||||||||||||||||||||||||||||||||||||||||
1 | With respect to 2008, the amounts in this column represent the following: (i) a hiring bonus of $200,000 was paid to Mr. Hatfield pursuant to his letter agreement and (ii) a retention bonus of $100,000 was paid to Mr. Edington pursuant to his letter agreement. Mr. Hatfield’s and Mr. Edington’s letter agreements are discussed under the heading “Employment Agreements” on page 38 of this proxy statement. |
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2 | This column reflects the dollar amounts accrued by the Company during 2008, 2007 and 2006 for financial reporting purposes for stock awards held by the Named Executive Officers and does not reflect value actually received by the Named Executive Officers. The column reflects expense accruals for the following types of stock awards: |
• | Performance Shares.We describe the performance shares under the heading “What are the elements of the Company’s compensation program? — Long-Term Incentives — Performance Shares” on page 29 of this proxy statement. With respect to the performance shares, we estimate the amount accrued based upon projections of the Company’s performance against projections of those companies in the comparator group. As earnings per share are reported by comparator companies, as new information becomes available, or as significant changes to the Company’s earnings become known, these estimates are updated. As such, based upon our estimates, the 2008 compensation expense accrued assumes that the following percentages of the target number of shares will be awarded: 2006 Performance Shares — 60% (compared to a 2007 estimate of 100%); 2007 Performance Shares — 60% (compared to a 2007 estimate of 75%) and 2008 Performance Shares — 60%. Compensation expense recorded for financial reporting purposes in 2007 for the 2005 grant was accrued using 75% of target shares, but the number of shares actually awarded was 54.6% of target shares. The expense accrued for this award was adjusted downward in 2008, as were the expense accruals for the 2006 Performance Shares and the 2007 Performance Shares. These adjustments are reflected as deductions in the 2008 stock award columns for Mr. Post (in the amount of $1,094,155) and Mr. Brandt (in the amount of $162,307), each of whom was also a Named Executive Officer in 2006 and 2007, and for Mr. Wheeler (in the amount of $24,454), who was a Named Executive Officer in 2007. The expense accrued for the 2006 Performance Shares will be adjusted downward in 2009 to reflect the change from 60% of the target number of shares (discussed above) to 0% of the target shares, since the performance metrics were not met and no shares were awarded. Under the award agreements for the 2006 Performance Shares, 2007 Performance Shares and 2008 Performance Shares, an employee is deemed to have been employed through the performance period if the employee retires after reaching the age of retirement and attaining the requisite years of service. Because Mr. Post had reached the age of retirement and attained the requisite years of service at the grant dates of the 2006, 2007, and 2008 Performance Shares, the Company accrued all of the expense associated with the awards on those dates (subject to the subsequent expense adjustments in the 2006 and 2007 Performance Shares discussed above). Messrs. Hatfield’s, Brandt’s, Edington’s and Wheeler’s awards are being accrued over the three-year vesting period of each Performance Share award. Consistent with the terms of his letter agreement, Mr. Hatfield was granted performance shares for the years 2006, 2007 and 2008 in 2008 that will be paid out in 2009, 2010, and 2011, respectively, if the performance criteria are met. Mr. Hatfield’s letter agreement is described under the heading “Employment Agreements” on page 38 of this proxy statement. | ||
• | Retention Units.The retention units: (i) vest in 25% increments, beginning on January 3, 2007 with respect to the grants to Messrs. Post, Brandt, and Wheeler, and beginning on January 25, 2007 with respect to the grant to Mr. Edington, so that the retention units will be fully vested on January 4, 2010; (ii) fully vest before the end of the regular vesting period if the participant becomes eligible for retirement (unvested retention units are forfeited if the participant terminates employment for any other reason); (iii) are payable in cash to the participant as the retention units vest in an amount equal to the number of retention units vesting multiplied by the fair market value of a share of Company common stock on the vesting date (in the case of a participant’s retirement before the end of the vesting period, the retention units are payable on the dates and in the percentages specified in the vesting schedule, even though fully vested); (iv) accrue dividend rights equal to the amount of dividends that a participant would have received if the participant had directly owned one share of Company common stock for each retention unit held, with the dividend rights payable only on the retention units that actually vest, plus interest at the rate of 5% per annum, compounded quarterly; and (v) are included in the determination of the participant’s compensation for purposes of calculating pension benefits under our supplemental excess benefit retirement program, to the extent the retention units ultimately vest. Under FAS 123R, we are required to accrue the entire compensation expense for retirement eligible employees on the date of the grant, as no additional services are required beyond that date. Because Mr. Post had reached the age of retirement and attained the requisite years of service at the grant date (December 13, 2006), the Company accrued all of the expense associated with Mr. Post’s retention unit grant on that date. Mr. Brandt’s and Mr. Edington’s awards are currently being accrued over the standard vesting period of the award. Mr. Wheeler reached the age of retirement and attained the requisite years of service in November of 2008, at which time the remaining award was fully expensed. | ||
• | Restricted Stock Units. We describe the RSUs under the heading “What are the elements of the Company’s compensation program? — Long-Term Incentives — RSUs” on page 30 of this proxy statement. Pursuant to the terms of the award agreement, the employee becomes fully vested in the award upon retirement, although the awards will be paid out over the standard vesting period. Because Mr. Post had reached the age of retirement and attained the requisite years of service at the grant date, which for purposes of FAS 123R is May 23, 2007 for the RSUs granted in 2007 and February 19, 2008 for the RSUs granted in 2008, the Company accrued all of the expense associated with the RSU grants on those dates. |
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Mr. Hatfield’s, Mr. Brandt’s, Mr. Wheeler’s, and Mr. Edington’s awards in 2007 and 2008 are being accrued over the standard vesting period of the awards. | |||
• | 2008 Incentive Plans and Mr. Edington’s 2008 Palo Verde Incentive. In January 2009, the HR Committee approved awards under the 2008 Incentive Plans, as described under the heading “What are the elements of our compensation program? — Annual Incentives” in the CDA on page 26 of this proxy statement, except with respect to Mr. Post, who did not receive an incentive payment. These awards were paid in the form of Pinnacle West common stock instead of cash and resulted in expense accruals during 2008 equal to the portion of the incentive paid in stock. See footnote 4 for information regarding the amounts credited to the deferred compensation accounts of Mr. Edington and Mr. Wheeler in connection with these incentive awards as a result of deferrals elections made by Mr. Edington and Mr. Wheeler in late 2007. The amount in this column includes $125,000 awarded to Mr. Edington in connection with the 2008 Palo Verde Incentive described under the heading “Employment Agreements” on page 38 of this proxy statement. This award was paid in the Company’s common stock. |
3 | Mr. Edington’s amounts for 2008 consist of (i) an amount credited to his deferred compensation account in connection with the 2008 APS Incentive Plan ($107,360); and (ii) $1,500 for incentive payments received in connection with the outage incentive plans for the 13th refueling outage for Palo Verde Unit 3, and the 14th refueling outages for Palo Verde Units 1 and 2 (collectively, the “Refueling Outages”). Mr. Wheeler’s amount for 2008 consists of an amount credited to his deferred compensation account in connection with the 2008 APS Incentive Plan ($113,386). The balance of Mr. Edington’s and Mr. Wheeler’s 2008 Incentive Plan payments were made in the form of Company common stock (see footnote 2 and the discussion under the heading, “What are the elements of our compensation program? — Annual Incentives” in the CDA on page 26 of this proxy statement). | |
4 | The amount in this column for 2008 consists of: (i) the estimated aggregate change in the actuarial present value from December 31, 2007 to December 31, 2008 of each of the Named Executive Officer’s accumulated benefit payable under all defined benefit and actuarial pension plans (including supplemental plans and employment agreements) as follows: Mr. Post — $1,772,235 (Mr. Post is eligible to retire at age 60 and receive the full retirement benefit and has announced his retirement effective April 30, 2009); Mr. Brandt — $143,385; Mr. Wheeler — $1,443,224 (Mr. Wheeler is eligible to retire at age 60, which age he reached in January of 2009, and will receive the full retirement benefit); and Mr. Edington — $418,551; (ii) the above-market portion of interest accrued under the deferred compensation plan as follows: Mr. Post — $35,281; Mr. Hatfield - - $67; Mr. Brandt — $18,839; Mr. Edington — $6,270; and Mr. Wheeler — $13,791. As Mr. Hatfield was not employed by us at December 31, 2007, there is no change in pension value from December 31, 2007. We describe the special agreement we have with Mr. Edington regarding his benefits under “Employment Agreements” on page 38 of this proxy statement. We describe the present value of Mr. Edington’s accumulated benefit under the special agreement and our pension plans in the Pension Benefits table on page 44 of this proxy statement. Under the SEC’s disclosure rules, the above-market portion of interest is determined by reference to 120% of the applicable federal long-term rate, with compounding. See the discussion on the rates of interest applicable to the deferred compensation program under the heading “Discussion of Nonqualified Deferred Compensation” on page 48 of this proxy statement. | |
5 | The amount in this column for 2008 consists of: (i) the Company’s contributions under the Company’s 401(k) plan as follows: Mr. Post — $10,350; Mr. Brandt — $10,350; Mr. Edington — $10,350; and Mr. Wheeler — $6,900; (ii) with respect to Mr. Post, executive life insurance premiums in the amount of $11,062; and with respect to each of the Named Executive Officers except Mr. Hatfield, a $61 premium, and for Mr. Hatfield, a $23 premium, for an accidental death and dismemberment policy that covers all directors and officers; (iii) for all of the Named Executive Officers except Mr. Hatfield and Mr. Edington (who are addressed separately below), perquisites and personal benefits (consisting of a car allowance, a maximum annual physical benefit and, with respect to Messrs. Brandt and Wheeler, financial planning services), in the aggregate amounts as follows: Mr. Post — $10,917; Mr. Brandt — $14,663; and Mr. Wheeler — $14,663; (iv) for Mr. Edington, perquisites and personal benefits consisting of a car allowance, a maximum annual physical benefit and financial planning in the aggregate amount of $11,878; a payment of $406,697 and $8,970 in connection with stock option grants and performance share grants from his prior employer that he forfeited when he became an employee of APS; $92,070, which reflects the incremental cost to the Company related to assistance provided by the Company in connection with the sale of Mr. Edington’s home as part of his relocation to Phoenix, Arizona; $2,556 for closing costs associated with the purchase of Mr. Edington’s home in Phoenix; and a tax gross-up of $2,496 related to the closing costs on the new home; and (v) for Mr. Hatfield, perquisites and personal benefits consisting of a car allowance and a maximum annual physical benefit in the aggregate amount of $5,492; and $61,891 for relocation expenses in connection with Mr. Hatfield’s relocation to Phoenix, Arizona (of which $3,604 is for apartment and car rental expenses; $52,358 is for household goods and automobile transport, and $5,929 is for other travel expenses); and a tax gross-up of $3,709 relating to the relocation expenses. As part of this relocation, the Company paid Mr. Hatfield the estimated equity in his home and assumed all obligations associated with the maintenance and sale of the home, including mortgage payments, real estate agent fees, and taxes. The home was sold in January 2009 and the Company’s expenses related to Mr. Hatfield’s home were offset by the amount received from the sale of the home, |
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resulting in the incremental cost to the Company. The amount ($375,457) will be reflected in the Summary Compensation Table in the Company’s 2010 proxy statement. |
Name | Grant Date1 | Estimated Possible Payouts | Estimated Future Payouts | All Other | Grant | ||||||||||||||||||||||||||||||||||||||||||
Under Non-Equity Incentive | Under Equity Incentive | Stock | Date Fair | ||||||||||||||||||||||||||||||||||||||||||||
Plan Awards | Plan Awards | Awards: | Value of | ||||||||||||||||||||||||||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | Number | Stock and | ||||||||||||||||||||||||||||||||||||||||
($) | ($) | ($) | (#) | (#) | (#) | of Shares | Option | ||||||||||||||||||||||||||||||||||||||||
of Stock | Awards2 | ||||||||||||||||||||||||||||||||||||||||||||||
or Units | |||||||||||||||||||||||||||||||||||||||||||||||
(#) | |||||||||||||||||||||||||||||||||||||||||||||||
William J. Post | 01/22/20083 (IP) | $475,000 | $950,000 | $1,425,000 | |||||||||||||||||||||||||||||||||||||||||||
02/19/20084 (PS) | 14,874 | 29,748 | 59,496 | 1,100,676 | |||||||||||||||||||||||||||||||||||||||||||
02/19/20085 (RSUs) | 29,752 | 1,100,824 | |||||||||||||||||||||||||||||||||||||||||||||
James R. Hatfield | 01/23/20083 (IP) | $1 | $112,500 | $225,000 | |||||||||||||||||||||||||||||||||||||||||||
10/21/20086 (PS) | 1,700 | 3,400 | 6,800 | 108,188 | |||||||||||||||||||||||||||||||||||||||||||
10/21/20086 (PS) | 1,000 | 2,000 | 4,000 | 63,640 | |||||||||||||||||||||||||||||||||||||||||||
10/21/20086 (PS) | 700 | 1,400 | 2,800 | 44,548 | |||||||||||||||||||||||||||||||||||||||||||
10/21/20086 (RSUs) | 2,500 | 79,550 | |||||||||||||||||||||||||||||||||||||||||||||
10/21/20086 (RSUs) | 3,500 | 111,370 | |||||||||||||||||||||||||||||||||||||||||||||
Donald E. Brandt | 01/23/20083 (IP) | $281,250 | $562,500 | $1,125,000 | |||||||||||||||||||||||||||||||||||||||||||
02/19/20084 (PS) | 6,624 | 13,248 | 26,496 | 490,176 | |||||||||||||||||||||||||||||||||||||||||||
02/19/20085 (RSUs) | 13,252 | 490,324 | |||||||||||||||||||||||||||||||||||||||||||||
Randall K. Edington | 01/23/20083 (IP) | $1 | $400,000 | $800,000 | |||||||||||||||||||||||||||||||||||||||||||
02/19/20084 (PS) | 4,000 | 8,000 | 16,000 | 296,000 | |||||||||||||||||||||||||||||||||||||||||||
02/19/20085 (RSUs) | 8,000 | 296,000 | |||||||||||||||||||||||||||||||||||||||||||||
07/15/20087 | $0 | $125,000 | $125,000 | ||||||||||||||||||||||||||||||||||||||||||||
05/04/078 | $0 | $1,250 | $1,250 | ||||||||||||||||||||||||||||||||||||||||||||
11/02/078 | $0 | $1,250 | $1,250 | ||||||||||||||||||||||||||||||||||||||||||||
05/02/088 | $0 | $1,250 | $1,250 | ||||||||||||||||||||||||||||||||||||||||||||
Steven M. Wheeler | 01/23/20083 (IP) | $1 | $222,500 | $445,000 | |||||||||||||||||||||||||||||||||||||||||||
02/19/20084 (PS) | 2,500 | 5,000 | 10,000 | 185,000 | |||||||||||||||||||||||||||||||||||||||||||
02/19/20085 (RSUs) | 5,000 | 185,000 | |||||||||||||||||||||||||||||||||||||||||||||
1 | The abbreviations in this column represent the following terms: “IP” means the 2008 Incentive Plans; “PS” means performance share awards; and “RSUs” means restricted stock unit awards. | |
2 | The amount in this column represents the full grant date fair value for financial reporting purposes for the 2008 performance share awards and the 2008 RSUs. We describe the performance shares and RSU awards under the heading “What are the elements of the Company’s compensation program? — Long-Term Incentives — RSUs” on page 30 of this proxy statement. |
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3 | This amount in the Estimated Future Payouts Under Equity Incentive Plan Awards represents the dollar value of the possible payouts under the 2008 Incentive Plans, which are described under the heading “What are the elements of the Company’s compensation program? — Annual Incentives” in the CDA on page 26 of this proxy statement. The actual number of shares of Company common stock equal to the dollar value disclosed, as determined at the time of payout, to the Named Executive Officers, are included in the “Stock Awards” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table on page 34 of this proxy statement. As required by SEC rules, the “Estimated Possible Payouts” represent the “threshold,” “target,” and “maximum” payouts the Named Executive Officers were eligible to receive under the 2008 Incentive Plans, although any awards were subject to the discretion of the HR Committee. The actual awards payable to the Named Executive Officers under the 2008 Incentive Plans are in the “Stock Awards” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table on page 34 of this proxy statement. With respect to Messrs. Hatfield, Edington and Wheeler, the minimum amount payable for which each officer would have been eligible to receive was calculated based on APS earnings achieving the threshold amount, which would result in no payment with respect to the Company’s earnings portion of the 2008 Incentive Plans, and the business unit results at the lowest possible award. See “What are the elements of the Company’s compensation program? — Annual Incentives” in the CDA on page 26 of this proxy statement for additional information about the 2008 Incentive Plans. | |
4 | This amount represents the 2008 performance share award made pursuant to the 2007 Plan and described under the heading “What are the elements of the Company’s compensation program? — Long-Term Incentives — Performance Shares” in the CDA on page 29 of this proxy statement. Based upon available information about the Company and the comparator companies at the date of the grant, we valued the awards using 100% of the target award and, in accordance with FAS 123R, the closing stock price on the date of the grant. | |
5 | This amount represents the 2008 RSU awards made pursuant to the 2007 Plan and described under the heading “What are the elements of the Company’s compensation program? — Long-Term Incentives — RSUs” in the CDA on page 30 of this proxy statement. In accordance with FAS 123R, we valued the RSUs using the number of RSUs awarded multiplied by the closing stock price on the date of the grant. | |
6 | On October 21, 2008, the HR Committee granted Mr. Hatfield performance shares and RSUs consistent with the terms of his letter agreement. Mr. Hatfield’s letter agreement is discussed under the heading “Employment Agreements” on page 38 of this proxy statement. | |
7 | This amount represents the dollar value of the 2008 Palo Verde Incentive, described under the heading “Employment Agreements” on page 38 of this proxy statement. The actual number of shares of Company common stock equal to the dollar value disclosed, as determined at the time of payout, is included in the “Stock Awards” column of the Summary Compensation Table on page 34 of this proxy statement. | |
8 | These amounts represent the potential payouts for the Refueling Outages described in footnote 3 to the Summary Compensation Table on page 36 of this proxy statement. |
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• | Mr. Edington’s base salary was increased to $800,000, effective June 1, 2008; | ||
• | APS entered into a separate deferred compensation arrangement with Mr. Edington, pursuant to which APS credited Mr. Edington’s deferred compensation account with $1 million, effective as of July 15, 2008. APS will increase this account balance by an additional $1 million on June 1, of each year beginning June 1, 2009, until the account reaches $4 million on June 1, 2011. The account will vest on June 1, 2012 if Mr. Edington remains with APS and will be payable before that date upon Mr. Edington’s death, disability, or involuntary termination. | ||
• | Effective July 15, 2008, APS established for Mr. Edington a life insurance benefit of $3 million that decreases by $1 million on June 1 of each year, beginning June 1, 2009, until the life insurance benefit terminates on June 1, 2011. |
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Name | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||
Option | Number | Number of | Equity | Option | Option | Number of | Market | Equity | Equity | |||||||||||||||||||||||||||||||||||||||||||
Grant | of | Securities | Incentive | Exercise | Expiration | Shares | Value | Incentive | Incentive | |||||||||||||||||||||||||||||||||||||||||||
Date1 | Securities | Underlying | Plan | Price | Date | or | of | Plan | Plan | |||||||||||||||||||||||||||||||||||||||||||
Underlying | Unexercised | Awards: | ($) | Units | Shares | Awards: | Awards: | |||||||||||||||||||||||||||||||||||||||||||||
Unexercised | Options | Number | of | or | Number of | Market | ||||||||||||||||||||||||||||||||||||||||||||||
Options | (#) | of | Stock | Units | Unearned | or | ||||||||||||||||||||||||||||||||||||||||||||||
(#) | Unexercisable | Securities | That | of | Shares, | Payout | ||||||||||||||||||||||||||||||||||||||||||||||
Exercisable | Underlying | Have | Stock | Units or | Value of | |||||||||||||||||||||||||||||||||||||||||||||||
Unexercised | Not | That | Other | Unearned | ||||||||||||||||||||||||||||||||||||||||||||||||
Unearned | Vested | Have | Rights | Shares, | ||||||||||||||||||||||||||||||||||||||||||||||||
Options | (#) | Not | That | Units or | ||||||||||||||||||||||||||||||||||||||||||||||||
(#) | Vested | Have | Other | |||||||||||||||||||||||||||||||||||||||||||||||||
($)2 | Not | Rights That | ||||||||||||||||||||||||||||||||||||||||||||||||||
Vested | Have | |||||||||||||||||||||||||||||||||||||||||||||||||||
(#) | Not | |||||||||||||||||||||||||||||||||||||||||||||||||||
Vested | ||||||||||||||||||||||||||||||||||||||||||||||||||||
($)2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
William J. Post | 01/20/1999 | 70,000 | 0 | 0 | 41.00 | 1/19/2009 | ||||||||||||||||||||||||||||||||||||||||||||||
11/17/1999 | 37,500 | 0 | 0 | 34.66 | 11/16/2009 | |||||||||||||||||||||||||||||||||||||||||||||||
11/15/2000 | 65,000 | 0 | 0 | 44.03 | 11/14/20103 | |||||||||||||||||||||||||||||||||||||||||||||||
11/14/2001 | 65,000 | 0 | 0 | 42.55 | 11/13/20113 | |||||||||||||||||||||||||||||||||||||||||||||||
06/19/2002 | 108,0004 | 0 | 0 | 38.37 | 06/18/20123 | |||||||||||||||||||||||||||||||||||||||||||||||
03/18/2003 | 85,750 | 0 | 0 | 32.29 | 03/17/20133 | |||||||||||||||||||||||||||||||||||||||||||||||
10,5185 | 337,943 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RU) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
29,7526 | 955,932 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RSUs) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
16,8757 | 542,194 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RSUs) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
29,7488 | 955,803 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(PS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
22,5009 | 722,925 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(PS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Name | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||
Option | Number | Number of | Equity | Option | Option | Number of | Market | Equity | Equity | |||||||||||||||||||||||||||||||||||||||||||
Grant | of | Securities | Incentive | Exercise | Expiration | Shares | Value | Incentive | Incentive | |||||||||||||||||||||||||||||||||||||||||||
Date1 | Securities | Underlying | Plan | Price | Date | or | of | Plan | Plan | |||||||||||||||||||||||||||||||||||||||||||
Underlying | Unexercised | Awards: | ($) | Units | Shares | Awards: | Awards: | |||||||||||||||||||||||||||||||||||||||||||||
Unexercised | Options | Number | of | or | Number of | Market | ||||||||||||||||||||||||||||||||||||||||||||||
Options | (#) | of | Stock | Units | Unearned | or | ||||||||||||||||||||||||||||||||||||||||||||||
(#) | Unexercisable | Securities | That | of | Shares, | Payout | ||||||||||||||||||||||||||||||||||||||||||||||
Exercisable | Underlying | Have | Stock | Units or | Value of | |||||||||||||||||||||||||||||||||||||||||||||||
Unexercised | Not | That | Other | Unearned | ||||||||||||||||||||||||||||||||||||||||||||||||
Unearned | Vested | Have | Rights | Shares, | ||||||||||||||||||||||||||||||||||||||||||||||||
Options | (#) | Not | That | Units or | ||||||||||||||||||||||||||||||||||||||||||||||||
(#) | Vested | Have | Other | |||||||||||||||||||||||||||||||||||||||||||||||||
($)2 | Not | Rights That | ||||||||||||||||||||||||||||||||||||||||||||||||||
Vested | Have | |||||||||||||||||||||||||||||||||||||||||||||||||||
(#) | Not | |||||||||||||||||||||||||||||||||||||||||||||||||||
Vested | ||||||||||||||||||||||||||||||||||||||||||||||||||||
($)2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
James R. Hatfield10 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
3,500 | 112,455 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RSUs) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2,500 | 80,325 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RSUs) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
3,400 | 109,242 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(PS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2,000 | 64,260 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(PS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Donald E. Brandt | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
5,5105 | 177,036 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RU) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
13,2526 | 425,787 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RSUs) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
7,5007 | 240,975 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RSUs) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
13,2488 | 425,658 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(PS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
10,0009 | 321,300 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(PS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Randall K. Edington | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
5,0005 | 160,650 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RU) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
8,0006 | 257,040 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RSUs) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
4,5757 | 146,995 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RSUs) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
8,0008 | 257,040 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(PS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
6,1009 | 195,993 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(PS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Name | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||
Option | Number | Number of | Equity | Option | Option | Number of | Market | Equity | Equity | |||||||||||||||||||||||||||||||||||||||||||
Grant | of | Securities | Incentive | Exercise | Expiration | Shares | Value | Incentive | Incentive | |||||||||||||||||||||||||||||||||||||||||||
Date1 | Securities | Underlying | Plan | Price | Date | or | of | Plan | Plan | |||||||||||||||||||||||||||||||||||||||||||
Underlying | Unexercised | Awards: | ($) | Units | Shares | Awards: | Awards: | |||||||||||||||||||||||||||||||||||||||||||||
Unexercised | Options | Number | of | or | Number of | Market | ||||||||||||||||||||||||||||||||||||||||||||||
Options | (#) | of | Stock | Units | Unearned | or | ||||||||||||||||||||||||||||||||||||||||||||||
(#) | Unexercisable | Securities | That | of | Shares, | Payout | ||||||||||||||||||||||||||||||||||||||||||||||
Exercisable | Underlying | Have | Stock | Units or | Value of | |||||||||||||||||||||||||||||||||||||||||||||||
Unexercised | Not | That | Other | Unearned | ||||||||||||||||||||||||||||||||||||||||||||||||
Unearned | Vested | Have | Rights | Shares, | ||||||||||||||||||||||||||||||||||||||||||||||||
Options | (#) | Not | That | Units or | ||||||||||||||||||||||||||||||||||||||||||||||||
(#) | Vested | Have | Other | |||||||||||||||||||||||||||||||||||||||||||||||||
($)2 | Not | Rights That | ||||||||||||||||||||||||||||||||||||||||||||||||||
Vested | Have | |||||||||||||||||||||||||||||||||||||||||||||||||||
(#) | Not | |||||||||||||||||||||||||||||||||||||||||||||||||||
Vested | ||||||||||||||||||||||||||||||||||||||||||||||||||||
($)2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Steven M. Wheeler | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
3,5075 | 112,680 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RU) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
5,0006 | 160,650 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RSUs) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2,8887 | 92,791 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(RSUs) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
5,0008 | 160,650 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(PS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
�� | 3,8509 | 123,701 | ||||||||||||||||||||||||||||||||||||||||||||||||||
(PS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1 | The options became exercisable one-third of the grant per year commencing on the first anniversary of the grant date, except as otherwise specified in footnote 4. | |
2 | The amount in this column is calculated by multiplying the closing market price of our common stock at the end of 2008 ($32.13 per share as of December 31, 2008) by the number of retention units, RSUs and performance shares listed for the specified officer. | |
3 | When Mr. Post retires on April 30, 2009, the expiration date for these options will be July 30, 2010. | |
4 | One-third of these options became exercisable on June 19, 2003, one-third on December 19, 2003 and the remaining one-third on December 19, 2004. | |
5 | This amount represents the retention units awarded in 2006 for Messrs. Post, Brandt and Wheeler and for Mr. Edington retention units granted in 2007; these retention units are identified by the abbreviation “RU.” The retention units, including their vesting schedule, are described in footnote 2 of the Summary Compensation Table on page 35 of this proxy statement. | |
6 | This amount represents the RSUs awarded in 2008 that are described, with their vesting schedule, under the heading “What are the elements of the Company’s compensation program? - Long-Term Incentives — RSUs” in the CDA on page 30 of this proxy statement, and which are identified by the abbreviation “RSUs.” | |
7 | This amount represents the RSUs awarded in 2007 that are described, with their vesting schedule, under the heading “What are the elements of the Company’s compensation program? - Long-Term Incentives — RSUs” in the CDA on page 30 of this proxy statement, and which are identified by the abbreviation “RSUs.” | |
8 | This amount represents the 2008 Performance Shares and is identified by the abbreviation “PS.” SEC rules require us to assume a number of shares equal to the 50th percentile payout level of the performance shares for the 2008 Performance Shares, although the actual number of shares awarded, if any, will not be determined until the end of the performance period, which ends on |
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December 31, 2010. The 2008 Performance Shares are described with their vesting schedule under the heading “What are the elements of the Company’s compensation program? — Long-Term Incentives —Performance Shares” in the CDA on page 29 of this proxy. | ||
9 | This amount represents the 2007 Performance Shares and are identified by the abbreviation “PS.” SEC rules require us to assume a number of shares equal to the 50th percentile payout level of the performance shares for the 2007 Performance Shares, although the actual number of shares awarded, if any, will not be determined until the end of the performance period, which ends on December 31, 2009. The 2007 Performance Shares have a performance period beginning on January 1, 2007 and ending on December 31, 2009. They otherwise are substantially identical in operation to the 2008 Performance Shares that are described in footnote 8 above. | |
10 | The terms of the grant to Mr. Hatfield are described under the heading “Employment Agreements” on page 38 of this proxy statement and in footnote 6 to the “2008 Grants of Plan-Based Awards” on page 37 of this proxy statement. |
Name | Option Awards | Stock Awards | ||||||||||||||||||||
Number of Shares | Value Realized On | Number of Shares | Value Realized on | |||||||||||||||||||
Acquired on Exercise | Exercise | Acquired on Vesting | Vesting | |||||||||||||||||||
(#) | ($) | (#)1 | ($)2 | |||||||||||||||||||
William J. Post | 0 | 0 | 10,883 | 426,870 | ||||||||||||||||||
James R. Hatfield | 0 | 0 | 4,952 | 161,336 | ||||||||||||||||||
Donald E. Brandt | 0 | 0 | 32,499 | 1,094,764 | ||||||||||||||||||
Randall K. Edington | 0 | 0 | 21,043 | 715,004 | ||||||||||||||||||
Steven M. Wheeler | 0 | 0 | 9,178 | 319,179 | ||||||||||||||||||
1 | The amount in this column consists of: (i) retention units that were granted to Messrs. Post, Brandt and Wheeler in December 2006 and Mr. Edington in January of 2007 and that vested in part on January 2, 2008 as follows: Mr. Post — 5,258; Mr. Brandt — 2,754; Mr. Edington - 2,500 and Mr. Wheeler — 1,752; (ii) RSUs that were granted in February of 2007 and that vested and were released, in part, on February 20, 2008 as follows: Mr. Post — 5,625; Mr. Brandt — 2,500; Mr. Edington — 1,525; and Mr. Wheeler — 962; (iii) shares that were granted to the Named Executive Officers in connection with the 2008 Incentive Plans as follows: Mr. Hatfield — 4,952; Mr. Brandt - - 27,245; Mr. Edington — 13,181, and Mr. Wheeler — 6,464; and (iv) 3,837 shares granted to Mr. Edington under the 2008 Palo Verde Incentive. The RSUs are described in “What are the elements of the Company’s compensation program? — Long Term Incentives” on page 29 of this proxy statement, the retention units are described in footnote 2 to the Summary Compensation Table on page 35 of this proxy statement, the 2008 Incentive Plans are described under the heading “What are the elements of the Company’s compensation program — Annual Incentives” on page 26 of this proxy statement, and the 2008 Palo Verde Incentive is described under the heading “Employment Agreements” on page 38 of this proxy statement. | |
2 | The value realized for the retention units, the RSUs, the 2008 Incentive Plan and the 2008 Palo Verde Incentive, is calculated by multiplying the number of shares of stock or units released by the market value of the common stock on the release date, which: (i) for the retention units for Messrs. Post, Brandt, Edington and Wheeler was $41.72; (ii) for the RSUs was $36.89; and (iii) for the 2008 Incentive Plan and the 2008 Palo Verde Incentive was $32.58. |
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Name | Plan Name | Number of | Present Value of | Payments | |||||||||||||||||
Years | Accumulated | During Last | |||||||||||||||||||
Credited | Benefits ($)1 | Fiscal Year | |||||||||||||||||||
Service | ($) | ||||||||||||||||||||
(#) | |||||||||||||||||||||
William J. Post | Pinnacle West Capital Corporation Retirement Plan | 36 | 1,358,670 | 2 | 0 | ||||||||||||||||
Pinnacle West Capital Corporation Supplemental Excess Benefit Retirement Plan (the “Supplemental Plan”) | 25 | 3 | 13,901,766 | 2 | 0 | ||||||||||||||||
Arizona Public Service Company Deferred Compensation Plan (the “APS Plan”) | N/A | 4 | 1,117,982 | 5 | 0 | ||||||||||||||||
James R. Hatfield | Pinnacle West Capital Corporation Retirement Plan | 1 | 11,473 | 0 | |||||||||||||||||
Supplemental Plan | 1 | 41,338 | 0 | ||||||||||||||||||
Donald E. Brandt | Pinnacle West Capital Corporation Retirement Plan | 6 | 125,597 | 6 | 0 | ||||||||||||||||
Supplemental Plan | 6 | 965,145 | 6 | 0 | |||||||||||||||||
Randall K. Edington | Pinnacle West Capital Corporation Retirement Plan | 2 | 28,281 | 7 | 0 | ||||||||||||||||
Supplemental Plan | 2 | 538,646 | 7 | 0 | |||||||||||||||||
Employment Agreement | N/A | 2,926,872 | 7 | ||||||||||||||||||
Steven M. Wheeler | Pinnacle West Capital Corporation Retirement Plan | 8 | 226,557 | 8 | 0 | ||||||||||||||||
Supplemental Plan | 8 | 9 | 1,413,320 | 9 | 0 | ||||||||||||||||
Employment Agreement | 12 | 9 | 3,363,825 | 9 | |||||||||||||||||
1 | See Note 8 of the Notes to Consolidated Financial Statements in the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2008 for additional information about the assumptions used by the Company in calculating pension obligations. | |
2 | The amount shown is the present value of Mr. Post’s accumulated benefits to be paid at age 60, the earliest age at which he could retire with no reduction in benefits. | |
3 | Under the terms of this plan, no additional benefit is awarded for credited years of service over 25 years of service. | |
4 | Mr. Post made his contribution to the APS Plan in 1986. He became vested in the payout at age 55, 19 years from the date of his investment. This plan was only offered from 1984-1986. For a description of the APS Plan, see “Discussion of Pension Benefits — APS Plan” on page 47 of this proxy statement. | |
5 | Represents the present value of Mr. Post’s benefit under his election to begin these payments at age 60. | |
6 | The amount shown is the present value of Mr. Brandt’s accumulated benefits to be paid at age 65. |
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7 | The amounts shown are the present values of Mr. Edington’s accumulated benefits to be paid after five years of service, the earliest time at which he could retire with no reduction in benefits. Mr. Edington is currently not vested in the present value of his Retirement Plan and Supplemental Plan benefits; however, if he were to leave the Company prior to retirement, these amounts could be payable to him under his employment agreement. With respect to Mr. Edington’s employment agreement, see “Employment Agreements” on page 38 of this proxy statement. | |
8 | The amount shown is the present value of Mr. Wheeler’s accumulated benefit to be paid at age 65, the earliest age at which he could retire with no reduction in benefits. | |
9 | The amount shown is the present value of Mr. Wheeler’s accumulated benefit to be paid at age 60, which he reached in January of 2009, the earliest age at which he could retire with no reduction in benefits. Mr. Wheeler has an additional 12 years of service credited to him in the Supplemental Plan pursuant to an agreement with the Company. See “Employment Agreements” on page 38 of this proxy statement. |
• | 3% of the participant’s average monthly compensation multiplied by the participant’s first ten years of service, plus | ||
• | 2% of the participant’s average monthly compensation multiplied by the participant’s next fifteen years of service, | ||
• | minus benefits payable under the Retirement Plan. |
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Percent of Monthly | ||
Compensation Contribution | ||
Age at End of Plan Year | Rate | |
Less than 35 | 12% | |
35-39 | 14% | |
40-44 | 16% | |
45-49 | 20% | |
50-54 | 24% | |
55 and over | 28% |
Percent of Monthly | ||
Age Plus Whole Years of Service | Compensation | |
at End of Plan Year | Contribution Rate | |
Less than 40 | 4% | |
40-49 | 5% | |
50-59 | 6% | |
60-69 | 7% | |
70-79 | 9% | |
80 and over | 11% |
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Name | Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||||||||||||||||
Contributions in | Contributions in | Earnings in Last | Withdrawals/ | Balance at Last | |||||||||||||||||||||||
Last Fiscal Year | Last Fiscal Year | Fiscal Year | Distributions | Fiscal Year End | |||||||||||||||||||||||
($)1 | ($) | ($)2 | ($) | ($)3 | |||||||||||||||||||||||
William J. Post | 0 | 0 | 123,072 | 0 | 1,764,033 | ||||||||||||||||||||||
James R. Hatfield6 | 7,500 | 0 | 234 | 0 | 7,734 | ||||||||||||||||||||||
Donald E. Brandt | 231,400 | 0 | 65,716 | 0 | 941,927 | ||||||||||||||||||||||
Randall K. Edington4 | 211,460 | 0 | 21,871 | 0 | 313,487 | ||||||||||||||||||||||
Steven M. Wheeler | 177,999 | 0 | 48,108 | (57,282)5 | 689,549 | ||||||||||||||||||||||
1 | The amount of the executive contribution is solely from the voluntary deferral by the executive of the executive’s designated compensation and does not include any separate Company contribution. These deferred amounts are included in the “Salary” and “Non-Equity Incentive Plan Compensation” columns in the Company’s Summary Compensation Table on page 34 of this proxy statement. | |
2 | A portion of the amounts reported in this column is also reported as compensation in the Company’s Summary Compensation Table on page 34 of this proxy statement, including, for Mr. Post — $35,281; Mr. Hatfield — $67; Mr. Brandt — $18,839; Mr. Edington — $6,270; and Mr. Wheeler — $13,791. See clause (ii) of the first sentence of footnote 4 to the Summary Compensation Table on page 36 of this proxy statement. | |
3 | The historical contributions of each Named Executive Officer to his aggregate balance at December 31, 2008, including “market rate” interest (as defined by the SEC) from the date of each contribution, is as follows: Mr. Post — $1,379,630; Mr. Hatfield — $7,667; Mr. Brandt - $904,282; Mr. Edington — $305,899; and Mr. Wheeler — $632,785. Of the totals in this column, the following amounts have previously been reported in the Summary Compensation Table in this proxy statement on page 34 or in the Company’s 2007 or 2008 proxy statements: Mr. Post — $85,924; Mr. Hatfield — $7,567; Mr. Brandt — $708,208; Mr. Edington — $293,981; and Mr. Wheeler — $406,440. | |
4 | Mr. Edington will not be fully vested until December 31, 2011. In the event Mr. Edington had left the Company on December 31, 2008, his aggregate balance would have been $303,162. | |
5 | In December 2002, Mr. Wheeler elected to receive his deferrals during 2003 as a lump sum payment in January 2008, instead of leaving those deferrals in the Plan until his separation from service. | |
6 | Mr. Hatfield will not be fully vested until December 31, 2012. In the event Mr. Hatfield had left the Company on December 31, 2008, his aggregate balance would have been $7,645. |
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Years of Plan Participation | Participation Rate |
Less than Five | Crediting Rate |
Five or More | Preferred Rate |
Years of Plan Participation | Participation Rate |
Less than Five | Crediting Rate |
Five or More | Preferred Rate |
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AS INDEPENDENT AUDITORS OF THE COMPANY
DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2009.
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Merck (MRK) | 57 | % | William Steiner (Sponsor) | |||
Occidental Petroleum (OXY) | 66 | % | Emil Rossi | |||
Marathon Oil (MRO) | 69 | % | Nick Rossi |
• | Three of our directors had 16 to 23-years tenure — Independence concern: |
William Jamieson
Roy Herberger
• | Plus with their independence concerns these directors still held 8-seats on our key board committees of audit, nomination and executive pay. | ||
• | Roy Herberger also served on the Apollo Group (APOL) board rated “D” by The Corporate Library www.thecorporatelibrary.com, an independent investment research firm. | ||
• | We did not have an Independent Board Chairman-Independence concern. | ||
• | We had no right to act by written consent. | ||
• | And our directors can still be elected with one-vote each under our obsolete plurality voting. | ||
Our poison pill with a 15% threshold could be reinstituted when it expires on March 26, 2009. |
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Yes on 3
• | Special meetings may already be called under our Bylaws. |
• | it enables the orderly conduct of the Company’s business; | ||
• | it affords the Board of Directors ample notice and opportunity to respond to proposals; | ||
• | it allows the Company’s directors, according to their fiduciary obligations, to exercise their business judgment to determine when it is in the best interests of shareholders to convene a special meeting; | ||
• | Arizona law protects shareholders’ rights by requiring shareholder approval for significant corporate actions, such as a merger, a sale of all or substantially all of the Company’s assets and the dissolution of the Company; and | ||
• | special meetings of shareholders should be reserved for extraordinary events that only occur when either fiduciary obligations or strategic concerns require that the matters to be addressed cannot wait until the next annual meeting. |
• | Shareholders can already communicate with the Board at any time. |
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• | Special meetings are time consuming and expensive. |
• | 10% is too low of a percentage. |
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• | call the Company’s Shareholder Services at 1-602-250-5511; | ||
• | mail a request to receive separate copies to Shareholder Services at P.O. Box 53999, Mail Station 8602, Phoenix, AZ 85072-3999; or | ||
• | e-mail a request to:shareholderdept@pinnaclewest.com; |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE NOMINEES LISTED IN PROPOSAL 1, “FOR” PROPOSAL 2 AND “AGAINST” PROPOSAL 3. Please mark your votes as indicated in X this example FOR WITHHOLD *EXCEPTIONS 1. Elect the thirteen (13) persons listed below to serve as ALL FOR ALL FOR AGAINST ABSTAIN directors until the next Annual Meeting of Shareholders or until 2. Ratify the appointment of Deloitte & Touche LLP as the their respective successors are duly elected and qualified. Company s independent auditors for the year ending Nominees: December 31, 2009. 01 Edward N. Basha, Jr. 08 Humberto S. Lopez 02 Donald E. Brandt 09 Kathryn L. Munro 3. Shareholder proposal asking the Company to amend 03 Susan Clark-Johnson 10 Bruce J. Nordstrom the Bylaws to allow shareholders owning 10% of the 04 Michael L. Gallagher 11 W. Douglas Parker Company s common stock to call special shareholder 05 Pamela Grant 12 William J. Post meetings. 06 Roy A. Herberger, Jr 13 William L. Stewart 07 William S. Jamieson (INSTRUCTIONS: To withhold authority to vote for any In their discretion, the proxies are authorized to vote on such other individual nominee, mark the “Exceptions” box above and matters as may properly come before the meeting or any adjournment write that nominee s name in the space provided below.) or postponement thereof, including procedural and other matters relating to the conduct of the meeting. *Exceptions The undersigned hereby revokes all previous proxies given by the undersigned with respect to the shares represented hereby in connection with the Company s 2009 Annual Meeting of Shareholders. This Proxy may be revoked at any time prior to a vote thereon. Mark Here for Address Change or Comments SEE REVERSE Signature Signature Date NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by the President or other authorized officer. If a partnership, please sign in partnership name by an authorized person. FOLD AND DETACH HERE WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK. Internet and telephone voting is available through 11:59 PM Eastern Time the day prior to the shareholder meeting date. INTERNET http://www.eproxy.com/pnw Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. OR TELEPHONE 1-866-580-9477 Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope. Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. Important notice regarding the Internet availability of Thank You For Voting proxy materials for the Annual Meeting of Shareholders The 2009 Proxy Statement, Summary Annual Report and Form 10-K are available at: http://bnymellon.mobular.net/bnymellon/pnw 46057 PRINT AUTHORIZATION(THIS BOXED AREA DOES NOT PRINT)To commence printing on this proxy card please sign, date and fax this card to: 212-709-3287 SIGNATURE:DATE: TIME: |
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PROXY FORM Pinnacle West Capital Corporation PROXY FORM This proxy is solicited on behalf of the Board of Directors for the Annual Meeting on May 20, 2009. The undersigned hereby appoints Donald E. Brandt and Nancy C. Loftin, individually and together, as proxies for the undersigned, each with full power of substitution, to attend the Annual Meeting of Shareholders of Pinnacle West Capital Corporation to be held May 20, 2009, at ten-thirty a.m. (10:30 a.m.), Mountain Standard Time, and at any adjournment or postponement thereof, and to vote as specified in this proxy all the shares of stock of the Company which the undersigned would be entitled to vote if personally present. The proxies of the undersigned may vote according to their discretion on any other matter that may properly come before the meeting. If the undersigned has voting rights with respect to shares of Company common stock under the Pinnacle West Capital Corporation Savings Plan (the “Plan”) then the undersigned hereby directs the trustee of the Plan to vote the shares equal to the number of share equivalents allocated to the undersigned s account under the Plan on all matters properly coming before the Annual Meeting, and at any adjournment or postponement thereof, in accordance with the instructions given herein. Shares under the Plan for which instructions are not received by midnight on May 18, 2009 will be voted by the trustee in accordance with the trustee s fiduciary duty. This proxy will be considered to be confidential voting instructions to the Plan trustee and to any entity acting as tabulating agent for the Plan trustee. ALL SHARES OF COMMON STOCK REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THOSE SHARES WILL BE VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2 AND AGAINST PROPOSAL 3. BNY MELLON SHAREOWNER SERVICES P.O. BOX 3550 Address Change/Comments SOUTH HACKENSACK, NJ 07606-9250 (Mark the corresponding box on the reverse side) (Continued and to be marked, dated and signed on the other side) FOLD AND DETACH HERE Dear Shareholders, The 2009 Annual Meeting of Shareholders of Pinnacle West Capital Corporation will be held at the Herberger Theater Center, Phoenix, Arizona, on May 20, 2009 at 10:30 a.m., Mountain Standard Time. At the meeting, shareholders will be asked to (i) re-elect thirteen (13) current directors to serve on the Board until the 2010 Annual Meeting; (ii) ratify the appointment of the Company s independent auditors for the fiscal year ending December 31, 2009; and (iii) consider a shareholder proposal asking the Company to amend the Bylaws to allow shareholders owning 10% of the Company s common stock to call special shareholder meetings. Your vote is important and you may vote this proxy in one of three ways — by Internet, by telephone, or by mail. The reverse side of this letter provides voting information for all three (3) voting options. We encourage you to attend the Annual Meeting and have provided a map for your reference. Sincerely, Nancy C. Loftin Senior Vice President, General Counsel and Secretary Validation for the Chase parking structure (only) available at the Annual Meeting registration desk. Choose MLinkSMfor fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more. Simply log on to Investor ServiceDirect®at www.bnymellon.com/shareowner/isd where step-by-step instructions will prompt you through enrollment. 46057 |