SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
PINNACLE WEST CAPITAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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[X] No fee required.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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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PINNACLE WEST CAPITAL CORPORATION
Post Office Box 52132
PHOENIX, ARIZONA 85072-2132
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
WEDNESDAY, MAY 17, 2000
To Shareholders:
The 2000 annual meeting of shareholders of Pinnacle West Capital
Corporation will be held at the Wigwam Resort located at 300 Wigwam Boulevard,
in Litchfield Park, Arizona at 10:30 a.m. on Wednesday, May 17, 2000 for the
following purposes:
1) To elect four Class III Directors, two Class I Directors, and one
Class II Director; and
2) To act upon a shareholder proposal requesting a report to
shareholders; and
3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Each of the 84,724,390 shares of the Company's common stock outstanding at
the close of business on March 17, 2000 entitles the holder to notice of and to
vote at this meeting or any adjournment thereof, but shares can be voted at the
meeting only if the holder is present or represented by proxy.
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Company's Board of Directors. So far as management is
aware, the matters described in this Proxy Statement will be the only ones to be
acted upon at the meeting. If any other matters properly come before the meeting
or any adjournment thereof, the proxy committee named in the enclosed proxy will
vote on those matters in accordance with its judgment.
Shareholders may vote in one of three ways:
* Mark, date, sign and mail promptly the enclosed proxy. A postage-paid
envelope is provided for mailing in the United States. OR
* Vote by telephone. Call toll-free 1-877-289-8962 on a touch-tone
telephone and follow the instructions on the enclosed proxy. There is
NO CHARGE for the call. OR
* Vote by Internet at the following Internet address:
www.proxyvoting.com/pnw
You are entitled to revoke your proxy at any time before it is exercised
and vote your shares in person if you attend the meeting.
By order of the Board of Directors
FAYE WIDENMANN
Vice President and Secretary
Approximate date of mailing to shareholders:
April 7, 2000
ITEM 1 - ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide for the division of the
Board of Directors into three classes of approximately equal size. The term of
each directorship is three years and the terms of the three classes are
staggered so that only one class is elected by the shareholders annually.
Four Class III directors are to be elected this year to serve as members of
the Board of Directors until the annual meeting of shareholders in 2003 or until
their successors are elected and qualified. Mr. Snell has advised the Board that
he may retire as a director in February 2001. Two Class I directors are to be
elected this year to serve as members of the Board of Directors until the annual
meeting of shareholders in 2001 or until their successors are elected and
qualified. One Class II director is to be elected this year to serve as a member
of the Board of Directors until the annual meeting of shareholders in 2002 or
until his successor is elected and qualified. Should one or more of the seven
nominees listed below become unavailable to serve prior to the meeting date, the
proxy committee will vote the shares it represents for the election of such
other persons as the Board may recommend unless the Board reduces the number of
directors in the affected class.
Directors for all three classes are identified on the following pages.
Information given for all directors has been furnished by each of them as of
March 17, 2000. The term "APS" refers to Arizona Public Service Company, the
Company's largest subsidiary.
NOMINEES
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NOMINEES FOR ELECTION TO CLASS III DIRECTORS
(TERM TO EXPIRE AT 2003 ANNUAL MEETING)
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PAMELA GRANT, 61, has been a director since 1985. She is a civic leader and from
July 1989 through January 1995 was President of TableScapes, Inc. (party supply
rentals). Ms. Grant was President and CEO of Goldwaters Department Stores
(general mercantile), a division of May Department Stores, from January 1987 to
April 1988. Prior to that, she was President, Chairman and CEO of Goldwaters
Department Stores, a division of Associated Dry Goods, from November 1978 to
January 1987.
MARTHA O. HESSE, 57, has been a director since 1991. She is President of Hesse
Gas Company. In 1990, Ms. Hesse served as Senior Vice President of First Chicago
Corporation (financial services); and from 1986 to 1989, she was Chairman of the
Federal Energy Regulatory Commission. She is also a director of Agra, Inc.,
Laidlaw Inc., Mutual Trust Life Insurance Company, and APS.
WILLIAM S. JAMIESON, JR., 56, has been a director since 1991. Since January
1999, he has been President of the Institute for Servant Leadership of
Asheville, North Carolina. Prior to that, he was Vice President of the Institute
of Servant Leadership and an Adjunct Member of the Bishop's staff of the
Episcopal Diocese of Arizona. Formerly, he was also the Archdeacon of the
Episcopal Diocese of Arizona.
RICHARD SNELL, 69, has been a director since 1985. He has been Chairman of the
Board of the Company and Chairman of the Board of APS since February 1990. Until
February 1999, he was also Chief Executive Officer of the Company and he was
Company President until February 1997. He is also a director of Aztar
Corporation and Central Newspapers, Inc.
2
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NOMINEES FOR ELECTION TO CLASS I DIRECTORS
(TERM TO EXPIRE AT 2001 ANNUAL MEETING)
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ROBERT G. MATLOCK, 66, has been an independent management consultant to various
governmental agencies involved in developing nuclear energy resources and to
utilities operating nuclear facilities since 1984. He is also a director of APS.
KATHRYN L. MUNRO, 51, has been Chairman of BridgeWest L.L.C. (investment
company) since February 1999. 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. Prior to her Arizona appointment with Bank of
America, Ms. Munro served as Executive Vice President and Manager of the Retail
Systems and Services Division of Seafirst Bank in Seattle, Washington, since
1993. Ms. Munro is also a director of APS, Central Newspapers, Inc., Flow
International Corporation, and Sun Community Bancorp.
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NOMINEES FOR ELECTION TO CLASS II DIRECTORS
(TERM TO EXPIRE AT 2002 ANNUAL MEETING)
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BRUCE J. NORDSTROM, 50, has been a certified public accountant at the firm of
Nordstrom and Associates, P.C., Flagstaff, Arizona, since 1988. He is also a
director of APS.
3
DIRECTORS CONTINUING IN OFFICE
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CLASS I DIRECTORS
(TERM TO EXPIRE AT 2001 ANNUAL MEETING)
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ROY A. HERBERGER, JR., 57, has been a director since 1992. He has been President
of Thunderbird, The American Graduate School of International Management, since
1989. Mr. Herberger is also a director of MicroAge, Inc.
HUMBERTO S. LOPEZ, 54, has been a director since May 1995. He is President of
HSL Properties (real estate development and investment), Tucson, Arizona. Mr.
Lopez is also a director of Bank of Tucson, Sun Community Bancorp and Nevada
Community Bancorp.
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CLASS II DIRECTORS
(TERM TO EXPIRE AT 2002 ANNUAL MEETING)
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EDWARD N. BASHA, JR., 62, has been a director since 1999. He is Chairman of the
Board of Bashas' supermarket chain and an Arizona civic leader dedicated to
multiple community projects. He is also a director of Samaritan Health Services
and the Arizona Ecumenical Foundation.
MICHAEL L. GALLAGHER, 55, has been a director since 1999. He is an
attorney-at-law and President of Gallagher & Kennedy, P.A., Phoenix, Arizona.
Mr. Gallagher is also a director of APS and the Omaha World-Herald Company, and
he is a Trustee of the Peter Kiewit Foundation.
WILLIAM J. POST, 49, has been a director since February 1997. He has served as
an officer of the Company since 1995 in the following capacities: From August
1999 to present as President and Chief Executive Officer; from February 1999 to
August 1999 as CEO; from February 1997 to February 1999 as President; and from
June 1995 to February 1997 as Executive Vice President. Mr. Post is also CEO and
a director of APS and has held various officer positions at APS since 1982. He
is also a director of Blue Cross-Blue Shield of Arizona and Nuclear Electric
Insurance, Ltd. (NEIL).
4
CERTAIN SECURITIES OWNERSHIP
As of March 17, 2000 (except as described in Footnote 4 below), shares of
the Company's common stock beneficially owned by the indicated persons or groups
were as follows:
SHARES
BENEFICIALLY PERCENT
OWNED (1) OF CLASS (2)
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DIRECTORS AND NOMINEES
Edward N. Basha (3) 2,225
Michael L. Gallagher (3) 1,691
Pamela Grant 28,300
Roy A. Herberger, Jr. (3) 6,200
Martha O. Hesse 17,882
William S. Jamieson, Jr. (3) 5,615
Humberto S. Lopez (3) 21,991
Robert G. Matlock (3) 1,549
Kathryn L. Munro 350
Bruce J. Nordstrom 2,889
William J. Post 254,753
Richard Snell 489,085
OTHER OFFICERS NAMED ON PAGE 11
Jack E. Davis (3) 89,374
Armando B. Flores (3) 42,585
James M. Levine 58,694
William L. Stewart (3) 85,211
ALL DIRECTORS, NOMINEES AND EXECUTIVE
OFFICERS AS A GROUP (26 PERSONS) (3) 1,439,648 1.69%
5% BENEFICIAL OWNERS (4)
Capital Research and Management Company 6,400,000 7.6%
333 South Hope Street
Los Angeles, California 90071
Wellington Management Company, LLP 8,528,338 10.1%
75 State Street
Boston, Massachusetts 02109
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(1) Includes shares which may be acquired by the exercise of stock options
within 60 days as follows: 61,500 for Mr. Davis; 21,750 for Mr. Flores;
24,500 for Ms. Grant; 14,000 for Ms. Hesse; 33,000 for Mr. Levine; 217,500
for Mr. Post; 20,000 for Mr. Snell; 45,667 for Mr. Stewart; and 669,895 for
all directors and officers as a group. In the case of officers, this also
includes shares of restricted stock and vested shares in the Company's
employees' savings plan as of February 8, 2000.
(2) Except as otherwise noted, common stock beneficially owned does not exceed
one percent (1%) of the outstanding common stock.
5
(3) Includes in the cases of Mr. Basha, 2,225 shares held in joint tenancy with
his wife; Mr. Davis, 13,256 shares held in joint tenancy with his wife; Mr.
Flores, 1,568 shares held in joint tenancy with his wife; Mr. Gallagher,
1,691 shares held in joint tenancy with his wife; Mr. Herberger, 3,700
shares held in joint tenancy with his wife; Mr. Jamieson, 2,115 shares held
in a family trust in which voting power is shared; Mr. Lopez, 10,491 shares
held in a family trust in which voting power is shared; Mr. Matlock, 482
shares held in joint tenancy with his wife; Mr. Stewart, 23,618 shares held
in joint tenancy with his wife; and the group, 99,747 shares as to which
voting or investment power is shared with others.
(4) Capital Research and Management Company's Schedule 13G filing with the
Securities and Exchange Commission as of February 10, 2000, reported sole
dispositive power as to 6,400,000 shares. Wellington Management Company's
amended Schedule 13G filed with the Securities and Exchange Commission as
of February 9, 2000, reported beneficial ownership of 8,528,338 shares with
shared voting power as to 3,498,382 shares and shared dispositive power as
to 8,528,138 shares. The Company believes these filings reported stock
ownership as of December 31, 1999. The Company makes no representations as
to the accuracy or completeness of such information.
THE BOARD AND ITS COMMITTEES
The full Board of Directors met 13 times during 1999. No director attended
fewer than 75% of the meetings of the full Board and of the committees on which
he or she served.
The Audit Committee of the Board reviews the performance and independence
of the Company's independent accounting firm, makes an annual recommendation to
the full Board with respect to the appointment of the firm for the following
year, approves the scope of the work to be performed, and solicits and reviews
the firm's recommendations. The Committee also consults with the Company's
internal audit group and periodically reviews the relationship among that group,
management of the Company and its subsidiaries, and its independent accountants.
The Committee met 3 times in 1999; its members were Ms. Hesse (Chairman),
Messrs. Basha, Herberger, Jamieson and Lopez.
The Human Resources Committee makes recommendations to the full Board with
respect to prospective Board members and officers and with respect to executive
salaries, bonuses and benefits. (See page 19 for the procedures for proposing
nominations to the Board.) The Committee also makes stock option and restricted
stock grants, and regularly reviews the Company's policies in all of the
foregoing areas. Its report on executive compensation policy follows, and its
members are identified at the end of that report. The Committee met 8 times in
1999.
Outside directors receive an annual retainer consisting of $12,000 cash and
500 shares of Pinnacle West common stock. To receive the 500 shares a director
is required to own 500 shares in advance of his or her first year on the board,
and that ownership requirement increases by 500 shares annually until it reaches
2,500 shares. Outside directors also receive $900 for each board meeting
attended and $700 for each committee meeting attended. The Chairman of the Board
also receives a $200,000 annual payment for his responsibilities.
The Company has a directors' retirement plan which provides, with certain
exceptions, to outside directors over the age of 65, upon their retirement from
the Board, an annual payment of $12,000. The length of time to which an outside
director is entitled to receive this benefit is limited to the number of years
he or she served on the Board prior to age 65.
6
HUMAN RESOURCES COMMITTEE REPORT
THE COMMITTEE'S RESPONSIBILITIES
The Pinnacle West Human Resources Committee, composed solely of outside
directors (the "Committee"), is responsible for compensation decisions regarding
Pinnacle West executive officers. The APS Human Resources Committee (the "APS
Committee") initially is responsible for salary and bonus decisions for Messrs.
Davis, Levine and Stewart (who are APS officers). However, the Committee reviews
the APS Committee's compensation decisions and is responsible for all
stock-based compensation.
BACKGROUND
The Committee's overall compensation philosophy is to attract, retain, and
reward qualified individuals critical to Pinnacle West's success; reinforce
Pinnacle West's objectives through the use of performance-based compensation;
and promote long-term ownership of Pinnacle West stock to more closely align the
interests of Pinnacle West's executive officers with those of its shareholders.
In general, the Committee concentrates on two main types of compensation.
One is annual cash compensation, consisting of salary and bonuses. Bonuses are
awarded only when certain performance objectives are met. The second type is
long-term equity compensation. This includes stock options and restricted stock.
The value of these awards depends on Pinnacle West's performance as reflected in
future stock values.
The objective of the compensation philosophy is to be competitive within a
broad industry group. As the utility industry continues to move toward
competitive business organizations similar to general industry, the Committee
considers blends of both utility and general industry to determine competitive
levels of total compensation. Consistent with past practice, during 1999 the
Committee met with an outside consultant and reviewed several reports regarding
the compensation program for Pinnacle West's and APS' executive officers. The
consultant provided the Committee with compensation information for the electric
utility and general industry groups, adjusted for size. The Committee formulated
its views about the responsibilities, skills, expertise, and performance of
Pinnacle West's executive officers, with input from Mr. Post as to performances
other than his own, and applied these views to the information provided by the
consultant and the APS Committee.
ANNUAL COMPENSATION
BASE SALARIES
Overall, the base salaries paid to Pinnacle West's executive officers
during 1999 were competitive with the median salaries in both the utility and
general industry groups.
BONUSES
The cash bonuses paid to Pinnacle West's executive officers, except Mr.
Flores, for 1999 were based on weighted performance objectives the Committee
established at the beginning of the year. These were based primarily on 1999
earnings, strategic planning, and matters related to electric utility industry
restructuring, in that order of importance. The APS Committee established
performance objectives for Mr. Flores, who was an APS officer prior to July 23,
1999, and for other APS officers, including Messrs. Davis, Levine and Stewart,
that were based primarily on APS performance and earnings.
7
The attainment levels of the several objectives were assessed by each
Committee in early 2000 and these assessments were factored into an arithmetical
formula that included predetermined percentages of the officers' respective
salaries resulting in the respective bonuses. The bonuses approved by the
Committee and by the APS Committee were near the maximum level in both the 1999
Pinnacle West plan and the 1999 APS plan.
LONG-TERM COMPENSATION
The Committee believes that management's performance is ultimately judged
by the delivery of rewards to shareholders in the form of share price
appreciation and dividends over time. To achieve this, the Committee intends
that grants of stock options and restricted stock serve as significant pieces of
the total compensation package for officers and key management employees of
Pinnacle West and its subsidiaries.
The Committee believes that senior management of Pinnacle West and its
subsidiaries should have a significant, ongoing personal investment in Pinnacle
West. To that end, restricted stock grants, besides being compensatory in
nature, are used to encourage the attainment and retention of targeted levels of
individual stock ownership by conditioning their vesting upon ownership of
certain numbers of shares for predetermined periods of time.
The Committee determines the size of awards in part by assessing
competitive grant practices for comparable positions and allocating equity
awards based on the executive's contributions to the organization. Value to the
executive is determined through the stock option component only when the
Pinnacle West stock price appreciates above the price at grant. The total value
of restricted stock grants is based on the value of the Pinnacle West stock at
the end of the vesting period.
CEO COMPENSATION
Mr. Snell retired as the Company's CEO on February 5, 1999. The Committee
had not increased Mr. Snell's salary of $515,000 since 1991, relying instead on
stock options and restricted stock grants.
Mr. Post assumed the position of CEO upon Mr. Snell's retirement in
accordance with a transition plan which was outlined for several years. In
recognition of Mr. Post's increased responsibility, and with input from Mr.
Snell as to Mr. Post's performance, the Committee increased Mr. Post's
compensation to $510,000 per year and granted him options to acquire 70,000
shares of the Company's common stock at $41.00 per share. The Committee
considered this compensation to be consistent with Mr. Post's accomplishments
and the significant increase in his responsibility for the Company's success.
GENERAL
As Pinnacle West moves forward in its efforts to increase shareholder value
in the continuing restructuring of the utility industry, the Committee will
continue to review, monitor, and evaluate Pinnacle West's programs for executive
compensation. The Committee will, as appropriate, monitor compensation to assure
that it effectively supports Pinnacle West's strategy, is competitive in the
marketplace to attract, retain, and motivate the talent needed to succeed, and
appropriately rewards creation of value for Pinnacle West's shareholders.
8
TAX CONSIDERATION
Publicly-traded corporations generally are not permitted to deduct, for
federal income tax purposes, annual compensation in excess of $1 million paid to
any of certain top executives, except to the extent the compensation qualifies
as "performance-based." While the Committee is biased toward rewarding
performance through the bonus and equity participation programs, certain
features of these programs do not fit the law's definition of
"performance-based," and limited amounts of compensation could therefore not be
deductible.
The foregoing report of the Human Resources Committee is provided by its
members: Ms. Grant (Chairman), Ms. Hesse and Messrs. Basha, Jr., Gallagher and
Lopez.
9
STOCK PERFORMANCE COMPARISONS
The annual changes for the five-year period shown in the following graph
are based on the assumption that $100 was invested on the last trading day in
1994 in Pinnacle West stock and in the market represented by each of two indices
(the S&P 500 Index and the Edison Electric Institute Index of Investor-Owned
Electrics), and that any dividends were reinvested.
[PERFORMANCE GRAPH]
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
PNW 100 152.03 173.67 239.66 246.39 184.44
S&P 500 Index 100 137.45 168.92 225.21 289.43 350.26
EEI Electric Index 100 131.02 132.59 168.88 192.34 156.57
10
EXECUTIVE COMPENSATION
The following tables on compensation and stock options relate to the five
most highly compensated executive officers of the Company for services rendered
in all capacities to the Company and its subsidiaries. The tables also contain
information on Mr. Snell, who served as the Company's CEO during a portion of
1999.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------- ---------------------
OTHER
NAME AND ANNUAL RESTRICTED
PRINCIPAL COMPEN- STOCK ALL OTHER
POSITION IN 1999 YEAR SALARY BONUS SATION AWARDS(1) OPTIONS COMPENSATION(2)
- ---------------- ---- ------ ----- ------ --------- ------- ---------------
Richard Snell (3) 1999 $ 79,231 $ 0 $ 0 0 $276,541
CHAIRMAN 1998 515,000 356,277 0 0 34,918
1997 515,000 406,953 298,125(1) 20,000 44,866
William J. Post 1999 $502,500 $418,455 $259,921 107,500 $ 26,693
CEO AND PRESIDENT OF 1998 450,000 270,000 186,500 20,000 13,317
COMPANY AND CEO OF APS 1997 420,834 171,000 131,175 16,500 11,949
William L. Stewart 1999 $464,000 $290,073(4) $190,609 17,500 $ 38,088
PRESIDENT, GENERATION OF 1998 464,000 291,280 219,137 13,500 13,125
APS 1997 432,517 204,512 $35,806(5) 186,825 13,500 10,212
Jack E. Davis 1999 $310,000 $160,394 $190,609 17,500 $ 21,046
PRESIDENT, ENERGY 1998 310,000 161,200 125,888 13,500 11,449
DELIVERY AND SALES OF APS 1997 268,364 103,230 107,325 13,500 9,492
James M. Levine 1999 $267,501 $217,002(4) $ 69,312 10,000 $ 28,948
EXECUTIVE VICE PRESIDENT, 1998 230,000 170,800 51,458 5,500 15,438
GENERATION OF APS 1997 209,167 151,610 43,725 5,500 10,873
Armando B. Flores 1999 $206,668 $116,014 $ 60,648 8,750 $ 16,723
EXECUTIVE VICE PRESIDENT, 1998 190,000 98,800 51,458 5,500 14,319
CORPORATE BUSINESS SERVICES 1997 173,334 63,270 43,725 5,500 7,666
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(1) The value of the restricted stock is based on the closing price of the
Company's common stock on the date the restricted stock was granted. Except
as described for Mr. Davis in the following sentence, the restrictions
lapse on restricted stock awards upon (i) the passage of three years from
date of grant or upon retirement after the age of 60 and (ii) the holding
of certain numbers of unrestricted shares for certain periods of time, as
determined by the Human Resources Committee at the time of grant. During
1999, Mr. Davis received 2,000 shares of restricted stock that vested upon
the date of grant. Any dividends paid on restricted stock will be held by
the Company until the restrictions lapse. The number and value (at market)
of aggregate restricted shareholdings as of the end of 1999 were: Mr. Post
-14,800 shares, $452,325; Mr. Stewart - 15,926 shares, $486,738; Mr. Davis
- 8,900 shares, $272,006; Mr. Levine - 4,200 shares, $128,363; and Mr.
Flores - 3,950 shares, $120,722. The 1997 grant of restricted stock to Mr.
Snell fully vested upon his retirement in February 1999.
(2) The figures in this column for 1999 consist of Company matching
contributions to the Company's employees' savings plan: Mr. Davis - $4,462,
Mr. Flores - $4,550, Mr. Levine - $4,800, Mr. Post - $4,800, Mr. Snell - $0
and Mr. Stewart - $0; the above-market portion of interest accrued under a
deferred compensation plan: Mr. Davis - $16,584, Mr. Flores - $8,486, Mr.
Levine - $22,061, Mr. Post - $19,587, Mr. Snell - $24,421, and Mr. Stewart
- $9,948; life insurance premiums (and gross-up on the premium for Mr.
Stewart) paid by the Company for: Mr. Davis - $0, Mr. Flores - $3,687, Mr.
Levine - $2,087, Mr. Post - $2,306, Mr. Snell - $3,388, and Mr. Stewart -
$28,140; $17,475 (which was deferred) paid to Mr. Snell for service as an
APS director; $28,800 paid to Mr. Snell as a Pinnacle West director;
$20,156 paid to Mr. Snell for value of stock granted to Mr. Snell as a
Pinnacle West director; and $183,333 paid to Mr. Snell for service as
Chairman of the Board.
(3) Mr. Snell served as the Company's CEO until his retirement as an employee
on February 5, 1999. He remains as Chairman of the Company's board and its
principal subsidiaries.
(4) This figure includes a $50,000 incentive payment based upon Palo Verde
Nuclear Generating Station's maintenance of specified federal and nuclear
oversight program ratings.
(5) This figure represents the reimbursement of taxes on income charged to Mr.
Stewart due to the reimbursement of housing expenses.
11
OPTION GRANTS IN 1999
PERCENTAGE OF
OPTIONS TOTAL OPTIONS
GRANTED GRANTED TO ALL EXERCISE GRANT DATE
IN 1999 EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME (SHARES)(1) 1999 (PER SHARE) DATE VALUE(2)
- ---- ----------- -------------- ----------- ---- --------
Richard Snell 0 0% N/A N/A $ 0
William J. Post 37,500 8.18% $34.66 11/16/09 $260,400
70,000 15.27% $41.00 1/19/09 $516,110
Jack E. Davis 17,500 3.82% $34.66 11/16/09 $121,520
Armando B. Flores 8,750 1.91% $34.66 11/16/09 $ 60,760
James M. Levine 10,000 2.18% $34.66 11/16/09 $ 69,440
William L. Stewart 17,500 3.82% $34.66 11/16/09 $121,520
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(1) Most of these options were granted on November 17, 1999. Most of these
grants become exercisable at the rate of one-third of the grant annually.
All options not already exercisable will become exercisable if an
individual retires on or after the age of 60. No SARs have been granted.
(2) The Black-Scholes option-pricing model was chosen to estimate the present
value. The basic assumptions used in the model were expected volatility of
20.5%; risk-free rate of return of 5.68%; dividend yield of 3.33%; and time
to exercise of five years.
OPTION EXERCISES IN 1999 AND YEAR-END VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END (2)
ACQUIRED ON VALUE ------------------------------ ---------------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ------------ ----------- ------------- ----------- -------------
Richard Snell 442,500 $9,966,170 20,000 0 0 $ 0
William J. Post 0 -- 91,166 126,334 $506,520 $ 0
Jack E. Davis 0 -- 30,500 31,000 $ 18,735 $ 0
Armando B. Flores 0 -- 7,499 14,251 0 $ 0
James M. Levine 0 -- 17,499 15,501 $ 18,735 $ 0
William L. Stewart 15,667 $ 154,456 14,667 31,000 0 $ 0
- ----------
(1) Value of options exercised is the market value of the shares on the
exercise date minus the exercise price.
(2) The value of unexercised options equals the market value of Pinnacle West
common stock on December 31, 1999 ($30.5625 per share) minus the exercise
price of options.
12
EXECUTIVE BENEFIT PLANS
EMPLOYEES' RETIREMENT PLAN AND SUPPLEMENTAL EXCESS BENEFIT RETIREMENT PLAN.
The following table illustrates the annual benefits, calculated on a
straight-life annuity basis, that would be provided under the Company Employees'
Retirement Plan and the Supplemental Excess Benefit Retirement Plan to the
Company's officers who retire at age 65 or later at the indicated compensation
and years of service levels.
YEARS OF SERVICE
AVERAGE ANNUAL -----------------------------------------------------
COMPENSATION (a) 5(b) 10 20 25
- ---------------- -------- -------- -------- --------
$ 100,000 $ 15,000 $ 30,000 $ 50,000 $ 60,000
200,000 30,000 60,000 100,000 120,000
300,000 45,000 90,000 150,000 180,000
400,000 60,000 120,000 200,000 240,000
500,000 75,000 150,000 250,000 300,000
600,000 90,000 180,000 300,000 360,000
700,000 105,000 210,000 350,000 420,000
800,000 120,000 240,000 400,000 480,000
900,000 135,000 270,000 450,000 540,000
1,000,000 150,000 300,000 500,000 600,000
- ----------
(a) Compensation under the retirement plan consists solely of base salary up to
$160,000 (as adjusted for cost-of-living), including any amounts
voluntarily deferred under the Company's 401(k) plan and salary reduction
contributions under the Company's flexible benefits plan. The retirement
plan does not include amounts voluntarily deferred under other deferred
compensation plans, bonuses or incentive pay. The Supplemental Excess
Benefit Retirement Plan does include, subject to certain exceptions, these
additional components of compensation plus base salary beyond the $160,000
limit.
(b) Although years of service begin accumulating on the date of employment,
benefits do not vest until the completion of five years of service.
The Company's Supplemental Excess Benefit Retirement Plan provides enhanced
benefits. Benefits payable under this plan that are in excess of the benefits
payable under the Company's retirement plan (as a qualified defined benefit
pension plan, the retirement plan is limited pursuant to the Internal Revenue
Code) are payable from the general assets of the Company. The number of credited
years of service for each of the individuals named on page 11 and their 1999
remuneration covered by the Company's plans and individual employment agreements
are as follows: Mr. Davis - 27 years, $471,200; Mr. Flores - 16 years, $305,468
(see description of Mr. Flores' employment agreement below); Mr. Levine - 10
years, $438,301; Mr. Post, 27 years, $772,500; Mr. Snell - 38 years, $435,508
(see description of Mr. Snell's employment agreement below); and Mr. Stewart - 6
years, $755,280 (see description of Mr. Stewart's employment
13
agreement below). The amounts shown in the table above are not expected to be
subject to any reduction or offset for Social Security benefits or other
significant amounts.
EMPLOYMENT AND SEVERANCE ARRANGEMENTS. Mr. Snell and the Company were
parties to an employment agreement setting forth the terms of his employment as
Chief Executive Officer of the Company. This agreement expired on February 5,
1999, and Mr. Snell's employment has ended, although he remains as Chairman of
the Company's Board of Directors. The contract allowed Mr. Snell to participate
in the employee benefit plans generally available to Company employees, and in
the Company's deferred compensation plan, supplemental excess benefit retirement
plan, and stock option plan, and provided him with a supplemental pension under
the agreement. For purposes of determining his supplemental pension benefits,
Mr. Snell's years of service on February 5, 1990 were assumed to be 29 years,
and he was credited with an additional year for each year of employment
thereafter. Mr. Snell's credited years of service disclosed above (38) include
the 29 years of awarded service.
As Chairman, Mr. Snell is paid $200,000 annually, on a non-employee basis,
for continuing chairman responsibilities. In addition, effective March 1, 1999,
Mr. Snell became entitled to a monthly pension from the retirement plan, the
supplemental pension plan and his employment contract equal to $39,039. In
accordance with his former employment agreement, the Company reimburses Mr.
Snell each month for a portion of the cost of his retiree medical coverage and
has purchased a $100,000 life insurance policy for Mr. Snell at a cost of $3,388
annually. The Company also reimburses Mr. Snell for any additional taxes he may
be required to pay as a result of the Company's payment of a portion of his
retiree medical coverage and its purchase of the life insurance policy.
In December 1999, APS entered into an agreement with Mr. Stewart that
amends and supplements certain provisions of Mr. Stewart's prior employment
agreement. Mr. Stewart receives 2,000 shares of restricted Company stock
annually under his August 1996 agreement. The additional terms of the new
agreement provide that Mr. Stewart will continue full-time employment with APS
through December 31, 2002, and he was paid a $300,000 signing bonus on January
3, 2000. In addition, APS agreed to provide to Mr. Stewart a line of credit up
to $1.2 million, drawable annually in $400,000 increments with interest payable
at 7.5%; a deferred payment of $400,000 in each year (2000-02) with interest
payable at 9% on the deferred amount; and two additional payments of $400,000,
one on January 3, 2003 and the other on January 3, 2004. The agreement further
provides that Mr. Stewart's pension benefit will be 80% of his average monthly
wage on the date of his retirement. If Mr. Stewart terminates employment for any
reason, including death or disability, prior to December 31, 2002, the line of
credit, deferred payments and the two additional payments will be forfeited, and
the outstanding amounts under the line of credit, if any, will be due and
payable within 10 days. In that event, his pension will be calculated in
accordance with his prior agreement which provides a supplemental pension
benefit calculated by adding a base amount of 20% of his average monthly wage
(as determined by the highest 36 consecutive months) and 10% of his average
monthly wage for each year of service up to a maximum of 100% of his average
monthly wage. See footnote 4 to the Summary Compensation Table on page 11 for
information regarding additional incentive payments to Messrs. Stewart and
Levine.
In July 1995, APS entered into an agreement with Mr. Flores crediting him
with an additional 8 years of service for purposes of determining the amount of
benefits payable under the Company's Supplemental Excess Benefit Retirement
Plan. The additional years of service are subject to revocation if Mr. Flores'
employment is terminated for cause, as determined in the sole discretion of the
APS Board of Directors. Mr. Flores' credited years of service disclosed above
(16) include the 8 additional years.
14
The Company has entered into severance agreements, which are identical in
content, with each of its executive officers. These agreements are intended to
provide stability in key management of the Company in the event of a change in
control of the Company. The agreements provide for certain payments if, during
the two-year period following a change of control of the Company, the officer's
employment is terminated involuntarily by the Company or by the executive for
significant and detrimental change in the executive's employment. The
termination payment, if required, is an amount equal to three times the sum of
the executive's annual salary at termination plus an annual bonus, as determined
by an average over the last four years preceding termination. In addition, the
executive is entitled to continued medical, dental and group life insurance
benefits at a shared cost for three years; the termination is treated as a
normal termination under the Company's stock option and benefit plan; and out
placement services are provided. If all or part of the total payments would be
subject to an excise tax imposed by Section 4999 of the Internal Revenue Code,
the agreement further provides for an additional gross up payment equal to the
excise tax imposed on the total payments. "Change of control" includes: (1) An
unrelated third party's acquisition of 20% or more of the Company's or APS'
voting stock; (2) a merger or consolidation in the case of either the Company or
APS combining with any other corporation such that the Company's or APS'
outstanding voting stock immediately prior to merger or consolidation represents
less than 60% of the voting stock of the Company or APS immediately after the
merger or consolidation, but excluding a merger or consolidation effected to
implement a recapitalization in which no unrelated third party acquires more
than 20% of the voting stock of the Company or APS; (3) the shareholders of
either the Company or APS approve a sale, transfer or other disposition of all
or substantially all of the assets of the Company or APS to an unrelated third
party; or (4) in the case where the composition of either the Board of the
Company or of APS changes such that the members of the board of the Company (the
"Company Incumbent Board") or of APS (the "APS Incumbent Board"), as of July 31,
1999, no longer comprise at least 2/3 of the Company's or APS' board of
directors. For purposes of this latter provision, a person elected to the
Company's or APS' board of directors after July 31, 1999, is treated as a member
of the Company Incumbent Board or the APS Incumbent Board if his or her
nomination or election by shareholders was approved by a 2/3 vote of the members
then comprising the Company Incumbent Board or APS Incumbent Board, and it does
not include anyone who became a director in an actual or threatened election
contest relating to the election of directors. No severance benefits will be
payable to an officer whose termination is due to retirement, disability, death,
voluntary termination, or for "cause" as defined in the agreements. Each of the
agreements terminates on December 31st of each year upon six months' advance
notice by the Company to the officer; if the six months' advance notice is not
given, the agreements will continue for successive one-year periods until the
notice is given.
Effective January 1, 1992, the Company established a deferred compensation
plan for directors and officers of the Company. Effective January 1, 1996, the
Company established a revocable trust for the purpose of funding the benefits
under the deferred compensation plan and certain other benefits. Upon the
occurrence of certain events, which generally include the sale of substantially
all of the Company's assets, a merger or consolidation in which the Company is
not the surviving entity, certain changes in the composition of the Board of
Directors or someone acquiring 20% or more of the Company's voting stock, the
trust will become irrevocable and the Company will be required to fully fund the
benefits earned under the deferred compensation plan within 60 days after the
occurrence of that event.
Effective January 1, 2000, the change of control definitions in the plan
and trust were amended to incorporate the same change of control definition
contained in the severance agreements described above.
15
ITEM 2 - SHAREHOLDER PROPOSAL
The Company has been advised that the Arizona Safe Energy Coalition (owner
of record of 59.496 shares), c/o Betty Schroeder, 5349 West Bar X Street,
Tucson, Arizona 85713 intends to present the following proposal at the 2000
annual meeting. The proposal and supporting statement, for which the Board of
Directors and the Company accept no responsibility, are set forth below. The
Board opposes this proposal for the reasons stated on pages 17 and 18.
SAFE ENERGY REPORT
"Whereas: We believe the economic and environmental interests of stockholders
and the public could be improved by Pinnacle West Capital Corporation and
Arizona Public Service Company (The Company) more aggressively implementing
energy efficiency, renewable energy and end-use planning;
"Global Warming, acid rain, urban smog, groundwater pollution and nuclear
waste will be reduced by the greater use of energy conservation and renewable
energy sources;
"The Kyoto Protocol (reducing greenhouse gases) goals will be more
efficiently met through uses of renewable energy and improved energy efficiency;
"Energy efficiency and some renewable energy sources are already
competitively priced, and all are environmentally superior to our present use of
coal, oil and nuclear fuels;
"State and federal incentives exist to aid utilities in transition to this
new energy strategy;
"Present generation at Palo Verde Nuclear Generating Station (PVNGS)
utilizes huge quantities of water, both reclaimed sewage (21 billion gallons
annually), and ground water (65 million gallons annually), causing concern that
sabotage or disruption of reclaimed water could imperil the necessary cooling
function, and that ground water aquifers may be lowered or adversely affected
over the long term; and
"We believe the Company needs to have an action plan in place, for
replacement power when PVNGS must be decommissioned; also the greater use of
energy efficiency and renewable energy sources would be economically
advantageous in avoiding costs of building expensive new generating facilities
(that result in difficult-to-amortize capital costs, especially in this new
competitive climate);
"THEREFORE the shareholders request the Board of Directors of Pinnacle West
Capital Corporation and Arizona Public Service Company to prepare a report for
shareholders within 6 months, with in-depth discussion of the Company's efforts
to expand energy conservation, reduce energy waste, utilize more renewable
energy sources, implement least cost energy planning, minimize wasteful uses of
water, reduce radioactive waste, reduce carbon emissions and minimize
environmental damage in all Company operations."
SUPPORTING STATEMENT
In our opinion, the Company's annual Environment, Health and Safety report
gives lip service but no substance to some of the subjects requested above. It
is commendable that APS is working on a few solar applications as an alternative
to nuclear, coal and oil technologies. Since there is enthusiastic public
support for these safer, cleaner technologies (especially in a state gifted with
superior sources of sun and wind), we urge the Company to explain how they plan
to expand this safe energy approach.
16
For Nuclear reactors to mitigate global warming, one reactor would have to
go on-line about every three days for the next 40 years, bankrupting our economy
(siphoning scarce monies from renewable energy . . . the REAL solution to global
warming), and adding huge quantities of lethal radioactive waste to our nation's
accumulation, with no safe technology or location for its permanent disposal. In
addition, the growing pressures to conserve water in a water-deprived state (and
risks of lowering the area aquifer) would call for the common sense decision for
early closure of PVNGS.
We invite your vote FOR this proposal.
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
The Company and its affiliates actively support environmental stewardship,
increased use of renewable energy sources, waste reduction, reduced
environmental impact and appropriate environmental planning. Much of the
information sought in the proposal for a report is already publicly available in
the various annual business reports: e.g., the APS Environmental, Health and
Safety Annual Report; Nuclear Regulatory Commission reports and filings; Arizona
Corporation Commission reports and filings; and other sources. Production of a
report as requested in the proposal would be largely duplicative of information
already compiled and made available by the Company and its affiliates.
Additionally, the Company believes that many of the statements contained in
the proponent's proposal are incomplete and, in some cases misleading.
For reference, the Company notes the following as examples:
Energy efficiency, renewable energy and end use planning already play a
significant role in ongoing operations and future planning.
In regard to energy conservation, the Company and its affiliates actively
promote energy efficient architectural design, encourage consumer conservation
through public education and, as to APS, provide rate structures that encourage
less use through low-consumption discounts. The Company also has a policy
regarding recycling and energy and water conservation in Pinnacle West and APS
business operations, and works with suppliers to maximize their use of recycled
materials.
The Company and various of its affiliates are likewise involved in
renewable energy sources such as solar and wind. APS Solar Partners is an
Arizona Corporation Commission-approved "green pricing" program that gives
customers an option to pay a small premium for solar-generated power. APS has
nearly 1,500 solar customers served in part by four commercial solar power
plants in Flagstaff, Tempe, Scottsdale and Glendale, Arizona. APS plans to add
additional solar capacity in 2000. In addition, APS-installed, fully automated
solar technology serves some remote Arizona customers who live one-half mile or
more away from power lines. APS has studied wind resources and will continue to
do so; to date, however, studies fail to support wind resources as a viable
economic alternative in the historic territory.
The Palo Verde Nuclear Generating Station ("Palo Verde") - the largest
power producer in America - is the nation's only nuclear generating facility
that uses recycled municipal treated effluent for cooling purposes, about 20
billion gallons annually. The plant maintains a supply of treated effluent
sufficient for up to two weeks of continued operations should the plant
temporarily lose this source; this planning is only one example of APS directly
addressing nuclear or industrial safety matters. The approximately 2,000
acre-feet (650 million gallons) of groundwater used annually at Palo Verde for
domestic and makeup water is about one-third of the 6,000 acre feet of
groundwater
17
that was used annually for irrigation on that property prior to construction of
the plant. Water tables in that area actually have risen since construction
began in the 1970s.
In regard to carbon emission reductions, the assertion in the proposal that
nuclear generators "would have to go on-line about every three days for the next
40 years" to mitigate global warming is potentially misleading and without known
support. The statement ignores the fact that America's fleet of nuclear power
stations has already displaced 1.6 BILLION metric tons of carbon since 1973, the
equivalent of taking 94 million automobiles permanently off the road. Palo Verde
alone displaces more than 30 million tons of carbon dioxide every year, for a
total carbon displacement of 279 million tons since commercial operations began
in 1986.
At the same time, Palo Verde has an aggressive radioactive waste reduction
program that has received wide industry recognition. Various initiatives have
reduced low-level radioactive waste at Palo Verde by more than 90 percent since
1990, to an annual total of about 60 cubic meters.
To shut down Palo Verde prematurely and replace its 3,810 megawatts of
electricity with solar or wind power would require a solar farm covering
approximately 38,000 acres, or a wind farm covering more than 322,000 acres.
Aside from the size and production cost impracticalities, solar sources provide
no electricity at night and wind sources produce power only with sufficient wind
speed. Palo Verde's generating capacity alone is twice the total capacity of all
solar and wind generating facilities in the U.S. combined.
In a closing note, it is significant that the Company's Environmental,
Health & Safety Annual Report, which contains much of the information presented
here, receives annual third-party review and comment by the Coalition for
Environmentally Responsible Economies (CERES), an independent non-profit
organization whose members include the National Resource Defense Council and
other leading environmental groups. Further, in 1994, the Company became the
nation's first utility to endorse CERES and adopt its 10-point environmental
code of conduct. Perhaps the most significant evidence of this commitment to
CERES principles and sound environmental stewardship is the Company's decision -
announced in December in conjunction with American Rivers, the Sierra Club and
other leading environmental groups - to decommission the Childs-Irving
hydroelectric plant in central Arizona and return full water flows to Fossil
Creek.
Because of the largely duplicative nature of the request for an in-depth
report on these subjects, and because the proposal is based on a
misunderstanding or misinterpretation of certain facts, the Board believes that
this shareholder proposal is not in the best interests of its shareholders.
THE BOARD THEREFORE RECOMMENDS A VOTE AGAINST THE ABOVE SHAREHOLDER PROPOSAL.
18
GENERAL
BUSINESS RELATIONSHIP. Mr. Gallagher is President of Gallagher & Kennedy,
P.A., a law firm which provided legal services to the Company in 1999 and which
will provide such services in 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a) of
the Securities Exchange Act of 1934, as amended, requires the Company's
directors and officers, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes of
ownership with the Securities and Exchange Commission. Based solely on its
review of the copies of such forms received by it, the Company believes that,
except as discussed below, during fiscal year 1999 all filing requirements
applicable to directors, officers, and greater than 10% beneficial owners were
complied with. A Form 3 was not timely filed (although such Form 3 was
subsequently filed) for Edward N. Basha, Jr. and Michael L. Gallagher. Forms 4
and/or 5 were not timely filed (although such Forms were subsequently filed) for
Pamela Grant, Roy A. Herberger, Jr., Martha O. Hesse, William S. Jamieson, Jr.,
and Humberto S. Lopez.
COST OF SOLICITATION. The cost of the solicitation of proxies, which will
be primarily by mail (consenting street name shareholders may be solicited by
Internet), will be borne by the Company. The Company has retained Beacon Hill
Partners, Inc. to assist in the distribution of proxy solicitation materials and
the solicitation of proxies for fees and anticipated expenses of approximately
$6,500. Brokerage houses and others will be reimbursed for their out-of-pocket
expenses in forwarding documents to beneficial owners of stock.
INDEPENDENT PUBLIC ACCOUNTANTS. It is anticipated that the Company's
financial statements as of December 31, 2000 and for the year then ended will be
examined by Deloitte & Touche LLP, independent certified public accountants.
Representatives of that firm are expected to be present at the annual meeting
with the opportunity to make a statement if they so desire and to be available
to respond to appropriate questions.
VOTING PROCEDURES. A majority of the outstanding shares entitled to vote in
person or by proxy at the meeting will constitute a quorum for the conduct of
business. Broker "non-votes" with respect to any matter are not considered
shares present and will not affect the outcome of the vote on such matter.
For the election of directors, the individuals receiving the highest number
of votes will be elected. The number of votes to which each shareholder will be
entitled is to be determined by multiplying the number of shares of common stock
owned as of the March 17, 2000 record date by the number of directors to be
elected, and any shareholder may cumulate his or her votes by casting them all
in person or by proxy for any one nominee, or by distributing them among two or
more nominees.
In voting on the shareholder proposal each shareholder will be entitled to
cast a number of votes equal to the number of shares of common stock owned by
such shareholder as of the record date. Approval of the shareholder proposal
will require the affirmative vote of a majority of the shares present at the
meeting.
NOMINATIONS TO THE BOARD. A shareholder wishing to propose the nomination
of an individual for election to the Company's Board of Directors must submit
his or her recommendation to the Company in writing, and in accordance with the
applicable provisions of the Company's Articles of Incorporation and Bylaws, so
as to be received by the Office of the Secretary no later than November 20,
2000. Copies of the Company's Articles of Incorporation and Bylaws are available
upon written request delivered to the Office of the Secretary. The Company
suggests that proponents submit their proposals to the Office of the Secretary
by Certified Mail -- Return Receipt Requested.
19
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING. In order to be considered
for inclusion in the proxy statement and form of proxy relating to the 2001
annual meeting of the Company's shareholders, a proposal intended by a
shareholder for presentation at that meeting must be submitted in accordance
with the applicable rules of the Securities and Exchange Commission and received
by the Company at its principal executive offices on or before December 8, 2000.
Proposals to be presented at the annual meeting which are not intended for
inclusion in the proxy statement and form of proxy must be submitted by the
close of business on February 16, 2001, but not earlier than January 17, 2001,
in accordance with the applicable provisions of the Company's Bylaws, a copy of
which is available upon written request delivered to the Office of the
Secretary. The Company suggests that proponents submit their proposals to the
Office of the Secretary by Certified Mail -- Return Receipt Requested.
20
[PINNACLE WEST LOGO]
April 7, 2000
Dear Shareholders:
The 2000 Annual Meeting of Shareholders of Pinnacle West Capital Corporation
will be held at The Wigwam Resort, 300 Wigwam Boulevard, Litchfield Park,
Arizona on May 17, 2000 at 10:30 a.m. Mountain Standard Time. At the meeting,
shareholders will be asked to elect two Class I Directors to serve until the
2001 Annual Meeting, one Class II Director to serve until the 2002 Annual
Meeting and four Class III Directors to serve until the 2003 Annual Meeting and
to vote on one shareholder proposal.
Your vote is important and this year you may choose to vote your proxy in one of
three ways -- by returning the enclosed proxy card, by accessing the internet or
by calling a toll-free telephone number. The reverse side of this letter
provides the information for all three voting options.
We encourage you to attend the meeting and have provided this map for your
reference.
[GRAPHIC OF MAP TO THE WIGWAM RESORT]
In accordance with Item 304 of Regulation S-T of the Securities Exchange Act of
1934, the map contained in this Proxy is a map of the Phoenix area indicating
directions to the Wigwam Resort, which is located on Wigwam Boulevard, north of
the I-10 Freeway and South of West Camelback Road, between North Litchfield Road
and North Dysart Road.
Sincerely,
Faye Widenmann
Vice President and Secretary
- --------------------------------------------------------------------------------
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 17, 2000.
The undersigned hereby appoints Richard Snell and Faye Widenmann, 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 17, 2000, at ten-thirty a.m., Mountain
Standard Time, and at any adjournment 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.
Voting with respect to the election of Directors may be indicated on the reverse
of this card. Nominees for Director are: Class I - Robert G. Matlock and Kathryn
L. Munro; Class II - Bruce J. Nordstrom; Class III - Pamela Grant, Martha O.
Hesse, William S. Jamieson, Jr., and Richard Snell.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE. IF NO SPECIFICATION
IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS
AND AGAINST THE SHAREHOLDER PROPOSAL.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1 AND AGAINST PROPOSAL 2.
- --------------------------------------------------------------------------------
1. Election of Directors
FOR ALL EXCEPT ______________________________
FOR [ ] WITHHOLD [ ]
Nominees:
Class I Class II Class III
------- -------- ---------
01. Matlock 03. Nordstrom 04. Grant
02. Munro 05. Hesse
06. Jamieson
07. Snell
2. A Shareholder proposal requesting a report to shareholders
FOR [ ] AGAINST [ ] ABSTAIN [ ]
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Signature Date
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Signature Date
All owners should sign as their name appears at left. Fiduciaries, trustees,
corporate officers should indicate title and authority.
Check if:
[ ] You wish to discontinue receiving the annual report for this account
[ ] You consent to viewing the Annual Report and Proxy materials via the
Internet instead of receiving them in the mail in the future.
================================================================================
Fold and detach here to mail proxy card
- --------------------------------------------------------------------------------
VOTE BY TELEPHONE OR INTERNET
QUICK EASY IMMEDIATE
- --------------------------------------------------------------------------------
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE: Call toll-free ANYTIME from a touch-tone telephone.
-- You will be asked to enter the CONTROL NUMBER located in the box at the
lower right of this form.
-- Follow the directions for voting:
To vote as the Board of Directors recommends on ALL proposals, press
"1".
If you choose to vote on each item separately, press "0" and follow the
recorded instructions.
VOTE BY INTERNET: The Web address is www.proxyvoting.com/pnw.
VOTE BY MAIL: If you do not have access to a touch-tone telephone or the
Internet, please complete and return the proxy card in the enclosed envelope.
If you vote by phone or Internet, DO NOT mail the proxy card.
Thank you for voting.
Call Toll-Free on a Touch-Tone Telephone or Go to: www.proxyvoting.com/pnw
1-877-289-8962 ANYTIME -------------------------
There is NO CHARGE to you for this call. CONTROL NUMBER
FOR TELEPHONE/
INTERNET VOTING
-------------------------