APS 2012 Annual Report Download - page 164

PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
139
which they separate from service on the Board, or as of a specified date, which 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 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 are paid, based on the
Director’s election, in either stock, or 50% in cash and 50% in stock.
Restricted stock units were granted to officers and key employees 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. In 2010, 2011 and 2012, officers and key employees 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, 2011 and 2012 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 the Company’s closing stock price,
and remeasured at each balance sheet date. Compensation expense for retirement eligible
participants is recognized immediately.
On December 19, 2012, the Company granted a retention award of 50,617 restricted stock
units to the Chairman of the Board, President, and Chief Executive Officer of Pinnacle West. The
award will vest and will be paid in shares of common stock on December 31, 2016 provided that he
remains employed with the Company until the vesting date. The award can be increased up to an
additional 33,745 restricted stock units payable in stock if certain performance requirements are met.
A 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 three years ended 2012, 2011 and 2010:
2012
2011
2010
Units granted
202,278
292,242
202,341
Grant date fair value (a)
$49.31
$41.98
$37.47
(a) Weighted-average grant date fair value