APS 2012 Annual Report Download - page 166

PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
141
2012
2011
2010
Units granted (a)
185,878
175,072
178,722
Grant date fair value (b)
$47.40
$41.71
$37.57
(a) Reflects the target payout level.
(b) Weighted-average grant date fair value.
The following table is a summary of the status of performance shares, as of December 31,
2012 and changes during the year:
Nonvested shares (a)
Shares
Weighted-Average
Grant-Date Fair Value
Nonvested at January 1, 2012
347,946
$ 39.64
Granted
185,878
47.40
Increase in performance factor
87,037
37.57
Vested
257,127
37.57
Forfeited
16,044
42.53
Nonvested at December 31, 2012
347,690
44.67
(a) Nonvested shares are reflected at the target payout level. The increase or decrease in
the number of shares from the target level to the estimated actual payout level is included in the
increase for performance factor amounts in the year the award vests.
Retention Units
The retention unit awards have fully vested and settled on January 4, 2010; for any employee
that was eligible to retire before that date, the employee’s retention units vested by retirement date
and the compensation expense was recognized by retirement eligibility. Retention unit awards were
granted to key employees in 2006 and 2007. Each retention unit award represented the right to
receive a cash payment equal to the fair market value of one share of Pinnacle West’s common stock,
determined on pre-established valuation dates. Each retention unit award vested and settled in equal
annual installments over a four-year period. In addition, the employee received a cash payment equal
to the amount of dividends that the employee would have received if the employee had owned the
stock from the date of grant to the date of payment plus interest. As this award was accounted for as
a liability award, compensation costs, initially measured based on the Company’s stock price on the
grant date, were remeasured at each balance sheet date, using Pinnacle West’s closing stock price.
The amount of cash to settle the payment on the first business day of 2010 was $1.3 million.
Stock Options
The Company has not granted stock options since 2004. 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, 2012: