SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-1(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)
Payment of Filing Fee (Check the appropriate box):
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14a-6(j)(2).
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14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
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how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
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PINNACLE WEST CAPITAL CORPORATION
P.O. BOX 52132
PHOENIX, ARIZONA 85072-2132
NOTICE AND PROXY STATEMENT
For Annual Meeting of Shareholders To Be Held On
Thursday, May 19, 1994
To Shareholders:
The 1994 annual meeting of shareholders of Pinnacle West Capital
Corporation will be held in the Ballroom of the Wigwam Resort at 300 East
Indian School Road in Litchfield Park, Arizona at 10:00 o'clock A.M. on
Thursday, May 19, 1994 for the following purposes:
* To elect four Class III Directors;
* To act on the management proposals described in the Proxy Statement;
and
* To transact such other business as may properly come before the
meeting or any adjournment thereof.
Each of the 87,416,453 shares of the Company's common stock
outstanding at the close of business on March 25, 1994 (the "Record
Date") 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 judgement.
Shareholders are requested to mark, date, sign and mail promptly the
enclosed proxy. A postage paid envelope is provided for mailing in the
United States. Being entitled to revoke your proxy at any time before it
is exercised, you may do so and vote your shares in person if you attend
the meeting.
The management of the Company cordially invites you to attend the
meeting.
By order of the Board of Directors
FAYE WIDENMANN
Vice President and Secretary
Approximate date of mailing to shareholders:
April 15, 1994
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 in a manner 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 1997 or until their successors are elected and qualified,
and it is the intention of the proxy committee to vote for the four
individuals named below. If between the mailing of this Proxy Statement
and the meeting date any such individual becomes unavailable to serve,
the proxies may be voted for a person properly nominated, or the number
of directors in Class III to be elected will be reduced.
Directors in the other two classes are identified on the following
pages. Information given for all directors has been furnished by each of
them as of March 25, 1994 unless otherwise noted. The term "APS" refers
to Arizona Public Service Company, the Company's largest subsidiary.
Nominees
_________________________________________________________________________
Nominees for Election as Class III Directors
(Term to expire at 1997 Annual Meeting)
_________________________________________________________________________
Pamela Grant, 55, has been a director since 1985. She is President of
TableScapes, Inc. (party supply rentals). Ms. Grant was President and
Chief Executive Officer of Goldwaters, a Division of May Department
Stores until April 1988.
Martha O. Hesse, 51, has been a director since 1991. She is President of
Hesse Gas Company, Dolan Energy Corporation and Sierra Blanca Gas Company
(marketing of natural gas and other fuels; energy investment). 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 APS,
Sithe Energies and American Natural Resources Co., a subsidiary of
Coastal Corp.
William S. Jamieson, Jr., 50, has been a director since 1991. He is an
Archdeacon of the Episcopal Diocese of Arizona. Mr. Jamieson was a
partner in the management, political and public affairs consulting firm
of Jamieson and Gutierrez (formerly the Bill Jamieson Company), from 1984
through April 1990, and he continued with the firm as a consultant
through February 1991. From February 1989 through May 1989 Mr. Jamieson
also served as the acting director of the Arizona Department of Economic
Security. Mr. Jamieson is also a director of Intergroup Healthcare
Corporation.
Richard Snell, 63, has been a director since 1985. He has been Chairman
of the Board, President and Chief Executive Officer of the Company and
Chairman of the Board of APS since February 1990. He was Chairman of the
Board, President and Chief Executive Officer of Ramada Inc. from 1981 to
1989, and Chairman of the Board and Chief Executive Officer of Aztar
Corporation (successor to Ramada's gaming business) from 1989 to 1990.
Mr. Snell resigned as Chairman of the Board of Aztar Corporation in
February 1992, but remains a director. He is also a director of Bank One
Arizona Corporation.
Directors Continuing in Office
_________________________________________________________________________
Class I Directors
(Term to expire at 1995 Annual Meeting)
_________________________________________________________________________
Roy A. Herberger, Jr., 51, has been a director since May 1992. He has
been President of the American Graduate School of International
Management since 1989. Previously he was Dean of the Edwin L. Cox School
of Business at Southern Methodist University. Mr. Herberger is also a
director of Bank of America of Arizona and Express America Mortgage.
Henry B. Sargent, 59, has been a director since 1985. He is Executive
Vice President and Chief Financial Officer of the Company. He is also a
director of APS and of Magma Copper Company.
Donald N. Soldwedel, 69, has been a director since 1985. He is Chairman
of the Board of Western Newspapers, Inc.
_________________________________________________________________________
Class II Directors
(Term to expire at 1996 Annual Meeting)
_________________________________________________________________________
O. Mark De Michele, 60, has since January 1988 been President and Chief
Executive Officer of APS. Prior to 1988 he was President of APS. Mr. De
Michele previously served as a director of the Company from February 1985
to July 1986 and was re-elected as a director in May 1990. He is also a
director of APS and America West Airlines, Inc.
John R. Norton III, 65, is Chairman of the Board and Chief Executive
Officer of J.R. Norton Company (agricultural production), Phoenix,
Arizona and was first elected as a director in February 1985. Mr. Norton
resigned as a director of the Company in May 1985 to accept appointment
as U.S. Deputy Secretary of Agriculture, a position he held until
February 1986. In February 1986 he was re-elected as a director of the
Company. Mr. Norton is also a director of Aztar Corporation, America West
Airlines, Inc., Terra Industries Inc. and APS.
Douglas J. Wall, 67, has been a director since 1985. He is of counsel to
the law firm of Mangum, Wall, Stoops & Warden. Mr. Wall is also President
of the Arizona Board of Regents.
CERTAIN SECURITIES OWNERSHIP
At March 25, 1994, shares of the Company's common stock beneficially
owned by the indicated persons, groups or entities were as follows:
Shares
Beneficially Percent
Owned (1) of Class
____________ ________
Non-Employee Directors
______________________
Pamela Grant (2) 25,700
Roy A. Herberger, Jr. 500
Martha O. Hesse 15,200
William S. Jamieson, Jr. 2,000
John R. Norton III (2) 27,500
Donald N. Soldwedel (2) 30,826
Douglas J. Wall 27,205
Employee Directors and Officers
_______________________________
O. Mark De Michele 146,281
Henry B. Sargent 123,301
Richard Snell 353,723
Other Officers Named on Page 10
_______________________________
Michael S. Ash 15,110
Arlyn J. Larson 27,927
Nancy E. Newquist 16,854
Faye Widenmann 23,049
All directors and officers 835,176 Less than 1%
as a group (14 persons)
________________________
5% Beneficial Owners (3)
________________________
FMR Corp. (Fidelity) 9,952,600(4) 11.43%
82 Devonshire Street
Boston, MA 02109
Mellon Bank 6,948,000(5) 7.95%
One Mellon Bank Center
Pittsburgh, PA 15258
_____________
(1) Includes shares which may be acquired by the exercise of stock
options within 60 days as follows: 24,500 each for Ms. Grant and
Messrs. Soldwedel and Wall; 17,500 for Mr. Norton; 14,000 for Ms.
Hesse; 70,260 for Mr. De Michele; 59,080 for Mr. Sargent; 312,475
for Mr. Snell; 15,462 for Mr. Larson; 5,300 for Ms. Newquist; 8,397
for Ms. Widenmann; and 575,974 for all directors and officers as a
group. In the case of officers, also includes shares of restricted
stock and vested shares in the Company's employee savings plan.
(2) Includes: In the case of Ms. Grant, 400 shares owned by a trust as
to which she disclaims beneficial interest; in the case of Mr.
Norton, 500 shares held by Mr. Norton's wife and 2,500 shares held
in a trust for Mr. Norton's late mother for which he serves as
trustee; in the case of Mr. Soldwedel, 6,326 shares held in a trust
in which investment and voting power is shared; and in the case of
the group, 75,108 shares as to which voting or investment power is
shared with others.
(3) The information set forth for these entities is taken from their
Schedule 13G filings with the Securities and Exchange Commission as
of December 31, 1993. The Company makes no representations as to the
accuracy or completeness of such information.
(4) Includes sole voting power as to 211,000 shares; shared voting power
as to 0 shares; sole dispositive power as to 9,952,600 shares; and
shared dispositive power as to 0 shares.
(5) A joint filing of Mellon Bank and The Boston Company, Inc., One
Boston Place, Boston, MA 02108 and certain of their subsidiaries,
reporting sole voting power as to 4,743,000 shares; shared voting
power as to 327,000 shares; sole dispositive power as to 6,452,000
shares; and shared dispositive power as to 496,000 shares.
THE BOARD AND ITS COMMITTEES
The full Board of Directors met 12 times during 1993. 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 five times in 1993; its members were Ms. Hesse and Messrs.
Herberger, Jamieson, Soldwedel and Wall (Chairman).
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 22 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 four times in 1993.
The Finance and Planning Committee makes recommendations to the full
Board with respect to the Company's financial objectives, budgets, long-
range plans, dividend actions and financing activities. It also monitors
the Company's retirement plan and insurance program. The Committee met
twice in 1993, and its members were Ms. Grant and Messrs. De Michele,
Herberger, Jamieson and Norton (Chairman).
With certain exceptions for newer directors, non-employee directors
currently receive their annual retainer for service on the Board in the
form of stock options on 7,000 shares of Company common stock. In
accordance with the provisions of the directors' stock option plan
approved by shareholders at the 1991 annual meeting, directors newly
elected on or after that date may elect to receive a cash retainer,
instead of options, at the prevailing annual rate, currently $20,000. In
addition, non-employee directors receive, with certain exceptions, $750
for each board meeting attended and $500 for each committee meeting
attended.
In the event that the Directors' Equity Participation Plan discussed
on pages 19 through 21 is approved by shareholders at this meeting, the
existing directors' stock option plan will be terminated and all non-
employee directors will thereafter receive an annual retainer consisting
of $12,000 cash and 500 shares of Pinnacle West common stock.
HUMAN RESOURCES COMMITTEE REPORT
The Human Resources Committee, composed solely of outside directors,
is responsible for making decisions regarding executive compensation. The
Committee's overall compensation philosophy is to (i) attract and retain
qualified individuals critical to the Company's success, (ii) reinforce
strategic objectives through the use of incentive compensation programs
and (iii) promote long-term stock ownership by executives.
The Committee applies its own compensation philosophy (and
specifically its preference to shift total compensation toward rewarding
performance) to comparative information provided by its consultants. For
1993 the Committee used the services of an independent compensation
consulting firm selected by it after an interview process conducted by
the Committee's Chairman, and to a lesser extent it also used a different
firm selected by APS. Both firms provided the Committee with comparative
practices of other organizations, all engaged primarily in the electric
utility business and having characteristics similar to the Company in
terms of size (including assets under management), nuclear generation and
diversification. Additional information from market surveys was also
provided to the Committee.
Finally, the Committee formulates its own views as to the
responsibilities, skills, experience, tenure and performance of the
respective executive officers, with input from Mr. Snell as to
performances other than his own.
Base Salaries. Based on the foregoing, the Committee approved minor
salary adjustments for executive officers in 1993. The base salaries of
Messrs. Sargent and Snell were left unchanged; the apparent decreases are
explained in Note 1 to the Table on Page 10.
Bonuses. Cash bonuses payable for any year are predicated on targeted
levels of corporate performance established by the Committee at the
beginning of the year. Performance is assessed by the Committee after the
end of the year; discretion is exercised in limited areas where the
Committee's judgment is called for by the bonus plan.
For 1993 the plan stipulated that no bonuses would be paid unless a
dividend on common stock had been declared and certain debt of the
Company had been called for prepayment. Provided these stipulations were
met, the predominant determinants of bonus levels were per-share earnings
and corporate net cash flow.
At the end of the year the Committee totalled the attainment factors
for the several determinants to produce a composite attainment factor
common to all officers and multiplied that by a predetermined percentage
of salary (40% for Mr. Snell, 30% for Mr. Sargent and 20% for all other
officers) to determine actual bonuses to be paid. The bonuses so arrived
at and paid reflect a composite attainment factor slightly below that
targeted in the 1993 plan.
Equity Participation. The Committee believes that the ultimate measure
of management's performance is its ability to deliver rewards to
shareholders in the form of share price appreciation and rising dividends
over time. To those ends, the Committee began in the fall of 1990 to make
systematic grants of stock options and restricted stock to officers and
key management employees of Pinnacle West and its subsidiaries in order
that they could participate in those rewards (if earned) through stock
ownership.
The program is designed to encourage stock ownership on a continuing
basis. Shares of restricted stock awarded to employees do not vest unless
the employee owns certain numbers of unrestricted shares (including those
acquired by exercising stock options) for certain periods of time, as
determined by the Committee at the time of grant.
The size of awards made to participants in the program is determined
by making assumptions as to how, generally, the stock should perform if
the Company achieves its longer term goals, and each grant is then
determined by bringing the recipient's total compensation to a level
approximately equal to or slightly ahead of competitive levels, provided
that the stock performs as assumed.
Tax Consideration. Pursuant to a new law enacted in 1993, publicly
traded corporations generally will not be permitted to deduct, for
federal income tax purposes, compensation in excess of $1 million paid in
any year beginning in 1994 to any of certain top executives, except to
the extent the compensation qualifies as "performance-based". Based upon
an analysis done for it, the Committee believes that none of the
Company's deductions for 1994 compensation to its executive officers
should be disallowed under this law. However, because the law is new and
the Internal Revenue Service has not yet promulgated final interpretative
regulations, the Company cannot determine its impact with complete
certainty. The Committee intends to review this issue periodically.
CEO Compensation. Mr. Snell's annualized salary and initial equity
participation (stock option and restricted stock awards) were negotiated
in January of 1990 as part of the employment agreement summarized on page
15. In those negotiations, the compensation levels and equity
participation he was leaving behind at Ramada/Aztar were taken into
account, along with then prevailing practices at Pinnacle West.
In the four years that Mr. Snell has been with the Company he has
received a single salary increase (3%). Consistent with its compensation
philosophy, the Committee has, instead, emphasized reward-for-performance
through the bonus plan and equity participation grants. Mr. Snell's 1993
cash compensation (base salary plus bonus) increased 3.2% from the prior
year, whereas the Company's 1993 earnings per share from continuing
operations increased 12.7%.
The foregoing report of the Human Resources Committee is provided by
its members: Ms. Grant (Chairman), Ms. Hesse and Messrs. Norton,
Soldwedel and Wall.
STOCK PERFORMANCE COMPARISONS
The annual changes for the five- and four-year periods shown in the
following two graphs are based on the assumption that $100 was invested
on the last trading day in 1988 (as required by Securities and Exchange
Commission rules) and 1989, respectively, in Pinnacle West stock and in
the market represented by each of two indices (the Dow Jones Equity
Market Index and the Edison Electric Institute Index of 100 Investor-
Owned Electrics), and that any dividends were reinvested.
The four-year period approximates the period of time that current
senior management has been in place at Pinnacle West, and thus shows the
relative performance of the Company during the tenure of that management.
Five Years Per SEC Rules
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
Pinnacle West 100 75.71 68.57 115.40 134.44 148.41
Dow Jones Equity 100 130.94 125.80 166.61 180.95 198.94
E.E.I. 100 100 129.92 131.52 169.39 182.09 202.82
Four Years Under Current Management
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
Pinnacle West 100 97.08 163.37 190.34 210.11
Dow Jones Equity 100 96.07 127.24 138.19 151.93
E.E.I. 100 100 101.23 130.38 140.15 156.11
EXECUTIVE COMPENSATION
The following tables on compensation and stock options relate to all
of the executive officers of the Company, including its chief executive
officer.
Summary Compensation Table
Long-Term
Compensation
_________________
Annual Compensation Awards
___________________________________________________________________________
Restricted All Other
Name and Stock Compen-
Principal Salary Awards sation
Position Year (1) Bonus (2) Options (3)
________ ____ ________ _______ __________ _______ _________
Michael S. Ash 1993 $114,054 $22,609 $22,125 5,000 $3,459
Corporate Counsel 1992 106,615 22,160 19,563 5,000 2,608
1991 93,687 22,680 49,500 20,000 1,730
Arlyn J. Larson 1993 $128,075 $25,361 $24,338 5,500 $6,128
VP Corp Planning 1992 126,668 26,416 21,519 5,500 4,737
& Development 1991 118,432 28,552 17,325 5,500 3,180
Nancy E. Newquist 1993 $114,054 $22,609 $22,125 5,000 $4,000
VP & Treasurer 1992 103,477 21,480 19,563 5,000 2,876
1991 91,454 22,248 15,750 5,000 1,754
Henry B. Sargent 1993 $315,181 $92,947 $95,138 21,500 $34,738
Exec. VP & CFO 1992 327,302 102,402 84,119 28,500 40,903
1991 313,180 75,643 67,725 28,500 38,429
Richard Snell 1993 $515,000 $202,498 $110,625 25,000 $37,104
Chairman, President 1992 534,808 180,000 97,813 32,000 37,699
& CEO 1991 512,923 123,600 78,750 32,000 35,598
Faye Widenmann 1993 $114,054 $22,609 $22,125 5,000 $3,407
VP Corp Relations 1992 107,595 22,372 19,563 5,000 3,126
& Administration 1991 93,618 22,569 15,750 5,000 1,794
and Secretary
(1) Employees of the Company are paid every two weeks, which normally
results in their receiving 26 paychecks per year. Approximately once
every 11 years an extra pay period occurs; 1992 was such a year.
(2) 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. The restrictions lapse on all restricted stock awards made
in 1993 upon the later of (i) the passage of three years from date
of grant 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. 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 1993 were: Mr. Ash - 6,000 shares,
$135,000; Mr. Larson - 5,325 shares, $119,813; Ms. Newquist - 3,862
shares, $86,895; Mr. Sargent - 17,783 shares, $400,118; Mr. Snell -
15,000 shares, $337,500; and Ms. Widenmann - 4,497 shares, $101,183.
(3) The figures given in this column for 1993 consist of Company
matching contributions to the Company's employee savings plan: Mr.
Ash - $2,702, Mr. Larson - $3,885, Ms. Newquist - $3,422, Mr.
Sargent - $4,497, Mr. Snell - $0, and Ms. Widenmann - $2,522; the
above-market portion of interest accrued under a deferred
compensation plan: Mr. Ash - $699, Mr. Larson - $1,087, Ms. Newquist
- $432, Mr. Sargent - $2,341, Mr. Snell - $8,430,and Ms. Widenmann -
$563; premiums paid by the Company for additional term life
insurance: Mr. Ash - $58, Mr. Larson - $1,156, Ms. Newquist - $146,
Mr. Sargent - $3,900, Mr. Snell - $4,674, and Ms. Widenmann - $322;
and amounts paid to Messrs. Sargent and Snell for service as
directors of APS in the amount of $24,000 each.
Option Grants in 1993
Individual Grants
Options Percentage of
Granted Total Options Exercise
in 1993 Granted to All Price Grant Date
(Shares) Employees in (per Expiration Present
Name (1) 1993 share) Date Value(2)
____ ________ ____________ ______ ____ ________
Michael S. Ash 5,000 1.2% $22.125 12/15/2003 $17,000
Arlyn J. Larson 5,500 1.4% $22.125 12/15/2003 $18,700
Nancy E. Newquist 5,000 1.2% $22.125 12/15/2003 $17,000
Henry B. Sargent 21,500 5.3% $22.125 12/15/2003 $73,100
Richard Snell 25,000 6.2% $22.125 12/15/2003 $85,000
Faye Widenmann 5,000 1.2% $22.125 12/15/2003 $17,000
(1) All options were granted on December 15, 1993 and become exercisable
at the rate of one-third of the grant annually starting on December
15, 1994. No SARs have been granted.
(2) The Black-Scholes option pricing model was chosen to estimate the
grant date present value. The assumptions used in the model were
expected volatility of .173; risk-free rate of return of 5.23%;
dividend yield of 3.62%; and time to exercise of five years.
<TABLE>
Option Exercises and Year-End Values
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-The-Money Options
Fiscal Year-End at Fiscal Year-End (1)
_______________________ _______________________
Shares
Acquired
On Value Unexercis- Unexercis-
Name Exercise Realized Exercisable able Exercisable able
____ ________ ________ ___________ __________ ___________ __________
<S> <C> <C> <C> <C> <C> <C>
Michael S. Ash 14,995 $131,124 0 15,005 0 $ 79,193
Arlyn J. Larson 11,550 $106,837 14,742 11,006 $ 97,040 $ 25,238
Nancy E. Newquist 6,665 $ 68,737 4,976 10,005 $ 16,128 $ 22,943
Henry B. Sargent 72,000 $859,033 53,669 43,022 $ 170,182 $ 98,659
Richard Snell 0 0 312,475 50,025 $3,246,400 $114,719
Faye Widenmann 15,000 $189,062 7,731 10,005 $ 27,367 $ 22,943
(1) The value of options equals the market value of Pinnacle West common stock at December 31,
1993 ($22.50 per share), minus the exercise price of options, and includes only those options
the exercise price of which was less than market value at year-end.
</TABLE>
<PAGE>
Executive Benefit Plans
Employees' Retirement Plan and Supplemental Excess Benefit Retirement
Plan. The Company maintains a retirement plan and a supplemental excess
benefit retirement plan for employees and employees of certain
subsidiaries. The following table illustrates the annual benefits,
calculated on a straight-life annuity basis, that would be provided under
these plans to all employees, including officers, who retire at the
indicated compensation and longevity levels.
Years of Service
Average Annual ______________________________________________________
Compensation(a) 5(b) 10 20 30 33 1/3(c)
___________________________________________________________________________
$ 100,000 $ 8,125 $16,250 $ 32,500 $ 48,750 $ 54,000
150,000 12,188 24,375 48,750 73,125 81,000
200,000 16,250 32,500 65,000 97,500 108,000
250,000 20,313 40,625 81,250 121,875 135,000
300,000 24,375 48,750 97,500 146,250 162,000
350,000 28,438 56,875 113,750 170,625 189,000
400,000 32,500 65,000 130,000 195,000 216,000
450,000 36,563 73,125 146,250 219,375 243,000
500,000 40,625 81,250 162,500 243,750 270,000
550,000 44,688 89,375 178,750 268,125 297,000
600,000 48,750 97,500 195,000 292,500 324,000
650,000 52,813 105,625 211,250 316,875 351,000
750,000 60,938 121,875 243,750 365,625 405,000
(a) Compensation under the retirement plan consists of base salaries,
including those amounts voluntarily deferred under the Company's
savings plan. The retirement plan does not include amounts
voluntarily deferred under deferred compensation plans, overtime
pay, directors' fees, bonuses or incentive pay. The supplemental
excess benefit retirement plan does include amounts deferred under
the deferred compensation plans and bonuses, subject to certain
exceptions.
(b) Although years of service begin accumulating on the date of
employment, there is no vesting of interests under the plan until
the completion of five years of service.
(c) The maximum number of years taken into account for purposes of
calculating benefits under the plan.
With respect to those employees whose annual benefits under the
Company's retirement plan will exceed the maximum benefits allowable
under that plan (which, as a qualified defined benefit pension plan, is
limited pursuant to the Internal Revenue Code), the excess benefits are
payable from the general assets of the Company under the terms of the
Company's supplemental excess benefit retirement plan. The number of
credited years of service for each of the individuals named on page 10
and their 1993 remuneration covered by plans of the Company are as
follows: Mr. Ash -- 9 years, $136,663; Mr. Larson -- 14 years, $153,436;
Ms. Newquist -- 8 years, $136,663; Mr. Sargent -- 33 1/3 years, 408,128;
Mr. Snell -- 4 years (see description of Mr. Snell's employment agreement
on page 15), $717,498; and Ms. Widenmann -- 16 years, $136,663. 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.
Supplemental Executive Benefit Plan. Effective January 1, 1992 the
Company established a supplemental executive benefit plan to provide
certain benefits to directors and officers of the Company and its
subsidiaries upon the occurrence of certain events, which generally
include bankruptcy, 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% of the Company's voting stock. Assets
to be used to fund the plan are held in an irrevocable trust.
The plan provides two benefits -- a participant's benefit and an
employer's benefit. The participant's benefit, to be determined annually
by the plan's administrative committee, will be paid in a lump sum to a
participant in January of the year following the date of the occurrence
of one of the above mentioned events, provided that the participant meets
certain conditions of employment. The employer benefit is the amount in
the trust that is not needed to pay a participant's benefit. It will be
paid in a lump sum to the Company when one of the participants terminates
employment for reasons which prevent him or her from qualifying for a
participant's benefit, or when there is an asset balance remaining in the
trust after payment of the benefit and such assets are not necessary to
fund any other participant's plan benefits.
Executive Severance Arrangements. The Company has entered into
severance agreements, which are identical in content, with each of its
executive officers except Mr. Snell (see the discussion of his employment
agreement on page 15). These agreements are intended to provide stability
in key management of the Company. Under the agreements each officer will
receive a payment and other severance benefits having an aggregate value
of not more than 2.99 times the officer's "base income" (the average of
the officer's annual compensation over the five years preceding the year
of a "change of control") if, during the three-year period following a
change of control of the Company, the officer's employment is terminated
or the terms and conditions of his or her employment are significantly
and detrimentally altered. "Change of control" includes any change of
control event required to be reported under the Securities Exchange Act
of 1934, an unrelated third party's acquisition of 20% or more of the
Company's voting stock or substantially all of the assets of the Company,
a merger or acquisition of the Company in which the Company is not the
surviving corporation, a change in the majority of the members of the
Company's Board of Directors over a two-year period, which change is not
approved by two-thirds of the members of the Board then serving who were
members immediately prior to the change, or the filing of a voluntary or
involuntary petition of bankruptcy (other than for liquidation or
dissolution) which is not dismissed within 30 days. No severance benefits
will be payable to an officer who has attained age 65 or whose
termination is on account of retirement, voluntary termination,
disability or death 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.
Mr. Snell's Employment Agreement. Mr. Snell and the Company are
parties to an employment agreement setting forth the terms of his
employment as President and Chief Executive Officer of the Company. The
agreement is for a term of five years, beginning on February 5, 1990, and
may be renewed for additional periods by mutual agreement. The agreement
may be terminated by Mr. Snell at any time upon 120 days' prior written
notice to the Company. Under the agreement Mr. Snell is entitled to a
base salary of $500,000 per year, subject to periodic appraisal by the
Board or a committee thereof, as well as to such bonus payments as may be
declared from time to time by the Board. The agreement entitles Mr. Snell
to participate in the employee benefit plans generally available to the
Company's employees, and in the Company's deferred compensation plan,
supplemental excess benefit retirement plan, and stock option plan. Mr.
Snell is also entitled to 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
will be credited with an additional year for each year of employment
thereafter, not to exceed 33 1/3 years. The supplemental pension benefit
is not payable, however, if there is a final determination that he has
breached the agreement. The agreement also contains "change of control"
benefit provisions which are in all material respects identical to those
contained in the severance agreements entered into between the Company
and each of its other executive officers (see page 14).
LEGAL PROCEEDINGS
In 1989 a shareholder derivative lawsuit was filed in the United
States District Court for Arizona naming certain of the Company's current
and former directors as defendants. The lawsuit generally alleged breach
of fiduciary duties by the directors in connection with the Company's
diversification activities, and alleged violation of federal securities
laws by a former director in connection with the sale of MeraBank to the
Company in 1986. The plaintiffs requested, on the Company's behalf,
unspecified compensatory and punitive damages. A settlement agreement
that would resolve this lawsuit along with others to which the Company or
its officers and directors have been parties, has been approved by the
court. That settlement has been appealed by two non-settling individuals.
ITEM 2
APPROVAL OF THE 1994 LONG-TERM INCENTIVE PLAN
The Board of Directors of the Company has approved, and recommends
that the shareholders approve, adoption of the Pinnacle West Capital
Corporation 1994 Long-Term Incentive Plan (the "Incentive Plan") for key
employees of the Company and its subsidiaries. The Incentive Plan
authorizes grants of Incentive Stock Options ("ISOs"), Non-qualified
Stock Options ("NQSOs"), Stock Appreciation Rights ("SARs"), Restricted
Stock and Dividend Equivalents to approximately 84 key employees. The
total number of shares of Company common stock available for awards under
the Incentive Plan is 3,500,000. The closing price for a share of Company
common stock on April 5, 1994, as reported on the New York Stock
Exchange, was $20.
The Board believes the use of long-term incentives as authorized under
the Incentive Plan to be beneficial to the Company as a means of
promoting the success and enhancing the value of Pinnacle West by linking
the personal interests of its key employees to those of its shareholders
and by providing its key employees with an incentive for outstanding
performance. These incentives also provide the Company flexibility in its
ability to attract and retain the services of employees upon whose
judgement, interest and special effort the successful conduct of the
Company's operation is largely dependent. The Incentive Plan, if approved
by shareholders, will have an effective date of March 23, 1994. The
following summary of the Incentive Plan is qualified in its entirety by
reference to the plan, a copy of which is included at the end of this
Proxy Statement as Appendix A.
The Incentive Plan will be administered by a committee appointed by
the Board consisting of at least two (2) non-employee directors. This
committee will have the exclusive authority to administer the Incentive
Plan, including the power to determine eligibility, the types and sizes
of awards, and the price and timing of awards.
Description of the Available Awards
Incentive Stock Options
An ISO is a stock option that satisfies the requirements specified in
Section 422 of the Internal Revenue Code (the "Code"). Under the Code,
ISOs may only be granted to employees. In order for an option to qualify
as an ISO, the price payable to exercise the option must equal or exceed
the fair market value of the stock at the date of the grant, the option
must lapse no later than 10 years from the date of the grant, and the
stock subject to ISOs that are first exercisable by an employee in any
calendar year must not have a value of more than $100,000 as of the date
of grant. Certain other requirements must also be met.
With respect to an ISO, under current tax law, an employee is not
taxed for regular income tax purposes either at the time of the award or
the time of exercise of the option. The difference between the exercise
price and the fair market value of the stock at the time of exercise,
however, constitutes income for alternative minimum tax purposes,
assuming the stock is either transferable or is not subject to a
substantial risk of forfeiture. Generally, the issuing corporation is not
entitled to a deduction with respect to an ISO.
If an employee holds the stock acquired upon exercise of the ISO for
at least two (2) years from the date of the grant and at least one year
(1) following the date of exercise, the difference between the amount
paid for the stock and the subsequent sales price is treated as long-term
capital gain or loss. If these holding period requirements are not
satisfied, the employee is taxed, at ordinary income tax rates, on the
difference between the exercise price and the fair market value of the
stock as of the date of exercise and the issuer of the ISO is then
entitled to a corresponding deduction.
Non-Qualified Stock Options
An NQSO is any stock option other than an Incentive Stock Option. Such
options are referred to as "non-qualified" because they do not meet the
requirements of, and are not eligible for, the favorable tax treatment
provided by Section 422 of the Code.
Under current tax law, if an employee is granted an NQSO, the grant
itself typically does not produce any taxable income for the employee,
and the issuing corporation is not entitled to a deduction at that time.
On the date the NQSO is exercised, the employee recognizes ordinary
income in an amount equal to the difference between the fair market value
of the underlying stock at the date of exercise and the exercise price
set forth in the option agreement between the issuing corporation and the
employee. The issuing corporation is generally entitled to a
corresponding deduction in the same amount and in the same year in which
the employee recognizes such income, provided that it satisfies
applicable withholding tax liabilities.
When an employee sells the stock acquired through an NQSO, the
employee recognizes capital gain equal to the difference between the
sales price and the fair market value of the stock as of the date of
exercise. If the employee holds the stock for more than one (1) year
following the exercise of the option, the gain is treated as a long-term
capital gain.
Stock Appreciation Rights
An SAR is the right granted to an employee to receive the appreciation
in the value of a share of common stock over a certain period of time.
Under the Incentive Plan, the Company may pay that amount in cash, in
common stock, or in a combination of both. If an employee receives the
appreciation inherent in the SARs in cash, the cash is compensation
income, taxable to the employee. If the employee receives the
appreciation in the form of common stock, the stock received is taxable
to the employee to the extent of its fair market value. An issuer of an
SAR generally receives a deduction in the amount equal to that taxable to
the employee in the year in which the employee recognizes taxable income
with respect to the SAR.
Restricted Stock Awards
Under the Restricted Stock feature of the Incentive Plan, an eligible
employee may be granted a specified number of shares of common stock.
However, vested rights to such stock are subject to certain restrictions
or are conditioned on the attainment of certain performance goals. If the
employee violates any of the restrictions during the period specified by
the Committee or the performance standards fail to be satisfied, the
stock is forfeited.
In the year in which the applicable restrictions lapse or the
applicable performance standard is satisfied, Section 83 of the Code
requires an employee to include in taxable income the excess of the fair
market value of restricted stock received over the amount, if any, paid
for the restricted stock. The issuer of restricted stock generally is
entitled to a corresponding deduction at the same time, provided that it
satisfies applicable withholding tax liabilities.
Instead of postponing the tax consequences of a Restricted Stock award
until the applicable restrictions lapse or until the applicable
performance standard is satisfied, an employee may elect to include the
fair market value of the stock in income in the year of the award by
filing an appropriate election with the IRS within 30 days of the date of
the award agreement. This election is made under Section 83(b) of the
Code.
Dividend Equivalent Rights
The Incentive Plan also allows for the granting of dividend equivalent
rights in conjunction with a grant of options. These rights entitle the
eligible employee to receive an additional amount of stock upon
exercising the underlying option. The number of dividend equivalent
shares allocated to a participant is determined by dividing the dividend
payable on the stock underlying the option by the book value of the
stock.
An employee who receives a dividend equivalent rights award does not
realize taxable income at the time of grant and the issuing corporation
is not entitled to a deduction at that time. When the dividend equivalent
rights award is paid, the employee must include the amount paid in income
and the issuing corporation generally is entitled to a corresponding
deduction. The measure of such income and deduction will be the fair
market value of the shares received at the time the dividend equivalent
rights award is paid.
Recent Tax Changes
Section 162(m) of the Code, adopted as part of the Revenue
Reconciliation Act of 1993, generally limits to $1 million the deduction
that can be claimed by any publicly-held corporation for compensation
paid to any "covered employee" in any taxable year beginning after
December 31, 1993. The term "covered employee" for this purpose is
defined generally as the chief executive officer and the four other
highest paid employees of the corporation.
Performance-based compensation is outside the scope of the $1 million
limitation, and, hence, generally can be deducted by a publicly-held
corporation without regard to amount; provided that, among other
requirements, such compensation is approved by shareholders. Among the
items of performance-based compensation that can be deducted without
regard to amount (assuming shareholder approval and other applicable
requirements are satisfied) is compensation associated with the exercise
price of a stock option so long as the option has an exercise price equal
to or greater than the fair market value of the underlying stock at the
time of the option grant. All options granted under the Incentive Plan
will have an exercise price at least equal to the fair market value of
the underlying stock on the date of grant.
Of the total 3,500,000 shares of common stock available for awards
under the Incentive Plan, the maximum number that may be awarded over the
term of the Incentive Plan to any participant, either as awards of ISOs,
NQSOs, restricted stock or dividend equivalent rights, or any combination
of each, is 750,000.
The Board of Directors recommends a vote FOR Item 2
ITEM 3
APPROVAL OF THE DIRECTOR EQUITY PARTICIPATION PLAN
At a meeting held on March 23, 1994, the Company's Board of Directors
authorized the officers to implement, subject to the approval of the
Company's shareholders, the Pinnacle West Capital Corporation Director
Equity Participation Plan (the "Equity Plan"). The Board believes that
adoption of the Equity Plan will promote the success and enhance the
value of the Company by (i) strengthening the Company's ability to
attract and retain the services of experienced and knowledgeable persons
as directors of the Company, and (ii) linking the personal interests of
directors to those of the Company's shareholders. The Equity Plan, if
approved by shareholders, will have an effective date of March 23, 1994.
A committee, appointed by the Board and consisting of at least two (2)
non-employee directors, will administer the Equity Plan which provides
for annual grants of 500 shares of the Company's common stock to each
director as partial payment of the annual retainer paid to directors for
their services to the Company. The total number of shares of Company
common stock available for grants under the Equity Plan is 50,000. The
following summary of the Equity Plan is qualified in its entirety by
reference to the plan, a copy of which is included at the end of this
Proxy Statement as Appendix B.
Summary of Plan Benefits
On July 1 of each year, commencing in 1994, each person serving as a
director of the Company on that date, who is not also an employee of the
Company, will automatically be granted 500 shares of Company common
stock, provided that the director beneficially owns 500 shares of Company
common stock on the date immediately preceding the date of grant. The
amount of beneficial ownership necessary to qualify for each subsequent
500 share annual grant will be increased by 500 shares each year during a
director's tenure on the Board until it reaches 2,500 shares, at which
point no further increases in share ownership will be required.
Therefore, an individual who received a grant of 500 shares on July 1,
1994 based upon beneficially owning 500 shares of Company common stock
would be required to beneficially own 1,000 shares immediately prior to
July 1, 1995 in order to qualify for a 500 share grant on that date. In
the event that a director does not own the required number of shares
immediately prior to July 1 of any year during his or her tenure on the
Board, that director will not be entitled to an award of stock for that
year.
The following table shows the grants that will be made on July 1, 1994
under the Equity Plan assuming that the plan is approved by shareholders
and that the current makeup of the Board does not change:
NEW PLAN BENEFITS
Director Equity Participation Plan Benefits
_______________________________________________
Dollar Shares
Name and Position Value(1) Granted
_________________ ________ _______
Richard Snell 0 0 (2)
Chairman of the Board, President & CEO
Michael S. Ash 0 0 (2)
Corporate Counsel
Arlyn J. Larson 0 0 (2)
VP Planning & Development
Nancy E. Newquist 0 0 (2)
VP & Treasurer
Henry B. Sargent 0 0 (2)
Executive VP & CFO
Faye Widenmann
VP Corp Relations & Administration and 0 0 (2)
Secretary
Executive officers as a group (6 total) 0 0 (2)
Directors who are not executive officers $70,000 3,500
Non-executive officer employees as a group 0 0 (2)
(1) Based upon the closing price of a share of Company common stock
on April 5, 1994 ($20). Actual dollar value will be determined by
using the average of the high and low price for a share of Company
common stock on the date of grant.
(2) These individuals and groups are not participants in the Equity
Plan, but they are required by Securities and Exchange Commission
rules to be listed in the table.
The Board of Directors recommends a vote FOR Item 3.
GENERAL
Cost of Solicitation. The cost of the solicitation of proxies, which
will be by mail, will be borne by the Company. Brokerage houses and
others will be reimbursed for their out-of-pocket expenses in forwarding
documents to beneficial owners of stock. Directors, officers or employees
of the Company may solicit proxies by telephone or in person without
extra compensation.
Auditors. It is contemplated that the Company's financial statements
as of December 31, 1994 and for the year then ended will be examined by
Deloitte & Touche, 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.
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 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 two management proposals (see pages 16 through 21),
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 each proposal requires the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote
thereon.
Proxies returned indicating the shareholder's wish to abstain from
voting on a management proposal are considered to be shares present and
entitled to vote, and such shares will be used in determining the
percentage of shares that voted on the proposal. Broker "non-votes",
instances where no proxy has been returned to a brokerage firm by the
beneficial owner, are not considered to be shares present and entitled to
vote and such shares will not be used in determining the percentage of
shares that voted on a management proposal.
Section 16(a) Reports. Section 16(a) of the Securities Exchange Act of
1934 requires the Company's officers and directors to file reports of
ownership of Company equity securities with the Securities and Exchange
Commission and the New York Stock Exchange. Mr. Jamieson was required to
file a Form 4, Statement of Changes in Beneficial Ownership, to report
his purchase of 500 shares of Company common stock on August 5, 1992.
Although this form was due by June 10, 1992, it inadvertently was not
filed until March 11, 1994. Ms. Newquist was required to file a Form 4
reflecting a transfer of 200 shares of Company common stock on February
16, 1994. Although this form was due by March 10, 1994, it inadvertently
was not filed until March 30, 1994.
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 21, 1994. Copies of
the Company's Articles of Incorporation and Bylaws are available upon
written request delivered to the Office of the Secretary.
Shareholder Proposals For Next Annual Meeting. In order to be
considered for inclusion in the proxy statement and form of proxy
relating to the 1995 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 16, 1994. 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 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.
Appendix A
PINNACLE WEST CAPITAL CORPORATION
1994 LONG-TERM INCENTIVE PLAN
1. PURPOSE
The purpose of the Pinnacle West Capital Corporation 1994 Long-Term
Incentive Plan (the "Plan") is to promote the success, and enhance the
value, of Pinnacle West Capital Corporation (the "Company") by linking
the personal interests of its key employees to those of Company
shareholders and by providing its key employees with an incentive for
outstanding performance. The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract and retain
the services of employees upon whose judgement, interest and special
effort the successful conduct of the Company's operation is largely
dependent. Accordingly, the Plan permits the grant of incentive awards
from time to time to selected officers and key employees of the Company
and any Subsidiary.
2. DEFINITIONS
The following definitions will be applicable throughout the Plan:
a. "Award" means, individually or collectively, any Option, Stock
Appreciation Right, Restricted Stock Award or Dividend Equivalent
Award.
b. "Award Agreement" means any written agreement, contract or other
instrument or document evidencing an Award.
c. "Board" means the Board of Directors of the Company.
d. "Code" means the Internal Revenue Code of 1986 and any
regulations issued thereunder, as the same may be amended from time to
time.
e. "Committee" means the committee of the Board described in
Section 4.
f. "Company" means Pinnacle West Capital Corporation.
g. "Date of Grant" means the date on which the granting of an Award
is authorized by the Committee or such later date as may be specified
by the Committee in such authorization.
h. "Disability" means any illness or other physical or mental
condition of a Participant which renders the Participant incapable of
performing his customary and usual duties for the Company, or any
medically determinable illness or other physical or mental condition
resulting from a bodily injury, disease or mental disorder which in
the judgment of the Committee is permanent and continuous in nature.
The Committee may require such medical or other evidence as it deems
necessary to judge the nature and permanency of the Participant's
condition.
i. "Dividend Equivalent" means an Award granted under Section 10.
j. "Eligible Employee" means any person regularly employed by the
Company or a Subsidiary on a full-time salaried basis who satisfies
all of the requirements of Section 6.
k. "Fair Market Value" means the average of the highest price and
the lowest price at which the Stock will have been sold regular way on
the New York Stock Exchange ("NYSE"), as reported on the Composite
Tape, on the date on which Fair Market Value is to be determined, or
if no such sales were made on such date, the average of the highest
price and the lowest price at which the Stock will have been sold
regular way on the NYSE, as reported on the Composite Tape, on the
immediately succeeding date on which such sales occurred.
l. "Incentive Stock Option" means an Option within the meaning of
Section 422 of the Code.
m. "Normal Termination" means Termination:
(i) At retirement pursuant to the Company or Subsidiary retirement
plan covering the Holder,
(ii) For Disability, or
(iii) For any other reason, provided that the Committee has
approved the continuation of any Option outstanding on the date of
the Participant's Termination.
n. "Option" means an Award granted under Section 7 of the Plan.
o. "Participant" means an Eligible Employee who has been granted an
Award.
p. "Plan" means the Pinnacle West Capital Corporation 1994 Long-Term
Incentive Plan, as set forth herein and as the same may be amended
from time to time.
q. "Restricted Stock Award" means an Award granted under Section 9
of the Plan.
r. "Stock" means Common Stock of the Company as defined in Article
Third of the Company's Articles of Incorporation or such other stock
that is substituted therefor as provided in Section 12.
s. "Stock Appreciation Right" or "SAR" means an Award granted
pursuant to Section 8 of the Plan.
t. "Subsidiary" means any corporation of which a majority of the
outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.
u. "Termination" means separation from employment with the Company
or any of its Subsidiaries for any reason other than death.
Notwithstanding the foregoing, a Participant's transfer to employment
with a Subsidiary from employment with the Company or another
Subsidiary (or vice versa) will not constitute a "Termination" for
purposes of this Plan.
3. EFFECTIVE DATE
Subject to the approval of this Plan by the affirmative vote of the
holders of a majority of the shares of stock of the Company present, or
represented, and entitled to vote at a duly convened meeting of
shareholders, the Plan will become effective on March 23, 1994.
4. ADMINISTRATION
The Plan will be administered by a Committee that is appointed by, and
will serve at the discretion of, the Board. The Committee will consist of
at least two individuals who are members of the Board who are
"disinterested persons," as such term is defined in Rule 16b-3
promulgated under Section 16 of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or any successor provision, except as may be
otherwise permitted under Section 16 of the 1934 Act and the regulations
and rules promulgated thereunder.
A majority of the Committee will constitute a quorum. The acts of a
majority of the members present at any meeting at which a quorum is
present and acts approved in writing by a majority of the Committee in
lieu of a meeting will be deemed the acts of the Committee. Each member
of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or
other employee of the Company or any Subsidiary, the Company's
independent certified public accountants or any executive compensation
consultant or other professional retained by the Company to assist in the
administration of the Plan.
The Committee has the exclusive power, authority and discretion to:
a. Designate Participants;
b. Determine the type or types of Awards to be granted to each
Participant;
c. Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
d. Determine the terms and conditions of any Award granted under the
Plan including but not limited to, the exercise price, grant price or
purchase price, any restrictions or limitations on the Award, any
schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof,
based in each case on such considerations as the Committee in its sole
discretion determines;
e. Determine whether, to what extent, and under what circumstances
an Award may be settled in, or the exercise price of an Award may be
paid in, cash, Stock, other Awards or other property, or an Award may
be canceled, forfeited or surrendered;
f. Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
g. Decide all other matters that must be determined in connection
with an Award;
h. Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan; and
i. Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan.
The Committee's interpretation of the Plan, any Awards granted under
the Plan, any Award Agreement and all decisions and determinations by the
Committee with respect to the Plan are final, binding and conclusive on
all parties.
5. SHARES SUBJECT TO THE PLAN
The Committee may, from time to time, grant Awards to one or more
Eligible Employees; provided, however, that:
a. Subject to Section 12, the aggregate number of shares of Stock
made subject to Awards under this Plan may not exceed 3,500,000.
b. To the extent that an Award terminates, expires or lapses for any
reason, any shares of Stock subject to the Award will again be
available for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available for the
grant of an Award under the Plan, in each case to the full extent
available pursuant to the rules and interpretations of the Securities
and Exchange Commission under Section 16 of the 1934 Act.
c. Stock delivered by the Company pursuant to an Award may be
authorized and unissued Stock, Stock held in the treasury of the
Company or Stock purchased on the open market.
d. Notwithstanding any provision in the Plan to the contrary and
subject to Section 12, the maximum number of shares of Stock with
respect to one or more Awards that may be granted to any one
Participant over the term of the Plan will be 750,000.
6. ELIGIBILITY
Awards may be granted only to officers and other key employees of the
Company and its Subsidiaries, as determined by the Committee.
7. STOCK OPTIONS
Options may be granted to any Eligible Employee. Each Option so
granted will be subject to the following conditions:
a. Option price. The option price per share of Stock will be set by
the grant, provided that in no event will the option price per share
be less than the Fair Market Value at the Date of Grant.
b. Form of payment. The Committee will determine the methods by
which the exercise price of an Option may be paid, the form of
payment, including, without limitation, cash, shares of Stock or other
property (including net issuance or other "cashless exercise"
arrangements), and the methods by which shares of Stock will be
delivered or deemed to be delivered to Participants. Without limiting
the power and discretion conferred on the Committee pursuant to the
preceding sentence, the Committee may, in the exercise of its
discretion, but need not, allow a Participant to pay the Option price
by directing the Company to withhold from the shares of Stock that
would otherwise be issued upon exercise of the Option that number of
shares having a Fair Market Value on the exercise date equal to the
Option price, all as determined pursuant to rules and procedures
established by the Committee.
c. Other terms and conditions. The Option will become exercisable
in such manner and within such period or periods as set forth in the
Award Agreement upon payment in full in any manner permitted under
Section 7b. In no event, however, will any Option be exercisable for
more than 10 years from its Date of Grant. Except as otherwise
provided in this Plan or in the applicable Award Agreement, any Option
may be exercised in whole or in part at any time. An Option will lapse
under the following circumstances, unless otherwise specified in the
applicable Award Agreement:
(i) Prior to the Participant's Termination or death, the Option
will lapse 10 years after it is granted, unless an earlier time is
set by the grant.
(ii) If the Participant separates from employment other than by
Normal Termination, it will lapse at the time of Termination.
(iii) If the Participant's Termination is a Normal Termination,
as defined in Section 2m(i) or 2m(ii), it will lapse 15 months after
Termination, unless an earlier time is set by the grant. In the case
of Incentive Stock Options, any Options which remain unexercised
after 3 months following the date of Termination will be deemed to
be Non-Qualified Stock Options.
(iv) If the Participant's Termination is a Normal Termination, as
defined in Section 2m(iii), it will lapse three months after his
Termination, unless an earlier time is set by the grant.
(v) If the Participant dies within the option period, the Option
will lapse 15 months after the Participant's death, unless an
earlier time is set by the grant. If a Participant dies after
Termination due to Normal Termination as defined in Section 2m, the
Option will lapse 15 months after the Participant's Termination,
unless an earlier time is set by the grant. Upon the Participant's
death, any exercisable Options may be exercised by the Participant's
legal representative or representatives, by the person or persons
entitled to do so under the Participant's last will and testament
or, if the Participant fails to make testamentary disposition of
such Option or dies intestate, by the person or persons entitled to
receive said Option under the applicable laws of descent and
distribution.
d. Award Agreement. Each Option granted under the Plan will be
evidenced by an Award Agreement between the Company and the
Participant containing such provisions as may be determined by the
Committee.
e. Individual dollar limitations. The aggregate Fair Market Value
(determined as of the time the Option is granted) of all shares of
Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed
$100,000.
f. Right to exercise ISOs. During a Participant's lifetime, an
Incentive Stock Option may be exercised only by the Participant.
8. STOCK APPRECIATION RIGHTS
The Committee is authorized to grant SARs to Participants on the
following terms and conditions:
a. Right to payment. Upon the exercise of a Stock Appreciation
Right, the Participant to whom it is granted has the right to receive
the excess, if any, of:
(i) The Fair Market Value of one share of Stock on the date of
exercise; over
(ii) The grant price of the Stock Appreciation Right as determined
by the Committee, which will not be less than the Fair Market Value
of one share of Stock on the date of grant.
b. Other terms. All awards of Stock Appreciation Rights will be
evidenced by an Award Agreement. The terms, methods of exercise,
methods of settlement, form of consideration payable in settlement,
and any other terms and conditions of any Stock Appreciation Right
will be determined by the Committee at the time of the grant of the
Award and will be reflected in the Award Agreement.
9. RESTRICTED STOCK AWARDS
The Committee is authorized to make Awards of Restricted Stock to
Participants in such amounts and subject to such terms and conditions as
may be selected by the Committee. All Awards of Restricted Stock will be
evidenced by an Award Agreement.
Restricted Stock will be subject to such restrictions on
transferability and other restrictions as the Committee may impose. These
restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Committee
determines at the time of the grant of the Award or thereafter.
a. Forfeiture provisions. In the event a Participant terminates
employment during an applicable restriction period, his right to a
Restricted Stock Award will be determined as follows, unless otherwise
specified in the applicable Award Agreement:
(i) If the Participant separates from employment other than by
Normal Termination, the Award will be completely forfeited.
(ii) Except as otherwise provided in Section 9a(iv), if the
Participant's Termination is a Normal Termination as defined in
Section 2m(i), the Participant will be vested in that portion of the
Award as bears the same relationship to the entire Award as the
period of service, measured from the date the Award was made to the
date of retirement, bears to the applicable restriction period.
(iii) Except as otherwise provided in Section 9a(iv), if the
Participant dies or becomes Disabled, the Participant will be vested
in a portion of the Award, with such portion to be determined in the
same manner as the portion under Section 9a(ii).
(iv) Notwithstanding Sections 9a(ii) and (iii), if one or more of
the restrictions placed on a Restricted Stock Award by the Committee
require an action by the Participant or the occurrence of an event
other than the passage of time, and the Participant retires, dies or
becomes Disabled before such restriction or restrictions have been
satisfied, the Participant will not be vested in any portion of the
Award unless the Committee, in its sole and absolute discretion,
elects to waive satisfaction of such restriction or restrictions as
a condition of receipt of all or any part of the Award.
b. Certificates for restricted stock. Restricted Stock granted
under the Plan may be evidenced in such manner as the Committee will
determine. If certificates representing shares of Restricted Stock are
registered in the name of the Participant, certificates must bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, and the Company will
retain physical possession of the certificate until such time as all
applicable restrictions lapse.
c. Dividends. Cash and Stock dividends may be either currently paid
or withheld by the Company for the Participant's account. At the
discretion of the Committee, interest may be paid on the amount of
cash dividends withheld, including cash dividends on stock dividends,
at a rate and subject to such terms as will be determined by the
Committee.
10. DIVIDEND EQUIVALENTS
Any Option granted under the Plan may include at no additional cost
Dividend Equivalents, either at the time of grant or by amendment.
Dividend Equivalents will be based on the dividends declared on the Stock
on record dates during the period between the date an Option is granted
or the date the Dividend Equivalents are granted, if later, and the date
such Option is exercised. Such Dividend Equivalents will be converted to
additional shares of the Stock by dividing the dividend that would be
payable on the shares of Stock under the Option by the book value of the
Stock.
The Dividend Equivalents earned with respect to a Participant will be
distributed to the Participant (or his successor in interest) in the form
of shares of the Stock at the time the Option is exercised. Dividend
Equivalents will be computed, as of each dividend record date, both with
respect to the number of shares under the Option and with respect to the
number of Dividend Equivalent shares previously earned by the Participant
(or his successor in interest) and not issued during the period prior to
the dividend record date. For purposes of this Section 10, the book value
of a share of the Stock will be determined in accordance with the
Company's regular established accounting practices as of the last
business day of the month immediately preceding the dividend record date.
11. GENERAL
Government and other regulations. The obligation of the Company to
make payment of awards in Stock or otherwise will be subject to all
applicable laws, rules, and regulations, and to such approvals by
government agencies as may be required. The Company will be under no
obligation to register under the Securities Act of 1933, as amended (the
"Act"), any of the shares of Stock paid under the Plan. If the shares
paid under the Plan may in certain circumstances be exempt from
registration under the Act, the Company may restrict the transfer of such
shares in such manner as it deems advisable to ensure the availability of
any such exemption.
Tax withholding. The Company or any Subsidiary will have the
authority and the right to deduct or withhold, or require a Participant
to remit to the Company, an amount sufficient to satisfy United States
Federal, state and local taxes (including the Participant's FICA
obligation and any withholding obligation imposed by any country other
than the United States in which the Participant resides) required by law
to be withheld with respect to any taxable event arising as a result of
this Plan. With respect to withholding required upon any taxable event
under the Plan, the Committee may, in its sole and absolute discretion,
permit a Participant to satisfy the withholding requirement, in whole or
in part, by having the Company or any Subsidiary withhold shares of Stock
having a Fair Market Value on the date of withholding equal to the amount
to be withheld for tax purposes in accordance with such procedures as the
Committee establishes.
Claim to Awards and employment rights. No employee or other person
will have any claim or right to be granted an Award under the Plan.
Neither this Plan nor any action taken hereunder will be construed as
giving any employee any right to be retained in the employ of the Company
or a Subsidiary.
Beneficiaries. Except as otherwise provided in Section 7, dealing
with Options, or in any Award Agreement, any payment of Awards due under
this Plan to a deceased Participant will be paid to the beneficiary
designated by the Participant and filed with the Committee. If no such
beneficiary has been designated or survives the Participant, payment will
be made to the person entitled thereto under the Participant's will or
the laws of descent and distribution. Subject to the foregoing, a
beneficiary designation may be changed or revoked by a Participant at any
time provided the change or revocation is filed with the Committee.
Nontransferability. Subject to the above paragraph concerning
beneficiaries, a person's rights and interests under the Plan, including
amounts payable, may not be assigned, pledged or transferred, provided
that a person's rights and interests under the Plan, with the exception
of Incentive Stock Options, may be assigned, pledged or transferred
pursuant to a domestic relations order that satisfies the requirements
for a "qualified domestic relations order" as set forth in Section
414(p)(1)(A) of the Internal Revenue Code.
Indemnification. Each person who is or will have been a member of the
Committee or of the Board will be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit or proceeding to which he may be a
party or in which he may be involved by reason of any action or failure
to act under the Plan and against and from any and all amounts paid by
him in satisfaction of judgment in such action, suit, or proceeding
against him. He will give the Company an opportunity, at its own expense,
to handle and defend the same before he undertakes to handle and defend
it on his own behalf. The foregoing right of indemnification will not be
exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's Articles of Incorporation or Bylaws,
as a matter of law or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.
Relationship to other benefits. No payment under the Plan will be
taken into account in determining any benefits under any pension,
retirement, savings, profit sharing, group insurance, welfare or other
benefit plan of the Company or any Subsidiary.
Expenses. The expenses of administering the Plan will be borne by the
Company and its Subsidiaries.
Pronouns. Masculine pronouns and other words of masculine gender will
refer to both men and women.
Titles and headings. The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, will
control.
Fractional shares. No fractional shares of stock will be issued. Any
fractional shares accrued under an Award will be eliminated by rounding
down.
Tender offers. In the event of a public tender for all or any portion
of the Stock, or in the event that a proposal to merge, consolidate or
otherwise combine with another company is submitted for shareholder
approval, the Committee may in its sole discretion take the following
actions.
(i) Options and SARs. The Committee may declare previously granted
Options and SARs to be immediately exercisable. To the extent that
this provision causes Incentive Stock Options to exceed the dollar
limitation set forth in Section 7e, the excess Options will be deemed
to be Non-Qualified Stock Options.
(ii) Restricted stock. The Committee may change or eliminate the
restrictions placed on a previously granted Restricted Stock Award.
Unfunded status of awards. The Plan is intended to be an "unfunded"
plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan
or any Award Agreement will give the Participant any rights that are
greater than those of a general creditor of the Company or any
Subsidiary.
Securities law compliance. With respect to any person who is, on the
relevant date, obligated to file reports under Section 16 of the 1934
Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the 1934 Act.
To the extent any provision of the Plan or action by the Committee fails
to so comply, it shall be void to the extent permitted by law and
voidable as deemed advisable by the Committee.
Governing law. The Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Arizona.
12. CHANGES IN CAPITAL STRUCTURE
In the event a stock dividend is declared upon the Stock, the shares
of Stock then subject to each Award (and the number of shares subject
thereto) will be increased proportionately without any change in the
aggregate purchase price therefor. In the event the Stock will be changed
into or exchanged for a different number or class of shares of Stock or
of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, merger or consolidation, there
will be substituted for each such share of Stock then subject to each
Award (and for each share of Stock then subject thereto) the number and
class of shares of Stock into which each outstanding share of Stock will
be so exchanged, all without any change in the aggregate purchase price
for the shares then subject to each Award.
Subject to any required action by the shareholders, if the Company
will be the surviving or resulting corporation in any merger or
consolidation, any Award granted hereunder will pertain to and apply to
the securities or rights to which a holder of the number of shares of
Stock subject to the Award would have been entitled; but a dissolution or
liquidation of the Company or a merger or consolidation in which the
Company is not the surviving or resulting corporation, will, in the sole
discretion of the Committee:
(a) Cause every Award outstanding hereunder to terminate, except that
the surviving or resulting corporation, in its absolute and
uncontrolled discretion, may tender an option or options to purchase
its shares or exercise such rights on terms and conditions, as to the
number of shares and rights and otherwise, which will substantially
preserve the rights and benefits of any Award then outstanding
hereunder; or
(b) Give each Participant the right to exercise Awards prior to the
occurrence of the event otherwise terminating the Awards over such
period as the Committee, in its sole and absolute discretion, will
determine. To the extent that this provision causes a Participant to
exceed the requirements of Section 7e, any excess Incentive Stock
Options will be deemed to be Non-Qualified Stock Options.
13. AMENDMENTS AND TERMINATION
With the approval of the Board, at any time and from time to time, the
Committee may terminate, amend or modify the Plan. However, without
approval of the shareholders of the Company or other conditions (as may
be required by the Code, by the insider trading rules of Section 16 of
the 1934 Act, by any national securities exchange or system on which the
Stock is listed or reported, or by a regulatory body having
jurisdiction), no such termination, amendment, or modification may:
(a) Materially increase the total number of shares of Stock that may
be issued under the Plan, except as provided in Section 12;
(b) Materially modify the eligibility requirements for participation
in the Plan; or
(c) Materially increase the benefits accruing to Participants under
the Plan.
No termination, amendment or modification of the Plan will adversely
affect in any material way any Award previously granted under the Plan,
without the written consent of the Participant.
Appendix B
PINNACLE WEST CAPITAL CORPORATION
DIRECTOR EQUITY PARTICIPATION PLAN
1. PURPOSE
The purpose of the Pinnacle West Director Equity Participation Plan
(the "Plan") is to encourage ownership in Pinnacle West Capital
Corporation (the "Company") by Directors, to strengthen the ability of
the Company to attract and retain the services of experienced and
knowledgeable individuals as Directors of the Company, and to provide
those individuals with a further incentive to work for the best interests
of the Company and its shareholders.
2. DEFINITIONS
For purposes of the Plan, the following terms will have the meaning
set forth herein:
(a) "Award" means a grant of Stock under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Committee" means the committee appointed by the Board to
administer the Plan.
(d) "Company" means Pinnacle West Capital Corporation and any
successor thereto.
(e) "Date of Grant" means the first business day in July of the year
in which Stock is granted to Participants as provided in Section 6.
(f) "Director" means an individual who is a member of the Board of
Directors.
(g) "Fair Market Value" means the average of the highest price and
the lowest price at which the Stock is sold regular way on the New
York Stock Exchange ("NYSE") as reported on the Composite Tape on the
date that Fair Market Value is to be determined, or if no such sales
were made on such date, the average of the highest price and the
lowest price at which the Stock is sold regular way on the NYSE as
reported on the Composite Tape on the immediately succeeding date on
which such sales occur.
(h) "Participant" means an individual who is a Director and is
eligible to receive shares of Stock under the Plan.
(i) "Plan" means the Pinnacle West Capital Corporation Director
Equity Participation Plan, as the same may be amended from time to
time.
(j) "Plan Year" means the twelve (12) consecutive month period
beginning July 1 and ending June 30.
(k) "Retainer" means the compensation to which a Director is entitled
for his or her services as a member of the Board. Retainer shall not
include (i) fees paid for attending Board meetings or meetings of
Board committees, (ii) any other amounts paid to a Director on a per-
meeting basis, or (iii) amounts paid by the Company or its
subsidiaries in a capacity other than as a member of the Board.
(l) "Stock" means the Common Stock of the Company as defined in
Article Third of the Company's Articles of Incorporation or such other
stock that is substituted therefor as provided in Section 7 of the
Plan.
3. SHARES OF STOCK SUBJECT TO THE PLAN
(a) Subject to the provisions of Section 7 of the Plan, the aggregate
number of shares of Stock that may be awarded under the Plan will be
fifty thousand (50,000) shares.
(b) The Stock to be awarded under the Plan may be made available from
(i) authorized but unissued shares of Stock, (ii) Stock held in the
treasury of the Company, or (iii) previously issued and outstanding
shares of Stock reacquired by the Company, including shares purchased
on the open market.
4. ADMINISTRATION OF THE PLAN
(a) The Plan will be administered by the Committee, subject to the
restrictions set forth in the Plan.
(b) The Committee has the full power, discretion, and authority to
interpret and administer the Plan in a manner that is consistent with
the Plan's provisions. However, the Committee does not have the power
to (i) determine Plan eligibility, or to determine the number, the
price, the vesting period, or the timing of Awards to be made under
the Plan to any Participant or (ii) take any action that would result
in the Awards not being treated as "formula awards" within the meaning
of Rule 16b-3(c)(2)(ii) or any successor provision, promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(c) The Committee's determinations and decisions under the Plan, and
all related orders or resolutions of the Board shall be final,
conclusive and binding on all persons, including the Company, its
stockholders, employees, Participants and their estates and
beneficiaries.
(d) Awards will be evidenced by a written instrument in such form as
the Committee shall approve and will not include any terms and
conditions which are inconsistent with the provisions of the Plan.
5. ELIGIBILITY
(a) All Directors who are not employees of the Company are eligible
to participate in the Plan.
(b) An eligible Director will automatically become a Participant in
the Plan for the Plan Year if he or she is serving as a Director on
July 1 of such Plan Year.
6. AWARDS
(a) Five hundred (500) shares of Stock will automatically be awarded
to the Participant on July 1 of the Plan Year; provided,
(i) That for the Participant's initial Plan Year, the Participant
must beneficially own five hundred (500) shares of Stock as of the
date immediately preceding the Date of Grant, and
(ii) That the amount of stock that must be beneficially owned by a
Director to qualify for each subsequent five hundred (500) share
annual award will be increased by five hundred (500) shares each
subsequent Plan Year during a Participant's tenure on the Board
until it reaches two thousand and five hundred (2,500) shares, at
which point no further increases in share ownership will be
required. In the event that a Director does not own the required
number of shares as of the date immediately preceding the Date of
Grant, such Director will not be entitled to an Award for that Plan
Year.
(b) At least six (6) months must elapse between the Date of Grant and
the disposition of the Stock issued to the Participant.
(c) The Company shall have the right to deduct from all Awards or,
alternatively, to require the Participant to pay to the Company, any
federal, state or local taxes as required by law to be withheld with
respect to such Award. If the Company is required to withhold taxes
with respect to an Award, the Participant must:
(i) Direct the Company to withhold from the shares of Stock to be
issued to the Participant the number of shares necessary to satisfy
the Company's tax withholding obligation, based on the shares' Fair
Market Value as of the date of withholding;
(ii) Deliver to the Company sufficient shares of Stock to satisfy
the Company's tax withholding obligations, based on the shares' Fair
Market Value as of the date of withholding; or
(iii) Deliver cash or a check to the Company to satisfy the
Company's tax withholding obligation.
A Participant may elect to use the stock withholding feature only with
the consent of, and at the time and in the manner prescribed by, the
Committee.
7. ADJUSTMENT PROVISIONS
In the event of any change in the outstanding Stock by reason of any
stock dividend, stock split, recapitalization, merger, consolidation,
reorganization, combination or exchange of shares or other similar event,
(i) an appropriate adjustment will be made in the maximum number and kind
of shares provided in Section 3(a) and (ii) an appropriate adjustment
will be made in the number and kind of shares awarded under Section 6(a)
and the number and kind of shares required to be beneficially owned under
Section 6(a).
8. GENERAL PROVISIONS
(a) Nothing in the Plan or in any instrument executed pursuant to the
Plan will confer upon any Participant any right to continue to serve
as a Director of the Company or to receive an Award for a Plan Year in
which the Participant did not satisfy the conditions therefor nor
shall it affect the right of the Company and its shareholders to
terminate the services of any Participant as a Director as provided in
the Company's By-laws or otherwise.
(b) No shares of Stock will be issued under the Plan unless all
applicable requirements imposed by federal and state securities laws,
regulatory agencies and stock exchanges upon which the Stock may be
listed have been fully complied with.
(c) No Participant and no beneficiary or other person claiming under
or through such Participant will have any right, title or interest in
any shares of Stock allocated or reserved under the Plan except as to
such shares of Stock, if any, that have been issued to such
Participant.
(d) No award made under the Plan will be taken into account in
determining any benefits under any pension, retirement, savings,
profit sharing, group insurance, welfare or other employee benefit
plan of the Company or any of its subsidiaries.
(e) If any provision of the Plan is deemed to be illegal or invalid
for any reason, the illegality or invalidity will not affect the
remaining provisions of the Plan, but will be fully severable and the
Plan will be construed and enforced as if the illegal or invalid
provision had never been included herein.
(f) Any expenses of administering the Plan will be borne by the
Company.
(g) The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of Arizona.
9. AMENDMENT AND TERMINATION
Subject to shareholder approval where expressly required by law, the
Board will have the power to amend, suspend or terminate the Plan at any
time; provided, however, that to the extent prohibited by Rule 16b-
3(c)(2)(ii) promulgated under the Exchange Act, the provisions of Section
5 and Section 6(a) may not be amended more than once every six (6) months
other than to comport with changes in Exchange Act, the Internal Revenue
Code, the Employee Retirement Income Security Act, or the rules
thereunder. Unless approved by the shareholders of the Company, no
amendment will:
(i) Change the class of persons eligible to receive Awards under
the Plan;
(ii) Materially increase the benefits accruing to Participants under
the Plan; or
(iii) Materially increase the number of shares of Stock subject to
the Plan.
10. EFFECTIVE DATE AND DURATION
(a) The Plan will become effective upon its adoption by the Board,
subject to and conditioned upon subsequent approval of the Plan by the
shareholders of the Company.
(b) The Plan will terminate upon the adoption of a resolution of the
Board terminating the Plan.
Given below is a map depicting the location of the Wigwam Resort for
those shareholders wishing to attend the annual meeting. Adequate parking
will be made available and the Company will provide for validation of
your parking ticket at the registration desk at the meeting.
<PAGE>
PINNACLE WEST CAPITAL CORPORATION PROXY CARD
P.O. Box 52136
Phoenix, Arizona 85072
P
____________________________________________________________________
R
This proxy is solicited on behalf of the Board of Directors for the
O Annual Meeting on May 19, 1994
X The undersigned hereby appoints Richard Snell and Faye Widenmann,
and each of them, proxies for the undersigned, each with full power
Y of substitution, to attend the Annual Meeting of Shareholders of
Pinnacle West Capital Corporation, to be held May 19, 1994 at ten
o'clock a.m., Phoenix 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.
Voting with respect to the election of Directors and the other
proposals may be indicated on the reverse of this card. Nominees for
Director are: Pamela Grant, Martha O. Hesse, William S. Jamieson,
Jr. and Richard Snell.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, it will be voted FOR the election of
Directors and FOR proposals 2 and 3.
_____________________________________________________________________________
The Board of Directors recommends a The Board of Directors recommends a
vote FOR the election of Directors. vote FOR proposals 2 and 3.
____________________________________ ____________________________________
1. Election of Directors 2. Management proposal relating to
(see other side) approval of incentive plan.
FOR* WITHHELD FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ]
*For all nominees, except vote 3. Management proposal relating to
withheld from the following: approval of directors' equity
plan.
_______________________________
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
____________________________________ ____________________________________
4. In their discretion, the
Proxies are to vote upon such
other business as may properly
come before the meeting.
__________________________________
Signature Date
__________________________________
Signature Date
Please sign as your name(s)
appear to the left. Joint owners
should both sign. Fiduciaries,
attorneys, corporate officers,
etc. should state their
capacities.
ANY PROXY GIVEN PREVIOUSLY IS
HEREBY REVOKED.
