Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 14, 2021, the Human Resources Committee (the "Committee") of the
Pinnacle West Capital Corporation ("Pinnacle West") Board of Directors (the
"Board") approved the portion of the Arizona Public Service Company ("APS") 2022
Annual Incentive Award Plan (the "APS Plan") that provides an incentive award
opportunity for Jeffrey B. Guldner, Chairman of the Board, President and Chief
Executive Officer of Pinnacle West and APS. On December 15, 2021, the Board,
acting on the recommendation of the Committee, approved the portion of the APS
Plan that includes an incentive award opportunity for Theodore N. Geisler,
Senior Vice President and Chief Financial Officer of Pinnacle West and APS and
Robert E. Smith, Executive Vice President, General Counsel and Chief Development
Officer of Pinnacle West and APS and the APS 2022 Annual Incentive Award Plan
for Palo Verde Employees (the "Palo Verde Plan"), which includes an incentive
award opportunity for Maria L. Lacal, Executive Vice President and Chief Nuclear
Officer of Palo Verde Generating Station, APS.
No incentive payments will be awarded under the APS Plan unless Pinnacle West,
with respect to Mr. Guldner, or APS, with respect to Messrs. Geisler and Smith,
each achieves a specified threshold earnings level. The award opportunities for
Mr. Guldner under the APS Plan are based on the achievement of specified 2022
Pinnacle West earnings levels and specified business unit performance goals. Mr.
Guldner has a target award opportunity of up to 115% of his base salary. Mr.
Guldner may earn less or more than the target amount, up to a maximum award
opportunity of 230% of base salary, depending on the achievement of the earnings
and business unit performance goals separately or in combination, and before
adjustment for individual performance. The business unit performance indicators
for Mr. Guldner are in the functional areas of customer experience, corporate
resources, generation (non-nuclear), transmission and distribution, and
performance of the Palo Verde Generating Station.
The award opportunities for Messrs. Geisler and Smith under the APS Plan are
based on the achievement of specified 2022 APS earnings levels and specified
business unit performance goals. Mr. Geisler has a target award opportunity of
up to 70% of his base salary, and Mr. Smith has a target award opportunity of up
to 75% of his base salary. Messrs. Geisler and Smith may earn less or more than
the target amount, up to a maximum award opportunity of 140% for Mr. Geisler,
and 150% for Mr. Smith, depending on the achievement of the earnings and
business unit performance goals separately or in combination, and before
adjustment for individual performance. The business unit performance indicators
that will be considered for Messrs. Geisler and Smith are derived from the APS
areas of focus of culture, reliability, customer centric and affordability, as
provided in its APS Promise.
The award opportunity for Ms. Lacal under the Palo Verde Plan is based on the
achievement of specified 2022 APS earnings levels and specified business unit
performance goals. No incentive payment will be awarded to Ms. Lacal under the
APS earnings portion of the Palo Verde Plan unless Palo Verde achieves specified
business unit performance goals and APS achieves a target threshold earnings
level. The business unit performance indicators for Ms. Lacal under the Palo
Verde Plan are derived from the APS areas of focus of culture, reliability,
customer centric and affordability, as provided in its APS Promise. Ms. Lacal
has a target of 75% of her base salary, and up to a maximum of 150% of her base
salary, depending on the achievement of the earnings and business unit
performance goals, separately or in combination, and before adjustment for
individual performance.
The Committee may adjust targets or incentive results under the APS Plan and
Palo Verde Plan to reflect unanticipated events or unusual or nonrecurring
adjustments to Pinnacle West or APS earnings (as applicable) that arise in the
APS Plan year, including without limitation, Arizona Corporation Commission
rate-related
impacts on earnings. Any awards for Messrs. Guldner, Geisler and Smith and Ms.
Lacal are subject to potential forfeiture or recovery in accordance with
Pinnacle West's Clawback Policy.
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