APS 2011 Annual Report Download - page 165

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PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
140
Stock Options
Pinnacle West has not granted stock options since 2004. Currently outstanding stock option
grant terms cannot be longer than 10 years and options cannot be repriced during their terms.
The following table summarizes the option activity under prior equity incentive plans for the
year ended December 31, 2011:
Options Shares
Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual
Term (Months)
Aggregate
Intrinsic
Value (dollars
in thousands)
Outstanding at
January 1, 2011 82,224 $ 39.37
Exercised 44,766 40.70
Forfeited or expired 14,500 42.55
Outstanding at
December 31, 2011 22,958 34.75 11 $ 308
Exercisable at
December 31, 2011 22,958 34.75 11 $ 308
Cash received from options exercised under our share-based payment arrangements was $1.8
million for 2011, $4.6 million for 2010, and $3 million for 2009. The tax benefit realized for the tax
deductions from option exercises of the share-based payment arrangements were immaterial for all
years.
The intrinsic value of options exercised was immaterial for all years.
As of December 31, 2011, there was $20.5 million of total unrecognized compensation cost
related to nonvested share-based compensation arrangements granted under the plans. That cost is
expected to be recognized over a weighted-average period of 2.2 years. The total fair value of shares
vested during 2011 was $14.4 million, 2010 was $11 million, and 2009 was $10 million.
The compensation cost that has been charged against Pinnacle West’s income for share-based
compensation plans was $23 million in 2011, $15 million in 2010, and $5 million in 2009. The
compensation cost that Pinnacle West has capitalized is immaterial for all years. Pinnacle West’s
total income tax benefit recognized in the Consolidated Statements of Income for share-based
compensation arrangements was $9 million in 2011, $6 million in 2010, and $2 million in 2009.
APS’s share of compensation cost that has been charged against income was $22 million in 2011,
$15 million in 2010, and $4 million in 2009.
Pinnacle West’s current policy is to issue new shares to satisfy share requirements for stock
compensation plans and it does not expect to repurchase any shares except to satisfy tax withholding
obligations upon the vesting of restricted stock during 2011.