APS 2011 Annual Report Download - page 162

PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
137
which date must be after December 31 of the year in which the grant was received. The deferred
restricted stock units accrue dividend rights equal to the amount of dividends the Director would
have received if the Director had directly owned one share of common stock for each restricted stock
unit held plus interest compounded quarterly. The dividends and interest are paid, based on the
Director’s election, in either (1) stock, or (2) 50% stock and 50% cash.
Restricted stock units have been granted to officers and key employees under the 2007 Plan
in each year since 2007. From 2007 through 2009, officers and key employees elected to receive
payment in either cash or in fully transferable shares of stock, in exchange for each restricted stock
unit on pre-established valuation dates. For 2010 and 2011, participants elected to receive payment
in either stock, or 50% cash and 50% stock.
Restricted stock unit awards vest and settle over a four-year period. In addition, officers and
key employees accrue dividend rights on the vested restricted stock units, equal to the amount of
dividends that they would have received had they directly owned stock equal to the number of vested
restricted stock units from the date of grant to the date of payment plus interest compounded
quarterly. The dividends and interest for the 2007 through 2009 awards are paid in cash. The
dividends and interest for the 2010 and 2011 awards are paid in the same form as the restricted stock
unit payment election. Restricted stock unit awards are accounted for as a liability award, with
compensation cost initially calculated on the date of grant using Pinnacle West’s closing stock price,
and remeasured at each balance sheet date. Compensation expense for retirement eligible
participants is recognized immediately.
An additional grant of restricted stock unit awards was made to officers of the Company on
February 15, 2011, payable solely in shares of common stock upon the officer’s retirement or other
separation of employment. This award will vest 50% on February 15, 2013, 25% on February 15,
2014 and 25% on February 15, 2015, provided that the officer remains employed on such date. The
officers will also accrue notional dividends equal to the amount of dividends that an officer would
have received if the officer had directly owned one share of Pinnacle West common stock for each
restricted stock unit held by the officer from the grant date to each dividend payment date. Each
additional restricted stock unit will proportionally vest on the same remaining vesting schedule that
applies to the original restricted stock unit.
The following table is a summary of granted restricted stock units and stock grants and the
weighted average fair value for the years ended 2011, 2010 and 2009:
2011 2010 2009
Units granted 292,242 202,341 261,006
Grant date fair value (a) $41.98 $37.47 $30.25
(a) weighted average fair value
The following table is a summary of the status of restricted stock units and stock grants, as of
December 31, 2011 and changes during the year. This table represents only the stock portion of
restricted stock units, per the election on payment discussed in the paragraph above: