SCHEDULE 14A INFORMATION
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Pinnacle West Capital Corporation
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(Name of Registrant as Specified In Its Charter)
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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 23, 2001
To Our Shareholders:
You are invited to attend the 2001 Annual Meeting of shareholders of
Pinnacle West Capital Corporation to be held at the Orpheum Theatre, 203 West
Adams Street, Phoenix, Arizona at 10:30 a.m. on Wednesday, May 23, 2001. At this
meeting, we are asking you to vote on the following proposal in addition to any
other business that may properly come before the meeting:
Proposal 1: Election of five (5) directors
All shareholders of record at the close of business on March 23, 2001 are
entitled to notice of and to vote at the meeting. Shares can be voted at the
meeting only if the holder is present or represented by proxy.
By order of the Board of Directors,
FAYE WIDENMANN
Vice President and Secretary
Approximate date of mailing to shareholders:
April 9, 2001
We encourage each shareholder to sign and return the enclosed proxy card or to
use telephone or internet voting. Please see our general information section for
information about voting by telephone, internet or mail.
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION........................................................ 1
What is the purpose of the Annual Meeting?
Who is entitled to vote?
How do I vote?
Is my vote confidential?
What constitutes a quorum?
What vote is required to approve the items to be voted on?
Who is entitled to attend the Annual Meeting?
Can I change my vote after I submit my proxy?
How much did this proxy solicitation cost?
How many annual reports and proxy statements are delivered
to a shared address?
PROPOSAL 1 - ELECTION OF DIRECTORS......................................... 3
NOMINEES FOR ELECTION TO CLASS I DIRECTORS.............................. 4
NOMINEES FOR ELECTION TO CLASS III DIRECTORS............................ 5
DIRECTORS CONTINUING IN OFFICE............................................. 6
INCUMBENT CLASS II DIRECTORS............................................ 6
INCUMBENT CLASS III DIRECTORS........................................... 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............. 8
THE BOARD AND ITS COMMITTEES............................................... 9
DIRECTOR COMPENSATION...................................................... 9
STOCK PERFORMANCE COMPARISONS.............................................. 10
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION................. 11
EXECUTIVE COMPENSATION..................................................... 14
OPTION GRANTS, EXERCISES AND HOLDINGS...................................... 15
EXECUTIVE BENEFIT PLANS.................................................... 16
AUDIT COMMITTEE REPORT..................................................... 19
OTHER MATTERS.............................................................. 20
BUSINESS RELATIONSHIP
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
INDEPENDENT PUBLIC ACCOUNTANTS
AUDIT FEES
FINANCIAL INFORMATION ON SYSTEMS DESIGN AND
IMPLEMENTATION FEES
ALL OTHER FEES
NOMINATIONS TO THE BOARD
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
APPENDIX: PINNACLE WEST CAPITAL CORPORATION AUDIT COMMITTEE CHARTER ....... 22
i
GENERAL INFORMATION
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
To elect five (5) directors and to transact other business as may properly come
before the meeting.
The Board of Directors is not aware of any other matters that will be brought
before the shareholders for a vote. If any other matters properly come before
the meeting, the proxy committee will vote on those matters in accordance with
its judgment. Shareholders attending the meeting will directly vote on those
matters.
WHO IS ENTITLED TO VOTE?
All shareholders at the close of business on March 23, 2001 (the record date)
are entitled to vote at the meeting. Each holder of outstanding Company common
stock is entitled to one vote per share on all matters on which shareholders are
entitled to vote. At close of business on the record date there were 84,717,495
shares of common stock outstanding.
HOW DO I VOTE?
You may vote in person or, if you are unable to attend the meeting, you may vote
in one of three ways:
VOTE BY TELEPHONE. The toll-free telephone number is on your proxy card.
Telephone voting is available 24 hours a day; or
VOTE BY INTERNET. The web site for internet voting is on your proxy card.
Internet voting is available 24 hours a day; or
VOTE BY MAIL. Mark, date, sign and mail promptly the enclosed proxy
(postage-paid envelope is provided for mailing in the United States).
If you vote by telephone or internet, DO NOT mail your proxy card.
IS MY VOTE CONFIDENTIAL?
Yes, your vote is confidential. Only the following persons have access to your
vote:
* election inspectors;
* individuals who help with processing and counting your votes; and
* persons who need access for legal reasons, including defending against
a claim.
WHAT CONSTITUTES A QUORUM?
To carry on the business of the meeting, we must have a quorum. A quorum is
present when a majority of the outstanding shares as of the record date are
represented in person or by proxy. Shares owned by Pinnacle West and broker
non-votes are not included in the calculation of the number of shares considered
to be present at the meeting and are not voted.
WHAT VOTE IS REQUIRED TO APPROVE THE ITEMS TO BE VOTED ON?
ELECTION OF DIRECTORS. Individuals receiving the highest number of votes
will be elected. The record date for determining vote entitlement is March
23, 2001. The number of votes which a shareholder may cast is calculated by
multiplying the number of shares of common stock owned times the number of
directors to be elected. 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.
WHO IS ENTITLED TO ATTEND THE ANNUAL MEETING?
You may attend the meeting if you are a shareholder as of the record date.
CAN I CHANGE MY VOTE AFTER I SUBMIT MY PROXY?
Yes, 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.
HOW MUCH DID THIS PROXY SOLICITATION COST?
The Company bears the cost of the solicitation of proxies. Proxies are primarily
sent by mail, although the Company may solicit consenting shareholders by
internet. The Company has retained Corporate Investor Communications, Inc. to
assist in the distribution of proxy solicitation materials and the solicitation
of proxies for approximately $7,500. As required, the Company will reimburse
brokerage houses and others for their out-of-pocket expenses in forwarding
documents to beneficial owners of stock.
HOW MANY ANNUAL REPORTS AND PROXY STATEMENTS ARE DELIVERED TO A SHARED ADDRESS?
If you and one or more shareholders of Company stock share the same address, it
is possible that only one annual report and proxy was delivered to your address.
Any shareholder who wishes to receive separate copies of an annual report or
proxy at the same address now or in the future may:
* call Shareholder Services at 1-800-457-2983;
* mail a request to receive separate copies to Shareholder Services at
P.O. Box 52133, Phoenix, AZ 85072-2133; or
* e-mail a request to: shareholderdept@pinnaclewest.com.
Shareholders currently receiving multiple copies of an annual report and proxy
at a shared address and who wish to receive only a single copy in the future may
direct their request to this same phone number and addresses.
2
PROPOSAL 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 (Class I,
Class II, and Class III). Each class serves for a period of three years,
although occasionally a director may be elected for a shorter term in one class
in order to keep the number of directors in each class approximately equal.
The shareholders will elect four (4) Class I directors this year to serve
as members of the Board until the annual meeting of shareholders in 2004 or
until their successors are elected and qualified. The shareholders will also
elect one Class III director this year to serve as a member of the Board until
the annual meeting of shareholders in 2003 or until his successor is elected and
qualified. If one or more of the five (5) nominees becomes unavailable to serve
prior to the meeting date, the proxy committee will vote those shares for the
election of such other person(s) as the Board may recommend, unless the Board
reduces the number of directors in the affected class.
The first two tables identify the Class I director nominees and the Class
III nominee, followed by two tables identifying continuing directors. Nominees
furnished the information as of March 23, 2001. The term "APS" refers to Arizona
Public Service Company, the Company's principal subsidiary.
3
CURRENT NOMINEES
NOMINEES FOR ELECTION TO CLASS I DIRECTORS
(TERM EXPIRING AT 2004 ANNUAL MEETING)
DIRECTOR
NAME AGE OCCUPATION, BUSINESS & DIRECTORSHIPS SINCE
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Roy A. Herberger, Jr. 58 President of Thunderbird, The American Graduate School of 1992
International Management, since 1989. Mr. Herberger is also
a director of APS, International Crossing, and Direct
Merchants Bank.
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Humberto S. Lopez 55 President of HSL Properties (real estate development and 1995
investment), Tucson, Arizona. Mr. Lopez is also a director
of APS, SunCor Development Company, Bank of Tucson, Sun
Community Bancorp, Nevada Community Bancorp, Paragon
Holdings, Inc., and TransAmerica Holdings LLC.
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Robert G. Matlock 67 Independent management consultant to various governmental 2000
agencies involved in developing nuclear energy resources and
to utilities operating nuclear facilities since 1984. Mr.
Matlock is also a director of APS.
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Kathryn L. Munro 52 Chairman of BridgeWest L.L.C. (investment company) since 2000
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. Ms. Munro is
also a director of APS, FLOW International Corporation, Sun
Community Bancorp, and Tosco Corporation.
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4
NOMINEE FOR ELECTION TO CLASS III DIRECTORS
(TERM EXPIRING AT 2003 ANNUAL MEETING)
DIRECTOR
NAME AGE OCCUPATION, BUSINESS & DIRECTORSHIPS SINCE
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Jack E. Davis 54 President of the Company since February 2001. Mr. Davis 2001
served as Executive Vice President and Chief Operating
Officer of the Company from April 2000 to February 2001. He
has served in various APS positions as follows: Currently
(since October 1998) President, Energy Delivery and Sales;
Executive Vice President of Commercial Operations from
September 1996 to October 1998; Vice President, Generation
and Transmission from June 1993 to September 1996. Mr. Davis
is also a director of APS.
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5
DIRECTORS CONTINUING IN OFFICE
INCUMBENT CLASS II DIRECTORS
(TERM EXPIRING AT 2002 ANNUAL MEETING)
DIRECTOR
NAME AGE OCCUPATION, BUSINESS & DIRECTORSHIPS SINCE
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Edward N. Basha, Jr. 63 Chairman of the Board of Bashas' supermarket chain and an 1999
Arizona civic leader dedicated to multiple Arizona community
projects. Mr. Basha is also a director of APS, Samaritan
Health Services, and the Arizona Ecumenical Foundation.
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Michael L. Gallagher 56 Attorney-at-law and Chairman Emeritus of Gallagher & 1999
Kennedy, P.A., Phoenix, Arizona. Mr. Gallagher is also a
director of APS and the Omaha World-Herald Company and is a
Trustee of the Peter Kiewit Foundation.
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Bruce J. Nordstrom 51 Certified public accountant at the firm of Nordstrom and 2000
Associates, P.C., Flagstaff, Arizona, since 1988. Mr.
Nordstrom is also a director of APS.
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William J. Post 50 Chairman of the Board of the Company since February 2001 and 1997
CEO of the Company since February 1999. He has served as an
officer of the Company since 1995 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 CEO and Chairman of the Board of
APS, and has held various officer positions at APS since
1982. He is also a director of Blue Cross-Blue Shield of
Arizona, Nuclear Electric Insurance, Ltd. (NEIL), and
Camelback Community Bank.
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6
INCUMBENT CLASS III DIRECTORS
(TERM EXPIRING AT 2003 ANNUAL MEETING)
DIRECTOR
NAME AGE OCCUPATION, BUSINESS & DIRECTORSHIPS SINCE
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Pamela Grant 62 Civic leader and from July 1989 through January 1995 was 1985
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. From November 1978 to
January 1987, she was President, Chairman and CEO of
Goldwaters Department Stores, a division of Associated Dry
Goods. Ms. Grant is also a director of APS.
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Martha O. Hesse 58 President of Hesse Gas Company. In 1990, Ms. Hesse served as 1991
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 APS, AMEC plc, Laidlaw Inc., and Mutual
Trust Life Insurance Company.
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William S. Jamieson, Jr. 57 President of the Institute for Servant Leadership of 1991
Asheville, North Carolina since January 1999. Prior to that,
Mr. Jamieson 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. Mr. Jamieson
is also a director of APS.
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7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table details the beneficial ownership of our directors,
nominees, named officers, executive officers and those persons we know
beneficially own 5% or more of our common stock as of March 23, 2001. The table
reports beneficial ownership in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934. Under these rules, beneficial ownership includes any
shares as to which the individual has the sole or shared voting or investment
power and also any shares which the individual has the right to acquire as of
May 22, 2001 (60 days after March 23, 2001) through the exercise of any stock
option, warrant, or other right.
SHARES PERCENT OF
DIRECTORS AND NOMINEES BENEFICIALLY OWNED CLASS (1)
- ---------------------- ------------------ ---------
Edward N. Basha, Jr. (2) 3,935
Jack E. Davis (2) 126,437
Michael L. Gallagher (2) 3,297
Pamela Grant 30,948
Roy A. Herberger, Jr. (2) 8,660
Martha O. Hesse 21,272
William S. Jamieson, Jr 5,990
Humberto S. Lopez (2) 22,616
Robert G. Matlock (2) 3,789
Kathryn L. Munro 1,998
Bruce J. Nordstrom 4,331
William J. Post 315,926
OTHER OFFICERS NAMED ON PAGE 14
Armando B. Flores (2) 56,178
James M. Levine 73,893
William L. Stewart (2) 111,177
ALL DIRECTORS, NOMINEES, NAMED OFFICERS,
AND EXECUTIVE OFFICERS AS A GROUP
(24 PERSONS) (2) 1,158,657 1.37%
5% BENEFICIAL OWNERS (3)
Capital Research and Management Company 5,729,800 6.8%
333 South Hope Street
Los Angeles, California 90071
Wellington Management Company, LLP 10,861,159 12.8%
75 State Street
Boston, Massachusetts 02109
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(1) Except as otherwise noted, common stock beneficially owned does not exceed
one percent (1%) of the outstanding common stock.
(2) Number of shares beneficially owned in table includes shares held in joint
tenancy with spouses and/or family trusts.
(3) Capital Research and Management Company's Schedule 13G filing, dated
February 9, 2001, reports sole dispositive power as to 5,729,800 shares.
Wellington Management Company's Schedule 13G filing, dated February 14,
2001, reports beneficial ownership of 10,861,159 shares with shared voting
power as to 4,904,492 shares and shared dispositive power as to 10,860,659
shares. The Company makes no representations as to the accuracy or
completeness of such information and believes these filings represent share
ownership as of December 31, 2000.
8
THE BOARD AND ITS COMMITTEES
The full Board of Directors met 13 times during 2000. Each director
attended at least 75% of the meetings of the full Board and any committees on
which he or she served. The Board has an Audit Committee and a Human Resources
Committee.
AUDIT COMMITTEE
The function of the Audit Committee, which held 3 meetings in 2000, is to
assist the Board in overseeing the Company's financial reporting process,
including the quality and integrity of the Company's financial reports and
system of internal controls. The Board has adopted a written charter for the
Audit Committee which appears in the Appendix on page 22. Members of the Audit
Committee are independent as defined in Section 303.01 of the NYSE Company
Manual.
Members of the Audit Committee are: Martha O. Hesse (Chairman), Edward N.
Basha, Jr., Humberto S. Lopez, Pamela Grant, and Bruce J. Nordstrom.
HUMAN RESOURCES COMMITTEE
The functions of the Human Resources Committee, which held 4 meetings in
2000, are to:
* make recommendations to the full Board with respect to prospective
Board members and officers and with respect to executive salaries,
bonuses, and benefits;
* make stock option and restricted stock grants; and
* review the Company's policies in the foregoing areas.
Members of the Human Resources Committee are: Pamela Grant (Chairman), Roy
A. Herberger, Jr., William S. Jamieson, Jr., Michael L. Gallagher, and Robert G.
Matlock.
DIRECTOR COMPENSATION
Only non-employee (outside) directors are compensated for Board service.
Beginning in May 2000, Company directors also serve as directors of the APS
Board. The Company revised its Company and APS director compensation
arrangements, eliminating payment for service on the APS Board (formerly a
$19,500 retainer and approximately $6,000 of Company stock annually). The annual
retainer for fees paid to Company directors was raised to $24,000 (from $12,000)
cash. The Company adopted a non-employee director equity plan, under which
directors are eligible for grants of unrestricted stock and non-qualified
options. Under the plan, a director receives 900 unrestricted shares of stock
each year. On or before December 31 of a director's first year on the Board, the
director must own or acquire at least 900 shares of common stock as a condition
to receiving the 900-share grant. The ownership requirement increases by 900
shares annually until it reaches 4,500 shares. Grants of non-qualified options
are discretionary. To date, no such grants have been made under the plan.
9
Directors are paid $900 for each meeting of the Board attended and $700 for
each committee meeting attended.
Effective June 21, 2000, the Company terminated its directors' retirement
plan. In connection with the plan's termination, the Company made lump sum
payments to its current and former directors in satisfaction of the Company's
obligations under the plan. The payments were made in the form of Company common
stock and were based primarily on the present value of each director's accrued
or earned benefits under the plan. The Company distributed the following number
of shares of common stock to each director: Edward N. Basha, Jr. (550), Michael
L. Gallagher (620), Pamela Grant (3,290), Roy A. Herberger, Jr. (1,560), Martha
O. Hesse (1,690), William S. Jamieson, Jr. (1,590), Humberto S. Lopez (900),
Robert G. Matlock (1,340), Kathryn L. Munro (180), and Bruce J. Nordstrom (450).
Mr. Richard Snell served as Chairman of the Board in 2000 and until his
retirement on February 5, 2001. During his service as Chairman of the Board, Mr.
Snell was paid $200,000 in 2000 and $33,335 in 2001 for his responsibilities.
STOCK PERFORMANCE COMPARISONS
The following graph shows a comparison of cumulative total returns for
Pinnacle West Capital Corporation stock, the Standard & Poor's 500 Stock Index
(the "S&P 500"), and the Edison Electric Institute Index of Investor-Owned
Electrics ("EEI Electric"). The graph assumes that $100 was invested on the last
trading day in 1995 in Company stock and in the market represented by each of
the two indices, and that any dividends were reinvested.
Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00
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Pinnacle West 100 114 158 162 121 196
S&P 500 Index 100 123 164 211 255 232
EEI Electric Index 100 101 129 147 120 177
10
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THE COMMITTEE'S RESPONSIBILITIES
The Pinnacle West Human Resources Committee (the "Committee") is
responsible for compensation matters regarding executive officers. Only outside
directors serve on the Committee. The Committee oversees compensation for all
Company and APS officers, including stock-based compensation, as outlined below.
BACKGROUND
The Committee's overall compensation philosophy is to attract, retain, and
reward key leaders critical to the Company's success; reinforce the Company's
objectives through the use of performance-based compensation; and promote
executive officer long-term Pinnacle West stock ownership consistent with the
interests of the Company's shareholders.
In general, the Committee concentrates on two main types of compensation
for executive officer performance results. One is annual total cash
compensation, consisting of salary and incentive pay. Incentive pay is awarded
only when certain Company objectives and individual performance objectives are
met. The second type is long-term equity compensation. This includes stock
options and restricted stock awards determined by the Committee. The value of
these awards depends on Company performance as reflected in future stock values.
The objective of the compensation philosophy is to be competitive within a
broad industry group. Based on the utility industry's movement toward a greater
level of competition similar to general industry, the Committee considers a
blend of both utility and general industry to determine competitive levels of
total compensation. Consistent with past practice, during 2000 the Committee met
with an outside consultant and reviewed reports regarding the compensation
practices of the Company for 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 all executive officers,
with input from Mr. Post as to performances other than his own, and applied
these views in conjunction with the information provided by the consultant.
ANNUAL COMPENSATION
BASE SALARIES
Overall, the base salaries paid to the Company's executive officers during
2000 were competitive with the median salaries in both the utility industry and
a blend of utility and general industry.
INCENTIVE PAY
For 2000, the cash bonuses paid to all executives were based on weighted
performance objectives the Committee established at the beginning of the year.
These were based primarily on 2000 earnings and corporate and business unit
strategic goals.
11
The attainment levels of the several objectives were assessed in early 2001
and these assessments were factored into an arithmetical formula that included
predetermined percentages of the officers' respective salaries resulting in the
respective bonuses. The incentive payments approved were near the maximum level
of the 2000 Company plan due to Company performance.
LONG-TERM COMPENSATION
The Committee believes that management's performance is ultimately judged
by the delivery of returns 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 the
Company and its subsidiaries.
The Committee believes that senior management of the Company and its
subsidiaries should have a significant, ongoing personal investment in the
Company. 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
Company's stock price appreciates above the price at grant. The total value of
restricted stock grants is based on the value of the stock at the end of the
vesting period.
CEO COMPENSATION
In November 2000, the Committee recommended to the Board that Mr. Post's
salary as the Chief Executive Officer and President of the Company and as Chief
Executive Officer of APS increase to $600,000 per year. This salary adjustment,
with input from Mr. Richard Snell (Chairman of the Board) as to Mr. Post's
performance, was based on Mr. Post's performance and the overall performance of
the Company and its subsidiaries and affiliates under Mr. Post's direction.
Based on the performance objectives discussed above and the Committee's
compensation philosophy with respect to equity awards, Mr. Post received the
incentive compensation and equity awards reflected in the Compensation Table
below. The Committee and Board considered this compensation to be consistent
with Mr. Post's accomplishments related to the Company's success.
GENERAL
As the Company continues in its efforts to increase shareholder value, the
Committee will continue to review, monitor, and evaluate the Company's programs
for executive compensation. The Committee will, as appropriate, monitor
compensation to assure that it effectively supports Company strategy, is
competitive in the marketplace to attract, retain, and motivate superior
performance, and appropriately rewards creation of value for the Company's
shareholders.
12
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.
COMMITTEE CHAIRMAN
Pamela Grant
COMMITTEE MEMBERS
Michael L. Gallagher
Roy A. Herberger, Jr.
William S. Jamieson, Jr.
Robert G. Matlock
13
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.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
-------------------------- -----------------------------------------
RESTRICTED
NAME AND STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) OPTIONS COMPENSATION(2)
------------------ ---- ------ ----- --------- ------- ---------------
William J. Post 2000 $519,000 $510,000 $572,390 65,000 $ 21,107
CHAIRMAN OF THE BOARD AND CEO 1999 502,500 418,455 259,921 107,500 26,693
1998 450,000 270,000 186,500 20,000 13,317
William L. Stewart 2000 $464,000 $526,812(3) $319,218 26,250 $ 27,747
PRESIDENT, GENERATION OF 1999 464,000 290,073 190,609 17,500 38,088
APS 1998 464,000 291,280 219,137 13,500 13,125
Jack E. Davis 2000 $396,253 $268,231 $319,218 46,250 $ 17,000
PRESIDENT 1999 310,000 160,394 190,609 17,500 21,046
1998 310,000 161,200 125,888 13,500 11,449
James M. Levine 2000 $320,004 $178,924(4) $114,478 13,000 $ 24,143
EXECUTIVE VICE PRESIDENT, 1999 267,501 217,002 69,312 10,000 28,948
GENERATION OF APS 1998 230,000 170,800 51,458 5,500 15,438
Armando B. Flores 2000 $230,004 $111,828 $101,269 11,500 $ 14,436
EXECUTIVE VICE PRESIDENT, 1999 206,668 116,014 60,648 8,750 16,723
CORPORATE BUSINESS SERVICES 1998 190,000 98,800 51,458 5,500 14,319
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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 Messrs. Davis and Stewart in the following sentence, the
restrictions lapse on restricted stock awards upon (i) three years' passage
from date of grant or upon retirement after the age of 60 and (ii) holding
certain numbers of unrestricted shares for certain periods of time, as
determined by the Human Resources Committee at the time of grant. During
2000, Messrs. Davis and Stewart each 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 2000 were: Mr. Post - 24,500 shares, $1,165,281; Mr. Stewart - 15,450
shares, $734,841; Mr. Davis - 11,450 shares, $544,591; Mr. Levine - 5,700
shares, $271,106; and Mr. Flores - 5,150 shares, $244,947.
(2) The amounts in this column for 2000 consist of Company matching
contributions to the Company's employees' savings plan: Mr. Post - $5,100,
Mr. Stewart - $0, Mr. Davis - $5,100, Mr. Levine - $5,080, and Mr. Flores -
$4,958; the above-market portion of interest accrued under a deferred
compensation plan: Mr. Post - $12,388, Mr. Stewart - $5,775, Mr. Davis -
$11,900, Mr. Levine - $16,976, and Mr. Flores - $5,790; life insurance
premiums (and gross-up on the premium for Mr. Stewart) paid by the Company
for: Mr. Post - $3,619, Mr. Stewart - $21,972, Mr. Davis - $0, Mr. Levine -
$2,087, and Mr. Flores - $3,688.
(3) This amount includes a $300,000 signing bonus paid on January 3, 2000.
(4) This amount includes a $22,500 incentive payment based upon Palo Verde
Nuclear Generating Station's maintenance of specified federal and nuclear
oversight program ratings.
14
OPTION GRANTS, EXERCISES AND HOLDINGS
The following tables provide information relating to option grants,
exercises and holdings for each of the executive officers named in the summary
compensation table.
OPTION GRANTS IN 2000
PERCENTAGE OF TOTAL
OPTIONS GRANTED OPTIONS GRANTED TO GRANT DATE
IN 2000 ALL EMPLOYEES IN EXERCISE PRICE PRESENT
NAME (SHARES)(1) 2000 (PER SHARE) EXPIRATION DATE VALUE(2)
---- ----------- ------------------- ----------- --------------- --------
William J. Post 65,000 14.40% $44.03 11/14/2010 $787,150
William L. Stewart 26,250 5.81% $44.03 11/14/2010 $317,887
Jack E. Davis 20,000 4.43% $27.16 03/21/2010 $107,400
26,250 5.81% $44.03 11/14/2010 $317,887
James M. Levine 13,000 2.88% $44.03 11/14/2010 $157,430
Armando B. Flores 11,500 2.55% $44.03 11/14/2010 $139,265
- ----------
(1) Options vest annually in installments of 33% per year beginning on the
first anniversary of the date of grant. All options not already exercisable
will become exercisable if an individual retires on or after the age of 60
or in the Human Resources Committee's discretion under certain
circumstances. 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
32%; risk-free rate of return of 5.813%; dividend yield of 3.48%; and time
to exercise of five years.
OPTION EXERCISES IN 2000 AND YEAR-END VALUES
NUMBER OF SECURITIES VALUES OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(2)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- ----------- ----------- ------------- ----------- -------------
William J. Post 22,500 $615,212(3) 107,333 152,667 $ 1,480,854 $ 924,986
William L. Stewart 5,667 $ 72,328(3) 23,834 42,416 $ 149,671 $ 246,814
Jack E. Davis 17,000 $277,938(3) 28,334 62,416 $ 184,265 $ 654,864
James M. Levine 0 -- 24,500 21,500 $ 303,274 $ 133,391
Armando B. Flores 0 -- 14,083 19,167 $ 113,970 $ 117,341
- ----------
(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
Capital Corporation common stock on December 29, 2000 ($47.5625 per share)
minus the exercise price of options.
(3) Messrs. Post, Stewart and Davis retained all shares received upon the
exercise of options, except for those sold solely for the purpose of
meeting tax withholding requirements.
15
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 retiring 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 Employees' Retirement Plan consists solely of base
salary up to $170,000 (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 and its
qualified transportation arrangement under Section 132(f) of the Internal
Revenue Code. The Employees' 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 $170,000 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 Employees' Retirement Plan (as a qualified defined benefit
pension plan, the Employees' 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 14 and their
2000 remuneration covered by the Company's plans and individual employment
agreements are as follows: Mr. Davis - 28 years, $557,082; Mr. Flores - 17
years, $346,018 (see description of Mr. Flores' employment agreement below); Mr.
Levine - 11 years, $486,406; Mr. Post, 28 years, $937,455; and Mr. Stewart - 7
years, $704,073 (see description of Mr. Stewart's employment 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.
16
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
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 1999
agreement provide that 1) Mr. Stewart will continue full-time employment with
APS through December 31, 2002, and 2) 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%; deferred payments of $400,000 per year beginning in
2000 and ending in 2002, which are credited with interest payable at 9% and
payable in a lump sum in 2003; 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.
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 may be revoked 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 (17) include
the 8 additional years.
The Company has entered into identical severance agreements with each of
its executive officers. The Company intends that these agreements provide
stability in its key management in the event the Company experiences a change in
control. The agreements provide for certain payments if, during the two-year
period following a change of control of the Company, the Company involuntarily
terminates the officer's employment or the executive terminates his or her own
employment following a 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 outplacement services are provided. If Section 4999 of the
Internal Revenue Code imposes an excise tax on all or part of the total
payments, the agreement further provides for an additional gross up payment
equal to the excise tax (plus any penalties and interest) imposed on or with
respect to 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 where either the Company or APS combines with any
other corporation such that the Company's or APS' outstanding voting stock
immediately prior to merger or consolidation represents less
17
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) 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 either
Board after July 31, 1999, is treated as a member of the Company Incumbent Board
or 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 pursuant to which amounts
deferred are credited with interest at rates determined by the plan committee
appointed by the Board. Effective January 1, 1996, the Company established a
revocable trust to fund the benefits under the deferred compensation plan and
certain other benefits. Upon the occurrence of a "change of control" within the
meaning of the plan and trust, the interest rate under the plan shall be the
enhanced rate established by the plan committee, 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," for purposes of the
plan and trust, is defined in the same manner as the "change of control"
definition contained in the severance agreements described above.
18
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of Directors
(the "Board"), the Audit Committee of the Board (the "Committee") assists the
Board in fulfilling its responsibility for oversight of the Company's financial
reporting process, including the quality and integrity of the Company's
financial reports and system of internal controls. During the 2000 fiscal year,
the Committee met three (3) times.
In discharging its oversight responsibility as to the audit process, the
Committee obtained from Deloitte & Touche LLP, the Company's independent
auditor, a formal written statement describing all relationships between the
auditor and the Company that might bear on the auditor's independence consistent
with Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees." The Committee discussed with the auditor any relationships
that may impact the auditor's objectivity and independence and satisfied itself
as to the auditor's independence. The Committee also discussed the quality and
adequacy of the Company's internal controls with the Company's director of audit
services, management, and the independent auditor.
The Committee discussed and reviewed with Deloitte & Touche LLP all
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent auditor's examination of
the financial statements. The Committee also discussed the results of internal
audit examinations.
The Committee reviewed the audited financial statements of the Company as
of and for the fiscal year ended December 31, 2000, with the Company's director
of audit services, management and the independent auditor. Management has the
responsibility for the preparation of the Company's financial statements and the
independent auditor has the responsibility for the examination of those
statements.
Based on the above-mentioned review and discussions with management and the
independent auditor, the Committee recommended to the Board that the Company's
audited financial statements be included on Form 10-K of the annual report for
the fiscal year ended December 31, 2000, for filing with the Securities and
Exchange Commission. The Committee also recommended the reappointment of the
independent auditor, and the Board concurred in such recommendation.
COMMITTEE CHAIRMAN
Martha O. Hesse
COMMITTEE MEMBERS
Edward N. Basha, Jr.
Pamela Grant
Humberto S. Lopez
Bruce J. Nordstrom
19
OTHER MATTERS
BUSINESS RELATIONSHIP
Mr. Gallagher is President and Chairman Emeritus of Gallagher & Kennedy, P.A., a
law firm which provided legal services to the Company in 2000 and which will
provide such services in 2001. The Company has a consulting agreement with
Robert G. Matlock & Associates, Inc., of which Mr. Robert G. Matlock is
President and Chief Executive Officer and fifty percent owner. During 2000, the
Company paid this company approximately $14,000 for consulting services and
expenses relating to the Company's nuclear operations.
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.
The Company receives and reviews copies of such reports. Based solely on this
review, the Company believes that, except as discussed below, during fiscal year
2000 there was compliance with all filing requirements applicable to directors,
officers, and greater than 10% beneficial owners. Form 4 was not timely filed
(although such Form 4 was subsequently filed) for Robert S. Aiken, John G.
Bohon, Edward Z. Fox and Martin L. Shultz.
INDEPENDENT PUBLIC ACCOUNTANTS
It is anticipated that Deloitte & Touche LLP, independent certified public
accountants, will examine the Company's financial statements as of December 31,
2001 and for the year then ended. The Company expects that representatives of
that firm will 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.
AUDIT FEES
The aggregate fees billed for Deloitte & Touche LLP services rendered for
the audit of the Company's annual financial statement for 2000 and for review of
financial statements included in Forms 10-Q were $726,500.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Deloitte & Touche LLP rendered no services or bills for financial
information systems design and implementation in 2000.
ALL OTHER FEES
The aggregate fees billed for Deloitte & Touche LLP services rendered for
all other services in 2000 were $490,485.
20
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. The Office of
the Secretary must receive such recommendations no later than November 23, 2001.
Copies of the Company's Articles of Incorporation and Bylaws are available upon
written request 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.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders who intend to have their proposals considered for inclusion in
the proxy statement and form of proxy relating to the 2002 Annual Meeting of the
Company's shareholders and wish to present the proposal at that meeting must
submit the proposal in accordance with the applicable rules of the Securities
and Exchange Commission. The Company must receive the proposal at its principal
executive offices on or before December 8, 2001. Shareholders who intend to
present proposals at the annual meeting but do not wish them included in the
proxy statement and form of proxy must submit the proposal by the close of
business on February 16, 2002, but not earlier than January 17, 2002, in
accordance with the applicable provisions of the Company's Bylaws, a copy of
which is available upon written request 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.
21
APPENDIX
Pinnacle West Capital Corporation
Audit Committee Charter
I. GENERAL
The Audit Committee is a committee of the Board of Directors of the
Company. Its primary function is to assist the Board of Directors in
overseeing the Company's financial reporting process, including the quality
and integrity of the Company's financial reports and system of internal
controls. The Company's outside auditor is ultimately accountable to the
Board of Directors and the Audit Committee.
II. COMPOSITION
The Audit Committee will consist of three or more directors. No member
of the Audit Committee may have a relationship with the Company that may
interfere with his or her exercise of independence from management and the
Company. Each member must also satisfy any additional "independence"
requirements established by the New York Stock Exchange from time to time.
Each member must be financially literate, as the Company's Board of
Directors interprets such qualification in its business judgment. At least
one member of the Audit Committee must have accounting or related financial
management expertise, as the Company's Board of Directors interprets such
qualification in its business judgment.
III. MEETINGS
The Committee will meet at least three times annually, or more
frequently as circumstances dictate. The Committee may meet for a portion
of each meeting with the Company's management, the director of audit
services, and the outside auditor, either collectively or individually, as
warranted, and a portion of each meeting will be restricted to Committee
members only.
IV. AUDIT COMMITTEE DUTIES AND RESPONSIBILITIES
1. Ensure open communication among the director of audit services, the
outside auditor, management, and the Board of Directors.
2. Evaluate the outside auditor and recommend to the Board of Directors
the selection, and where appropriate, the replacement of the outside
auditor.
3. Ensure that the outside auditor submits on a periodic basis to the
Audit Committee a formal written statement delineating all
relationships between the outside auditor and the Company, and take
appropriate action to satisfy itself of the outside auditor's
independence.
4. Review the compensation of the outside auditor.
22
5. Review and concur in the appointment, replacement or dismissal of the
director of audit services.
6. Maintain an awareness of key financial reporting issues and review
proposed changes in financial reporting principles affecting the
Company.
7. Inquire of management, the director of audit services, and the outside
auditor about the significant risks or exposures to the Company and
assess the steps management has taken to minimize these risks,
including an annual review of the Company's insurance programs.
8. Consider, in consultation with the outside auditor and the director of
audit services, the audit scope and plan of the outside auditor and
the internal auditors.
9. Consider and review with the outside auditor and the director of audit
services individually and collectively:
(a) The adequacy of the Company's internal controls, and
(b) Any related significant findings and recommendations of the
outside auditor and director of audit services, together
with management's responses.
10. Review with management and the outside auditor at the completion of
the annual audit:
(a) The Company's annual financial statements and related
footnotes,
(b) The outside auditor's audit of the financial statements and
its report thereon,
(c) Any serious difficulties or disputes with management
encountered during the course of the audits; and
(d) Other matters related to the conduct of the audit that are
to be communicated to the Committee under generally accepted
auditing standards.
11. Prepare in conjunction with management and legal counsel for inclusion
in the Company's proxy statement any audit committee report required
by Securities and Exchange Commission rules or regulations.
12. Review management's monitoring of the Company's compliance with the
Standards of Conduct policy.
13. Review this Audit Committee Charter at least annually and, if
appropriate, recommend changes to the Board of Directors.
23
While the Audit Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Company's financial statements are
complete and accurate and are in accordance with generally accepted
accounting principles. This is the responsibility of management and the
independent auditor. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between management and
the independent auditor or to assure compliance with laws and regulations
and the Company's Standards of Conduct policy.
This Audit Committee Charter is not intended to change or augment the
obligations of the Company or its directors or management under the federal
securities laws or to create new standards for determining whether
directors or management have fulfilled their duties, including fiduciary
duties, under applicable state law.
Effective as of February 21, 2001.
William J. Post
-------------------------------------
Chairman of the Board of Directors
Martha O. Hesse
-------------------------------------
Director and Chairman of the Audit
Committee of the Board of Directors
24
[LOGO OF PINNACLE WEST]
April 9, 2001
Dear Shareholders:
The 2001 Annual Meeting of Shareholders of Pinnacle West Capital Corporation
will be held at The Orpheum Theatre, 203 West Adams Street, Phoenix, Arizona on
May 23, 2001 at 10:30 a.m. Mountain Standard Time. At the meeting, shareholders
will be asked to elect four Class I Directors to serve until the 2004 Annual
Meeting and one Class III Director to serve until the 2003 Annual Meeting.
Your vote is important and this year you may again choose to vote your proxy in
one of three ways - by calling a toll-free telephone number, by accessing the
Internet, or by returning the enclosed proxy card. 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.
Sincerely,
Faye Widenmann
Vice President and Secretary
[MAP OF DIRECTIONS TO MEETING]
In accordance with Item 304 of Regulation S-T of the Securities Exchange Act of
1934, the map on this proxy card provides directions to the annual meeting. The
meeting will be held at 203 West Adams Street which is one block north of
Washington Street and one block south of Monroe Street, between 2nd Avenue and
3rd Avenue.
- --------------------------------------------------------------------------------
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 23, 2001.
The undersigned hereby appoints William J. Post 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 23, 2001, 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 - Roy A. Herberger Jr.,
Humberto S. Lopez, Robert G. Matlock and Kathryn L. Munro; Class III - Jack E.
Davis.
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.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
- --------------------------------------------------------------------------------
FOR WITHHOLD
1. Election of Directors [ ] [ ]
FOR ALL EXCEPT __________________________________
Nominees:
Class I Class III
01. Roy A. Herberger, Jr. 05. Jack E. Davis
02. Humberto S. Lopez
03. Robert G. Matlock
04. Kathryn L. Munro
________________________________________________________________________________
Signature Date
________________________________________________________________________________
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 1-877-289-8962 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
------------------------------