EXHIBIT 10.91bd
PERFORMANCE SHARE AGREEMENT
UNDER THE
PINNACLE WEST CAPITAL CORPORATION 2002
LONG-TERM INCENTIVE PLAN
THIS AWARD AGREEMENT is made and entered into as of ___________, 200__ (the
"Date of Grant"), by and between Pinnacle West Capital Corporation (the
"Company"), and <<Name>> ("Employee").
BACKGROUND
A. The Board of Directors of the Company (the "Board of Directors") has
adopted, and the Company's shareholders have approved, the Pinnacle
West Capital Corporation 2002 Long-Term Incentive Plan (the "Plan"),
pursuant to which performance share incentive awards may be granted to
employees of the Company and its subsidiaries and certain other
individuals.
B. The Company desires to grant to Employee a performance share award
under the terms of the Plan.
C. Pursuant to the Plan, the Company and Employee agree as follows:
AGREEMENT
1. GRANT OF AWARD. Pursuant to action of the Committee (as defined
herein) which was taken on the Date of Grant, the Company grants
to Employee <<Shares>> performance shares ("Performance Shares"),
subject to the terms, conditions, and adjustments set forth in
this Award Agreement. The Performance Shares granted under this
Section 1 are referred to in this Award Agreement as the "Base
Grant."
2. AWARD SUBJECT TO PLAN. This award is granted under and is
expressly subject to, all of the terms and provisions of the
Plan, which terms are incorporated herein by reference, and this
Award Agreement. The Committee described in Section 4 of the Plan
(the "Committee") has been appointed by the Board of Directors,
and designated by it, as the Committee to make awards.
3. PERFORMANCE PERIOD. The performance period for this award begins
_________ __, 20___, and ends _____________ __, 20___ (the
"Performance Period").
4. PAYMENT.
(a) PERFORMANCE SHARES PAYABLE IN COMMON STOCK. Subject to early
termination of this Award Agreement pursuant to Section 7
below, as soon as practicable following the end of the
Performance Period and the determination of the Company's
Earnings Per Share Growth Rate (as defined herein) as
compared to the Earnings Per Share Growth Rate of the S&P
Electric Utilities Index over such Performance Period but in
no event later than December 31, 20___, the Company will
deliver to Employee one (1) share of the Company's Common
Stock for each then-outstanding Performance Share under this
Award Agreement. If the Employee terminates employment after
the end of the Performance
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Performance Share Agreement
Period but before distribution of any shares pursuant to
this Award Agreement, the distribution of the shares will
not be made until six (6) months following the Employee's
termination of employment if required by Section 409A of the
Code.
(b) DIVIDEND EQUIVALENTS. At the time of the Company's delivery
of Common Stock to Employee pursuant to Subsection 4(a)
above, the Company will also deliver to Employee a cash
payment equal to the amount of dividends that Employee would
have received if Employee had directly owned all of such
Common Stock during the Performance Period, plus interest on
such amount at the rate of _____ percent, compounded
quarterly.
(c) MAXIMUM AWARD. Employee may not receive more than 120,000
shares of Common Stock under this Award Agreement.
5. PERFORMANCE CRITERIA AND ADJUSTMENTS.
ADJUSTMENT OF BASE GRANT. The Base Grant will increase or
decrease based upon the Company's "Earnings Per Share Growth
Rate" as compared to the Earnings Per Share Growth Rate of the
S&P Electric Utilities Index during the Performance Period, as
follows:
IF THE COMPANY'S EARNINGS PER SHARE THE NUMBER OF
COMPOUND GROWTH RATE OVER THE PERFORMANCE PERFORMANCE SHARES WILL BE:
PERIOD AS COMPARED TO S&P ELECTRIC UTILITIES
INDEX IS:
-------------------------------------------- ---------------------------
___th Percentile or Greater ___ X Base Grant
___th Percentile ___ X Base Grant
___th Percentile Base Grant
___th Percentile ___ X Base Grant
Less than ___th Percentile [None / ___X Base Grant]
If intermediate percentiles are achieved, the number of
Performance Shares awarded will be prorated (partial shares will
be rounded down to the nearest whole share when applicable). For
example, if the Company's Earnings Per Share Growth Rate during
the Performance Period places the Company's performance in the
___th percentile, then the number of Performance Shares would be
increased to ______ multiplied by the Base Grant. In no event
will Employee be entitled to receive a number of Performance
Shares greater than ___ times the Base Grant, even if the
Company's Earnings Per Share Growth Rate during the Performance
Period places the Company's performance higher than the ____th
percentile. Attachment A provides a generic example of the
operation of an award granted under this Award Agreement.
6. EARNINGS PER SHARE GROWTH RATE. "Earnings Per Share Growth Rate"
for the Performance Period is the compounded annual-growth rate
(CAGR) of a company's earnings per share from continuing
operations, on a fully diluted basis, during the Performance
Period; provided, however, that for purposes of calculating the
Company's Earnings Per Share Growth Rate, SunCor Development
Company's earnings from discontinued operations will be
considered earnings from continuing operations for each fiscal
year during the Performance Period. Only those companies which
were in the S&P Electric
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Performance Share Agreement
Utility Index at both the beginning and the ending of the
Performance Period will be considered. The Earnings Per Share
Growth Rate of the companies in the S&P Electric Utilities Index
will be determined using the S&P Compustat system. If the S&P
Compustat system is no longer in use, the Committee shall replace
it with the most comparable third party data system then in use.
If the S&P Electric Utilities Index is discontinued, the S&P
comparable replacement index for the sector will be used for
computing Earnings Per Share Growth Rate. If S&P no longer
computes an index for the electric utility sector, the Committee
shall select the most comparable index then in use for the sector
comparison. In addition, if the sector comparison is no longer
representative of the Company's industry or business, the
Committee shall replace the index with the most representative
index then in use. Once the CAGR of the Company and all relevant
companies in the S&P Electric Utility Index have been determined,
the member companies will be ranked from greatest to least CAGR.
Percentiles will be calculated based on a company's relative
ranking. For example, company 1 out of 26 companies is given a
percentile of 96.2% (1.0 - 1/26). Percentiles will be carried out
to one (1) decimal place. If the Company is not in the S&P
Electric Utility Index, then its percentile will be interpolated
between the companies listed in the relative ranking. These
calculations will be verified by the Company's internal auditors.
7. TERMINATION OF AWARD. This Award Agreement will terminate and be
of no further force or effect on the date that Employee is no
longer actively employed by the Company or any of its
subsidiaries, whether due to voluntary or involuntary
termination, death, retirement, disability, or otherwise. Subject
to Section 4, Employee will, however, be entitled to receive any
Common Stock and dividend equivalents payable under Section 4 of
this Award Agreement if Employee's employment terminates after
the Performance Period but before Employee's receipt of such
Common Stock and dividend equivalents. For avoidance of doubt, no
acceleration of Performance Shares or the Performance Period will
occur on a change of control of the Company.
8. TAX WITHHOLDING. Employee must pay, or make arrangements
acceptable to the Company for the payment of any and all federal,
state, and local income and payroll tax withholding that in the
opinion of the Company is required by law. Unless Employee
satisfies any such tax withholding obligation by paying the
amount in cash or by check, the Company will withhold shares of
Common Stock having a Fair Market Value on the date of
withholding sufficient to cover the withholding obligation.
9. NON-TRANSFERABILITY. Neither this award nor any rights under this
Award Agreement may be assigned, transferred, or in any manner
encumbered except by will or the laws of descent and
distribution, and any attempted assignment, transfer, mortgage,
pledge or encumbrance except as herein authorized, will be void
and of no effect.
10. DEFINITIONS: COPY OF PLAN AND PLAN PROSPECTUS. To the extent not
specifically defined in this Award Agreement, all capitalized
terms used in this Award Agreement will have the same meanings
ascribed to them in the Plan. By signing this Award Agreement,
Employee acknowledges receipt of a copy of the Plan and the
related Plan Prospectus.
11. CHOICE OF LAW. This Agreement will be governed by the laws of the
State of Arizona, excluding any conflicts or choice of law rule
or principle that might otherwise refer construction or
interpretation of this Agreement to another jurisdiction.
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Performance Share Agreement
An authorized representative of the Company has signed this Award
Agreement, and Employee has signed this Award Agreement to evidence Employee's
acceptance of the award on the terms specified in this Award Agreement, all as
of the Date of Grant.
PINNACLE WEST CAPITAL CORPORATION
By:
-------------------------------
Its: Vice President and Treasurer
-----------------------------------
Employee
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Performance Share Agreement
ATTACHMENT A
GENERIC EXAMPLE
(PERFORMANCE SHARE AWARD)
ASSUMPTIONS:
- Employee is granted 500 Performance Shares, which constitutes
Employee's "Base Grant".
- During the Performance Period, the Company's Earnings Per Share Growth
Rate is in the 88.3 percentile compared to the S&P Electric Utilities
Index.
CALCULATION OF EMPLOYEE'S COMMON STOCK PAYMENT:
- Based on the Company's achievement of the 88.3 Percentile during the
Performance Period, in April of the fiscal year immediately following
the end of the Performance Period, Employee will receive ____ shares
of Common Stock, calculated as follows:
- ___ shares of Common Stock as a result of the Company's Earnings
Per Share Growth Rate meeting at least the ___th Percentile (____
X Base Grant) plus
- ___ shares of Common Stock as a result of the Company's Earnings
Per Share Growth Rate achieving ________ of the Percentile
increase between the ___th and ___th Percentiles (________ X
_______ shares, with the ___ shares representing the Common Stock
opportunity between the ___th and ___th Percentiles). (Note:
__________ X _________ shares = ______ shares and must be rounded
down to ____ shares.)